Month: May 2020

Pay What is Owed

Posted on by richabbaholyabba

‘Dad, will you lend me $250.00?’ This from my eleven year old son.

‘What for?’

‘So I can buy V-Bucks for Fortnite on my Playstation!’

‘I’ll lend it to you,’ his older sister chimes in, flexing her financial muscles. ‘I charge two percent interest a month.’

At this point, I elect not to launch into the questionable morals of charging your eleven year old brother interest. That is a lesson for another day It’s all little more than friendly banter at this point. I bite my tongue and wait to see how it plays out.

‘Done!’ says my son who can already feel money in his hand.

Time to step in before this interaction ends in tears. ‘Hold on,’ I say. ‘How are you going to pay back $250.00? Ask yourself, can you pay what is owed?’

My son grins and shrugs. He and I both know he has not even considered repaying the loan. I should explain that money runs through his hands like water. He saves because I make him – but he hasn’t understood the value yet.

I turn to my daughter and say, ‘You’re going to want some sort of security on that loan.’

She looks puzzled so I explain, ‘What if your brother can’t pay the loan back?’

She ponders this for a moment. ‘I’ll charge him even more interest until he can pay what is owed.’

‘Forget the interest!’ I laugh and shake my head, ‘You won’t even get your $250.00 back. That money is in the wind.’

Silence as the two siblings stare each other down each with a lopsided grin on their faces.

‘How about this?’ I suggest. ‘Take your brother’s Playstation as security. If he doesn’t pay you back, he has to give you the Playstation.’

‘What!’ my son is incredulous but his sister’s eyes light up.

‘Yes!’ she exclaims. I can sell it on ebay to get my money back.

Suddenly, my son is less keen. He had to smash up a patio as part of a landscaping project and lift a nearly a ton of rubble into a skip to earn the money for that Playstation. This is too big a prize to lose if he can’t pay what is owed – and, in his heart, he knows he can’t.

‘Why should she get my Playstation?’ he asks.

‘That’s how loans work,’ I explain. ‘When I take out a loan, I have to offer the bank security, like our house. That way, if I don’t pay them back, they can take my stuff and sell it to get their money back.’

‘But what if they sell it for more than you owe?’

‘Well, in that case, they will give you back whatever is left over. But, trust me, it won’t be much.’

More pondering. And staring. And grinning.

‘So, how about it?’ I ask. ‘Do you still want that loan from your sister?’

He grins and shakes his head. ‘Nah! I don’t really need the money.’

We are still all smiling and the game is over.

There were two lessons here.

First, for the lender; don’t lend money unless you are sure the borrower is able to repay you. As a lender, you have a duty to make sure the borrower understands, and can bear, the cost of this loan if they are unable to pay what is owed as originally planned.

Second, the borrower needs to understand that they have a Biblical and moral obligation to pay what is owed.

pay what is owed

7 Give to everyone what you owe them: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honor, then honor. 8 Let no debt remain outstanding, except the continuing debt to love one another, for whoever has loved others has fulfilled the law.

Romans 13:7-8

I would rather teach my children to assess risk properly, both as a borrower and a lender, in their early teens than see them learn this lesson the hard way as adults.

A story my mother told me many years ago about an ex-colleague of hers still haunts me. Recently retired, he received his pension package as a lump-sum payment. This was his nest-egg; the money that would see him and his wife through their autumn years.

When his nephew approached him with plans to open a restaurant, he became excited. He could help out a family member and ensure that his money was in the care of someone he trusted. As a silent partner in the business, he would be guaranteed an income for years to come and who knew what the business could grow into!

A 50/50 partnership seemed fair. He put in all of the money and his nephew would run the business and do all of the work. Sadly, things did not work out as planned. In a matter of months, the business burned through all his cash and ultimately failed. By the time his nephew came clean and told him how bad things were, it was too late. The restaurant closed, leaving the man and his wife destitute.

His nephew couldn’t help or make things right. He had no money of his own, which is why he had needed the loan in the first place. How bad must that young man have felt? He didn’t set out to cheat his uncle out of his life’s savings. What a dreadful position to find yourself in.

What my mom’s colleague failed to do was assess the risk. His nephew may have been a great chef but that did not automatically make him a great businessman. Furthermore, he had no means to pay back the loan if things went wrong. Neither of these men had any recourse and all was lost.

God vs Mammon

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19 ‘Do not store up for yourselves treasures on earth, where moths and vermin destroy, and where thieves break in and steal. 20 But store up for yourselves treasures in heaven, where moths and vermin do not destroy, and where thieves do not break in and steal. 21 For where your treasure is, there your heart will be also. 22 ‘The eye is the lamp of the body. If your eyes are healthy, your whole body will be full of light. 23 But if your eyes are unhealthy, your whole body will be full of darkness. If then the light within you is darkness, how great is that darkness! 24 ‘No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other. You cannot serve both God and money.

Matthew 6:19-24

In the financial context, Jesus sums up the crux of the problem in Matt 6:19-24. There are two types of treasure; one in the next life and one in this life. Each is stored in a separate place; heaven or earth.  And each is represented by a different master; God or Mammon.

It is impossible to serve both so we have to choose which master we serve and where our treasure is stored – for there our hearts will be also.

This is hardly an even contest. God is Love and the source of all good in this world while Mammon, a cruel master, the love of which is the root from which all evil stems. And yet, it is Mammon’s lure that we follow. Rich or poor, we are captivated by our need for money and whether we admit it to ourselves or not, money is what drives us out of bed and off to work each day.

It is the promise of riches, or even just making rent for the month, that captivates us and keeps us in Mammon’s clutches. However, the sad reality is that there is never quite enough. No matter how much we already have, we always need just a little bit more – and then we will be satisfied. We literally spend our lives chasing the pot of gold at the end of that rainbow, Mammon.

How does this keep happening? Mammon preys on our basest instincts:

  • Greed
  • Fear and
  • Envy/Covetousness

Greed

Otherwise known as desire represents

  • the things we want
  • the things we think we need
  • the things we can’t live without

Fear

Fear, or insecurity is the second string in Mammon’s bow. Mainly, we fear losing what we already have. It is this fear that keeps us chasing the next increase or the next promotion. As prices continue to rise, we need to earn more money to keep up. So we avoid taking risks and, above all, do nothing to jeopardize what we already have.

Envy

Envy keeps us comparing ourselves to others. Usually the ‘others’ are our peers or those we deem more fortunate than ourselves. The only time we tend to compare ourselves to anyone less fortunate is in the context of fear, as already discussed.

It is envy that drives our fears and desires; fear of losing what we have and being looked down on by our peers or desire to acquire more and become like those to people to whom we aspire.

Choosing the Right Master

When we address these areas of our lives, we redress the imbalance. We break the power of Mammon and the love of money in our lives and we put ourselves in a position where we can serve God, our one true master. 

So what then of Mammon? When God is our master, it’s not as if money magically disappears from our lives. It remains very much a part of our day-to-day existence. There is a fundamental difference, however. By choosing God as our master, we reduce money to its rightful place in our lives. A mere resource; something to be used as God directs. In this new hierarchy, God is the master. We are his stewards, managing the resources with which he has entrusted us. And money is forced to do our bidding, aiding us, as we follow God’s plan for our lives.

In a weird twist of spiritual cause and effect, when this happens we make money, or Mammon, our servant rather than our master. But here’s the rub. When you make Mammon your servant rather than let it be your master, you actually unleash the power to create true wealth!

When you eradicate greed and desire, your spending habits will change and it becomes easier to save money.

When you shackle your fear, you are more open to risking your money in investments – and from each investment, you will learn to make even better investments in the future.

When you root covetousness out of your life, the power of both greed and fear begin to diminish and you free yourself to walk in God’s plan for your life rather than concerning yourself with what other people do or think.

The Business of Forgiveness

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Never has my capacity for forgiveness been as stringently tried and tested as it has in business. No doubt, the love of money brings out the worst in people.

Forgiveness is one of the central tenets of our Christian faith. God has forgiven us. Jesus death and resurrection purchased that forgiveness. And he calls us to forgive others as he forgave us.

As a believer since my mid teens, I have experienced bullying, hurt, disappointment, and the pain of broken promises. But only in business has my capacity to forgive been strained to breaking-point.

I have tried my level best to walk in forgiveness throughout my life. In truth, there have been many times where God’s grace carried me for a period when I was unable to show the forgiveness I should. For that I am grateful and can say that, in time, I came to a place where I could let the pain and anger go.

In business, your suppliers will take advantage of you. Your clients will refuse to pay you just because they don’t want to. Your investors will squeeze you. Your business partners will cheat you and abuse your trust. And your employees will steal from you. If you plan to start a business of your own, be prepared; your ability to forgive will be tested to the very end of its limits.

What lessons have I learned from running my own business? Many – but I will lead with the most important. Forgive! When someone abuses your trust to gain at your financial expense, it’s hard but you have to let it go. There are many reasons for this.

First and foremost, it is what God requires of us. Second, life is too short to carry the weight of resentment for every penny someone ever stole from you. Your energy is far better spent on building your future than dwelling on past hurts and losses. Forgiveness is as liberating for the one forgiving as it is for the one being forgiven. In many cases, more so.

Should we learn from those bad experiences? Absolutely. I have formulated a number of principles over time. These principles guide my interaction with clients, suppliers, employees and business partners. Walking in forgiveness does not mean you have to be a push-over.

For instance, one of my businesses, in the self-catering hospitality sector, was at constant risk of non-payment. The bottom line was this; if a client had not paid before taking occupation of an apartment, it was unlikely that I would ever receive any money from them. So I implemented a simple rule. Payment up-front or no access.

No variations or exceptions. If a customer is already in and wants to extend their stay, they either pay for the extension before their original check-out date or they have to vacate on the original check-out.

Many long-standing clients, who stay in my apartments regularly, might call me up on a Friday and ask if they can book another week starting on the following Monday. When Saturday comes and no money is forthcoming they assure me that they will pay during the course of the following week.

You might assume this is okay on the basis of the long-standing relationship. The customer has used the apartment regularly for eight to twelve weeks and payment has never been a problem before. You would be wrong. The last check always bounces.

Rather than manufacture yet another opportunity to walk in forgiveness, I always say the same thing. ‘I’m truly sorry, Mr. X. We have simply had too many clients check out without paying in the past so we have a strict up-front payment policy. I really need to process payment today or we will be forced to cancel your booking.’

Yes, I realise this can be distressing for the honest customers who would never dream of cheating you but experience has taught me that trust is too easily abused.

Whenever I lose money through another person’s blatant dishonesty, I take stock. I think about what I could have done differently to prevent the theft in the first place. I then implement that as a new principle that guides all my interactions with future clients. After that, I choose to forgive and let the matter go. I chalk up the financial loss as school fees; the price I paid to learn a valuable lesson in business.

Love of Money – The Great Irony

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Most hard-working people think of the love of money as something only those far wealthier than them struggle with. I certainly used to think this way. Today, I find this thinking ironic.

We work ten to sixteen hours a day in jobs we hate just to keep pace with our ever-increasing bills – and the neighbours. Marriages break down and children end up in therapy because parents are simply never around. We’re too busy working to give our children the things we never had when we were growing up. 

All the while we pat ourselves on the back saying, our value system is more Biblical. We’re not like those materialistic rich people where everything is just about money. We choose not to pursue riches because the love of money is a root of all kinds of evil.

We need to be honest with ourselves and ask the question. Could it be the love of money that drives us to the office each day? Would we still do this if our employers said, ‘We’re not going to pay you any more. After all, it’s not really all about the money.’

Could it be the love of money that keeps us locked in a cycle of acquiring things and constantly spending just a little more than we earn? Do we really need that extra living room in the more expensive suburb, or the new car and flat-screen TV that eats up the pay increase we just got?

I’m not saying rich people don’t love money. Many do. I’m simply saying let’s not judge them too harshly because none of us is immune. The love of money is sin – and we are all sinners.

While this may sound depressing, I believe quite the opposite. I find it liberating. Nowhere does the Bible tell us that either the acquisition or wise stewardship of money is evil or sinful in any way. Only the love of money – and that is something we need to deal with in our lives regardless of whether we are princes or paupers.

Which leads me to the biggest irony of all. The love of money not only distracts us from our relationship with God. It’s actually the culprit that keeps us locked in the very financial bondage from which it promises to rescue us.

Our constant need to spend prevents us from saving money. Our fear of losing what we already have prevents us from investing money. And our endless reach for just a little bit more keeps us locked in the cycle year after year.

There is a flip-side to this, however. When we break free from Mammon’s grip, we not only rectify our relationship with God; we also free ourselves of the yoke that keeps us in financial bondage. Far from denying us true wealth, understanding 1 Tim 6:10 and applying it to our lives is the very key to unlocking the wealth we desire.