Imagine you’re walking down the street and approached by an obviously homeless person. You know what happens next, they ask for some money. A little loose change, a spare dollar, anything. You look in your wallet, relieved to find that you don’t have any cash. You report the bad news to the man dismissively. You then scurry to your car only a block or two away, where you have some cash safely stored in the glove compartment.
Why were you so relieved to find yourself without money? Why not take the few extra minutes to get the cash for the man?
Do we, as Christians, put money out of arm’s reach so we don’t have to use it?
Christian organizations and families are particularly obsessed with the idea of paying down debt. As Dave Ramsey loves to say “debt is dumb and cash is king.” What’s ridiculous about this saying is that you can’t have both. The very act of paying down debt locks cash away in the asset it’s secured by. You either separate with your cash to reduce debt or you float your debt in order to sustain cash balances. You can’t do both simultaneously. The majority of America’s wealth is locked in retirement accounts and home equity. It’s not available for mission. It’s not available for risk. It’s not available to God.
In their typical religious fashion, churches step over dollars while picking up dimes. Buying their buildings in cash, then laying off staff when they hit a hard patch. Meanwhile, they beg and shame their congregants for support while a million dollar asset sits on the balance sheet. Can we take a church or organization seriously if it wants our money now so they can keep their assets for later?
Having a paid off building or a fat retirement account aren’t necessarily bad things. But we’re lying when we tell donors (or God) we “don’t have the money”. The money is there. It’s just locked up in a building or retirement account.
What if, instead of solving our finances for security, we solved for flexibility. What if instead of planning our next 30, 40 or 50 years of following Jesus, we planned to be available. What if we were honest and said “we don’t know”. What if we did the work that was in front of us, and kept dry powder available for Christ to call on.
Not a single thing in the Bible suggests financial security as an appropriate goal for Christians. Mind you, having financial health is prudent and a wise move, but placing our security in anything but Christ is an affront to the gospel. Our call is to follow Christ, wherever He may take us. Often assets stuck in a building, retirement plan or business prevent us from saying “yes” to the call.
Liquidity is the measure of cash and cash equivalents we have available. This is money accessible today or in a couple days without penalty. Examples of liquid accounts include bank accounts, non-retirement brokerage accounts and short term CDs.
I’ve interviewed many people who decided to cash in 401(k)s, sell homes, or liquidate businesses in order to follow the call God had in their life. I, myself, sold a rental property in order to gain some liquidity as I left the corporate world and entered ministry.
I applaud the people who have taken these giant risks to get liquid, but I wonder how much damage we do to our finances when we continually shift long term assets into near term cash. Paying penalties and transaction costs when perhaps having a little extra liquidity could left our retirement intact. I also wonder how many would-be faithful Christians hide their money in the sand via retirement plans and debt paydown and shrug their shoulders when the call comes “I just can’t”.
Maximizing for flexibility is more ‘on mission’ than maximizing for security. There is a balance between planning and availability that we must strike. We must both build financial capacity in a responsible way and make that wealth available should God call on us to take a risk.
The wind blows wherever it pleases no one can tell where it comes from or where it’s going. So it is with everyone who is born of the Spirit. John 3:8
I don’t know about you, but this verse captures my experience following Jesus. Staying flexible with our money both prepares us to say yes, and confesses that we don’t know the future. The financial planning industry wants to slap a fifty page report on the table that perfectly lays out your next 30 years. The truth is no one knows.
When we take the ‘long view’ by locking our money into retirement plans, houses or businesses we actually take the short view. The real long view is asking; how can I position this money to impact eternity? Again, it’s not that planning or using long term vehicles are a bad thing, they are a necessary part of financial health, but the price of their tax advantaged status and outsized returns is liquidity. No matter how we position our wealth we experience a trade off.
While Christians should certainly buy houses and save for retirement, they should recognize that they do so at the risk of their liquidity. While they may be willing to walk to the car to get some money when asked, they should keep a proverbial five dollar bill in their wallet in case someone asks for it.
How to Maximize Flexibility
The tried and true method of building wealth involves maximizing your retirement plan contributions, paying down your mortgage and increasing your income over time. You will have a fine retirement if you do these things. However, if your goal is to keep in step with the Spirit, you may want to change your approach. Consider these ways to maintain financial flexibility:
- Consider utilizing a taxable brokerage account to save. The tax advantaged status of retirement plans are attractive, but you’ll pay penalties and taxes if you want the money. Consider maximizing any matches in your retirement plans then using a taxable account for additional saving, this allows you to access the money without paying income tax. Though you may pay a (typically lower) capital gains tax, if you sell out of positions.
- Continually save cash. Many people stop contributing to their savings account at the magical 3-6 months of expenses mark. Continually putting something, even if it’s a small dollar amount into your cash savings account keeps money available for the mission. We keep a savings account specifically for giving and sweep money into it monthly. That way when a need arises it’s there.
- Don’t pay your mortgage aggressively. The pay off/ don’t pay off your mortgage debate is heated. The idea that you would sacrifice cash today to someday get extra cash flow in return is ludicrous to me. If you’re maximizing security then there is psychological value in paying off the house, but you lock away money God could call on today.
- Maintain a home equity line of credit. If you insist on paying down your mortgage, having a home equity line of credit gives you access to the equity in your home should you need it. This flexibility allows you to continue paying your mortgage aggressively without locking the money away permanently. Most home equity lines cost nothing or a small annual fee to maintain.
- Don’t oversave. I’ve met several couples who could stop saving for retirement today and be fine. They feel a call from God, but they won’t take the financial leap to lower their income. Once you reach the saving finish line, stop! The saddest financial outcome is dying a millionaire having said “no” to all the life Jesus invited you into.
I don’t need you to empty your retirement account and give it to the poor. We need to build financial capacity over time to sustain our ministries. However, it’s unconscionable for churches, organizations and Christians to shrug their shoulders and say “we don’t have it”, while they pack gobs of money into long term assets. We should consider our liquidity as a measure of our readiness to respond to God. Furthermore, we should be willing to liquidate long term assets if that’s the call, not pretend like they are untouchable.
Yes, we have faith that God can provide through financial miracles. However, obedience and faith are about positioning our lives not forcing God’s hand. Yes, sometimes we are in a bind and we need God to come through, but as a lifestyle we should continually shift money with an eye toward flexibility and allow Him to provide security.