The Quest for Debt Freedom – An overview of Crown Financial Ministries and Global Lending Group Perspectives

by Tom Furio

Some of the things you may have read on this website or have heard on our radio show, “Your Home - Your Money” may seem to conflict with other financial strategies you have heard from other financial ministries, in particular Crown Financial Ministries. Though our strategies seem to contradict theirs, they do in fact compliment one another.

The main difference between our two viewpoints is that Crown Financial Ministries is a ministry that is primarily run by laypeople, whereas the Mortgage Professionals at the Global Lending Group are experts in the field. I say that as both. I am not only a Mortgage Consultant; I am a Crown Financial Ministries trained and Certified Budget Counselor.

Crown Financial Ministries is wonderful organization. Their financial strategies are sound and biblical. If you follow their strategies, you will not fail. They are ultra-conservative. Those strategies will not ever lead you astray in the short term. But you will also never get wealthy from them either.

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The main thing to remember about Crown Financial Ministries is that they are reaching millions of radio listeners every day. They have no idea where these people are financially. They do not know what the underlying reasons are for their financial situations. And they have no way to follow-up with each of these millions of listeners individually. Their financial strategies have to be straightforward and fool-proof. It would be irresponsible for them to try and communicate sophisticated strategies without the involvement of a financial professional.

Crown Financial Ministries also offers small group studies to help people take their strategies home and apply them individually. Often times there will be a study leader to facilitate these studies. And in some cases, you will be connected to a Certified Budget Counselor. I functioned in that role for many years. In fact, I was a team leader in a very large church ministry. We were the largest budget counseling group in our state. With very few exceptions, each of these Budget Counselors were lay people with a heart for financial ministry but no real world financial experience. This ministry was very effective and was a wonderful help to the people seeking counsel. But remember, it is by design a ministry for laypeople led by laypeople. We can teach principles but we were not qualified, trained or licensed to take them to the next level of financial strategizing.

Global Lending Group is the next step. We are Trusted Advisors who can help you navigate through the financial waters of your personal financial situation. We know the financial tools and how to best apply them. We have partnered with other professionals to be able to provide to you the best guidance and wisdom available. We offer resources that are not available to the lay people involved with Crown Financial Ministries.

Here are some of the things that the Global Lending Group and Crown Financial Ministries agree on:

• Work toward being debt free (though we define that differently).
• Eliminate waste from your monthly cash outflow.
• Save, not consume any excess funds.
• Save for large purchases rather than finance them.

There are also some things that differ in our strategies. For example, we differ on the definition of debt. Crown Financial Ministries would call any outstanding financial obligation debt and would advise paying it off. We take the accountant’s definition of debt; that is evaluating assets and debt based on a balance sheet. If you owe $5000 but also have $5000 in assets in a savings or investment account, you are debt free. You can retire that debt at any time, but it is not always in your best financial interest to do so. The balance sheet shows a wash of assets versus liabilities and therefore we consider that person to be debt free.

I can think of several reasons to maintain that $5000 obligation mentioned above.

• If the $5000 in your savings account is your only cash reserves, you should keep it available to you for emergencies.
• If that $5000 liability is the only account of that type reporting on your credit report. Keeping that account open and in good standing will boost your credit profile.
• If you are anticipating a future expense that you can pay cash for instead of using credit.
• If you are earning more on the investment than the obligation costs you, and there is a substantial degree of security in that investment.

So the next question becomes: “If there are good reasons to have debt, why does Crown Financial Ministries tell us to be debt free?” Great question. Remember, Crown Financial Ministries is broadcasting to millions of people they will never meet. If you go through their study materials, you will find that they are really more concerned about your heart. What drove you to make poor financial decisions? If you went far into debt before, what will prevent you from doing that again? Those are important questions. In their broad stroke approach, it is more responsible to have people get out of debt, than it is to trust them to manage their debt. (We address debt management in other articles on this web site.)

The other thing that we differ on is the use of your home’s equity. Crown Financial Ministries would teach that you should never use your home equity to pay off debt. Their reason is that once the credit is paid off, if the spending or heart issues have not been addressed, they will run the credit card balances up again. That is very wise. We would also never recommend that. But it is good financial advice to use your equity to retire consumer debt for two reasons: First, consumer debt is usually at a high interest rate. Mortgage interest rates are usually lower. Second, mortgage interest is tax deductible. The net impact on your financial well being can be substantial.

For example, let’s say that you have $300 each month that you can use to pay down your mortgage. If you paid $300 extra toward your mortgage each month, you would pay off a 30 year fixed rate mortgage in just over 23 years. Sound great right? Now let’s say that you took that same $300 per month and invested it into a safe, liquid investment account that earns an 8% return, you would be in a position to pay off your mortgage in only 17 years. That’s 6 years sooner!

Some would argue that it is unwise to consolidate consumer debt into a mortgage that is secured by your primary residence. I would agree that if your goal is to free up funds to increase your spending, that would be a very unwise thing to do. But if your priority is to create a sound financial plan for your long term security, then I would disagree. In most cases, the new mortgage payment will be lower than the current monthly payments of your mortgage and consumer debt combined. That will make your monthly financial picture stronger. And, as I mentioned above, you will experience a tax advantage on the repositioned debt that will compound its value to your bottom line every year.

That illustrates how a professional can help you to achieve the same goals by a different path. So while our on-air messages may seem contradictory, they really are not. Crown Financial Ministries offers sound financial advice for laypeople by laypeople. We take your financial strategy to the next level. The professional level.