Yearnings Greater than Earnings

Posted on September 25, 2008

by Jeremy L. White, CPA

An old saying states a surprising truth: "The quickest way to bankruptcy is an increase in pay."

As 12-year old baseball fan, I still remember hearing about a player on my favorite team. He had signed a million-dollar contract. I couldn't imagine that someone was paid that much to play ball! That's small by today's standards where the average baseball player makes $2.3 million per year.

But the next year the player filed for bankruptcy. How could that happen? Eight sports cars, three houses, a drinking habit, and two wives - that's how it happened. Another confirmation of the truth of the opening quote.

Sports stars and entertainers earn outrageous sums in a surprisingly short time. Such high incomes do not translate into financial security. Willie Mays, Mike Tyson, Johnny Unitas, Brooks Robinson, and Kareem Abdul-Jabbar have all filed bankruptcy.

London newspapers reported recently that singer Elton John, one of the highest paid entertainers, sought a $40 million loan to pay off a few bills. Proving once again another anonymous saying, "Having money to burn is a good way to start a fire you can't put out."

The key point in managing your money is not how much you earn. It's what you keep. It's how much you spend in relation to what you earn. It's so easy for us to raise our lifestyles as fast - or faster - than our incomes.

If someone consistently earns $200,000 per year and spends $202,000, then he is behind the man earning consistently earning $30,000 and spending $29,000.

As usual, the Bible gives us excellent wisdom in this area. Consider Solomon's words in Proverbs 21:20, "In the house of the wise are stores of choice food and oil, but a foolish man devours all he has."

Jesus points out the obvious common sense involved in planning in Luke when he says that anyone should count the cost before starting a building.

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Unhooked from Plastic
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I got hooked on plastic after graduation from college.  The plastic, and it's instant free money, seemed to grow on trees.  My wife and I ate of it freely for some months.    I felt we deserved a payoff for having scrimped so much through the college days.  I had landed a TV newsman's job in Houston making enough so she didn't have to work and could stay right there in our rented apartment to focus on our infant daughter.  We were ready to outfit our little pad.   We scooped up new couches, bedroom furniture, accessories,    
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