Provident Planning

Tithing in the Bible: Abram’s Example (Genesis 14:18-20)

Paul Williams — Mon, 09 Nov 2009 08:00:52 +0000

¹⁸ Melchizedek king of Salem brought out bread and wine: and he was priest of God Most High. ¹⁹ He blessed him, and said, “Blessed be Abram of God Most High, possessor of heaven and earth: ²⁰ and blessed be God Most High, who has delivered your enemies into your hand.” Abram gave him a tenth of all.

Genesis 14:18-20 (WEB)

Genesis 14:20 is the first time the tithe (or “tenth”) is mentioned in the Bible. This passage is often used to show that tithing is a moral law that preceded the Mosaic Law. As such, tithing is to be considered an eternal principle that was not replaced by the New Covenant after Jesus’ death. Let’s examine this passage to see what the Bible says about tithing here.

The Whole Story

Let’s first look at the rest of the story surrounding those three verses. The first part of chapter 14 explains that five kings who ruled in the area near the Dead Sea rebelled against a king from the North (in Mesopotamia) and his three allies. The four kings from the North defeated the five kings from around the Dead Sea. The five kings fled and verse 11 picks up with what the four kings from the North did after winning the war:

       ¹¹ They took all the goods of Sodom and Gomorrah, and all their food, and went their way. ¹² They took Lot, Abram’s brother’s son, who lived in Sodom, and his goods, and departed. ¹³ One who had escaped came and told Abram, the Hebrew. Now he lived by the oaks of Mamre, the Amorite, brother of Eshcol, and brother of Aner; and these were allies of Abram.

       ¹⁴ When Abram heard that his relative was taken captive, he led out his trained men, born in his house, three hundred and eighteen, and pursued as far as Dan. ¹⁵ He divided himself against them by night, he and his servants, and struck them, and pursued them to Hobah, which is on the left hand of Damascus. ¹⁶ He brought back all the goods, and also brought back his relative, Lot, and his goods, and the women also, and the people.

       ¹⁷ The king of Sodom went out to meet him, after his return from the slaughter of Chedorlaomer and the kings who were with him, at the valley of Shaveh (that is, the King’s Valley). ¹⁸ Melchizedek king of Salem brought out bread and wine: and he was priest of God Most High. ¹⁹ He blessed him, and said, “Blessed be Abram of God Most High, possessor of heaven and earth: ²⁰ and blessed be God Most High, who has delivered your enemies into your hand.” Abram gave him a tenth of all.

       ²¹ The king of Sodom said to Abram, “Give me the people, and take the goods to yourself.” ²² Abram said to the king of Sodom, “I have lifted up my hand to Yahweh, God Most High, possessor of heaven and earth, ²³ that I will not take a thread nor a sandal strap nor anything that is yours, lest you should say, ‘I have made Abram rich.’ ²⁴ I will accept nothing from you except that which the young men have eaten, and the portion of the men who went with me: Aner, Eshcol, and Mamre. Let them take their portion.”

Genesis 14:11-24 (WEB)

Abram Gave Only from the Spoils of War

It’s clear from reading the entire passage that the “tenth” that Abram gave Melchizedek came only from the spoils of war (in verse 16) and not from Abram’s personal wealth or income. Abram only took his trained men out to war, and he only brought back the things the kings from the North took in verses 11 and 12. Therefore, we know that the tenth that Abram gave to Melchizedek had to come from the spoils of war. This idea is also backed up in Hebrews:

Now consider how great this man was, to whom even Abraham, the patriarch, gave a tenth out of the best spoils.

Hebrews 7:4 (WEB)

It’s clear that this does not set a precedent for the Israelites. Abram’s example was never used in Scripture to justify tithing to the Levites or tithing from spoils of war (both are included in the Law).

Abram Gave the Rest to the King of Sodom

In verse 21, the king of Sodom offers to let Abram keep the rest of the spoils of war except for the people. But Abram refuses and tells the king of Sodom to give his allies their portion and keep the rest for himself. Abram refused to keep anything for himself because God had already promised to bless him. When Abram became rich, he wanted everyone to know that it came only from God and not from pagan kings.

If Abram’s example is supposed to serve as an example for Christians, then we would be giving away everything – well, at least the spoils of war that is. But this portion of the story is hardly discussed when using Abram’s example to support the idea of a tithe for Christians.

Abram Only Tithed Once

As far as we know, this is the only time Abram ever gave a “tenth” or “tithe” to anyone for any reason. No other place in Scripture records Abram tithing to God or any representatives of God. Abram may have helped the poor in other ways, but he didn’t seem to make a habit of tithing.

Abram’s Example Was Never Used for Christian Giving

Finally, if Abram’s example was intended to set a precedent for Christian giving or tithing, then it seems logical that we would have found an emphasis on it in the New Testament after Christ’s death. However, neither Paul nor Peter nor James nor John seemed to think Abram’s example of a tithe was relevant to Christian giving. Instead, New Testament Scriptures emphasize the importance of giving out of love and giving according to the Holy Spirit’s leading. And I don’t know about you, but I’ve never taken my spoils of war to church.

It seems strange that we should break from the teaching of Jesus or the Apostles to enforce tithing as a Christian rule simply from Abram’s example in Genesis 14.

Tithing in the Bible Series

This article is the first in a series that will examine tithing as it is presented in Scripture. If you’re interested in learning more about this topic, I suggest you sign up for free updates to Provident Planning. I’ve also completed a series on the giving principles outlined in the New Covenant.

If you have questions or comments, please take a minute to leave them below!

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Hiring a Financial Planner: The First Phone Call

Paul Williams — Fri, 06 Nov 2009 08:00:56 +0000

If you’ve decided to hire a financial planner, you should consider your choices very carefully. You’ll be sharing your financial information with this person, so you want to make sure you can trust him to provide quality advice and look out for your interests first. Unless you meet the financial planner at a seminar or some social event, your first contact is likely to be over the phone. Read on to see what you should expect from this first conversation.

The Greeting

Your call should be answered promptly and by a friendly, professional person. If you’re calling a small, solo financial planning firm, the person who answers may actually be the financial planner. For larger firms, you’re likely to speak with a secretary or assistant first. Let them know you’re interested in learning more about their financial planning services. Depending on the firm’s procedures, you may be transferred directly to a financial planner, a business development/marketing person, or you may be asked for some basic information first. Understand that the firm operates in this way for a specific reason and be willing to work with their requests unless they’re unreasonable.

The Screening

Early in this initial phone call, the planner or other representative of the firm should ask you if you have a few minutes so they can describe their services. This description should include a summary of the services they offer, their typical client, and the associated fees.

If they do not tell you what the fees are up front, don’t be afraid to ask them now. This process helps you get an understanding of what the planner can do for you and whether or not you will need the services they offer.

Some planners may mention a minimum account size or net worth so that you can screen yourself out of their services. If you are far from reaching their minimums, politely say so and move on to the next planner. Trying to work with a financial planner focused on wealthier clients is likely to cost you much more money and may not provide you with the essential services you need.

If they do not take the time to discuss their services and fees with you but instead rush to set up your first meeting, be very wary. Anyone who is not willing to take the time initially to teach you about what they can offer you is likely a pure salesman. You should be on your guard when hiring a financial planner as there are many out there who will not put your interests first. But be especially careful when the planner moves quickly to set up your appointment without first taking the time to let you know what they do.

The Question

After describing the services they offer, the financial planner should ask you if you have any specific needs or services they did not mention. They may also ask you, “Do you feel like these services will be helpful to you?” Be up front and clear. If you are looking for a planner who will manage your investments and do your tax returns, say so. This will avoid any misunderstandings or disappointments and keep you from wasting your time in a meeting to find out the planner will not suit your needs. On the other hand, set your expectations carefully. Though it can be nice to get everything done at a “one-stop shop”, you may be forsaking quality or integrity for convenience.

Setting the First Meeting

If both you and the planner are in agreement that their services may meet your needs, the next step is to set a date, time, and place for the first meeting. The planner should explain what will happen at this first meeting and let you know if you’ll need to bring any specific documents along. They may also send you a packet of information further describing their services and requesting information from you before the initial meeting. Carefully complete any requested information if you’re comfortable with it and return it promptly so the planner has time to review it prior to your meeting.

You should go into the first meeting not looking for specific recommendations for your situation but with the understanding that you haven’t yet hired this financial planner. You should prepare a list of questions to ask the planner about what their services entail, how they charge for their services, their qualifications, if they are required to put your interests first (fiduciary duty), and if they meet state and federal regulatory requirements.

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Weekend Reading – 11/06/09

Paul Williams — Fri, 06 Nov 2009 08:30:27 +0000

I had articles in three different carnivals this week. Here they are:

Carnival of Personal Finance – How to Buy Life Insurance

Festival of Frugality – Cheap, Healthy Food: A Wholesome Meal for Under $1/Serving

Money Hacks Carnival – Who Should Own Your Life Insurance Policy?

Trent at The Simple Dollar has ten tricks for staying warm this winter without huge energy bills. I know heating costs are one of our largest expenses in the winter, and we’ve already used some of these tips to save some money. Be sure to check the list to see if there’s anything you can do to cut your costs while staying warm. Have a great weekend!

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How Big of a Mortgage Can I Afford?

Paul Williams — Thu, 05 Nov 2009 08:00:02 +0000

Before you go shopping for a house, it’s important to set a limit for yourself on how much you’ll spend. If you’re paying in cash, it’ll be easy to set that limit. But if, like most people, you’ll be using a mortgage and a down payment to purchase your house, the question becomes how big of a mortgage can you afford.

The Quick Method

The quick way to estimate how much of a mortgage you can afford is to take your gross (before-tax) annual income, subtract your debt payments, and then multiply by 3 (use 2.9 if the mortgage rate is 6%, 2.7 if it’s 7%, or 2.5 if it’s 8%). Here’s an example. Let’s say you earn $50,000/year before taxes and you pay $200/month for student loans (which works out to $2,400/year). Subtract your annual debt payments and you’ll get $47,600. Multiply by 3 (since mortgage rates are currently around 5%) and you’ll find that you can afford a mortgage of roughly $143,000.

To translate that into a purchase price for the house, divide by 0.8 (assuming a 20% down payment). Doing so will tell you that you can afford a $179,000 home if you have a $36,000 down payment. Don’t forget that you’ll have to pay some closing costs on the mortgage as well (possibly an extra $2,000-3,000). Set your limit at the number you come up with, and do not go looking at houses above your price range.

The Better Method

If you want a more accurate method with less math on your part, I highly recommend Dinkytown.net’s Mortgage Qualifier Calculator. By entering all the information it asks for, you can come up with a home price and mortgage amount that will be affordable for your situation. You’ll need to enter your annual income, cash on hand, mortgage interest rate, mortgage term, property tax rate, homeowner’s insurance, closing costs, and your debt payments.

You can estimate your mortgage information by doing a few searches on Google. You can also find information on property tax rates and homeowner’s insurance costs for your area by searching Google. If you can’t find that information, call a real estate agent and ask them for some estimates. They’re very familiar with such costs and can help you guess at those costs.

What You Can Afford May Not Be What You Need

Just because a calculator spits out a number telling you that you can afford a $200,000 house does not necessarily mean you need a $200,000 house. If your actual needs are less than what you can afford, by all means buy a less expensive house and use the money you save for your other needs. Buying more house than you need is unlikely to do you much good in the long run. You’ll pay higher property taxes, insurance rates, and maintenance costs for something you’re not fully using.

If There Are No Homes Available in Your Price Range

Then you likely need to save a larger down payment or move to an area with a lower cost of living (if that’s an option). Stretching yourself to buy a house outside of your affordable range can easily lead to disaster when hard times hit. Beware of exotic mortgages (like interest only and other variations), and be very careful of ARMs (adjustable rate mortgages). The most manageable and safest mortgage is the traditional 30-year or 15-year fixed interest rate mortgage.

Another option is to keep shopping around until you find a house within your price range. Patience is a powerful tool when buying a house. Rushing the biggest purchase in your life is not a wise decision. Don’t let the emotions of searching for a home control your decisions and put you in a financial bind.

If you have any questions, leave a comment. I promise to respond as quickly as possible!

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Why We’re Not Buying Life Insurance (Yet)

Paul Williams — Wed, 04 Nov 2009 08:00:30 +0000

Last month, I posted several articles about life insurance. Today, I’m going to tell you why my wife and I have decided not to buy life insurance yet.

Our Situation

We’re a young married couple with no kids (and none on the way). We’re both very healthy and both of us have college degrees. Michelle’s is in nursing and mine is in financial planning. The only debt we have is my student loan, which is very manageable and has a low, fixed interest rate of 4%. We also have an adequate emergency fund and we’re saving for a house.

If One of Us Dies

In my articles I’ve advised you to only buy life insurance if you actually need it. You must determine if there is a true risk that needs to be insured. Figuring this out means that you need to ask yourself (and your spouse) what life will look like for the survivor. After going through this process, Michelle and I determined we don’t need life insurance.

If I die, Michelle is fully capable of earning more than enough money to cover her needs. We do not have nor are expecting children, so she would be free to work as much as she needs to. We also do not have a large amount of debt that depends on two incomes. Because of her ability to earn a good income through nursing, Michelle would be able to meet her needs even if I die.

If Michelle dies, I would also be able to manage. I’m in the process of becoming self-employed, and as it is right now I may not earn much money for quite a while. In the short run, we will be depending on Michelle’s income for our needs. But if Michelle were to pass away, we would have enough savings to cover my needs for a year while I start my business. If the business is not providing enough income for my needs at the end of that time, I’d need to find another way to earn some income. Even though the job market is not very bright for financial planning right now, I am comfortable taking the risk that I would have to do something (possibly anything) to earn money while I continue working on my business.

So for us, there’s no financial risk if either one of us passes away prematurely at this time in our life together. That could easily change though if one of these three situations occurred:

We Have Children

Once children are on the way or in the picture, we’ll be looking at this question again. Michelle will likely be at home more to take care of the children, and I’ll be the primary earner. At that point, if either of us were to die the survivor would need some financial help to make things work well. We’ll both get life insurance then.

One of Us Becomes Disabled

If one of us were to become disabled, we’d need life insurance on the non-disabled person to help cover the cost of care in the event of a death. If the disabled person were to die, it would likely improve our financial situation. But if the non-disabled person were to die, the disabled person could need quite a bit of help.

We Take on Debt That Requires Two Incomes

The only way this is likely to happen is through a mortgage, but even then it’s highly unlikely. We’re not going to push ourselves to purchase a house that requires a mortgage payment dependent on two incomes. Our plan is to save up a large enough down payment so we won’t need to take on too large of a mortgage. My ideal is actually to build my own house for cash, but we’re not sure if that’s what we’ll end up doing.

What Should You Do?

My point in sharing our decision is not to tell you that this should be your decision as well if you’re in the same situation as us. The lesson here is that you must look at your own circumstances, ask the right questions, and then determine what you should do. Don’t go buying life insurance just because someone tells you to. Make sure you need it first!

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