Managing Money God’s Way

No matter what your budget is this Christmas, remember to be thankful.

You might have a lot. You might have a little. If you are driving a beat up old car, be thankful for that old car. You would rather drive that than walk, wouldn’t you? There is always something to be thankful for.

That’s what contentment is all about. When you understand and really grasp contentment, it becomes easier to save money and invest. Stress slowly disappears. Budgeting is easier. Relationships improve.

Without contentment, it’s easy to be bitter and apathetic. Happiness is sold to us, especially during this time of year. We think if we can just get one more piece of stuff that “true” happiness will be right around the corner.

We say things like, “I’ll be happy when I get that house!” or “I’ll be happy when I get that new car!” But happiness cannot be bought. Sure fun—in the form of a house, a car, a new LCD television—can be bought, but fun is temporary. True happiness, or contentment, is lasting.

You can get out of debt, save money, and get on a budget, but until you realize that stuff doesn’t bring contentment, you will always feel stressed and unhappy. Contentment brings peace. And isn’t this time of year about bringing “peace on earth and good will toward men”?

Remember what this deal is all about. It’s not about trees, lights, gifts, baked hams, and shopping malls. It’s about a little child who was born in a manger and grew up to die on a cross. It’s about peace on earth and good will toward men.

So if the Christmas frenzy is wearing you out, you’ve missed the point of Christmas. Make a plan with your money, and make a plan to get back in touch with the true meaning of this special day.

Welcome to the 25th edition of the Best of Money Carnival.

This is the first carnival I have hosted, and I can tell you it has been a great experience.

After reading all 41 submissions, here are my top 10 favorites.

1. Abysmal Survey Results: Americans Don’t Understand Basic Financial Concepts at Darwins Finance – This article really points out how little most Americans know about personal finance.  Anyone for changing what our schools teach?
2. Great Debates: ETFs vs. Index Funds at The Amateur Financier – A very good explanation of the pro’s and con’s of ETF’s and Indev Funds.
3. Savings & Rubber Band Balls at Budgets are Sexy – A good analogy on savings and what our true goal should be.
4. The Day I Killed My Credit Card at Enemy of Debt – I loved this post.  It was written as a story instead of your typical personal finance entry.
5. Learning How to be Content at Christian Personal Finance – Being a christian myself, I really took this article to heart.  Something I see a lot of my friends struggle with and that is always trying to keep up with everyone else.
6. Get Back To The Blocking And Tackling Basics of Personal Finance at Own The Dollar – If you like football, you will love this article.  Great at explaining the basic building blocks to personal finance.
7. Save Money on Health Care: A Quick Summary of Tax Advantaged Medical Savings Accounts at PT Money – Good explanation of the different options available to you during open enrollment period.
8. How to Make Money as a Soccer Referee at Free Money Finance – Being an avid soccer fan, coach and referee myself I enjoyed this article.  This could be a great way to earn a little side income.
9. Good to Know Rules and Limits for the Traditional IRA at Good Financial Cents – The Traditional IRA still has it’s place and this article gives you a good explanation of the rules.
10. How to Stop Money from Ruling Your Life at Debt Kid- Money should not rule or control you.  Money is a tool that should be used to achieve your goals.

Thanks to Free Money Finance for allowing me to host this carnival.  I look forward to hosting another!

I will always strive to be honest with those of you reading my blog posts.  So coming from someone who is still in debt, I can tell you that it really stinks to be in debt.  I would like to give you 10 reasons why being in debt stinks.

1. God, through his word tells us that being in debt stinks.  Proverbs 22:7 states: “The borrower is servant to the lender.” Being a Christian this one really hits home for me.  I have not been a good steward of what God has given me.  My wife and I are actively working on this one.
2. Debt limits your opportunities.  Maybe you would like to make a career change, go back to school, or maybe even move to another area.  Forget it.  You are in debt.
3. Debt affects your entire family.  Your kids may not fully understand the fact that mom and dad are in debt and maybe even struggling to pay their bills, but they sure understand when mom and dad are fighting about money.
4. Debt forces you to put up with a lot of crap.  Being in debt forces you to put up with a lousy job, broken down cars, and overall lower standard of living.
5. Debt plays by its own set of rules.  If you don’t believe me, try carrying a large balance on a credit card.  One month your statement shows an APR of say 7.99%, the next is is up to 23.99%.  What happened?  You just appeared to be a high risk.
6. Debt is something you think about all the time.  If you are anything like me, it is one of the first things you think about when you wake up in the morning and it is the last thing you think about when you go to sleep at night.  Don’t we all have better things to think about?  And realizing that it is not going away anytime soon, leaves you with a feeling of helplessness.
7. Debt eats away at future earnings.  Every dollar you pay in interest on debt is a dollar that could have been saved or spent on something else, and a dollar taken away from your earnings.
8. Debt is a lousy employer.  When you are in debt, and more and more of your income is going towards repaying that debt, you might as well as consider yourself the employee of your debt.  What a lousy employer!
9. Debt sours even the best events in life.  getting married, having a baby, buying a house, taking a well deserved vacation should be some of the highlights of your life.  But if you are deep in debt, these events only provide temporary relief.
10. Debt plain STINKS!

I hope and pray you are like me and working your way out of debt, because trust me it stinks!

It has been said that nearly half of American workers are living paycheck to paycheck.  Combine this with the news in recent months of housing foreclosures, late payments on credit cards, and other types of loans and it is easy to see why so many Americans are struggling with their financial lives.

What is Living Paycheck to Paycheck?

I am not sure if there is a true definition of “living paycheck to paycheck”, but I know I have been there myself.  If I can sum it up by example, it is the day before payday and I am breathing a sigh of relief after logging on to check my balance in my checking account (first time in 2 weeks) and realize that I am not overdrawn, and there is still a few bucks in the account.

The Statistics

• 70% of people in North America live paycheck to paycheck.
  - The Wall Street Journal
• 17% of Americans do not have enough savings to cover 1 week without a paycheck. 55% could not live for 3 months or less without a paycheck.
  - USA Today
• The estimated average credit-card debt per US card-holding households in 2005 was $9,312.
  - Time Magazine
• The personal savings rate in the US has now fallen to -2.2% — the lowest in 60 years.
  - The Department of Commerce

The numbers tell all.  Most of us spend everything we make each month.  In fact we spend more than we make, because we carry a balance on our credit cards.  I imagine a large percentage of us could save something every month if we just cut back on our lifestyle.

Save Something, Anything

I used to fall into the category of saving nothing because the amount of money I had left over at the end of every month was so small I thought it would not make a difference.  How wrong I was!  Even $20 a month adds up over time.  In just a few short months you could build up a $100 cushion in your emergency fund.  Here are a couple of ideas to get you started on the road to saving:

1. Find one or two monthly expenses you can live without and get rid of them.
2. Open a high-yield savings account.
3. Set up automatic transfers each month in the amount you saved by reducing your monthly expenses.
4. Earn extra money (work part-time, start a blog, etc.)

The point I am trying to make is to start saving something.  Saving nothing this month leaves you right where you started, living paycheck to paycheck.

Often the hardest part of doing something is just getting started.  For example, millions of Americans smoke and most people know that smoking will cause long-term health issues, yet they don’t quit.  Why?  The majority of people know that McDonalds is not only fast, but it can also be bad for you (and can be expensive).  Yet, thousands of households feast nightly at the altar of the dollar menu.  Why?  I think the answer to both of these questions is because it is easier to keep doing what you are doing than to change your lifestyle.

Pay Me Now, Pay Me Later

Fram, the maker of automobile oil and air filters has a very effective commercial that says, unless you take care of your car problems today, no matter how small they appear, you will have to pay someone a lot more money to fix the big problems later caused by years of neglect.  The same idea applies to our personal finance situation.  If we refuse to make the necessary life changes now to address our current problems, the problems in years to come will be a lot bigger.

Have you thought about how you are going to pay for your kids college? What about your own retirement?

Just Do It!

In 1988, Nike introduced a new slogan – Just Do It!  I am pretty sure that almost everyone has at one time or another heard or read those words.  Most likely, especially if you are a parent, you have used those words.  But too often, we ignore the meaning behind the phrase and become content with ‘not doing it’.

The thing we are not doing is obviously the one thing in our life that is preventing us from being successful.  The weird thing is that the one thing that is holding you back, probably isn’t that big of a deal.  As a matter of fact, for most people, 30-minutes a week, could change their financial life forever. What am I talking about?

Success Begins with a Budget

You guessed it a budget.  What else would I be talking about on a Personal Finance blog.  Maybe you have a budget, but you aren’t living on it.  Maybe you and your spouse just can’t agree on how to spend your money.  Whatever the reason you are not living on a budget, it is time to treat the problem and let go of the excuses.

Before my wife and I began living on a budget, we often found ourselves not able to afford certain things.  We were constantly telling each other, “We can’t afford that”.  It usually wasn’t anything overly extravagant, just normal items that today we can buy anytime we like.

By managing our resources we have found that we no longer have to say, “we can’t afford that”.  However, what we have found is that quite often we don’t want to buy a lot of those items anymore.  There are still times when we find things that don’t fit into our budget, but instead of saying “we can’t afford that”, we now say, “we have decided to spend our money on more important things”.

By putting the focus on what we have decided to do (instead of what we can’t do), we keep a positive attitude with regard to our finances.  If there is something that we really want, we simply decide on how much we need to save to make it happen.

A positive attitude is extremely important when things begin to slow down or the light at the end of the tunnel seems to be getting dimmer.  Anyone that tells you living financially free is easy hasn’t ever had to struggle to make ends meet.  The ideas we talk about on this site are simple, but implementation of those ideas is anything but easy.  The next time you find yourself wondering if it is worth it, just remind yourself that you have decided to be in control of your future.  Remind yourself that you have decided to no longer make poor decisions based on emotion.  Remind yourself that just because it doesn’t fit into today’s budget, doesn’t mean you can’t afford it.  It simply means that you have decided to spend your money on more important things.

I have been having a discussion with my wife lately that centered around the topic are we ‘living within our means’ or ‘living below our means’.  I think they are two phrases that are completely different and here are my ‘definitions’ of them.

Living Within Your Means

To me, this phrase is too positive.  Living within your means sounds like you are spending everything that you earn. That sounds more like living paycheck to paycheck.  Which one sounds more positive to you? If I told someone I was living within my means, they would think that I am getting by just fine.  However, since I am spending everything that I earn in order to pay the bills, mortgage, debt, etc., I am in no way saving any money.  They wouldn’t think to ask if I am saving money because the phrase kind of implies that I am saving when I am not.  However, living within your means also implies that you are taking on no additional debt.  Since I am only buying things that I can afford based on my income, I would not be buying things that I cannot pay with cash.

If I told you that I am living paycheck to paycheck, you would probably feel bad for me.  Living paycheck to paycheck is more negative and it definitely applies that I am saving no money.  I am here to tell you that these phrases are the same thing and there is no difference.

Living Below Your Means

When someone says that they are living below their means, I automatically think of clipping coupons and driving an old beat up car.  I don’t know why, but that is just what I picture.  However, I feel that living below your means simply means that you are able to sustain your standard of living by spending less than you earn.  You may be completely comfortable with the way you live your life financially.  You just do not spend all of your income meaning you can save.  You can save up for retirement, a car, a house, etc.

What are your definitions of these phrases? Are they radically different than mine? Which category do you feel you fit in?

Most people think that the solution to their financial problems is more money.  If they could just get a few more dollars each month, they would be able to make ends meet.  Larry Burkett used to tell a story of three couples, each with different incomes and expenses, yet they all three said the same thing.  The cause of their financial problems was too little income.

Although I understand the logic behind the statement, the logic really is flawed.  The answer to the problem isn’t always more income, sometimes it is less expenses.  That’s right.  If you had less money going out, you wouldn’t need more money coming in.  Instead of buying coffee that costs $5.00 a cup, you could make coffee at home for $0.50 a cup.  Instead of paying for the extra fast internet you could cut back and go with the pretty fast internet.  Instead of paying $6.00 a day to eat out for lunch you could bring lunch from home.

What does all of this do for your “I don’t have enough money” problem? If you are not spending as much, you don’t need as much.  When you decide (and it is a choice) to cut your expenses, it is the same as getting a raise, and you didn’t have to ask your boss to get this raise.  Actually, cutting your expenses is better than a raise for two reasons. First, because you have learned to live on what you are currently bringing home, you aren’t paying more taxes. Second, when you really do get a raise you will be able to use the raise for the important parts of your financial plan, like debt reduction and retirement.

What have you done recently to lower your monthly outflow? Leave a comment and share your ideas with others.

One of the most talked about topics in the Bible is money and possessions.  Depending on what information you read, there are almost 1000 scriptures in the Bible that deal with this topic.  Even if you are not a Christian or read the Bible, a lot of the financial information found in the Bible makes very good practical sense.

Sound Mind Investing is one of the leading voices when discussing Biblical Financial principles.  In addition to their monthly newsletter, they also offer The Sound Mind Investing Handbook.  Here is a list of just a few of the things you will find in this edition.

• Six characteristics of investing that glorifies God
• What mutual funds are and why they make investing easier than ever before
• How to implement an investing strategy that’s guaranteed to help you keep pace with the markets
• Tax-wise ways to invest for college, including the new state-sponsored 529 savings plans
• The rules governing IRAs and 401(k)s and which should have the priority
• How to make the calculations needed to make sure your retirement countdown is on schedule

The latest edition of the handbook is now ready and you can get your copy and enjoy a 35% discount.  Sound Mind Investing has been endorsed by respected Christian teachers Ron Blue, Randy Alcorn, Mary Hunt, Howard Hendricks, and Beverly LaHaye.  Previous editions endorsed by Larry Burkett, Bill Bright, Adrian Rogers, and D. James Kennedy. Get your copy of this great resource today.

I write this article today, as I am going through the process of determining if I am spending money that I really don’t need to.  This is something I think we should all go through periodically.  It helps us to see if things have crept into our spending that we could get rid of.  It is like when you are looking for something and it is right under your nose, but you cannot see it.

The same thing is usually true with our money. Unless you are living on a budget it is very likely that you are spending money each month and you don’t even realize how much it is costing you. A while back I read an article at SmartMoney.com that lists 7 Things You’re Wasting Money On.

1. Bottled Water
2. Extended Warranties
3. Gym Memberships
4. Overdraft Fees
5. Organic Produce
6. Auto Insurance
7. Music Downloads

At some time or another each of us has spent money on most if not all of these items.  Some may seem like they are necessities, but with a little bit of work, you can still enjoy the benefits without wasting the money.  For example, bottled water.  You can try using a filtered pitcher such as Brita.  Auto Insurance can often be found cheaper from another company, or maybe your current company will offer a discount.  What about that gym membership? Do you really need to go to the gym to use their treadmill? Try a nice walk around the block.

The one that seems to be the most detrimental to your long-term financial plan is the overdraft fees.  If you can convince yourself to start living on a budget, then you can eliminate overdraft fees from your life very easily.  The solution is very simple; first, keep your checkbook balanced or monitor your account online at least once a week. Second, stop using your credit and and finally, don’t use your debit card on anything other than what you have budgeted.

It isn’t difficult but it does take some discipline.