Friday, August 29, 2014
Tuesday, August 26, 2014
Laziness Is Financial Cancer (Proverbs 6 (Part 2))
You lazy people can learn by watching an anthill. Ants don't have leaders, but the store up food during harvest season. How long will you lie there doing nothing at all? When are you going to get up and stop sleeping? Sleep a little. Doze a little. Fold your hands and twiddle you thumbs. Suddenly, everything is gone, as though it had been taken by an armed robber. Proverbs 6:6-11
Being lazy in any aspect of your life will never cause you to win. This is especially true when it comes to your finances. If you don't set a financial goal(s) that you've got your sights set on, you will constantly be doing things that sabotage your ability to win. Zig Ziglar said, "If you aim at nothing, you will hit it every time." If the only thing on your To-Do List is NOTHING, you will always be headed in the wrong direction.
Laziness is a direct result of:
- Lack of a Goal
- Loss of Hope
Product marketers are counting on you to not have a Goal that is bigger than their item. When you don't have a target that is more important to you than nearly anything else around, you will fall for the ad campaigns that tell you the item you have just isn't good enough anymore. When you fall prey to this situation, you will always be playing catch up. "Keeping up with the Joneses" may seem like the thing to do, but "the Joneses" are BROKE, FIGHTING, and SCARED.
I'm going to be very transparent here and tell you that I LIKE STUFF. More particularly, electronic stuff. One of my favorite things in life, don't judge me, is pulling the static cling stickers off of a brand new electronic toy. There are LOTS of things I'd like to have RIGHT NOW, but our family has set a Goal to pay our house off in 2015 that sticks in the front of my mind every time I see a new toy I think I NEED.
Lack of Hope is like throwing water on a fire that once burned bright. Maybe you tried to better your situation at some point in the past and something beyond your control caused failure. It's time to dust yourself off and try again. You can either tread water, drown and become shark bait OR you can take the first stroke toward the shore. You may still take a couple of bites, but keep swimming. There are rarely any directions that take you on a single, straight road from Point A to Point B.
When you find Hope again, the water that was poured on your fire is turned to gasoline. When you throw some Hope on top of a Goal, STEP BACK because there's going to be some serious fire. You'll be able to do things that you never thought you could do in a million years. People will say, "How did you do that?"
When you find something that means more to you than temporary comfort or stuff and set a GOAL to get there; and you have HOPE that you can make it despite what everyone around you might say. Only then will you get off your butt and do something about it. Until then, you'll continue to lay there and wallow in your mess.
Monday, August 25, 2014
Run Baby, Run!! (Proverbs 6 (part 1))
My son, if you have put up security (gotten into debt)...then do this...Give your eyes no sleep and your eyelids no slumber; save yourself like a gazelle from the hand of the hunter, like a bird from the hand of the fowler. Proverbs 6:1-5
I'm going to spend several days on Proverbs 6 because there is so much to learn from just the first few verses of this chapter. Today in Part 1, we are going to talk about God's way to get out of debt.
It's easy to wander into debt. If you're like I was; you start out with a credit card for "emergencies". Then you see a surround sound system you NEED for your dorm room so, "just this once", you put it on your emergency only credit card. Before you know it, you've somehow wandered up to the (Thank God only $1,000 in my case) credit limit.
Or maybe you see a shiny new car with that intoxicating smell of new leather and plastic that makes you despise the car you're driving (which is perfectly capable of getting you to and from where you need to go). Before you know it, you've been approved for "great financing terms" and have a brand new car payment of $471 per month (average in the U.S. as of March 2014) for the next 6 years. About a month later, after you've shown all your friends and you make your very first of 72 payment, you realize it's just another car.
Or maybe you find your "dream house" and although it was higher than the amount you promised yourself you wouldn't go over, your Realtor took you to see it anyway. You fall in love and get into a loan the bank said you could afford based on your income. They did however forget that you had credit card debt up to your eyeballs, 2 car payments on vehicles that are worth less than you owe and $100,000 in student loans for a degree that pays an average of $25,000 per year...but, hey, your credit score was great so why not?
Maybe your weakness takes another form of "stuff". But, the point is, there is and will always be someone out there pushing newer, bigger, faster, etc. and even more people out there willing to help you wander deeper into the abyss of debt.
So, we've decided we don't want to be in debt anymore and want to know how. Can you just turn around, face the opposite direction and wander at the same pace out of the mess you've made? Absolutely NOT! You will NEVER get out this way.
Proverbs 6 tells us that you've got to run like a Gazelle running from a Cheetah. You've got to:
- STOP going deeper into debt!
- START living on a budget that balances each month!
- WORK an extra job or some overtime!
- SELL some of the junk you thought you needed!
- PRAY that God will bless your efforts and keep you focused!
The ONLY two options are:
- Stay where you are and become the Cheetah's lunch
- RUN. FOR. YOUR. LIFE. You may trip and fall. Maybe even get a few bites. But for the love of Freedom...KEEP RUNNING!
If you want this bad enough, you can do it. If you like the status quo of your dumb decisions and aren't willing to sacrifice in the short term to make your long term GREAT, you'll never make it. If, however, you are utterly disgusted and ready to make a change, you can do it!
Friday, August 22, 2014
Make A Plan!! (Proverbs 4)
Know where you are headed, and you will stay on solid ground. Proverbs 4:26
Too many of us have used (or still use) the READY, FIRE!, AIM approach when it comes to our money. You get your paycheck, go spend it and then look at your bank account balance. Even worse, all the money has already been allocated to the stuff you've already purchased and are now making payments on. Then you get the dreaded "Financial Hangover."
Now, I know you're thinking I'm going to suggest the READY, AIM, FIRE! approach, but you'd be wrong. I want you to use the wild idea of AIM, READY, FIRE! when it comes to your money. Yes, I want you to select your targets before you even have your ammunition.
Let me explain:
- AIM - Create a NEW, unique budget before the month begins. Aim at numbers that are happening specifically in that month (February's expenses are NOT the same as December's). Budget with ONLY the money you know will be coming in that month (Are you getting an "extra paycheck" this month or maybe a bonus?).
- READY - When the money you've budgeted is deposited into your bank account, you now have a loaded weapon to attack with.
- FIRE! - Now that you've got a your targets selected and a loaded weapon, it's time to hit those targets! It's always a good idea to step back and take a look several times a month to see how your accuracy is. You may in fact, need to make adjustments to your AIM throughout the month (and that's ok).
The absolute BEST program I have found to assist you in finding your AIM and tracking your FIRE! is You Need A Budget (YNAB for short). They offer a 34 day trial of the software and if you like it and would be interested in a 25% discount, please let me know and I can help you with that.
Proverbs 4 is clear that in order to keep yourself, your family and your life on solid ground, you need to know where you are headed. Looking back into the past can be nostalgic, but keep your eyes forward and MAKE A PLAN!
Thursday, August 21, 2014
Honor In Wealth
Honor the Lord with your wealth and with the firstfruits of all your produce; then your barns will be filled with plenty. Proverbs 3:9-10
Honoring the Lord with your wealth involves several things.
- We are asked to return a tithe (10%) back to his work through the church
- We are asked to take care of the needs of our own household first 1 Timothy 5:8
- We are asked to get and stay out of debt (more on this in a future post)
- We are asked to help others (only the strong can help the weak)
- ...among other things
Despite all the negative teachings about money that are shown throughout our society, Christians ARE NOT called to be broke. In fact, quite the opposite is true. The natural by-product of managing your money based on a biblical foundation is becoming wealthy.
Think about it. If you stop spending more than you make, live your life based on a budget, sacrifice some short term comfort to become debt free, build an emergency fund and save for the future...what do you think is going to happen? Do you really think intentionally doing all these things on a weekly, monthly and yearly basis will cause you to be broke?
Every time I tell our story of paying off our debt after college ($12,000 student loan paid off in 2 months), I get the same question. "How did you do that?!" I have to answer the same every time. "I really don't know, I think I remember eating those two months." The truth is, we didn't make enough money to pay off $6,000 a month for 2 months. The only thing I can say is that God blesses efforts that line up with his teachings.
I'm a Dad of two crazy kids now. When they are doing something that makes me proud, I want to shower them with praise, gratitude and, sometimes, gifts. On the other hand, when they are acting in ways that I don't approve of, it makes me want to withhold those same things.
God is our Dad (Heavenly Father), right? We were made in his image, right (Gen 1:27)? This means that our Dad is proud of us when we do good things and disappointed in us when we don't quite measure up.
When we honor our Dad with our wealth, he rewards us with peace, comfort and, sometimes, gifts.
Honor the Lord with your wealth and with the firstfruits of all your produce; then your barns will be filled with plenty. Proverbs 3:9-10
Wednesday, August 20, 2014
Seeking Wisdom
Search for wisdom as you would search for silver or hidden treasure. Proverbs 2:4
Most people have, at the very least, the desire to go out and "make a living." Whether that "living" is a good one or not, there are relatively few truly lazy people that would rather sit on their butts than help their family eat. So we'll make the assumption that most people make some effort to search out money.
Proverbs 2:4 compares our search for money to how we SHOULD BE seeking to gain wisdom. Wisdom is NOT simply knowledge of something you didn't previously have.
The definition of Wisdom has three facets and without all three of these, you do not gain wisdom.
- Experience
- Knowledge
- Judgment
In our world where people get paid to be dysfunctional on television for our entertainment and we get news from soundbites or posts on Facebook, wisdom is getting harder to obtain. The days of critical thinking have almost been wiped away.
It's time we turned off the TV once in a while and read a non-fiction book. It's time we sit down with someone older (and wiser) and soaked up some real wisdom from a person who has been there and done that. It's time we stop listening to the advertisements that tell us that it's time to upgrade because what we have just isn't good enough.
Let's seek out Wisdom (Experience, Knowledge and Judgment) with the same passion that most of us seek out money.
Tuesday, August 19, 2014
Ill-Gotten Gain
"These men lie in wait for their own blood; they ambush only themselves! Such are the paths of those who go after ill-gotten gain; it takes away the life of those who get it." Proverbs 1:18-19
Over the next few weeks I am going to read through each chapter of Proverbs and dig out the items that can be applied to personal finances and share them here. Today is Chapter 1...Ill-Gotten Gain.
In Chapter 1, Solomon warns against taking advantage of another person for your own personal gain. In other words, ripping someone off or screwing someone over to make some money for yourself. Solomon warns that any profits obtained from this type of transaction harms the thief in the end.
The very first thing that came to mind when I read this, was the practice of "Payday Lending." A practice that takes advantage of people who are in desperate need of money. A business built on accepting "hot" checks, that a person has non-sufficient funds for, and holding it for up to 2 weeks until payday. All this for a small fee.
Here's the big issue with this. The same person who was struggling 2 weeks ago when they went to take out the "Payday Loan" is most likely not going to be able to pay back the $200 + $60 in fees when they get their next paycheck, so they'll fall into making the minimum payment due on this loan. This is what these rip-off, scum bags are counting on.
Here's an example I pulled from an actual online Payday Lender's website for borrowing $200 to "get you through till payday":
| Payment Number | Amount of Payments | When Payments are Due |
|---|---|---|
| 1 | $70.00 | 5/1/2014 |
| 2 | $67.00 | 5/30/2014 |
| 3 | $64.00 | 7/1/2014 |
| 4 | $61.00 | 8/1/2014 |
| 5 | $58.00 | 8/29/2014 |
| 6 | $55.00 | 10/1/2014 |
| 7 | $52.00 | 10/31/2014 |
| 8 | $49.00 | 12/1/2014 |
| 9 | $46.00 | 12/31/2014 |
| 10 | $43.00 | 1/30/2015 |
| 11 | $40.00 | 2/27/2015 |
| 12 | $37.00 | 4/1/2015 |
| 13 | $34.00 | 5/1/2015 |
| 14 | $31.00 | 6/1/2015 |
| 15 | $28.00 | 7/1/2015 |
| 16 | $25.00 | 7/31/2015 |
| 17 | $22.00 | 9/1/2015 |
| 18 | $19.00 | 10/1/2015 |
| 19 | $16.00 | 10/30/2015 |
| 20 | $13.00 | 12/1/2015 |
Some quick math tells us that this person's total payments (on a $200 loan) come to $830. This loan was paid back over a 20 month time frame. This equates to a 360% INTEREST RATE! Do you see why I call these people scum? They are intentionally setting up a business that's sole purpose is to take advantage of people who were already struggling in order to make insane profits.
Now, don't get me wrong. I'm not saying that providing a service and getting paid well for it is bad. When you serve people well and receive a profit for your work, that is a beautiful thing. Just be honest in your dealings and strive for well-gotten gain.
Wednesday, August 13, 2014
The Cornerstone of Winning with Money
"Suppose one of you wants to build a tower. Will he not first sit down and estimate the cost to see if he has enough money to complete it? For if he lays the foundation and is not able to finish it, everyone who sees it will ridicule him, saying, 'This fellow began to build and was not able to finish.' Luke 14:28-30
If there is one thing that will destroy your ability to win in your financial life, it is lack of planning. You need a plan.
No, I'm not talking about some complicated financial plan that you need to hire a CPA and Estate Planning Attorney to decode for you. I'm talking about a simple Spending Plan...the dreaded BUDGET! (If I could play a dramatic sound right now, I would).
People blow the idea of a budget WAY out of proportion. When I'm leading Financial Peace University, I get statements like, "straitjacket feeling" or "I'll never get to have fun." The truth is, a budget is no more than telling your money what to do BEFORE you spend it (aka Spending Plan). This is PERSONAL FINANCE. If you want to spend some money on (enter your favorite thing here), put it in your budget. It's that simple. But remember, you can't spend more money in the lines of the budget than you have. I've been doing a budget every month since 2006. At first it was a little strange, giving each dollar a mission. But if you think I'd go back to "managing" my money based off what the balance in my bank account said minus the in-my-head math of everything that still needed to be paid...You're CRAZY.
It's also not just about creating a budget, but living by that budget. By making the budget, you've given yourself out-of-bounds markers. Now, you have to track your progress based on those lines and adjust if necessary. The best program I've found for this is You Need A Budget (YNAB for short). This program allows you to set up your budget from your computer, enter transactions on the go and check your progress on the go.
If you're out shopping and find a pair of shoes you want for $100, you can pull out your phone and see what you've budgeted for clothes before making the purchase. If you budgeted enough...GREAT, enjoy the new shoes. If you didn't allocate enough money for those shoes, you have a choice to make. You can wait until you budget again and add more to that category or you can choose to move money from another category to make up the difference. The budget is not to restrict you, but to help you make informed decisions...unless you desperately need restriction!
There are VERY few people who can out earn stupid money decisions that are placed in front of each of us on a daily basis and live with no plan at all. As for the rest of us, it takes intentional planning. Some of those stupid decisions are easier than others to turn away from. Some are HARD to resist. The hard ones are different for each of us, but a budget can help you make informed decisions instead of wondering what happened to all that money you made last year.
Friday, August 8, 2014
Morty's August 2014 Weigh-In
Don't know who Morty is? Go back and read The 72,850 Lb Elephant In Our House.
For those of you who do know Morty and are wondering how his diet is going let me give you a quick update.
Morty may have just had his best month ever. With some extra income this month and a couple sacrifices Morty did great. At this rate he'll be into an XXXXL in no time.
Morty's Starting Weight (April 2014): 72,850 Lbs
Morty's Previous Weight (July 2014): 60,529 Lbs
Morty's Current Weight (August 2014): 55,911 Lbs
Morty's 1 Month Weight Loss: 4,618 Lbs
Morty's Overall Weight Loss (Since April 2014): 16,939 Lbs
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