Monthly Archives: July 2012

Car Headlight Restorer a Great Value

I’m a car guy, and since I like to keep my car nice it has always driven me crazy that the xenon headlight lense covers were no longer crystal clear, but yellow and brown. They didn’t shine as bright either, since the aged plastic filtered the light.

I drive a 1999 Toyota vehicle with over 285,000 miles on it, I don’t have a name for it, but I do call it my baby, and it still looks great. I believe it is smart financially to maintain a car well for a long time and extract as many miles out it as possible. When I keep it clean I seem to appreciate it and treat it better too. Funny, I swear it drives better right after it has been washed I’m not kidding, I’m thinking that ‘my baby’ has a soul and just appreciates being treated right.

No matter how well I cleaned this car, since the headlight lenses looked so bad, it just never looked clean. I’ve tried some headlight restorer products over the years, but none of them worked well so I was skeptical. While at the auto parts store picking up a headlight bulb for my wife’s van, I got into a discussion about the various products for restoring headlights. It seems the manufacturers have gotten much better- great idea since so many cars have the clear lenses over their xenon or halogen bulbs. In the old days, cars only had ‘sealed beam’ headlights and the whole unit was one big light bulb that had the headlight lense built in.

The sales person recommended several products, but he said the auto detailer guys would mainly buy the 3M kits, so that is what I tried, and the results were amazing, restoring the finish to 90% show room luster. This is the after picture, I wish I had a before picture to show you, but it was very dirty looking.

Not only am I glad that the car looks a lot better, I will be able to see a lot better at night, and during rain, snow and fog. I bought my car for 9,300 in 2005, and have had very little maintenance and repairs and the $25 was a good investment, and I plan to keep it for many more years. I am grateful for the great 3m product, and it was easy to use. The kit consisted of an electric drill bit attachment, three different grits of sand paper, and a buffer and rubbing compound. I followed the directions and it worked great. The hour and half process just consists of removing a slight layer of plastic and polishing it clean. Now my wife wants me to do her car. Guess what I am going to do this Saturday morning?

Monday Launch, Not An Economic Crisis

I spend a lot of time thinking about finances, studying financial issues, writing about various personal finance topics. I regularly meet people in financial crisis and read international news about the Global economic crisis, but I am starting to come to the conclusion that we don’t have an economic crisis at all, but something altogether different.

When we think of our personal finances, or how we plan to spend, invest, donate, earn, and enjoy money, it says a lot about who we are. Some say that if you want to see what your priorities are, look at the check register in your check book, and at your online account information. But do our priorities lineup with our beliefs?

Most religions teach the approach to finances should entail the responsibility to be good stewards over the things they have been given. They also teach responsibility to care for family, the poor, elderly, sick and infirm. The major faiths teach integrity and honestly in business dealing, putting other’s needs first, work hard for our employers and pay taxes. They also have in common certain verses or practices such as saving, limiting borrowing or not doing it all together, and to care wisely for natural resources. Native American spirituality is keenly tuned into caring for the earth, and other major religions may emphasize some principles more than others.

The earth’s population is over 7 billion people, and many of which follow the major religions that teach sound practices regarding personal finances, but I wonder why so many people continue to struggle with debt and poor financial management. I too wonder why those with plenty fail to care for those that lack the basic human life needs of food and healthcare. Part of the blame falls to the government and business, when it seems all too common power and money is of paramount priority, again I wonder why some of the most important beliefs are not demonstrated by leaders. Considering all of this, I’m starting to come to the conclusion that the global economic crisis isn’t a financial problem, nor is it a political problem either, it is a spiritual condition.

Christianity is the majority religion in the US, yet statistically us Christians suffer the same rates of economic and social ills that the rest of society does. Either that means we practice what we believe and our beliefs are wrong, or we fail to practice what the Bible teaches. The backward thinking that I am most aware of, falls between my ears, and those in my country: us American’s try to mix our religious beliefs with our expectations for The American dream of prosperity and personal ambition. We want our cake and eat it too. We want the great life of abundance, and salvation. 

The teachings of Christ are a stark contrast to this duality. My pastors compel me to think Christ like, some call Christologicaly. My self-definition is to think and act towards things the way Christ does, taught, and how Christ is leading me. To think from the perspective of the Bible, and Christ first, before considering my political, economic or other worldview beliefs. Christ’s life and teaching exemplified living for God and others, total honesty and integrity. No where did he teach personal ambition  or self fulfillment. Many of the financial difficulties I’ve faced have been because of my dualistic quest of vanity. However many thousands of years ago it was written: “Unless the LORD builds the house, its builders labor in vain. Unless the LORD guards the city, the watchman stands guard in vain. In vain you rise early, to stay up late, toiling for food to eat – for he grants sleep to those he loves.” (Psalm 127:1-2)

IRA Withdrawal Rules

Traditional IRAs which I wrote about a few days ago are good for supplementing ones retirement, providing current tax deductions, and growing tax-deferred until retirement. However, when someone wants to use the money for retirement or other needs they should be conscious of the rules and limitations to avoid tax penalties. Let me say at the outset that planning for IRA distributions can be tricky so obtaining advice from a qualified financial expert would be a good idea. Roth IRA withdrawals work a little different, and I covered them in a separate article.

If the owner wishes to withdraw money from their traditional tax-deductible IRA, all of the monies received are taxed at income tax rates, unless they make a special arrangement to donate them to a qualify charity. If they pull any funds out of the IRA account before their age of 59½ they will have to pay an additional 10% tax penalty, there are exceptions and I will cover them in a moment).

Money can be left in the IRA, so the owner is not forced to take it out, but they must begin making ‘Required Minimum Distributions (RMD)’ by April 1st of the year following the year they reach 70 ½. Failure to withdraw the RMD has a 50% tax ramification on the amount that should have been taken out. The RMD calculation considers all of money held in deductible IRAs, qualified plans, 403b and several other types of accounts.

The tax penalty for early withdrawal prior to the age of 59½ is punitive, encouraging people to leave the money in until they are older and retired. There are a few ways to avoid the penalty:

  • First time home purchase
  • Qualified education expenses
  • Death or disability
  • Unreimbursed medical expenses
  • Health insurance if you’re unemployed
  • 72t withdrawals

72t withdrawal regulations permit IRA holders to take out some or all of their accounts balances and avoid the 10% penalty if  substantially equal periodic payments are withdrawn, over a minimum of 5 years or until age 591/2, whichever is longer. The rules are a little complicated and there are 3 different methods; the amortized method of level payments based on life expectancy and an assumed interest rate, similarly the annuitization method using the annuitant’s and beneficiary’s age and an interest rate, and the RMD method of dividing the account balance by the life expectancy each year.

Roth IRA Review and 2012 Contribution Limits

The old or traditional Individual Retirement Accounts or IRAs came on the investment scene with the enactment of the Employee Retirement Security Act (ERISA) in 1974. These individual retirement plans provided a reduction in taxable income, the IRS doesn’t tax the growth on the monies while they are accumulating, however upon withdrawal, all amounts disbursed are taxed at income tax rates.

Roth IRAs came on the scene as a result of the Tax Payer Relief Act of 1997, and like traditional IRAs, Roth’s accumulate without tax on their gain, interest or dividends that investments held in the account might have. However unlike traditional tax-deductible IRAs, Roth IRAs are not tax-deductible and money withdrawn from Roth IRAs after the age of 591/2 are not taxed, (a later article will discuss early withdrawal penalties as well as exceptions to the rules).

2012 Roth IRA Contribution Limits

  • $5,000
  • Additional $1,000 if over age 50
  • IRA Roth Contribution amount is limited based upon income, from IRS.gov

Roth IRAs have been attractive to both those in low and high tax brackets planning for retirement; on one hand those in very low brackets realize very little tax savings if they invested in a regular tax-deductible IRA, and would appreciate a large tax-free accumulation until retirement, and tax-free income when they retire. Those in very high tax brackets, might indeed save a few thousand dollars on their tax returns if they invested in a tax-deductible IRA, yet if they were investing say for 20 or 30 years or longer, because they are now young, when they reach retirement the total tax savings they might have enjoy could pale in comparison to a large hundreds of thousand dollar or million dollar account, and would prefer tax-free access a Roth IRA would afford. Of course it is always good to talk to a tax advisor first before making a financial decision like this.

Traditional IRA Review and 2012 Contribution Limits

Individual Retirement Accounts or IRAs came on the investment scene with the enactment of the Employee Retirement Security Act (ERISA) in 1974. These individual retirement plans provided a reduction in taxable income, but contribution maximums were only $1,500 per year then. To further enhance IRAs, the IRS doesn’t tax the growth on the monies while they are accumulating, however upon withdrawal, all amounts disbursed are taxed at income tax rates, (a later article will discuss early withdrawal penalties as well as exceptions to the rules).

They were not entirely popular in the 1970’s since ERISA restricted contributions to only those that didn’t have an employer-provided retirement plan, or also known as a qualified plan. In 1981 the Economic Recovery Act removed that restriction and increased contribution maximums to $2,000, regardless how much money someone earned. In 1986 the Tax Reform Act limited or eliminated altogether the tax deduction, if someone had a qualified plan and had incomes over certain amounts. In the 1980’s sales of IRAs took off, and millions of people opened IRA accounts at their bank or credit union, insurance company, and investment firm and the investment landscape hasn’t been the same since.

There have been new IRAs such as  the Roth and Education ones, since the 1980’s and various tweaks to them, but except for changes to contribution amounts, and income limitations, the basics of IRAs remain the same since then.

As a review…

  • Contributions to IRAs reduce taxable income
  • The amount of the contribution that someone can deduct from their income depends upon their income, if they have a qualified plan at work
  • Individuals can still contribute to IRAs even if they are not able to deduct contributions, and they still maintain tax deferred growth

2012 Contribution Limits

  • $5,000
  • Additional $1,000 if over age 50
  • IRA deduction if covered by a retirement at work from IRS.gov:

  • IRA deduction if spouse is covered by a retirement plan at work:

Capital One Credit Card Woes

The credit card industry, within the last few years, has come under closer oversight and regulation. Dave Ramsey in his Financial Peace University class lessons of Dumping Debt and Credit Sharks in Suits has been particularly critical of the bad behavior and sometimes illegal practices of credit card companies.

Just last week Capital One Financial Corporation agree to pay $210 million to settle allegations that they allowed its call-center contractors to pressure customers to purchase add-on products that they didn’t understand, need, want or would qualify for. Credit One will begin refunding customers who purchased the products after August 2010. The have stopped selling them. Other banks are expected to face similar scrutiny.

This was one of the first actions by the newly formed Consumer Financial Protection Bureau (CFPB) of the Obama administration, headed by former Ohio Attorney General Richard Codray. The CFPB reports that Capital One is one of the biggest source of credit card company consumer complaints.

The credit card industry probably feels that they are over-regulated, but they have had much free rein for decades, abusing and taking advantage of consumers, to their [billion dollar] profit. I welcome the CFPB’s aggressive stance towards credit card companies, as well as the Credit Card Reform Act of 2009- they are both a great start to combating abuses of that industry that have gone on for far too long.

Higher Bank Yields

Interest rates continue to plummet for borrowers, with mortgage rates dropping below 4% for 30 year fixed, and less than 3% for shorter term mortgages like 15 year plans. Conversely investors continue to see interest rates drop for their investments and savings accounts. For conservative investors and those wanting to put emergency savings in a FDIC insured accounts, it is common to earn less than 1%, making these accounts loose purchasing power due to inflation. A few days ago the Wall Street Journal had a good article about banks and credit unions that are paying much better rates than those in my neighborhood, and may be worth considering.

Monday Launch, Why God’s Way Takes Longer

A few years ago Bob Lotich of ChristianPF.com published this excellent article, and I continue to find inspiration and insight from it.

It is kind of like becoming a tree

I was staring at a tree the other day just day-dreaming and kind of worrying about how long it was taking to get answers to prayer for a few issues in my life. I was reminded of…

Psalm 1:1-3

How blessed is the man who does not walk in the counsel of the wicked, nor stand in the path of sinners, nor sit in the seat of scoffers! But his delight is in the law of the LORD, and in His lawhe meditates day and night.

He will be like a tree firmly planted by streams of water, which yields its fruit in its season and its leaf does not wither; and in whatever he does, he prospers.

In my case I have been diligently trying not to “walk in the counsel of the wicked,” and it seems to be making my answers to prayer take even longer. I have been earnestly trying to do things the right way, knowing full well that by cutting a few corners or compromising my values I could make the answers appear faster. The major difference being that I can get mediocre answers doing it my way or the fruit God promises by doing it His way.

The pre-requisite for our fruit bearing from Psalm 1 is that we:

  1. Do things God’s way
  2. Stay in the Word

If we do these two things we have the promise that whatever we do will prosper and that we WILL bear fruit IN OUR SEASON.

Trees grow slowly

As I was staring at this tree I began to realize that trees grow slowly. You plant a seed for a tree and it takes a while to sprout and takes a while to grow to a decent size.

Grass and even plants, on the other hand, grow a lot faster. They sprout up quickly and sometimes you can even notice growth one day to the next. I have been enjoying watching this rapid growth with all of the plants in my vegetable garden.

Grass grows fast

Then it kind of hit me that God wants to make me “like a tree.” He isn’t interested in seeing rapid growth that will not make it to the next season and is ultimately unsustainable. A tree, though it grows slowly, becomes a lot more sturdy and is able to withstand challenges that grass and plants can’t.

I am reminded of a storm we recently had that snapped my tomato plant right in half. The plant had grown to about 2.5 feet in a matter of months and was not strong enough to survive when the winds came. God wants to make us strong and sturdy to withstand the storms in our lives.

Psalm 92:7

“That when the wicked sprouted up like grass and all who did iniquity flourished, it was only that they might be destroyed forevermore.”

Psalm 92:12

“The righteous man will flourish like the palm tree, he will grow like a cedar in Lebanon.”

Trees yield more fruit

I am excited about the tomatoes that my plants will produce this summer, but even the best tomato plant would be lucky to produce 40 lbs of tomatoes in a season. But older mature trees can produce over 1000 lbs in a season.

The downside, of course, is that trees don’t bear fruit 3 months after you plant them like many vegetable plants will. Some trees will take a few years or even longer to bear fruit. I remember the frustration I had with this when I wanted apples from a new tree and learned that I may have to wait a while.

Patience seems to be a rare virtue in our society these days, but it is one that we ought to develop. God seems to like taking the long road with a lot of things and as I begin to see the reason behind it, it causes me to say, “huh, God really is smarter than I am.” ;)

Trying to be a tree

It’s tough watching the grass sprout up all around you and seeing others bearing fruit when you have been faithfully doing what is right, but we must not be short-sighted. We need to try to look at these things the way God sees them.

Though the tomato plants around us may be popping out some fruit, while we seem to wonder what is taking so long, our day will come. God is doing a work and creating something in us that will be around long after the grass has come and gone.

Galatians 6:9 (AMP)

“And let us not lose heart and grow weary and faint in acting nobly and doing right, for in due time and at the appointed season we shall reap, if we do not loosen and relax our courage and faint.”

Used by permission from ChristianPF.com

Future of the Federal Estate Tax

The Federal Estate Tax is the tax paid on assets that transfer at death.

The current top rate is 35%, but it could increase to 55%, reverting to the 2001 tax rules if Congress doesn’t continue the lowering of tax of the Bush Administration. The current tax only applies to estates of $5,000,000 or larger, but the prior law applied to estates of $1,000,000 and larger.

Analysts believe the future of estate taxes will probably go one of three ways: 1) let the Bush tax cuts expire to help balance the budget, thereby reverting to system that had a top rate of 55% and began taxing estates of $1,000,000 or more 2) compromise, perhaps with a top rate of 45% and an exemption amount of $3.5 million. 3) continue the tax cuts and leave the exemption and rates where they are today.

What should they do depends upon your political and economic beliefs. Those who lean more to the right favor low or no tax, stating that estate tax is arbitrary and confiscatory redistribution of wealth, and have negative ramifications to business growth. Those on the left feel that funds are needed to help balance budgets, and redistribution helps prevent large amounts of wealth (and power) gradually ending up in fewer hands, recalling a few hundred years ago of America’s monopolies. Perhaps there is room for compromise here, I favor a law that penalizes fewer small businesses and farms, yet considers some of the thoughts contained in the “Gospel of Wealth” by Andrew Carnegie. Carnegie argues the tension created by having an estate tax, has social philanthropic benefits and satisfies the concerns of those in both ends of the spectrum.

Before You Bargain Hunt

Before You Bargain Hunt, Consider This…
Everyone is looking for a way to save money. Companies are taking advantage of this by promoting their best “bargains” to the fullest and people are scouring thrift shops for a used version of anything they need. However, not all bargains are created equal. There are some things that you should definitely not skimp on. In these special cases, paying a little more for the real deal is usually the best decision.

Bedding
First of all, never buy used bedding. Not only do you not want to sleep on somebody else’s mattress that’s been collecting their dead skin cells for years, but these days bed bugs could be hitching a ride into your home as well. Always, always buy new when it comes to bedding. You’re probably also not going to want to buy discount bedding either. Our sleep is important to our body and mind function. The last thing you need to do is sacrifice the health of your back for a few bucks. For the sake of your cleanliness and back, buy new, good quality bedding and get your savings elsewhere.

Baby Items
It’s okay to buy used baby clothes or even toys. However, items such as car seats and cribs should not be taken for granted. Always purchase these items new and find a good quality brand to invest in. The safety of your child is at stake. There are so many recalls on cribs, citing failed safety standards, why would you put your child at risk?

Tires
These round pieces of rubber are standing between you and the road. There’s no way of knowing if a used tire has suffered damage from an accident or a careless driver. At the same time, discount tires don’t offer the same dependability as trusted, quality brands. For your safety, be willing to shell out a little bit more cash for your tires to ensure dependability.

Computers
Some electronics are okay to buy used. However, used computers are better left alone. You never know how a person before you treated that computer. They are very fragile electronic devices that require proper care and maintenance. If your computer was dropped or had something spilled on it, you’re out of luck. If you are prepared to pay a little more for a brand new, decent computer, you will have a machine that will last you much longer, as long as you take proper care of it. Make your money count.

Safety Gear
Anything that has an intended purpose of keeping you safe is something you shouldn’t be saving money on. Helmets, for example, whether you ride a motorcycle or a bicycle, you want a quality material standing between your head and the pavement. Used helmets can be broken or tampered with and cheap helmets can lack safety rating and dependability. When it comes to your safety, it’s worth the extra cash.

The old saying, “you get what you pay for” applies to most things. While it might be okay to save money on a kitchen table or a night stand, there are certain items that you are better off paying full price for. As hard as it may be for hard-core thrift shoppers, taking the item into consideration before grabbing that great bargain is always a good idea.

Steve Henning writes about frugality, finance, and cheap travel insurance.

Knowing Where to Make Your Cuts

Budgeting – Knowing Where to Make Your Cuts
If you’re struggling financially, cutting your expenses is the first step toward regaining financial control. With less money going out, more money can go toward your necessary expenses to catch up and solidify your financial ground. But where do you make your cuts? Everything can seem important, and deciding what to cut from your budget isn’t necessarily going to be easy. However, knowing where to make cuts will ensure that your needs are taken care of while some of your wants take the brunt of the damage until you’re back on your feet.

Stop Giving Away Free Money
Paying unnecessary fees is the worst form of unnecessary spending imaginable. Stop forgetting to get things paid on time. Late fees may seem inconsequential, but they add up fast. Overdraft fees with your bank are another form of unnecessary spending. Balance your checkbook regularly to avoid these extra charges. Get organized and pay things on time and keep track of your spending and you’ll see a little extra money that you never knew you had.

Change Your Routine
If you stop at the coffee shop on your way to work or dump half of your paycheck into the vending machine, stop it. You can easily brew your own coffee and take your own snacks to work for a small fraction of the price. Expensive lunches are another money guzzler. Learn how to make a ham sandwich and a pot of coffee. Your wallet will thank you.

Stop Overusing
Turn off the lights when you leave a room. While it can become a habit to leave them on, it’s an expensive habit. You might not receive cash in hand every single time you flip the switch, but your utility bills will be much lower. The same goes for your water. Stop letting it run while you wash dishes or get ready for your shower.

Become Gas Conscious
Before you go somewhere, ask yourself if the trip is really necessary. If you’re just bored and want to run to the store, consider doing something else instead. If you’ve really got to go somewhere, ask yourself if there’s anywhere else you need to go while you’re out. Eliminating unnecessary trips in the car will cut down on the precious resource of gas and save a ton of money.

Stop Splurging
While everyone wants to be able to go see the new movie that just hit theaters or the big concert coming to town, if you’re having money troubles it might not be the best time to splurge. Opt for a night in with microwave popcorn and a flick on the TV. Rather than buying new clothes, try thrift shops. You can even make your old clothes work for you now. Find a how-to online for turning some of your old winter clothes into a fun summer wardrobe.

You don’t have to revert to the stone-age in order to save a couple bucks. Simply track where your money is going and crack down on extra expenditures. Limiting bad habits like smoking and alcohol consumption can save some people hundreds of dollars. Before spending money, ask yourself if it’s necessary. If the answer is no, chances are that’s somewhere you could make a cut.

Georgia Dalsum writes about financial health and credit reports.

Dave Ramsey Financial Peace University Class is Awesome

Best selling author, nationally syndicated radio financial expert, motivational speaker, and creator of Financial Peace University financial education class Dave Ramsey is an amazing guy with a great institution. Operating under the Lampo group in the Nashville Tennessee area, Dave has grown his company over the last 20 years employing hundreds of people serving millions of people through books and classes taught in business, churches, community centers, military, schools and prisons worldwide.

We have coordinated about 8 classes over the last 3 years, to almost 700 people, at Vineyard Columbus. Dave’s system of financial education really works, and works well at helping people manage money, become debt free, relate with spouses better about money, and build wealth for emergencies, college education and retirement. Someone asked me once if I agree with everything Dave says, my answer to that is I don’t agree with everything I say- but I do believe in about 95% of what he teaches, because I have studied his concepts and they work.

Why does Dave’s system work so well? It works great because he has researched, refined and improved his program to find out the best way to be financially healthy. His system is proven, and I have seen it work with the classes we have led.  Each class that we have led reported that it helped most people. In addition we have seen about $1.5 – $2 million dollars of debt reduction of class attendees.

Dave has recently updated his course and will be rolled out in August, and we lead it again starting September 13th every Thursday for 9 weeks. For those that want to check it out before signing up for it, can attend a preview September 6th at 7pm. The same night we are going to do an orientation, so that attendees can derive the most out of the class. To find out more about this upcoming class go to the link at Vineyard Community Center.

The new class was shortened from 13 weeks to 9 weeks, making it easier for people to commit to. In addition, a few classes have been combined (the two on investments), and the class on dealing with debt collections will only be available online to members, and the class on careers has been eliminated. Lastly, the lessons taught on DVD are all now 60 minutes, some of the prior classes were much longer.

The format for the class is to watch a professional, informative, educational teaching by Dave Ramsey on DVD, jam-packed full of information. Small groups are assembled following the DVD to discuss the lesson and provide accountability for those that want it. Dave not only teaches information well, but talks from the heart from his own deep failures and successes. He motivates, gives sample cases so that you can identify with, and is generally funny and entertaining to listen to, what I call ‘Edutainment.’

The new class also has more Bible in it, something that us class coordinators have been wanting for some time. Financial health isn’t just making practical changes, but at its basis requires spiritual and emotional change- this is a welcome update to the course.

If you or someone you know would like to be more financially smart, and improve their financial future, they should attend a class near them, and hundreds of classes with the new materials are scheduled to start nationwide in August and September. To find a class near you go to www.daveramsey.com.

Retailers to Avoid

Retailers are a dime a dozen so I can be choosy who I decide to deal with. Here are the top things that turn me off and others that attract me to do business with them:

Retailers to Avoid

  • Those that make big claims that they always have the lowest price. I never trust this comment because no one single retailer has the lowest prices on anything, they couldn’t stay in business if they did, and can’t shop around constantly to be sure, so right off I suspect that I might not be able to trust them. Therefore I avoid auto dealers that make this claim.
  • Firms whose employees are not happy to serve me. If they are not happy with how they are being treated or trained by their employer, this tells me the corporation doesn’t really care about the customer. I particularly find this with many stores in big malls.
  • Poor return policy. If a company doesn’t stand by their products and is unwilling to work with me on returns, then I avoid them. Therefore I will never shop in stores like Burlington Coat Factory.
  • Stores that have poor access to the disabled. If someone isn’t able to manuever into the doors and through the isles then I know they don’t care about disabled people, and may not have a heart. I avoid them like the plague. For example every Hollister store that I have been around has steps and narrow doors to get in.
  • Retailers that exploit people sexually. If a store uses in advertising images and clothes that are sexually explicit, especially towards women and youth then I never shop there. For this reason I will never buy anything in Abercrombie and Fitch or Victoria’s Secret. Just checking A & F’s website this morning, were a few such images.
  • Some people avoid firms that support political, economic or social causes that they disagree with, sometimes I do this, but frankly I don’t have the time to keep track of them.

Retailers I like:

  • Great return policies, like Costco and Bed Bath and Beyond.
  • High quality products at great prices. Costco gets the nod for me for many items, often saving me from having to research items (I still do and got a better price on tires elsewhere). Also I like the fact they try to have products that I normally couldn’t afford, such as organic food.
  • Starbuck’s like, happy to see me, attitude. If prices are competitive and I am being served and treated like they appreciate me, then I love to shop at places that appreciate the fact I am contributing to their profitability and paychecks.
  • Great reputation for sales and service. If I’m buying things like appliances, furniture, and car repairs I ask people I know what they think. Last time I went against my instincts and bought an item from a regional appliance firm who treated a friend horribly, I too had a bad experience.
  • Plenty of easy to find sales people to help me find items and answer questions about different choices.  Large stores are the worst at this, sometimes I can walk all over the store and never find any help. If the price is right I will shop at smaller hardware stores where I can get individual help.

Monday AM Launch, The Race of Self-Control

Good financial management entails more than making wise career and purchasing decisions. Managing our purchases is more than being principled in our mind about finances, in how God is the owner and we are merely stewards. It is even more than being generous givers, avoiding debt, living well below one’s means and saving. Good personal financial management is even beyond being organized by tracking everything in Quicken, discussing all purchases with our spouses, planning and investing well for retirement, working hard, being honest and paying all of the taxes that we owe. Yes these are all good things, but if we don’t have self-control, then we might end up not being good managers of money and life.

Consider these Bible verses:

  • Proverbs 25:28  A man without self-control is like a city broken into and left without walls.
  • 1 Corinthians 10:13 No temptation has overtaken you that is not common to man. God is faithful, and he will not let you be tempted beyond your ability, but with the temptation he will also provide the way of escape, that you may be able to endure it.
  • Galatians 5:22-23 But the fruit of the Spirit is love, joy, peace, patience, kindness, goodness, faithfulness, gentleness, self-control; against such things there is no law.
  • 2 Peter 1:5-7  For this very reason, make every effort to supplement your faith with virtue, and virtue with knowledge, and knowledge with self-control, and self-control with steadfastness, and steadfastness with godliness, and godliness with brotherly affection, and brotherly affection with love.
  • 1 Corinthians 9:24-27 Do you not know that in a race all the runners run, but only one receives the prize? So run that you may obtain it. Every athlete exercises self-control in all things. They do it to receive a perishable wreath, but we an imperishable. So I do not run aimlessly; I do not box as one beating the air. But I discipline my body and keep it under control, lest after preaching to others I myself should be disqualified.

It seems that without self-control, our lives are easily invaded by outside forces. Without this uncommon characteristic we will give into temptation. The trait of self-control is right up there in the top 9 gifts of the spirit of integrity, virtuosity, and supreme character traits of man. Self-control is equated to much more effort than even elite athletics exhibit- sorry Olympians.

Self-control links godliness, affection, steadfastness, and knowledge and even love. Our self-control that we exhibit when we use money is a test, or a demonstration of our ability or spiritual growth to suspend, or look beyond or temporary needs, and be at peace and joy where we are. How patient and full of self-control am I?- I’ve been asking myself this question quite a bit recently, and honestly the mirror isn’t very kind to me here. Am I given over to my wants, or to others needs and what the Lord has in mind for me? Where do I look for satisfaction?

This is the food of strong people not the milk to be fed to infants. Meat of swallowing pride and self-service, and gratefully, contentedly excepting the wonderful better gifts the Lord has for us.

Self-control is a product often of pain, of facing life’s disappointments. It is the churned up soil that causes us to look within. It is a fruit brought about by our roots going deep, and not letting the troubles or pleasure of life move us off the path that He lays for us. Self-control growth comes through being generous to others, to giving our time and money when we don’t want to. It is not giving in to ourself, kids and spouses when a budget buster of immediate wants is pressuring us- it is leadership. Self-control is exhibited in our spending but also eating, work habits and what we say. Self control is something we should pray for, yearn for and practice. Fasting from eating and buying help too. As I run the race into mid-life, the marathon of life, as I age I notice older people more, and reflect on the 9 gifts of the spirit, will I be like those that only improve in them, am I improving in them? Will I finish the race with a perishable wreath or a permanent prize?

Lender Reduced Interest Rate to 1% for Veteran

I just spoke to a good friend and veteran in Columbus Ohio that has a mortgage with JP Morgan Chase for 30 years at just over 6%. Chase lowered their interest rate to 1% for 3 years, which made their monthly payment drop by about $400. They were told that this was a special program for people who had been in the military, and had applied for a loan modification in the past. The letter they received was a godsend, allowing them a little extra in their budget to save and re-pay other debt. The letter said the payment reduction amount is taxable, which indicates to that this amounts to forgiven interest, but they should consult their tax preparer to be sure.

The benefit this couple received is probably part of the settlement reached with the Federal government and 49 state Attorneys General, Bank of America, J.P. Morgan Chase, Ally, Citi, or Wells Fargo in February to provide relief to servicemembers and veterans. From the Whitehouse’s website, the lenders will

  • conduct a review of every servicemember foreclosed upon since 2006 and provide any who were wrongly foreclosed upon with compensation equal to a minimum of lost equity, plus interest and $116,785;
  • refund to servicemembers money lost because they were wrongfully denied the opportunity to reduce their mortgage payments through lower interest rates;
  • provide relief for servicemembers who are forced to sell their homes for less than the amount they owe on their mortgage due to a Permanent Change in Station;
  • pay $10 million dollars into the Veterans Affairs fund that guarantees loans on favorable terms for veterans; and
  • extend certain foreclosure protections afforded under the Servicemember Civil Relief Act to servicemembers serving in harm’s way.

Reducing Fees for FHA Borrowers Seeking to Refinance: FHA will cut its fees for refinancing loans already insured by the FHA. An estimated 2-3 million borrowers could be eligible for this savings, providing the typical FHA borrower with the opportunity to save about a thousand dollars a year through refinancing than they could have under today’s fee structure.

This is very brief information, servicemembers and their dependents who have or have had a mortgage with Bank of America, J.P. Morgan Chase, Ally, Citi, or Wells Fargo and want to read about all of the benefits (this is just a summary of some of them), should look into this further:

  • Call the Justice Department at 800-896-7743, they have information to determine if you are victims and the settlement requires those individuals to be contacted
  • Military legal assistance office locator at http://legalassistance.law.af.mil and click on the Legal Services Locator
  • Justice Department’s enforcement of the SCRA and the other laws protecting servicemembers is available at www.servicemembers.gov
  • Whitehouse fact sheet

What is the worst financial advice you have been given?

Someone once gave me advice when I was young and eager in business, to live just below my means. Have a nice car and loan to go with it, and other niceties of life, I was told that this would motivate me to succeed.  He said that living on the edge this way would keep me hungry to work hard. One of the worst things that sales people and self-employed people should do, which I was both of, is to live near, at or above their income. Earning an income through sales and self employment is hard and stressful enough without the added pressure of bills. If you don’t have a steady pay-check, one should live well below their means, and have adequate savings to keep one afloat during difficult seasons. When one is desperate to make a living, sometimes this leads to creative ways to work, but for me it was just more distracting and exhausting. Err on the side of wisdom should have been my reaction, but the appeal of living a nice lifestyle was attractive to me then, and I bought into the advice.

What is the worst financial advice that you have been given? Comment below…

When to Pay off Your Mortgage

There is quite a bit of miss-information when it comes to whether someone should pay-off their mortgage. On one hand it is wise to have as a goal to someday have a mortgage free home, especially as one enters the retirement years, and minimizing of cash flow and simplification are goals. Many people wonder if it makes financial sense to payoff one’s mortgage instead of using those dollars to invest.

Dave Ramsey and other financial experts advise people to payoff the mortgage after one has: 1) repaid all other debt 2) fully funded emergency savings with 6 months of expenses (or 12 – 18 months if self-employed) and 3) putting enough money into accounts for retirement and college education. This is great advise for the masses, these experts are trying to convey with a simple message that people can strive for. Debt elimination is always good, as it is always nice to not be under the burden that we feel when we are shackled with debt. Simple messages are good for public communicators, because people are often looking for loopholes for their ‘special’ circumstances, and then lose sight of goals and lessen their chances of overall success.

That said, does it ever make sense to direct money that would be going into savings and/or investments instead of house mortgage repayment?  If someone is not investing (bad idea) and just putting the money into a savings account that today is earning less than 1%, they would be better off to pay off the house. This is because even with today’s low mortgage rates of less than 4%, their savings would still be earning less interest than they would be paying. If someone is investing, and earning a rate of return that exceeds the mortgage on their home, then it is a maybe. Maybe because it would depend upon how they are investing, and the interest rate of their mortgage net of tax-deductions, since most people are able to deduct the interest on their mortgage. The interest rate calculation may require careful analysis with the help of one’s tax preparer. Lastly, the invest or pay-off question depends upon how much money someone has to invest, either as a lump sum or a monthly amount. Meaning the analysis would be easier if someone had $100,000 in investments, and the mortgage was $100,000, but the calculation would be more difficult if someone didn’t have that lump sum, but merely an additional monthly amount to apply to principle. In this case there is no rule of thumb and careful analysis would reveal the most appropriate solution.

Money Etiquette: 6 Mistakes to Avoid

The other day Dave Ramsey’s newsletter  had the Money Etiquette: 6 Mistakes to Avoid, I thought they were pretty good, funny and worth sharing. Dave’s newsletters are really good and worth signing up for (they’re free):

  • Tipping poorly.
    Dear Mr. Bad Tipper: Nothing says, “Thank you for taking my order, bringing my food, refilling my drinks, and providing good overall service,” like that $1.56 tip you left on your $20 order. Just think: If your server invests that $1.56 tip in a 12% growth stock mutual fund, they’ll have $17.20 in 20 years! How fancy! In all seriousness, here’s a tip about tipping: Unless your server cursed at you and threw grilled eggplant at your wife, tip him 15–20%. Is that really too much to ask for someone who helped you put food in your belly?
  • Talking about how much money you make.
    Unless you’re calling into Dave’s show to make your debt-free scream, your household income really isn’t relevant information in everyday conversation. Usually, people who freely share this type of personal information are high-earners, so it only comes across as bragging. Every conversation is a new opportunity to share their income: “Hey Jim. What about that storm last night? Thought a tree might fall on my house, but I make 250k a year, so we could’ve handled it. How’s your wife?”
  • Talking about how much you give.
    This one is just as bad as talking about how much you make. No doubt that building wealth and finding financial peace is all about giving to others and changing your family tree. But that doesn’t mean you should broadcast the amount you tithe and give to charity like it’s a tattoo on your forearm. Genuine givers are humble and even secretive when it’s called for. If you’re giving in hopes that one day you’ll have a county bridge named after you and a statue in town square, then you’re giving for the wrong reasons.
  • Bumming off your friends all the time.
    Every group of friends has one. The bum. The mooch. The guy who always realizes he’s “forgotten” his cash right when the check arrives. Don’t be that guy. Here’s the thing: You might save a couple of dollars here and there, but at what cost? Everyone in your group of friends knows what’s up. They aren’t stupid. You’ve been labeled as the “group mooch.” And, before long, you won’t get invited to dinner, and then you’ll become “the guy who invites himself to dinner,” in addition to being the group mooch. Then you’ll become a social pariah and never score another date—all because you weren’t willing to pay for a $3 taco.
  • Making unreasonable offers when negotiating.
    One of the quickest ways to end a negotiation is to make a ridiculous offer. It shows the seller that you aren’t serious about buying and you think they’re stupid. You’re saying, “Hey idiot. You obviously have no concept of the cost of physical objects that exist on this Earth. But, tell you what, I’ll humor you and offer you 40% of your asking price. You’re welcome. Dummy.” How do you know if you’re making an unreasonable offer? Put yourself in their shoes. Would you take $150,000 for a house that’s listed for $275,000? Would you take a quarter for a lamp that’s priced $10 at a garage sale?
  • Putting business over friendships.
    Dave says all the time that business partnerships are a bad idea. Why? Because business and friendships rarely mix. There are too many complications and emotions involved. But good friends part ways all the time because someone decided to throw business into the mix. It’s the guy who thinks his buddy with a nice office job is obligated to make a spot for him. It’s the guy who gets into a multi-level scheme and proceeds to badger all of his friends to “not miss this opportunity!” It’s the athlete who signs his first big contract and feels like all of his childhood friends deserve a cut. A business opportunity may improve, but a friendship will soon end. You can count on that.

So please, whatever you do, no matter how much or how little you make, don’t be a financial faux pas repeat offender. Slip up once or twice? That’s okay. But don’t become the “group mooch” or the “poor tipper” or the “income bragger.” Those are well-earned labels you want no part of. Don’t let a $3 taco ruin your friendships.

Money Principles Like King David

King David is one of the central characters in the Old Testament. Ancient Israel’s nearly 500 year history of monarchial rule begins with David, following the first king Saul. Studying David from a financial perspective in the books of Samuel, 1 Kings, and 1 Chronicles makes very interesting reading, as does the book of Psalms since many of them are attributed to David.

David started out as a humble shepherd and leapt on to the scene in front of the Nation of Israel when as practically a boy he slew a giant of the solder Goliath, with a few stones and a sling. He is the greatest Cinderella story of all time, when we witness a man ascend to being one of the first Kings of a powerful nation. David had much success on the battlefield, in wealth and power. David was known as being chosen by God because he was a “man after his own heart,” 1 Samuel 13:14. The Psalms exemplify David’s heart for the Lord, when he cries out to God through his failures and successes in intimate detail.

Not without significant errors in judgement and flaws, one thing that you couldn’t say about David, either during Saul’s persecution of him before he was king or under his great success as king, is it didn’t seem that he was motivated by power or wealth. Comparing him to the other 40+ kings that came after his rule, it is easy to see the difference when rulership was from the point of view of power and not humility like David had.

How does all of this relate to stewardship, wealth and money?

“Praise be to you, Lord, the God of our father Israel, from everlasting to everlasting. Yours, Lord, is the greatness and the power and the glory and the majesty and the splendor, for everything in heaven and earth is yours. Yours, Lord, is the kingdom; you are exalted as head over all. Wealth and honor come from you; you are the ruler of all things. In your hands are strength and power to exalt and give strength to all. Now, our God, we give you thanks, and praise your glorious name. 1 Chronicles 29:10-13

This was part of a public prayer David made at the coronation of the next king, his son Solomon, and the funding of the great temple of Solomon.  This was a public pronouncement that David attributed ownership, wealth, honor, strength, rule and power to God and not himself. This further exemplifies David’s heart of not being set on himself and his own success, but after God.

This ideology is at the heart of stewardship, that we are merely temporary stewards, and caring for what we have been entrusted with not for our personal gain, but for God’s purposes. This central theme runs throughout the Old and New Testaments, and exemplified in the life of Christ. Financial freedom is found not in having wealth and the things it promises, but in setting our hearts on Him. I want to be like David’s a man after God’s heart. God transform my heart!

The Benefits and Costs of Power Outages

Our city (Columbus Ohio) is 4 days into an electrical outage for nearly half the city. Our power through American Electric Power continues to come and off, giving us some relief, but never sure if we should buy ice or move refrigeratable goods to our parent’s units.  My wife and I are experiencing some benefits and costs to all of this, so thought it might be worthy of a blog to list a simple cost benefits analysis:

Costs:

  1. Eating out more
  2. Ice
  3. Batteries
  4. Candles
  5. Gas to buy more ice
  6. Cold drinks
  7. More ice
  8. Time off work if you are hourly and your employer is without electricity
  9. Thrown away food
  10. Trips to the laundromat
  11. Eye strain from reading with flashlights
  12. More ice

Benefits

  1. Less gas needed to drive to work if your employer is without electricity
  2. Paid time-off possible
  3. More time to get to know neighbors
  4. Time with relatives
  5. Less TV and all media in general
  6. Time to relax, meditate, pray, and just listen to nature through open windows
  7. Less money spent on groceries
  8. Relaxing in coffee shops
  9. Time to read

Numerically the costs seem to outweigh the benefits, but some of the benefits are more meaningful.