Monthly Archives: September 2012

What Are the Best Savings Account Rates? Does it Matter?

Do you wonder what is the best rate of return that you can get on a savings account? Does it really matter? Toward the end of this article I will give you some rates I found, but even though it does matter, it doesn’t matter as much as you think, so don’t sweat it too much. Even though your savings account gets a poor rate of return, the idea is that the low rate is the cost of having insurance. I don’t mean insurance in the traditional sense, but self-insurance if something happens and you need to get your hands on your money for a health condition, lost employment, or car repairs, such as the transmission going out on your car. The cost of ‘insurance’ is the low rate of return. The benefit is having money readily available, insured by FDIC, and in something that won’t go down in value. Remember what Mark Twain said: “I am more concerned with the return of my money than the return on my money.”

That is the reason I don’t think it is too important to lose sleep over the low interest rate your savings account is earning. Also, the difference in rate of return isn’t going to add up that much anyway. For example, if your account is earning .50% and another one is offering .65%, the difference in accumulation in 1 year on $10,000 is only $15 dollars. However, as you save more money and you are going to have it in savings a long time, then you should do more homework to find a great rate.

Saving money is all the rage these days. In April of 2005 the US personal savings rate was .80%; today it stands at about 4%. More people are saving money as a result of the recession, now that they see the value of having a safety net. Hopefully the trend toward saving instead of spending almost all we make will continue and we won’t return to a spend-and-borrow culture that helped contribute to a recession. People are taking classes, learning from experience, and understanding the value of having an emergency fund of savings.

The challenge many people face is where to put their money. We are told to deposit it into a safe money market account, pass-book savings, or certificate of deposit, but the interest rates are horrible. We are supposed to save 3 to 6 months of expenses in case of a rainy day. If someone is self-employed, it may be good to have 12 to 18 months of savings in case of business slumps. If people are paying off debt, Dave Ramsey suggests they start with baby-step #1 and put $1,000 into savings, then start to snowball debt reduction with a gazelle run-hard mentality.

Basic bank and credit union savings and money market accounts are great, because they are easy to get to, they don’t go down in value like the stock or bond market, and they are insured against loss by the FDIC. Make note though–there are some money market accounts that are not insured.

I looked around the web and found some decent rates in the neighborhood of .65% to 1.05%; the best from my quick search was at CIT Bank and Sallie Mae. I found some institutions with rates as good as 1.50%, but they had requirements such as minimum balances and a checking account. At Bankrate.com the average money market account was paying from .50% to .70%, depending on minimum balance. Find a good institution, with a good rate, keep an eye on it, but don’t sweat it too much initially.

Following God’s Principles and Experiencing Giving

A long term financial ministry leader and follower of Christ in her family’s finances shares some thoughts on God’s financial principles and giving. It is really encouraging.

“Our perspective and feelings about our finances changed dramatically when we went through a Crown Financial Bible study during the first year of our marriage. Both of us were pretty responsible when it came to finances, but the study revealed to us that we never truly believed that our money and possessions belonged to the Lord, not ourselves. As we began to learn and see through scripture that God is the owner of everything we have — time, money possessions — giving took on a whole different meaning.  If everything you have belongs to the Lord, you can’t ever give too much, or too sacrificially. We truly started to feel peace about our finances and joy in giving when we fully realized that as Christians, God owns it all….everything.

“One of the most important things that God has taught us is that He deeply desires freedom in our lives so that we can better know Him and love Him, without distractions.  As a couple, we are united in our view that serving Him with our resources is so much more fulfilling than committing those resources to credit cards, car payments, expensive clothes, extravagant gifts or vacations. When we began letting God change our hearts regarding work, saving, becoming debt-free and giving, we began to experience more and more freedom and a greater capacity to give of both time and money. Knowing that we have been able to contribute financially to the building of the community center and the fruitful growth of this church has expanded our dreams for the future — not dreams of margaritas on peaceful beaches, but dreams of how we can share in expanding God’s kingdom.”

Hard Work and God’s Blessing

A Dave Ramsey class attendee sent me an email awhile back, and it was so encouraging I wanted to pass it on to you. This is a wonderful couple; it’s just that finances have been a major struggle for them. Taking the Dave Ramsey Financial Peace University (FPU) class has led them to financial freedom.

“I wanted to let you know the impact that this study (Dave Ramsey FPU) has had upon me. I have a WORKING BUDGET for the first time in our 27-year marriage. I have completely overhauled the way I go grocery shopping; my previous cost was more than $150.00 a week and is now down to $100.00. I also save between $9 to $18 dollars on manufacturers coupons. So I am saving around $250.00 a month. I have saved over $80.00 on car repairs by asking my present dealership to honor other dealer coupons. I have paid off 3 debts and am snowballing 2 others. Our taxes were paid by April 14th. WOW!

“When I went to the bank last week to set up my check card, I started a conversation with my teller and mentioned the Dave Ramsey class. She immediately asked if I wanted envelopes…. she started the class a few years ago and petered out after class 5. Sweet gal, though, and we shared a few laughs. As of today, I have the funds and I cut up my gas and credit card and will be using only cash! My heart did race a little as the paper shredder groaned over the plastic but what a Powerful Prayer of Thanksgiving and YIPPEE!!!! I am free!”

She recently sent me an update: “We have now paid off ALL debt except the mortgage on our home 🙂 Have three months of earnings in the wings. I will be replacing my current car with 215,000 miles on it for a new one with cash. (All the while paying off hospitalizations, surgeries, assisting our three 20 something sons, a major employment change for my husband, and I went back to college.) God has been incredibly faithful to us during this process and we owe Him all the praise!”

God is Faithful

The wife of a married couple that I have known for several years now, recently shared her experience of finances and walking with the Lord. They have really tried hard to seek counsel, reduce debt, and follow a budget for quite some time, and with these efforts and the help of friends and the Lord they are doing very well:

In 2008 my husband’s company required him to transfer to another state to keep his job. Besides the fact that we couldn’t sell our house, we felt that God was telling us to quit, that we were done with this company. So we quit, with 2 kids and no savings. Our families thought we were crazy, but it was what we believed God was calling us to do. We were unemployed for 9 months, and then under-employed for another nine. But for the first 9 months, we never missed a house payment or any other bill; God always provided. We learned to really trust Him as our provider. We would receive anonymous checks in the mail for hundreds of dollars. It even got to the point where we almost expected one to be there when we needed it.

Our small group community came around us, giving us gift cards so we could get our kids Christmas presents, buying them clothes, and even bringing us meals when we didn’t have enough money for food. We learned humility as never before. We tried so many ways to provide for ourselves during that time, but over and over, God said to let Him provide and He did. In a culture where it is enforced to be independent, to not need anyone, we learned that we couldn’t live without the body of Christ. God has taught us to be faithful as He is faithful, and generous as He is generous. Nothing sways us anymore. Whatever comes our way we know God is in control. Even when we had moved out of our house because we thought we were losing it, He had a plan to bring us back, and we waited patiently until we realized that was His intention. 🙂

One last note–shortly after losing our job, Rich Nathan gave a sermon that was talking about tithing, and saying how you should tithe even off of gifts, not just income. We had always been good about tithing off income, but had never thought about gifts. And I didn’t know it then, but we were entering into a season where we were living off of gifts. So when we heard that sermon we decided we should tithe off of gifts. It was hard sometimes, because people would give us gift cards, and we’d want to tithe off of them, but had to use cash to do that. I don’t know how many times I wrote tithe checks that would clear out our bank account when we had bills due and didn’t know where the next bowl of cereal would come from. But the bills got paid, we all got fed, and our tithe for those months stayed the same as it had when we were employed.

You definitely can’t out-give God! While it was a very hard time, we wouldn’t trade it for the world. In this process, we learned what it was like to be poor, to need people to survive, and how to lean on our church and God. The  lessons we learned about God and the relationship we found with Him are priceless. And to top it all off, when my husband was finally restored to full time work, his salary was the same as it had been for the job he originally gave up!

Financial Miracles Happen

My wife Laura shared this yesterday with her Dave Ramsey FPU small group break-out class–something that happened to us about 6 years ago.

A few years ago when we were both jobless and I was ill, I was told that I needed to have surgery.  At the time we were using Cobra and it was supposed to end before my surgery was scheduled.  To shorten the story, a mistake was made with our Cobra and they extended it two extra months.  I was able to get the surgery during the time of that extension saving us somewhere around $20,000.

In my last Ramsay small group we all prayed for a miracle of getting a raise or unexpected checks.  Several of us in that group got raises.  We brought it up to the whole group and many of them prayed the same way.  One evening several people told of how they had been given or received unexpected sums of money, raises, etc.

I guess I want to make the point that while you are doing the homework and trying to ‘live like no one else’, remember to pray for miracles.

The biggest miracle that we hear about over and over is that marriages are strengthened when couples take the course and that single people gain a sense of empowerment and security.

It doesn’t matter what has already happened to you, what mistakes have already been made or what your situation is right now.  If you follow the concepts in this class you will see a big difference by the end of our classes.  We are on this road together.

Free Fun Idea, Free Museum Admission 9/29/12

Bargaineering.com had a great post for those that are looking for something fun and free to do this weekend.

Smithsonian Magazine Sponsors Free Museum Day

by Jim Wang

Museum Day Live! is an annual event hosted by Smithsonian Magazine where you can get admission into participating museums across the country absolutely free. This year, Museum Day Live! will be this Saturday, September 29th, and you can see a list of participating museums here.

To get admission for two, you will need to get a ticket here. The ticket is emailed to you after you submit your information and you’ll need to print out the email to gain free access.

There are quite a few venues participating, including every Smithsonian Institution Museum (they are always free anyway, with the exception of the Cooper-Hewitt and National Design Museum). Here in Maryland, we have several dozen museums participating in Museum Day Live!

It’s a fun way to visit museums with your family without paying a penny!

Are Young People Saving More Money?

Do you think your children are learning from their parents’ financial woes and are practicing better personal finances, such as saving more money? The Wall Street Journal yesterday reported on this subject in “Watching Parents Fail Sparks New Rebellion: Saving Money.”

I think this could indeed be true. I know we have been transparent with our kids about things we have learned, sometimes the hard way, and their attitudes about finances are very spot on. It seems as though for prior generations finances were sometimes more secretive. Today in light of the fact that parents perhaps have not saved enough or budgeted like they should have, the recession has exacerbated family financial problems; the kids have witnessed these problems first hand, and they don’t want to go through the same thing.

I know when we lead the Dave Ramsey Financial Peace University class it seems there are almost two groups of people: those in their 20’s who want to get it right for a lifetime, and those who are older who have gone through difficulty and have regrets. There are about 20% who actually are doing okay but just want to do better too.

Have you noticed teenagers and young adults trying to take control of their finances more these days?

Options for the Unbanked

Several media sources report that 1 in 12 households or 10% of Americans today do not use bank checking accounts, but use cash for everything. Most people have had checking accounts at some point.  Some have had to close them because they never learned to manage them well. Others closed accounts after life’s circumstances put them in a bind, resulting in bounced checks and accumulated fees and making it too difficult for them to try opening another account. Many banks don’t want to deal with people who have had bad checking account and credit history.

Not having a checking or other bank account makes it difficult for people to establish credit, which is often a barrier to home ownership or buying a car to get to work. Thus people remain economically depressed because of their failure or refusal to deal with banks. Many people with modest incomes, or those who have gone through terrible financial circumstances, as well as those in poverty, don’t have traditional bank accounts these days.  Bankless or under-banked people can wall themselves off to financial advancement by not learning good financial management and the knowledge required to manage bank accounts. This seems to be another consequence of our bad economy. The best thing these folks can do is to take a financial class, often held by non-profits in their community, or at a Dave Ramsey Financial Peace University course.

For those that continue to go the non-bank route, they might be victims to high charges for the only options that are available to them:

  1. Check-cashing stores are the first option many choose when they have problems with bouncing checks. These unscrupulous enterprises provide a payday advance {loan} until the paycheck arrives, charging high fees and interest, sometimes several hundred percent. They provide a handy service to the person who gets stuck and needs quick cash, yet they charge exorbitant amounts of interest. Many people get stuck, unable to catch up, and have a hard time breaking the pay-day loan, cash advance, check-cashing store cycle. I recommend that people avoid all these if at all possible.
  2. Some people cash their paychecks and then buy everything with cash. If they need to send a bill, they pay for utilities at a local bill-paying place such as some grocery stores offer, or they buy money-orders. Money orders aren’t cheap if you calculate the cost throughout the year, and having cash can make security an issue and budgeting a challenge. I recommend that people who do this use the envelope system until they can get re-established with a bank checking account.
  3. Pre-paid credit cards are another option that people may use. Companies like RushCard provide a nice way for people to pay bills easily, as their paychecks are automtically deposited and they can use these debit-like cards to pay bills. Some of these services have high fees that really add up. Some of them have an annual fee, monthly fees, and per-transaction (bill paying and ATM) fees. Searching these companies on Google, I found numerous complaints, often concerning the quality of service, money not being deposited on time, and mis-used account numbers (theft of account numbers). Some users of pre-paid cards hope to establish good credit by using them, but I am not sure they accomplish that. What I do like about the RushCard is the budgeting tools and bill managing capability. This feature might teach some to get back on their feet and to practice and learn good personal finances, thereby helping them build a bridge back to financial health.

Those with modest incomes and those who are in or near poverty are a vast population under-served by most mainline large financial institutions. It would be welcome news if just one of these institutions made it corporate policy to design a plan to serve this population. They could start by offering new creative services and education and customer support especially designed for the under-served population, all with an affordable cost structure.

Not Judging Other’s Finances, Matthew 7:1-5

Jesus Money Monday: Not Judging Other’s Finances

This week’s money and stewardship devotional from the Four Gospels is from Matthew 7:1-5* is regarding judging others. This verse doesn’t directly relate to money, but it is very applicable because we often view others through the lens of money.

“Do not judge, or you too will be judged. 2 For in the same way you judge others, you will be judged, and with the measure you use, it will be measured to you. 3 Why do you look at the speck of sawdust in your brother’s eye and pay no attention to the plank in your own eye? 4 How can you say to your brother, ‘Let me take the speck out of your eye,’ when all the time there is a plank in your own eye? 5 You hypocrite, first take the plank out of your own eye, and then you will see clearly to remove the speck from your brother’s eye.”

We all know people in various economic stations, and we wonder what they did or what decisions they made that caused their present circumstances. There are those that are struggling to raise their families with tremendous financial stress, and there are single people trying to make ends meet. I run into people in their 50’s and 60’s starting over again, with no retirement savings or home ownership, after lengthy periods of unemployment or underemployment. I see adult children moving back with their parents, and sometimes the opposite happens too. A high percentage of families struggle as single parents. There are homeless people wandering the streets of almost every town.

Likewise, there are many people that are doing quite well. Their jobs continue to flourish, they have great careers, and they work for wonderful companies. Many have been able to keep adding to their 401(k) retirement funds, and debt is not an issue even through this recession. I know people that are quite well off, have plenty of money, and are enjoying a comfortable retirement. There are those that live very smart, and although they don’t make much, they manage finances quite well.

We can easily see that we are doing better than others financially, and we often judge the reason they are facing unfortunate personal finances. We reflect back on our own situations and conclude that we made better decisions, or for some reason God favored us more than he favored them. When we dig deeply, though, we can see that we could just as easily have been in the same shoes. Likewise, we can look at the wealthy and conclude that their decisions were smarter, and that God favored them more than us. Maybe we can think that they got their wealth by taking advantage of others, or by playing the corporate game to their advantage.

Reflecting on the Bible verse, you can see that Jesus knows we judge others when we contrast people to our own situation without exploring deeply what is going on in our own hearts. Jesus, the heart surgeon, the doctor of the drivers of our souls, offers us up some cutting medicine when it comes to looking at people through the eye of comparison and judgment. Remember the last time you had a little speck of dust in your eye and you couldn’t see? The pain and eye watering prevented you from doing anything. Jesus says we have planks in our eyes; big pieces of lumber. We are blinded, truly unable to see through judgmental eyes, what is really going on with other people because of the condition of our own souls.

It’s not that Jesus doesn’t want us to learn from other’s success and failures, and to be wise with finances and careers; it’s just that he just hates it when we take a judgmental position and remain soulfully sick. God has a unique plan for each person’s life; we all have different trajectories. Besides, we shouldn’t, or actually we can’t compare or judge; it isn’t fair to them or to us. We simply don’t have all the facts about others, or do we know what God is doing. When we pluck the log out of our own eyes, we have examined our motivations and explored the root of sinful behaviors or attitudes; or we have done as the Psalmist said: Search me, O God, and know my heart! Try me and know my thoughts! 24 And see if there be any grievous way in me, and lead me in the way everlasting! Psalm 139: 23

People who have gone through this type of heart surgery refrain from judging and have more compassion for others, whether they be rich or poor. Compassionate people don’t put themselves above others or create walls to relationships and friendships. We humble ourselves to others, help them through difficulty with encouragement, and come along side them to gently show them wisdom and to provide helpful support.

Lord when I judge others, hold a mirror up to my eyes, search my soul, forgive and heal my heart. Thank you for the compassion and grace you show to me, and help me to extend that to others.

*A chronological examination of any verse that involves  money and stewardship, attempting to see the new light that Jesus shines on money in his selfless, grace filled, Holy Spirit empowered, and Kingdom oriented positions. This is the eighth post in this series.

How Does Inflation Affect Savings?

People are aware of inflation, since it is talked about all the time on the news and they see gasoline prices increasing astronomically and erratically. You may have heard someone talk about loss of purchasing power, but what does that mean?

As a quick review, when you invest or save money, and you pull it out later, it should be worth more. This is because it either pays interest (e.g., bank pass-book savings, money market account, certificate of deposit [CD], bond), or earns dividends (e.g., stocks), or appreciates in value (e.g., stock, real estate).

If you invested in a savings account, CD or money market account, you are typically going to earn 0 – 1.5% annually.

Inflation (increase in the cost of goods), on the other hand, averages about 3.5% over time. If the money you deposit in an interest earning account earns less than the rate of inflation, you won’t be able to buy the same amount of goods when you take your money out to buy something as you could have bought before you invested the money. You have lost what is called purchasing power.

If you buried the money in a coffee can in the back yard or hid it in your mattress, it would not appreciate in value at all. Each year you left it in the ground or in your mattress, it would actually go down in value an average of 3.5% per year, since you can’t buy the same amount of goods with it when you take it out as you could have bought with it when you buried it or hid it.

Some people are very risk averse, meaning they are afraid stocks or bonds may lose value. However, as you can now see, even by taking no risk, your money can go down in value if not invested wisely.

 

How to Sell Your Scrap Gold

The price of gold is climbing again to about $1,800 per ounce, close to its all time high of $1,895 on 9/6/11, so many people are thinking about selling their old gold jewelry they have lying around. If you are interested in selling yours, here are a few tips to help you get the most for it.

  • 24 carat gold is 99.9% pure gold, and the price fluctuates everyday
  • 99.9% 24 carat gold is very soft; most jewelry is either 10, 12, 14, or 18 carats, but it can be other grades as well
  • Coins and bars might be pure gold
  • Jewelry stores and gold buyers have to buy your gold at a discount, either because the market price may go down tomorrow or they need to make a profit when they sell it
  • 10 carat gold is 41.7%, 14 carat is 58.3%, and 18 carat is 75% gold
  • Your scrap gold is weighed in grams, and it is purchased from you at the buyer’s per gram quote offer, depending upon your gold’s carat rating
  • There are approximately 28 grams in an ounce
  • An Example: If gold is selling at $1,700 per ounce and you have 14 grams (1/2 ounce) of 14 carat gold, the current market value of your gold equals 50% of $1,700 ($850), and then 58.3% of $850 (to account for the amount of gold in your item), or $495. Go to Wikihow for additional information before selling.

When you decide to sell your scrap gold, first have a reputable jeweler grade your gold (with a little acid and stone test), and weigh it. Next ask their purchase price per gram for each item, and then ask for the total amount they will give you for your items. Then call or visit some other gold buyers for their prices per gram for your carat weight. Make sure each item is tested and weighed separately, since each one could be a different carat. Don’t ever mail your gold to any gold buying firm.

Take each item, such as old gold teeth, bars, coins and scrap jewelry, in a separate ziplock bag, and take your time. Some buyers talk fast and the process can be intimidating. A few days ago, a relative took 4.7 grams of 14 carat gold to 2 places. Assuming a $1,750 per ounce (solid gold), or $62.50 per gram. If 14 carat would be 58% of that, or $36.25 per gram. The retail price is $170.35. They were offered $40 from a coin shop (23% of the value) and the attendant didn’t weigh it. The second offer was from a jewerly store was for $90 (52% of the value). Don’t be hurried, understand what you have, if you don’t do your homework and visit 2 or more reputable buyers, you might get ripped off.

A Little Girl’s Gift

This email, “A Little Girl’s Gift*,” from Joni Eareckson Tada (quadriplegic www.joniandfriends.org) was forwarded to me yesterday, and I thought it was wonderful.

A gift opens the way for the giver and ushers him into the presence of the great. Proverbs 18:16

When I wheeled up to the cashier’s counter in the airport gift shop, I asked the clerk to reach into my handbag behind my chair, open up my wallet, and take out the correct currency and change. “Sure,” the clerk replied. And so, while standing next to me and holding my wallet, she began to count out the bills and coins, laying them on the counter one-by-one. Suddenly a little girl darted up and-clink!-dropped a penny into my change purse. Then she ran back to her daddy. “What was all that about?” the clerk said with surprise.

Then I put two and two together. The child, who must have been watching me the whole time from behind her daddy’s legs, saw the clerk rummaging through my wallet. She must have thought I was poor and didn’t have enough money. Should I go over and tell that little girl the truth? Should I say, ‘No honey, I don’t need your pennies. I am a self-sufficient person’?

I wheeled over to the child, smiled, and said, “I want to thank you very much for helping me. You have the wonderful quality of Christ like compassion, and if you don’t know what that means, ask your daddy.” Her father gave me a wink. As I left the store, I realized it wasn’t only the right response, it was the only response. God must have been looking down and smiling. A child’s generous spirit was reinforced, her compassion encouraged, a father was made proud, a proud person was made humble, and God received the glory. A little penny opened the way for a young girl to be ushered into the presence of God, the giver of all gifts.

Today, reinforce the gift of compassion and generosity in the life of someone who has been kind to you – no matter how small that gesture of kindness.

Father, I humble myself in your presence. Show me how to humbly receive, and to encourage hearts with my gratitude.

*From her Pearls of Great Price –a devotional by Joni Eareckson Tada

Financial Diligence Is Required More Now Than Ever

Various news sources last week reported that inflation-adjusted median incomes haven’t increased since 1995. The recession is partly to blame, since many higher paying white-collar jobs are gone. Over the past 20 years many factories have moved overseas, so higher paying blue-collar jobs are rare.

As if those challenges aren’t enough, those with modest incomes have a tougher uphill battle than ever before. Gasoline has doubled in price since 2009. Grocery costs have gone up, and package sizes have come down. Many people living on the margin are driving older cars, needing more repairs.

Health insurance costs climb at rates faster than inflation, and with higher deductibles common with many plans, consumers have to pay more out of pocket. Many people don’t have health insurance even though Obamacare was passed (but it will not be fully implemented until 2014), and still business owners haven’t really figured out how to pay for benefits for low income and uninsured workers. So many modest and low income people continue go without regular health care, so they must pay everything out of pocket.

I know many people that are going back to college to get degrees in nursing or computers in order to find better jobs. Yet college costs have increased way beyond normal inflation, and many people graduate with burdensome loans. When financially strapped with debt, many exhaust their savings and are forced to use credit cards and check-cashing stores. Those with modest incomes and the poor are further hit with high interest rates, making it all the more difficult.

Is Obama or Romney coming to the rescue? Well I have been listening closely to both presidential candidates, and I hear they are concerned about all these challenges, yet I haven’t heard either articulate about their actual plans; their rhetoric remains abstract.

With all of these challenges, Financial Diligence is required more now than ever. Politicians and government in the end might help some, but it will take quite a long time. To make changes to present circumstances, it is up to me and you.

Financial Diligence

  • Making personal finances a priority
  • Committing time to do banking and budgeting
  • Investing time and money to take a class, e.g., Dave Ramsey’s Financial Peace University
  • Being smart and wise with decisions
  • Planning shopping trips and putting limits on grocery buying, eating out and entertainment expenses
  • Not borrowing for consumer goods
  • Saving for emergencies
  • Getting cost savings books from the library and implementing homemaking cost reduction measures
  • Obtaining advice from a financial coach about all areas, and especially before all major expenses
  • Being a great employee–learning extra skills or going back to school, and asking for more work when you have down time
  • Lastly, praying for wisdom to make good non-emotional decisions, and asking for all kinds of heaven-sent help for such things as financial miracles, raises, jobs, and good health for you as well as for your possessions that might break down and require budget-breaking expenses

Conclusion: The challenges are greater now than ever, yet it is not hopeless; it just requires greater concentrated Financial Diligence. You are smart, intelligent, and gifted; you can do it! You will repay debt, make more money, accumulate savings, and have more for good and fun things in the future. Don’t be discouraged–I have seen it happen to people over the past few years as they endure and improve through difficulty.

The New Economy, Matthew 6:19-34

Jesus Money Monday: The New Economy

This week’s money and stewardship devotional from the Four Gospels is from Matthew 6:19-34.*

For the past several weeks this devotional has covered some of the references to money in Jesus’ Sermon on the Mount. This teaching is early in his ministry, and it was groundbreaking, for he taught a totally new, radical way of thinking and living. If you were to try to describe Jesus’ approach to money, you could say it was Kingdom oriented and not self centered, and it taught us to rely on Jesus to provide–a new economic system.

Do not store up for yourselves treasures on earth, where moths and vermin destroy, and where thieves break in and steal. 20 But store up for yourselves treasures in heaven, where moths and vermin do not destroy, and where thieves do not break in and steal. 21 For where your treasure is, there your heart will be also. 22 The eye is the lamp of the body. If your eyes are healthy, your whole body will be full of light. 23 But if your eyes are unhealthy, your whole body will be full of darkness. If then the light within you is darkness, how great is that darkness! 24 No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other. You cannot serve both God and money.

25 “Therefore I tell you, do not worry about your life, what you will eat or drink; or about your body, what you will wear. Is not life more than food, and the body more than clothes? 26 Look at the birds of the air; they do not sow or reap or store away in barns, and yet your heavenly Father feeds them. Are you not much more valuable than they? 27 Can any one of you by worrying add a single hour to your life? 28 And why do you worry about clothes? See how the flowers of the field grow. They do not labor or spin. 29 Yet I tell you that not even Solomon in all his splendor was dressed like one of these. 30 If that is how God clothes the grass of the field, which is here today and tomorrow is thrown into the fire, will he not much more clothe you—you of little faith? 31 So do not worry, saying, ‘What shall we eat?’ or ‘What shall we drink?’ or ‘What shall we wear?’ 32 For the pagans run after all these things, and your heavenly Father knows that you need them. 33 But seek first his kingdom and his righteousness, and all these things will be given to you as well. 34 Therefore do not worry about tomorrow, for tomorrow will worry about itself. Each day has enough trouble of its own.

Looking back 2,000 years, we see that it is obvious little has changed in terms of man’s striving after economic resources. We worry about having enough money to buy more clothes, shelter, and food. It is not bad to build wealth–in fact it is a good thing. Accumulating wealth is good for alleviating poverty, avoiding debt, helping our families and society. However, what Jesus was concerned about for his kids was a life with wealth at the center. He used the image of a slave and its master. Jesus’ words are pretty sharp indicating that we can’t have two masters. Considering times of forced slavery prior to emancipation in America, or for those captured today in the sexual slave industry, no one could have two slave masters or two pimps. If we try to do so, Jesus advised, we will love one of the masters and hate the other. Jesus indicated that we should choose to serve  either him or something else, and we are slaves to those things we choose to serve.

This is perhaps one of the most difficult things for Christians to conquer in America today. We live in a society dominated by consumerism and greed. Economic issues are one of the top 5 news stories every day, right up there with war, sports, politics and celebrities. Finances affect our decisions about careers, where we live and go to school, and often our friendships. We live in a society of great material expectations where many strive for the American Dream. We are guilty of wanting the materially good life as well as wanting to serve Christ, so we often go after both and risk trying to serve two masters. Jesus says it can’t be done.

Jesus goes on to encourage us in verses 25 – 34 by telling everyone about his new economic system–one that is not based upon worry for self and striving for material things, but on going after his Kingdom and righteousness. Jesus promises that he will take care of the rest. Seeking his Kingdom and his righteousness, means turning from the world and giving our hearts to him. It means being obedient to his word and following him in the new abundant life he calls us to. For some believers it may mean repenting of greed, or of trying to serve two masters. The exciting part is living a life no longer consumed by worry and anxiety but a life based on trusting God, who is always good and reliable.

*A chronological examination of any verse that involves  money and stewardship, attempting to see the new light that Jesus shines on money in his selfless, grace filled, Holy Spirit empowered, and Kingdom oriented positions. This is the seventh post in this series.

Credit and Gift Card Positives, Negatives and Innovation

The banking industry has never been known as innovators or centers of creativity. That’s why an article in the Wall Street Journal caught my attention today: Ice-Cream Bank’s Rocky Road. I’ll get to the article in a moment, but my gripe with credit cards and gift cards is that although they provide a definite convenience, their negatives outweigh their positives for many Americans.

Credit cards and debit cards are definitely handy. No one wants to carry thousands of dollars around when making large purchases. and the cards are necessary for making flight, hotel and car rental arrangements. Cards also provide reward points (maybe a small percentage of the purchase) that can be used for gifts, cash, and travel.

Then there are the negatives: retailers are charged 1.5% – 3% on purchases, automatically resulting in inflating the cost of goods we buy. The credit card industry makes a lot of money on these fees. They also like it when people don’t pay off their balances each month, because they charge up to 30% interest on unpaid balances. The credit card issuers are really nice when they offer you a card, tempting you with points and no interest for the first year, and maybe an offer to waive the annual fee. However, if you run into hard times and miss a payment, many of them increase your interest rate to their highest rate (nearly 30%), making it even harder for you to catch up.

Research shows that people that use plastic instead of cash to buy goods feel less pain psychologically and spend more per purchase.

In summary, you use credit cards for convenience.The retailers charge more for the goods to cover the cost. You spend more money, and you may end up paying high interest rates. In return, all you get is convenience and points. Now some people have awesome discipline and don’t spend more, so they really profit from the points. I wouldn’t recommend this to most people, but if you are really disciplined, the points can cover your vacation costs every year, potentially saving a few thousand dollars from your budget.

Gift cards, on the other hand, are a nice way to buy gifts for people. Some people buy them at grocery stores and get reduced gasoline costs; Kroger and Giant Eagle are common grocery and gas bundlers in our area. Some people do this when making large purchases at other retailers. The negative side of gift cards is that they can sometimes get lost in the mail, we may forget or lose them once we receive them, or they may lose value if not used within a specific time.

Now back to the story about an Ice-Cream Bank. Seems there’s this boutique ice-cream parlor in Pittsburg that pays 5.5% interest per month on its cards. The interest can be redeemed for items they sell, such as ice-cream and coffee. The banking regulators are in turmoil trying to shut down this parlor offering bank-like products, but so far they haven’t figured out how to shut down the niche the proprietor found in banking and securities regulations.

I like innovation, and I admire Ethan Clay (the owner) for his creativity and courage to come out with an interesting idea to attract and reward customers. This got me thinking: Why don’t the credit card and banking industries, as well as major retailers, come up with ideas not only to add convenience and points, but also to encourage saving money on purchases and perhaps provide discounts on purchases if you use their cards? Wouldn’t it be cool if a credit card company rewarded people who finally paid off their balances, by depositing money into a special savings account (redeemable only in the future) for each month that the balance is reduced? Maybe they could even increase that amount for every month that this is maintained and the balance is finally repaid. They probably cook up ideas like this all the time, but they are not approved when they get to the executive team for fear of lost revenue, since they make more money on interest and fees. But like Ethan Clay’s small Whale Bone Cafe, small companies can try new ideas. Maybe a smaller credit card issuer will read this story in today’s Wall Street Journal and provide a card that has positive innovations to help people more.

 

Low Cost Hearing Aid Solutions

Yesterday’s Wall Street Journal had an interesting article about some lower cost alternatives for people with hearing loss. Some people can’t afford FDA approved hearing aids, since they often cost up to $4,000 a pair; often insurance doesn’t pay for them either. According to the article, 20% of 36 million Americans suffer from hearing loss, so these new devices might be an option for some who have gone without hearing because of the expense of FDA approved devices. They come in various designs and models, and range in price to around $50 to less than $1,000.

Ironically, in Monday’s Journal there was an article about George Martin, rock music’s most famous record producer and producer of all of the Beatles’ albums except one. His proximity to loud music for decades is being blamed for his near deafness. George can afford the best hearing aids, and with the alternatives mentioned in today’s Journal article, many of us suffering from the recession might now have affordable, if not the best, solutions to this growing malady.

Preparing for Attending Dave Ramsey FPU Class

If you have signed up for a Dave Ramsey Financial Peace University (FPU) class starting this Fall, congratulations. Your life will change for the better very soon. I am excited for you.  This is just a short blog post, to get you ready. Be sure to arrive on time, since class starts promptly. Plan to come early to drop children off at childcare (if offered), or obtain your Membership Kit, if you are buying it or have pre-purchased it from from the class coordinator. In addition, be sure to bring your Member Workbook from your kit and a pencil each week, as well as any homework assignments. Doing this as well as coming with a positive attitude will prepare you to get the most out of each lesson.

For a class that I am coordinating that starts Thursday September 13th, I have prepared a short Power Point Presentation. If you were unable to come to the orientation/preview September 6th, you might want to review it. Click the link to view this saved at Slidshare.

For information about the class, as well as details about our class and to find others in your area, see my prior post.

Annual Cost of Gasoline

With gasoline hitting or exceeding $4 per gallon in many parts of the country, it is important to consider your annual cost of gas when purchasing a new or used car. In 2009 gas was less than $2 per gallon, and it seems that we have gotten used to the current costs. With the price of groceries and healthcare steeply increasing over the past several years, the average American’s budget is really being stretched. Throw on a doubling of gas prices, and there is little room for many extras, making vehicle purchase decisions that much more important.

The chart below illustrates that it is easy to spend thousands of dollars each year on gas; however, it might not seem that big a deal to some people. But if you add it up for 5 years, the difference in cost between a full-sized SUV averaging 15 miles per gallon and a small or medium-sized one averaging 25 mpg is $5,333. Upgrading from a sedan averaging 25 miles per gallon to an ultra-efficient hybrid averaging 50 miles per gallon could save $4,000.

Many people react to this and wonder if they should buy a hybrid to get better gas mileage. However, the cost of the hybrid model sometimes is more than the gasoline cost savings. Anyone considering purchasing a hybrid should factor in expected savings based on the yearly mileage, as well as the additional cost to purchase the hybrid vehicle. Caution, don’t totally rely on the published MPG ratings on the sticker. Consider the number of miles you drive on the highway and in the city, and then take a conservative approach by rounding down that number by at least 10%.

Using some of this methodology may help you make important calculations when considering a new car purchase. In a couple of prior blogs I mentioned used cars to avoid and an evaluation of the potential cost savings of a newer, more fuel efficient car with monthly payments. If you are in the market for a car, these articles might also be good to read.

 

The Lord’s Prayer about Money, Matthew 6:9-14

This week’s money and stewardship devotional from the Four Gospels is from Matthew 6:9-14.*

Early in Jesus’ ministry, he taught a very large crowd many things, including how to talk to God in prayer. Until now I didn’t realize it had some strong financial elements.

9 “This, then, is how you should pray: ‘Our Father in heaven, hallowed be your name, 10 your kingdom come, your will be done, on earth as it is in heaven. 11 Give us today our daily bread. 12 And forgive us our debts, as we also have forgiven our debtors. 13 And lead us not into temptation, but deliver us from the evil one. 14 For if you forgive other people when they sin against you, your heavenly Father will also forgive you. 15 But if you do not forgive others their sins, your Father will not forgive your sins.'”

Bread could have several meanings, both material and spiritual. Jesus refers to himself as the living water and bread of life in other verses, so the reference to bread could mean spiritual food, as well as the bread our body needs for energy. Bible scholars often say that words are sometimes left intentionally vague to allow for more than one meaning, and in this example I think it quite fair to pray for the material aspect as well as for spiritual food.

Praying for our daily bread is a strange thing to pray for, isn’t it?  When we have a steady paycheck, do we pray for this earnestly?  When the Social Security or other retirement check shows up regularly, do we think about praying for food as much? When the grocery store always has food, or the food pantry or government food card gets replenished monthly, do we pray for our material needs and those of others with grave effort?  We probably pray for this harder when we are out of work and our savings are running out.  Let’s be honest, we really take it for granted that we are going to have enough food. It might cross our minds to be tempted to say to ourselves that it isn’t Jesus baking our bread or growing our crops. So we go to work each day, thinking that we and not Jesus are the ones exerting the efforts to earn money to buy food at the grocery store. So why should we pray for bread? That was a first century thing, before our modern food supply system evolved to what it is today!

When drought conditions threaten the world food supply like they have this year, we might think about this more. When recessions hit and the effects are felt for many years, and we or people we know go through tough times, we tend to pray about it more. When public and private pension systems talk about running out of money (e.g., when Social Security is going to go broke), or many state pension plans are underwater, we might have more concern.

The fact of the matter is that Bible verses are timeless. The magic of them is that throughout history the truths that are taught are steady as a rock. People might argue evolution and intelligent design, from relatively a few words in Genesis, but at the end of the day the things Jesus said are timeless and applicable to how we face life and treat others more now than ever. It seems that Jesus never wants us to take even the things like food, shelter, transportation, healthcare and utilities for granted. He indicates that he wants us to pray for these things every day. This is because in doing so we recognize that we might not have any of these things tomorrow, and that he is the actual creator and supplier of these goods: Through him all things were made; without him nothing was made that has been made John 1:3. I think praying for these things keeps our eyes on him and not on our employer, our paycheck, our business or our bank account.

When I pray verse 12: “And forgive us our debts, as we also have forgiven our debtors.”, for the first time I am considering the possible financial guidance Jesus is offering here. Some versions have trespass or sin instead of debt. I am no Bible scholar or a student of languages that many of them study to derive the essential meaning of a word. To check on this a little more, I looked up 25 Bible versions online at Bible Gateway, since I don’t own them. Interestingly, most use the word debt, so I think it is fine to also think about what we might pray in relation to financial debt. Debt is bondage (Proverbs 22:7) and Jesus doesn’t want us to be shackled by it. When I pray this verse, I ought not only to think about the aspects of sin to God and others, but to pray that God will forgive me for going into too much debt, and I should ask for his help to get out of it. Conversely, if we have loaned money to others, we might want to consider ways for us to help them get out of debt. Sometimes debt is so high that forgiveness might be an option (Bankruptcy), but this verse indicates that we should pray about it. Those considering this option should talk to qualified advisors and make every effort for repayment (Psalms 37:21) before choosing it.

One last thought–there seems to be a connection when the word ‘and’ is used to connect daily bread and debt. It would take more words than I have space here to delve into the connection of these two prayers. However it is obvious that materially there is a definite connection between praying over our financial condition and our debt, and praying for spiritual blessings and our state of forgiveness with God and with others.

*A chronological examination of any verse that involves  money and stewardship, attempting to see the new light that Jesus shines on money in his selfless, grace filled, Holy Spirit empowered, and Kingdom oriented positions. This is the sixth post in this series.

August Unemployment Payroll and Jobless Claims Results and Explanations

Unemployment statistics are an important indicator of how our economy is doing; more people employed points to stronger business growth and to fewer people receiving government entitlements. However, this is a little difficult to track, since the government doesn’t really publish a combined statistic that truly indicates what is happening. Most people who study this issue follow these three indicators: percentage of people unemployed, monthly change in non-farm payrolls, and jobless claims for unemployment insurance. The most discussed statistic is the unemployment rate; reading the explanation below illustrates how this number falls short.
Positive: Unemployment DECREASED in August to 8.1% from 8.3% in July
Is this a good indication of improvement?  Any indication of positive change is good. However, this ‘Official Unemployment’ rate only tracks those who are without jobs and have actively sought work within the past 4 weeks. Since this statistic does not track all people who are not working, some websites report that the ‘Real Unemployment’ rate is about 15% when all able-bodied people of working age are considered. For a historical perspective: The unemployment rate during the Great Recession peaked at 10.10% in October 2010. In 2012 it has varied in the range of 8.10% – 8.30%, so we are not seeing a lot of change this year. It could be worse when you consider that during the Great Depression it peaked at about 25% in 1933.
Negative: Monthly change in non-farm payrolls DECREASED: only 96,000 new jobs were added in August, compared to 141,000 new jobs added in July (originally reported as 163,000).
Negative: Jobless Claims for Unemployment Insurance INCREASED: from 371,000 to 371,250 4 week rolling average. Looking back 12 weeks, the average was 387,500; 6 weeks ago it was 366,250 , so we are seeing this figure continuing to trend up slightly, which is not good. This number is much better than it was in 2009 when it peaked at over 650,000. In 2010 we saw a decrease from nearly 500,000 early in the year to the low 400,000′s. In 2011 the claims were in the low to mid 400,000′s, but since October of 2011 they have been below 400,000. The lowest we have seen this rate in 10 years is 282,000 in January of 2006, and the earlier part of the last decade we saw the average similar to what we are seeing now. During the Great Depression from 1929 – 1941 there was not the same level of unemployment insurance that we have today, although unions may have had some. It wasn’t until the Social Security act encouraged it in 1935. Today we have the Federal Unemployment Tax Act (FUTA) tax to fund state agencies.