Monthly Archives: October 2012

14 Sources of Funding College and Calculators

College costs are going through the roof! You’ve seen the headlines. How are you going to pay for college, and what is going to cost you or your kids? A 4-year college costs on average  $21,447 for in-state public and $42,224 for private per year for tuition, room, and board. That’s a total of nearly $100,000 for public and $170,000 for private, if the students graduate in 4 years.

If it will be many years before your kids attend, then you will have to plan for much more. We know that college costs increase at an average 7% a year, at least double average inflation.  With 7% inflation the costs double every 10 years. Why you might ask? They have to. Have you been on a college campus lately? They are like country clubs, with state of the art exercise facilities and gourmet-like cafeterias if you compare them to the slop they served in the late 70’s when I began college. Large university presidents and coaches are paid many millions of dollars each year, the campuses have huge sports complexes, and many campus buildings have been updated to like-new condition. College professors are paid high salaries with great benefits, which adds to the ever increasing costs. Also, colleges have faced government funding cutbacks.  On one hand I love the opportunity the colleges provide students in a wonderful learning environment, but if people don’t plan or know their options, students will graduate with double the debt they need too.

The cost of college is still a good value, as I covered in an earlier article: The Relationship of Education to Poverty.

Some parents have planned well enough, but many kids either have to go at it on their own, or they have to share the costs with their parents. Recession, job loss, stock market decline, too much debt, and health care that doesn’t cover as much as it used to and costs much more now than ever before are all putting more financial pressure on kids, so it is extremely important to consider many alternative ways to pay for college.

I think it is insane to borrow the full college costs. At the very least parents and students should explore and use many options. Last March I wrote an article about College debt already passed $1 trillion in 2011. Avoid contributing to this statistic by employing this college funding priority list:

  1. If parents have saved for college, have not faced financial setbacks, and desire to pay for college, then stop here.  Parents often use 529’s and prepaid tuition. Some parents require certain grades and behavior for their children to stay on the parent plan. I covered the options in an earlier article: What’s an ESA, Coverdell Education IRA, and 529?
  2. Look for tax savings to help lower the net costs. I touched on many of them in College Education Tax Deductions and Credits and Tax Breaks for Students.
  3. Choose an in-state public school. This alone will reduce your cost almost 50% in some places.
  4. The next source is scholarships: for academics or sports, or through special offerings from numerous organizations. Often the latter are small, but every bit helps.
  5. Grants and non-loan financial aid based on the income or net worth of the student or parent. If you qualify for financial aid or you want to qualify, you should read How Not to Blow it Financial Aid.
  6. Students working at jobs can help some, and there is nothing wrong with their working. It looks good on their resumes, teaches maturity, and lessens the loan burden.
  7. Many people lessen the initial cost by getting the basic education requirements out of the way at lower-cost community colleges. Many people already know this, and you probably noticed how much these institutions are growing. In Columbus,Ohio, where I live, Columbus State Community College has grown by leaps and bounds.
  8. Pay as you go. While working part-time takes longer, you will end up with less debt.
  9. Commuting and living with parents for a few years will lower out-of-pocket costs, and transportation may be lower than room and board.
  10. Working for a company that pays part of the tuition for their employees. Again this takes longer, but it is a great benefit that can lower amounts needed from savings, income and borrowing.
  11. Work/study on-campus employment is in a separate category, since it requires financial qualification.
  12. Paid internships are a great way to earn income and to help graduates get great jobs.
  13. Loans are near the bottom of the list, since after doing all the above you minimize how much money you need to borrow.  I recommend against parents co-signing loans, since the Bible recommends against it and it is not usually needed if you follow the above suggestions. Some things about student loans changed as reported in the Wall Street Journal last July. Parents can get parent plus loans, but if they want to consider them they should read The Minuses of Parental Plus Loans. If students need loans, then when they start to repay them they should read my articles Federal Student Loan Repayment Options and How Does Obama’s College Loan Program Work?
  14. Lastly, the Wall Street Journal reported that there are a few non-traditional methods that some parents are now using.

Estimating the costs for your child depends on the child’s current age, the school the child wants to attend, and the annual increase rate. After you have that number, you are then armed to calculate how much money you will need to save and invest for the child. Your financial planner can run the numbers for you, or you can calculate them yourself using eFinPLAN.com online financial planning (which has a college cost estimator) for a small fee. Dinkytown has a good simple cost estimator, but it doesn’t have the costs for each college. The Dave Ramsey Financial Peace University website has a simple calculator you can use if you have enrolled in the personal finance course–Financial Peace University. College Board has some calculators.

What you don’t know is what college actually will cost after grants and financial aid are factored in, since that depends on your income, when the child will attend, the amount of money you  have saved, and the amount of money the college has to reward students. Various colleges and universities you might be considering may have calculators. However, caution may be warranted a bit, based on a recent article: Tools That Help Compute Real Price Of Schools Get Mixed Grades So Far.

How to Withdraw Needed Funds from and IRA or Inactive 401(k)

Question: I lost my job several months ago, and have exhausted my savings. However, I have some money in a 401(k) Plan from an old employer. I need to get to some of it to pay my rent, but I don’t want to pay tax on the entire amount in the Plan. What is the best way for me to get to a portion of it? I am under the age of 59 1/2 and would be faced with the 10% withdrawal penalty in addition to income tax.

Answer: The first thing you should do is to make sure that you are living on a minimalist budget, so that you take out only the small amount that you really need. Next, contact your investment professional and ask him/her to open an IRA account for you, and to execute a trustee-to-trustee transfer of your funds into the new IRA. Tell the investment person you need to have some money sent to you right away after the funds clear and are deposited into your IRA. Doing it this way will ensure that their is no automatic tax withholding to your 401(k) Plan, as there would be if you asked your Plan’s provider to just send your money to you in check form. Also, this way gives you control of when to take money out, and how much to take–just based on your needs. Also, as the year end approaches, this gives you a way to spread the tax due over a couple of tax years.

Question:  How should I invest the money?

Answer:  If you are having financial difficulty and are not sure if you will need more of the money, then you don’t want to invest the money for the long-term nor pay any sales charges to invest or contingent deferred sales charges (CDSC) to pull the money out. Short term investments such as savings accounts or FDIC-money market accounts are suitable because the principal is guaranteed by the FDIC not to lose any value. Avoid annuities or mutual funds until your situation is more stable, you have adequate savings, and you can resume planning for the future.

Question: Is there any way around paying the 10% pre-age 591/2 penalty?

Answer: Some expenses of your family may be deemed to be immediate and heavy, including certain medical expenses, costs relating to the purchase of a principal residence, tuition and related educational fees and expenses, payments necessary to prevent eviction from or foreclosure on a principal residence, burial or funeral expenses, and certain expenses for the repair of damage to your principal residence.  For more information, go to IRS.gov.

Question: What are some other issues to be aware of?

Answer: There are too many to cover in this article; however, be sure to ask your financial professional about all of the issues that pertain to you, including the tax issues. Be sure to plan for the extra tax that you will owe on the IRA or 401(k) distribution. If you need the money very quickly, you might ask the current 401(k) Plan to send you some money now, but to execute the trustee-to-trustee rollover on the balance.

The Deal of a Lifetime, Matthew 13:44-46

This week’s money and stewardship devotional from the Four Gospels* is about Jesus talking about maturing believers and pursuing the Kingdom comparing the journey to the pursuing of wealth, from Matthew 13:44-46.

 44 “The kingdom of heaven is like treasure hidden in a field. When a man found it, he hid it again, and then in his joy went and sold all he had and bought that field. 45 “Again, the kingdom of heaven is like a merchant looking for fine pearls. 46 When he found one of great value, he went away and sold everything he had and bought it.

Are we like merchants going about our business in the marketplace? Business owners can identify with the 44th verse here. We sometimes dream about landing the next ‘big deal,’ and we hope that big sale will lead us to fame and fortune.  Farmers and anyone who digs in the earth can relate too. One summer job I had when I was in college was installing cables for cable TV in people’s backyards. We had a small backhoe that we could maneuver around people’s property, and on the back of it was a cable plow. The cable plow was hollow and narrow. We would insert the cable into the hollow section, and the plow unit would shake the ground as it cut the turf. The back hoe would move slowly as it fed the cable into the ground, with minimal damage to people’s yards. Since I was just general labor for the summer, I didn’t get to use this cool piece of machinery. Instead I was stuck 8 hours a day with a basic shovel, since the backhoe didn’t fit into many people’s backyards.  I still have calluses from digging up people’s backyards, around fences and trees. It wasn’t fun, since most of the soil was full of rocks, roots and construction debris. Many times during those hot and humid hot summer days, I dreamt about digging up a diamond or valuable piece of archeology. I was never very lucky, and I didn’t even find an Indian arrow head. Diggers and treasure hunters often dream about Staffordshire Hoard of 3,500 items found in 2009, the largest Anglo Saxon hoard of gold, jewelry and other items, dating to the 7th century.

My wife has relatives that live in Tahiti; they have friends that dive for oysters and often find valuable and beautiful black pearls.

Had I found something very valuable buried beneath people’s yards, I would have been tempted to rebury it and do anything I could to buy the home, such as selling everything I owned. If I ever travel to Tahiti, I would love to find a valuable pearl.

We aren’t treasure hunters or pearl divers. I don’t dream anymore about finding riches and cures to financial comfort. We aren’t searchers, but Kingdom builders, and of a lowly type of builders at that–oysters. We are bottom dwelling humble oysters, building up pearls in our hearts. I fondly recall Barbara Streisand’s singing of “Sweet Zoo,” concluding after she woke from dreaming she was various interesting animals, that she would “enjoy being an oyster,” I guess she was right. These pearls of great price can’t be purchased, but they are crafted over a long time from small grits of sand, smoothed over as Christ readies our hearts for eternity.

The oyster’s seed irritants, specks of abrasive sand, that become pearls, might be parts of us, dark parts, that Christ wants to redeem. That is the mystery of his work in us, he takes the things about us that might not be so good–our self-centeredness, or greed, and unfulfilling desires–and turns them into desires for him and work for his kingdom that he has promised will one day be reality. He makes beauty from ashes, pearls from dust, and we get to enjoy him and his forgiveness for eternity–the deal of a lifetime.

*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 fifteenth post in this series.

What is GDP, and What is it Trending in the 3rd Quarter?

You probably hear about GDP on the evening business news all the time, but do you wonder what it means and what it indicates about our current economy?

GDP stands for gross domestic product; it represents the output of goods and services produced by labor and property in the United States, and is used to indicate if our economy is shrinking or expanding. GDP tracks the size of our economy by calculating the total dollar value of all goods and services produced over a specific time period in comparison with the previous quarter.

What has GDP been historically?

Since the recession officially ended June 2009 our economy has been expanding, but at different rates. GDP growth was at 4.1% about 9 months ago; this year it slumped to 2% in the first quarter, and to 1.3% for the second quarter. The Bureau of Economic Analysis early estimate is that for the 3rd quarter of 2012 it increased at an annual rate of 2.0 percent.

Are We Headed for a Double Dip Recession in 2013?

Do you think we are headed for a double-dip recession in 2013?  Technically a recession occurs when business cycles retract, evidenced by down consecutive quarters of GDP, or a 12-month 1.5% or more rise in unemployment. The most recent recession officially started December 2007 and ended June of 2009. I blogged about this topic about a month ago, but in light of the coming election and some new financial statistics I wanted to cover it again.

This past week it has been reported that home sales continue to increase; that is a good sign. However, the fact that America’s largest companies are getting ready to report lower quarterly sales is of great concern. Manufacturing output is a good indication of how industry is doing, and it was modestly increasing this past winter, leading to some guarded optimism, but for almost the last 6 months it has decreased to Spring 2009 levels. So this new estimate is really bad news. Gross Domestic Product (GDP) tracks the size of our economy by calculating the total dollar value of all goods and services produced over a specific time period in comparison with the previous quarter. GDP growth was at 4.1% about 9 months ago, this year slumping to 2% in the first quarter, and to 1.3% for the second quarter. There are a couple of good indications: US Consumer Spending is currently at 84.00 compared to 64.00 a year ago, a 31.25% increase. For 2012 we have seen a general increase, peaking at 96 in March, then it was erratic with a sharp drop in July. Since then we have seen a gradual increase. Economists watch consumer spending trends to try to track their confidence in the economy. The more confidence consumers have, the more willing they are to spend money. US Household Debt Service as a percentage of people’s disposable income is at 10.69% (June); it has been steadily decreasing from its 10-year high of about 14% in the 3rd quarter of 2008.

It seems as if American consumers are borrowing less and saving more. However, the Federal Government doesn’t seem to be catching on to reality yet: if the Federal Deficit reaches the $1.1 trillion projected by the Congressional Budget Office to be $1.1 trillion for 2013, this will be 5 years in a row that it has exceeded $1 trillion, and this doesn’t include all the money our Federal government borrows, adding to the US National debt which now exceeds $16 trillion. The outcome of the presidential election is being closely watched since both candidates have different approaches to solving these recession financial issues.

From last Friday’s article about unemployment, these mixed numbers don’t bode well for the economy either:

  • Positive: Unemployment DECREASED in September to 7.8% from 8.1% in August: Is this a good indication of improvement? Any indication of positive change is good, and this is lowest rate since January 2009. 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.
  • Positive: Monthly change in non-farm payrolls INCREASED: 114,000  jobs were added in September, compared to 96,000 new jobs in August, and 141,000 in July.
  • Negative: Initial Jobless Claims for Unemployment Insurance INCREASED: 365,500 4 week rolling average from 364,750. Looking back 12 weeks, the average was 366,250; 6 weeks ago it was 375,750. 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.

In conclusion, I remain optimistic about our overall economy in the long run, based on what I read and hear, yet in the short-term, we may have some economic setbacks. What do you think? Please give us your feedback by commenting below.

The Benefits of Dave Ramsey FPU Outweigh the Cost

A couple more people sent me short notes about how they benefited from  taking the Dave Ramsey Financial Peace University class. The cost is less than $100, but most people save that much in the first few weeks of taking the class by living on a budget, eliminating credit card debt, avoiding unneeded purchases, being smart with insurance, investments, mortgages and home purchasing. If you add up just the interest many people save from paying off credit cards so that they are no longer paying high interest rates, the return on their $95 tuition would be over ten thousand  percent. The financial pay-off is one thing, but people tell me all the time that they feel freer spiritually and closer in their walk with the Lord when they are being Biblically wise and obedient with money. People also enjoy the blessings from tithing and blessing others in need. Time and time again, I hear from married couples that there is new harmony in their marriage, because they are communicating better and working together toward common goals. Imagine how much happier people are with fewer financial arguments and less anxiety, buyers’ remorse and stress.

I think I went through the class about two or three years ago. At that time I had debt hanging over my head. It wasn’t as much as it had been when I was in my deepest debt but it was enough to make me not ever want to be in debt again. While in the class I paid off my remaining debt and continue to be debt free. I incurred my debt in my 20’s. I was always living paycheck to paycheck and at times would need to borrow money from family to make my mortgage payment. Today I am living debt free and I pay for EVERYTHING in cash. My car was already paid off. I have been saving the money that I would have been paying for my car in a separate account so when I need a new car I can pay cash. Being debt free is the best feeling ever! – T.S.

In March of 2011 my wife, and I scraped up the money to attend FPU at Vineyard Columbus.  I had just started a new job.  For the majority of 2010 I spent all of my 401k savings and our personal savings on a failed retail business venture.  At the start of FPU my wife and I had no savings, and over $50,000 in credit card, student loan, and business loan debit.  During FPU we began utilizing the tools taught by Dave Ramsey such as budgeting, the envelope method, and most importantly the debit snowball.  By using these tools we eliminated each one of our debits over the course of 16 months.  Today, aside from our home and one car, we are completely debit free.  We have set aside a six month cash reserve in a savings account, we are diligently putting money away for retirement, and we are expecting our first child.  We are truly blessed!  Thank you Vineyard Columbus for sponsoring  such an awesome program! – J. P.

How Financial Peace University Has Helped Us, 2 Stories

Just a brief thank you for offering these (FPU) classes. They were a real blessing to us.  We have been blessed to be totally out of debt now except for our house.  The freedom that this has opened up for us as a family is to be available to say yes to the Lord’s leading for us to adopt again, which we are very grateful to the Lord for.  Thanks again for your faithfulness in serving and educating the body of Christ in wise financial practices. – Jason P.

My girlfriend (now wife) and I took the class (FPU) together first because we thought we would learn important life lessons but we also wanted to be on the same page about finances. These lessons and what “Dave says” became foundations for the way we handle our finances as a married couple. I am SURE it has saved us a lot of trouble as it is easier for us to come to agreement on the way we spend our money. Thanks Vineyard for hosting Financial Peace University! – Anthony W.

Free eBook Today Only, The Art of Neighboring

A few weeks ago, Jay Pathak, pastor of the Mile High Vineyard in Colorado, spoke at the Vineyard Columbus leadership conference. He recently wrote a book titled “The Art of Neighboring.” Jay is a great guy with a lot of experience and success at his approach to loving his neighbors, an easy and practical way to live out the second greatest commandment; to love your neighbor as you love yourself.

Today only, you can download the eBook version for Kindle at Amazon at no cost. If you have a Kindle or the free software downloaded to your personal computer, you can download the eBook for FREE, but only today.

I downloaded the Kindle application a few weeks ago onto my laptop, and it was really easy. Downloading the book was a cinch too; I just had to read the instructions (which I am not always apt to do), and the short link to download the book is http://amzn.to/Po9X8p.

To download the Kindle application into your laptop, desktop, or tablet computer, just go to the link above and BEFORE trying to download the book, click on “Free Reading Apps” in the upper menu bar.

14 Most Fuel Efficient Cars

When you buy a car, what is most important to you: purchase price, cost of ownership (regular maintenance, repairs, insurance, MPG, depreciation), utility, performance (how fast and how well it handles), safety, image or the green factor?  Maybe you consider them all, but some prioritize the list differently. Strangely, many people do little research; they wander into a dealership and are talked into buying a car by a salesperson.

For those people very concerned about cost of ownership, miles per gallon makes up most of the annual costs. Kiplinger recently published its list of the most fuel efficient cars for 2012. Fuel efficiency is very important for many people’s budgets since gasoline can cost them several thousand dollars per year, so this article is worth checking out. However, in my opinion, Kiplinger’s list isn’t all that helpful, since it just rates them by class, but it serves as a useful reminder when a person is considering different car categories.

Kiplinger’s highest MPG rated cars for:

  • Cars under $20,000: the Scion IQ: 36 city, highway 37. This is a tiny car, and there are bigger ones with close to the same MPG rating
  • Cars $25,000 – $20,000: the Toyota Prius 2. city 51, highway 48
  • Cars $25,000 – $30,000: the Mitsubishi i-MiEV ES, city 126, highway 99 all electric limited range
  • Cars $30,000 – $40,000: the Nissan Leaf, city 106, highway 92, all electric limited range
  • Cars $40,000 – $50,000: Audi 2.0T Premium, city 25, highway 33
  • Cars $50,000 and up: Infinity M35h, city 27, highway 32
  • Sport cars $50,000: BMW Z4 sDrive28i, city 22, highway 34
  • Small Crossovers: $31,000 Ford Escape Hybrid, city 34, highway 31
  • Midsize and large Crossovers:, $46,000 Lexus RX 450h, city 28, highway 32
  • Truck Based SUVs: Cadillac Escalade, Hybrid (TE), $75,000, city 20, highway 23,
  • Chevrolet Tahoe Hybrid and the GMC Yukon: rated the same as the Escalade, since they are are similar to it, but they cost $20,000+ less
  • Minivans: Honda Odyssey LX, $29,000, city 18, highway 27
  • Wagons: Toyota Prius V Two, $27,000, city 44, highway 40

When I have purchased new cars I relied on comparisons published by various automobile magazines, such as Road & Track and Motor-Trend. These two regularly compare models and you can see side-by-side price, utility (e.g., trunk size), performance, image and green factors. My local library has back issues, and I can easily find the comparisons by first doing a quick Internet search.

What do you do if you want to compare safety beyond braking ability, anti-lock brakes and number of airbags? Then you have to go the Insurance Institute for Highway Safety or IIHS. You can also look at cars reviewed by U.S. Department of Transportation at SaferCar.org. Some rely on acceleration for accident avoidance, and some magazines publish lane change and cornering ability–good to check out for clues about how easy it might roll over or lose control when you have to react quickly.

What about the other factors of cost of ownership besides miles per gallon, and regular maintenance costs? Consumer Reports magazine is the only place I know to check out those costs. For that you will need to subscribe to their magazine, or go online and get access to their records, but it might be worth the cost. Also, be sure to call your insurance agent to get an estimate for the car you are considering.

Those are the logical reasons; however, humans are not very logical Spock-like creatures. We are very emotional and image driven, so a lot of people are attracted by the brand image that shows they are frugal, well-off or classy. Many men buy a car for the sporty image, or the tough look of masculinity.  Sometimes we bypass looking at these things, and we buy a particular brand we like, one that we feel offers the things we want, or a brand that has been good to us in the past. Brand loyalty has always been important to car manufacturers. Avoid emotional decisions, as they can be costly sometimes. I’ve written about used cars to avoid in prior articles. To get the best deal, do your research first.

How much car we can afford is also a critical factor. But does that mean we should buy the most car we can afford, even if it is a very expensive luxury class vehicle?  That is a great question, I think. Since we are Christians, we have a responsibility to be good stewards over the money God gives us, and over the planet’s natural resources consumed to produce and run a particular vehicle. Before purchasing, we can examine our emotions and motives, pray for direction and wisdom, and seek the counsel of others, including our spouses and our professional financial advisers. Only after doing these things, can we make a clear headed and responsible decision.

What do you think are the most important things to consider when purchasing a car, a motorcycle, a truck or an SUV?

Worries Nor Riches, Luke 8:4-15

This week’s money and stewardship devotional from the Four Gospels* is about Jesus talking about maturing believers, and not being consumed by worries or wealth.

While a large crowd was gathering and people were coming to Jesus from town after town, he told this parable: “A farmer went out to sow his seed. As he was scattering the seed, some fell along the path; it was trampled on, and the birds ate it up. Some fell on rocky ground, and when it came up, the plants withered because they had no moisture. Other seed fell among thorns, which grew up with it and choked the plants. Still other seed fell on good soil. It came up and yielded a crop, a hundred times more than was sown.” When he said this, he called out, “Whoever has ears to hear, let them hear.” His disciples asked him what this parable meant. He said, “The knowledge of the secrets of the kingdom of God has been given to you, but to others I speak in parables, so that,‘though seeing, they may not see; though hearing, they may not understand.’ This is the meaning of the parable: The seed is the word of God. Those along the path are the ones who hear, and then the devil comes and takes away the word from their hearts, so that they may not believe and be saved. Those on the rocky ground are the ones who receive the word with joy when they hear it, but they have no root. They believe for a while, but in the time of testing they fall away. The seed that fell among thorns stands for those who hear, but as they go on their way they are choked by life’s worries, riches and pleasures, and they do not mature. But the seed on good soil stands for those with a noble and good heart, who hear the word, retain it, and by persevering produce a crop.”

You may have read or been taught that this is a kind of missionary Bible verse, but in my reading it looks like something altogether different. Reread it a few times, and I think you will see Jesus explaining that some do not believe Him, and others do. Those that do believe fall into three camps: those on rocky ground, those who fall among thorns, and those on good soil.

The first group are those with shallow beliefs (rocky ground); during difficulty they can’t endure testing (no root), so when life doesn’t work out for them their faith falters.

The second group are those that fall on thorns, the immature. They try to live dualistic lives, consumed by the worries or riches and pleasures; they want it all: Jesus, riches and comforts.

The strange news is that at times we can be like both of these groups. We are like the first example when we have not taken the time to let our roots go deep and difficulties or times of testing happen. We quickly wonder why God is picking on us when we lose a job or go through financial difficulty. We whine and lose faith in God because we thought that to a large extent our faith was about us–about living the good life. At times life may go really well, at least financially. We have a great income, a nice house, a new car, and ample savings, and the 401(k) is accumulating nicely. The verse tells us that we are immature when we are easily consumed by our financial success.

The third group is the one Jesus wants us to be in (those who fall on good soil). He wants us to know that our lives don’t consist of what happens to us, whether it be good or bad. He wants us to succeed in times of testing, either the test of abundance or difficulty. He wants us to have a “noble and good heart,” whose focus is not self-centered, but Christ and Kingdom oriented. When we bury the word (the promises of Jesus) in our heart, then our dependence is on him. Jesus promises that we will all encounter difficulty, and when we do we will persevere in our faith because our eyes are on eternity and not on our present riches or difficulties.

*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 fourteenth post in this series.

How to Help Others Financially

Most financial articles are self-help so I thought it might be good idea to discuss how to help others. I suspect most people can’t fix their own finances without some kind of help from someone else. Yes, ultimately it is still up to each individual person to apply financial wisdom, but they need your help.

  • Encouragement is one of the best gifts you can give to someone. Encourage means to give courage. Tackling financial problems isn’t easy, and people feel defeated. You can help them by telling them they are smart, intelligent and creative people- because they are, everyone is, in their unique way. You can encourage them by telling them how you struggled or avoided it, and how you clawed your way out. Tell them they can do it, and to keep trying. Few people totally succeed with their first few efforts and encouragement really helps.
  • Financial study is key. Tell them how particular authors, blogs, or financial personalities helped you. Great writers and speakers like Mary Hunt and Dave Ramsey too where nearly, or were bankrupt, and they learned from others how to dig their way out. Point people you know towards these writers.
  • Taking classes is essential too. We lead two Financial Peace University (FPU) classes each year, because they work. They work because Dave Ramsey’s video lessons teach everything people need to learn to get their house in order. In addition, they have small group breakout discussions so that people can get extra help and accountability. Go to www.daveramsey.com to search by zip code for classes nearby- they are offered all over town, and start soon. If someone lives hundreds of miles away from civilization, they can pay a little more and get the do-it-at-home course.
  • Sponsor someone to take the class, but don’t pay the entire amount. Most people need to have some skin, or investment in the game. If people don’t invest a few dollars into it, then they will not be committed to the class. Some people don’t like help, but come up with a creative way to pay some of the cost (usually around $100), or babysit their kids while they are in class.
  • Help them budget. If you know someone who is having a tough time, tell them you will sit down with them and show them how to manage their income and expenses so that there is money left over at the end of the month. Research says 70% of people live paycheck-to-paycheck, but most people don’t know how manage their monthly finances or balance their checkbook. Use simple paper and pencil forms, or great software like www.ynab.com, on their PC or mobile device.
  • Lead a FPU class, if you have already taken the class. Leading FPU is easy, they provide all of the ‘how-to’s’. Lead a class in your neighborhood, apartment complex, Bible study group, work lunch break, or local community center.
  • Be a good example, by being wise with savings and investments, and spending. Have a good attitude and tell people who helped you. You can have a lot of nice things, but don’t flaunt your wealth, but be grateful for the good things God has given you and walk in humility. My brother Barry, and my pastor Rich Nathan, have been lifelong examples for me of managing money wisely.
  • Be generous. Give to churches and organizations helping others with their finances, jobs and other essential lifestyles skills. Help others with basic needs if they are going without food, or utilities. However try to offer it with humility, along with offers to help them budget and take financial classes if appropriate. If people are making bad decisions, and you don’t provide wisdom along with cash, at least at times you might be hurting them more than helping them. Many churches offer benevolence assistance with bills for people that are struggling, and provide it with accountability. Get involved in your church’s benevolence ministry and help them do just that.
  • Pray for those who are struggling. Lead a small group financial Bible study, like those offered by Compass.
  • If you are in the position to start a business, consider doing so. Nothing helps people financially more than a good job with benefits.
  • If you are a leader in business, get behind offering financial education classes to your employees. Several studies have shown that they help people with their finances, and help them be better employees.
  • Lastly, teach your children how to manage finances at home, and lead financial classes for youth at church. Some financial institutions have sponsored financial classes in schools.

Helping others will be good for them and you. It is satisfying, and character building to do the hard work to help others carry their burdens. Finally, when we help others we are following what Jesus called the second greatest commandment in Matthew 22:39 ‘Love your neighbor as yourself.’

Life After Foreclosure, Other Personal Finance Headlines

Interesting articles worth checking out: Homeowners qualifying for new mortgage after short sale. Auto purchasing and the various fine print costly add-ons. Estate planning: Naming a trustee for your trust, and living wills. Roth IRA escape hatch, for those that already converted, but now regret it.

 

Jesus Ordains and Provides, Matthew 10:9-10

This week’s money and stewardship devotional from the Four Gospels* is about Jesus’ ordaining and providing.

Do not get any gold or silver or copper to take with you in your belts— no bag for the journey or extra shirt or sandals or a staff, for the worker is worth his keep. Matthew 10:9-10

Reading this verse I am reminded of George Mueller, the 19th century’s great man of faith who built orphanages that cared for more than 10,000. He also established 117 schools that educated London’s children, some of whom were orphans. He accomplished this without ever having done any fundraising. There were times when the cupboards had no food minutes before dinner, and then a truck would pull up with enough food for them. I recall too Bruce Olson (book Bruchko), who in 1962 at the age of 19 with no financial resources flew to Venezuela and hiked up into the mountains to bring the Gospel to the violent Motilones. He made first contact with this primitive stone-age tribe, but in time he gained their confidence. Approximately 70% believed in Jesus, and some have gone on to become doctors and lawyers and other professionals. More recently, a financial class attendee was trying to live on a budget and avoid borrowing, but she didn’t have enough money for any more groceries at the end of the month. She had loads of laundry to do for her family, but no soap. It would be tempting to charge it, but a knock on the door from a friend bringing detergent was her answer to prayer. The friend felt that she needed it, so she brought it over. A friend of mine with a family of 8 exists without fundraising on a low income of contributions to the financial ministry he brings to many churches. I know of many more examples.

We believe that Jesus ordains people in various religious roles and vocations. We see the laying on of hands on new pastors and church planters. We pray for their work, protection and success–but what about their finances? Outside of church there are many other ordained responsibilities. Parenting is ordained, as are the areas Jesus calls us to: to work to make money to provide for our needs, and to be salt and light to the world around us. Many of us feel called into this or that line of work, paid ministry or volunteering. Sometimes he calls us into work that has low pay and an expensive college education in fields such as social work.

We often wonder when we consider venturing out, if we will have enough supplies for the journey. Jesus’ disciples were wondering the same thing. Knowing their thoughts, Jesus told them to not take extra clothes or money, that he would provide for them, even though he wasn’t physically with them. Why does Jesus do this? Doesn’t he want us to be like the wise builder? For which one of you, when he wants to build a tower, does not first sit down and calculate the cost, to see if he has enough to complete it? Otherwise, when he has laid a foundation, and is not able to finish, all who observe it begin to ridicule him (Luke 14:28-29). The scriptures appear to be in conflict here, don’t they? In actuality, they are in agreement, reading Luke 14:33. In the same way, those of you who do not give up everything you have cannot be my disciples. The cost of being a disciple is letting go of being self-sufficient and putting our trust in him to provide for us during the journey he as appointed us to take. Jesus wasn’t just sending them out to do ministry to others, he was stretching them by asking them to let go and depend on him.

The other side of the equation is for us to be the ones providing for others. Jesus calls us to be the ones writing the checks for those ministering to us, to those called to go afield. He prompts us to buy laundry detergent or other groceries for people in need. The challenge for us today is to be interruptible and to avoid being so busy that we can’t hear his quiet voice when he directs us to buy for others, to donate, and to make changes in ministry or vocation, even when the financial odds seem to be stacked against us.

There are financial planning applications that are helpful too. For those preparing for ministry or vocation calling, or wanting to help others more, he wants us to be free of debt and to live well below our means so that we can accomplish what we feel Jesus is asking of us.

*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 eleventh post in this series.

Are the Educated Smarter With Finances?

A new study shows that prior to the current economic crisis, it was the highly educated people that were more inclined to have unmanageable levels of debt. The percentage of Americans with more than 40% of their income going to debt payments increased from under 15% in 1991 to 27% in 2008.

You would think college-educated people would be less likely than those without a college degree to make this mistake, but the study showed more of them exceeded 40 percent. The study provided some clue as to why this happened–optimism. College educated people with large amounts of debt were more optimistic about future economic conditions. Did they think they were immune to economic problems because they had advanced degrees, so they had less fear when they borrowed? That is the conclusion Sherman Hanna, co-author of the research and professor of consumer sciences at The Ohio State University, reached.

It wasn’t that those with advanced degrees didn’t understand debt as well as those with less education, but perhaps they thought economic conditions would always get better for them.

What caused the economic crisis? There is no one group to blame, but you could probably categorize them two ways: institutions and people. Institutions are guilty, especially those in the sub-prime industry (including the lenders), mortgage security issuers (investment bankers), and rating agencies. Some people place blame on the government’s excessive borrowing, and for not watching the institutions closely enough. At the end of chain are the consumers. We were borrowing too much and not saving enough. Can we blame one group of people more than the others? Some have opined that it was the lower-income and less-educated people that borrowed for mortgages too much.

However, the study found that the debt crisis wasn’t caused by homeowners who took out mortgages, since 35% of renters had heavy debt compared to the debt that 21% of the homeowners had in 2007. They concluded that we can’t blame the uneducated, the homeowners, or the educated.

The study appeared in Consumer Interests Annual and the International Journal of Consumer Studies.

How can I use the information, I ask myself. It provides more information when recession conversations come up. More personally, it forces me to examine my own thoughts about my financial plan. What do you think–comment below, or tweet or Facebook others if you found this interesting.

Upcoming Personal Finance Classes

The following are classes that we have scheduled for the coming year at Vineyard Columbus:

Dave Ramsey’s Financial Peace University, Thursdays, February 7 – April 4, 2013

Dave Ramsey’s Financial Peace University comprehensive 9 class series on managing your personal finances–more information is available online and at the free preview, 1/31/2013.  You can attend the first class free too, and if you like it, you can pay then.  Class runs for 9 weeks, from 7 to 8:45 pm. Cost is $95 per person or couple (covers our cost of the material); childcare is available.

Make Cent$ with Coupon$, Monday November 5th, 2013, 7 – 8:30 pm

In this class, you will learn how to save hundreds of dollars each month on your grocery bill.  During this class you will learn couponing basics and some savvy coupon secrets that will make you a pro at saving money.  You will learn where to get your coupons and how to organize and use them.  Some of the insights you will glean are how to:

  • match coupons to sales ads
  • find unique bargains specific to stores where you shop
  • use rebates and promotions.

Budget Workshop Saturday, February 23, 2013  9:30 AM – 11:30

A free workshop is being offered to help those who have attended or are attending Dave Ramsey FPU, Crown Financial Bible Study, or any personal finance course. Basically this is a workshop to help people who have made significant effort to budget but are struggling, who need to get back on track, or who just need someone to help them. Class will provide instruction and a one-on-one meeting with a budget coach for individual help designing a budget. Pre-registration is required. Bring to class the following: paper, pencil (laptop if you have one), calculator, and completed Spending Plan from http://vineyardcolumbus.org/ministries/financial-ministry/resources/.

Space is limited, so please pre-register for any of the above classes online at http://www.vineyardcommunitycenter.org/.

Eye Glass Monopoly Ripoff

60 Minutes ran a piece last Sunday night about a near monopoly on an eye glass company.  The story highlighted the largest company in the industry, Luxottica; they severely inflate the cost we pay for eye-wear for corporate profits. Eye glasses and frames cost the manufacturer only about $30 but our end cost can easily hit $300 – $500 from their companies (below).

I’m all for profit-making capitalism, but when a company such as Luxottica controls the market, I get pretty angry, especially when I see so many families scratching to get by in this global economic crisis.

Consider that Luxottica owns:

  1. Pearl Vision
  2. Sunglass Hut International
  3. LensCrafters
  4. Sears Optical
  5. Target Optical
  6. JC Penny Optical
  7. 10 other retail establishments, AND
  8. EyeMed Vision Care insurance

This past summer I got new prescription sunglasses and lenses for my regular glasses from Pearle vision. My wife’s employer has EyeMed, and they pay a premium for the coverage. EyeMed paid for part of the lenses and we had to pay the balance. It seems pretty crazy to me that the same company that controls the insurance also sells the glasses–at exorbitant rates.

A year ago, I got a great deal with Pearle. They were running a frame, lens and coating special. When I went there this year the prices were double. I should have gone to Walmart, Costco, or a store front discount chain as I have done in the past, and I would have paid much less, even considering the insurance. There are many Internet companies that sell great frames and lenses for a great deal too.

Luxottica also owns Ray-Ban and Oakley. They purchased Oakley after Oakley’s stock price plummeted. And oh, yea, their price plummeted because Oakley didn’t sign a contract with Luxottica that would have required them to pay Luxottica a large percentage of their profits, so Luxottica no longer allowed Oakley to carry their frames in their stores; they do now.

Also, the Ray-Ban frames that I have are only 1-1/2 years old and a screw fell out. I went back to Pearle to get a screw popped in. They didn’t have any of the special very tiny screws. They referred me to an eyeglass repair firm. This independent company couldn’t acquire the special screws because they were not an authorized Ray-Ban dealer. I had the glasses repaired with new temples for $50. I will never buy Ray-Bans again.

It is time to break up this monopoly. In the meantime I will only purchase from non-Luxottica establishments.

Debt Collector Fraud in the News

Over the last 4 years we have seen an epidemic of late monthly debt repayments. Many of the borrowers have never been late on payments before. However, during the recession people often have to deal with multiple problems. It used to be common that someone just had to work through unemployment and get hired within a short period of time. Now unemployment usually lasts longer, savings runs out sooner, and money invested in stocks drops in value, as in March of 2009 when the market plunged more than 40%. Unemployed people are especially vulnerable to financial setbacks, since often they can’t obtain or afford health insurance, they face inflating prices on gas and food, and many stressed-out couples go through money-stripping divorces.

The debt collection industry, either organized with massive call centers or as law firms, often buys the outstanding debt from the original lenders. The lender’s collection department or the collection companies have to follow strict guidelines and regulations outlined by the Federal Trade Commission, but they often break the law in their efforts to collect.

The Columbus (OH) Dispatch ran an article last May investigating the problems with the credit rating agencies, and this month it is extending the Credit Scars series about collections firms. The Dispatch is running what I have found to be one of the best series of articles on this subject in the entire country:

Is Black Friday the Best Time to Shop?

I ran across a great article in the Wall Street Journal today, The Myth of the Black Friday Deal compared prices of certain items over the term of a year, and many items actually cost more during the Holiday season than during other times. People lining up to buy ‘door busters’ of limited quantity may save a few bucks but those buying other items (such as Xboxes, watches, jewerly, UGG  boots, LCD TVs, etc.) may find that they have to spend more on Black Friday.

Jesus and Financial Abusers Matthew 9:9-13

This week’s money and stewardship devotional from the Four Gospels* is about Jesus ministering to people who are financially abusive.

As Jesus went on from there, he saw a man named Matthew sitting at the tax collector’s booth. 9 “Follow me,” he told him, and Matthew got up and followed him.  10 While Jesus was having dinner at Matthew’s house, many tax collectors and sinners came and ate with him and his disciples. 11 When the Pharisees saw this, they asked his disciples, “Why does your teacher eat with tax collectors and sinners?” 12 On hearing this, Jesus said, “It is not the healthy who need a doctor, but the sick. 13 But go and learn what this means: ‘I desire mercy, not sacrifice. For I have not come to call the righteous, but sinners.'”

The tax collectors in Jesus day were known to have been particularly bad people. They had few true friends because they tried to gather information about people and their wealth so that they could extract as much money for themselves and the Roman government as possible. People would turn in other people to gain an advantage, and they would tax people as much as possible. The collectors were often Jewish and treated their fellowmen harshly; they made their living by charging an extra amount. They collaborated with the Roman authorities to abuse their brethren for their own benefits. Their lifestyle and occupation was one of deliberate constant sin, I guess, compared to the rest of us who sin on occasion but not by practice to make a living.

In our day and age, financially abusive people would be those that charge high interest rates on loans, such as credit card companies and pay-day lenders. They would also be scammers who take advantage of people, especially the poor and the elderly. Ponzi schemers like Bernard Madhoff would also be in this category. I would also include politicians and lobbyist who collaborate to line their pockets to the disadvantage of their constituents. Considering the recession that we are going through, one could also include the investment bankers and rating agencies who conspired to create and sell poorly designed mortgage-backed securities. Could we also include those businesses that moved factories offshore (or politicians and unions who passed legislation encouraging it), shutting down millions of factories, leaving fewer high-paying manufacturing jobs?

Jesus knew that the flow and influence of money affects the entire society and its people, and it is especially the poor who ultimately suffer from abuse, since they are at the bottom of the financial food chain. If you think about it, the economic system is one of the main influences and sources of power, in addition to government, business, military and educational institutions. Maybe that is why Jesus particularly focused on this group of people not only to associate with but also to minister to, and he called one of them to be a disciple–Matthew.

How much of an influence does faith have on those who run banks and work for them, investment firms, the United States Treasury, politicians and lobbyists, insurance companies, and rating agencies? Are high morals and ethics a top goal, or is the bottom line always profits? On one hand, the financial systems do work pretty well; if they were totally corrupt, things would be a whole lot worse than they are today. On the other hand, the gap between the rich and poor is the widest now that it has been in 40 years. When economic systems are fair and just, there is more opportunity for all to do well. Jesus greatly cares for the poor: Luke 4:18 “The Spirit of the Lord is on me, because he has anointed me to proclaim good news to the poor.” So it seems as if Jesus made efforts to minister to the spiritually “sick.” as he called them. He wasn’t just trying to save the group he was ministering to–in verse 13 he challenged them to think of helping the poor not as a sacrifice, but as a a merciful, generous response to his mercy for them.

In this we can see that we are called to raise up leaders in economics, business and politics of high moral standards. We are to pray for the institutions that affect us all greatly. Christians working in these institutions, especially financial ones are to conduct themselves with high ethics, and be a witness in the workplace and on committees and boards. These things are needed more now than ever. You and I are key to economic recovery.

*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 tenth post in this series.