Monthly Archives: August 2012

Friday Blog Roundup

Around the financial blogosphere there were several noteworthy articles that I thought were worth reading:

Financial Peace University Online Resources

Per my previous post, the class has been substantially updated and improved. In addition to the class being revamped, the online ‘member’s only’ resources have been substantially improved. The previous one was okay, but was a little hard to navigate and students had difficulty finding the tools they needed. The new one is much easier to use for locating the various resources for the entire course, as well as those unique to each week’s lesson. The following are some of the online resources:

  • Lesson recaps (2 min videos hitting the highlights of the class)
  • Class Wall for online conversation
  • Money tools to help students through their class experience, such as Gazelle Budget, Debt Snowball calculator, Investing calculator, and more…(limited time access)
  • Weekly budget tips
  • Video tutorials to walk members through how to utilize different forms and tools
  • Budgeting & Additional Forms
  • MP3 of the lessons
  • Homework reminders
  • Other full videos of lessons that where omitted when the class was reduced from 13 to 9 weeks. These lesson didn’t apply to everyone, so it was a good idea to shorten the class but to provide online access to them for those that are interested in learning more about dealing with creditors, making large purchases, and career direction.

Since some people may have difficulty setting up their account and finding everything, I have created a little video to get new members started: “Financial Peace University, how to use the online resources

Some people ask me what resources will they stop having access to at the end of the class, here is a little Q & A that may help clarify.

Q. What are the online resources called?

A. FPU Central

Q.  How long does that last, for new attendees?

A.  They have long-term access to FPU Central as long as that site is available. 2 tools (Gazelle Budget, Debt Snowball tracker) go away 2 weeks after class ends. The confusion probably lies here. These 2 tools come from our subscription-based website, (, which is why there is a limited time to access them. We are giving FPU Members free use of these tools during their FPU experience.  If FPU class members would like to continue using those 2 tools after the usage period, then they can go back to that tool and upgrade to at a 25% discount.

Q. What does MMRC provide during the free membership?

A. FPU Central is the online companion to FPU and a part of their paid FPU membership outside of the 2 aforementioned, featured tools. Class members have continuous access to additional videos, tips, articles, calculators, forms, homework reminders, audio lessons, and more.

Q. What portion ends after the class is over, and what do they still have access to?

A.  Will lose Gazelle Budget and Debt Snowball tracker 2 weeks after class. Still have access to everything else.

Dave Ramsey and Tithe

A recent Dave Ramsey Financial Peace University class attendee asked me if Dave recommends suspending tithing. Here is my response.

Dave Ramsey’s Financial Peace University class is concluded with the final lesson “The Great Misunderstanding.” In this lesson he highlights the importance of giving and faith. However, it seems as if some people interpret Dave  as advocating delaying giving. In fact he even teaches the following 7 Baby Steps:

  1. Save $1,000 emergency fund
  2. Eliminate non-mortgage debt
  3. Save 3 – 6 months income for emergencies
  4. Invest 15%  income
  5. Fund college
  6. Pay off home early
  7. Build wealth & give

It is not surprising that some people think they need to get out of debt and save a lot of money before giving or tithing; in fact some churches that host the class experience a reduction in giving by people that attend. In actuality though, Dave doesn’t teach this. He advocates giving and saving as part of one’s budget from the beginning and not waiting until after accomplishing a particular baby step. The previous version of the course doesn’t perhaps convey this message loud enough, but the newest release of the material for Fall 2012 classes does a better job of making sure that people who take the course understand that they are not to stop giving.

Most churches teach tithing as a principle, not so much as law, but as an act of faith and worship. I posted an article about it at this blog site recently. Whether people choose to tithe is a matter of their own interpretation of scripture, conscience and faith. If people believe in tithing the full 10%, but they are going through financial difficulty, they may wonder if it makes sense for them to do so in light of what they are learning. I feel this depends upon various factors such as the severity of debt, their faith, counsel from wise counselors and prayer. However at the end of the day, I think it is a great idea to always give something, and a regular amount. Doing so helps us walk in faith through difficulty and it is always good to be a blessing to others. It helps us turn the focus away from our own temporary bad predicament, amongst other things. The cool part about Dave’s emphasis on giving while we are doing well and accumulating wealth is that we are in a position to give well above the traditional tithe amount.

Pros and Cons of Being Rich

In the back of our minds, it seems as if a lot of us have a desire to be rich. This thought reminds me of Tevye. The central charachter in the Tony (10) Award Winning Play, and Oscar (3) Winning Movie, Fiddler on the Roof, Tevye shows us his interesting story about poverty and wealth.

This Broadway musical started in 1964 and was one of the longest running shows. It was the first to surpass 3,000 performances for almost 10 years. The movie version released in 1971 remains a timeless classic; it’s on my top-ten list of best movies and plays of all time. These productions made many people wealthy, yet the story’s focus was on a poor dairyman in early 20th century Russia.

Tevye is a likable character, yet he has complaints about his situation: suffering from poor transportation (lame horse), family discord (daughters not following tradition and a disagreeable wife), oppression (Jewish and political), and modest lifestyle (laborious job and humble belongings). Throughout the film Tevye is constantly conversing with God. It is in this discourse and transparency that we see his internal struggles.

In a couple of scenes he is complaining to God about his suffering and poverty, and he looks up and says:

  • “It may sound like I’m complaining, but I’m not. After all, with Your help, I’m starving to death. Oh, dear Lord. You made many many poor people. I realize, of course, it’s no shame to be poor… but it’s no great honor either. So what would be so terrible… if I had a small fortune.
  • “Money is the world’s curse.  May the Lord smite me with it. And may I never recover.”

We all think at different times that financial wealth is a solution to our problems, or society’s ills; we are no different from Teyve it seems; I guess that is why I think of him.

What are riches?

If we count the things we have, most of us are really quite rich, especially compared to most other humans on the planet. Tevye had many things to feel bad about, but he had good things to appreciate too.

  • Family: he had beautiful, intelligent daughters full of promise who loved their father, and a devoted wife who was good to him, a loving partner in the struggles of life
  • Job: he had a job that provided income, even though it was not glamorous or easy, but it was important, filling a vital role for his community
  • Friends: he had friends and family surrounding him, providing connection, solace, humor and companionship
  • Community: he had the community of faith and neighbors, who helped each other generously through life’s ups and downs
  • Shelter: Tevye had a house that he owned, a place to lay his head down at night and to sup with family and friends
  • Country: this Tevye didn’t have; his people faced upheaval, something most of us will never face–the forced immigration with only the belongings on our backs, a situation some in Africa and middle-eastern countries face today
  • Faith: knowing a God that cared for him, provided guidance in scripture and at temple, promised a great eternity and peace and joy in his heart
  • Transportation and pets: he had a cart, a horse and a milk cow to help him get along and to provide for his needs

We could list many more things for Tevye, and for ourselves, with an inestimable total price tag. Most people, even those with less, after adding things up, are indeed rich, again especially by entire world comparatives.

Having a higher income has its benefits, don’t get me wrong, such as better health-care, safer neighborhoods, better schools, and overall healthier environment. Going from higher income to riches has its benefits too, such as better homes, cars and vacations, but there are disadvantages too. There is the worry of keeping the money, living with some fear of having to return to living as those with less means do. Wealthy people often have spoiled children to deal with, and they find that facing financial adversity often upsets marriages and friendships. Living modestly has benefits too–the opportunity to be happy and content with what is really important: character not based on wealth, appreciation for what one has, and the joy of being generous to those around us who are in financial need.

In conclusion, striving to be better, to succeed, to have a business that grows is a good thing, but sometimes the measuring stick is financial. Striving for integrity, strong character, strong community and  justice are higher goals, and ones our country’s Founding Fathers held high, something that I am reminded of by mentors of mine.

Reconciliation Makes Financial Sense, Matthew 5:23-26

This week’s money and stewardship devotional from the Four Gospels is from Matthew 5:23-26.*

Matthew 5:23-24 “Therefore, if you are offering your gift at the altar and there remember that your brother or sister has something against you, leave your gift there in front of the altar. First go and be reconciled to them; then come and offer your gift.

5:25-26 “Settle matters quickly with your adversary who is taking you to court. Do it while you are still together on the way, or your adversary may hand you over to the judge, and the judge may hand you over to the officer, and you may be thrown into prison. Truly I tell you, you will not get out until you have paid the last penny.”

These verses are from Jesus’ sermon on the mount, where he is teaching his followers to conduct their lives in a totally different way from the rest of mankind. I find these verses particulary convicting. The messages might not be linked, but they could be.

Jesus wisely instructs his followers to do heart surgery before approaching God in a public setting. In those days taking a gift to the temple of God could be giving a financial offering or some other offering, such as grain or an animal. It was a done for such things as thanksgiving, or perhaps it involved repentance from sin. He doesn’t want us to go through religious motions, especially in public, to make a mockery of the giver or of the recipient–God. Sin usually involves some kind of act involving another person. Jesus cares more about the relationships between his kids than he ever does about the gift being made at church, even a really big financial donation. We can be the most generous people on the planet, but if we are not reconciled to someone we have offended or who has offended us, then our faith falls short. The gift of unified friendship is worth more than any gift, and the gift given after reconciliation is sweeter, and it shows praise to our heavenly father for forgiving us.

Is it possible that our financial situation shelters our heart from where it really is with people? Can we hide within our comfortable financial zone and not worry about those we have problems with, since we are self sufficient and don’t need the other persons? Equally we can be in financial difficulty and consider that the person who hurt us, or whom we have hurt, is in a different financial class. So why should we bother. Do we feel better when we make a financial gift and think that our conscious is quelled? Interestingly, Jesus is after reconciled community, and reconciliation with him.

Getting to Matthew 5:25-26 now, if things between people have elevated to the point that lawsuits are being written up, the legal war has heightened to want of blood letting. Mutual reconciliation from contrite hearts seems to be out of the possibility. When you walk into court, how much money you will lose or gain is an unknown. You could be in the right, but lose in court and end up penniless. Even two thousand years ago, it made a lot of sense to settle matters early between parties, before emotions got heightened; attorneys make their fees from months and years of litigation. Settle matters and reconcile if possible. It honors God, and it is good for our souls, good for our giving, and good for our personal finances.

*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 fourth post in this series.

Best and Worst Fitness Values

Investing in physical fitness is smart, being in better health not only means feeling better, and having less stress, it saves money on doctors bills. Healthier people not only get fewer colds and flu, they have less disease and falling accidents. They spend less on prescriptions, and save time going to the doctor and pharmacy. Taking good care of our bodies is also good stewardship; intelligent smart use of the most amazing thing ever given to us by our creator, shows appreciation to God. Some of my friends tell me they have wonderful mediation, spiritual times of contemplation while exercising.

Consumers of physical fitness products are ripe for rip-offs, because people want the most efficient way to achieve their fitness and weight loss goals. However, I have found most of the pills and equipment marketed on TV are junk and a waste of money. Marketers are after quick bucks, and make millions selling products to people that have little knowledge of fitness.

Have you ever gone to neighborhood yard sales and not seen exercise equipment, videos (most of the time unused).   Consumers should especially avoid equipment that is  purported to help you loose weight on a particular body part such as the butt and stomach.  It is a fact that any cardiovascular exercise will burn calories and fat all over the body.  Doing isolated exercise will create more muscle in a particular area, something that the user may not want. This is all common knowledge in the exercise world and could be learned by anyone reading a decent book on fitness.

A few days ago the Federal Trade Commission recently settled for false marketing claims with the Ab Circle Pro for $25 million, and Skechers last May for $50 million for toning shoes. This reminds me of the vibrating exercise belts of yesteryear which  pulled a canvas belt back and forth across one’s hips. Gymnasiums had these for decades, I remember seeing a few still in the 1970’s.  It seems even with fitness equipment nothing is new under the sun.

I recall seeing various “….Of Steel” videos in boxes at our yard sale as well as an Ab Roller. It is a good rule of thumb to remember that 90% of highly marketed devices DVDs and pills aimed at consumers wanting to get in shape and loose weight are junk.

The better investments I have made on exercise equipment are good bicycles.  Also membership to a fitness facility can be a good buy (when I actually go) – Just be sure not to sign a long-term contract.  I know people that really use their treadmills, so they can be a good investment too, but they are not cheap, look for a good used one. Investing in a modestly priced personal trainer might be a really good idea too, to help you stay on track. The best buy in exercise equipment for me has been a good pair of running shoes, I get hundreds of hours of running and walking for a small investment. To get a really good pair that will be kind to your feet and ankles, initially spend $75 to $115. Then when you need a new pair buy last-year’s model online for a big discount. These days the new model offers few enhancements-  the changes are mostly cosmetic, only the very avid runner will notice the upgrade.

Obama Versus Romney Tax Rates

The presidential race tax debate faces Romney’s lowering them 20% for all, versus Obama’s increasing them for those in middle to higher incomes. For quite a while the tax burden has continued to shift to higher income people, and those on the opposite end pay less and less taxes, per the Wall Street Journal. If you want taxes lowered for all bracket, it seems as if your candidate is Romney lowering them and if lowered just for the upper income earners, then you may favor Obama, per Bank Rate.

According to the Wall Street Journal, the following chart outlines the tax policy for Obama and Romney.


What is Jesus’ Financial Plan?

Many Christian financial books have attempted to answer the question: “What is the Biblical way for managing personal finances?” Probably the best book ever written on the subject is Randy Alcorn’s “Money Possession and Eternity.” If you haven’t read it you should. It provides the wisest approach for Godly management of money. Although this and other wonderful books are really great at giving people the solid foundation they need, at the end of the day they leave me ‘wanting,’ as my 11th grade English teacher described some of my writings. This isn’t a criticism at all, but an opportunity, I think, to dig deeper into what Jesus thinks about money. You see, it seems to me that Jesus brings a lot more to this conversation. I guess that is why I’ve titled my blog “JesusMoney.”

I counsel people who are trying to survive financial crisis, such as job loss and too much debt.  There are two questions I try to steer towards: What is the Biblical way to manage finances? What is the path? A road map can simply, but not easily, be put together. There is a third question:  What is Jesus doing in this mess? He is often right there in our quagmires, comforting and guiding us through them all. However, there is often heart surgery and healing to be done with his help.

At this point I wonder in my mind: “Jesus, what is your philosophy on money?” As with most direct questions, he wisely doesn’t answer simply. This is because his answers spider out into so many more areas of life. Also, he knows we would try to formulate some Biblical equation for financial successand many try. The following is my attempt to formulate how I think Jesus would answer this question.

  1. Not self centered: Whoever seeks to preserve his life will lose it, but whoever loses his life will keep it. Jesus declared in Luke 17:33 his radical departure from a life centered on concern for self. Jesus’ approach is often incompatible with the American culture of consumerism,  self-satisfaction and fulfillment.
  2. Grace-filled. Jesus blessed countless people (sometimes setting them free from demons, raising some from the dead and healing others), and rarely did he justify his blessings on the performance of those who were blessed. Sometimes Jesus recognized their faith, but grace and forgiveness ran cross current to the “cause and effect, reap what you sow” rule of life. Jesus knows we have difficulties and failures with money, and he extends grace to us so that we can make progress despite them.
  3. Kingdom oriented. A majority of Jesus’ teaching did not center on reaching a personal dream of prosperity, but on getting in line with his plan for humanity. He wants us to have this as our main plan.
  4. Holy Spirit led and empowered. Jesus prayed for direction and strength, and he followed God’s will all of his days. We have the same connection to God, so we are not left to our own energy and ideas to handle the financial challenges and stresses facing us today.
  5. God is the provider; money and the things it brings are not our comfort. He wants us to seek him and his kingdom for our needs.  Matthew 6:18-21, 28-33: 19 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. 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.
  6. Miraculous. Jesus did many economic miracles (bread, fish and wine), as well as hundreds of healings, and he also walked on the water. He has the power to provide us with financial miracles and set us free from things like materialism and debt. Jesus wants us to ask for these things too.
  7. Participatory. God chooses to work with and through us to redeem creation and all of its institutions, including government and business. We are to consider that we are active players in this co-creation, and our personal finances and business practices are key elements.
  8. Eternal reward. Jesus exemplifies in the Parable of the Talents the blessing “Well done good and faithful servant.” In Matthew 25:23, he promises to bless those who are good managers/stewards of the things he entrusts to them. Therefore Jesus wants us to have eternal focus, to recognize that we will be asked to give an account. He will reward us for good, wise, entegrity-filled management.
  9. Generosity: Jesus life was full of giving things and not accumulating anything for himself. He loved, healed, saved, led, taught, and participated in community. He didn’t set up his own castle. He didn’t teach directly to tithe, but he indicated that tithing is a practice we should continue. Jesus people are naturally generous, especially to those in need.  “Woe to you, teachers of the law and Pharisees, you hypocrites! You give a tenth of your spices—mint, dill and cumin. But you have neglected the more important matters of the law—justice, mercy and faithfulness. You should have practiced the latter, without neglecting the former.” Matthew 23:23
  10. Financial success? God provides no Biblical formula or guarantee of riches; in fact we may go through bad financial times, sometimes not caused by our own actions. Jesus promised that rain would fall on the just and unjust (Matthew 5:45 and John 15:20), but financial freedom and peace is a form of contentment (Philippians 4) whether we have an abundance of money or not. Many who apply the right principles will do well financially, but at the end of the day either way, he wants us to have the right approach.

The above list isn’t complete.There are three other foundational principles regarding personal finances: (1) God is the owner and we are temporary stewards, (2) Wisdom: There are hundreds of principles throughout the Bible  that we are to follow with regard to the wise use of money. (3) How we manage our personal finances can lead us to reap blessings and curses, sometimes in a cause and effect fashion, but considering the 10 principles above we can approach this challenge not self-centeredly or with fright, but in a new way.

For me having this balanced Jesus point of view towards money helps me to have a solid basis for approaching this difficult and stressful subject. This also helps me when I consider things I read about finances, or take classes, whether they be from Christians or others. I am able to filter things out, using the good aspects and leaving the bad behind.

I also need this filter because there are all sorts of preachers teaching erroneously. There are those  in the vein of health and wealth, or positive thinking (e.g., Robert Schuler, Joel Osteen, or Norman Vincent Peal), or faith and financial success (Gary Keese), or generosity ‘give-to-get’ theologiesbut at the end of the day, following Jesus in my finances will give me the freedom and peace he promises.

Roth IRA Withdrawal Rules

Roth IRAs which I wrote about a few days ago are good for supplementing one’s retirement and growing tax-deferred until retirement. This article doesn’t cover the rules regarding IRAs that were converted into Roths.

The rules are quite a bit different, than they are for traditional IRAs withdrawals. The differences compel many to seriously consider Roth IRAs, since they have many tax advantages over them at retirement, h0wever their are rules. Careful planning is important, so if someone wants to use the money for retirement or other needs they want to avoid tax penalties. Let me say at the outset that since planning for IRA distributions is tricky, obtaining advice from a qualified financial expert would be a good idea.

At retirement, if the owner wishes to withdraw money from their non-tax-deductible, tax-deferred Roth IRA, all of the monies received are tax free. If they pull any funds out of the Roth IRA account before their age of 59½ or within 5 years of the contribution, they will have to pay a 10% tax penalty, there are exceptions and I will cover them in a moment.

Money can be left in the Roth IRA indefinitely until death, and then specific rules apply affecting the distribution, so unlike traditional IRAs (and most other accounts like 403b and 401k) the owner is NOT forced to make Minimum Required Distributions (RMD) by April 1st of the year following the year they reach 70 ½. Also, since ROTHs have no RMDs, there isn’t a 50% penalty for monies left in the account, again unlike traditional IRAs.

Withdrawal prior to retirement can be done at any time, however there may be a tax hit. If someone wants to get to their Roth IRA prior to their age of 59 1/2 there is a 10% penalty on the growth only, and no tax on your contribution, since you made it with after tax/non-deductible payments. There are a few ways to avoid the penalty according to the IRS website:

  1. It is made after the 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for your benefit
  2. Made because you are disabled
  3. Made to a beneficiary or to your estate after your death
  4. One that meets the requirements under first time home under exceptions (up to a $10,000 lifetime limit).

Does Jesus Favor the Poor? Matthew 5:2 – 15

Monday morning devotional from the four Gospels of Matthew, Mark, Luke and John. Starting in August I’ve been going through these books chronologically and commenting about any verse that involves  money and stewardship. In my personal journey it has been helpful to me to consider the new light that Jesus shines on money in his selfless, grace filled, Holy Spirit empowered, and Kingdom oriented positions. This is the third post in the series.

In of Jesus’ first more significant recorded teachings, the Sermon on the Mount, some wonder if Jesus favors the poor: Matthew 5:2 – 15 Seeing the crowds, he went up on the mountain, and when he sat down, his disciples came to him. 2 And he opened his mouth and taught them, saying: 3 “Blessed are the poor in spirit, for theirs is the kingdom of heaven. 4 Blessed are those who mourn, for they shall be comforted. 5 Blessed are the meek, for they shall inherit the earth. 6 Blessed are those who hunger and thirst for righteousness, for they shall be satisfied. 7 Blessed are the merciful, for they shall receive mercy. 8 Blessed are the pure in heart, for they shall see God. 9 Blessed are the peacemakers, for they shall be called sons[a] of God. 10 Blessed are those who are persecuted for righteousness’ sake, for theirs is the kingdom of heaven. 11 Blessed are you when others revile you and persecute you and utter all kinds of evil against you falsely on my account. 12 Rejoice and be glad, for your reward is great in heaven, for so they persecuted the prophets who were before you. 13 You are the salt of the earth… 14 You are the light of the world…”  

Some interpretations of the Sermon on the Mount only have the word poor and don’t include “in the spirit”; either way, some have concluded from those verses that perhaps Jesus favors the poor over those who have more money. There are other Bible verses that might clarify this…

  • Luke 6:20 Blessed are you who are poor, for yours is the kingdom of God.
  • Luke 4:16-19 16 He went to Nazareth, where he had been brought up, and on the Sabbath day he went into the synagogue, as was his custom. He stood up to read, 17 and the scroll of the prophet Isaiah was handed to him. Unrolling it, he found the place where it is written: 18 “The Spirit of the Lord is on me, because he has anointed me to proclaim good news to the poor. He has sent me to proclaim freedom for the prisoners and recovery of sight for the blind, to set the oppressed free, 19 to proclaim the year of the Lord’s favor.”
  •  Mark 10:23-25 Looking at his disciples, Jesus said, “Do you have any idea how difficult it is for people who ‘have it all’ to enter God’s kingdom?” The disciples couldn’t believe what they were hearing, but Jesus kept on: “You can’t imagine how difficult. I’d say it’s easier for a camel to go through a needle’s eye than for the rich to get into God’s kingdom.”

Doesn’t it seem as if the rich have more blessings in about every category of life: healthcare, vacations, homes, transportation and careers. They can afford better education, insurance, and legal representation.  We teach cause-and-effect personal economics; some quote ‘”you reap what you sow.” So some wonder if the rich are more blessed. Yet according to the Bible the poor may seem to have the opportunity to have more of God in their lives, as represented by the term Kingdom (means both today and his coming Kingdom) because they are more aware of their need for him. Those with fewer things have the opportunity to be more free from the worries and anxieties attached to striving to satisfy themselves.

Jesus doesn’t seem to advocate anywhere either a pursuit of poverty or wealth to bring meaning to life, yet he cautions about the difficulty and challenges of wealth. Again and again Jesus points to the answer to our yearnings, which is much different from the daily barrage of advertisement and thoughts that go through our minds.

Lastly, countless verses seem to indicate that Jesus’ heart is inclined to the poor, alien, downtrodden, prisoner, sick, oppressed, and lonely because he loves his kids and hates it when they suffer. He likes it when we help the poor: Proverbs 19:17 He who is kind to the poor lends to the LORD, and he will reward him for what he has done.

I find these verses very challenging and a great reminder of what my goals should be centered on for this new week.

Mid Year Benchmark Rates of Return

My article entitled The Asset Allocation Style of Investing, highlighted this method of investing made popular from the study by Garry P. Brinson, Brian D. Singer, and Gilbert L. Beebower that found that over 91% of long-term portfolio performance is derived from the decisions made regarding asset allocation, and not market timing or security selection.

In that article I compared 5 fictitious model portfolios to help demonstrate different risk levels: very conservative ‘Volvo portfolio’, conservative ‘Lexus portfolio’, moderate ‘Acura portfolio’, aggressive ‘BMW portfolio’, and lastly the very aggressive ‘Porsche’ model portfolios – each investing in a different mixture of cash, bonds and stock, as well as different allocations of large, mid and small cap stock and foreign stocks.

Benchmarking The mid-year chart below provides historical rates of return for each asset allocation model from the article, based upon the respective indices. Investors should take into consideration expenses and timing and have a healthy historical perspective.

The Expense Factor

The table below compares the GROSS rates of return that you would have earned in any of these portfolios if you invested in index funds that held investments identical to the index. Gross rates of return are before any expenses, such as: * Mutual fund management fees and expenses * Taxes * Commissions * Transaction costs * Financial planner’s management fee


In order to have earned these rates of return, you would have had to invest at the same precise time of the time period represented. Fluctuations in the market can make a drastic difference in your actual rate of return, so if you invested a lump sum of money on a day that the market was down or up, or you invested each month (perhaps using dollar-cost-averaging), you may and will experience quite a bit different results than illustrated here.

Historical Perspective of Indexing

Index fund investing (passive) has been popular because people hear in the media frequently that a majority of actively managed mutual funds do not consistently beat their respective index.

Actively managed mutual funds usually have higher expenses, thus making it more challenging for them to out perform their passive brethren. However, investors may want to consider looking for mutual funds that beat the indexes (net of expenses), they might even find some that have a lower risk (volatility) than their index.

The preference to invest in index funds is a fairly recent phenomenon. Now you can even invest in ETFs or exchange traded funds, a hybrid of index investing that has emerged in the last several years. The charts below illustrate returns all the way back to 30 years, however index funds and ETF’s didn’t exist for each of the indexes used to make these calculations back that far.

Past Performance an Indication of Future Performance?

Anyone who as ever glanced at any financial product advertising or literature will see “Past results are not an indication of future performance” pasted all over the place. This sentence is required by the security industry’s regulating authorities and it is very true. However in order to make intelligent decisions, historical information is very useful for comparison purposes, in addition to a lot of other financial information including your own personal financial plan.

The Indexes

The indexes used to compile the historical rates of return are below. Keep in mind there are dozens of different indices. These ones many feel most closely represent the benchmark for each category. There is some differing of opinion in the investment community as to the best indices that should be used for benchmarking. * Cash – Money Market (3-month CD * Intermediate Long Bond – Lehman Bros Aggregate Bond * Large Cap Value — S&P 500 * Mid Cap — Russell Mid-Cap Index * Small Cap – Russell 2000 * International Equity – MSCI EAFE Equity Index.

Historical Rates of Return as of 6/30/2012
Portfolio Model ‘Volvo’ ‘Lexus’ ‘Acura’ ‘BMW’ ‘Porsche’
Model Type Very Conservative Conservative Moderate Aggressive Very Aggressive
1 year 3.9 2.91 1.44 .83 -.27
3 year 9.91 11.11 11.63 13.17 14.44
5 year 3.43 2.61 1.43 .79 -.01
10 year 5.55 5.72 5.71 5.96 6.20
20 year 5.88 5.77 5.65 5.8 6.01
30 year 9.41 9.83 10.08 10.57 11.00

If you do your own investing – active or passive or hire someone to invest for you, it is prudent to make sure that you are doing as good as the benchmark. The benchmark is a minimum expectation of rate-of-return that you should be achieving. It is a way to hold yourself or your investment advisor accountable. It is important that you know why your investments are either not doing as well or much better than the benchmark. Either could be cause of concern: it could be merely a timing issue or it could be because your advisor made a mistake or is not doing their job. It is important that you are in the know and asking the right questions, and getting the right answers.

Asset allocation investors do not just invest in funds similar to the S&P 500 or the DOW (the most common benchmarks), therefore they should compare their results to aggregated benchmarks that include indices that closely match their allocations.

Should I Buy a SAAB?

A few days ago in a question and answer automobile section of the Wall Street Journal, a reader asked if it was okay to buy a SAAB. If you don’t already know, the Swedish automobile manufacturer filed for bankruptcy about a year ago. No one has yet to step up to the plate to buy them and start manufacturing cars and parts again.

I think it is terrible advice that Jonathan Swift gave to recommend that was okay to buy a SAAB. I usually like his car reviews and Q and A columns, but this time I think his advice is erroneous. On one hand I imagine you can get a great deal on them, since some might want to sell them in case parts become hard-to-find. However looking around the internet I found some people who are not able to find parts they need. After market parts manufacturers will continue to make many of the regular serviceable parts for a while, such as alternators and brake parts, but if no one buys and revives the brand it is a gamble, in the long-term.

Many people today are struggling through the recession with debt and depleted savings, so purchasing a car that has higher incidents and costs of repairs compared to the average would be better off buying another brand, one they are certain they will be able to find parts for. There are many cars that fit the description of higher incidents and costs of repairs, especially for used ones, and I blogged about it earlier this year– these are the used cars that I would avoid. Cars cost a lot of the average person’s budget, when you consider loan or lease costs, purchase price, gas, oil changes, tires, insurance and regular maintenance. Why compound their expense by getting a really nice envious car, when it might make you go broke.

I know a lot of modest income people buy these really nice cars like Land Rovers and Mercedes, but sometimes the repairs puts them, or keeps them in poverty. Buyer beware.

Buy a Car to Save Money?

Does it make sense to buy a new used car that gets great mileage, compared to keeping an old heap, thinking that the gas savings will outweigh the cost of borrowing?

Suppose an old family van isn’t needed anymore since the kids are out on their own. It could be tempting to consider alternatives, for example, there is the opportunity to buy a great used car; a Honda CIVIC from a friend for $5,000. A loan will be necessary since debt reduction has been the goal instead of saving for future needs, so will the gas savings be larger than the loan?

The new car in question is a 2001 2 door CIVIC, 106,000 miles, in excellent condition, and can get nearly 40 miles per gallon, since it has the high-efficiency engine and constant velocity transmission.

The van in question is a 1998 Ford Windstar with 165,000 miles on it, and it averages about 17 miles per gallon with its 3.0 engine.

A $5,000 loan at 7% for 36 months has a monthly payment of $154.39. The van gets driven about 700 miles per month, with a monthly fuel consumption of 41 gallons  for $144.11 per month at $3.50 per gallon  (700/17×3.50).  The Honda’s Fuel cost at 35 miles per gallon would be $70 per month (700/35×3.50).

The net result is that since gas savings would be $74.11 per month and the car payment is $154.39, then to purchase the car by borrowing the buyer would be about $80 in the hole.

I have not calculated the residual values of the vehicles, nor have I considered the maintenance cost.  On one hand the Honda should be inexpensive to maintain since it is excellent condition and has new tires. However it requires timing belt replacement every 80,000 miles and other regular service that is unknown. The van is in good shape mechanically, but it could die any day or need a major repair, but either way its useful life is probably less than two years.

The only way it would make sense to make the change is if the van needed major service today, or if gas went to almost $8 per gallon, or there is a substantial increased the amount of miles driven.

Since the gas savings doesn’t exceed the car payment, it makes sense to save the difference, buy a car later, and pray for the van to continue to hum along without major repairs.

Bread and Money, Matthew 4:1 – 4

Monday morning devotional from the four Gospels of Matthew, Mark, Luke and John. For the next several months I am going through those books chronologically and commenting about any verse that involves  money and stewardship. In my personal journey it has been helpful to me to consider the new light that Jesus shines on money in his selfless, grace filled, Holy Spirit empowered, and Kingdom oriented positions. The second post in this series:

The first mention of Jesus saying that he was bringing a totally new radical economic system into creation is Matthew 4:1-4, I’ve highlighted a few sections I find helpful:

Then Jesus was led by the Spirit into the desert to be tempted by the devil. 2After fasting forty days and forty nights, he was hungry. 3The tempter came to him and said, “If you are the Son of God, tell these stones to become bread.” 4Jesus answered, “It is written: ‘Man does not live on bread alone, but on every word that comes from the mouth of God.’”

When Jesus dropped on the scene of humanity, we saw how in last week’s post, he disturbed an entire city even as a baby, on rumor only. Jesus was the most significant radical of all time. When some people think of radicals, they picture someone who isn’t following the most common viewpoints, sometimes visually striking by the clothes they wear, maybe an abundance of tattoos and piercings, far out political beliefs and going a different way than conventional society. The radicals we see in the news today might be the anarchists protesting at the G8 Summits or those at the Occupy Movement rallies. Merriam-Webster defines radical : adj 3 a : very different from the usual or traditional : extreme b : favoring extreme changes in existing views, habits, conditions, or institutions c : associated with political views, practices, and policies of extreme change.

The testing of the radical Jesus came after not eating any food for 40 days. When a radical is deprived of food, human companionship, and physical pleasure for that long, as was Jesus, sometimes convictions are tested. Jesus was alone in the hot desert for almost 6 weeks without even the pleasure of cold water.  Yet I imagine he wasn’t alone or without spiritual food to sustain him. Jesus feasted on God’s word and in companionship with his Father in prayer and the company of the Holy Spirit.

The systems in place during the height of the Roman empire nearly 2,000 years ago were not a whole lot different from today. There was constant political battles about how the empire should be run. There were rich and poor, and uncared for sick. Roman citizenship and racism; greater opportunity for those of privilege. Sometimes democratic governing. The economics of power and wealth, politics and business. These things were on the minds of the average person on the street. Much like today the populace struggled for money- people were concerned about food, shelter, widowhood, and having enough to live on if they got sick, or old.

Jesus cares about these things too, but the Radical Jesus, brought an entirely new system into play; pointing his finger to the satisfier. Jesus didn’t start by reforming politics or economics, he knew the best place to start was to reform the heart. Jesus in the desert turned all civilization on its head by taking the focus off of money and the things it brings to satisfy our thirsty souls.

Sometimes in my life I go through spiritual and physical deserts, and its there I learn that the things I had during abundance paled in comparison to the real bread God feeds me. The answers to many of the problems I face today aren’t financial, even though I sometimes think they are. Jesus made a radical stand at the very beginning of his ministry, in the face of the tempter, during difficulty. Christian marriage counselors find the best place to help fix difficulties in marriage, is to start off focusing  on where they are in their walk with Christ. The same approach towards correcting financial difficulties works too.

Whether we are going through financial difficulty or not it is good to consider how we think about finances, and what gives life meaning. Jesus called himself the bread of life, replacing what we  are inclined to pursue for what we want in life:

John 6:31 – 35 Our ancestors ate the manna in the wilderness; as it is written: ‘He gave them bread from heaven to eat.’” 32 Jesus said to them, “Very truly I tell you, it is not Moses who has given you the bread from heaven, but it is my Father who gives you the true bread from heaven. 33 For the bread of God is the bread that comes down from heaven and gives life to the world.” 34 “Sir,” they said, “always give us this bread.” 35 Then Jesus declared, “I am the bread of life. Whoever comes to me will never go hungry, and whoever believes in me will never be thirsty.

Home Mortgage News, for Those Struggling with Payments

I’ve talked to several people who have been having difficulty staying current on their mortgage, some just over the past year, and others that have been struggling for several years that have qualified for help recently, and they are able to stay in their homes.  Some have even been turned down for loan modifications and short-sales in the past, and things looked very dark. It seems as if some lenders are trying to help borrowers more than ever now. The help includes:

  • Loan modification temporarily lowering of monthly payment
  • Second mortgage forgiveness
  • Interest rate reduction to 1% for veterans
  • Refinancing with their current lender even though they might not normally qualify
  • Settlement to compensate people for unfair treatment due to bad foreclosure processing, but the deadline to apply is 9/30.

I encourage you to call a qualified HUD counselor and contact your lender talking to their mortgage hardship department. Lastly pray for a financial miracle, I’ve seen plenty.

Treasures of Generosity to God, and God Providing, Matthew 2:1-12

The Monday morning blog posts were previously called Monday Launch. They were devotional articles involving various Bible verses regarding various thoughts relating to money and stewardship. However for the next several months, I am going to go through the four Gospels of Matthew, Mark, Luke and John chronologically and comment about any verse that involves  money and stewardship. In my personal journey it has been helpful to me to consider the new light that Jesus shines on money in his selfless, grace filled, Holy Spirit empowered, and Kingdom oriented positions.

The first mention of currency or precious metals used as money is Matthew 2:1-12, I’ve highlighted a few sections I find helpful:

After Jesus was born in Bethlehem in Judea, during the time of King Herod, Magi from the east came to Jerusalem 2 and asked, “Where is the one who has been born king of the Jews? We saw his star when it rose and have come to worship him.” 3 When King Herod heard this he was disturbed, and all Jerusalem with him. 4 When he had called together all the people’s chief priests and teachers of the law, he asked them where the Messiah was to be born. 5 “In Bethlehem in Judea,” they replied, “for this is what the prophet has written: 6 “‘But you, Bethlehem, in the land of Judah, are by no means least among the rulers of Judah; for out of you will come a ruler who will shepherd my people Israel.’” Then Herod called the Magi secretly and found out from them the exact time the star had appeared. 8 He sent them to Bethlehem and said, “Go and search carefully for the child. As soon as you find him, report to me, so that I too may go and worship him.”9 After they had heard the king, they went on their way, and the star they had seen when it rose went ahead of them until it stopped over the place where the child was. 10 When they saw the star, they were overjoyed. 11 On coming to the house, they saw the child with his mother Mary, and they bowed down and worshiped him. Then they opened their treasures and presented him with gifts of gold, frankincense and myrrh. 12 And having been warned in a dream not to go back to Herod, they returned to their country by another route.

When Jesus dropped on the scene of humanity, not only was Herod disturbed but an entire city. I never noticed that anyone beside Herod was bothered by idea of fulfilled messianic prophecy. When change happens, people first wonder how it is going to impact them personally. I know if there is a change in leadership for companies I have worked for before, people fear all types of change, for they worry about finances, fairness and politics. Those with the most to lose fear the greatest, as did Herod who ended up killing all new-born males. He didn’t want to lose his position of power and wealth.

In stark contrast, the aliens of the land, the Magi traveling through the country side  were overjoyed at the idea. They gave extravagantly to Jesus out of their joy, worship and expectation. They didn’t squeeze out a few token gifts, just barely opening their purses in a dark corner so no one could see what they had. They opened their treasure chests and gave generously. They didn’t have to wait for a guilt lined lesson, or someone preaching the blessings that will flow back to them if they present a faith-gift. I don’t think the Magi counted the cost, how it might affect their financial standing, they didn’t worry about what others would think, or about thieves if someone saw their wealth.

This blessing was meant for Jesus, yet I imagine it helped this young couple financially who would be carrying and caring for Jesus, since they were a poor young couple who couldn’t afford nice accommodations. I think the same analogy may apply to us today, if we carry Jesus in our hearts and lift him up as a priority in our lives. Sometimes our financial results are a direct result of our hard work and wise financial decisions, yet it is often out of his grace and love of us that he provides extravagantly.

I think I’m too often like Herod since I count the financial cost of Jesus coming into my life, but I am challenged by the Magi who are overjoyed by what he will do to us and the world we live in and want to give whole heartily to him?

Mixed Unemployment, Hiring, and Jobless Claims for July

  • Unemployment INCREASED in July to 8.3% from June 8.2%
    • This tracks those who are without jobs, and have actively sought work within the past 4 weeks. The Great Recession’s unemployment peaked at 10.10% in October 2010. In 2012 it has varied in the range of 8.10% – 8.30%. This statistic does not track all people who are not working, but are not too young or old, some websites report that the real unemployment rate is about 16%, which is probably more realistic. During the Great Depression it peaked at about 25% in 1933.
  • Monthly change in non-farm payrolls: 163,000 new jobs for July an INCREASE from when in June we saw new jobs 64,000 added.
  • Jobless Claims for Unemployment Insurance: DECREASE from 367,750 to 365,500 4 week rolling average. July 28th they were 365,000, an INCREASE from the prior week of 357,000.
    • Historical numbers: Peaked at over 650,000 in 2009. 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 S0cial Security act encouraged it in 1935. Today we have the Federal Unemployment Tax Act (FUTA) tax to fund state agencies.

Dave Ramsey’s FPU Class, Week 6 Lesson: Insurance

The Dave Ramsey Financial Peace University multi-week class has an entire lesson on insurance, or risk management. On the surface this subject doesn’t seem all that spiritual, but protecting our family and the property God has given us, using as few dollars as possible is very good stewardship. To underline a few items from this lesson, and a few things that need a little more information…

  • Evaluate your life insurance Amount: if you have minor children and a mortgage a good rule of thumb is 10 times income (an insurance expert or financial planner can help you calculate your amount). You can subtract from that number your group life amount and other insurance, savings and investments. If your spouse doesn’t work outside of the home, she probably needs it too.
  • Life Insurance Type: Most personal finance experts, and financial planners recommend term insurance since it is pretty inexpensive, and buy as long a term as you can afford usually, such as 10 – 25 year level term. The length of the term will depend upon your age, affordability and overall financial plan.
  • Permanent Life Insurance: Dave and other financial experts recommend against using permanent (also known as whole life, universal and variable life) as an investment vehicle. This is because the fees are high, the net overall rate of return is modest, and the need for permanent insurance declines as we get older, as well as your savings and investments build up. Sometimes life doesn’t always go according to a neat plan with careers, business or family (e.g., death, divorce, starting families when we are older, and step families). Also, the ‘buy term and invest the rest’ depends upon exhibiting great personal finance habits throughout life. Considering these last two points…
  • Replacing permanent insurance with term: If someone evaluates their financial plan, and decides to replace their existing permanent insurance with term, they should be careful.  First of all the new policy has a period of waiting for incontestability and suicide. Secondly, being able to switch to low cost term is dependent on one’s health- so before you switch, make sure that you are insurable and at a good rate, and the new policy is in force until you drop the old one. Lastly, especially if the permanent policy has been in force for a long time, it is good to consider its overall net cost (examine’s its dividends {that could pay the premium} and cash value annual increases. Obtain an inforce ledger first of the existing policy to examine, and get second or third opinions before dropping- you have incurred a lot of upfront cost in the permanent, so don’t be hasty to drop it too quickly.
  • Competitive casualty insurance: If you haven’t shopped your auto and homeowners insurance in a while, call some independent and captive agents for quotes for various deductibles, you may be able to save a goodly amount.  Be sure to have your policy’s declaration page or description of coverage handy to refer to.
  • Umbrella coverage: Talk to your agent about ‘personal catastrophe’ or ‘umbrella’ insurance to protect you from excess liability. A few million dollars of coverage costs less than $200 usually.
  • Replacement cost: Ask your agent about your homeowner’s ‘replacement cost’ coverage for dwelling and contents.
  • Riders: Look into riders for increased limits on certain kinds of property, collectibles, and jewellery, as well to be covered if a sump pump fails or sewage backs up.
  • Long term care insurance (LTCi): If you are in your 50’s it is okay to consider this coverage now before age 60. Dave recommends this age, since that is usually the best time statistically considering normal life plans, accomplishing the baby-steps, and premiums. Rates go up with age, and sometimes our health changes more as we age, so if your financial plan permits LTCi, before age 60, that is okay.
  • Disability Insurance: Review your short-term and long-term disability coverage at work, even if you have it, it may be a good idea to consider supplemental since group DI is usually taxable.
  • Estate Planning: Dave recommends good estate planning. Be sure to contact an attorney about having a will, power of attorney written for you. If you believe in end-of-life planning, ask about living wills and health care power of attorney. Trust planning makes good sense for asset protection, and to take care of minor children, not including privacy and tax and probate cost minimization.

Conclusion, we can have insurance to protect us financially from almost everything that can happen to us, however the most effective protection is prayer:

  • Matthew 6:9-13 “This, then, is how you should pray: “‘Our Father in heaven, hallowed be your name, your kingdom come, your will be done, on earth as it is in heaven. Give us today our daily bread. And forgive us our debts, as we also have forgiven our debtors. And lead us not into temptation,but deliver us from the evil one.
  • Ephesians 6:11-13 “Put on the full armor of God, that you may be able to stand firm against the schemes of the devil. For our struggle is not against flesh and blood, but against the rulers, against the powers, against the world forces of this darkness, against the spiritual forces of wickedness in the heavenly places. Therefore, take up the full armor of God, that you may be able to resist in the evil day, and having done everything, to stand firm.”
  • Psalm 27:1-3 “The LORD is my light and my salvation; Whom shall I fear? The LORD is the defense of my life; Whom shall I dread? When evildoers came upon me to devour my flesh, My adversaries and my enemies, they stumbled and fell. Though a host encamp against me, My heart will not fear; Though war arise against me, In spite of this I shall be confident.”

Wrongful Foreclosure Compensation Deadline Approaching

If you’re one of the millions of people who’ve faced losing your home through a wrongful foreclosure, you might get help, but you must act quickly. Homes that were foreclosed on in 2009 and 2010 should find out about the free Independent Foreclosure Review (IFR) process. The IFR process is by the Office of the Comptroller of the Currency and the Federal Reserve, will award financial assistance to borrowers who were foreclosed on because of inaccuracies and oversights.

According to the Independent Foreclosure Review website, borrowers are eligible for independent foreclosure review if: (1) the property securing the loan was the borrower’s primary residence; (2) the mortgage was in the foreclosure process at any time between January 1, 2009 and December 31, 2010; and (3) the mortgage was serviced by one of 27 IFR approved servicers. These servicers include: America’s Servicing Co.; Aurora Loan Services; BAC Home Loans Servicing; Bank of America; Beneficial; Chase; Citibank; CitiFinancial; CitiMortgage; Countrywide; EMC; EverBank/EverHome Mortgage Company; Financial Freedom; GMAC Mortgage; HFC; HSBC; IndyMac Mortgage Services; MetLife Bank; National City Mortgage; PNC Mortgage; Sovereign Bank; SunTrust Mortgage; U.S. Bank; Wachovia Mortgage; Washington Mutual (WaMu); Wells Fargo Bank, N.A.; and Wilshire Credit Corporation.

A small fraction of people have applied for this, and with the application deadline extended to September 30, 2012, it is important that potential claimants look into receiving compensation or other support, as soon as possible. This may apply to people who were foreclosed on – even when they were abiding by the terms of their mortgage or their modification agreement, or were protected by bankruptcy.

The Independent Foreclosure Review process may provide compensation in the form of a lump sum payment, a loan modification, a suspended foreclosure, or even a corrected credit report.

To find out more about the Independent Foreclosure Review process, visit the website

Home Vacuum, and Steam Vac Great Values

Floor vacuum cleaners seem to be a controversial topic these days. I know people who have very strong opinions about their Dyson, Hoover, Oreck, Eureka, Dirt Devil, Rainbow or Kirby. Prices can vary from about a $100 to over a thousand dollars. I have heard people who tell me they really love this or that brand. My wife hates our old cleaners and lusts after Dysons when a commercial comes on the TV. 

There is a dizzying array of features and options, and frankly just the idea of comparing all them to get the best deal gives me a headache. Doing a little searching on the internet you will find many comparisons, and consumer reviews on Amazon. Reading many of them I have come to the conclusion that you don’t have to spend more than $200 to get a great unit. The other day I noticed that the highly rated Shark is offered at Costco for less than $200, that is why when Mary Hunt,  founder and publisher of Debt-Proof Living, a highly regarded organization consisting of interactive website, monthly newsletter, personal finance tools and almost 20 books, recently wrote a couple of great articles about her Shark vacuum cleaner, and her Hoover steam vacs, it caught my attention. Maintaining carpets is important to protect the value of expensive carpets and for good health and hygiene, and with her permission I have them published here.

Compulsive carpet cleaner meets her match

by Mary Hunt

While I am a very busy person and not 100 percent organized, I do pride myself on cleanliness to the point of having been accused a time or two of being a wee bit compulsive. Which brings me to the matter of vacuum cleaners. I’m freakish if not particular about my vacuum. And I wear them out, regularly.

I just blew out my third Hoover Wind Tunnel, and I mean I wore that thing out down to its last gasp. I carried it in pieces to the trash. I was planning to replace it with the latest and greatest from Hoover … that is, until I heard about the Shark Navigator.

I wasn’t that impressed as I looked it over at the store. It was on the smallish side, lightweight — certainly not the hefty, beefy Hoover I’ve been used to. But based on a recommendation from a trusted friend, I decided to give it a try, knowing I’d just bring it back to the store if it couldn’t live up to my standard.

This is probably where I should end this column. It’s that embarrassing.

I plugged that puppy in and started to vacuum my family room, which is carpeted with 100 percent wool Karastan carpet. Look, I love this carpet and have babied it from the day it was installed. It looks like new, which you need to take with a grain of salt because I never wear my glasses when I vacuum. Still, I think of it as pristine.

Within minutes, that canister filled to the top. And I was vacuuming a fairly small area. I was so shocked, disgusted hardly describes the feeling. I took the canister out to the trash to dump it out, hoping the neighbors wouldn’t be peering over the fence to see what was coming out of my home. Look, this room is not small, but it’s not massive, either. I filled that canister four times before I put Sharky away for the day. Since then, I’ve vacuumed it a couple more times, and still I’m sucking out who-knows-what from this carpet. Even my husband was shaking his head.

Last night, I vacuumed the room once again and the canister remained empty. Finally.

I’ll admit to the carpet being 10 years old, but it’s been vacuumed to death over the decade. And cleaned routinely. All for naught, apparently.

The price for a Shark Navigator ranges from about $120 to $180. It’s the best money I’ve spent since I got my carpet-cleaning steam vac, which I still use all the time and as recently as yesterday. See? I am a little compulsive about having to be clean, especially carpet.

I am stunned at the power and light weight of my Shark Navigator. But more than that, I am so happy to know that the carpet in my home is really clean. I mean, probably as clean as the day it was installed.

And my bonus? No more bags!

 The Best Thing I Ever Bought

Okay, so maybe I should say, “One of the best things ….” but at this moment, as I write, I cannot think of anything I’ve ever purchased that can top my carpet cleaning steam vac.

Background: I have a love/hate relationship with carpet. I love how it looks, how it feels under my feet and how it warms up a room. But I hate dirty carpet. Cannot abide a spot. The thought of what lurks between those fibers gives me the heeby-geebies.

You know how some people select carpet color by what won’t show the dirt? What?! I select the lightest color possible so it WILL show me where the dirt is, so I can get rid of it.

The two enemies when it comes to keeping carpet clean and pristine are 1) Soap and 2) Water. And guess what carpet cleaners use to clean carpet? Soap and water.

The problem with the soap is that there is always a residue that remains. Most cleaners use way too much to start with, leaving no way to retrieve every last bit. ANY soap left in the carpet becomes a sticky dirt magnet. Huge problem.

The problem with water is that it is not extracted fully, leaving the carpet wet too long, which causes it to mold and mildew. That sets you up for an icky mess.

Carpet is just downright troublesome. I do not even trust commercial cleaning companies. Are you kidding me? They leave soap and residue in the carpet. Even the ones that use a “dry cleaner” leave stuff behind. I’ve tried ’em all and been disappointed within weeks of spending a small fortune.

But, I am so proud to say, I’ve licked the problem. I have very light carpet (color: mink) that is 100% nylon Stainmaster on the second story of my home. After more than five years it is still lovely. Pristine. Stainfree. No paths, marks or problems. I owe it all to my Hoover SteamVac.

This home steam cleaning machine (cheaper than one visit from a carpet cleaning company) is truly an amazing machine, but only because I have made a few adjustments to the way I use it. Let’s just say I have slightly rewritten the Owner Manual. Yes, I am a brave woman.

First I DO NOT USE ANY SOAP OR CLEANING LIQUID in the machine at all. None. Nada. I’m no fool. I know that I will never be able to get that soap out no matter how hard I rinse. Instead, I use a good liquid spot remover called Spot Shot. I’m sure there are others, but I love this one. I take care of spots as quickly as I can, when they happen. That is so important. I vacuum often. Also important. Then every few weeks or months I pull out my buddy, Hoover.

First I treat any spots or dirty areas with Spot Shot. Then I fill up Hoover.

The instructions say to fill the top canister with hot water. I go one step further. I boil the water and pour it in there carefully, boiling hot. Do not worry. This is okay! After all what do you think steam is? It’s very very very hot water! Most home cleaners do not use the power of boiling water, but I do.

With NO SOAP at all, only the power of the spot remover, I go to work. I pull that trigger liberally too, to release a lot of hot water. And I follow the instructions to release the trigger to suck up all the water on each return path. It is truly amazing how that hot water pulls out normal everyday dirt and dust. I go over an area many times (it’s kinda fun, actually) until no more water is coming up (you can see this in the clear cannister that holds the dirty water).

Now here’s the bonus: Because the water is so hot and it gets sucked back up so quickly, the carpet dries in no time. I know, you are suspicious about this. But it is so true. Hoover has such a powerful extractor, I think I get up almost all of the water I lay down.

And the best part? NO STICKY RESIDUE! I never clean all the carpet at one time. I do a bit now and then until I have made my way through all the rooms and halls. Then I start over. It’s just maintenance. Easy, enjoyable and very rewarding. And cheap! I never buy soap or cleaning solution for Hoover. Ever. Poor guy. Starves on water only.

My big pay off: the feel, look and smell of beautifully clean carpet!  Yes, my Hoover SteamVac is the best thing I ever bought.

NOTE: I do not suggest trying this on all steam cleaners. As I said in my blog, I have only done this with my Hoover SteamVac–which has tanks, not bladders. If your steam cleaner does not have a very sturdy tank it’s not wise to pour boiling water into it, is it?