Monthly Archives: December 2012

Do you want to know what the fiscal fight is really about?

This is a non-partisan article about what the fiscal cliff fight is really about. It is a philosophical battle, but if you read the newspapers and watch TV news, you will not get this story. Believe you me, I have watched and read many commentaries and opinions about this, but no one has yet to boil it down to one article–so I will take a shot at it. In addition, since this is a financial blog, I will try to render a non-political opinion about what this means to your personal finances. Since readers from both sides of the political spectrum read this, I will try not to take sides.

First of all, we have an economic crisis in the United States of America.  Real unemployment is about 15%, not the less than 10% that you read about. Secondly, government spending both today and into the future exceeds income or revenue (mainly taxes). The budget deficit exceeds $1 trillion per year, and the total federal deficit is almost $16.5 trillion.  Manufacturing is down, growth of our gross domestic product is lack-luster, and we are headed to long term double- and, who knows, maybe triple-dip recession. Yes, housing is gaining strength, some industries are doing quite well, and there are other reasons to be optimistic, but a strong argument can be made that we are headed to economic disaster because our federal balance sheet is a disaster.

Coming through a recession, we have a lot of people with their hands out wanting financial help. With high unemployment we have people on unemployment benefits. With an aging population we have a large, increasing number of people on Social Security, Medicare, and Medicaid. With low incomes coming out of the recession we have a large percentage of people not paying Federal income tax. We have have a large number of people without health insurance or under-insured (who should be provided for). We have a large percentage of people on food assistance, income assistance either in the form of weekly benefit or an annual bonus check called the Earned Income Tax Credit.  These are a lot of open hands, some very well justified that need help, I agree, but none-the-less, at the end of the day a lot of open hands with no long term plan to pay for helping them.

Even if we aren’t paying Federal income tax, we pay a lot of our income out to sales tax, payroll tax (Social Security, Unemployment Insurance, Medicare and Medicaid), gas tax, real estate tax, toll roads, corporate tax that we pay in increased cost of goods, to mention a few. So the poor and low income do pay tax; the point here is that government–federal, state, city and local–has high revenues.

The Left’s Viewpoint: To meet the financial needs of our country, such as entitlement programs, the tax plan that President Obama wants congress to pass would increase income or revenue through increase in taxes on the rich and modest cutbacks in spending but not on entitlement programs, and in some instances Obama wants to increase expenditures, for example  by extending unemployment benefits.  Class warfare seems to be used as a motivator: “The rich and big business caused the economic crisis, therefore we want to take from them to help everyone out and fix our economy.” A few of them definitely did contribute to the recession, but really, can we tax our way of this mess?

The Right’s Viewpoint:  To meet the financial needs of the country, reduce spending (including entitlements) and move towards a balanced budget, keep taxes low for everyone and leave more wealth in the hands of the wealthy and businesses, who create jobs and expand the economy. Really, can we not increase taxes some with spending so high. Okay they say, but reduce spending first.

The 113th Congress of 201 Democrats and 234 Republicans in the House of Representatives don’t want to budge on these issues because it is coming down to these philosophical differences. If the House can pass something agreeable, then the Senate’s 54 Democrats and  45 Republicans will approve it and send it to Obama for his signature.

The philosophy on the left says: We want to be more like a European style social democracy, with high taxes and a high level of social programs. It puts faith in the government to care for the people in a fair and just way. Society weilds power from 3 entities: government, people, and business. Therefore this style of government seeks a shift to have more power than people and business. The hope here seems to be that government will maintain the freedom and welfare of the majority of people. Government is self seeking, so those in power don’t always care for people well. I am not saying if you are on the left you totally believe all of this, but this is seems to be what they are saying.

The philosophy on the right says, we want to maintain more freedom for business and people, and the answer to economic problems is better financial management and business growth (which will in turn generate more taxes). The hope is that business and capitalism, hard work and self determinism, good personal financial management (spending saving and investing) will, in the long run, pay for entitlement needs, not taxes and government programs- it doesn’t always do that well, but that’s its hope. The right believes in entitlement programs, but seeks a balance. The people on the right are not heartless, since well researched analysis validates that conservatives give much more money to non-profit entities benefiting the poor than those on the left.  I am not saying if you are on the right you totally believe all of this, but this is what seems to be they are saying.

What is the Christian viewpoint, since I am writing this in a Christian personal finance blog? Evangelicals, protestants and Catholics are in both camps, so I don’t think it would be fair or possible for me to make the final determination on that one. But what I do believe is that perhaps one side doesn’t exclusively have the only answer–both can actually be right and wrong in part. Compromise doesn’t mean giving up one’s philosophy, but agreeing to work together on a balanced approach with some give and take. I think the Christian way is a balanced approach that takes care of needy, preserves freedom by not shifting too much power to government and business, has modest taxes, AND something that neither party seems to be mentioning much, encourages new business startups and growth. A rising economy alleviates many of the financial problems struggling economies face.

A good president and majority and minority leaders are ones that support compromise, work together, and bring both sides together. This battle is frustrating, but actually it makes good political theater. Will one philosophy win out here, or will we end up with a good compromise and the best part of both parties will help everyone, not just those on the right and left?

Conclusion: The longer we take to answer questions of budgets, taxes and deficits, the longer our economy will languish. The more it languishes the greater the toll to average people’s personal finances. A government that manages money well, taxes fairly, takes care of the poor, secures freedom and encourages business growth by working together will be one that leads us to prosperity.


A Primer on Recession Indicators: Gross Domestic Product and Unemployment

Unemployment statistics are an important indicator of how our economy is doing; more people employed points to stronger business growth and to fewer people receiving government entitlements. However, this is a little difficult to track, since the government doesn’t really publish a combined statistic that truly indicates what is happening. Most people who study this issue follow these three indicators: 1- percentage of people unemployed, 2- monthly change in non-farm payrolls, and 3- jobless claims for unemployment insurance. The most discussed statistic is the unemployment rate; reading the explanation above illustrates how this number falls short.

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. For 2012 GDP slumped to 2% in the first quarter, and 1.3% for the second, so the announcement of 2.7% for the third quarter is good news. Is this a great indication? Well any increase is good; however, this would only add up to 2.1% for 2012. Looking back at the most recent recessions, from a presidential term perspective, provides some challenging information. During the economic recovery under Ronald Reagan, GDP averaged 4.4% from 1995 – 2000, assuming you take out his first two years in office, where there was negative GDP, as it took some time for his policies to take affect. Bill Clinton took office in weak economic times, but not nearly as bad as what Reagan faced when he took office. Under Clinton, GDP averaged a decent rate of 3.1% from 1994 – 2000. This assumes you don’t take into consideration his 1st year in office, when there was negative GDP. Under President Barack Obama it has averaged 2.1% if you don’t include his first year with negative GDP. How does this compare to those other Administration’s first few years in office? In Reagan’s first 3 good years GDP averaged 5.3%, and for Clinton it averaged 3.4% for his first 3 good years in office.

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 Low Hormone Rip-Off

Radio and Television is awash with silly advertisements aimed at anyone 40 or older, to get you to buy supplements to counter the effect of lower hormones as we age.  The ads ask if you are fatigued or depressed, have low sex drive, are gaining weight, or are generally having a feeling of malaise. These ads appeal to everyone really, since everyone experiences some of the symptoms as they age.

Amberen is the product that I hear advertised the most on AM radio for women and Andro 400 and Ageless Make for men. Looking at Amberen’s web site, I see a  list of the ingredients that include basic vitamins a lot of people need. Listed are calcium and magnesium, zinc and vitamin E. My wife has been taking calcium/magnesium for years, and it helps her a lot with her monthly hormone fluctuations. You can buy these supplements a lot cheaper than Amberen’s regular price of $149.

Also Amberen has MSG, an additive used in many food products like snacks and Asian food, to enhance flavors. MSG gives me migraine headaches, and I have read a lot of side affects of taking MSG on various web sites. I’m puzzled why this ingredient is added, although the Amberen website says it is added for energy.

The other ingredient listed is an amino acid, which they indicate helps with emotion when coupled with magnesium.

I would avoid these pills, since the advertising is misleading and their product is expensive. At the very least talk to your doctor first. If you feel you need these vitamins and proteins, first eat more nutritious food, and if you feel you fall short on some items, buy high quality but much lower cost supplements.

Contrary to the ads, most people will notice very little change in their fatigue, depression, sex drive, or weight loss. Just like people avoided the snake oil sold centuries before, avoid big claims and big price tags. Save your money. The best way to treat these things is through better life management, including good personal finances, diet, exercise, adequate sleep, professional medical care, and habits to promote positive mental health.


Save Big on Hanes

Average quality, 100% cotton underwear seems to have really gotten expensive the last few years. While shopping for just basic plain white T-shirts, we were amazed that a packet of 5 costs $34 at Sears and Kohls. Sometimes you can find where they are throwing in an extra shirt or briefs so you get 6 for the price of 5. Is that supposed to help you get over the shock of having very little change left over after tax, after laying down a couple of $20 bills on the merchant’s counter?

Sears and Kohls often run these items on sale, as they did recently. The deal being advertised was “Buy One, Get One 50% Off”–what coupon masters refer to as BOGO. So now you are tempted to buy a couple of packages. If both items cost $34, then after tax you will spend about $55. I hate the feeling of having $100 bucks in my pocket–5 $20 dollar bills, and then be down to only having 2 of them left, plus change. I feel like I have been taken to the cleaners.

My son went to the Internet to check prices. He found the same items being sold for $18.99 at Amazon, so after buying a couple of packages that normally sell for $34, we could have had them for about $40, plus free shipping for Prime members. The same items were on sale at for $14 per package, but some other items were a little more expensive and they didn’t offer free shipping. So after comparing both websites, we saved a couple of bucks at Amazon.

Later, I wanted to buy some for myself and I only found them at the Hanes website, and searched for discount promo codes and saved another 5% off the entire order, so I ordered them directly from Hanes. My order was just under $60, so I was going to have to pay 10.99 shipping, so I was able to add another low cost item ($6.99) to get free shipping.

You can buy decent quality 100% cotton name brand underwear online right now, without having to give ther shirt off your back to buy them.

2013 IRA and Retirement Plan Contribution Limits

The Internal Revenue Service (IRS) recently published the new rules for contributions into retirement plans and IRAs for 2013. Some of these numbers have increased. They are good for you to know if you participate in IRAs (individual retirement accounts) or retirement plans such as 401(k)s sponsored by employers.

The most an individual can contribute to any kind of IRA, whether it be deductible, non-deductible or a Roth IRA, is $5,500 or $6,500 if you are age 50 or older. The amount that you can deduct or contribute to Roth depends on your income and whether or not you are eligible to participate in a retirement plan through your employer. For the current income tables, go to for IRAs and go to for Roths. This does not cover contributions to spousal IRAs.

Retirement plans

  • 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan: employees contribution increased from $17,000 to $17,500. The catch-up contribution limit for employees aged 50 remains unchanged at $5,500.
  • Defined benefit plans commonly referred to as pension plans: maximum benefit increased from $200,000 to $205,000
  • SEP IRA annual contributions the employer makes to an employee’s account can’t exceed the lesser of 25% of compensation or $51,000 for 2013, up $1,000 from 2012.
  • Simple 401k limit is 12,000, up from $11,500 in 2012.
  • Total contributions (employer and employee) for 401k and Profit Sharing plans can’t exceed lesser of participant’s income or $51,000 (or $56,500 including catch-up contributions), up from $50,000 in 2012.

There are many other types of retirement plans. The ones listed above are probably the most common types, but the information provided doesn’t compare exactly to those other plans. Go to the document for other plan limits.

Some of these limitations are subject to IRS updates, changes in interpretation, and actual plan type and design. Refer to and your plan description for complete information.

Underwater mortgage: Financial relief options for struggling borrowers

Property owners whose mortgage outstanding balances is more than their property’s value are already aware that refinance is a distant dream for them. This is because in order to refinance an underwater mortgage or in that case any mortgage, lenders look for at least 20% home equity in the borrower’s property. However, home mortgage borrowers shouldn’t lose hope since there are several federal debt relief programs that can resolve their financial problems.

What are the federal mortgage relief programs?

Under the ‘Making Home Affordable Program’, underwater mortgage borrowers can now refinance their loans as per the modified debt relief programs.

The program is known as Home Affordable Refinance Program (HARP). It was introduced in 2009. This program was initiated with the objective to help borrowers refinance their loans whose mortgages are more than what their house is actually worth in the market. In this case, people with mortgage loan that is more than 125% of their home’s value will not qualify for HARP.

However, the government amended the eligibility criteria and so; it removed the loan-to-value cap as a determinant in qualifying people for HARP. Recently, the Federal Housing Finance Agency announced a slew of modifications that are as follows:

  • Underwater mortgage borrowers are exempted from conducting fresh home appraisals if the estimation is made by either Fannie Mae or Freddie Mac.
  • Borrowers who opt for short-term mortgage refinance can now enjoy waiver of risk-based fees while closing the process.
  • The mortgage relief programs have been extended till 31st December, 2013 from the erstwhile deadline of 30th June, 2012.

HARP – Eligibility criteria

Those mortgage borrowers who meet the set eligibility criteria will be allowed to refinance their home loans under HARP. According to the HARP rules, eligible homeowners are permitted to refinance their loans by about 105-125% of their home’s value.

However, there are some limitations for people to qualify for HARP. Here is the basic outline of the eligibility criteria:

  1.  Underwater mortgage loans should be owned by the mortgage regulators – Fannie Mae or Freddie Mac. Struggling mortgage borrowers can visit the Making Home Affordable Website in order evaluate the amount of refinance loan that will be most suitable for them by using the lookup tools or calculators available there. Lenders will analyze the payment history, credit scores and existing loan agreements as per the lending rules created by the government, before they refinance home mortgage loans.
  2. In order to qualify for the HARP, properties of the underwater mortgage borrowers should not be in the pre-foreclosure phase. Moreover, delinquent payments of atleast a year will disqualify the borrowers, as per the HARP guidelines.

Due to these stringent eligibility requirements, a good number of mortgage borrowers could not take optimal advantage of HARP. However, if borrowers can save around $300-400 in a month as mortgage payment, then it can be a better choice than losing one’s home altogether.

On the contrary, many homeowners have their mortgage loans underwater who have missed several payment deadlines as well. For such borrowers, the government has another relief plan which is known as Home Affordable Modification Program (HAMP).

Hence, struggling mortgage borrowers who would like opt for the HAMP will have to demonstrate their financial hardship to the lenders. Moreover, the mortgage loans should also be owned by the Fannie Mae or Freddie Mac and any other mortgage regulators approved by the US Treasury, so as to qualify for the HAMP.

Lenders who process HAMP applications are entitled to a governmental incentive of about $1,500. It is the lender who has the final say in approving HAMP applications of the borrowers.

This article was written by J. H. Holmes. Author of several excellent articles  on financial problems, loans, insurance frauds, mortgages and many more financial topics.

Should You Buy Gold?

The most commonly asked question I get is this: “Should I buy gold or some other precious metal like silver or platinum?” The main reasons for driving interest in gold are advertisements, the increased price of gold, and fear.

There are a lot of commercials on TV and the radio from companies that want to sell you gold. The main reason is that they are guaranteed to make a profit when they sell it to you, regardless of whether the price goes up or down. They are not selling it to you at the pure spot price because they have to mark it up to make a profit or else they charge you various fees. Their commercials prey on your fear that the economy is going to collapse and that money will be worthless. The secondary motivation they use is that they build the expectation that the price of gold will go up, benefiting you, the buyer. If you want to sell your gold, you can sell it back to the company you bought it from, or some other entity, but they won’t give you the full market value of it. That is because they have to make a profit when they subsequently sell it.

Are gold and other precious metals good investments? They are if you buy low and sell high. However, most people buy when the excitement is the greatest, when prices are at their highest, and then sell when it slumps. This is perhaps the riskiest time to buy gold and some other metals. The highest price gold ever reached was in September of 2011, when it hit $1,895 per ounce. This year the price per ounce has been bouncing pretty much between $1,600 – $1,800. 10 years ago it was only $400.

People that bought gold at $400 and sold it when it peaked at $1,895 earned about a 475% return on their money. That is really exciting, but now that it has been fluctuating within a couple hundred dollars of the peak, it is a nervous time to get into gold. Some might play it like a commodity–buy when it trickles down a little and sell when it pops up, or sell it short when prices get high, but even trained gold professionals don’t know when is the best time to speculate like that. Others may tell you to wait until it drops a lot, then buy in, but how do you know it might not drop more after you buy it? Or what if you bought gold 10 years ago and watched it do nothing for a few years, and then impatiently sold it before it started climbing when the recession hit.

I watch some of the recession indicators and post them every Friday here, on at Weekending Financial Scorecard. Some feel there are clear signs that we could go through another recession next year, and that would make gold prices go up, since recessions and inflation fears often are indicators. However, as we look back at many financial indicators over the last 10 years, some of the things financial experts always rely on haven’t always held true.

Some people remember when silver hit almost $50 an ounce in 1980, going from about $5 an ounce just a couple of years prior. It quickly dropped back to about $5 an ounce in a short time, and it held there for about 15 years. Those who invested in silver late and got out after it tumbled lost a lot of money. Now part of that run up was due to market manipulation, when the Hunt brothers tried to corner the market. I’m no expert or conspiracy guy, but various forces unknown to the average investor like you and me could cause the price of metals to fluctuate these days, making it more difficult to know when to buy and sell. If you have gold and are considering selling it, you may want to read an article I previously wrote on How to Sell Your Scrap Gold.

If you own various mutual funds, check out their statement of additional information for lists of the underlying stocks and bonds they hold. You may find that they are investing in the precious metal industry. Already you may be investing in gold and silver or other metals and not even know it. If you direct more of your money into precious metals, you could be increasing your exposure and your risk.

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Don’t Go In Debt for Christmas

Emotions are a very powerful force. Don’t ever underestimate their pressure to go against your good senses. Christmas, maybe more than any other time of year, tugs on your emotions to be a good friend, spouse, parent, and child and demonstrate it through generosity–generosity so great that you spend more than you have and charge the purchases on your credit card. Now that Christmas is less than two weeks away, you will feel more pressure now as time starts to run out.

Don’t do it. You will regret it later. Many Americans wake up in the cold months of January facing the stark reality of balances on their credit cards they can’t pay, and they are stuck with paying the minimum. This is exactly what the credit industry wants you to do. Not only do they make a percentage of every purchase, but they also get to charge you interest. Every month that you don’t pay off the balance they assess interest that ranges from 9% to 30%.

These immorally high interest rates are designed to keep you in debt and make you a slave to the lender. This makes the credit card issuers rich and you poor. The more debt you have, and the more difficulty you have making payments, the higher the interest rises. The more it rises, the higher their profits, and the more likely you will stay poor. That is their game, and they usually win because they know your emotions and will advertise like crazy to tug on them.

The great before-Christmas deals may tempt you to go into debt, too. You might think that this is a once in a lifetime to buy at that price, but recent research indicates retailers increase prices in the Fall, so now isn’t always the best time to buy.

Coffee with Jesus used with permission. Check out Coffee with Jesus on Radio Free Babylon on Facebook, and like it to follow these daily challenging messages.


Financial Acts of Righteousness, Matthew 25:31-46

This week’s money and stewardship devotional from the four Gospels* is about  the eternal significance of financial acts of righteous believers, from Matthew 25:31-46.

25 “When the Son of Man comes in his glory, and all the angels with him, he will sit on his glorious throne. 32 All the nations will be gathered before him, and he will separate the people one from another as a shepherd separates the sheep from the goats. 33 He will put the sheep on his right and the goats on his left. 34 Then the King will say to those on his right, ‘Come, you who are blessed by my Father; take your inheritance, the kingdom prepared for you since the creation of the world. 35 For I was hungry and you gave me something to eat, I was thirsty and you gave me something to drink, I was a stranger and you invited me in, 36 I needed clothes and you clothed me, I was sick and you looked after me, I was in prison and you came to visit me.’ 37 Then the righteous will answer him, ‘Lord, when did we see you hungry and feed you, or thirsty and give you something to drink? 38 When did we see you a stranger and invite you in, or needing clothes and clothe you? 39 When did we see you sick or in prison and go to visit you?’ 40 The King will reply, ‘Truly I tell you, whatever you did for one of the least of these brothers and sisters of mine, you did for me.’ 41 Then he will say to those on his left, ‘Depart from me, you who are cursed, into the eternal fire prepared for the devil and his angels. 42 For I was hungry and you gave me nothing to eat, I was thirsty and you gave me nothing to drink, 43 I was a stranger and you did not invite me in, I needed clothes and you did not clothe me, I was sick and in prison and you did not look after me.’ 44 They also will answer, ‘Lord, when did we see you hungry or thirsty or a stranger or needing clothes or sick or in prison, and did not help you?’ 45 He will reply, ‘Truly I tell you, whatever you did not do for one of the least of these, you did not do for me.’ 46 Then they will go away to eternal punishment, but the righteous to eternal life.”

Who are the ‘righteous?’ Are the righteous those that obey the rules and don’t break the commandments?  Are we acting righteous when we don’t steal, when we pay our taxes and tithe, and when we are Godly stewards with our finances? Are the righteous those who confess Jesus as their savior and read their Bible daily and go to church every weekend ? Is that how you spot the financially righteous?

Who are Jesus’ people? They are those who have been saved and made righteous by Christ as seen in 2 Corinthians 5:21 God made him who had no sin to be sin for us, so that in him we might become the righteousness of God. However, some of us evangelical Christians do a masterful job, with surgical precision, when we use our razor sharp instruments to separate the act of Jesus’ sacrifice to save us from works of righteousness. It seems, though, in scripture, acts of righteousness are the other side of the coin: you can’t separate the two and still have something of value. When we use our scalpel and start dividing what is good and what isn’t in our walk with Jesus, we often keep the part that causes us little discomfort and pain–that has financial cost.

When you read the words Jesus spoke in the four Gospels of Matthew, Mark, Luke and John, you will not find a lot of rules or new commandments to follow. What you will find is Jesus encouraging us to love our neighbors and our enemies with as much fervor as we love ourselves. Jesus mentions quite frequently what Kingdom living looks like, and that we would suffer and have troubles.  Jesus doesn’t show us how to live a life of financial comfort, but how to live one that helps others live theirs.

It seems to me, as I write this morning, that the righteous people are those that put a higher priority on others’ comfort and problem resolutions than on their own. In the verses above, Jesus acknowledges that many people are lonely and going without food, water, friends, visitors in prison and hospitals, and clothing. Christians are really good at helping with this, because you have compassion for others; you care about the things Jesus cares about. This has been true for centuries; I can think of many hospitals started by Christians, but I can’t recall any started by Atheist organizations. Christians start and work food pantries and many other charities the world over. Christians visit and pray with those in hospitals and prisons. Christian lawyers and change agents fight for people in poverty. Christian believers donate their money to organizations that feed, house and help the poor. Thousands of Christians have started colleges and business, providing jobs and education for those that need them.  This is what Jesus’ people do. We do without things we want to buy for ourselves because we are righteous; our goals are not for ourselves, but for others, and for Him, for he says when we do this, we are doing it for Him. Lastly, these acts of righteousness are so important that they have eternal consequences: for the Kingdom, for those we are blessing, and for 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 twenty-first post in this series.

Do You Worry About Money?

Can you imagine what it would feel like if you had one day without worries?

Does the thought of not having enough money worry you?  Are you anxious about what would happen if you lost your job? Are you fearful that when retirement comes, that you won’t have enough or you will run out of money?  Do you have so much money that you fear what your life would look like if investments fared poorly, or a lawsuit left you high and dry?

Personal and business finances are probably the area of life people worry about the most. People from developed industrialized countries worry more about money than people in developing countries. Worry is not good for our health; stress is right up their with smoking and obesity as big causes of health problems.

How do you stop worrying? If you listen to any advertisements, all of your worries can be alleviated if you buy the advertised products. The financial industry will take care of your retirement when you get too old, the bank if you need to borrow quick cash, and investment firms if you will just trust them. You can insure everything you own: insurance is available for your health, life, auto, income (disability), house, belongings, and even your cat. If you have enough money, you can be insured against any calamity: fire, theft, death, sickness, earthquake, flood, hurricane, law suit, error or omission and even your own mistakes or stupidity. But at the end of the day, you will still worry even if you have all of these things- life is still uncertain.

I have only met about three types of people who don’t worry–those with strong religious faiths, sociopaths, or those that generally don’t seem to care about much. Christians worry and are anxious quite a bit of the time, but they don’t have to worry; start by reading Matthew 6:25-34:

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

Worry is future tense, but it is impossible to live in the future. It is smart to make financial plans and insure for your future. It would be ignorant to not plan and not worry. Even people who have good plans still worry. All you can do today is only what you can do today, and that is it. You can’t change tomorrow. You can minimize problems tomorrow by making good plans today. No wonder Jesus says we can’t do anything about tomorrow by stirring it up in our heads. We can pray for tomorrow, but we should also really pray about what we are doing, thinking and saying today, and we should live at peace in our minds.

Last week my pastor preached the best sermon I have ever heard on this subject, “Why Do You Worry?”. Click the link to listen to it. Rich Nathan said the Greek basis of the word means divided. To worry means to have divided thoughts–thinking in the flesh with half our brain, and thinking God-like in the other half. People in turmoil worry.  To worry means to divide our thoughts between today and the future. Having a divided mind means to have hidden agendas if God’s agenda doesn’t work so well.

Financially peaceful, worry-free minds don’t come from having a lot of money so that we don’t worry. Jesus covered this in Luke 12:19-20, talking to the rich who say to themselves “You have plenty of grain laid up for many years. Take life easy; eat, drink and be merry.” God’s response is, “You fool! This very night your life will be demanded from you. Then who will get what you have prepared for yourself?”

Likewise he never says to have no plans for the future and consume all of your money today, but to be wise to save for rainy days:  Proverbs 6:6-8: 6 Go to the ant, you sluggard; consider its ways and be wise! 7 It has no commander, no overseer or ruler, 8 yet it stores its provisions in summer and gathers its food at harvest.

To not worry means to follow Jesus and stop worrying. It means seeking first his Kingdom. It means working on the troubles, challenges and today’s work–even planning and budgeting. Not worrying requires mindful discipline, work, and not yielding to the what-ifs of tomorrow. Not worrying is freeing and life changing–another one of the beautiful gifts of Jesus.

Costco Cost Savings and Warnings

Big Box retailers like Sam’s Club and Costco can sometimes save you a lot of money, but if you aren’t careful you can end up spending more money than you planned to. I suspect most people do go over budget at these places.

We are avid coupon clippers and deal shoppers, and often our receipt from the regular grocery store shows we saved 25 % – 45%, so I think we can tell when something is a good deal or not.

What I like about Costco: Take for example batteries. It is easy to buy an average size package of batteries at most places for $8; even if they are the smallest AAA you often get fewer than 10. Last time we bought double and triple A batteries at Costco we paid less than $15 for a huge package–I think it had about 40.  The savings is not unusual. We find good deals on hummus, some frozen and produce items, jeans, prescriptions and some health and beauty items, such as an unbelievable price on a Claritin generic. I also like the fact that some food products are organic and don’t have MSG added, and many of their deli meats don’t have nitrates. Don’t get me wrong, they are not anything close to an organic grocer. However, if you are like us and can’t afford to shop organic exclusively, you might like the fact that they make some effort, at a price you can manage, to avoid some of the things organic shoppers don’t want in their food. It is probably not good enough to satisfy those that shop organic exclusively, but it is good for those on a budget that like to be able to get some products that are more healthful.

A few other Costco savings examples: Last month they had top-brand windshield wipers, buy-one get-one free for $7.99. That was about 1/3 of the normal price. A friend of mine recently bought a new Honda Accord through Costco, and, after negotiating with several local dealers in the area, was still able to save money through Costco.

What I don’t like about Costco: I have noticed that almost every item in the store starts out at nearly $10, so it is easy for the things in your cart to add up to $100. Of course there are a lot of exceptions, but Costco is a masterful marketer, so you may be drawn impulsively to buy things you don’t need. I don’t like the fact that some of the containers are so big, such as canned goods. Americans throw away a lot of food, so you have to be careful to buy only what you will realistically consume. Emotionally our brains tell us that if the package is big, it must be cheaper. However, we find that some things, such as laundry detergent and some dry goods, are cheaper elsewhere, especially when we use our coupons and our organized system of  using sales and grocery cycles. Don’t be drawn to buy something that seems cheaper without doing some price checking.

Do people save money there? Sure they do, but I would venture to guess that most people end up spending more money. Generally observing what people are pulling off the shelf, we can see quickly the things people are overspending on. My wife teaches a class on couponing, which is actually more like home economics. She finds that most people lack proper knowledge about pricing and sales, buy out of habit, and don’t plan because they feel they are too busy. However, she estimates that for every hour she spends planning and cutting coupons she saves $50. For us this adds up to $200 in savings each month. Try asking your boss for a $200 monthly raise.

In summary, groceries are one of the biggest parts of monthly budgets; however, if we plan and shop smartly, we can prevent big box retailers from breaking our budgets.

Layering Term Life Insurance, To Minimize Cost & Extend Coverage

Last week I wrote on reviewing your life insurance policies; today I describe a way to layer term life insurance to provide affordable life insurance protection for longer periods of time.

As a review, the most common forms of term life insurance are level term and annually renewable term. Both offer level death benefits:

  • Level term life insurance premiums remain level for the ‘term.’ These policies are issued usually in terms of 5-year increments: 5, 10, 15, 20, 25, 30 and longer years. During the term, the premium remains the same and is guaranteed not to increase. The longer the term, the higher the premium, so most people don’t opt for the longest term. However, the premium does increase when the term is up. For example, let’s say you bought a 15-level term policy for $500 per year. In the 16th year you can keep the coverage but the premium will dramatically increase to several thousand dollars per year.  Sometimes these policies allow you to apply for a lower premium, but the rate is dependent on your health. The new premium will be much higher because you will be 15 years older even if you are in excellent health. However, if you have some health history that precludes you from buying life insurance at standard rates, you may be rated to pay a higher premium. Many people will need life insurance after the term is up, so this big increase is a challenge.
  • Annually increasing premium term life insurance is sometimes called AYT (Annual Renewable Term). The premium goes up every year. In the earlier years while you are young, the premium increase is very slight. In the later years it is like a hockey stick. The cost becomes several thousand dollars per year, and by the time you are in your 90’s, the premium almost equals the death benefit.

Will you need life insurance when you are older?  Some advisers recommend that you purchase term insurance for the length of time you plan to need it. For example, if you are 40 and in 20 years your house will be paid off, children will have completed college, and the retirement fund will be well on the way to being fully funded, then you won’t need the insurance anymore–so 20-year term would be great here.

What if life changes?  For many people life doesn’t go according to plan. There could be job changes, divorces, or unexpected children, or your investments might not have performed well. You might need life insurance into your 60’s and 70’s, but if you just bought 20-year level or AYT term, you could be facing very high premiums at those ages.

Layering life insurance is a way to have life insurance when you are older while keeping the premium down somewhat. Let’s assume the life insurance buyer is a 40-year old named Tom, and he needs $500,000 of life insurance in addition to his group life his employer provides. He would like to buy 30-year level term to cover him until he is 70, but the cost is a little more than he wants to pay. Tom thinks he will probably only need insurance for 20 years; by then his kids will be out of college and his house will be paid for. However, he is unsure about his career, since a lot of people in his industry have been laid off and have gone into other lines of work, sometimes for much less pay. If this happened to Tom, he might not have the house paid off in 20 years, and he might not have saved as much money for retirement. If he died at age 60, his wife wouldn’t have enough money to pay off the house and help fund retirement without his income.

Tom decides to buy both a 20-year and a 30-year level term, each for $250,000. If he doesn’t need the 30-year term in 20 years, he can drop it; but if he continues to need it, he can keep it, and he doesn’t have to worry about being older (and perhaps not in as good health) and having to pay a much higher premium then. Tom likes diversifying his life insurance too, in case one of the insurance companies has financial difficulty. Also, say 10 years from now, when Tom reviews his insurance he decides he needs more coverage longer, he might decide to replace his 20-year term that has only 10 years left with a new 20-year term, giving him full coverage until he is 70. Having two policies like this gives him some nice options as he ages.

Comic Strip Coffee With Jesus, Viewpoints on Life and Money

The funny comic strip “Coffee with Jesus” recently hit on some Christmas money themes. It prompted me to write this short article. I read this daily on Facebook. It’s from Radio Free Babylon. RFB usually makes me chuckle and it sometimes pokes my conscience. I feel a certain kinship with RFB, since we both are trying to bring Jesus’ perspective on things–RFB about anything in the American culture, and JesusMoney on personal finances.

It seems as if many aspects of our culture have hijacked and contorted the true messages that Jesus taught. This Americanized view of culture, money and even religion sometimes waters down our faith and marginalizes its effectiveness in our lives. My pastor challenges me to think differently, that I should first consider everything through the lens of the Bible. For example, sometimes we can easily interpret things from our political or financial perspectives first, then somehow to try to make it Biblical. This can be backwards.

Take for example this comic* appearing last week: Lisa is discussing with Jesus how thankful she is for the basics in life. Lisa wasn’t thinking of the wonderful blessing of the thousands of basic things that make life in America wonderful, but cable TV and smart phones. We take for granted for so much of what we have, and only appreciate some of the really cool glittery things.

Check out Coffee with Jesus on Radio Free Babylon on Facebook, and like it to follow these daily challenging short messages.

* Used with permission from RFB


The Eternal Significance of Good Stewards, Matthew 25:14-28

This week’s money and stewardship devotional from the four Gospels* is about  the eternal significance of being good stewards, from Matthew 25:14-28.

14 “Again, it will be like a man going on a journey, who called his servants and entrusted his wealth to them. 15 To one he gave five bags of gold, to another two bags, and to another one bag, [a] each according to his ability. Then he went on his journey. 16 The man who had received five bags of gold went at once and put his money to work and gained five bags more. 17 So also, the one with two bags of gold gained two more. 18 But the man who had received one bag went off, dug a hole in the ground and hid his master’s money. 19 After a long time the master of those servants returned and settled accounts with them. 20 The man who had received five bags of gold brought the other five. ‘Master,’ he said, ‘you entrusted me with five bags of gold. See, I have gained five more.’ 21 His master replied, ‘Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master’s happiness!’ 22 The man with two bags of gold also came. ‘Master,’ he said, ‘you entrusted me with two bags of gold; see, I have gained two more.’ 23 His master replied, ‘Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master’s happiness!’ 24 Then the man who had received one bag of gold came. ‘Master,’ he said, ‘I knew that you are a hard man, harvesting where you have not sown and gathering where you have not scattered seed. 25 So I was afraid and went out and hid your gold in the ground. See, here is what belongs to you.’ 26 His master replied, ‘You wicked, lazy servant! So you knew that I harvest where I have not sown and gather where I have not scattered seed? 27 Well then, you should have put my money on deposit with the bankers, so that when I returned I would have received it back with interest. 28 So take the bag of gold from him and give it to the one who has ten bags. 29 For whoever has will be given more, and they will have an abundance. Whoever does not have, even what they have will be taken from them. 30 And throw that worthless servant outside, into the darkness, where there will be weeping and gnashing of teeth.’ “

Have you ever thought that since money and possessions will be all destroyed in the apocalypse, how we handle these temporary things of money and possessions is of little significance? Do we sometimes think that God is so busy with more important things, that he isn’t watching how we manage the little details of life? Does it really matter if I overspend, even if a little?  Investing money is too complicated, so many people are discouraged and don’t take the time to learn how to manage it well. Maybe we think God has given us money to enjoy and spend, and we are accountable only to ourselves or our spouses.

To examine these verses more closely, it might be helpful to modernize the parable, to see perhaps what God thinks about this. For example,  let’s say you are leaving the country on an extended mission trip, but when you return you will need the money you have accumulated in an IRA for your retirement. You have saved a nice sum of $700,000 in your IRA and want it to grow nicely while you are away. You have three investment advisers you have worked with, and you want to diversify who invests for you.  You split up the $700,000 between them according to their investment abilities. The first one you have worked with a long time, and you know he usually does a good job, so you give him $500,000 to invest. The second one is not quite as experienced but has done a good job a couple of times before for you, so you give her $200,000 to invest. The last one is fairly new in the investment world, but is showing promise, and you want to give her the opportunity to invest for you too, so you give her $100,000.

When you return from the long trip, one of the first things you do, as you are looking forward to retirement, is to meet with all of your investment advisers.  You meet with the first one; he invested in good businesses, and he doubled your money, from $500,000 to $1,000,000. You tell him how happy you are with him, so you invite him to join you on several of your amazing vacations for free. You invite him to help manage your other businesses, and you pay him quite nicely to do so. You have confidence in him, since while you were away and no one was watching, he didn’t squander your money but took his job seriously.The second one was just as successful at doubling your money from $200,000 to $400,000, and you reward her the same as the first.

However, the last one was fearful, full of worry. She was also lazy and had evil intentions. She didn’t want to take risks, so she buried the gold in the ground so she could at least give it back when you returned. She was so afraid that she didn’t even trust the banks to hold the money and earn interest. Even though she gives your $100,000 back, you aren’t so happy with this adviser, and you don’t give her any money to manage or invest, nor do you invite her to go on those amazing vacations with you and the other two advisers.

If you were the client, now that you have $1,500,000 to invest, would you want to give any of that now to the third adviser? God’s economy is kind of the same. It seems he considers all that he gives us as small things, probably in comparison to the eternal kingdom that we will help manage. Those who have managed the few things we have now will be entrusted with that responsibility. Jesus is talking about the coming kingdom here, but this could in part be applied to our lives today, since through Jesus the kingdom is breaking forth now into this world. Not only does our stewardship of the things he entrusts to us have eternal significance, but I believe those who are good at managing are often blessed now, not just in the coming Kingdom.

*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 twentieth post in this series.