A Penny Saved

I was at a seminar on Tuesday evening and the speaker, Tim Suloff, a Stewardship Representative from a local college, shared the 3 laws of the Least. With his permission, I thought I would share it with you:

1. Borrow the LEAST AMOUNT of money possible.
2. Borrow for the LEAST TIME possible.
3. Borrow at the LEAST PERCENTAGE RATE possible.

The laws of the least are also purposely put in the order of effectiveness (2 is more effective than 3, 1 more effective than 2). I thought it was a very succint way of putting it. A good reminder that borrowing costs, and if we have to do it, ways to minimize expense.

Contentment is hard. It’s easy to want what someone else has, to want the “latest”. We just seem to always want just a little bit more. In my lifetime, I have seen the progression, especially in areas of technology. For instance:

• First, it was black and white TV’s with rabbit ears
• Then came color TV’s
• Then came remote controlled color TV’s
• Then came large screen TV’s
• Then came cable, then satellite
• Then came surround sound, Dolby, etc. TV’s
• Then came flatscreen TV’s
• Then came digital
• Then came….

I’m sure I am missing a few things, but I think you get the “picture”. Would any of us be content with a black & white TV with rabbit ears today? I remember reading somewhere (I think it was an MSNBC article) about going on a 1970’s budget as a way to save money - no cable, no cell phone, no home computer, etc. Funny how we (at least those of us old enough to remember) made it through without those things but now they are necessaties.

Now, I like these things and they are helpful (as well as dishwaters, air conditioning, and other things I didn’t have growing up!). But it is easy to slip out of contentment.  And when we do, and we desire more riches (or stuff), it can become a snare which can plunge us into ruin and destruction (i.e., credit card debt, house foreclosures, etc.).

We brought nothing into this world, and we will take nothing out (Bible, 1 TImothy 6:7). But in between we sure like to collect and keep up. So be content with where you are - not complacent or lazy. But content and hard working.

Have a great and contented day!

In honor of April Fool’s Day, I thought I would share an appropriate story…

A dog was walking home with his prized dinner, a large piece of meat, in his mouth. On his way home, he walked by a river. Looking in the river, he saw another dog with a wonderful chunk of meat in his mouth.

     ”I want that meat, too,” thought the dog, and he snapped at the dog to grab his meat which caused him to drop his dinner in the river.

The moral of the story: “It is very foolish to be greedy.”

Have a Happy, but Wise, April Fools Day! 

I was reflecting this weekend how powerful emotions are in regard to fianances. What got me thinking about this was an event that happened Firday at our home. It started Wednesday when our refrigerator started making some strange noises. By Thursday evening we knew something was wrong. So Friday morning my wife called the appliance dealer that we bought it from four years ago. Well they came out and it was the compressor, which is a very expensive part of the refrigerator.

Between Wednesday and Friday I was bummed. Here we go again, anouther unplanned expense. And my emotions started caving in. “Why is it every time we try to pay off debt something happens” (not true in reality, but emotionally I was there). “What is the use.” And on and on. It was just a downward spiral - and my friends consider me pretty level headed and steady.

Then on Friday as I am thinking how much this is going to cost me, my wife calls me and says the repair will be free! The refrigerator was still under warranty, and the part they were replacing (it was the condensor) was part of a bad batch of units, and the company that made the refrigerator would cover everything including the service call.

Now my spirits were soaring. Life was good again.

The whole episode got me to thinking how important emotions are in finances, and likewise, how finances affect our emotions. During my brief frustration between Wednesday and Friday, I was tempted to use money to bring “happiness” - shopping therapy. Fortunately I did not do that, but there was temptation. Likewise, after I found out that it would cost us nothing, I was ready to go back to full scale pay off the debt.

Nothing changed but my frame of mind, my emotions. So I have been thinking about how important emotions are to achieving our goal of being debt free. It’s good to understand our tendancies, how things will affect us, and set out a plan.  It’s also good to have someone on your team. For me, it’s my spouse, but it could be another relative or friend. When things get tough (and they will), it’s good to have someone on your side to pick you up and cheer you on.

I hope you have a plan that will help you weather the financial storms. And I hope you have someone else on your team to pick you up when you fall.

“He who is faithful in a very little thing is faithful also in much” (Bible, Luke 16:10). Faithfulness in finances begins with the little things. If we cannot control ourselves in the little spending areas, it will soon become evident in the bigger areas.

Some of us look at the debt or saving mountain ahead of us and we despair, we give up, it’s too big. These mountains are real, they are big, and they are hard. We feel like we have made too many mistakes, and have been too lax regarding spending or money decisions. But you do not have to conquer the mountain in a day, or week, or even a year. Start being faithful in little areas of your life, and build upon it. Not only will these little steps build upon each other, but your faitfulness financially will spill over into faithfulness in other areas of your life. And then one day you will look back and be amazed at how far you have come.

Sure, we love to save Penny’s, Invest wisely, etc. But at times we can forget how blessed we are. As a reminder, take a jump over to www.globalrichlist.com This is a site that will tell you how rich you are compared to the world. For example, I make a little less than $60,000 a year. I plug that number in and I discover that I am the 55,923,010 richest person in the world! It also shows me that I am in the top 0.93% richest people in the world. In other words, 99% of the rest of the world is poorer than I am.

So if you get down about reducing debt, or not able to save as much as you like, head over to the Global Rich List for a reminder of how much you really do have, and be thankful.

Happy Easter.

Yes, it is true. The sky is not falling and the world is not ending, although you wouldn’t be able to tell from the media. Yes it is rough out there financially, and I personally have friends who cannot get jobs or are possibly losing theirs. But it is not the end (as a Pastor, if you are so inclined, I would refer you to the book of Revelation for more info on the end).It is easy to get frustrated, even depressed when reading all the stuff that is out there -

• surviving the Recession
• worst since the depression
• gloom and doom on Wall Street
• Chaos in the Financial Markets
• When will we hit bottom

We need to remember that the job of the media (including some blogs!) is to make money, to sell. And bad news sells. For instance, my grandmother is 93 years old. She lived through the Great Depression - and this no Great Depression. It might be time to take a step back, take a deep breath, maybe even skip the news for a few days. Focus on your goals, readjust if necessary: cut back a little bit, save a little bit more, etc.

But don’t panic or go into a funk. And definitely don’t believe everything you read. And if you really want the scoop, go to my Grandmother, or go to a nursing home and visit - make their day by caring and listening, and get a little perspective on life as a bonus.

Yea! After over four years, the last of the adoptions is done. Our 7, 6, and 5 year old are now legally ours. As the judge said, the state is just acknowledging what is already a fact - that they are our children! The three girls are sisters (same mother, 3 different fathers). Now only 1 or 2 more lawyer bills to wipe out my emergency fund.

Our family is going away for the rest of the week - I took some vacation time and we are going to a local resort that has fabolous food, an indoor waterpark, etc. We will meet up with the grandparents and have a wonderful family time. In the spirit of the ocassion, I will probably break most of my  financial rules!

I received my Tax Refund yesterday - a whole $100! I try to keep my refund as low as possible. It’s part of my philosophy of not “lending” money to government or companies for free. I don’t like giving free loans. So at the beginning of the year I estimate my taxes, and then I have only what I think I will need taken out - I keep the rest. This allows me to have more income during the year, and allows me, if I am good, to put more into savings and earn interest. I do the same with companies - that is why I recently opened an online checking account - I was tired of my local bank having my money for free. At least now I get a little interest.

Not only do I try not to give “free loans”, but I try to get free loans for myself. For example, my cell phone provider allows me to put my bill on credit card. I pay it off every month, but I get a “float”. More importantly, I get cash back for paying a bill.

None of this will make me rich, but a penny saved…

There’s a lot of noise going on in the blogosphere, the news, and around the water cooler. Basically it can be summed up by - What do I do? Interest rates falling, Stocks on a wild ride, Congress and the President proposing tax rebates. Which leads to questions like…

• Do I buy or sell stocks now?
• Should I refinance my loans now?
• Is now a good time to buy or sell a home?
• What should I do with my rebate check?

And you can go just about anywhere for advice. But I’m not. Believe it or not, I actually learned something in business school! The basic premise that I was taught is that you develop your financial plan, then you apply it, then you make adjustments as needed. Or as I like to say - You plan your work (finances) and work your plan. And that is what I am doing.

For example, my current plan is to invest in a 403-B plan at work (similar to a 401-K). My employer takes x amount every month and sends it to my stock fund of choice. I invest it in Vanguard Index funds. Since I believe one of the best ways to invest is by not timing the market, but by regular and systematic investments, in the short run I do not care what the stock market does - if it goes up - I buy fewer stocks with my fixed amount. If the market goes down - I buy more stocks. Either way I am following my plan (buy fewer stocks when the price is high, buy more stocks when it is a good value). I do not let the hysteria and foolishness of others affect my plan.

Likewise, if I get a “rebate” from the government, I will follow my plan - which is to put any extra available money towards Home Equity Debt reduction. That has been my plan for the past year, which I have done whether money comes along from expected or unexpected ways.

The bottom line is that if you have taken the time to plan, really plan, then outside events like these are opportunities. Obviously as new information or significant events happen you may have to realign or adjust your plan, but that is a lot better than just being tossed about in a sea of change without a compass.