I recently read an article by a banking group called Mission Management and Consultants, LLC , who are mortgage bankers and project finance specialists. They work with nonprofits and schools in their financing needs.

According to their article, historically there were four components that bankers and underwriters would look at in determining a borrower’s fitness for a loan:

1. Income of the borrower (ability to pay the new loan)
2. Equity in the project (how much are they putting down, what % of the project is being financed)
3. Stability of the Leadership of the organization (how long has leadership been in place, what is the turnover rate for leadership, etc.)
4. Stability of congregation (if a religious organization) or enrollment (if school)

After all that has happened in the economy, the article talked about bankers using a fifth component – Liquidity when looking at credit approval. Liquidity is a measure of cash on hand. Based on their requirements, they like to see at least 4-6 months of operating reserves in place.

Although individuals are not companies or nonprofits, these 5 components are not bad measures for us to use – especially if we are thinking about taking out loans for cars, projects, etc.

• Is our income adequate to service our current debt without that debt being a burden?
• Are we putting enough down on the project? I would never recommend putting 0% down. I think the old rule of at least 20% down is still a good guideline. If you can’t do that, you may want to rethink going ahead.
• How stable is your family situation? Is divorce on the horizon? Are there major changes coming – a new baby, sickness or death of a loved one? These life events need to be factored in.
• How stable is your work environment? Is your industry prone to layoffs? Your company stable?
• Do you have an adequate emergency fund (liquidity)?

Although these are not all the factors, it is a good place to start to evaluate your current financial situation. With these 5 factors in mind, how are you financially?

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One snow cost me money, the last snow saved me money.

We live in a really windy area. The last snow storm, although only a few inches, came with high winds that caused drifting. I had left one vehicle in the garage – the garage door was drifted shut. I left the other vehicle at the top of the hill predicting that my garage doors would drift shut – unfortunately the way the wind came it drifted that vehicle in also. We were stuck.

We had been planning on going to a restaurant that was having a special. They have a smorgasbord and they were only charging $5 per person because of a “grand reopening.” So my family and I were going to take advantage of that special (more than 1/2 off per person) and we had invited my parents to come along. It would have cost us $35 (7 people), plus tip and taxes – probably about $50. Not bad for 7 people. However we had already spent our restaurant budget for the month of February.

Well, being snowed in canceled our plans. We were bummed. But the more I thought about it, the more I realized that it was probably a good thing. We had gotten caught up in the promotion, and even though I didn’t have the money we were going to find a way. It’s not that $50 would have been the end of the world, but we are really trying not to overspend right now, and are trying to save our pennies as much as we can.

This was a good reminder to me how hard it is to save and resist temptation. That special was tempting. Yes it would have been fun, but it would have set us back. And right now we really can’t afford setbacks. And again, although it was only $50, sometimes temptation is bigger – that furniture store deal, or the car deal, or the vacation deal.

I’m glad we didn’t get to go – in fact my wife and I are both actually really happy that it didn’t work out. I guess a snow storm can be a blessing and a teacher!

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I finished doing all my taxes – Federal, State, and Local. I owed on the State ($39) and the Local ($14), but am getting a return on the Federal ($679).  I try to keep my return very small – I don’t like “loaning” money to the Federal Government interest free. This year my return was bigger than expected because I forgot about the “Making Work Pay” credit. If it wouldn’t have been for that I would probably have owed a little bit, about $120. I will probably have to adjust my withholding and increase the amount of taxes I pay per paycheck so I don’t get stuck owing next year.

I used H&R Block’s software again this year  (Taxcut or Home Edition I guess they call it now). It worked okay – I thought it was a little cumbersome compared to last year, but it did the job. I use it for both my State and Federal Tax. It only took me about 5 hours or so to do my taxes. Since I am organized, it didn’t take long to pull all the documents I needed. I think the longest part was waiting for the printer to spit out all the documents.

This year  I had to mail my tax return in because of some extra forms I needed to submit, which is a bummer. I wish I could electronically file. It makes it easier and quicker, and you get your money so much faster. Now I will have to wait weeks instead of days. Yuck. But at least I am done.

Anyone out there also finished with their taxes? How did it go this year?

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Children are expensive. And as my children are getting older (7, 8, and 9) and they start doing extracurricular activities, it can get very expensive. But so far my wife and I have been able to keep the costs down – some of that is through diligence, some of it is because of the kindness of others.

For instance, when our girls were a little younger they had an interest in ballet. Well, ballet can cost $25 or more per week per child. With three girls that would be $300 a month, which is pretty serious money. However, my wife was reading our local free paper and saw an advertisement for a ballet school not far from us, and the name of the instructor rang a bell. She called up, and here it was a classmate from college. They reconnected, and out of kindness she let our girls come for free!

Last Fall one of our girls wanted to try horseback riding. My wife found someone willing to trade services – horseback riding for homeschool evaluations. So we swapped and everyone was happy.

Our oldest girl wanted to try soccer. We looked and looked. Everything was multiple practices, games on Sunday (occupational hazard – we cannot do anything on Sunday since I am a Pastor). Finally, we saw in our local free paper that there was going to be a noncompetitive soccer “league” for boys and girls that only met once a week on Saturdays for about nine weeks – and it was only $35!. We were thrilled, my daughter was thrilled.

Finally, our middle daughter wanted to try piano. Again, Piano can be expensive. So we asked around, and we continued to ask around, even asking friends of friends. We came across a lady who loves piano, who has been giving lessons for years, and she only charges $20 a month (yes that’s right – $20 a month!) for weekly lessons. This women loves piano and she wants others to learn to love the piano also and she doesn’t want cost to be a barrier. Our daughter had her first lesson last night and this lady was fantastic – definitely the right choice.

All of this to say that if you are willing to work hard, keep your eyes and ears open and really search, you can find activities for your children that do not cost an arm and a leg. And everyone will be the richer for it – your children for the experiences, and you in your pocketbook!

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I had to run my wife to the doctor yesterday – she has an infection in her lungs. Yuck! Afterward, I stopped by our local grocery store to pick up something for the family to eat that would be easy and quick to make. I decided on soup. There,in the soup isle,  sitting on top of some cans of soup was a coupon for a dollar off! A “coupon angel” left it there for someone else to use – and I did!

That was a little pick me up in an otherwise down type of day. It was a reminder to me that little thoughtful things like that can make a big difference in someone’s day. Have you been a little “financial” angel to someone recently? If you have – thank you!

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I went to purchase some gardening plants online last week. After making my selections and starting the checkout process, there was a space for a discount code. But I didn’t have one. So I took a minute, opened up a search engine and typed in “_________(company name) discount code”. There are tons of sites that offer codes. Places like retailmenot.com, ultimatecoupons.com, keepcash.com, couponcraze.com, simplybestcoupons, befrugal.com, etc.

After choosing a code, I went back to the checkout process, entered the code, and yeah! – I saved 10% off my order. Not bad for a few minutes work. This is something that is easy, and although you may not always find a code, I have been pretty successful and have saved some hard earned pennies – all for just a quick search! Now that is easy money!

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A lot of people at this time of year like to make New Year’s Resolutions. I don’t. I like to set goals. The difference? A New Year’s Resolution is usually a wish, a generic “I would like to…”. Goals on the other hand are specific, measurable, and attainable.

I sit down (usually with my wife) and I map out where we would like to be at the end of the year – whether it is financially or some other area of our life. Then I sit down to determine how to measure that goal, and the steps it will take to achieve it.

For example, our Emergency Fund has taken several  big hits recently (windows and a well pump). So one of my goals for next year is to build back up our emergency fund. Now that is still too general – a good goal will state how much I want to put into the emergency fund this year (specific, say $3000), and the steps I will take to achieve that. With money, it is pretty easy to set goals because money is measurable (either I will have put the money into the emergency fund or not).

I believe it is very important to set goals, especially financial ones. Otherwise, you will be tempted to spend your money on whatever comes along rather than having an objective for your money. If you don’t know where you are going, than any road will take you there.I hope we all know where we are going financially.

What are some of your financial goals for this year? Share in the comments where you are headed this year. I will close this post with one of my favorite quotes – “Failing to plan is planning to fail.”

Have a great New Year!

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Our three children were in a summer reading program through our public library. This year, they got all kinds of “goodies” for completing the program. One was a free Rita’s Italian Ice. After clipping a coupon from the local paper (seperate story – we don’t get a paper, but the other Sunday they sent us a promotional copy) that had a buy one get one free, we went to Rita’s and the whole family of five got Italian Ice for $4.00. Good job Rita’s!

The children also got gift cards for Subway – $5.00 each. So we went to subway last Friday for supper. We went to pay, the cahier said that each child had to check out seperately, their computer system only allowed one gift card per order. What? So instead of getting $15 off the entire order, it was each child having to ring through seperately which left a whole 75 cents on each card that my wife and I couldn’t use on our order. Not so good. Maybe we will go back with the kids and let them get a cookie (which is about 75 cents). Subway needs to change that unfriendly customer policy.

With all of that said, if you have school age children, I would encourage you to check out your local library summer reading program – it was good for our children and it saved us a few pennies. A win win situation!

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I have a confession to make. I like western movies. Actually, I love them. So the other day I watched again “The Pale Rider” starring Clint Eastwood as the mysterious man who saves a struggling mining camp from the rich land baron. In one scene in the movie, a miner finally finds gold. After hooting and hollering he comes to Clint Eastwood and says that he is going to throw a party to celebrate. The Clint Eastwood character says “that should be enough to pay off your debts“.  Of course the miner listens to Mr. Eastwood. And so should we!

It is tempting when things go right, when there is a little extra cash, to spend it. I know I face this (and have failed). But usually the best thing to do is to pay down debt. Pay down the credit card, the 2nd mortgage, the car loan, even the student loan. Debt is a heavy anchor, and the sooner we can be free from it the better. Every penny we put toward our debt not only reduces the debt by a penny, but reduces the interest we owe. That is why even a little bit extra toward a debt goes a long way.

So take Mr. Eastwood’s advice. When a little extra “gold” comes your way, pay down your debts. It will make his day.

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Someone stole my credit card number from my Wells Fargo Credit Card. I went online to check my balance (which is a good thing to do on a regular basis). Since we hadn’t used the card for over a week I wasn’t expecting anything new, but to my surprise there was a charge made on Friday July 24th (this was Tuesday July 28).

I noticed it right away because it was a charge for $180 at Victoria’s Secret. I knew I hadn’t purchased anything there (ever), and my wife does not shop there (ever). So I called Wells Fargo and they started a Fraud Investigation, cancelled our existing account, and sent us new cards – they were very professional and have done a great job so far in this situation.

Now, I have a wonderful marriage (Thank you Honey!). And my wife and I are in constant communication with each other, including finances. But what if we didn’t talk regularly, especially about money? I could have missed that charge thinking she bought something. Or worse, what if we didn’t have the level of trust that we have? I could be thinking who did she buy Victoria’s secret for? Or she could be thinking who did I buy it for? And we could be mistrusting each other or arguing, etc. instead of trying to resolve the fraud!

It was a reminder to me that a good marriage can make for good finances.

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