Wednesday, March 5th, 2008
Today I’d like for us to think about why it’s important to live a frugal life.
--It’s not to avoid debt, though that’s a big part of it. Being frugal is the key to stop the use of consumer debt as a lifestyle tool.
--And it’s not to have money left over after our expenses to invest and build wealth with, though that’s certainly part of it too.
Living frugally has one goal: to enable us to have money left over after our needs are met to give as generously as possible to God-led initiatives.
William Penn, the founder of Pennsylvania and an influential Quaker in the Colonial era, wrote a small book called Some Fruits of Solitude. In it he wrote about this very topic,
“Frugality is good, if Liberality be join’d with it. The first is leaving off superfluous Expences; the last bestowing them to the Benefit of others that need. The first without the last begins Covetousness; the last without the first begins Prodigality: Both together make an excellent Temper. Happy the Place where ever that is found.” (Some Fruits of Solitude, William Penn, Reflection #50).
“Frugality is good, if Liberality be join’d with it”
Being frugal and then giving away the wealth you’ve created to meet the needs of other people is a good thing. What isn’t good? Two things Penn says.
“The first (frugality) without the last (liberality) begins Covetousness”
Being frugal without an eye to giving away what we don’t use for our own needs leads to “Covetousness.” That’s not a word we use anymore. Greed is a fairly good synonym for covetousness. It was one of the “seven deadly sins” identified by medieval theologians. Basically it is a thirst for what we don’t have. Being frugal, Penn says, without liberally giving away what we retain to those in need simply creates a thirst for getting more money.
“the last (liberality) without the first (frugality) begins Prodigality”
Prodigality was another old English word we don’t use anymore. Prodigality simply meant “excessive spending.” It was a description of lavishness.
Have you ever met someone who gave away lots of money they didn’t have? That’s prodigality. Giving away money you don’t have, while putting money on credit cards and having nothing in savings, is just as bad, according to Penn, as being stingy and never giving money away.
“Both together make an excellent Temper. Happy the Place where ever that is found.”
To me, that’s the goal of frugality. Not so much the act of giving but what happens to people as they give.
As a pastor much of my time is spent in the reclamation business – helping people reclaim their lives out of the ditches they’ve allowed themselves to drive into (having, of course, driven myself into many ditches myself).
Probably the biggest ditch people drive themselves into is divorce.
Excessive spending is usually the vehicle.
Show me a marriage where a couple has (1) learned to work together on their finances and (2) learned to live as frugally as possible and (3) taken their excess resources and given them away to God-inspired needs…you show me that marriage and I’ll show you a home where a sign could be placed in the old English idiom, “Happy the Place.”
The Goal of Living Frugally (Frugal Pastor – Part 8)
Does God Want Me To Get Rich? (Frugal Pastor – Part 7)
Wednesday, February 27, 2008
Over the years I've discovered two primary reasons Christians fail to save for important future needs.
First, we’re lazy. Be honest. Creating wealth takes discipline.
Second, and more important, we think God doesn’t want us to create wealth in the first place.
We’ve read a few scriptures out of context and taken them to mean that God thinks any planning for the future is bad and that any desire to build wealth is evil. So what do we do? We use consumer debt as a lifestyle tool and never amass the wealth we need to cover important future needs.
Proverbs 13:11 says, “Whoever gathers money little by little makes it grow.”
You do that over thirty and forty years and any Christian living on a modest salary can amass a considerable amount of wealth. But is that biblical? Does God want us to get wealthy?
Here’s what we do know God thinks about people getting rich…
--God doesn’t want us to amass wealth to fund a lavish lifestyle (Luke 12:15)
--God doesn’t want us to amass wealth to replace him as our ultimate source of security (Matthew 6:24, 33-34)
--God doesn’t want us to cultivate a desire to create wealth just for the sake of doing it (Ecclesiastes 5:10)
--God doesn’t want us to amass wealth so people will treat us differently (James 2:1-4)
Creating wealth for any of these reasons is sinful and goes against God’s best for us, and in the end will destroy our faith, our families, and ultimately our lives (1 Timothy 6:6-10).
But that doesn’t mean that God doesn’t want us to create wealth. On the contrary, one of the godliest things someone can do with their money is slowly and honestly make it grow over time.
Why does God want us to build wealth?
1. God wants us to provide for our own personal needs (both present and future) and not shift that responsibility onto our families, church and government.
The Apostle Paul told the new Christians in the Greek city of Thessalonica, “For even when we were with you, we gave you this rule: Anyone who is unwilling to work shall not eat” (2 Thessalonians 3:10).
If you are 25 years old, over a 40 year working lifetime you will need to amass considerable wealth, into the millions, to save for your retirement. This is a godly activity. Why? If you don’t, someone else will have to take care of you.
2. God wants us to provide for the needs of our family.
The Apostle Paul instructed, “Anyone who does not provide for their relatives, and especially for their own household, has denied the faith and is worse than an unbeliever” (1 Timothy 5:8).
I have three daughters. I calculated a few months back that it will take anywhere between $300,000 and $400,000 to put them all through college. I can stick them with that bill and leverage their futures to the hilt with student loans, or I can plan, save, and build wealth slowly and honestly over time. Saving for our children’s college is a godly activity.
Do you have aging parents? Do you have other family members in need? The same rule applies. If we can create wealth and don’t and those needs have to be met by someone else, we are dishonoring God. Period.
3. God wants us to leave an inheritance to our children.
Proverbs 13:22 says, “Good people leave an inheritance for their children's children, but a sinner's wealth is stored up for the righteous.”
Creating wealth to leave our children is a priority in God’s mind. That’s a godly activity.
4. Beyond tithing, God wants us to give considerable amounts of money away to the needy within and without our church and to spread world evangelism.
Read 2 Corinthians 9:10-11, Matthew 6:1-4, and Acts 4:34-35.
If we’re not about the business of slowly and honestly gathering money little by little and making it grow, who exactly is going to fund these important activities?
Are we just going abandon wealth-building activities and let people who will waste money on their own lifestyles accumulate all the wealth?
As Dave Ramsey says,
“The bottom line is, if you take the stand that managing wealth is evil, then by default you leave all the wealth to the evil people. If wealth is spiritually bad, then good people can’t have it, so all the bad people get it…If we all abandon money because some misguided souls view it as evil, then the only ones with money will be the pornographer, the drug dealer, or the pimp.” (The Total Money Makeover, p. 221-222)
So does God want Christians to become wealthy if they can do so with the proper attitude?
Absolutely.
Does God want us to live wealthy lifestyles?
Absolutely not.
My wife’s Aunt Janet became a single mom when her husband tragically died of leukemia while their son was just an infant. She’s never made more than $20,000 a year.
Over the last thirty years she raised her son, put him through college debt free, saved for retirement, paid off the mortgage on a nice home, and given generously to her church and just about every kingdom need that has come across her plate. She has never purchased a car on credit. She never uses credit cards. She is as frugal as they come.
Janet created wealth with the money God gave her and became rich. Janet then used that wealth wisely to meet her life's needs as they arose in her life.
She has saved consistently.
She has given generously.
She has lived frugally.
And everyone would say that she has lived well.
Best of all, she will die broke, having met all her life’s needs and then having given away the rest to family, the church, and missions.
If you ask me, I believe with all my heart that God wants people to become “rich” like Lisa’s Aunt Janet.
Can you imagine what the church would look like if everyone lived like her?
Live frugally. Give generously. Live well.
Brian
6 Places To Find Quick Money To Pay Off Consumer Debt (Frugal Pastor – Part 6)
Tuesday, February 26, 2008
Once you’ve become radically committed to paying off consumer debt in record time, where do you come up with extra money (once you’ve trimmed every place you can trim)?
Here are six places to find some extra cash in the next three months to radically pay down debt…
1. Ask for a raise
Unlike what I do for a living, most people I know can get more money just by asking. When was the last time you asked for a raise? Google “how to ask for a raise” and a zillion articles will come up to give you tips. Pray about it. Get all your ducks in a row. Set up an appointment with your supervisor and get your butt in there and tell them why you’re worth more to your company more than you’re getting paid. What’s the worst that can happen?
2. Trade in your air miles on your credit card for cash
Years ago when I was trying to pay off a credit card I discovered that Capital One will allow you to get a cash payout instead of getting a free airline ticket. Get the cash!
3. Have H&R Block check your last three year’s tax returns
A couple years ago someone mentioned this to me and I had H&R Block re-check my 2004 tax return. I had missed a deduction and once they refilled I got a check from the good ole US government for $3750! Checking your past returns is free. Re-filing is $50.
4. Go to the library, check out 5 personal finances books, and glean the 10 best ideas from all of them
The people I know who get out of debt quickly and begin slowly building personal wealth are always voracious readers. If your library doesn’t have a certain book in stock, have them find it through interlibrary loan. Here are a few books you need to read. Pour over these books and look for the best ideas that apply to your situation. Overtime you’ll find they all start saying the same thing, but eventually, at some point, something’s going to “click.”
The Total Money Makeover – Dave Ramsey
The Millionaire Next Door – Thomas Stanley
The Wealthy Barber – David Chilton
Your Money or Your Life – Joe Dominguez (if you only have time for one, read this!)
All Your Worth – Elizabeth Warren
The Average Family's Guide to Financial Freedom -- Toohey
America’s Cheapest Family -- Steve and Annette Economides
The Boglehead’s Guide to Investing -- Taylor Larimore
Smart Couple’s Finish Rich – David Bach
5. Make an Ebay/garage sale pile and sell it all by June 1st
My friend Frank Chiapperino is an Ebay master. Slow but sure he’ll sell an item for $5 here, $3 here, and $27 there. Overtime he’ll build up enough cash to buy something he really wants, all from junk he doesn’t use anymore. Be a wise steward of the stuff God has entrusted to you. If you don’t use it anymore, sell it. Hang up flyers at grocery stores. Ebay it. Have a garage sale.
6. Pull everything out of non-retirement savings accounts except $1,000 and pay off as much as you can
Listen, I’m not an investment guy, so I’m not about to start giving out investment tips. But I believe what Dave Ramsey writes. Why have non-retirement money sitting around in CD’s, checking and money market accounts earning 3-5% when you’re paying off a car loan or credit card at 7 to 9%? Even if you have a 0% loan, it’s still a depreciating asset. You’re paying money on something that is losing money while all the time you’re not paying yourself money into an account that’s making money.
Proverbs 22:7 says, “The rich rule over the poor, and the borrower is slave to the lender.”
If you have consumer debt, that verse is describing you. Get fanatical and make 2008 the year you get yourself out of that mess!
Live frugally. Give generously. Live well.
Brian
Two Hours A Week – The Key To Building Wealth (Frugal Pastor – Part 5)
Monday, February 25, 2008
How much time do you spend each week improving your financial health?
One of the first things I did when I became serious about getting my financial life in shape was make a commitment to spend 2 hours a week, every week, on financial stuff. Not paying bills, but working on a proactive list of things to do to improve my financial health. I do this every week in addition to the 15 minutes a day I spend on entering receipts into Quicken, paying on-going bills, and moving money little by little into savings.
I became serious about doing this when I read a quote in The Millionaire Next Door. It said,
“Although both prodigious accumulators and under accumulators of wealth state similar goals about achieving wealth, these groups have completely different orientations when it comes to how much time they actually spend on wealth-building activities. Prodigious accumulators of wealth allocate nearly twice the number of hours per month to planning their financial investments as under accumulators of wealth do” (The Millionaire Next Door, 71).
It hit me that the only time I spent working on my financial picture each month was paying bills. I didn’t spend any time beyond that being strategic: looking for ways to save and invest. That was like paying attention to the proverbial “trees” and not taking time to see the whole “forest.”
Here are a few simple changes I made:
1. I created an on-going list in my laptop called “Financial Things To Attend To.” Real catchy, huh? Whenever I have an idea that hits me to improve my financial health I add it to that list.
2. Once a week, usually on early Saturday mornings, I go to my office and break open that file and begin working on that list one by one.
For instance, This past Saturday I contacted all my airline miles accounts to figure out how many frequent flyer miles I have in each and made a plan for which one to focus on to get the max miles for summer vacation.
Then I transferred some money from one savings account to another for a higher interest rate.
Then I bought the Entertainment Book for $15.
Then I revised my annual budget to take into account the cost of summer camps and how much I needed to save in the next four months to cover them.
Next week’s list is pretty simple: 1. Contact Verizon about reducing cell phone plan 2. Finish update on our wills 3. Explore refinancing mortgage (rates low enough?) and on and on.
3. I limit myself to just 2 hours a week on that list. That’s it. My goal is not to become obsessed with finances, but organized, proactive and constantly looking out for new ways to maximize what God has entrusted to me. It’s all about stewardship.
Jesus told a story about three guys who were given cash. Two went out and doubled their money. One went on autopilot and didn’t lose any, but didn’t make any either. Who do you think Jesus said was the bad guy in the story? You got it. The one who neither made nor lost money.
Make a commitment today to become someone who is always looking for ways to double what Jesus has given to you, whether it be money, health or joy.
Live frugally. Give generously. Live well.
Brian
10 Ways To Cut Your Monthly Car Expenses (Frugal Pastor -- Part 4)
Tuesday, February 19, 2008
I have a friend who loves cars. He’s constantly buying new cars, sizing them up, comparing them to the latest models that come out, and reading about them in magazines. His cars are always waxed and in immaculate condition. Not coincidently my friend is flat broke. You just wouldn’t know it by the cars he drives. Everyone thinks he’s rich.
Cars are horrible investments, and if you aren’t socking away enough for retirement every month, have 3 months cash in the bank for emergency expenses, and are on track for other big expenses coming up like college, then the last hobby you need too is tinkering around with cars.
Repeat after me, “Cars are for transportation, not self-esteem enhancement.”
Here are a few things I’ve learned from friends over the years that have enabled me to make a big dent in my monthly car expenses:
1. Find a local gas station that consistently sells the cheapest gas.
One really cool website I found is http://gasprices.mapquest.com/. It tracks the gas prices of every single gas station in the US. Check it out over a few weeks time and determine who sells the cheapest gas in your area and frequent that gas station.
2. Buy regular gas.
Your car will be okay using the same gas that the “commoners” use. It will perform the same and give you the same gas mileage. Everyone on the planet that drives a high end luxury car will say I’m clueless, but I don’t believe them.
3. Don’t let the car idle.
Use the “thirty-second rule.” If you will sit outside the school waiting for your son to come out from band practice and estimate you will wait more than 30 seconds, turn your car off. Automotive experts everywhere say that will vastly cut down on gas consumption.
4. Drive as close to the speed limit as you can.
I don’t actually do this, but felt I needed to put this in here! I do need to change in this area.
5. Regularly check and replace your tire pressure, air filter and engine oil.
This the place where most car experts say we drivers lose 10-15% of our gas mileage. I’ve tried to get in the habit of filling up once a week and checking these at that time, but I still struggle with consistency.
6. Cross your heart, hope to die, stick a needle in your eye that this is going to be the last car you will ever buy on credit.
My wife’s aunt is a real role model in our family. Lisa’s aunt pays herself a car payment every month into a savings account. She’ll buy a reliable car and drive that for 10 years and then take cash from the bank and buy another one. She’s never bought a car on credit. Ever. I don’t think she’s ever earned more than $20,000 a year.
USA Today notes that the average car payment is $378 over 55 months. Most people get a car payment and keep it throughout their lives. As soon as a car is paid off, they get another payment because they “need” a new car. But Christian financial advisor Dave Ramsey observes that if you invested $378 per month from age 25 to 65, a normal working lifetime, in the average mutual fund averaging the 70 year stock market average yield, you would have $4,447,084.01 at age 65.
7. Make plans to drive your current car into the ground.
Check out http://www.junkycarclub.com/ to see how people are making it a goal to drive cars that are paid off, are ten years old and older, and then using the money they save to help children around the world. Deciding in your mind up front that they’ll have to pry the cold hard lifeless steering wheel from your hands changes your mindset. My car is 8 years old and has 74,000 miles on it. My plan is to keep it until the wrecker takes it away. Because of this I pay a little closer attention to maintenance than I normally would.
8. Find a mechanic before you need one.
You know where you will go if you need groceries, right? Why not when your car needs fixed. Shoot out an email to everyone in your email database and ask who they use to fix their cars. For instance, my favorite place to buy tires is http://www.creamerytire.com/. They consistently have the cheapest prices and get me in and out in 15 minutes with no appointment. The problem is I’m still looking for a trustworthy auto mechanic in our area. I’m a moron when it comes to judging what I really need when the mechanic calls up and says, "Um, Mr. Jones, it appears that your car needs a _________ but the good news it will only be $657 plus labor.”
9. Talk over every potential car expenditure over $200 with someone smarter than you.
My dad knows cars inside and out, so whenever I’m in a position to buy a car or get one fixed I’m on the phone with him. He’s saved me thousands over the years just talking me through stuff.
10. Explore raising your deductible on the collision part of insurance from $100/200 to $500 a month.
Just call your agent up and say, “Hey, help me save some money. What can I do to lower my monthly premiums?” I’ve always found my State Farm person to be incredibly helpful.
Live frugally. Give generously. Live well.
Brian
10 Ways To Save At The Grocery Store (Frugal Pastor – Part 3)
In my last post I talked about identifying the top 30 places we potentially waste money. Since everybody has a tendency to eat, the grocery store is a likely candidate for everyone’s list. Here are ten things I’ve done to reduce our grocery bill by about $150 each month.
I know there are people out there that have gone crazy with some pretty cool but far-out/time-intensive ideas for saving $ at the grocery store, but honestly, I’m not interested in becoming Amish to save a few bucks.
Here are a few things that anyone can do to save cash at the grocery…
1. Create an exhaustive shopping inventory list
When I pulled a grocery shopping coup d’état in our household and took over grocery shopping duties, one of the first things I did was begin compiling a list of everything we buy. Over time I compiled an exact list of everything – food, personal products (ex. hairspray), household products (ex. lightbulbs, air filters), and automotive products (ex. Oil, fluids, filters). That’s my shopping list. It’s all on one crammed sheet. On the side are sections for each meal for the week.
2. Shop the same time, same day, same process, and same stores every single week
Every Monday on my day off I print out my inventory list and check everything in the house (and the list I keep on the fridge of stuff during the week when I think of it). Then, having gotten the input of the entire clan the night before, I make the dinner menu plan for the whole week. My whole goal is to shop ONE TIME that week. I’ve found the secret to spending more money is to have multiple people shopping a bunch of stores more than once a week. The more people go to stores, the more they spend, period.
3. Find the cheapest stores and master them
I have a simple route I take each Monday (most days unless I’m behind). First, I go to Wal-Mart. If there’s anything on my list I always get it there. 9 times out of 10 it’s cheaper than any grocery on personal products and non-perishables. Second, I go to Lowes for any remaining household items on the list. Then I go to Giant for whatever groceries remain on the list. Every week I try to master those three stores – coupons, aisles, sales, etc.
4. Find coupons, but don’t go overboard
We find coupons four ways 1. cards mailed to us 2. midweek circulars 3. online coupons at Giant’s website and 4. the Sunday paper (which in Philly really comes on Saturday, go figure!). Sometimes I’m able to find additional online coupons (but usually waste time searching). I used to have a complex box to hold them, but that actually wasted more time than anything else. Now I just put them in a Ziploc baggy. When I print out the inventory sheet and circle my items to be purchased I simply mark a “C” next to the items I have coupons for.
5. Use the 15 second rule
If you pull something off the shelf to buy it, make a point to spend an additional 15 seconds looking lower, higher and around that product for something cheaper. Most stores put their money makers at eye-level.
6. Buy generic/bulk only if you will use it and save money
Many times it is cheaper to buy name brands with coupons, but not always.
7. Don’t take your kids
Let them play in the street unattended before you take them to the grocery store. :) Kids, especially older kids, will add to the bill.
8. If married, challenge each other
Lisa and I have a little healthy competition going when it comes to grocery shopping, and it saves us money. She’s convinced I spend more than she does. I’m convinced running around to multiple stores chasing sales wastes more time and money. So we have this whole “let’s see who can save more money” thing going on. Couple friends of ours actually have an on-going competition to see who can save more with coupons. $150 saved at the end of the month is $150 in the bank. $150 invested in a simple ING savings account every month for five years is $10,000.
9. Buy canisters for cereal
Like my pictures ? (I'm proud of myself...didn't know I could actually shoot a picture and get it up on the blog). The best thing I did recently was buy five canisters for our cereal. For the longest time I always noticed remnants of cereal at the bottom of the box. It was a waste because it was never enough for a bowl. Now with the canisters I can buy cereal in bulk, save money, see what’s left, and become the cereal Nazi and tell people “no empty canister, no new cereal for you!” It’s also environmental. And besides, removing the box will also allow you the opportunity to buy generic without anyone knowing about it.
10. Finally, always shoot for monthly savings, not weekly savings
The more you save, the more you have in cash reserves. The more you have in cash reserves the more you can buy things on sale when they come up that will save you money on your monthly bill, but not necessarily on your weekly bill.
For instance, the last time I went to the grocery I used a coupon and doubled it on a sale item and bought TWO things of laundry detergent. I usually only buy one, but now I’m set for a very, very long time. I spent more that week, but will save boatloads over three months.
I know for a fact that most of you are better at this than me, so I would love to hear your ideas for saving at the grocery store
Live frugally. Give generously. Live well.
12 Ways To Save Big (Frugal Pastor—Part 2)
Thursday, February 14, 2008
1. Pray that God helps you save this year
One of the biggest mistakes we make is thinking that money is evil and that God is concerned with more “spiritual” things. Money is intensely spiritual. Pray that God makes you a frugal person and a fanatic saver/investor.
2. Find out where your money is going
One advantage of using Quicken is that you can have a print-out in seconds of what you spent last week, month, year, decade. Where is your money going? How much to debt service? Eating out? Housing expenses? We can’t change what we don’t track and understand.
3. Identify your “throw-away threshold”
Every person alive is willing to waste money. The question is how much? Starting with 1 cent and working your way up, at what point do you move from being unconcerned to concerned about waste? Years ago I identified $9 as my “throw-away threshold.” If I needed to eat out or was at the store and needed something that cost $4, $6, or $8, I bought it without thinking. Once I got to $9 I started to squirm a bit. Throwing away $10 was a problem. Mentally throwing away $9 wasn’t. $9 was my throw-away threshold. The problem was that $6, $7, or $8 is a lot of money when multiplied 15 or 20 times a month. Now I’m a fanatic about saving $9 bucks. I’m nuts about it. What’s your threshold? Your throw-away threshold is what stands in between you and creating wealth.
4. Reduce the top 30 elephants in your spending
The Italian economist Pareto said, “If you’re Noah, and your ark begins to sink, look for the elephants first.” What are the top 30 places you potentially waste the most money? Are there hidden fees? Is there a way to cut this cost altogether? Can you shop around for different services, stores, or online?
5. Create simple savings goals, in writing, together (if married)
Everyone says the same thing – save for retirement first, then sock 3-6 months into an emergency fund, then move on to big ticket items like a house, college for kids, and then expand from there. Blah, blah, blah. Who cares if one person has stellar financial goals if the other one doesn’t buy into them? My wife has always been the real saver in the family. But for years she would save and I would spend. It wasn’t until we identified common goals together that she got me to agree to modify my spending habits. I had to feel the goals first before I could change my habits.
6. Discipline yourself to put $100 into savings after every paycheck (and keep increasing by $25 until it starts to hurt)
Do this immediately. Do this before you even start cutting expenses.
7. Ask your vendors how to save money
Businesses view everyone they spend money with as “vendors” and negotiate in an on-going fashion how they can lower their costs. You should too. I’ve begun asking everyone I meet in the stores I frequent one simple question, “How can I save money here?”
8. Create a Yahoo or Gmail account and sign up for everything
Most vendors send coupons through email now. Sign up for every rewards program at every store you frequent, but give them your junk email account. Check that once a week or month and print off what you need.
9. Google “coupon codes” when shopping online
When I purchased an updated version of Willmaker 2008 I went to Google and typed, “Willmaker 2008 coupon code” and found a 15% off code on some website. I do that EVERY time I buy something online.
10. Transfer the money you save immediately
One of the benefits of having an online savings account is you can transfer any amount of money at any time. If I save $40 at the grocery I will go home and immediately transfer $40 into my ING online savings account. That feeling feeds on itself over time. Start saving $100 a paycheck and then $40 and $20 and $60 here and there, and just watch how much you can save by the end of the month.
11. Identify your annual “Big Ticket” expenses and save ahead
Most people get into trouble not so much with monthly, on-going expenses, but with annual things they don’t plan for—vacation, Christmas, back to school, birthdays, etc. That was always the case with me. Have you identified the 4-5 “extra” things you will do/spend/need for 2008 and are you making plans to save accordingly?
12. Completely flip out on yourself for getting into consumer debt
Have you gotten sufficiently angry over robbing your 2008 savings because of 2007 debt? I’ve discovered things don’t change until I’m ticked off about them. Make right now the moment when you get hacked off enough to stop shooting yourself in the foot financially. Get mad enough to change. Remember, it’s never too late to change, ever. But you probably won’t change until you get mad first.
Live frugally. Give generously. Live well.
Brian
10 Ways To Get Financially Organized (Frugal Pastor—Part 1)
Tuesday, February 13, 2008
Before our marriage Lisa and I decided that I would do the checkbook. Big mistake. Three months into our marriage I had screwed it up so bad that I took it to the bank and asked a teller to help me unscramble what I had done. Two and a half hours later she said, “Let’s just close this and start over.”
Today my tax guy says I’m the most over-kill organized guy he does taxes for. To me, becoming a frugal person begins and ends with organization. I don’t think it’s possible to maximize your finances without becoming slightly anal. I’m sure you probably already do most of these, but here are TEN ways to go from checkbook nightmare guy to H&R Block customer of the month.
1. Set up “Financial central” somewhere in your house. Pick a place in your house, set up a desk and computer, and make that the place where you immediately place incoming bills for payment, etc. For me it’s my home office desk in the basement.
2. Create an “incoming bills to be paid” file on your desk. Everyday when something new comes in I file it. I have a simple three-section file I got from Staples and have divided it into first pay period bills, second pay period bills, and misc.
3. Buy Quicken 2008. Like yesterday. A number of years ago I switched from doing the checkbook by paper to doing it on my computer. My financial organization quadrupled. Instead of hours, I now spend minutes doing our finances. Quicken is set up to look like a checkbook and is so simple that, well, I can do it. You can set up a budget, print reports, etc.
4. Automate your bills. Every single on-going bill I pay, including my tithe, is done through automatic withdraw. Doing so saves time and postage. I have created a “Bills Due Schedule” and check off each bill I pay on which pay period.
5. Take 10 minutes a day, every day, to reconcile your checkbook. Every morning I gather our receipts and enter them into Quicken. There is an “update” feature in Quicken which automatically reconciles your computer ledger to the bank. I know what I have in checking to the penny, every single day. Each transaction is labeled and linked to my budget. Every morning I take a post-it and write down how much is in checking and stick it on the top of the checkbook for Lisa to see.
6. Create file folders for all your receipts. Once a year, every year, I create new files for all my receipts – “2008 Debt – Mortgage” or “2008 Housing – Electric”. They are stored in my desk. Every expense I have has a corresponding file in which that receipt goes. Each time I pay a bill I put that receipt in its file folder. Years ago I used to just throw receipts into a big plastic tub and spend years trying to find receipts to return stuff and prepare for taxes.
7. Print your budget vs. expenses each month and discuss it with your spouse. At the end of every month Lisa and I look at our Quicken budget income vs. expenses budget report and talk about how we can improve the next month and what bills we have coming up. If you’re married, like in everything else, communication and common planning is vital for staying organized financially.
8. Find a great tax person. My tax guy saves me thousands of dollars every year. No joke. I used to brag that I did my own taxes and then realized that my tax situation was becoming too complex. Little did I realize that if I had started using a tax professional years prior, I would have saved even more money and had been vastly more organized. I’ve learned that to become frugal you have to think monthly quarterly and annually, instead of weekly. A great tax guy will help you plan your year, prepare/save for any taxes owed, and as a result give you piece of mind. If you are confident your taxes are so simple that you won't save any money by using a tax professional, I'd still use a program like Tax Cut.
9. Get a will. Do you have one? Is it up to date? One inexpensive option is to get Willmaker 2008. It will walk you through the creation of your will, and once done you can get it notarized and filled appropriately. Willmaker will also walk you through designating your final healthcare wishes, funeral arrangements, etc. Simply put, if you don’t have a will that takes care of your kids and property after death, your lack of organization will hurt those you love severely. Get Willmaker. Contact a lawyer. Something is better than nothing.
10. Create a Balance Sheet. Every accountant and business type knows what a balance sheet is. It is a statement that shows your financial position. It is a listing of all your assets (money in saving and equity in property owned) minus your liabilities (all debts to be paid). What’s left-over is your family’s net worth. I think one of the keys to getting and staying organized is creating a balance sheet that you update once a quarter. True wealth is not your lifestyle (houses, cars, vacations, clothes, clubs), but your net worth (what you would have in the bank if you sold everything and paid off all your debst). If you don’t see your net worth go up quarter after quarter, you aren’t building wealth. Keeping that target in mind at all times is a great motivation to becoming more frugal.
On Monday I saved $40 in coupons at the grocery store. I’m taking that $40 I saved and putting that directly into savings in my ING Direct account online. 15 minutes of coupon clipping saved me $40 which will earn me 3.4% interest in savings. That simple act of cutting coupons and saving $40 added $40 to my net worth.
Live frugally. Give generously. Live well.
Brian
Frugal Pastor Blog Posts
Tuesday, February 13, 2008
For a while now I’ve wanted to do a series of blog posts about practical ways to become more frugal. Years ago I prayed a simple prayer, “God, help me become a more frugal person.” Over time, the more I prayed that prayer, God slowly helped me find ways to cut expenses, save money, and give sacrificially towards some pretty cool God-led stuff.
So starting today I’m going to begin a series of posts on this subject, and I’d like to consider them a conversation more than anything else because I’m by no means an expert in this area. And, quite frankly, part of the reason I’m doing this is to steal great ideas from you. So as I share some things I’ve learned over the years please share your good ideas as well.
Live frugally. Give generously. Live well.
Brian
Who Wants To Be A Millionaire?
Tuesday, February 5th
A book that has had a tremendous influence on the way I think about money is a book called, The Millionaire Next Door.
I don’t know if you’ve ever read it. It’s a little old, but it’s a fascinating read. Basically, the authors, Dr. Thomas Stanley and Dr. William Danko, wanted to discover who the millionaires in the United States were and how they got rich. The book outlines what they discovered.
The authors began by saying,
“Twenty years ago we began by studying how people become wealthy. Initially, we did it just as you might have imagined — by surveying people in so-called upscale neighborhoods across the country. In time we discovered something odd. Many people who live in expensive homes and drive luxury cars do not actually have much wealth.
Then we discovered something even odder. Many people who have a great deal of wealth do not even live in upscale neighborhoods. Most people have it all wrong about wealth in America. Wealth is not the same as income. If you make a good income each year and spend it all, you’re not getting any wealthier. You’re just living high. Wealth is what you accumulate, not what you spend.”
Here were some surprising characteristics of millionaires discovered by the authors:
--Eighty-percent of the people were millionaires because they’re self-made millionaires. In other words, people couldn't look at them and say, “Well, they’re millionaires because their mom or dad gave them money. They inherited money.”
--Most had good but modest household incomes. Most didn’t make more than $110,000 a year. Many had a household income of $75,000 to $80,000 a year.
--Most lived in modest homes. The average millionaire that they surveyed lived in a home valued at $320,000.
--About half of the wives didn’t work outside the home. It wasn’t like they became millionaires because of dual incomes. The #1 occupation for wives that did work was a teacher.
--Most had common jobs that many would consider quite dull — welding contractors, auctioneers, rice farmers, owners of mobile park homes, pest controllers, paving contractors.
--The average millionaire drives a late model Ford truck.
--They wear inexpensive suits.
--They rarely buy expensive watches.
--They don’t take elaborate vacations.
What did the authors say made these people millionaires?
1. They use budgets meticulously.
They said that when they started sharing this information around the country in seminars, people would ask, “Why would people who are millionaires budget?” They said the answer was very simple. They became millionaires because they were meticulous budgeters. They maintained their wealth because they were meticulous budgeters.
2. They learned to control their spending.
The metaphor that they used in the book is that people who have limited income but become millionaires have a good offense. They go out and make as much money as they can. But they also have a good defense. They lower their spending considerably.
3. They defined wealth differently –Wealth = Net Worth (not lifestyle)
The biggest reason they’ve become millionaires is the way they define wealth. To the average millionaire, wealth is not the abundance of material possessions — big homes, luxury cars, vacations, private schools. Wealth is the money you have in the bank after you’ve paid all your bills.
The author said there was a phrase used by a Texas millionaire that aptly described people that lived way beyond their means: “Big hat, no cattle.” Or as Proverbs 13:7 says, “One person pretends to be rich, yet has nothing. Another pretends to be poor, yet has great wealth.”
Good Morning America -- Money & Churches
Friday, January 25th
I thought this clip from Good Morning America was pretty interesting so I had our team tape it and copy it to You Tube. Seems like our church isn't the only one out there trying to help people do finances God's way. Check it out:
A Different Kind of Christmas
Tuesday, January 8th
The Sunday before Christmas I killed my sermon for the day and went on a twenty-five minute rant that began by me saying,
“People just don’t get how stupid and anti-Christian Christmas has become."
And ended with,
"Should we celebrate Christmas as a family? Absolutely. But just realize that God wants you to celebrate the holiday of Christmas no more than he wants you to celebrate the Holiday of St. Patrick’s Day. A Christ follower could never celebrate Christmas the rest of his or her life and God would be cool with that."
I thought people were going to tar and feather me and kick me out on my can. Instead, at the end of my 25 minute talk, people applauded.
I talked about how the Bible never told us to celebrate Jesus' birth and how Christmas came to be in the first place and how by promoting the "holiday of Christmas" the church gives people the impression that we condone living an unchristian lifestyle (ie. God is cool with going into debt and God himself has created a holiday to bless us with more material stuff).
You can listen to it online or podcast it by clicking HERE.
Anyway, I share that because there's been such a surge at our church to create a counter-cultural approach to celebrating Christmas next year that we're creating a "CCV Christmas Covenant" that we're going to ask all of the families at our church to read, sign, and practice this coming Christmas.
Here's a preliminary cut at a first draft that I shared in my message this past Sunday:
CCV Christmas Covenant
As a family we will seek to make Christ the center of our Christmas holiday celebration by…
1. Creating a modest budget and commit as a family not to buy any gifts on credit (and share budget as a family if appropriate).
2. Going together as a family to serve the poor at an outreach event set up by the church.
3. Adopting a child/family locally or oversees and purchasing items they need in proportion to the money we spend on ourselves. (Question – “Are we sacrificing to give this gift?”)
4. Reading the Christmas story (Luke 2) on Christmas Eve as a family and asking each other something like, “What’s the greatest gift Jesus gave you this year?” and ending with someone praying.
5. Create a family “savings jar” and save money as a family from Thanksgiving until Christmas Eve and bring that offering to CCV’s Christmas Eve services and give towards the annual benevolence event to take place the following year (On Christmas Eve we raised enough money to build 2 homes in Mexico for two impoverished families and send 40 volunteers...pretty cool stuff).
6. Make a gift “from the heart” for each person of the family (cannot be purchased…meant to be a memento that expresses the love we have for that person).
Let's do Christmas different next year...both at CCV and beyond!
