Budgeting, Credit Cards, Credit Counseling, Debt, Money Management, Saving

Ask Chuck: Move Back from the Financial Cliff

By: Crown Financial Ministries, Chuck Bentley

Dear Chuck,

Our finances are stretched so thin that I am stressed out all the time. We live on a budget, but my husband and I both need some hope that it will not always be this way.

Living on a Financial Cliff

Dear Living on a Financial Cliff,

There is certainly reason for hope, so hang on!

Let’s put your challenges in a current economic context and then a Biblical context before I offer some practical tips to help you through this painful time.

Economic Context

With the lingering impact of inflation, a new CNBC survey reports that 70% of Americans say they, too, are feeling financial stress, and 58% report they are living paycheck to paycheck. The report pointed to several specific concerns, including a lack of savings and a dependency on debt.

“People are worried that the money they’ve saved won’t last and are worried they’re going to have to lean more on their credit cards and other sources of debt just to get by,” said Bruce McClary, a senior vice president at the National Foundation for Credit Counseling.

With rapidly increasing costs, higher interest rates, and a sense of economic uncertainty in the air, many are feeling like their finances are balanced on a razor’s edge with no margin for error.

Biblical Context

The Bible is full of people who had to face incredible amounts of stress. It is also full of principles and truth that help us to reframe our present circumstances. I am reminded of Romans 8:18–21:

I consider that our present sufferings are not worth comparing with the glory that will be revealed in us. For the creation waits in eager expectation for the children of God to be revealed. For the creation was subjected to frustration, not by its own choice, but by the will of the one who subjected it, in hope that the creation itself will be liberated from its bondage to decay and brought into the freedom and glory of the children of God. (NIV)

We live in a fallen world—in bondage to decay—because of mankind’s disobedience to God, but a promise of freedom and redemption awaits those who are children of God. Considering our eternal future, our present trials and tribulations are insignificant. Remember to keep your present cares and burdens in the context that this is not our home. We temporarily manage what God provides and seek to be faithful until we have finished our race.

Help in Reducing Your Financial Challenges

Three very practical steps will help you reduce the immediate pain you are in.

First, no matter how much or how little income you have each week or month, be sure that you are spending less than that amount. Think of the old game of limbo, where you have to bend your body to get under a bar without knocking it off. The bar represents your income. Your attempts to get under it represent your control over your spending. That is why a budget is so very helpful. You can adjust your expenses to ensure that you never exceed the height of the bar (your weekly or monthly income).

Second, build an emergency savings fund. You need at least $1,000 set aside to help with unexpected expenses. That is the bare minimum. Set a goal of saving three months of overhead. Emergencies always happen, so this is non-negotiable. In the CNBC survey, most of those who report living paycheck to paycheck say they do not have any money saved. This is like flying through the air on a trapeze bar without a safety net. It is scary! Crown has some free tools to help you get that accomplished. Perhaps you need to adjust your budget. You might benefit from our budgeting resources and a coach.

Finally, make a plan to reduce your debt and break any dependence on credit cards, store accounts, buy-now-pay-later plans, or payday loans. The largest expense in most American budgets today is the interest expense on debt. Just imagine how free you would feel without debt hanging over you each month. We partner with Christian Credit Counselors to help free people from this burden.

Thank you for writing. Please know that we want to help! May God give you His peace and the freedom you so desire.

Christian Credit Counselors is a trusted source of support in assisting people with getting on the road to financial freedom. Reach out to them today; they may be of great benefit to you.

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Retirement & 401k

5 Things You May Not Know About an IRA

By: FaithFi, Rob West & Jim Henry

Do you think you know everything about your IRA? Find out by taking this pop quiz.

First, a little inspiration. Proverbs 18:15 reads, “An intelligent heart acquires knowledge, and the ear of the wise seeks knowledge.” So let’s seek some knowledge about IRAs.

Don’t worry, our quiz won’t count toward your final grade and just to make it easy, these will all be true or false questions.

Question #1: You can’t open an Individual Retirement Account if you already have a qualified retirement plan with your employer. True or false?

It’s actually false. An IRA can be a great way to supplement your retirement savings, even if you have a 401k or 403b with your employer. In 2023, you can contribute up to $6,500 to a traditional or Roth IRA, or $7,500 if you’re 50 or older. You can even have a traditional *and* a Roth IRA, but the combined contributions must not exceed those limits.

Question #2: You can invest in anything in an IRA. True or false?

That one is false. Your IRA isn’t an investment in itself. It’s more like a bucket that holds your investments, which are managed by the account’s custodian. That custodian will offer you a wide variety of investment options, like bonds, money market funds, stocks, and mutual funds, but there are limits. You can’t invest in things like whole life insurance policies, antiques, or physical precious metals (that last one requires a different animal, a self-directed IRA.

Question #3: If you should die, your IRA must go through probate and be distributed to your heirs according to your will. True or false?

That one, fortunately, is also false. Like many financial accounts, your IRA allows you to name one or more beneficiaries to receive those funds in the event of your death. The beneficiary designation supersedes anything specified in a will and prevents the IRA from going through the sometimes lengthy probate process. You do, however, have to keep the beneficiary designation up to date if you go through a major life change, such as the death of a spouse. The custodian can’t read your mind, so making your intentions known with a new beneficiary designation is necessary.

Question #4: At some point, you have to take money out of your IRA. True or false?

Unfortunately, that one is true. Traditional IRAs come with Required Minimum Distributions or RMDs. When you retire, you may not need the income generated by your IRA, and you’d be perfectly content to just let those assets accumulate. Uncle Sam, however, sees it differently. He wants his cut and is only willing to wait so long. That means you’ll have to start taking money out of your traditional IRA by April 1st of the year after the year you turn 73 and a half. In 2033, the age for RMDs will be extended to 75.

Now, if you’re worried that you’ll need a calculator and calendar to figure all that out, don’t worry. IRA custodians are required to send you an RMD notice by January 31 each year and you really want to pay attention to those notices. If you fail to take an RMD on time, the penalty is a whopping 25% of every dollar you failed to withdraw. This is why a Roth IRA is sometimes a better alternative since it’s funded with after-tax dollars and has no required minimum distributions.

Question #5: You can’t borrow from your traditional IRA. True or false?

That is also true. While you may be allowed to borrow from a 401k or 403b, (not advisable, by the way) you can’t borrow from an IRA even for a good cause like buying a house or sending your kid to college. If you withdraw funds from your traditional IRA, the money will be added to your adjusted gross income and taxed at your income tax rate and a large withdrawal could push some of your income into a higher tax bracket. You certainly don’t want to do that.

That’s our pop quiz. We hope you did well. Now pass your papers to the front, please.

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Economy, Finance

Are Banks Even Safe Anymore?

By: Crown Financial Ministries, Chuck Bentley

Dear Chuck,

This banking crisis has me nervous. How bad is it? Should we trust our small regional banks? Where should we put our money?

Widowed and Worried

Dear Widowed and Worried,

As you are, we should all be concerned and paying attention. This is a very real and dangerous economic challenge.

What Happened?

Silicon Valley Bank and Signature Bank are the 2nd and 3rd largest bank failures in U.S. history, topped only by Washington Mutual, which collapsed in the financial crisis of 2008. 94% of Silicon Valley’s deposits were uninsured, as were 90% at Signature. SVB had a concentration of tech startups, and Signature had a significant number of holders of cryptocurrencies. Together, the banks held combined assets of nearly $320 billion.

The assets at SVB were too heavy in long-term treasury bonds that were purchased before the Fed raised interest rates. Their value decreased as investors preferred new bonds that earn higher rates. Rather than analyzing the market value of the bonds, the accounting value gave a false portrayal of the bank’s status. To calm a run on banks, the current administration guaranteed uninsured deposits at both banks, and the Federal Reserve announced a lending program for institutions needing to borrow money to cover withdrawals. Over time, the FDIC fund will have to be replenished, possibly by a “special assessment” on banks that customers will undoubtedly have to pay in fees.

“The principle of sound money was ignored by the Fed. SVB violated principles of diversification and prudence. It set aside its fiduciary duty to steward the assets of others and focus on business, not ideology.” (Jerry Bowyer)

Bank Contagion

I don’t pretend to be an economist or understand the complexity of the current banking crisis. I do know that the First Republic Bank is also distressed and had to be rescued by its rivals. Credit Suisse, a century-old European stalwart bank, had to be rescued by rival UBS (United Bank of Switzerland) for it to remain solvent. While some are calling for more bank reform and regulation as the solution, the Federal Reserve is working overtime to stop runs on banks and ease the fears of depositors like you and me. By some indications, as of this writing, those measures are working to diminish the fear of a complete banking meltdown.

What To Do with My Money Now?

An in-depth article in Fortune Magazine gives insight into the history of bank failures and some helpful advice on managing your bank accounts. Here are a few tips from my perspective:

  • Make sure that your money is in an institution that is FDIC-insured. The Federal Deposit Insurance Corporation guarantees deposits up to $250,000 in checking/saving accounts and CDs—$500,000 for joint accounts. If you have more than that in one place, then open accounts with other banks. Do NOT procrastinate.
  • Know the rating of your banks: A, B, C, D. Grades are based on credit risk, duration risk, and portfolio composition. How much do they have in US Treasury bonds and mortgage-backed securities? Fitch Ratings publishes a global heat map of the bank ratings they track. Don’t hesitate to ask your banker for their grade/score.
  • If you have retirement accounts, remember to diversify your investments.
  • Get your financial house in order. Spend less than you earn, and build emergency savings. Track your spending, and find a budget you will actually use. We have multiple resources on our website. Financial margin creates options and strength during a crisis.
  • Don’t panic! Making rash decisions based on fear usually leads to poor results.
  • Stay informed. There will be ripple effects from this.

The Economic Finger Trap

One side of our economic challenges can be solved by controlling inflation, which requires raising interest rates. The other side can be controlled by increasing liquidity in our banks, thereby increasing inflation. Some say the Fed will be choosing between generational inflation and another banking crisis in the days ahead.

“A prudent person foresees danger and takes precautions. The simpleton goes blindly on and suffers the consequences.” Proverbs 27:12

The coming days will be interesting indeed. This should be a wake-up call to millions of people, especially Christians. We need to live prepared for any of these possible scenarios.

The Crown God Is Faithful devotional offers inspiring and practical Biblical wisdom. You can subscribe to receive daily devotionals that will help transform your finances and provide much-needed encouragement. May it be a blessing!

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College Debt, Student Loans

Ask Chuck: Are Student Loans a Rip-Off?

By: Chuck Bentley, Crown Financial Ministries

Dear Chuck,

When students were paying 10% on student loans, we couldn’t get 1% interest on the money we put in savings. It seems like students and families who continue to take these loans are getting ripped off. Would you please address usury?

Looks Like Usury to Me

Dear Looks Like Usury to Me, 

This question has many aspects to it that I will attempt to address: first, the problems of usury and rip-offs and, then, some possible solutions to student loan debt.  

Usury

Usury, as defined by Merriam-Webster, is “the lending of money with an interest charge for its use, especially the lending of money at exorbitant interest rates.” Usury laws are an attempt to protect people from predatory lenders who tend to take advantage of people in desperate circumstances. 

Typical federal student-loan rates for people with good credit today range from 4.99% to 7%. In the case that you cited, a 10% interest rate for student loans is above the market rate but does not fall into the definition of usury. It appears that way when compared to the market rate for passive savings, but you have to compare it to the available market for student loans. 

Student loans are legal and optional, and most do not borrow the money under desperate circumstances but rather to pursue a desired goal. However, many students and families who take on these loans are unaware of the long-term consequences. 

Rip-Offs 

Student loan debt is second only to mortgage debt in America, as millions borrow to attend school in hopes of a brighter future and an increase in lifetime earning power. But the “borrow your way to a diploma” method continues to get more expensive and is unlikely to change soon. 

“How Government-Guaranteed Student Loans Killed the American Dream for Millions” by Daniel Kowalski reveals that there is absolutely no incentive for colleges and universities to lower their prices. He reports that in 1980, there were 3,231 higher-education institutions in the U.S., but by 2016, there were 4,360. In reference to a Forbes article, he says that the average price of tuition has increased eight times faster than wages since the 1980s.

Another Forbes article states that the tuition at Harvard in 1840 was $75 a year. If that price had risen at the same rate as prices (or the inflation rate), the cost in 2015 would have been $1,703, not $45,278. (2022-23 tuition is $52,659.) “But it is arguable whether today’s college graduate is in a real sense more educated than ones in 1840 when individuals like Samuel F.B. Morse and John Deer were revolutionizing communications and agriculture, and some with far lesser education (think Abraham Lincoln) were making big contributions in law and politics,” the article states.

Today, many college graduates are underemployed, but there is no evidence this was a problem among 19th-century graduates. As federal aid has increased, so have tuition fees. The proportion of recent college graduates (the article is dated 2015) from the bottom quartile of the income distribution is lower today than in 1970—before Pell Grants or massive federal loan programs. In addition, administrators now outnumber faculty. 

Student loans have benefitted colleges and universities, with the burden falling on students, taxpayers, and those hoping to get a degree in the future.  

Many people are discovering that their assumption that a university education was necessary for financial security was false. The opposite has happened. Students often graduate with diplomas and debt, sometimes in the hundreds of thousands of dollars—but without job security.  

Merrill Matthews wrote a compelling article titled “University Endowments Should be the Primary Source of Student Loans.” “At the end of fiscal year 2020, the market value of the endowment funds of colleges and universities was $691 billion . . . If colleges and universities had to turn to their endowments as the first line of student loans, they might decide to get their costs under control,” the article states.

How to Avoid Student Loans

Parents should not borrow money for their children’s higher education. If you want to help cover a university education, start saving early. Demand academic excellence from your schools to prepare your children to qualify for scholarships. I used to tell my boys that getting good grades would be the highest-paying job they could have in high school. Our rule was that nobody would borrow to attend college. Either we would find a way to pay for it via savings and scholarships and jobs while in school, or they would not attend.  

Here are some tips for students who want to get an education without borrowing money:  

  • Start saving early, and learn how to budget. 
  • Research average salaries for careers that interest you before going to college.
  • Consider trade schools.
  • Consider careers that do not require a college degree.
  • Fill out the FAFSA (Free Application for Federal Student Aid) early.
  • Apply for grants and scholarships early.
  • Students should work part-time, live at home, and take advantage of community colleges. 
  • Accelerate time to complete the college degree by:
    • Taking AP and college courses in high school.
    • Attending summer and winter classes. 
    • Taking more than the average number of hours of classes. 
  • Rent or buy used textbooks.
  • Become a resident assistant (RA) to get free room and board.
  • Pray, and seek wise counsel. 

Dealing with Student Loan Debt

If you have a student loan now, look at refinancing options to reduce your interest rate. Make a plan to apply all extra income toward the reduction of the debt. Attempt to pay it off as soon as possible. Ask the Lord to give you help in accomplishing this goal.

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College Debt, Student Loans

Recognizing Student Loan Scams

By: The Consumer Financial Protection Bureau (CFPB)

Numerous student loan borrowers recently submitted complaints to the CFPB about companies that promised them student loan forgiveness or loan forbearance in exchange for fees amounting to hundreds or thousands of dollars. Borrowers believed they were talking to their servicer or a company authorized by the U.S. Department of Education (ED) because they often knew private information such as the borrower’s loan balance or recent consolidation activity. This is fraud.

Legitimate options for getting rid of your federal student loans:

  • Loan forgiveness is not available for all student loan borrowers at this time, though there are programs to forgive federal student loans for specific borrowers, such as public service employees, and discharge loans in other circumstances. On October 6th, 2021, the ED updated the Public Service Loan Forgiveness (PSLF) program to provide a limited-time opportunity for student loan borrowers to receive credit for payments that would otherwise not qualify for PSLF. This opportunity ends on Oct. 31, 2022.
  • Eligible borrowers can now apply for a full or partial discharge of loans up to $20,000. This one-time debt relief is provided by the ED as part of the Biden-Harris Administration student debt relief plan. As of today, the application is open but debt discharge is paused. Due to a court order, the ED is temporarily blocked from processing debt discharges. However, eligible borrowers are still encouraged to apply (no later than Dec. 31, 2023). The ED will continue to review applications and quickly process discharges when they are able to do so.
  • Federal student loan servicers cannot charge you to apply for loan forgiveness, income-driven repayment (IDR), deferment, forbearance, or to file any other paperwork. Federal loan servicers do not charge any application or processing fees to consolidate your federal loans into a Direct Consolidation Loan.
  • The CARES Act pause on payments and interest for federally held student loans has been extended through Dec. 31, 2022. Forbearance on qualifying loans will happen automatically. No one will contact you to sign up for CARES Act forbearance. There is no fee to enroll in CARES Act forbearance. If your payment will be too high when the pause ends, please reach out to your servicer directly to explore a variety of payment relief options. Your federal loan servicer will not charge you any application or processing fees to help you switch to a different repayment plan such as an IDR plan or enroll in any of the deferment or forbearance options available to you.

In addition to submitting complaints to the CFPB and the Federal Trade Commission (FTC), we encourage consumers to learn how to recognize these scams and how to report scammers to authorities.

Here are some red flags to watch out for:

  • Charging upfront fees for free programs

Scammers often attempt to charge for programs that all borrowers can access for free, including preparing the paperwork. Loan forgiveness or discharge (to the extent those programs are available to you), loan consolidation, student loan forbearance, and deferment are all free programs provided by your servicer. If a company is asking you to pay large amounts of money upfront, it is likely a scam and should be reported. Do not give any money or personal information to the company. Contact your loan servicer to determine what options are available to you. You can find out who your servicer is by logging in to your Federal Student Aid account or calling 1-800-433-3243.

  • Pressure to decide quickly

Scammers might tell you that you only have 24 hours to take advantage of an offer or program. This is a red flag. Most government-offered programs do not require this sense of urgency. Confirm whether this is a legitimate company before you take any additional steps.

  • Encouraging you to cut off communications with your loan servicer

This is a warning sign that this company is not working in your best interest. As a student loan borrower, it’s important for you to maintain communication with your servicer. If someone urges you to make payments to their company instead of your loan servicer or to stop communicating with your loan servicer, do not give them any information. Do not stop making payments to your servicer.

  • Claiming to be affiliated with your loan servicer or the ED

Scammers might name-drop organizations you have a loan account with. Be careful of statements like “we work with the Department of Education” or “we’re partnered with your loan servicer.” If someone contacts you and claims to be partnered with your loan servicer, hang up the phone and contact your loan servicer directly to confirm. Call the number provided on your billing statement or through your servicer’s web portal. Do not use the contact information provided in an email or voicemail message.

There might be times when your student loan servicer contacts you about Public Service Loan Forgiveness (PSLF). As part of a recent settlement with the CFPB, Edfinancial, a federal student loan servicer, is required to contact all of its Federal Family Education Loan Program (FFELP) borrowers to inform them of the limited PSLF waiver so that eligible borrowers can take advantage of the waiver before it expires.

  • Asking for personal information via email or over the phone

Scammers often ask for personal information like your full Social Security number, bank account number, FSA ID, or studentaid.gov password. Do not give any personal information to an unverified company over the phone. If you suspect the caller may be a scammer, hang up and contact your servicer directly to determine if there are any actions required for your loan. If you have provided your personal information to a scammer, we have listed some tips for avoiding scams below.

Tips for avoiding scams

  • The person contacting you might have correct information about you or your loan, but that doesn’t mean they’re legitimate. Some scammers knew the borrower’s loan balance or about their recent application for consolidation. This led borrowers to believe they were talking to their servicer or another legitimate entity.
  • Don’t share your personal information. Consumers reported being asked for their Social Security number, bank information, FSA ID, and studentaid.gov login information. This allows them to steal your money and cut you off from your servicer, so they can’t notify you of missed payments.
  • Don’t sign a power of attorney. Some consumers have been asked to sign a power of attorney allowing the company to deal with the student loan servicer on their behalf. This allows them to make financial decisions for you. Don’t give this power to someone unless you know them personally and trust them!
  • Stay in contact with your servicer. Sign into your student loan servicer’s web portal to periodically check in on your loans. Any notices for your student loans will be available through your servicer’s website.
  • Take your time. An honest company will not pressure you to make a decision quickly. If you’re unsure, end the conversation and research the company to confirm whether or not they are legitimate.
  • Keep track of your student loans. Student loans can be confusing, and scammers rely on that. If you know the types of loans you have and who your servicer is, it’s harder for scammers to take advantage.

If you’ve been contacted by a scammer or defrauded

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Economy, Investing

Putting Your Money to Work

By: MoneyWise

Most of us make money by working a job, but there is another way to make money — and that’s by putting money itself to work. Getting your money to earn more money is crucial if you’re going to build a nest egg for the future.

There are five basic things you can do with money: (1) You can earn it, (2) live on it, (3) give some away, (4) owe it to someone (or a business or government), and (5) you can grow it for the future.

This article will focus on the last one: growing your money.

The run-up in inflation that we’ve seen over the past year-and-a-half makes it clear that finding ways to grow your money is essential. If you put money in the bank and earn a 1% or 2% annual return while inflation is running at 7% or 8% annually, you’re falling behind— way behind.

Inflation means that the money you put in the bank will have significantly less purchasing power when you take it out than when you put it in. That’s why it’s so important to increase the growth rate of your money, to try to keep up with, or in the best possible case, to outpace inflation.

There are many options to do that, but each calls for investing your money in some way. The safest approach right now would be to invest in government I bonds. The “I” stands for inflation. These bonds, guaranteed by the U.S. government, are designed to keep pace with inflation.

Unfortunately, I bonds carry restrictions, such as a $10,000 per-person limit on how much you can invest each year. Further, you can’t hold I bonds in a retirement account such as an IRA or a company-sponsored 401(k) plan.

So, to get your money growing to match or beat inflation, you have to go beyond super-safe I bonds and look to investments that grow with the economy.

For most people, investing in the stock market is the easiest way to do this. That scares some people. After all, stocks can go down as well as up, but to get your money to grow requires you to take some risk.

The good news is that you can minimize the risk of investing in stocks if you spread your money across many companies and stay invested for a long time. Being broadly invested and staying the course over a long time are two key ways of reducing risk.

The easiest way to broadly invest is to hold mutual funds that contain shares of many companies. Some funds hold the stock of hundreds of companies and those funds have tended to do quite well over time.

Of course, no one knows the future. This year has been a tough one for the market so far. Next year could be terrific, or it could be worse. We don’t know. But history tells us that those who invest broadly and steadily over a long time almost always come out ahead.

As your investments grow over time, the earnings on them can purchase more shares. Those new shares will grow and allow you to purchase still more shares.

This “compounding” growth is what helps keep you up with—or outpace inflation. The effect of compounding, given enough time, is remarkable. It can turn relatively modest investments of thousands of dollars a year into millions over a few decades. That’s why compound interest is often called the “8th Wonder of the World.”

This is not without danger, however. Investing can foster bad things in your life, such as greed when the investment markets are performing well and fear when they’re not. As a Christian investor, you need to be on your guard. Don’t let greed and fear take over. Instead, seek to be a wise and faithful steward who takes a reasonable amount of risk to prepare for future needs.

It’s possible to take excessive risk with your investments. Proverbs 13:11 warns, “Wealth gained hastily will dwindle, but whoever gathers little by little will increase it.” It’s also possible to take too little risk, which likely will result in you not being financially prepared for your later years.

As a steward of what belongs to God, it’s your role to find the right balance as you seek to put your money to work and make it grow.

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Budgeting, College Debt, Kids & Money, Money Management, Saving, Student Loans

Ask Chuck: How Do I Financially Prepare My Child for College?

By: Chuck Bentley, Crown Financial Ministries

Dear Chuck,

I’ve tried to prepare my daughter to handle money responsibly while she’s away at college. But, I’m concerned that peer pressure and the stress of classes will throw her off track. Any tips?

Budget-Minded Mom

Dear Budget-Minded,

Congratulations are in order for preparing her for this crucial transition. Far too many students leave home without a clue how to manage money and are vulnerable to making life-altering messes.

While most Americans assume that student loan and consumer debt is the only way to get a college education today, this is simply not true, regardless of income. I have a friend who immigrated here from China. She only had $2,000 to help her daughter when she left for college. When her daughter finished her undergraduate and decided to seek a master’s degree, her mother asked if she needed financial help. Turns out that her daughter had been able to graduate without borrowing money and still had cash in the bank. She explained that she had been saving and investing for years and had $70,000 cash in the bank before entering grad school!

Financial preparedness for college students and young adults is crucial today. Demands come from all directions and unless students understand the value of a dollar, they can blow through spending money and quickly rack up consumer debt and long-term student loan debt before they ever realize the consequences ahead. 

Having raised four sons, we can appreciate your concerns but also want you to know that it is possible for our children to swim against the tide. 

Set Clear Boundaries

Make sure there is a clear understanding of what you will pay for and what your student is required to cover. Typically, students are more careful with the money they have earned, so avoid robbing them of an important lesson by giving them everything. 

For example, if they have a car at college, determine who will pay for gas, insurance, tags, parking, maintenance, and repairs. If they’re going to be responsible for those expenses, then they need to find a part-time job. That’s real life! If you plan to cover the expenses, have clear stipulations and terms (e.g. you’ll only cover those costs as long as they remain in school and maintain a decent grade point average). Every family situation is different, but the goal is to grow financially mature adults.

Some Practical Tips 

Here are a few additional tips you may want to teach the young people in your life:

  • Exercise self-control. Don’t drink, smoke, or binge with money
  • Live like you’re poor in college and you won’t be when you graduate!
  • The earlier you save and invest, the more you’ll have for your future
  • Boundaries now grant freedom later
  • Be careful loaning money
  • Keep healthy snacks on hand and in a backpack
  • Use cash to avoid overspending
  • Avoid debt. Period. Set a goal to graduate without student loans or consumer debt.

What They Need to Know

  • How to use a checking account and debit card – understand bank fees
  • How to make deposits into a savings account – preferably at a different bank to avoid easy withdrawals
  • How to use a credit card wisely – pay it off in full each month
  • How to make a budget and keep track of expenses
  • The importance of good credit and how to establish it
  • The joy of giving and saving with intentionality
  • Student loans will be offered but try to avoid them

Prevent Medical Expenses

  • Cook healthy meals or use a meal plan wisely
  • Sleep, exercise, avoid alcohol and drugs
  • Seek a community of Godly friends
  • Take care of mental health: limit social media, join a church, volunteer

Practical Tips

  • Keep $100 tucked away in your wallet for emergencies only
  • Guard personal information
  • Know how and where to buy/sell used textbooks
  • How to study well, apply for scholarships, and work part-time
  • Know identity in Christ to withstand peer pressure, FOMO, and comparison traps
  • Live at home or with another relative to save dorm/apartment fees
  • Know how to make coffee, cook, and do laundry
  • Get to know the financial aid counselors
  • Work on campus: saves time/gas, and opens doors to deeper relationships with staff

Preparing our youth financially will give them a step ahead of most people. Diligence requires purpose, intentionality, and resolve. It requires renewing the mind and working toward specific goals. May they be filled with the understanding of who they are in Christ and the knowledge that they are stewards of what He gives.

And whatever you do, in word or deed, do everything in the name of the Lord Jesus, giving thanks to God the Father through him. (Colossians 3:17 ESV)

Whatever you do, work heartily, as for the Lord and not for men, knowing that from the Lord you will receive the inheritance as your reward. You are serving the Lord Christ. (Colossians 3:23-24 ESV)

By discussing your daughter’s financial needs, desires, and habits regularly now, you can help her avoid the mistakes that most make plus prepare her for the next stage of her career without the bondage of debt-driven decisions.

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College Debt, Student Loans

6 Lines of Thought That Result in Significant Student Loan Debt

By: MoneyWise

Student loan debt is a significant issue. Many high school students are receiving their diplomas and heading off to college.

How will they cover the costs? Based on statistics, a significant number will use debt.

Why? It is not purely a function of costs. Sometimes, students believe some lines of thought that result in significant student loan debt.

If you are a student, try to avoid these lines of thought:

  1. Attending a costly school will get me a better job. Higher tuition does not always equate to higher salaries. Employers do not look at the amount you paid to get a college degree. They just look at your degree. This is especially true after your first job. After your first job, where you went to school starts to take a back seat to your prior work experience. Find a school that makes financial sense for you.
  2. I need the “college experience.” Certainly, there is nothing wrong with enjoying your time in college, especially if it works with your finances. But more and more students are realizing that having the “college experience” is not worth having the college debt. Instead of attending social after social, they are getting jobs to help offset their tuition costs. They are working hard to make sure they are not still paying for their education ten years after graduation.
  3. It is ok to stretch out college. Certainly, there is some leniency here, but be very careful when choosing to stretch out your degree program. Two things can happen. First, you tend to end up paying more. This is especially true if you find yourself unable to pay for living expenses. Second, you run a greater risk of not completing your degree. And don’t take throwaway classes. Make your investment worth it. Finish your degree in a timely manner.
  4. I don’t need to know what I am signing. You should educate yourself on student loans. Before you sign any papers, understand what you are committing to. Know what it will take to pay off the loan. Also, know how it compares to other alternatives. You will need to understand your loan when you’re paying it off, so you better understand it prior to signing the agreement.
  5. Everything will take care of itself. Student loans don’t just go away. They even survive bankruptcy. I’m less concerned with the student who feels burdened by their loans than the one who feels no burden from their debt. Student loans are a debt to be repaid and students need to view them as such.
  6. There is no other option. Without question, the cost of higher education presents a formidable challenge for many current and future college students. But this does not mean there are no other options. Change often necessitates additional change. A change in the cost of college may require you to reconsider what going to college looks like. It is very likely that your college experience will not look like your parents’ college experience.
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College Debt, Loans, Student Loans

Student Loan Forgiveness (and Other Ways to Repay Your Loans)

By: Federal Student Aid, an Office of the U.S. Department of Education

Here’s a common question from customers who have taken out student loans… Is it really possible to have my federal student loans forgiven or to get help repaying them?

The answer: Yes!

However, there are very specific eligibility requirements you must meet to qualify for loan forgiveness or receive help with repayment. Loan forgiveness means you don’t have to pay back some or all of your loan.

You never know what you may be eligible for, so take a look at the options we have listed below:

  1. Teacher Loan Forgiveness

If you teach full-time for five complete and consecutive academic years in certain elementary or secondary schools or educational service agencies that serve low-income families and meet other qualifications, you may be eligible for forgiveness of up to a combined total of $17,500 on eligible federal student loans. Get the details about Teacher Loan Forgiveness.

  1. Public Service Loan Forgiveness (PSLF)

If you work full-time for a government or not-for-profit organization, you may qualify for forgiveness of the entire remaining balance of your Direct Loans after you’ve made 120 qualifying payments—that is, 10 years of payments. To benefit from PSLF, you should repay your federal student loans under an income-driven repayment plan. Learn more about PSLF now! If you’re interested in PSLF, use the PSLF Help Tool to generate a form to submit to MOHELA, the PSLF servicer. If you have been denied loan forgiveness under PSLF because one or all of the payments you made on your Direct Loans were under a nonqualifying repayment plan, you might be eligible for Temporary Expanded Public Service Loan Forgiveness (TEPSLF). Learn about TEPSLF and how to apply for this first come, first served opportunity.

  1. Income-Driven Repayment (IDR) Plans

If you repay your loans under a repayment plan based on your income, any remaining balance on your student loans will be forgiven after you make a certain number of payments over a certain period of time. Learn about IDR plans and how to apply.

  1. Military Service

In acknowledgment of your service to our country, there are special benefits and repayment options for your student loans available from the U.S. Department of Education and the U.S. Department of Defense. Benefits include interest rate caps under the Servicemembers Civil Relief Act and Department of Defense student loan repayment programs. Learn more about federal student loan benefits for members of the U.S. armed forces.

  1. AmeriCorps

The Segal AmeriCorps Education Award is a benefit received by participants who complete a term of national service in an approved AmeriCorps program—AmeriCorps VISTA, AmeriCorps NCCC, or AmeriCorps State and National. After you successfully complete your service, you are eligible to receive a Segal AmeriCorps Education Award, which can be used to repay qualified student loans.

  1. Other Options

Check out the “Student Loan Forgiveness” page for information about other types of loan forgiveness and discharge that might be available if you meet certain conditions.

If the options listed above don’t apply to you but you need help making your federal student loan payments, contact your loan servicer about the options to:

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Budgeting, Finance, Money Management

Ask Chuck: How to Budget for the Dangers of Inflation

By: Chuck Bentley, Crown Financial Ministries

Dear Chuck,

We tried to live on a budget when we first got married but didn’t stick with it. Now that we have children and are feeling the pain of rising gasoline and groceries, etc., we need to get disciplined with money! Can you help us? 

Budgeting for Inflation

Dear Budgeting for Inflation, 

We are all having to navigate the dangerous challenges to our finances caused by inflation. To help you get serious about your budget, I reached out to Steve Brooks at Dedicated Money Management. Steve is a dear friend who served on staff with CRU for 21 years and Crown for 27. He has been a trained budget coach for over 20 years, helping tens of thousands of people manage money from a Biblical perspective. He answered a number of questions that will help you get on the right track. 

Why don’t more people live on a budget?

Steve: I think there are three main reasons why people do not stay on their budgets:

  • They have wrong money beliefs.
  • They have poor money behaviors.
  • They don’t have a simple budgeting tool.

I teach my clients that God is the Owner of all that they possess. They are stewards of His money and possessions. If they do not get this right, they will never become “good and faithful stewards” of God’s money and possessions. If I do not have a spending plan (budget), I am probably spending God’s money the way I want to spend it instead of the way He wants me to spend it.

What is the best way to get the right perspective on budgeting? 

Steve: I ask my budget coaching clients two important questions:

  1. How would you act if I hired you as my money manager/steward?
    • Would you spend my money any way that you wanted to?
      • If you did, I would quickly remove you from your money-managing responsibilities!
    • Or would you ask me how I want you to manage my money?
      • This is the appropriate thing for a money manager/steward to do.
  2. Since God has hired you as His money manager/steward, how should you act?
    • Should you spend God’s money any way that you want to? 
      • If you do, He might remove you from your money managing responsibilities. This is what happened to the shrewd and dishonest steward in Luke 16.
    • Or should you ask God to show you how He wants you to manage His money? 

This is the appropriate thing for a money manager/steward to do.

Do people need special skills to make this work?  

Steve: I want my clients to become “budgeters,” not “accountants.” The difference is that budgeters check the category balance throughout the month before making a purchase to make sure they have enough money set aside for that purchase. 

What tools do you recommend? 

Steve: Choose a budgeting tool that works best for you.

  • Cash envelopes 
  • Paper and pencil 
  • An Excel spreadsheet
  • A computer program (Quicken, QuickBooks, etc.)
  • A budget app that can be accessed on a cell phone to check a category balance before making a purchase. Some examples are You Need a Budget (YNAB) – the one I like best, Mint, Every Dollar, or Calendar Budget.

What about those who say they don’t make enough to budget? 

Steve: If one is unable to live on a budget because income is too low, consider these options: 

  • Look at every spending category in the budget, and ask yourself: Can this category be eliminated or lowered? Is it a necessity?
  • Sell stuff you no longer need or want. Use the income to fund short- or long-term savings goals. For example, if you sell an item for $500, you might consider funding your vacation with this money instead of setting aside that money monthly.
  • As a last resort, you might consider starting a side business or working part-time to earn additional income. I have clients who have become Uber Eats drivers temporarily to fix holes in their budgets.

What are the behaviors needed to budget well?

Steve: This is a great question and an important one to make the budget work well! 

  1. Keep your budgeting tool updated. 
  2. Check it before making a purchase.
  3. Accelerate debt repayments.
  4. Be generous toward God’s work in the world.
  5. Save for future expenses.
  6. Invest part of your income.
  7. Husbands and wives, make financial decisions together.
  8. Refer to the Crown Money Map when making financial decisions.
  9. Seek counsel from the Bible and Godly family and friends.
  10. Be completely honest and trustworthy.
  11. Teach/train others to be faithful stewards (multiplication principle).

What are the beliefs that you want your budget coaching clients to know and believe?

Steve: All of these are Biblical principles that I can summarize: 

  1. God is the Owner, and we are stewards of HIS possessions and money.
  2. Debt is bondage and should be avoided.
  3. We are to be givers (generous) rather than getters (consumers).
  4. We are responsible to teach/train others to be faithful stewards.
  5. We are to seek counsel from God and others when making financial decisions.
  6. We are to save and invest our money to meet needs and to build God’s Kingdom.
  7. We are to work hard for the Lord in our God-given areas of strengths and talents.
  8. We are to be absolutely honest.

Thank you, Steve! 

General Principle to Follow

Since overall inflation is estimated to be between 8–10%, I suggest you reduce all spending by the same amount to ensure you are keeping up. You also need to increase your emergency savings, as you are able, to ensure you can navigate any disruptions to your income should inflation hurt your job or career. 

Hopefully, these ideas will set you on a course to develop your budget, stick with it, and navigate the rapidly changing effects of inflation on your finances. If you want help creating and staying on a budget, reach out to Steve today, or contact Crown to enroll in our Budget Coaching Program.

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