Budgeting, Economy, Finance, Money Management, National Debt, Saving

Ask Chuck: Practical Advice During the COVID-19 Crisis

By: Crown Financial Ministries

Dear Chuck,

Many of the young people in my Bible Study are frightened of the Coronavirus and the threat to their families. I understand their fear. But, as an older American, I’m also concerned about their economic well-being in the aftermath of this crisis. What kind of financial advice can I offer them?

Sheltered in The Storm

Dear Sheltered in the Storm, 

We have two crises happening now and you have properly identified a third one. First, the virus has created a very real health crisis. Second, the shutdown of the economy has created a very present economic crisis and third, the government bailout will put us at risk of a future debt crisis and threat to the global economy. 

As Thomas Sowell said about our current challenges, “We do not have good choices, we simply have trade offs.” 

Living on the Edge

The Coronavirus has revealed the financial unpreparedness of millions of citizens. Aaron Zitner, at the Wall Street Journal, reports: “Some 15% of Americans have used, or plan to use, either short-term loans or credit cards that they don’t know they can repay in order to buy emergency goods to deal with the outbreak, a survey by NORC at the University of Chicago found.” He says others rely on savings or plan to divert money set aside for other things.

It is my hope that many Americans have been better prepared for this event after making financial adjustments following the Great Recession, which started in 2008, by paying off debt, increasing savings and living within their means. Either way, here are some practical and spiritual insights for the young people in your Bible study. 

Establish Essentials as Priority

Everyone’s situation is different. Let’s help the young people understand how to deal with the current economic crisis, and we will deal with the long-term consequences of the bailout later. Here’s how I would attempt to help those in your Bible study when meeting one-on-one. 

Regardless of what’s happening in the world, everyone needs food and shelter. Pay the bills that provide food, home, and necessary utilities. This is a time to sacrifice wants to provide for needs.

Most middle income families will receive some sort of government assistance money. Establish or grow your emergency savings account. Always keep it resupplied as you are able. 

With job cuts right now, childcare and transportation costs may drop significantly. If possible, save that money in an emergency fund for future needs. Even a small amount in a savings account will reduce financial stress and grant margin in your life. Exercising self-control (a fruit of the Spirit) will boost your confidence and grant hope.

Face your bills with courage and hope. Pray over them and ask God to work in miraculous ways knowing He is able to do far more than you can imagine. Avoid fear and anxiety with this verse:

“Rejoice in hope, be patient in tribulation, be constant in prayer.” (Romans 12:12 ESV)

Practical Steps 

  • Limit social media to avoid online shopping. Don’t give in to your (or your children’s) wants right now. Lead by example in love.
  • Student loans: this may be the time to refinance.
  • Debt: negotiate with lenders to reduce your interest rate or balance. Seek to eliminate penalties. Demonstrate your intent to pay. Avoid maxing out credit cards. Consider balance transfers but read all the fine print. Set a goal to eliminate the debt and the method to get there (I recommend the snowball or avalanche methods). Contact Christian Credit Counselors if you are falling behind. 
  • Insurance: assess coverage and negotiate the cost. Some coverages may not be a necessity or deductibles may need to be raised to lower premium costs. 
  • Make a will. Don’t procrastinate. 
  • Save: deposit something weekly, or every other week, to develop the habit. Get a fireproof, waterproof safe to keep some cash at home at all times. I recommend one month of living expenses. 
  • Wisely use your government check if you have an emergency savings account: give a portion, pay current bills, and pay down debt.
  • Income tax filing has been postponed until July 15th. If you owe money, set that money aside in a separate account.
  • Ask for help. Trade skills: haircuts for food, tutoring for computer help, etc.
  • Sell what you don’t need. Facebook Marketplace and Craigslist make it easy. Do it safely by meeting buyers in a grocery or government parking lot during daylight hours.
  • Look for opportunities. This may be the best time to start a business or take on greater responsibility at your current place of employment. Learn new skills. Take advantage of online classes. Educate yourself by reading, listening to books, watching Ted Talks, and documentaries.
  • Be generous. There are many suffering at this time. Be exceptionally generous while also being wise and discerning.

 

Hope for Troubling Times 

Those who are frightened, worried, angry, or frustrated must remember they are not alone. God has not left us on our own. In fact, idols are being revealed and priorities analyzed. It’s time to reorient our lives.

We all know we should live one day at a time. That requires taking one step at a time. But, what if fear overwhelms and you don’t know what steps to take?

Imagine a sailboat drifting in the center of a large lake with no apparent destination in sight. It rocks back and forth, back and forth, unable to move forward. Suddenly, the wind begins to blow. The sails of the boat fill with air. The sailor takes action and strategically directs the boat to a desired destination. The boat glides effortlessly while the sailor works with the wind to safely arrive to shore.

The Holy Spirit is the wind. He fills our sails enabling us to know when and how to move forward. Filled with hope, we develop perspective and work toward our destination.

“May the God of hope fill you with all joy and peace in believing, so that by the power of the Holy Spirit you may abound in hope.” (Romans 15:13 ESV) 

Not Our First Rodeo

Like you, I have lived long enough to have experienced a number of crises in my life. As my friend said, “this is not my first rodeo, but this is the first time I have ever ridden this horse!” We are living through something the world has never experienced. It’s an opportunity to trust God with all our heart. May He fill you and me with all hope so we can proclaim His goodness. 

 “…we rejoice in our sufferings, knowing that suffering produces endurance, and endurance produces character, and character produces hope, and hope does not put us to shame, because God’s love has been poured into our hearts through the Holy Spirit who has been given to us.” (Romans 5:3-5 ESV)

For anyone struggling with credit card debt, get in touch with our partners at Christian Credit Counselors. They can advocate for you, helping lower payments, and organize your debt. Start your free debt analysis today.

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Budgeting, Debt, Money Management, Saving

4 Steps to Spend Your Stimulus Check and Tax Refund Wisely

By: America Saves

Most Americans don’t have an emergency fund. While we’re all experiencing this pandemic very differently — some having only minor inconveniences and others finding themselves without a job or having to close their business — those without a savings cushion are vulnerable to feeling the ramifications of COVID-19 for a very long time.

With stimulus checks and tax refunds on the way, there will be tough financial decisions to make once received. Here are active steps you can take, along with things to consider to help you develop a solid spending plan.

  1. Make a list of all expenses

Write out every single expense that you have, including essentials like food and utilities. Be sure to go through your checking and savings account history to make sure you don’t have any “vampire” expenses, like monthly subscriptions that you may have forgotten about and no longer need.

  1. Talk to all creditors and lenders

The CARES Act puts into effect two mortgage relief provisions: protection from foreclosure, and a right to forbearance (pausing or making partial payments) for those experiencing loss of income due to COVID-19. However, the provisions are not automatic and are only for federal loans, so you MUST talk to your lender.

If a creditor/lender offers you a payment plan or other relief, make sure you get it in writing and take note of the names and dates of the customer service representatives with whom you speak.

Thankfully, some utility companies have announced they won’t cut off services if they aren’t being paid. Be sure you know all of your utility and service providers’ stance on this, so there are no surprises. You don’t want to make any assumptions.

If you cannot afford your DMP payments, contact your creditors directly to request for deferment on your credit cards. This will prevent your account from falling (further) past due and help to maintain your credit score. Creditors are making payment exceptions on a case by case basis. If you are granted a deferment from your creditors, please contact your CCC representative so that they can adjust your DMP payments.

  1. Prioritize expenses

Expenses relating to food, shelter, and medicine should come first. This would include mortgage, rent, utilities, groceries, diapers, and medications. It also includes medical insurance premiums and homeowners/renter’s insurance.

If you need childcare to work, that is another essential expense. Next in line are auto-related expenses, including transportation, gas, insurance premiums, and car payments.

Loans that are secured by collateral (for example, mortgages and auto loans) are generally considered more important than those without collateral, like consumer credit card debt. For example, if you don’t pay your mortgage, a bank can foreclose on your property; if you don’t pay your car loan, the bank can seize your car. While not paying your credit card bills will negatively affect your credit score, credit card companies will not come into your house and take your personal possessions.

Federal student loans are currently not accruing interest until September 30, 2020, and can be put into forbearance so that no payments are due. If you have a private or institutional loan, you will have to contact the lender for other options.

If you struggle to make the minimum payment on your credit card, call CCC at 800-557-1985 option 5 to add the account to the program for a total consolidation of your outstanding debts.

Expenses for “elective” items, like gym memberships, streaming services, and other subscriptions, come last. Before simply canceling a contract, make sure to contact the vendor – canceling may come with a hefty penalty, but you may be able to temporarily “pause” the service.

  1. Pay your debts in the order of priority.

Now that you know all your expenses, have prioritized them, and know your payment options with creditors and lenders, it’s time to make the payments in order of priority.

It’s important to note that many are still or will be receiving their tax refunds, too. If you receive a refund, you can apply the same process to that extra income.

Remember, there is no prepayment penalty on your Debt Management Program! Contact your CCC representative to apply your stimulus check and/or tax refund toward your balances and pay off your debts.

If you are still unsure or are overwhelmed with where to start, use our decision tree for guidance on what to do with your stimulus check and/or tax refund.

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Budgeting, Money Management, Saving

Money-Saving Tips for the COVID-19 Pandemic

By: Crown Financial Ministries

The Crown team makes it a priority to “practice what we preach”. During this pandemic, as we recommend to cut back your living expenses by 25% for the next 90 days, we’ve made a list for you of the ways we’re doing that ourselves. There are some natural savings that happen when you follow social distancing rules, like spending less on gas, eating out, and entertainment. Below are some additional recommendations from the Crown team for cutting expenses and increasing your savings!

Cut back on any unnecessary or luxury subscriptions

Maybe Spotify free is the way to go for now. Here’s a video with easy ways to do this. Courtney said, “My husband and I both went through the last few statements of our bank accounts looking for subscriptions that we could cancel or downgrade. I didn’t realize I was paying for a few app subscriptions! That has saved us a few extra dollars a month.” Calvin and his wife have cut their gym memberships and are working out at home. They are also saving all discretionary dollars in their budget for a few months.

Negotiate cable and internet rates

You may be able to negotiate a better rate for your cable and/or internet. Businesses are wanting to keep their clients right now, so call to check if there are any special promotions you can take advantage of. “We contacted our internet provider and found that we could save 30% on monthly payment because they could move us to a new promotion package,” Alet said. Another one of our staff members cancelled their cable TV altogether. Many streaming services are offering free promotions over the next few months, so be sure to look on Google for coupons before signing up for anything new.

Turn off the lights

Be mindful of your energy usage while you’re home. Do you have a habit of leaving the lights or ceiling fans on? Get up from your home office desk and make sure you’re not paying extra for that electricity!

Defer medical bills

If you need to, call your medical provider and set up a payment or deferment plan. Most will let you do this if you ask and work with them.

Slow down loan payments or stop paying ahead – for now

Several staff members have been paying ahead on their mortgage or student loans. For the next few months, their plan is to pay the required monthly balance as billed and use the extra to increase their savings.

Save on your phone bill

Handre called his mobile provider and moved to a less expensive package saving him each month on his family plan.

Activate the “pantry challenge”

Melinda and her family have challenged themselves to eat out of only their pantry and freezer before going out to eat. Once a week, someone grocery shops for a few fresh essentials for their meals. Other than that, they save money by depleting their stocked food and complying with social distancing rules.

Go meatless

Hannah said her family has moved to 3 meatless dinners a week. It has helped them to mix up their recipes and helped them cut back on their grocery bill!

Save on insurance

One member of the Crown staff said, “I contacted our home insurance company and asked if there were any discounts we could qualify for because of recent improvements we did to our home. A miracle happened – they lowered our yearly insurance amount by $400 and gave me $500 towards this year’s installment because we fixed the roof recently. We had already decided to give to people who were losing their jobs, and now our gifts have been doubled!”

Trusting God’s Promise

We know it’s not fun to take these steps, but we’re trusting in God’s promise that discipline now will pay off later. “For the moment all discipline seems painful rather than pleasant, but later it yields the peaceful fruit of righteousness to those who have been trained by it.” Hebrews 12:11 (ESV) Here are a few other financial steps you can take to find peace and freedom.

Pay off debt

Now is a good time to work on decreasing or eliminating debt. If you need help making a plan, contact our partners Christian Credit Counselors. They’ll help you consolidate your payments so you can be debt-free sooner!

Increase your savings

If you’re not in the habit of saving, now would be a good time to start. To make it easy, check out the Eli Savings App. It automates your savings for you and only saves what you’re able to afford.

Give generously

It may seem uncomfortable right now to think about giving, but it is in these times where we are able to truly show our faith and trust in the Lord. Share the resources you have with your neighbors and friends. Are you able to give more to your church when others might be holding back? Do you know someone furloughed or out of work that can use some help? Find a way to share.

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Budgeting, Credit Cards, Finance, Money Management

Ask Chuck: Breaking the Cycle of Overspending

By: Chuck Bentley, Crown Financial Ministries

Dear Chuck,

My husband is tired of my overspending. I struggle living on the budget he’s made because I make quick purchases rather than planning ahead. Then I feel guilty defending my decisions when the bills arrive. How can I get out of this cycle?

Spontaneous Spender

Dear Spontaneous, 

First, be thankful you have a husband who cares enough to make a budget. If only more people would do so! Next, let’s deal with the cause for the spontaneous spending so you can escape the cycle you are in.

Money and Emotions 

Money affects our emotions and our emotions affect our use of money. Experts understand this and market to your emotions – merchants from grocery stores, furniture marts, car dealerships, and online advertisers. They all target your feelings toward shopping. Learning to separate your identity from the things you buy will keep you from spending money to feel good. The term “retail therapy” implies that some people spend money to bolster their mood. It is a very real urge. I have experienced it myself and watched others do it as well. 

I had a friend who was competing for a big promotion in his company. Over multiple interviews and several months of consideration of all candidates, management selected someone else over my friend. The very day that he learned he was not selected, he went out and purchased a brand new, expensive car. The problem was he could not afford the car without the promotion but he had been dreaming of it for so long that he bought it anyway. In his own words, he told me that it was “retail therapy”.  

God’s Word makes it clear that we enter the world naked and we leave naked…and naked has no pockets. Since we can’t take any purchases with us when we die, we should become emotionally neutral towards our spending choices.

Avoid Spending Triggers

Certain emotional triggers can cause people to spend money. A few of the most common include:

  • Alcohol or hunger: lower inhibitions cause people to buy and regret later.
  • Anger or sorrow: spend to gain control, feel happy, find short-term gratification.
  • Loneliness: spending medicates briefly. But, materialism and loneliness are a self-reinforcing cycle.
  • Insecurity: try to keep up with the Joneses.
  • Self-focused: raises or tax refunds justify splurges or rewards.
  • Overwhelmed: spend on fast food, maid services, laundry, yard work.
  • Fear: causes hoarding or poor investments.
  • Guilt: spending to alleviate the pain inflicted on others.

Can you relate to any of these?

People justify spending when they are emotional because spending momentarily feels good. But, decisions based on feelings often create financial problems that further complicate life.

We cannot buy happiness. Spending and accumulating more money may not increase our wellbeing and can actually have a negative effect. But, wisely managing money, as a steward of God, is fulfilling.

Solutions to Your Urges and Splurges 

  • Create a budget and set goals.
  • Don’t go where you know you might spend money.
  • Resolve to make no impulsive purchases. Wait 24 hours if tempted.
  • Limit exposure to advertising and social media.
  • Delete or unsubscribe from sites where you waste time and face temptation.
  • Replace unnecessary time on the computer or cell phone with productive use of time.
  • Exercise or spend time with friends for lasting comfort.
  • Be accountable to your spouse or mentor.
  • Learn basic financial principles.
  • Avoid making big decisions when extremely emotional.

If you have true needs, take them before the Lord. The Apostle Paul teaches:

do not be anxious about anything, but in everything by prayer and supplication with thanksgiving let your requests be made known to God. And the peace of God, which surpasses all understanding, will guard your hearts and your minds in Christ Jesus. (Philippians 4:6-7 ESV)

Check Your Emotions

When did you last thank God for who He is and what He has done for you? Are you seeking satisfaction from people or things rather than the only One who can truly satisfy?

Thankfulness delays our need for instant gratification. Meditating on what God has provided can calm our emotions and prevent budget-wrecking purchases. Couple that with generosity and a heart of compassion, and our contentment can soar, bringing positive thoughts to light. 

Set your mind on things above, not on things that are on the earth. (Colossians 3:2 ESV)

In so doing, you will find that your heart becomes satisfied with the riches of Christ that are of much greater value than the things of this world.

A Final Tip

Consider some of Crown’s resources to help you and your husband get on the same page. My wife and I wrote a book together on this very topic. You can find it here and access numerous free resources on the Crown website. Thanks again for writing.

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Budgeting, Credit Cards, Holiday Tips, Money Management, Saving

A Saver’s Guide to Holiday Shopping

By: America Saves

Ready or not, the holiday shopping season is here. With the multiple sale days between now and the end of the year, you can avoid being served a heaping side of seasonal debt along with your plate of honey-baked ham if you keep a few smart-saver tips in mind.

Set Reasonable Expectations

In 2012, it was reported that the average American expected to spend $854 on gifts during the holiday season. While many won’t spend that much on shopping, any spending that strains your finances or saddles you with post-holiday debt is bad for your financial future —period. Take the time to talk with family and friends about realistic holiday spending limits before you go shopping. Consider less expensive gift options like homemade gifts. If you have a large extended family, maybe it’s time to start a new tradition of picking one name out of a hat to buy a gift for, rather than everybody buying a gift for every person in the family.

Plan, Budget, and Save

One of the best approaches you can take to holiday shopping is figuring out who’s on your gift list, creating a holiday budget, and gradually setting money aside to help you avoid overspending, unwanted debt, and financial stress. You can find helpful budgeting tools on mymoney.gov. If you didn’t budget and save for this year, it’s never too early to start saving for next year. Check with your bank or credit union to see if they offer holiday savings accounts that you can use to save for next year’s holiday goals. If you set up a plan now and leave that money alone, you’ll have a nice gift fund in a year.

Keep the Big Picture in Mind

It can be easy to forget that we spend money on other things besides gifts during the holidays. Big holiday dinners, travel to see family and friends and even increased electricity costs to run massive holiday light displays can drain your bank account. Make sure you plan for the cost of all of your extra holiday activities.

Watch Out for Costly Surprises

If you’re using gift cards or layaway plans, make sure you fully understand the terms and conditions. Expiration dates, inactivity rules, and hidden fees on gift cards can eat away at their value if you’re not careful. Take the same cautious approach with store credit cards that you’re offered at checkout. They might save you a few bucks at the register today but stick you with very high-interest rates later.

Avoid Holiday Debt Traps

Doing things like catching early sales, comparison shopping, ordering from sites or stores that offer free shipping, shopping at discount stores, and buying items that offer rebates can help save you money on holiday purchases. However, don’t let the excitement of holiday deals go to your head! If you rush to a store sale because you can get a $3,000 television for $2,000, you’ve still spent $2,000. Was that really something you had planned to do? Also, don’t be enticed by payday lenders who want to “help” you get holiday cash. Proper planning and saving long before the holiday can help you avoid a cycle of high-interest debt that can last for weeks or even months after the holidays are over.

Keep in mind that holiday spending is short-term spending. Once the unwrapping frenzy is over, how long will the excitement last? Saving your money for long-term goals like homeownership, college or a comfortable retirement may be the very best gift you can give yourself and your loved ones.

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Budgeting, Coupons, Holiday Tips, Saving

How to Save During the Holidays

By: America Saves

Holidays are often an exciting time of the year. Spending time with family, enjoying time off work, and celebrating with family traditions are enjoyable activities. However, the holidays can also represent added stress due to the crunch on your wallet.

It is hard to look forward to a holiday if you are worried about how to pay for it. Have you stressed about how to provide a fun experience for your family without breaking the bank? Decorations, gifts, and food expenses add up quickly.

To avoid this financial strain, it is important to plan for holiday expenses throughout the year. America Saves has compiled some tips to help you plan for a fulfilling holiday season while not drowning in expenses.

Develop a Holiday Budget

One way to reduce impulsive spending is to develop a budget that includes clear expectations for travel, food, entertainment, and gift-giving expenses.

  • Set your spending limit before you start budgeting. And stick to your limit. That might mean making some compromises. Decide what you will spend on each person before going shopping. If possible, talk with family members and friends to set a spending limit that everyone can spend on each gift.
  • Be as comprehensive as you can when you create your budget. Make a list of everyone who will receive a gift as well as all items that will cost money during the holiday season. Some items often forgotten include gasoline, babysitter fees, eating at restaurants more often, and so on.
  • Reduce your spending. Add up the total of your holiday list, and don’t be shy about reducing it some more. Challenge yourself to spend a little less each year. Consider writing handwritten notes expressing thanks or appreciation rather than buying gifts when possible to reduce your spending costs.
  • Divide the list into necessary items (needs) and extra opportunities (wants). For example, gasoline is a needed expense for traveling while eating out at restaurants while on the road is an extra expense that can be avoided if needed. Dividing your list will help you save for all necessary expenses and provide a list of ideas in case extra money is leftover.
  • As part of your budget, determine how you will pay for each item. Paying with cash will help avoid unexpected spending. Paying with a credit card without keeping track of spending may cause you to forget purchases for which you’ll have to pay later. If paying with layaway, look out for hidden fees and be sure to budget for any interest added.
  • Carry a copy of your budget with you, and be sure to follow it while in stores. Once a budget is made, it can still be hard to follow. In-store sales are tempting, but making impulsive purchases, no matter how small, can add up quickly.
  • Plan your shopping trips ahead of time by reviewing store ads for upcoming sales. This step will lower costs while also helping to reduce impulsive decisions while in the store.
  • Remember to save. Continue saving over the holidays so you don’t shortchange your retirement, education, small business, or other goals. Stick to more long-term savings goals and avoid the accumulation of new debt.

Download our Free Holiday Budget Printable for easy budget construction, and check out additional budgeting tips here.

Consider the following tips for the upcoming holidays:

  • Cooking an entire holiday meal on your own can be expensive. Consider having a potluck with friends and family to avoid cooking or paying for the entire meal yourself.
  • Keep the menu simple. Dinner can be special without two different types of meat, four vegetable dishes, and three different desserts. If you plan to serve mashed potatoes and gravy, you can skip the macaroni and cheese casserole. If you plan to make candied carrots, no need to serve candied yams also.
  • Plan for meals ahead of time to take advantage of coupons and grocery deals. Advertisements about upcoming sales can be found online and in local newspapers. Using in-season produce for recipes can often reduce food costs.
  • Reduce travel expenses by visiting out-of-town families for one holiday during the winter season (such as just Thanksgiving or only Christmas, rather than both holidays).
  • Consider setting up new holiday traditions that cost less. For example, some families or friend groups use “Secret Santa,” where each person draws a name randomly so that each person receives a gift and each person only buys a gift for one person.
  • Consider spending time together rather than gift-giving. Other ideas include a nice dinner out or playing games as a group.

When it comes to holiday spending, the important thing is to stick to your budget. We all want holidays to be special, but if you create debt in the process, it will end up being more of a headache than a holiday.

Spending less is just the first part of a successful financial plan. Put away the money you save during the holidays into a savings account for future expenses, both anticipated and unexpected ones. Those with a savings plan are twice as likely to save successfully. Let America Saves help you reach your savings and debt reduction goals. It all starts when you make a commitment to yourself to save. That’s what our pledge is all about. Learn more about how to save money for the future here.

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Budgeting, Credit, Credit Cards, Credit Score, Debt, Money Management, Saving, Student Loans

Top 9 Money Mistakes People Make

By Jim Garnett, The Debt Doctor

After counseling average Americans about their financial problems for many years, I noticed early on that there is a common set of money mistakes people usually make.

Money Mistake #1: Being comfortable with debt.

Why would anyone choose to be a slave if he could choose to be free? One answer is because, over a period of time, one seems to develop a “slave mentality.” They have never known freedom and have gotten used to being slaves.

There is a very real sense that being in debt makes us slaves. The wise King Solomon wrote, “The rich rule over the poor, and the borrower is slave of the lender” (Proverbs 22:7 NRSV). Many in our society have been in debt so long, they have cultivated a “debt mentality.” Because they have never known financial freedom, they grow accustomed to being in debt and accept it as “the normal way of life.”

But just imagine what it would be like to be out of debt and not have a mortgage payment or car payment each month? Just think what you could do with all that money. Out of debt, you would not need as much money to live, and you would be free to use this money which was once tied up in debt payments for whatever you wanted.

Just think of being in your 30’s or early 40’s and being able to have discretionary monies of $2,000 to $3,000 a month. You could put a sizable amount away toward car replacement, house repair, or future education needs. And imagine what it would be like to be able to write checks to your church or charities that are sizable in amount.

Being debt-free would allow you the freedom to grow wealth quickly and give substantially.

It is high time we stop treating debt like an old family friend that has moved in to stay with us forever! We need to kick him out and send him on his way! There is no reason to remain enslaved to debt when we can be free.

Money Mistake #2: Not knowing what we spend each month.

The only part of the budget process that many people know is the “what I make” part. Most people are totally in the dark about the “what I spend” part. This money mistake is one of the main reasons why 40% of Americans spend more than they make each month. Sadly, most of that 40% are unaware that they do.

How can this be? Because by using credit cards each month, an illusion is created that makes us think we are doing fine financially. After all, the bills are getting paid on time. This may be true, but if the credit cards were put in a drawer and not used for two months, the bills would not, nor could not, be paid on time. Without the constant use of credit, we would see that we are running out of money before we run out of the month.

Being smart with our money, no matter what amount that might be, includes knowing how much we spend in relation to how much we make. Using credit hides that fact from our eyes. Once we determine what we are spending, we can bring our spending in line with our earnings by either spending less or making more.

To get to a destination, we must know where we presently are. That’s why the first step in money management is always to know what we spend.

Money Mistake #3: Behaving like credit cards are money.

Many people say they know that credit cards are not money, but their actions betray their words.

A college sophomore once told me, “No matter how broke I am, I always have money in my pocket with my two credit cards.” Like many, he was confusing the “buying power” of his cards with money.

But when we use a credit card, we are not spending money but borrowing money in as much the same manner as when we take out a loan at a bank. The buying power of our credit card originates from borrowing money from a creditor – we call that borrowed money “credit.” If that credit is not repaid within a certain amount of time, a high-interest rate is added to the debt.

I am convinced that if we actually viewed our credit cards as the ability to borrow money – money that must be repaid – we would greatly restrain ourselves in their use.

Money Mistake #4: Being satisfied with only making minimum monthly payments.

Interest.com calculates that paying off a $2,000 credit card balance with an 18% interest rate at a minimum payment of 2% would take 288 months or 24 years to pay off. So, if at age 30 you closed the card and just paid on it at monthly minimums, you would be 39 years old when you finally pay it off! But note, you would not have paid just $2,000 but $6,396.40 because of the added interest charges. I don’t know about you, but I work far too hard for my money to spend it like that.

Money Mistake #5: Borrowing to “pay off” debt. 

Borrowing to pay off debt normally backfires! It has similar results to digging a hole in our front yard so we can fill in the hole in our backyard.

This “money mistake” yields some pretty disastrous results:

  • Our borrowing does not actually “pay off” debt – it merely moves the debt to a different location. Now we have a second mortgage on our home or a loan against our 401(k).
  • The debt we pay off by borrowing usually reappears within 3 years. This occurs because our borrowing makes it unnecessary to change our spending habits.
  • Borrowing against our home equity turns an unsecured debt into a secured debt. That’s why the interest rate is now less – the bank would rather loan against our house than loan against our name because it is less risky.
  • Borrowing against our 401(k) often has a 10% penalty if we are not 59.5 years old, plus the monies we borrow are taxed as income. At times, 40% of the monies taken from a 401(k) loan will “disappear” in penalty and taxes.
  • If we move again, our house produces very little profit because we have increased the mortgage balance, plus there is little to put down for a down payment on our new home.
  • When we are old enough to retire, we often cannot because our home is not paid off. We still have house payments to make because we borrowed against it to “pay off” debt.

Borrowing to pay off debt does not decrease our debt, and often we are worse off than we were before.

Money Mistake #6: Co-signing a loan.

It’s great to help somebody get a loan, but it’s critical to understand the risks before doing so. There’s a reason the lender wants a cosigner: The lender isn’t confident that the primary borrower can repay in full and on time. If a professional lender isn’t comfortable with the borrower, you’d better have a good reason for taking the risk. Lenders have access to data and extensive experience working with borrowers.

The co-signer promises to repay the other person’s debt if, for any reason, he does not. The liability assumed is for 100% of the debt, thus, if $5,000 is the total amount borrowed, the co-signer is responsible for the entire $5,000 if the other person defaults.

Also, the co-signer’s credit score can be affected if the primary signer makes late payments or misses payments on the loan. Currently, 75% of student loan co-signers end up making payments on the student loan.

Money Mistake #7: Having no emergency savings.

A recent survey asked people if they could get $2,000 for an emergency. The results revealed that 55% of the respondents said they could get the money within 30 days, but 92% of those people said they would need to borrow the money from family, friends, bank loans, or credit cards.

Another survey revealed that 28% of the 1,000 people surveyed have absolutely nothing in savings. In other words, many people are simply not prepared for emergencies.

Money Mistake #8: Creating debt for tax benefits or to establish credit.

Debt for Tax Benefits. It is good to claim every deduction that you can on your taxes, but it is often not good to spend money in order to get a tax deduction. An example would be the deduction one is allowed to take for interest paid on a mortgage loan. If I paid $10,000 of interest and was in a 25% tax bracket, I would receive a tax deduction of $2,500. If I absolutely had to pay the interest, I would surely deduct it. But if I had the choice of paying my home off and having no interest to pay, that would be my choice by far. I would rather have the $10,000 non-spent money in my hand than receive a $2,500 tax deduction. I may pay more tax, but on the other hand, if I gave monies to charities, I would receive the same deduction. Remember, you often have to spend your money to receive tax deductions. If you are not careful, you can “tax deduct yourself into the poor house.”

Debt for Establishing Credit. One of my clients followed the advice of her financial counselor and bought a house in order to build up her credit score! In order to establish credit, you simply need to pay your bills on time. You do not need to maintain debt to do this. You can establish your credit just as well by paying your credit card balance in full each month.

Money Mistake #9: Thinking that good credit is the most important thing in life.

Good credit is important, but it is not the most important thing in life. The main benefit of having good credit is being able to go into debt with good terms. But what if we decide we are not going to go any further into debt and work out a plan to get out of debt and stay out of debt? Then the benefits of good credit are not nearly as important to us.

To me, the benefits of living debt-free are much more important than the benefits of having good credit. It is true that most people who live debt-free also have good credit, but it was not their good credit that allowed them to become debt-free. It was their living within their means and discontinuing the use of credit to create any further debt.

Mind you, I am certainly not advocating that one should have bad credit. I am simply stating that getting out of debt and staying out of debt is much more important than having good credit.

The benefit of observing and sharing these money mistakes is that they allow us to learn from the mistakes of others.

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Budgeting, Christian Credit Counselors, College Debt, Consumer, Coupons, Credit Cards, Credit Counseling, Credit Score, Debit & Your Credit Score, Debt, Debt Consolidation, Finance, Freebie, Holiday Tips, Kids & Money, Money Management

10 Back-To-School Shopping Tips that Save Money

To your kids, shopping for new clothes, gear, and school supplies may be the only good thing about going back to school, but that doesn’t mean you have to spend a fortune every year. Here are 10 great ideas for how to get everything they need and save a few bucks doing it.

Hold off buying trendier gear

Kids may love a certain lunch box or pencil case they find in July, but once they start school and see that their friends are all using another kind, they’ll beg you to upgrade them, and that only results in wasted cash.

Shop end-of-summer sales

You know as well as we do that kids wear short sleeve polo shirts all year long, so hit the big summer sales and snap up discounted duds that can be worn well into fall.

Stick to the list

The teacher’s supply list at the start of a new school year is daunting enough so don’t waste time and money on unlisted items. Extra supplies, while they may be cute, will probably never get used and just leave your pockets empty.

Head to the supermarket for basic supplies

Check weekly circulars for great deals on pens and loose-leaf paper, and get your weekly grocery shopping done at the same time. Bonus: buying everything in one place will save time and gas money!

Let the kids raid your cabinets

The kids can select home-office supplies and then personalize them in unique ways. For example, decorate inexpensive plain, white binders with digital photos by creating a collage and inserting the page into the plastic outer cover.

Host a back-to-school swap

Round up a couple of other moms with kids the same gender as yours but different ages, and host an annual clothes swap. Trade toys and books, too! You’ll save a bundle.

Plan lunch

When you’re in charge of what your child eats, you’ll save yourself money. Check the weekly circulars at your local supermarkets for sales. If turkey isn’t on sale one week and ham is, go for the ham!

Buy bright

Lost school supplies may be a given, but gear that’s hard to miss can stave off the inevitable. Pack all their pencils, erasers, and other goodies into a bright backpack or pencil pouch to keep them from disappearing.

Shop the big three

Old Navy, Gap Kids, and The Children’s Place rotate merchandise often. Ask when they do their markdowns so you can grab the deals. Also, if you see an item you bought in the past 14 days on sale later, you can get the difference refunded, you don’t need the clothing, just the receipt.

Browse craigslist.org

Yes, you can find top-quality stuff on the cheap, but you can be a seller, too. Why not get some cash for that barely worn, now outgrown brand-name outfit? Just enter your location and click on “Baby and Kids.”

By: http://www.parenting.com/article/10-back-to-school-shopping-tips-that-save-money

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Budgeting, Christian Credit Counselors, College Debt, Consumer, Coupons, Credit, Credit Cards, Credit Counseling, Credit Score, Debit & Your Credit Score, Debt, Debt Consolidation, Debt Settlement, Goals, House, Kids & Money, Money Management, Personal Goals, Saving, Student Loans, Uncategorized

Use the Start of the School Year to Set the Stage for Your Child’s Financial Success

By: Brittany Frost

Where did the summer go? As the school year rapidly approaches, children are preparing for the academic and social journey of the next grade level while parents are bracing their financial situation for the costs of continuing education. Parents can take this golden opportunity to go above and beyond just shopping for school supplies at Wal-Mart and, instead, show their children how to budget, save, and spend their money in order to teach them how to financially prepare for school (which will undoubtedly come in handy for college).

Alarmingly, a study released in July by the FINRA Foundation estimated that almost two-thirds of Americans couldn’t pass a basic financial literacy test, including calculating interest payments correctly (See Ref. 1). When you pair that with the fact that public, in-state college tuition, room, and board has risen 1300% since 1971 (See Ref. 2) and a recent survey showing that 75% of U.S. workers have student loan debt so high that they contribute less to their retirement (See Ref. 3), it is easy to see why parents must take every opportunity to educate themselves and their children so they do not end up in pools of unmanageable student loan debt. It is never too early to avoid the debt cycle and teach your children to financially prepare for school. Think about it: Did you or do you still struggle with enormous student loan debt? Did you avoid college altogether because you couldn’t afford it? Or did you have the financial means or knowledge to keep your student loan debt to a minimum? Either way, think of your financial mistakes, trials, and triumphs and use the start of this school year to teach your children everything you’ve learned about financially preparing for school. Use your experiences along with the following resources and ideas as motivation to set the stage for your child’s financial success or, perhaps, to change your own path.

So how can you do this? Include your child in the financial process of preparing for school. Sit down and discuss with them. Educate them on the difference between a “want” and “need” so they can decide what they need for school. Ask for their opinion and listen. Use free online budgeting tools available on www.christiancreditcounselors.com to set a budget together. Discuss and research ways to stick to that budget by using free resources such as Passionate Penny Pincher’s Free Back-to-School Cheat Sheet for a complete list of back-to-school deals. Record and track your spending. Make back-to-school shopping a learning experience through mathematical games. In “7 Smart Ways to Save on Back-to-School Clothing,” Deacon Hayes also suggests tips like assessing your child’s current school inventory, visiting thrift stores first, and adding in a fun but frugal activity such as stopping for an inexpensive lunch or treat to make back-to-school shopping a happy experience (See Ref. 4). Above all, just enjoy spending time and working toward your financial goals together as a family. By doing this, you will not just be buying more pencils and notebooks, but you will be setting the stage for the financial success of your children AND yourself. Here’s to a successful school year!

References

1.       Farber, Madeline. Fortune. Nearly Two-Thirds of Americans Can’t Pass a Basic Test of Financial Literacy. 12 Jul. 2016. http://fortune.com/2016/07/12/financial-literacy/

2.       Jacoby, Jeff. The Boston Globe. Making college ‘free’ will only make it worse. 13 Jul. 2016. 18-20. http://c.ymcdn.com/sites/www.ncher.us/resource/collection/6E4F0103-05C8-4F48-844E-BEEAC285C10B/db0714_2016.pdf

3.       O’Connell, Brian. The Street. 75% of U.S. Workers Say High Student Loan Debt is Crippling Their Retirement. 12 Jul. 2016. https://www.thestreet.com/story/13627148/2/75-of-u-s-workers-say-high-student-loan-debt-is-crippling-their-retirement-savings.html

4.       Hayes, Deacon. U.S. News Money. 7 Smart Ways to Save on Back-to-School Clothing. 15 Jul. 2016. http://money.usnews.com/money/blogs/my-money/articles/2016-07-15/7-smart-ways-to-save-on-back-to-school-clothing

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Activities, Budgeting, Consumer, Coupons, Finance, Freebie, Goals, Holiday Tips, Personal Goals, Saving

Thoughtful Money-Saving Ways to Celebrate Dad

Showing Dad you love him doesn’t have to mean sending him on an expensive golf vacation or buying him a new camera. The special day should be all about connecting with him, and there’s no better way to do so than by spending some quality time together. Here, we’ve rounded up meaningful activities you can do no matter where you live or what budget you have — all the activities are free or cost very little. Cheers to being fun and frugal with Dad!

Pack a Picnic
Picnics are for spending quality time with loved ones, and that certainly includes Dad. Take time to pack snacks you know he’ll like, and head to the park for a day of sun and making memories.
 
Play Tourist
Make like a tourist and see sights in your own city that you often overlook. If Dad grew up there, he might even share some stories of his younger days around the block.
 
Browse Books
Whether it’s at a local bookstore or public library, you two can get lost for hours surrounded by books. Discuss which genres are your favorites and why, buy one another a favorite book, or take home the same book so you can start your own book club for two.
 
Take a Cooking Class
Get ready to roll up your sleeves for some quality cooking time with Dad. Many culinary schools and even locals will open up their doors and homes to teach you how to make a delicious meal at a fair cost.
 
Play Mini Golf
He doesn’t have to be a big golfer (or a middle schooler) to appreciate the fun that comes with a good game of mini golf. Other similar and budget-friendly ideas include bowling or hitting the batting cages.
 
Watch Home Movies
Break out those VHS tapes collecting dust in your drawers and take a trip down memory lane by watching homemade movies with Dad. You’ll not only get to see how much you’ve changed, but you can also poke fun at Dad’s camera skills.
 
Tour an Art Gallery
You’d be surprised at how many art galleries — and even big museums — open their doors for free or offer discounts. Bond with Dad while strolling past beautiful paintings and sculptures.
 
Go For a Hike
There’s nothing like some fresh air and scenic views to enjoy the day. If Dad is someone who likes to hike a lot, ask him to take you on his favorite trail.
 
Go Wine Tasting
You don’t have to travel to the vineyards of Napa to enjoy some wine tasting with Dad. Do so right at home by looking up wine bars and clubs that typically offer samplings at an affordable cost.
 
Learn Your Family History
It’s not very often that we sit down with our parents to learn about their upbringings. Take this time to go through old family photos or mementos with Dad; ask him about his grandparents and to tell you all that he knows about your family’s genealogy.

By: http://www.popsugar.com/smart-living/Cheap-Father-Day-Ideas-30636652

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