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Would Jesus have an emergency fund?

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Would Jesus have an emergency fund?I talk a lot about the importance of having an emergency fund and how it is a necessary ingredient to a sound financial plan. But, I thought we should step back and ask the necessary question, “Would Jesus have an emergency fund?”

In trying to answer this question, the first verse that came to mind was Proverbs 27:12 (NLT) “A prudent person foresees danger and takes precautions. The simpleton goes blindly on and suffers the consequences.”

Would Jesus have an emergency fund? The whole purpose of having an emergency fund is to be prepared for when the inevitable “trials of life” hit. Christians are not exempt of these trials and struggles that seem to pop up unexpectedly.

This reminds me of the parable of the foolish virgins in Matthew 25:1-13. From what I can tell, the foolish virgins brought enough oil for their lamps had the bridegroom showed up on time. Well the bridegroom was probably playing football with some friends and showed up a little late. (And he didn’t even call to say he was going to be late!!)

What separated the foolish from the wise was their preparation for the unexpected. The virgins forever known as foolish, didn’t plan for the unexpected by bringing extra oil. Those who were labeled wise brought extra oil in preparation for the unexpected.

Jesus knew the balance of what part He played and what He should rely on God to do. We have a part to play, but it is foolish of us to think higher of ourselves than we ought and think that we have a more important role than we actually do. Ultimately God is the one who supplies all of our needs (Philippians 4:19).

But Jesus also said “Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where neither moth nor rust destroys, and where thieves do not break in or steal; for where your treasure is, there your heart will be also.” Matthew 6.

I get convicted by this verse when I have a temptation to think that if I can save enough money, I can insulate myself from any and all problems; thus not needing God. I have to fight against the tendency to trust in myself and depend on my abilities rather than God. The truth is that we can never make enough smart financial decisions or do enough things right that we will not need Him. He designed it that way. We are imperfect beings who are dependent on God.

So, as far as Jesus’ emergency fund goes, if He were walking the earth today, I think He would have one, but He would still trust God for His daily bread (Matthew 6:11).

There are a bunch more verses that would point to suggest yes or no to the question, so I would love to hear what your take on Jesus’ emergency fund is in the comments below…

Technorati Tags: Would Jesus, emergency fund, christian

Save money on car depreciation

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How to save money on car depreciation

Cars are terrible investments. In their most basic form, they are merely a tool to get us from A to B. In their most elaborate form they can be a “shiny” tool that gets us from A to B, but with more luxuries. But either way, they are not likely to be much of a financial benefit. Everyone has heard that a brand new car goes down hundreds or even thousands of dollars the minute you drive it off the dealer’s lot.

This is just the beginning. Over the first year some cars depreciate at a rate as high as 35%. KBB.com says that the average car loses 65% of its value in the first 5 years. Add on maintenance, repairs, interest on the loan, and insurance and you can quickly see that automobiles can have quite a large negative effect on our finances. We dump all this money into our cars and what do we have to show for it? An asset that just continues to go down in value and still becomes LESS reliable. So, if we are not likely to benefit financially from our cars, how can we minimize the damage?

Minimize depreciation loss by buying used cars

I have always heard (and I agree) that a two year old car is a good age to buy, because you are still getting a fairly new car that is likely to have some amount of manufacturer warranty remaining, but yet a huge chunk of depreciation is knocked off.

SafeCarGuide.com says, “A stabilized rate of depreciation (7% – 12% per year) makes used cars a better value than new ones. New vehicles lose an average of 20% of their value the instant they are driven away from the dealership. When coupled to the average yearly depreciation of 7% to 12%, your first year’s loss is anywhere from 25% to 35%. That translates to a first year $6,000 to $8,000 loss on a $22,500 new vehicle, or a $10,000 to $15,000 loss on a $40,000 one. And that’s for a vehicle only driven the average 13,500 miles. If you drive more than that, your depreciation will be greater (35% to 50% for the first year).”

A good way to find a reliable used cars is by checking Consumer reports. They are a Not-For-Profit organization that reviews thousands of products to help consumers get the most for their money. They have a very thorough and detailed list about the reliability of various different makes and model. Since they do no advertising (which helps them stay unbiased) they do charge for the service. They offer a one-month online subscription for $6.00 and a one year for $26.00. If you are in the market for a car, this would be a few bucks well spent.

If you buy a new car, plan on keeping it for a long time If you do buy new, plan on keeping it a long time. This is one of the best ways to get your money’s worth out of a new car. On the other hand buying a new car and trading in the “old” one every two years is one of the worst financial moves you can make. This seems to be what many Americans are doing these days as they try to keep up with the Joneses. As mentioned earlier, it is the first two years in the life of a car that are the most expensive. So why would you want to own the car only on the most expensive years?

One of the advantages of buying new is being able to break the car in properly and having the assurance that you know how the car was cared for all of its life. If you take care of your car and stay on top of your car maintenance, many cars these days can last 200,000 miles. I recently drove past a Toyota dealership that had an old Corolla that had been driven over 500,000 miles. I need to get hold of the owner and find out what he did to keep it running that long. I will let you know 🙂

Feel free to leave me some comments and let me know how you save money on your cars…

Budgeting is like baking cookies

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budgeting is like baking cookies

For some reason the word “budget” has an interesting effect on most people causing them to cringe in pain more than the thought of going to the dentist. It really shouldn’t be as painful as people make it seem. If done correctly, it should give you MORE freedom to get what you want. If you think of a budget as a plan “that takes away all the fun” or eliminates your ability to get things you want, then you are doing it wrong.

A budget is no more than “measured spending.” I think it is a lot like baking cookies. Just like cookies, to make the perfect batch you have to follow a recipe and measure each ingredient. Of course you can improvise a little bit, but each slight variation changes the outcome of the cookies and can take a great recipe and make it mediocre, or a decent recipe and make it great.

Budgeting is not like cookies without sugar

Most people seem to think of budgeting as baking cookies without sugar or chocolate chips. To me chocolate chip cookies are the only kind, so if they don’t have chocolate chips, they aren’t really cookies.

A budget is no different, if you don’t have money budgeted for areas like going to the movies, vacation, buying clothes, or even “blow money” then IT IS like baking cookies without chocolate chips or sugar!! Of course no one likes it!! Who would eat cookies without sugar or chocolate chips?

On the other hand, if your cookies are all sugar and all chocolate – well, that doesn’t sound good either.

The reason many budgets fail is because people forget to add or are instructed to eliminate the ingredients they enjoy the most. If you invent a cookie that doesn’t have sugar or chocolate chips please let me know 🙂

Budgets are NOT supposed to be TORTURE!

Don’t get me wrong, there may be some slight discomfort, if you have never told yourself NO, you will have to say NO to yourself occasionally. If you are currently spending more than you earn – just like the little kid who eats chocolate until they vomit, you will have to learn to say NO when you just want to eat the whole bag of chocolate chips in one sitting.

This is the other main reason that budgets fail. A baker has to be disciplined enough to know that just because sugar and chocolate are good, it doesn’t mean that they can just add as much as they want. Having the correct amount of each ingredient is the key to great cookies.

Don’t forget you SHOULD add sugar and chocolate to the cookies, it is what makes them good!! Maybe just not the whole bag. 🙂

Find a recipe you like

Creating a budget is a trial and error process. Just like creating a recipe from scratch will take you a few attempts to get it right, a budget is no different. Using someone else’s recipe may give you a head start, but still may need to be tweaked a little to fit your personal preferences (check out How to make a budget our the Real Money Budgeting course for a head start).

Stick with what works

Once you find the recipe that you like, the only way to get those cookies exactly the way you want them is to follow the recipe. Sure, you can bend on the ingredients if you need to – after all they are YOUR cookies. But learn from the pros – cookie companies may spend years or months developing a recipe, but once they find a great recipe that works, they print out a recipe that measures out each ingredient that will yield those great cookies if followed exactly.

Cookies are made for enjoyment

Cookies are baked by someone for someone to enjoy. Budgets are the same, being disciplined to follow the recipe may be a little bit of a challenge, but the rewards are the cookies!

In terms of a budget, the reward is having control over your financial life, rather than letting it control you, telling your money where it should go, rather than being told, watching debts shrink, watching savings increase, and not really having to think much about money. Now those are some good cookies!!

Add some sprinkles to your cookies!

If you would like to add some sprinkles to your cookies you can start with these free budget spreadsheets or you can find a piece of free budgeting software that tastes good!

Buying a wedding ring from Amazon.com

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Wedding rings on amazon.com

I bought my wife’s engagement ring from Amazon.com and I learned a few things in the process…

Pros of buying a wedding ring from Amazon

When I began shopping for my wife’s engagement ring, I started browsing “traditional” jewelry stores to get a ballpark figure of what the ring I wanted was going to cost me. Like most other purchases I make, I did my homework and learned about the four C’s (color, cut, clarity, carat) so that I could make an educated buying decision.

All of the “traditional” stores seemed to be within a few hundred dollars of each other for similar diamonds. And this ballpark figure was tending to be higher than I was looking to spend. Coincidentally, I stumbled upon the Amazon.com Jewelry Store when I happened to be in the market.

I explored the site and studied the return policy. Once I felt comfortable that I would have no problem returning the ring if I wasn’t satisfied, I began actually looking at the ring design feature. The store is set up so you can actually design the ring you want and specify how good of a diamond you would like. It was a very easy process and gave me the liberty to create what she wanted rather than search for what she wanted.

Seeing the price of the ring that I designed, I became very skeptical, because it was thousands less than what I had seen in the stores (for the same specs). But after thinking about it for a while, I decided to take the chance since they had a good return policy.

Since the ring was custom designed, it took about a month to arrive. It came in a nice looking wood ring box (without the Amazon logo, thank God) and looked really nice.

Included in the package was an appraisal of the ring which stated that it’s appraisal value was a few thousand more than I had just paid. I didn’t put much confidence in their appraisal, so I took it to a high-end jeweler to have it appraised. He charged me $75 for the appraisal, but I figured it was worth it to know if I was getting ripped off.

When I received the appraisal back from this jeweler, it was a few hundred less than what Amazon had appraised it for, but still thousands more than what I had just paid.

Since Amazon goes direct to the diamond importers and sells directly to the customers, they can cut the costs that other jeweler’s have to pay for sales staff, rent, electricity, etc.

Cons of buying a wedding ring from Amazon

  • The biggest downside to buying jewelry online is that you can’t see it until it arrives.
  • If it is custom designed, it may take over a month to arrive.
  • Most “traditional” jewelers offer free cleaning for life if you purchase from them, so you will likely have to pay for cleanings.
  • It isn’t as easy returning it online as it would be driving to the jeweler who you purchased it from.

Overall, I am very happy with my decision to buy from Amazon. As mentioned, there are some cons to buying from them, but when all things are considered, I think it was definitely worth it.

I believe they sell all sorts of jewelry now, so next time you make a jewelry purchase it may be worth your time to check them out. 










How I organize my bank accounts

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how I organize my bank accounts

Organize your Bank accounts

If there is one thing that I have learned about personal finances, it is that nothing is one-size-fits-all. There are different tools, methods, products, and investments that work for different people at different phases of their lives. My system that I am currently using to manage my accounts and cashflow did not work for me 5 years ago.

But now I couldn’t think of anything easier or more efficient.

Below is a diagram showing how cash flows through my accounts.

accounts diagram2

This is a simplified version, but it gets the point across.

Variable Expenses

Every two weeks, our paychecks are direct deposited as noted above in the diagram into our accounts at our credit union. Our checking account for GAS & GROCERY gets a fixed amount deposited into it every two weeks. From this account we get our spending cash (or blow money), pay for fuel for our cars, and groceries. None of the three are really fixed expenses, so when gas prices rise we are forced to cut back on our spending money or grocery bill.

I sure hope that gas doesn’t go up to $4 a gallon – I won’t be able to eat!! 🙂 Keeping a leash on variable expenses is extremely important when trying to save money. Most people do not realize that expenses rise to meet income, and they pay the price because of it.

Look at any well established business and you will find that each department has a set budget for the quarter or year. They have to stay within those limits that have been created for them.

Why do they do this? Because it works. Businesses are in business to make money, so if it minimizes expenses they are happy.I am not suggesting to manage your finances like a CFO, but we can learn a lot about how to get things done from the business world.

Fixed Expenses

Roughly 75% of our paychecks go into our BILLS account. When we set this account up, I calculated how much all of our monthly bills cost, divided it by two and set up a schedule for when each would be paid. So, in all honesty I don’t check the balance in this account very often. Since we know how much needs to be paid out each month, we have exactly that amount deposited in. I use bill pay to pay my bills out of this account every two weeks based on my bill payment schedule.

Budgeting

Part of this fixed amount that gets direct deposited into our BILLS account is our  Capital One 360 savings. Cap One 360 is a great budgeting tool and if you don’t have an account with them, I recommend that you take a look at what they have to offer.

From our BILLS account (every two weeks) I transfer a fixed amount into each one of our Cap One 360 savings accounts. As the accounts grow I am earning a good interest rate on my budgeted money.

I would love to hear how you manage your money or any other thoughts or suggestions…




















How to budget with Capital One 360 (Formerly ING Direct)

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How to budget with capital one 360 formally ING directUpdate:  Capital One has since bought out ING Direct.  So while the name has changed, it seems that the method still works just as well.

Budgeting with Capital One 360

Capital One 360 has played a critical role in helping me get my financial life organized.

They don’t advertise themselves as a great budgeting tool, but they really are.

You could probably use this same budgeting technique at other banks, but I will show you why it is more beneficial at Capital One 360.

Video explaining the process

1. Open multiple Capital One 360 savings accounts

How to budget The first step is to open up multiple savings accounts at Capital One 360 (Yes, they allow you to open multiple accounts). At most other banks, this is discouraged, if not by the bank itself, by the amount of paperwork required for each. However, once you have opened up your first account, any additional accounts can be opened with about three mouse clicks.

Each one of the accounts that you open will be something that you are saving (budgeting) for. For example, I have my emergency, vacation, car maintenance, entertainment, clothing, and any other savings funds at Capital One 360. I put a fixed amount into each account every pay period (they can automate this if you would like).

2. Open up a Capital One 360 Checking account

It is really this checking account at Capital One 360 that makes this budget system possible. You could still use the Capital One 360 savings accounts to make a budget without the Capital One 360 checking account, but it will be much easier if you have the ING checking as well. And to be honest, I don’t think there is a better checking account out there that is better than Capital One 360’s.

Capital One 360’s Electric Orange checking is unique in a few ways:

  • They do NOT offer checkbooks. It is a debit card based account
  • You can send E-Checks to someone elses bank account for free
  • It has a 3.93% (at the time of this writing) interest rate even with a $10 balance (try to find that at your local bank)
  • Free ATM access at 32,000 locations across the country
  • There are no overdraft fees. Instead of charging you $30 when you bounce a check, they just lend you the money until you bring the balance back up to $0. So instead of having a $30 NSF fee, you might have a $.50 interest charge. This alone is reason enough to switch. They has saved me a lot of money with this feature.

3. Use the debit card to pay for items budgeted for

Once you have the first two steps taken care of and have saved up money in the accounts you are ready to go. Now is the fun part: SPENDING!! You have to do some work on the car? Just transfer the money from you car maintenance fund (this is a real-time transfer) to your Capital One 360 Checking and head to the dealer or if you are like me and like to do car maintenance yourself, head to Autozone and swipe the debit card.

How is that for a simple budgeting tool?

I just get a lot of pleasure in simplifying my life. If you have ever used the envelope system for budgeting, you should be able to notice the advantages of this system. Like I mentioned earlier, you can probably do this at variety of banks, but I think it would be difficult to find a bank that offered all of the conveniences of ING as well as the great rates.

The negatives of using Capital One 360 as a budget tool

The two things I would warn anyone trying the Capital One 360 budget:

  1. Stay on top of your transfers from your Capital One 360 savings accounts to your checking. If you do a lot of budgeted spending for a couple weeks and forget to do the transfers, it can be difficult to backtrack. Like most things in life, it works better with regular maintenance.
  2. You can only transfer FROM the savings accounts 6 times per month. This really hasn’t been an issue for me but maybe once or twice in the few years that I have been using the Capital One 360 budgeting method. (But, I figured out a simple hack to getting around this restriction.)

How to budget with other tools

If using Capital One 360 to budget method doesn’t interest you, then you could try the envelope system of budgeting. You could also try these household budgeting spreadsheets or some of the free budgeting software.  If that doesn’t work you might want to check out YNAB’s personal budget software or you could try Mvelopes Personal Budget system free for 30 days.

























Should you give to beggars?

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Giving to the Poor, Should you give to beggarsI think it is worthwhile to play devil’s advocate and look at situations from both sides and giving to the poor is an issue that most everyone will deal with at some point in their lives.

Working within the city limits I run across homeless guys often, in fact I have seen one guy begging every morning, on the same corner for at least the last two years.

I have talked to him a little bit too, and it seems to be a similar situation.

I have given him some food from time to time, but I wonder if I am doing more harm than good.

Obviously, the Bible makes it very clear that we are to give to the poor . There are countless verses to support this.

But, it also says in 2 Thessalonians 3:10, “For even when we were with you, we used to give you this order: if anyone is not willing to work, then he is not to eat, either.”

What if by giving to a beggar it was actually HARMING them, by only perpetuating the problem?

Genuine love doesn’t always do what people want, it does what is BEST for them. Just as a loving mother wouldn’t let her toddlers play with a loaded gun even if they really wanted to, maybe loving some beggars is to NOT give them food or money. I know it sounds absurd, but that is why I am bringing it up (Devil’s advocate, remember?). Could it be possible that some beggars(who are fully capable of working) would stop begging and get motivated to get a job, if people didn’t keep giving to them.

I am not sure if it is true or not, but I heard that the “Naked Cowboy” from New York City collects over $250,000 a year from basically just being a beggar with “style.” If a “normal” beggar is getting plenty of cash from begging, then why should the look for a job?

Just as with any addiction, the difficulty of breaking it is based on the length of time that it has existed. If this is the case, then giving to a beggar is “addicted” to laziness could actually be harming them by sustaining the “addiction.” If no one gave to him, he would have more incentive to find a job.

The tricky thing about this is that we never know the whole situation and we have to be led by the Holy Spirit when making these decisions. After all, who are we to judge? God knows what is going on in the beggar’s life and what will help them the most.

I would love to hear everyone’s thoughts on this.














Expenses rise to meet income

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why expenses rise to meet income

Expenses rise to meet income. This is the gist of Parkinson’s law. This is the reason that a couple months after most people get a raise, it feels just as tight financially as it did before the raise.

We create the additional expenses when the funds are available. Not on purpose, of course, but on accident. As long as the money is in our pocket we can usually find somewhere to spend it.

We teach our kids to put the money in the bank, because we know that if they can’t get to it they will save it. This is the trick to saving money and believe it or not, it works for adults too.

Without an intentional effort, houses, desks, kitchen sinks naturally get messy and cluttered. We have to take action ON PURPOSE to keep things clean and organized. The same ON PURPOSE effort needs to be made to keep our expenses BELOW our income.

It is a profoundly simple concept, but ironically some of the simplest things in life are the most difficult.