Bible Money Matters » money

Do You Share Equal Financial Responsibility With Your Spouse?

John Frainee — Tue, 10 Aug 2010 11:49:00 +0000

It’s inevitable. An individual within a married couple will become the main financial person. It’s common knowledge that over the course of marriage, either the husband or wife will emerge as the “one who does the finances.” But should this be allowed to be taken to the extreme? Should only one be in charge of the finances while the other is left in the dark? Of course not! If you’re struggling with who should do the accounting, budgeting, and spending within your marriage, this article is for you.

Our Story

My wife and I have been married for a little over a year now. Fairly quickly, it was evident that I was more interested in personal finance than she, so I began researching budgeting methods and implementing our finances. I knew that my wife needed to be involved in the process, but I wasn’t sure to what degree.

Typically, I would sit down with her every month and we would decide together how to spend our money for the next month. It worked well, but I felt something was missing. Nevertheless, I proceeded to reconcile all our transactions, send off all the bills, and have overall control over the financial situation. It just didn’t feel right. I had to find out what was missing!

After much thought, I found that I had just too much responsibility and needed Courtney to know the inner workings of our budget. Instead of reconciling our transactions myself, we now sit down together and do it! It was not enough for Courtney to know how much to spend or even enough to just have a say in how much we spend, she needed to be a part of the larger process. Now she knows how to reconcile transactions in MoneyWell, how our bill scheduler works, and other nuances of our financial plan.

Benefits Of Equal Financial Responsibility

So why share all the little fine details of your financial plan with your spouse? Here are a few reasons it is crucial to a healthy financial future.

Brings up discussion on spending habits: By reviewing transactions together at the same time, you’ll have the opportunity to ask questions about why money is being spent on certain items. Remember, this is an opportunity for discussion, not argument. Encourage each other in this process.
Ensures that each person is financially capable in case of emergency: If you were to be in the hospital for any extended period of time, would your spouse understand what bills to pay and when? If not, go over all the essentials with your loved one to make sure the financial end of things is handled while you’re recovering!
Builds your relationship as you spend time learning to work together: This one is powerful. Learning to work together as a team is essential for any relationship. If you can’t work together in marriage, your marriage is likely to fall apart. Budgeting together is a wonderful opportunity to learn from each other and build your communication skills.

If you’re having trouble getting your spouse to let go of some financial responsibility and letting you get involved, be patient and prayerful. If your husband or wife is controlling and wants to handle it all, counseling is recommended – there are probably larger issues that you must address.

Most importantly, keep communication at a high level. There will be less room for argument and you’ll become more productive in your financial plan. So, do you share equal financial responsibility with your spouse? Start today.

This article was written by John Frainee. John Frainee is a personal finance writer at TheChristianDollar.com. His goal is to provide biblical financial principles that encourage people to live healthier lives. Beyond personal finance, John enjoys spending time with his wife and two crazy cats, playing a competitive game of Monopoly, and reading just about anything he can get his hands on. You can also find him on Twitter and Facebook.

Wealthy Heiress’s Empty Mansions Attest To How Material Things Can’t Buy Happiness

Peter Anderson — Wed, 04 Aug 2010 11:55:28 +0000

Up on a bluff on the Pacific Ocean sits Bellosguardo – or “Beautiful view.” – a $100 million dollar mansion owned by a reclusive billionaire and 104 year old heiress Huguette Clark. By any account the mansion is beautiful, and the estate is one that any person would love to call home. The thing is, the reclusive owner of the estate hasn’t been there in many decades. Neither has she ever stayed at her estate in Connecticut which she bought in 1952, and she has only rarely been seen at her suites in New York in the past 30 years. For the past few decades since the death of her mother Huguette been a reclusive figure, preferring to remain in the shadows, only talking with a few people, including her lawyer. She now lives in a hospital room, not necessarily because she’s sick, but because it’s easier for her to be there.

So how did it all start for her, and how did she end up living such a reclusive life where things like her homes meant so little to her? From NBC:

Huguette inherited a fortune in railroads, copper mines, cattle, timber and banks. Her father also owned the land that would one day become Las Vegas. But it was here in Santa Barbara that she began to turn her back on all that, retreating from the world after a brief marriage.

Like her mother’s before her, Huguette’s wedding sold a lot of newspapers. Her husband, William Gower, was a bank clerk making 30 bucks a week; Huguette spent 11 times that much every day. She confided to friends that her great wealth was a “menace to happiness,” yet she hung out with rich daredevils who drove fast cars and flew rickety planes. Her marriage lasted two years.

Huguette was later linked with Edward Fitzgerald, the Duke of Leinster, who subsequently told a British bankruptcy court he had come to America looking for a rich wife. The duke denied being engaged to Huguette, but again her life was reduced to cartoons in newspapers.

She stepped into the shadows for good. Huguette never remarried; had no children.

Huguette found that she was living in a prison of her own wealth, one where she felt that her wealth was the only reason people wanted to be around her, and one where they would just as quickly turn on you if they had the chance.

She was by many accounts a generous person, and for those in her inner circle, a wonderful soul. But as she has aged, the money and homes didn’t mean as much – until the point where she gave up her lavish apartment and started living in a drab hospital room.

Almost everyone who worked for Huguette had a job until they died. She sent her chauffeur out to pick up an elderly maid every day. Now she is quite old herself; she turned 104 in June.

“She’s still alive,” Andre Baeyens said. “She knows where she is. She’s not very interested in her friends, but she’s still alive.”

In New York, he said. My colleague, Bill Dedman, msnbc.com’s investigative reporter, tracked her to a hospital.

“I had imagined she’s in a three-room suite, a room for her caretaker, and it’s elegant,” Dedman recalled. “I found that part of the hospital. They looked her up in the computer and they said, ‘No, she’s not here. She’s down in another section.’

“I went there and it’s drab, patient names written on a board in the hallway. It couldn’t be more ordinary.”

Huguette had lavish estates in California and Connecticut, but hasn’t been to either in 50-60 years. She had money, but it doesn’t sound like it had brought her enjoyment in years. In fact she now is not even “very interested in friends”.

Money, Material Things And Wealth Can’t Bring Your Happiness

For me what just stuck out in this story is just how little importance money and possessions can have, once you have enough money to have anything you could ever want. She had money, but she didn’t have happiness. She had an unhappy short marriage, suitors coming after her only because she was wealthy, and she felt like her money was a “menace to her happiness”.

I’m of the opinion that no matter who you are, you need to find happiness in your faith first, and in your family and friends next. Putting your faith in things, money and things of this world will lead to nothing but trouble.

Better is a little with the fear of the Lord than great treasure and trouble with it. – Proverbs 15:16

Have you seen people around you trying to find happiness in money and possessions? Have you done it yourself? How can you keep yourself from falling for the honey trap of wealth?

This article was written by Peter Anderson. Peter Anderson is a Christian, husband to his beautiful wife Maria, and father to his baby boy, Carter. He loves reading and writing about personal finance, and also loves a brisk game of tennis every now and again. You can find out more about him on the about page or check out his design site at http://www.logosforwebsites.com. You can also follow him on Twitter at @moneymatters.

Should Married Couples Divide Their Money?

Jason Price — Wed, 07 Jul 2010 11:59:36 +0000

Some couples combine their money while others divide their money. Perhaps both couples were earning and managing money individually before they got married, so why not continue right on doing the same thing. It’s the easy thing to do, right? Well, of course there is always that discussion about who will pay what when the bill arrives in the mail. And if you get a new car, who’s name goes on the car title? Keep financial matters separate, right? Nah, you don’ want to do that. Dividing up your finances and claiming territory leads to communication challenges, individualism in your marriage (in a bad way) and developing the wrong perspective about money.

Communication Challenges

Oh yeah, we’ll each pay our own bills and have our own spending money. But when big financial decisions need to be made who is going to handle what? I’m talking about that big unexpected expense or emergency that occurs. Bill, do you have enough money in your savings to cover this one. No, Jane, I spent every bit of it this summer on entertainment and my new super gadget. What about you, Jane? Well, I needed a new wardrobe for work. I know it’s important to save, but I just needed my new clothes. What? You mean neither of us have an emergency savings account between the two of us? Geez. So, you get the picture. You want to avoid arguing about money. If you’re not talking about your money then you’re in separate worlds and you definitely can’t hold one another accountable for wise financial decisions.

Individualism

So we all know that marriage is about becoming one, right? You leave mom and dad, meet the love of your life and decide to tie the knot for the rest of your life. You’re no longer dating, you’re married. When she is upset about something, you’re upset about it too. When you leave the house, you have to tell your honey where you’re going. Yes, you’re one. You’re in lock-step, well, at least you’re supposed to try to be as much as possible. Men and women are no doubt different and that is what makes relationships so great. But you shouldn’t manage your affairs as individuals and this certainly includes money dealings. Come on! Are you going to fix your own dinner each night? Which affairs will be together and which will be separate? Nah, just become one in your marriage and work through it all together! It’s a lot more fun that way.

Perspective

Ah, the perspective on money management. Common perspective says money is our money and we can do with it what we please. But the Christian knows that’s not true. Our money, is really the money God has entrusted to our care. It’s all His money. But when you’re in a relationship and you start drawing lines between his and hers; you’re already creating an atmosphere counter to Godly principles on money. Rather, the perspective should be on God’s economy and managing together what you’ve have been blessed with in your marriage. You know, it’s not easy keeping the right perspective on money. Money is powerful and it takes accountability and help. Who better than your spouse to be there for you when your selfish tendencies start to take over.

Final Thoughts

Alright, just put your money together and be done with this. What do you have to lose? Oh, he or she is going to go out and spend it all? Sit down with a cup of coffee, tea, or whatever once a week have a money meeting and talk about your money. Talk about it over a spending plan you both create together. You’ll learn you get to experience more joy and develop a deeper bond in your marriage when you can manage your finances together. Nothing will be more pleasing to God and your sex life will be better too. Yeah, I said that. Personal finance, if done right and together, can deepen your relationship on many levels.

So, reader are you convinced married couples shouldn’t divide their money?

This article was written by Jason Price. Jason Price is a personal finance writer at One Money Design and a Money Map Coach. His mission is helping people achieve true financial freedom. He provides practical tips for managing money wisely and shares Biblical financial principles. Beyond personal finance, Jason enjoys spending time with his family and playing soccer. You can also find him on Twitter and Facebook.

The Financial Checklist For Newlyweds

Guest Poster — Wed, 30 Jun 2010 12:09:19 +0000

This is a guest post from RJ Weiss, who is an aspiring financial planner. RJ writes about financial planning for twenty-somethings at Gen Y Wealth. If you like what you see here, please consider subscribing to his RSS feed.

First things first, congratulations to anyone who has recently married or is getting married. I wish you the best of luck.

Once you get married, a lot of things change real quick. One area of change that takes some time to get used to is in your personal finances. Even if you decide not to combine financial accounts at first, your money needs to be handled a lot differently now.

After you tie the knot, big financial decisions start coming at you really fast. Should you open a combined checking account? What bank should you deposit your wedding gifts? How will you handle current debts? Plus, there are going to be plenty of things that you don’t even think of such as changing beneficiaries on your life insurance or adjusting the amount withheld from your paycheck.

I thought it would be helpful for any current or future newlyweds to have a checklist. An outline of what to do, things to change, and what to discuss after you have been married.

Let’s start with the exciting process of legally changing your name and what needs to be done after changing your name.

Step # 1 – Personal Documentation

If one person in the marriage is going to change their name, you first priority is to legally do so. (Your name doesn’t change automatically once you’re married) This is usually accomplished by visiting the County Clerks or Social Security Office where you were married.

After one of you has changed your name, you will need to update the following:

Driver’s license and ID Card
Passport
Social Security Card
Credit/Debit Card
Bank & Investment Accounts
Mortgages/Loans
Titles to house and car
HR Department (paycheck, health insurance and other benefits, 401K, business cards, etc…)
Prescriptions
Postal address
Any services, subscriptions, or clubs
Voter registration

Step # 2 – Getting Your System in Order

After you name has been changed, it’s time to get your financial system in place.

The first big decision you need to make is to decide if you’re going to combine or split your finances. There is no right or wrong answer, just choose a system that you think will work best.

Don’t be afraid to to test out both methods. If you’re going to be together till death do you part, time is on your side.

With your decision in place, you then need to start or update the following:

Set financial goals together
Start a monthly budget(s)
Start tracking your combined net worth
Delegate certain financial tasks (paying bills, tracking expenses, etc…)
Adjust withholding from paychecks
Set a time once a month to review your finances and goals
Start a filing system for financial documents

One tip, don’t be afraid to talk about this stuff even before you get married. That way, once you’re married, you can spend less time decision making and more time doing.

Step # 3 – Insurance, Investments, and Wills

Getting married, is a great time review and adjust your current insurance coverage and investment plans.

Change beneficiaries on investments and insurance (401K, life insurance, Roth IRA, bank accounts, etc…)
Close any unused checking or savings account
Apply for or adjust life insurance policy
Look into purchasing a disability insurance policy
Combine car insurance policies to get a multi-car discount
Add wedding rings to insurance policy
Compare health insurance plans to see if combining will provide better coverage
Update or draft a wills

One last tip, always order one more copy of your marriage certificate then you think you will need. The last thing you want to do is find yourself going bank and forth from the clerks office, to get marriage certificates.

There is sure to be something that I missed. If you see anything or would like to add this checklist, let the readers know in the comments.

This article was written by Guest Poster. We love guest contributors here at Bible Money Matters. Would you like to write for us as well? Please check out out our guest post submission guidelines and then contact us with your post idea!

What Expenses Should I Expect When Having A Child?

Peter Anderson — Thu, 24 Jun 2010 15:23:25 +0000

As my wife and I prepare for our journey into parenthood, one thing we’ve slowly realized is just how expensive it can be to have children. There are a host of big and small baby expenses that you may not have even considered, and as time goes on they slowly add up to a pretty large sum of money. In fact, by some estimates over the life of the child you’ll spend in excess of $250,000 on each child!

Does the fact that it can be expensive give us pause about becoming parents? Absolutely not – we’re excited beyond all belief for the coming birth of our son Carter. On the other hand, it’s a good idea to go in with eyes wide open so that you can plan ahead, and be ready for all the added baby expense that will come your way. If you look hard, there are plenty of ways to save.

Today I want to take a look at some of those expenses, along with exploring ways to counter the expenses to help minimize their impact.

Baby Expenses To Expect, And How To Cut Costs

There are a ton of costs to consider, and we probably won’t cover them all here, but here’s a start.

Baby furniture: Baby cribs, dressers, lamps, accessories, rocking chairs and changing tables will all be pushed on you when you visit the Babies R Us. Do you need them all? Probably not. At the very least you’ll probably need a crib and/or a pack ‘n play for your child to sleep in and a place to put your baby clothes. If you end up buying everything on the baby furniture list, however, you can easily spend over $1000! A way to get around this is to find good quality furniture used at a second hand children’s store, or from a family member or friend that no longer needs theirs. Just be careful that the item isn’t recalled or unsafe.
Diapers and wipes: A newborn will go through between 8-12 diapers a day or more for the first few months. That’s 3-400 diapers a month! Add in the cost of baby wipes, butt cream, a diaper genie and a variety of other diaper care products, and it can quickly add up to $100-200 a month! Ways to cut costs? Use cloth diapers! It may not be pretty, but it can add up to a huge savings – just ask my mom! (We’re sticking with disposables at our house)
Baby Clothes: Who knew how fast babies grow out of their clothes, and just how many changes of clothes you’ll need when they have those blowout diapers? You need clothes for 0-3 months, 3-6 months, 6-12 months, 12-18 months and so on. Don’t expect babies to stay in that cute onesie for more than a month or two! Costs for clothes can quickly get into the hundreds of dollars. To cut costs, shop second hand baby stores (where you can often find brand new baby clothes with the tags still on), get clothes from friends and family, and register for all the clothes you need for the baby shower. By doing this we ended up only spending $40-50 on baby clothes.
Baby Formula: The cost of baby formula to feed your baby is high, and rising! You can easily spend in excess of $100 a month (or more) on baby formula. One of the best ways to save is breastfeed your baby if you can. You’ll save hundreds of dollars over the months! Even after the cost of a good breast pump, it can still be much cheaper than the alternative.
Toys: The child probably isn’t going to need a ton of toys, especially those first few months. You can save a lot here by just not buying a lot of toys, or by getting them second hand from friends family and second hand stores. We were just given enough stuff that we really didn’t have to buy any of this.
Increased medical costs: The average hospital bill for a vaginal delivery is in the range of $9,000-$17,000, up to $25,000 if you have a C-section (source). (Great reason to have good insurance! Costs usually top out around $3,000 with insurance) Also, adding a child to your health insurance will cause your rates to go up. You can expect the rates to go up anywhere from $75-150 or more per month. Also add in the costs of regular doctor’s visits, especially in the first year or two. Ways to save on medical care? The only thing I can say to try is try asking for a discount when paying for your hospital stay. Sometimes you can get a reduced rate by paying cash.
Child care costs: If you are both going to be continuing to work, you’ll most likely need to find a daycare for your child. Day care isn’t cheap – it can range anywhere from $100-800/week depending upon where you go, who is watching your child, etc. That’s thousands of dollars a year! It will behoove you to do your research beforehand in order to find the best possible care at the most reasonable price. Ways to save? Have a friend or family member watch your child for you at a reduced rate or for free. In our situation we actually decided that it made more sense for my wife to stay home, and to become a single income family.
Babyproofing costs: This is one I didn’t really think of before, but you do have to make your house safe for a child to live and play in, especially once they become a bit more mobile. You’ll need things like baby gates on stairways, plug covers so they don’t get electrocuted and covers for your door handles – so they can’t open a door and fall down the stairs. The costs can quickly get into the hundreds of dollars if you’re not careful. Try finding some items secondhand, and shop around for good deals on others.
Increased utilities costs: If you previously both worked, and you were able to use a programmable thermostat to use less energy during the day when you were gone, you may not be able to do that now if one spouse is staying home with the child. By some accounts you may see a 30-40% increase in energy usage.
Miscellaneous baby gear: You’ll probably need a ton of other baby gear including things like a baby carrier, diaper bag, pacifiers, baby bathtubs, crib bedding, jogging strollers, car seats etc. Save by asking for much of this stuff on your registry, and quite often you’ll get all you need from your shower.
Less time for income creating activities: One thing I do in my spare time is create income for my family via my blogging and other online activities. When the baby comes I expect to have less free time available for those activities, and as such time will be at a premium. I think I’ll still be working quite a bit, but I’ll need to be more organized and strategic about how I spend my time.

Baby Cost Calculator

Want another way to estimate some of the costs you’ll incur? Check out this baby cost calculator at babycenter.com to see just how much you can expect to spend during the first year. For us, it says we can expect to spend about $11,000 or so.

Other Resources

One thing that we really used a lot when deciding what things we needed to buy, and what not to buy was a book called Baby Bargains. The book will tell you what things to buy, and which things to avoid. It tells you where to buy things at a discount. It will tell you which stroller is the best buy for the money, and which crib has a sketchy safety rating. The book was invaluable, and I’d highly recommend it.

Baby Bargains: Secrets to Saving 20% to 50% on Baby Furniture, Equipment, Clothes, Toys, Maternity Wear and Much, Much More!

There are also a ton of great resources online to help you plan for when the baby comes.

Benefits Of Having A Baby

While there a ton of monetary costs associated with having children, there are some positive financial aspects to having children as well.

Tax credit: For each child you have you get to claim a $1000 child tax deduction. I’ve got one friend with 5 children – he gets a nice tax deduction (although I admit, he has added cost as well).
Wake-up call financially: For many having children gives them a financial wake-up call that gives them the added kick in the pants they need to get their financial lives together. Trent Hamm of the simpledollar.com said it this way: “Having kids was the single best financial move I ever made. Their presence made me rethink things and get my act together. With a one and a three year old at home, I’m now in the best financial shape of my life.“

Get Your Financial House In Order Now And Plan Ahead

If you aren’t having children yet, but plan to, take advantage of the time you have before having children in order to become debt free, and to make sure you’re financially able to have children – before you need to. There’s nothing better than being debt free with an emergency fund saved when you’re having a child because it helps to eliminate many of the money worries that go along with having children. After all, for many people the likelihood of financial worries and loss of a carefree life are reasons why they would decide not to have children.

For us, we’re excited to be growing our small family, and we can’t wait to bring another little Anderson into the world. We’ve planned ahead for the expenses, boosted the size of our emergency fund, and prepared ourselves for what is to come. How about you?

Are you planning on having children, and has the cost given you any second thoughts? Already had children? What kind of expenses did you see – were they higher or lower than you thought? Tell us your thoughts in the comments!

Don’t Let College Debt Crush Your Will To Learn

Guest Poster — Thu, 20 May 2010 13:40:37 +0000

Nobody ever said that attending college was going to be easy. In fact, with the downward spiral of the recent economy putting the crunch on public services across the board, schools are placing more and more of the burden of paying for higher education on the shoulders of students. Even in cases like California, where colleges and universities face caps on the percentage that tuition can be raised each year, schools are finding ways to supplement the money they are losing from the state by implementing outlandish fees (what exactly does a student union do that they need a hundred bucks from every student, every semester?). That said, it is now more important than ever to take advantage of the opportunities available to students looking to save money on their secondary education.

Save Money By Attending A Community College

If you are one of the millions of scholars that find yourself overwhelmed by the prospect of coming out of college with thousands of dollars worth of debt, then you should know that there are still ways around paying full price. For starters, you can consider taking two years of general education courses at a community college. The benefits of this decision are more than just financial (although they can’t be overlooked, community college will cost you only a fraction of what you’ll pay at a state college or university). Most community colleges accept nearly everyone, so if you weren’t so studious in high school, you still have a good shot at acceptance. Furthermore, if you do well in a community college setting, it will increase your chances of gaining entrance to the university of your choice (not to mention boosting your consideration for scholarships). Finally, you should know that the general education classes offered at community colleges adhere to the same standards as other state institutions, so you are getting almost exactly the same education at far less cost.

Take Advantage Of Scholarships

If, on the other hand, you find yourself already attending a four-year program and piling up the debt, there is still help to be had. Many students can take advantage of federal financial aid by simply filling out the form (www.fafsa.ed.gov). Or if that route has failed to produce enough money to really help, consider using the internet to your advantage. Sites like www.fastweb.com and www.scholarships.com cater to students by offering a wide variety of scholarship opportunities. By filling out a profile, these sites will deliver a list of applications (mostly essay-based) that fit your particular talents and interests. And prizes can range from $50 to $50,000, with some essays being as short as a paragraph. It’s worth spending a little extra time to try nabbing one of these scholarships, and many of them have multiple awards, so you can apply more than once in a year.

These are just a few of the options available to the industrious student seeking money, but the main thing to remember is that help is out there. From deals on textbooks (www.back2college.com/library/text.htm, www.cheapesttextbooks.com) to discounts on food and movies (flash your student I.D. to find out which merchants offer student discounts), there are all kinds of resources you can take advantage of to save money during your stint in school. You may have to put in some time and effort to find them, but if you come out of college with little or no debt, it will be well worth the weight off your shoulders.

This is a guest post by Sarah Harris of Zen College Life where you can find accredited online degrees and browse top online colleges.

Do you have other suggestions of ways to save on your college education? Resources for finding financial aid? Places to save as a student? Tell us your thoughts in the comments!

Need To Consolidate Debt? Lending Club May Have The Solution

Peter Anderson — Wed, 19 May 2010 12:00:07 +0000

I‘ve been writing about Lending Club for quite some time now, but usually from the viewpoint of an investor. I’ve invested in 30+ loans over the last year or so, and thus far I’ve been extremely happy with the experience. I’ve been pretty careful about the loans that I invest in, and I think because I’ve been so careful, I haven’t yet had any of my loans default.

One thing I have neglected to write about much in regards to Lending Club is how you can also use the service as a borrower, and now it may be more manageable as they’ve added a 5 year term loan for borrowers.

Using Lending Club As A Borrower

I’m never the one to suggest that people take on new debt. I’m a huge advocate of saving up and paying cash for the things you buy, and I think I’m actually allergic to creating new debt.

I do understand however, that sometimes people make poor decisions, or have created debt before they started being more careful about their finances. In instances where people have a variety of high interest debt, I actually think it’s a good idea to consolidate those debts into a lower rate, and cut the amount of interest you’re paying, while you pay the debt off.

Debt consolidation has gotten a bad name in recent years, and most likely deservedly so as there are a million debt consolidation companies out there who are fly by night operations, not doing anything for you that you couldn’t have done yourself (and charging you an arm and a leg to do it!) A good number of them are actually crooked (be careful!)

So what’s the key to having debt consolidation be a good thing for you? You need to remember these things:

Debt consolidation doesn’t remove or fix the problem. When you consolidate your debts all you’re doing is moving the debt around, and you should be paying less interest. Don’t get a false sense of security just because you’ve consolidated your debt and have one payment. Remember it still needs to be paid off, and you have to stop incurring new debt!
If you’re not careful debt consolidation could mean you’ll pay MORE in interest. Remember to make sure that you only consolidate your debts that carry a higher interest rate than your Lending Club loan, otherwise you could end up paying more than you would have otherwise. It can be tempting to consolidate everything so that you just have one easy payment, instead of several smaller ones – but don’t do it! Only consolidate higher interest debts.
Debt consolidation can mean you’ll be in debt longer. Be aware that consolidating could mean that you’ll be in debt for a longer period of time. Try to make sure you pay off your debts as fast as possible!
Only consolidate your debt if you’ve got a plan in place. While consolidating your debts can be a good idea, if you don’t have a plan in place to pay off your debts in a timely manner, you’ll be doomed to failure.

There have been a lot of folks who have used Lending Club in order to help them consolidate higher interest credit card debt, home equity loans and other high interest debt. Just remember, it can be used as a helpful tool, but if you don’t use it correct, it can become a curse as well. Make a plan, be careful about what debts you consolidate and start paying your loan off as fast as possible!

Have you used Lending Club to consolidate your debt? Were you happy with the experience? Tell us how it worked for you!

Doing A Zero Based Budget Will Lead To Found Money

Peter Anderson — Thu, 06 May 2010 12:47:00 +0000

Over the past couple of years the economy has been in a tailspin. With double digit unemployment, people are having a hard time finding jobs, and not many people (beyond government workers) have been seeing their incomes increase. Because times are tough most people are having to be more creative in looking for places to trim the fat, create new side incomes and keep their head above water.

What if I were to tell you, however, that most people could easily give themselves a raise without having an increase in income? Here’s how it can be done.

Zero Based Budgets

A couple of years back my wife and I took Financial Peace University, and as a result ended up doing a budget for our family for the first time in our 5 year marriage. Until then we hadn’t really bothered to keep track of where the money was going because it seemed like we just didn’t have enough to keep track of anyway. What we didn’t realize was that because we weren’t keeping track, money we could have been saving was instead just disappearing into the ether every month.

After we started doing the Dave Ramsey recommended zero based budget and a cash flow plan, however, we found that we were routinely had hundreds more in our bank account every month just because we were being conscious about our spending. It was like getting a raise!

So let’s get started!

Write Down Your Income And Expenses

Figuring out what your current situation is should be the first step in coming up with a zero based budget. Sit down with pen and paper, and set about figuring out what your income and expenses are for the month.

Income: What money is coming into your bank account from your full time job, part time jobs and sideline income that you might have. Your regular income streams probably don’t change that much from month to month, so this shouldn’t be too hard. (Unless you have a sales job, own your own business or other different situations)
Expenses: Go through your monthly expenses and figure out what you’re spending for necessary things like food, clothing, shelter, utilities, insurance and so on.
Less Frequent Expenses: You’ll also want to look at your less frequent expenses that can be different from month to month. These can be things like entertainment, gas, property taxes, pet supplies.

Create A Plan To Allocate Every Dollar

After you have written down all of your monthly and infrequent income and expenses, you need to start allocating every dollar to a specific spending saving or giving category. This is called creating a cash flow plan.

For example, if you have 3000 dollars of income coming in for the month, you would allocate every penny of that 3000 dollars to one category or another. A pared down zero based budget might look like this:

$1000 for Housing expenses ($2000 left over)
$300 groceries ($1700 left over)
$200 car payment ($1500 left over)
$300 Utilities & Insurance ($1200 left over)
$200 Gas ($1000 left over)
$300 tithe ($700 left over)
$100 clothing ($600 left over)
$100 entertainment ($500 left over)
$200 savings account ($300 left over)
$200 mutual fund ($100 left over)
$100 Donation ($0 left over)

At our house, the money for tithe comes out first. Next, the money for monthly or irregular expenses gets allocated. If you have money left over when you’re done with those expenses, money gets allocated to a saving, investment or giving category.

When the month is done you have allocated every dollar, and reduced the total to zero. No money goes unaccounted for.

When you start allocating your incoming funds to specific categories every month, and don’t go over those spending limits set forth in your budget, the result is that you’ll end up having more money left for saving, investing and giving every month. My wife and I found we were able to find almost $500-600 per month extra just by doing a budget and not overspending on our allotted categories. You can do the same, so why not start?

The Zero Based Budget: Review

The steps to follow when setting up your own zero based budget include:

Figure out all your income sources and write down a figure for total net income.
Write down and allocate for all giving and saving categories. Come up with a total for giving and saving.
Figure out a dollar figure for total expenses, both fixed regular monthly and irregular expenses.
Subtract total expenses and giving/saving from total net income. You should come up with zero as the final tally. If the total isn’t zero, allocate the remaining funds to a saving or giving category.

Have you ever done a zero based budget? Did it lead to decreased spending and increased available funds in your accounts? Tell us your thoughts in the comments.

The Choices We Make Have Consequences. Change Your Life One Decision At A Time

Peter Anderson — Wed, 28 Apr 2010 12:00:43 +0000

I was reading a new book that I received in the mail yesterday called, “8 Attributes of Great Achievers“, written by Cameron C. Taylor. The book examines the lives of famous historical figures and gives light to attributes that they shared that helped to make them successful in life. It’s a great read that I would highly recommend.

The book begins by looking at one basic attribute that great achievers possess, they are responsible.

The price of greatness is responsibility – Winston Churchill

A lot of people don’t want to be responsible for the choices they make, and they often don’t want to admit that their decisions have real life consequences. Try as you might, you can’t escape the consequences of your decisions, whether good or bad.

Every choice carries a consequence. For better or worse, each choice is the unavoidable consequence of its predecessor. There are not exceptions. If you can accept that a bad choice carries the seed of its own punishment, why not accept the fact that a good choice yields desirable fruit? – Gary Ryan Blair

In the book Taylor describes how the consequences of our choices are directly related to the decisions that we’ve made – and often times people think they can make bad decisions and escape the consequences of those decisions. They want someone to rescue them from their bad choices (s0und familiar in this day and age?) but often there’s no one there to help:

With each choice comes a consequence. No amount of rationalizing or complaining will alter the consequence. If you pick up one end of a stick (choice), you also pick up the other end of the stick (consequence of that choice).

There is a human desire to be miraculously delivered from the consequences of an action. We tend to seek a rescue from consequences with little or no effort on our part. This tendency can easily be seen manifested by those who have incurred large amounts of debt and then seek to be delivered from the bondage and obligation of repayment through bankruptcy, or those who seek deliverance from a disease of choice by taking a pill to treat the symptoms instead of changing the behavior that causes the symptoms. We should seek to change our actions because we cannot choose the consequences. We must accept responsibility.

Through a responsible use of our freedom to choose our path in life and by making the right choices (instead of sometimes the easy or convenient choice), we will help ourselves to succeed. Make a bad choice, you’ll get a negative consequence. Make the right decisions and in the long run you’ll prosper.

The Power Of Choice

The greatest power that a person possesses is the power to choose. – J. Martin Kohe

There is great power in being able to make choices in our life. We have the choice of what kind of life we’ll live, and what type of person we want to be. We aren’t just a result of how our parents treated us or a product of our environment. We are a result of the choices we make every day.

There are so many choices that we can make.

We can choose if we’ll reflect our environment, or if we affect our environment.
We can choose to be happy, or not.
We can choose how we react to hard times in our life, with positivity or negativity.
We can choose to take responsibility for our actions, or blame others for our failures.
We can choose to be a victor or take on the role of a victim.

What choices are you making in your life? Are they the ones that result in positive consequences?

Change Your Life By Being Responsible

By being responsible for our own lives, and being accountable for the decisions we’ve made we can change our lives for the better. We can make the choice to be happy, and make a decision to react positively to all of life’s situations. We can take control and be a victor and not a victim. So what choices are you making today?

Should Your Finances Be In Order Before Having Children?

Jason Price — Tue, 27 Apr 2010 11:59:57 +0000

You might be surprised by my response to this question. But in general, I don’t think you should plan having children around your finances or financial situation. In other words, I do not think finances have to be in order to have children.

Now I know there are some exceptions in which a child couldn’t receive the medical care or food needed for survival if there wasn’t some sort of firm financial foundation or income. But then again, by whose standards of living am I basing that statement? There are people with children in other parts of this world without the standards we’re accustomed to having. Although there are struggles, many children survive fine.

Why your finances don’t have to be in order

Okay, so back to my initial thought. Why do I feel this way? Simple…

Having children is a blessed part of life. If you’re considering starting a family let me tell you there is never a perfect time to do so. Truthfully, the only perfect timing is God’s timing. If you use finances as an excuse you’ll certainly find something holding you back. A financial excuse could also block God’s plans for you as it relates to children.

Let’s just consider for a moment you have no debt and your emergency savings is fully funded. You could still conclude you don’t have your retirement fund established , or perhaps your home paid off.

No, there is not a financially ideal time until perhaps you’ve reached the point of financial freedom and all financial goals are achieved. But even at that point, I suppose you could reason you don’t have enough time and resources for children because you’re focused on giving to others.

How far do you take achieving financial goals before making the decision to have a child? I don’t think there is a good answer and therefore, I don’t believe you can ever apply what I refer to as a financial child birth formula.

Do finances fit anywhere into the picture of having children?

While I don’t think finances should deter or stop you from having children, I do think there are some wise financial things to do in order to prepare.

Lifestyle adjustments

The best approach to prepare for having children, in my opinion is to focus on adjusting lifestyle. Ultimately, I believe people should have children and adjust their lifestyle accordingly. By adjusting lifestyle you can still make progress towards financial goals and enjoy the blessing of having a child.

Perhaps you’re diagnosed with a condition that required additional expenses to treat each month. You might be forced into a lifestyle change in order to continue to make forward progress with paying off debt, etc. The same approach holds true with having a child.

Emergency savings

You can either build an emergency savings, or create a separate cash savings for children. Having cash on-hand is helpful. There are many expenses that come up that are sometimes unplanned with young children. Having an extra savings fund available to draw upon from is helpful in those cases.

But guess how much emergency savings I had when we had our first child? Zero, yes, zero. It would have been helpful, but it’s not necessary. Again, a lifestyle adjustment would ideally allow you to build an emergency savings while raising children.

Insurance

Buy the most insurance you can afford. As the father of two young children, I can tell you that you will want the best coverage that fits within your budget. You might be able to save on insurance premiums later, but good coverage early can help cover pregnancy, delivery, hospital and other medical costs.

One household income

Live off one household income. I feel very blessed my wife and I made the decision when we did to sacrifice and learn to live off of my income. It took some adjusting (again lifestyle adjustments), but we made it work. As an aside, I love the fact that my children are able to spend each day with my wife. This is an opportunity for my wife to instill into them our Christian values.

Reduce or eliminate debt

Of course, it’s helpful to reduce or eliminate debt. Looking back, we paid off debt to make living off one household income possible. But if you’re unable to pay off debt prior to having your child, you can look to cut out big expenses which might include driving used versus new.

Pray

Finally, set everything aside and just turn to God. It may be within God’s plan for you to have a child now. And even if your finances are not in order you have to be open and responsive to God’s plan for your life. You have to trust He will provide.

Final thoughts

Don’t sacrifice having a child, which is one of the rich’s blessings in life, over accomplishing financial goals and having a perfect financial situation. Remember the path to financial freedom is a life-time journey. Life will bring many new things along the journey. Certainly, we have to take wise steps to prepare, but most importantly we have to learn to adjust and modify our plans around these blessed events. And of course, you can still achieve financial freedom with children.

What are your thoughts on having your finances in order before having children?

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