Christian Finance

Hearing something in the midst of noise

Early this morning, at a meeting of a men's group in my church, an interesting debate ensued about health care reform. Americans are very aware of the current debate going on, and no matter which side of the debate you are on, I'm curious how familiar each of us actually is with the details on what is happening.

Because I am always up for a good (and lively) debate, I purposely took the opposing position of those who began the conversation - and what I found to be rather enlightening was the lack of knowledge about certain elements to the proposal that were simply not known by those who, nonetheless, still held very strong opinions.

After some good natured bantering, we finally agreed that it is important to fully understand both sides of a policy decision before forming a justifiable conclusion.

With our increasingly polarized (at least politically) society, it is easy not to get the 'full deal' when trying to form an opinion on an issue.  Both sides of any perspective will always attempt to sway with reasoning that supports their own position - however as is generally the case, both sides on their own are usually wrong, and the truth is generally somewhere in the middle.

This demonstrates the importance of trying to 'hear' despite all of the noise going on. Listen through this noise - and become fully informed.  If you take the time to do this, you will be in a position come to an informed conclusion on an issue - a conclusion that you will be able to support, defend and even debate if necessary. 

Spending carefully

After a fairly hectic couple of months, I'm back - and while I am still busy with work and church, I am also anxious to get back in touch with all of you through this blog.

How has 2010 been for you so far?  My wife and I have done a complete review of our finances from top to bottom and have made some interesting changes as a result.  For example, we've decided to use cash only for things like groceries, clothing and such - rather than using debit or credit cards (note that we always pay our credit cards off every month).

The point of this experiment is to determine whether we spend less on these items when using cash - studies have shown that debit or credit card utilization tends to increase the average amount of a purchase when compared to using cash.  This does make sense - think about how difficult it can be to pull out a wad of 20s to pay for something - it is much easier to swipe a card, isn't it?

This experiment - while perhaps sounding a little old fashioned - is also reflective of being more conscious of just where our money goes.  After all we work incredibly hard for it and as a result, try to ensure that we truly receive the best value for it in return.

A Pause

Because of several things going on in my life right now, I am forced to take a break from blogging for a while.

I will be back - and hopefully soon.  

A look forward...

Now that we are solidly into 2010 (day 2 LOL), I want to share my thoughts on what I believe is necessary if we, as Americans, are to make this decade better - from a financial perspective - then the one we just came out of.  Some of these themes will be familiar to regular readers, but I believe they are incredibly important and thus worthy of speaking about again.

Thus, I present to you five things that will make or break this decade for us all:

1.  An increased savings rate - in order to make the investments that are required for our economy to succeed (think infrastructure and business expansion), an increase in our savings rate is needed.  While this has been improving through the course of the recession, it will have to continue - otherwise we will continue to indebt ourselves to foreign creditors - which of course results in us exporting money to service such debt - leaving even less money for reinvestment at home.  It is a terrible merry-go-round that is next to impossible to get off without getting hurt, once it is spinning too quickly.

2.  Fiscal responsibility - governments at all levels are going to have to make a strong commitment to balancing budgets and living within their means.  Failure to do so will result in mounting debt levels, which in turn lead to higher interest rates; a high interest rate environment is not one that spurs economic growth.  Fortunately an increased savings rate will help finance government debt internally - and stop the export of our dollars to foreign creditors.

3.  Belief, innovation & hope - America has an innate ability to continually reinvent itself.  Think about it: how many times over the past fifty years has it appeared that America was floundering - and how many times did it come roaring back stronger than ever?  We are in one of those times again - fortunately this is the exact situation when we exhibit the best of what we are - and can demonstrate it yet again.

4.  Reduced consumer spending - look around your house and notice all of the junk that you probably don't even need.  Turn over some of it and see where it came from - likely not the USA!  Every dollar needed to manufacture those items - along with the manufacturer's profit - was directly exported from the USA to the country where the item was made.  And what happens when dollars leave the USA?  They are not available for re-investment in our economy, along with our roads, bridges and other things that keep us connected and together.

5.  Keeping focussed on God - while I listed this point last, it is obviously the most important.  Without a focus in Him, our nation will not succeed.  The one solace that can be found is that people have a tendency to turn to God when times are difficult - there is no doubt that we are in such a time right now, so perhaps the economy will be a catalyst for revival in our nation.

We are fortunate to be alive in these exciting times - I believe the innovation and excellence that will occur over the next ten years will restore our nation and rebuild it in ways that we have not yet conceived.  Hang on - it's going to be a fun ride!

A look back...

 For whatever reason, the fact that we were entering a new decade did not enter my thought pattern until the last few days of 2009.  It really hit me about five minutes before 2010 when I started having flashbacks to ten years prior.

It's amazing how much life has changed for me in the past decade.  I recall ringing 2000 in with a baby in my arms and big dreams for the future.  While we watched the fireworks burst on the waterfront, I remember almost blizzard like conditions - and yet we were all warm inside - partially because the Y2K (remember that!) predictions never did come true.

The decade brought with it times of change - another baby, a new state, and a dream being fulfilled.  Although He always was with me, my Jesus became more real - my guide and love of my life.  As I hugged my now 10 year old girl this morning, I couldn't help but smile - a smile of thankfulness mixed with contentment.

The past decade was not the best of times - if anything, it was somewhat reminiscent of the 1970s.  But just like that decade ended with dreams looking forward, I believe that this new decade will hold promise for us all.

Even though we are coming out of a very deep recession, we cannot forget that it is times like these when our nation comes together and shows the world just how innovative, creative, and renewing that we can be.  Yes - it will be difficult - but yet it will be very satisfying and something that I pray that you will all be able to be a part of.

So even as you look back, don't keep your focus there.  Continue to look forward - for that is where God is leading us and where we need to go if we are to maintain the awesomeness of what we are.

Happy New Year to you all!

'Tis the season

 As usual, the holiday season has kept me busy - just as I'm sure you have been.

I look forward to seeing you back in 2010.  In the meantime, please enjoy the holidays with your friends and family.  

I hope that you also pause and take some time to remember what we are really celebrating - the birth of our Lord and Savior.

Merry Christmas from Christian Finance!

Dollars in your wallet - Part 7: FSA Accounts

Many American employers offer "Flexible Spending Accounts" (FSA) to their employees. These accounts allow you to save a portion of your salary - before taxes and social security - and utilize the funds for unreimbursed medical and dependent care expenses.  They are generally a good deal because a typical employee will save upwards of 20% of the contributed amount in taxes.

Like many good things however, there is a catch - the 'use it or lose it' provision attached to such plans.  This means that any amount that you do not utilize for allowable expenses is 'lost'.  With the end of the year rapidly approaching, it is time to do some financial housecleaning to make sure that you do not find yourself in this situation.

Any expense that is normally eligible as a medical expense can be utilized for FSA reimbursement.  This includes things like contact lenses, glasses, prescription drugs, physician co-pays, dental expenses, etc.  Check your receipts to see what you have - and get them in for reimbursement.  Most plans allow you to request reimbursement for some period of time after the end of the year, but expenses must generally be incurred before the end of the year.

If you don't have any receipts, see if you can 'stock up' on medical supplies or devices that you anticipate utilizing in 2010.  This is a much better approach rather than allowing the funds to go to waste.  In addition, think ahead about medical expenses that you know you will be incurring in 2010 - and make a 2010 FSA election this month before your open enrollment period closes.  It is an easy way to get more bang for your buck because of the tax savings - and along with that bang, more dollars in your wallet!

Mortgage rates are down!

In the news today, mortgage rates in the United States have dropped to new record lows - the average rate on a 30 year mortgage is now 4.71% according to a news release from Freddie Mac.  This is the fifth consecutive week of lower rates.

If you haven't refinanced yet, it may be time to start thinking about it.  I refinanced my mortgage during the summer and have been enjoying paying 1.5% less on my mortgage rate. A lower rate means more money in your pocket - definitely something to be happy about!

Underwater on your mortgage

 This weekend I stumbled across an article regarding a paper written by Professor Brent White from the University of Arizona. The premise of his paper is that if an individual is 'underwater' on their mortgage (i.e. the mortgage is higher than the value of the home) then the homeowner should just walk-away from the home and not have any moral quandries about it.  Because this will cause an immediate hit to your credit score, he further advised buying major items such as cars, appliances, etc. that you may need credit for prior to defaulting - since you will not be able to obtain credit any time soon after default.

I thought about his suggestion a lot over the past couple of days.  In general, I heartily disagree with it, if only for the simple fact that when you borrow money to purchase anything - whether it be a car, home or whatever - you have made a promise to pay the lender back under the terms of the loan (whatever they may be).  As Christians, we need to keep our promises to everybody - even when there are financial consequences to them.

Having said that, I believe there are (very) limited circumstances when it could be acceptable for a Christian to walk-away from debt - this would include severe financial consequences that truly leave no other option.  Often situations like medical debt or other major hardships lead to bankruptcy anyway and would thus have the safe financial effects.

Before you are ready to take the easy way out, think about the promise that you made.  The frustration of being underwater is temporary.  Your house will eventually go up in value and your mortgage balance will go down.  And while you are waiting, you will know that you are doing the right thing.

A day to shop?

Having purchased what I wanted online, I didn't have a specific reason to 'celebrate' black Friday today.  Out of a sense of curiosity however, I did roll out of bed at 6:00 AM and trotted off to a couple of stores just to see what was going on.

Of course by that time, all of the 'door crasher' deals had been snapped up (both stores I visited had opened at 5:00 AM). Admittedly however, I was absolutely amazed at the crowds and the very full shopping carts.  Anecdotal news reports indicate this is turning out to be a much better kickoff to the Christmas shopping season compared to black Friday 2008.

Are today's brief observations an indication that people are turning back on their pledges to save and pay off debt, and instead return to a consumer driven economy? While it is too early to make that conclusion - and it would be discouraging if this indeed was happening - it was at least encouraging that many people felt confident enough in their financial lives that they were able to go out and spend a few dollars today.  

And in case you're wondering, I didn't buy a single thing this morning.