Friday, November 2, 2007

Talking About Money at Church

Bring up the word Money at church and watch everyone get quiet. I live in a rural area and I attend church in a small town. While I understand that things are tough all over, we are in an especially low-income area.

With that as our backdrop, what happens when you tell a Sunday School class full of young married couples (with kids) that you are going to spend four weeks talking about personal finance? You fill the class. It is the strangest phenomenon; nobody talks about money, but everybody wants to talk about money. Too often, the Church ignores the topic of money except when discussing Tithing. There is little discussion of budgeting, debt, consumer issues, relational issues, etc. We're hoping to see that change.

We began our series with the Biblical principles for money management, which focused on God's roles in our finances and our roles.

From a biblical perspective, all of the earth is the Lords and He has complete control over all resources. God's role is Owner, Controller, and Provider. Our role is the role of steward, or manager. The resources we have under our controller are given to us by God and someday we will be called to account for our management of the resources.

If you are interested in more information on a Biblical perspective of money management, Crown Ministry is a wonderful place to begin.

How Dave Ramsey Changed My Life

I gave up on my first million during the summer of 2002. My wife was pregnant with our first child. We had been married for two years and we had never seriously discussed our finances, our goals, or any other money related topics. We simply got paid and spent.

At that time, we owed about $16,000 on two vehicles, $7,000 in credit card debt, and somewhere around $20,000 in student loans. We had no money in savings and my wife was beginning to fret. Her maternity pay would only be 60% and she was afraid of not being able to cover the difference.

At that time, I began listening to Dave Ramsey on the radio. It didn’t take long to realize that this was the advice that I had been looking for. The moment things changed came when I heard Dave Ramsey ranting about people “going to the gas station and you have to put a candy bar on your credit card with the gas because you don’t have enough money in your pocket to pay for it.”

Well, that was me. On a daily basis, I didn’t have enough money available to buy a snack on my way home from work. At that point, I realized that my method wasn’t working. I needed a different direction, and I found it on the radio.

We put away the credit cards, began paying cash for everything and made saving our top priority (after tithing). By the time our baby came we had a successful emergency fund, we had cut our spending significantly, and we had a plan developed for getting out of debt. We paid off the last of the student loans in January 2006 and became debt free.

I share this story to let people know that sound financial planning works. We are a young couple living in rural Missouri. We now have three children, we live on one income and we have all the basic financial planning items in place (will, life insurance, disability insurance, IRA’s and ESA’s).

Why doesn’t everyone do this? I wish I knew. Sometimes I feel like a voice crying in the wilderness. But, ministering to others is something God has given me the resources and a passion to pursue. So I will.

Thursday, November 1, 2007

How Not to be Broke

Walter Williams, Economics Professor at George Mason University, offers this advice on how not to be poor.

“Avoiding long-term poverty is not rocket science. First, graduate from high school. Second, get married before you have children, and stay married. Third, work at any kind of job, even one that starts out paying the minimum wage. And, finally, avoid engaging in criminal behavior.”

Following this basic advice will almost guarantee that you keep your head above the poverty level. But what if you have already screwed up on one or more of these points? How do you avoid being perpetually broke for the rest of your life?
Here are some basic tips for avoiding long term poverty.

1. Learn something new

The only difference between where you are now and where you will be 5 years from now are what you experience and what you learn. (I stole that, but I can’t remember where) Come to terms with the fact that your current skill set is not enough to keep you out of poverty and decide to do something about it. There are several ways to accomplish this-

Take a class-
Many vo-tech and community colleges offer cheap night classes for adults to learn everything from basic computer skills to photography and plumbing.

Find a mentor-
If you have friends that work in a trade that interests you, hang out with them, go on jobs with them, take any opportunity to ask them questions about their field.

Perhaps the simplest way to begin this process is to

2. Read a friggin’ book!
The average millionaire reads a non-fiction book a week. The average American hasn’t read a non-fiction book since their last day of formal education. Get off the couch, turn off the television and get a library card. It’s free, it’s easy and it keeps you away from the television. Which brings us to number three-

3. Stop focusing your life on being entertained

I used to work in a video store and I would watch the folks coming in every Tuesday when the new releases came out. Four movies at a time cost $12. They came every week. This was in addition to their cable or satellite bills. This was in addition to the collection of cd’s they owned. This is in addition to the hours they spent on the internet playing yahoo games or forwarding stupid emails.

I don’t mean to sound callous, but please understand that every minute you spend focusing on entertainment costs you money. Not only is most entertainment not cheap, but it delays you from pursuing bigger and better things. If you don’t want to be broke for the rest of your life, start focusing on learning and improving yourself.

4. Stay away from places that rip you off

As you read this, you need to know that I am a staunch free market capitalist. I understand that pay day loans represent a huge risk to the lender. The default rate is sky high in that business and in my opinion the interest rate ought to be unbelievably high in order to dissuade broke people from using the service in the first place. Pay day loans are bad math. The cost of doing business is too high, especially when you are broke.

Other places to avoid when you’re broke-
Rent to own stores
Buy Here Pay Here auto dealerships
Cut rate insurance agencies

5. Appreciate the value of government services

If you’re broke, there is a good chance that you have several government assistance programs available to you. This includes food stamps, welfare, WIC, Medicaid, free daycare, free school lunches, etc.
While I inherently disagree with welfare programs, I understand that if you are a parent and you are broke, you do what you have to in order to care for your kids. With that in mind, understand what happens if you ever start making money for yourself.
If your habit is to buy overpriced junk food and pre-packaged meals with your food stamps, you are going to have a hard time making due on your own income if you ever get off the government programs. You have to be frugal when you spend your own money and if you don’t develop a habit of wise spending now, it will be twice as hard to develop later.


There is nothing easy about being broke. There is also nothing easy about getting out of poverty. It takes work to move beyond being broke. These 5 things are not an exhaustive list, but they are a good starting point for building a better life.

Wednesday, October 31, 2007

The Cost of Stupid

I want to tell you about a friend of mine. He's 29 years old and I will affectionately call him a loser. He's a likeable guy; talented, friendly, and even intelligent. He's also a moron.

We spoke not long ago about how things were going for him. He jumps back in forth between menial jobs, doesn't have a drivers license, and isn't allowed back in the state of Illinois. Why? Because the price of stupidity is high.

A few years ago, he got some speeding tickets and chose not to pay them. This led to a warrant for his arrest and a suspended license. The suspended license led to more tickets and more warrants. He eventually spent two weeks in jail before deciding to leave the great state of Illinois where the warrants are still outstanding.

At this point, he estimates it would cost him around $13,000 to put himself in good standing with the state of Illinois. Until then, he can't get a license in Missouri and he can't get a "real" job because he can't pass a background check.

So what is the price tag for his stupidity? $13,000 is the minimum. When you factor in the loss of productivity over the last ten years, I fear the cost will be immeasurable.

I work in the insurance business and I've recently begun learning about the world of "non-standard" auto insurance. These would be insurance companies that specialize in high-risk drivers. When you see ads for "Cheap Insurance", these are the non-standard companies. But how cheap is it?

Most of the clientele are poor, often in trouble for various driving related offenses and most don't read financial blogs. When they go for their cheap insurance, they pay-
$50 up front just to do business. This is in addition to their actual premium.
$25 to file sr-22 form with the state showing proof of insurance
$20 every time they make a change to their policy.
$20 to reinstate the policy every time they let their coverage lapse.

The numbers may not look like much, but these are fees that you would never expect to pay with a standard company like State Farm, All State, etc. The point being, the more mistakes you make, the more you better expect to pay for them. To quote the late John Wayne, "Life is hard. It's even harder when you're stupid."

Tuesday, October 30, 2007

Welcome to My 2nd Million

Greetings Personal Finance fans. You have stumbled across my quest for my 2nd million. No, I'm not already a millionaire, it's an old joke. I gave up on the 1st million because it wasn't working.

My quest for my 1st million got me nothing but debt. At 25 old, I could have been that nameless face you read about in every article detailing how poorly 20-somethings handle their money. I was making every mistake while thinking to myself that I was on the right track.

Five years later, and I'm finally on track. My family has been debt free but the house for almost two years now. From the day that we began our new path, it's been my desire to offer financial guidance to others. I am a Dave Ramsey Certified Counselor and I'm currently trying to start a finance ministry in our church.

What makes me any different from the hundreds of other PF bloggers? Probably not much, except location and background. I'm a small town boy living in rural Missouri. I live debt free in the 2nd poorest county in the state. Looking at the level of poverty that surrounds me breaks my heart. So I want to do whatever I can to help the ones that want to change. I suspect that my posts might venture toward the lower end of the financial spectrum; issues that would affect people who are just trying to get by.