Here are links to the carnivals I was in this week:

• Carnival of Personal Finance – Advice to a Young Professional [Editor's Pick!]

 

• Festival of Frugality – Raising a Cow for Beef: Month 8 [Editor's Pick!]

 

• Money Hacks Carnival – How to Get Out of Debt: Step 5 – Build a Starter Emergency Fund

       I found a few good articles this past week. Here they are:

• The Simple Dollar – Four Atypical Things to Do Before You Consider Buying a House [Trent offers some great tips on things to do before you buy a house. This advice goes against the grain of what most people will tell you, but it will make a huge difference and free up a lot of money.]

 

• Gather Little by Little – Bible Passages about Church Finance [Continuing his series on church finances, Stew shares some Bible verses that can guide how we should hold churches and church leaders accountable.]

 

• Out of Your Rut – Why Earning More Money is More Important than Frugality [Without knocking frugality, Kevin shares why earning more is an important aspect of improving your personal finances. In many ways it can be more important than spending less. My advice is to do both.]

 

• Redeeming Riches – Should Christians Take a Vow of Poverty? [Jason talks about the dangers of seeking righteous actions rather than seeking God and His will for our lives.]

 

• Scordo.com – Recipe: How to Make Ricotta at Home [I've wanted to make homemade cheese for a while. I think I might try Vince's recipe and see how it turns out.]

       Have a great weekend!

       I recently discovered Jacob at Early Retirement Extreme. I’m not sure how I got there – maybe from this post at Monevator – but I’m glad I did.

       Jacob is a bit of an anomaly in our culture – he’s a retired 34 year old, but he’s not rich (based on typical standards). He was able to retire early by saving 70-80% of his income for five years. He did not make a ton of money during that time. I think his salary was around $40,000-50,000/year while he was saving. He simply lived very frugally and saved the rest. Now, he still lives frugally but no longer needs to work to cover his expenses. Despite the fact that he doesn’t need to work, he does – and he makes enough to cover his expenses.

Cheap Living

       Jacob lives on about $7,000 per year. He’s able to do this because he’s learned to live cheaply – especially when it comes to the major areas of most budgets (housing, transportation, food, etc.). He doesn’t have a car, finds cheap/free forms of entertainment, and eats healthy meals with little to no meat. He currently lives in an RV with his wife, but he admits it’s not a necessary choice to duplicate his results.

Should We Retire Extremely Early?

       I don’t highlight Jacob as an example to be followed for extreme early retirement. I don’t think early retirement as a goal in and of itself as admirable or desirable for a Christian. (I also don’t dismiss it as a goal because I can see how God could use a person in this situation for full-time volunteer work or missionary work – a self-funded missionary if you will.) I’m highlighting Jacob and his choices because he offers insights that Christians can use to question the cultural norms and make choices that can lead to extreme generosity.

       For example, Jacob’s views on housing, insurance, and “sacrifice” greatly coincide with my own. (I don’t really agree with him on investing, but that’s irrelevant.) He doesn’t see money as necessary to have fun or live comfortably. He avoids waste. He learns new skills so he can make and do more stuff himself. His approach to living cheaply so he could retire extremely early can be adapted by Christians who want to give generously.

       If you want to get a better feeling for what Jacob did and why, check out his frequently asked questions, about himself page, and about Early Retirement Extreme. You can also see his best posts of 2008 and 2009.

How Can We Use Jacob’s Examples to Honor God?

       What I ask is that you read his articles from the perspective of how they can help you better serve God in your finances. Unless God has a specific purpose for you retiring early, that’s probably not a goal that will glorify Him. But we can use the same ideas Jacob used to enable extreme generosity in our lives by reducing our expenses and questioning the cultural norms. If you find something particularly insightful or helpful on his website, please feel free to share it in the comments below.

       A couple months ago, my wife and I canceled our phone, Internet, and satellite service (via Dish Network) through the local phone company to switch to Comcast. We did it to get faster internet and to cut out the TV service (which we replace by watching online videos). This saved us some money over the monthly costs and provided better Internet service (a big plus for me).

       There were no cancellation fees, and I asked to make sure. I had to talk to a different person to cancel the Dish Network subscription and she explained the return process. (They want the receiver, remote, card, and satellite dish “eye” back to reduce theft of their service. I can understand that.) She said they’d send me a box with prepaid postage and a list of instructions. If I didn’t send the stuff back, they’d hit me with major charges (anywhere from $200 to $500). If I did send it, no charges. Or so I thought…

The Bogus Fee

       I opened a bill in the mail a couple weeks ago from Dish Network. They wanted to charge me a $15 “return fee” plus $0.90 in taxes. Apparently, this is to cover the cost of the prepaid postage for the box to return their hardware. They’re supposed to tell you about this fee when you’re canceling your service, but they never told me. So I called them up to complain.

The Phone Call

       Honestly, I didn’t expect much cooperation since I’m no longer a customer. Dealing with bogus fees is a lot easier when you can threaten to cancel your service or stop being a customer. Not an option for me, so my hopes were not high. Surprisingly, the representative cleared out the charges after I explained the situation and he conferred with his manager. Score 1 for Dish Network customer service.

Don’t Put Up with Bogus Fees

       Here’s my point. Don’t put up with bogus fees. If you get hit with random fees that you’re not expecting (from any service or business), call and complain. Be nice but firm. Patiently and calmly explain the situation, tell them why you don’t believe you should pay the bogus fee, and listen to their response. I didn’t have to haggle much with Dish Network, but it’s not always that easy. Be prepared to keep (calmly) discussing the problem until you get the resolution you want.

It’s Worth Your Time!

       Why do this? Because it will save you money, and it might not take much time. For example, my phone call with Dish Network took a total of 8 minutes. I saved $15.90 by refusing to pay that bill and making the phone call. My time dealing with this annoyance was worth nearly $120/hour. Does your job pay that much?

       It might not seem like much, but a small savings over a small amount of time translates to a high hourly rate. So assuming you have the time, it’s worth your effort.

       What about you? Have you had an experience like this? How did you handle the bogus fees, and what was your outcome? Share your experiences in the comments!

       A while back, I wrote an article titled “Is Debt a Sin?“. I explained that God never condemns those who borrow money, but He provides several cautions against debt. I took a strong stance against debt in that article, but I want to make something clear to you.

       Most Christian financial ministries are very opposed to debt of any kind. There is almost a sense of debt being evil – something that no Christian should be involved with. But the Bible never says that, and God nowhere forbids the use of debt. God warns against the dangers of debt, but there are prudent uses of debt that Christians should consider.

Good Debt or Bad Debt?

       The personal finance world often tries to make a distinction between good debt and bad debt. But that’s pretty stupid. Debt doesn’t have inherent qualities of being good or bad. It all depends on how you use it and why you go into debt. In truth, there are only two kinds of debt: smart debt and dumb debt. That’s really what people mean when they’re talking about good or bad debt.

Smart Debt

       Smart debt is the kind of debt that’s used wisely and prudently to achieve your goals. When you’re reasonably sure you can repay the debt, don’t overextend yourself, and will get a good value for the cost of borrowing, you’re making a smart debt choice. We can use smart debt to buy a home, get an education, start a business, or (occasionally) buy a car.

Dumb Debt

       Using debt to pay for vacations, shopping sprees, or unplanned, unnecessary purchases is never smart. Going into debt we know we can’t afford to repay is dumb. And borrowing money for risky ventures that are unlikely to succeed is just plain gambling.

       But some of the “smart debts” can be dumb as well. Borrowing to buy more house than you need is not necessarily smart. Getting $50,000 in student loans for a degree in a low-paying career field is not very smart. And going into debt to start a business where you have no experience, have done no research, and just have a “feeling” about is flat out stupid.

God Warns Against Dumb Debt

       What you’ll realize as you read what the Bible says about debt is that God is mainly warning against dumb debt. Dumb debt can put us in situations where it becomes nearly impossible to serve God as He desires. It can make us worry, drain our finances, and enslave us to our lenders.

       But using debt wisely as just another tool in our personal finance belt is fine. In fact, it can often be very wise. Without debt many successful businesses would have never started, many people would never own homes, and many would never be able to get the college education that leads to a successful career.

       Obviously, I’m not recommending that you use debt foolishly to start buying everything you want but can’t afford. However, you shouldn’t be completely opposed to using debt either. If you think you’ll be able to repay the debt, don’t get more debt than you need, and ensure you’re getting value for the cost of borrowing, debt can be a good and wise financial choice. But dumb debt will always be dumb – so please avoid it for your own sake.

       I’ve written extensively about tithing in the bible, New Covenant giving, and New Covenant giving guidelines for Christians. Not too long ago, I wrote that tithing is so Old Testament. I explained that I don’t hate tithing, but I’m against teaching it because we have a much better example for giving in the life of Jesus Christ.

       But to make my point a little clearer on how New Covenant giving differs from Old Testament tithing, I thought it would be helpful to look at Jesus’ teaching. I’m going to divide this into two sections. First, we’ll look at what Jesus taught about tithing. Then, we’ll look at his other teaching on giving in general. This will be the verses only – no commentary.

What Jesus Taught about Tithing

       Woe to you, scribes and Pharisees, hypocrites! For you tithe mint, dill, and cumin, and have left undone the weightier matters of the law: justice, mercy, and faith. But you ought to have done these, and not to have left the other undone.

Matthew 23:23 (WEB)

       But woe to you Pharisees! For you tithe mint and rue and every herb, but you bypass justice and the love of God. You ought to have done these, and not to have left the other undone.

Luke 11:42 (WEB)

       ⁹ He spoke also this parable to certain people who were convinced of their own righteousness, and who despised all others. ¹⁰ “Two men went up into the temple to pray; one was a Pharisee, and the other was a tax collector. ¹¹ The Pharisee stood and prayed to himself like this: ‘God, I thank you, that I am not like the rest of men, extortioners, unrighteous, adulterers, or even like this tax collector. ¹² I fast twice a week. I give tithes of all that I get.’ ¹³ But the tax collector, standing far away, wouldn’t even lift up his eyes to heaven, but beat his breast, saying, ‘God, be merciful to me, a sinner!’ ¹⁴ I tell you, this man went down to his house justified rather than the other; for everyone who exalts himself will be humbled, but he who humbles himself will be exalted.”

Luke 18:9-14 (WEB)

       And that’s it. That’s all Jesus said about tithing.

What Jesus Taught about Giving

       ²³ If therefore you are offering your gift at the altar, and there remember that your brother has anything against you, ²⁴ leave your gift there before the altar, and go your way. First be reconciled to your brother, and then come and offer your gift.

Matthew 5:23-24 (WEB)

       Give to him who asks you, and don’t turn away him who desires to borrow from you.

Matthew 5:42 (WEB)

       Give to everyone who asks you, and don’t ask him who takes away your goods to give them back again.

Luke 6:30 (WEB)

       ³⁵ …for I was hungry, and you gave me food to eat. I was thirsty, and you gave me drink. I was a stranger, and you took me in. ³⁶ I was naked, and you clothed me. I was sick, and you visited me. I was in prison, and you came to me.’ ³⁷ “Then the righteous will answer him, saying, ‘Lord, when did we see you hungry, and feed you; or thirsty, and give you a drink? ³⁸ When did we see you as a stranger, and take you in; or naked, and clothe you? ³⁹ When did we see you sick, or in prison, and come to you?’ ⁴⁰ “The King will answer them, ‘Most certainly I tell you, inasmuch as you did it to one of the least of these my brothers, you did it to me.’

Matthew 25:35-40 (WEB)

       ³² If you love those who love you, what credit is that to you? For even sinners love those who love them. ³³ If you do good to those who do good to you, what credit is that to you? For even sinners do the same. ³⁴ If you lend to those from whom you hope to receive, what credit is that to you? Even sinners lend to sinners, to receive back as much. ³⁵ But love your enemies, and do good, and lend, expecting nothing back; and your reward will be great, and you will be children of the Most High; for he is kind toward the unthankful and evil.

Luke 6:32-35 (WEB)

       But give for gifts to the needy those things which are within, and behold, all things will be clean to you.

Luke 11:41 (WEB)

       ³³ Sell that which you have, and give gifts to the needy. Make for yourselves purses which don’t grow old, a treasure in the heavens that doesn’t fail, where no thief approaches, neither moth destroys. ³⁴ For where your treasure is, there will your heart be also.

Luke 12:33-34 (WEB)

       ¹² He also said to the one who had invited him, “When you make a dinner or a supper, don’t call your friends, nor your brothers, nor your kinsmen, nor rich neighbors, or perhaps they might also return the favor, and pay you back. ¹³ But when you make a feast, ask the poor, the maimed, the lame, or the blind; ¹⁴ and you will be blessed, because they don’t have the resources to repay you. For you will be repaid in the resurrection of the righteous.”

Luke 14:12-14 (WEB)

       In all things I gave you an example, that so laboring you ought to help the weak, and to remember the words of the Lord Jesus, that he himself said, ‘It is more blessed to give than to receive.’”

Acts 20:35 (WEB)

       For whoever will give you a cup of water to drink in my name, because you are Christ’s, most certainly I tell you, he will in no way lose his reward.

Mark 9:41 (WEB)

       ³³ But a certain Samaritan, as he traveled, came where he was. When he saw him, he was moved with compassion, ³⁴ came to him, and bound up his wounds, pouring on oil and wine. He set him on his own animal, and brought him to an inn, and took care of him. ³⁵ On the next day, when he departed, he took out two denarii, and gave them to the host, and said to him, ‘Take care of him. Whatever you spend beyond that, I will repay you when I return.’

Luke 10:33-35 (WEB)

       ¹ He looked up, and saw the rich people who were putting their gifts into the treasury. ² He saw a certain poor widow casting in two small brass coins. ³ He said, “Truly I tell you, this poor widow put in more than all of them, ⁴ for all these put in gifts for God from their abundance, but she, out of her poverty, put in all that she had to live on.”

Luke 21:1-4 (WEB)

       ¹ Be careful that you don’t do your charitable giving before men, to be seen by them, or else you have no reward from your Father who is in heaven. ² Therefore when you do merciful deeds, don’t sound a trumpet before yourself, as the hypocrites do in the synagogues and in the streets, that they may get glory from men. Most certainly I tell you, they have received their reward. ³ But when you do merciful deeds, don’t let your left hand know what your right hand does, ⁴ so that your merciful deeds may be in secret, then your Father who sees in secret will reward you openly.

Matthew 6:1-4 (WEB)

       ²¹ Jesus said to him, “If you want to be perfect, go, sell what you have, and give to the poor, and you will have treasure in heaven; and come, follow me.” ²² But when the young man heard the saying, he went away sad, for he was one who had great possessions. ²³ Jesus said to his disciples, “Most certainly I say to you, a rich man will enter into the Kingdom of Heaven with difficulty. ²⁴ Again I tell you, it is easier for a camel to go through a needle’s eye, than for a rich man to enter into the Kingdom of God.” ²⁵ When the disciples heard it, they were exceedingly astonished, saying, “Who then can be saved?” ²⁶ Looking at them, Jesus said, “With men this is impossible, but with God all things are possible.” ²⁷ Then Peter answered, “Behold, we have left everything, and followed you. What then will we have?” ²⁸ Jesus said to them, “Most certainly I tell you that you who have followed me, in the regeneration when the Son of Man will sit on the throne of his glory, you also will sit on twelve thrones, judging the twelve tribes of Israel. ²⁹ Everyone who has left houses, or brothers, or sisters, or father, or mother, or wife, or children, or lands, for my name’s sake, will receive one hundred times, and will inherit eternal life. ³⁰ But many will be last who are first; and first who are last.

Matthew 19:21-30 (WEB)

       ²¹ Jesus looking at him loved him, and said to him, “One thing you lack. Go, sell whatever you have, and give to the poor, and you will have treasure in heaven; and come, follow me, taking up the cross.” ²² But his face fell at that saying, and he went away sorrowful, for he was one who had great possessions. ²³ Jesus looked around, and said to his disciples, “How difficult it is for those who have riches to enter into the Kingdom of God!” ²⁴ The disciples were amazed at his words. But Jesus answered again, “Children, how hard is it for those who trust in riches to enter into the Kingdom of God! ²⁵ It is easier for a camel to go through a needle’s eye than for a rich man to enter into the Kingdom of God.” ²⁶ They were exceedingly astonished, saying to him, “Then who can be saved?” ²⁷ Jesus, looking at them, said, “With men it is impossible, but not with God, for all things are possible with God.” ²⁸ Peter began to tell him, “Behold, we have left all, and have followed you.” ²⁹ Jesus said, “Most certainly I tell you, there is no one who has left house, or brothers, or sisters, or father, or mother, or wife, or children, or land, for my sake, and for the sake of the Good News, ³⁰ but he will receive one hundred times more now in this time, houses, brothers, sisters, mothers, children, and land, with persecutions; and in the age to come eternal life. ³¹ But many who are first will be last; and the last first.”

Mark 10:21-31 (WEB)

       ²² When Jesus heard these things, he said to him, “You still lack one thing. Sell all that you have, and distribute it to the poor. You will have treasure in heaven. Come, follow me.” ²³ But when he heard these things, he became very sad, for he was very rich. ²⁴ Jesus, seeing that he became very sad, said, “How hard it is for those who have riches to enter into the Kingdom of God! ²⁵ For it is easier for a camel to enter in through a needle’s eye, than for a rich man to enter into the Kingdom of God.” ²⁶ Those who heard it said, “Then who can be saved?” ²⁷ But he said, “The things which are impossible with men are possible with God.” ²⁸ Peter said, “Look, we have left everything, and followed you.” ²⁹ He said to them, “Most certainly I tell you, there is no one who has left house, or wife, or brothers, or parents, or children, for the Kingdom of God’s sake, ³⁰ who will not receive many times more in this time, and in the world to come, eternal life.”

Luke 18:22-30 (WEB)

Note: I didn’t include Luke 6:38 in this list because when I read it in context Jesus seems to be speaking about giving forgiveness rather than money.

       I’m seeing a pattern in Jesus’ teaching and it’s not tithing. I wonder why so many churches spend more time talking about tithing than Jesus did…

       Here are links to the carnivals I was in this week:

• Carnival of Personal Finance – How to Garden: When to Plant

 

• Festival of Frugality – Contentment Is Not Complacency

       I found several good articles this past week. Here they are:

• Scordo.com – On What Italian-Americans Can Teach You About Personal Finance: 10 Tips [Ten great personal finance tips]

 

• Get Rich Slowly – Finding Frugal Fun with Board Games [I enjoy playing board games, so I was interested in this post. Games can be great fun at a low cost because so many people can play multiple times for a one-time price.]

 

• The Simple Dollar – Does Rewashing Ziploc Bags Really Save You Money? [Trent does the math to answer this frugal question.]

 

• The Simple Dollar – What About Freezer Bags? [In response to reader questions, Trent calculates whether it's worth your time to rewash freezer bags. He finds a big difference between the savings on freezer bags and regular sandwich bags.]

 

• Len Penzo dot Com – Real Estate Agents: Why You Rarely Get What You Pay For [Len discusses the value of real estate agents and the benefits you can reap by doing it yourself]

 

• Fiscal Geek – Should I use a Realtor to Sell My House? [With impeccable timing, Paul at Fiscal Geek weighs in on the benefits of FSBO versus using a Realtor. In contrast to Len, he prefers using a Realtor.]

 

• Bargaineering – Consequences of a Large Roth IRA Conversion [Jim brings up a point that many people seem to miss. Tax strategies can have ripple effects on your tax return by disqualifying you for some credits/deductions or making others available. This is something I've been meaning to write about as understanding this helped me increase one client's refund by $1,100.]

 

• Gather Little by Little – Can I trust my church with my money? [Stew brings up some great points about keeping your local church accountable and ensuring that resources are used wisely and honorably.]

 

• Gather Little by Little – Can I trust my church with my money? (Cont.) [This is a follow-up to Stew's first post. It contains great additional insights.]

 

• Rich Christian, Poor Christian – The Gospel of Jesus revolves around generosity (part 1) [Larry picks up on the fact that Jesus taught a lot about generosity. This is a point I'll be making in a post on Monday.]

 

• Rich Christian, Poor Christian – The Gospel of Jesus revolves around generosity (part 2) [In part two of Larry's post, he provides some applications based on Jesus' teaching about generosity.]

 

• Bad Money Advice – The Phony 401k War [Frank uncharacteristically provides one-size-fits-all-advice in this article about the decision to rollover a 401(k) or keep it with your old employer. I agree with his recommendation. There are very few times you should keep a 401(k) with an old employer.]

 

• Get Rich Slowly – Why I No Longer Track Every Penny I Spend [J.D. shares why he no longer tracks his spending closely. For the same reason as J.D., I don't track mine either. I still use Mint which gives a pretty good picture, but I'm not very strict about tracking every little penny.]

 

• Money Help for Christians – What To Do When God Gives Bad Financial Advice [Craig wrote an excellent article challenging himself and all of us to be very careful about putting man's wisdom above God's. This is very easy to do when looking to the Bible for financial wisdom. One of my fears is that I will misinterpret the Bible and teach others falsely in my writing on this website. If I ever do so, please stop me and warn me!]

       Have a great weekend!

       In 1748, Benjamin Franklin wrote a great little letter entitled Advice to a Young Tradesman. It’s packed with wise advice, but the language is outdated for most readers today. So without much ado, here’s an updated version of Ben Franklin’s “Advice to a Young Tradesman”.

TO MY FRIEND, Y.P.:

       You asked me for my advice, so I’ve written these tips for you. They worked well for me, and they’ll work for you if you’ll follow them.

       Don’t forget, time is money. Let’s say you can earn $200/day. Now if you sit and watch TV for half the day, you can’t count the $3 you spent for cable as your only expense. You’ve really spent – actually, you wasted – $100 besides that.

       Don’t forget, credit is money. If a man is late collecting the money I owe him, he’s giving me the interest that can be earned on it. This extra interest can add up if we’re talking about a lot of money.

       Don’t forget, money can compound. Money can give birth to money, and its babies can give birth to more, and so on. A hundred dollars used well can become two hundred. That two hundred can become four hundred, and so on until you have ten thousand dollars. The more money you have, the more you can make each time you use it well. Then your profits will increase faster and faster. But if you kill the goose that lays the golden eggs, you destroy all the eggs you would have gotten in the future. If you murder a hundred dollars, you destroy all that it might have produced, even ten thousand dollars.

       Don’t forget, that $1,825 a year is only $5 a day. For that small amount (which you can easily waste in time or money) a man with good credit could cover the interest on a personal loan of $20,000. That much money put to quick work by a diligent man gives a great head start.

       Remember this saying, “The man who pays his loans on time owns another man’s bank account.” If you always pay on time and as you promised, you’ll never have trouble borrowing more money. This can be very useful. After hard work and frugality, nothing brings more success to a young man than punctuality and justice in all he does. So never keep borrowed money an hour longer than you promised. A bad mark on your credit history could close the bank for a long time.

       Pay attention to even the smallest things that can affect your credit. If your creditor knows you’re working hard, he’ll give you a break. But if he sees that you’re being lazy and not trying to pay him back, he’ll be demanding you pay him back all of his money tomorrow.

       Your diligent work and long hours will show that you remember what you owe. It also makes you appear to be a careful and honest man, and that will improve your credit as well.

       Don’t live like everything you have belongs to you. Too many people with a credit card make this mistake. To avoid it, carefully track your income and expenses for several months. If you take the time at the beginning to track even the smallest things, you’ll have great results. Here’s why. You’ll see how tiny amounts pile up into larger amounts of money. Then you’ll know where you’ve wasted money and how you can save it in the future with very little inconvenience.

       Here’s what it boils down to. The way to wealth, if you really want to know it, is as clear as the way to Target. It depends mainly on just two things – diligent work and frugality. Waste neither time nor money. Make the best use of both. Without hard work and frugality you’ll get nowhere. But with them, you can go anywhere. The man who gets all he can honestly and saves all he gets (except what he needs to live) will definitely become rich. Provided, of course, that God (whom everyone should ask for blessing on their honest work) doesn’t have other plans for that man.

An Old Pro