Archives For March 2012

Do you consider yourself rich? Odds are that you don’t consider yourself rich. My wife and I are both in graduate school and working full-time. While we do okay for ourselves by most standards, in most conversations, we wouldn’t consider ourselves rich. Not by any means.

What Does “Rich” Usually Mean?

When you hear the word, “rich” what do you think of? I am sure everyone has their own image in their mind (and it’s probably relative to your current financial state), but I am sure there are some commonalities. Perhaps it means having enough money so that you never have to worry about making ends meet? Maybe it means driving a nice car or living in a big house?

The truth is that our society often labels “rich” or “wealthy” by the stuff that we have. Not only are we a culture obsessed with material possessions, but because of this, we always think that we aren’t rich. Rich always seems to be defined as the people one or two steps above us. We aren’t rich because we don’t have what THEY have. They’re the ones that are actually rich.

A Different Perspective on Rich

It was a couple years ago that I came across this film and had my perspective radically changed. I always thought that I was not rich – that I was just a middle-class nobody. I failed to realize that I was not looking outside of my culture. Instead, I was buying into the materialistic paradigm.

How does the following film change your perspective?

Here are some key lines that stood out to me:

  • 43% of the world’s population live without basic sanitation
  • 18% live without an improved water source
  • 20% of the population owns 75% of the wealth
  • 14% are hungry or malnurished
  • only 8% have an internet connection

The list could go on and on. The key theme for me is realizing how much I already have and take for granted. The truth is that my wife and I are pretty comfortable. We have a large emergency fund where we could survive for about 10 months without earning any income – and that’s without cutting any major expenses.

What Does This Mean?

Understanding myself as rich ultimately means a new appreciation for the things I have AND a higher importance on correcting the imbalance in the world. Instead of continuing within a highly capitalistic society that is driven by material possessions, this new understanding forces me to give to others. Generosity is a defining factor of Christianity - and it’s not just a coincidence.

The truth is that many of who wouldn’t normally consider ourselves rich are indeed rich. Christians are forced to recognize this and do something about it. We are called to use our wealth and/or status to help bring about change in the world – not to reinforce it.

Does a global understanding of wealth/rich change your self-perception?

 

One of the many things that has kept me from starting a Christian personal finance website to this point is the fact that I have been left wondering what is so unique about Christianity from other finances. Often, the token distinction between a Christian personal finance blog and just a regular old personal finance blog is the attention to one issue: tithing. Is this really the only distinction between a Christian personal finance blog and any other finance blog?

Before I dive into this question further, another question that haunts me is whether it makes a difference. Does it matter if Christian finance is unique? What I mean is that there seems to be a troubling exclusiveness to Christianity. Growing up in a Christian family, it is easy for me to say that this rings true with my experience. There is a constant need within some Christian communities to completely separate themselves from the rest of the world. Understanding these two issues will not only help me focus and share the direction of the site, but should also clear up some misconceptions about Christianity.

Does Christianity Need to be Exclusive?

The first of these two questions is then, whether Christianity needs to be exclusive. This issue arises out of a tradition that reinforces a false dualism. Many people have heard the terms sacred (or Christian) and secular. These are terms that have changed meanings over the years. Nowadays, these terms are used to apply strict labels to items, people, movements, etc. Have you ever heard of music being defined as secular?

Growing up in a Christian home, I was determined to listen to only “Christian” music. While I wouldn’t have admitted it at the time, it was along the assumption that this would make me a better Christian. Somehow, I understood the path or identity of a Christian to be one who separated him/herself from anything specifically Christian. This mentality stems out of this strict and false binary. It has to be either Christian or secular. There is no middle ground or shade of gray.

In the past few years, I have come to realize that the world is much more complicated than this simple division. I am reminded that I am not one to judge someone’s identity with strict labels. Instead, I have come to understand the complexity in which this world exists and thrives.

How do I Distinguish Christian Personal Finance from Personal Finance

If my understanding of the world is one that is complicated, without strict borders, the question naturally arises how to distinguish christian approach to personal finance. The question, “How is Christian finance different?” still echoes. The easy answer would be to continually emphasizing themes of giving, generosity, and compassion for those without. This is why Christian blogs often discuss tithing, or giving and using the Bible as a source of information. It is the easiest overlap of the two.

The more difficult answer would be that there isn’t always a distinction. Sometimes, the “Christian” financial advice is the same as advice that does not self-identify as Christian. The truth is that in managing your personal finances, everyone is forced to wrestle with questions that Christians also face. How much should I save for my future? Am I giving enough to help the world? Am I treating myself too much? Are my spending habits healthy? Even in using the Bible as a source, everyone is interpreting it in their own context…

Personal finances offers us a unique overlap with the Christian faith. Yet, at the same time – it is not exclusively Christian. Sometimes the need to be exclusive is more of a deterrent than anything else. Perhaps the need to separate or distinguish Christian personal finance is all in vain.

Do you know how much you should be spending on various bills or areas in your budget? Do you know what the “experts” recommend? If you are wondering what you should be doing when you budget or how much money should be designated to certain areas of your budget, it is important to consult popular advice, but it doesn’t mean it should be the end all answer. Finding a happy balance should be something that you take the time to discern. There are many people out there that want to tell you where to spend your money or how much to give. I want to suggest that this is just impractical.

What the “Experts” Tell You to Spend / Give

Many people use national averages to regulate their spending. One of the most common guidelines is that you should not spend more than more than 40% of your income on housing. This means that when you add up your household income, no more than $.40 for every dollar that you earn should be spent on housing-related costs. This sounds like a great guideline (as it prevents people from overspending), but it is limited in its scope. I’ll get to that in a minute.

Another popular rule of thumb, particularly within Christian circles, is that you should tithe 10%. Many Christian circles believe that you are required to give 10% of your income to the church because it is biblical. While Christian tithing is an important value because of its indication of generosity, this hard and fast rule is rather limited and fails to highlight the real importance for tithing.

Why These Rule of Thumbs are Limited

When it comes to understand these common suggestions for how we should spend our money, it becomes clear to me that we have to accept them with a grain of salt. They may be beneficial for comparison, but they should not be followed strictly. Here’s where the suggestions fall apart.

The recommendation not to spend more than 40% is rather limited because it does not account for the different regions of the country. My wife and I live in the greater NYC area and housing (along with cost of living) is higher than almost anywhere else in the country. Yet, while housing is higher, our transportation costs are significantly lower than my siblings as they are required to have to cars. My wife and I are able to get by with one car that we drive infrequently because of our access to public transportation. To make a long story short, it doesn’t account for the many variables that affect your budget. Spending more than 40% of your budget may be perfectly okay if other costs are lower.

Thinking about strict and fast rules about giving or spending always reminds me about the Widow’s offering in the gospel of Mark. Here’s what Mark 12:41-44 says…

41  And he sat down opposite the treasury and watched the people putting money into the offering box. Many rich people put in large sums. 42 And a poor widow came and put in two small copper coins, which make a penny.[a]43 And he called his disciples to him and said to them, “Truly, I say to you, this poor widow has put in more than all those who are contributing to the offering box. 44 For they all contributed out of their abundance, but she out of her poverty has put in everything she had, all she had to live on.”

The truth is that many of these guidelines break down because of the different incomes that people earning. Giving 10% is a lot easier for someone earning 100k each year than a poor graduate student who is barely paying for the cost of tuition. The truth is that many recommendations prove their inadequacy when you try to appropriate them to people with lower incomes.

If you are trying to figure out how to budget, it’s important to listen to recommendations as long as you are making your own decision after that. If you fall into cookie-cutter plans that don’t apply to you, you could become frustrated and give up being responsible with your finances. My advice would be to take time to discern what will work for you and what is the best use of your money, paying close attention to your motives when doing so.

One of the most important financial lessons that I have learned in the past few years is the importance of living below your means. If you are unfamiliar with this term, it simply means to spend less than you earn. In today’s culture and the numerous everyday expenses that come up (like insurance, rent, food, transportation, etc.), it can seem almost impossible to stay within your budget.

I know from personal experience that this can be difficult. My wife and I live in one of the most expensive regions in the United States. We make very modest salaries while both of us also go to graduate school.  Despite the apparent difficulty of living on less money than you earn, it isn’t impossible.

How My Family Lives Below Our Means

As I mentioned, my wife and I live in a region of the U.S. with one of the highest costs of living. If I were to tell you how much we pay for rent (for a 1 bedroom apartment without laundry or a dishwasher), you would probably faint. In fact, when we moved here so that I could pursue my graduate studies at a seminary, I nearly did the same thing. Considering that my wife and I had just graduated from college with little or no professional experience in the workforce, I knew it was going to be difficult to earn enough money to pay all of the bills.

Even though the primary purpose was for me to go to graduate school, I knew that in order to make ends meet, I would have to work part-time to help with the expenses. I ended up getting a part-time job on campus for 30 hours a week. This meant that I would have go to school part-time and extend my degree 1 year. While extending my degree an extra year was not my favorite thing in the world, it meant that I could graduate without any college debt.

We ended up both securing jobs and finding as cheap of an apartment as possible. My wife’s job was horrible (she was a street canvasser who was force to work regardless of whether it was raining, snowing, or over 100 degrees outside), but it ended up having some nice benefits that helped us through this time. Even with both of us working, we were forced to bring lunches to work, eat out only 1x per month, and limit our entertainment options.

What Living Below Your Means Offers You

It takes a lot of work to begin spending less than you earn, but living below your means offers you a lot of benefits. Here are some of the basic things it gives you:

  • Ability to Save: One of the most basic ideas is that if you are spending less than you earn, you will have extra money to save for the future. This is important because we all experience “rainy days” and need to have some sort of emergency fund to protect us from a financial disaster.
  • Financial Freedom: Living below your means allows you some financial freedom. Because you are not strapped for cash and have some cushion, it means you can pursue things that seem really important to you without having to worry about not paying all of your bills. This is especially important because some people feel tied to a corporate job that is doing more harm to the world than good. Spending less money than you earn allows you the personal freedom to resist these oppressive systems without worrying about having food on your table.
  • Ability to Give Freely: One of the most important things, in my opinion, is the ability to give to those in need. If you are living paycheck to paycheck, you aren’t in a great shape to give to those in need. By limiting your spending, this frees you up to contribute towards making this world a better place.

Living below your means is important because it not only takes away the stress of paying your bills, but allows you the freedom to follow your dreams and help others. If you constantly struggle with giving generously, as I have in the past, it might be time to reconsider where you are spending your money.

After a lot of prayer and careful thought, I have decided to sell this website. I’ve thoroughly enjoyed writing and getting to know some of you through the comments. But God has presented me with an opportunity I cannot pass up, and it is time for me to move on from Provident Planning. I want to give my next project my full energy and attention, so I have decided to sell this website to enable me to do that.

Why I’m Selling

Although I could simply keep this website myself, it would eventually drop in the search rankings without fresh content. There are also administrative tasks that I’d need to keep up with even if I’m not writing any posts. Updates to my publishing software and plugins, responding to comments, and various other tasks eat into my schedule, which is stretched as it is.

So when I received an offer for the Provident Planning website, I was excited and relieved. Selling the site will take the administrative tasks off my plate and eliminate the mental drain of running it. (Yes, there is still a mental drain even though I haven’t been writing lately. I think it’s just the idea that it’s sitting here languishing that bothers me.)

What I’ll Be Doing Next

I want to minimize the distraction of having this site to maintain because I’d like to focus completely on my next project. About a year ago, Kevin Tupper and I began talking about a project we’re calling Christian Simplicity.

Christian Simplicity is focused on living a lifestyle that is inwardly rich toward God and outwardly rich toward our neighbors. We will encourage people who identify themselves as still having thorny soil where the cares of the world, the deceitfulness of riches, and desires for other things take precedence over the kingdom of God and choke out the Word, making it unfruitful. We hope to share the truths that life is not measured in the abundance of possessions, that God can be trusted to take care of us, that we don’t need to rely on our own ingenuity and ability to secure our future, and that we can live in the creative goodness of God.

We also want to work with people who desire to manage their finances in light of the reality of the kingdom of God and in a way that supports the unique dreams and goals that come from a life in Jesus; however, this may happen as a project of Christian Simplicity rather than being the main focus itself. We won’t be charging for this one-on-one counseling because our desire is to help anyone who wants to manage their finances in this way.

We are in the process of setting up Christian Simplicity as a non-profit. I will be focusing my time on running Christian Simplicity, writing for our website, and working one-on-one with people are attracted to our approach. So even though I probably won’t be writing here at Provident Planning any more, you can still find me at Christian Simplicity or email me at paul@christiansimplicity.com.

If you are a client of my financial planning and tax preparation services, you might be wondering what will happen next. Well, I’ll still be running my business through the end of this year, but I will be having a discussion with each one of my clients about my transition to Christian Simplicity. I will work with you to determine if you’d be a fit for Christian Simplicity or to help you find a trusted advisor to work with in the future. The business side of this website will be maintained here at Provident Planning until I have finished this transition process, so you can still find any information you need or get in touch with me there.

If you have any questions about Christian Simplicity, feel free to check out the website or email me. I’d be glad to talk with you about it.

I have come to think of many of you as my friends because of our conversations in emails and the comments on this site. I do hope we’ll keep in touch and you’ll check out what we’ll be doing at Christian Simplicity. I wish you all the very best of God’s blessings. May the grace of our Lord Jesus Christ, the love of God, and the fellowship of the Holy Spirit be with you all.

Who Is Buying Provident Planning?

Now, with all that said, you’re probably still wondering who is buying Provident Planning. I’m pleased to announce that Corey from 20′s Finances will be buying the website. I’ll let Corey introduce himself below and he’ll take it from here.

A little about me (Corey)

I’d like to take a brief minute and introduce myself to all of you. My name is Corey and I am currently in graduate school at a seminary. I will be finishing up my Master of Arts in Theology in December of this year. When I initially approached Paul, asking him if he would consider selling Provident Plan to me, I was primarily interested in the site due to it’s connection with finances.

Even though I am studying religion in graduate school, I have become fascinated with personal finance. Personal finance has become an obsession a hobby because I have been forced to grapple with the many questions about finances that adults are forced to answer. As I have transitioned into adulthood over the past 7 years (which involves going to college, graduating college and getting a job, getting married, and returning to graduate school to follow another passion of mine), I have learned to face some of life’s important questions when it comes to finances. I realize the difficulty of this task and I want to share my story in order to help others with the same difficult questions.

What to Expect on Provident Plan

Provident Plan will continue to be a great balance between Christian values and personal finance. I hope to utilize my religious education and training to provide you all with insightful information. I promise not to bore you with Greek or Hebrew (too much), and instead focus on the everyday things that both you and I struggle with. Because this is a finance site, you can expect to see some of my thoughts on giving and tithing, but I envision this site to be much more than that. It will house important information about living below your means, investing and planning for your future, as well as some reflections on my life in general.

While I will be the first one to admit that my faith informs and shapes my approach to personal finance, I also believe that it is not the exclusive influence in how I approach finances. We are all influenced by a variety of factors and I want to reflect that here as well. Much of what will be written here will continue to be applicable to everyone, regardless of their faith tradition, while still being true to my Christian heritage.

I am looking forward to this new adventure and I look forward to getting to know you all through comments, emails, and other interaction.