Archives For Corey

Should You Avoid Debt?

Corey —  August 7, 2012

Too often people in both niches of finances and religion identify a situation as black and white when it is actually gray. I hate to burst anyone’s bubble, but the world is much more complex than to have a clear cut answer for every question out there. This is the reason why it is important to be intentional with your finances. Making well-thought-out decisions about what and why you do them is an important step for every individual and family. While it is a wise decision to get advice from those you trust, you have to make the decision.

One of the most challenging questions is whether you should avoid debt like the plague. Most people, including myself, will tell you that it is better to live a debt free life because of the flexibility and freedom that it gives you. Yet, there is also many benefits of using debt to your advantage. Many card companies offer credit card rewards for using their card on everyday purchases. You can leverage your money in real estate by taking out a mortgage instead of buying a home in cash. Thus, I think it is an important question to ask whether one should avoid debt at any cost or if you can use it to your advantage.

Biblical Defense?

One of the most common things that I see among other religious finance blogs is the use of the bible to support one argument or the other. But, if you examine the entirety of the book, you will see that it isn’t black and white.

Pro-Debt Use:

Luke 19:11-27

11 As they heard these things, he proceeded to tell a parable, because he was near to Jerusalem, and becausethey supposed that the kingdom of God was to appear immediately. 12 He said therefore, “A nobleman went into a far country to receive for himself a kingdom and then return. 13 Calling ten of his servants,[a] he gave them ten minas,[b] and said to them, ‘Engage in business until I come.’ 14 But his citizens hated him and sent a delegation after him, saying, ‘We do not want this man to reign over us.’ 15 When he returned, having received the kingdom, he ordered these servants to whom he had given the money to be called to him, that he might know what they had gained by doing business. 16 The first came before him, saying, ‘Lord, your mina has made ten minas more.’ 17 And he said to him, ‘Well done, good servant![c] Because you have been faithful in a very little, you shall have authority over ten cities.’ 18 And the second came, saying, ‘Lord, your mina has made five minas.’ 19 And he said to him, ‘And you are to be over five cities.’ 20 Then another came, saying, ‘Lord, here is your mina, which I kept laid away in a handkerchief; 21 for I was afraid of you, because you are a severe man. You take what you did not deposit, and reap what you did not sow.’ 22 He said to him, ‘I will condemn you with your own words, you wicked servant! You knew that I was a severe man, taking what I did not deposit and reaping what I did not sow? 23 Why then did you not put my money in the bank, and at my coming I might have collected it with interest?’ 24 And he said to those who stood by, ‘Take the mina from him, and give it to the one who has the ten minas.’ 25 And they said to him, ‘Lord, he has ten minas!’ 26 ‘I tell you that to everyone who has, more will be given, but from the one who has not, even what he has will be taken away. 27 But as for these enemies of mine, who did not want me to reign over them, bring them here and slaughter them before me.’”

While not explicitly about debt this passage in luke helps illustrate the importance of using what we have been given to grow wealth. Most of the time this is use to argue about using our personality strengths for the purpose of God’s work. While this analogy may still apply, this passage has many financial illustrations:

  • The money that the nobleman gave to his servants
  • Talk of interest, bank, minas as a form of investment (note that a mina is about 3 months work for a laborer – imagine getting three months of your salary, how would you invest it?)

On the other hand, there are a number of other biblical verses that are strongly against debt:

Proverbs 22:7 –

The rich rules over the poor, and the borrower is the slave of the lender.

Romans 13:8 –

8  Owe no one anything, except to love each other, for the one who loves another has fulfilled the law.

While it is important to consider the context of both of these passages (which I don’t have time to explore) the message is quite clear. Owing money to other people or companies can limit your pursuit of happiness and justice. Living in debt can be a debilitating thing.

My Take on Using Debt

While I would love to hear from my readers considering this interesting debate, I will give you my stance on debt (which isn’t normal). For the most part, I live a hard and fast rule of living a debt free life. Again, I said for the most part. I do think that owing money (like getting a mortgage) whether that be for your own home or real estate investments is a great way to go, but within reason. Too many of my friends and family jumped into buying a home before they could afford it and are now under water.

When you are considering using debt to leverage your money and build wealth, be sure to ask yourself it is worth the risk AND whether you can handle the risk. Will you be able to pay the debt should anything terrible happen? Or are you praying to God for a miracle each month to pay the mortgage. People often make a distinction between good debt and bad debt, but I’d like to propose smart debt and stupid debt. Stupid debt is the one that is bordering on insane. This is the type of debt that people get just because they want to – whether that be drive a new car or getting a HUGE house. Smart debt is the idea of using debt responsible to build wealth and obtain financial security much faster. These examples include using credit cards, getting a mortgage that you can afford, etc.

Debt is not something to be used out desperation, but something that can be beneficial to the people who use it correctly. It’s too simplistic to say that you should avoid debt ALWAYS, but then again, it may not be a bad motto if it keeps you from making huge mistakes.

Readers, what’s your take on going into debt?

 

In Miscellaneous
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Family Finance Advice

Corey —  August 2, 2012

Experienced drivers know that if they want their vehicles to run properly for years to come, regular maintenance is essential. Household finances can benefit from the same advice. To improve a budget that isn’t running as smoothly as it could, or to prevent a financial breakdown, consumers should consider performing a financial “tune-up”.

Schedule a Budget Meeting

Improving one’s financial standing requires full participation and equal effort from both partners. Before any real change can occur, it’s a good idea to gather all bills, bank statements and other financial documents. Allotting adequate time to sit down with one’s spouse and go over household finances with a fine-toothed comb is essential.

The first step is looking for budget leaks and behavior patterns that cause late payments and other detrimental effects on household finances. Budgeting software is incredibly helpful, including the many new free online budgeting programs.

Next up is an honest, blame-free discussion of how these behaviors can be changed. Examples include scheduling set bill payment days, re-allocating bill payment responsibilities, or even something as simple as having plenty of stamps on hand.

Other Household Budget Considerations

Many couples are unaware of the numerous leaks in their budgets. Like a leaky engine, these budget holes can cause more serious problems in the future if not adequately addressed.

Some are as simple as downgrading to a smaller cable or phone package. Many households have TV channels and phone features they never use. Bundling services with one company can create even greater savings.

Auto insurance is another area of the budget that is often overlooked. Many drivers stay with an insurance agency out of familiarity or loyalty. Complacency could be costing many households a lot of money.

Online vehicle insurance comparison sites make no-obligation rate and coverage comparison simple and quick. Having a current insurance coverage statement handy while shopping for car insurance online ensures that switching to a new company won’t affect coverage.

For households that have already fallen behind on credit card and loan payments, it’s a good idea to contact creditors. Credit card companies in particular may be happy to lower the payment amount or interest rate on a delinquent account. It’s in their best interest to receive less money than agreed upon rather than no money at all. In today’s economic climate, credit issuers are accustomed to these types of calls.

Accelerating Debt Payment

Having a grasp on the current state of one’s household finances makes moving forward easier. Plugging budget leaks leaves more money available for paying off installment loans, credit cards and lines of credit.

Budget calculators make it easy to find out how long it will take to pay off a given bill. Many personal finance and industry-specific sites boast free calculators that allow users to input the current balance and interest rate to find out how much extra, and how many payments, it would take to pay off the debt.

Since many consumers have multiple loans and credit cards, prioritizing early debt payment is the final step. Many financial advisers recommend paying off debt with the highest interest rate first.

However sound this advice, some find it difficult to see the light at the end of the tunnel if the debt with the highest interest rate is also the one with the largest balance. If paying off smaller balances with lower interest rates first is a better motivator, then taking this route would be advisable.

Budget Maintenance as Prevention

Performing a financial tune-up may seem daunting, but it’s the most effective way to get back on track. From creating sound bill payment habits to shopping for less expensive auto insurance, budget “maintenance” helps households avoid the need for costly repair down the line.

In Miscellaneous
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Too Soapy Finances? Everyone’s Finances are Different!

Corey —  July 22, 2012

In several Christian traditions, there is a recent phenomenon of a devotion method known as SOAP. It’s a nice acronym that stands for the following: Scripture, Observation, Application, and Prayer. For those who are unfamiliar with it, it is a devotional method. It is the structure used for people to engage the Bible. Here’s how it works. Someone will select a scripture, and write it down next to the ‘S’. Then, they will make an observation from that scripture. It can be something simple or complex. Based on that observation, you apply it to your life – make an application. Then, say a prayer in a way that incorporates the rest of what has been covered.

There are many great things to say about this devotional method. It’s easy to remember and encourages people to read their bibles. What it is really directed at is making it personal. It is a post-modern take on reading the bible because it emphasizes that everyone can make different observations and applications from the same scripture verse. It isn’t saying that there is one way to read each and every verse.

Yet, at the same time, it is doing the Christian community a disservice. While I agree that ordinary people can have a valuable perspective from reading a part of scripture, it often entails taking things out of context. Not only is the scripture selected as a part of a larger context (that is, a couple verses instead of the whole chapter or book), but it often fails to incorporate historical context. The stuff that is not explicitly said in the passage. When reading the bible, there are just as many important things that are not said as there are things that are written. Another horrible thing it is doing is misapplying the context of the Bible to current day settings. In other words, people are believing that the context in the Bible is similar to their own, when it really isn’t.

What happens, as a result, is a Christian community that is uninformed, under-educated, and most importantly, emphasizing the observations or applications over the scripture itself. In other words, people remember what you should or should not do as opposed to the story that they read in the Bible that communicated that moral wisdom. In case you can’t tell from my previous 390 word rant, this is an injustice to the Christian tradition.

It Happens With Finances As Well

This type of injustice isn’t just something that happens within the Christian communities. It also happens within the financial realm. With the increase in technology and especially social networks, it is much easier to learn of other people’s financial situations. Whether it is someone buying their first home, having a baby, paying off debt, or whatever. It is easy to learn of other people’s financial situations. Much easier than it used to be.

With that increased awareness comes, unfortunately, increased judgment and inappropriate comparisons. For example, a friend of mine recently asked me to help her lease a car. Me, being the person who obsesses over numbers, I tried to figure out if it was the best financial decision available to her. I quickly pointed out that financially, it would make more sense to buy a slightly used car (or fix her current one) than lease a new car. That’s what I would do. Yet, what I failed to consider is that her life situation (or context) is much different than mine. While we are still friends (she understood my intentions were good), I have come to realize that it isn’t a bad decision based on her life. While I don’t need to go into the specifics of her reasoning here, suffice it to say that I learned that I had made large assumptions. I failed to realized that our finances were different. In a manner of speaking, I let me finances become to “soapy.”

People make these false assumptions about similar contexts all the time. When people see friends buying a home and instantly feel jealous, they fail to understand that it’s more complicated than it seems. The friends may have worked second jobs or went to graduate school to get a good-paying job to afford a nice house. Or it may be that they are buying too big of a house and they won’t be able to afford it. Before you feel jealous of their “success,” you need to realize that it’s hard to make comparisons. Period. There is never enough information to make a 1-to-1 comparison, and even if you get all the facts, there are going to be life differences that influence the financial decisions.

Therefore, before you jump to assumptions or develop feelings of jealousy or hatred over other people’s finances, remember that it’s not as easy to compare yourself to them. Everyone’s life is different and we have to learn to accept that fact.

In Contentment, Politics , , , ,
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Signs of Dysfunctional Finances

Corey —  July 15, 2012

If you are trying to get your finances in order, you may be reading a lot of advice on what you should do. Everyone is quick to say that you should do this or that, or offering advice to you (even though they don’t know you) on how you should invest. The list goes on and on, but perhaps the first step is to identify what you should NOT do.

Often times the things that keep us from financial security are not the tasks that we forget to do (or didn’t know about), but the unhealthy things that we failed to recognize. Here are several indications that your finances are not in order, despite what you may or may not think.

Carrying a Credit Card Balance – Even if you are doing all other things right, carrying a credit balance is an easy sign that you are throwing money out the window. Most credit cards have high interest rates and it will cost you big time to carry a balance. But that’s not the worst of it – carrying a credit balance is often a sign of consumer debt. If you carry a balance on these pieces of plastic, it may be time to honestly ask yourself if you are buying stuff that you don’t need and can’t afford.

Living Paycheck to Paycheck – I have trouble understanding why people would want to live this way. I imagine that they don’t want to do it, but see no way out. I understand that if you are in a tight situation, you would consider all sorts of loans to provide temporary relief (including parrot loans), but at some point you have to get back on track. If you are waiting for your next paycheck in order to pay off some of your bills, it might be time to consider saving up money over the next few months to get yourself out of this horrible financial place. It is possible, regardless of how much money you are making, to live with some cushion and (even more importantly) peace of mind.

“Can’t Afford” to Save for Retirement – If you find your saying that you “can’t afford to save for retirement,” it might be time to re-prioritize your finances. Almost everyone can afford to save for retirement. It’s just a matter making it important to you. To find out if you can really afford it, ask yourself these questions:

  • Am I eating out more than once a month?
  • Do I go out to the movies frequently?
  • Do I buy my lunch?
  • Do I own clothes that I don’t wear?

While this is just a few of the many questions that you could ask, if you answered “yes” to any of them, then you have money to save for retirement. Retirement planning is all about prioritizing the long-term goal of financial security when you are old over things that you want now. It’s that simple.

If you can identify with any one of these 3 signs of dysfunction, it might be time to re-evaluate your approach to your finances. Maybe it’s time to set things straight and live a better life. You have the power to take charge of your finances. What are you waiting for!

What are other signs of dysfunctional finances?

In Budgeting , , ,
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Shop Around for Your Property, Not Your Bank

Corey —  July 13, 2012

Looking for a home?  If so, then you know shopping around for both your mortgage and your new home can save you thousands of dollars.

The problem is that shopping around takes time—a lot of time.  You could spend many hours comparing different banks’ home loans and the different types of mortgages.  In your home search, you may look at 25 or more houses.

Most people don’t have time to shop around effectively for both a mortgage and a home, which is why many people don’t get the very best deal they can.  The good news is that you can choose to use a mortgage broker and reduce your shopping around to homes only; the mortgage broker can shop around for the best mortgage for you.

Why should you use a mortgage broker?

  1. Mortgage brokers are free.  You don’t pay the mortgage broker, the banks do.  (Usually the mortgage broker gets paid a small percentage of the loan amount.)
  2. Mortgage brokers aren’t loyal to any one bank.  Brokers have access to many banks and can easily perform a home loan comparison to find you the best deal.
  3. Mortgage brokers want to find you the best deal.  If a broker can find you the best deal, you are much more likely to take out that particular loan, and the broker gets a small commission from the bank.  If you are dissatisfied and don’t take the loan, the mortgage broker gets nothing.
  4. You are under no obligation to the mortgage broker.  True, the mortgage broker spends time trying to find you the best loan, but if for any reason you are dissatisfied, you are under no obligation to take out the loan with the broker.
  5. Mortgage brokers save you time.  If you let the mortgage broker do the work, you save hours of time by not having to personally compare the many loans that are available from several different banks.  That gives you more time to find your perfect property.

Buying a home is an emotional process.  You can spend hours look for just the right home, you will likely negotiate to get a better price, and after all of that work, you still may not get the home and may have to start the process all over again.

Mortgage brokers work for you and can help you relieve some of the stress of looking for a new home by finding the best home loan for you and your circumstances.  Considering mortgage brokers are free to homeowners, why not let an experienced professional help you shop around and reduce some of your stress over a very time consuming, but ultimately worthwhile, endeavor finding your home.

In Miscellaneous
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Is Self Employment a Viable Career Option?

Corey —  July 12, 2012

For one of the first times in my life, my future career is uncertain. I remember as a child thinking that I wanted to be all sorts of things, including a police detective, architect, religious leader, etc. It’s amazing how our childhood dreams always change, isn’t it? I am convinced it’s not necessarily a bad thing, it’s just a fact of life. We grow up, we change as we experience life in new ways, and we learn more about ourselves.

My Career Change

As it turns out, my career path has been on a roller coaster in the past 2-3 years. I started graduate school thinking that I would continue on to get a Ph. D. in religion, but that has since changed. While I dreamed of being a professor of religion one day, reality has caught up with me. I realized that I would not make a great professor and to make matters worse, that job has become increasingly competitive with fewer job opportunities available. I realized that I while I may be able to get into a Ph.D. program, it would be hard to get a job after 5 years of studying.

Around this same time, I came into some opportunities to pursue some business ideas. The business opportunities were small, but it got my feet wet in applying some of my business ideas. Once I started making a few hundred dollars on the side, I realized that there was potential to make this a long term thing. I could make a living off of running a small business.

Is Self-Employment for You?

While running a business may sound great on paper, I have learned that there are many small things that could make it annoying to the wrong person. You have to keep a close eye on your finances (or pay someone to do that for you). This could mean utilizing some sort of merchant services or hiring an individual to do your taxes. Not everyone likes to do all of these things. Being a successful business owner means being able to manage diverse tasks.

Running a small business also means putting in the work at the beginning to make it successful. I don’t know about you, but it’s easy to lose hope. It’s easy to become discouraged and lose confidence in your service or product.

While it may not be the best option for everyone, I think I will give it a shot in the future. There is something about making something successful from nothing that intrigues me. There’s something about being able to be my own boss. While it may mean more work and less pay for a while, I think it will give me the freedom to pursue my passions and not be stuck in a dead-end job.

Have you ever considered self employment?

In Contentment , ,
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Will There Always Be Poor People?

Corey —  July 8, 2012

One of the most commonly-referred-to passages in the New Testament when it comes to Christianity and finance has to be Mark 14:1-9:

14  It was now two days before the Passover and the Feast of Unleavened Bread. And the chief priests and the scribes were seeking how to arrest him by stealth and kill him, 2 for they said, “Not during the feast,lest there be an uproar from the people.”

Jesus Anointed at Bethany

3  And while he was at Bethany in the house of Simon the leper,[a] as he was reclining at table, a woman came with an alabaster flask of ointment of pure nard, very costly, and she broke the flask and poured it over his head. 4 There were some who said to themselves indignantly, “Why was the ointment wasted like that? 5 For this ointment could have been sold for more than three hundred denarii[b] and given to the poor.” And they scolded her. 6 But Jesus said, “Leave her alone. Why do you trouble her? She has done a beautiful thing to me. 7 For you always have the poor with you, and whenever you want, you can do good for them. But you will not always have me. 8  She has done what she could; she has anointed my body beforehand for burial. 9 And truly, I say to you, wherever the gospel is proclaimed in the whole world, what she has done will be told in memory of her.”

How Mark 14:1-9 is Often Used

Unfortunately, this passage isn’t appreciated for the bigger context. In fact, I would venture to guess that is most often used to support inaction. In other words, people use this passage to support not giving to the poor because they understand this passage as support for the inevitable existence of poor people or poverty.

While that may sound absurd to some, it makes sense to a certain degree. After all, Jesus did say, “For you always have the poor with you.” 

Isn’t it plain and simple. It says it right there.

Possible Reasons Poverty Could be Inevitable – Can We Get Rid of Poverty?

While I think this understanding of the passage, I think it is important to first consider the possibility. History has long had the existence of a lower economic class. It was around in Jesus’ time and it certainly is still around today. It isn’t just in the U.S. either. It’s around the world. Side note: If you will recall my new definition of rich, wealth should be something that is considered world-wide, not just within the U.S. One of the easiest ways to see that there are large groups of poor people is to see the growth of payday loan companies, whose primary market is poor people.

I can’t help but ask then if poverty is inevitable? Since it seems that there has always been poor people, is there any hope to change the world for a better place? Is there any hope in a more equal world?

Why Is there Poverty?

While I still believe there is hope (you should never give up hope), there is something to say for how the world is constructed and why poverty exists. In fact, when you view the hierarchical structure of our financial world, with CEO’s making significantly more than the average worker. In fact, a Huffington post article relates how CEO’s pay grew 725 percent from 1978 to 2011, while worker pay grew only 5.7 percent, meaning that a CEO’s compensation grew 127 times faster.

It doesn’t take a genius to surmise that this isn’t right. While some may be against more equal pay, there is a huge inequality in these figures. But it only gets worse. This is indicative of the economic hierarchy. The rich are using their influence to get richer and the poor are only getting poorer. I believe that poverty, at least in its extreme form that in which it currently exists, is a direct result of the economic structure. Major organizations’ intentions to maximize profits by decreasing labor costs (through outsourcing jobs to developing countries), is only one example of the corruption we face. It is clear that the companies that participate in said international networks are not intending to help those particular regions where they are getting their laborers, but instead are doing so to pad their wallets with more money.

This current existence of neo-capitalism, full of greed, makes me question whether Jesus was right when saying the poor will always be with us.

A Better Way to Understand Mark 14:1-9

Yet, as I said before (and despite my misgivings about the current economic structure), there seems to be a more appropriate way to understand this passage. While it may seem clear what Jesus’ intention was, if we take this one sentence and separate it from the rest of the story, we are taking it out of context. Taking passages out of context is an recipe for disaster. This is how interpretations are twisted to fit a particular perspective.

We must honor the greater context of this story. When doing so, we understand what the author is really trying to communicate in writing this story.

The first thing to note is that this is happening at the house of Simon, the leper. A social outcast. Jesus often associated with social outcasts. It was a part of his radical vision for the Christian Kingdom. This setting isn’t accidental – it’s a part of the message that this story is trying to convey. We understand this when we see the woman enter the story. It becomes clear that she is not supposed to be there, by social standards because some of the people there began questioning what she was doing. Some even tried to go the “righteous route,” saying that there could have been better use for the perfume.

These types of statements happen all of the time, don’t they? Even today, I hear similar statements. This person goes on a mission trip, but the money would have been better spent just sending money to the people that they visited. All of that money was wasted on the airfare, when it could have been put to better use. While some may be concerned about the best use of money, these statements are often made our of ulterior motives.

It wasn’t about the perfume. It was about the woman being allowed to do what she did. The social status of women was very low and social guidelines often restricted them from being present at certain meals or meetings. I am pretty sure this is the case here. Her presence is being questioned.

What does Jesus do? How does he respond?

He affirms her, saying that she has done a special thing. He does mention the poor, but only to diffuse the argument. So, while we make a bigger deal out of his one statement, Jesus true message seems to be one of inclusion and equality. When we read the passage this way, it only indirectly deals with the issue of poverty. Jesus isn’t saying poverty isn’t important or something that we should work to get rid of – he is just placing the value of this woman over the political stance. We shouldn’t be so strict with our finances that it reinforces systems of injustice.

This is what the passage seems to be about. When we understand it this way, we aren’t asking if there will always be poor people, but how to eradicate poverty with compassion for the socially marginalized – the outcasts – the poor. That’s what Jesus did and what he was communicating here.

In Economy, Politics , , , , , ,
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