Archives For Corey

Tithing Is So Old Testament

Corey —  March 30, 2010

       If you’ve read my articles on tithing, you might begin to think that I hate tithing. (In fact, I almost titled this article “I Don’t Hate Tithing”.) Or maybe you think I’m just stingy. Although that conclusion would be difficult to reach after reading my thoughts about New Covenant giving. But the truth is there’s a deeper reason behind why I teach against tithing as a giving standard for Christians.

       Tithing is the Old Testament example and standard for giving. It was part of the Law of Moses given specifically to the Israelites through the Old Covenant. But Christians today are no longer under that covenant. We’re under the New Covenant. And you see an interesting trend when you look at what the early Christians were taught about giving.

       Keeping in mind that the New Covenant began after Jesus’ death on the cross, consider the teaching you find in the New Testament about giving. Can you find any passages where tithing is used as the example that Christians should follow for giving? I’ll wait while you look.

       I can already tell you that you won’t find any. I know because I’ve looked. I’ve searched long and hard to find all the verses in the Bible that talk about personal finance. And you know what I’ve found in the New Testament about giving? The only example ever used to explain how much Christians should give is Jesus. Not tithing, not the Old Testament offerings – only the life and sacrifice of Jesus Christ.

       That’s a significant statement. We’re supposed to give like Jesus did?! That sounds so difficult. How can I ever be that generous? How do I even calculate that for my budget??? But He is our example for giving as Christians who want to honor God. No, it’s not as easy to figure out as 10% of your income, but there are some general giving guidelines we can glean from the New Testament. New Covenant giving requires a deep, intimate relationship with God and demands that you spend time in His Word and in prayer seeking His will.

       Recently, I did a personal finance Bible study at my church for our winter Sunday school elective. When we started talking about tithing and giving, one person brought up the statistic that Christians only give about 2-3% on average. I also brought up the fact that only about 6% of Christians tithe to their churches (though about 27% of evangelical Christians give at least 10% of their income to charities). With statistics like that, why would I even try to teach something beyond giving 10%? We can’t even get to a tithing standard. How can I expect Christians to give generously and sacrificially???

       But I think that’s our first mistake. We think that by teaching tithing we’re giving Christians a simple, straightforward guideline that they can follow for their giving. It’s clearly taught in the Old Testament and even comes with curses and blessings. Surely that will motivate people to give generously. And that’s the problem.

       The reason I teach so strongly against tithing is because we have a much greater example and motivation for giving. Tithing never suffered for us. Tithing did not die for our sins. Tithing will not grant us eternal life. Tithing does not love us.

       But Jesus did suffer and die for our sins. Jesus will give us eternal life with God in Heaven. Jesus does love us – extravagantly, generously, sacrificially – even to the point of death!

       Brothers and sisters, why would we choose to continue using a lesser, weaker example for giving? We wonder why no one is motivated to tithe. Why don’t we teach giving based on Jesus’ life and sacrifice? How can our response to His gift be anything other than love, which will then produce generous, sacrificial giving in us? We can dismiss tithing and come up with excuses why we can’t afford it right now. But we cannot dismiss the gift of Jesus – the gift of His death for our sins so that we can have eternal life. The Holy Spirit will compel us to give if He is our focus.

       So if you wonder why I teach against tithing, that’s it. I don’t care if you disagree with my thoughts about why tithing no longer applies to Christians. I’m not here to debate the Law versus Faith (or Grace) ideas with you. But can’t we agree that teaching a giving standard based on Jesus’ gift to us will result in more generous, more sacrificial, and more cheerful Christian givers than teaching based on tithing? Let me know in the comments.

In Giving, Personal Finance Bible Study
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Traditional IRA Contribution Limits

Corey —  March 29, 2010

Contribution Limits

       The maximum amount you can contribute to a Traditional IRA depends on your age. These are the correct Traditional IRA contribution limits for 2009 and 2010. This limit can be split between a Traditional IRA or Roth IRA, but the combined total of your contributions to your Traditional and Roth IRAs cannot exceed this limit.

  • Under age 49 at the end of the year: $5,000

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  • Age 50 or older by the end of the year: $6,000

Deadline for Contributions

       Contributions for a year can be made any time that year or until the due date of your tax return for that year. Contributions for 2009 must be made between January 1, 2009 and April 15, 2010. Contributions for 2010 must be made between January 1, 2010 and April 15, 2011. You can designate for which year (current or previous) you are making contributions if you contribute between January 1 and April 15.

Tax Deduction for Contributions

       How much of this contribution you can deduct on your tax return depends on your adjusted gross income and whether or not you are covered by an employer-sponsored retirement plan at work.

       You may also be eligible for the Retirement Savings Contribution Credit.

In Investing, Retirement, Taxes
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Why Are You Here?

Corey —  March 26, 2010

       Sorry to sound so rude, but I have a question for you.

       Why do you read what I write on Provident Planning? What are you looking for? Why do you come here? What do you need?

       I’m asking because this is often a very one-sided thing for me. I try to figure out what people need to learn or want to learn, and then I write the articles to provide that information. (OK, so sometimes I just write stuff because I can’t think of anything else. But most of the time I do put a lot of thought into the articles I write.)

       So I’m asking you to help me make Provident Planning better. Help me make it something that meets your needs. Help me make it amazing! I can’t do it without your help because I don’t have all the answers.

       What do you need to do to help me? Simply leave your answers/suggestions in the comments below or contact me directly. Again, I want to know why you’re here, what you need, and what you’re looking for from Provident Planning. Also, I’d appreciate any ideas you have to make Provident Planning better. What would you like to have on here that I don’t yet? What could help make this site great?

       Remember, I need your help to do this. Without you, this website is just me talking to myself. Thank you so much for your help!!!

In Miscellaneous
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Investing Basics: What Is a Stock?

Corey —  March 25, 2010

       In our last Investing Basics article, we talked about securities and what that term includes. The next few articles in this series will focus on the specific types of securities available. We’ll look at stocks, bonds, mutual funds, options, futures, and short-term savings options. Today, we’re going to talk about stocks.

What Is a Stock?

       As I explained in the post about securities, a stock represents ownership. Stocks are also referred to as equities, which simply means they represent an ongoing ownership interest in a business. Each share of a company’s stock represents a piece of ownership interest in that company. When you own a share of stock, you own a part of a company.

       The return you get from owning a stock comes in one of two ways: dividends or capital gains/losses. Dividends are payments the company makes to its shareholders (owners) from its earnings. If a company declares a dividend of $1.00 per share and you own 100 shares, you’ll get $100 in dividends.

       Capital gains or losses result from changes in the price of the stock. If the stock’s price goes up from where you bought it, you’ll have a capital gain when you sell it. If the stock’s price goes down, you’ll have a capital loss when you sell.

       Stocks are considered riskier investments than bonds because of what happens when a company liquidates or goes bankrupt. Stockholders are the last people to be paid when a company goes belly-up. Bondholders get paid before stockholders, so there’s less risk. If there’s no money left when it comes time to pay the stockholders, then they get absolutely nothing.

       Finally, there are two main types of stocks: common stock and preferred stock. The biggest difference between the two is in how dividends are paid out. Common stock comes with no dividend guarantees. Preferred stock comes with a stated dividend rate (either a specific dollar amount or a percentage of the stock’s par value – the face value). Also, preferred stocks have priority over common stocks when dividends are paid. That means that dividends owed to preferred stockholders must be paid out before common stockholders receive anything. They’re a little more complicated than that, but that’s the basic difference.

       In the next article, we’ll look at bonds. Make sure you sign up for free updates to Provident Planning if you want to learn more!

In Investing
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How to Get Out of Debt: Step 4 – Find Ways to Cut Back & Earn More

Corey —  March 24, 2010

       This article is the fourth in a series on how to get out of debt. If you haven’t already, you should check out the previous articles:

Step 4 – Find Ways to Cut Back & Earn More

       Once you’ve created a budget, you have a powerful tool to propel you out of debt. By looking at where your money is going, you can target areas to cut back. First, you can look at your biggest expenses. Finding ways to cut back just a bit (percentage-wise) will give you a large return on your effort. Saving 10% on your rent or mortgage payment will provide you with more extra money than saving 10% on your grocery bill. That’s not to say that the latter is not good, but going for the biggest wins first will help you get the best return on your time.

       Next, you can look at the small expenses. Where are the little leaks that are sinking your financial boat? Five dollars here and ten dollars there can add up to a significant sum by the end of the month. Pinpoint a few of your small expenses to target at first. You’ll soon plug all the holes in your boat.

       When you’re prioritizing the areas of your budget where you’ll cut back, don’t ignore the personal value you receive from each expense. You’ll find greater success by attacking the items you don’t enjoy very much rather than depriving yourself of small things that make you happy. For example, you’ll feel more satisfied by lowering your tax bill than you will by giving up sweet tea and drinking only water. (I bleed sweet tea so that’s my example.)

       Finally, find ways to earn more money. If you can take more hours at work or get overtime, that’s a good way to grab some extra cash. Get a second job, sell your stuff, or start your own side business. You don’t have to completely change careers to earn more money. Yes, you’ll have to give up some of your personal time. But if you really want to get rid of your debt, you’ll be well served by both cutting back and earning more. Combining those two strategies is like fanning the fire. You’ll burn more debt away in a much shorter period of time. (The same could be said for dieting and exercise. You lose the most weight by doing both.)

       What do you do with this extra money you find? You’ll first build your savings (so you don’t have to go into debt again). Then you’ll attack your debt aggressively. Every extra dollar you can get will bring you closer and closer to your goal. Be sure to check out the next article to find out why you should build your savings before paying off your debt.

Get Free Updates!

       If you want to keep getting tips on how you can get out of debt and manage your personal finances well, make sure you sign up for free updates to Provident Planning! I’ll be continuing this series throughout the year while I also explore other aspects of personal finance.

       Let me know how you’re going to cut back or earn more in the comments below!

In Debt
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Raising a Cow for Beef: Month 7

Corey —  March 23, 2010

       Last month, I posted an update about how my wife and I are raising a cow for beef. This is a summary of our activity and costs for month 7. As always, let’s first check Bambi’s growth. Here he is at six months old:

Bambi - 6 Months Old

       And here he is at seven months old:

Bambi - 7 Months Old

       My friend, Konrad, came down this past month with a weight tape (basically a tape measure that helps you estimate how much a cow weighs). Bambi’s up to at least 420 pounds now (probably more like 430-440 today). That means he’s been gaining about 2 pounds a day since we got him, which is excellent – especially for the breed of cow he is (75% Jersey/25% Holstein). Today, I’ve got an extra bonus for you. I took a short, one minute video of Bambi about a week ago while he was out eating some grass:

Costs & Time

       It still takes about the same amount of time to take care of Bambi every day. I should be able to speed up the process a bit since it’s warming up. Right now, I have to take his water bucket to the spigot to fill it up. But since Spring is coming, I’ll be able to run a hose to the bucket and fill it up in place. That’ll save me a couple minutes every day.

       We spent a bit more this month because we needed to buy feed, hay, and straw. However, we won’t need nearly as much hay or straw for the rest of Bambi’s life because we’ll be able to let him graze outside. That will cut back on our costs a bit. Here are our costs for this past month:

  • Feed – $40.81

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  • Hay – $36.00

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  • Straw – $5.00

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  • Total Spent this Month – $81.81

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  • Time – 7 hours

       And here are our total costs over the past seven months:

  • Cost of Bambi – Free!

    •        

  • Castration & Dehorning – $16.00

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  • Milk Replacer – $45.54

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  • Miscellaneous – $46.87

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  • Feed – $201.16

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  • Hay – $88.00

    •        

  • Straw – $20.00

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  • Medicine – $5.00

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  • Total Spent – $422.57

    •        

  • Time – 63 hours

       So after seven months we’ve spent a total of $422.57 and 63 hours raising a cow for beef. So far it’s working out to about $1.99/day and around 15-20 minutes/day to raise Bambi.

       I’m trying a new method for cleaning out his pen this month because it was very difficult the last time I cleaned it out. He tends to pull his hay into his straw, which then gets matted down with his manure and urine. The result is a stinky, impenetrable pile of muck that takes a long time to clean out. So now I’m taking just a couple minutes each day to fork out a little at a time so it doesn’t get so bad.

       Despite the frustration I had cleaning out his pen the last time, it helps me appreciate the value of physical labor. Most of my work is mental, and there are few tangible results at the end of the day. But when you clean out a pen full of poop and put in fresh straw, you can see (and smell) the results of your hard work. That’s satisfying in a way that publishing a post on here isn’t.

       That’s it for this month. If you have any questions or comments, please leave them below. And make sure you sign up for free updates to Provident Planning if you’re interested in knowing what it takes to raise a cow for beef!

In Miscellaneous
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What Is Earned Income? What Is Unearned Income?

Corey —  March 18, 2010

Uncle Sam says,        The IRS determines your responsibility to file based on your gross income, which consists of both earned and unearned income. This is especially important if you can be claimed as a dependent on someone else’s tax return. Your eligibility for certain tax credits and IRA contributions also depends on how much earned income you have. This article will help you determine the difference between earned and unearned income.

Earned Income

       Obviously, any income you earn by working for someone else will be considered earned income. Salaries, wages, tips, professional fees, business income (from self-employment), and farm income all count as earned income. Those are pretty straightforward.

       But there are a few tricky ones. For example, alimony counts as earned income. (I’m talking about true alimony – you can’t count child support for this.) Also, income from partnerships, S corporations, trusts, and estates can only count as earned income if they are considered “non-passive”. For the most part, this means you must have actively participated in the business that provided the income. There are special rules relating to rental real estate on this issue. If you’re not sure about your situation, you need to consult a tax professional. Finally, taxable scholarships and fellowship grants can also count as earned income.

       That’s pretty much it for earned income. One last note – any earned income that you exclude under the Foreign Earned Income rules does not count as earned income for your IRA contributions. Again, this is another complicated situation that may require talking to a tax professional.

Unearned Income

       Calculating unearned income is very important if you can be claimed as a dependent on someone else’s tax return. You’ll want to know how much unearned income you have so you can figure out if you’re required to file a tax return. Also, if you’re looking to make IRA contributions, none of these items will count. Here are most of the items that are considered “unearned income” by the IRS:

  • Interest & Dividends
  • Capital Gains
  • Retirement Income (IRA distributions, pensions, and annuities)
  • Rental Real Estate Income
  • “Passive Income” from partnerships, S corporations, trusts, and estates
  • Unemployment Compensation
  • Social Security Benefits
  • Gambling Winnings
  • Cancellation of Debt
  • Excluded Income under Foreign Earned Income rules
  • and a few others…

       Your gross income is the combination of both your earned and unearned income. Knowing what counts for these amounts will help you figure out if you are required to file a tax return and if you’re eligible to make IRA contributions.

Get More Tax Tips!

       If you want to get more tax tips, make sure you sign up for free updates to Provident Planning. If you have any questions about earned or unearned income, leave a comment and I’ll do my best to help you!

In Taxes
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