How to Save Money by Eliminating Debt

debtIs one of your goals to improve your financial health? If you want to save more money, the first step is getting out of debt. There are many different methods about how to best manage and eliminate debt, and the important thing is to find the one that works for your lifestyle. The best method for eliminating debt is the one you can actually stick to for a long period of time.

The easiest way to start is to do a little research to learn about the different types of debt, consolidation and payoff strategies, and budgeting methods. Once you have a good understanding of the options, you can choose the one that’s the right fit for you. Here are some possible strategies for reducing your debt, saving more, and improving your overall financial situation.

Understand Your Personal Debt

If you are like most people, you have a combination of “good” and “bad” debt. Good debt refers to secured debt where there is a reasonable expectation of a return on investment. A mortgage is generally considered good debt. Credit card balances are generally considered bad debt because the interest rates are extremely high and the debt is unsecured. Before you come up with a plan to pay off your debt, look at your overall financial situation and determine how much good and bad debt you have. It’s usually best to pay off the bad debt first.

Stop Overspending

Before you can start paying off your debt in earnest, you may need to rein in your spending habits. For some people, this isn’t possible. If all your monthly spending is truly necessary (such as utility bills, school tuition, mortgage payments, and food), then you may not be able to change it. But most people have at least a few unnecessary expenses every month, such as eating out, daily lattes, or magazine subscriptions. Take a good look at your spending and find any areas where you can cut back until you get your debt under control.

Prioritize the Payoff Strategy

Once you have a good understanding of all your debt and have cut back on unnecessary spending, you should prioritize which debts you want to pay off first. There are several different theories about whether you should pay off “bad” debt first, or the debt with the highest interest rate, or the one with the largest balance, or prioritize according to any number of other aspects. You should choose the method that makes the most sense to you and the one you feel you’ll be the most motivated to achieve.

Create a Plan

Now that you know which debts you want to pay off first, it’s time to make a plan. Budgeting is an important part of the plan, so you know exactly how much of your income you can put towards debt repayment and how much you need to keep for living expenses. Some people find that using an automatic payment plan works well for actually sticking to the payoff plan.

Consider Refinancing

One option for consolidating debt in order to reduce interest payments is to refinance your mortgage. The options for refinancing depend on the current state of the economy, your equity in your home, your credit score, and many other factors. Refinancing is a very smart financial move for some people. It’s a good idea to read about how a refinancing plan works, and if possible talk with a financial adviser or another expert to determine if it’s the right move for you.

Research a Personal Loan

One way to consolidate your debt and start rebuilding your credit is to secure a personal loan. While this type of loan can be used for many things, one particularly good use is to pay off high-interest credit card balances. There are many personal loan providers so it’s important to use a loan comparison tool to figure out which one is the right fit for your situation. Once you know a bit about the providers, terms, and options, you can apply for your loan and get those credit cards paid off.

One of the best ways to save money and improve your financial situation is to get rid of your personal debt as much possible. Paying off debt can be a complex process, so the best way to start is through careful research and planning, and then staying with your plan until you pay off your loans.

What to Consider When You’re Financing a Purchase

Consumers have a lot of power today. The Internet has enabled us to review providers and products, make recommendations and research prices before buying. There are also more ways to pay for purchases using credit.

All this gives you more control and purchasing power. However, without careful consideration financing, a purchase can be costly and negatively impact your credit score. If you plan to finance a major purchase instead of using cash here are some things to consider before signing on the dotted line.

Types of Financing Available

There are more financial tools today than ever before. That means there are a lot more options to consider. Deciding which type of financing to use is the first and most important decision you’ll make.

Retailer Financing

Some retailers provide direct financing to customers, but others may offer it through a third party. For example, Crest Financial is an alternative that offers in-home layaways. Unlike traditional layaway offers, the program allows customers to take their purchase home while paying for them.

business credit cardCredit Cards

One of the most common financing options is using a credit card. However, because of the interest rates (see below) credit cards may not be the most affordable option. They also tend to have low credit limits, which could make it impossible to finance an entire purchase for a high price item.

Short Term Loans

A short term personal loan is one way of getting a lump sum of cash when you’re in a jam and need to make an essential purchase. They can be tricky and expensive if you don’t follow the terms precisely. That’s why they usually aren’t the first choice for most people and should only be used for necessities.

Interest Rates

One of the most important considerations of any financing option is the interest rate. This is the fee that’s paid to the lender for the use of a credit or a loan.

Interest rates vary significantly based on the type of credit that’s being used. Your credit score will also be a determining factor in the interest rate. The higher your credit score is the lower the interest rate will be.

A no interest introductory offer can help keep the total purchase price low, but buyers have to be aware of the terms. Often the no-interest period is short and may be revoked if you make a late payment. If the purchase isn’t paid off at the end of the introductory no interest period the rate could be extremely high. Before taking a no interest offer, consider whether you will be able to pay the purchase off before interest kicks in.

Term Length

Term length refers to how long or how many payments need to be made. If you opt to use a loan there will be a definite term length that specifies when the loan needs to be paid off. Options like credit cards and retailer financing may be more open-ended.

Monthly Payments

Virtually all financing options will specify minimum monthly payments that have to be made. The payment will include interest and principle (funds that go towards paying off the purchase price). One thing to look out for on a loan is a prepayment penalty fee. These may be applied if you pay off the loan early.

Lender Credibility

Last but not least, you should carefully consider the lender’s credibility. Short term loans in particular have a reputation of less than scrupulous lenders taking advantage of borrowers. Another reason to examine the lender’s credentials is to determine how sound and secure the financing will be.

Buyers can check out a lender’s credentials and credibility at the Better Business Bureau. It’s also a good idea to read customer reviews to get a better idea of what it’s like to work with a lender.

 

What to do When Simply Saving and Working Isn’t Getting the Job Done

You read them every day: those articles that list crazy or extreme methods for saving money. They say things like “don’t buy anything new for a year” and “cook all of your meals at home.” You read them and you sigh because that’s not extreme, that’s your everyday life.

To you, the dollar menu is a decadent treat and, in spite of all of your efforts you don’t seem to be getting anywhere. Your debt isn’t reducing the way you’d hoped. Your paychecks aren’t stretching as far as you’d like. You feel guilty using even a simple savings plan. So what do you do?

Time to Start Selling

Everything you own is a potential source of cash. Seriously. So: ask yourself how much you truly need on hand to survive and then sell the rest. It seems crazy but remember: books, clothing, furniture–it can all be replaced later when you’ve reached your goals.

Sell Your Car. Yes, seriously. Even if your car is used or old you can probably still get at least a couple thousand dollars for it and that should make at least a sizeable dent in your debt. Use part of the sale to buy a good bicycle. Sure you might be pedaling a long way, but think of it as your morning workout. When the weather is bad, pack your work clothing into a weatherproof bag and change into them when you get to work.

Sell Your House. You’re already downsizing your stuff, why not downsize your house for an apartment? Apartments are cheaper and easier to clePocket Moneyan and maintain. Because they are smaller, the utilities you do have to pay are often much cheaper than you’d pay at your house. You can use the sale of the house to pay off what you still owe on it and then put the rest toward your debt.

Debt Consolidation

By now, it’s time to be honest with yourself: managing your debt and savings plan on your own isn’t working the way you’d hoped it would. It’s time to bring in a professional. There are a lot of people who will warn you against debt consolidation. They will say that it can wreak havoc with your credit. Here’s the truth: consolidating your debts makes them easier to pay off. A professional debt consolidator will also be more effective at negotiating down balances owed and interest rates.

The key to debt consolidation is to work with a non-profit agency. Non-profits get their money through grants and other programs so you won’t have to worry that the money you pay to them will be used to line a CEO’s pocket.

Bankruptcy

Bankruptcy is often considered “the nuclear option.” This is because, until filing Chapter 13 bankruptcy became more common, most people had to file Chapter 7. Chapter 7 Bankruptcy requires you to liquidate the vast majority of your assets (save for clothing, home furnishings and “the tools of ycompound interestour trade”) to help pay off as much of your debt as possible before wiping out whatever is left. This meant that people declaring bankruptcy often were forced to find housing, etc while the declaration was still fresh. Yikes!

Today, chapter 13 is much more common. It is is the “kinder, gentler, bankruptcy.” In California, by filing chapter 13 bankruptcy, you get to keep your assets protected, so there is no risk of losing your home, car or personal belongings. It is still an option that is best left until you have no others, but it doesn’t have to be the disaster that you might imagine. This is helped by the fact that, thanks to the economic crash in ‘08, more people have declared bankruptcy than ever before; it is almost common now.

The point is: don’t give up! Even if saving and work aren’t helping you reach your financial goals, you still have options. These are just some of them. What are some others you can try?

Making Credit Card Payments in the eCommerce Environment

eCommerceMaking Credit Card Payments in the eCommerce Environment

You may feel insecure and unsure of paying for goods that you purchase with your credit card. This is understandable in the sense that you might be thinking that your identity and banking information will not be safe and will be available for abuse in fraudulent dealings on the part of the retailer. Retailers, on the other hand, feel insecure in the sense that they would need to use credit card payment devices in the store and on the Internet, depending on whether they are a brick-and-mortar operation or not. Surveys have shown that the banking institutions and the eCommerce development experts have these concerns covered, and safety is practically insured. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage, according to Wikipedia. These electronic commerce transactions take place between businesses and between businesses and customers.

Retail Businesses and eCommerce

To accept credit cards as a form of payment, as a vendor you need to research and list the systems that are available in the market right now. You are certainly placed in a disadvantaged position if you don’t accept credit cards as a form of receiving payment. Through the years of development of credit card payments, it has been proven to be a secure method of receiving and making payment. Can you imagine how much you would lose in sales if you didn’t accept credit card payments? It would mean losing more than 50 percent of what your total sales could be.

Credit cards have been widely used by consumers and accepted by merchants as payments throughout the world. It is by far the most popular method of payment, especially in the retail marketplace. Some of the most important advantages to business and customers are privacy, integrity, transaction efficiency, convenience, mobility, and low financial risk. Anonymity is another important factor.

Online Trading and eCommerce Transactions

Since such a large portion of the population is using mobile devices and networks these days, it is no wonder that eCommerce needed to institute a means of payment for those who do Internet marketing and shopping online. Many, if not most, mobile devices are used for online shopping, and the only means of making and receiving online payment is by way of Internet banking, EFTs, and credit cards. Even debit card payments are possible via eCommerce these days. Processing credit card payments also introduces an inherent interactivity between the business, its customers, and the banks.

It is clear that those businesses that accept credit cards as a form of payment are flourishing, especially the Internet and mobile merchants, who previously had no way to accept payment except by way of cash or bank deposit.

Security Systems in Place

If you are concerned regarding the security of making or accepting eCommerce credit card payments, there’s something worth noting. The PCI DSS Standard was established by the Payment Card Industry Security Standards Council to increase security of customer data and to reduce, and to prevent fraud. As a business owner, you would need to set up a merchant account at your bank in order to receive credit card payments. This allows you to receive payment from a customer by way of credit or debit cards. To cap it, for security purposes, merchant providers are required to obey regulations established by card associations and bankers, enforceable by law.

It appears that this previously feared means of payment has become very popular, almost in the forefront of eCommerce, and you are almost ensured of integrity and safety of your personal details. Proceed with business as usual with the surety that eCommerce is not out to get you, whether you are a business owners or a customer.

How To Successfully Barter Your Services

barteringBartering is a form of payment that’s been used for centuries. Whether you are trading chickens for a goat or conducting a more modern day exchange, bartering is a great way to get what you need without having to pay cash. Of course, as with any form of payment, there are definitely some things to be aware of. So, below are some tips to make sure your barter goes as smoothly as possible.

Exchange Based On Time

When you are trading someone for completely different services, it can be difficult to ascertain what constitutes as an even trade. One of the best ways that you can barter evenly is to trade time. If it takes you two hours to do your handyman’s taxes, and it takes him two hours to tile your bathroom, then your time is traded equally. Each one of you is doing something that the other would prefer to avoid. This makes each person feel as though they are getting an excellent deal. If you feel that your service is worth more than someone else’s or that you had to put in more time and education to be able to do your service, you can always exchange based on value.

Exchange Based On Value

Sometimes, you will have to increase the quantity of your side of the barter in order to receive something of greater value. For example, you might own an art and framing business, but you might want landscaping for your home. You might have to exchange several pieces of art for a nice landscaping job. Similarly, you might have to detail several cars if you want a dental appointment in exchange. These are examples of exchanging based on value.

Make a Contract

Many people who barter make the mistake of agreeing to terms with a handshake. While you may trust someone implicitly, sometimes it’s simply helpful to write down everyone’s expectations so that no one gets a false sense of hope. This is also important if you are dealing with friends or family, just to have a signed record of the agreement. Remember that if there is a problem with your deal, a contract will be your only evidence of an agreement.

Agree On a Time Frame

Some projects and services take longer than others. If you are building furniture for someone, it might take a lot longer than someone completing an eye exam. Despite this, it’s important to remember that you are treating your barter as you would with any other business exchange. That means completing projects in a timely manner and ensuring that your client doesn’t have to call you and remind you that you owe them something.

Treat Them Equally

It’s easy to put a project on the back burner if you aren’t waiting for a cash payment, so it’s important to remind yourself that your clients are all of equal importance, regardless of their payment methods. If a job takes longer than you expect or becomes frustrating, just remember that you are also getting something you want out of your bartering deal. Treat them as you would want to be treated.

 

As evidenced, bartering is a great payment method that has been proven to work for hundreds of years. However, it’s not without its flaws. So, remember to think carefully about how you want to exchange services or products, write down your expectations, and treat each other with respect. Complete those steps, and you should have a great experience bartering.

Have you ever used bartering to get what you want? Were you successful in your exchange?

photo by vaticanus

How To Responsibly Pay Others Back

paying backWe’ve all done it before.   At some point or another, we’ve had to borrow money from someone. Whether it was a forgotten wallet and a spotted $10 or a more serious situation, it isn’t always the best feeling to have to ask a friend if they can spare a few bucks. However, we all need help every once in a while, and there’s no shame in asking if you’re responsible in how you pay them back. Check out the tips below for ways to pay others back respectfully and maintain your relationship with them in the process.

Be timely.

Did you borrow $20 from a friend when a restaurant only accepted cash? Go out of your way to withdraw $20 from the closest ATM, write them a check, or make an electronic funds transfer as soon as you can.   Did you have to borrow a large sum of money from your parents during an emergency?   As soon as you’re able, sit down and take a look at your finances.   What can you afford as the first payment and when can you give it to them?   Do you owe someone, but you’ve forgotten the money the last couple times you saw them?   Rather than not mentioning it, make it a point to say you still remember and that you will get the money to them as soon as possible.   Showing that you want to pay someone back as quickly as you can instills confidence that no one is going to go unpaid.

Make a plan.

In most situations, the best way to pay someone back is by making a plan.   You may find it helpful to make a payment schedule if you do owe larger sums of money.   Perhaps you can take a little from each paycheck without depriving yourself of your basic needs.   Maybe you can sacrifice going out to eat with friends every weekend until you’ve paid your debt.   Look at your income versus your necessary expenses and see where you might be able to temporarily cut back.   Whatever you work out, be sure to communicate that with the person who lent you the money to let them know you’re getting back on track.

Write it down.

When you’ve committed to a payment schedule that you’ve thought out and written down, you’re more likely to stick to it.   Put your payment due dates on your calendar or set up a reminder in your smart phone. If you go the paper route, post it in your office or on your fridge. You can even give a copy to the person you’ll be paying.   For some people this may be overkill, but for others it lays everything out on the table so there are no questions left unanswered.

Don’t feel bad.

Like I said before, we’ve all been there at some point in our lives.   So, don’t let your guilt keep you from asking for assistance if you truly need it.   Likewise, don’t allow your guilt to keep you up at night if you can’t repay someone as quickly as you want.   Be open and honest with them about your situation.   They’re likely to understand if they were willing to spot you in the first place.

Occasionally, your quality time or willingness to help may be repayment enough or at least make a later payment acceptable.   Offer to help them move next weekend or watch the dog while they’re out of town as a gesture of good will.

Have you ever borrowed money from someone? How did you go about paying it back? Are you still friends with them to this day? I’d love to hear about it!

photo by 42Dreams

How I Paid off $6,000 In Credit Card Debt

credit card debtI didn’t have credit card debt for long. I didn’t suffer for decades. I never had creditors calling me, and I wasn’t in bad enough shape to get turned down for a loan. Yet, I still felt the weight of it every day. That’s the reality of credit card debt. Whether it’s $500 or $50,000, it’s still a nagging feeling, something extra on your to do list, and something that’s quite difficult to improve if you’re not willing to change habits and get in the right mindset.

How It Started

I got my very first credit card at age 22 for one purpose and one purpose only: to buy my husband (then fiance) his wedding ring. I didn’t have the money to buy something so expensive at the time, so I wanted to put it on a zero percent card and pay it over time. Of course, you probably know how it goes. Something that started out innocently enough grew into putting gas on it here or there and then we used it to fund a little bit of our honeymoon, etc. I’m not proud of how it started, but I do like to be honest about it.

When It Got Worse

We were managing our debt well enough and always paid above the minimum. I suppose I always felt that I was trying to get it back to zero, but I never sat down to figure out how much it would take. We both had steady jobs and were never late on a payment. Then, my husband decided to apply to medical school. We spent hundreds in application fees, and then when he got into a Caribbean school, we lost his income.

The Peak

As someone who is a personal finance blogger now, I shake my head knowing exactly what we did wrong. We didn’t track anything we were spending, which is just absolutely amazing to me now, as someone who plugs everything we spend into an excel spread sheet throughout the month. But that’s now, and we’re talking about then. We had good jobs and a comfortable life, but we didn’t have enough in savings, and we certainly didn’t have enough for international plane tickets to send the hubs to school. At the peak, we both maxed out a $3,000 card each.

Chipping Away At It

Before that $6,000 peak, we were actually trying to pay it down. Like I said, I was always aware of our debt, and I often felt the weight of it. I always paid above the minimum, and even managed to knock out a credit card for a TV we owned prior to my husband going back to school. (Yes, I know. Credit card for a tv = bad. My how things have changed.)

18 Months of Work

It wasn’t until 18 months ago that I laser focused my efforts on this challenge. For 18 months straight, I focused heavily on paying it off. I wanted it gone. I wanted it out of my life. We were accruing student debt due to my husband’s medical school tuition, and I didn’t want the credit card debt to get out of hand too. I started working as a freelance writer on the side. It was slow at first, but a year later, I am able to add a considerable amount of extra money to our monthly income. I have used this extra income every month to slowly pay off the debt.

Victory

I was hoping for victory by the end of this year, but it came sooner in the form of a promotion at work. That first paycheck was all I needed to finish off the credit card debt once and for all. I’m actually very proud of myself. While my husband certainly contributed to these efforts by not spending needlessly and not complaining about modest meals, I feel as though this is a personal victory too because it showed me how much can be accomplished with good old fashioned hard work. We now have $500 extra dollars a month (an amount I had been paying on our credit card debt for almost 10 months). It’s time to go to the next goal, which is paying down our student loan interest and maybe saving for a vacation. We’re so excited, relieved, and proud to be here saying we’re credit card debt free. If we can do it, we know anyone else can.

Who else is working on their goal of being debt free?

photo by vectorportal

Why You Should Be Debt-Free on Your Car

debt free on your carCar loans have become so common that most of us seldom think of buying a car without one. But you should think about doing just that, and there are a number of strong reasons you should.

Other Big Debts are only getting bigger

A house is an expensive proposition these days; so is a college education. Most people today are using debt to pay for the majority of these purchases, and that ’s forcing overall debt levels to get steadily higher.

As the bigger debts get even bigger, one of the best ways to manage debt overall is to be debt free on everything else. That means no credit card debt, no secured debt (furniture loans, etc) and no car loans!

We may not be able to completely eliminate mortgages and student loans from our lives, but that makes getting rid of the rest even more important.

Cash flow drain

All loans are not created equal, not when it comes to monthly payments. A typical monthly credit card payment will be about two percent of the outstanding loan balance. A student loan payment will be in the ballpark of one percent of the loan balance. Monthly mortgage payments (on a 30 year loan) will be substantially less than one percent of the balance.

Car loans are a different story entirely. The monthly payment on a $15,000 car loan at five percent interest for a four year term will be $345 a month, or more than two percent of the loan balance. That ’s not bad, but it gets worse as time goes on.

When you’ ’ve paid your loan balance down to $10,000, your payment will still be $345 a month, or nearly 3.5% of the remaining balance. At $5,000 your payment will be equal to nearly seven percent of the balance.

That ’s good for paying the loan off quickly, but it ’s an outsized payment for a small loan balance, and a big cash flow drain on a relatively small debt. And it figures significantly in the next issue ……

You can lose your car for a very small loan balance

Let ’s stay with that $345 monthly payment for a bit. You’ ’ve paid the balance down to $5,000–which is good– —but you just lost your job and now you have no income. Even though you ’’ve paid the loan down by two-thirds, the monthly payment isn’ ’t doable any more and the lender won’ ’t give you any credit for your good work to date if you can’ ’t make the payments going forward.

You know what happens when you can’ ’t make a car payment– —the lender takes back the car. A car repossession doesn’ ’t take nearly as long as losing a house in foreclosure. You can lose a car in a matter of weeks and there aren’ ’t many legal defenses for non-payment.

If the car is worth, say $12,000 at the time of repossession, you will have lost 100% of that value for inability to pay a $5,000 debt that you were well on your way to paying off while you were working. It ’s a lot to lose for a small loan balance.

Pay it off, and you don’t have to worry about any of that.

A car is too important to risk with a loan

Staying with the repossession idea, this is complicated by the fact that it ’s very difficult for most people to earn a living without a car. Some areas are well served by public transportation, but let ’s face it, most aren’ ’t. In the areas where most people live, no car equals no job.

For that reason you want to keep your car free of debt risk. You already have the break down/repair risk that ’s inherent in cars to begin with so you don’ ’t need to increase that risk with a loan.

Keep the car free and clear so that come what may, you ’’ll always be able to earn a living.

More people are working from home than ever

Few things in life are as absurd as the concept of making payments on a car that seldom leaves your driveway. If you work from home, this could be your situation.

Whether by telecommuting or running some sort of online business, more people are working from home now than ever and more are joining the ranks all the time. You may still need a car for other purposes, but if you don’ ’t have to worry about commuting to work you almost certainly don’ ’t need too much of a car, and certainly not one that ’s expensive enough to rate having a loan on.

Take advantage of your work status by getting rid of that expense.

Considering all of the above, if you ’’re planning to buy a new car, try to buy one that doesn’ ’t require a loan. That might mean buying a less expensive vehicle, or delaying the purchase until you can save up enough to pay cash for it.

If the car you own now has a loan on it, do what ever it takes to pay it off as soon as possible. The sooner you do, the faster you’ ’ll eliminate a big monthly payment, and guarantee that, come what may, you’ ’ll always have a car to get to work in.

photo by tworubies

When Financial Secrecy May Not be a Good Idea

financial secrecyOne of the areas of life we tend to be most secretive about is our finances. That’s a broad category of course, encompassing our income, expenses, assets, debt levels and credit standing. Now for obvious reasons we want to be secretive when it comes to giving out financial information as a matter of protecting our identityâ”that goes without saying. But the secrecy I’m talking about here deals with people, as in those closest to us.

It’s easy enough to see why we don’t want other people to know too much about our financial affairsâ”too much income and assets and other people might resent us; too much debt and poor credit and they might judge us. Who wouldn’t want to avoid that?

While we can argue the pros and cons as to how much of our financial lives we reveal to family and friends, there may be times when doing so is in our best interest.

Accountability

As much as we might not like the idea of driving on a road that’s monitored by traffic cameras, it’s equally true that we tend to behave better when we do. So it is anytime others have sight of what it is we do. It’s called accountability, and it’s a way of keeping us on the straight and narrow.

At a minimum, we need to keep our spouses in the loop as to what we’re doing with our money. While this might be self-evident, in my experience in the mortgage business, I’d come across people who didn’t want their spouses to know a about a certain savings or investment account, or about a debt or even a collection of credit cards. There may be all sorts of logical sounding reasons for this practice, but it’s doubtful that it leads to a happy place.

Whoever conceals his transgressions will not prosper, but he who confesses and forsakes them will obtain mercy.ââ”Proverbs 28:13

But beyond our spouses, there’s also an argument for having a close friend or family member (parent, sibling or adult child) aware of at least some aspects of our finances. By having someone else in the loop at least regarding the general state of our finances, we’re more likely to do the right thingsâ”or at least to stick to what it is we’ve declared to others we plan to do. It’s like have a second pair of eyes❠keeping watch over us.

When you have money problems

It’s ironic that the one time we most rebel against financial transparency is probably the time we most need to be open about it. Maybe we shouldn’t broadcast it to the world, but it’s generally better when a small number of people very close to us know what’s happening.

You should never go through a financial crisis alone; at a minimum you need trusted people to bounce ideas and strategies off of. In addition, when we’re going through troubles we’re not always thinking clearly, and that’s when an outside opinion becomes absolutely necessary.

Achieving savings, investment or debt payoff goals

If no one knows what our financial goals are it will be a lot easier for us to give up on them when the going gets tough. This is especially true if your goal is to pay off debt. Sometimes the pain of the effort can be offset by the greater pain that comes with disappointing people whose opinions really matter to us.

In general, financial goals are not always best accomplished in private. If you make a plan to begin saving money or to pay off debt, letting one or two others know what you’re doing is a way of making the plan official with an announcement. Think of it as an unwritten contract. Once that’s done, you’ll have greater incentive to follow through with the plan, if for no other reason than to show people you trust that you can be counted on.

In making your final arrangements

Grief and financial management are not compatible. Even though you commit your final arrangements to paper through a will, you still need to have at least one other person from outside your immediate family who will act as a point person at the time of your death to help your family cope with your loss. That person should have intimate knowledge of your finances beforehand.

Though we might think that our spouseâ”armed with a willâ”will be up to the task, that isn’t always true. Our immediate family may be too overcome with emotion to handle our financial affairs at the time of our death, to say nothing of dealing with banks, creditors, courts and tax authorities in the months that follow. Assigning beforehand a person that YOU trust to help settle your affairs can be one of the best provisions you can make for your loved ones.

How much of your finances do you keep hidden from close family and friends? Have you ever had problems because no one knew anything at all? Have you ever had problems because you revealed too much?

How the Financial Meltdown has Changed all the Rulesâ”or Should Have

financial meltdownBut godliness with contentment is great gain. For we brought nothing into the world, and we can take nothing out of it. But if we have food and clothing, we will be content with that. Those who want to get rich fall into temptation and a trap and into many foolish and harmful desires that plunge people into ruin and destruction. For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.ââ”1 Timothy 6:7-10 (Emphasis added)

Four years after it began, we still find ourselves mired in some level of the Financial Meltdown. We’re all sitting around waiting for politicians, economists and industry leaders to fix what’s broken in the economy, but have you noticed that doesn’t seem to be working? Maybe it’s time for us to get busy. And since we have the handbookââ”the Bibleâ”perhaps as Christians we need to take the lead.

Part of the reason that our leaders have been unable to fix the economy is purely because of the enormity of the problem. As much as we want to pin the blame for the mess on politicians, in truth the causes are so deeply rooted in our culture that fixing them defies easy solutions.

So where do we start?

 

It starts with money

I believe that we need to change our views and opinions of money, and align them with what we read in the Bible. Most of us are unaware that the traditional role of money has changed completely in just the past few decades.

In its essence, money is a medium of exchange. It’s used to facilitate trade between people and businesses and because it carries a standard value, it’s more efficient than barter. So far, so good.

But here’s the problem⦠In today’s economy, money is no longer just a medium of exchangeâ”it’s become an asset unto itself. We still use it to trade, but it’s become something much more. Success is now defined as earning, acquiring, preserving and growing as much money as possible. The end game is no longer to produce as much food, fish, minerals, shoes or widgets as possible, but to earn as much money as possible!

That’s a game changer, and it has a lot to do with the mess we’re in. Money manipulation has become more important than building a better mousetrap!

 

Money as wealthâ

What is it you think about when you see or hear the word wealth� From Biblical times up until about the end of the 19th Century this might have invoked visions of vast acres of rich farmland, a forest full of timber waiting to be cut, large catches of fish, coal mines or perhaps a thriving family business.

Do you notice something about each of these? They all refer to something tangible, something that’s being produced. Wealth was measured by what you added to the economy and community.

How do we see wealth today? Stocks, bonds, certificates of deposit, money markets, cash. Notice something about these? None of them are tangibleâ”they’re all paper. Stocks represent a share of ownership; they’re the way we own- and trade ownership in- the means of production, but are not means of production in themselves. All the rest are debt securities, which is to say that they represent a promise to pay, but nothing tangible.

The one possible wealth exception we have today, the one that actually represents something tangible, is real estate. But in the modern world there’s a caveat even with this. So much real estate has been purchased with debt (mortgagesâ) that’s often so large that the owner has little or no equity. Many property owners today are even in negative equity situations, owing more on their mortgages than their property is worth.

Wealth today is measured not in units of production as in days of old, but by the accumulation of pieces of paper.

 

Detaching money from the real economy

Here’s where we get to the root of the problem. Back when people grew, built, fixed or produced things for a living, there was a clear connection between being productive and earning a living. With the rise of money as a commodity in itselfâ”as the end game everyone now chasesâ”we’re now detached from actual production. Think about how many people work in money-related businesses, as compared to farming, manufacturing or the skilled trades.

The financial meltdown that started in 2007 has been commonly called the Financial Meltdownâ, but have you noticed that no one refers to it as the Economic Meltdownâ? That’s because the failure of what we loosely call the economy❠has been driven almost exclusively by financial factors. Could that possibly have something to do with the fact that in today’s world moneyâ”and all things closely related to itâ”have come to dominate all things economic?

When the ultimate economic goal becomes the creation of ever larger amounts of money, should we be surprised by the explosion of debt, the disappearance of real jobs, and the many Ponzi schemes that have flourished in recent years?

Those who work their land will have abundant food, but those who chase fantasies will have their fill of poverty. A faithful person will be richly blessed, but one eager to get rich will not go unpunished.ââ”Proverbs 28:19-20

 

How should Christians react to the financial meltdown?

I believe the time has come for Christians to realign our goals and set our sights on what is lasting. How do we do that? By changing our attitudes toward wealth and what it truly is.

Work. In the financial thinking of today, when we go out to look for a better job❠what we really mean is a better paying job, don’t we? That’s a pure play on money.

But perhaps if instead we sought work that we find fulfilling at a deeper level, money would become less important. Shouldn’t we be seeking our life’s callingâ”the work we’re meant to doâ”rather than just a higher paycheck? Maybe we should be asking ourselves, where can I be most productive?❠That needs to come back into the equation before work can be anything more than another component of the paper chase.

Investing. When we turn our money over to othersâ”mutual funds, investment managers, financial plannersâ”we’re asking them to get us a good return. Do we ever concern ourselves with what it is the money is invested in? We should.

We even seem content to have the money invested in exotic vehicles that we know little about, as if complication and complexity increase our chance at making a killing (they don’t). We need to invest only in what we do understand. How about investing in ourselves, investing in our own business, in the stock of companies that are either producing something tangible or providing a necessary service, in people (charity), or in our churches? Think of it as investing locally, in ventures we’re already familiar with.

Debt. If we could pick one cause to the financial meltdown that stands above all the rest, it’s debt! Culturally, we’ve come to believe that debt is benign, and once we reached that point the end result was inevitable. That needs to change. We don’t need to be borrowing to pay for entertainment, travel and consumer goods. And for those where we do need to borrow, we need to do so more conservatively.

We may need to borrow to buy houses and cars, but when we do we should 1) only buy well within our means, 2) make the largest down payment possible and, 3) take the shortest term we can afford. Paying off a loan (as opposed to rolling into a consolidation loan at a later date) should be a priority, otherwise we lock ourselves on a debt treadmill.

Family, community and church. It’s sad that we no longer think of these as wealthâ, but that’s exactly what they are. It’s equally disturbing that these very institutions that are so critical to basic life have degenerated in the great money chase of the past 50 years.

Family, community and church are the very foundations of civilized life and if we can’t invest our time, effort and money in them, then the quest to earn and amass more money will condemn us to chase that which we will never find.

What do you think that we as Christians should be doing to move the economy in a positive direction? Should we be doing anything at all? Scripture calls us to come out and be differentâ”does this also apply to economic and financial matters?

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