Archive for December 2006

Proverbs 14:30-31

30: "A heart at peace gives life to the body, but envy rots the bones."

31: "He who oppresses the poor shows contempt for their Maker, but whoever is kind to the needy honors God."

As I help folks get their finances in order, I cast vision as to "how things could be" IF "they would just do this, this, and that."  Many times this involves selling some stuff – cars, boats, motorcycles, houses!  I want people to have nice stuff, but many times the nice stuff is eating up 50% of their budget OR MORE.  Folks just will not win with expenses like that!

As I cast vision, it is not unusual for me to say, "If you sell the two cars and buy two used cars, you could be debt-free except for the house in 12 months.  If you keep the cars, you may be debt-free in 60 months." Or I might say, "If you sell the boat and motorcycle, you could be debt-free immediately.  If you keep the boat and motorcycle, you may be debt-free in 72 months."

When I mention selling some stuff, I begin encountering resistance!  This is their stuff!  They love their stuff!  They bought this stuff, and they want to keep it!  Even when it is eating them alive financially!  Even when they are not able to give one thin dime and are not assisting others at all!

As I go through meetings like this, I see that God's word is true.  Proverbs 14:30 says that "envy rots the bones".  When people have a bad case of stuff-itis, it is usually a result of envy.  They saw someone else with that item, and they wanted one too.  The difference is that they could not afford it.  The verse also says that "a heart at peace gives life to the body."  When stuff-itis is cured, WOW!  The peace is awesome!  Knowing you could go to the store and buy anything in there, but not doing it because you really don't need anything.  Wow!  I am telling you it is AWESOME!  Jenn and I have been vaccinated against stuff-itis, and it feels good!

Proverbs 14:31 says that "whoever is kind to the needy honors God."  I guess that is why it pains me so deeply in my soul when I see people up to their eyeballs in debt with a bad case of stuff-itis.  They are so loaded up with their own wants that they do not even see the the needy, let alone help them.

The solution?  Get a vaccination against stuff-itis!

Children need to learn about money

One thing that really pumps me up is seeing parents teaching their children how to manage money well.

I remember as a child that I knew the value of money.  I was the youngest of six children.  My dad was self-employed and my mother kept the six boys in line.  We knew the value of money.  How did we know the value of money?

We rarely went out to eat.  Why?  We could eat at home sooooo much cheaper.

We planted a HUGE garden.  We picked, cleaned, snapped, and canned over 100 quarts of green beans in a single day multiple times.  We planted an ACRE of sweet corn.  We boiled that corn, cut the kernels off, but them into freezer bags, and froze hundreds of bags of corn.  We picked grapes until it filled 5-gallon pails and made grape juice out of it.  We grew asparagus.  We grew tomatoes – yellow and red.  Butternut squash, zucchini, yellow squash, pumpkins, … the list goes on and on.  Why did we plant a huge garden?  It was much cheaper than buying it at the grocery store PLUS my parents had six laborers available!

We went on vacation, but we went to places that were cheap and accommodated large families (country areas).  We loved every single vacation.

My dad attempted the weekend farmer thing.  We had a cruddy old Gleaner combine that broke nearly every time we took it out.  We saw how tough it was to get ahead if we did not plan on break downs!

My dad gave me a book when I was around twelve years old called The Wealthy Barber by David Chilton.  It was a fictional story written around the concept of compound interest.  WOW!  It got my attention and the instant I began earning an income, I started investing money – in large part due to reading that one story!

Children need to learn about money.  I learned about how to manage money from my parents.  I DID NOT learn how to manage money from the school I attended.  For most children, the number one way they will learn how to manage money is from their parents.  Are you setting the example?  Are you teaching them the "How-To" part?

If you are looking for a great place to start teaching your children about money, it would be during Christmas break.  Get a copy of The Wealthy Barber by David Chilton and read it together with your children.  Sound nerdy?  Maybe, but I guarantee you that your child will not forget it!

Frequently Asked Questions

I am regularly asked questions, so I thought that today I would write out a few common questions that I get along with my answers.

Do you really use cash envelopes?

Yes.  Jenn and I believe that it is the best way for us to ensure that we do not overspend the amount budgeted.  When we utilized the debit card, we blew the budget EVERY SINGLE MONTH!  Therefore, we use the cash envelope system.  I will say, however, that we only use cash envelopes for those categories that tend to go out of control – groceries, dining out, entertainment, blow money, household (stamps, haircuts, flowers, plants, holiday decorations, etc.).

We do not use cash envelopes for the utilities, the house payment, or other expenses that we do not have the ability to splurge on.  One category that we are debating right now is gasoline.  We have always used a cash envelope, but it is not like we are going to splurge on an extra tank of gas.  Where would I put it?  We may be moving that to a debit card transaction for a trial period.

How do you and Jenn put together a budget?

Whenever we plan an outing or event, we mark it on the calendar.  About 1 or 2 days before the month begins, we will sit down and put together the budget using the budget forms (you can get your free copy by clicking "Tools" in the top right-hand corner).  We have kept loaded the expenses from the previous month and adjust them according to this particular month.  Because this month is December and we will travel more and spend more time out on the town with family, we bumped up the "Gasoline" and "Entertainment" categories.  We also bumped up the "Household" category because we are purchasing Christmas Cards and snail-mailing them.  We knocked down the "Groceries" category because we will be at our family Christmas and eating leftovers for a week (YES!!!!).

We then ensure that the secret formula is applied:  INCOME – OUTGO = EXACTLY ZERO

Print it out, put the cash in envelopes, write the checks, the end.  Fun stuff!  Total Time:  20 minutes

What type of cash envelopes do you use?

The ones handed out by the bank.  We ask for a couple of extra ones and replace the torn/battered ones.  I know other people who use the free envelopes that come along with those wonderful credit card applications.  Best part – Free.

Does your daughter use cash envelopes?

Yes, our daughter does use cash envelopes.  It is priceless! 🙂  When the money runs out, it's over!

Do you tithe (give 10% away)?

ABSOLUTELY – and then some.  I believe that people who live in the wealthiest nation in the world have a special responsibility to help others.  Jenn and I passionately believe in some things – Purdue University (Go Boilers!), NewSpring Church (Yeah!), and Missionary Work (Alaskan remote regions and the Military).  We want to support these causes financially so that they can accomplish their work effectively!  Maybe we should give more to Purdue because their football team has struggled (SMILE), but we LOVE these things.  We can't help BUT give.

Does Jenn believe in this stuff as passionately as you do?

I would say that Jenn believes in this stuff at least FOUR TIMES more than I do!  Here is the big secret:  I did not come up with the budget in our family.  It was JENN!!!  I am the spender!  I hated the word "budget"!  But when I saw that it would enable us to WORK TOGETHER and achieve the PLANS we have for our life!  Oh yeah, I became a kool-aid drinking fool about this stuff!

Let me know if this type of Q&A helps you!  If you have any questions that you would like me to answer on this blog, post it in the comments or send me an e-mail.  Thanks!

Financial Learning Experience!

Last night was simply amazing!!!  I had the opportunity to teach the tools that Jenn and I used to obtain financial freedom to over 350 people!  It was awesome!

I was able to swim in credit cards last night.  If anyone has a picture of that, I want it!  It was totally unplanned, but it just felt right.

I was able to show people how to calculate their debt freedom date.  You can do it as well!  I have loaded the Debt Freedom Calculator under "Tools".

I was also able to show people how to spend all of their money on paper before the month actually begins.  There is POWER in putting this plan TOGETHER BEFORE the month ever begins.  You can obtain a blank budget and start doing this for your family as well.  Just click on "Tools" above.

We took the time to write out the reasons we want to be financially successful and write down goals that we want to achieve.  For many people in the room, it was the first time that our dreams were written down on paper!  For many people, it was the first time in years that they have been able to even dream!

We calculated how much money we will need in our retirement funds to be able to retire, and once again we observed the power of compound interest.  It IS the 8th wonder of the world!  $100/month for 40 years @ 12% annual growth is $1,176,477.  The money invested is $48,000, but the value is $1,176,477.  WOW!

At the end of the Financial Learning Experience, everyone completed a survey.  I wanted to share some comments that were made because they have rocked my world and are THE REASON I do what I do.

What are you going to do as a result of what you learned tonight?

  • Do a budget plan with my husband for the 1st time in 32 years.  (WOW!) 
  • Work on our finances together
  • Change our lives
  • Start tonight 
  • Plan a financial goal tonight
  • Calculate my debt freedom date
  • Start investing
  • Share with my wife
  • Work with my husband on our finances
  • Make a budget
  • Share the information with husband and children (wow!)
  • Sign up for the 5 week class
  • Stop adding new debt

To those who attended the FLE tonight, THANK YOU!  I am so PROUD of the HUGE step you made tonight to learn more on how to improve your finances.  This was a HUGE step.  Do you know that over 690 people signed up for the FLE, but only 350 showed up.  Why?  Because it is TOUGH to face the dragons!  This is emotional.

Never stop pursuing education about this!  Don't give up after one month of budgeting.  The 1st month is the toughest.  You CAN do it.