How Some Whole Life Insurance Policies May Be A Lot Better Than Dave Makes Them Out To Be

Photo by Thomas Hawk

Photo by Thomas Hawk

[Excerpts from this post are taken from Larry’s book, Beyond Peace In Christian Finances: Accelerating Past Average With Your Money Plan]

The Whole Life Versus Term Life Debate

In Financial Peace University, Dave makes it clear that he hates whole life insurance products. He encourages everyone to buy term life insurance and then invest the difference normally paid for a whole life policy. There are many in the personal finance world chanting the exact same mantra. I get it. I understand most of the reasoning behind the debate.

When I first heard about the whole versus term life insurance debate around 2004, I immediately bought a decent amount of term life insurance to protect my family. Then, I turned around and canceled my variable universal life (VUL) policy that I had been suckered into by a “friend” and his buddy life insurance guy a few years earlier. I was too ignorant back then and didn’t understand the various forms of life insurance. I had no clue on “good” and “bad” forms of life insurance. Fast forward a few years. I now have in place a newer, larger, quality, twenty-year term life policy. I have peace of mind knowing my wife, four daughters, and son will have the resources they need if something happens to me.

Bank On Yourself: The Infinite Banking Concept

A few years after buying this latest term policy, I ran across several books and blogs recommending a new financial product (which is really an older way of doing life insurance) called the Infinite Banking Concept (IBC). The basic idea behind IBC is the reality that most American families will finance large ticket items such as cars, college, and homes. When financing these items through conventional banking methods, borrowers are throwing away thousands of dollars in interest that they could be recapturing for their own personal benefit. When properly set up, an IBC utilizes a form of permanent, whole life insurance to create a personal “bank” of money to borrow from, that also has some tax advantages tied to it (assuming that the Federal government doesn’t mess with these policies in the future).

Let me say upfront that I currently do not have an IBC. At the time of my writing this book, I’m still in the research and investigation phase. My first impression after reading several books and web articles on IBC is that the concept and its application in this way are intriguing. The idea of building up a storehouse of wealth over several years in which the person, in theory, becomes his or her own bank seems rather ingenious to me. But, because I have heard the whole Dave Ramsey rant on whole versus term life insurance for so long, it has taken me a while to process the concept.

In the article “My History With IBC,” economist Robert P. Murphy, PhD addresses the problems that Dave brings up about whole life policies:

… Dave Ramsey is a radio talk show host who (admirably) counsels people on how to get out from their crushing debt load, through obvious but crucial things like making out a budget, communicating with one’s spouse on financial affairs, etc. Ramsey is very entertaining and I can certainly understand why his show is so popular. However, Ramsey absolutely has it out for whole life (and other types of permanent life insurance) policies, advocating instead that people “buy term and invest the difference.” For example, in a post from his website, Ramsey implies that you won’t have any cash value for the first three years of a new policy. He goes on to explicitly say that the rate of return on your money is much higher in mutual funds, that you won’t need life insurance after 20 years if you follow his plan, and that the insurance company keeps your cash values when you die, giving your beneficiary only the death benefit.

Every one of these (typical) objections is either misleading or downright false, at least when it comes to Nelson Nash’s IBC approach of using whole life policies. First, if you set up the policy properly with a “Paid Up Additions (PUA) rider,” then right off the bat, a portion of your periodic payment is buying a chunk of fully paid-up life insurance. Thus, your cash value begins rising immediately, and you can begin borrowing against your policy right away (if you need to).

As far as comparing rates of return, again the problem is that Ramsey is viewing permanent life insurance as an investment, rather than a cash flow management strategy. Yet even if we use the standard tools of financial analysis, it is a non sequitur to point out that a mutual fund is expected to have a higher 30-year (say) average annualized rate of return, compared to the internal rate of return on an insurance policy’s projected cash value growth. Such a bald statement ignores the difference in risk between the two strategies. (Whole life insurance policies have guaranteed minimum rates of return. Do equity-based mutual funds have that?) Ramsey could just as easily “prove” that nobody should ever buy a corporate bond, because stock issued from the same company will always have a higher expected return…

By making these comments, I’m not “proving” that more life insurance is always the best thing to buy, from a conventional “asset class” allocation perspective; otherwise we would have the absurd result that everybody should put every last dollar of his wealth into life insurance policies, with nobody owning stocks, bonds, real estate, or precious metals. (Obviously somebody has to own a share of corporate stock or a piece of real estate, and that ownership must be voluntary. So their prices adjust to make it attractive for someone to acquire and hold.) All I’m making is the modest point that in Ramsey’s critique of whole life and related insurance policies—when he compares them very unfavorably with “buy term and invest the difference in mutual funds”—he isn’t even attempting to set up an apples-to-apples comparison of the two strategies. He’s pulling one set of statistics—internal rates of return—out of context and trumpeting them as if they’re decisive, when the actual situation is much more nuanced.

When IBC policy holders take out a policy loan to personally finance large sums of money, they must set up terms of repayment with interest. The purpose of repayment with interest is in order for the policy to generate the benefits of the storehouse of wealth system. The good news here is that policy owners are paying themselves back with interest. They are able to bypass the greedy, overpaid executives in the large corporate banks in New York City. This is the beauty of IBC.

Potential Uses for Your Storehouse of Wealth

As I continue doing research on IBC over the last several months, I’ve been asking myself a bunch of “what if” questions such as:

  • What if I established an IBC, let that policy mature for a few years, build up a storehouse of wealth, and then put this money to work creating more streams of income that create more streams of income?
  • What if took out a policy loan for a decent amount of money, used it as a down payment for a bargain rental property, and started some new streams of income this way?
  • What if I took out a policy loan to buy an existing business that had decent cash flow to it already?
  • What if I used a policy loan to do some peer-to-peer lending?

I do see the potential to use an IBC as a personal storehouse of wealth to create even more wealth. This money could be put to work at higher interest percentage rates and create multiple streams of income. My own next step in the process is to speak directly to a trained professional in setting up an IBC policy.

IBC Core Details

Here are some of the core details of what I understand about the Infinite Banking Concept. First, the policy (or policies—multiples can be set up for family members) must be established in mutual insurance companies. Second, these policies are not the “run of the mill” whole life policies. They are a very specific, specialty product: high-premium, dividend-paying, whole life insurance policies. Third, seek out trained professionals who know the specific mutual insurance companies as well as the technicalities to set this up an IBC properly. Check out the resources at the end of this chapter to find these professionals. Fourth, it will take a few years (perhaps 3 to 5) of premium payments to establish a policy in a position to be a storehouse of wealth. There are methods to speed up the cash value of a policy to tap into these benefits earlier than this. I recommend speaking with a certified professional in IBC to uncover all the many options.

Fifth, when requesting a policy loan, it is just a matter of filling out a form to request the money—and it will be available a few days. The insurance company won’t ask a bunch of personal financial questions or check credit scores like most lending institutions. The insurance company administers and guarantees the value of the collateral. The company actually doesn’t even care if you repay the policy loan. They will simply deduct that amount from the cash value/death benefit of the policy. But, the policyholder cares if it’s repaid, because repayment with the terms chosen accelerates the growth of the policy. Sixth, an IBC policy shouldn’t be viewed an investment vehicle. It should be viewed as a cash flow management strategy with many unique benefits. Seven, creating an IBC policy (or policies) in a family is a way to move away from the corrupt, fiat money system of a central bank. It creates a personal privatized banking system. This is the key distinction and benefit of the IBC. Conventional, commercial banks create money “out of thin air” as well as create all sorts of national financial problems. A privatized banking system such as IBC is based on actual cash values created within the policy.

The information shared in this post can be found Larry’s book released in the Amazon Kindle store: Beyond Peace In Christian Finances: Accelerating Past Average With Your Money Plan.

What’s The Big Deal About Christian Financial Stewardship Anyway?

Photo by Paval Hadzinski

Photo by Paval Hadzinski

The Light Comes On For Me, Over Time

Stewardship.

Yeah, it’s a weird word. It’s a churchy word, too. Not many people really get it, either.

Twenty years ago, I would associate the word “stewardship” to tithing on Sunday mornings and church building campaigns. That’s what I thought it was all about.

Then, I attended my first Crown Financial Bible Study Class back around 2001-2002, and the light of understanding slowly began to come on as I learned what God’s Word had to say about financial matters. I learned that “my money” was not mine at all. Everything that I possess has been given to me by Almighty God to manage for His kingdom purposes.

This is the core essence of Christian stewardship. As believers, we are called by God to manage the time, money, abilities, and relationships He has given us. We aren’t supposed to squander all these resources on selfish, fleshly desires.

Here’s an excellent synopsis of stewardship taken from Wikipedia:

A biblical world view of stewardship can be consciously defined as: “Utilizing and managing all resources God provides for the glory of God and the betterment of His creation.” The central essence of biblical world view stewardship is managing everything God brings into the believers’ life in a manner that honors God and impacts eternity.

Stewardship begins and ends with the understanding of God’s ownership of all.

After I went through the Crown Financial Bible study, I ran across this blueish-green book in a local book store called Financial Peace by some guy named Dave Ramsey, who I had never heard of before. I’m reading through this book thinking to myself, “this guy makes a lot of sense. Debt is dumb. I need to get my family out of debt with gazelle intensity!” As a result of reading Dave’s book, I started listening to his syndicated radio show and eventually began coordinating Financial Peace University at my church.

All of these baby steps in the area of Christian stewardship eventually led me to take on a secondary role in my church as our Stewardship Pastor. It has certainly been an exciting as well as interesting journey as I have grown in stewardship in my own life and have attempted to teach it to others.

Why Stewardship?

So, why should stewardship be such a big deal in the life of a believer, anyway?

I believe there are several answers to this question.

First, the Bible is filled with financial wisdom and instruction. The estimates on the amount of financial verses in the Bible range from 900 to over 2,000 depending on your criteria. Needless to say, that’s a lot of Bible verses on money!

Second, Jesus Himself spoke a lot about money in the parables He taught the Jewish people. In fact, money was (possibly) His second most discussed topic with the Kingdom of God being the first. There is much theological debate on which parables dealt specifically with the topic of money, but money was a huge issue that Jesus addressed frequently in His ministry here on earth.

Third, money is one of the biggest areas of struggle for most believers. Unfortunately, the majority of Christians have adopted cultural beliefs and practices when it comes to money. Most of us have either forgotten or never been taught Biblical financial principles.

Fourth, stewardship is about more than money. The more I study and practice the principles of Biblical stewardship, the more I understand this important principle. It really encompasses every aspect of your life – your time, natural talents, abilities, money, assets, physical health, and relationships.

My Take

Here’s my own personal take on this area of stewardship. If God’s Word is filled with financial wisdom and Jesus’ own ministry focused a lot of time teaching on money management, then there are certainly good reasons for this instruction. This is an area that the Lord knows we all struggle and need to work on in our life on a continual basis. It’s not a “one and done” kind of deal, either. Stewardship is a life long pursuit.

Every day, we have to surrender our selfish, greedy financial plans and desires over to our Lord and Savior. Our primary concern should be using the resources God has entrusted to our management to advance His Kingdom here on earth and in heaven.

Questions: Do you think stewardship should be a big deal in the life of a believer? Why or why not? Is stewardship a big deal in your own life and the life of your family?

Book Review: Financial Fitness: The Offense, Defense, And Playing Field Of Personal Finance

Financial-fitness-bookForced To Ponder

I wasn’t sure how to respond.

I recently made a new acquaintance at my church who studies and understands financial matters. We were discussing my stewardship pastor role at the church and my use of Dave Ramsey materials for financial instruction.

He told me that he believes Dave spends too much time on the defensive side of money. All he talks about is budgeting, getting out of debt, and emergency funds.

I really couldn’t argue too much with my new friend. He was making a solid point.

My friend then recommended that I look into the Financial Fitness materials by LIFE Leadership. So, I bought the Kindle version of their book and did a quick read on it in a few days.

In this post, I’ll share a few of the highlights of what I learned.

3 Key Elements I Learned From Reading This Book

Financial Fitness: The Offense, Defense, and Playing Field of Personal Finance by LIFE Leadership Written by Chris Brady and Orrin Woodward

1. I have perhaps spent too much time on the financial defense side of money then the offensive side. Here’s an excellent quote from the book that makes this exact point:

“Most books on personal finance start (and, all too often, end) with a focus on financial defense (how to get out of debt, protect your money, and prepare for contingencies). But defense is the wrong place to start because it creates the wrong mindset. Defense of money is vitally important, but making it the first priority often puts people in an attitude of scarcity rather than abundance. We will cover financial offense (making more money) first and then defense (protecting one’s resources) later because the values and attitudes of financial offense are naturally abundant, aggressive, and bold. Successful financial offense requires initiative, innovation, ingenuity, and tenacity—the entrepreneurial values” (Kindle location 1212).

2. I need to excel in my current job role, and then figure out a side income to throw off passive cash flow. While this wasn’t necessarily a big news flash for me, it was a good reminder for me on how to stay on financial offense. Here are three excellent quotes from this book regarding this point:

“As you truly excel in your current role, you will naturally be given more responsibility, and as you do the same with the new duties, you will build yourself into a better and better leader. This is why the offense side of finances is so important in achieving financial fitness. Whatever you are working on right now in your life, truly excel at it in order to fully invest in yourself. The natural result will be progress and increasing prosperity and opportunities” (Kindle location 1432).

“If you have a job, it means doing the same thing as an intrapreneur—thinking like an entrepreneur, a leader, and an innovator at your work, rather than just fitting in to your job description. It means adopting an ownership mentality, thinking and acting like an owner rather than just settling for an employee mentality. Focus on the owner mentality in your choices, work, interaction with others, and in all tasks, character opportunities, and relationships whether or not you are actually the owner—as an entrepreneur or intrapreneur, or both” (Kindle location 1420).

“One of the key principles of financial fitness is to increase your passive income, even if you continue to work at a primary active income source. Of course, if you are currently employed, don’t quit your job until your passive income has surpassed your active income (and you have sought professional advice, gotten out of debt, done the proper planning, and so forth). As we said earlier, you can keep carrying buckets for your employer, but it is also helpful to begin building your own pipeline of passive income” (Kindle location 1753 ).

3. I need to give more consideration to Emergency Preparation: food, water, power, guns, cash, and precious metals. In my mind, I would think that emergency preparation would fall under the area of financial defense. Brady and Woodard categorize this interestingly enough under financial offense. Here is a lengthy but excellent quote on this topic:

“Saving for a worst case includes the opposite of compounding money, which we will call “impounding.” This means putting away various forms of money just in case catastrophic things happen. Stash some cash in a safe, secure, secret place. And in case inflation ruins the value of the currency, put away some silver coins as well. Silver is better than gold for this purpose because in a worst-case world, gold will be very valuable, so a gold coin will be worth a lot more than the food you will want to buy with it. Small silver coins will be easier to trade for small needs. Gold can be used to effectively protect larger amounts from loss of value due to government inflation (more on this later). Saving for a worst case includes the opposite of compounding money, which we will call “impounding.” By the way, don’t be too extreme about this. We are not doom and gloomers, and we’re not predicting a world with roving bandits and no electricity. It could happen, but so could a lot of things. We are simply suggesting that part of sound money planning is to realize that bank holidays and closed banks can happen. They occurred during the Great Depression, even though the world didn’t end. But people with some cash and silver were able to purchase food and fuel when others could not. And major storms, natural disasters, and other challenges can come also. So be prepared. Don’t be fanatical. Just take some wise precautions. Another valuable investment on this same level is food storage. Get the kind that lasts many years and keep it in a cool, dry place. Many people store guns and bullets with their food and metal coins. Learning to hunt might be a very helpful preparation. Again, this is for last-ditch survival needs, but having it as part of your investment hierarchy can be very valuable” (Kindle location 2323).

My Recommendation

Okay, so here’s my recommendation: I highly recommend reading Financial Fitness, especially if you have been down in the trenches with the Dave Ramsey philosophy for a while. I’m not saying that the Dave philosophy is bad, but you can get too immersed in financial defense for too long. This has the potential for developing a financial scarcity mindset, which isn’t where you want to be, long-term.

This book can help you get turned back around to focusing on financial offense, which leads to abundance thinking. I wonder what this world would be like if people had thoughts of abundance rather than scarcity mindsets?

Questions: Have you read Financial Fitness? What were your takeaways from this book? Would you recommend this book to others?

Using Mint.com As An Excellent Financial Dashboard To Think And Act Like The Wealthy

Mint.comI’m A New Fan Of Mint.com

Several years ago, I heard about Mint.com but never really took the time to dig deep and discover what this website was all about.

So, why didn’t I?

Like many financial websites, I assumed it wasn’t really going to change much of my current financial process of budgeting, saving, investing, and debt-free living. For many years now, I have been disciplined in my finances, so I wasn’t seeing the need to throw one more layer of personal finance tracking into my current process.

But a few months ago, through the encouragement of some friends of mine, I decided to give Mint.com another look.

Now I get it.

I’m not sure why I didn’t understand the beauty of this site five years ago. Because we now live in the age of electronic banking, we all have website accounts that need to be monitored. These websites include multiple bank checking and saving accounts, investment accounts, credit card accounts, and perhaps other loan accounts such as student loans.

So, once I actually took some time and plugged all my electronic accounts into Mint.com, I began to see the beauty of the website. Mint.com became my own personal finance dashboard. Instead of visiting all of my accounts individually, I could have a snapshot of my family’s financial health in one convenient website.

As I was reviewing my financial dashboard the other day, I had this thought:

Used correctly, an account on Mint.com can help people to focus on three important principles of the wealthy.

3 Important Principles Of The Wealthy

Source Note: These three principles were taken from Rich vs. Poor People Principles by Harv T. Ekker.

  1. Rich people play the money game to win. Poor people play the money game to not lose. With the way the financial dashboard is set-up on Mint.com, it has a quasi-game feeling to it. And, if you are the competitive type, I can see the dashboard having a unique way to encourage you to pay off debt, save, and invest.
  2. Rich people focus on their net worth. Poor people focus on their working income. Due to the nature of this financial dashboard, you have a clear picture of your net worth. Mint.com automatically adds up all your assets and subtracts your liabilities, leaving you with your net worth at the end. Mint does a great job with this wealth principle. I’ve enjoyed watching my net worth grow each month. Thumbs way up!
  3. Rich people manage their money well. Poor people mismanage their money well. At the end of the day, Mint.com is a great tool to manage your personal finances well. Now, you still have to put work into your personal finance management. Mint doesn’t do this management for you automatically, but this website sure can help you become a better money manager.

I realize that not everybody out there is as detailed and compulsive as I am regarding stewardship and personal finances. I am always on the lookout for new ideas and great tools to give me an even greater edge in this area of life. Mint.com is one of those tools to give you an advantage in living out the principles of the wealthy.

Questions: Do you use Mint.com in your personal finances? Why or why not? If you do use this service, do you agree with my assessment of the manner in which it helps you focus on these three wealth principles? Why or why not?






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Does The Bible Really Contain A Secret Money Code?

Photo by Susan Kambalu

Photo by Susan Kambalu

Sean Hyman And The Biblical Money Code

His advertisements are everywhere!

Over the last few months, it seems like anytime I have my local talk radio station on, Fox News, or simply browsing the web, I keep running into advertisements for Sean Hyman’s Biblical Money Code.

A few weeks ago, I was curious enough to just go ahead and purchase the lowest subscription possible to check out what all the hype is on this Biblical Money Code book is all about.

Buying The Biblical Money Code book is really more of an opportunity for you to end up on an email subscription to the Ultimate Wealth Report plus NewsMax.com. Of course, this is the new normal in today’s digital marketing age, so now I am blessed with at least two to three extra emails cluttering up my inbox each day!

But, you do also receive several ebooks and other pieces of financial information for your purchase. It’s not a complete “bait and switch.”

Who Is Sean Hyman?

Sean Hyman is a former pastor who has allegedly moved from making $15,000 a year to now giving away up to $50,000 a year. He didn’t make this kind of money in church work, however! Here’s a portion of Sean’s bio regarding his financial work:

Sean Hyman has become a trusted correspondent on CNBC, Fox Business and Bloomberg due to his extensive background in the financial markets, having spent more than 20 years in the investing trenches. Over that time, he’s been a stockbroker at Charles Schwab, a trading course instructor for foreign exchange market maker Forex Capital Markets (FXCM), a financial writer for numerous outlets, and a key speaker at conferences both nationally and internationally. Over the course of his career Hyman has also held five financial licenses …

… Sean Hyman became the editor of the Ultimate Wealth Report newsletter because he loves teaching and helping others to have a better life than what they’d had before. His goal with the Ultimate Wealth Report is “to shepherd readers in the right direction so their wealth doesn’t get eaten away by inflation, but rather benefits from the rise of inflation.”

A Fast Overview Of The Six Keys

The primary ebook focused on the Biblical Money Code that you receive as part of your subscription is called The Six Keys To Financial Success. Like many ebooks you receive online, it’s a brief 47 pages and a quick read.

In the ebook’s introduction, Sean makes the case that in order for God to bless us financially, we need to follow all the financial wisdom in Scripture. In order to unlock the full potential of the Biblical Money Code in our lives, we must be fully obedient to all God’s wisdom, not just part. That won’t work.

Sean states that most people only follow some or part of the Biblical financial wisdom found in Scripture. Perhaps, they may tithe on a regular basis, but the rest of their financial life is a complete mess. Or, maybe they live a debt free lifestyle, but don’t tithe.

Sean drives home the point that a believer living in full obedience to each financial principle unlocks the full and complete blessing of God in the area of personal finances.

Here are the six Biblical financial principles that Sean focuses on:

  • Principle #1: Pray for God’s Favor and Blessing In Your Work.
  • Principle #2: Tithes and Offerings: 10% Plus Some, Not Just 10%.
  • Principle #3: Save Money and Reduce Your Debts
  • Principle #4: Invest for Your Future
  • Principle #5: Philanthropy
  • Principle #6: Being the Lender and Not the Borrower

My Take On The The Six Keys To Financial Success

I am of the personal opinion based on my own research PLUS personal experience that there is a “Biblical Money Code.” Is it some kind of big secret or something? No, of course not. But, the Bible does give us A LOT of common sense wisdom when it comes to handling money.

I do believe that God blesses complete obedience to His Word and His will. I also believe in the power of the Law of the Harvest. When you do the right things in the right order and in the right way, you will reap a bountiful harvest.

This is so very true in this area of personal finances. If you follow Biblical financial wisdom in every area (giving, saving, spending, debt, and investing), then God will bless you. You will reap what you have sown.

BUT, I would be hard pressed to say that this will happen every time for every person in every situation, though.

God is God, and He does not always conform to the box that we place Him in. He may allow negative financial circumstances into our lives, even if we may be following this “Biblical Money Code.”

Why would God allow this to happen, though, if we’re playing by these Biblical money rules?

It’s always difficult to pinpoint a definitive answer. We may never know this side of heaven. Perhaps God is teaching us an important spiritual lesson. Maybe He wants us to learn to rely on Him, rather than money. Or, maybe, He wants us to learn a lesson in controlling our emotions and growing in the virtue of patience.

I believe the key is remaining open to growth in your life when your expectations aren’t met, even when you are doing all the right things. But, don’t give up, though. Keep on doing all the right things in spite of the circumstances. There will be a tremendous payoff, eventually. Remain obedient, teachable, and press through to the end!

Questions: Do you believe in a Biblical Money Code? Why or why not? Have you experienced the Law of the Harvest in your personal finances from following these principles?






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If You Don’t Get Out Of Debt Now, You’ll Hate Yourself Later

Photo by Dave Lawler

Photo by Dave Lawler

Waiting For Perfect Timing

Perfect timing.

I suspect I’m the king of this elusive time issue. I tend to wait around for the timing to be just about right on most everything such as writing an important article, scheduling the doctor’s appointment, working on a speech, having an important conversation, or making that critical phone call.

The reality of perfect timing is that it is merely a socially acceptable way to procrastinate.

And, I’m sure I’m not alone in this, either. I would guess that most of us like to wait around for the “perfect timing” on almost anything in life.

Yeah, we’re just procrastinating.

So, why do we procrastinate? What are we waiting around for?

Perhaps, taking action will take us out of our comfort zone? It will make us uncomfortable, and we human beings are funny that way. We live for comfort. We don’t like stress. But, we also don’t accomplish what we need to do, either.

If we would just embrace our discomfort and take one small step of action, then we would find that it’s really not as bad as we made it out to be in our mind.

The Perfect Time To Pay Off Debt

Paying off debt is one of these areas that people like to wait around for the right timing.

Perfect timing is a myth. It’s pure hokum.

Yeah, we think we’ll start paying down our debt when we get a higher paying job, when we get our website built that is going to make us a million dollars, when we can finally get moved into our dream house, or when we’re done having kids and the wife goes back to work.

The reality is that there is no such thing as perfect timing. We’re just procrastinating taking action on something that will cause us discomfort. We know that we shouldn’t be carrying the debt load we’re currently carrying, but it’s this big scary monster that we don’t want to deal with.

So, we put it off until tomorrow, or the next day, or the day after that. If you’re not working on getting out of debt now, then it’s probably not going to happen later.

But, I can tell you from personal experience that if you face your fear and look at this ugly debt monster in the face, it’s probably not as bad as you think. We always make things bigger in our mind than they are.

Now Is The Time

I don’t care where you’re at, today.

Maybe you’re still in college. You started a new business a few months ago. You just got married. Your wife is about to give birth to your firstborn child.

Wherever you are in life, right now IS, without a doubt, the very best time to embark on your debt-free journey. Your life will not be any easier one year from now. It’s just going to get more complicated and more expensive at some level. Plus, in these uncertain economic times we now find ourselves, you are better off to just deal with your current state than wait on better financial times that may be several years away.

Take action today on moving toward a debt-free life. Don’t procrastinate any longer. The clock is ticking. If you don’t get out of debt now, you’ll hate yourself later.

Questions: Are you waiting around to become debt-free? What are you waiting around for? What one action could you take today to break your cycle of procrastination and move toward financial freedom?






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3 Ways To Run Your Personal Finances Like America’s Successful Companies

Photo by Sal Falko

Photo by Sal Falko

America’s Best And Brightest

I enjoy hearing success stories of America’s best companies.

In our current political climate which often demonizes hard work and smart business practices, I have an even greater appreciation for companies such as Coca-Cola, Apple, Google, Wal-Mart, and Berkshire Hathaway.

Even during the worst economy in decades, these companies have figured out ways to succeed. They have made intelligent financial decisions that have helped them prosper.

I wonder what would happen if we approached our personal finances like these successful companies?

What if we as individuals and families had the financial mindset, will, and tenacity to make it in a difficult economy just like these businesses? If we did, then I believe we would no longer be in a down economy!

There are some great personal finance lessons that we can all learn from these prosperous companies.

3 Ways To Run Your Finances Like Successful Companies

  1. Avoid Debt. Apple, Inc. used to be a great example of this. Apple was formerly a completely debt-free company with billions of dollars in savings. In 2013, though, they decided to go into debt for a number of different reasons which included boosting their stock price, paying out dividends to investors, and taking advantage of our current U.S. corporate tax law. The decision to go into debt was really more of a strategic tax move and not a necessity to stay afloat, financially. Long-lasting wealth is built on the avoidance of debt in any form. In our personal finances, we would be wise to follow the ways of Apple, Inc., pre-2013! Get out of debt as fast as you can and stay out forever!
  2. Pile Up Cash. In our current economic climate, more and more companies are playing it safe: Apple, GE, Yahoo, and Caterpillar, just to name a few. These companies all realize that “Cash is King,” especially in an era of uncertainty. We should have the same mindset in our personal finances. Be sure to have a “baby” emergency fund of at least $1,000 if you’re still paying off any debt. If you’re completely debt free, then you want to have at least three to six months worth of expenses in accessible, liquid cash.
  3. Focus On Revenue Streams: products, traffic, clients, sales, and money. The best U.S. companies out there today have a laser-like focus on bringing in more revenue. They realize that revenue is the life blood for their company’s survival. Click here to see the revenue strategies for three major tech companies. In the same way, we should have laser-like focus on additional streams of income for our families such as side jobs, side businesses, passive income, dividend producing investments, and real estate. I highly recommend a couple of books on this subject from Robert G. Allen: Multiple Streams of Income: How To Generate a Lifetime of Unlimited Wealth and Multiple Streams of Internet Income.

Questions: How about you? Are you running your personal finances like these successful companies? Are you avoiding debt, piling up cash, and focused on revenue streams? Why or why not?






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Do Rich People Stuff And File Your Taxes As Late As Possible

Photo by Ken Teegardin

Photo by Ken Teegardin

Tax Season Is Upon Us

It’s tax season. Yippie!

(That was a touch sarcasm if you didn’t catch the tone of my writing voice.)

I recently finished doing all my family’s tax forms. I don’t really enjoy doing my taxes, but who does? This is mainly because I’m either really close to receiving a small refund or owing a ton of money. You see, I have the awesome privilege and responsibility of paying quarterly estimated taxes due to my status as an ordained minister.

My income taxes are not deducted from my paycheck each month, and I like it this way.

(And now, I probably just painted a bullseye on myself for an IRS audit.)

What this means for me, though, is that I need to plan, budget and save accordingly, so that I can pay my federal and state quarterly estimated taxes on April 15, June 15, September 15, and January 15.

In paying my income taxes this way, I experience the financial “pain” of my taxes. Most people don’t experience this same pain due to tax withholding from each paycheck. Believe me, it’s a totally different experience. The government knows and understands this, too. They don’t want the majority of the population to feel this kind of tax pain.

For 2013, I messed up my tax calculations for a couple of different reasons. Now, I owe a substantial amount to Uncle Sam next week.

While I’m not thrilled with the thought of having to pay a substantial amount of money in addition to what I’ve already paid, I am okay with it.

And why in the world would I be okay with owing the government a bunch of money? Because I have a different tax season financial mindset than your average American.

Two Different Tax Season Mindsets

Poor and lower middle class families typically file early in the tax season.

Why do they file early? I believe this is due to the fact that poorer people tend to view tax season as an opportunity to “make money.” They have structured their withholding as such that they have been enrolled in a one-year forced money-saving program.

The funny thing, though, is that they have essentially loaned their money interest-free to the government for a whole year. They lost the opportunity of using that money for an entire year.

The poor usually have regular income from only one or two jobs. Their tax forms are relatively clean and simple. They can fill out the forms quickly and begin the process of getting their money back.

The sad reality is that the majority of Americans who receive refunds have no real strategic plan for this money once they get it back from the government. They tend to go spend it on stuff that they probably don’t even need, and then the cycle begins anew for another year.

On the other hand, wealthier individuals and families typically file as close to April 15 as possible.

So, why would rich people choose to file so close to the deadline? Probably due to the fact that they feel the pain more of paying taxes. Their tax forms are more complicated. They have a variety of income streams. They have investments. They own a small business. They have more of a producer mindset rather than a consumer one. They understand the value of every dollar they earn.

Rich people definitely experience the pain of paying taxes at a deeper level than poorer people.

And, I wonder what would happen if poorer families had to pay their taxes like wealthier families? My guess is that we would probably experience a tax revolution in this country!

Here are some thoughts on how we can all shift our financial mindsets during tax season.

5 Ways To Shift Our Tax Season Mindsets

  1. Consider tax strategy in your overall budget process. I know when I plan my monthly budget, I want the largest amount of monthly net income in order to leverage what I need leveraged in my family finances, such as debt reduction, savings, and investing.
  2. Give the government exactly what it deserves. No more and no less. Yes, we should pay our taxes. As Christians, we need to be obedient to the laws of the land. But, handing additional money over to the government for them to use interest free for a whole year is not wise stewardship.
  3. Structure tax withholding and payments for equilibrium. You don’t want to owe, but you also don’t want to receive a massive refund, either. Consider meeting with a tax advisor or financial planner to achieve this tax equilibrium.
  4. Start some type of small side business and see your taxes and tax forms become more complicated. If your business is even moderately successful, you will need to pay estimated quarterly taxes. You will now experience the pain associated with paying taxes at a new level.
  5. Create a wise financial plan for any refund money that you may receive. You might consider using the money for debt reduction, savings, or investing. Otherwise, that money is going to somehow wander into Wal-Mart and be gone forever!

Questions: What is your tax season financial mindset? Do you think more like the poor or the rich? Do you file your taxes early or as late as possible? Why or why not?






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Whatever You Do, Don’t Manage Your Money Like Many Professional Athletes

Photo by yoyo du 33

Photo by yoyo du 33

From Riches To Rags

Broke. Tapped Out.

Would it surprise you to know that some of the greatest athletes of the last 40+ years are now poorer than dirt?

I’m talking athletes like Mike Tyson, Johnny Unitas, Latrell Sprewell, Dorothy Hamill, Scottie Pippen, Evander Holyfield, and Michael Vick.

All of these famous, well accomplished athletes have made millions upon millions of dollars in their careers, and what do they have to show for it? Not a whole heck of a lot.

On a percentage basis, professional athletes are the WORST money managers.

I recently read the following statistics when it comes to professional athletes and money: Around 78% of NFL players and 60% of NBA players go broke within five years of leaving the field, according to a Sports Illustrated estimate made in 2009 (Source: UK Guardian).

Just look at the life of professional boxer Mike Tyson.

At the height of his career, here’s what Mike was able to accomplish. He was the undisputed heavyweight boxing champion of the world. He was the youngest man to ever win the WBC, WBA and IBF Heavyweight Titles. Finally, he was the first man to win 12 of his first 19 fights in the first round by KO. His estimated lifetime earnings range from $300-400 million.

Yes, you read that correctly, $300-400 million!

But then, the wheels came off and his life fell apart. Mike Tyson’s story reads like the Great American Tragedy: domestic violence, bad press interviews, the death of his father-figure trainer, a nasty divorce, a federal rape charge, felony possession of drugs, a DUI, and a bloody ear incident.

And, at one point after this whole mess, Tyson was worth less than $700. Now, how in the world do you go from $300 million all the way down to less than $700?

3 Ways To Go Broke Quickly As A Professional Athlete

When you investigate the lives of professional athletes who have gone from millions to bankruptcy, you can definitely see a pattern that led them down a bad financial path. If I had to pick three areas that led these athletes in the wrong direction, then here are the three I would list:

  1. Fast Living. Sex, drugs, and rock-n-roll. If you want to make millions of dollars and lose it all, then simply live fast and loose. In this way, you can lose your career faster, go to court, land your butt in jail, get divorced, and then pay millions in alimony and child support. Yeah, that’s pretty easy to do.
  2. Toy Gathering. Expensive luxury cars. Multi-million dollar homes. Massive yachts. These are the high dollar items that get many athletes in trouble. But, this is what happens though when young athletes go from financially poor to massively wealthy as soon as they sign on the dotted line of an incredible contract deal. They don’t know how to handle that kind of wealth. So, they run out and go on spending sprees. Plus, they end up spending more than they actually make on stuff that will sharply go down in value within a few short years.
  3. High Risk Investments. Getting investment advice from those people closest to you (family and friends) is always a bad idea. But, when you look at these riches-to-rags athletes, this is definitely what you observe – rich people taking investment advice from other people around them who are just plain money hungry. Bad restaurant deals are pretty typical with athletes. The restaurant business is a brutal industry and not a wise place to invest large sums of money.

Questions: Ok, so you’re not a wealthy athlete, but are you making some of the same mistakes as these athletes? Are you living a questionable lifestyle that will damage your finances at some point in the future? Are you buying a bunch of stuff that is dropping like a rock in value? Are you making any risky investments that will come back to bite you in a few years? What decisions do you need to make, today, in order to put yourself in a better financial position?






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How To Craft A Christian Personal Financial Theology

Photo by UnlockingTheBible

Photo by UnlockingTheBible

Let’s Review

In my last post Do You Have A Philosophy Or A Theology When It Comes To Personal Finances?, we explored four separate money beliefs that I believe many Christians operate their financial lives through one of these four belief systems:

  • Money Belief #1: Money is worldly and a necessary evil to survive. Let’s not discuss it.
  • Money Belief #2: Money is a taboo topic for the church world, but I recognize that money is addressed in Scripture.
  • Money Belief #3: I know what God’s Word says about money. I like my money system better. Now, leave me alone!
  • Money Belief #4: I recognize that I am God’s financial manager. I will follow His instructions.

Unfortunately, I believe many of us as Christians have never connected the dots between the whole money issue being addressed throughout the pages of Scripture and our role as money managers for God. The universal church has done a poor job of teaching and preaching what God has taught us about money through His Word.

In my last post, we also looked at the definitions of “Philosopy” and “Theology.” In simple terms, a philosophy is a life theory invented by man. Man’s theories are flawed and imperfect. A theology is a system of belief based on Scripture. If we believe that God’s Word is holy and without error, then a theological system of belief is flawless and perfect.

I believe Christians today are operating under financial beliefs invented by man, not a system of belief founded upon the Word of God.

Crafting A Christian Personal Finance Theology

Now is a great time for Christians to return to God’s ways about money. We live in a world that is severely confused on how to handle money at any level whether it’s personal finances, business finances, or government finances. This is why we’re living through such difficult financial times in recent years.

So, as Christians, how do we put together a belief system that is completely based on God’s Word? How do we craft a truly Christian personal finance theology?

Here are my thoughts on how to develop a Biblical theology of money:

  1. Be a regular reader of God’s Word. Shocking, I know. That’s rocket science right there! Seriously though, if you want to know what God has to say about money, you need to be reading through your Bible consistently. Don’t just camp out on a single book of the Bible. Don’t just read the New Testament or only the Old Testament. God’s financial belief system is sprinkled throughout the entire Biblical narrative. You can’t just read the book of Proverbs and nail down your theology of money, although that’s a great place to start.
  2. Attend a Crown Financial Bible Study and Financial Peace University. When people ask me the difference between these two small group studies, this is my response: Crown Financial is more of a true Bible study that is heavy on Scripture and truth. Financial Peace University is a practical, step-by-step financial plan based upon Biblical principles. I have done both, and I highly recommend both for a solid foundation in developing a theology of money.
  3. Google it! Again, I’m sure this is all rocket science that never even occurred to you. Type in the search bar “Bible verses about money” and you will receive 3,350,000 results! I’m looking at the search list, and I’m seeing some great pages to open up and explore.
  4. Read blogs that address personal finances from a Biblical perspective. There are many great Christian personal finance blogs out there, today. Here’s a list of the ones I’m most familiar with:
  5. Be sure to focus on these main areas in developing a Biblical theology: giving, tithing, saving, spending, debt, investing, business, contentment, planning, and stewardship. Check out this great article that addresses these issues and more: 250 Bible Verses about Money.

Questions: Have you ever gone through the process of developing a solid, Biblical theology on money? What other steps have you taken in developing your theology on personal finances?






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