Why You're Still In Debt

I call it a 3 a.m. moment. It's the instant you realize that you need to do something about your debt. Maybe it doesn't happen at 3 a.m. necessarily. Maybe it happens when you look at the next credit card bill, or when you go to write that massive check for an unexpected car repair. It's like waking up in the middle of the night with the horrible realization that you forgot to do that very important thing.

So you decide to make a change. You even get a little angry about it. That "3 a.m." moment made you determined to get out of debt for good!

Buuuuut it didn't take. After a while, your conviction waned and now, sadly, you're still in debt.

What keeps people from getting out of debt? Why would someone want to stay in chains instead of living in freedom? Sadly, there are all sorts of reasons people choose MasterCard over being free from debt, but here are a few:

1. They want to keep up appearances.

This is what realty TV has got us trained to do—keeping up with the Joneses, or, to many, the Kardashians. But most people who appear to have it all really have a steep mortgage on that million dollar home, and a lease on that expensive car, and a Visa card that's maxed out. These are some of the most broke people in your neighborhood! Trying to keep up appearances with anyone is nothing but your ego taking a stroll on the uneasy side and it will lead to bankruptcy if you're not careful.

2. They are unwilling to sacrifice.

When Danielle and I got married, I couldn't fathom not going out to eat at least once a week. But it was a sacrifice I eventually made. Now we go out to eat once every few months. If that. And you know what? It's not as dreadful as I imagined it would be. We have since come to sacrifice many other things in order to get ahead—cable TV, high-speed internet, Netflix, vacations. This doesn't mean we have to do without these things forever, but the savings we've accumulated over the last two years is precisely why we are currently debt free! It’s about priorities. Here’s the question: What are you willing to sacrifice?

3. They’re addicted to stuff.

During my time as a UPS driver I had two stops on my route to women who were full-blown shopaholics. It was a rare day that I didn't stop at their houses with multiple packages from amazon.com. A love of stuff isn't that hard to understand, really. I mean, who doesn't like stuff? Heck, I LOVE stuff! And learning not to impulsively purchase everything we want isn't easy, because, for some reason, the more we have, the more confident and powerful we feel. But it's all a fraud! Eventually, stuff just weighs us down.

4. They don’t know how. 

A lot of people get those "3 a.m." moments and want to kick their debt to the curb, but they just don't know how to do it. Our culture, with its mentality of immediate gratification, has trained people to look at their mountain of debt and see it as something too big to bother with. Quick and easy, that's what people want. Hard work? Forget about it! But hard work and discipline is exactly what it takes to get your debt under control. That, and a plan. Thankfully there are plenty of solid, reliable budgeting programs to help you out—be it Crown Financial or Dave Ramsey, for example. You may have to plunk down some cash to get the program or take the course, but it's well worth the investment.

5. They’re lazy.

Some people know what to do. Maybe they know about the debt snowball and they sorta, kinda want to get out of debt. They know how debt can negatively affect their marriage, their stress levels, their relationships, and their future; they know that buying expensive coffees and cable TV packages and newer, more expensive cars and clothes isn't a wise move, but they just aren’t motivated to make a change. And that's... well, embarrassing. Especially if you've got kids. It's now not only your life you're ruining but theirs because they're going to learn their financial habits from you.

Every day, people are making the decision to get out of debt and change their lives. They’re ready to sacrifice and get rid of their fear of change or their addiction to stuff. If you're ready to take that leap, we can't recommend Dave Ramsey's Financial Peace University enough. It saved our finances and our marriage.

If a lazy, stuff-lovin' bum like me can make this change, then anyone can!

Keep pinchin' :-)

How Financial Stress Can Lead To The "D" Word

Jake and I were recently talking about how hard our first two years of marriage were, specifically the first year. We have publicly stated before that had we not taken Financial Peace University, we may not be married today. That statement is not something I am proud of, but it is also not much of an exaggeration!

Debt, finances, and no real money-management plan can cause a lot of stress on a relationship, and when that relationship is fairly new that stress can be hard to bear!

I remember there were times when we would just walk away from an argument and not speak because frustration, misunderstandings, and hurt had caused both of us real pain that we didn't know how to communicate.

Even after we started budgeting there were times that our financial meetings ended with me in tears and the hubby frustrated that we still weren't on the same page or that our money didn't seem to be doing what we wanted it to.

We had made a promise to each other to never mention divorce, not even jokingly. It is a word we just don't want in our vocabulary. Still, in the midst of those first couple years, we both contemplated how we were ever going to make this marriage work, and whether or not we even wanted to.

Fast forward to where we are now.

This summer has been amazing, not that our marriage still hasn't had its challenges, but because we've become more united in our goals. We've begun to cement as a team with a single vision of where we want to go with our finances, our family, with God.

When we decided to sell our house it was a huge relief to both of us. After living there for almost two years we realized that it was way more house than we needed, more work than we could handle, and really not in the location we wanted to be in. So, a few weeks ago, we packed up our bags and moved in with Jake's beautiful grandmother, one of the sweetest ladies you'll ever meet. The situation is mutually beneficial for all of us because having us there at the house helps Grandma and also gives us some time to save some money and invest a little more time in finding our dream home.

Some may consider moving in with family a step back, but for us it has been freeing. I don't completely regret buying our big old homestead because while we were living there we learned a lot about what we really want in a home, what we really need, and where we want to be.

The weirdest part about all of this, however, is that even though we're probably facing more stress than ever right now—with trying to sell the house, with Jake possibly losing his job soon—we're dealing with it much better than we would have a couple years ago. Instead of all this stress driving a wedge between us it has become something we can come together about, praying and trusting that God has a plan in it all, and being thankful that we do have that 3-6 months savings set aside for these uncertain moments in life.

I think the reason we are both so passionate about Financial Peace University is because of how it helped not only our finances but our marriage.

If you're facing marital problems, won't you let us pray for you? Click the contact button above. And if you'd like more information about Financial Peace University, ask us!

Keep pinchin'

Breaking Free Part 5: The Art Of Sustainable Sacrifice

It's been two years since Danielle and I started down this road toward debt-free living. It's been a challenge, a fun ride, a ministry, and a blessing, all rolled into one adventure. This week we'd like to look back on our journey, share some of the intricacies of how and why we do it, and hopefully encourage you to gain some ground in your financial battle.

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Saying that I don't complicate things is like saying a full moon doesn't throw a monkey wrench into the Wolf Man's daily grind.

I have a tendency to immediately over-think and over-complicate things, but when Danielle and I first started budgeting I forced myself to be intentional about keeping it simple. In fact that's one of Dave Ramsey's key points in Financial Peace University. He calls it KISS: Keep It Simple, Stupid.

So, first, we followed the plan. Simple.

Then we wrote our entire budget out on paper to make it easier to work with. I even used a pencil instead of a pen. Simple.

When we compiled our budgetary needs we put them into a small number of categories. For example: instead of having budget lines for cleaning supplies, tools, and home repair, we have one line item called Home Needs. See? Simple.

We found that a successful budget needs three main things in those first few months:

1. Discipline. You've got to keep at it. You've got to do the work. You've got to set it up and make your money work for you.


2. Realistic expectations. Unplanned expenses are going to happen, and the money to cover them has to come from somewhere.


3. Flexibility. A budget is rarely going to work properly from the get-go. It will need adjustment.

After about six months we had the budgeting thing down to a science.

Spend Less, Earn More

When it comes to paying off debt, Dave Ramsey points out that the two things that contribute the most to attacking debt are spending less and earning more. I'll give Danielle the most credit when it comes to earning more. That girl can work like a dog when she's got a goal. She took a lot of extra jobs on top of her full time job to earn extra money.

And when it came to spending less we both made a lot of sacrifices. We didn't cut out restaurants and movies at first, but over time we cut back at these things more and more with the understanding that we couldn't give them up forever.

That's what sustainable sacrifice is all about—sacrificing unnecessary expenses to accelerate progress for a period of time. The idea is to stay motivated as you see your sacrifice enabling you to get ahead in other areas financially. If you can get debt free in one year by sacrificing deeply, go for it! Otherwise, take a good look at your budget and determine what expenditures you can cut back and for how long.

In our case, we knew we'd have to sacrifice for about five years at least, and we made decisions based on what we thought we could handle for that amount of time. Had we gone into it without a determined timeframe we—mostly I—would've gotten too discouraged and probably given up.

I Gotta Have My Cookies

Sustainable sacrifice isn't about depriving yourself of everything you enjoy. It means being intentional about telling your money where to go. If you want to spend some of it at Dunkin Donuts, that's fine, just make sure you plan for it. Otherwise you get fat.

Oh, wait. Wrong topic. Well, it still sort of applies. See, now that my wifey is into being a Beachbody coach, and now that I've seen the tremendous success she's had with eating right, I've decided to work on adding a better dietary plan to my workout routines. But, like my personal spending money, if I don't have some junk food to look forward to I'm going to get real discouraged real fast.

So I prepared an entire batch of chocolate chip cookies and divided them up into little freezer bags of three. Every Saturday I know I have that beautiful, chocolaty sweetness to look forward to. If i didn't have that, I wouldn't keep track of what I was eating. A candy bar here. A brownie there. I wouldn't know from one week to the next how much junk food I was eating.

Knowing I've got cookies coming on Saturday makes the sacrifice during the week sustainable.

Sustainable sacrifice.

Now, just as a quick side note, the types of sacrifices that move the debt needle the fastest are monthly sacrifices like cable TV, subscriptions services, and the like. Maybe for this summer you decide not to purchase a golf membership. (I know, heresy!) Or if cutting out television entirely isn't an option, maybe a cheaper package with fewer channels is the way to go for the next year.

Making sustainable sacrifices will help you make progress, which will help keep you motivated to make more sacrifices to keep on keeping on.

What sacrifices have you made to dump debt?

Other posts in this series:
Part 1: My Personal Wake-Up Call
Part 2: How To See Some Hope
Part 3: Overcoming The Comparison Trap
Part 4: The Things We Didn't Give Up

Breaking Free Part 4: The Things We Didn't Give Up

It's been two years since Danielle and I started down this road toward debt-free living. It's been a challenge, a fun ride, a ministry, and a blessing, all rolled into one adventure. This week we'd like to look back on our journey, share some of the intricacies of how and why we do it, and hopefully encourage you to gain some ground in your financial battle.

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Too often Danielle and I harp on all the sacrifices we've made. No movies. No restaurants. No this. No that.

Woe is we!

Although it's the sacrifices that are the hardest, there's lots of other stuff that we DON'T sacrifice. Like Superman holding back that train, or a fly bouncing against the glass, we're determined not to surrender these things, stubbornly holding onto them in dogged determination to retain some sanity in the midst of all the sacrifices.

This is kind of an essential part to this whole journey, actually. Because you can go too far with all the penny pinching, the budgeting, and the Dave Ramsey fanfare. To really be successful—and to not go crazy—you've got to be stubborn in some areas. So here are some of the things that Dani and I have refused to give up.

(Also note that these things are different for everyone. What you chose to keep might be totally different.)

Giving

I'm a natural giver. I love blessing others, but I always wish I could give more. In the past I wouldn't hesitate buying a birthday present for someone that cost more money than I could afford. "I'll get my paycheck next week," I'd tell myself. "I'll just pay for it then." But that's not a good habit to get into. Like Dave Ramsey is fond of saying, "Live now like no one else so that tomorrow you can live and give like no one else."

So, someday, Danielle and I will have the money to "give like no one else," but for the time being we need to be a bit more conservative. Still, we like to give, to others and each other. So we have a fund for birthday presents, Christmas gifts, baby showers, weddings, and anything else that may come up. It's not a lot, but it's what we can manage for now.

Tithing

Apart from giving to others, Danielle and I believe that, first and foremost, we need to give to God. Tithing honors Him, it reminds us that everything we have comes out of His hands, and it increases our faith. We have never not tithed since the day we got married, and we intend to keep it that way. The missed blessings of not tithing aren't worth the risk.

For a more detailed look at tithing in the midst of paying off debt, see our post: Is It Ok To Stop Tithing To Pay Off Debt?

Investing in My Photography

As much personal enjoyment as I get out of my craft, photography can be a big money earner too. I can make more money shooting one wedding than I do in a week at my day job. In our rural area of the country, however, it's hard to keep photography work steadily coming in.

Still, in order to make money, we need to spend money, which is why 50% of all money earned through my photography goes into a fund to maintain equipment, buy new lenses and filters, and market my services.

Healthy Living

When we first got married Danielle thought we could survive on a $40 grocery budget.

When you're done laughing I'll continue.

Finished?

Ok.

The problem was she didn't know how much a 30-year-old man with a daily calorie intake of 2,000 would need to eat. And when that number goes to 2,750 during workout periods that can amount to a whole heckofalot of food. Since Danielle started getting into all this health and fitness stuff through Beachbody.com she found that she needed more food to fuel her body as well, not to mention the fact that healthy food simply costs more money.

So over the last two years we've upped the grocery budget twice. We've decided that even though we can eat more cheaply, the types of food we'd be eating aren't worth it. Our physical livelihood and general health are more important than a few extra dollars. So we're making the investment in healthier living, and so far it's been worth it.

Pocket Money

I need my pocket money.

No. You don't understand. I neeeeeeeeeeed my pocket money.

I would lose my mind if I didn't have some dollars, unencumbered by some budgetary requirement, to spend at my leisure. So both Danielle and I get a little money every week to spend however we want. It's not much, but it helps make the rest of the budget feel doable.

For all the other spenders out there, I can't stress enough how much easier budgeting is when there's a little money set aside just for you. It does wonders for your mental health, and it actually helps keep the whole budget on track because without that little bit of "fun cash" one might be tempted to dip into other areas of the budget.

No matter where you are in this process, it's helpful to remember that this is only for a season. Danielle and I know that even though we're dramatically scaling back in many areas, it's not going to last forever. Our spending habits and the sacrifices we make are going to look dramatically different when we're debt free!

So what things have you been stubbornly refusing to give up? Or is your budget too tight? If so, what things do you think you could introduce—like tithing or pocket money—that might give you a little bit of your sanity back?

Other posts in this series:
Part 1: My Personal Wake-Up Call
Part 2: How To See Some Hope
Part 3: Overcoming the Comparison Trap

The Horrendous Healthcare Hunt, Part 2: The Why

Stock photo by Kurhan
www.freeimages.com

I know. I know! I said I was done shaking my fist at the government in my last post about healthcare, but the truth is I just don't shake my fist as often. Still, every time the subject of healthcare comes up I turn toward Washington and extend an obscene finger—not really, but I'm thinking it.

And Dani and I are not alone. There isn't a single person we know who doesn't roll their eyes at the mention of our country's laughable "affordable" healthcare system. Almost everyone within our circle of family and friends has had to make radical life adjustments to their finances, their jobs, or living arrangements in order to be able to afford the massive expense of Obamacare.

Dani and I have been on the hunt for affordable healthcare for the last couple of months, looking at several Christian sharing programs. We'll blog about what we've found on a later date—so stay tuned—but for now I wanted to address the "whys" behind our reasoning.

Yes, it has a lot to do with the fact that we literally cannot afford insurance through the Affordable Care Act—informally known as Obamacare, which is what I will call it from this point on because I can't type "AFFORDABLE Care Act" without laughing so hysterically that I lose the ability to type. But, seriously, we CAN NOT afford it. We would have to go hungry or forgo putting gas in the car or not pay our mortgage in order to get the government's insurance.

But there are other reasons that we oppose it—reasons I believe every Christian should hold to.

WHY #1: Caring for the sick isn't the government's job.
Let me paint a picture for you. I love my wife. I'm sure that you want me to love my wife. You can desire for me to love my wife all you want, but it's not your role to love my wife FOR me. You would be taxing yourself too much if you tried to love my wife... and your neighbor's wife... and all the wives in the world. It's just not up to you.

The same goes for the government regarding health care (among other things). The government's role is to do things like protect our borders, execute justice, and fight threats (Romans 13:4, 1 Peter 2:13-14, the Preamble to the Constitution). They are not tasked with caring for the sick.

What begins to happen when the government steps in and starts doing things it's not supposed to be doing is tyranny. In regards to health insurance, when the government starts handling healthcare it cannot help but intrude upon people's lives and impede their freedoms.

WHY #2: Obamacare creates bondage, not freedom.
An addict is enslaved to their own addiction. A non-believer is in bondage to sin. Obamacare claims to allow choice, but does so within such strict confines that true freedom doesn't exist. In actuality, Obamacare creates bondage. When we do not have the freedom to choose if or how we want to spend our earnings, then we are in bondage. And with Obamacare we are in bondage to the government.

Scripture is clear on this: God hates slavery. He sent his only Son, Jesus Christ, to die on the cross to free us from slavery to sin. The Apostle Paul warns us not to become slaves to men (1 Corinthians 7:23).

Ultimately, Obamacare is theft, but, unfortunately, our government has come to believe that the ends justify the means. Stealing from one person to give to another—even if it is for a good cause—has become acceptable. Anytime money is taken from us involuntarily to fulfill a purpose not expressly stated in our Constitution, it is theft, even if it's for a good cause.

WHY #3: Obamacare violates Biblical truths that we hold sacred.

One of the worst aspects of Obamacare is that it forces Christians to violate their conscience and subsidize things like abortions, sterilizations, and contraceptives. The government should not put itself above the Christian principles upon which it was founded. In the New Testament, Peter says that Christians must obey God before men (Act 5:29). And when it comes to Obamacare, we will NOT participate if it means murdering innocent babies.

WHY #4: Lowering healthcare costs through the government is a lie.
One of the biggest lies perpetuated by Obamacare is that government regulation can lower healthcare costs. But think about this: the government gets its money from the people it governs. If it decides to enact a massively expensive healthcare program, who is going to pay for it? The people of course! When the government demands that everyone have health insurance, healthcare costs are going to increase for two reasons: 1) demand increases, and 2) competition decreases. Government oversight actually raises healthcare costs exponentially.

The goal in any free economy should be to shop for good medical care like you shop for a good mechanic. With healthy, economical competition among healthcare providers, costs go down. This is what should happen in a free society. This is the kind of society our forefathers wanted to establish, and the kind of society my grandfather fought for.

WHY #5: America needs to become more responsible with its debt.
Obamacare has inflated our national debt beyond anything anyone ever could have imagined. We are currently spending as a nation more money than we possess. This is NOT good financial stewardship! This is NOT being responsible! God's warnings against debt are all throughout Scripture, and they don't apply just to individuals, but families, businesses, and nations too.

For Dani and I, the main reasons for not wanting to be a part of Obamacare is the way it violates our Biblical beliefs, robs us of our freedom of choice, and the massive expense of it. We are hopeful that some day a different solution will be found, but until then the horrendously time-consuming, difficult task of finding affordable healthcare continues.

Keep pinchin' :-)

Click here to read "The Horrendous Healthcare Hunt Begins."

10 Financial Principles Straight From The Bible

It amazes me that Dani and I, who both grew up in Christian homes, who were both saved at young ages, didn't start learning all of this financial stuff until we were married. In the 16 months since taking Dave Ramsey's Financial Peace University we have discovered a whole world of biblically-based financial advisors, blogs, websites, books, and more that talk about managing your money from a God perspective.

Neither of us learned this growing up. I never once heard it preached from a pulpit. I never remember hearing it on Christian radio. Maybe the whole trend of managing money God's way is just now starting to catch on, but I also think it's sad that more pastors don't preach this stuff. The more I learn, the more I think, "It's so obvious! Why didn't I get this sooner, and why aren't more people doing it?"

Here are 10 financial principles straight out of the Bible that I'm, A) stunned I never heard about before, and, B) want to pass on to someone else so they don't waste their life digging themselves into debt. Because, let's face it folks, America isn't getting any better. The government is not going to protect your assets, your 401k, or even your hard-earned retirement. Don't count on it. Put your trust in the only thing that has proven trustworthy: God. The following financial principles are tried and true. They're real, and if put into practice will change your financial future.

1. God is the source of everything. Learn this. Learn it now and it will make the rest of your life a lot easier. All throughout Scripture we're taught that everything we have comes from God and we give it out of His hands. God owns it all, from the earth (Psalm 24:1) to all the silver and gold (Haggai 2:8) to me and you (1 Corinthians 6:19–20).


2. Giving isn't a good thing to do, it is an ESSENTIAL thing to do. Like I blogged about yesterday, Deuteronomy 14:23 tells us that tithing wasn't created for God's benefit, but ours, to teach us that God comes first. The Bible encourages us to give a tithe to the Lord (Proverbs 3:9, 10) from the "first fruits" of our earnings—yes, that's before taxes. The book of Hebrews suggests a tithe should be 10%.


3. You've got to allow some room in your life for the unexpected to happen. By all means, make your plans and live out your plans, but do so with an understanding that God may ask you to do something different. The Apostle Paul was running around murdering Christians when God radically changed the direction of his life. The same goes for the disciples, as well as Jonah, Job, and countless other Biblical figures.


4. Set something aside for a rainy day. The Bible says that only a fool spends everything he has, but in the house of the wise are stores of choice food and oil (Proverbs 21:20). We should all be setting aside a little bit of what we have because no one is exempt from hard times. A house fire. A lost job. Sickness. The Bible essentially says that not planning for hard times is idiotic.


5. Avoid unnecessary debt. As I've written about before, the Bible doesn't necessarily condemn or condone debt, but it does strongly caution against it. In fact Proverbs 22:7 essentially calls anyone who is in debt a "slave to the lender." Debt isn't usually worth it. Stay clear of it.


6. Be content with what you have. Despite what cultural philosophy might tell you, happiness is not found in the "American dream" or by having more money, better cars, or bigger homes. Scripture teaches that covetousness and lust are wayward desires of the flesh that just pull us away from Christ. Just read The Ten Commandments.


7. Keep records. People who run their businesses without keeping records are morons. Their businesses fail. No intelligent person would run a business like that, yet it's how we run our lives every day. Proverbs 21:23 says to be diligent in knowing the state of your wealth, and 1 Timothy 5:8 says—and this is the heavy one—"If anyone does not provide for his own, especially for those of his household, he has denied the faith and is worse than an unbeliever." So know what you've got and what you're doing with it.


8. Don't go into debt with someone else. Cosigning on a loan? I'd hesitate on that one. Proverbs 27:13 suggests that poorest credit risk you could take is to agree to pay someone else's debt. Think about it, the only reason a lender requires a co-signer is if they don't trust the borrower to pay the money back. If you agree to cosign, this means that the lender is smarter than you!


9. Don't be afraid of hard work. The Bible doesn't pull any punches on this one. God values labor, and richly rewards those who aren't afraid to work hard (Proverbs 14:23, Proverbs 28:19). This whole concept of work is all throughout Scripture. God worked to create the world (Genesis 1:1), and when Jesus called the disciples away from their fishing, it wasn't so they could just follow Him around and listen to Him preach, it was to make them "fishers of men." A different kind of work.


10. Seek Godly counsel. The Bible says that people who seek the counsel of the Godly are blessed (Psalm 1:1, Proverbs 15:22). If you need financial advice, don't talk to friends and family members who are just as in debt as you are. Talk to your pastor, your elders, and, above all, seek God's guidance through prayer and His Word. And be prepared to hear hard things because they're most likely going to tell you that some of your financial decisions are downright stupid. But if they won't tell you, who will? And if they don't tell you, where does the roller coaster of spending and debt end?

Keep pinchin' :-)

This blog was inspired by an article by Christian financial advisor George Fooshee. Click here to read his 10 biblical financial tips.

Jake's Take: A League of Their Own - It's The Hard That Makes It Great

Deriving financial insights from today's blockbusters and yesteryear's classics.

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Economically, times are tough right now. Most people are sailing into financial headwinds with no idea of what they’re going to do to get survive. In tough tough times, the mettle of individuals is tested and their resolve to hold fast to their financial goals is put through the ringer. But you know what?

“It’s the hard that makes it great.”

There’s a wonderful baseball comedy from 1992 about the short-lived all-female baseball league during World War II. Geena Davis plays Dottie Hinson, a level-headed gal waiting for her husband to return home from the war when she decides to take up baseball. To everyone’s surprise, she’s not just good at it, she’s amazing.

By the end of the film, however, Dottie is facing a whole host of issues: she and her sister have become rival opponents, her husband returns from the war, wounded, and her team is about to enter the playoffs. Dottie decides to quit the team and return home, which is when the team’s manager, played beautifully by Tom Hanks, confronts her, demanding to know why.

“It just got too hard,” Dottie says.

“It’s supposed to be hard,” Dugan retorts. “If it weren’t hard, everyone would do it. It’s the hard that makes it great.”

Now, granted, saving money and paying off debt is hardly the level of great as the all-American sport of baseball, but Dugan’s point remains: if it were easy, everybody would do it. If it were easy, no one would be in debt. If saving money were easy, we wouldn’t be in the economical straight-jacket we’re in. It’s hard. But it’s the hard that makes it worth it.

No matter what you’re facing right now, don’t give up. Maybe it’s a lost job, maybe it’s medical bills, or school. Accept the fact that these challenges are going to slow you down, maybe even set you back, but they will pass. Keep moving forward. Getting out of debt and building wealth is going to get hard, but the biggest reward is going to come to those who persevere in the hard times.

Keep pinchin' :-)

Don't Be A Toadie

It amazes me sometimes just how deep, and how often, people get into debt. I'm not pointing fingers. I'm guilty of this. Just ask my wife. People like me who enjoy spending money are always in danger of spending too much. The discipline of reeling ourselves in takes time and practice.

I'm sick of being in debt. It's one of the main reasons I've decided to strive for debt-free living with "gazelle intensity," as Dave Ramsey says.

But there's another reason I want to be out of debt: I don't want to be a toadie.

Humans are like toads sometimes. You put them in a frying pan and turn up the heat, and the little toadie will cook to death because he doesn't sense the gradually rising heat (or so I've heard. I don't think MythBusters has done an episode on this yet. PETA probably won't let them). Just like that poor little toadie, those of us who attract debt just sit there as the mounting threat of debt builds around us. We start to sweat under the pressure as the heat rises. It takes a lot sometimes to realize that that sizzling sound isn't a barbecue. It's our butts!

You can always tell who the toadies are too. They're the ones living in a run down trailer with a six different satellites attached and a brand new 4X4 parked out front. They're the ones with high blood pressure. They're the ones who can barely afford to pay the rent, but go to the movies every week, buy gourmet coffee every morning, and eat at restaurants like they're going out of style.

UrbanDictionary.com defines "toadie" as someone who is a side-kick, a tag-along, someone who does the dirty work. Like people with too much debt—they're not walking around with a credit card in their pocket; it's the credit card that's walking around with a toadie attached, tagging along, spending and spending and spending. The dirty work.

I don't want to be a toadie. I don't even want to look like a toadie. When people look at my house I want them to see evidence of a good steward. I don't want to be embarrassed by my purchase history. I'm done living in the frying pan of debt collectors.

Keep pinchin' :-)

Jake's Take: Die Hard - If It Works On Terrorists...

Deriving financial insights from today's blockbusters and yesteryear's classics.

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It was Bruce Willis’ claim to fame and it’s one of my all-time favorite movies: Die Hard. Sure it’s loaded with blood splatterings, gunfire, explosions, and profanity, but Die Hard is a classic example of the action flick at its best.

And Die Hard has some great lessons to teach us about the mind set that we need to have when we approach budgeting. Trust me it does. It has to. I’m writing a blog about money management and I love Die Hard, so I’ll squeeze a metaphor out of it if it kills me.

The hero of the story is John McClane, an under-appreciated, down on his luck, New York City cop who flies out to California to reconnect with his wife and hopefully save his marriage. While attending a Christmas party at her office building, McClane and all the company employs get trapped on the 40th floor when a group of terrorists seize control of the building with hopes of acquiring the $640 million stored in the company vault. Slipping away from the baddies, McClane becomes everyone's best hope for survival. But he’s a fish out of water. He’s got no phone, no technological know-how, and no shoes.

McClane’s biggest asset is his method to approaching to conflict—simplify. He’s not good with computers (in fact he’s utterly baffled by a touch screen monitor). He doesn’t understand electronics, and he’s not motivated by greed or ambition or money. He's good at being simple because John McClane is a simple guy, and throughout the movie he’s continually breaking down his challenges to the simplest fundamentals.

Too many bad guys in the ways? Use bullets.

Bad guys shooting up police officers? Drop a bomb on their heads.

Roof about to explode? Jump off…. but first tie yourself to a fire hose.

Granted, his ideas aren’t always the greatest, but it is his ability to simplify that saves his life again, and again, and again.

Like John McClane, we need to take a more simplistic approach to money management. It’s not all facts and figures and calculators and spreadsheets and computers. Sometimes it’s just good old fashioned discipline and common sense. Maybe you don’t need a budget with 40 categories. Maybe 20 will do just fine. Maybe if your spouse can’t understand the colorful spread sheets you’ve set up in the computer, maybe it’s time to just write it down on paper. Whatever the case may be. Simpler is better. If it works on terrorists it'll work on your bank account.

Keep pinchin' :-)

Jake's Take: Rocky - The Way Winning Is Done

Deriving financial insights from today's blockbusters and yesteryear's classics.

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There is hardly any other film series that has been as good, or inspired more generations with its tear-jerking rags-to-riches tale of love and determination than the boxing epic Rocky. One can extrapolate countless life lessons from the ground-breaking original 1976 film, and the five sequels that followed—lessons for business, morality, integrity, relationships—but when it comes to money management, one lesson holds the title.

It is a well-known Hollywood tale that when Sylvester Stallone wrote the original script for Rocky, numerous studios wanted to buy it as a starring vehicle for big name actors like Burt Reynolds, James Caan, and Ryan O’Neal. But Stallone, even though he was penniless and out-of-work, refused to sell the script without a guarantee that he’d also star in the film. Much like his character Rocky, he was determined to go the distance no matter what. Eventually he got someone to bite, and the film went on to win dozens of awards including the 1977 Oscar for Best Picture.

Rocky is the ultimate story of determination, of a man whose drive to win pushes him beyond his limits. In the film, Rocky takes a beating against boxing's champion Apollo Creed, and just when the crowd and the judges, and even Apollo himself, think Rocky is going to go down and stay down, he rises again.

It’s what Dave Ramsey calls it “gazelle intensity.”

Paying off debt is rarely a one, two punch. It’s 15 rounds with Apollo Creed. Along the way there are going to be setbacks, black eyes, broken noses, pain, and tears, but, as Rocky says: “It ain’t about how hard you hit, it’s about how hard you can get hit and keep moving forward, how much you can take and keep moving forward. That’s how winning is done.”

Keep pinching’ :-)

The Debt Snowball: Why It Works, How It Works

It's been 16 months since Dani and I first went through Financial Peace University, and in that time we've completed the first three baby steps. We're just now getting around to thinking about things like insurance and retirement planning, so I'm sure we'll have more to say on those topics in the months ahead.

For now, we're experts on the "debt snowball." What is a debt snowball? How is it supposed to work? Essentially the debt snowball is a behavior modification plan. It's purpose is to get you to start thinking differently about money. It's also designed to motivate you by getting you to pay off some smaller debts more quickly.

When you were a kid, making snowballs usually started with a small pinch of snow, then you added to it and added to it until you could roll it into a nice little aerial projectile of devastation. Rolling was key to making big snowballs because they got bigger quicker when you rolled them. That's exactly how Dave Ramsey's debt snowball plan works.

Start by listing your debts smallest to largest, and ignore the interest rates. It doesn't matter if it has a 2% interest rate or a 22% interest rate. Forget about it. This is behavior modification and motivation, not math.

Pay minimum payments on all the debts except the smallest one and then attack that one with a vengeance. Once it's gone, take the money you were putting toward that debt and add it to the minimal payment on the next smallest debt. Once that's done, take that combined payment and go to the next one. Knock them out one by one.

The reason you start with the smallest debt first is because if you start with the largest one you won't see it leave for quite some time. You'll see numbers going down on a page, but that's it. Eventually you'll lose steam and motivation and you'll probably end up quitting. But when you attack the small debts first you see progress. When you see the plan working, you'll be more inclined to stick to it.

The only time you might make an exception is if one of the debts is to the IRS. You don't want them hovering over you, so pay off that debt first, then proceed down the list of other debts, smallest to largest, using the debt snowball method.

Dani and I had about 19 months of payments on a car, a motorcycle, and a credit card when we started to employ the debt snowball method. In about six months our debt was GONE! This. Plan. Works!

If you want more details about the debt snowball including an example, Dave Ramsey explains it best here: How The Debt Snowball Method Works.

Keep pinchin' :-)

Seven Things I Really Don't Need: Part 1

Dani and I have approached the halfway mark in our facilitating of Financial Peace University at our local church. The Bible-based money management program has attracted about 60 participants, some of whom are beginning to experience some success in their battle against debt.

This week's lesson was about the marketing gimmicks that companies and advertising gurus use to lure us into buying tons of junk we don't need. Think you're immune to their schemes? Think again. A lot of their tactics are subliminal and extremely, extremely clever.

Back in 2006 USA Today reported that some stores have experienced an increase in sales by manipulating people's sense of smell. The Sony Style store, for example, pumps the subtle fragrances of vanilla and mandarin oranges into the store to make you feel so relaxed that you let your guard down. Bloomingdale's uses the faint whiff of baby powder in the baby section and suntan lotion in the summer aisles to help entice people into buying related products.

Companies do extensive studies to figure out how best to hit you. A study of credit card use at McDonald's found that people spent 47% more when using credit instead of cash. It's easier to spend more with a credit card. Plain and simple. And companies are doing surveys and focus groups and other studies every day to learn how to target us—you!—and make you buy stuff.

Repetition. Product placement. Logos. Radio. TV. We all like to think that those advertising schemes are tricking other people, but just because you may be aware of their methods doesn't mean you shouldn't be on your guard.

Dave Ramsey—the guy behind Financial Peace University—lists seven things that people are continually tricked into purchasing that we really don't need. I'll list his seven things, and then I'll list mine (things that are pitfalls for me that I know I don't need, but I sometimes end up buying anyway).

1. Luxury cable TV packages.
2. Private schools.
3. Elaborate vacations.
4. Eating out.
5. Expensive gadgets.
6. Name brand clothing.
7. Expensive hobbies.

Dave doesn't deny that the above things are fun from time to time—a vacation on the beaches of Florida sounds nice, doesn't it? So does a round of golf with the guys!—but when you're struggling to get out of debt there are sacrifices you have to make. Those seven unnecessary things listed above are great places to start. You don't have to sacrifice them forever, but if you don't start taking the right steps toward financial freedom then you'll simply never get free.

Now, for me, I don't watch a lot of TV, and neither does Dani, so we don't have any kind of cable or satellite TV package. There's a few shows that we like to watch, but we can usually find them online. Neither of us are really into expensive gadgets or brand name clothing, and we don't have any expensive hobbies. But we're not without our pitfalls. Trust me! Want to know what mine are?

Tune in tomorrow!

(You're hooked now aren't you?)

Why It's Important To Live Debt Free

If you were to ask me why my wife and I are penny pinching, why we believe in a good budget, or why it's important to us, I could quickly rattle off a few reasons.

• I like stuff, and by saving money now I'll be able to buy more stuff later


• I want a Mustang someday and getting out of debt will help me get that


• I like making my wife happy. Happy wife, happy life, right?


• I like not being independent and not obligated to credit card companies

Notice that each one of those points starts with "I." They're all very selfish, I admit it. It's like Dave Ramsey says in his Financial Peace University, "Live now like nobody else so that tomorrow you can live like nobody else." Don't get me wrong, I'm not condoning selfishness, and the list above is meant to be taken in jest, but my point is: there are many good personal reasons for penny pinching.

But there's a deeper reason, and a far more important one. God doesn't like debt. Romans 13:8 advises believers to owe nothing to anyone except love. At the same time, however, the Bible does not explicitly command against all forms of debt, nor does it expressly forbid or condone the borrowing of money. Essentially, the Bible offers a strong warning when it comes to borrowing money, saying that debt makes the borrower a slave to the lender (Proverbs 22:7).

Slavery. That's not something God likes either. He sent Jesus Christ, His only Son, to earth to die in order to get us out of slavery to sin. The problem with slavery is that it holds us back. It pins us down. A bird that's tethered to a cage can't fly. For this reason there's a lot of Christian ministries and organizations that won't hire other Christians to work for them if they have a lot of debt. When you're tethered to a bank loan or a credit lending agency, you're held back from serving God to the fullest. I'm not saying you can't serve Him at all or do mighty works for His Kingdom, but just imagine the heights you could soar if you weren't tied down to a monthly house payment or student loans.

The Bible says that the plans of those who are diligent with their money lead to wealth (Proverbs 21:5), and that those who are faithful with what they earn will abound with blessings (Proverbs 28:20).

Paying off debt is about more than just financial freedom. It's about spiritual freedom. And I believe we should make it our priority as Christians to get out of debt as soon as possible so we can experience all that God has for us.

Keep pinchin' :-)

Are Credit Cards REALLY That Bad?

I'm just going to go ahead and let the cat out of the bag: Dani and I have a credit card.

"But Jake, doesn't that violate Dave Ramsey's Commandments about financial freedom?!"

Probably, but, then again—and here's the second cat out of the bag—I don't necessarily agree with absolutely everything Dave Ramsey says.

"Heresy!"

Ok, ok. Just put the torch and pitchfork down for a minute while I explain.

Dave Ramsey is absolutely right when he rants about how easily credit card usage can land people in debt. Let's say you take a vacation and you decide it's easier just to put everything on the credit card. You've got money to cover the expenses in your bank account, so it's no problem to pay everything off as soon as you get home, but what if tragedy strikes? What if you need a new car or have a medical emergency and suddenly you can't afford to meet the monthly credit card payments? One missed payment and you're in the hole 30% or more! Besides, if you've got the money in your bank account to pay for everything, why the heck are you using a credit card in the first place?!

The practice of using credit cards is just plain dangerous, and that danger is multiplied exponentially if you don't have money in your bank account to cover the expenses, which is just plain stupid, as Dave would say.

"Responsible use of a credit card does not exist," Dave says in this article The Truth About Credit Card Debt. "There is no positive side to credit card use. You will spend more if you use credit cards. Even by paying the bills on time, you are not beating the system!"

Though I wholeheartedly agree with his sentiment, I think Dave can be a little too apocalyptic when talking about credit card usage.

Last Christmas, our Discover card ran a three month cash-back program where any time we used the credit card for gas or online shopping we got some cash back. In three months we earned $80 in cash back bonuses. We always paid the credit card off within a couple days of making a purchase, we never spent a cent on interest, and that $80 went a long way to helping with our Christmas shopping that year. So is there really no responsible way to use a credit card? I think maybe there is, but it takes a great deal of discipline to do so.

According to the American Bankers' Association, the average family today carries $8,000 in credit card debt. That is just shocking, and it is not where God wants us to be financially. A study of credit card use at McDonald's found that people spent 47% more when using credit cards instead of cash—forty-seven percent more! Why? Because the great majority of people don't comprehend that when they flip a tiny little plastic card onto the check-out counter they are, ultimately, spending their own hard-earned money, and probably more of it. It just doesn't compute with them. This is why Dave advocates for the "cash only system." Because when you're spending your cash, out of your wallet, it's easier for your brain to comprehend that "Hey, this is my money, and it's leaving me. Oh my!"

Dani and I have used our Discover card maybe three times in the last twelve months, but each time it is to take advantage of a special offer. It's never in huge amounts, and we always pay it off within a couple days.

Personal finance is 80% behavior. If you find that your credit card is getting you in trouble, get rid of it! Use common sense. Don't spend money you don't have.

Keep pinchin' :-)

There's No Wrong Way To Pinch A Penny

When I was growing up a popular saying was, "There's no wrong way to eat a Reese's."

The statement can be true of living a Penny Pinching lifestyle. No two family plans look quite the same. You may be content adding an extra $100 to the car payment each month. Another family might want to add $200. It depends on how much debt you have, the size of your family, your age, income level, and many other factors.

For Jake and I, our financial plan meant giving up most entertainment, including going out to eat, and living within a budget that we had worked together to create. Then, in addition to our regular incomes, we try to pick up extra work each month to earn income that we pour directly into our debt. If we got hung up on making sure we were following a plan that had worked for someone else, I don't think we would be very successful.

The key is figuring out what works for you, and this will take a few months. It's important to stay flexible, too, in case you need to re-focus the budget in order to achieve your financial goals.

I've heard stories about couples paying off a hundred thousand dollars in just a couple of years, but I've also heard other stories about people who spent just as much time paying off a few thousand.

But I can't get hung up on either of these stories. Instead, I need to say, "There's no wrong way to Penny Pinch." As long as we are doing our best with what we have, we are doing it right.

Keep pinchin' :-)