Finding a Financial Planner (part 2)

Last week’s blog was about the background work you need to do when you are looking for a financial planner. This week’s blog is about interviewing a potential financial planner. As a reminder, be sure to interview at least 3 people before determining which financial planner is right for you.

The first thing you want to discover relates to their practice in general terms, such as their investment and client philosophy and previous work experience. Most financial planners have a typical type of client and financial situation they like to work with, so it is important for you to understand how their preferences relate to you. You want to be sure the services they offer to match your needs.

After you learn the basics, find out more about their qualifications. Anyone can call themselves a financial planner, so be sure and ask if they are recognized as a certified financial planner. A CFP designation means they have passed a rigorous test administered by the Certified Financial Planner Board of Standards. The CFP designation also means they must commit to continuing education on financial matters and ethics to maintain their designation. The CFP credential is a good sign that a prospective planner will give sound financial advice.

Ask for the code of ethics they follow. Certified Financial Planners are held to the CFP Board’s Code of Ethics, which requires them to act as a “fiduciary.” In short, this means the planner has pledged to act in a client’s best interests at all times. This point is critical and should be a deal breaker if a prospective planner is not a fiduciary.

If an investment professional is not a fiduciary anything they sell you merely has to be suitable for you, not necessarily ideal or in your best interest. The difference between ‘best interest’ and ‘suitable’ is an important fine line for you to consider.

Request a copy of the ADV form which is used by investment advisers to register with both the Securities and Exchange Commission (SEC) and state securities authorities. These forms are available to the public on the SEC’s Investment Adviser Public Disclosure (IAPD) website at http://www.adviserinfo.sec.gov/.

There are two parts to the form. Part 1 requires information about the business, such as ownership, clients, employees, business practices, affiliations, and any disciplinary events of the adviser or its employees.

Part 2 contains information such as the types of advisory services offered, the adviser’s fee schedule, disciplinary information, conflicts of interest, and the educational and business background of management and key advisory personnel.

After you have checked out their credentials, the next important fact to understand is how they get paid. Financial advisors deserve to get paid for managing your money and since you are paying the bill, you need to understand how it works.

There are several pay structures they may use. They may be paid based on commission for certain products. In this case, they could have an incentive for steering you to certain financial products in order to maximize their commission, which may not be in your best interest. They may not be the most unbiased source of advice if they profit from steering you into particular products.

The second method of payment is a flat rate. You might pay them a flat fee, such as $1,500, for a financial plan or their fees may be calculated on an hourly basis. If you’re young and don’t have a lot of assets, a planner who charges by the hour could be most appropriate as they are usually the best fit when your needs are fairly simple.

The third way financial planners make money is being paid a percentage of your portfolio. This fee may be calculated quarterly or annually. It is often 1-1.5% of all the assets—investment, retirement, college-savings and other accounts—they’re minding for you. This method means the more your money earns for you, the more it earns for them so they have an incentive to keep your portfolio growing.
When talking about fees, you also need to find out how you pay for their services. Are the fees deducted from your account? Are you expected to pay by check? How often?

As you learn more about their practice and qualifications, ask about the types of investments they would recommend to someone in your circumstances. This is a good way to match the list you made earlier (see part 1 of this blog) to what they actually recommend.
If they start bragging about beating market averages, run away – no one can do that on a regular basis. And anyone who’s trying to beat the market may be taking risks that you don’t want to take. Always be wary when you’re being pitched an investment by someone who stands to earn money from that investment. Where is that profit coming from? That’s why it is important to understand how financial professionals are compensated.

Ask how much contact they normally have with their clients. Some planners hold an initial planning meeting and then only meet with clients once a year. Others might have quarterly meetings.

Generally, financial planners cannot sell insurance or securities products such as mutual funds or stocks without the proper licenses. Nor can they give investment advice unless registered with state or federal authorities, so be sure to clarify who your main contact will be. It doesn’t give you much confidence if you interview one person and decide you’d like to work with them only to have another person handle your accounts.

You may want to ask for a sample financial plan. Financial plans will vary based on the planner and the company. You may get overwhelmed with 40 pages of facts and figures or you may think that amount of detail is not enough. Be sure that what they provide will meet your needs.
As the meeting ends there’s one last question you want to ask yourself: Did they seem interested in you or did they do 90% of the talking? If they asked about you, your life and your goals that’s a good sign. If they bragged about their qualifications and expertise, and how much money they can make for you, they may be more interested in getting your business than in helping you reach your goals.

When in doubt, do more homework and make sure that the person you choose to work with is right for you from a lot of different perspectives and angles. Don’t let someone con you into working with them just because they promised to make you rich. Nobody can make that promise and keep it.

While choosing the right financial planner is important, ultimate peace of mind comes from the confidence that all money is God’s money, and that God alone is our true provider and protector.

Where is Your Heart?

Our hearts follow where our money goes as it says in Matthew 6:21, “For where your treasure is, there your heart will be also.” Too often we let the money take the lead and control our heart. However, the heart should take the lead and control where the money goes.

If God is our treasure, then it is easy to understand God’s role in helping us put our priorities in the proper order. God comes first. He comes first in our heart, and the money follows where our heart leads.

There are many immediate demands on our money. The mortgage has to be paid, there are groceries to buy, the oldest child is approaching college, retirement is looming on the horizon. All of these requirements can simultaneously compete for every dollar in our possession.

There are only three ways to deal with these competing priorities for your money. You can spend it, save it or give it away. Think of these three methods as being the three sides of a triangle. If one of the sides is too long or too short the triangle is out of balance or incomplete. Or think of these things as being three legs of a tripod. If one of the legs is too short, too long, or entirely missing, the tripod will be out of balance and unable to stand firmly.

The key to a godly attitude in how we handle money is to have the three sides of the triangle or the three legs of the tripod in balance. Spending, saving and giving must be balanced.

If we get too caught up in spending and saving, giving can be forgotten.

As Christians, we are called to be light and salt in the world. We are challenged to live in a way that is different from how the rest of society lives. That means holding on to our money and possessions with an open hand. Think of the difference between someone holding an item in their open palm versus holding it in a clenched fist. If, for some reason, money and possessions are to be removed from our care, and they are resting lightly on our open palm, it will be much less painful than if God has to pry open our tightly clenched fist to remove it.

Everything we consider so important in this world has no meaning in the light of eternity.

There is a story about a man who was about to die. He was very wealthy and hated to leave his riches behind, so he prayed that he could take his wealth with him.

An angel hears his prayer and tells him that is impossible to take it with him. The man asks the angel to speak to God and plead for an exception on his behalf. The angel speaks to God and returns to the man telling him he will be allowed to take one suitcase to heaven with him. The man gathers his largest suitcase, fills it with gold bars and places it next to his bed so he can quickly get it when his time on earth is finished.

Shortly thereafter, the man dies and approaches St. Peter at the pearly gates. St. Peter sees the suitcase and tells the man he is not allowed to being anything to heaven with him. The man explains that God has granted him an exception since he was so wealthy on earth.

St. Peter zips open the suitcase to inspect the worldly treasure that was too important to be left behind. He stares in astonishment at all the gold and in a bewildered tone says “You brought paving stones?”

We are so caught up in this world that like the man in the story we sometimes forget that what we have on this earth has no lasting value.

I encourage you to estimate the number of days you have left on earth. My mom is 96 and my dad died at 90. If I live an average of their two ages, I have about 10,000 days left. Sounds like a lot, but thinks of how fast the years pass by. Making this calculation has helped me become aware that I need to invest my life, my time, and my money in efforts that will count for eternity.

Imagine a rope running through the room where you are now. To your right, the rope runs billions of light years all the way to the end of the universe; to your left, it runs to the other end of the universe. Now imagine that the rope to your left represents eternity past, and the rope to your right, eternity future. Take a magic marker and place a small dot on the rope in front of you. That tiny dot represents your brief life on earth compared to eternity.

Because most people don’t have an eternal perspective, they live as if the dot is all there is. They make dot choices, live in dot houses, drive dot cars, wear dot clothes, have dot friends and raise dot children.

When I am face to face with Christ I want to know that my heart followed him in all ways. I want to know that how I used my money followed my heart. I want to know that material things were useful if they facilitated serving God while I was on earth. I don’t want to squander my life on things that won’t matter throughout eternity.

As Sirach18:7-8 advises, “The sum of a man’s days is great if it reaches a hundred years: Like a drop of sea water, like a grain of sand, so are these few years among the days of eternity.” This is the backdrop against which we can determine which is leading and which is following – our heart or our money?

Cosigning is Bad for Your Financial Health

writing-1149962_640Many people gladly cosign a loan thinking they are doing the right thing by helping someone out of a difficult situation. Cosigners are usually friends or relatives who sign loan papers for someone who’s not able to get a loan on their own merit.

It seems like a good idea at first. You may be trying to help your daughter or son go to college. You may be assisting someone who is trying to purchase a home. Or maybe your brother needs to replace his car. Whatever the reason, cosigning is always done with the best of intentions.

You may think your only responsibility is to sign the paperwork and as long as they pay the loan back everything should be great, right?

Maybe not!

When you cosign you are agreeing to pay the loan in full if the person you cosigned for does not pay. You are legally responsible for the debt. By co-signing, you have promised to pay off the entire loan if the borrower does not pay.

Cosigning is required by a lending institution when a person applies for a loan and their credit score and credit history indicate they are a poor loan risk. The lending institution requires a cosigner to guarantee the loan. In other words, the lending institution with millions or billions of dollars in assets will not risk making the loan because they do not think the borrower can pay back the loan.

When you cosign you become fully responsible to pay the loan if the original borrower cannot do so. If the borrower makes late payments or does not make payments per the loan agreement, it is reported on YOUR credit report. You are risking what ever assets you have to guarantee the loan for which you are cosigning.

Therefore, if the borrower pays 30 days late, the late payment appears on your credit report. Your credit report will get a negative hit and your credit score will be affected. One thing most people do not consider when they are co-signing is that if the borrower defaults, your credit could be affected for at least seven years.

Cosigning means you get all the problems that come with debt and none of the benefits since you do not have possession of whatever the person bought. Your daughter or son may have a college education and your friend may have a house and your brother may have a car but you have the debt.

Proverbs 17:18 says “Senseless is the man who gives his hand in pledge and who becomes surety for his neighbor.” The Bible is telling us that we have no sense if we cosign.

The statistical truth supports the Bible. Rather than the original borrower paying their own loan, you, the cosigner will most likely end up paying for the loan. If you agree to cosign someone else’s loan, statistically the odds are against you. Various sources indicate the borrower defaults on approximately 75% of cosigned loans so before cosigning a loan you should think twice. In the end, you will be grateful you took the time to think about it.

Bankrate.com defines the following top ten reasons to avoid cosigning:

  1. All the risk, very little reward
  2. The lender will sue you first if payments are not made
  3. You may need to sue the other responsible party if payments are not made and you get sued
  4. The person you help will be happy, but you have a lot to lose
  5. Cosigning and financial issues can destroy friendships or family relationships
  6. You are 100 percent liable for the loan and it could be a significant amount
  7. You could face tax consequences if the debt is settled
  8. If you need a loan, the cosigned debt on your credit report may have a negative on the approval of your loan
  9. You are fully responsible to make the loan payments if your co-signer defaults
  10. To ensure protection you need to monitor the payments your cosigner makes

Cosigning means you are paying on something you don’t own, the relationship with the other person has probably been ruined, your credit has been wrecked and your financial future is in jeopardy through something you could not control. Doesn’t really sound like a very good deal, does it?

If you’re considering co-signing, think about this verse from Sirach 29:17 “Going surety has ruined many who were prosperous and tossed them about like waves of the sea.”

Cosigning can be very dangerous to your financial health.

Money Myths

dollar-941246_640 (2)When I was young, I believed the Tooth Fairy put money under my pillow, Santa put the toys under the tree and the Easter Bunny put the candy in the basket. As an adult, I don’t believe in the Tooth Fairy, Santa or the Easter Bunny, and you probably don’t either. But you may believe some money myths.

There are many timeless truths about money—most of them originating in the Bible—and there are nearly as many myths about money as there are truths. Listed below are some Money Myths and the real truth:

If I only had more money, then I’d be happy.
Happiness is a state of mind. Ecclesiastes tells us about the foolishness of thinking that wealth brings happiness. If you aren’t happy with what you have, you’ll never be happy with what you get.

The mortgage interest deduction is a huge tax advantage so I never want to pay off the mortgage.
This is just bad math. The amount of interest paid on your mortgage reduces the amount of tax you owe based on your tax bracket. You aren’t getting money back; you are getting a tax deduction. Sure the deduction helps decrease your taxes, but you are paying way more in interest than you’ll ever get back on your taxes.

I don’t make enough to save.
The truth is, almost everyone can cut expenses enough to tuck away a few dollars a week. It just takes discipline and practice. People who make little HAVE to save or else you’ll end up digging an even deeper hole by having to use credit cards, payday loans or title loans every time an unplanned expense comes a long.

I don’t make enough to give.
This goes along with not having enough to save. Giving to God comes from your first fruits – before you have a chance to spend it on something that is not important. If you aren’t giving, start giving with an open heart and see what happens.

I don’t make enough to budget.
The less a person earns the more important it is to budget. Flying by the seat of your financial pants often means you spend more than you make. Everyone needs a budget, which is simply a way to allocate money to the things that are most important to you and your family.

A raise will cost you money if it moves you into a higher tax bracket. Actually, the higher tax rate only applies to the increase, not your whole salary, so you’ll net more money with a raise, even in a higher bracket.

Renting is just throwing money in the trash.

That’s wrong, too. Housing is a necessary expense, just like transportation and food. That myth got started back when property values rose continuously, so when you bought a house, it always appreciated. If you are going to be in a location for a short time, renting makes more sense, as you can rent less expensively than buying. If you’ll be moving soon, renting avoids the closing costs and realtor fees associated with buying a house.

You get what you pay for.
People say this all the time to justify spending. Actually, there are plenty of expensive things out there of questionable value, such as brand-name drugs, which cost 2 or 3 times more than generic, but are rarely more effective. Another example is tests done on cosmetics to see if the more expensive ones were better than the drugstore brand. They weren’t. Google “generic vs expensive cosmetics” to see the details of many different investigations of this subject.

The stock market is going down I have to sell.
Or, the market is soaring, I have to buy.
That’s exactly backward. The best time to buy stocks or mutual funds is when prices are low. The best time to sell is when prices are high. Your investment horizon (that’s the period of time before you need the money) should be far enough in the future so that you can ride out downturns in the market. If it’s not, you need to invest in something that has less risk.

The more money you make the richer you are.
Wrong! Just because someone has a 6-figure salary does not mean they are managing it well. The more people earn, the more they tend to spend. How many lottery winners go bankrupt? Sixty percent of NBA athletes are broke within 5 years of leaving pro sports. It’s not how much you make; it’s how well you manage what you make.

It’s easy to minimize credit card costs with 0% offers
If using a zero percent interest card is part of your strategy to pay off your credit cards, it may be a great idea. But just shuffling your debt around by opening and closing credit card accounts can hurt your credit score, which can lead to higher interest rates down the road

Carrying a balance on your credit card boosts your credit rating.
In truth, the best way to improve your credit score is to pay your credit card off every month in full.

It’s more spiritual to be poor.
In the Bible we find people who love and follow Jesus with all their heart at every economic level. We are not required to be poor nor are we promised riches. God’s people are called to be faithful whether they have much or little.

I don’t need a will because I’m leaving everything to my spouse.
There could still be probate costs and challenges from children and other relatives if you don’t have a will. And no will means the state in which you live decides how to distribute your assets. What if you and your spouse die together? Who will be the guardian of your children? Every adult should have a will.

So Tooth Fairy, Santa, and the Easter Bunny are not real, and neither are these money myths!

“The way of fools is right in their own eyes, but those who listen to advice are the wise.” Proverbs 12:15

The Dishonest Steward

cross-66700_640 (1)The Gospel reading yesterday always confused me, until I really concentrated on the details. Luke 16:1-13 tells the story of “The Dishonest Steward.” To summarize, a steward was fired because he had squandered the rich man’s property. He was left without a job and did not want to do manual labor, nor did he want to beg. But he needed a way to make a living. Finally, he decided to go to each of his master’s debtors and forgive a portion of their debt. And the master commended that dishonest steward for acting prudently.

The praise for a dishonest steward has always bothered me. Why is he being praised for being dishonest? In understanding this passage, it helps to remember that at this time in history, agents acted on behalf of their master. The steward was praised because he collected the full amount of the debt owed to his master. The debt that was reduced or eliminated was actually his commission. So even though he was guilty of squandering the rich man’s property, he was honest in collecting the master’s debt payments.

He was also praised for being prudent. By eliminating his commission, he charged the debtors less and made friends with them. Thus they became obligated to him. Instead of being a victim of circumstance, he turns a bad situation around to benefit himself by making friends with the debtors. The parable does not praise dishonesty, rather it praises the ability to use our material resources wisely in a time of crisis. The steward knew he needed friends more than he needed the commission money.

This same parable of The Dishonest Steward gives us the passage where Jesus mentions two kinds of wealth—dishonest wealth and true wealth. “If, therefore, you are not trustworthy with dishonest wealth, who will trust you with true wealth?”

In some Bible translations the word mammon is used instead of the phrase “dishonest wealth.” The root word in Greek is mammonas, which translates to “money, wealth, and material possessions.” In ancient times, the word mammon had a negative connotation, as it was used to describe gluttony, greed, and dishonest worldly gain. Ultimately, mammon described excessive materialism, which seems to continue to be a problem today.

Money, worldly riches, or wealth are not bad in and of themselves. These things are simply tools for us to use in our secular society in order to buy things we need (and maybe some items we want.) What becomes bad is when money becomes the driving force in our lives and takes on a level of importance it does not deserve. Money can be used to build churches and hospitals or to care for the poor and needy. It can also be used to for illicit purposes which destroy people’s lives.

The true riches in this gospel passage have nothing to do with money and everything to do with spiritual blessings, such as the seven fruits of the Holy Spirit: love, joy, peace, forbearance, kindness, goodness, faithfulness, gentleness and self-control, and most importantly a relationship with God. These true riches can not be bought with any amount of money, no matter how wealthy you are.

Another meaningful passage in this parable is: “You cannot serve both God and mammon.”

If we are worshiping the almighty dollar, and money is the primary focus of our life, then there is no room for God. The verse says you CAN NOT serve God and money. It does not say you MAY NOT be able to serve God and money. Nor does it say it COULD BE POSSIBLE to serve God and money. It says you CAN NOT. Not much room for second guessing—serving God and money at the same time is impossible
There is nothing wrong with making money or being wealthy, as long as it is a result of being a faithful steward. Using money to serve God and help others indicates you love God and you are serving him with the material blessings he entrusted to you.

It is not about the amount of money we have. It is about how faithful we are with whatever amount we have been gives whether much or little. Look at someone’s bank account and you will see what is important to them – what they idolize.

Jesus calls us to have complete dependence on the Father, not on our own economic security. All the money and possessions we have here on earth ultimately belong to God and are to be used for his purposes.

This world is temporary, yet millions of people live their lives as if this world is all there will ever be. They devote their entire lives to getting ahead in this world and accumulating all the “stuff” that seems so important, but which is, in reality, useless.

If the reason you are living is to make money for the sake of the things money can buy, then money becomes your god, and you cannot serve the living and true God. The verse says we CAN NOT serve God and Money. To be dependent upon wealth is opposed to the teachings of Jesus who counseled complete dependence on the Father as one of the characteristics of the Christian disciple

Everything we have can be used as either an material idol to worship or a tool to spread God’s Kingdom here on earth.

Evelyn Bean

Are You Honest or Truthful?

church-783165_640Fifty or sixty years ago, if you had asked someone if they were honest or truthful, they would have looked at you as if you had two heads. At that time, there was no discernable difference between the two. Our attitudes have changed so much that today people often manipulate their words and actions so they are scrupulously truthful without being absolutely honest. Unfortunately, the act of being totally truthful without being absolutely honest is acceptable in our secular society.

A great example of this is the little boy who was playing soccer in the house. He kicked the ball and it crashed into a lamp. The lamp fell to the floor and broke into a million pieces. Mom rushed into the room and asked the little boy if he had broken the lamp. He looked at her innocently and said “No Mommy.” When questioned further, he admitted that HE did not break the lamp. The BALL broke the lamp. He was technically honest, without being entirely truthful!

Judges 17:6 reads, “In those days there was no King in Israel; everyone did what was right in their own eyes.” When we act in ways acceptable to the secular world, but unacceptable in our spiritual lives, we are acting as if our living Lord, Jesus Christ, is incapable of discovering our dishonesty.

It is human nature to try and avoid the feelings of discomfort, yet acting dishonestly is never an acceptable way to make ourselves feel better. When we act dishonestly, we take matters into our own hands and control situations to our own benefit.

Think of the Pharisees who were utterly meticulous in giving their tithe. They even made sure to include the smallest mint leaf in their offering. But they were giving their offerings from a sense of duty rather than a sense of love and their attitude was not pleasing to God.

By manipulating our actions and words to be totally truthful without being honest, or by telling “little white lies” to avoid conflict, we are just as displeasing to God as the Pharisees. Society’s acceptance of relative honesty is the opposite of what we learn in Scripture. The Lord requires absolute honesty from all of us at all times in every aspect of our life.

Think about the difference in attitudes related to honesty that exist in our secular society and in God’s eyes. Society says our decisions about being honest can be based on whether or not we will be caught, yet if we are making a godly decision, we must base all our decisions on whether or not they will please God.
All of us make many small decisions about being honest every day. Do you deal honestly in all areas of your life, even the smallest ones? Do you quietly smile and pocket the extra money if the cashier makes a mistake when giving you change? Have you ever sold something and not been entirely truthful because you may have lost the sale? Do you cheat on your taxes—even just a little? Do you bring supplies home from the office for personal use?

When we act dishonestly we are deceiving another person. We may fool ourselves into thinking it’s just a business, or the government, or an insurance company. We may talk ourselves into thinking we are just trying to avoid conflict, but the victim is always a person and ultimately it is the business owners, the other consumers, or the taxpayers, or your spouse, friend or family you are hurting. In these situations, we are directly harming one of God’s children.

Our actions speak louder than our words and acting dishonestly dims the light of Christ shining within us, erodes our faith response, and tarnishes the Christian life that others see in us.

Little white lies are easy to tell, but each one leaves a small chip in the foundation of your relationship with others, and too many small chips will result in a cracked foundation.

The Catechism teaches, “By its very nature, lying is to be condemned. It is a profanation of speech, whereas the purpose of speech is to communicate known truth to others. The deliberate intention of leading a neighbor into error by saying things contrary to the truth constitutes a failure in justice and charity.” (Catechism of the Catholic Church 2485)

And the Bible tells us: “Scoundrels, villains, are they who deal in crooked talk.” (Proverbs 6:12) and “Lying lips are an abomination to the Lord, but those who are truthful, his delight.” (Proverbs 12:22)
If you have been dishonest in any way, seek the Sacrament of Reconciliation for a fresh start.

Evelyn Bean

Adults Kids, Parents and Money

dollar-1362244_640Most parents look forward to a visit from their adult children…but what if that visit includes all their worldly possessions, two grandchildren, a ten-week-old puppy, two hamsters and no plans to move out?

There are any number of reasons adult children may move back home but by far the most common one is money. A listener to our radio show recently asked the following: “My husband and I are finally empty nesters. Now our oldest daughter is experiencing financial problems and wants to move back in with us bringing her spouse and two kids. As a couple, they are very poor money managers. The combination of mortgage, school loans, credit card debt, and an unexpected job loss has overwhelmed them. I feel sorry for them, but I know they are spending money on frivolous items, and I resent them asking to move in with us.”

If this situation comes up, the first step is for parents of adult children to have a conversation with each other about how much to help and how much to let adult children handle on their own. It is important to have a united front as this decision is more an art more than a science. And both mom and dad will experience the results of their decision. As with most things in life, the resolution to this problem is made easier with much prayer and discernment.

Maybe this state of affairs is an opportunity to influence your daughter and her husband to be fiscally responsible. On the other hand, having them move in with you may just make a bad situation worse. There is a fine line between helping and enabling, but that line blurs when your child suffers from something they caused vs. a situation that was out of their control.

You and your spouse should also consider the following:

  • How much can you afford to do?
  • Is your child and/or their spouse working or actively seeking employment?
  • Will the problem be resolved relatively quickly or is it a long term issue?

It also helps if you and your spouse talk about ways you can help without having them moving in with you. This again takes lots of open discussions and your daughter and her husband need to share their whole financial situation with you.

I believe that we should do whatever we can to help our children when something challenging happens to them that is beyond their control. However, if they caused their own problem, having them work through their problems on their own will make their marriage stronger.

Perhaps parents can lend a hand best by providing something, but not everything. If their situation is easily remedied, you may want to take the grandchildren shopping for school supplies or school clothes, give your daughter and her husband gift cards for items such as gas and groceries or pay them to do work around your home that you would normally pay someone to do (as long as they are qualified.) This gives them some temporary relief, but you are not totally rescuing them from the circumstances they caused.

If, after much prayer, the Lord makes it clear to you and your spouse that your daughter and her family should move in with you, establish ground rules for them staying in your home—and have both husband and wife sign it. If they are poor money managers, the ground rules may include having them work with a budget coach or credit counselor. The ground rules also contain detailed living arrangements such as who does what around the house, an estimated timeframe for them to move out, and financial arrangements. What tasks will they do around the house, what will you provide, will they pay rent, how long will they stay, what are they doing to improve the problems they incurred, etc. Once the ground rules are established, welcome them, just as the forgiving father welcomed home the prodigal son.

  • There are some guiding principles to keep in mind during this situation.
  • Don’t usurp the spouse if they are married – your advice is secondary to their spouse.
  • Don’t use your money to control their lives.
  • You and your spouse should be of one mind.
  • Encourage them to be dependent on God and each other.

If you decide to give them money instead of having them move in with you, be clear if the money is a gift or a loan. If it’s a loan, draw up paperwork with the amount, interest rate and expected payback plan. If you are helping them financially it is important to distinguish between a gift and something that has strings attached—many hard feelings on both sides can be avoided by being sure this is understood clearly by both parties from the initial stages.

Adults moving back home presents a strong case for teaching young children how to be responsible with money. Teaching children to handle money God’s way is part of a parent’s responsibility. Teaching them how to save regularly, spend wisely and give generously when they are children will prevent many heart and head aches when they are adults.

Proverbs 22:6 “Train up a child in the way he should go; even when he is old he will not depart from it.”

It’s not easy, but it could be a good experience if you are able to help them learn to be independent. If you are just increasing their dependence on you, it’s going to be trouble!

10 Steps to Build a Budget That Works

Many people cringe at the thought of a budget as it raises mental images of not being able to go anywhere, do anything or have any fun.  A budget seems to convey the feeling of restrictions and lots of record keeping.

However, a properly designed and maintained budget gives you freedom rather than restrictions, especially if you think of it as a spending plan, not a budget.

Instead of your money simply trickling through your bank account each month, a budget allows you to actually plan where your money goes—you are in control. It gives you the freedom to decide what is important to you, both long and short term, and then use your money for what is most important.

Most people struggle with how to set up a budget and they often start by estimating how much they spend each month, which creates a lot of trouble.  How much we think we spend is usually much less than what we actually spend. 

By following the ten simple steps below, you can create a budget based on reality and you will be much more successful.

STEP 1 – Before even trying to create a budget, track all your spending for a minimum of 30, preferably 60 days.  Track every kind of spending you do, using cash, checks, credit cards, debit cards and auto pay accounts.

To keep things simple, start by using one of the two following methods:

1. Pencil and paper. Many people prefer using paper, to begin with. This is a good start as it helps you think through how you actually spend money and when you decide to use a more sophisticated process what you learned using paper and pencil will help you choose the appropriate software.

2. Spreadsheet.  If you are a whiz with spreadsheets, you may want to start budgeting by using a spreadsheet.  The Compass Catholic website has spreadsheets you can access by clicking here.

STEP 2 – As you track your spending, categorize it into different areas. The following categories are typical: Saving; Housing; Food; Transportation; Clothing; Medical & Health; Education; Personal; Entertainment & Vacation; Debts. Details for suggestions on what belongs in each category can be found here.

STEP 3 – Look at last year’s bank statements and credit card statements to find those items that only occur quarterly or yearly.  Divide the amount of the payment by how many months the payment covers to determine a monthly amount.  If a payment is due quarterly, then the payment should be divided by 3 to calculate a monthly amount. If the payment is due yearly, divide the payment by 12 to determine a monthly amount. If your car insurance is paid annually, you need to save money each month so when the annual payment is due you have money set aside to cover it. Another example is Christmas, money should be set aside each month to cover Christmas expenses. Failing to do this is a big budget buster.

STEP 4 – Calculate your monthly “Net Spendable Income.” This is not the same as your salary. It is the amount of money available for you to spend each month after you subtract all the deductions (Income Tax; FICA [Social Security and Medicare]; Employer-provided insurance, 401K or Retirement plan, etc.)  ALSO, subtract your giving at this point—giving comes from your first fruits, not your leftovers. Using your gross salary instead of your net spendable income is another big budget buster.

Step 5 – After tracking spending and income for a month or two, subtract your average monthly spending from your average monthly net spendable income and determine if the number is a negative or positive. 

Step 6 – Make adjustments to eliminate the deficit or surplus based on the results of Step 5.

A positive number means you have money to save toward an emergency fund or long-term goals such as buying a home or car, retirement or funding college. If you have not been saving and you don’t have any extra money at the end of the month, you missed recording some expenses. 

A negative number means you are spending more than you are making. If you find yourself in this position, you need to take action by either spending less or making more.

The good news is that you now have real data to use in analyzing where adjustments to your spending can be made.

Step 7 – Set up a long-term process for your budget by selecting one of the following.

1. Budgeting software. Good user-friendly software programs are available, such as Quicken, or Microsoft Money.  Once you have a handle on your spending using a manual process, you can explore the software options and find one that works best for you.

2. There are tons of apps available.  Our recommendation is to look at the following: Mint; PocketGuard; You Need A Budget; Good Budget; Mvelopes; Home Budget; Wally; Level Money; Spendee;BUDGETT; Unsplurge; Why You Need a Budget.  Each of them is similar, but different.

Explore each one and find one that works for you. The best app will allow you to enter your own categories, define your own budget amount and enter your spending. It also helps if the app is connected to your bank account.  Be sure you can look at multiple views of your spending, both in total and by category. The key is to find a system you’re comfortable using.  And then use it regularly.

Step 8 – Make it a habit. Once you get a good process in place, make budgeting a habit of recording. Recording your income and spending at least once a week enables you to stay current with your finances..

The good thing about using a spending plan is that it doesn’t require endless hours of bookkeeping. It shouldn’t take more than an hour of your time each week.  Being diligent with your budget is a small price to pay to stay on top of your finances.

Step 9 – Review on a regular basis, which will allow you to quickly discover any issues. You (and your spouse if you are married) need to review the spending plan at least weekly to start out.  After you become more comfortable with the process and find you are staying on track, make the interval between reviews longer.  When you are a long term budget user, the reviews can be monthly.

Step 10 – Overhaul your budget when life changes occur. You might have a new child, change jobs, pay off a lot of debt, move to a new location or retire … you’ll be making adjustments due to major life changes as long as you use your spending plan. Anytime one of these life changes occurs, the spending plan will need a total review and update.

Once you establish and use your budget you will see how freeing it can be. “The plans of the diligent end in profit, but those of the hasty end in loss.” (Proverbs 21:5)

For more information, listen to Compass Catholic on BreadboxMedia on Saturday 8/27 at 9:00 am where we talk about creating a budget and leaky budgets.

Evelyn Bean

Finding Happiness in Riches

Let’s face it—most people want to get rich. When we want to get rich, we actually love money. Show me somebody’s bank account and I can see what they treasure by where they spend their money.

But why is wanting to get rich so incredibly dangerous? Because the Bible cautions against it: “those who want to get rich fall into temptation and are caught in the trap of many foolish and harmful desires, which pull them down to ruin and destruction” (1 Timothy 6:9.) This verse declares that those who want to get rich give in to temptations and desires that ultimately lead to ruin.

The next verse explains further why the quest for riches is dangerous: “For the love of money is a source of all kinds of evil. Some have been so eager to have it that they have wandered away from the faith and have broken their hearts with many sorrows” (1 Timothy 6:10, GNT.)

The Gospel reading from Mass on Sunday was from Luke 12:13-21, where Jesus tells the story of the rich man. This man was blessed with an abundant harvest and decided to tear down his old barns and build new barns to store ALL his grain and other goods. Then, since he had a bounty stored up for many years, he could eat, drink and be merry. The parable ends with an admonition: “But God said to him, ‘You fool, this night your life will be demanded of you; and the things you have prepared, to whom will they belong?’ Thus will it be for all who store up treasure for themselves but are not rich in what matters to God.”

Are you rich in what matters to God? Where do you?

I am not saying it’s wrong to become rich. Many of God’s chosen people in the Bible, such as Job, Abraham, Solomon and David were rich. In fact, we should all rejoice when God enables a person who has been a faithful steward to prosper.

Nothing is wrong with becoming wealthy, if it is a by-product of being faithful. The problem is when we follow the worldly path of our society and becoming rich is our primary purpose. And the problem becomes bigger if we don’t balance our riches with a godly purpose for our lives. And it escalates even further if we do not balance wealth accumulation with generosity.

How then, can a faithful Catholic overcome the love of money and the desire to become rich that is so prevalent in our society? You might begin by analyzing just what it is that triggers your desire for wealth. Is it comparing yourself to your neighbors or to other family members? Is is driven by a desire to be better than everyone else? Do riches signify happiness, satisfaction and power to you?

The ultimate way of escaping the quest for wealth is to submit to the Lord. We can do this confidently because Jesus overcame a huge temptation to become rich. After fasting 40 days in the desert, he was tempted three times by the devil. In the final temptation: “Then the Devil took him up and showed him in a second all the kingdoms of the world. The Devil told him. ‘I will give you all this power and all this wealth…if you worship me.’” (Luke 4:5-7, GNT)

Jesus was offered all the kingdoms of the world in an instant. Because of his complete submission to God the Father, He was empowered to resist the devil’s temptation by the same Holy Spirit who lives in us.

Wanting to get rich—loving money—closely parallels greed. And “greed is idolatry” (Colossians 3:5.) We have many idols in our lives today and they all stem from the spirit of the world. Money, consumerism, greed, and coveting others possessions, are just a few of the many.

Spend 60 seconds and think about your own personal life. What are your idols? Write them down on a piece of paper and put them in a safe place so you can pull them out from time to time and pray about them. Are these the things that God really wants you to be so focused on? Are these really more important to you than God himself?

Pope Francis sums it up: “If money and material things become the center of our lives, they seize us and make us slaves. Seeking happiness in material things is a sure way of being unhappy.”

Evelyn Bean

Christmas is Just Around the Corner!

Lots of people are at the beach this week, air conditioners are blasting and July is a great month for ice cream, snow cones, bathing suits and sun screen, but it’s also a great time to consider Christmas!  

The fact that Christmas will be in December is not news to anyone reading this, but we often act as though we don’t know when Christmas will arrive, because time and again the Christmas season catches us financially unprepared.  

As you probably know all too well, the holiday season can be a major financial event each year. Many Americans tend not to think about Christmas until November or even December.  And the result is that we whip out the plastic to pay for Christmas. The average American pays off their Christmas credit card bill in October.  The average consumer ends up with more than $1,000 of Christmas related debt on their credit cards and last Christmas, 14 million Americans were still paying off holiday debt from the previous Christmas.  

Think about it—should we celebrate the birth of Jesus by taking on more debt?

What is really important at Christmas is the gift of God made man, not all of the toys, clothes, electronics and stuff nobody uses that we buy for each other. In 2 Corinthians 9:15, we read of the only important Christmas gift, Jesus, “Thanks be to God for his indescribable gift!”

We are talking about Christmas in July to help you plan ahead financially so you can use the Advent season to concentrate on what is really important this Christmas. Hopefully this will mean that the weeks leading up to December 25th are a prayerful and serene preparation for the Lord’s birth instead of one mad dash from store to store to buy stuff nobody needs.

The best time to start planning for Christmas is January 1st.  If you decide then how much you are going to spend on Christmas, you can save 1/12th of that amount every month and break the habit of using debt to pay for Christmas. If you did not start saving for Christmas in January, you still have 5 months to build a Christmas nest egg. You may be thinking that it’s impossible for you to save any money between now and December, but if you can’t afford to save now in order to pay cash for Christmas, why do you think you’ll have enough money to pay the credit card bills after Christmas?

To determine a reasonable amount to set aside each month for holiday spending, look at your previous year’s checking account and credit card statements to see what you spent last year.  Be sure to include ALL costs – if you host a Christmas party, that needs to be in your calculation for savings. If the Holiday dinner is at your house and you take care of all the food and beverages, that needs to be in your budget. Or if you travel to be with family in a different state that needs to be in your calculations

Look at the list of people who received gifts from you. Next, factor in the average price of gifts. Then determine whether it’s better, for example, to spend $100 a piece on eight recipients or attempt to please 40 people by buying each a $20 present.  More often than not, this will help you pare down your list to just your closest friends and relatives.

Many times in an effort to maintain peace many people spend more than they should, and no one wants to take the lead in the family about putting a level of sanity on gift giving. Now is the time to have the discussion with other family members and friends about cutting back on Christmas spending. They will probably be as relieved as you are to simplify things. Maybe instead of trying to buy gifts for the whole family, decide to draw names and each person buys for one other person. Or drop the older kids (18 and up) from the gift giving and cut out all the adult gifts.

Now is the time to discuss changes in gift giving–otherwise you are into the holiday season and it is too hard to change what you’ve always been doing. In the relaxed atmosphere of the summer vacation time, you may want to initiate discussions with family and friends about special memories of Christmas past so you can do more of those things this Christmas and cut back on the non-essential gift giving.

Once you have a clear idea of who you are buying for and how much you are spending on each gift, start your holiday shopping early. Keep your eyes peeled for bargains year-round and you’ll almost certainly find great gifts at steep discounts – from toys and games to clothing and electronics.


Also pay attention during the year to ideas for gifts.  People who wait until the last minute are usually so focused on simply finding something that they buy whatever comes to mind without much thought or analysis. You may get some great ideas as you analyze what interests the people in your life without the pressure to figure out the perfect gift. By listening and observing, it will be much easier to find the perfect gift.

If you are a crafty person, make some of the gifts. It’s very personal and often more appreciated than buying something at the store. And that handmade gift would communicate how much you care for them without costing much. Gifts can be something as simple as a framed picture of the family you took during a special time.

By preparing for Christmas proactively, your December can be a time to focus on the spiritual side of Christmas this year. The important thing is to prayerfully make the commitment not to go one penny in debt this Christmas.

From James 1:16-17: “Do not be deceived, my beloved brothers: all good giving and every perfect gift is from above, coming down from the Father.”

The only gift anyone really needs at Christmas is the Baby Jesus.
Evelyn Bean