Seeking Godly Counsel

When we really want to buy something, how many times do we slow down enough to seek Godly counsel before purchasing it?

The seven gifts of the Holy Spirit are: wisdom, understanding, knowledge, counsel, fortitude, piety and fear of the Lord. So, if we have received the gifts of the Holy Spirit, especially wisdom, understanding and knowledge, then we should inherently know that seeking godly counsel is a wise thing to do.

The Bible gives us many verses related to seeking counsel:

  • A wise man will hear and increase in learning, and a man of understanding will acquire wise counsel (Proverbs 1:5).
  • Through presumption comes nothing but strife, but with those who receive counsel is wisdom.  (Proverbs 13:10).
  • Listen to counsel and accept discipline, that you may be wise the rest of your days (Proverbs 19:20).
  • Prepare plans by consultation . . . (Proverbs 20:18).
  • Where there is no guidance, the people fall, but in abundance of counselors there is victory (Proverbs 11:14).
  • Without consultation, plans are frustrated, but with many counselors they succeed (Proverbs 15:22).

Those are only a few of the 48 Scriptures verses I found that encourage us to seek counsel.

But how often do we actually go out of our way to seek counsel – especially when it comes to financial matters? For most people, the answer is never or not often enough!

Most of us are very proud of our independence, especially as it applies to our financial situation. When we come face to face with a decision, we don’t relinquish control to anyone or seek help–we’re independent, and we don’t need anyone’s counsel. Yet one of the best ways to avoid financial problems is to seek godly counsel before making financial decisions, especially large decisions.

So, who do you ask for counsel, and how do you go about asking? Even though it may take a little courage to ask for advice, our most trustworthy advisors are the ones who have been there all along—parents, or close, trusted friends. Tell them the facts of your situation in a straightforward manner, being totally truthful. Just tackle the conversation head on, open your heart, and listen closely.

If you are married, your spouse should be your number one source of counsel. You will both suffer the consequences of any bad decision, so it is important for both of you to agree on the course of action. If you do not agree, wait, pray and keep talking about it.  Nothing will ruin your marriage faster than making one sided decisions.

We know because that’s what happened to us. We talked around our differences but never came to a decision on which we both agreed. Many years ago, we were in the middle of buying land and working with an architect to design and build our dream house. This was at the same time my husband decided to start his own business and quit his job which paid a generous salary.

The bad news is that we were not on the same page financially. We never really had any financial issues up till that point in our marriage so we never needed to sit down and hash through a budget, talk about debt or plan for saving. The money just came in and went out.

We never thought of seeking godly counsel in an honest and forthright way.  If we did get input from anyone, our questions were couched in language that assured us of getting the answer we wanted, because of course, we knew we were right. Almost as soon as our dream house was built and the mortgage payments started, we ran into financial turmoil.

The verse from Proverbs 12:15 says, “The way of fools is right in their own eyes, but those who listen to advice are the wise.”  And we were certainly fools who thought we were right in our own eyes. The results of those actions were one of the worst financial mistakes we ever made and those mistakes almost cost us our marriage.

Like us, many people have lost a lot of money and have subjected themselves and their families to years of heartache and stress by making bad financial decisions. And what’s really tragic Is they could have avoided most of their difficulties if they had simply sought counsel from someone with a solid understanding of God’s way of handling money.

All of us should intentionally seek to surround ourselves with godly people who can counsel us is different areas. We each have limited experience and knowledge and we need the insights, suggestions and thoughts of others to make a proper decision.

The one common attitude that keeps us from seeking counsel is pride. Some people think seeking advice is a sign of weakness. It’s against our American spirit of independence to ask for help. The American mantra of “Stand on your own two feet” seems to contradict getting advice and counsel from anyone.

Yet this is totally contrary to what we see in the Bible, which encourages a spirit of interdependence in the Body of Christ. In 1 Corinthians 12:12-26, we are described as a body where in order to function properly, we need each other. As we are one body in Christ, God encourages us to seek wise counsel and to rely on each other for Godly advice. The Christian life is not one of independence from one another; we’re to be dependent upon each other and grow together in love and faith.

There are cautions when seeking counsel. First of all, it is important to be totally open and honest. Because of our pride sometimes we don’t give all the facts. We just offer up the facts that will give us the answer we want. This isn’t really seeking counsel – it’s going through the motions. So, when you ask for advice stick to the facts – all of them, and don’t disguise or hide the facts in order to sway the person to give you the answer you want to hear.

You also need to be careful about who you ask for advice. Sales people may get a larger commission by pushing you to buy a certain product. Or they may pressure you to buy immediately so they can make their sales quota. It is certainly appropriate to gather facts from experts (like sales people) when making a financial decision. But godly advice is best gotten from a person you know well and who has no vested interest in your decision other than your welfare.

If you don’t have someone in your life who can give you financial advice based on the Bible, pray for the Lord to bring that person into your life. It will be one of the best decisions you can make. A great way to find godly people is through the Compass Catholic Navigating Your Finances God’s Way Bible study. Get involved with your church community and you’re sure to find brothers and sisters in Christ who are more than willing to help and share the Catholic perspectives on handling money God’s way.

For more on this topic, connect with the Compass Catholic podcast on Podbean as we discuss seeking godly counsel.

Middle Class Money Mistakes

According to a Pew Research study done in 2014, the middle class is defined as people who have an annual salary between $42,000 – $125,000. That is a huge margin between the low end and the high-end earners.

If you are on the low end of the income level, you are probably struggling to make ends meet, you have little to no savings and you can’t afford any frills.  If you are on the high end of the spectrum, you probably have a little bit of savings and can afford some of the nice things in life.

But whether you are on the low end or the high end, you may be making some mistakes that are not beneficial to your financial future. Here are some topics to consider if you want to improve your financial health.

The first thing that everyone needs to work on is ditching the debt. You want to be in a position where you are totally debt free—no credit card payments, no car loans payments and no mortgage payments.  Getting rid of the mortgage is a long-term goal but paying off the consumer debt should be priority number one.

If you were going to be charged an extra 15%-21% for everything that you buy would you still buy it?  Probably not. But people who use their credit cards and don’t pay them off at the end of the month are doing just that by paying interest. You get absolutely no benefit from carrying a balance on your credit cards and paying interest. It only provides added costs, more debt, and lots of stress when it’s time to make the payment.

The second most common mistake people make is not having an emergency fund. Personal finance experts stress the importance of having an emergency fund to cover unanticipated expenses and avoid long-term financial damage.

If you were suddenly hit with an unexpected $500 bill, would you be able to cover it? If the answer is no, you’re not alone. Nearly six in 10 Americans don’t have enough saved to cover an unplanned $500 expense, according to a report from Bankrate.com. When the unexpected expense occurs and there is not enough ready cash to cover it, the credit cards get whipped out and you go further into debt, paying even more due to interest charges.

An emergency fund is money that has been saved and reserved for emergencies. It needs to be in a liquid account (checking or savings not a retirement plan) so you can access the cash immediately when needed, with no penalty for early withdrawal. The money is never touched except for emergencies.

We encourage people to start with a minimum of $1,000. For most people, this is a goal that will take several months to achieve.  But even if you only have $400 in your emergency fund when you need it, you will avoid $400 in debt for that emergency. After you get a $1,000 saved in your emergency fund, increase it to one month’s income, then three month’s income. The goal is financial protection from all the unexpected expenses that are looming in your future.

The third mistake people make is spending without a plan.  If the money comes in and goes out and you have no idea where it went at the end of the month, how do you know that you are spending money on what is most important to you and your family?  

A lot of mistakes can be avoided if you just stop, think and evaluate how, when, where and why you are spending. Proverbs 21:5 tells us “The plans of the diligent are sure of profit, but all rash haste leads certainly to poverty.” Spending without setting priorities is certainly a way to run head first into financial chaos.

The fourth mistake is not taking advantage of an employer match on retirement savings. To avoid this mistake, invest enough in your 401(k) to maximize your employer match. Always, always save the maximum that your employer will match—it’s free money!

Along with not maximizing your employer match, the fifth mistake is delaying retirement savings until later. You may think that saving for retirement will be easier once the car is paid off, or after the kids graduate from college or when you get that long-awaited raise. But the key to a healthy retirement fund is to start early and save consistently, even if it’s a very small amount. That way you can maximize the magic of compound interest, where you’re earning interest on both what you have saved and the interest you’ve previously earned. Compounding the interest on your savings helps your savings grow exponentially over time.

The sixth mistake is spending too much on cars. A car is a depreciating asset and the newer it is, the faster it depreciates. An average car loan these days is five years or 60 months. An average payment on a car loan is $500. If you start when you are 20 and buy a new car every five years with a $500 monthly car payment, over your driving lifetime of 60 years, you will spend about $360,000 on car payments. And that calculation does not include the interest you could have earned if you had saved and invested that monthly car payment.

The seventh mistake is absorbing any extra money into your day-to-day spending. If you get even a small financial windfall or an increase in your salary it will disappear quickly if you just spend it.  Instead, allocate the additional money to emergency savings, retirement savings and to a worthy cause.

And that brings us to the eighth mistake, which is thinking you don’t have enough money to be generous. Everything we have is a blessing from God.  It is all too easy to bemoan what we DON’T have. When we think this way, it is easy to rationalize why we can’t give any money to charitable causes. Yet if we really believe that everything we have is a blessing from God, then when we are generous we are simply giving back to God what is already his. We need to look for ways to praise God and be grateful for what we DO have, and one of those ways is to be generous.

Taking time to think and plan your spending is the best way to avoid these common mistakes. It’s not glamorous and it may not be fun, but steady plodding keeps you on track. Proverbs 21:20 tells us “Precious treasure remains in the house of the wise, but the fool consumes it.”

Planning Your 2018 Vacation

Paying for a vacation is a lot like paying for Christmas, which seems to sneak up on people each year. You know Christmas is coming, so you should be planning for the costs all year. Similarly, vacation is coming so NOW is the time to prepare.

I can hear some people thinking that they can’t afford to save for vacation all year. Then the question is why they think they can afford the vacation by putting it on credit cards and paying the cost of the vacation PLUS the cost of interest.

It is easy to dream and spend countless hours planning and organizing the perfect summer vacation for the family. But the important thing is to create a plan for how to pay for it. 

Going into debt for vacation is not a good idea.  Vacations are a luxury not a necessity and you should never pay for a luxury by financing it. About 74% of Americans have gone into debt to pay for a getaway, according to a new study from financial planning company LearnVest. The study, which surveyed 1,000 adults, showed on average, Americans take on about $1,100 in debt for vacations.

In order to take a vacation and not go into debt, treat your vacation saving like any other monthly bill – figure out how much you spend on a yearly vacation and put 1/12 of that in a savings account each month. When vacation time rolls around, you will have the money set aside in a vacation savings account. Saving instead of getting into debt is a great lesson to teach your children.

To find money to save, look at everything you are spending in ALL areas and see what you can save for vacation by eliminating nonessentials, such as premium cable, fancy coffee on the way to work, fast food meals, lunch out, etc.  Making several small changes can amount to about $100 in savings a month towards that vacation.

As you think about a vacation for 2018, now is the time to start planning and saving in order to have a stress free vacation next year. Relaxing and treating yourself while you are on vacation is a great way to recharge, unless that indulgence wrecks your budget and you come home to a ton of credit card debt.

It’s possible to have a great vacation without overspending if you know when to make trade-offs. Find the parts of your vacation where you can compromise, and spend your money on what matters most to you.  

Staying in one place may be convenient, but changing accommodations during your stay can yield savings. Hotels in some big cities, such as Washington DC revolve around business trips on weekdays, leaving weekends open for tourists at less expansive rates.  At the same time, the weekends are more expensive in tourist-heavy destinations; so hotels may give you a better rate if you check in on a weekday rather than a weekend.

Investigate the area you are visiting and find free sightseeing. Monuments like the National Mall and Notre Dame cost nothing. Many museums, like New York’s Guggenheim and American Museum of Natural History, offer free hours every week or are donation-based. Consider stuffing your itinerary with free attractions. Skip the expensive attractions by planning your trip before you leave.

For road trips, prepare coolers full of meals to avoid fast food on the road. Food from home comes in handy at theme parks, where a small bite can cost as much as a full meal. Just check beforehand to make sure outside food is allowed. For bigger trips, visit local markets for snacks instead of eating out every time you get a little hungry. It’s similar to a technique you may use at home: eat cheaply to save for special occasions. But unlike at home, your special occasion on vacation may be one big meal every day.

Taxis and rental cars can be expensive. On a recent trip to Washington DC, our hotel charged $60 a DAY for parking, Needless to say, we left the car at home and took public transportation and Uber. Research the public transportation options to see if that’s a viable option for you.  We have met some interesting locals by getting lost on the subway!

Many people keep their kids shielded from financial realities which does not teach them anything about wise financial management. When planning for vacation, have a family meeting, talk about where to go, and make a vacation plan as a family. Follow up by talking about the cost of the vacation. Set up a “thermometer“ type chart on the fridge showing how much progress you are making toward your vacation savings goal.

Getting the kids involved in reaching the financial goal for vacation teaches them a lot about delayed gratification, making and reaching goals and financial stewardship. They will be much less likely to complain about cutting back if they are involved in the planning process and they can see a visual reminder of why the family is cutting back.

If you’re into vacations, you know that life is about experiences, not stuff.  You may be able to bulk up your vacation savings by selling your unused stuff to fund your vacation. Try Facebook garage sale groups, consignment shops, eBay, Craig’s List or an old fashioned garage sale

Do a Google search for “Free vacations” and you will find several options, which may or may not interest you, depending on your vacation preferences. You may be able to find a work-vacation opportunity where you can spend a few hours a day working in exchange for free room and board. Some wilderness and trail associations are looking for volunteers to help maintain the area in exchange for food and camping

Check out the Workaway website, which is for people who are interested in cultural exchange and learning. Volunteers get food and accommodation in exchange for working a few hours a day. Visits can last anywhere from a few days to a few months. Put your existing skills to good use, or try something new you would never normally get to do and pick up new skills along the way. Their site lists 1000s of active hosts in over 155 countries offering all kinds of places to stay.

We all need time away from our day to day work. Even God rested on the 7th day when he completed the work of creating the world. The key is to plan ahead so that you can enjoy your vacation and be debt free when you return home. Saving up for a big trip isn’t easy, but these strategies should help you save a little bit faster and have your trip already paid for before you leave home. 

After all, who wants to go on the perfect vacation and come home to a pile of debt?

Send an email to mailto:info@compasscatholic.org. and let us know how your family saves for vacation.

Middle Class Money Mistakes

According to a Pew Research study done in 2014, the middle class is defined as people who have an annual salary between $42,000 – $125,000. That is a huge wide margin between the low end and the high end.

If you are on the low end of the income level, you are probably struggling to make ends meet, you have little to no savings and you can’t afford any frills.  If you are on the high end of the spectrum, you probably have a little bit of savings and can afford some of the nice things in life.

But whether you are on the low end or the high end, you may be making some mistakes that are not good for your future. Here are some topics to consider if you want to improve your financial health.

The first thing that everyone needs to work on is ditching the debt. You want to be in a position where you are totally debt free—no credit card payments, no car loans payments and no mortgage payments.  Getting rid of the mortgage is a long term goal but paying off the consumer debt should be priority number one.

If you were going to be charged an extra 15%-21% for everything that you buy would you still buy it?  Probably not. But people who use their credit cards and don’t pay them off at the end of the month are doing just that by paying interest. You get absolutely no benefit from carrying a balance on your credit cards and paying interest. It only provides added costs, more debt, and lots of stress when it’s time to make the payment.

The second most common mistake is not having an emergency fund. Personal finance experts stress the importance of having an emergency fund to cover unanticipated expenses to avoid long-term financial damage.

If you were suddenly hit with an unexpected $500 bill, would you be able to cover it? If the answer is no, you’re not alone. Nearly six in 10 Americans don’t have enough savings to cover a $500 unplanned expense, according to a report from Bankrate.com. When the unexpected expense happens and there is not enough money to cover it, the credit cards get whipped out and you go further into debt, paying even more due to interest charges.

An emergency fund is money that has been saved and reserved for emergencies. It needs to be in a liquid account (checking or savings not a retirement plan) so you can access the cash immediately when needed, with no penalty for early withdrawal. The money is never touched except for emergencies.

We encourage people to start with a minimum of $1,000. For most people this is a goal that will take several months to achieve.  But even if you only have $400 in your emergency fund when you need it, you will avoid $400 in debt for that emergency. After you get a $1,000 saved in your emergency fund, increase it to one month’s income, then three month’s income. The goal is financial protection from all the unexpected expenses that are looming in your future.

The third mistake people make is spending without a plan.  If the money comes in and goes out and you have no idea where it went at the end of the month, how do you know that you are spending money on what is most important to you and your family?  

A lot of mistakes can be avoided if you just stop, think and evaluate how, when, where and why you are spending. Proverbs 21:5 tells us “The plans of the diligent are sure of profit, but all rash haste leads certainly to poverty.” Spending without setting priorities is certainly a way to run head first into poverty.

The fourth mistake is not taking advantage of an employer match on retirement savings. To avoid this mistake, invest enough in your 401(k) to maximize your employer match. Always, always save the maximum that your employer will match—it’s free money!

Along with not maximizing your employer match, the fifth mistake is delaying retirement savings until later. You may think that saving for retirement will be easier once the car is paid off, or after the kids graduate from college or when you get that long awaited raise. But the key to a healthy retirement fund is to start early and save consistently, even if it’s a very small amount. That way you can maximize the magic of compound interest, where you’re earning interest on both what you have saved and the interest you’ve previously earned. Compounding the interest on your savings helps your savings grow exponentially over time.

The sixth mistake is spending too much on cars. A car is a depreciating asset and the newer it is, the faster it depreciates. An average car loan these days is five years or 60 months. An average payment on a car loan is $500. If you start when you are 20 and buy a car every five years with a $500 month car payment, over your driving lifetime of 60 years, you will spend about $360,000 on car payments. And that calculation does not include the interest you could have made on the money if you had saved it. We suggest driving used cars, avoiding the car payment altogether, and saving the extra cash for retirement and long term goals.

The seventh mistake is absorbing any extra money into your day-to-day spending. If you get even a small financial windfall or an increase in your salary it will disappear quickly if you just spend it.  Instead, allocate the additional money to emergency savings, retirement savings and to a worthy cause.

And that brings us to the eighth mistake, which is thinking you don’t have enough money to be generous. Everything we have is a blessing from God.  It is all too easy to bemoan what we DON’T have. When we think this way, it is easy to rationalize why we can’t give any money to charitable causes. Yet if we really believe that everything we have is a blessing from God, then when we are generous we are simply giving back to God what is already his. We need to look for ways to praise God and be grateful for what we DO have, and one of those ways is to be generous.

Taking time to think and plan your spending is the best way to avoid these common mistakes. It’s not glamorous and it may not be fun, but steady plodding keeps you on track. Proverbs 21:20 tells us “Precious treasure remains in the house of the wise, but the fool consumes it.”

Avoiding Christmas Debt

It’s August, so why in world are we talking about Christmas?

Too many Americans whip out the plastic for Christmas spending and use credit cards to finance Christmas costs. The average consumer ends up with more than $1,000 of Christmas related debt on their credit cards each year. Last Christmas, 14 million Americans were still paying off holiday debt from the previous Christmas.  

More than 25% of all consumers said it took them until October the following year to pay off credit cards from their holiday spending. That’s 10 months of interest payments on top of whatever you spent on Christmas. If the interest rate on your credit card is 18%, and it takes you 10 months to pay off the Christmas debt, that $1,000 Christmas debt cost you an additional $154.

The reason so many people get into debt for Christmas is simple—they haven’t planned ahead. Now is the time to establish a budget for how much you’re going spend for Christmas and start saving some money each month between now and Christmas. This exercise will put you in much better financial shape come January 2018.

You may be thinking that you can’t possibly save all the money you need for Christmas in 4 months. So, my question to you is “How can you possibly afford to pay for those Christmas costs PLUS INTEREST in the months following Christmas?”

Planning ahead not only helps you avoid the last minute rush to buy presents, it also eliminates all the stress of shopping with a deadline, which can get us out of the Christmas spirit. What is really important at Christmas is the gift of God made man, not all of the toys, games, clothes, and electronics we buy for each other.

In an effort to maintain peace in the family, many people spend more than they should, something that becomes painfully obvious when credit card statements arrive in January. 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. Instead of trying to buy gifts for the whole family, draw names and have each person buy a present for one other person.

Look at your checking account and your credit card statements and figure out how much you spent last year for Christmas. That info will help you determine a reasonable amount to set aside each month for holiday spending.

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, the costs to cover the trip need to be included in your planning. If your family lives in a different location there are shipping costs to consider, along with the cost of gifts.

Where many people get into trouble is not matching the list of gift recipients to their budget. Once infused with the gift-giving spirit, you may be tempted to include every aunt, uncle, fifth cousin, neighbor, and friend on your list. Before that happens, limit the number of names by dividing the amount of money you can reasonably spend by the number of people on your list.

For example, if your budget is $400 for gifts, determine whether it’s better, to spend $100 a piece on four people or attempt to please 20 people by buying each one a $20 present. More often than not, this will help you pare down your list to your immediate family.

Let’s be realistic—many of the gifts we give are not used by the recipient. They are tossed aside, ignored, re-gifted, returned for something else or donated to a non-profit organization. So why spend your hard earned money on something a person won’t use and doesn’t appreciate?

Thoughtful spending also means keeping some sense of sanity in the gifts for the children in your family.  It’s easy to over buy and shower the kids with everything they think they want, but is that really a good lesson for them to learn?

We had a mom share with us their formula for Christmas gift giving. Each child gets 5 presents: something to wear; something to share; something to read; something they need and something they want. This family discovered the formula for keeping their Christmas spending in bounds with their budget. And along with that they set reasonable expectations for the kids. This is a much more reasonable plan that buying the ten things the kids just have to have.

When it comes to the children in your life, pay attention during the year to ideas for gifts. You may get some great ideas as you analyze what interests them without the pressure to buy the perfect gift at the last minute. We were on vacation last week with our son and his family and in talking to the teenagers, we got several good ideas for Christmas gifts based on those conversations. Keep your ears open to the interests and activities of the children and teens in your life so you can pick up gifts throughout the year.

By starting your holiday shopping early or, better yet, by keeping your eyes peeled for bargains year-round, you’re almost certain to find great gifts at steep discounts—from toys and games to clothing and electronics.


If you are a crafty person, make some of the gifts. It’s very personal and often more appreciated than a store bought item. Summer is also a good time to get the kids involved in crafts. Maybe the kids can decorate an inexpensive picture frame with seashells. Add a picture of the family at the beach and you have a unique personalized present that grandparents will love and treasure. And that handmade gift would communicate how much you care for them without costing much.

Now is the time to plan for saving and keeping some sense of financial sanity in Christmas spending. Otherwise, you are into the holiday season and it is too hard to change what you’ve always been doing

The most important thing you and I can do is to remember why we’re celebrating Christmas—the birth of our savior, Jesus Christ. In the busyness of the holiday season, it takes an intentional effort to focus on the true meaning of Christmas. It takes a purposeful effort to have a spirit that’s ready to worship the Christ of Christmas without getting caught up in all the Christmas hype our culture throws at us.

The important thing is to prayerfully make the commitment to avoid all debt this Christmas. When you are tempted to overspend, think of this verse 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.

Consider This Before You Buy a House

We’ve probably bought and sold more houses than the average person. We are on our 9th house – and these have all been a primary residence – no vacation homes. Sometimes it was a job related move because we were transferred to a different city. Sometimes we just wanted a bigger house (before we got smart) and sometimes we downsized (after we got smart).

In all that moving around, we learned several tips which we are going to share with you.

But first, let’s start with a verse from Proverbs 24:3 “By wisdom a house is built, by understanding it is established; and by knowledge its rooms are filled with every precious and pleasing possession.” These thoughts of understanding, wisdom and knowledge sum up the things you need to consider as you buy a house.

The first big step in buying a house is to determine if it’s even a good idea. Do a cost comparison on renting vs buying to determine which is better for you. It is really easy to get caught up in the glow of all of the potential benefits of home ownership; equity, no landlord, doing whatever you want to the property.

At the same time, people tend to overlook the benefits of apartment living. For starters, when you live in an apartment, you don’t have to do maintenance on the property. If something goes wrong, call the landlord. If you own the house, you have to pay for the repairs to be done, or do them yourself. Rental insurance is far cheaper than home owner’s insurance on even the least expensive home. If you are renting, you don’t have things like property taxes or association fees. Renting also means you don’t have to spend weekends mowing the lawn, pulling weeds and trimming trees.

A deciding factor in rent vs buy is the permanence of your location. What’s the chance you will be moving in a year? 5 years? Ten years? You need to be in a home at least 5 years to make buying a better choice.

Several websites will help you calculate the difference between renting and buying: Realtor.com; New York Times; Bankrate.com. Or, just google rent vs buy and millions of articles will be at your fingertips.

Calculate the numbers related to rent vs buy from several different websites over and over and over again and make absolutely sure that the financial benefits you’re getting from buying a home are greater than the financial benefits you’re getting from renting.

Keep in mind that there is a huge grey area in the rent vs buy decision based on emotion. That is why it is so important to have facts and figures to use in your decision making process. Buying a home can be a good decision for many people and a very bad one for others. Calculating the raw numbers removes the emotions before you look at a house and fall in love with the backyard.

If buying still seems like the best choice, decide how much house you can afford. In our Navigating Your Finances God’s Way Bible studies, we encourage people to keep their housing costs at 40% of net spendable income. So, take your gross income (before taxes), subtract all the usual payroll deductions and your weekly giving to church and you’ll have your net spendable income. That 40% for housing costs includes not only the mortgage payment, but all the costs associated with owning a house; prepayment of mortgage principal; property tax; homeowner’s insurance; flood insurance; electricity; lawn care/gardening; gas (as a utility); water; sanitation; home maintenance; furniture; appliances; TV (cable, satellite or on demand service); internet service; pool maintenance and supplies; extended service warranties; pest and termite control; homeowner association dues, etc.

If all of those items add up to more than 40% of your monthly net spendable income, then you’re putting yourself in a very dangerous financial position.

Before you even start looking at houses with a realtor, get preapproved for a mortgage. Be sure to talk to several banks and lending institutions before deciding on which to work with. If your preapproval is based on capping your housing costs at 40% of net spendable income, you will have a natural stopping point and you won’t find yourself in a serious mess by buying more house than you can afford.

Avoid the need for private mortgage insurance by saving up for a 20% down payment. That’s actually really good practice for the realities of home ownership, because you need to be smart with your money to be successful in managing a household budget.

Typical cost for private mortgage insurance is 1% of the total balance of the mortgage each year, which is included in your mortgage payment. Basically, mortgage insurance is like adding a 1% to whatever the interest rate is on your loan – if it’s a 3.5% loan, you’ll effectively be paying a 4.5% which includes both interest on the loan and mortgage insurance.

Decide in a rational way what kind of house you really NEED (not want). How many bedrooms or bathrooms do you really need? Once you start looking at houses, it is very easy to get caught up in the excitement of house hunting and fall in love with a house that far exceeds what you really need.

Start your home search by looking at homes at the low end of your budget. If you start out looking at homes at the high end of your budget, the less expensive homes will never satisfy you. If you have to move to a higher budget level, proceed with extreme caution.

The most important part of home buying is a decision on location. You can change lots of things about a house but you cannot change the location. Consider proximity to schools; shopping; church and especially your commute to work. If you pick a location with a long commute, your costs increase and you are wasting time driving back and forth.

Even though it’s a poor long-term financial decision, people most often choose a 30-year mortgage since it has a lower monthly payment than a 15-year mortgage. But that lower monthly payment means you are paying exponentially more in the long term, which is definitely not a wise financial choice.

A 15-year mortgage will save you about 2/3 of the interest you would pay on a 30-year mortgage. That’s because a 15-year mortgage usually comes with a lower interest rate. Plus, interest on a mortgage is calculated based on the outstanding balance and on a 15-year mortgage, the balance decreases faster since the payment is larger.

After you’ve spent a ton of money on your down payment and closing costs, there is more to spend when you move in. If you are moving from an apartment, you’ll need things you probably don’t have like a lawnmower, tools or appliances. Whether you are moving from an apartment to a house or from one house to another, you are bound to want some stuff like furniture, window coverings, paint, and décor. 

Those costs are going to add up, and it is NOT a good idea to start home ownership with a lot of credit card debt. So, during those last few months before moving, save, save, save so you will be able to pay cash for all those expenses that hit when you first move in. You’ll be incredibly glad you had a savings cushion, otherwise it is very easy to max out your credit card.

Anything that makes the new place feel like home will be on the list of things you’ll want to buy. There’s nothing wrong with that temptation. Just do it smartly. Waiting to buy stuff until you live in your home for a few months helps you understand how the house will live and you’ll make better choices than if you run out and try to buy everything all at once as soon as you move in.

There is also that credit card debt to consider. Until you get used to the new budget of homeownership, keep all your non-essential living expenses as low as possible to avoid digging a financial hole. If you can pay cash for non-essentials you will avoid the added expense of paying credit card interest and you won’t be tempted to use your emergency fund or long term savings for non-essentials.

We’ve learned these tips as we have bought and sold houses in various locations and one of the most meaningful things we learned is from Matthew 7:24-27,  “Everyone who listens to these words of mine and acts on them will be like a wise man who built his house on rock. The rain fell, the floods came, and the winds blew and buffeted the house. But it did not collapse; it had been set solidly on rock. And everyone who listens to these words of mine but does not act on them will be like a fool who built his house on sand. The rain fell, the floods came, and the winds blew and buffeted the house. And it collapsed and was completely ruined.”

The most important thing about buying a house is to make a conscious prayerful, faith based decision to seek God’s will for you and your family.

How to Pick a Bank and Avoid Fees

We’ve dealt with quite a few banks over the years, as we’ve moved from one location to another (we are currently living in our 9th house) and we’ve usually picked our bank based on how convenient it was to our house. That is definitely not the best way to make a decision about where to keep your money.

There are lots of options when deciding where to bank. There are regular ‘brick and mortar’ banks, which can range from small local banks to large mega-institutions.  Another option is the Credit Union, which is typically organized as a not-for-profit company, affiliated with a business, branch of the military or educational institution. There are some Savings and Loan institutions which originally started as a mutual association to benefit both depositors and borrowers.  And one of the newer choices in an online bank.

In order to make a decision on which type of bank is right for you, discern why you need a bank in the first place. Are you required to use an automatic deposit by your employer in order to get paid?  Do you need a checking account, savings account or a credit card? Do you want to establish a relationship with a bank in order to secure a home mortgage or a car loan?

Whatever type of institution you are considering be sure your money is insured. The FDIC (Federal Deposit Insurance Corporation) is an independent agency of the US government that protects the funds of depositors in banks and savings and loan associations. All federal credit unions are insured by the NCUSIF (National Credit Union Insurance Fund). State-chartered credit unions may be insured by the NCUSIF, or might have their own state insurance or private insurance.

The typical accounts covered by insurance are checking, savings, money market deposit accounts and CD’s. Deposit insurance typically does not cover other types of financial products such as stocks, bonds, mutual funds, life insurance policies, annuities or securities.

Look at the bank’s website to determine how closely their services meet your needs. Are their locations and hours convenient for you? Can you access the bank when you are in a different location? Does the bank have 24-hour security monitoring so you are able to report a stolen card or fraud transaction off hours? Will you have access to online banking? Are there requirements for a minimum balance?  Are there limits to electronic transactions?

And one of the most important things you need to know is their fee structure.  Ask what situations result in a fee and what are those fees.  Because not knowing this little tidbit can hit you right in the wallet. According to a CNN Money report from February 2017, in 2016, the “big three” banks earned the following in fees:  $1.1 billion in ATM fees; $2.3 billion in maintenance fees to keep accounts open and $5.4 billion in overdraft fees.

It wasn’t that long ago that if the bank received a check that you had written and you didn’t have enough money in the bank to cover the check, they would send the check back to whomever you wrote the check to marked with a big red NSF stamp, indicating that there were insufficient funds in the account to pay the check.

The bank would charge you a small fee (@$10) and you would also have to pay a small fee to the business which tried to cash the check. Today most banks will cash the check, even if you don’t have money in your account and charge you an overdraft fee, sometimes as much as $35 per check.  The legal amount for NSF fees varies by state.

A Pew Charitable Trusts report from December 2016 said that, at that time, more than 40 percent of banks in the U.S. shuffle transactions to maximize overdraft fees.  For example, if you have $100 in your account and have the following charges in this order: $75; $25 and $115, the bank may reorder your transactions so the $115 is deducted first so both the $75 and $25 charges result in overdrafts, thus the bank can charge you twice for two overdrafts, rather than the one which would have occurred if the transactions had been processed in the time sequence order.

Here are some tips that will help you avoid paying ANY bank fees. The first step is to have a clear understanding of the fees and go with the bank that has the lowest fee structure, based on your requirements.

Keep your check register up-to-date and record all transactions (checks; ATM and debit cards) every day. Also, be sure to keep track of related fees for using an out of network ATMs or monthly fees for your checking or savings accounts.

Balance your checkbook and savings accounts every month. If you have any questions or find any errors visit the bank and ask questions until you understand. It’s your money and you have every right to understand what the bank is doing.

Have an EMERGENCY FUND! Overdrawing your checking account by even a few pennies can trigger some hefty fees. Protect yourself by adding a small cash cushion to your account and don’t let your account go below that cushion.

In order to keep track of your cash cushion, sign up for online alerts with your bank or credit union. They will send you an email when your checking account balance dips below a certain limit, say $50 or $100.

Steer clear of “bounced check coverage” or “courtesy overdraft protection.”

Many banks and credit unions enroll customers into courtesy overdraft programs when they open their checking accounts. But you are supposed to agree with this option so be careful when opening an account at the bank. If you aren’t sure that your bank did you the ‘courtesy’ of enrolling you in a super-expensive protection program, check the fine print of your account agreement or call your bank and ask. If you are enrolled, ask to opt-out of the program and be sure to follow up in writing.

If you feel you need overdraft protection, signup for a program linked to a savings account, line of credit, or credit card. You might pay an annual fee for this service and a small fee for each overdraft, but you will be guaranteed protection if you overdraw your account. Be sure to read the fine print when signing up for one of these services.

If you prefer to use debit cards rather than cash, be careful. Merchants can place holds or blocks on your checking account when you pay by debit card. These blocks can be more than the purchase amount, especially for gasoline, rental car and hotel purchases. They do not actually take the money out of your account, but the block does affect your available account balance for a day or two.

Remember that debit cards don’t have the same protections against fraud as credit cards. If someone obtains your debit card number and pin, they can clean out your checking and savings accounts and you don’t have any protection. If someone steals your credit card, your loss is typically limited to only $50 and most times not even that.

If you pay attention to how your bank operates then you can eliminate having to pay bank fees.  You want the money to remain in your account and not pad the bank’s bottom line. Remember the adage from Sirach 20:12. “A man may make a good bargain, but pay for it seven times over.

Finding a Financial Planner (part 1)

You can certainly go it alone when it comes to managing your money, and you could also try to do it yourself when it comes to auto repair, cutting your own hair or giving yourself a root canal. Doing it yourself is a brilliant idea for some people in some instances and a really, really bad idea for many others.

Learning all the details about managing personal finances requires many hours of research, study, and experience, and it may not be worth your time and effort to develop the expertise you need to make good decisions when it comes to your own personal financial planning.  Plus, the fact that you are emotionally involved with your own finances may prevent you from making an unbiased decision.

A trustworthy financial planner can save you both time and money and help you stay on track with your financial strategies. They can help you tackle a specific financial goal, such as preparing for retirement, saving for college or estate planning.  It may sound crazy to pay someone to keep track on your money, but if you match your needs with their skill-set and knowledge it may be crazier to try and do it yourself.

Finding the right planner requires work and patience, but once you find someone who shares your passion for what you want to accomplish, it can make all the difference in the world when it comes to your financial future.

To help you find the right financial planner, start by having a conversation with your spouse if you are married.  Even if their knowledge of finances and investments is very limited it is important for this to be a collaborative decision. Marriage is a joint effort and the results (good or bad) of your savings and investments will affect both of you—so you both need to be involved in the decision-making.

Single or married, the first step is to decide what you are looking for. Are you only interested in certain financial firms? Are there other financial firms you want to avoid? How aggressive or conservative do you want to be in your investments? Are you looking for someone who provides counsel from a Biblical perspective? Are there certain types of products you do or do NOT want to invest in (annuities, mutual funds, bond, stocks, etc.)?

Do you want to avoid companies or products associated with gambling, alcohol, or pro-choice issues? There may also be investments that you prefer, such as companies that are environmentally friendly, focused on pro-life issues, or businesses that close on Sunday.

If you have a specific interest—such as charitable giving or socially responsible investments or if you’re a newlywed or recently widowed — you’ll want to find a financial planner that concentrates in that area.

Write down your financial goals along with a high-level time line.  Do you have 5 years to prepare for retirement or 25?  It also helps to have documentation on your current financial situation.  How much do you make each month? How much do you spend each month? How much debt do you have? How much do you have saved in what type of accounts (401K, 403B, IRA, Roth, stocks, mutual funds, stocks, annuities, passbook savings, etc.)? Yes, this is personal financial information and yes you will need to share it with a financial planner if you intend to use one.

Once you (and your spouse if you are married) have a high-level idea of your current financial situation, your goals and what you want in a financial planner, seek counsel from godly people. Sirach 32:19 tells us, “Do nothing without counsel, and then you need have no regrets.”

Friends, relatives, and neighbors may all have recommendations about financial planners they trust. They may also have some suggestions about people to stay away from! Some parishes have a resource listing all parishioners who own or run a local business, and there are always advertisements in the back of the bulletin where you can potentially find professionals who have the expertise you are looking for. Use all the resources at your disposal to vet potential advisors.

Assemble the facts that will influence your decisions, then seek God’s direction as well. Anytime you are making a large financial decision it is a good idea to pray about it. We have to remember that answers to prayer will sometimes direct us in a way contrary to our assessment of the facts alone so pray with an open mind.

Once you have a list of names, start investigating. Look at their website–what does it say and does it appeal to you? If you don’t have a website address for them, you can usually find a financial planner by entering their name and “CFP” in a google search. Be cautious if they or their business does not have a website.

Check the Financial Industry Regulatory Authority (FINRA.org) website. You’ll have to enter the broker’s full name, the Company’s full name, and the zip code. The results will be a report on whether the financial planner has any criminal charges and convictions, formal investigations or disciplinary actions initiated by the regulators, customer disputes and arbitrations or personal financial disclosures such as bankruptcy, unpaid judgments or liens.

Once you find everything you can discover from all public sources, you still have to be sure that they are a good fit for you, and the best way to do that is in a face-to-face meeting. Pick your top three choices, contact them and set up an appointment. In this process, you may encounter financial planners who cater exclusively to clients with a certain level of assets to invest.  If someone you call has criteria you do not meet, move on to the next name on your list.

When you meet with them it’s good to have all your questions written down and to take notes on what you asked and how they answered. We suggest meeting with a minimum of 3 financial planners before deciding who you’ll work with.  

Our next blog (Finding a Financial Planner (part 2)) will delve into more details on qualifications and questions to ask as you look for a financial planner who is right for you.

Your Own Personal Groundhog Day

Pugroundhog-1891621_1280nxsutawney Phil is the name of a special groundhog who lives in Punxsutawney, Pennsylvania. On Groundhog Day (February 2) each year, Phil emerges from his little groundhog home on Gobbler’s Knob. According to the tradition, if Phil sees his shadow and returns to his hole, he has predicted six more weeks of winter-like weather. If Phil does not see his shadow, he has predicted an “early spring.”

Groundhog Day has always been a part of my life, as I grew up in Western Pennsylvania (about 80 miles south-east of Punxsutawney) and I was probably prompted to write about this pseudo-holiday as I am currently visiting Pennsylvania.

Punxsutawney Phil became a national celebrity in 1993 because of the movie Groundhog Day. The movie starred Bill Murray and Andie MacDowell.  Murray plays an arrogant Pittsburgh TV weatherman (Phil Connors) who is assigned to cover the annual Groundhog Day event in Punxsutawney. He considers the assignment a joke and does not hide his contempt for the small town and the “hicks” who live there.

He travels to Punxsutawney on February 1st to spend the night in preparation for Groundhog Day on February 2nd. On February 2nd, Phil awakens in Punxsutawney to Sonny & Cher’s “I Got You Babe” on the radio and the cheery announcement, “It’s Groundhog Day!” He tapes a half-hearted report on the groundhog, then gets stranded in Punxsutawney due to a heavy snow storm.

On February 3rd, he is still in Punxsutawney and again awakens to “I Got You Babe” and the same cheerful announcement from the radio, announcing Groundhog Day.  He relives Groundhog Day and returns to bed thinking the whole things was a bad dream. February 4th starts the same way – he awakens to “I Got You Babe” and the same cheerful announcement from the radio, and repeats Groundhog Day. He is trapped in a time loop that no one else is seemingly aware of.

Phil realizes there are no consequences for his actions, so he engages in some outrageous behavior such as binge drinking, one-night stands, and reckless driving. However, Phil soon becomes depressed being stuck in the same day over and over, leading to him to find ways to commit suicide to end the time loop, including electrocuting himself with a toaster in a bathtub, and stealing Punxsutawney Phil and driving off a cliff. Even with his apparent deaths, he still wakes up to “I Got You Babe” and every day is February 2nd— Groundhog Day.

After repeating the same day over and over again, he decides to use his knowledge of the day’s events to try to better himself and the lives of the people who live in Punxsutawney. Over many repeated days, he learns how to play the piano, sculpt ice, and speak French. After witnessing the death of a homeless man which could have been prevented, he plans out his actions during the days to avert this and other accidents and disastrous situations that otherwise would have occurred. Phil turns out to be an upright guy, concerned about the welfare of others and searching for good.

Ultimately, in one-time loop, Phil eagerly attends the Groundhog Day festivities and gives a very eloquent report about the small town he previously disdained. His report causes all of the other news stations to turn their cameras to him, ending the time loop.

As February approaches, many television networks are gearing up to air day-long marathons of the movie Groundhog Day.  It is a fun and funny movie that subtly challenges us to look at our lives and discover those ways we are making the same mistakes over and over again. Unfortunately, in the real world, we are not quite as lucky as Bill Murray’s character and we don’t get a chance to live our days over and over till we get it right.

And too often, we put ourselves in our own personal Groundhog Day by making the same financial mistakes over and over again. Spending more than you make; not saving any money; running up debt; keeping up with the neighbors and not tracking where your money is going are all harmful to your financial health and can put you in a Groundhog Day type of time loop.   

These things drown you in financial stress during every month when you repeat that feeling of being overwhelmed each time there is not quite enough money to get you through to the next paycheck. You get that sinking feeling when the bills arrive in the mail knowing you’ll have to juggle things around and figure out which bill doesn’t get paid this month. There is no money in the saving account when extra funds are needed. You can’t figure where the money is going and how to escape from this cycle of financial turmoil.

Unfortunately, these mistakes can impact you for years to come. 

Sometimes, if you aren’t sure what to do, the easiest thing is to do nothing.  But if you continue to do what you have been doing, you’ll keep getting the same results.  If you aren’t sure where to start, read Your Money Counts, which can be accessed for free from the Compass Catholic website. Click HERE. It’s a simple read which will give you an overview of how to change course.

When you have the foresight to look past the harmful things you are doing and understand God’s call for you to be a financial steward, you can escape from the time loop of making the same mistakes over and over again.  We all make mistakes.  They can provide the stepping stones to a better life or they can keep us embroiled in a constant endless loop of living every day as if it were Groundhog Day.

Christmas is Coming!

This year… Christmas will be in December!decoration-1934889_1280

That is really not news, but too often the Christmas season catches people unprepared financially. Consumer counseling agencies see a 25 percent increase in the number of people seeking help in January and February, mostly due to overspending during the holidays. In an effort to maintain peace in the family and goodwill toward themselves, many people spend more than they should every Christmas, something that becomes painfully obvious when credit card statements arrive in January.

The reason so many people get into debt for Christmas is simple—they haven’t planned ahead and they overspent. They haven’t saved or given thought to how they may be able to creatively reduce the cost of Christmas. Now is the time to establish a budget for how much you’re going spend for Christmas and start putting money aside. Even though we just finished the holiday season and Christmas is out of our minds right now, it’s the best time to start planning for Christmas 2017.

To determine a reasonable budget for Christmas 2017, look at your spending for Christmas 2016. While it is fresh in your mind, in your bank account, and on your credit card statements, calculate the total you spent on Christmas 2016.

Be sure to include everything. if you host a Christmas party, that needs to be included. If the Holiday dinner is at your house and you take care of all the food and beverages, that needs to be included. If you travel to be with family in a different state, travel costs need to be included, along with the cost of presents, decorations, and any other items you bought.

Starting now, there are 12 months to save up for Christmas, so divide your total spending for Christmas 2016 by 12 and that’s what you need to save each month to have a debt free Christmas in 2017.
Saving $25 per month gives you $300 at Christmas; $50 a month results in $600 at Christmas and $100 a month is $1,200 for Christmas spending. Saving something each month will help you avoid a holiday spending hangover. If you can’t afford to save something each month, what makes you think you can pay off the credit cards after Christmas?

Now is the time to have the discussion with other family members and friends about curbing Christmas spending – they will probably be as relieved as you are to simplify things. Suggest drawing names and having each person buy a gift for one other person. But do it now so nobody is surprised in December when you want to cut back on spending. Otherwise, you are into the holiday season and it is too hard to change what you’ve always been doing.

Once infused with the gift-giving spirit, we all may be tempted to include every aunt, uncle, fifth cousin, neighbor and friend on our Christmas list without being able to afford it. Even if you are financially well off, what about friends and family – are they able to keep up with the overspending most families do at Christmas?

Many stores liquidate merchandise at the end of each season so start your holiday shopping early and keep your eyes peeled for bargains year-round. If you shop sales throughout the year you’re almost certain to find great gifts at steep discounts – from toys and games to clothing and electronics.

One reason so many people bust their holiday budgets is waiting until the last minute when the pressure to buy is the highest. Pay attention during the year to ideas for gifts. You may get some great clues as you analyze what interests the people in your life without the pressure of trying to figure out 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. A handmade gift communicates how much you care for them without costing much, and you have 11 ½ months to finish making the gifts.

Think of something unique and meaningful like a framed picture of the family you took during a special time. Try getting the kids involved in decorating the frame to make it more unusual.

Maybe you make baked goods for gifts. I realize there are no Christmas cookie bags and plastic containers in the stores now – so buy a red one at the Valentines Day or July 4th sales and make it Christmassy with ribbons and tissue paper.

For the non-financial aspects of the holiday, take a long hard look at Christmas 2016. What went well? What was a disaster? The key is to plan Christmas 2017 so you can do MORE of the fun things and LESS of the non-so-fun things.

Remember, Christmas is the time of year that we should be centered on celebrating the birth of Jesus. We encourage you to prayerfully make the commitment not to go one penny in debt this Christmas.

But this doesn’t just pertain to Christmas. Planning and budgeting for birthdays, anniversaries, and any other holiday that involves gifts or spending helps us stay out of debt.

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

No matter how much we spend, or how many presents we buy, our gifts are only temporary and the only true gift comes from above.

Evelyn Bean