How Much Debt is Too Much?

Debt is a way of life in America. Most Americans carry some amount of debt. There is the mortgage, the car payment, medical bills, credit cards, student loans and the money good old Uncle Fred loaned to you.

Unfortunately, many people don’t realize they have too much debt until they reach disaster level with their debt load. That’s when they get to the point where they’ll do anything to escape the enormous weight of those monthly payments.

If you don’t know how much debt you have in total, try adding up the outstanding balances on all your debt and see if the number horrifies you. Calculate how many hours you have to work to pay your monthly debt. Calculate how your total debt compares to your yearly salary. How many years do you have to work to pay it off? Calculate how much you are paying each month in interest only. Then figure out what you are NOT able to do because you have to pay debt.

Usually that’s enough for an epiphany of some kind, and there is a “light bulb” moment when you decide it’s time to turn things around. That happened to us when we hit bottom. We had a mortgage, tons of credit card debt, two car payments, no savings and an unhappy marriage filled with financial stress. We knew that something had to change, in order for us to turn around our financial mess and stay married.

If you have stopped bringing the mail into the house and let it sit in the mailbox, or if you bring it into the house and shove it into a drawer so it is easier to ignore, you may be in a situation where the debt is taking over your life.

If your credit card balance increases every month you have too much debt.

If you are just squeaking by financially each month, and living paycheck to paycheck that is a big warning sign. When your debt payments consume so much of your income that you’re scraping pennies together at the end of the month, it’s time to do something about it. 

If you’re just making the minimum monthly payments, getting out of debt can take almost forever. When you owe so much that your credit cards are rejected it is a telltale sign that things have gone too far.

Have you ever checked your net worth? If you haven’t, it’s worth exploring.  First list your assets and total them (house, car, cash on hand, bank and investment balances) then list your debts and total them (outstanding balances on your mortgage, car loans, student loans, credit cards, past due bills, etc.) Then subtract your debts from your assets. That figure is your net worth. If your net worth is a negative number then you owe more than you have. When your net worth calculation is negative, it is certainly a signal that things have to change. (Go to CompassCathlic.org where you can find “spreadsheets to customize your budget” for a form to help you calculate your net worth.)

If you aren’t able to save for an emergency fund, or if you aren’t contributing to long term savings through a 401K or IRA because all the money is going to pay off debt, you are making one serious mistake. A mountain of debt can create a vicious cycle of not saving and not saving means more debt when emergencies come up.

A job loss, unexpected illness, or family emergency will throw your finances into a tailspin. Think about what would happen if you or your spouse lost your job—how long could you survive financially? How many months of living expenses and debt payments can you handle with a decreased income?

If you’re in debt and ready to make a change, you have to be ready to say enough is enough. You have to get to the point where you’re thoroughly tired of the struggle, and ready to make some sacrifices—to do whatever it takes to turn it around.

The first step in getting out of debt is to acknowledge the situation you are in, then vow it’s time to change. Start by praying for strength and guidance as well as contentment. Track every penny you spend, which will show you how much money you may be wasting on non-essentials. If you can’t pay off your credit cards every month, stop using them.

Starting with your credit cards, make the minimum payment on all your debts and funnel any extra cash to the credit card with the smallest balance, while making the minimum payment on all other debts. Once the credit cards are paid off, tackle the consumer loans, school loans then the mortgage.

We know what you are going through. When all of your expendable income goes toward debt payments, it can be disheartening. We’ve been there and it is not a happy place to be. Paying off debt is not fun and it is a ton of hard work. But, I can tell you from experience, that there is nothing better than paying off all your debt and being totally debt free.

If debt is holding you back, now is your moment to decide to stop digging a hole, and start climbing out. Getting out of debt won’t happen overnight, but the process can’t begin until you decide it’s time. Dealing with and recovering from your mountain of debt requires a life change, a total transformation.

When you and your spouse decide together that enough is enough, and you work together to pay off your combined debt, your marriage will be MUCH stronger.

Proverbs 22:7 tells us “Just as the rich rule the poor, the borrower is slave to the lender.”  Stop being a slave and get that debt paid off! The freedom is worth the struggle.

Easter

We are all familiar with the story of the Easter resurrection.

He is not here, for he has been raised just as he said. Come and see the place where he lay.  Then go quickly and tell his disciples, ‘He has been raised from the dead, and he is going before you to Galilee; there you will see him.’ Behold, I have told you.” Then they went away quickly from the tomb, fearful yet overjoyed, and ran to announce this to his disciples.  Matthew 8:6-9

Mary Magdalene brought the shocking news to the apostles that the grave was empty and the Lord had risen.  When Mary Magdalene and the other women heard the news from the angel “. . .  they went away fearful yet overjoyed … ” only to be met with skepticism and disbelief from the apostles when telling them about the angel and the empty tomb.

Can you imagine what the apostles were thinking after Mary’s amazing news? Their heads must have been whirling with so many thoughts. “What just happened? Is this the truth? How does my life change based on knowing he is risen? What do I do now?”

Jesus appeared to two disciples on the road to Emmaus and they only recognized him in the breaking of the bread, and their hearts were burning for joy (Luke 24:32).  Similarly, in chapter 21 of John’s Gospel (John 21:1-14), we hear that Simon Peter and others had returned to the Sea of Tiberius in Galilee and taken up their former lives as fisherman. When they met Jesus on the shore, they recognized him in the breaking of the bread.

The various feelings expressed in each of the Easter stories above—from fear to joy to skepticism to disbelief to recognizing Jesus in the breaking of the bread—can also be part of our faith journey.

Sometimes we fear what God wants us to do, and how much he is asking of us. We often find great joy in our belief.  Skepticism can occur when someone challenges us about what we believe and disbelief can haunt us at those times when our faith is not strong.  At other items we are overwhelmed by the miracle that occurs at each Mass in the breaking of the bread.

In each Mass, we have the opportunity to share the disciples’ experience of meeting the resurrected Christ and recognizing him in the miracle of the Eucharist. The words of the Memorial Acclamation express the disciples’ experience of the resurrection. When the priest says: “Let us proclaim the mystery of faith,” our response proclaims these great tenants of our faith:

A – “Christ has died, Christ is risen, Christ will come again.”

or

B – “Dying you destroyed our death, rising you restored our life. Lord Jesus, come in glory.”

or

C – “When we eat this bread and drink this cup, we proclaim your death, Lord Jesus, until you come in glory.”

or

D – “Lord, by your cross and resurrection, you have set us free. You are the Savior of the World.”

 

Through the Eucharist, we are all invited to be transformed and conformed to the Image of God. We have to be willing to be crushed – dying to ourself and giving ourself to others.  This means we must be willing to sacrifice and suffer for the good of others.

Just as the bread and wine are transformed into the body and blood of Christ, so too are we transformed if we have placed a part of ourselves, (family, job, finances, worries and gratitude) in place of the bread and wine that are being transformed.

The Eucharist enables us to be part of the body of Christ, it allows us to be transformed and to be nourished by God so that we, in turn, can nourish those in need.  By participating in the Eucharist, we commit ourselves to sacrifice for others just like Jesus did.

Assembling to celebrate Eucharist allows God to transform the bread and wine and us into the Body of Christ.  By assembling, we acknowledge the truth of nourishing the hungry and thirsty, caring for the sick and imprisoned and all those in need.

Through the Eucharist we can mystically enter into the Death and Resurrection of Jesus, enabling us to accept His saving grace in the life long process we call Salvation. Jesus’ body and blood are present in the bread and the wine that are consecrated during the Liturgy of the Eucharist. Jesus is present in the Christian community gathered to celebrate the Lord’s Supper.  He is present in the priest, in the proclamation of the Word, and in everyone assembled for the celebration of the Mass.

Transformation should occur at each Mass we attend. The next time you respond when the priest asks us to “proclaim the mystery of faith,” ask yourself the same question the apostles may have asked themselves: “What just happened? Is this the truth? How does my life change based on knowing he is risen? What do I do now?”

The eleven disciples went to Galilee, to the mountain to which Jesus had ordered them. When they saw him, they worshiped, but they doubted. Then Jesus approached and said to them, “All power in heaven and on earth has been given to me. Go, therefore, and make disciples of all nations, baptizing them in the name of the Father, and of the Son, and of the holy Spirit, teaching them to observe all that I have commanded you. And behold, I am with you always, until the end of the age.” Matthew 8:16-20

Just like the apostles, Jesus us calling each one of us to “make disciples of all nations” through the saving grace of his life, death and resurrection.

Planning for Retirement: Part II

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In my last post, I touched on some basic retirement planning concepts. A brief analysis of your assets, contributions to retirement savings, expected retirement expenses, and goals is a good place to start your analysis and get a snapshot of your progress.

One area many people overlook is how their expenses may change in retirement. Ideally all credit cards, consumer debt and the mortgage will be paid off so only a minimum amount should be needed to sustain your lifestyle. However, other expenses may crop up or get higher and those should be factored into your planning as well.

Leading into the Golden Years of Retirement, many people are still active and mobile. In fact, retirement probably conjures up images of endless rounds of golf and travel to exotic places as well as having the time to volunteer at some of our favorite charities. But, as we get older, we need to be mindful of our health and the expenses related to making sure we are taking care of ourselves properly.

Also, in the event that we need to take things a little easier, it may become necessary to hire someone to help with various tasks around the house. Even if it is employing a nice teenage boy from the neighborhood to mow the lawn, you will want to compensate him for his time and effort.

Along the same lines, having meals prepared for you may be an added expense that needs to be factored into the budget. Whether it means going out to restaurants more often or having a service that delivers meals to your home, if your capacity to cook for yourself is compromised, you need to consider this extra expense.

Similarly, housekeeping services may need to be in place. Granted, some people may just want those services in place because they’ve always done it themselves and would like a break from it, but others will legitimately need the help due to physical limitations. Either way, if it is a service that has not been utilized in the past, it is important to do some research to make sure there are funds available for it.

One area I know will impact us personally is home repairs, and I need to do some research. I have been incredibly blessed by my husband’s talents and abilities to take care of our home. He does pretty much all of our home repairs himself with the exception of some of the really big jobs like the air conditioning (which is one reason why we have a home warranty in place). So, my assignment is to find out how much some of these repairs would cost if we need to hire someone to do them, then I need to make sure that I account for that when I’m considering our retirement plans.

Not only does my husband do the majority of our home repairs, but he also does some of the basic maintenance on our cars such as oil changes and brake jobs. We have a reliable mechanic whom we trust with the larger maintenance issues that crop up so he would likely be our go-to person for the oil changes and brake jobs, too. However, we will need to factor in paying for his time, not just paying for the parts like we do now. (Of course, if I had things my way, I wouldn’t even own a car, I’d just call a cab to take me places!)

I hope this list has helped you walk through your own expenses and take a look at how things might change for you in retirement. Your list may look very similar to this or it might be entirely different. The important thing is to make sure you put thought into this area because it is just as much a part of the retirement planning process as the amount you have saved and your retirement age.

“Help carry one another’s burdens and in this way you will obey the law of Christ.”—Galatians 6:2

Happy New Year!

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After the excitement of Christmas Day celebrations, as Catholics we are blessed to be able to continue celebrating Christmas into the New Year, until the Feast of the Epiphany (January 6th).  We marvel at the miracle of the birth of Our Savior and dwell on the magnitude of how our lives have been changed by the simplicity of a baby.  Nothing inspires more awe than the birth of a child, let alone the birth of God’s child, whom he sent to save us from our sinful selves.

When we ponder this great blessing, many of the trappings of the secular Christmas celebration pale in comparison.  As we meditate upon the miracle that happened, we are inclined to look at our lives in a different way.  We have been given a second chance because our God is such a loving God that he sent his child to heal us, to stand in our place and redeem us from the mistakes and poor choices we have made (and will continue to make).  The calendar also begins anew and with the New Year there is motivation to do better, be kinder, act more patiently, be better stewards, and work harder to be the children God created us to be.

Traditionally, the New Year starts with a litany of resolutions to bring us closer to these ideals, which we desire for ourselves and our families.  This is all well and good.  Setting goals is a part of life and reaching those goals feels even better.  Once we’ve set and achieved one goal, it gives us the momentum to achieve another goal and another.  As these achievements build on each other, our goals might become bigger and more challenging, but we have previous successes behind us to give us the confidence to reach the bigger goals too. 

However, as we continue to work our way through our checklist, we need to stay focused on THE goal—Heaven.  We have many opportunities throughout the year to reset our earthly goals, but our eternal goal is Heaven and we must never lose sight of that. By staying focused on the birth of our Savior, constantly remaining in prayer, reconciliation, and thanksgiving, the rewards we reap from our earthly goals will be that much sweeter. 

“Deliver us, Lord, we pray, from every evil, graciously grant peace in our days, that, by the help of your mercy, we may be always free from sin and safe from all distress, as we await the blessed hope and the coming of our Savior, Jesus Christ.”

~Embolism after The Lord’s Prayer

Wishing you abundant blessings in the New Year and always,

The Simple Steward

4 Ways to Manage Christmas Spending

johnIt’s hard to believe, but Christmas is only weeks away.  Seeing the first Advent candle lit in Church this past Sunday reminds us all to focus on the real reason for the season—the gift of the Christ child. These next few weeks are designed to draw us closer to God and allow us to prepare our hearts and minds for the arrival of the Christ child.

Oftentimes, it can be challenging to focus on the real reason for the season when our children, loved ones and the media keep reminding us that we need to BUY, BUY, BUY.  While we strive to keep Christ in Christmas, we still need to get some shopping done.

Christmas can be a huge financial stressor to many families. The average family spends about $1,000 during Christmas on gifts, meals, cards, etc. Unfortunately, they are typically reaching for a credit card to make those purchases.  Getting into more and more debt will not elicit feelings of comfort and joy.

So, how can you ensure that you don’t go into debt at Christmas? It may be too late for this year, but we’ve compiled 4 ways to help you manage your Christmas spending and avoid going into credit card debt for Christmas 2015:

  1. Plan. While it can be incredibly challenging to be thinking about Christmas in January, we encourage you to plan how much you can afford to spend on next Christmas in early 2015. Your plan needs to be based on how much you can afford for Christmas, taking into consideration all of your other spending, not how much you want to spend.
  2. Self Layaway. In January, open a free savings account at your bank and begin a Christmas savings fund.  If you know that you’ll be spending $1200 next Christmas, simply put away $100.00 a month.  By creating your own layaway program, you’ll avoid racking up debt and interest charges.
  3. Manage Expectations. As parents we love to shower our children with gifts. The reality is that your kids can only focus on 3 to 4 toys or gifts, so start managing their expectations early.  This is an excellent opportunity to instill lessons about contentment, not greed!
  4. Shop Smart. We are all busy. Christmas shopping can be a challenge and sometimes, we just have to wait until the last minute to get things done.  When you wait until the last minute, you may not be getting the best price on the particular items you’re buying.  If you see a great deal on a gift months prior to Christmas, simply use your Christmas layaway account.  You’ll not only get an early start, you’ll save some money (and a lot of frustration) at the same time.

Simply put, planning next years Christmas early in the new year will help you save money, time and aggravation.  To learn more money saving Christmas tips, you may wish to listen to our radio show entitled Christmas Spending:http://compasscatholic.org/archived-radio-shows/

These words from Pope Francis help to frame the entire season of Advent: “This is the horizon that makes a good journey,” The time of Advent that we begin again today returns us to the horizon of hope, a hope that does not disappoint because it is founded on the Word of God, a hope that does not disappoint, simply because the Lord never disappoints. He is faithful.”

Thanks for reading our blog, and on behalf of the entire team at Compass Catholic, we wish you a joyous and peace filled Advent season.

Freedom Is not Free

johnMark 10:45: “For the Son of Man did not come to be served but to serve and to give his life as a ransom for many.”

On Monday, May 26, we celebrate Memorial Day, an American holiday which honors men and women who died while serving in the U.S. military. Initially known as Decoration Day, Memorial Day originated in the years following the Civil War and became an official federal holiday in 1971. Too many times we use this holiday to celebrate the official start of summer and forget its real meaning—to remember, honor and thank the troops who have given their lives in service to protect our nation.

Ask any of our men and women in uniform, and they’ll tell you that a life of service is not easy. By definition, service involves sacrifice and requires putting others’ needs before your own. Those in military are no longer just living for themselves; they are putting their lives at risk for the greater good, acting as protectors and defenders of all our country stands for.

Similarly, Jesus demonstrates to us that accepting a life of service is not easy. In the Bible, we see that selflessness is an integral part of service for Jesus and the apostles. They fed the poor, sheltered the homeless and accepted the outcasts, even when doing so would require them to die. In that sense, then, doesn’t a life of service equate to a life of love?

It is not difficult to see how a commitment to military service parallels Jesus’ example. Every day, military personnel are faced with danger, leaving behind their families and friends to protect our country.  Just like Jesus, our troops willingly accept their role of dying for us “He humbled himself, becoming obedient to death, even death on a cross” (Philippians 2:8). Their willingness to give their lives in service is an example of the selfless love of Christ.

Use this Memorial Day to remember the ultimate sacrifice made by so many, both those who have died in service and those who are still serving.  In the morning of Memorial Day, the flag of the United States is raised briskly to the top of the staff and then solemnly lowered to the half-staff position, where it remains only until noon. The half-staff position remembers the more than one million men and women who have given their lives in service of our country.  At noon, the flag is raised to full-staff for the remainder of the day. This signifies the living service personnel, who resolve that the sacrifice of those who died will not be in vain.


At its core, this life of service is truly a life of love. Thank you to all of the brave men and women who have served in the military. We truly appreciate your service. God bless all the military personnel, past, present and future, who are protecting our freedom.

Good Intentions

It’s the middle of January and the bills are piling up. In spite of your good intentions, you once again overspent on Christmas. And then there are the debts you owed before the Christmas spending spree. Where will the money come from to pay for all of it and how do you break the debt cycle?

Every time debt is mentioned in the Bible, it is highly discouraged. “Owe nothing to anyone” (Rom 13:8). “The rich rule over the poor and the borrower is slave to the lender” (Prv 22:7). “Do not become slaves of men” (1 Cor 7:23). The Bible not only discourages debt, it tells us how pay our debt. The story of the widow and the oil (2 Kgs 4:1-7) may be the most familiar debt repayment story. The widow was threatened with losing her children due to her husband’s debt. She turned to the prophet Elisha who told her to borrow empty jars from her neighbors and fill the jars with her only asset, a small amount of oil. The Lord blessed her, and the small amount of oil filled all the empty jars, allowing her to sell the oil and pay off the debt. Although this story took place thousands of years ago, it teaches many principles of debt repayment.

The first thing the widow did was to pray and to trust in God. Recognize that your spiritual and financial lives are integrated by asking God to help you manage your finances. Pray for the discipline to persevere and be a good steward. And then trust in God’s divine providence.

The widow then sought counsel from a godly person. Most of us are embarrassed if we have financial issues and very reluctant to share our situation. Yet getting advice from a godly person can give us a fresh perspective, creative ideas and much needed encouragement.

The counselor helped the widow to wisely use her assets in the most prudent way possible. All of us need to discern how skillfully we are managing our assets. You know the large monthly bills, but do you really know where every penny is spent? Most people don’t have any idea exactly how much money they spend each month. Once you track your exact spending, you’ll be surprised how much money leaks through your purse or pocket each month.

At the end of each month, categorize your spending from all sources – cash, check, automated payments and credit. The categories need to be right for your situation, but usually include giving, taxes, housing, auto, clothes, food, insurance, entertainment, etc. Most people also need a miscellaneous category, but be careful–miscellaneous is not a dumping ground. I f the miscellaneous category is too generic, you still won’t know where the money is going.

Now that you know exactly how much you are spending, compare it to your income. If you earn more than you spend, are you spending wisely according to how God would have you behave? If your income is less than what you spend, you have discovered why you can’t get ahead and there are only two solutions – either earn more or spend less.

In either case, a spending overhaul may be needed. Increase your income by taking a part-time job, selling assets you aren’t using or working overtime. Spend less by examining the categories you created and what you spent in each one. Was everything you bought necessary? Is there a way to cut back? Can you eliminate some things and do without? Are you spending on wants or needs?

To many people, their financial lives are totally separate from their spiritual lives. Yet how we handle money has a direct impact on our relationship with God. In Luke 16:11 we read “If therefore you have not been faithful in the use of worldly wealth, whom will entrust true riches to you?” In this verse, Jesus equates how we handle money with the quality of our spiritual life. If we handle money in a godly way, according to biblical principles, our relationship with the Lord will be strengthened. If we handle our money unfaithfully by wasting the resources we have been given, our relationship with the Lord will suffer.

Like the widow, begin by understanding your current situation, turn to God for help, seek counsel from a godly person and wisely manage existing resources. With prayer, trust in God and discipline, it is possible to eliminate the bondage of debt. This year, make your good intentions a reality and change your spending habits. The freedom is worth the struggle.

We can’t save ourselves through our wealth.

Screen shot 2013-02-21 at 4.28.47 PMThe problem, Pope Francis explained in his homily yesterday how sometimes we want to save ourselves, “and we believe that we can do it, for example basing our security on money — and we think: I have money, I am secure, [I have it] all, there are no worries, I have dignity: the dignity of a rich person.”

“This,” said Pope Francis, “is not enough.”

“Think of the parable of the Gospel, of the man who had the full granary, who said, ‘I’ll make another to get more, and then I’ll sleep soundly,’ and the Lord says, ‘You fool! This evening you will die.’ That salvation is wrong, it is a temporary salvation, it is also apparent salvation.”

The Holy Father went on to say that, at other times, “We think we save ourselves with vanity, with pride,” that, “We believe ourselves powerful …,” and that “we mask our poverty, our sins, with vanity, with pride … Even that ends,” he said.

“True salvation is in the dignity that God gives back to us in the hope that Christ has given us at Easter,” he affirmed.

“Let’s make today an act of faith,” said Pope Francis, “[Let us say]: Lord, I believe. I believe in Your love. I believe that Your love has saved me. I believe that Your love has given me the dignity that I had not. I believe that Your love gives me hope.”

VATICAN CITY, April 10, 2013 (Zenit.org)

Pope to Stay in Domus Sanctae Martae

Pontiff Will Use Papal Apartments For Official Audiences, Vatican Spokesman Says

 

VATICAN CITY, March 26, 2013 (Zenit.org) – Fr. Federico Lombardi, director of the Holy See Press Office, informed journalists today that Pope Francis has decided for the time being to stay in the Domus Sanctae Martae house rather than move into the papal apartments.

The Domus Sanctae Martae is a modern residence building located near St. Peter’s Basilica on the site of a former hospice for pilgrims. Since its construction in 1996 it has provided housing for prelates and others having business with the Holy See. The five-story building has 106

Domus Sanctae Martae

suites, 22 single rooms, and one apartment. Its management is entrusted to a director, whose appointment is reserved to the Secretariat of State, and its tasks are defined by statute.

The cardinal electors reside at the Domus Sanctae Martae during conclave. Once a Pope is chosen, the newly elected Pontiff transfers to a slightly larger room- Suite 201 – until preparations are finished in the papal apartments.

Prior to the start of the conclave, lots were drawn to determine which room each Cardinal would stay in the residence. Since his election, Pope Francis has stayed in the room chosen for him rather than move to the papal suite at the Domus Sanctae Martae.

Fr. Lombardi stated that now that the Papal apartment is ready, the Holy Father has chosen instead to move to Suite 201 for the time being and will use the the papal apartment for official audiences and for his weekly Sunday Angelus address. Living at Domus Sanctae Martae, Fr. Lombardi stated, would allow the Pope to live in a communal atmosphere with those who reside there.  By Junno Arocho Esteves