Your 2020 Financial Checklist

Your financial strategy should be reviewed and updated regularly to consider any lifestyle changes that occurred in your life. The review needs to occur as changes happen and at a very minimum once a year.

One important thing to think about as you do a financial review is to take into account the potential for a recession. We don’t know when it’s coming or how serious it will be, however, considering the regular cycle of bust and boom times, we are overdue for a recession. 

One of the best ways to prepare is to pay down your debt. Having no debt puts you into a much better position to weather economic storms. Along with paying down debt, don’t be hesitant to err on the side of having a year or two of expenses in cash–just in case.

A potential recession should not stop anyone from saving, investing and planning. Typically, recessions happen every 7-10 years. Don’t be afraid of it, just plan for it and be sure you have an emergency fund. There has never been a recession that lasted more than 24 months. If you have cash set aside, you won’t have to sell stocks and mutual funds that have decreased in value as a result of the recession. 

While having more in cash assets is a good idea to prepare for a potential recession, you should also analyze your investments to be sure you are balanced between aggressive and conservative positions. The closer you get to retirement, you will want to move to a more conservative position.

If you plan to retire in 2020, it is important to understand what you are currently spending to support your lifestyle.  Many retirement calculators suggest using 75% of your current budget as your estimated retirement budget. The rationale is that your taxes may be lower due to reduced income and your living expenses may also be reduced for work-related items like clothes, transportation, parking, dry cleaning, lunches, etc. But your expenses may increase for items such as travel and hobbies, especially in early retirement.

Medical and health care for the next 20-30 years can be a big number that needs to be factored into your retirement budget. You may want to inflate your pre-retirement budget by 10% to put yourself in the best position to have enough money to fund your lifestyle through many years of retirement.

If you are working and have not done so, max out your 401K contribution. The longer you have till retirement the better off you will be if you save as much as possible for your long-term needs. If you increase the amount you are saving from 6% to 9%, over 30 years your retirement savings could increase by more than $300K depending on the amount you are investing. 

In 2020, the maximum contribution you can make to an IRA remains at $6,000, and if you are over 50 you can make a “catch up” contribution of $1,000. The maximum contribution to a 401K or 403B is $19,500 with the “catch up” contribution at $6,500.

Many employer-sponsored retirement plans offer 12-15 investment options, but their matching contribution can be heavily weighted to company stock. If your match is based on company stock it would be wise to not include company stock as a primary investment option to allow for maximum diversification of your portfolio.

If you are age 701/2 you will have to consider minimum required distributions from your qualified plans. The minimum changes each year, based in your age and account value.

If you plan to retire before your full retirement age, you need to have a good understanding of how your lifestyle will be funded, including the costs of your medical insurance since that will most likely be an out-of-pocket expense. Take a long hard look at how your long term savings can fund your lifestyle for the number of years you have until you qualify for retirement benefit and Medicare. That plan takes many years of preparation, so start planning well in advance.

Have at least one year of expenses in cash so you are a year separated from any market downturns. Having a year in cash separates you from market fluctuations and gives you some breathing space for the market to recover before you have to take money out.

For people just starting out in the job market, it is important to have a long term perspective. The stock market goes up and down, but in the long term, it goes up. Early in your career it is most important to build the discipline and habits of building long term savings and not using it for short term spending. If the market does go down, don’t panic, as you can buy more stock when the prices are lower. Time is on your side if you won’t need the money for 30 years.

Join our Financial checklist podcast with one of our favorite financial planners, John Kennedy of Candor Path Financial for more on this topic.

Evelyn Bean ~ Compass Catholic

Find a Financial Planner Who is a Fit For You

calendar planner and cup of coffee on table.

A financial planner can save you time and headaches in addition to helping you tackle financial goals, such as retirement, saving for college, or estate planning.  

Before talking to a financial planner, get a handle on your personal finances. 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.)?  What are your financial goals for the next year? 5 years? 10 years?

Once you have a high-level picture of your current financial situation and your goals, seek counsel from godly people to find the right planner for you. 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 planners to avoid! 

Once you have a list of names, start investigating. You can find a financial planner by entering their name and “CFP” in a google search. Look at their website. Does it appeal to you? Be cautious if they or their business does not have a website. 

Check the Financial Industry Regulatory Authority ( website to investigate further. Enter the broker’s full name, the Company’s full name, and the zip code to get a report on whether the financial planner has any criminal charges and convictions, formal investigations or disciplinary actions initiated by the regulators. The report will also disclose situations such as bankruptcy, unpaid judgments, liens, customer disputes, and arbitrations.

After gathering information, set up an interview—we recommend interviewing at least three planners before deciding who you want to work with. 

Start with questions about their practice in general terms, such as their investment and client philosophy. Your intention is to be sure the services they offer match your needs. Your basic questions should include: 

  • How many clients do you work with? 
  • Are you currently engaged in any other business, either as a sole proprietor, partner, officer, employee, trustee, agent or otherwise? 
  • Will you, an associate or a team be working with me? 
  • Do you provide a comprehensive written analysis of my financial situation along with recommendations? 
  • Do you offer advice in:
    • Goal Setting
    • Cash Management/Budgeting
    • Tax Planning
    • Investment Review and Planning
    • Estate Planning
    • Insurance Needs
    • Education Funding
    • Retirement Planning

Anyone can call themselves a financial planner, so ask if they have a CFPÆ designation, which means they have passed a rigorous test administered by the Certified Financial Planner Board of Standards. It also means they must commit to continuing education to maintain their designation. The CFPÆ credential is a good sign that a prospective planner will give sound financial advice.

After you learn the basics, ask these questions to find out more about their qualifications: 

  • What is your educational background?
  • What are your financial planning credentials/designations?
  • How long have you been offering financial planning services?
  • Do you have clients who might be willing to speak with me about your services?
  • Will you provide me with references from other professionals? 
  • Have you ever been cited by a professional or regulatory governing body for disciplinary reasons? (Also available on the ( website.)
  • What more can you tell me about your experience in providing financial planning services?

Ask for the code of ethics they follow. Certified Financial Planners are held to the CFPÆ Board’s Code of Ethics, which requires them to act as a “fiduciary.” In short, this means the planner has pledged to act in a client’s best interests at all times. This point is critical.

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

The next important set of questions relates to their compensation. Financial advisors deserve to get paid for managing your money and since you are paying the bill, you need to understand how it works. 

  • How is your firm compensated and how is your compensation calculated?
  • Do you have an agreement describing your compensation and services that will be provided in advance of the engagement? 
  • Do you have a minimum fee?
  • Do you receive referral fees from attorneys, accountants, insurance professionals, mortgage brokers, etc.? 
  • Are there financial incentives for you to recommend certain financial products? 
  • How do you pay for their services? How often? Are the fees deducted from your account? Are you expected to pay by check? 

If a financial planner is paid on commission they could have an incentive for steering you in a direction, which may not be in your best interest. 

You might pay them a flat fee, such as $1,500, for a financial plan or their fees may be calculated on an hourly basis. 

They may be paid a percentage of your portfolio. It is often 1-1.5% of all the assets in your portfolio—investment, retirement, college-savings, etc. The more your money earns for you, the more it earns for them so they have an incentive to keep your portfolio growing.

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

  • Do they offer continuous, on-going advice regarding your financial affairs, including advice on non-investment related financial issues?
  • Do they offer an online platform or some level of technology integration so you can view your account, net worth, budget, etc.? 

Financial plans will vary based on the planner and the company. Be sure that what they provide will meet your needs.  You may get overwhelmed with 40 pages of facts and figures or you may want more details.

As the meeting ends there’s one last question you want to ask yourself: Did they seem interested in you or did they do 90% of the talking? If they asked about you, your life and your goals that’s a good sign.  

Don’t let someone con you into working with them because they promised to make you rich.  Nobody can make that promise and keep it.

Choosing the right financial planner is important, but ultimate peace of mind comes from the confidence that God alone is our true provider and protector. 

Thanks to John Kennedy, CFP, Co-Founder of CandorPath Financial for his expertise in this podcast and blog.

Mastery Over Money

Bills and coins on table.

Bills and coins on table.

Do you disconnect your faith from the more secular aspects of life? If you are like most people, you spend one hour a week in church and are focused on consumerism and materialism the rest of the week.
Step away from that a moment and ask yourself this question: “Is what I am doing with my life helping me be the person God wants me to be?” The purpose of our lives should be to live in a way that pleases God in all areas.

Once we put God in first place everything else seems to fall into place. This is the basic premise of being a good steward–God first in all ways.

True stewardship is NOT about giving it’s about how we live in all areas of our life. Too often when we hear the word Stewardship, it’s related to giving. There is a need for offertory increase in the parish. There is a capital campaign. It’s time for the yearly giving pledge, or the bishop’s annual appeal.

Applying Stewardship to our life and living a stewardship lifestyle on a daily basis can be difficult. It means analyzing our actions and their motivation. Am I greedy? Do I make hasty decisions and later regret them? Am I generous? Am I overrun with debt? Do I gave money a place of importance it does not deserve?

Once we have deeply examined our habits, including how we give, save and spend, managing money becomes simply an administrative matter. We can escape from the pressure society puts on us by telling us that we must have lots of money and lots of stuff in order to be important or worthwhile.

Money is simply a medium of exchange. It is not a statement on how valuable we are. Yet so many times, we give money an importance it does not deserve. The purpose of our lives is to know, love and serve the Lord. If the way we are handling our money hinders our ability to do that, then how we manage money needs to be changed!
Acknowledging that God made and owns everything (Deuteronomy 10:14) is a practical first step in handling money properly. Managing our money wisely is our way of showing God that He reigns in our hearts. And knowing that we possess material things to help fulfill our calling as a Christian helps us to differentiate between how the world tells us to live and what will please God.

Think about the story of the rich fool (Luke 12:16-21). He had become so wealthy that he wanted to tear down his barns and build bigger ones. It never occurred to him that he could have built an additional barn. He also never thought about sharing his wealth with others. The rich man was unwilling to give up his material things because they had the number one place in his heart.

Jesus never condemned the rich man for being rich. But Jesus was sad that the rich man was not willing to walk away from his wealth. His money took priority even over Jesus Himself.

The issue of money is as difficult now as it was when Jesus began His public ministry.

Money is one of those things from which we should be able to walk away. Being able to walk away from anything and everything for Christ reveals a pure heart.

Do we give money first place in our hearts—a place where God should be? All too often, financial issues have their root in spiritual issues. What is in our hearts becomes evident through outward signs. When we use money to find personal fulfillment, when we are greedy or stingy with the money God has blessed us with, when we are overrun by debt and buy things we don’t need, then we may be giving money an importance it does not deserve. Recognizing these problems can be difficult.

The parable of the talents teaches us that God is looking for faithfulness in the little things. The talents were a form of money. The man who entrusted money to his servants expected a return. Two of the servants managed their money well and were rewarded with more of their master’s goods. The third servant managed the money poorly. When the master returned he punished the third servant for mismanagement of his goods

So mastery over money is mastery over ourselves. Mastery over money provides the ability to know, love and serve the Lord. As we better know, love and serve the Lord we become more obedient in all areas of our lives. As we become more obedient we are showing that we can be trustworthy. As we become more trustworthy the Lord bestows greater blessings on us.

We are not saying that if we are generous we will get more money. We are saying that when we submit ourselves to the Lord many blessings come to us in the form of peace, joy, gratitude, and contentment
The foundation of mastery over money is serving the Lord as our number one priority.

Odd as it may sound, spending decisions need to be thought of in terms of our faith. Asking yourself how this purchase helps you be a better steward prior to making the purchase is much more beneficial than beating yourself up after the credit card purchases stack up.

If your attitude toward money needs adjustment, take time to sit in front of the tabernacle and listen to the Lord. It takes a conscious effort to change your mindset and adjust your attitude. Once you master your money, nothing is the same.

And that’s a good thing!

Checkout the Manage Your Money God’s way podcast for more.

How To Not Lose Your Mind with Christmas Shopping

By Victoria Sechrist 

Invariably, at some point during Lent, I refer to Good Friday as “Black Friday.” 

I think it makes sense because Good Friday is a dark, but beautiful day in our Church that led to the foundation of our Christian beliefs.

Lent is months away, but Black Friday is upon us – and it doesn’t have anything to do with Christ’s suffering or resurrection. That doesn’t mean we can’t bring God into our shopping and spending decisions. Like anything, He can transform the way we think about ordinary things.

Things to Remember

  1. Kids value your time and attention over all else. Yes, they may love that new toy in the moment, but they’ll be over it in a few months. They’ll never tire of good, quality time spent with you. 
  2. There is so much you can give that costs nothing: a smile, a hug, a text of encouragement, a shoulder to cry on, friendship. 
  3. It’s OK to miss out on a sale.
  4. It’s OK to feel overwhelmed by all of the sales. 
  5. It’s OK if you get to the store and realize you forgot the coupon. Be compassionate with yourself – you have a lot going on! 
  6. No matter what gifts you give or receive, God loves you the same. 
  7. At the same time, it’s OK to want to bring beauty to the world through the gifts you buy. All beauty ultimately points us back to God. 
  8. You can accept that no holiday is ever perfect, but you can focus on the love surrounding you, whether it’s friends, family, or pets. 
  9. From scripture: “Keep your life free from the love of money, and be content with what you have, for he has said, “I will never leave you nor forsake you” (Hebrews 13:5). 
  10. If you do overspend, realize that everything can be fixed in finances. There is always hope to turn things around and be debt free! 

Now onto the practical stuff

  1. Make a list of everyone who you want to give a gift to. It could be a spreadsheet, notepad, not on your phone, etc. 
  2. Commit to a spending threshold for all of the gifts. For example, if you’re buying for 5 people, decide how much you’re willing to spend in total. For example, if it’s $200, then that’s an average of $40 per person. If you’re married, discuss with your spouse an amount spent on gifts that you both would feel comfortable. Think of it this way: what dollar amount would make you cringe when you look back and find that you spent that amount? If it’s $600, then you know to stay under that. 
  3. Consider buying the same book for all the adults on your list. Pick one you love and write a nice message in each one. It gets rid of a lot of the guesswork in gift buying and also provides a personal touch to all recipients. 
  4. Consider doing homemade gifts (no pressure, though if you’re not crafty). For example, you could make homemade chocolates in different molds; you could knit or crochet; or paint something. Personally, my favorite gifts are homemade ones! Knowing that someone put care and attention into making it for me is special.
  5. If you haven’t saved at all for gifts, ask yourself what you can sacrifice the next 6 weeks so that you don’t go into credit card debt. 
  6. Unsubscribe from retail emails that make you feel especially tempted! 
  7. Use the Honey extension to search for coupon codes on the items you already have in your cart. 
  8. Consider going dark on social media if you get FOMO (fear of missing out) from seeing what other people are buying or what sales are going on. 
  9. If you want to earn a little when you spend, try a site like Rakuten to earn cash back from online retailers. If the thought of creating an account and earning points sounds annoying, then don’t do it. 
  10. Save receipts in order to keep track of your total spending.

I hope you all have a blessed Advent and Christmas!

Be Content and Give Thanks

Our culture urges us to buy, buy, buy and Thanksgiving Day is the only time our society encourages thankfulness. Even that attempt gets diluted by the focus on joining the mad shopping rush on Thanksgiving evening, before the turkey leftovers are cold in the refrigerator.

A large part of giving thanks is recognizing all the blessings we already have and learning to be content. Contentment is in short supply in our country because the advertising industry spends mind boggling amounts of money to create discontent in our minds.

A good reliable used car isn’t good enough. A new car is better. A phone that does everything you need it to do isn’t good enough, if it’s not the latest model. We live in a consumer society that operates on the assumptions that we need to keep purchasing everything we see. It influences us to think happiness is based on acquiring stuff because bigger and more expensive is always better.

That mindset influences us to be discontent no matter what we have. And discontent leads people to buy things they don’t really need and things that will never really satisfy them. Anything you buy in an effort to make yourself happy will not make you happy for more than a few days.

Have you ever felt that “if only” you had more money, the new car or the bigger house, then you’d finally be content? If you’re not content with where God has you today, you’ll never be content when you get that nicer home, that newer car, or more money. 

You can fall into this trap whether you have a modest income or a generous one. How much you have is not a happiness indicator. A person can be dirt poor and be happy and content while someone with all the money in the world can be unhappy and discontent.

How many times do we feel like we have enough? As stewards of God’s gifts and the talents we’ve been given, we should always seek to improve everything about our lives. But in the meantime, part of being a good faithful steward is learning to appreciate what the Lord has already provided. In the book of Tobit 5:19 we read “What the Lord has given us to live on is certainly enough for us.”

Here’s the secret of contentment. It’s realizing that the Lord has given us exactly what he knows is best for us for the moment. Contentment is an inner peace that accepts what God has chosen for our present situation. 

It’s being grateful for what we have and appreciating all the blessings in our life without striving for some magic thing to happen in the future when we think we can finally achieve some level of happiness. 

Owen Phelps, Ph.D. Director, Yeshua Catholic International Leadership Institute, suggested that one of the ways to be more grateful is to use a “Gratitude Journal.” Take time each week to write down the things for which you are grateful to focus on those small things that often escape notice but are so important. 

Discover all those blessings you take for granted–like your job, your family, freedom, birds, the very air you breathe. The list of things we each take for granted can go on and on. Yet each of these things, no matter how important or mundane, is a gift from God.

Gratitude doesn’t have to be saved for the “big” things in life. The habit of being grateful starts with appreciating everything, and recognizing that there is nothing too small to be thankful for. Don’t leave anything out when practicing gratitude.

Another way to bring gratitude into your everyday life is to have each person at the dinner table share three things that happened that day for which they are grateful. The gratefulness discussion at meals can provide fodder for deeper discussions and keep gratitude at the forefront.

At the end of each day spend a few moments in silence to reflect on your day and say a prayer of thanksgiving about the things you experienced during your waking hours. Doing this every day will rewire your brain to naturally discover those things for which you are grateful. 

It only takes 30 days to develop a habit, so try the thankfulness prayer at the end of the day for a month. Once you become naturally more grateful, you’ll start feeling happier each day.

When we think about being grateful, we often think about the positive experiences, but many times the experiences that impact us the most and have a way of moving us forward are life’s challenges. Those challenging circumstances give us ways to grow and change that could not have happened any other way. So learn to appreciate them.

If you’re struggling with being grateful, think about the people you spend the most time with. Maybe everyone at work complains about the office, the work, other employees and the boss. Or maybe your neighbors are constantly complaining about the other neighbors. That kind of thinking can interfere with your ability to see the good surrounding you. Why don’t you take the lead and change the environment by refusing to engage when those conversations start.

We are showered with blessings from God each and every minute of the day and night and it is right to acknowledge and be thankful for those blessings. This year, concentrate on ways to be consciously thankful every day instead of waiting for Thanksgiving to jog your mind about being grateful.

“Thanks be to God for his indescribable gift!” 2 Corinthians 9:15

Join the Compass Catholic Podcast for more ideas about ways to be consciously content and grateful.

10 Questions to Ask Your Parents

If anything happens to mom, dad, or your spouse, where would your family find the information in an emergency situation such as accident, illness or death? 

It can be tough to have a conversation about this important issue, but if you come at it from an objective perspective, it’s a lot easier to do now, rather than when there is an emergency and you need vital information you can’t find.

Here are 10 questions to ask to be sure you know what information they have and where it is located:

1. Where do you keep your important information, in case I need to find it in an emergency? 

All the documentation and information in the world won’t help if you can’t find it when you need it. You may have to access things such as: deeds; vehicle titles; savings bonds; stock certificates; insurance policies; pension information; bank, brokerage and mutual fund accounts; real estate holdings; partnerships and business agreements.

By starting with where the information is located, you can discover which information may be missing.  Make sure your parents have a safe place to store all sensitive and private information and you (or their preferred designate) knows where that place is. 

2. Where can I find a list of your key contacts? 

Ask for a list of their key contacts and be sure you have the names, addresses, phone numbers, and websites, for any professionals involved in your parents’ financial and medical lives. 

This list should include: financial planners; investment advisors; brokers; lawyers; insurance agents; accountants; doctors (general and specialty) as well as other medical professionals.

3. How are your accounts registered?

Whether your parents’ accounts are registered in one name, or in both names as joint owners, the way they are set up determines who controls the assets and how they will transfer. You can help avoid probate by making the account owner’s intentions crystal clear. 

Make sure your parents’ beneficiary designations are up to date. What are the names, addresses and phone numbers of all beneficiaries? Have they designated both primary and contingent beneficiaries in case their primary beneficiary passes away before they do.

4. Do you have an up to date will?

A will appoints someone to manage an estate and dictates how a person’s property will transfer upon his or her death. Having a current will or trust is essential if your parent wants to have any say in how their estate will be distributed. 

If there are children, are all the children to be treated equally?  Does a child need special provision? Should distributions be made outright or in trust? What about bequests to their parish, diocese, friends and relatives? Are they planning to disinherit anyone? If so, have they made a written statement as to why? 

5. Have you Designated a Power of Attorney?

Everyone should have durable power of attorney appointing someone to make financial decisions for them, if they are no longer capable of doing it themselves. Power of Attorney allows the designated individual to file their parent’s income tax return, withdraw funds from their IRA or other retirement accounts for the parent’s care, deal with credit card companies or insurance companies, make deposits or write checks on the parent’s bank account, and more. 

If access to a bank account is intended, it may be necessary to complete a separate Durable Power of Attorney at the bank, using the bank’s form and completing a signature card that puts your signature on file.

6. Do you have a Health Care Proxy?

A health care proxy designates a person who has the authority to make medical decisions for them. If they don’t have a health care proxy, the court system intervenes and will appoint a legal guardian, which can be invasive and complicated at best, and the legal guardian may not follow your parent’s wishes.

7. Do you have a living will or an advance health care directive?

The Advance Health Care Directive (AHCD) allows your parent to designate an agent (and alternate agents) who will have the authority to make health care decisions for them if they are no longer able to make their own.

The AHCD is a legal document that can clarify their wishes with regard to artificial life support in the event of a condition from which they will never recover. It allows them to make statements regarding the types of treatment they may or may not want, such as radiation, chemotherapy, or blood transfusions. 

Make sure the AHCD is attached to their refrigerator door, as emergency medical personnel are trained to look for such documents in that location if they are called to the house.

It is also important to note the difference between a living will from a doctor or hospital and a Catholic living will. The Catholic living will respects the sanctity of life and requires that a person receives nutrition, hydration,   comfort and pain relief even if they are deemed to be terminal. (Let’s face it, we are all terminal!)

8. How can I access your electronic assets in an emergency?

If any of the critical information is stored electronically, you’ll need the URLs, user IDs; personal identification numbers (PINs); passwords and security questions and answers.

Your parents should keep these in a safe place which you know how to access.

9. How do you want to disposition your personal Items?

Have your parents made an inventory of property, including furniture, jewelry, art and other collectibles? Unless it’s unusually valuable these items are not covered by a will.

Do they have any special directions regarding how their assets are to be distributed? Is there anything they have promised to someone? Are there certain items (jewelry, tools, art, musical instruments, vehicles, whatever) that should go to a specific individual? 

10. Have you documented your final wishes?

Though it’s probably the toughest question to ask, find out what your parents want for final arrangements. When someone dies, you’re so overcome with grief that it’s a blessing to have these decisions made ahead of time. Ask them if they have a cemetery plot; prepaid mortuary arrangements; and a preference regarding burial or cremation. It is also good to discuss any special songs or readings they would like at their funeral. 

This is one of the most important and possibly one of the most difficult discussions you will ever have with your parents, but there are bonuses. Sometimes in a discussion such as this, the old letters and pictures get pulled out as well as some ancient family history and stories. Use this time to rejoice in your family and celebrate the lives you’ve shared.

Death comes to us all sooner or later. In Isaiah 38:1 we hear “Thus says the Lord: Put your house in order, for you are about to die; you shall not recover.””

These questions will not only ensure that your parents have a good handle on their estate planning, but should also encourage you to Set your own House in order!

The Compass Catholic Podcast this week discusses these important topics and we encourage you to check out the Set Your House In Order Bible study to help your parents (and you) get all your critical  information created, updated and organized.

Health Care Alternatives

Health care sharing plans are gaining popularity as a viable alternative to traditional health insurance. A health care sharing plan is typically a faith-based organization, which facilitates voluntary sharing among members for eligible medical expenses. 

Members send in monthly “shares” (which is similar to a premium) and that share covers the medical expenses of other members. In other words, I make a payment and that payment is distributed to you for health care costs you incurred, according to the program guidelines.

The premise is that people with similar beliefs and values are coming together to share each other’s burdens. It is the same message we find in Galatians 6:2, “Bear one another’s burdens, and so you will fulfill the law of Christ.”

A major appeal of these plans is that they are much less expensive than regular health insurance.  Families can become members in health care sharing plans for $300 to $500 per month, compared to an average cost of $1,500 per month for traditional health insurance. 

The cost is usually calculated on one or two adults, plus children. However, children are considered one unit, so it’s the same cost whether you have one child or ten. In addition, health care sharing plans usually have lower out-of-pocket expense limits than typical high-deductible health insurance. 

It’s easy to see the savings appeal for people who do not have job related health care or those who do not qualify for government assistance. 

One caveat to keep in mind is that healthcare sharing plans are not actually health insurance and their limitations of coverage are based not only on managing potential costs and claims, but also the faith-based nature of the programs in the first place. The requirements to join vary by program and may require you to sign a statement of faith, verify regular church attendance and have your church membership validated by a church leader.

Health care sharing plans typically do not cover many health-related costs deemed to be unbiblical. People who use tobacco, drugs, or alcohol may be excluded. Recreational marijuana use (even in legalized states) would not be consistent with program guidelines. 

People who participate in hazardous activities need to be cautious. Each program defines “hazardous” differently. It may be riding motorcycles, or hobbies that require you to wear a helmet such as three-wheel ATVs, off-road vehicles, rock/cliff climbing, spelunking, skydiving, deep sea diving or bungee jumping. Any medical expenses related to these activities can result in otherwise eligible expenses being rejected for sharing.

Some of the sharing plans will negotiate lower costs with the doctors and other plans require you to do the negotiating. Are you comfortable negotiating lower costs with your doctor? Most medical providers are so happy to not deal with insurance companies and their claims process that large discounts are often available for cash-pay customers who are willing to ask.

There are several health care sharing plans which include a savings card for dental, vision, and prescriptions. And others don’t have that option. If those services are important to you, ask before buying.

Some plans require you to send your monthly payment directly to another member instead of to a clearing house. This may appeal to you as it gives you the chance to tell someone you are praying for them or maybe you like connecting with people in different areas. Other people prefer to send payments to a clearing house to avoid the personal connection. Which is right for you?

Pre-existing conditions are defined differently in each program. In general, there is some time limit applied, and sharing around subsequent events related to a pre-existing condition are either not shared, or shared at a lower level. If you have any pre-existing conditions, be sure to understand exactly what is and is not covered. 

Each sharing program has their own prescription drug policy, but generally prescriptions are only shared related to a specific medical need, and only for a short duration.  

This means that someone who developed a condition like Type I Diabetes after becoming a member would only have insulin considered a shareable expense for a very short duration. Maintenance prescriptions are usually not eligible for sharing at all.

There are some key features of health insurance which health care sharing plans lack. Insurance is a legally binding contract between an insurer and the insured. But everything in the health care sharing plan is voluntary and not binding. Health care sharing plans do not guarantee compensation for specified loss, damage, illness, or death in return for payment of a premium.

In a time of rapidly increasing health insurance costs, people are turning to this alternative option more frequently. All of the major healthcare sharing groups have seen dramatic increases in membership over the last few years, with total membership now over one million people between the four major programs. 

You can find information on the web arguing how good or bad each of these programs are. In general, the website of each program is very clear about what is and is not covered—and what they do and don’t cover isn’t always the same as traditional health insurance. 

On one hand, there is considerable risk in joining these programs, as your health and even your life may be at stake. However, there are many people for whom these health care sharing options are working very well. Their needs are covered, and they are saving hundreds of dollars (or more) every month. 

It’s a decision each individual needs to make based on their own situation, the price, moral appeal, and acceptance of the various coverage gaps and risks. And even being aware of the gaps, doesn’t mean it’s easy to know the risks. 

The major health care sharing plans are listed below. Most of them have an online calculator to determine your costs. There are “contact us” forms on their websites where you can request further information. And most of these sites have an online chat option. 

If you are considering a health care sharing program, we highly encourage you to do extensive homework. 

When making a decision such as this, which has such a potentially significant impact on your life and wellbeing, we also encourage you to pray for wisdom!

Our guest on the Compass Catholic Podcast this week has been a member of a health care sharing plan for the last 5 years. Join us as he discusses his experience.

Important Money Decisions for every Marriage

In a marriage, differing opinions about finances can trigger arguments, tension, anger, stress and worry. Money differences can drive a wedge between you. It is important for you to work together and develop a way to manage money in your marriage—not just when bills are due, or when the debt is overwhelming, or when a large purchase needs to be made, but every day. 

If you’ve been married for a long time and the way you handle money in your marriage evolved over time, it’s time to visit those assumptions.

If you are a newlywed, you need to figure how to manage money as a couple. Either way, here are eight important financial decisions to discuss:

Yours, mine or ours?

Many couples keep separate accounts and divide the financial responsibilities so they each have certain bills to pay without ever joining forces. What happens when one of them loses their job? What happens when some of those financial responsibilities are related to the children? What happens when one of the spouses wants to be a stay at home parent? 

In our experience the couples who pool their money and manage all the money as one resource have much stronger marriages because they are working together as a team.

What’s our Money Management Process?

Unless you are as rich as Bill Gates, you only have a certain amount of money to spend each month and it’s important to have a plan for managing that money. Otherwise it seems to slip through your fingers and you find out you have too much month left at the end of the money.

One of you can be the family accountant who is responsible to pay the bills and keep track of the budget. But the other person should know where everything is and how to pay the bills. There are apps, spreadsheets, software, and a bunch of different ways to track income and outgo. The important thing is to define a plan that works for both of you know how much money is coming in each month and where it is going.

How do we make money decisions?

Along with determining how to manage money, the third point is defining your decision process related to money, which makes things a lot easier when you come to a point where you are not on the same page.

The husband and wife need each other to achieve the proper balance for a correct decision. Regardless of your spouse’s business background or financial aptitude, the husband and wife should agree, because they both will experience the consequences of money decisions in marriage.  Even if their choice proves to be disastrous, there are no grounds for an “I told you so” fracture in their relationship.

In these situations praying for wisdom helps. In addition to prayer, create a list that helps document each other’s thoughts and feelings regarding the decision. Get down to facts by having the calculations in front of you showing the financial impact of two different options.

How Big is Our Emergency Fund?

We know there is always something that pops us and ruins our best laid plans, so it’s good to have an emergency fund, and that means deciding how much you feel comfortable having on hand for emergencies.

Obviously more is better and the amount may change as you move through different seasons of life. But if you don’t talk about and plan for it,  that emergency fund will never become a reality, and when there is no emergency fund, you can be sure a budget buster is going to come along.

We recommend building the emergency fund to $1,000, then 3 months income, then 6 months income, then one year of income.

How Much Are We Going to Save?

A savings plan is an important part of your financial future. In addition to an emergency fund, discussions about savings need to include short term goals such as money for Christmas or vacations; mid-term goals such as replacing a car, buying a house or renovations to your existing home and long term goals such as retirement or sending the kids to college.

Each of these savings goals are important and with different time frames, there are different vehicles to use for saving. The critical thing is to be on the same page about your goals, how much you are saving for the goals and what savings vehicle suits your purposes best.

How Much Are We Going to Give?

Hopefully you and your spouse are on the same page spiritually, if you aren’t, giving to the church can be a bone of contention. Start by talking to your spouse about an amount that they are comfortable giving on a regular basis.  It is important for you both to agree—peace in your marriage is much more important than giving a specific amount. Continue to revisit the amount you are giving as you review your budget each year.

How Much Debt is Too Much?

The average household credit card debt equals a little over $16,000. Student loan debt averages about $40,000. Car loans add $15,000, and the average mortgage is in the neighborhood of $150,000 to $200,000. When it’s all added together, it’s easy to see how a couple could have $300,000 – or way more in debt

Nobody planned to get into that much debt, it just happened gradually over time. We highly suggest you have a discussion about limiting the amount of debt you have. Maybe it means you stop using the credit cards once your unpaid balance reaches a certain amount. Or maybe you decide you will never have two car payments at the same time. Or maybe you set a cap on the mortgage amount, or decide not to buy a house till the student loans are paid off. Having a discussion about debt limits helps keep you out of financial bondage when the debts become overwhelming. 

How Do We Plan to Teach the Kids About Money?

Ideas on how to teach the kids about money usually vary based on how successfully or unsuccessfully your parents taught you, and how your childhood experience helped or hindered you when you became an adult.

There are no right or wrong answers. Will you give your children an allowance? Will you have the children save a portion of any money they earn or get as gifts? How will you teach them to give and be generous?

The important thing is for you two to be on the same page and to be consistent with the children. If one of you is the ‘bad guy’ and the other bails the kids out anytime the need money, you really aren’t teaching them anything.

All of these suggested money decisions are to help you communicate about money so it never becomes an issue in your marriage. Couples who talk about money on a regular basis are happier in their relationships than those who discuss finances less frequently.

Here’s a little Bible math: when it comes to marriage, 1 +1 = 1. Jesus himself tells us this fundamental truth: “So they are no longer two, but one flesh” (Matthew 19:6). This unity is designed for every aspect of a couple’s life together: physical, emotional, spiritual, and even financial.

Join us on the Compass Catholic podcast for more about making financial decisions as a couple.

Cheap OR Frugal?

There is a difference between being cheap vs being frugal.

The dictionary definition of cheap is: not costing a lot of money; of low quality; not worth a lot of money; not willing to share or spend money. The definition of frugal is: careful about spending money; using money or supplies in a very careful way.

Here is an example of the difference between the two. There are two different types of trash bags in the store. The price on first one is $30.00 for 300 bags, or $0.10/bag.  The price on second one is $25.00 for 200 bags, or $0.12/bag. 

The ten cent bag sounds like a better deal, doesn’t it?

But taking into account the entire picture, the $0.10 bag the cheap person bought is so flimsy, two bags are needed to hold the trash, making the cost per use $0.20. The frugal person only needs to use one bag at $0.12 cents per use. The more expensive purchase price was $0.08 cheaper per use.

In order to be frugal, not cheap, it is important to compare both the price you pay when you buy something against the cost per use for that same item. A cheap person merely looks at the price but the frugal person views the larger picture and considers the overall cost.

Being frugal balances saving money against other factors. You can save money where it makes sense, but you will also pay more for a product where paying more is a better deal for your whole lifestyle.

Here’s another example. A person jogs for exercise. The frugal person will buy the running shoes that best protect their feet and are appropriate for their use. Their decision is made with their overall health in mind, not simply the cost of the shoes. However, they will take advantage of sales or coupons to buy the running shoes as inexpensively as possible. The cheap person simply buys the least expensive shoes whether or not the shoes will offer proper support and protection.

Cheap people use price as bottom line. Frugal people use value as the bottom line.  

Cheap people are driven by saving money regardless of the cost. Frugal people are driven by maximizing total value, including the value of their time, effort and the use of the product.

Being cheap is about spending less; being frugal is about prioritizing your spending so that you can have more of the things you really care about. 

A cheap person will invest a lot of time and energy in order to save a dollar or two, but the time and effort they expend may not be worth the amount of money they save. A cheap person may spend an afternoon repairing a $2 piece of equipment. 

Their whole focus is dollars and cents, without regard to other areas of their life. They willingly take advantage of social situations to avoid spending money. Cheap has a negative connotation, as it refers to a person who often doesn’t consider the value of their time, their energy, or the friendship and goodwill of others. They value money above all else, and they may make spending choices that can alienate others socially. A cheap friend will demand to go to the least expensive restaurant, regardless of what anyone else in the group thinks. They are the person who will pay for their part of the meal precisely down to the penny, but not include any money for the tip.

A frugal person wants to spend less money but the money saving decisions are made with a balanced lifestyle in mind. A frugal person knows enough to balance saving money against other areas of life such as time, energy, friendship, faith, love, and health. The frugal person tends to account for the impact on things such as relationships when deciding if a money saving tactic is worthwhile. 

A frugal person might haggle for a lower insurance bill, but never take advantage of friends in a social situation. A frugal person might reuse a takeout container, but won’t invest the time to wash a flimsy sandwich bag.  A frugal person will make small sacrifices of their own resources—time and energy—to save money, but they generally won’t impinge on others to do the same, nor will they sacrifice large quantities of their own resources to save a few pennies. 

Cheap people are often afraid to spend money. They are willing to sacrifice quality, value and time in order to cash in on short-term savings. Frugal people are resourceful with their spending, maximizing their dollars, so that they can fund big picture wants and dreams.  

I consider myself to be frugal. I plan lunch and dinner so we use every bit of leftovers. I use up every bit of the products we buy by standing ketchup and other bottled products on their head to completely empty the bottle. I use a teeny tiny spatula to get all the product out of a make-up tube. I cut off the end of a toothpaste tube to get a few more nurdles of toothpaste out of it.

But I do not see myself as cheap. I do everything possible to maximize the money we do spend. But I also splurge on the areas where I am passionate (and where the money is in the budget!).

While we DO encourage people to be frugal, we do not encourage you to be so cheap that your life is miserable. Being a good steward means a balancing act by spending money on what is important to you and saving money in those areas that are not so important. Being frugal is about balancing income, giving, saving and spending with a stewardship mindset.

Be frugal, not cheap. Proverbs 28:22 tells us “Misers hurry toward wealth, not knowing that want is coming toward them.”

Life is short—enjoy it but be responsible!

Join us on the Compass Catholic podcast for more about why being frugal (not cheap) is important!

Are You Prepared for the Next Recession?

We aren’t predicting a recession tomorrow. But after such a long “Bull” run there’s bound to be a downturn sooner or later, and now is the best time to prepare your financial life so that you don’t get turned upside down or inside out when it happens.

Even a mild recession could cause a lot of pain for people with credit card debt. The next recession may not be as extreme as the one that occurred in 2007-2008, but it doesn’t have to be in order for credit card delinquencies to become a significant problem. 

Even now, amid a record 10-year economic expansion, most people are doing well, but some are living close to the financial edge and delinquencies are ticking up. 

What does your current and future financial picture look like? Just 35% of Americans have enough savings to cover three months’ expenses, and 28% have no emergency savings at all. Additionally, 39 million U.S. adults have been carrying credit card debt for at least two years, and another 8 million can’t recall how long they’ve been in debt. About one fourth of people who have debt expect to die before they can pay it off.

All of this despite an extraordinarily low unemployment rate of 3.7%. Makes you wonder what will happen if the unemployment rate goes back up to a more traditional 5-6% rate.

If you listen to the financial gurus on the TV and internet their top tip for paying off a credit card balance is to get a 0% balance transfer card, which lets you transfer your existing high-rate credit card debt to a new card with no interest for up to 21 months. They say that depending on how much you owe, a balance transfer could save you hundreds, maybe even thousands of dollars. 

The second top tip is to get a personal loan and use that to pay off the credit cards. Rates aren’t zero, but they are as low as the mid-single digits if you have good credit. The financial gurus suggest personal loans are a useful way to consolidate debt and lower your interest rate. 

The major issue with both of these two “Top Tips” is spending habits. 

If you haven’t changed your spending habits and you pay off your credit cards, you’ll have an open credit line. And that open credit line is tempting to use, potentially running up more significant debt. If you do that, you still have to pay the “old” debt that you transferred to the 0% card or the personal loan. So instead of taking a positive step forward, you have just taken a huge leap in the wrong direction.

It’s time for an attitude adjustment! Think about why you are spending money and how you are spending it. Are you trying to buy happiness? If you are buying things to make you feel better, what is it about your life that you don’t like? If you can focus and change the parts of your life that you’re not happy with, will that eliminate the spending sprees?

Another approach would be to think about the way you spend. It is much harder to spend using cash rather than credit. Carrying cash in your wallet means there is a limit to how much you can spend. Using credit means not really spending the money till the payment is due. Studies have shown that people spend about one third more when using credit rather than cash. Maybe it’s time to leave the credit cards home when you go to the mall.

Here is another approach. Review each of the purchases you made on your last credit card bill. Evaluate each, one rating it from 1-5. Did the purchase make you happy? With 1 being the happiest. We’re not talking about happiest at the point of purchase. We’re talking about happiest today during your review. You need to seriously think about any purchase that scored 3-5. What can you do to make all purchases score a 1 or 2 on the happy meter, even weeks after the initial purchase?

Do you live from a perspective of scarcity or abundance? Most people live from a scarcity mentality, thinking there is never enough. The focus is that we might not have enough. We might suffer from the lack of something. 

Take a moment to think about what things would look like if you lived from an abundance mentality. First, thought is that you already have enough and you don’t need more. The quest to buy happiness disappears.

In Paul’s first letter to Timothy he said “For we brought nothing into the world, just as we shall not be able to take anything out of it. If we have food and clothing, we shall be content with that” 

Nothing has changed in the past 2000 years. We still enter the world with nothing. We still can’t take anything with us when we die.

You can be prepared for the next recession if you focus on getting out of debt and stop spending in an effort to buy happiness. 

The Compass Catholic podcast shares more about preparing for the potential of a recession.