Catholic Money Management

Health Care Sharing Plans – Part 2

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To help you decide if a health care sharing plan is right for you and your family, we are going to look at things to think about and questions to ask.

Several plans have restrictions on the doctors available to you. If you live in a large metropolitan area, this may not be a problem, but if you are in a small town or rural area, you may not have much choice in doctors. Be sure you understand which doctors are included or excluded from any plan you consider buying.

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.

One of the plans requires 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?

The terms around pre-existing conditions and how pre-existing conditions are defined vary with 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. None of the programs we investigated decline membership due to pre-existing conditions. 

Even though some of the programs will actually help pay for adoption costs, the adopted children are subject to the same eligibility requirements as other new members, which means adopted children who have pre-existing conditions will be subject to the pre-existing conditions clause. This limitation on adopted children seems to be in conflict with the family friendly mindset of these plans.

People who use tobacco, drugs, or alcohol may be excluded. Any medical expenses related to these can result in otherwise eligible expenses being rejected for sharing. Tobacco use is prohibited across the board in all health care sharing programs. In addition, 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 is different about what exactly constitutes “hazardous.” It might 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. 

Each health care sharing program has at least some caveats with respect to being a secondary payment source for those also eligible for federal or state assistance. If you receive federal or state assistance be sure to understand the limits of the sharing plan. 

The sharing programs have their own prescription drug policies, but generally prescriptions are only shared related to a specific medical need, and only for a short duration.  Such prescriptions would generally fall under the same per-incident limits or personal responsibility. 

There are some restrictions as to how long medication is covered. 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 not eligible for sharing at all.  Members are encouraged to participate in prescription discount programs such as NeedyMeds, GoodRx, OneRX, and LowestMed.

While all of the health care sharing programs have strong histories of success, there is no guarantee of payment because these are voluntary programs and not an actual contract for health insurance benefits. 

In fact, each group makes it abundantly clear they are not insurance and membership is not a contract. 

Typical disclaimers read …

  • Whether anyone chooses to assist you with your medical bills will be completely voluntary because participants are not compelled by law to contribute toward your medical bills. 
  • Therefore, participation in the ministry or a subscription to any of its documents should not be considered to be insurance. 
  • Regardless of whether you receive any payment for medical expenses or whether this ministry continues to operate, you are always personally responsible for the payment of your own medical bills.

Ultimately, members are placing a great amount of faith in these programs, which do not receive the state regulatory oversight and protection afforded to traditional insurance. 

With that being said, they have shared billions of dollars of eligible medical expenses over their history. 

The success of health care sharing depends on upholding and dutifully administering the member guidelines – on the whole, they seem to have done this so far.

There are plenty of positives about health care sharing and at the same time, there are lots of things to be cautious about to avoid surprises if you don’t have a complete understanding of the program guidelines. 

Money Matters in Marriage

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When couples say their vows at the altar, they don’t promise to be completely open and honest about all their financial information from this day forward.

Maybe they should.

If the husband and wife aren’t honest with each other about their entire financial situation, it can lead to big problems in a marriage.

If money isn’t an open topic that is easily discussed, money challenges can become a way of life. A secret bank or credit card account; spending $500 or more on a purchase without telling their spouse; missing cash in the bank accounts and hiding expensive purchases all break down the trust required for a strong marriage.

Differences about money can put a divide between husband and wife. When spouses don’t share financial information with each other it can often lead to divorce.

Our culture pushes us toward thinking that money is the most important aspect of our life and will ultimately make us happy and fulfilled. This leads us to think finances are an individual matter and it is OK for a married couple to keep their finances separate.

Advertisers manipulate us with their consistent messages about what we have to buy in order to happy and successful. Their focus isn’t about the product meeting our needs. Rather the focus is on sex, wealth, power and prestige. The ads encourage us to buy what we deserve, rather than what we need or can afford.

Our culture also encourages debt, which cripples the family finances. Over half of U.S. adult population has at least two credit cards and 14% have more than 10 credit cards. The average consumer has 13 debt obligations on record at the credit bureau (credit cards, mortgage, student loans, car loans, lines of credit, etc.)

When you add the pressure from society to the typical amount of debt families have, the situation gets even worse. Even though they seem to be doing well, you never know the hidden financial problems in many marriages. The average household credit card debt equals a little over $16,000. But it’s not unusual for families to have $20,000 – $40,000 in credit card debt. We’ve met several couple who had close to $100,000 in credit card debt.

With younger families, there is also student debt—anywhere from an average of about $40,000 to as much as $200,000. Then there are car loans, adding another $15,000 to $70,000 to the debt total. Most families have a mortgage to round out their debt portfolio—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.

It’s also easy to see why they don’t want to talk about it

Lack of communication in marriages can be troublesome, especially if the topic is about money (or lack of money). Money is a taboo subject in many families as talking about money makes people uncomfortable. Many couples don’t want to talk about money because they are afraid of the conflict that might develop. It is easier to keep spending and ignore the looming problem.

A lot of times these couples simply don’t know HOW to talk about money or what to do to dig out of their financial mess. But not talking about money in an open positive manner will definitely create conflict!

Bishop Robert McElroy of San Diego recently said: “The Church must always be enmeshed in the real lives and sufferings and challenges and joys of the people of God and the whole of humanity.”

The Church can go a long way in helping couples build a stronger marriage by giving them easy ways to talk about money. But when does the Church actually teach/talk about money? For most Catholics, the only time they hear about money in church is when there is a need for fundraisings, such as enhanced offertory, capital campaigns or missions.

Even the marriage preparation programs cover finances at a high level with almost no tactical detail. They do mention the importance of using a budget or avoiding debt. But do they talk about sharing credit reports and credit scores or how much each spouse can spend without a conversation, or lifestyle limits (how much is enough)?

Sharing dreams and goals and plans in any area of a marriage makes the couple much stronger and builds bonds between husband and wife. People who say they have a “great” marriage discuss their money dreams with their spouse. But beyond dreams, couples who talk about money on a regular basis are happier in their relationships than those who discuss finances less frequently.

Many priests don’t talk about personal money matters because they don’t think about it, don’t think it’s their role or they lack skills to do it. They don’t see the correlation between faith and finances. But aren’t we supposed to live our faith in every area of our life?

Unfortunately, most married couples learn about finances through Trial & Terror, which mean years of conflict and pain and arguing about money.

As a church, we need to teach people that their faith and their finances go hand in hand towards having a stronger marriage.

Money Matters in Marriage!

We have resources to help couples talk about money wrapped in the word of God:

Navigating Your Finances God’s Way is a 9-week small group Bible study; Set Your House in Order is a 5-week small group study and God Marriage & Money is a resource to help couples who are engaged to be married have the money talk before money becomes a problem.  Contact us for more information.

Listen to our podcast. 

Things Frugal People Never Do

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In the many years we have been in this financial ministry, we have discovered some consist things that people who are careful with money never do. 

Try some of these – they will definitely improve your bottom line!

People who are money smart avoid borrowing money. Think about the paradigm of our society—it’s normal to go into debt to buy whatever you want. Of course, most people cannot afford to buy a house with cash, but how many people go into debt for a new car, a flat screen TV, clothes, the latest version of a smartphone and restaurant meals?

Frugal people always pay cash for anything and everything they can. They have learned the secret of saving for what they want and they avoid wasting money paying interest. They pay cash for their cars. They pay cash for the new TV. They don’t use debt to pay for new clothes. Frugal people know that paying interest means throwing money away!

How do they pay cash for so many items? It’s called an escrow account. Chances are if you own a house you already have an escrow account for property taxes and home insurance through your mortgage company. Your monthly mortgage payment consists of PITI (Principle, Interest, Taxes, and Insurance.) Each month when you make your mortgage payment, some money is put into a savings (escrow) account to cover your yearly insurance and tax bills.

In the same way, you can set up your own escrow account to pay for large purchases. If you need to replace your car in a few years, save a little each month—in advance—to pay cash for a good used car. If you plan to take a vacation this summer, save a little each month in advance so you don’t come home from vacation to face a mountain of debt. If you want to avoid the avalanche of Christmas bills in January, start saving now for Christmas 2019.

If you think it’s impossible to save in advance, then ask yourself why you can afford to pay for the item plus interest after you have charged them on your credit card. Paying interest significantly increases the cost of what you’re buying.

An escrow account is different than an Emergency Fund. An Escrow Account is money that you are saving up for future planned expenses. An Emergency fund is for unplanned expenses.

Besides avoiding interest payments and carefully planning future purchases, frugal people avoid window shopping. Why? Because if you are shopping for entertainment you will probably spend money on something that really isn’t necessary! Someone told me that every time they go to the mall just to walk around, they spend money. My response? Don’t go to the mall! If you shop for entertainment, you will eventually find something that you really don’t need but can’t live without.

Frugal people don’t collect stuff. Typically, they will recycle 90% of their stuff to a worthy cause and it works because they don’t buy a lot of stuff to begin with. St. Vincent de Paul Society, Catholic Charities, and Parish flea market sales are all good places to donate things you no longer need or use. How many times do you look at all the stuff in your closet, drawers, and garage and see things you don’t need and haven’t used in years?

Frugal people don’t take their monthly bills at face value. They are always on the lookout for ways to cut expenses like cable bills. Cable can run as high as $80 – $150 for 100+ channels. How many of those can you reasonably watch? There are many alternatives that will give you most, if not all, of the normal programs you watch for $10 – $15/month.

A PEW research study shows that 95% of Americans now own a cell phone and 77% of Americans own a smartphone. Frugal people are ditching the landline. And saving even more money, frugal people don’t upgrade their smartphones as soon as a new model comes out. If your current phone works and does everything you need it to do, why spend the money to upgrade? And if most of the calls you make and receive are on your cell phone, why have a landline?

Frugal people don’t ignore their budget. Using a budget means you have a plan for every penny! Unless you know exactly where your money is going, how do you know if you are using it wisely on what is most important?

Frugal people don’t go to restaurants as a regular habit. You can cook for two people for way less than you will spend in a restaurant for just one meal. And frugal people never throw away leftovers. When you put leftovers in the fridge, have a plan. Will they be used for lunch or will you have a potluck dinner from the fridge later in the week?

Frugal people don’t pay fees. Whether it’s overdraft charges, late fees, bank account fees or yearly fees for the privilege of using a specific credit card, frugalistas avoid fees.

The most important thing frugal people don’t do is to try and live someone else’s life. They don’t compare what they have to what other people have. They don’t buy things just because everyone else has one and they understand the psychology of advertising so they don’t fall for all the ways advertisers manipulate us. It may seem like some of your neighbors, friends and relatives have so much more than you do, but you never know how much debt is behind all that stuff.

Social media is causing a lot of people to go into debt because they see perfect lives on social sites. In reality, people only post their best parts of their day. They would never post their credit card bill, how much debt they actually have, or how much money they are wasting in interest payments.

Being frugal is like being content—focusing on what you have instead of being in a constant state of wanting more and more.

In Philippians 4:10-14, Paul says that he learned to be content in all circumstances.  Learning how to be frugal will take you a long way down the road to also learning to be content.

Listen to the Podcast

Is the Lottery Calling Your Name?

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Should a Catholic buy lottery tickets? Is it a sin? But what if I win? Think of all the good things that I could do and all the people I could help.

Let’s look at the lottery from a secular point of view and then we’ll look at it from a Catholic perspective.

This summer we have seen several different lotteries reach all-time highs. Mega Millions was worth over a billion dollars million and people were standing in line to buy tickets. When they finally got to the front of the line, they were tempted by all those other lotteries paying big money.

Logically, your odds of winning are abysmally low. You have a 1 in 259 million chance of winning Mega Ball. For Powerball the odds are 1 in 292 million. Your chances are much better for getting struck by lightning (1 in 13,500); dying in a car accident (1 in 645); being a victim of identity theft by the age of 40 (1 in 6); getting bitten by a dog while out for a jog (1 in 133); or even getting a hole-in-one on your birthday (1 in 25,000).

The average American buys $200 of lottery tickets per year. If you live in Massachusetts you will average $735 per year!

What about the scratch-off tickets? They’re easier to win, right? A survey was done by a company that bought $1,000 of scratch-off tickets. Their winning average was 22% and they won $974; their winnings did not even cover the $1,000 they spent buying tickets.

If you are one of the lucky people who win the lottery, you may be in the 70% of winners who end up broke in just 7 years, and many go broke much faster than that. There is a very small percentage of lottery winners who actually do quite well with their winnings, but your odds of doing well are almost as bad as your odds of winning.

The Federal Trade Commission (FTC) has truth-in-advertising laws that prevent advertisers from making false claims about the benefits of their products. That’s why you see so much long legal language on ads for auto leasing, and why there is a long list of potential side effects on ads for drugs. State Lotteries are exempt from the FTC truth in advertising laws so don’t believe everything the lottery commercials tell you!

Let’s look at the lotteries from a spiritual perspective. What does the Bible say about playing the lottery?

1 Timothy 6:9-10 tells us, “Those who want to be rich are falling into temptation and into a trap and into many foolish and harmful desires, which plunge them into ruin and destruction. For the love of money is the root of all evils, and some people in their desire for it have strayed from the faith and have pierced themselves with many pains.”

Based on this verse, playing the lottery, focusing on accumulating or winning money and getting rich can lead to spiritual suicide. The Catechism has a section for our examination of conscience prior to the Sacrament of Reconciliation. One of the questions we are to ask ourselves is: “Have I squandered money on gambling?”

In the Gospel of Matthew, chapter 25 we read The Parable of the Talents. In this parable, Matthew goes to great lengths to describe a faithful steward who was responsible for managing the owner’s funds. A steward must be trustworthy. A steward doesn’t waste or foolishly spend the property they are administering. Wasting money would include playing the lottery in hopes of becoming rich.

Everything we have comes from God—it all belongs to him. Our job is to be a good steward of all the blessings God has given to us, which means managing our possessions wisely in a way that honors God.

Who do you really love, money or God? If you are looking for a get-rich-quick scheme, you are focused on money. Gamblers, which includes lottery players, typically covet money and the things that money can buy.

God forbids covetousness: “You shall not covet your neighbor’s house. You shall not covet your neighbor’s wife, or his male or female servant, his ox or donkey, or anything that belongs to your neighbor” (Exodus 20:17; see also 1 Timothy 6:10).

One of the world’s lies is that money is the answer to life’s problems. People are lured into playing the lottery with promises that their lives will improve if they can only hit the jackpot. If they can just get lucky with the numbers, their problems will disappear. Such thoughts are empty promises. (see Ecclesiastes 5:10–15). “The covetous are never satisfied with money, nor lovers of wealth with their gain.”

If you think playing the lottery is just a form of entertainment, be cautious! There are many better ways to spend your money and more intelligent forms of entertainment.

Once we start playing just for fun it could eventually become more than just fun. It could become an addiction, especially if you play the same numbers each week. You become caught in a “what if” trap. “What if the week I don’t play is the week my special numbers win?”  Buying a lottery ticket here and there is not a sin, but greed is. If you play the lottery on a regular basis, you should prayerfully examine your motives. But we would encourage you not to do it at all!

Wealth and possessions by themselves are meaningless unless they can be used to serve the Lord’s purposes. “The Lord grieves over the rich because they find their consolation in the abundance of goods.” Luke 6:24

King Solomon was in a position to know whether money would bring true fulfillment. He was one of the richest people in the world, yet his conclusion about riches was, “Useless, useless . . . it is all useless!” (Ecclesiastes 12:8) Nothing, not even winning the Mega Millions lottery can replace the value of our relationship with the Lord.

Are you sacrificing a close relationship with Christ in the pursuit of wealth?

Join us on the Compass Catholic podcast for more about why playing the lottery is not in your best interest.

Cheap vs Frugal—Is There a Difference?

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What some people call being frugal, other people call being cheap.  But there is a difference between the two.

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.

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 will 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’re also willing to take advantage of social situations to avoid spending money. To me, 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 so, nor will they sacrifice large quantities of their own resources to save a few pennies.

Here is an example of the difference between being cheap and frugal. There are two different types of trash bags in the store. The price on the first one is $30.00 for 300 bags or $0.10/bag.  The price on the 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 bag the frugal person bought cost $0.12 cents each, and had the more expensive purchase price, but 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 means balancing money savings 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 sales or coupons to buy that running shoe 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 the 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. 

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!

Social Security – Will it be There for You?

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Well, the answer to the title question is … Maybe!  Depends on how you are thinking about Social Security. If you consider the original intent for social security the answer is YES. It will probably be there to supplement your retirement savings.  If you consider the way many, if not most retirees use Social Security, the answer is NO! Social security is only supposed to supplement your income. It is not designed to provide your entire retirement income, so you need to save for retirement.

It’s up to each one of us to stop relying on the government to take care of us in retirement.

There are approximately 3,650,000 boomers who will retire each year for the next 10 years, which will put a huge crunch on Social Security and Medicare.

Starting in 2018, Social Security will begin to draw down trust fund reserves to help pay for benefits. Although Social Security has a long-term financial shortfall that must be closed, the program’s combined trust funds will not be depleted until around 2034, which gives policymakers time to develop a carefully crafted solvency plan.

To eliminate Social Security and Medicare would be political suicide for Congress, but Congress may be forced to cut benefits, raise taxes, increase the eligibility age, or some combination of the three to cover the cost of the program.

For the 52% of Americans who rely on Social Security for more than half their retirement income and the 25% of retirees who get more than 90% of their income from the program, that would be a disaster.

The average retirement savings in America is $60,000 and the average Baby Boomer has saved $103,000 for retirement. The projected lifespan in the US is about 85 years. If you retire at 65 and live till 85, your retirement savings has to last for 20 years. Eliminate or decrease Social Security benefits and that $60,000 won’t last very long.

If you are younger than 60, you need to be saving as much as possible for retirement. If you retire at age 65 you will need to have saved about 8 times your annual salary to cover your living costs in retirement. The chart below shows how much you should have saved for retirement at age 65 based on your salary:

  • $50,000 x 8 = $400,000
  • $75,000 x 8 = $600,000
  • $100,000 x 8 = $800,000
  • $125,000 x 8 = $1,000,000

Are you saving enough???

Proverbs 21:20 tells us “Precious treasure remains in the house of the wise, but the fool consumes it.” Are you consuming your treasure?

We have had 10 years of a bull market and we don’t know when it will stop, but we can guarantee that it will stop at some point and we’ll be in a bear market. Everybody needs to realize this and be prepared.

What are your plans to make sure that you are prepared for a market downturn? If you are already retired, how much money do you have access to in liquid assets, which won’t devalue during a bear market? You want to be in a position where you don’t have to sell depreciated assets when the market decreases. If you are within 5 years of retirement, you should be thinking the same way.

If you have 10 or more years before retirement, what will you do to take advantage of reduced stock prices? Will you be buying or selling?

As we approach the inevitable bear market, you want to pay off as much of your credit card and consumer debt as possible and increase your emergency fund to a minimum of 6 months.

You probably can’t do everything at once and that’s why it’s so important to have a balanced budget, manage your spending and keep debt to an absolute minimum at all times.

We don’t know when the bear market will begin, so it’s important not to delay. Take advantage of the time you have prior to the bear market to get your finances in order. If you’re in good financial shape when the bear market hits, you might be able to take advantage of it and continue to dollar-cost-average your investments and buy more stock at reduced prices.

Since 1934 there have only been four bear markets when the average of the S&P 500 dropped more than 20%. The most recent was in 2008 when it declined 37%. Despite bear markets, more good than bad has prevailed. In a look at five year rolling time periods it’s 76% up, 24% down. Looking at ten year rolling time periods, it’s 88% up, 12% down.

In order to be prepared for those inevitable downturns, you should plan on having 12-18 months of liquid investments if you need would need to live off your savings. Note we didn’t say everything should be liquid, only the money you may need to live on for one to two years. The rest should stay invested per your normal plans because the first six months of recovery can often create the largest gains and if you are not invested you will miss out.

We need to have a Joseph mentality. Joseph saved during seven years of great plenty (Genesis 41:29) in order to survive during the seven years of great famine (Genesis 41:30.) Like Joseph, we need to prepare for the future by saving.

We also need to be diversified in our investments. Money can be lost on any investment. Stocks, bonds, real estate, gold—you name it—can perform well or poorly. Each investment has its own advantages and disadvantages. Since the perfect investment doesn’t exist, it is important to diversify. “Make seven or eight portions; you know not what misfortune may come upon the earth.” Ecclesiastes 11:2

The wisdom of diversification applies to both where we investment AND to how we plan to use Social Security.

Join us on the Compass Catholic podcast for more about your retirement future and Social Security.

What is Your Treasure?

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Our pastor came to Florida as a newly ordained priest many (many, many) years ago. Each year his vacation is a trip home to Ireland to reconnect with his family and his roots. After returning to his parish in Florida, he gave a homily about his trip which is summarized below.:

On one of these trips, he was thinking about the long flight, especially the 51⁄2 hour layover in Boston. This brought to his mind all those Irish people who made that same journey decades ago as refugees from the potato famine. He talked about the overcrowded wooden sailing ships that took between one and four months to cross the ocean. The immigrants were forced from their homes, and their children were facing starvation. They had to get away, leaving almost everything behind. Most of them carried just one small cloth sack onto the ship.

He talked about what those people treasured by what was chosen to go into that sack. These were very poor people, so there wouldn’t be any jewels or silver. Maybe a child would bring a worn-out toy. Maybe there would be a photograph, or an old rosary, or a teacup with a missing handle, or a small stone, or a scrap of lace. Behind each item, in the small sack, there would be a story to explain its value.

Each of the “treasures” represented a memory of times past. The toy might remind the now-homeless child of the warm feeling of being tucked into bed at night.  The photo might be all that was left of a beloved grandparent. Maybe the rosary was from a long-ago First Communion. Maybe the teacup was a gift from a best friend, left behind in Ireland. Maybe the stone was from the path to their cottage, or the scrap of lace was part of a wedding veil.

Those material things represented the underlying treasures: a parent’s care, family, faith, friendship, home, and love.

This leads each one of us to ask ourselves a question. If we had only one small sack into which we could put our most valuable treasures, what would we put in?

This question may be hard to answer because our lives are cluttered with so many possessions. But here is a suggestion. In her bestselling book The Life-Changing Magic of Tidying, Marie Kondo suggests an interesting process. She wants us to pick up each item we own, slowly, one by one, and ask ourselves if the thing “sparks joy.”

Think about that for a moment. She doesn’t ask if the thing cost a lot of money, or if it impresses other people, or if it was a gift from someone who might be annoyed if it disappeared from our bookcase. She just wants us to ask if it “sparks joy” within us.

Possessions themselves are never our real treasures. When we hold an item, and experience a real ‘spark of joy’, there is always a story behind it.  These stories are what lead us to our true underlying treasures.

Our priest told us what he would put into his small cloth sack. The first thing was a get well card he received after open heart surgery. This one card was representative of all the cards, notes and prayers he received from our parish as he recovered from his surgery. He said that the power of prayer and the network of love and care found in our parish were priceless gifts to him. This one card would also represent the treasure of good health, which he would never take for granted again.

The second thing he would put in his cloth sack was a photo of his Mom. After he was ordained in Ireland, he was excited about his journey to Florida. His mom was supportive, and positive about helping him get ready for his long trip. One day as his departure drew near, he found his mom crying. And when he questioned her she said it was because she would never see him again. She still remembered all those people who sailed away forever on those wooden ships, never to come home again. The underlying treasures in this story were his mom’s faith and family. Even when she thought she was losing her son forever, her faith was so strong that she was willing to make this sacrifice.

Now it’s your turn. What do you treasure? If you had only one small cloth sack to put your treasures in, what would they be? Once you decide, then think about the story behind your choice. If you take the time to search underneath that story, I promise you will find what you truly treasure.

The underlying treasure of course, is life itself, the life we’re given straight from the hand of God. All of life is such a gift and when we take the time to stop and really look at it, our gratitude can overwhelm us. All of life is grace—every minute of it.

Join us on the Compass Catholic podcast for more about life’s true treasures.

Lifestyle Inflation—How to Avoid it

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Lifestyle inflation is accepted as a normal part of life in America. It means each time your salary increases, so does your spending in an effort to achieve some perceived level of lifestyle where you will finally be happy. In fact, you are considered abnormal if you aren’t constantly striving for more bigger and better stuff.

The problem is that no material thing will result in never ending happiness, and we can get distracted from an authentic Catholic life when we try to keep up with the cultural norms.

The best way to avoid lifestyle inflation is to detach your spending from your income. Set a standard of living you are comfortable with, and stick to it, even when your income increases. Just because you are making more money does not mean you have to be spending more money

One way to put that extra money into perspective is to calculate the real increase to your spendable income.

After giving, taxes, and other related payroll deductions are subtracted from your gross salary, a raise can have a smaller impact on your spendable income than you think. If you get a raise of $500 a month it looks like an additional $6,000 a year. But after you subtract about $200 a month for payroll deductions and another $50 for increased giving, the real addition to your monthly income is $250. Over 12 months that $6,000 increase is only $3,000 in real spendable dollars. While that’s a gracious plenty, it’s not enough to dramatically change your lifestyle.

Calculating the bottom line on your spendable income gives you a dose of reality. Once you calculate your raise versus your net gain, you may find that the increased income has better uses that an inflated lifestyle.

A much better approach is to step back and contemplate your life goals. What is it that you want out of life? What are your goals for the next 5, 10, and 15 years? Is buying more stuff going to fulfill those goals? Or in 10 years will you regret the money spent on all the useless stuff you bought?

When you define and work on your goals, life is much more satisfying. You may change your mind about where you want to be in 15 years but any worthwhile goal will still move you in a direction that will be positive even if the end state changes.

It is easy get off track when you live your life in order to impress other people. When I see someone driving a fancy car, I have a fleeting thought that goes somethings like this: “Nice car—glad I don’t have to pay for it!” Because what other people drive really does not affect me at all. Don’t fall into the mindset of trying to impress other people with what you have, because they simply don’t care! And let’s be realistic, you really don’t know what other people think. If you are spending your hard earned money to impress other people you are making an assumption that you are impressing them, but you may not be.

Live your life and make your financial choices according to what you care about, not what you think the people around you care about. If you truly stop worrying what other people think, the whole impact of lifestyle inflation disappears. Don’t waste your time and energy trying to impress people who are not involved in your day to day life.

Many of the things we enjoy most are completely free. For example, do you have more time and focus on your friends if you have a potluck dinner at home or do you have more time to focus on them in a noisy crowded, expensive restaurant?

The potluck at home is much more relaxed. You don’t have to worry about parking or waiting for your table to open up or being rushed out the door so the restaurant can turn the table over. You and your friends can linger over dinner as long as you want to. Plus, if you have friends who are also avoiding the lifestyle inflation bandwagon, you can all save money by having dinner at home instead of going out to a restaurant.

Why are you having dinner with friends? Is your purpose to spend money or to enjoy time with your friends? Once you get to the bottom of WHY you are doing something, it makes it much easier to concentrate on what is really important and eliminate the potential for lifestyle inflation.

We have found that the best way for us to stay on track and keep ourselves motivated is to spend most of our time with people who think like we do, who share our faith and who want what’s best for us.

Make a conscious effort to fill your life with people who share a set of values with you. You don’t want everybody to think alike in all situations but being in conflict with the people who are closest to you isn’t a good way to live your life. Concentrate on spending time with those people who will support you, understand you and encourage you.

When we get on the lifestyle inflation merry-go-round we spend so much time and effort looking forward to what we want that we often forget to be content with what we already have. If you aren’t grateful for what you have, you’ll never be grateful for what you get. If you are thinking about upgrading the kind of car you drive, stop for a minute and say a prayer of gratitude that you already have a car to drive. If you are thinking about buying a bigger house, stop for a minute and say a prayer of gratitude that you have someplace warm and safe and dry to live.

In 1 Timothy chapter 6 we hear that if we have food and clothing we should be content and we also hear that we brought nothing into the world and we shall take nothing out of it.

We encourage you to avoid lifestyle inflation and be content with the blessings the Lord had bestowed upon you.

Listen to the Compass Catholic podcast for more about lifestyle inflation.

Lifestyle Inflation—What is it?

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Advertisements are created to convince you to part with your hard earned money. They tell you that you need the new car, bigger house, latest fashions and expensive cosmetic products in order to be happy and fulfilled. All too often we fall for the advertising hype.

In the gospels of Luke and Matthew, we hear the verse about serving two masters. We cannot love God and money. When we take our eyes away from God and focus them on money, lifestyle inflation can occur.

Lifestyle inflation means you spend just a little bit more than you make in order to get to the next (perceived) level of affluence. As your salary increases it’s easy to justify treating yourself and your family to nice things. Once you make a little more money, you can afford a bigger house, a better car, a fancier vacation, and the kids deserve to have everything they want.

And this applies whether you make a little or a lot.

We have worked with many people over the years who have a generous 6-figure income, but they can’t seem to make ends meet. In fact, some people with a high income are in worse shape financially than the people on the lower end of the earning scale. The people who earn less money know they have to spend carefully. While the people at the higher end of the earning scale have more disposable income to use for lifestyle inflation.

A study done by Princeton University’s Center for Health and Well-Being found that happiness peaks at an annual income of $75,000, and then levels off for higher incomes. Yet it’s almost impossible to keep your lifestyle capped at a certain level when your income goes up.

The first area where lifestyle inflation shows up is the bigger car. The average payment on a new car is about $500 a month. On luxury models that car payment can easily balloon to $700 a month per car. Transportation is a requirement. But the kind of car you drive does not indicate the kind of person you are. Nobody but you really cares what kind of car you drive. If you are buying a bigger, fancier car in order to impress people, you are on a fool’s errand

Buying a larger more expensive house is another element of lifestyle creep. In the 42 years between 1973 and 2015, the average home size increased by over 1,000 square feet and at the same time, the American family got smaller.

A larger house means paying more for the mortgage, property taxes, maintenance, insurance, association fees and utilities. Plus, there’s the additional time, money, and effort required to maintain a larger home. And that bigger home needs more furniture and décor than a smaller home.

Selling and buying a home involves costs on both ends of the deal. As a seller, you’ll be paying realtor fees which are estimated at 5-6% of the sales price and your closing costs can range from 2-4% of the sales price. That means that as a seller if your house sells for $250,000 you may be paying as much as $25,000 in fees.

On the other side, as a buyer, you may pay as much as 2-5% in closing costs for things like application fee, appraisals, attorney fees, escrow, home inspection, title insurance, and on and on. So, if you sell a home for $250,000 and buy a home for $350,000, your out of pocket costs can add up to a whopping $42,000, without even considering the down payment on the new house!

Another mark of lifestyle inflation is buying your kids everything they want, and everything their friends have, everything they see, and everything they think they need. We know that parents want to treat their kids to nice things. But taking a one-year-old to Disney World or purchasing an apple watch for a nine-year-old, or buying a 16-year-old a new car may not be the wisest decision, even if you can afford it.

It’s so easy for lifestyle inflation to creep up on you when you forget about long-term goals and base your spending on how much money is available to spend. If you want to provide yourself with some budget breathing room when you get a raise, that’s great. But each time you make the decision to give yourself a little lifestyle boost, you are also hurting your ability to grow your wealth. Because when you spend more, you’ll have less to save.

Real happiness comes from enjoying the blessings God has given you, learning the virtue of contentment and thanking God in prayer for everything you already have.

Join the Compass Catholic podcast to hear more about Lifestyle Inflation.

Ways to Save BIG on your Wedding

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Weddings have become big business. According to The Knot, which is one the most popular wedding websites, the average wedding costs about $35,000. Cost of Wedding.com has the average price at about $26,000, and neither of those estimates include the cost of a honeymoon.

The challenge of both of these websites is that their budget includes everything you may dream of having, which may be overkill for the type of wedding you really want, or the budget available to you.

We suggest you start planning your wedding by asking yourself some questions:

  • Am I paying more attention to the wedding day or the marriage?
  • What is really important to us on our wedding day?
  • Am I getting caught up in non-essential details?
  • How much money do we really want to spend (or have our parents spend) on our wedding?

The most important part of a Catholic wedding is what is commonly known as the exchange of vows. These words are the heart—the essential element—of the sacrament of marriage; they form the covenant that establishes the couple’s marriage. The Church calls the exchange of vows consent—that is, the act of will by which a man and a woman give themselves to each other, and accept the gift of the other. This is the only thing that is really important at a Catholic wedding.

If you can focus on that one truly important thing you can put the reception, food, flowers and everything else into perspective. Here are some tips to have a lovely wedding without driving yourself to exhaustion, going broke, or having your parents spend their retirement funds on your wedding.

Start your marriage debt free by setting a realistic budget and sticking to it. Be sure your budget includes everything you want and excludes those items you decide not to have. Just because there is an idea on a wedding planning website or app doesn’t mean it’s something you need to have or do.  If there is something important to you and you are willing to splurge on that item, cut back on something else.

Save money by looking at dates and times that may be less expensive than others. WeddingWire’s wedding date calendar shows you the most popular days and dates, based on your location. Those most popular dates are also going to be the ones that are most expensive.

Saturday is generally the most expensive day to get married.  People may expect a wedding and reception to be held in the evening, which is a much more formal affair than in the daytime. But you’ll still be just as married if you do it mid-day, and having a daytime reception can be more cost effective. A brunch reception may save you 30% over an evening reception and you can save even more by not getting married on Saturday.

Keep your guest list limited to the people who mean the most to you. If you haven’t seen someone for 2 years, why invite them to the wedding? And don’t include “plus ones” on your invitations. If you and your fiancée socialize with a couple, invite the couple to the wedding, but if you don’t even know your friend’s “other half” why invite a stranger to your special day?

The average bride spends about $1,500 on a wedding dress. A simple Google search for white prom dresses pulls up hundreds of beautiful white dresses that cost a fraction of that. You may also be able to buy a white dress in the party dress section of any department store. Ask your bridal salon if they offer any discounts for paying the full price of your gown upfront. When budgeting for your dress, take into account the extras such as alteration fees, shoes, jewelry and your veil. You may be able to borrow some of these items from a friend or family member, making it your “something borrowed” and saving you money.

You may want to mail out traditional wedding invitations, but there are a lot of things you can communicate electronically. Instead of “Save the Date” cards, send them electronically and at the same time, ask for mailing addresses, saving you the time and trouble of tracking them down when it comes time to send the invitations.

Bridesmaids and groomsmen are one more thing to coordinate. You can avoid choosing which of your six friends you want as bridesmaids, by eliminating the whole thing. And, you’ll eliminate all the additional costs for flowers, hair, makeup and gifts. Your friends will probably be relieved that they aren’t taking on a financial obligation and can just enjoy the wedding as guests.

Wedding cakes are priced by the slice and can range from $1.50 to $12 a slice. The more complicated the wedding cake, the more you’ll pay. A good cost-cutting option is to have the wedding cake of your dreams made on a small scale for a price you can comfortably afford, and then order sheet cakes of the same flavor to be cut in the kitchen. Serving “half-portions” will also save money as people always leave half-eaten slices on their plates anyway.

Local blooms that are in season at the time of your wedding are going to be much less expensive than exotic imported flowers. Plus, local flowers tend to look fresher because they weren’t in transit for days. Another option is to use a single large flower, such as a hydrangea, which naturally looks fuller and takes up more space with fewer stems. Flowers from the wedding ceremony can also be used as decorations at the reception with some preplanning.

Do it yourself projects can cut costs, especially when it comes to invitations and decorations. Or you may be able to borrow items from friends who have recently gotten married. If you are going the ‘do-it-yourself’ route, be sure to keep it simple and only tackle the projects you can comfortably handle with a minimum of help.

If you are using vendors or caterers, read the contract carefully so you know exactly what is and isn’t included. And keep an eye out for requirements such as a venue requiring you to use a certain caterer. Reviewing contacts in detail will avoid unexpected expenses, including cake-cutting and corkage fees or power for your DJ and photo booth. If a cost seems unreasonable, or you feel that you are paying for something you don’t want, respectfully request to have it removed.

Save money by cutting down on the amount of time your photographer and videographer are present. You’ll likely want them there for the ceremony, and part of the reception, but you might not need them for the ENTIRE reception.

There’s no reason to purchase something if you truly would prefer not to have it. Do you really need wedding favors which will just be thrown away? Things like wedding programs, and menu cards take time to create and the wedding guests probably don’t really notice them. If you don’t want a three-tier cake or a skyscraper-like centerpiece, then skip it! Do you really need a limousine or can a friend with a nice car transport you to the wedding ceremony and reception?

A wedding should be more about what it means to the couple getting married, not what our culture dictates as far as what kind of party to have. After all, the wedding is a point in time and the marriage is the rest of your life.

Bottom line, anybody who is in the wedding business will probably try to upsell you on products and services. Your job is to devote the biggest parts of your budget to the areas that are most important to you and be willing to compromise on the rest. When analyzing what you want or don’t want at your wedding, consider if (and how) it’ll impact you and your spouse years from now. Concentrate on those things that you will fondly remember 10, 15 or 25 years down the road.

Everybody’s different and just because your friend did something at their wedding does not mean you should do it at yours. Don’t say yes to anything just because you feel pressured to, or because that’s what “you’re supposed to do.”

Your wallet, and future marriage, will thank you for it.

Listen to the Compass Catholic podcast for more on this topic.