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

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.

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!

Is a Financial Disaster Heading Your Way?

If it’s time to get your finances under control, you may want to consider the services of a credit counseling organization. Most reputable credit counselors are non-profit and offer services at local offices, online, or on the phone. 

Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate non-profit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.

A reputable credit counseling agency should send you free information about itself and the services it provides without requiring you to provide any details about your situation. If a firm doesn’t do that, consider it a red flag and go elsewhere for help.

Once you’ve got a list of counseling agencies check them out with your state Attorney General and local consumer protection agency. They can tell you if consumers have filed complaints about any one of them. BUT if there are no complaints about them, don’t consider it a guarantee that they’re legitimate.

After you’ve done your background investigation, you will want to interview several credit counseling agencies. Look for an organization that offers a range of services, including budget counseling, and savings and debt management classes. Avoid organizations that push a debt management plan (you pay them and they pay your creditors) as your only option before they spend a significant amount of time analyzing your financial situation.

Find out about their fees—either an initial or monthly fee and get a specific price quote in writing. Do a thorough review of any agreement or contract and never sign anything without reading it first and having a complete understanding of the terms and conditions. 

Check out their qualifications to be sure they are licensed in your state and see if they are accredited or certified by an outside organization and be sure to check out the certifying organization. Try to use an organization whose counselors are trained by a non-affiliated party.

Ask about confidentiality. What assurance do you have that your personal information (including address, phone number, and financial information) will be kept confidential and secure?

Find out how the employees are paid. If employees are compensated by selling you certain services, or if you agree to pay a fee, or if you make a contribution to the organization, consider it a red flag and go elsewhere for help.

Beware of any organization that tells you it can remove accurate negative information from your credit report. Legally, it can’t be done.  Accurate negative information may stay on your credit report for up to seven years. And if they are making you pay for removing inaccurate information, you can do that yourself free of charge.

If you do decide to work with a credit counseling service, continue to pay your bills until your creditors have approved the plan. If you stop making payments before your creditors have accepted you into a plan, you’ll face late fees, penalties, and negative entries on your credit report. Contact your creditors and confirm that they have accepted the proposed plan before you send any payments to the credit counseling organization for your debt management plan.

Make sure the organization’s payment schedule allows your debts to be paid before they are due each month, since paying on time will help you avoid late fees and penalties. Review the monthly statements from your creditors to make sure they received and correctly applied your payments. 

If your debt management plan depends on your creditors agreeing to lower interest rates or eliminating finance charges, or waiving late fees, make sure these concessions are reflected on your statements.

The best advice we can give you is to stay on top of your finances on a regular basis and don’t let your spending habits and debt overwhelm you.

If you have any inkling that your finances are headed for disaster, address the problems as soon as you see them coming. The longer you wait to get your finances under control the more of a mess you’ll have to clean up. These problems don’t happen overnight—they creep up gradually. If you are in a situation where your finances feel slightly out of control, the best thing you can do is get them under control before they get unmanageable.

If you are experiencing overwhelming financial challenges, you’re not alone. Consumer debt is at an all-time high. Whether your debt is the result of an illness, unemployment, or simply overspending, it can seem impossible to manage.

Although it may seem counter intuitive, one of the most important things you can do in tackling a financial problem is to pray. If you are married both of you should pray together on a regular basis for the strength and wisdom to be good stewards of the blessings God has given to you.

It IS possible to dig your way out of a financial disaster. We know—we did it!

The Compass Catholic podcast has more ways to be proactive about avoiding a financial disaster.

Don’t Get Scammed!

The Consumer Financial Protection Bureau has only been compiling complaints for about 8 years. Debt collectors are the top consumer complaint category. Identity theft (credit card fraud and tax fraud) was the second biggest category. 

The third most common consumer complaint is an imposter scam, which involves someone pretending to be a government official, tech support representative, or a loved one in trouble to trick consumers into giving them personal information.  

There are any number of scams out there—here are some ways to avoid them. 

Secure passwords are a vital way to protect yourself. The most often used passwords are Password or 00000 or 12345. Protect your personal information by creating secure passwords.

Think of a sentence, such as “I was born on September 13, 2000 in Abilene, Texas.” Then take the first letter of each word or number: iwbosttiat. Once you have that, create a password by making some of the letters caps and replacing some letters with symbols or numbers that are similar to the letters being replaced. Using that logic, your password would be: Iw6o$13ti@T.

The new password is not a real word, it can’t be found in the dictionary, it is a mixture of letters, numbers, and symbols, it is meaningful to you and it is not something people can easily discover (like your phone number or birthdate.)

A second way to protect yourself is to be careful with emails. Even if you recognize the name of the sender on the email, if it’s suspicious, check out the email address in case that person’s email has been spoofed. If you are trying to see if a website mentioned in the email is legitimate, type the email address in your browser, do not click on the links

You can also protect yourself by being cautious about answering phone calls. Don’t believe your caller ID. Technology makes it easy for scammers to fake caller ID information, so the name and number you see aren’t always real. Don’t answer any calls from numbers you don’t recognize. If it is important, and if the call is personal, the caller will leave a voice mail. 

Hang up on robocalls. If you answer the phone and hear a recorded sales pitch, hang up. These calls are illegal, and often the products are bogus. Don’t press 1 to speak to a person or to be taken off the list. That could lead to more calls, since they were able to get a live person to interact with them.

You can also use the website whitepages.com to do a reverse phone look-up. Type in the phone number which called you and see if the phone number is a high potential for scam. On your cell phone, block the calls you know are from scammers.

If you are suspicious about a specific call, take time to check it out. If someone says they are from a credit card company or a government agency and they are asking you for personal info like a credit card number or your social security number, call them back on a number you have verified.  Don’t use the phone number the potential scammer gave you.

If someone calls and says there is a potential for fraud on your credit card and they want you to give them your credit card number to verify, don’t do it. Use the phone number of the back of your credit card and call the company back to verify if the potential fraud is real.

Don’t pay upfront for a promise. Someone might ask you to pay in advance for things like debt relief, credit and loan offers, mortgage assistance, or a job.  They might even say you’ve won a prize, but first you have to pay taxes or fees. If you pay, they will probably take the money and disappear. 

In all situations, be cautious about how you pay. Credit cards have significant fraud protection built in, but some payment methods don’t. Wiring money through services like Western Union or MoneyGram is risky because it’s nearly impossible to get your money back in case of fraud. That’s also true for reloadable cards (like MoneyPak or Reloadit) and gift cards (like iTunes or Google Play). 

Don’t deposit a check and wire money back. By law, banks must make funds from deposited checks available within days, but uncovering a fake check can take weeks. If a check you deposit turns out to be a fake, you’re responsible for repaying the bank, even if you already spent the money you deposited.

Before you give up your money or personal information, slow down and think. Scammers want you to make decisions in a hurry. They might even threaten you, or say the police are on their way to arrest you. Slow down, check out the story, do an online search, consult an expert, or talk to a friend.

Be skeptical about free trial offers. Some companies use free trials to sign you up for products then bill you every month until you cancel. Before you agree to a free trial, research the company and read the cancellation policy. And always review your monthly statements for charges you don’t recognize.

Freeze your credit through Equifax, Experian or Transunion to avoid identity theft. Unless you are applying for a mortgage, car loan, a credit card or some other type of loan, there is no reason to allow inquiries against your credit. When you restrict access to your credit information, it becomes more difficult for identity thieves to open new accounts in your name. That’s because most creditors need to see your credit report before they approve a new account. If they can’t see your report, they may not extend the credit.

Sign up for free scam alerts from the Federal Trade Commission at ftc.gov/scams to get the latest tips and advice about scams sent right to your inbox. If you spot a scam, report it at ftc.gov/complaint

Proverbs 24:6 says, “For by strategy war is waged, and victory depends on many counselors.” Wage war on the people or organizations out there who are trying to take advantage of you. 

We hope these ideas will help you keep your information safe and protect you from scammers. The Compass Catholic podcast has more ways to protect yourself.

Plan to be Content This Christmas

School just started a few weeks ago, and Christmas is probably not at the top of your priority list currently, but the best time to start planning for Christmas is now. 

Bring unprepared can lead to stress and debt. Plus so many times we feel pressured to make Christmas perfect and we aren’t content till there is a mountain of toys for the kids and we have spent a ton of money buying gifts for every aunt, uncle, friend, neighbor and 5th cousin 10 times removed. Too often our buying and spending frenzy is driven by an effort to be content.

Did you know that contentment is mentioned in the Bible seven times and six times it has to do with money and possessions? Scientific evidence suggests that being content may have major benefits for your health. Contentment helps fight stress, boosts your immune system, protects your heart and reduces pain. What’s more, it may even increase your life expectancy.

Contentment is in pretty short supply in our culture because the advertising industry creates discontent, especially when there is a holiday where the advertisers can influence us to spend money and buy what they are selling. 

If we believe the commercials, we have to buy things people don’t need in order to satisfy our gift giving obligation and in an effort to make them happy. And you and I know that Christmas can be one of the most frustrating times of the year when it comes to obligatory gift giving.

It doesn’t matter if  we can afford to spend a lot of money, the problem is being obligated to do it, and not being content unless we are keeping up with everyone else. We live in a consumer society that operates on the assumptions that more is always better and happiness is based on acquiring more stuff.

That concept is especially true when it comes to the overload of spending many people do at Christmas. Paul wrote in Philippians 4:11-13 “I have learned to be content in whatever my circumstances. I know how to get along with humble means, and I also know how to live in prosperity; in every circumstance I have learned the secret of being filled and going hungry, both of having abundance and suffering need. I can do all things through Christ who strengthens me”  

Paul learned to be content, it’s not an instinct we’re born with; we must learn it. And the foundation of contentment is being grateful for what we do have. As Americans we live in one of the richest countries that ever existed. Even if you are barely making ends meet, you are still among the richest people on earth when compared to the standard of living in most other countries.

So if you struggle with being content, or if you are overwhelmed with Christmas obligations you would just as soon avoid, meditate on Phil 4:11-13. If your feeling of happiness, peace and joy comes with a price tag, you’ll never be content no matter how much you spend at Christmas. The poorest people can be content, while all the money in the world can’t buy contentment. 

Take a long hard look at Christmas last year. What brought you the greatest joy and contentment and what added to your holiday stress? The key is to plan Christmas so you can do more of what went well and less of what was a disaster.

Maybe the kids really enjoyed going to midnight Mass, or maybe they were so tired and cranky that midnight Mass was a failure. Maybe traveling halfway around the country to visit grandparents was the best thing ever or maybe it was a disaster because the kids really missed being at home for Christmas. Maybe your Christmas spending was well planned and under control or maybe it was out of control and you ended up facing a ton of bills in January.

Now is the time to plan on doing more of what went well and figuring out how to avoid the disasters. Now is the time to have the discussion with other family members and friends about cutting back on Christmas spending. They will probably be as relieved as you are to simplify things. But do it now so nobody is surprised in December when you want to change what you have always done.

Even if you are financially well off, what about your friends, family and neighbors. Are they able to keep up with the overspending most families do at Christmas? Or are they pressured into spending money they don’t have in order to keep up with everyone around them?

If finances are tight, as a family decide to cut down on the number of gifts you’re giving until your finances are in better shape. This could be a tough call and you may have a lean Christmas in order to get ahead, but there will be no long-term harm if you spend less. 

What is really important at Christmas is the gift of God made man, not all of the toys and clothes and electronics we buy for each other. 2 Corinthians 9:15 (NABRE)  “Thanks be to God for his indescribable gift!”

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

So as you are thinking about and planning for Christmas, and as a way to focus on what is really important at Christmas time, try to make this Christmas a time to practice the virtue of contentment, and remember the verse from St. Paul …  “For I have LEARNED to be content” … anyone can learn to be content and escape from the discontent the advertisers try to thrust upon us at Christmas.  

Join us on the Manage Your Money God’s Way podcast for additional thoughts about how to be content this Christmas. 

Debt Payoff Plans

Paying off debt is a lot like going a diet. There are many ways to do it and some seem simple and easy like skipping meals; fad food diets; replacing meals with shakes or bars. The list could go on and on.

The best way to lose weight and keep it off permanently is to change your lifestyle by eating a balanced diet and exercising, but that takes discipline. Which is why so many people tend to ignore the hard stuff and look for the fast easy fix.

The same concept applies to paying off debt. There are many fast easy ways to get out of debt, but not all of them work and many of them are unhealthy for your financial future.

So with that said, let’s talk about some debt payoff strategies that sound like a quick fix, but they may not be in your best interest.

Debt Consolidation is a loan to pay off all your debts. Sounds good on the surface, but the only thing you are doing is trading one debt for another. If you are not disciplined and managing your money smartly, you’re simply moving debt from one place to another. The worst part is that you feel good because now instead of making eight payments to different credit card companies, you only make one payment which often leads to running up additional debt on the credit cards.

The other danger is that you have given a debt consolidator control over your debt payments and your financial future. If you ever use a debt consolidator, you need to retain the responsibility to monitor what they are doing by keeping up with the payments they’re making on your behalf.

Home Equity Loans are another option that seems like an easy fix. The equity in your home appears to be available money. If your house is worth $200,000 and you owe $150,000 on your mortgage, you may think you have $50,000 available for debt payoff. But if you run into financial trouble in the future and can’t make the equity loan payments, you may be at risk of losing your home.

Related to the home equity line of credit, selling your house may be a good idea. If you have too much house and the upkeep and maintenance are costing a bundle, you may be better off with a smaller home. Do the math. What is the cost of buying and selling? What percentage of your income is spent on your current house and what percentage do you estimate will be spent on the new house? Once you do the math, it may make more sense to stay put, buckle down and get serious about paying off the debt or selling and downsizing may be your best option.

Taking out a 401(k) loan is another perceived easy fix as it sounds like you are borrowing your own money. But look deeper. An early withdrawal from your retirement account (any withdrawal before age 59 ½ is considered early) means paying a 10% penalty plus income taxes on the withdrawal. If take a $30,000, the penalty will be $3,000. Taxes at your current income tax rate—say 28%—means the government will keep another $8,400.

This leaves you with just $18,600…. NOT $30,000 for debt payments. You actually wasted $11,400 in taxes and penalties. If you are 30 years away from retirement the future value of that $11,400 in your 401(k) at 7% is $86,799.  Taking money out of your 401K is borrowing from your future and wasting money in penalties and taxes. 

If you have a healthy emergency fund, it may be tempting to use that money to pay off debt. But don’t do it! As soon as that emergency fund is empty, emergencies pop up. The car needs a new transmission. There’s an insurance claim with a big deductible you have to pay. There’s a layoff at work. Avoid draining your emergency fund even if you’re doing something positive like paying off debt.

We all get frustrated with our jobs and you may decide to start your own business to control your own destiny. When that thought occurs, be careful. Typically, two-thirds of new businesses fail within 10 years. You may need a huge investment to get started. And where will the money come from to cover daily living expenses until your business becomes profitable? If you take out a loan to get started and do not make enough money to support yourself, you’ll be digging that debt hole deeper. (We’ve done this and it was a disaster!)

Scattering a little bit of extra money on all the loans may seem like you are making every effort to pay off debt, but it won’t get you very far very fast, and the lack of progress can be depressing. Instead of scattering a little bit of money in all directions, concentrate on paying off the smallest debt first.

Use any and all extra cash on the smallest debt and make the minimum payment on the others. As you knock out the smallest one, apply what you were paying on the smallest to the next smallest.

This method is known as the debt snowball, and according to the Harvard Business Review, it’s the most effective way to pay off debt. Their study found that people’s perception of debt pay off progress was not based on a dollar value, but rather on the portion of the balance they succeed in paying off. So paying off a $500 loan completely was more motivating that paying $750 on a variety of loans. This aligns with other research on the power of small wins to keep people motivated.

Playing the lottery in hopes of winning may be fun to think about, but it is never a viable solution. The odds of winning either the Powerball or Mega Millions are roughly the same: 175 million to one. Despite those odds, one-third of Americans believe that winning the lottery is the only way they will ever retire. Money you use to play to the lottery could just as easily be flushed down the drain to achieve the same results. Lotteries thrive by building a sense of false hope.

Instead of looking for the fast, easy fix, use a budget and work hard to pay off debt with a plan. It is the best way to succeed.

We have seen many people pay off enormous amounts of debt when they add prayer along with doing their part in making the necessary lifestyle changes. God hears our prayers, but we have free will to act or not.

If all you’re doing is praying and not taking responsibility in action, that debt is going to hang around forever! Instead of praying and then doing absolutely nothing to improve your financial situation, do both! It definitely works—we have lived it!

Tune into our podcast for more info about various plans to pay off debt.

Health Care Sharing Plans – Part 1

Health care costs seem to be rising every year, which has increased the popularity of some alternatives to traditional health insurance. These are called health care sharing plans. They operate at a cost that is well below traditional health insurance but they may be restrictive with their benefits.

To help you decide if one of these plans is right for you and your family, you need to know that 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, which is similar to the risk-pooling nature of regular health insurance. 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 health care sharing 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 about $1,500 per month, which is the average unsubsidized cost of traditional health insurance coverage for a family. 

The cost is usually calculated on one or two adults, and the plans we looked at have an additional cost for children. However, it is 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. One of the reasons they’re less expensive is that their coverage may be more limited. 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.

While health care sharing plans do cover many ordinary medical expenses that health insurance covers, they typically do not cover many health-related costs deemed to be unbiblical. They may exclude payments for birth control, injuries related to alcohol or drugs, and injuries from certain hazardous activities (or even failure to wear helmets or seat belts in some situations.)

To become a member, health care sharing plans may require you to sign a statement of faith, and in some cases, they may verify regular church attendance and have your church membership validated by a church leader. The requirements vary by program, but are very similar.

Even though it may seem like a group of people pooling risk and sharing expenses is the definition of insurance, it isn’t. 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 plans 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.

Even though they are not health insurance they rely on a similar framework, but use different terminology. 

Here are some common health insurance terms, and their health sharing program equivalents:

  • Deductible = Personal Responsibility, Annual Household Portion (AHP), or Annual Unshared Amount (AUA)
  • Premium = monthly share
  • Claim = eligible event, incident, or illness
  • Explanation of Benefits (EoB) = Explanation of Sharing (EoS)

Health care sharing plans are designed to mimic insurance, and have successfully done so for decades to the tune of billions of dollars of facilitated sharing payments. 

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 covered and is not—even if what they do and don’t cover isn’t always the same as traditional health insurance. And, of course, each program works differently from traditional insurance. 

And each of the healthcare sharing organizations has multiple options. And, to make it more complicated they all have their own unique approaches, pros, cons, and quirks. 

With an understanding of what these programs are, how they work, and some of the differences between healthcare sharing and regular health insurance, what should you do?

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. 

But 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. 

Being willing to accept those risks is a very personal decision that YOU have to make based on personal research. Nobody can make that decision for you.

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. Look at the company, how long they have been in business, comments from members, all the different options and especially what they will and will not cover.

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!

Join us next week for Healthcare Sharing Plans – Part 2. We will be having a discussion about things to beware of because they are not covered or coverage is limited.