A close family friend is retiring soon at the relatively young age of 62.  She can think of nothing more than days that are entirely her own.  She can’t imagine working anymore even though she has many productive years ahead of her.  She is the face of a retirement that may soon disappear.

My husband and I have discussed our retirement, and luckily we are in agreement that we both plan to work well into our retirement.  I am already a freelancer, and I plan to continue freelancing as a writer well into retirement.  My husband has started his career late because of our growing family and his Ph.D. studies.  Now that he has his Ph.D., he is working as a post-doc researcher.  At 38, he is really just starting his career, so he has no intention of retiring at 62.  Even when he does retire from his full-time job, he plans to do consulting work and writing in retirement.

Working In Retirement

We are not alone.  The Social Security Administration now states that full retirement age for those born after 1960 is 67 years old.  Popular finance guru Suze Orman also advocates that people wait until age 67 to retire.  With a U.S. life expectancy of 78.5 years (CDC), that still leaves a person with at least 11 years to live fully off their retirement, though many of us know people who have lived well into their 90s.

There are many benefits to working at least part-time through retirement:

1. People are generally more satisfied when they are working.  Peter published a previous post, “Do You Ever Plan to Fully Retire,” that includes research that many people are depressed after they retire.  Those who continue working in some form in retirement report being most satisfied with their lives.
2. You can extend your retirement income.  Working for several years (or more) into retirement helps you extend your retirement funds further.  We have always been a one income family, and while we have saved for retirement since I began my career at 29, our retirement is not big enough, in my opinion.  Because my husband and I both plan to work in retirement, we will need less of our retirement income to meet our expenses.  We hope to be able to delay taking Social Security (assuming it is around!) until the full retirement age, and we plan to wait to tap money from our other retirement funds until we reach the age when we must withdraw some of the money.  Working later in life will help us make our retirement income stretch further and will make up for the fact that our retirement is not as large as we would like.
3. You can still enjoy free time with a reduced work schedule.  While endless days of retirement with nothing scheduled may seem like a dream to some such as our close family friend who is retiring, for others it is a terrifying thought.  My husband and I fall in the latter camp.  We can’t imagine not working and not being busy.  When my husband retires from his job, we plan to travel while we are still young enough, but we will also be able to do our freelance work around our adventures.  We can benefit from working on a smaller scale to enjoy things we did not have time to do when working full-time, but we will still be able to work and be challenged.  That sounds like the best of both worlds to both of us.

We have gently suggested to our family friend that she may want to work a bit in retirement to make her retirement fund stretch, but she has no interest.  She is the face of a traditional retirement that will likely not be attainable to many of our peers.  For us, we are happy to work in retirement, at least on a reduced basis.

Do you plan to work in retirement, or would you like a traditional, but fading, retirement?

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The sermon at our church this week was a good one.  It had a lot of things to say about how as a culture we’ve become so saturated with the idea that we can find fulfillment in things, people or passions.   Those things in our lives, while they aren’t necessarily bad things, have a way of becoming all consuming things, and they become more than what they were originally intended to be.

We strive to get the next promotion, in the hopes that we’ll be professionally fulfilled. We aim to make a million dollars, hoping that it will lead to a life of leisure and pleasure.  We look to find the right significant other, thinking that the relationship will bring happiness. Often it leads to just the opposite, in part because that person never can live up to expectations.

We look for things in our lives that aren’t necessarily bad, but in our self focused culture these good things become ultimate things.  When they don’t fulfill in the end, they are merely empty shells of what we had hoped for.

They exchanged the truth about God for a lie, and worshiped and served created things rather than the Creator—who is forever praised. Amen.  Romans 1:25

What Kind Of Idols Can We Have In Our Lives?

In the Bible it talks about how our craving for physical pleasures, desires for things we don’t have, and our pride in our possessions can lead us to create idols.  Idols are essentially things that take the place of God.  They talk about idols in 1 John.

For everything in the world—the lust of the flesh, the lust of the eyes, and the pride of life—comes not from the Father but from the world. 1 john 2:16

So as we can see from that passage, it talks about three things that can lead to idols in our lives, and they are not of God, but worldly ideas.

1. Lust of the flesh, or craving for physical pleasures: We have a craving for physical pleasures which can cause us to create idols in our lives.  Unhealthy idols can be things like food cravings and addictions, unhealthy sexual appetites and a craving for leisure or fun.
2. Lust of the eyes, or wanting things we don’t have:  We can have desires and idols created from being envious or jealous of things we don’t have, and that we want. This can take so many different forms, but essentially we create an idol in our lives in the pursuit of finding or getting something we don’t have.  For example, creating an idol of having a big expensive home, or of having a million dollars.
3. Pride of life, or being proud of things we do have: We can have an unhealthy desire to be praised or seen as successful due to things we already have.  We make an idol out of being seen as rich, being praised as an accomplished artist or just as being a person who is knowledgeable on a certain topic.  We want to be seen as smart, powerful, rich or to have others see how much we have.

When the woman saw that the fruit of the tree was good for food and pleasing to the eye, and also desirable for gaining wisdom, she took some and ate it. She also gave some to her husband, who was with her, and he ate it. Genesis 3:6

Eve saw that “the fruit of the tree was good for food”, and despite knowing that she wasn’t supposed to take it, she gave in to the craving for physical pleasures.  She ate the fruit.

She also saw that the fruit was “pleasing to the eye” and gave in to the lust of the eyes, and of wanting something she didn’t have that looked good.

Finally she knew that as soon as she ate the fruit she would gain knowledge and wisdom, and gave in to the pride of life, being proud of something you already have.

Surface Idols And Deeper Cravings

Idols often begin as good things, things that if we had pursued them with the right heart may not have been so bad.  Instead we twist them and try to make them “ultimate things”. Somewhere along the lines those things become the main focus of our attentions.  We sacrifice other more important things to get these idols, mainly our relationship with God.

The surface idols we pursue are often just masking a deeper craving or desire in our life.  We may want to make a lot of money, and that becomes our surface idol.  But deep down our true craving is the pride of life, or to be seen as successful, powerful or commander of our own destiny.

Or we may have a surface idol of having a nice house and lots of nice possessions. But the deeper craving or idol is for the “lust of the flesh” the physical pleasures and security that come along with a comfortable life.

Idols Can Be Underestimated Or Overestimated

People can under or overestimate idols.  There are times when we have strong desires in our lives, that if they weren’t from God, could definitely be idols. Sometimes, however, because we do focus on God first, those deep seated desires are from God.

For example, when Hannah had a desire to have a son.  God used her desire for his purposes.

Once when they had finished eating and drinking in Shiloh, Hannah stood up. Now Eli the priest was sitting on his chair by the doorpost of the Lord’s house. In her deep anguish Hannah prayed to the Lord, weeping bitterly. And she made a vow, saying, “Lord Almighty , if you will only look on your servant’s misery and remember me, and not forget your servant but give her a son, then I will give him to the Lord for all the days of his life, and no razor will ever be used on his head.  1 samuel 1:9-11

Or other times we see in the Bible where people were very focused on becoming good at something, or were very skillful at things – to the point where it had to have been something extremely important in their lives.  But they didn’t lose focus, and made sure to focus on God first.

There are other times, however, where our desires aren’t of God, and because they’re for what could be seen as good things, we underestimate their power in our lives.   For example, a desire for a spouse.  While in some cases could be a good thing, if it becomes an all consuming desire that hinders our relationship with Christ, it can become an idol, with a deeper idol of having security and a comfortable life.

When it comes right down to it, idolatry is a heart issue.  So how do you know if your good thing has become an idol?

Questions To Identify Idolatry In Your Own Life

1. What one thing do you hope for in the future?
2. What do I worry about most?
3. If you could change one thing about yourself right now, what would it be?
4. What have you sacrificed for, and what do you value most?
5. Who can you not forgive and why?
6. What do you do that makes you feel the most value?
7. What triggers depression in you?
8. Where do you turn for comfort?

Focusing On Our Idols Instead Of God

Idols lie and tell you they’ll fulfill all your desires.  They tell you if you satisfy their requirements, you’ll find happiness.  But they can’t really give you those things.  They are empty shells and created things, and they can’t follow through on the promise.  We can only truly find happiness and fulfillment when we go to Christ.

On the last and greatest day of the festival, Jesus stood and said in a loud voice, “Let anyone who is thirsty come to me and drink. Whoever believes in me, as Scripture has said, rivers of living water will flow from within them. John 7:37-38

Focus On Him To Strip The Lie Of It’s Power

Take delight in the Lord,  and he will give you the desires of your heart.  Psalm 37:4

Of course when we’re truly following Christ, our desires may not be the same as when were following our idols.

Have you examined your heart and asked yourself if you’re holding onto any idols in your life?

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Memorial Day is here!  It’s become synonymous with being a day to enjoy family, friends and even a having a BBQ, but let’s not forget to take a moment today to remember all our fighting men and women over the years who have made the ultimate sacrifice, by giving their lives so that the rest of us might live free.

Over the years on Memorial day I’ve had a chance to stop at my grandparent’s graves at Fort Snelling National Cemetery in Bloomington, MN.  While I didn’t make it there this year, it is always a vivid reminder of just how much so many have given. There are row after row of graves for our military men and women, so many of them having died while fighting for our nation.

A couple of times while I was there I found the graves of medal of honor winners there, and it was amazing to read of their sacrifices later on when I got home via a Google search.

Being at Fort Snelling also reminds me of just how much my grandfather gave, despite the fact that he wasn’t killed in action. My grandfather, Fred Anderson, was in the U.S. Army Air Corps as a waist gunner on a B-17 Flying Fortress and was shot down, becoming a prisoner of war in a German POW camp for several years. What he went through couldn’t have been easy, and I’m just sad that he passed at such a young age (in his 60′s) due to Parkinson’s Disease.  I was never really able to get a full accounting of his experiences as I would have liked.

Since it is Memorial Day weekend the cemetery will be in full bloom with flags flying, and flowers on countless graves, in remembrance of loved ones.  It’s usually a very stirring sight, and I may try to make it down there the day after just to get a glimpse – and to say thank you in prayer for all those brave men and women.

So on this Memorial Day weekend, thank you to our veterans, and thank you to those who have already paid the ultimate price.  You won’t be forgotten.

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My wife and I are currently planning a trip for our 10th anniversary, and in the midst of all the planning we’re trying to find ways to save. The trip we had decided to take a while back is turning out to be quite a bit more expensive than we had bargained for.  To try and save some dollars now we’re trying to find ways to cut back, without cutting out all the fun.

So today I thought I would talk about some ways to save some money when you’re planning your next trip.

10 Ways To Save When Traveling

You can save money in a lot of places, from the travel, to your lodging to your meals while you’re away.  So let’s jump right in.

• Make your plans far in advance:  Depending on where you’re traveling you can save a ton of money by booking your vacation well in advance.  For example, we saved thousands of dollars on a cruise to the Mediterranean because we booked a year in advance.
• Book last minute deals: If your travel plans are flexible, you can save not only by booking well in advance, but by waiting until the last minute.  This one isn’t often as reliable though, so make sure you’re OK with waiting for the right deal.  Use tools like Bing Airfare Predictor, Airfarewatchdog.com or FareCompare.com maps to find when the best flight prices are available.
• Travel to the location during off-peak times: Some locations will have cheaper rates and better service if you book for the off-season.  Our current trip for our anniversary is going to be a bit off-season, and we’ll be saving money and experiencing less crowds because of it.
• Use the Internet!: One of the great things about the Internet age is that it offers us all sorts of great tools to help us save money.  Use sites like FareCompare.com, Kayak.com, Hotwire.com, Priceline.com and others to fully research pricing and figure out where you can find the best deal.  Don’t forget that some airlines and hotels don’t sell via third party sites, so check airlines direct as well.
• Stay in a rental home or swap houses instead of a hotel:  Often hotel prices will be astronomical or unreasonable, and staying in a rental condo or home is a better bet, especially if you’ve got a large group.  Try sites like HomeAway.com, Airbnb.com to find one that’s a good fit.  Or check out a site like BudgetPlaces.com.  To save on a hotel stay consider using a rewards site like Hotel Club.
• Make sure to get a discount on your rental car:  Save hundreds on a car rental by finding and stacking discounts with coupons and member programs, and finding the best deal through site like Kayak.com, Hotwire.com or Priceline.com.  Try a site like AutoSlash.com to find you even more discounts even after you book.
• Use rewards credit cards: You can use airline rewards credit cards that will offer bonuses for signing up to help net you a free or discounted flight.
• Buy a travel guide:  Make sure to do your research and get a travel guide for your destination to help you to find cheap places to eat and discover little known free events.  If you’re a AAA member take advantage of their free trip planning services.
• Set a budget before you go:  Make sure to set spending limits before you go so you don’t overspend.
• Don’t eat out for every meal while traveling: When you’re traveling it can be easy to just take the easy way out and eat out for every meal.  You can save a ton of money, however, by going grocery shopping when you arrive, and eating some of your meals in the hotel, or packing a lunch to eat on the go.

So there you go, 10 quick ways to save on your next trip.

Have your own tips for saving on travel? Tell us what they are in the comments!

If you have a travel tip of your own, head on over to Budgets Are Sexy to enter his $1,000 giveaway, in partnership with HotelClub!

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Getting from point A to point B.  If you live in an area without a lot of public transportation, or spread out over a wide area like the Minneapolis area is, you’re probably going to need transportation of some sort.

We use cars for commuting to our jobs, driving to the grocery store, going to the doctor or visiting family. Having a reliable car can be pretty important just for living every day life.

Buying a car is also one of the biggest purchases you’ll probably make besides your house, and as such it’s important to consider the financial ramifications of this important decision.

So when it comes time to buy a car, the question is, how big should your car down payment be?  How much of a car can you afford?

A 100% Down Payment?

At our house, we’re at a point financially where the only down payment we’ll consider on a car is a 100% down payment.  While that may sound a bit crazy, it’s actually not as hard as you might think.

We follow a plan similar to “Drive Free Cars and Retire Rich” plan offered by Dave Ramsey where you first buy an older car worth $1,000-2,000 in cash.  Instead of paying a car payment, you then save up what would have been your car payment, and within a year or so, you’ll have enough money in the savings account along with your trade-in in order to afford a significant upgrade in car.  Do that once more and after a couple of years you’ll be able to afford a nearly new car with what you’ve saved. At some point the car you’re driving is going to last longer than you’ll need to save up the replacement cost for a new car, and you’ll be able to start putting that money away for retirement or other savings goals instead.

Consider this: The average new car transaction price last year was $29,509.  The average down payment in 2011 was 11%, so that leaves a loan balance of $26,246.   If you were to get an 5 year loan on that car, with an average 5% interest rate,  your monthly payment would come out to $495.29.   Without any extra payments you would end up paying over $3700 in interest over the life of the loan.

So let’s say instead of buying a new car with that $495.29 payment, you banked it for 12 months while driving that old beater.   At that point you’d have $5943.48 saved up, along with a car that is still probably worth about $1,000-1,500 (since used cars don’t depreciate as fast).  You use that money to buy a car worth somewhere in the range of $7,000-8,000, and then repeat the process.  This time, however,  you can save up for longer since the car is in better shape and should last longer without major repairs.  After repeating this process a couple of times you’ll already have the balance saved up for your next car, without needing to replace the current one. At that point you can start taking that extra money and putting it directly into savings, retirement or some other savings or giving goal.

What If You Can’t Afford 100% Right Now?

What if you can’t afford the 100% down plan like we propose? What’s the next best thing?  I would suggest that you put down as much as you can without affecting your other goals.   Some good reasons to put down as much as you can:

• Larger down payment can mean a shorter term, and less interest: A bigger down payments can mean shortening the term from 5 to 3 years, and reduce the amount of interest you’re paying over the life of the loan.
• A larger down payment will help avoid being upside down in the car:  A new car depreciates on average about 21.8% in the first year of ownership. Putting down as much as you can help avoid a situation where you’re upside down if you wreck the car or want to trade it in a year later.
• A bigger down payment means a lower payment, leaving more money to pay extra on the car, and pay it off sooner: With a bigger down payment your monthly payment will be lower, leaving more left over to make extra payments – and pay the car off sooner.

So putting down as much as you can on the car is a good bet.

What’s The Minimum I Should Put Down?

So let’s say that you don’t have a lot of extra to put down on a car, what’s the minimum that experts suggest that you put down?

Reading a bunch of sites I’ve found that the minimum to put down varies from new to used cars.

New Car Minimum Down Payment – 20%

The average down payment last year on new car purchases was 11 percent of the purchase price, or an average of $3,263 per vehicle.   That is less than most experts would recommend, and many think it’s because of the low interest rates and low down payments required these days.  People think they can get better returns on their money elsewhere.

Based on the fact that the average new car will depreciate between 20-25% in that first year, most experts suggest that you put down at least 20% on a new car when you purchase it.  That way you’re covering that first year’s depreciation and won’t end up underwater if you decide to trade the car in one year later, lose a job or if you end up in an accident.  If you don’t put anything down you could end up in a situation where you have to pay several thousand dollars out of pocket to settle  your loan – if the worst case happens.

Used Car Minimum Down Payment – 10%

Used cars depreciate at a much lower rate than a new car, with an average depreciation of around 10% per  year.  Because of that a lower minimum down payments is suggested by experts.  Edmunds.com suggests a down payment of at least 10% for used car purchases to cover the depreciation.

What Other Things Do I Need To Consider?

When considering how much of a down payment to to pay, there are some other things to think about.

• How is your credit?  If you’ve got bad credit, you may want to wait longer and save up a bigger down payment because you’re probably not going to get a very good interest rate on a car loan.  That means you’ll pay a ton more in interest if you do end up getting a loan.  Here’s how to figure out if you’ve got a good credit score.
• Do you really NEED a new car?  In my opinion far too many people decide that they absolutely need a new car, when the reality is that their current car would probably last a few years longer with a few repairs.    Figure out if your current car can be made to last longer, and save up a bigger down payment in the meantime!
• If your down payment isn’t enough on the car you want, downgrade! If you’re only able to get a 10% down payment on that new car, consider buying a used car or a less expensive car instead.  It will depreciate less anyway, and your down payment will be a larger percentage of the purchase price.

What We Did At Our House

At our house, as mentioned, we follow a plan where we put 100% of the purchase price down – we pay cash. So for my wife’s car that we purchased last year, here’s the progression we followed to get where we are today.

• Purchased an older Honda Civic for cash in 2000:  She paid about $5000 for the car before we were married, and it ran like a champ for several years, while we saved up payments for the next car.
• Purchased a 3 year old Honda Civic for cash in 2005:  We paid about $15,000 in cash after selling the old Civic for about $4,000.
• Purchased a 2 year old Honda CRV for cash in 2011:  We paid about $21,000 in cash, after selling the old Civic for about $8000.

So each time we’ve bought her a new car we’ve upgraded a bit, buying a more expensive lower mileage car, but paying cash because we saved a car payment automatically ever month into our goal based savings account with ING Direct. We also did our research and bought cars that held their value well so we were able to re-sell them at a decent price with minimal depreciation.

We are still saving our car payment every month in anticipation of my next car, and at this point we’ve already got almost enough saved. After that is saved we’ll start adding that monthly payment to the retirement accounts.

What are your thoughts on how much to save for a car down payment?   Do you prefer to pay a big down payment or to pay cash, or a smaller one and put your money elsewhere in hopes that it will grow? Tell us your thoughts.

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Dave Ramsey is fond of saying that you don’t want to be normal because “normal” is broke.  Now, CreditLoan has graphic proof of that in the infographic, “A Lifetime of Debt: The Financial Journey of the Average American.”   Comprised of information from several sources, this infographic, which is laid out like the Life board game, shows Americans’ journey into debt.  Would you believe that it begins in high school?

Debt Often Begins In High School

By high school, the average American has a department store credit card.  While many teens want to be independent and show that they are grown up, is incurring debt the way to do this?  I would prefer that my kids show they are grown up by avoiding credit until the end of their college career, but that doesn’t happen typically.  In fact, according to the infographic, 84% of college students have credit cards, and the average undergraduate carries a balance of $3,200.  Only 2% of college students do NOT have a credit history.

I don’t know about you, but I didn’t earn much money in college.  I did have credit cards, and I was “normal” and carried a balance.  All I could afford was the minimum payment, which was often just enough to pay the interest for the month.  Let the enslavement begin.

Student Loan Debt

The infographic explains that the average undergraduate graduates with $20,000 in student loan debt; if they go on to graduate school, they amass $17,000 more for a total of $37,000 in student loan debt.

Unfortunately, once again I was completely normal.  My mom was a widow who had never worked outside the home until my dad died, so she didn’t have any money to pay for my college education.  I got the first two years of college free by attending a community college’s honors program, but I amassed $20,000 in student loan debt for my last two years of undergraduate work.  I took two years off after that and worked and paid down as much debt as I could before going to graduate school, which is the only reason why I left grad school with “only” a combined total of $22,000 in student loans between undergrad and grad school instead of the “normal” amount of $37,000.

Sadly, I am still paying down my student loan debt, in part because my husband and I thought we could afford our lifestyle when we should have been paying down debt.  However, the student loan is my next target on my debt snowball, so I expect it to be gone by this fall.  Yeah for giving up a lifetime of normalcy!

Home Loans And Auto Loans

According to the infographic, after students graduate college and move on to adulthood, they continue to amass debt.  The average home loan is $240,000 and after 30 years of making payments, the homeowner will have paid a total of $580,000 over the life of the loan.  (Suddenly the monthly payment doesn’t seem so affordable.  I wonder how many new homeowners take the time to compute exactly how much they will pay over the life of the loan.  I am guessing that most blissful believe they are paying down $240,000.)

Most “normal” Americans own two or more cars and take out a car loan of $30,738 for 6 years.  Their average interest rate is 7 to 9%.  (This infographic was created in 2009, so I am guessing the interest rate should be lower now, but on a loan of more than $30k, you are still paying quite a bit of interest.)

A Lifetime Of Debt And Interest

The most staggering fact of all—over a lifetime, a “normal” American pays out $600,000 in interest for all of these loans they take out over a lifetime.

Paying cash and paying for only what you can afford is considered weird, but it is no wonder “weird” people get ahead in life—they have an extra $600,000 to use or invest that they are not paying out in interest.

Until last year, I was living a very “normal” life.  However, last October we swore off credit cards and have paid down nearly $10,000 in debt in 7 months.  We are on our way to being “weird” and couldn’t be happier.

How about you?  Have you thought about being weird and swearing off debt?

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No one would remember the Good Samaritan if he’d only had good intentions. He had money as well. (Margaret Thatcher)

Looking at your finances through the paradigm of stewardship profoundly affect how you manage your personal economy, operate your businesses, capitalize on marketplace opportunities, and respond to perceived risks. Stewardship, acting on the behalf of others, can markedly change your financial world. Here are 3 ways stewardship can revolutionize your finances!

Being A Responsible Steward Pays

Inherent in financial stewardship is that you pursue something beyond a self-serving agenda. You are not the owner. You’re compensated to manage of the affairs of another. You aim to see his or her wishes fulfilled.

I saw a surprising example of stewardship via my interaction with Dr. Bill Evans, the CEO of St Jude Children’s Research Hospital. When he spoke at UNC School of Pharmacy, I expected a research-centric presentation. After all, he’s a seasoned scientist and author of over 300 research and textbook publications. However, he delivered so much more than a boilerplate “research talk” or an organizational infrastructure talk. He discussed their mission to find cures and save lives. He connected their key research objectives to this mission. There was an entirely different texture to his talk compared with the other presentations. He wasn’t just there as a scientist or CEO; he was their ambassador, and he was a good steward.

In the midst of many charities closing their doors, St Jude took in a staggering $1,051,623,909 (including $183,752,685 net investment income) for fiscal year ending June 2010. Its assets exceed $2.4 billion. People open their wallets because St Jude prompts them to first open their hearts. When you decide that there are bigger things than your own personal gain, you become a magnet to those on a similar path. They will rally to support your vision: an authentic quest to do great things.

The personal application is that the same sense of responsibility that prompts the St Jude team to excel can change the finances of your household, your extended family, and perhaps your community. For example, a speaker at a recent conference was so motivated by the need for education that in addition to giving generously to schools in his community, he also decided every Christmas to personally invest $1000 into the education of each of the children of his relatives (all 30 of them). His contributions enabled one of his sisters to receive her bachelor’s degree in her fifties! He also inspired his own daughter to forsake a $150,000 starting salary upon graduation to develop a social entrepreneurial business employing under-served people and revitalizing their communities. She gets to build the wealth of these communities and her own balance sheet. What a win-win strategy!

If you’re willing to be your community’s steward, there’s good to be done and profits to be made.

Stewardship Can Prompt You Take Proper Inventory of Available Resources

Additionally, an important aspect of stewardship is that when you feel responsible for acting on the behalf of another, you will likely take better inventory of your available resources. We see it frequently with expectant parents who radically change their lifestyles (from their diets to spending habits) in anticipation of a baby.

This is why belonging to a team, association, church, mastermind group, and other organization that will hold you accountable can be tremendously beneficial. I remember some challenges that seemed insurmountable in my own life. If it wasn’t for the odd email, phone call, smile, or other form of encouragement from a colleague, I might have quit. However, I had a sense that not only would I be failing (them and myself), but we would both KNOW this is something that I could have accomplished but didn’t. Thus, my relationship prompted me to draw on dormant potential and to utilize available resources, even through unpleasantness.

When deciding between 1) failing and disappointing the people you are working for or 2) pushing through unpleasantness and having a reasonable possibility of success, the choice may not be easy, but it is often simple.

Stewardship Liberates You To Take High Reward Opportunities

I have found that among its other benefits, giving liberates the soul of the giver (Maya Angelou )

While the steward has implied accountability to fulfill the wishes of those he is representing, he is not necessarily responsible if those wishes do not prove fruitful. If extenuating circumstances prohibit you from achieving the desired results, that’s rarely catastrophic.

At another business conference, a Morgan Stanley managing director discussed this very issue as it applied to the modern workplace. She mentioned that fear is often False Evidence Appearing Real. She stated that it will prevent you from taking advantage of the very opportunities that will give you the competitive advantage in your organization. She indicated that even if you failed while attempting something great, you would have not only 1) gained wisdom from the experience but 2) would often be given another opportunity to prove yourself at a high level because of your willingness to try. Since failure is often temporal, why should we fear? You can experience a do over!

Men don’t drown by being underwater, they drown by staying underwater.

When you are willing to be held responsible for something greater than yourself, to strive for excellence, and to use the available resources to the best of your abilities, you may find that the critics are not so quick to hang you. After all, inactivity or avoiding risks doesn’t necessarily spare you from workplace adversity no more than it would solve your household economics. No guts…no glory!

Closing Thoughts

Harness the power of stewardship to improve your finances. Pursuing abundance is not selfish. To the contrary, some of the most selfish people only want enough for themselves or their families. The challenge is to expand your vision to contain something greater than you, for therein lies your power to achieve the impossible.

This was a guest post by Roshawn Watson.  Roshawn writes at Watson Inc on eliminating debt, investing money, and building wealth. Get his free eBook Your Foundation to Wealth by signing up for his email updates (no spam I promise). Get his RSS feed and connect with him on Twitter @roshawnwatson too.

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If you’re pregnant, congratulations! If you’re in the beginning stages of planning for a new addition to the family, congratulations. Possibly one of the largest financial mistakes that future parents make is to underestimate the cost of a baby. It’s hard to say no to the sometimes called biological clock and the pull it has on us and that can sometimes make us forget that a baby costs money, and a lot of it.

Rather than taking a more business-like approach and using a budget spreadsheet to see if we can really afford a baby, we sometimes says yes to a child without figuring out if we really can afford it. Make your financial situation just as large of a part of the decision to have a child as other decisions you’ll make. With that in mind, let’s look at how a baby will impact your finances.

Total Cost

Ready for this? According to babycenter.com, the total cost of raising a child from birth to age 18 is about $200,000 and that doesn’t include the cost of a college education.Although the monthly costs will change as the child grows up, that is an average of $925 each month.

In the current economy, starting a college savings account is a necessity if your child is to avoid the crippling effects of student loans. Parents can expect to pay $78,000 for a four year college education starting in 18 years. Not counting any investment income that comes with a tax advantaged education savings account, that’s $361 per month making the total more than $1,200.

Any amount of money saved for college is a great start and $361 may end up overfunding the account but remember that the overfunding could be used for a second child or even yourself.

Furniture

Furniture is an upfront cost that comes with welcoming a son or daughter in to the world and compared to your bedroom suite, the cost is relatively small. Designer cribs could cost $1,000 or more but other models may cost as little as $100. Sites like Criagslist may have great deals on higher end cribs for very reasonable prices.

Along with the crib comes the changing table and maybe a rocking chair for the baby’s room. All of these together might cost $450 or less depending on how skillful you are as a thrifty shopper.

Disposable or Cloth?

Now we reach the great debate among moms. Should you use disposable or cloth diapers? According to diaperingdecisions.com, the cost of disposable diapers is $2,700 over three years while cloth diapering is only a fraction of that since cloth diapers are washable. A set of cloth diapers comes with a $300 price tag but saves money over time. If it were that easy, there would be no debate so this may be an issue that will require a lot of reading during those nine months.

Baby Formula

A year’s worth of formula will cost between $1,000 and $3,000 depending on what you buy. If you’re looking to cut down on those costs, a breast pump costs about $300.

We’ve all heard how the price of food is skyrocketing and baby food has seen the same inflation. There are so many variables that estimating a cost is nearly impossible as a general number but some people learn to make their own baby food to save on the cost of grocery store food.

Final Thoughts

Although looking at the costs of a child may take all of the joy out of your plans, just as you would with any other financial decision, collect all of the facts and design your budget around the added cost. Being prepared now instead of surprised later is the best way to avoid financial disaster.

Bob enjoys dark chocolate, paying off debt, giving, Foosball, loose-leaf tea, and helping people succeed. He started ChristianPF in 2007 and Co-Founded Blogging Your Passion in 2011.

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My Lending Club account has been kind of hands off the last couple of months, with no new loans being bought or sold.  The good news is that my returns are continuing to improve.  My returns are now up to 11.93%, getting close to the 12% I said I was looking for a while back.  By moving away from purchasing only A and B grade loans, and selectively choosing more C, D and F grade loans I’ve been able to boost my returns significantly.  Hopefully next month I’ll be over that 12% hump.

Lending Club continues their steady growth, as they added an another 42.1 million in new loans for April 2012.  From SocialLending.net

When you look at the numbers Lending Club issued almost $42.1 million in new loans this month. The total number of new loans was up substantially (over 10%) from last month with 3,230 loans issued. This meant for the second month in a row their average loan size reduced – in April it was $13,019. The total loans issued since inception is now around $612 million and with eight months left in the year it is clear that Lending Club will cross over $1 billion in total loans before the end of the year.

Lending Club has continued to show strong growth, and should be able to cross $1 billion in total loans by the end of the year. I think that goes to show that they aren’t just a flash in the pan. Peer to peer lending is here for the long haul!  Prosper has also continued to show growth as well, and may be worth a second look by investors.

Social Lending Video Course

Also this month Peter Renton of SocialLending.net has relaunched his peer to peer lending training video course.  The course goes over the social lending sphere in depth, talks about how to maximize returns and gives some of Peter’s best investment strategies to help you succeed.  The course is well worth the cost, and worth a look if you’re interested in maximizing your returns with P2P Lending.

More Details + Video Overview Of Peer to Peer Lending Wealth System

Returns Now At 11.93%

A week or two ago I started looking at my Lending Club account for 2011 tax purposes. Trying to figure out your taxes when it comes to Lending club can be extremely confusing as the reporting processes can vary depending on how much you’re investing in each loan, how your interest income will be reported, etc. If you’re as confused as i was when I started looking at it, check out my post on Lending Club and taxes.

A couple of months ago I had my first charged off loan. It was disappointing to see my perfect record of no charged off loans go down the tubes, but it wasn’t completely unexpected. With as long as I’ve been investing with Lending Club I would have expected at least 1 or 2 charged off loans a while ago. Here’s a look at my account to date:

1. Net Annualized Return of 11.93%: Up from 11.61% in early April, 11.44% in February, all the way back to 10.53% in July of last year. It  continues showing progress.
2. Number of defaults.. one, with 2 new late: A few months ago now I had my first charged off loan, a Grade B loan. It’s interesting that the loans I’ve had either go late or get charged off have mostly been the higher grade loans. I’ve now got two more late loans, one of them a grade A loan, and the other a Grade D loan.   The grade A loan is thankfully almost all paid off already, so even if it gets charged off my losses would be minimal.  The grade D loan that’s late is about 1/2 paid off by now, and is already on a payment schedule to hopefully get them back on track. We’ll see.
3. Twenty seven loans have been paid off early: Ten were A grade loans, eight were grade B loans, six were C grade, two grade E and one F. Looks like grade A and B loans are more likely to get paid back early, reducing returns. Another reason why I’ve started investing in more higher grade loans.
4. My account balance increasing, re-investing returns: I currently have $2,777.11 in my account, with $170.87 of that ready to invest. I’ll get around to re-investing that money soon.
5. I’m still diversified by investing across a large number of loans: I’ve had 169  loans, with no more than $25 in each loan. In other words, I’m diversified across a large number of loans, lessening my risk from any one loan going into default or getting charged off.

NOTE: Did you know that 100% of investors who have invested in 800 notes or more had positive returns. Not too shabby, not everyone in the stock market can say that!

What’s Your Actual ROI?

When you’re looking at the numbers on the Lending Club and Prosper sites, it has been pointed out time and again that their numbers are overly rosy view of what your actual return on investment will be. The ways that they calculate the ROI isn’t really standardized, and they don’t take into account how old your loans are, possible future default rates, or other things that may become a factor. The numbers they show are just something you have to take or leave.

A site that I discovered a while ago that gives what I think is a better picture of the actual ROI you can expect is Nickel Steamroller’s Lending Club portfolio analyzer. Basically the analysis tool with give you an estimated ROI after you download all your notes from your Lending Club account and upload the .csv file. It will go through you notes and give sell recommendations, show duplicate notes and highlight notes that are below Lending Club’s average return (so you can sell them on the secondary platform). It will even give you a fun little map showing where your loans are (see mine above).

In looking at my returns on the analyzer, my actual return according to the site will be closer to 10.74%.  It also gives me quite a few sell recommendations, particularly on some of my older lower interest loans that I did when first starting out. Those particular loans tend to be grade A or B, and have interest below 8%.

Evolving Lending Club Strategy

Here’s the basic strategy I’ve been using with Lending Club since I started investing.  The strategy has changed a little bit over time to include more low grade loans and a few loans with higher balances.

• Less than $10,000: I believe I’ll still be sticking with mostly loans below $10,000. Lower amounts mean higher likelihood of payback of the loan.
• Zero delinquencies: Again, I may fudge slightly on this one, but I still want it to be very few or zero delinquencies.
• Debt to income ratio below 20-25%: I like to invest in loans where the borrowers have a lower DTI ratio, and preferably have higher incomes. I’ll try to keep this as is.
• Good employment history: I like loans with a decent employment history of at least 2 years, and a decent income.

So that’s what I’m doing with my Lending Club portfolio right now, and how I’m investing.

Not ready to invest, but looking to consolidate debt or pay off a high interest credit card? You might want to consider borrowing from Lending Club. Check out my post on borrowing from Lending Club.

Are you currently investing in Lending Club? How are your returns looking? Tell us in the comments!

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My wife and I have pretty good credit. We’ve never missed a payment on any of our debts, have had a variety of credit types (installment loans, mortgages and credit cards) and the cards that we do still have, we’ve had for years.

We’re not too concerned about having a good credit score these days because we don’t really use debt that much, we pay cash for most things.  There is one thing that we DO need a good credit score for, however, that may be happening within the next year or two. Buying a house.

When buying a new home it is important to stay on top of your credit situation as your credit score can have a huge impact on what rate, and what type of loan you can get.  In the end it can save or cost you thousands of dollars. So today I thought I would do a quick review of why it’s important to stay on top of your credit when looking for a home loan, and how to do it in a way that doesn’t cost you very much.

Why Having A Good Credit Score Matters When Buying A House

When you’re buying a house having a good credit score is integral to getting a decent rate on a home mortgage.  The better your rate, the less you’ll pay both in the short term on your monthly payment – and in the long term in interest.  It can also mean the difference between getting a longer and shorter term loan – which can end up saving you even more!

Let’s look at an example scenario in my home state of Minnesota using the calculators found at myFICO.com.

Let’s say you are you seeking a 30 year fixed loan for $250,000 to pay for a new house.  Depending on your credit score range the rate that you get can vary pretty widely.

Even if you have a good credit score, and not an excellent score, you’re losing out on thousands of dollars in interest.  Boosting your credit score to the excellent category would save you an additional $11,107 in interest!  Going from an average or poor credit score to a higher credit score range could save you even more!  So be aware of where your credit score is, and do your best to improve your score!

What Is A Good Credit Score?

What a good credit score is can vary a bit depending on who you ask, but in general it’s safe to say a good FICO credit score is going to be anything above a score of 700-720. In the 680-700 range, you’ve got average credit. If your score is 620 or below you’ll most likely be tagged as a poor credit risk.  Here’s a general look at the credit score ranges.

So what is taken into account with your credit score?  According to the FICO site:

• Payment History (35%): How good are you at making your payments, and making them on time?
• Amounts Owed (30%): How much credit are you using – how much do you owe?
• Length of Credit History (15%): How long have your accounts been open, and how long since you’ve last used them?
• New Credit (10%): Are you opening a lot of credit cards lately, or other lines of credit? Lots of inquiries for credit?
• Types of Credit Used (10%): Number of and different types of accounts.

Where Can You Check Your Credit Report?

There are a couple of things to stay on top of when carefully monitoring your credit, your credit score and your credit report.  Your credit report will be a detailed listing of your credit situation showing all of your accounts, loans,  negative events on your record, missed payments, etc.  In other words it will give you an overall look at your credit situation.

You should never really have to pay for your credit report as you can get a free report from each of the big three credit agencies every year through the government site at AnnualCreditReport.com.  Personally I like to stagger pulling my reports for each agency, and get one every 4 months to better monitor my situation.  If you haven’t pulled one in a while, however, and you’re hoping to get a loan soon, you may want to pull all three.

• AnnualCreditReport.com

Where Can You Check Your Credit Score For Free?

There are several places that you can check your credit scores from the three agencies, TransUnion, Experian and Equifax, for free.    Keep in mind these credit scores are not the FICO score used by the banks when deciding on your rate, but they are similar and can help to inform you and give you a good idea of where  your FICO credit score will probably be.

You can currently get your credit scores from the big 3 agencies for free if you know where to go.  Here is how I get mine.

• Credit Karma: Get your TransUnion credit score for free.  Credit Karma Review.
• Credit Sesame:  You can get your Experian credit score for free. Credit Sesame Review.
• Quizzle: You can get your Experian credit score for free here as well. Quizzle Review.
• Equifax: Get your Equifax score for free by signing up for a free 30 day trial. Just don’t forget to cancel.

Your credit score for the three agencies can help to inform you of approximately where your credit score will be when the mortgage companies check it.  But where can you go to get your actual FICO score?

Where Can You Get Your MyFICO Score?

Your FICO score, the one used by the mortgage companies in order to give you your home loan rate, is a bit harder to come by without paying for it.   Places I’d recommend going to get it:

• FICO score from Equifax:  a $15.95 one-time fee.
• FICO score from MyFICO.com: Several different ways to get your score. The cheapest is a free 10 day trial in their Score Watch product, or a one time $19.95 fee.

Conclusion

Changing your credit score isn’t an easy process and won’t happen overnight. So if you’re hoping to make a big purchase anytime soon, like a home, make sure to get your credit scores early, and do what you can to improve them by the time you finally apply to get a loan.  Have a decent amount of accounts, utilize the credit responsibly, don’t cancel old accounts and make sure that all of your payments are on time.

Have you recently purchased a home and seen what kind of an impact a credit score can have? Hoping to buy sometime in the near future?  Tell us your thoughts on credit scores and buying a home in the comments.

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