Where Your Treasure Is

A Wonderful FREE Valentine's Day Present

2008-02-05T11:17:00.000-06:00

If you are looking for something special to do for Valentine's Day with your spouse, consider the Great Smoky Mountain Marriage Retreat. It is being held February 14-15, 2008 at the Sevierville church of Christ. The retreat is free - the only cost is for accommodations and meals.

Sessions:
Thursday
7:00-7:45p - You Can Have a Great Marriage!
8:00-8:45p - Christian Couples in the Bedroom

Friday
9:30-10:15a - Christian Couples at Payday
10:30-11:15a - A Balancing Act: My Spouse and My Children
10:30-11:15a - The Empty Nest: A Time to Renew
1:00-1:45p - Christian Couples at Play (using recreation to strengthen your relationship)
2:00-2:45p - Christian Couples at Church (using your marriage to help you get to heaven)

The marriage retreat is being overseen by the elders of the Jacksonville church of Christ in Jacksonvile, AL. It'd be a great Valentine's gift, and a wonderful learning experience! In fact, this is what we are doing for Valentine's this year! For more info, or to register, e-mail info@jvillecoc.org.

My Favorite Utility Freeware Programs

2008-01-31T22:00:00.000-06:00

After the computer is bought and up and running, the never ending need for one more program never seems to end. I never stop looking for freeware options to accomplish the needed tasks. Many people use shareware programs. However, shareware programs are only for trial purposes. Legally, you are expected to pay for the program if you decide to use it past a certain trial period. Shareware often also has limited functionality unless it is purchased. Freeware programs, on the other hand, are designed to be distributed completely free of charge, with full functionality. I've found a lot of freeware programs that are extremely useful. The following are my favorite utility freeware programs.

1. Mozilla Firefox
Firefox is a wonderful and free alternative to Internet Explorer. Firefox featured tabbed browsing long before IE did, and also features Add-on extensions, which enable you to customize and add additional features to your browser. I recommend Adblock Plus; Download Status Bar; Last Tab; Nuke Anything Enhanced; and Print Preview. Firefox 3 is coming soon, and the current edition can always be downloaded from the Firefox website, here.

2. AVG Anti-Virus
AVG Anti-virus is freeware for home users, in its most basic edition. The free edition automatically updates itself and automatically scans for viruses daily. It is the second most popular download from Download.com. It can be downloaded from Grisoft here.

3. Ad-Aware 2007
This program is one of the best at removing spyware. I've found it to be unbeatable at cleaining up a spyware filled computer. It's the most popular download from Download.com. It can be downloaded here.

4. Zip Genius
Windows XP and Vista have built in capabilities of unzipping (uncompressing) archived files in the zip format. Zip Genius adds to these capabilities. It adds right-clicking (context menu) options to zip (compress) files. Additionally, self-unzipping files can be made with advanced options for distribution. It truly is a powerful program that adds a multitude of options to compressed files. I have found no better compression program, and this one is free! Available here.

5. SyncEXP
I use two computers regularly, and like to keep my files synchronized between the two computers. Unfortunately I have found that Windows Briefcase is not up to the task. I have frequently had the sad misfortune of Briefcase mistakenly deleting files. So I began looking for an alternative. SyncEXP is not quite as user friendly, but is more powerful and gets the job done. I have also been a little disappointed with its speed - it seems to transfer files more slowly than a normal copy. All in all though, I can trust it to make the proper transfers. It can be downloaded from here.

Well, those are my favorite utility freeware programs. Look for future posts about my favorite Audio, Video, and Graphics freeware programs! A wonderful freeware program is a diamond in the rough, but they're worth looking for!

Long Trips: Money Tips

2008-01-31T13:11:00.000-06:00

Next week my family and I will head to Henderson, Tennessee, for the annual Freed-Hardeman University Bible Lectures. We are planning on leaving early Monday morning and staying until Friday morning.

Being gone that long, and with the type of schedule the lectures have, we will have to eat out quite a bit. Here are some things we do to help this not destroy our budget.

1. We already have the cash set aside. We go to this lectureship each year, so we know about how much we spend on food. So, back in December, we set aside enough money to pay for our meals and our hotel room. That way the only thing coming out of our budget is gasoline.

2. We stay at a hotel with breakfast, but we also buy some items. The "breakfast" at this hotel consists of a few Little Debbie snack cakes and Sunny D. I can't drink anything with that much sugas in it early in the morning. Also, we are very busy until lunch (at around 11:30), so we need something with substance. So, we take our own juice and usually take a few homemade muffins or other items. While this doesn't really save us money at breakfast, it can help save money at lunch; since we are not as hungry.

3. We don't buy snacks throughout the day. During the brief breaks, it can be tempting to go grab a soda or candy bar for a little "pick me up." To be honest, we might do this one time during the week, but we simply avoid doing it daily. We only buy a little snack if we are going to have time to enjoy it.

4. My wife orders water (and I do, too, ... sometimes). We usually eat fast food for lunch, but then we try to have a "sit down" meal for supper. As you know sodas, tea and other drinks greatly add to the total bill. Drinking water can really help keep costs down, especially if you are eating out a lot.

5. We ask about our daughter eating free. She is just 2 and doesn't eat all that much right now. However, we do not want to just assume that she can eat from our plates. We like to ask so that, if another worker sees her doing so, we can say that we asked about it. So far, we have never had a problem with this, and that alone saves a lot of money. Many restaurants charge anywhere from $2-$6 for a child's meal!

6. In connection to that, our daughter drinks water nearly every meal. She likes it, so that helps!

7. We take advantage of discounts or gifts. I am one of the song leaders at the lectureship next week, and, as such, I am entitled to a free meal on campus. That means that one of our meals will be eaten at half-price. The line for this meal is always long, but you can't beat half-price food! (And the food is quite good.)

Whether it is a vacation or a business trip, nearly everyone will face a trip like this one at some point. Using some planning and a little common sense will help you avoid running through your food budget, and will help you have a little extra money at the end of the trip. Maybe you can use that money to buy a souveneir for the kids!

Debt on Hold? Is that Possible?

2008-01-30T11:00:00.000-06:00

Yes, it is.

We are still paying on our debt (of course), but we are not paying extra right now.

As you may or may not know, my family and I have accepted a job in Nashville, Tennessee, and will be moving at the end of March. We have all-but sold our house (it still has be be inspected, but we haven't had any large cracks in the walls or large mice crawling around), and have had an offer accepted on a house near Nashville (Hermitage, Tennessee, if you are keeping score at home).

With all the extras that come up in moving, we have decided to put away money for the move--just to be on the safe side. We have really been blessed in that we will have zero closing costs on either end of the house selling, and the congregation where we are moving is paying for our move (unless we can't get a decent estimate). So we should not have any major costs.

However, there are always little things that pop up in a move, and we know that. So, for the time being, we are saving up cash for "moving costs." We won't spend the money unless we absolutely have to, but we want to have it ready in case it is needed. It is serving almost like a "moving emergency fund."

But then...

whatever we don't spend?

Straight to debt!

A Car Update

2008-01-21T10:19:00.000-06:00

In late October 2007, I mentioned that our car (a 2001 Daewoo Laganza) had died. It is shot, but still has some value (although not much).

After a lot of thought, I have decided to sell the car on eBay. I took some pictures, gave an accurate description and listed the car last Friday night. I was hoping to get around $400-$500 for it.

The auction doesn't end until this Friday and, to my surprise, the car is already at $400, and has over 10 people watching the auction. While it may not "move" a lot from here, it is nice to know that it is already where I wanted it to be.

Since that day in October, Leah and I have been living with one car. Some folks at church loaned us their car for awhile (and we are extremely thankful!), but we have decided to try it with one for awhile. It gives us a chance to get out of debt faster (since we have less insurance to pay) and to make sure that, when we buy another car, we are informed and ready (read: to pay cash!).

We are moving to Nashville at the end of March and we aren't sure how this whole "one car" thing will work, but we also don't want to buy a car that we can't afford just because we "need" a second car. (Note: I was watching a car last week on eBay, but the price jumped and I stopped looking.)

I have been trying to look for information on reliable used cars, and today Yahoo! Finance has a good article about buying used instead of new. In the article, the writer mentions her personal blog, where she recently wrote about reliable used cars. I found this brief article interesting, too.

It's not the most fun in the world having just one car, but we can make it. We are saving up slowly for a good, cheap car to buy, but I'm thinking it would be smart to wait until we move (or at least until very close to the move). The reason? We'll have to get tags in Tennessee. Why pay for tags twice?

If you have thoughts about car buying--especially recommendations of reliable and inexpensive used vehicles--feel free to leave a comment.

And, if you want a Daewoo Laganza for parts...check out eBay!!!

Tax Tips for Students

2008-01-18T17:01:00.000-06:00

I am really enjoying pursuing a master’s degree in counseling, however I don’t enjoy the loans that have to be taken out to pay for higher education. However, if I’m going to have to pay so much for education, the best thing to do is see how to minimize the cost of that education.

One way to reduce the cost of an education is through secondary means of taking advantage of education tax deductions and credits. First, the more popular education tax credits. The IRS makes available the Hope and Lifelong Learning Education Credits through form 8863. The Hope Credit can be taken for the first two years of higher education, gaining a credit of up to $1,650 per student. After those two years, the same form can be used for the Lifetime Learning Credit - which can also be used throughout graduate school. This credit is for up to 20% of the qualified educational expenses (maximum credit of $2,000 per student).

An alternative to the Education Credits is the Tuition and Fees Deduction which is submitted through form 8917. If eligible, this option makes it possible for an individual to gain an above the line deduction of up to $4,000.

One catch is that of the above three option (Hope Credit, Lifetime Learning Credit, Tuition and Fees Deduction), only one can be applied to each student. However, if you have multiple college students in your family a different option can be applied to each student. Since Stacey and I both had graduate classes in 2007, we will be able to take a Lifetime Learning Credit for Stacey’s classes, and a Tuition and Fees Deduction from my classes.

A final method of minimizing the cost of education through a tax advantage is available through the student loan interest deduction. This is also an above the line deduction, allowing you to deduct all the interest that was paid on qualified student loans before your adjusted gross income is computed. This deduction is taken as a line item, line 33 on form 1040, instructions can be found on page 30 of the form 1040 instruction manual.

Higher education is an investment. However, hopefully if you are making this investment you are also taking advantage of these tax tips to make the investment as small as possible! If you know of any more tax incentives for those in higher education, post comments!

Book Review: "Faith and Finance"

2008-01-16T10:42:00.000-06:00

Focus Press has put out a lot of good material in her magazine, THINK, dealing with how we should look at money from the Biblical point of view. Jim Palmer writes a monthly article in that magazine under the heading "Faith and Finance."

Now some of those thoughts have found their way into book form, with the volume having the same title. Subtitled Understanding the Inseparable Link, Palmer's book is one that everyone should read. If you even remotely believe in God, this book will remind you of His perspective of money, and help you make sure your view is the same as His.

In this review, I want to give a brief overview of each section of the book.

Preface

In this brief section, Palmer has the reader imagine that he, the reader, owned a business that was having some problems. What would you do? Would you continue to do the same things, or would you seek to solve the problem?

Sadly, for many, when it comes to money, we do the same things and expect different results. With that mindset in place, Palmer moves to chapter one.

Chapter One: Is Money Your Servant or Your Master?

This chapter really forms the basis for the rest of the book, and the title question is the overarching theme of the entire volume. Money is neither good nor bad, but it is necessary and important. How we view money is not just important, it is eternally important! Jesus taught that "no one can serve two masters" (Matthew 6:24), and the rest of that passage shows that the main thing Jesus had in mind was money (or possessions).

Palmer points out that we can be a servant to money if we are rich or if we are poor. Both of these lifestyles can lead us to covet more and more, so we must keep our minds properly focused.

In this chapter, Palmer also briefly mentions the problem of using debt to gain the lifestyle we want. This is a way of making money (or the possessions money can gain us) our master.

Chapter Two: Prosperity Theory

This chapter deals with the "health and wealth" gospel that is so often seen on television. This is the belief that God wants me to have whatever I want and, in fact, He wants me to be rich.

While there might be some truth to the fact that God wants us to prosper, He is not going to "zap" a huge amount of money into our bank accounts, and He certainly does not want us to get rich by unscrupulous means.

Palmer writes

The problems with the Prosperity gospel are many. The danger in adopting this "other gospel" (Galatians 1:8) is that we no longer focus on eternal blessings and instead favor blessings which will not last. (page 23)

The rest of the chapter deals with the mindset that this view gives: that God is nothing but a cosmic ATM! We begin to get whatever we want and the ultimate "god" then becomes money, or ourselves. This obviously is not the Biblical view of wealth and money.

Chapter Three: Poverty Theology

This teaching is the exact opposite of the Prosperity gospel outlined in chapter two. We won't spend much time here, because the "opposites" are obvious.

Those who subscribe to this teaching say that we should not have anything. We should give everything away and basically be a hermit. "God will provide" is their motto.

The basis for this teaching is a misinterpretation of Scripture. God will provide, but sometimes He provides money and things! Also, the Bible does not teach that money is evil; rather, it teaches that the love of money is the root of all kinds of evil (First Timothy 6:9-10). It's not the money, it's the love of it.

In closing the chapter, Palmer writes,

In order for us to walk in all the ways the Lord God has commanded we must train our hearts and minds with thorough application of all of God's Word. We must prepare our hearts to willingly accept God's provision and use it to His glory. That way we will not be enamored with and deluded by extremes that would endanger our souls and the souls of others. (page 44)

Chapter Four: Stewardship Theology

In this chapter, Palmer gets to the Biblical view of money and possessions. As we attempt to point out on this blog quite often, we are just stewards (caretakers) of the blessings--money and possessions included--that God has given us.

That implies, according to Palmer, that God wants my best effort in giving, in care taking and in all other areas related to money. On pages 56-58, Palmer writes a section entitled "Find--and Keep--Your Balance." This section is worthy of your reading, as it really (in my estimation) gives a great summation of the Bible's teaching on money. (In fact, I am using this material in a sermon on Sunday night!...thanks, Jim!!!). Included is a list of passages and points on page 58 that is worth preaching or teaching; especially to young people.

Chapter Five: You Can't Take it With You

This very brief final chapter is one of those "put it all in perspective" chapters. Why do we spend and horde and spend and horde? We all understand that when we die, or the Lord returns, we won't have any of our "stuff" anyway?

We should enjoy the things we have, but we should not be a miser. We need to plan for our children's future. We need to give more liberally to the church and other important works. In short, we need to have the Bible's view of money.

Recommendation

While this book is not long, it is filled with information that will help you. Each chapter has questions for thought and discussion (and a little soul searching). There are a total of 21 quotes (called "links") interspersed throughout the chapters that keep the reader's mind going in the right direction.

I recommend this little book for individuals, and I think it would also be a fun book for a group to read and study together (a small group or Bible class for 1-2 months).

To order Faith and Finance from the Focus Press website, click here and scroll down a bit.

State Income Taxes and Politics

2008-01-14T11:45:00.000-06:00

NOTE: I am by NO MEANS a tax professional. Nor am I qualified to give tax advice. I am not a CPA, don't have a business degree, and am only mentioning some things I have found that might be helpful. Truly my only suggestion here is to do the research yourself to see if you qualify for this tax credit!

When I moved away from Tennessee, I knew one financial change would be moving from a state without an income tax, to one with a state income tax (Arkansas). This year I will end up paying over $1,000 in state income tax, and still have to pay a sales tax of 9.75%. It doesn't seem hardly fair! Since I do have to pay state income tax, I searched for ways to limit how much I have to pay. To my knowledge there isn't yet a deduction or credit for education expenses on Arkansas income taxes (without itemizing), though there is a deduction for interest paid on student loans (AR 1000 ADJ, line 4).

This year in the packet that I received, however, I paid more attention to the forms that I hadn't used before. AR 1800 - the Political Contributions Credit. Basically, I can donate up to $50 (or up to $100 as a married couple) to a candidate seeking public office (state level or lower - not federal), an approved PAC (Political Action Committee), or a political party, and receive a 100% tax credit. The donation must be made by April 15, 2008 to count as a credit for this year. This year we have decided to send $100 to the Arkansas Right for Life PAC. After filling out AR 1800, we will send in $100 less in state income taxes, making this donation cost us nothing more than we would be spending otherwise! Oregon and Virginia also have similar laws.

If you have to pay state income tax, check and ask around - see if you can make a contribution to a political organization and thereby become qualified for a tax credit! What a great way to quite easily make your voice heard!

NOTE: I am by NO MEANS a tax professional. Nor am I qualified to give tax advice. I am not a CPA, don't have a business degree, and am only mentioning some things I have found that might be helpful. Truly my only suggestion here is to do the research yourself to see if you qualify for this tax credit!

"Faith and Finance" = A Duel Review

2008-01-11T13:35:00.000-06:00

Lord willing, over the coming weekend, I hope to read Faith and Finance by Jim Palmer. Jim works for Focus press and writes monthly in THINK magazine about the Christian and money. His book is not long, but seems to be filled with important information and Scripture.

I am calling this a "duel review," because I plan on putting a longer, chapter-by-chapter review on this blog, and a quicker, more "overall," review on my personal blog.

If you wish to order Faith and Finance from Focus press, click here. (You will need to scroll down a bit. The cost is $12.)

A Quick Site Update

2008-01-11T13:29:00.000-06:00

The authors of Where Your Treasure Is want to pass along a couple of updates.

First, we apologize for not posting for so long. We all basically took a holiday break...and then it just kept getting longer. With James' post yesterday, we are back on track.

Next, we are sorry to see one of our authors step down. I know you enjoyed reading Wes Hazel's articles that dealt with the Bible and money. His posts were always powerful and thought-provoking. Each of us writes on this blog voluntarily, and it does take time. Wes decided that he needed to step away from this (hopefully, just for awhile). We wish him well and thank him for the contributions he made to this effort.

Finally, after the holiday break, the authors decided to slow down our posting a bit. Hopefully, we will have more regular posting schedules and that will help you, the reader, be more familiar with the work being done. We will not take month-long breaks (like we just did), but we will also not have a daily post. With this site still being less than one year old, there are still some "kinks" that need to be worked out, and one is our scheduling. We hope to continue to post solid, Bible-based, practical articles that help you with your money and your faith.

If you have not added Where Your Treasure Is to your blogroll or feed reader, please do so!

Taxes and Savings

2008-01-10T09:15:00.000-06:00

Yes, I know it isn't April 14th yet, and you're probably waiting until then to start on taxes, but don't you think we might be able to get a jump start on taxes? After all, part of frugality involves planning ahead, and making wise financial decisions now for the future. I am by NO MEANS a tax professional. Nor am I qualified to give tax advice. I am not a CPA, don't have a business degree, and am only mentioning some things I have found that might be helpful. Truly my only suggestion here is to do the research yourself to see if you qualify for this tax credit! However, every year since I had my first job, I've filed my own taxes with only the help of my mother (thanks!). As I'm beginning to work on my 2007 taxes this month, I want to share a few things I've found this year, or in the past, that are really beneficial to me as I prepare my taxes. Most of you will probably already be aware of them, but in the event that you aren't, maybe what I share will encourage you to study the relevant tax laws yourself to see if they might apply to you, or to ask your tax preparer about these deductions and credits.

The first income tax 'discovery' I'd like to share is what I have found concerning retirement savings contributions. Most people are aware of the fact that if they make contributions to a traditional IRA, the contributions may be tax-deferred (see IRS Form 1040 Instructions for requirements). Many of you, like myself, however would rather pay the taxes today, and be able to withdraw those funds after retirement tax free, expecting to withdraw more than you put in, and so we choose Roth IRA's. Here's the great news - just because you don't get the above the line deduction for a Roth IRA contribution, doesn't mean there aren't any tax benefits! You may qualify for a tax credit for contributions to your retirement account (whether it is a traditional IRA, Roth IRA, 401(k), or other plan). IRS Form 8880 should be consulted to see if you are qualified. Some specific requirements concern your Adjusted Gross Income. If you meet the other qualifications and have an AGI of $15,500 or less ($31,000 or less for married couples) you can receive a credit for 50% of your contributions to the retirement savings plan, up to $2,000. The credit phases out for those with a higher AGI, with a 10% credit for individuals with an AGI less than $26,000 ($52,000 for a married couple).

So then, supposing your income is as low as mine, and you work to deposit $2,000 into your Roth IRAs throughout the year, you will pay $1,000 less in taxes - essentially allowing the federal government to match your first $1,000 of contributions!

Don't pass up this great possibility at a tax credit that encourages you to save for retirement! And, if it is already too late for your 2007 taxes, work towards utilizing this credit in 2008 by beginning to make regular deposits into a qualified retirement account now!

NOTE: I am by NO MEANS a tax professional. Nor am I qualified to give tax advice. I am not a CPA, don't have a business degree, and am only mentioning some things I have found that might be helpful. Truly my only suggestion here is to do the research yourself to see if you qualify for this tax credit!

2008: The Year That...

2007-12-28T10:57:00.000-06:00

When Leah and I got really serious about getting out of debt, we looked at "the numbers" very closely. We added up our debts from Turner's birth and the debts we already had, and looked at our income and any other variables we could think of.

While things change and some numbers change, we are still focused on getting out of debt on our target date. That date?

December 31, 2008.

We are happy to say that, since April of this year, our debts have continued to go down. We have not added a penny to them. While we do not know if we will "hit" that target date, we are going to do our very best.

Hopefully we can keep you up-to-date on this blog as to how we are doing.

In other news...

Where Your Treasure Is has been added to pfblogs.org. This site is a reader--much like an RSS feed--of scores of personal finance blogs. However, to be added, a site has to be reviewed and approved. I am proud to announce that we were approved yesterday and added late yesterday. Check out the site for literally hundreds of great articles from dozens of blogs and watch for articles from Where Your Treasure Is!

A GREAT Month!

2007-12-20T09:10:00.001-06:00

Usually, December is a hard month in which to really "pay down" debt. With Christmas shopping (which, for us, includes driving = $ for gas) and the electric bill starting to rise, this just usually isn't a very fun month.

But December 2007 will go down as a great one in the Faughn house!

We budgeted for Christmas throughout the year and are going to be right at the budget. We still have a couple more gifts to purchase, but we still have money left, too. So that came in right on schedule. Our family helped very much. We all set a limit (that was equal for everyone) on what we would spend on Christmas presents. We set a limit where we could get each person something he/she wanted, without feeling the pressure to buy anything huge. It took some savvy shopping, and some online work, but we met that goal.

Also, our electric bill (for November; paid in early December) was low for this time of year. We have been staying around 50 degrees and have actually been up in the 70s for a few days in late November, so our heater didn't have to run all that much. Also, when we went out of town for Thanksgiving, we turned the unit way down, so it would hardly run. While our water bill was a bit high, it was more than covered by the lower electric bill.

We have had two negatives this month, though. First, we have had to travel a bit more than expected, so we are going to barely make our gasoline budget (if we make it). Gas prices have come down just a bit, which is helping, but we are still paying quite a bit (about $2.85 on average). Also, our DirecTV bill had a mistake on it and the mistake was ours. We had been paying it, but we had been unintentionally late a couple of times. We just did not realize that our payment was due on the 1st of the month, and we had been waiting until the 2nd week of the month, because we pay all our bills out of that one paycheck. We had to pay the extra money, but we also had DirecTV move our "due" date back so we can continue paying without the late charge. We also went ahead and paid January's bill early.

Now, for the big "upside" factor. For the past 3 months, I have been teaching a class for Faulkner University, one night each week, on the Book of Acts. I finished last week and quickly graded all papers and sent in the necessary paperwork on the night of the final. I was hoping to get my paycheck before Christmas (kind of a "special" holiday treat). They were good to me, and we got the paycheck yesterday.

Add all these up, and December became a banner month for us:

1. First, we got cash to pay for our entire trip to the Freed-Hardeman University lectures in February. The trip is already taken care of, which will be a big help in January's budget.

2. Second, we are up to date on all bills (since we got our mistake taken care of with DirecTV). We have never been behind before--and still haven't intentionally--so this is a great relief.

3. Finally, and most exciting for us, is the fact that we paid off...are you ready for this?...over $1100 in debt this month! We did that while going Christmas shopping and taking another 2 trips out of town! By sticking to out budget and using the extra money from my class, we were able to attack our debt.

When you have good news, you just have to share it. And this was great news to us. We're not debt free, yet. But we are working on it, and this month really pumped us up to work even harder in 2008 to finish our journey out of debt!

"The Automatic Millionaire" (Conclusion)

2007-12-18T13:23:00.000-06:00

The last section of David Bach's book is brief, but, in my mind, it is a solid conclusion. Entitled "Your Journey Begins Today!" this section simply gives a "pep talk" to those who might have read the book and thought, "That works for some folks, but not for me."

Bach takes a moment to remind the reader of the most important step to any financial plan: "You just need to start" (226). How true that is! For the rest of this short section (it is only four pages), Bach reminds the reader of the different chapters and asks you to re-read whichever will get you going (or going again).

For me, the best part of this book is the opening story, about the McIntyres. It's one of those "if they can do it, I can, too" type of stories.

Buy or Don't Buy: My Recommendation

I have read Automatic Millionaire cover-to-cover on more than one occasion. I am glad I own the book and it is helpful.

My personal feeling is that someone just starting out needs to read Dave Ramsey's Total Money Makeover first. For my money, that book is more practical and helpful.

That being said, if you have read Ramsey's book and still need a little encouragement, The Automatic Millionaire can deliver. You will obviously find some differences in the books, but you will also find help in both.

So, my recommendation is to buy Dave's book first, but make sure you add Bach's book to your library eventually.

"The Automatic Millionaire" (Chapter 8)

2007-12-13T14:01:00.000-06:00

If you have followed this series on David Bach's book, you have noticed that now, just about everything is "taken care of" financially. All debt payments, the mortgage, retirement--it's all being automatically drawn either directly from the paycheck or from the checking account.

However, in this last chapter, Bach addresses one more aspect of life that is a financial decision: giving back.

When I first saw the title for this chapter, I was a bit upset. It is "Make a Difference with Automatic Tithing." While this is another discussion, I don't believe in tithing. I believe in giving. I believe we are under New Testament obligation to give, but that we are not told to give a specific amount. Also, I had trouble with the idea of making my giving "automatic." Bach goes so far as to say that your tithe should be automatically deducted from your paycheck, just like the mortgage.

While I still don't agree with all the aspects of this chapter, after some consideration, I turned around a little. Why? Because Bach is writing a book "for the masses," and he still makes giving a priority.

Admittedly, he speaks of giving to a charitable organization or church (and he leans towards charities), but, still, Bach helps us understand that giving is an essential part of any financial plan. He ends the chapter by reminding the reader that some of the wealthiest people of all time gave, and did so before they could really afford to give!

My recommendation is to give, but don't "automate" the process. Take each week and think of how the Lord has prospered you. Give accordingly.

While I don't agree with the entire chapter, there is still quite a lot of worthy information if you are interested in giving money to a specific charity. Bach takes a brisk look at different ways to accomplish this worthwhile goal.

Eating Out? Where Does the Money Go?

2007-12-10T11:26:00.000-06:00

My wife and I do not have a "blow" section of our budget. We just don't blow money right now (or we do our best not to!). However, we do have a couple of areas of our budget where we splurge every now and again. One is that we still have DirecTV, but we do not have a large package (and we renegotiated our bill down to less than $40/month, with two receivers).

The other is that we still go out to eat sometimes. We don't go a lot, but we do like to "grab a burger" every couple of weeks. We also like to "dine" about once a month. We don't go to five-star restaurants, but we also don't go to Waffle House for our fine dining!

However, just because we set aside money for eating out does not mean we can just pile up a huge bill when we do so. Many people leave a restaurant and have no idea where all the money went. Here are some "little" things that really add up when you eat out:

1. Appetizers and desserts. At most national chains (think Applebee's, Olive Garden, etc.), these can be anywhere from $5-$10 each. Just adding one appetizer and/or dessert can make a bill get large quickly. Why do you think the wait staff asks you if you want them?

Two people: one gets an appetizer, the other dessert: add about $15 to your bill.

2. Not drinking water. I have to admit, I "add this" on my bill nearly every time I eat out. I drink a lot of water during the day, so, when I eat out, I want something else. This being a Christian blog, we're not even going to discuss the cost of alcohol. But just think of a soda, tea or lemonade. $1.50-$3.00 per person! And many restaurants are starting to offer "premium" drinks, like specialty sodas that are even more.

Two people: two "non-water" drinks: add about $4 to your bill.

3. Over-ordering. Some restaurants have smaller and larger versions of certain dishes. Many have half-portions if you will just ask, especially on large dishes. Often we are guilty of letting our eyes tell us we will eat a 12 ounce steak, when we only end up eating 6 or 8 ounces. If you constantly have food left over, ask about smaller portions, OR...

4. Not getting to-go boxes. When you have food left over and you can take it home, but fail to do so, you are leaving money on the table. If an entree costs $10 and you each 3/4 of it, but don't take the rest home, you, in essence, just left $2.50 on the table...and not as a tip. Sometimes you are travelling and cannot take food home, but you often can. Do so if possible.

Two people: don't eat (or take home) 1/4 of two $10 entrees: you just lost $5.

5. Tipping Too Much. I think tipping is a great thing. Many waiters are great and earn their money through kind service and quick response. Others, though, don't. They are just there and don't do well at all. There are some who think you should tip a certain percentage "no matter what, because it's just the right thing to do." I can't disagree more! While I always leave a tip, a waiter has to earn a larger tip.

Two people: overtip by $3.

Add all those things up. On a typical night at a typical restaurant, by just doing these five things, you have over-spent (or lost) $27. Now, do that once a month (which is way less than most people eat out), and you have just thrown away over $300 just in "extras" while eating out.

You can eat out and be frugal, but you have to think and plan ahead.

"The Automatic Millionaire" (Chapter Seven)

2007-12-10T08:59:00.000-06:00

In this, the shortest "action" chapter of David Bach's book, the author simply gives some tips on how to use your new automatic system to get out of debt and then stay that way. Getting and/or staying out of debt is a major step in becoming a millionaire. As you know, if you don't have to pay Mastercard, Visa, and other cards, you have freed up money each month, and you are not paying interest.

How do I get out of debt? Bach offers five steps, but, before doing that, he reminds us all of how bad credit card debt really is. If you are like the typical American family, you have $8,400 in credit card debt (and only credit card debt!). If you pay just the minimum and never charge another thing, you will pay over $20,000, and you will be paying it off for over 30 years! (pages 195-196)

With those things, in mind, how do I pay off those cards quickly? Here are Bach's five steps:

1. Stop Digging. It's pretty simple when you think about it. If you don't have credit cards, you won't build up debt on them! Dave Ramsey recommends cutting up your cards (which I did a long time ago). Bach never makes a statement quite that bold, but he does recommend that you never go shopping with a credit card in your pocket.

2. Renegotiate the Interest on Your Debt. A lot of people don't even realize you can do this. Check the fine print to find out how much interest you are really paying, then simply call the company and ask for a lower rate. If they act like they won't do it, tell them you will be closing the account and moving (transferring) the money elsewhere. If they won't go lower, ask to speak to a supervisor. If that person won't go lower, transfer the money. Another way to accomplish this, is to move all your debt to one card (or account, since, hopefully you'll get rid of the actual card). Many companies will take a higher amount and give you a lower rate.

3. Pay for the Past; Pay for the Future. Here is where I disagree with Bach. He says that you should continue to put money into retirement and pay off the debt. He says that you will see progress in both areas and that will be a great motivating factor. I disagree. I would rather get rid of the debt as quickly as I possibly can. Either way works, as long as you stay focused.

4. DOLP Your Debt Our of Existence. "DOLP" stands for "Dead on Last Payment." This is basically the same idea as Ramsey's Debt Snowball, but is a much more math-intensive way of doing it. Here are the steps (quoted from page 206):

Make a list of the current outstanding balances on each of your credit card accounts.

Divide each balance by the minimum payments that particular card company wants from you. The result is that account's DOLP number. For example, say your outstanding Visa balance is $500 and the minimum payment is $50. Dividing the total debt ($500) by the minimum payment ($50) gives you a DOLP number of 10.

Once you've figured out the DOLP number for each account, rank them in reverse order, putting the account with the lowest DOLP number first, the one with the second lowest number second, and so on. [Page 206 has a table that shows you small example; using three credit/charge cards.]

5. Now Make It Automatic! You knew this was coming, didn't you? Automatically pay your debts from your paycheck (or checking account) until the debt is gone. When it is gone, call that company and close the account completely, then automatically pay off the next debt, paying all you can each month to get it gone (including the money you were sending into the first debt).

Now, you are debt free, your house is being paid off quickly and you have money going into retirement. There is still one more step, though.

"The Automatic Millionaire" (Chapter Six)

2007-12-04T13:59:00.000-06:00

Poor people rent, while rich people own their home. In fact,

According to one survey of consumer finance published by the Federal Reserve in January 2000, the average net worth of renters was $4,200 vs. $132,000 for homeowners. In other words, homeowners were more than 31 times richer than renters! (page 160)

No doubt you have been told that before. It is true, at least to a certain extent. Rich people aren't rich because they have a house payment for thirty years. They also didn't get rich with a massive mortgage on a huge house they really could not afford.

The next step in David Bach's plan is to automatically pay off your house. How do you do that? It's not as hard as it may sound, if you follow Bach's plan. There are really just two steps!

1. Buy a house, but buy a house you can afford. From pages 162-165, Bach lists 6 reasons to own a house. These six reasons are worth your time. Bach then takes the time to walk the reader through different kinds of loans and companies that can help you understand more about this massive purchase.

Also in this section, Bach discusses the question, "How much can I afford." While the numbers are a bit odd, he says that a person can afford to spend up to 29% of their income if they have debt (unless the debt is out of control), and up to 41% if there is no debt. Personally, I think both of these are a bit high. I am not comfortable paying more than 25% of my income for a house, because there will always be other costs!

Unlike Dave Ramsey, who recommends getting a 15-year fixed mortgage, Bach says it is okay to get a 30-year mortgage. BUT, only if...

2. Pay off the mortgage quickly and automatically. How do you accomplish that? There are three ways that Bach recommends, all of which equal about the same thing:

First, you can enroll in a bi-weekly payment plan. In other words, you will pay on your mortgage every two weeks instead of each month. How does that help? Run the math. There are 52 weeks in a year, so you make 26 payments. That equals thirteen months!

Second, if your company does not offer bi-weekly payment, you can just send in an extra payment at the end of the year, and ask the company to apply the entire payment to the principle amount of the mortgage.

Third, you can pay "extra" on your mortgage. If you do this, Bach recommends paying 10% extra each month.

No matter which of these you choose, Bach recommends you do them automatically if possible. Once you have paid a bit extra for 3 or 4 months, you will no longer "miss" the money.

Finally, how much of a difference does this make? A house, when purchased correctly, is a great investment, but keeping the mortgage for three decades greatly hinders that investment. Paying just a small bit extra can save you tens-of-thousands of dollars over time! By way of example, Bach uses a $250,000 mortgage. If you paid for 30 years at 8% you would pay $410,388.12 in interest alone! However, if you paid every 2 weeks and had the same terms on your mortgage (30 years at 8%), you would pay $119,000 LESS!

Owning a house, when you are financially ready, is a great decision, but having the mortgage around forever is a terrible idea. Follow these steps and you can greatly help yourself truly OWN your home more quickly.

"The Automatic Millionaire" (Chapter 5)

2007-11-29T10:54:00.000-06:00

NOTE: I'm sorry it's been so long since our last update in this series. I really don't have any excuse for the delay, and I apologize.

Chapter five of David Bach's book is entitled "Automate for a Rainy Day." As you might expect, this chapter deals with building an emergency--or "rainy day"--fund. The chapter even contains a purpose statement: "This chapter answers two basic questions: How much money should you put aside in order to protect yourself from the proverbial 'rainy day,' and where should you put it?" (pages 135-136).

Nearly every financial planning book contains this step, because, no matter how much planning we do, things go wrong. There are emergencies. Sadly, these emergencies often sidetrack people's financial goals and lead them back into, or further into, debt. If we have a plan, though, we can avoid such a serious setback.

Bach, as Dave Ramsey does, uses "months" instead of "dollars" to figure out a rainy day fund. On page 136, he writes a short "sleep well at night" test. Here it is:

My monthly expenses currently total $_________.
I currently have $___________ saved in a money market or checking account.
This equals _______ [insert number] months' worth of expenses.

The numbers can be estimated, because most of us have a pretty good idea how much those are. Tragically, for many of us, the second number is $0!!!

The next step, after realizing that you need money to handle emergencies is to follow Bach's "Three Rules of Emergency Money."

1. Decide how big a cushion you need. Bach sets the minimum bar at 3 months' worth of expenses. He goes beyond Dave Ramsey by suggesting that some people may even need as much as two years' worth! The main thing is that it is enough (1) to cover a certain number of months, and (2) to help you sleep at night.

2. Don't touch it. Bach mentions that many people start saving their fund, only to have an "emergency" all the time! Notice what Bach says, which is worthy of reading and remembering:

What's a real emergency? Be honest with yourself. You know what a real emergency is. A real emergency is something that threatens your survival, not just your desire to be comfortable. (140)

3. Put it in the right place. While Bach doesn't think we should put the money in something like stocks or bonds (because it has to be liquid), he also points out (with a GREAT story, I might add) that we don't need to bury it in our backyard or stuff it under our mattress. You should earn at least some interest on this fund, because you need at least a small hedge against inflation.

Bach's suggestion is to "shop for a rate like you'd shop for a car" (143). His primary location for a rainy day fund is in a money market account, but some pay terrible interest and others have a lot of fees. If you are frugal, you will shop for a car very carefully, trying to get the best deal. The same should be true of a money market fund. Just a small percentage difference, over time, can pay off in a large way.

Over the next several pages, Bach walks the reader through the process of setting up an account and answers several important questions which are worthy of your reading. He even lists several places that have money market accounts that are fairly easy to use.

He then mentions using US Savings Bonds as a possibility. I disagree with him here. While buying bonds has become easier (you can do it online), they have a terrible rate of return and, in my mind, you are helping the government use debt!

Finally, Bach mentions the question, "What if I'm in debt?" In other words, if you aren't debt free, do you need to build up an emergency fund. Bach differs from Dave Ramsey here slightly, bu the principle is the same. Whereas Ramsey says you should start off with $1000 in your emergency fund, Bach says you should work toward building up one months' worth of expenses, then go back to paying off debt aggressively. To me, either is acceptable and both are reasonable.

Of course, Bach says over and over that you should automate the savings into this account. In other words, when you set up your rainy day account, make sure you set it up to automatically come out of your paycheck (or your checking account) at a specific time each month.

With these steps out of the way, Bach has you paying off your debt and building up your emergency fund at the same time. While that's not my favorite way of doing it, the benefits are there, if you can stick with the program.

It's THAT Time Again

2007-11-27T11:00:00.000-06:00

Last week we had the greatest holiday of the year: Thanksgiving. For many, the day after Thanksgiving begins a frenzy that won't end until December 25, as shopping lists are filled to buy gifts for loved ones and friends.

However, when people are in debt (or saving for another financial goal) how does that family not get side-tracked during the buying frenzy of Christmas? Here are some suggestions.

1. Have a limit and stick with it. The best way to do this, in my mind, is to discuss ahead-of-time with your family how much you can spend on each member of the family. We have done this in my family and it is already helping us stick to our Christmas budget.

2. Look for sales, but don't get duped by every "sale." Just because Store A has a shirt for 25% off does not mean that the shirt is quality. Make sure that the price is good for the item you are purchasing. Some retailers truly believe in volume instead of quality this time of year. I would rather pay a couple of dollars more for a quality item. Also, make sure the "sale" is really a SALE. Sometimes prices are marked up, then marked a certain percentage "off," and you are right back at the original price!

3. Shop online before shopping in person. You can find great deals online, but you can also find out what things are really selling for. Many times, when you shop online, you end up paying more for the item because you have to pay for shipping. Factor that in! If the item is going to be more with shipping, go to the store, but make sure you know what you could have paid online. Sometimes, for bigger-ticket items, stores will bargain a bit.

4. If you find a deal, don't spend more just to reach your limit. For example, if you have $50 set aside for your sibling and you find "THE BLOUSE" that she has been wanting for $30, don't feel obligated to spend the other $20 on another gift. Take that money and pay down a debt, or use it for gasoline on your Christmas gift-giving. The people you are buying for already know you love them, and they will never know that you got a good deal.

5. Remember your goals. I can't overstate this. If getting out of debt is a high priority--truly a high priority--you will not overspend on Christmas. This is a time of year that will really test your dedication to your financial goals.

Enjoy Christmas shopping. Be kind to those in the stores. Don't ruin their experience. But make sure you don't lose focus of your goals when it comes to your finances.

WYTI Links: 11/21/2007

2007-11-20T20:41:00.000-06:00

Here's a mid-week set of links to go around...have a great holiday week!

10 Easy Ways to Save Money Without Much Effort (via Consumerism Commentary) Thanks to Adam for submitting this link last week...

What If You Make Maximum Retirement Contributions For 20, 30, 40 Years? (Roth IRA, Traditional IRA, 401k, 403b) (via No Credit Needed)

Organization 101: A Visual Guide to How I Manage the Information in My Life (via The Simple Dollar) Trent uses a system very closely akin to David Allen's "Getting Things Done" philosophy. Here he spells it out...and includes pictures.

Would Jesus Have an Emergency Fund? (via ChristianPF) This addresses an interesting thought we probably have all considered about the balance of saving for the future and using our blessings for God's good.

MP3 Players for Nine Year Olds? Whatever Happened to Simple, Inexpensive Fun? (via Money, Matter, and More Musings) In the holiday shopping spirit...

Don't Pass Up Free Referral Money

2007-11-16T14:00:00.000-06:00

We've all seen the DirecTV commercial with the play on 'Speed Dating.' "Do you want to make 50 bucks the easy way?" While the commercial was annoying long before the 100th time I saw it, the point should not be forgotten. When I signed up for DirecTV I knew at least 10 families who had DirecTV service. Many of them knew I was planning to get DirecTV. It was only after I was a customer that I found out about the referral program. Had I simply stated when signing up for service that I was referred by my friends with account #: xxxxxx, we both would have received a total of $50 in bill credits. Instead, since no one mentioned this to me, we all passed up on free referral money. It is really quite sad to see how many companies offer free referral money, and then to know how many times service is obtained without anyone getting a referral bonus.

When you are planning to sign up for new service with a company that a friend or family member already has service with, check to see if the company offers referral bonuses. Some that definitely do:

DirecTV as mentioned offers $50 to the referring customer and the new referred friend.
Dish Network offers $50 for the referring customer, though I'm not sure if the new customer gets a credit.
Charter Communications offers $25 for each person on new phone service.
AT&T offers a variety of $25-50 referral bonuses to the referring friend on new phone service, or new features on phone service (ie. adding long distance or high speed internet).
Earthlink offers one month of free service or $25 cards for the referring friend on new internet or cable packages.
AT&T Wireless (formerly Cingular) offers $25 for the referring customer and the new referred friend on new wireless plans.
Many Credit Cards (at least Citi cards) frequently offer referral bonuses to the new card member and the referring card member.

I have personally taken advantage of the offers through DirecTV, Cingular (now AT&T wireless) and a Citi card. So, using this frugality tip may benefit you, or at least a friend. Don't pass up free referral money!

Oh, and by the way, if you need someone to refer you to DirecTV, AT&T residential, or AT&T Wireless let me know, I'd be glad to give you the referral info needed to get the credit!

Photo: Sufi Nawaz via stock.xchng.

WYTI Featured

2007-11-16T10:58:00.001-06:00

James's article on Life with Pets was featured this week in the Carnival of Financial Planning.

Adam submitted the article, so they accidentally credited him with the writing.

Enjoy the entire carnival (James's article is 3rd) here.

"The Automatic Millionaire" (Chapter Four)

2007-11-16T08:54:00.000-06:00

"Now make it automatic."

That's the overriding theme of this chapter, and the idea from which the book gets its name. David Bach is a firm believer in putting as many things on "autopilot" as possible. In fact, for the rest of the book, nearly every step includes the idea of making it automatic.

If you work for a company that will move money from your paycheck before you ever see it, get in touch with them and enroll in a 401(k) plan, but make it automatic! As we mentioned in the last chapter review, Bach also says that, whatever percentage you think you can put away, add one or two percent to it. After just a couple of weeks, you won't miss the money, anyway!

The chapter also contains a very easy-to-understand comparison of the traditional IRA (Individual Retirement Account) and the Roth IRA. As with most financial gurus, Bach teaches that, if at all possible, one should work in a Roth, but only after taking a company match in a 401(k) plan.

This quite lengthy chapter (it's 54 pages in length) also takes the time to show you the names and contact information for some companies that can help you get started with an IRA.

There is one major "plus" to this chapter. Bach takes quite a bit of time to share with the reader the importance of compound interest and of getting started as soon as possible. As you, no doubt, know, compound interest, over time can make thousands of dollars worth of difference if the same amount is invested. A chart on page 97 shows what investing just $100 per month will grow into. If you invested $100 at 10% for 20 years, you would have 76,570. However, if you invested that same $100 and only got 9%, but started 10 years earlier, you would have $184,447! That's almost twice as much, despite making less in interest!

I feel there is one major "minus" to the chapter, too. Bach is a firm believer in the "pyramid" way of investing. He says that, over time, one should move money from investment to investment, getting a little more "safe" (or conservative) as time goes by. For my money, I agree more with Dave Ramsey on this one. If you will take you time and do your research, you can keep your money in good stock mutual funds for your entire life and still be quite safe.

This chapter is long, but it is informative. While I feel that Bach gets off the subject just a bit (or, maybe, he just tries to explain too much about investing in one chapter) the overarching theme is still to pay for your retirement automatically. If you decide that you can write out checks every month, if you are like me, you will fail. "Something" (whatever that is) will "come up," and keep you from putting money away regularly. Save yourself from yourself and make it automatic.

"The Automatic Millionaire" (Chapter Three)

2007-11-13T08:48:00.000-06:00

If you think the "Latte Factor" is used several times in David Bach's book, the principle introduced in chapter three is used even more. In many ways, this step in his "automatic" plan is the basis for everything else.

Now that you have found something (or several somethings) in your budget on which you "nickel and dime" yourself into the world of being broke, you can change that. Stop (or greatly curb) your spending on that item. Now you have freed up some money to pay down debt, and build wealth.

The key, according to Bach, though is not just to cut out those small expenditures, it's to make sure you "Pay Yourself First."

By "first," he means "first!" Even before the government. If you work for a company that will help you by putting money out of your paycheck where ever you tell them to, you can easily do this. Simply call or email those in charge of this and ask them to put a certain percentage of your check into a retirement account.

Notice that Bach recommends a percentage, not a specific amount. The reason is really quite simple. If you get a raise, the amount you are putting away for retirement goes up proportionately with that raise.

You may say, "I'm already in debt and living paycheck-to-paycheck! How can I possibly put even 1% into retirement." The answer is this: you have cut your spending by finding your latte factor. Now you can live on less. Also, after just a couple of weeks of doing this, you will be amazed at how you don't even miss the money.

Finally, Bach recommends putting away more than you think you can. Challenge yourself. If you think you can only put away 2%, make it 3 or 4. If you think you can do 5%, make it 7 or 8. Again, after a few weeks, you won't miss the money anyway. And you will be taking advantage of compound interest over time. Also, if your company matches your retirement, make sure you are putting at least the amount they match away. If you fail to do so, you will be missing out on "free" money!

MY TAKE: Obviously, this "order" of doing things is not the same that Dave Ramsey would recommend. We have not even starting getting out of debt (officially) yet. Bach believes in doing both at the same time so that you will see little victories in both categories. While I agree with Ramsey on this one, Bach does make an interesting argument.