A Bodey in Motion

Building momentum, one step at a time

4 Reasons to Stay in Debt

Life takes Visa...and Master Card...and American Express...and don't forget the car loans...and the student loans...and the super-sized house payment...If you are one of the five regular readers of this blog, you’re well aware that I have no love of debt. To me, there’s almost no good reason to go into debt, and a lot of good reasons to pay it off as quickly as possible. However, I try to keep an open mind. So, I thought it would be a good mental exercise to try to come up with some valid reasons to stay in debt. Here’s what I came up with.

#1. You have severe pulpuslacerataphobia.

That’s the fear of getting paper cuts, which is sure to happen while you sort through and organize all of those statements and bills you’ve piled up. Getting everything organized is usually the first step when you’re trying to get out of debt, because you have to have an accurate picture of your financial situation before you can move forward. While the internet and online banking are making mail and the paper it’s printed on less and less common, it’s not totally gone yet. Serious pulpuslacerataphobics might consider investing in good pair of gloves if they’re trying to get their money under control…or they can just stay in debt.

#2. The thought of divorce excites you.

Study after study shows that the top indicator that a marriage will end in divorce is the number of money fights a couple has per month. Debt adds a lot of tension to an already difficult situation. If one partner is desperately trying to pay off outstanding loans, while the other is constantly opening new ones, they’re doomed. Getting a couple to communicate about their money goals, make compromises, put all the numbers on paper, agree to it all, and not go off and do whatever-the-hell-they’d-like afterwards, is so important for a healthy marriage. They all should have that discussion before they head down the aisle…or they can just roll the dice and hope for an exciting outcome.

#3. You love your stuff.

Once you get going on paying off your debts, everything you own gets looked at through a very difficult filter. Namely, “Do I want that thing more than I want to be out of debt?” How much do you love that big and beautiful flat-screen television? Or that vintage automobile that you’re sinking hundreds of dollars every month into? Sure, you could always buy more stuff later, with cash, after you’ve paid off all of your debts, but that’s not the point. You already have this stuff, it’s yours, and you love it.

#4. You don’t want to change your life.

I can remember what it was like before we started fighting our way out of the financial hole we dug, and it was pretty easy on me. I’d go to work, bring home a steady income, and my wife would take care of making sure the bills were paid. It is shocking how different my perspective on life is today than it was four years ago. It’s way more difficult, but the future looks so much better in so many ways. Still, there’s a shrinking, immature part of me that misses what used to be. Maybe that part is bigger for you?

Perhaps that wasn’t the most open-minded list. How about you? Can you think of a good reason to keep your debt?

May 7, 2013 Posted by | Marriage and Family, Past and Future, Work and Money | , , , , , , , , , , | Comments Off on 4 Reasons to Stay in Debt

FPU Lesson 9 – The Great Misunderstanding

This is the lesson that makes all of the difference. You can do everything covered up to this point, and it’ll work, but you won’t be half as successful as you could have been. How can generosity possibly play a part in building wealth? Below are my notes from the lesson, including the key points that I highlight from the video when leading the class, and some supplemental material that I think could help the class go further on this topic.

Financial Peace Unversity

Lesson 9, The Great Misunderstanding

Key Points

The great misunderstanding is that we believe the way to have more money is to hold on to what we have tightly. The truth is that it’s just the opposite. When we hold our money with an open hand, instead of a closed fist, it’s able to flow out and in more freely. Generosity is a tool for wealth building.

We are not owners. We are only managers. We’re stewards. This is the hardest thing for us to accept. Everything we have is there for us tend, cultivate and grow, but not for ourselves.

Giving makes us more Christ-like. God is a giver. A spiritually mature Christian gives. If you have dedicated your life to following Jesus, but you’re not generous with what you’ve been given, you’ve missed something.

Challenges

The Parable of the Talents. From Matthew 25, and it has become one of my favorite passages. It covers the major points of how we need to approach money:

  1. Everyone is given something, each according to their ability. There isn’t any room for envy. We each have what we can manage.
  2. Grow what you’re given, no matter how small. Don’t bury it.
  3. Be ready to give it all back to the one who gave it to you.
  4. Being responsible with what you’re given right now prepares you for more in the future. In the end, how you grow what you’ve been given reflects on how you are growing. We all want to hear “Well done, good and faithful servant.”

This is only the beginning. You might still have months (or years) to go before you’ll see huge progress. Remember that you’re trying to be the tortoise, not the hare. Be committed to continue educating yourself about money. Read at least one financial book every year.

May 1, 2013 Posted by | Christ and Church, Past and Future, Work and Money | , , , , , , | Comments Off on FPU Lesson 9 – The Great Misunderstanding

FPU Lesson 8 – Real Estate and Mortgages

Making the right decisions when it’s time to buy or sell a home are a huge part of financial success. Below are my notes from the lesson, including the key points that I highlight from the video when leading the class, and some supplemental material that I think could help the class go further on this topic.

Financial Peace Unversity

Lesson 8, Real Estate and Mortgages

Key Points

Be patient when buying a home. Think like an investor. Overlook bad and outdated features. Use experts to confirm the home’s value. The purchase of a house is a major financial event in our lives. Rushing through the process would be a mistake. Surround yourself with advisors to find a house that you will enjoy living in and will hold it’s value.

Never get more than a 15-year fixed mortgage, with at least 10% down. No more than 25% of your take-home pay in house payments. Being house poor is usually a worse fate than being in heavy credit card debt. Setting a specific upper limit to your purchase helps keep you from being in over your head.

When you get ready to sell your home, think like a retailer. You’re not selling someone a house, you’re trying to sell them their new home. Your home is now a product, show off its best features.

Next week: Lesson 9 – The Great Misunderstanding

April 24, 2013 Posted by | Work and Money | , , , , , , , , | Comments Off on FPU Lesson 8 – Real Estate and Mortgages

FPU Lesson 7 – Retirement and College Planning

Once the debt is gone and you’ve put together an solid emergency fund, it’s time to start working on funding the future. Both for yourself and your children. Below are my notes from the lesson, including the key points that I highlight from the video when leading the class, and some supplemental material that I think could help the class go further on this topic.

Financial Peace Unversity

Lesson 7, Retirement and College Planning

Key Points

Independence in the future is up to you. Work with investment advisors who have the heart of a teacher. You are responsible for funding whatever kind of future you want to have. Do not count on government programs or handouts to provide for you. Make a plan and start now.

The best way to invest is to be out of debt first. Work the Baby Steps. If you try to fund your future while trying to save for emergencies, put aside money for your kids college, and make all of your debt payments, well you’re not going to do any of those things well. Multitasking is a bunch of crap. Only work on one goal at a time until you’ve mastered it, and then move to the next step.

Don’t put all of your eggs in one basket. You must diversify. Spread your money around. You should never pile all of your wealth into one particular investment. The more you spread it around, the better your money will grow.

Fund college education only after you are fully funding your retirement. Your kids future in college may or may not happen. Your future (and your spouse’s) is definitely coming, and you need to be ready for it. There are a lot of options for your kids to fund their education, and it’s probably healthy to let them explore them as a part of the process.

Challenges

Can You Get a 12% Return? Investing is about long-term growth, and requires patience. Dave bases the 12% number on the average performance of the S&P over the past 80+ years (11.84%). Individual annual returns are going to fluctuate:

2010: 15.06%
2009: 26.46%
2008: -37.00%
2007: 5.49%
2006: 15.79%
2005: 4.91%

Based on 20 to 25 year averages, I feel 10% is more realistic, but ask me again in 5 years.

What’s Your Magic Number? How old are you going to be when you retire? Is 65 set in stone?

Consider Life-Long Work. If you are doing work that you love, why would you want to stop doing it? What does that do to the concept of retirement?

Say No To Student Loans. The average student graduates with $27,000 in loans (In 2011, it was $24,000, and in 2008 it was $18,000. Not a good trend). In most circumstances, these are NOT able to be bankrupted.

Is Education Changing? Almost everyone predicts that the next big economic bubble will be in education. At the same time, how we learn and what we need to learn has changed. Will the next decade do to the education industry what the last decade has done to the newspaper industry?

Go Deeper

  • Thou Shall Prosper by Rabbi Daniel Lapin
  • 48 Days to the Work You Love by Dan Miller
  • Stop Stealing Dreams by Seth Godin
  • Debt Free U by Zac Bisonette

Next week: Lesson 8 – Real Estate and Mortgages

April 17, 2013 Posted by | Marriage and Family, Work and Money | , , , , , , , , , , , , , , | Comments Off on FPU Lesson 7 – Retirement and College Planning