Make Room to Tithe

Free Money Finance just made a post that has me thinking about how my readers can free up room to tithe.

I won't go into the biblical reasons for tithing in this post, but I will try to cover some different strategies I've seen used to get people to the 10% mark.

Strategy 1: The BIG CHECK

This method is probably the least Biblical since you are not giving of your firstfruits. Rather, when you do your direct deposit you have 10% go into a separate account that you don't normally look at. At the end of the year you write a check for the account balance, and you've tithed your 10%. This one is the easiest to adjust your lifestyle to though, since you don't see the money ever.

Strategy 2: Month By Month

If you have a budget that tracks spending, this method is fairly easy. At the end of the month move the decimal on your total income to the left one space, that is how much you write the check for. EASY!

Strategy 3: Every Week

Same as month by month, but this time you do it with each paycheck.

Strategy 4: Help I'm in a debt crisis! I can barely afford 1%!

Now would be a great time to reevaluate your budget or spending habits. Remember, what is more important, God or eating out one more night a week?

Tithing is actually very simple, and it puzzles me why people find it so hard. If you just simplify your life, it should become easy to live off a smaller and smaller percentage of income, even now.

The new site

The new web domain is giving me some difficulty in how I want to set everything up so for the time being I will continue to post here.

Oh, and if you are looking for a safe investment, try CDs or Certificates of Deposit, especially if you don't have a high tolerance for risk.

Why?

I just met a person who actually invested lottery winnings $120,000 worth after taxes. She has set it up in a CD a month laddered situation. In other words every month she opens a new 12 month CD for $10,000. All her money is insured because she shops for the best rates at every bank in town. I'm not sure what her tax situation is like, but when her interest becomes her income (She'll be retiring in 11 years) it will net her $855.17 a month, which isn't astounding, but if she needs it she will have access to over $17,000 a month.

Meanwhile the winnings haven't changed her lifestyle one bit in any other way, she loves her job and will do it for as long as she can (probably won't really retire for another 20 years).

Learn to do without.

One of the best ways I’ve found to get an edge on finances is keeping myself consistently under budget. I do this by learning to do without. For example, there was a time when I would drink 3 fancy shmancy coffee drinks a day. Each one would cost me $2.00 so I was spending $6.00 a day just on coffee. That’s $42 a week, $128 a month.

And that’s just a cup of coffee.

Do you go out to eat with your spouse once a week? Going out every other week could save you $60 a month.

Do you buy name brand groceries? Trying some generic products could save you $10-$40 a week on shopping.

One big expense that saves people when they go without is alcohol. Depending on what you drink, you could save anywhere from $14-$200 a month by not buying alcoholic drinks, or even cutting consumption in half.

So how does one find out what they can cut?

This goes back to Knowing what you Spend. Save your receipts and really take a count of what you buy, what you use, and what just sits there. Does someone buy a magazine from the supermarket counter every month? It may be cheaper to get a subscription. I personally buy tools I don’t need and probably won’t use, but by making a rule that all tool purchases are a two-party decision, my wife and I save money by doing without.

I am interested in learning what other people have been able to do without, reuse, save money on, etc. If you have a good tip, post it in the comments below.

Eliminate the Debt Factor

I will start with a basic situation first with this one to show how crippling debt can be.

Imagine a family with 5 credit cards, and 2 car loans. We'll say that each card has a $1000 balance and minimum payments of 2% or $20 to each card every month, so total payments of $100 a month for the credit cards. The cars both have monthly payments of $300, for a total of $600, and a grand total of $700 a month.

$700 a month in minimum payments, and this doesn't talk about a mortgage or student loans which many people will also have.

Now the average family in America makes $40000 a year, so this family with $700 in debt is spending about 21% of it's income on minimum payments. Everyone should ask the question, What could I do with that extra $700 a month?

How do I get rid of that debt? after all I'm paying the Minimum.

The key is to pay as much more than the minimum as you can comfortably afford, lets say an extra $200. Simultaneously you stop using credit cards. This prevents your debt from increasing. With that $220 ($200 + $20 minimum payment) a month you will have one card paid off in 5 months. Now you have a spare $220 to put towards the next card $240 will pay it off again in 5 months with some change left over. Your third card gets paid off in 4 months with change left over and so on.

Reward yourself after you pay off a major debt. Take the family out to eat or something, thank them for their efforts. It is important that they feel good about eliminating debt so they don't make the same mistakes you did.

Once you have all your debt paid off, you are in a great position to save, set up a CESA (Coverdell Educational Savings Account) for your kids, or set it aside in a money market for a downpayment on a new home, or make an Emergency Fund. The more money you can put towards the debt, the faster it will be gone, consider cutting back on shopping, eating out, cigarettes, and alcohol if you want to see the most dramatic results.

Know What You Want

This is the fun part about budgeting, especially for the new family. Knowing what you want will give you your big goal that will drive the rest of your budget.

Sit down and have a chat with your family:

• What do you like to do?


• Where would you like to go?


• Do you want to buy a house?


• Do you want to have children?


• If you have children, do you want to pay for them to go to college?

The Written Word is key

The possibilities are as unique as every person, and this should be a discussion where all ideas are open for consideration and get written down. Dad wants a new Porsche? Write it down. Little Jimmy wants a bicycle? Write it down. Everyone wants to take a trip to Six Flags? That's great! Write it down. New couple wants to know the joys of home ownership? WRITE IT DOWN.

So let's drum up a sample list of different financial goals.

• Jimmy's new bike


• New House


• Porsche


• Ice Cream every Sunday


• Go out to eat twice a month


• Retire at age 60 and be able to live to be 160


• Put Jimmy through college

Now these are 7 general goals (this is an example, you could come up with hundreds fairly easily). Obviously some of them are more pricey than others, some are more specific, some are very general. Now it's time to prioritize.

Break the goals up into short-term and long-term.

Short-term

• Jimmy's Bike


• Ice Cream every Sunday


• Going out to eat twice a month

Long-term

• New House
  
• Porsche


• Retirement


• Jimmy's education

Now you just need to use the short-term goals to drive your long-term ones. I'll use the Porsche for an example.

Let's say that it costs $60,000 (I have no clue what a Porsche costs)

$60,000 becomes your big savings goal, your short-term goals should motivate you to continue to save. Just make milestones in your savings. So, if Ice cream for the family costs $30, set a goal that everytime $130 is added to the savings account, everyone gets ice cream. The result is that everytime you've saved another $100 you get rewarded for saving.

That about sums up this article, anyone want to clue me in on how to post an excel document I could chart this for you.

Know Yourself (Get on Board)

"So, who controls the finances in your new family?"

My grandmother asked me this question about a week after the wedding, and I am glad that I had an answer for her, I do. Of course, she asked me why my wife didn't have control too, and in our case it is because she is afraid of money. The important thing here is that we figured this out before we got married. We tried to combine our budget about 3 months before the wedding, and had more arguments than ever before or since (So far).

What we learned about ourselves.

• Our hot button issue is money
• Our financial discussions end in stalemate (a tied argument)
• Budgets really stress my wife out
• Allowances do not.

What did we do?

Since I worked at a Credit Union at the time, I was getting a large amount of financial planning advice, budgeting tips, strategies, etc. This made it clear to both of us that when it came to handling the finances I would be the better choice, especially long-term. However, since I can decide to spend large amounts of money rather randomly, as part of this control, I am required (it's in writing) to inform my wife about these purchases and show her that we can afford it.

Before we got to this point though, my wife had to get past the idea of not having control over her money, and this should be key to any family: You don't get paid anymore, your family does. This doesn't mean give your kids everything they want, it means that your family controls what you earn. Even though one of you earns more, all the money is equally everyone's.

Once we had figured out how much we spend on things (WOW we dine out a lot!) and where our sources of conflict are, (You spent HOW MUCH? on a new computer!) we were able to get on board with the idea of a combined budget designed to meet the needs and some wants of our family.

Ways to get on board

• Have the hard money conversations immediately, letting them go leads to bad things.
• Look up statistics for divorces caused by money problems (You don't want a divorce do you?)
• Plan on doing something both of you enjoy after you talk.
• Discuss things you would both like to do and promise to plan for those things in the future
• You love each other, and this is the simplest way to get the best for each other.
• Remember, a budget is not a law it's a living document subject to change.

What are some other ways you use to get excited about budgeting?

The Basic Budget pt. 1

"How can the two of you afford that?"

This is a question my wife and I were recently asked when we purchased a Nintendo Wii.

Before I get into the hows of our material gains, it's important to realize first that my wife and I don't make much money, but we do work full-time 35-40 hours a week. I will now outline our spending plan strategy for getting out of debt without losing your mind.

1. Know Yourself (Get on Board)
2. Know What You Spend
3. Know What You Want
4. Eliminate the 'Debt Factor'
5. Rewards and Punishments
6. Dealing with the unexpected
7. Learning to do without
8. Learning how to do yourself

These 8 topics are just the tip of the iceberg right now, I hope you find this blog helpful in the future. Check back often as I will update a lot on my days off and space it out over the work week.