Tip of the Day

Today I received the most useful financial tip I think that I have ever heard in my entire life. Seriously! It kind of sounds weird, but it is really great.

Over the last couple of years certain things have happened to friends and family that made my husband and I realize that overall we didn't have enough insurance coverage. When we were first starting out, all we could afford was the most basic of insurance coverages. And to top it out, we really didn't know what we needed. Our agent was very kind, but not necessarily helpful.

Then a friend lost everything in a fire and didn't have enough coverage. A family member had huge medical bills not covered by insurance. And other similar situations, and we got to thinking... Do we have enough coverage?

Long story short since we just recently moved we decided to go meet our new agent and up our coverage. So glad we did!! Our agent was awesome. He answered all of our questions and helped us figure out what was best for us. Now don't just assume we got duped or sold a pitch. We had done research before and pretty much knew what we wanted. There were just some loose ends and unanswered questions.

One of our areas of discussion was life insurance for my husband. I have a tiny life insurance policy through my employer, but my husband had nothing. While the reality is that we would both really struggle financially without the other, I would be worse off than my husband.

We would really love to get a permanent life policy (meaning you pay a certain amount for a set period of time then have insurance for the duration of your life; it never expires and you never get disqualified) versus a term-life policy (meaning you pay for set period of time but the policy expires, you can be disqualified, and if you don't use it, you lose everything you paid into it). The problem is permanent life is more expensive and we cannot afford it right now. The other problem is it gets more expensive as you get older.

Note this - the younger you are, the cheaper permanent life insurance is!

So here is the most useful financial tip I think I have ever heard in my life....


Get a permanent life insurance policy for your infant or toddler.

Seriously!

Yes, it is more expensive than term life, but it is cheaper for a child than for an adult. It will cost a nice chunk of money for my husband to have this type of insurance, but would be far less if he were a baby. So get it for your kid. When he gets older, he can adjust the policy to fit his needs and those of his family, but the life insurance is there. And the painful "start-up costs" of your 20s are taken care of at a much cheaper price as an infant.

Random I know, but something to consider.

Grandparents, if you are planning on leaving your grandchildren an inheritance, consider paying for this expense when your grandchild is born. That could be more valuable and give you more "bang" for your buck.

Life insurance is one of things that is really weird to think about. I didn't like sitting next to my husband and saying, "Well, if you passed away, I would like to receive enough insurance money to pay off any outstanding debts and put a chunk of money down on a house so I don't have to move in with my parents or bear the expense of renting." How awkward is that? But if you can fit it in your budget, it is definitely something to consider.

And think about it - how awesome would it be if you taught your kids to pay it forward? You set them up with a permanent life insurance policy, so they didn't have to worry about that as an adult. Then they in turn set up their children with permanent life insurance, then your grandkids set up their children.

Train 'em right! The financial things my parents taught me, I am implementing in my life right now.

Again I know that this is totally random, but I thought it was such a good tip I had to share it!

Stewardship vs. Frugality

What do the words stewardship & frugality mean to you? They are just words. In Christian circles, these words tend to go hand in hand, but they really are quite different. According to the dictionary frugality maintains the idea of using resources sparingly, whereas stewardship gives the idea of supervising or managing resources for another.

When I was growing up, there was always a great emphasis placed on stewardship. My parents, my Pastor, ministry leaders, Christian school teachers always stressed the importance of being responsible and faithful with the resources that God had entrusted to me.

There was an extremely high cost of living, as there tends to be with any big city. While the millionaires and wealthy abound, they were not always the ones actively involved in my life. Everyone I knew faithfully used their weekly coupons, purchased items on sale, and rejoiced over a great find on the clearance rack. While the financial side of life wasn't always easy, everyone worked hard and lived within their means. They spent time with their family and loved the Lord. They were faithful to church and diligent in all that was set before them. From my child-like perspective, it seemed that they all knew God had entrusted them with their lives and they were responsible to care for it according to His principles. No matter how tight finances would be, they knew that God would provide for the tiniest need as long as they were good stewards with what they had.

I could give you story after story of how I saw this play out in people's lives.

That was stewardship.

Then I moved and the new word seemed to be "frugality." Here in Small Town, South, absolutely everything is cheaper - except for maybe groceries, because we have to pay high taxes on food. There is a lot less affluency in this area, but that's ok because it's not like I was rubbing shoulders with the millionaires anyway.

It is different though. Everyone seems to do the extreme coupon thing. Everyone shops at thrift stores & consignment stores almost exclusively, if they shop at all. And they are all always worried about money. There are certain numerous people that I absolutely cannot talk to unless the conversation is wholly centered around money. These people will drive 50 miles in their low mpg vehicle to pick up a single free item - then they will stop for lunch with the family as a reward for the money they saved. They will spend hours trolling the internet for free products, coupons, and cheap work. But they will totally miss out on time with their family, or they just can't find time to serve in ministry at church. Money is on the brain, and it is always something that they are worried about.

When I moved to this Small Town, South, I wanted to fit in with all of the other ladies. It seems like there are two key "rights of passage" - having babies (not happening anytime soon), and couponing (I guess I can do that). But I quickly discovered something about that couponing. I was worrying about money. Money is something that God is supposed to take care of. I was spending more money on groceries than ever, simply because they were on sale and I had a coupon. The ladies told me it was a good deal. Before I just bought what I needed when I needed it. If it happened to be on sale or I happened to have a coupon, it was an added bonus. Occassionally I would stock up on expensive or hard-to-find items if it truly was a good deal. But with the couponing, I was no longer relying on God to provide for me, nor was I just being a steward. I was trying to be frugal and I was trusting me.

In God's eyes, not relying on God and instead relying on me is sin. I can dress it up here on earth as a good thing, but the heart behind it is sin. When I was just a steward, I never really worried about money. Sure, I still wondered how a bill was going to be paid, or I was painfully aware that I didn't have enough money for something that my family needed. But God took care of all of that. The bills were always paid. As a steward, I carefully planned my meals with affordable ingredients. I did due diligence and searched for good deals. I tried to use coupons and buy things on sale as often as I could. Not because it was my money, but because it was God's. I knew that in the end, as long as I was faithful, He would take care of it. And He always did.

But the minute that I tried to live frugally, it suddenly seemed like the bills couldn't get paid and I was spending too much money in an effort to save money and I was busy worrying.

Stewardship & frugality - they are just two words. They mean a lot. Maybe they mean different things to you. But I know I learned the difference for me.

One thing I know for sure. God specifically tells me not to worry about finances for food or clothing because He has under control.

No man can serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. Ye cannot serve God and mammon. Therefore I say unto you, Take no thought for your life, what ye shall eat, or what ye shall drink; nor yet for your body, what ye shall put on. Is not the life more than meat, and the body than raiment?
Behold the fowls of the air: for they sow not, neither do they reap, nor gather into barns; yet your heavenly Father feedeth them. Are ye not much better than they? Which of you by taking thought can add one cubit unto his stature? And why take ye thought for raiment? Consider the lilies of the field, how they grow; they toil not, neither do they spin: And yet I say unto you, That even Solomon in all his glory was not arrayed like one of these.
Wherefore, if God so clothe the grass of the field, which to day is, and to morrow is cast into the oven, shall he not much more clothe you, O ye of little faith? Therefore take no thought, saying, What shall we eat? or, What shall we drink? or, Wherewithal shall we be clothed? (For after all these things do the Gentiles seek:) for your heavenly Father knoweth that ye have need of all these things. But seek ye first the kingdom of God, and his righteousness; and all these things shall be added unto you. Take therefore no thought for the morrow: for the morrow shall take thought for the things of itself. Sufficient unto the day is the evil thereof. (Matthew 6:24-24)

And God specifically tells me to be a good steward of what He has entrusted to my care in Matthew 25.

Couponing, thrifting, and similar activities aren't bad. I don't mean that all. We as servants of God, just can't be consumed with them.

Be responsible, but let God be in control of your finances.

Saving on a Tight Budget

Most people in ministry understand that the ministry is not lucrative business. If they didn't know, they knew after the first paycheck. 

As a child I was blessed to attend a church that was generous... extraordinarily generous! And the deacons held to the philosophy that you take care of your pastors. They believed that money should not be something that a pastor needed to worry about. My pastors could have made substantially more money doing something else, but they were all able to afford a working vehicle, buy a house, send their kids to good schools, and help them through college. They didn't necessarily have the nicest or the newest, but all of their needs and many of their wants were met. I wasn't a pastor's kid, but this was the philosophy that I had seen as a child. When I moved out on a my own and began attending a different church (eventually joining my husband on staff), it had the same philosophy.

Blessed is the only word to describe it.

Let me just say now, I am not in ministry because of the money. But please understand that it is a necessary evil. We have to have money to survive. I am too practical and my prayer life is not that of George Muellers.

Well, my husband and I moved to Small Town, South, and I was shocked by the 60% paycut. I wasn't working at that point, so it certainly increased the shock level. Our heartbeats slowed down a little when we realized cost of living was a lot less than in Big City. And we knew that all of our absolute essentials were provided for.

We don't carry debt on any of our credit cards. We don't spend more than we make... Ever. The only debt we have is a car payment, but that is totally manageable. We made a budget and it is tight. We have to carefully plan out every meal, activity, birthday. Pennies saved are small victories and pennies lost are a tragedy. But it works. All of our bills are completely paid for each month and a few "luxury" items are paid for (like our smartphones, a huge daily blessing!)

But the question, we keep asking is "how do you save on a tight budget?" We don't spend more than we make, but depending on the bills that month, we tend to spend all that we make. Saving has become a luxury.

Here are a few things that we have found help us...


1. Budget for savings. This isn't a terribly original thought. But.. It is a lot easier to make sure that money makes it to the savings account, if you were planning on it in the first place. For my husband & I, the reality is this is at the bottom of our budget list and it really is a tiny amount. We occasionally have to skip saving to pay the electric bill, or buy a baby shower gift but because we budget for it, more often than not, we are able to save.

• We have to have cell phones. It's just the reality and the "want" is to have a smart phone. But I can't afford $150 for my husband to have a data phone plus additional cost to add me on the line. So what we have done is have a joint-plan with several friends to save costs. We obviously trust these friends greatly - to not dump us with the bill at the end of the month. Because we have done this, our plan costs less than a basic, non-data plan for one person. We don't have the latest model smartphone, but ours are still new and current. 

• To have cable or not have cable? With so many live-streaming options, skipping cable can be a great option. Actually this was a tough choice for us. We didn't have cable for several years and just had Netflix. For years that was great, but eventually you run out of options. For us, we just ran out of things we were interested or found appropriate for us. This is one of our few monthly splurges. We have the cable option one jump up from the standard channels. It took us a long time to get around to getting cable. (Not going to lie, I was pretty excited!)

• I'm so sick of 
cooking at home. I come to this conclusion about once a week. The sad fact is that it's not in the budget to eat out that often. It would cost a lovely, small fortune. So we eat out once - maybe twice - a month. The key to saving money when it comes to eating out is to set a spending limit. We almost never go to a restaurant that costs more than a total of $20 (after tip and taxes), unless it is a special occasion like Valentine's Day or an anniversary. That really limits our options, but we don't get to go out that often, so options aren't a problem. 

• Spa-like hair cuts and manicures. It is a wonderful feeling to just sit back and let someone else do your hair and or paint your nails, and someone else can always do it better than me. But it is such a money pit! I have tried getting my hair cut as infrequently as possible, and I still felt like I was spending way too much money. One of my favorite money savers has been getting my hair done at a hair school. I have a really basic hair style and don't dye it, so it's really hard to mess up. And if they do, it will get fixed by a more experienced stylist for free. The only problem I have had so far is that the students are slower than professionals. A forty-minute appointment took over an hour and a half, but the $10 price tag made it worth it.  If that isn't an option for you, look for a budget salon that you are comfortable with and get your hair done as infrequently as you can possibly handle. Men - sorry, just go get that haircut!

• Skip the movies and wait for it to come out on DVD. Use coupons to get Buy-One-Get-One-Free items (dessert at a restaurant or a free entree with the purchase of one entree). It will save you money, which you can then pass on to your savings account.

2. Always save something. To have a free savings account with our bank, it automatically withdraws a minimum amount from checking and puts it into savings. So while we may not save our full budgeted amount every month, at least we were able to save something.

3. Cut out as many luxuries as possible. The money you save should go straight to savings. 

4. Save the leftovers. If you have food leftovers at a restaurant, you might want to take it home (think "free meal"). Why not save the leftovers with your money too? If you have a couple dollars left in a budget category, put that money into your savings account. It all adds up!

5. Annual Expenses. A sneaky way that my husband and I manage to save money is through a monthly budget item that we call "Annual Expenses." They are the unplanned or one-time expenses (non-emergency) that we know about, like oil changes, dry cleaning, hair cuts, eye wear, Christmas presents. Previously we just took a hit or pulled from savings. It always hurt. So what we did is calculate approximately how much each of those items would cost over an annual period or if it should come up, then split it up into a monthly amount. Some things require putting aside $2 per month, others like car maintenance and eye wear $25. Then we added up all of the categories and moved that amount into a second checking account. Whenever we spend something in one of those categories, we just take the money from that checking account. It doesn't hurt, it doesn't hinder our savings, it's always there. It's a win-win! 

6.  Get a Cash Rewards credit card. I'm serious! This has become our 2nd savings account. I know that a lot of people in ministry don't like to use credit cards for various reasons. And I respect that, but if you use a credit card and pay it off every month, you can actually get a credit card company to pay you. Most companies don't give you much more than $0.02 on the dollar, but let me tell you - that adds up! And my credit card company gives you an additional percentage if you get a pay out sent to a checking account with their partner bank, and a larger percentage if you wait, and pay out after you have saved several hundred dollars in cash rewards. We use our credit cards as often as possible and always, always pay them off at the end of the month. (Personal story - we have made several hundred dollars and are still saving for a really, really nice vacation.) If you are concerned about what happens if the bank discontinues the program... my bank guarantees a pay-out even if the  program is discontinued or the bank closes. 

It is really hard to live paycheck to paycheck, be on a strict budget, and save money. We calculated the other day that is going to take us six and a half years from today to save the recommended six months salary and we already have money in the bank. (I almost had a heart attack!) But we will get there... eventually. :) 

You can too! It takes discipline, but you can set yourself up for success. I hope that these tips are helpful.

How do you save money?