KNS Financial

Personal Finance From a Biblical Perspective

5 Simple Ways To Take Advantage Of Low Interest Rates

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Many people are disappointed because of the low interest rates available today. They look at the fact that their bank accounts are paying pennies per year in interest, and conclude that they cannot get ahead financially. However, there are things that you can do to take advantage of low interest rates.

Refinance Your Mortgage With Low Interest Rates

This is one of the most common ways to take advantage of low interest rates. This is because most mortgages involve hundreds of thousands of dollars and span across multiple decades. Even a small change in the interest rate of your loan can have drastic effects on your monthly payments.

The best time to refinance your mortgage is when you owe at least 20% less than the appraised value of your home. This way, you won’t have to worry about private mortgage insurance when you refinance.

Low Interest Rates

If you do decide to refinance, make sure you perform an analysis to see if the expected savings outweigh the points, fees, and other expenses associated with the refinance to make sure it is actually going to save you money.

A great way to pay off your mortgage early is to refinance at a lower rate, secure a lower monthly payment, but continue to pay the higher amount. This way you will be able to pay a few hundred dollars extra on your mortgage each month, without having to change your current budget. Just make sure that your additional payments are applied to the principle of your loan.

Negotiate Lower Rates

When you notice that interest rates are going lower, that should be a signal to you that it’s time to negotiate lower rates with your creditors. Give your credit card companies a call and ask them to lower your interest rate.

If you have an excellent payment history with that company and you have good credit, you should be able to get them to lower your interest rate. In fact, even if we aren’t in a low-interest-rate environment, you should be able to secure a lower rate if you have those credentials!

Consolidate High-Interest Debt

If your individual credit card companies and banks aren’t willing to give you a lower interest rate, a consolidation may be in order. Actually, depending on my situation, I may try to consolidate my debt first!

When dealing with high-interest credit cards, there are typically two ways in which you can consolidate your debt. First, you can apply for a consolidation loan. This is usually an unsecured, personal loan that you use to pay off all of your debt. The main benefit here is – hopefully – a lower interest rate, and only having to worry about making one payment each month.

The second way to consolidate your debt is to move all of your debt onto a single credit card. If you can find a card that has a balance transfer offer – such as 0% for the next year – then this can be a great move. Usually, you will have to pay a fee in order to process a balance transfer – just make sure that this fee is less than the money you plan to save by the reduced interest rate.

Refinance Your Car Loan

Many people only think of refinancing a mortgage when faced with low interest rates. However, with the price of a new car easily exceeding $30,000, you can save thousands of dollars by refinancing your car loan!

I would make the same recommendation to pay it off early. Refinance the loan in order to have a lower mandatory monthly payment, but continue to pay the same amount that you are paying today. If this amount is going directly toward the principle of the loan, you will finish paying it off much faster!

Make Prepayments To Secure A Lower Purchase Price

There are a number of financial agreements which we enter into, that will allow us to pay a reduced price if we pay the bill in full up front. The most common charge that I can think of which fits this description is car insurance. Most companies charge a fee for breaking your premium up into monthly payments; thus giving you a discount for paying the full charge up front.

Sometimes landlords will be willing to give you a discount on your rent if you pay up front. The discount may increase as you add more months to your initial payment. Paying your rent a year in advance can lead to real savings.

The same is true for many other arrangements where there is an option to pay over a long period of time versus paying the entire amount due in the beginning of the agreement.

You may be thinking to yourself, “I can make prepayments at any time! This has nothing to do with interest rates”. However, the reason why this is tied to low interest rates is because you have less incentive to put out $15 – $20,000 all at once, if rates are high.

If you can earn a high interest rate by putting your cash in a savings account or CD, then you will not be inclined to pay your rent a year in advance, unless the savings in rent are more than what you would earn in interest. Therefore, low interest rates make it financially feasible to make prepayments in order to secure a reduction in your purchase price!

photo by jscreationzs

A Few Questions About Low Interest Rates

  1. Do you take advantage of low interest rates to reduce your debt payments?
  2. Have you ever taken out a consolidation loan?
  3. Do you feel more justified in living above your means (borrowing money to pay for expenses) in a low interest rate environment?

 

8 Things You Can Do With Your Tax Refund

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Many people will be receiving (or have already received) a tax refund in the near future. Most people that I know plan to blow it on something that will not provide a benefit for their lives. Instead of wasting your refund and regretting your decision, try one of these 8 tips!

Tax Refund

What To Do With Your Tax Refund

Start An Emergency Fund

Probably the most common characteristic of a financially stable household (besides the idea of living within their means) is an emergency fund. The point of this emergency fund so you can have money stashed away when something unexpected comes up.

If you are not financially prepared for emergencies, then you may be forced to rely on high-interest credit cards, or tap into your retirement savings in order to get by.

Pay Down Debt

Another great use of your tax refund is to pay off debt. This may seem like a boring option (especially when compared to how most people use their tax refund), but it will automatically earn a rate of return that is equal to the interest rate on your debt.

For instance, if you pay off a credit card that had an interest rate of 20%, then that is equivalent to earning 20% on an investment!

If you use it to pay off/down an installment loan (such as a mortgage or car loan), then you may have to specify that your extra payment should be applied to the principal.

Consider Paying Infrequent Expenses

Many times it can be difficult to remember those expenses which only come once or twice each year. Instead of being taken by surprise and sent scrambling for extra cash at the last minute, either pay or put aside money for these expenses using your tax refund.

Some of these can include your car insurance premium, a maintenance fee on a timeshare (don’t get me started on this one) or other property, roadside assistance fee, and any other types of subscriptions.

Save For Retirement

You can easily fund a retirement account, such as an IRA with your tax refund. If you have more than the current IRA contribution limits, then you can fully fund your account while taking advantage of one of these other options.

If for some reason you are not reaching the 401k contribution limits at work, you can use this extra money as a way to increase what you currently contribute. Of course, you can’t add outside money into a 401k; however, if you fall short of the contribution limit due to other expenses, you can use your tax refund to pay those other expenses and increase the amount that goes into your 401k!

Save For A Large Purchase

If you are looking to purchase a car (learn how to save money on car costs), new laptop, vacation, or any other large purchase, this may be your chance. Instead of going into debt to buy the item, you can use your tax refund.

Even if the amount of your refund isn’t enough for you to purchase the item outright, it can greatly reduce the time it will take to save up for it. You can also pad the account with bonuses, raises, and future tax refunds.

Give

Giving is a very important part of any financial plan – especially for a Christian (we are commanded to give). I know many people who have a strong desire to give, but are not able because things are too tight for them financially.

If you are in a situation like this, a large tax refund can provide you with the perfect opportunity to give. There are plenty of organizations that are looking for donations in order to fulfill their mission such as, your local church, a missionary, food banks and homeless shelters, and any other charity that is fighting for a worthy (to you) cause, and has proven to be reliable!

 

Start A “Blessing Fund”

One of the things that my wife and I want to do (once we are out of debt) is to establish a savings account that will only be for the purpose of providing financial blessings to others. By having a separate account for this, we never have to worry about depleting our emergency fund or any other “dedicated” savings when we come across someone in need.

If you have a desire to help people out at various times, but don’t always have the means when these times come up, use your tax refund to start a “blessing fund”.

Spend Your Tax Refund

I’ve talked before about celebrating small victories during your financial journey.  Use some or all of your tax refund and do something that you have wanted to do, but couldn’t. Maybe go out to a fancy restaurant, or buy a New iPad or some clothes!

No matter what you choose to buy, use all or a part of your tax refund to treat yourself. Then take the rest and put it toward your highest financial priority. This way, you can celebrate achieving a financial milestone, without diverting funds away from your current plan.

Reader Questions

  1. Did you receive a tax refund this year? If so, how did you spend/save it?
  2. Do you purposely have excess taxes withheld during the year so you can have a large refund?
  3. Do you regret how you’ve spent a previous tax refund, bonus, or other “windfall”?

Real Money Answers for Every Woman Book Review

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I sat down with my copy of Real Money Answers for Every Woman: How to Win the Money Game With or Without a Man not knowing what to expect. In all honesty, it is because I have never deeply considered how my approach to personal finance is affected by my womanhood. All it took was a glance down the table of contents for me to understand why this book is needed. More specifically, I was able to see why I needed to read it!

The book has four sections, with a few chapters within each section. The magic is what happens within these chapters: the table of contents lists questions that are proposed within the chapter topic. Many of these questions resonated with me and many of the clients with whom my husband and I engage. They come up over and over again, a lot of them specific to women of varying demographics.

Real Money Answer Book

Reading this book, the author delivers on her promise of real money answers. She doesn’t speak in personal finance generalities, taking a one-size-fits-all approach. I can believe that Mrs. Washington has taken her years of experience in her field, having really heard the voice of her clients and audience, and packaged her most genuine responses in a power-filled tool!

The Tone

Have you ever had a friend that ALWAYS tells you the truth, even though you may not want to hear it? (If you haven’t, you really need to get one of those!) Well, let me help you be prepared if you are going to pick up this book: PATRICE WASHINGTON WILL BE THAT FRIEND!!!!

Her tone is very down-to-earth, very conversational — and equally firm. She is not afraid to let her readers know when their mindsets are just crazy, silly, or wrong!

She writes, “If you’re not really a finance type of person, then make yourself one, and quickly! That type of mentality is not how a wealthy, successful person
thinks. If you’re thinking you’ll be fine, God will provide, you’ll just hit the lottery one day, blah, blah, blah, then this book—all the books in the world—won’t help you. You might be uncomfortable hearing that, but somebody had to tell you.”

I’ll admit, you may have to say “ouch” a few times while reading this, but you will keep on going because you can trust that she is helping to get past your unhealthy mindsets and actually providing you with the information you need to get results. It reminds me of Proverbs 27:6 “Faithful are the wounds of a friend”.

She is also extremely open and encouraging throughout the pages. She starts off by sharing her own story, including some of her own missteps and how she had to change her thinking and relationship with money to become financially healthy and successful.

The Treasure

There are many gems in Real Money Answers, but I will just mention a couple of my favorite things.

  1. The detail: Mrs. Washington gives you everything you need to set you up for success (There she goes being that friend again). It’s more than just some useful worksheets in the back – although there are those, but when she answers specific questions, she provides resources to utilize and specific steps to take to get things accomplished!
  2. The scope: As I said already, the author did an amazing job of meeting the needs of her audience. She covers such a wide range of topics where I know people need direction and advice. For example, she tackles how to handle: friends who are taking advantage, entitled children, money questions to ask when dating, and financial recovery after a divorce.

The Takeaways

  • You need to change your mindset about money! If you don’t change that first, you’ll keep making the same mistakes. The book will help you consider your mindset, how you’ve developed it, and the steps needed to adjust.
  • Wherever you are in life (single, married, child, elderly, etc), you are exactly where you need to be to make a positive change in your finances. This book has such a wide range of questions and answers, that I am sure women will find the help they need to be financially successful
  • The time is now! Nothing will change, or things will get worse, in your financial situation until you take action. Real Money Answers for Every Woman is available on Amazon and other retailers.

 

The Real Money Answers Author

Patrice Headshot

Patrice C. Washington has dedicated her life to moving the masses from debt management to money mastery since 2003. As a featured columnist, television commentator, radio host, author, speaker and leading authority on personal finance for women and youth, Patrice is intentional about keeping her message on money management practical and upbeat.

Patrice’s down-to-earth advise has been featured in numerous articles, quoted in dozens of newspapers and magazines and appeared on hundreds of radio stations and television networks, including Bloomberg TV, Forbes, The Huffington Post, CNN Money and Black Enterprise. Each week, 8 million listeners tune in to hear her “Real Money Answers” segment on the nationally syndicated Steve Harvey Morning Radio Show.

As a transformational speaker, Patrice is invited to conferences, churches and colleges nationally to electrify, entertain, educate and most importantly to her, inspire action in thousands of families monthly.

 

How to Choose A Career Path

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When considering a career path, one can feel overwhelmed by the various choices. In order to help you narrow down your choices, some well-meaning friend will tell you, “do what you love”, while another will say, “choose a career that will pay a lot of money”. Who is right in this case? How can you determine what path to take?

I was reading an article titled, “Doing What You Love Versus Doing What Pays” that looks at common advice on the subject. In reading the comments to that article, it seemed as though most of the readers would advise someone to choose a career path based on the potential income. Others still stuck with the “do what you love” advice that many hold to.

Career Path
Career Path

But is it really that simple? Let’s take a look at a few of the pros and cons to both of these views, and also see if there isn’t some other choice that we can make.

A Career Path that you don’t love but pays well:

Pros:

  • You will make a good amount of money
  • You will more than likely avoid the stress that comes from having a lower income (of course this ultimately depends on your financial discipline)
  • The added income may give you the financial freedom that you need to pursue what you love, as a hobby – or at least to not focus on the income it generates
  • You may be able to retire faster and then do what you love full-time

Career Path
photo credit: HikingArtist.com

Cons:

  • If you dislike a particular field, it may be harder to gain enough of an expertise in order to be highly compensated (for instance, those who hate math will not make top notch engineers)
  • You may be required to give up quality time with family and friends in order to accomplish your salary goal
  • Some people with higher incomes find it harder to exercise financial discipline than those with lower ones
  • Many high paying careers paths are also considered to be the most stressful
  • This stress will impact your relationship with family and friends over the long run

A Career Path that you love, regardless of the pay:

Pros:

  • Your love of that field will make you a great student, and so you may excel to the point where you are a top earner in that sector
  • You will have a sense of fulfillment and happiness from your work
  • The lower salary may force you to develop financial discipline
  • You may have lower levels of work-related stress

Career Path

photo credit: icadrews

Cons:

  • Lower salary – you may have to live a much simpler life
  • May take you longer to retire – this may not be a big issue for you if you absolutely love your job
  • If you lose your job, it may be harder to find a new one – although there are a few low paying jobs that are in demand

A couple of things to note. First, this is by no means an exhaustive list. Actually, I am counting on your comments below to help fill in the missing pieces. Second, you will notice that many of these points use uncertain terms like “may”, or “many”; this is due to the fact that many of these will not be true in EVERY case.

My take on choosing a Career Path is this:

I think that the answer to this question is different for everyone and is a matter of prospective. My initial reaction to this question was, “If you can get paid a ‘decent’ living wage for doing what you love, go for it! We wouldn’t have teachers, social workers, or pastors if people didn’t follow this line of thinking.” I also said to myself, “Money isn’t everything, and if you have to be miserable for 10 hours/day just to make a few extra dollars, it probably isn’t worth it.”

Do what you love, and if the pay isn’t great, lower your standard of living to match your pay. You can’t determine your standard of living apart from your income. In other words, LIVE WITHIN (or actually below) YOUR MEANS! This is true no matter what your income turns out to be.

However, for many there is little to no career opportunity in what they “love“. In that case, find a balance. Do something you like, and if it doesn’t pay enough to maintain your desired standard of living, try to make a few bucks from what you love. Like others have said, don’t choke the life out of what you love by focusing on money, but maybe you can be a consultant in that area or start a blog giving advice about it.

Ultimately, we should be content with whatever financial/work situation in which we find ourselves. In the words of the Apostle Paul:

Not that I speak from want, for I have learned to be content in whatever circumstances I am. I know how to get along with humble means, and I also know how to live in prosperity; in any and every circumstance I have learned the secret of being filled and going hungry, both of having abundance and suffering need. I can do all things through Him who strengthens me. ~ Philippians 4:11-13

We see from this passage that our situation should not be able to determine our satisfaction or contentment in this life – especially if we are slaves to Christ!

Personally, I happened to “like” a field that is in good demand (Economics & Finance). However, my true love is Theology, and that may be something that is in my future.

What about you? What choice did you make? Any regrets? How would you advise someone in choosing a career path? Would you tell them to look for money, happiness, or both?

To help you in your choice, Payscale.com has released it’s list of “Best Undergrad College Degrees By Salary”:

Degrees Degrees
Methodology
Annual pay for Bachelors graduates without higher degrees. Typical starting graduates have 2 years of experience; mid-career have 15 years. See full methodology for more.

Not an engineer or an economist? Here is the full list: http://www.payscale.com/best-colleges/degrees.asp

Be sure to leave your comments below.

 

photo credit: jeremy.wilburn

True Christian Conduct

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The one another verses of the bible remind me how fruitless it is to focus on God-honoring finances if we dishonor God by failing to love our brothers and sisters in the faith. This was something that our Lord condemned in the Pharisees (Matthew 23:23). This thought was placed upon my heart recently, and I wanted to share it with you.

One Another Verses True Christian Conduct

My wife and I drove down to her parents house for an early Memorial Day celebration. While we were having a conversation about God and Christian living, my mother-in-law shared with us a passage from her daily devotional (I believe it was Our Daily Bread). It focused on how we, as Christians, are to conduct ourselves toward one another.

The One Another Verses

We are to:

Love one another – John 13:35 – By this all men will know that you are My disciples, if you have love for one another.

Admonish one another – Romans 15:14 – And concerning you, my brethren, I myself also am convinced that you yourselves are full of goodness, filled with all knowledge and able also to admonish one another.

Bear one another’s burdens – Galatians 6:2 – Bear one another’s burdens, and thereby fulfill the law of Christ.

Be kind to one another – Ephesians 4:32 – Be kind to one another, tender-hearted, forgiving each other, just as God in Christ also has forgiven you.

Be subject to one another – Ephesians 5:21 – …and be subject to one another in the fear of Christ.

Comfort one another – 1 Thessalonians 4:18 – Therefore comfort one another with these words.

Live in peace with one another – 1 Thessalonians 5:13 – …and that you esteem them very highly in love because of their work. Live in peace with one another.

Confess sin to one another – James 5:16 – Therefore, confess your sins to one another, and pray for one another so that you may be healed The effective prayer of a righteous man can accomplish much.

Be hospitable to one another – 1 Peter 4:9 – Be hospitable to one another without complaint.

Living Out These Admonitions

This is not an exhaustive list of the one another verses in scripture, but these examples serve to show as a breadth of service and selflessness we should extend to other Christians. It reminds me of Christ’s example of humility and service in Philippians 2, as He humbled himself, to the point of death, on our behalf.

By nature, I am a very private person and I tend to keep to myself – that makes it difficult to be obedient to some these commands. I have noticed that the more time I spend in prayer and in studying God’s word, the easier it gets to obey God. This is one of the reasons we are commanded to “pray without ceasing” (1 Thessalonians 5:17), and to “lay aside [our] old self” (Ephesians 4:22).

I am going to be sure to incorporate each one of these things into my prayers every day! It is not enough for us to wear the title “Christian”, but we are to be transformed into the image of our Lord Jesus Christ (Romans 12:2; 2 Corinthians 5:17).

I ask that every believer reading this continue to pray that my wife and I will submit to God in these areas, and that our love for God will be displayed in how we act toward our brothers and sisters in Christ!

Reader Questions

How do you ensure to have these character traits when relating to fellow believers?

What advice would you give to someone who is seeking to follow these commands?

How do you handle struggling in these areas?

I would love to read your comment below.

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