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Personal Finance From a Biblical Perspective

Build Up Your Financial Security In Uncertain Times

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[This post is written by Derek from Creating A Passive Income. His goal is to explore every single passive income source there is and evaluate their effectiveness and revenue. If you’re interested in extra income, be sure to check out his site.]

There is a common piece of advice going around between parents and students. “Go to school, find a safe, secure job with good benefits, and you’ll retire well.” Let me be the first to tell you, this advice is terrible.

In our world today, there are fewer jobs than there are people, and employee turnover is higher than ever before. If you make a mistake or if your salary exceeds what is typical for your position, you might very well be on the chopping block. You might have your college degree, but guess what, so does everyone else.

The Typical Response for Financial Security

Occasionally, things just don’t work out with employment. It might not even have been your fault. The decline of the economy, the struggling sales of your company, or a transfer of ownership could be the cause of your job displacement. Whatever the case may be, you should have a financial plan in place so that you’re protected against total bankruptcy.

Once again, there’s some common advice out there – “To protect yourself from financial devastation after a job loss, you must have an emergency fund with funds equivalent to 6 months worth of expenses.” While I do condone an emergency fund, this alone will not protect you against complete financial failure.

After all, what if you just can’t find a job until month number 8? What happens then? You load up the credit cards? I hope not. The problem with setting aside a static stash of cash is that it is not regenerative. If you keep pulling money out and no more money gets put in, it WILL run out!

Financial Security 2

photo credit: Stuart Miles

The Best From of Financial Security

In these economic times, one really has no sense of security in a typical job. I’ve seen it too many times – people proclaim that no one can do what they do and that they’re too valuable to get rid of. And then….they get the boot….

Rather than depend only on an emergency fund for that potential job loss, I suggest that you focus on two more aspects of financial security.

1)      Live well below your means

2)      Build a residual cash flow

Live Well Below Your Means

My wife and I both work and we make a point to live off only one of our incomes. That way, if one of us loses a job (it’s happened before), we’re still completely fine financially. Maybe you can’t bring your expenses down to half of what you’re used to, but make an effort to reduce them and you’ll feel much more secure in the event that a job is lost.

Build a Residual Cash Flow

Instead of having just one or two incomes, why not go for three or four? That way, if one of your jobs says “see-ya”, it won’t be that big of a deal. My wife and I both have full-time jobs, plus she does photography on the side and I earn quite a bit of money through various passive income ventures. Now this is a true set-up for financial security, wouldn’t you say?

Perhaps you’re strapped for time and cannot possibly start another venture. If this is the case, then at least have some potential income options written down. You don’t want to lose your job and have no possible income sources. This is how you deplete your emergency savings in record time and make friends with the repo men…

Have you set up an emergency fund in the event of a job loss? Have you done anything more?

article photo by cooldesign

Financial Blessings – Reader Stories

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I recently posted a story about one of the many financial blessings that I have received in my life. It was inspired by a number of people who were anonymously paying off the layaway balances for random Kmart shoppers.

We are constantly bombarded with stories of corruption in financial institutions, people taking advantage of the elderly, and companies ripping off their customers for an extra buck. Then there are all of the negative personal interactions that we have in our own lives. Because of all of this, I thought it would be nice to hear about people helping each other out financially.

I asked the readers of that post to leave their stories of financial blessings in the comments.

Your Financial Blessings:

Tim @ Faith and Finance – “I remember when a guy from my home church sponsored me to go on a missions trip right before I started college. I didn’t have any money at the time and he asked if I wanted to go on the trip. I said, ‘yes, but I don’t have any money to go’ so he said ‘you’re going’ and paid the cost to go. I’ll always remember that.”

Shanendoah @ The Dog Ate My Wallet – “In highschool, I participated in an exchange group, where kids from Spain came to live with us for 2 weeks and then we would go live with them for 2. Sadly, while we could host, my mom couldn’t afford to pay for me to go. So the school in Spain paid $1,200 of the $1,500 cost, and my mom got to send me to Europe for $100/week.
I will always be grateful for the teacher who arranged that “scholarship”.”

Jeff @ Sustainable Life Blog – “I’ve only been that bad off once, when because of practices now outlawed, I spent about 80 cents more than I had in my checking account – of course, these were of varying sizes, but they put the large transaction through first, not leaving money for the other transactions to clear. I quickly got about 8 overdrafts (or more) and was charged a negative balance fee for my account on top of it all. by the next time I would have gotten paid, it would have taken up my entire check – nothing for food or rent or ANYTHING else.
My dad paid it off and I closed the account, but not after he called me a moron and suggested I get a handle on my finances. That moment was probably the turning point in my finances – i still slipped up after that, but it’s been going mostly up since.”

Elle @ Couple Money – “When I was growing up, my mom’s car broke down and needed a engine. As a single parent with 3 kids on a tight budget it was a bigger emergency than she imagined. A friend came through and offered a gift for a portion of the repairs and a no interest loan for the rest. It allowed my mom to continue working. A real blessing for our family that I never forgot.”

Jai Catalano – “I recently was in a financial bind and entered a video competition and won. I never expected to win nor get blessed with a $1000 prize.”

Pam @ Penny Saver Blog – “I remember feeling really blessed when my husband and I were first married. We didn’t have very much money but we were close friends with one couple who continually blessed us by giving us food, taking us out to eat, and being so unbelievably generous to us. It really meant a lot to us during those tight financial times. It’s so cool how God works through others around us at exactly the right time!”

Amanda L Grossman @ Frugal Confessions -“By the way–my sister and her husband were one of the beneficiaries of the Kmart person!! They had $180 of their layaway paid for them by an anonymous person.”

Ryan @ Budgetable – “This isn’t exactly “my” blessing, but a friend of mines. About a year ago he was going through some really hard times. His wife had just left him for another man, he lost his house, car…his new laptop got stolen… it was really raining hard on him. This was all within probably a 3 month span. Anyways, he got behind on his electricity bill and they shut it off. We live in Colorado and this was during the winter… heat is a MUST. He had no money to pay the bill and wasn’t sure what he was going to do. After being in the dark and cold all weekend suddenly his electricity just turned on. He called the electric company to find out what had happened. Turns out a person who wanted to remain anonymous paid his bill. He said it changed his life… after what he went through the past few months, he had been convinced the whole world was terrible.. that made him realize that there were still good people in the world.”

I think it’s inspiring to see that people are still interested in helping those in need. I think one of the common themes in all of these stories is that the recipients will not forget what was done for them! This shows us why it is so important to take notice of those in need.

photo by Salvatore Vuono

Unexpected Financial Blessings…What’s Your Story?

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I came across an article today about anonymous donors paying off layaway balances for various Kmart shoppers. As you can tell from the Kmart Black Friday 2011 ad, they offer a ton of great merchandise around Christmas time!

It’s amazing to consider that people still desire to be the source of these types of unexpected financial blessings! Of course, we know that God is the true source of all blessings…

Do not be deceived, my beloved brethren. Every good thing given and every perfect gift is from above, coming down from the Father of lights, with whom there is no variation or shifting shadow. ~ James 1:16-17

However, God still uses willing hearts to help bring financial blessings (and other kinds as well) to His children. I’ve had people come through for me on many occasions, and I was grateful for every one – no matter how great or small the gift.

Even though the bible constantly warns us about misunderstanding the true value of possessions, we are still commanded to help those in need.

What Were Your Unexpected Financial Blessings?

Reading this story made me want to hear about more stories of people receiving financial blessings that were unexpected. So, I want you to share your own experiences. I’ll start with one of my own.

A long time ago I had a little bit of trouble with my driver’s license. Because of this, I needed to pay off my financed car immediately. The only thing is that I was broke and I still owed $2,000 on the car! If I couldn’t come up with the money in a short period of time (like a week or 2), they would repossess the car.

My wife (who was just my girlfriend at the time) told her best friend about my problem. He then offered to give me a loan for the full amount and allow me to pay it back over 8 months without interest! My car payments were about $241/month, and I was able to pay him back at $250/month.

I had met him a few times and we were cool, but I wouldn’t consider us friends at that point. However, he still felt moved compelled to help me with such a large gift. At that time I was working full time and I went back to school – I couldn’t afford to have my car repossessed. His generosity really helped me get through a very tough time.

Once we pay off debt, one of our goals is to set up an account for this purpose. We always want to be in a position to help others. This is another reason why I hate being in debt bondage!

Share Your Stories Of Financial Blessings

Now it’s your turn. Share how people have come into your life and helped you out when you were in a financial jam.

I really think that stories like this can encourage people to be more helpful when others are in need…even if they are complete strangers!

I may even take the comments that are left here and put them in a future article.

photo by Michal Marcol

A Lawyer Is Forced To Become A Stripper To Make Ends Meet: How Far Would You Go?

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It’s been said that desperate times calls for desperate measures, and that can definitely been seen when we face financial problems. I’ve had between 15 and 20 jobs in my life – usually working 2 jobs at any given time. Since I dropped out of college (shhh…don’t tell anyone) at the age of 18, and didn’t have any trades under my belt, I was forced to take whatever jobs came along in order to pay the bills.

I’ve done door-to-door sales (twice), delivered auto parts in my own car (without being reimbursed up to the  standard mileage rate), and I’ve even scrubbed toilets (and other things) in a hotel overnight!

For much of my adult life I’ve been broke, stuck trying to pay off debt (even to the point of trying debt consolidation), and unable to do anything about it because of a lack of education and opportunity. However, I have never been forced into a job or position that has made me feel a lack of dignity.

A few days ago I came across a story on MSNBC about a lawyer who was forced to become a topless dancer in order to make ends meet. I was fascinated to find out how she ended up in this position, and what, if anything, she could have done to change things. Here is a part of her story:

When Carla graduated 10 years ago, she thought her law degree would be a permanent ticket to a high-paying job.  But instead of selling her mind, Carla is selling her body. After student loans, debt, a layoff and unemployment battered her bank account, she now finds herself in an almost unbelievable position – dancing in a topless bar.

“Did I ever think I’d be taking my top off for rent money? No. I was in my mid-30s and had never danced before,” said Carla, who asked that we use her stage name and withhold her identity and some personal details. “As a little girl, I never thought to myself, ‘I just want to grow up and be a stripper,’ or, ‘All I ever wanted to do in life is climb in the lap of sweaty stranger and take my top off.’

“But, with our economy the way it is, especially in smaller cities … you strip or you starve,” she said.

The first thing that I was reminded of by reading this story is that it is very unwise to judge people based on their external circumstances. I’m sure that when many people see her “working”, or hear of what she does for a living, they immediately get a number of [probably wrong] ideas about her. I know that I would be shocked to meet a exotic dancer with a law degree!

I am sure that many of us have been in desperate financial positions – or we may still be in them now. How far would you be willing to go if you lost your job and had no income? Before you answer that, consider how Carla went from respectable work to doing something that causes shame:

After graduation, she worked for nine years putting her degree to use, but she had entered the crowded legal profession at the wrong time. When she was laid off in 2009, she couldn’t find work.

“At first, I worked as a waitress, and a cashier in gas station,” she said.

As her prospects grew dim, she went back to school to earn a master’s degree, hoping to bolster her credentials. But her financial aid came in lower than expected, her credit was battered and she struggled to find part-time work in her new town to keep her afloat.

I’m sure that many of you can imagine going through this type of downward progression. She first got a couple of low-paying jobs, and then tried to go back to school. When that didn’t work out as she planned, she tried to find another low-paying job – but wasn’t able to find anything:

“I went around to see if could get a job as cocktail waitress, but there was not a single retail or waitress job.  No one was hiring, except for the topless places,” she said.  “It was an act of desperation.”

She started out serving drinks as a waitress, but moved quickly to dancing “because that’s where the money is, and that’s what I needed.”

This wasn’t someone who just took the “easy” way out; this is someone who tried many options before ending up where she is now. The article didn’t say if she tried other options than what is listed, such as becoming a part of the contingent workforce, applying for social welfare programs, or even living with friends. In order to choose a “profession” as demeaning and as looked down upon as stripping, I would hope that she looked into these other measures first.

I am not sure what her situation looked like before she was laid off, but here are a couple of things that you can do to help soften the blow if/when this happens to you.

How To Prepare For Financial Hardships

  • Have a Large Emergency Fund – Try to have between 9 months and a year of living expenses in a high-yield savings account.
  • Pay off Debt – It is much easier to adjust your living expenses than debt payments.
  • Have a Financial Contingency Plan – Whether it’s an old profession or side job, have a way to earn money that’s not connected to your current full time job. Also know what expenses you can easily cut and what services you can do without (it may be wise to just cut them now and build up your emergency fund, pay off debt, or save for retirement)!
  • Have a Support System – Know who you can count on in an emergency. You may need to consider taking loans from family or staying with loved ones; it’s good to know ahead of time, who you can rely upon.
  • Consider What You Can Sell – This doesn’t mean that you should start holding garage sales tomorrow, but it is important to have a discussion with your family members and decide what items can go if you fall upon hard times. It will be much easier to make this plan now, rather than when you are all under the stress of a financial hardship!

How Far Would You Go?

Looking at her situation made me wonder how far many of us would go in order to make ends meet. What would be the first steps you would take if you lost your job and ran through your savings?

Would you go back to school and live off of student loans until you graduate? Would you sell most of your possessions and live with a friend or family member?

Of course, I am not considering anything illegal or immoral, because that wouldn’t be appropriate for this discussion. However, I would like to hear from you on this issue.

What things would you do before you would be willing to swallow your pride and take a “demeaning” job, move back in with your parents/kids, or give up certain luxuries that you foolishly consider to be needs?

photo by Pat Shannahan for msnbc.com

The Article Was Featured In The Following Carnival(s):

The Best Of Money Carnival #122

Totally Money Blog Carnival Celebrity Roast Edition

Yakezie Carnival – Examples of Selflessly Helping Others Throughout History – September 25th, 2011 Edition

Becoming Debt Free: You Can’t Fix What You Don’t Own

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[The following is a guest post by Matt Wegner, founder of Living In Financial Excellence]

Becoming Debt Free: You Can’t Fix What You Don’t Own

Owning The Problem Is The First Step To Successful Debt Elimination

I’ve been a financial coach for about four years now, helping clients clean up their financial situations and get more bang for their buck. In that time, I’ve met with quite a few people and seen both successes and failures as they attempt the process of eliminating debt and building wealth.

Over the years I have noticed a definite trend with those who are successful with the process vs. those who are not successful. I’d like to say the difference between success and failure is having a top notch financial coach in your corner to help you navigate the course to becoming debt free. But that’s not it.

I’d also like to think it’s the income you earn, or even your debt to income ratio. But it’s neither of these. In fact, I don’t even think it’s a physical or quantifiable element that determines your success in becoming debt free. It actually boils down to a character trait.

He Who Owns The Problem Solves The Problem

In a word, what makes you successful in becoming debt free is ownership. I’m not talking about owning the right assets or the right credit card or even owning companies. I’m talking about owning the problem. In a society where the popular thing to do is blame someone else for your problems, I find very few people willing to admit that their financial problem is their own responsibility.

Simply put, there is nobody out there that can clean up your debt mess for you. Debt management plans, consolidation,  and bankruptcy can all give you temporary relief and make everything seem like it’s ok, but they don’t address the root problem. If you don’t change the way you manage your money, there’s a really good chance you’ll end up back in debt.

At the end of the day, you’ve got to accept responsibility for your actions and decisions, past and present.

Unexpected Expenses Causing Debt

Ok, I know what you’re thinking right about now: What about medical debt? What about unemployment? What about [insert miscellaneous causes of debt here]? [Khaleef Here: I guess I can’t make excuses for my $65k student loan repayments! 😳 ]

No matter the cause of the debt, I still think it’s your responsibility. Sure, there are many cases where unexpected events happen that send a family spiraling into financial hardship. In the majority of these cases, though, the debt could have been prevented by being prepared with an emergency fund and not living so close to the edge.  The unexpected expenses didn’t cause the debt. The lack of an emergency fund did.

I will admit that sometimes families are prepared and do everything right but still get socked with events that land them in debt. But in my experience these are the exception to the rule. Either way, you still have to own the situation and accept the responsibility to change things. Nobody’s going to win the game for you. You’ve got the ball. Time to run with it.

Time To Stop Pointing Fingers

A friend of mine likes to say it this way: When you point a finger at someone else, you have three fingers pointing back at you. How true that is. When I see folks constantly pointing the finger at someone else, I know they’re not going to be successful. They’re more interested in explaining how they got into financial distress than they are in fixing the problem.

When I work with families who solely accept the responsibility for changing their situation and aggressively take action to reverse their financial trends, I know I’m working with champions.

It doesn’t do you much good to dwell in the past and play the blame game. There are some lessons in the past that we can learn from, but living in the past keeps you from moving forward. It’s important to recognize that however you got to your current situation, the only person responsible for moving you forward is the person in the mirror. If you’re ready to accept the responsibility, get ready for success!

photo by Daquella Manera

Are You Ready To Be Debt Free?

What do you think?

Is debt caused by unforeseen circumstances or lack of planning?

Is it sometimes out of our control or totally preventable?

I’d love to hear your thoughts.

Matt Wegner is a Christian personal finance and small business coach, blogger, podcaster, speaker, husband, and father. Matt is passionate about debt free living and building wealth, which form the foundation of what he calls Living In Financial Excellence.

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