Poor

I don't know the precise definition of poor. I generally think the poor are anyone who is less well off than I am. I have never really felt poor in my life. I remember as a child always having food on the table and as a teenager wondering how mom and dad managed to do that once I had started working and realized what things actually cost.

My dad considered himself a financial failure. It hurt me to see how much it hurt him. He started a few businesses but was never able to get them beyond the barely - sometimes not quite - break even point. He was an insanely intelligent person who had no idea how to manage money or to control his impulses to work a plan long term. And he never wanted to work for anyone else. He wanted to have his own business. And they failed.

My brother Mark and I have talked a few times about how it is probably not a coincidence that we saw these businesses fail and the stress that put on our parents and that we picked the careers that we have. Mark is a postal carrier and I work for the largest retailer in the world. We might not have our own businesses, but it is a safe bet that neither of our companies are going out of business anytime soon.

I don't want you folks to think that my brothers and I shared our father's thought that he was a financial failure. Quite the opposite. We knew we were not rich but we also knew that we were fed and had a roof over our heads. We did not get everything we ever wanted but Christmas always had a full tree (thanks mom) and there were always presents on our birthdays. We were happy kids.

And we did not know everything about our parents finances either.

There was a time when my family was living on the land where my dad co-owned a small saw mill. We lived in a trailer and my dad was taking a salary of just $50.00 a week. With a wife and 3 sons, that ain't a lot of money even in 1976. You would think that we would have qualified as poor.

But like I have already stated, we never felt that way. Turns out that during that time there was a family in town that really needed help. My dad knew the folks from when he was a kid. He got with my mom and they started giving that family $10.00 each week. That's 20% of their income going to someone not related to them.

And they never told anyone. Nobody. The only folks who knew were that family (maybe just the one who got the 10 bucks) and my parents. I never knew this while I was a kid. I never knew this while I was a teen or a young man. I did not find out about this while my dad was alive.

My mom told me about this roughly a year after my dad was dead and gone while she and I were driving back from dinner in town. She made no bones about it that it was Dad's idea and that she had campaigned against it at the time. But he had convinced her and they did it for several months. And she made sure I knew it was not easy. Young boys are hungry boys and she had become an expert on just how many ways a person could serve rice.

My wife and I support an inner city missionary group that plants small churches to help the urban poor. We support our local food bank with donations and occasionally with our time. Priscilla is currently heading up a Relay for Life team at her work to help raise funds to fight cancer. I have given money to the American Heart Association almost to the day that my dad died of heart disease. All of that added up and even if you assign a wage per hour for the time we have spent helping, does not equal 20% of our total take home pay.

I have made more per year since I took my first management level job than my dad ever made in a single year from any of the businesses that he tried to get off the ground. But from the standpoint of taking care of others, the old man and my mom have run circles around me.

But Priscilla and I are finally free from debt. We are setting up accounts now with a financial planner to give ourselves the best chance to provide for a secure future. And we are going to be able to find those chances to help and support in total anonymity. You know, the way my dad did it.

The Math Makes Sense

I posted on Thursday our plan to eventually buy a house without a mortgage. That's right. We hope to buy a house without ever getting a loan for it. That statement probably made a few of you think I was completely nuts. And there is an argument to be made that I am, but not about this. The math actually makes sense.

I have heard the argument that you should buy the house since renting an apartment is just throwing money away. Sounds logical. Sounds right. Have you ever done the math on it though?

I have.

Let's say you plan to buy a $150,000.00 house with a 20% down payment and a 30 year mortgage. That means you will finance $120,000.00 of the purchase and let's be generous and say you have 4.5% interest on your loan. That means that over 30 years, you will pay an additional $98,891.46 for the $150,000.00 house.

Now, if you rent an apartment for $1000.00 a month and save $2000.00 a month for your $150,000.00 house, it will take you 6.25 years to save for a house. In that time you will have paid out $75,000.00 dollars with absolutely nothing to show for it. Except...

$98,891.46 minus $75,000 equals $23,891.46. Or to put it another way, you will be making $3822.64 per year over the course of the 6.25 years that you save for your house. The math just makes sense.

But where do I get $2000.00 dollars extra per month. If you have read the post from Thursday you know that you do the house thing after you have paid off all your other debts that have been holding you back. For most folks, not making any payments to car companies, credit cards, or student loan organizations should get close to an extra grand or two each month. If you are patient for 6 years and 3 months, you can have a fully paid off house.

The more expensive the house, the more money you have to find from other sources. Remember though, you are going to pay extra on a 30 year mortgage and you need to do anything you can to avoid that. The money you save is your child's college fund or your retirement fund. Those things are worth being patient for, right? Doesn't it just make sense?

WE'RE DEBT FREE!!!!!!!!!!!!!!

My wife and I are DEBT FREE!!!!! We have been working the Dave Ramsey plan for a few years now and sent off the final payment on my truck today. It is our plan to NEVER borrow money again.

I spent most of my life just assuming that you had to have credit and good credit to get by in this world. Took a while, but my wife and I finally figured out it was a lie. And it was a lie we told ourselves. We wanted new cars, so we got car loans and had our new cars. We wanted a week in Florida on vacation, so we took a couple of credit cards to the beach.

And that is how the lie works for the whole world. If you were to save your money and pay cash for a car, you actually pay less for the car, but you have to wait a while for it. I did not want to wait. I wanted what I wanted when I wanted it and was willing to pay a finance charge for it.

I was childish and selfish and short-sighted. And there is a whole industry in this country that flourishes in catering to a childish, selfish, short-sighted public. One of the things I read in one of Ramsey's books is that there is a reason why most of the tallest buildings in big cities have the names of banks on them. For your savings account they will pay you almost nothing in interest. Fall behind on one of their credit cards and they will charge you 24% interest. And we fall for it because we get our bright and shiny toys.

But my wife and I got frustrated because we knew we made darn good money. Really good money. Way above the national average as a family money. And we had nothing to show for it.

Well, that is not entirely true. We had a few student loans that followed us around for a few years. We had a great relationship with the folks at American Express who were always willing to up our limit since we were always great about paying them off. Looking back at AMEX, I laugh at the idea of them giving us more and more credit like a little kid blowing up a balloon waiting for the moment when the balloon just can't hold any more air.

But back to our frustrations. For a few months, Priscilla would balance the check book and we would look at the relatively small number of actual bills we had and the money we should have had left over that we had somehow wasted. I won't tell you how much money it was out of embarrassment but it was not a small number. And we always intended to have do better the next month and then were surprised when we had not done better.

Then I found Ramsey's book, The Total Money Makeover. And before you think I was out there trying to find a way to get my family out of debt, I wasn't. I was at an airport and I needed a book to make the airplane fly faster and it looked like a book I could finish on a round trip. And I read it all that day. And it made sense.

And I gave it to my wife. And it made sense to her too. We prayed about it. Talked about it. And then decided to do it. Priscilla gets much more credit for this than me. She has always handled the money in our family from a tracking stand point. I handled a whole bunch of it when it came to spending it. She has the Quicken books all set up and can tell you what we have spent and what we have spent it on since the day we were married. And she did a great job of setting up our budget that made this particular post possible.

But back to the Ramsey book. This is not a get rich quick scheme. You don't have to buy or invest or sacrifice a live chicken. All you have to do is be smart with the money you have. If you do, Priscilla and I can tell you, life is better on the other side of debt.

How do you do it? Go get the TMM and read from the expert. Its a great read and a fast read written for those of us who hate numbers and accounting. Getting out of debt is less about math and more about attitude - which might surprise some of you as much as it did me.

With that in mind, each chapter of the book features a testimonial from someone who has worked the plan to success so you will KNOW that it is possible. Some of the people in these examples made more money than Priscilla and me (like 3 or 4 or 5 times more) but also had WAY more debt than us too. Some of the people in the examples made less money as a family than I do as an individual - and they are debt free, with their kids' college funds fully in place, a paid for house, and a solid retirement plan in place.

Here are the basics:

1. Write a budget at the beginning of the month and only spend what is on the budget (and don't forget your tithes).
2. Make sure to make all your minimum payments and take the extra money you found when you wrote up your budget (and you will find extra money) save up a small emergency fund of $1000.00 to cover things that might come up
3. List all debts from smallest to largest regardless of interest rates - take the extra money you found when you wrote out your budget and apply it to the smallest debt until it is gone - then take that money plus the minimum payment you were making on the debt you just cleared and put it all against the next debt on the list - repeat until debt free
4. Now save up your big emergency fund - 3 to 6 months of expenses - this is to cover you for the big things in life that come out of no where - how many of you know someone in this economy who lost a job they had held for years?
5. Start the college funds while also
6. Fully funding your retirement (15% of your income here) while also
7. Paying off the house early while also
8. Supporting the charities and ministries that God puts on your heart

Folks, go read the book. It can change your life. Priscilla and I will have our big emergency fund done over the next 4-5 months. We aren't going to need the college funds so we are going to be able to save up enough to pay cash for a house within the next 5 years and never have a mortgage. And never go into debt again.

If you think it ain't possible, read the book. If you think you have to finance a car, read the book. If you think its smart to have credit cards "just in case", read the book. If you think you can never retire, read the book. If you think you can't ever get out of debt, read the book. If you think you have no hope, read the Bible. If you think your finances are hopeless, read The Total Money Makeover by Dave Ramsey.

Empty Things

Fortunate to find that empty things are empty before my soul is emptied.

Finding things that are empty of any value but finding myself in their outline.

Could not know the emptiness without the possession and the risk of possession.