Gather Little by Little

For our next two posts, I am going to explore the question: is debt reduction a greater financial priority than tithing? The intuitive answer from a “good money sense” point of view might be “yes”. After all, isn’t debt the worst possible financial ill on the planet? Shouldn’t we be employing every possible financial means to reduce our personal indebtedness? For many of us, ten percent of our income (the tithe) might seem like a good chunk of money that could be used for paying down our mortgage or car loan principal. Mathematically speaking, think of how quickly our debts might disappear if the tithe were applied to our credit card balance? Look at all of the things that good stewards of money practice in order to pay down debt: shop second-hand stores, reduce driving miles, down-size our homes, save energy, cook our own food, make stuff, stretch stuff, use coupons . . . is the tithe only obligatory for people who have been blessed with extra money?

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The Microsoft Office suite of programs is nearly universal when it comes to personal computers. Nearly everyone has a working knowledge of Word and is familiar with PowerPoint. Outlook, Microsoft’s email software, also has wide use and acceptance. However, my favorite MS program is Excel. When I worked as a soccer coach, I used Excel in almost every facet of my program, from budgets to planning practice to recruiting to filling out rosters. There was almost nothing that I did in the office without Excel.

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For the last month or so, we have been talking about budgets here at GLBL. We have defined the family budget and set forward the major steps for setting up a budget.

There was a time when the average family did not need a budget or at least, the budget was so simple that it could be kept in one’s head. Over 100 years (and longer) ago, most people built their own houses, grew or raised their own food and made their own clothes. Physical currency was not an essential part of life. If an item could not be made, grown or traded for, then they did not need it. Folks could go days and weeks without ever having to use money for a purchase. Today, things are different.

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What is a budget?

A budget is a visual representation of your financial priorities. It is a plan for dealing with the money that flows into one’s household and a plan for how that money will flow out of one’s household. It is a systematic plan for the expenditure of a fixed resource, such as money or time, during a given period.

What purpose does a budget serve?

A budget sets financial goals.

A budget shows the small steps needed for a long journey.

A budget represents potential.

A budget will help you to organize family financial discussions.

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Why are personal finance professionals so focused on budgets? Because a budget is a plan for spending money, a written record of spending and the consequences of that spending. A budget provides accountability for the money that flows in and the money that flows out.

One of the worst financial habits that a person can have is the habit of spending money without a plan. This is the reason why credit cards can be such a trap – it is so easy to spend a couple of extra dollars every time that piece of plastic gets run through the machine. If I go shopping with $10 cash in my pocket, I can only spend that $10. If I go to the store intending to spend $10, I often walk out having spent $11.40 or $12.75 or even $15.38 without really thinking about it.

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Give, and it will be given to you. They will pour into your lap a good measure–pressed down, shaken together, and running over. For by your standard of measure it will be measured to you in return. Luke 6:38

Sometimes those of us who watch our pennies closely forget to practice this verse. Recently, I had a friend do a favor for me for which I was quite thankful. Afterward, when I was reflecting on his generosity, I was struck by a thought: Would I have done the same thing if the situation were reversed? I had to admit to myself that the honest answer was “no”! I am often the person who avoids getting involved with others, either by making excuses for why I cannot help someone in need or by immediately wondering, so, what’s in it for me?

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This is not an article about bulimia or growing fruit trees.

As we all consider our financial futures and commit ourselves to more prudent use of our resources, be sure to go through your budget line by line. Spend a few moments on each item to brainstorm on ways to reduce or eliminate that cost. Here are some places to start:

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• Cable – Seriously, this might be the biggest and most senseless budget drain around – especially if you have broadband internet. If you are in a budget crunch, but still insist on paying for cable . . . I do not have much sympathy.

I think it is important to review your personal finances at least once a year. At the beginning of each year, I sit down at my kitchen table and talk about finance with my wife. We update our balance sheet to determine our net worth, we look at our previous year’s balance sheet to see how it went and make sure that we have increased our net worth year over year. In order to make it grow, you can only change to 2 things:

#1 Increase the worth of your assets

#2 Decrease the amount of debt

chase blueprint

In recent times, I have been receiving email from Chase and their “fabulous” new concept: Chase Blueprint. I was a bit reluctant to look into this “new concept” as I wondered how it could really help a person to manage his debt better”¦ especially since the idea came from a bank ;-)

However, I have received more information about the Chase Blueprint features and they appear promising.

chase blueprint

What is Chase Blueprint?

As the name suggests, Chase is offering you a way to create a Blueprint to pay off your debt. Blueprint is a free debt management system that allows setting repayment goals for specific expenses.

As I had written a few weeks ago, a good friend of mine is getting married in early 2010. Being a financial planner, I always find it interesting to see how couples deal with money. It is often overlooked but it shouldn’t be. Studies have shown that financial corners and disputes rank at the top of the reasons for separation/divorce. It’s a lot more complex than most people think and it’s so easy to overlook when you are in love and visualizing the wedding, your honeymoon and all the other good stuff that is to come.

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