Don't Worry, Part 2

The second part of David Powlison's article series "What Good Is "Don't Worry' in Time Like These?" is available at the CCEF blog. This series has been very helpful to me so far because I am personally dealing with a lot physical effects related to high levels of anxiety. This is something new to me.

Of course there is the question: What do you worry about? But then a second penetrating question is: Why do you worry. Here's why I consider Powlison to be a master at biblical counseling, he writes about Jesus in Luke 12:

The easy answer is to point your finger back towards what you are worrying about, and to think that explains it. “I’m worried because I don’t know if I’m going to get a job. I’m worried because I don’t have enough saved for retirement. I’m worried because I have a family history of cancer.” But Jesus doesn’t do that. He explains our worries not by pointing to how uncertain life is, but by pointing to something in us. Throughout this whole passage He says, “You worry because of something about you, not because of the things you worry about.” That’s what He threw on the table in the interchange just before the passage we’re focusing on: “Guard yourself from every form of greed.”

I bolded that line in the above quote because it gets to the heart of the matter - the heart, my heart, your heart, everyone's heart. Quotes like this are equalizers in that the truth in them places everyone on common ground.

Then Powlison shows us where Jesus is taking the crowd:

Jesus has no interest in simply talking about what’s wrong with us. He’s always going somewhere good. He does make reference to the temptations you face during anxiety, and to some of the ways you go off the rails, and to how your faith dims when you fall into greed. But the passage is largely about giving you lots of solid reasons not to worry. Sure, you have good reasons to worry, because lots of things are uncertain. But you have many, much better reasons not to worry!

This is great stuff! It's the gospel message in very practical terms. I find it helpful in showing me how to live out what the gospel really means in my own life. I hope you read the article.

Don't Worry

One of my favorites in biblical counseling is David Powlison.  I amazed at his wisdom.  I am also a big fan of CCEF (Christian Counseling and Education Foundation).  Powlison is a counselor and faculty member at CCEF.

On CCEFs blog there is an article from 2003 by Powlison, What Good is Don't Worry" In Times Likes These?.  It's actually the first part in a series on Worry and Luke 12.  I highly recommend it.

1 Year Ago Today We Made Our First Debt Snowball Payment

Today marks the official one year mark since starting our debt snowball plan - we made our first payment last March 3, 2008. Our progress has been above average paying off $19,000.

Since it's spring break for my kids I am taking them to Camp Nickelodeon at the Mall of America to celebrate a little.

But our work is not over! We're working hard to kill a consolidation loan by June. I hate this loan since we've been paying $400 a month for the last two and a half years - I HATE IT! When that baby is paid off and that extra monthly cash flow is freed up it will be like getting close to a 30% raise. We're working our own stimulus plan!

Debt Snowball Update

We're still pluggin' away at our goal to be debt free. It has has been close enough to a year so here's another update.

Debt Snowball Progress

	February 29, 2008	February14, 2009	Change
Total Debt	$182,890.00	$163,971.00	($18,919.00)
Mortgage	$138,489.00	$135,813.00	($2,676.00)
Consumer	$44,401.00	$28,120.00	($16,281.00)
Number of Debts	12	3	-9

A footnote about the Consumer Loan balance: Right now we are banking our extra payments into savings so the balance is current IF we made a lump sum payment right today. We're banking until June or so and then we'll make the final payment on our next debt which is $6,100 right now.

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Be Ready to Start a Debt Snowball Plan

What's the process for getting the snowball rolling toward paying off consumer debt?

Before starting a debt snowball plan there needs to be a short term plan for getting ready to pay off debt. The idea itself of being totally debt free is exciting and provides a rush of transforming motivation for any one willing to see the dream. Yet, once the idea settles in, there is also an awesome sense of urgency that could lead to premature action in the way of foolishly allocating money toward debt when it is needed elsewhere. I believe certain requirements need to be met before applying extra toward paying off personal debt otherwise being in debt continues on as an endless, fruitless cycle of trying to get out of debt. I think these are the essential steps:

1. Stop, stop, stop, stop using debt to fund life. Cut up the credit cards - all of them. There is no need to have a credit card for emergencies. In a time of great want the definition of "emergency" changes too easily. At the very least, keep one credit card, place it in a large bowl of water and place the bowl in the freezer. Next time you want to use your credit card, think deep about your needs, wants, and emergencies as you watch the ice melt.

2. Create a zero-based spending plan. In other words, create a budget on paper that allocates every penny before it is actually spent. I've read advice that says to track what you spend for 30 days, then you'll know where it all goes, and then you are better able to create a budget. I disagree. It's a waste of time. I'll be doing more posts on this topic but essentially budgets are never set in stone. A personal budget is fluid and the bottom line changes from month to month. Create the budget first and work it for three months, that will give you an idea of what you're spending and create great habits for running the budget as you begin a debt snowball.

3. Sell something and apply the money to step 4 or 5. This is not an official step in Dave Ramsey's plan even though he does suggest selling stuff. I am making it a step because is proves commitment and of course it creates cash. Most households have something that can be sold on ebay or in a garage sale. Also, what about the car you are making payments on (sorry, that might have stung)?

4. Get current on all past due bills. Past due bills like utilities, phone, etc are vicious enemies of any debt snowball plan. In essence they are debts but they're probably small enough to catch up on in a month or two. If they would take longer than that then perhaps these past due bills need to be placed in the debt snowball plan (as the first items to get paid down).

5. Save $1,000 for a savings account as fast as you can. This is Baby Step 1 in Dave Ramsey' s plan. This is a short term reserve so that you don't have to use a credit card. This may take a while but with the prior three steps in place first saving $1,000 will happen sooner than later. Sell more stuff to achieve this step.

For my family this process took about two months but if you're starting totally from scratch it's plausible that it could take six months or even a year. We already had a zero based spending plan in place, we just needed to pay more attention to it. We cut up our credit cards two years prior as well. Oh, I also sold $1,500 worth of stuff on Craigslist for steps 4 and 5.

The three years prior to starting our debt snowball plan I believed the only answer to our problems was to make more money. I decided to let go of that thought while my wife and I went through Financial Peace University in January 2008. I realized that the drain on our finances had to do with not having the above requirements in place.

Take Financial Peace University Online

If you can't find a local session of Financial Peace University, enroll in the online version.

My wife and I took the classes locally through our church. I liked being with other people going through the sessions together, but yet I found the small group times to be less than I expected. I suppose it comes down to the leaders and the willingness of each participant to truly commit and be real in the groups. I personally was almost sleeping each night by the time the groups started as Wednesdays at that time were very long days for me.

One aspect I really like about the online version is that you don't have to wait for each weekly session (I think). I believe you can watch as many sessions in a row as you'd like.

Debt Snowball Update

Haven't blogged much lately because I am working the part time job and the kids are home for the summer. But, I am happy to report that with our most recent debt snowball payment we have now paid off $10,000 of debt since starting our snowball back in Feb 2008. This is total debt including mortgage but just over $8,000 is consumer. Things keep rolling. We now have $750 a month getting applied to the next item on the list.

Maintaining the monthly cash flow plan (budget) has been the key. We have our income spent on paper each month before we spend it for real. I check things out once or twice a week and make adjustments when needed. Food and gas expenses have definitely gone up and so has home repairs, entertainment, and our giving (because we want it to.) No worries though, we've just cut back in other areas for the summer (i.e. a good budget allows us to capture and redirect the higher amounts that would go to the heat bill in the winter, etc.)

Time Your Flight and Save Big With Farecast

To book the lowest priced flights for my flying wife's recent travels to Dallas for Operation Outcry I've used Farecast. I am telling you, it is simply fantastic.

About Farecast

Farecast, brought to you by Microsoft Live Search, is the smart travel search site that helps you buy with confidence. Since 2006, Farecast allows you to easily compare, filter and sort flight results from hundreds of airline, hotel and agency websites to find the right trip. Farecast's award-winning technology also empowers you to Know When to Buy™ with airfare predictions and Know Where to Stay™ with the hotel Rate Key™.

Farecast® is the 2008 Webby Award winner in the travel category and is recognized as one of Web 2.0's "Best Travel Sites", one of Travel & Leisure's "Top 25 websites" and one of PC World's "20 Most Innovative Products". Farecast is headquartered in Seattle, WA.

Farecast predicts where prices will be and guides with the use of a confidence rating - it tells you to buy or wait. After using the service four times now, I am a true believer in its accuracy.

For example, about a month ago I looked up a flight to San Antonio, the price for a round trip ticket was $474. I waited as Farecast predicted prices would go even higher - with in a week they jumped to $502. I waited some more because Farecast told me prices would drop by $100. What is really nice is that I set up email alerts to track the price levels. One day I got an alert to Buy! Prices dropped to just under $400. But Farecast had a 60% confidence level that prices could drop by another $50. I waited. Then I got another email indicating a strong buy as prices would soon climb to back over $450. I bought a round trip ticket at $389 two weeks ago. I still get the email alerts however and see now the prices are back up to $474.

Farecast, my favorite!

There's Something About Benjamin

Okay..this is close to being stupid silly but it's not totally so check it out:

Debt Snowball Status Update

The $840 per month we've been paying toward 9 debts is now being directed to just 3 debts - it will be 2 debts on June 15th when we kick our dentist (bill) out of our house. Since Feb 2 we've paid off $6,500 of debt and saved up $1,000 for an emergency fund. The small balances are essentially gone and now we need to dig into the next balance, which is much larger at $8,800. This will take us until April 2009 to pay off.

The money to pay down the debt came from:
1. Monthly Budget
2. Tax refunds and rebates
3. Selling stuff

I have started working part time. It's been three weeks now. I got my first check today and it went straight to debt.

We're going to increase our monthly giving budget. This money will come from reducing the debt snowball payment. On paper the snowball end date will extend a bit but I am not going to fret.

My oldest son got glasses. We paid cash. We had the money in the bank one week before we needed it.

The budget shows we're over spending in some areas but I'll get it under control.

FPU Session 14: The Great Misunderstanding

This was the last session. I posted a picture of our completion certificate here.

Right down to the last minute of the last class Ramsey sticks true to his style. Straight talk about the basics fueled by intense motivational language that calls for action.

"The Great Misunderstanding, the paradox, is that we believe that the way to have more is to hold on to what we have more tightly."

Ramsey drives home the biblical stewardship principle in this lesson - that we are merely managers of the money God allows us to work with, in order to show and test our faithfulness. He discussed giving in general but he does not get into theological hair splitting on what Tithing really means.

It's funny how so many church goers like to argue (or, rationalize) about the tithe with studies have shown for decades that the typical evangelical church member family gives less than 3% of it's income. Tithe means 10%. When you are tithing, you are giving 10% off the top of your overall household income. Perhaps I'll post on this sometime in the future but I am persuaded that I should be giving away as much of my income as possible - as much as possible, much more than 10%. I would love to do this but I must also take care of my family first (or I am worse than and unbeliever, Timothy 5:8). Tithing is not a rule but a guideline, or rather a place to start, something to shoot for. Amazingly, its a guideline that currently no one is meeting! There should be no arguing over what Tithing really means, no one is doing it by definition anyways!! Eventually, but sooner than later, I want my family's giving to far exceed 10% of gross income. If we work hard to get out of debt in the next 24 months, we'll be able to give much more.

I so often lose touch with biblical stewardship principles on a daily basis in the midst of rising gas prices, rising food prices, falling home values, rising (you fill in the blanks). It is so easy to think my job in life is to try to get a head, to always be looking for ways to maneuver through fast flowing turbulent financial times of my present life. What I need to do more of is rest, trust, and depend on my Lord. I want to recall more quickly that my wife and I do not own a thing, but, for our own good, God entrusts us with resources and ordains the circumstances so that we are drawn closer to Him, or so that the idols of our hearts are exposed as the usurper kings that they are. This is the big picture that puts perspective on everything. Debt snowballs, part-time jobs, baby steps, etc are not the end of the matter. In the midst of them though, the heart of giving comes before all else. It is through giving that the heart changes and becomes more like Christ the King. In the end, the goal with money is to become more like Christ by giving it all away.

FPU Completed

Debt Poll

Check out the debt poll in the sidebar to the right of this post.

How much debt do you and/or your household have?

Tell me in a comment what you are doing about getting out of debt?

FPU Status Update: Emergency Fund Restored

I just transfered money to our Baby Step 1 Emergency Fund savings account. We're back on track since this set back on March 24th.

My wife and I have decided to build up the baby step 1 fund a little bit more. We are going to split the extra payments we've budgeted for our debt snowball in half until the emergency fund has another $750 to $1,000 in it. Yes this will slow down the debt snowball but its so minimal compared to the extra security. Anyways, I think we will be using some of the extra funding for some bills that have come up. One big expense for sure is a pair of glasses for my oldest son.

By the way, it's his birthday today, he's eleven. Glasses - what a great birthday present.

Happy Birthday Bud!!!

He'll be so happy to hear about his present don't ya think? It is all in how I sell it to him "Josh, for your birthday, how'd you like to get your sight back?"

FPU Session 13: Real Estate and Mortgages

This session was all about real estate. Ramsey certainly loves real estate. I'll just be honest, I was way too tired and stressed from the day to sit through his story telling this time. I was the most disengaged from this session than all the rest.

Ramsey covered the ins and outs (his ways) of buying and selling real estate. He approaches all of it like either a retailer or investor. There were some good tips but they were not relevant to my present situation because I am not planning to sell or buy a home right now.

As far as mortgages go, Ramsey strips away all consideration for any type of mortgage other than a conventional 15 year fixed. Also, payments should be no more than 25% of your income. Again, this session contained good information that can be tucked away for future use.

I did really appreciate one part of the session as it attacks a widespread myth.

Why keeping your mortgage for a tax deduction is a bad idea.

Baby step 7 is Pay off Mortgage early. What's the first thing that comes to your mind when thinking about this step? What about the tax deduction? The benefit of keeping a mortgage just to get a tax deduction is a myth - the math does not add up. Yet, financial professionals advice against paying off your mortgage early all the time (I was one of them.) Yes, there is a tax deduction for mortgage interest if you itemize but what does it really mean. Here is an example of the bad math:

• You have a mortgage of $200,000 at an interest rate of 5%. So, each year you are paying the bank $10,000 in interest.
• At tax time you would get to deduct $10,000 from your adjusted income. Depending on your tax bracket, you are only saving a percentage of this amount.
  
• Let's say you are in the 25% tax bracket. You would then be saving 25% of $10,000 - or $2,500.
• You sent $10,000 to the bank so that you wouldn't have to send $2,500 to the government?
• The math does not work. It doesn't make sense.
• You can get the same tax deduction by making a charitable donation instead.

Ramsey skipped an entire section from the workbook in this lesson on refinancing. Looks like he would have just covered a simple break even analysis on closing costs.

Pay Down Debt With Tax Rebate

A week or so ago I posted a poll asking people what their plans are for the tax rebate coming in May (if you're eligible). Thirteen responses and 74% said they'd pay down personal debt. Two said they'd save it and one person said they're going to buy something. I thought those were results were pretty encouraging.

I love straight talk. Wisdom that lovingly smacks me right between the eyes. I need it. I came across an article the other day that I classify as straight talk on what one should do with their tax rebate.

Using rebate to pay down debt might rescue economy.

It starts out:

If you're like me, you might be a little confused about what we should do to jump-start a dangerously weak economy.

Here's what the federal government suggests: Spend!

But this is what many personal financial experts and economists recommend: Save!

There are always choices:

A White House fact sheet says the checks are designed to "stimulate consumer spending."

But some economists say the best thing we can do is to save those rebate checks and pay down debt.

"We are spending like there's no tomorrow," Michigan State University economist Charles Ballard told me.

A sociological phenomenon?

"It's almost beyond economics," Ballard said of our spending habit.

"It's more like a sociological phenomenon in which we have this desperate desire to consume, consume, consume."

Ballard says we need a more balanced mix of spending and saving so we don't end up owing our financial souls to our Chinese financiers.

Oh it is so much more than that!!!

The Dream

Thinking about these babies will surely invite too much temptation into my life. I could find a pair on my feet with two easy skipped debt snowball payments. Not.

2008 Bont Vaypors. Aren't they precious? Hypothetically...which color would be best on me?

Questions That Need To Be Settled About Money

I've been reading Facts of the Matter for years now. This week's column is on money. Dwight Hill gets to the heart of the matter with these questions:

"In your heart of hearts have you settled the issue that your primary purpose in life is the pursuit and knowledge of the Holy One? Is knowing Him your consuming passion? Or are you still wallowing around in fear and anxiety as to where the resources for survival or opulence will come from? Just what does your daily schedule reflect about your priorities? One of idolatrous pursuit of the temporal? Or of a passionate pursuit of the Eternal One?"

Read the rest of the article here: The Vexing Issue of Money