Dear Chuck,
My wife and I made more than our share of financial mistakes early in our marriage and are still making up for losses. Can you give us some tips on how to catch up?
Catching Up Financially
Dear Catching Up Financially,
As I said last week, I could write a book on all the financial mistakes I have made, and I addressed these common financial mistakes:
Today, I want to acknowledge a few more mistakes to avoid in order to make up for past losses.
Buying New Cars
Many people are financing new cars that they could not otherwise afford. A June 27th report revealed that average new car payments hit a record high of $725 in the first quarter of 2023. That is up 11% over 2022, although car prices are up just 4.7%. $40,851 is the average amount borrowed on new vehicles. Auto loans are the 3rd highest debt, surpassed only by mortgages and student loans. If financing is necessary, find a dependable used car with low payments, and apply the difference you would pay on a new one to an automobile fund. In the future, you will be able to pay cash for cars.
“The rich rules over the poor, and the borrower is the slave of the lender.” (Proverbs 22:7 ESV)
While you may not see borrowing for a new car as slavery, many do so by sacrificing giving, saving, or investing that they could be doing by driving a lower-cost car.
Buying a House, Upsizing, and Downsizing
Buying a home is a good financial decision. Staying in it for life can also be a blessing.
Warren Buffet bought his house in 1958 for $31,500 and still lives there. The 1921 home, five minutes from Berkshire Hathaway’s corporate headquarters, is now worth about $1.2 million. He says, “I’m warm in the winter, I’m cool in the summer, it’s convenient for me. I couldn’t imagine having a better house.”
My wife’s sister and husband bought their modest ranch house 40 years ago. They never upsized, even with four children, and now have no need to downsize. As a result of simply staying put, they were able to put their children through private schools, give, save, and invest. One must weigh the hidden financial costs of buying big houses until you must ultimately downsize.
Paying PMI (Private Mortgage Insurance)
PMI provides the means to buy a house without a 20% down payment. I highly recommend avoiding it for these reasons:
Aside from saving for a 20% down payment or buying a less expensive home, a mortgage professional can possibly help you review and find other options.
Long-Term Storage Rentals
One in five Americans use self-storage. The average rate is $128 for a 10X10 unit. The most common reasons are not enough space at home, moving, downsizing, changes in household size, storing for business reasons, or home renovation. The most popular items stored are furniture and clothing, followed by home appliances and equipment, sports and hobby gear, vehicles, RVS, boats, business items, and more. Besides the monthly fee, there is the added cost of insurance to cover stored items. And, at some point, you (or your heirs) must clear out the contents. Unless you have a buyer for the items, this can cost more time and money. For many, the cost of storage exceeds the real value of the items being stored. We try to use storage units for less than six months if needed, or we simply dispose of the items.
Get-Rich-Quick Schemes/Scams
Con artists promise opportunities with unrealistic returns. They often play on fears or greed that make people ignore common sense. Beware of those who promote “once in a lifetime” opportunities or a sense of urgency. Avoid promos with exaggerated language, guaranteed income, or the requirement to recruit people to earn more money. Profit-making details that are missing or cloudy are questionable. Flee work that requires money upfront or guaranteed results with no skill or experience required. Think the lottery is harmless? For most people, the return is only the paper on which the tickets are printed. That goes for any kind of gambling.
Not Taking Care of Your Health
Being proactive in taking care of your health pays countless dividends! The financial savings alone adds up, with protection from long-term disease, fewer doctor visits, lower absenteeism at work, and a reduced incidence of catastrophic injury or death. That is in addition to a higher quality of life. Protect yourself physically, mentally, and emotionally with a healthy diet, sleep, exercise, and stress management. This kind of self-care requires discipline and motivation. If you struggle with unhealthy addictions (tobacco, caffeine, alcohol, drugs, sex, etc.), ask the Lord to break the stronghold. Pray for self-discipline and the desire to glorify Him in your body—the temple of the Holy Spirit.
Obviously, I have lots to say about mistakes that I have made and ones that I hope you can avoid! Take one day at a time. You will be surprised by how quickly you can catch up and reverse the damage from past financial mistakes by being faithful with small decisions.
For additional help with financial difficulties, Crown’s online Budget Coaching program matches you with one of our certified coaches to thoroughly analyze your financial status. They will work with you to develop a customized spending plan and debt elimination strategy to help put you on the road to financial freedom!
This article was originally published on The Christian Post on July 14, 2023.
Dear Chuck,
My wife and I made more than our share of financial mistakes early in our marriage and are still making up for losses. Can you give us some tips on how to catch up?
Catching Up Financially
Dear Catching Up Financially,
Ha! You and me both! I could write a book on all the financial mistakes I have made. To answer your question, I’ve compiled a short list of common financial mistakes to avoid.
First and foremost, remember that you are a temporary steward entrusted with managing what God provides.
“Yours, O Lord, is the greatness and the power and the glory and the victory and the majesty, for all that is in the heavens and in the earth is yours. Yours is the kingdom, O Lord, and you are exalted as head above all. Both riches and honor come from you, and you rule over all…” (1 Chronicles 29:11–12a ESV)
Mistake: Spending More Than You Earn
Now that you know your role and responsibility, never spend more than you earn. It’s the quickest way to end up in debt and will set you back months, years, and even decades with interest payments and missed opportunities to save and invest. Imagine playing limbo every month—the bar represents your income, and you represent control over your spending.
Mistake: No Emergency Savings
When spending less than you earn, you can fund an emergency savings account. The money set aside for this purpose will prevent you from having to use a credit card when the unexpected hits—which it will! You might as well learn to expect the unexpected! Things happen that may catch you off guard: a flat tire, a lay-off, a medical issue, etc.—so having an emergency fund grants you financial protection.
“Go to the ant, O sluggard; consider her ways, and be wise.
Without having any chief, officer, or ruler, she prepares her bread in summer and gathers her food in harvest. How long will you lie there, O sluggard? When will you arise from your sleep? A little sleep, a little slumber, a little folding of the hands to rest,
and poverty will come upon you like a robber, and want like an armed man.”
(Proverbs 6:6–11 ESV)
Mistake: Streaming Services That Waste Time and Money on Entertainment
Last year, CNBC reported that consumers spend an average of $133 more each month on subscriptions than they realize. 85% of US households have at least one video streaming subscription, and 60% have at least one paid music streaming subscription. These are usually auto-paid, and users fail to notice the cost. Many are charged for subscriptions they do not use. As a result, many consumers underestimate how much they spend on subscriptions each month: mobile phone, internet, TV/movie streaming, Amazon Prime, music streaming, miscellaneous digital subscriptions, gaming, news, and others. Cutting back on streaming can save you money and time. Closely monitor bank and credit card statements to avoid paying for what you do not use (or need).
Mistake: Carrying a Balance on a Credit Card
Assuming you have a credit card or two, never carry a balance. Current interest rates are ridiculous, and more than half of Americans are paying them. Do you want to pay 25% more for debt you carry over each month? This is financial suicide. Set a goal to pay off balances as quickly as possible using the avalanche or snowball methods, a balance transfer, or a combination of these methods. Try Crown’s online courses, work with one of our Budget Coaches, or contact Christian Credit Counselors.
“Owe no one anything, except to love each other, for the one who loves another has fulfilled the law.” (Romans 13:8 ESV)
Mistake: Taking Expensive Vacations
When I was growing up, vacations were spent driving to visit out-of-town family or a National Park. They were never expensive but always fun! Today, people fly to destinations, even if they are in debt. One survey showed that despite inflation and credit card debt, consumers have a “treat yourself” mentality, indulging in drinks, experiencing new activities, and purchasing expensive souvenirs. FOMO, hidden costs, under-estimated extras, and more can lead to post-vacation debt. Budgeting and planning ahead prevent overspending. Pray about a trip you want to take. Then work and save together. God can provide in amazing ways that you would miss if you choose to go into debt.
“Trust in the Lord, and do good; dwell in the land and befriend faithfulness. Delight yourself in the Lord and he will give you the desires of your heart. Commit your way to the Lord; trust in him, and he will act.” (Psalm 37:3–5 ESV)
Practice Contentment And Improve Your Finances
“Keep your life free from love of money, and be content with what you have, for he has said, ‘I will never leave you nor forsake you.’” (Hebrews 13:5 ESV)
When we realize that this life is so very temporary, we learn to be content, which leads to far less spending. Less spending creates more giving, saving, and investing, which reduces stress and accelerates the ability to catch up.
Thank you for your question. Due to the importance of this topic, I plan to cover more mistakes next week.
I would like to invite you to our Crown Reunion in Ridgecrest, North Carolina, from October 12–15, 2023. Here, you will learn more about financial stewardship, meet our staff and some of our international partners, and grow spiritually with new friends. More information is available here: https://www.crown.org/reunion/.
This article was originally published on The Christian Post on July 7, 2023.
Dear Chuck,
I am overwhelmed with financial challenges. I constantly feel defeated and discouraged to the point of giving up. I had no idea that financial challenges could lead to such despair. How do I climb out of this dark hole I am in?
Financial Dark Hole
Dear Financial Dark Hole,
I am sorry for your pain. Through the years, Crown has served many who have come out of the same place you are in right now. There is definitely hope! It will take a concentrated effort to renew your mind and a plan to fix your financial problems. Your circumstance reminds me that the task of eating an elephant must be done one bite at a time. Let’s lay out those bite-sized steps to help you conquer this problem.
Change Your Mindset
“Those who live according to the flesh have their minds set on what the flesh desires; but those who live in accordance with the Spirit have their minds set on what the Spirit desires. The mind governed by the flesh is death, but the mind governed by the Spirit is life and peace.” (Romans 8:5–6, emphasis mine)
Changing what we think about money impacts our behavior. It requires dedicated training.
Think about athletes. They train their bodies for competition with grueling workouts. They make sacrifices and prioritize this area of their lives. A ballet company or orchestra trains for a performance or event. Believers are called to train their minds in order to respond with wisdom and discernment. Godly stewardship requires mental prowess achieved by training. Repeated practice becomes second nature, requiring little conscious effort.
We bear fruit when we abide in Christ. This happens when we devote time to regular worship and fellowship with other believers, prayer, and the reading of His Word. It is our living source of Truth, wisdom, and understanding. When we meditate on it, memorize it, and pray it, we can recognize error and flee temptation. When we set our “minds on things that are above, not on things that are on earth” (Colossians 3:2), we can consciously shut out the negative influences of the world that distract us from walking and abiding with Christ.
Scripture to Strengthen the Mind
Practical Advice
It is important to set financial goals and implement a plan of action. These might include debt payoff dates, funding an emergency account, funding a retirement account, and saving for major purchases, like a car, appliance, vacation, home, or remodel. It could include saving for adoption, college, going on the mission field, or starting a business.
Progress in Spite of the Pain
I recently read Saved: A War Reporter’s Mission to Make It Home by Benjamin Hall. He is the Fox journalist who survived a 2022 bombing near Kyiv, Ukraine. His story is incredible in numerous ways, but one thing I found remarkable was his strength of mind. Despite the horrible trauma, intense pain, and emotional challenges, his mental fortitude helped him survive.
“Without any real painkillers available, all I could do was turn the pain into a mind game. I had to tell myself—convince myself—that the pain didn’t matter. I had to teach my body to ignore the pain and teach my mind to block it out. I had to, in essence, put the pain away. The only way to do that was to absolutely believe there was something more important than the pain that needed my attention, and that thing was my survival. . . . I reached past the level of pain and found another level I never knew was there. . . . I marshaled every bit of my focus and put it on the only thing that mattered; to survive, to escape, to get back . . .”
His book helped me reset my perspective on pain. I hope you will consider reading it too. Persevering through pain can help you fight despair and find hope. The Lord will strengthen you and never leave you.
Christian Credit Counselors is a trusted source of support in assisting people with getting on the road to financial freedom. Reach out to them today; they may be of great benefit to you.
This article was originally published on The Christian Post on June 30, 2023.
Dear Chuck,
Our adult daughter is single and working in retail. She just revealed that she has credit card and after-pay debt issues. She has asked us for help. Should we bail her out?
Daughter in Debt
Dear Daughter in Debt,
In short, no. Obviously, I don’t have all the facts, but helping her to work her way out of this without paying the bills for her would be my recommendation.
We learn from our mistakes, and this is an opportunity for a great education. Of course, you don’t want to be unkind, so there are constructive ways you can help. Let’s look at the big-picture problem before getting to the specifics for your daughter.
Americans Have a Problem with Debt
A recent Kobeissi Letter revealed the following:
The bottom line: far too many Americans are spending more than they can afford. This is a serious economic challenge that must be addressed!
Money but No Margin
Americans overspend because they have no margin. They have not learned or applied Biblical financial principles. As a result, they do not have adequate emergency or regular savings accounts. So they use credit cards to cover budget gaps. Many have unforeseen medical expenses or poor spending habits. Some try to keep up with the “Joneses” (who may also be buried in debt) or presume on future income without considering a layoff or lost income, while others fall for get-rich-quick schemes. Persistent inflation has brought on extra stress to already strained family budgets.
Coach Your Daughter Out of This Crisis
Here are my step-by-step recommendations to assist your daughter out of her current financial mess.
Ask Her to Analyze Her Spending Habits
Sit down with her to study her credit card bills, bank accounts, and cash receipts. Ask her: where did you overspend—food, drinks, clothes, entertainment, pets, personal care, etc.? Have her keep a notebook, and record every dollar she spends. Every week, do a spending check-up. Ask her: what can you logically reduce or cut? Is she using after-pay at her own retail establishment? This habit must be stopped now.
She may need to make some painful sacrifices, like selling a car, moving, or taking on another job to increase her available income to pay down some debt.
Ask Her to Analyze Her Friends/Family
The next questions should be: With whom do you spend money? What activities drive your spending? If it is a healthy relationship with friends or a significant other, ask her to be open with them about her desire to spend less in order to pay off debt and build a savings account. Otherwise, suggest that she make new friends. Is somebody always borrowing money from her? Lovingly explain that she can no longer be their banker, just as you can’t be hers. If someone owes her money, explain to her how she can collect it. They may be abusing her generosity.
Ask Her to Analyze Her Financial Future
This is where you can best counsel your daughter or anyone else with debt issues:
Ask Her to Consider the Joy of Financial Freedom
Children benefit from other Christ-centered relationships, in addition to their parents. Seasoned adults can prepare the young for their future with patience, wisdom, and Biblical financial advice. Your goal is to have children who find meaning and purpose in life, are grateful for what they have, and are financially free to follow the Lord. Show her these benefits of spending and accumulating less:
Ask Her to Learn about Contentment
Contentment means we are satisfied. When content, we can exercise self-control, a fruit of the Spirit, that enables us to say no to what we want. Ask her to memorize these Scriptures:
For additional resources, Crown has Budget Coaches and online courses. Christian Credit Counselors is a trusted source of help for a debt management plan. Thanks for writing. I am excited for you and your family as you go on this journey together.
This article was originally published on The Christian Post on June 23, 2023.
Dear Chuck,
I am a recent college graduate embarking on a career in a new city. I am a believer desiring to pay off debt and use my income wisely. I have some old friends here but always spend too much money when we do things together. What realistic goals should I try to achieve?
Setting My Financial Goals
Dear Setting My Financial Goals,
Congratulations! I will help you with a few goals to get your finances off on the right start, but I want to address the issue of peer influence on your finances first.
Sometimes we have to let go of friendships that are dangerous to our financial well-being. People who do not respect our desire to live beneath our means, abide by a budget, or save for the future can be far more of an influence than we may realize. Always spending money or going into debt when with them is not conducive to good financial health. Those who criticize your decisions can negatively affect your emotional health. If you have to defend yourself or are intimidated by people like this, I highly recommend that you address the issue or limit your time with these friends.
Not all big spenders are bad people. They may just not understand where you are financially. Try to winsomely communicate why you choose to live frugally: it enables you to give more, save more, and stress less. Speaking this in a spirit of love creates opportunities to help others who may be living far beyond their means or those who are unaware of a different lifestyle. Insecure people tend to overspend to prove themselves. Be the conduit to offer a different way of living. This may open the door to sharing the Gospel or the opportunity to explain financial stewardship—managing well what God provides.
When planning things with friends, set clear financial boundaries so that all parties have a clear understanding of what is expected. Be prepared to offer less expensive options or other ways to experience healthy fellowship.
Plugging in to the Right Community
Because there is true economic value in living in community, I encourage you to take steps to improve this part of your life. It’s important to find a trusted group where you can be transparent and not worry about being judged. It must be a place where you can give and accept from others the understanding that you are all serving Christ. This can be a small group, a Bible study, a ministry, or a charitable organization where you serve. You need real people—not just those on social media. I suggest plugging into a solid Bible-believing church as soon as you can.
At a very minimum, seek out several wise mentors who can give guidance, provide basic financial help, and much more. It is my experience that if they cannot, they probably know someone who can. Here are some practical helps that can come from wise stewards:
A community of like-minded individuals is where we learn to trust, love, serve, provide, and pray for one another. Your needs may grant someone else the opportunity to fulfill God’s purpose in his or her life. Your experiences in life may help someone else in need. It’s a win-win for all! So step out in faith as you put down roots in your city.
Some Financial Goals to Start Right Now
You mentioned paying off your debt and increasing your savings; those are good general targets, but let’s get specific:
Hopefully, you can find a community that encourages you to achieve these goals.
“And let us consider how to stir up one another to love and good works, not neglecting to meet together, as is the habit of some, but encouraging one another, and all the more as you see the Day drawing near.” (Hebrews 10:23–25 ESV)
Crown offers a variety of Biblically-based online courses that can help you find freedom in your finances, career, and stewardship journey. May they be a blessing.
This article was originally published on The Christian Post on June 16, 2023.
Dear Chuck,
I work in the technology sector and am worried about getting laid off. Can you help me be prepared?
Worried about Layoffs
Dear Worried about Layoffs,
I have friends whose daughter-in-law was laid off a month ago. Then their son, who is married to that daughter-in-law, was laid off last week. Both held good jobs in the tech industry. Many people are in the same circumstance. Accenture, Google, Amazon, Microsoft, Meta, Salesforce, Yahoo, Zoom, and many more have announced cuts in their workforces. In fact, 696 tech companies have laid off 197,985 employees so far this year. According to Nerdwallet, tech employment grew during the pandemic to meet the need created for work, shopping, and socializing. We see big companies correcting for over-hiring and underperformance and preparing for the rise of AI. This may continue until inflation is corrected. Changes are happening in the industry, but the news is not all bleak. Some startups are recruiting software developers, data scientists, and engineers, but many are replacing workers with offshored contractors.
Despite the anticipation, fear, stress, and disappointment of a layoff, do not despair or panic. Be upfront with your spouse. Together, ask the Lord for wisdom and direction. Be mindful of the many things for which you can be grateful, and thank Him. Here are some practical steps:
Be Diligent Before You Go
If you do get laid off, it is important to ask your employer these questions, as suggested in an article by the Harvard Business Review:
Managing Your Money
To ready yourself for a layoff, immediately cut back discretionary spending. Aim to have housing, utilities, cars, and necessary expenses covered. Implement a crisis budget. Check the current balances in all bank accounts, when CDs mature, and other investments that could be converted to cash if needed quickly. If you have adequate savings, don’t blow it on a vacation. Take care of yourself but with a frugal mindset.
Ask Chuck Get Prepared For Layoffs
View This as an Opportunity
Be optimistic while trusting the Lord. It’s possible that your job is not in jeopardy. Can you discuss the situation with your manager? Perhaps, you will discover that your fear is unfounded. You may learn ways to improve your job performance. If, however, you discover that a layoff is inevitable, you will at least have time to prepare emotionally and financially. It may be an opportunity to change course, move into a new career, or verify that you are in the right industry.
I believe it is always a good idea to be aware of other job opportunities. Update your resume and LinkedIn profile. If you do lose your job, notify business contacts of your availability, along with friends who may be able to help. Though humbling, this may actually open a wonderful new chapter in your life. Use your free time to update skills and acquire new ones. Read, research, and study companies you believe would be a fit for your skill set or those in which you have an interest. Prepare yourself for future interviews here and here.
“Be strong and courageous. Do not be frightened, and do not be dismayed, for the Lord your God is with you wherever you go.” (Joshua 1:9 ESV)
Pray with trusted friends, and ask God to work in ways beyond your comprehension. I have seen God close one door only to open a better one for thousands of people we have served and coached.
Crown has a great assessment and coaches available to help guide any decisions you may be making regarding your career path. We also have Budget Coaches if needed. Reach out if we can help in any way.
This article was originally published on The Christian Post on June 9, 2023.
Dear Chuck,
I would love to treat my family to a vacation, but we just can’t afford it unless we put it all on a credit card and pay it out over the coming months. Seems worth it to us. We need a break.
Vacations Via Credit Cards?
Dear Vacations Via Credit Cards,
Happy June! School’s out, and many are looking forward to a traditional summer vacation to a theme park, the beach, or even bucket list travel destinations. Others, like you, do not see how they can afford one. The truth is, you need a vacation; that is non-negotiable. But paying it out over months of high interest rates is not wise.
Vacations Are Vital
Vacations are permissible, profitable, and, more importantly, Biblical! An article at Forbes, “Why Taking Vacation Time Could Save Your Life,” makes the case that time off is “integral to well-being, sustained productivity and high performance.”
The Harvard Business Review offers this compelling article: “Thinking of Skipping Vacation? Don’t!” Research shows that taking regular vacations grants greater job satisfaction. Those who take ten days of vacation are 30% more likely to get a raise. “Research on elite athletes shows that rest is what enables them to perform at peak levels, and the same is true for us.” Another HBR article to reference is: “We All Really Need a Vacation. Here’s How to Make the Most of It.” The article states, “Even before the pandemic, millions of days of vacation time went unused in the United States.”
This article at Very Well Mind addresses burnout prevention and managing stress. “How to Take a Break from Work” says time off is needed when these signs are evident:
Even if these signs are not present, because we are made in God’s image, we all benefit from rest. If He rested, we certainly can’t ignore our need for rest! The break in routine can rest your mind and body, but sticking to clear parameters will prevent financial stress upon your return home.
Steps to A Vacation You Can Afford
A debt-free vacation is possible if you do it on a budget! Be realistic about what you can afford. Planning a vacation without debt requires cooperation, planning, perseverance, and, perhaps, some painful sacrifices, but the reward is worth it. Spend some time researching costs; then set a financial goal and get started.
Assess your financial situation. Try cutting back your variable expenses to accumulate some cash. If the family works together, you can jointly agree on things like not eating out for a month and giving up certain activities, foods, subscriptions, or new clothes. How about having a garage sale or selling larger items on Facebook Marketplace?
Consider driving to see friends and family or receiving them at your home. Camp, stay in state and national parks, spend time in nature, and simply unplug. Enjoy a staycation, and take advantage of all the free or low-cost experiences near your home. Invite other families to join you. It can be a truly enjoyable time for all! If you cannot afford a summer vacation, save for a fall or winter one. You can find great rates in the off-season!
Vacation Without Overspending
According to a survey by Accrue Savings on travel and vacation habits:
Managing Family Expectations
It is easy to overspend when away from home because people let down their guard. They relax and treat themselves to new activities, souvenirs, drinks, and once-in-a-lifetime experiences. Some find it easier to give in to a child or spouse than answer with a loving, “No, we can’t do that this year.” Discuss the situation, and try to teach basic financial principles before leaving home. Then hold one another accountable. You might want to enact a no-complaining rule.
Perhaps you can surprise the family with special treats purchased or prepared ahead of time. Carrying food and drinks with you is usually more affordable than buying on location. If driving, bring books, journals, pens, pencils, games, and in-car entertainment to pass the time. Limit or avoid screen time so the family is truly present—communicating with one another and enjoying the scenery. Plan family devotions and time to praise and worship God.
Set a New Standard
Please get away and rest, but try to avoid doing it with debt, which will only add financial stress to back-to-school and holiday expenses coming in the Fall. I have a wealthy friend who annually pitches a tent in a state park just an hour from his home in North Carolina. He and his wife spend the weekend completely unplugged from the world. Although he could afford a 5-star hotel, this is one of his favorite ways to recharge. He inspires me to find ways to set a new standard for how I steward my vacation expenses.
Crown has a number of resources available to assist in budget planning, including calculators, online courses, and even personal budget coaches. If we can help your family get on the road to financial freedom, please reach out, and we would be honored to help.
This article was originally published on The Christian Post on June 2, 2023.
Dear Chuck,
I am 25, live in a hot housing market, and feel squeezed by rising rents. I can’t see any way that I could ever buy a home! I need a plan and some hope.
Sick of Paying Rent
Dear Sick of Paying Rent,
We are in a very unique time when millions of renters are motivated to buy a home but feel trapped. Hopefully, this will not last too much longer. In the meantime, there are steps you should be taking now.
The Refinancing Boom
There was a refinance boom during Covid-19. Mortgage rates fell dramatically, and 14 million mortgages were refinanced. A 30-year mortgage fell to 2.65% in early January 2021, which allowed average homeowners to decrease monthly payments by $220. Others took advantage of 15-year mortgages, which dropped to 2.16%. Although monthly payments increased, these borrowers were motivated to save tens of thousands of dollars in interest while building equity faster than a 30-year mortgage.
Those desiring to buy a home today are struggling to find what they want because many homeowners do not want to sell. Mortgage rates are near 7%, and home prices are still high. These are disincentives.
According to Market Watch, “The mortgage refinancing boom is over, but its impact will be seen for decades to come,” said Andrew Haughwout, director of household and public policy research at the NY Fed.
Research shows that the refi boom of 2020-2021 differed from booms in 2003 and 2013 in three specific ways: interest rates were historically low, home equity was at an all-time high, and the rebound in rates was historically steep.
Count the Costs
When calculating the ability to buy, do not forget to add in the costs of property taxes, insurance, utilities, and HOA fees, along with emergency funds for maintenance and repairs. Consider additional costs for landscaping, furniture, window coverings, and décor. Take into account future expenses: child care, private education, braces, pets, college, vehicles, weddings, continued inflation, and unexpected costs, like caring for a family member or a loss of income. Depending on the climate, you may have expenses for snow removal, tree maintenance, and after-storm care. Will there be greater transportation costs? Needs arise out of the blue.
Experts recommend the 28/36 rule when buying a home:
If you are married, I recommend buying a house based on the lower of the two salaries because that provides flexibility in the use of a spouse’s income for greater saving, investing, or future goals. It also provides some protection in the event of job loss or if one of you chooses to pause your career.
Start Now; Prepare to Buy When the Market Changes
First, you should begin now to save for a down payment:
Next, be patient as you watch for mortgage rates to drop and more home inventory to come on the market in your area. When you think you are ready to buy, create a budget with a proposed mortgage payment. Include all expenses you may encounter. Do not fudge. It is wise to buy in a price range that keeps your expenses in a similar range as your rental costs, if possible. Buying too much house impacts saving for retirement, paying off debt, traveling, and the freedom to give as the Lord directs. It can create stress that affects your marriage and career. Just because you qualify for a more expensive home does not mean you should buy one!
Praise God for the place you live now. There are many benefits to renting that are not available to homeowners. Remember to number your days, for we are all just passing through. Steward wisely, and live intentionally with your “future home” in mind. Our hope is in the life to come, not in this one.
If credit card debt is a concern, Christian Credit Counselors is a trusted source of support. Getting out of debt can certainly help with your goal of home ownership. Reach out to them today; they may greatly benefit you.
This article was originally published on The Christian Post on May 26, 2023.
Dear Chuck,
I work and live with those who buy whatever they want, whenever they want. I find myself constantly influenced to join their spending sprees! Can you give me any tips that I can implement to control my spending immediately?
Spending Too Freely
Dear Spending Too Freely,
Yes, I can help you—been there, done that! Living in debt is deceptive. I once saw a sign that described what it was really like living beyond our means and on ever-increasing debt: “I started out in life with nothing, and I have most of it left!”
Based on consumer credit statistics, you are not the only one struggling. For the first time in more than 20 years, credit-card debt failed to fall between the fourth and first quarters. The U.S. credit card debt level is approaching a historic high of $1 trillion.
Find a Great Example to Watch and Learn From
Early in our marriage, my wife, Ann, worked with a remarkable single mom. She immigrated to the United States with her former husband, who was a soldier at the time. Shortly after they arrived in this nation, which was very foreign to her, she delivered their child, and he exited their lives. She found herself alone, without sufficient resources, without support systems, and facing a daunting challenge to make it all work.
We got to know her through work, but she became a close personal friend. Immediately, her habits stood out to us: she carried her simple lunch every day, including a dessert of 10 chocolate chips in a reusable sandwich bag (without the cookies). Rather than joining a fitness club, she walked ten flights of stairs each day after lunch in the bank building where she worked for slightly above entry-level pay. Her frugality kept her fit in mind, body, and finances. She earned a college degree and paid for a house and her daughter’s education. She eventually married.
Interestingly, this was also during a time of high inflation in the 80s. Mortgage rates soared to 17%! Although a painful time in many ways, she found joy in spending far less than she earned; she kept a budget, set goals, and made steady progress with her humble, disciplined lifestyle. She never complained. We actually were the ones most impacted after she spent time in our home over meals and holidays.
Know Where Every Dollar Is Going
Today, our economy is on shaky ground. I recommend using a budget and then applying the tips below to change your habits, prepare for the future, and live on less. Ann and I have learned to be frugal without missing out on life. We have found unexpected joy in saving money and becoming more generous.
Increase Your Savings
Build your emergency fund to avoid having to borrow or use a credit card. Stop all impulse spending, and reduce debt so you can pay off all bills each month. By eliminating interest charges and penalties, you take a step back from the financial cliff. Implementing a frugal lifestyle will give you extra money to deposit in a fund each month. Set up an automatic deposit, and increase the amount over time.
Time with Friends/Entertainment
If your friendships are not beneficial to you and your budget, make new ones. Volunteering is a great way to broaden your community. Enjoy budget-conscious friendships by going on walks, visiting museums, or taking advantage of free events. Listen to books, and work puzzles. Gather friends to play board games, hike, or bicycle. Pack a picnic, and meet at a park. Plan a potluck. Ask others to join you in a no-spend month. Make it a time to share budget-saving ideas and encouragement. Those you think don’t need to watch their spending may join you so they can save or give more. Consider the fact that they may be living a lifestyle that hides financial pain.
Limit/Drop Social Media Plus a Few Other Things
Scan credit card and bank statements for items to drop, like subscriptions and memberships. Instead, use the library or YouTube for free. Read for personal development and financial prowess.
Food
Gasoline
Reduce driving, compare prices (GasBuddy.com), carpool, bike, walk, and work remotely when possible.
Utilities
Clothing
Shop thrift/resale shops and yard sales, accept hand-me-downs, and borrow for special occasions. Aim for quality, not quantity. Get creative, and remake clothes. Cut off a dress for a new blouse. Convert pants to a new pair of shorts. When shopping online, put items in your shopping cart, then wait and compare prices for several days. It is likely you can live without them.
Self-Care
Take care of yourself but in a cost-efficient manner. Extend the time between hair or manicure/pedicure appointments. Or temporarily do without. Eliminate other expenses, or trade skills for essential services.
Wait, Wait, and Wait Some More!
The wise man saves for the future, but the foolish man spends whatever he gets.
Proverbs 21:10 TLB
Learning to delay gratification and wait for what you need pays big dividends. God can surprise in amazing ways! It is a sign of wisdom according to the Proverbs.
Christian Credit Counselors is a trusted source of support in assisting people with getting on the road to financial freedom. Reach out to them today; they may be of great benefit to you.
This article was originally published on The Christian Post on May 19, 2023.
Dear Chuck,
I am a baby boomer with lots of friends and a healthy community at church, but I see loneliness as a major problem for so many of my friends, our kids, and our grandkids. How do you think this trend will impact the economy in the future?
Worried about the Disconnected
Dear Worried about the Disconnected,
I am glad to hear of your concern for the disconnected and your insightful connection of this problem with economics. Loneliness is truly a devastating and costly problem.
Loneliness is no longer a problem that affects just the elderly or shut-ins. Three years after Covid-19 lockdowns and restrictions, reports reveal that loneliness has become a public health crisis. The U.S. Surgeon General recently addressed the issue: Our Epidemic of Loneliness and Isolation.
According to the Harvard Health Blog, “Isolation is the objective measure of how large your social network is, whereas loneliness is a subjective perception of how one feels. In other words, you can have many friends and be lonely, or no friends and not be lonely.” However, isolation is a risk factor for loneliness.
The High Cost of Loneliness
The CDC reports that social isolation and loneliness cost the U.S. economy an estimated $406 billion a year, in addition to approximately $6.7 billion in annual Medicare costs. The socially isolated are more likely to need skilled nursing care in a facility. This becomes very expensive to beneficiaries because of limitations in Medicare coverage.
A study by the University of Chicago found that loneliness can be as debilitating as anxiety or depression. High blood pressure, heart disease, obesity, and a weakened immune system, along with cognitive decline and Alzheimer’s, are linked to it, increasing the risk of premature death. The disabled, those with poor physical and mental health, single parents, and the financially insecure particularly suffer. Research shows that social isolation is as bad as smoking 15 cigarettes per day or drinking six alcoholic beverages a day. This is a serious and costly issue.
God created us to thrive within a community. Busyness, technology, and social media cannot substitute for in-person socialization. Without it, there is a price to pay:
Financial Behavior of the Lonely
A study out of Hong Kong reported that the lonely or rejected tend to put a greater value on money. They often make risky financial decisions that offer high rewards. They spend money, often sacrificing important resources, in an effort to secure social bonds, fit in, or be accepted. Those who place their identity in money feel pressure to be financially successful. They may forfeit time with family and friends to reach goals while damaging the quality of their relationships. Loneliness can also follow sudden wealth because people often don’t know who to trust. It is easier to build walls of protection than determine who is truly genuine.
“I cannot even imagine where I would be today were it not for that handful of friends who have given me a heart full of joy. Let’s face it, friends make life a lot more fun.”
–Chuck Swindoll
Some Helpful Action Steps
The lonely commonly withdraw, which only exacerbates the problem. One must step out of comfort zones to conquer loneliness. If a child or spouse is suffering, find ways to broaden their activities. Seek wise mentors, trusted friends, family members, or coaching to aid in social skills. Ask God for help, and see who He brings into your life. When we moved to a new city, my wife and I prayed for local couple friends, and the Lord graciously provided. Mayo Clinic reports that friendships enrich your life and improve your health.
Here are some helpful tips:
It takes work to make and maintain relationships, but it is so beneficial. Invite someone to walk and talk. Spend some money on an experience that is good for your mental health. Do not wait for someone to call or invite you somewhere. Reach out first. You may discover that person is just as hungry for friendship as you.
“The dearest friend on earth is a mere shadow compared to Jesus Christ.”
–Oswald Chambers
If you’re looking for a way to help others or make connections, consider starting a small group or volunteering. Here is a Crown resource that you might find beneficial. Thank you for the excellent question.
This article was originally published on The Christian Post on May 12, 2023.
