We have created a free monthly newsletter that is now open for new subscriptions.  The newsletter will be distributed early in the month and will contain articles on finances (debt reduction/budgeting/investing/etc.), career, family, and more.

To subscribe to the newsletter, click on the button below and follow the instructions on the webpage that appears.






The first edition of the newsletter is due to be distributed on June 8th.

        

How about helping the Dad or grad in your life to find their true calling by doing work that they truly love? 

If this kind of material interests you, we recommend the career resources at http://www.48daysproducts.com.

At this site, you can find a personality profile and a variety of books, church study materials, etc. that will help you to discover what careers are a good fit for your personality and aid you in your search for more fulfilling work.

        

What's a stay-cation?  It's the growing phenomenon of staying home on your vacation and either doing things around the house or visiting local attractions.  According to a story on Marketwatch.com, 60% of consumers are cutting back on spending, due to inflationary pressures (food, gasoline, air travel, etc.), and 49% are scaling down their leisure travel.

Have you adjusted your travel plans because of the economy?  If so, are you doing a stay-cation?

        

The speaker lineup for the 2008 Catalyst Conference, to be held October 8-10 in Atlanta, has been announced. 

Anticipated speakers for this year's event include : 
        Andy Stanley
        Jim Collins
        Dave Ramsey
        Franklin Graham
        Billy Graham (remote)
        Seth Godin
        Craig Groeschel

The promo video for 2008 can be seen below : 

       


To find out more about the conference, click here.

        

Late last year, I had the privilege of being able to see a presentation on personal accountability by John G. Miller, the author of QBQ: The Question Behind the Question and Flipping the Switch.  Recently, Miller was on the Dave Ramsey show discussing the importance of taking personal responsibility.

I have read both of Miller's books and subscribe to his "QuickNotes", where he regularly provides stories of people who are living out the QBQ.

A video clip of the appearance can be found below :

 

To find out more about the book or to subscribe to the QuickNotes, you can visit the QBQ website by clicking here. 

        

Christy Kline, from our parter site CrossChick, was recently published in the Lookout magazine.  For those who are unfamiliar with this publication, it is a weekly magazine from Standard Publishing in Cincinnati, Ohio.

Her article focused on using love as a way to reach out to people that we know who are not Christians.

To read her article, click here.

        

In one of our previous posts, we outlined the importance of getting rest.  Therefore, we took a brief sabbatical from posting new content. 

We are now back to regular posting and plan to add new features and content in the coming weeks.

By the way, if you like our content and manage your own website, we encourage you to link to us.  If you link to us, drop us a line at mail@sensiblesteward.com and let us know about your site.

Thanks for visiting our site and we hope that you come back often.

        

Skybus Airlines yesterday announced that they are ceasing operations as of Saturday, April 5th.  If you have a flight scheduled on Skybus, you should arrange with your credit card company to request a refund.

To find out more, visit http://www.skybus.com/.

        

1)  Debt can be deadly - Bear Stearns was leveraged 30 to 1.  When you're deep in debt, even the smallest misstep can lead to a crisis of confidence, and ultimately disaster.  There were rumors last week that Bear Stearns could be vulnerable, which lead to a run on the bank that ended up in a transaction where the company was bailed out at a small fraction of the previous day's market close.

2)  Allow yourself a reasonable margin for error - not only should you allow for things to go bad in your monthly budget but you need an emergency fund for those large expenses that arise from time to time that could potentially throw your finances out of line.  For example, are you prepared for unforeseen car expenses or medical bills?  When these items arise, and they will every once in a while, you don't want to run to your credit card to bail you out.  You will be much less frustrated by the experience if you can pay with cash.

3)  Diversify your investments - Bear Stearns was more than 30% owned by its employees.  As a result of the crisis, many of those employees will not have jobs, and their savings have been wiped out as well.  Since you are relying upon your employer for a regular income, you don't want to have a lot of money saved in your company stock as well. 

Even if you do not work for a given company, it is not wise to have too much of your investments in one company or sector, no matter how good of a company or sector that may be.

4)  Try to keep some cash around for opportunities to buy at low prices - This is especially true for your investment account but could also be applied to your checking/savings account.  You don't know when the opportunity of a lifetime will present itself.  If you don't have the available funds, you won't be able to take advantage. 

JP Morgan had some cash available to pounce upon an opportunity to buy Bear Stearns at a price of more than 95% off its highest price.  Plus, the Federal Reserve was there to help JP Morgan make the deal happen.  One week ago, no one would have thought that such a scenario was possible.  Because JP Morgan had the cash, they were able to make the deal.

5)  Don't find too much comfort or self-worth in the size of your income statement or balance sheet - we don't know what will happen tomorrow.  As it reads in James 4:13-15, "Now listen, you who say, 'Today or tomorrow we will go to this or that city, spend a year there, carry on business and make money.' Why, you do not even know what will happen tomorrow. What is your life? You are a mist that appears for a little while and then vanishes.  Instead, you ought to say, 'If it is the Lord's will, we will live and do this or that.' "

No matter how much of how little we have, something can happen tomorrow that will wipe us out financially.  Instead, we should put our trust in God.  Our attitude should be like that expressed by David in Psalm 20:7, "Some trust in chariots and some in horses, but we trust in the name of the LORD our God".

        

Bear Stearns, the fifth largest investment bank, was bought out over the weekend by JP Morgan for $2/share, which is much lower than the stock closed on Friday.  This is due to the liquidity crisis at the firm that was revealed late last week.

In response, the Federal Reserve and JP Morgan worked out a bailout package for Bear Stearns that was revealed late Sunday night.  In addition, the Fed cut a key benchmark interest rate by 0.25%

The markets are expected to be volatile today, as fears of a financial contagion persist. 

We will write more about the situation later today.

        

Today, we will explore a simple plan to pay off your debts that is often called a debt snowball.  The details of how to execute a debt snowball plan can be found below :

a)    List your debts from smallest to largest.  Show the amount owed on each debt and the minimum monthly payment on each

Example :
    Target     minimum payment = $50      amount owed = $1,000
    Visa        minimum payment = $100    amount owed = $5,000
    GM          minimum payment = $350    amount owed = $10,000

b)    Focus on paying off the smallest debt first.  Each month, pay the minimum payment on all remaining debts but the smallest one.  Pay the remainder of your budget for debt payments on the smallest debt.  This will allow you to retire this first debt quickly, gain some confidence, and move on to the second debt on the list.

Example : if debt budget = $800, first month payments would be as follows :
    Target    : $350
    Visa :       $100
    GM :         $350   

c)    Once the smallest debt is paid off, move to the next smallest debt remaining and attack it

Example : Debt budget = $800, payments are allotted as follows :
    Target : PAID OFF
    Visa :   $450
    GM :     $350

d)    Continue the snowball until all of the debts have been retired

This is a fairly simple plan to help you gain some momentum in paying off your debts and should help you gain confidence as you pay off each debt one at a time.  The beauty in this plan is that you only focus on paying off one debt at a time, instead of trying to pay off all of them at once.

        

 

Today, we continue our series on debt by considering how credit cards can inhibit our financial progress.

 

•        Credit cards are typically unsecured and used to pay for things that decline in value, so they fall into the bad debt category

•        With rates often exceeding 10%, credit card interest can pile up quickly, due to compound interest

•        Statistics vary on actual usage of credit card debt in this country

•        However, evidence suggests that more than half of people do not pay off credit cards each month

•        In response to subprime crisis, credit card companies are tightening the noose around the necks of Americans by dramatically raising interest rates and fees on responsible people

•        Consider this example to show how damaging credit cards can be

•        $10,000 balance

•        19.90% interest rate

•        minimum payment = 3% of outstanding balance

•        Making only the minimum payment, it would take 25 years and over $22,100 to pay off the debt completely

•        Total amount of payments could be higher if the borrower makes any late payments or if the bank raises rates due to market conditions

•        It’s tempting to open new credit lines to get 10% discount at clothing retailers; this illustration shows why those companies are making you that deal

Clearly, credit cards should be used with care.  In fact, studies show that people tend to spend more money when using a credit card than when they pay with cash.  This is why more and more merchants accept credit cards, even though there is a transaction cost for the merchant for each credit card transaction.

 

The best practices for credit card usage involve only charging what you can pay off at the end of the month (i.e. not carrying a balance). 

 

Tomorrow, we will review a plan to pay off your debts in an orderly manner.

        

Today, we explore the difference in good debt versus bad debt.  Here are some thoughts :

• Not all debt is created equal
• Although it’s best to have no debt, debt secured by items that increase in value (such as houses) is better than debt taken out to buy things that decline in value, such as automobiles and flat screen TV’s.  The people who end up truly wealthy are those folks who tend to use their money to buy things that appreciate in value (houses, stocks, bonds, etc.) instead of consumer goods, automobiles, entertainment, and other items that quickly lose their value.

However, these assertions do not mean that borrowing on appreciating items should be done irresponsibly.

Much of the subprime mortgage crisis that our country is undergoing right now is the result of reckless borrowing on a (generally) appreciating asset.  Many folks believed that real estate would not decline in value, so they took out mortgages for more than the house was worth, in the hopes that they could flip the house for a quick profit or in order to cash-out to pay for other expenditures.

Furthermore, because real estate was not supposed to decline, the thinking was that it made sense to borrow to pay for vacation homes, investment properties, etc.  Now, many of those homes are in the foreclosure process.

Similarly, the use of margin accounts in stock investing can lead folks into trouble if there are problems at one of the companies in which those funds are invested and the price of the stock declines dramatically.

Thus, even debt on appreciating assets should be exercised with caution.

• Educational debt and business debt may be OK, in moderation.

For example, a small amount of debt to start a new business may be OK, as long as there is a clear plan as to how that business will make money and pay off the debt.

Education loans may be OK to supplement other ways of spending for college.

However, it is not OK to rack up hundreds of thousands of dollars in student loan debt only to end up working in a job making $20K per year.  There is no way in that scenario that the student loans will ever get paid off.

            Similarly, business loans where there is little chance of success are recipes for disaster as well.

• Be especially careful of debt where the interest rate can adjust higher in the future; be sure to understand the basic terms of the agreement.  Many mortgages come with “teaser” rates, where the rate starts out low, but then is guaranteed to adjust higher in a few years, making the payment unaffordable for the homeowners.

To summarize, borrowing to pay for appreciating goods is better than debt to buy depreciating assets.  As always, the use of debt should be done with care.

In our next installment on debt, we will examine why the use of credit cards can be very damaging.

        

If you're not sure how to begin setting a budget, a new free online tool from Dave Ramsey may help you get started.  The resource is called "Gazelle Budget Lite".

To begin, you enter your monthly income, and then the software automatically enters a recommended target amount in categories ranging from savings, giving, housing, utilities, food, etc.  From there, you can adjust the categories according to your individual situation.

In each category, the tool will explain what kinds of expenses should go into each one and will tell you how much room you have remaining in your budget to make additional adjustments.  When you are finished, you can print your budget for later reference.

If you want to keep track of your spending against your budget, you will need to use something else in addition to this starter budget.  Several options include pencil and paper, cash in envelopes, a spreadsheet, Microsoft Money, Quicken, Quicken Online, Wesabe.com, or Mint.com.  Dave Ramsey also has a subscription online budgeting site called MyTotalMoneyMakeOver.com.  It is important that you find a system that suits you.

To try out the Gazelle Budget Lite tool, click here.

        

For the second installment in our series on debt, we will examine what the Bible says about debt.

• Nowhere in the Bible is debt listed as a sin
  
• However, Bible advises against reckless borrowing
• Proverbs 22:7 “The rich rule over the poor, and the borrower is servant to the lender”
• Psalm 37:21 “The wicked borrow and do not repay, but the righteous give generously”
  
• Sin can enter the equation if debt comes from envy of neighbor’s possessions or pure greed
• 1 Timothy 6:10 “For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs."
• Hebrews 13:5 “Keep your lives free from the love of money and be content with what you have, because God has said, ’Never will I leave you; never will I forsake you’ ”
• Finally, debt can also cause a conflict between your pocketbook and your God
• Matthew 6:24 “No one can serve two masters. Either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve both God and money.”

So, in summary, debt is not a sin but should be used with caution.  We should make sure that we are able to repay our debt and keep money from competing with God. 

We want to serve God, not our lenders, so it is imperative to keep debt to a minimum.  One of the biggest dangers with borrowing is that too much debt can keep us from fulfilling what God created us to do.

Tomorrow, we will examine the difference between good debt and bad debt.

        

Most folks, men especially, have much of their identity and purpose embedded in the work that they do.  While studying my Bible this week, I ran across a passage that illustrates how important it is that we are working in a position that suits how God made us.

When we are doing what God created us to do, we will enjoy our work and end the day with a sense of accomplishment and fulfillment. Studies show that most people are not in love with their jobs and would like to be set free.

In Ecclesiastes 5:18-19, Solomon wrote, "Then I realized that it is good and proper for a man to eat and drink, and to find satisfaction in his toilsome labor under the sun during the few days of life God has given him—for this is his lot. Moreover, when God gives any man wealth and possessions, and enables him to enjoy them, to accept his lot and be happy in his work—this is a gift of God."

Regardless of how trapped you may feel, there are ways to transform your work situation toward finding something that you find more satisfying.  It may involve asking your boss for different assignments; maybe it is a different job at your current employer.  Perhaps, you need to find a position at another company, or you may want to start your own business.  What is really important is for each of us to be accountable for our own happiness and realize that we have a choice.

I recommend Dan Miller's resources because I have used these materials to personally transform my thinking about work to the point where I am about to begin taking steps out of the rat race and into work that is more fulfilling.  I have been liberated from the trap of entitlement thinking and want everyone to experience this transformation.

If you're ready to take a step toward fulfillment in your career, you can click here to get started.

        

One often overlooked downside to buying gift cards as gifts is what might happen if the company goes out of business.

People holding Sharper Image gift cards may find out that their cards are now unusable, due to the company's recent bankruptcy filing.

Federal law permits firms to stop honoring gift cards if they file for Chapter 11 bankruptcy.

To read more, click here to read the full story from Marketwatch.com.

        

•
We are starting a series of posts regarding debt.  Today is the first installment.

Below are 6 reasons why debt should be avoided as much as possible:

• Debt can limit our options, forcing us to work in jobs that we hate or work long hours that keep us from spending precious time with our families – “I owe, I owe, so off to work I go”.
• Strain of debt often leads to breakup of marriages – money is often cited as the #1 cause of divorce
• Because of interest compounding at high rates, we can get stuck in a spiraling debt cycle that is difficult to escape
• Debt assumes that we know what will happen tomorrow; Because there are no guarantees in life, this is a dangerous assumption.
• Debt increases our stress level, which can lead to a variety of health issues – depression, heart attacks, etc. Furthermore, the additional time spent at work can cause people to neglect their health by eating unhealthy foods and spending less time exercising
• Practices of collection agencies is borderline criminal and can lead some people to suicide (see the movie “Maxed Out”)

In later posts, we will examine debt further, including what the Bible says about debt, good debt vs. bad debt, and more. 

        

The leaders in Washington were hoping that Americans would spend the tax rebates that they authorized earlier this month.  The last round of stimulus from 2001 had a 40% spend rate.

However, according to a new survey, only 18% plan to spend the rebate this time around.  Most people, wisely, are either planning to save the money or use it to pay down debt.

Earlier today, a report showed that consumer confidence is starting to sag, due to concerns about jobs, housing prices and inflation on gas and food items.  Thus, the evidence is mounting that people are starting to cut back on their expenses.

My family is planning to use the cash to build our emergency fund, as we are planning to make some lifestyle changes in the upcoming months.

To read more about the survey, click here

        

Earlier this month, President Bush signed a tax rebate package that will see checks going out to most Americans from the IRS later this spring.

The rules are a bit complicated, so if you're not sure how much you will receive, you can use this simple calculator from Kiplinger.com. 

To complete the tool, you will need to know your adjusted gross income for 2007.

In order to receive a check, you will need to send in your 2007 tax return first.  Thus, those who file for an extension will not receive a check as soon as someone who files by April 15.

        

Proverbs 23:4 states, "Do not wear yourself out to get rich; have the wisdom to show restraint." 

Early in my career, I tended to be a workaholic.  I was always chasing the next promotion, pay raise, etc., in an attempt to earn more money and provide for my family.  In addition, I would volunteer for almost everything going on at church and would enroll my kids in as many things as I could.  Eventually, every waking moment was occupied with some sort of activity that involved taking care of somebody else's needs.

However, after doing this for several years, I found that I wasn't satisfied with where I had ended up and was very tired.  Not only was I physically exhausted from the activity, but I had also neglected my health along the way and had gained a great deal of weight.

This year, my family decided that we needed some time for ourselves and that we would keep Sundays reserved for family time and rest (after going to church, of course).

We found that there was a reason that God commanded rest in Exodus 20:8-11, "Remember the Sabbath day by keeping it holy. 9 Six days you shall labor and do all your work, 10 but the seventh day is a Sabbath to the LORD your God. On it you shall not do any work, neither you, nor your son or daughter, nor your manservant or maidservant, nor your animals, nor the alien within your gates. 11 For in six days the LORD made the heavens and the earth, the sea, and all that is in them, but he rested on the seventh day. Therefore the LORD blessed the Sabbath day and made it holy."

If God needed to rest on the 7th day, why do we try to push ourselves to the brink of collapse?  If anyone could go nonstop, it would certainly be God, but even He took the the time to rest and recover.

In our society today, we tend to wear our busyness as a badge of honor.  Whoever runs their kids to the most extracurricular activities and works the hardest to buy the most toys for their children is revered as the best parent.  Companies use incentive pay structures to reward those who have unhealthy work-life balances. 

However, if we stay on this treadmill and never stop to catch our breath, then we don't have ample time to recover and prepare ourselves adequately for the next challenge.  Also, too much busyness can keep us from using our talents to fulfill our God-given purpose.  If we're busy, then we must be doing something important, right? 

In their book, The Power of Full Engagement: Managing Energy, Not Time, is the Key to High Performance and Personal Renewal, Jim Loehr and Tony Schwartz explain how intermittent periods of full engagement, following by periods of disengagement, are critical for high-level performance over time.  To illustrate, they show how sprinters will run as fast as they can for a spell and then intentionally rest to recover their energy.  If these sprinters did not take the time to rest, they would not be able to run as fast the next time around, and their performance would be diminished.

Our family has seen numerous benefits from taking an intentional day of rest each week.  We have been generally more healthy than we were in the previous year.  Our relationships with one another are better.  Most importantly, our overall happiness has improved significantly.  Therefore, I highly recommend taking a day of Sabbath and making it a priority.

        

One of yesterday's posts described the Dave Ramsey Plasty Award show.  The winner of the People's Choice Award was the video below, where a soldier in Iraq detonates his credit card with some explosives.

Enjoy the video...

        

Dan Miller, author of 48 Days to the Work You Love and No More Mondays was on the Dave Ramsey show this week.

Below, you can find a clip from the opening segment

 

A couple of key points that I learned from the segment : 
    1)  Dollar bills are a reward for service - if you serve others, like Jesus modeled, the money will follow.  If you focus on the money first, it will always be out of reach
    2)  Dan defined risk as the lack of control.  If you're not in control and not doing work that suits you, there is a huge opportunity cost.
    3)  Dave shared that about 1/3 of his financial counseling clients need help because of career issues

If you're not satisfied with your job and want to start your own business or find a vocation more in line with your God-given talents, you can visit http://www.48DaysProducts.com to find out more.

        

Dave Ramsey's show on Fox Business Channel will be having its "Plasty" awards show tonight.  The contest will honor those who submitted videos that show people creatively destroying their credit cards.

The show airs at 8 p.m. EST.  Check your local listings, as there may be opportunities to catch the reruns if you missed the original airing.

One of our favorities is a video of a soldier in Iraq blowing up his card.

To see this video and the rest of the nominees, click here.

        

One of the previous posts outlined how the NFL was cracking down on churches who hosted Super Bowl parties that used screens larger than 55 inches.

Starting with the 2009 Super Bowl, the NFL will now permit religious organizations to host live showings of the big game, regardless of the screen size.

To read more, click here.

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