Financial:

November
Before we get started I would like to take some time and tell you why it is so important that we get our financial house in order. Our politicians in Washington are on a “drunken sailor” spending spree. Our government is spending money at such a rate that we as a nation are faced with two alternatives to fund or pay for this spending spree: A) barrow money from other nations; B) print more money. Either method has a significant impact on our dollar, which in turn affects your purchasing power. Both methods will create inflation. When you hear someone speak about inflation and they tell you that the rate of inflation is low don’t believe them. As long as our government is printing more money there are more dollars in circulation and this drives the value of the dollar down. Most people think of inflation as it relates to the price of goods and services, but you should look at how much our government is spending and how much new money they are printing. This is the true mark of inflation. With that said, there are two big spending bills that are coming up soon for a final vote in both Houses of Congress. They are: Healthcare; Cap and Trade. With new talk of another stimulus package. The point I am trying to make is that high inflation is just around the next turn and we have to prepare for it. There is talk of doing or moving a way from the U.S. Dollar as a world monetary basis for valuing such things as oil. If that happens the value of our dollar will plummet. We still have time to get our financial houses in order, but we have to make an honest effort now.

Let’s recap of what we have done thus far. We started by listing our debt on a sheet of paper and admitting we have a financial problem. Then we tried to figure out how we can save $1,000.00 for an emergency fund. Next we learned how to balance our check books. We last ended on preparing a monthly budget. I hope in your monthly budget you planned for saving $1,000.00 for an emergency fund. I gave you possible ideas on how to get the money for your emergency fund. You might want to try paying just your minimum payment amount on your credit card until you reach your $1,000.00 emergency fund. That is entirely your decision.

Before we move onto the next step of paying off your credit cards you must be current on all of your bills. If you are not then don’t start this step until you are current. With that said let’s get started!

On the form that I have provided you can list your credit card debt from smallest amount owed to largest amount owed. Just fill out the information in each column. I should mention that you can save this form on your computer in “My Documents.” The purpose of listing and paying your credit cards off from the smallest balance to the largest balance is your seeing the results sooner than if you did it the other way. You will get victory sooner this way. Once you have your credit card debt listed on the form you will pay as much as you can on the smallest balance, while paying the minimum amount on the rest of your credit card debt. Once you get one credit card paid off you repeat the process for the next smallest balance while paying the minimum payments on the rest. Now, when you move onto the next smallest balance you can take the amount that you were paying on the one you paid off and apply it to the next credit card you are paying off. Repeat this process until all of your credit cards are paid off.

One important side note: This is why creating a budget and sticking to it is so important to climbing out of the hole of debt. If you take the time to use and review your monthly budget you should be able to find where you can cut back to pay extra on your smallest balance credit card. It is not going to be easy or painless, but through prayer and God’s guidance all things are possible.

The next Financial Corner will deal with saving six-eight months of your living expenses incase you get laid off, loose your job, or some other unforeseen reason. Now you can do this because you have extra money that you were paying on your credit card debt.

Lists: Suggested Reading List, Suggested Websites

October
Let’s now turn our attention to the importance of a budget. I want you to think of a budget like a road map. If you were to take a trip to Los Angeles California leaving from Saginaw Michigan would you just jump on the highway heading in a westerly direction? The answer is definitely not. You would get a road map and plot your way to Los Angeles California. Then why is it that so many people do not take the same care with their personal finances to create a road map called a budget. If you create a budget and follow it you will find that life doesn’t have to have so many detours. In fact if you would create a budget and stick to it you should find that over time you can save money for a family vacation, a new car, or for your retirement years. Most people get themselves into financial difficulties because “we see and want now” instead of saving up for something like most of our grandparents generation did. I should mention too that financing purchases with a credit card is very costly and most times it turns into several months or even years before that purchase is paid off. Then when you finally pay it off the true cost is a lot higher than the cost of that item, because of the interest that has accrued on it. Most people who have little money saved fall into that trap. You can climb out of the hole of debt by creating and sticking to a budget. If you are a child of God and you read His word you find a message in Proverbs 22:7. It says “The rich ruleth over the poor, and the borrower is servant to the lender.” You see when we use our credit cards we are enslaved to the bank until we pay that off. I will save a number of Bible verses dealing with money for another issue of Financial Corner.

You can talk to five different people and you would get five different answers on “how to prepare a budget.” You can go online to www.chrsitianpf.com and click on how to make a budget. He will tell you to take your monthly income and deduct 10% of that for tithing. Then take 100.00 out for retirement and some for savings. He will then go on to tell you that what is left over is to pay bills. This is just one example. One of the best financial help books that I have read is called Financial Peace Revisited by Dave Ramsey. He goes into great depth on how to do a budget. If you are interested in reading his book you can go www.daveramsey.com and order his book or books. He wrote another financial book called The Total Money Makeover. I have read both of these books and I highly recommend them to you. You can buy both of these books at Barnes and Nobles for about $24.95 each, but if you are in debt and cannot afford books right now I will give you what you need to know in preparing a budget. My method will work too if you give it a try. After all, what do you have to loose but the debt! Unlike most people, I feel that a budget is derived from your debt. If you are in a lot of debt it won’t do any good to assign a recommended percentage of your take home pay to a certain category of debt. That does not make any sense to me. What does make sense is to list your bills in a budget and start paying your debt off.

Let’s begin our budget process. If you listed your debt on a piece of paper as discussed last month you will be ahead of the class. This information will be very helpful in creating your budget. I have created a form to help you in preparing a budget, I have taken a list of what I thought would be what most people have for debt. I listed them on this form and I have put in the formulas to make the budget process easier for you. If you want to use this form you should save it in “My Documents” on your computer. Than all you have to do is click on to a given cell and take your arrow key over to the dollar amount cell and hit the backspace key and enter your dollar amount. Then move to the next item. Make sure every so often that you save what you have entered in case something happens with your computer you won’t loose your information.

As you can see my budget form is set up for a month. You can change the month by moving your mouse over to that cell and click on it then enter the month you want. Next you would enter your monthly take home pay in the far third column. Then if you tithe you would enter that amount. Next you would go down the list and enter in all the bills by your known monthly payment amount. Remember all you have to do is click on to the cell, hit the backspace key and enter your amount. The object of this budget form is to have a zero amount when you are finished. If you have a positive dollar amount left over put it in another item until you reach zero on the total budget line. Now if you have a minus or negative dollar amount than you will have to decrease an item.

Now let’s take a look at some other items on this monthly budget form. Whoever does the grocery shopping in your house should know about what you spend a week, biweekly, or monthly depending on when you do the shopping. You would enter a budgeted amount for your groceries. Next look at your housing expense and list those amounts. You would go right done the list of this budget and enter all your known monthly payments. If you have a dollar amount left over you could look at using it for savings, maybe retirement or even furniture replacement. Your furniture might be in good shape now, but in two or three years what kind of condition will it be in. Now if you have budgeted for it no problem because you have saved cash for it. The point that I am trying to across is that a budget can be used for planned future purchases. If we plan now we won’t have to barrow money or use a credit card to make that future purchase.

To help you stick to your budget you could use an envelope system. Groceries is a good example. Let say you budgeted $100.00 per week than put a $100.00 in an envelope and mark on it groceries. When you go shopping only take your “grocery envelope” and that will force you to only spend up to that amount. Then if you have money left over leave it in your envelope. Then after a few weeks maybe you will decide you budgeted too much for groceries. You could take something a way from groceries and put it in some other type of debt or budget category.

I have another form that I use when I pay my own bills. I am paid weekly so I pay all my bills on a weekly basis. I pay almost all my bills on line. I have the payment electronically deducted from my checking account. I can schedule my payments in advance to be deducted before the due date. That way I never have to worry about a bill being paid late. When I pay my bills on line I print out a confirmation of payment page. This shows what amount I am paying, what account number and bank the payment is coming out of. The confirmation number is given so if you ever had to call your creditor you can give them the confirmation number and they can pull up the payment information. Then I enter my payment information on my monthly payment form. Then at the end of the month my actual bills that I paid are totaled. If you used both forms you could very quickly compare what you budgeted to what was actually spent. This would give you positive feedback as to how well you did with your budget. You could look at your budget and make adjustments to it. As a side note, you could attach all your payment receipts to your monthly payment form. You could put your budget form, your monthly payment sheet with payment receipts attached to it in a file and mark the month on the file. Then if a problem ever came up you could go to that monthly file and pull out your needed information. You could even put your bank statement reconciliation in that monthly file.

I want to remind you that if you are married both you and your spouse must do this budget process together. Ladies do not pick a Sunday afternoon to do your budget when you know the football game is on. A budget has to be agreed upon by the both of you. The both of you will have to hold each other accountable for the budget as well.

You will never create the perfect budget so don’t try to do it here. You will have to play around and adjust your budgets for the first few months until you see what your spending habits are. I would like to mention that when you are working on your budget don’t make the process long and drawn out. You should be able to do it in a couple of hours or so. I invite you to give this a try and I know that it will help your financial position out a great deal.

If you would try and do the things that we have discussed in Financial Corner thus far you will be on the road to being debt free. You will be taking steps that will ensure a better financial future for yourself. Up to this point you are working on saving a $1,000.00 emergency fund and you are going to start your monthly budget. You should be able to balance your check book on a regular basis if you did not know how. Just remember that no matter how bleak you think your personal finances are God is always with you. All you have to do is pray and ask Him for His wisdom and guidance.

Forms: Actual Monthly Spent Form • Bank Reconcilation Form • Monthly Budget Form • Paying off credit card debt

Next month I would like to talk about how to pay off the credit card debt in a quick way. Dave Ramsey called it the “snowball effect. If you have any questions or comments email me at kenbauman@faithofsaginaw.org.

September
Most people get their cars tuned up for the winter months, but fail to do a financial tune up for all seasons. If you are tired of being in debt or living paycheck to paycheck then “Financial Corner” can be of help to you. It is my prayers and hope to give you ideas or a system that if followed could give you financial peace that our Lord and Savior has intended for us to have.

Before we get started allow me to introduce my self. My name is Ken Bauman and I am a member of Faith Baptist Church. I have a BBA-Accounting that I received in 1991 from Saginaw Valley State University. I am not a Personal Financial Planner or an Investment Person, nor do I claim to be. I am just offering some free common sense advice to help all people through these difficult economic times. If you have a comment, question or a thought for Financial Corner you can email me by clicking here.

Each month we will be working on adding tools to your financial tool box to help you get your financial house back in order. Like any other remodeling job it may take some time for this to happen. My advice to you is to be patient, pray and ask God for his wisdom and guidance.

This month I would like you to take a sheet of paper and list all your bills on it with the following columns:

• Due date
• Name of Creditor
• Total amount owed
• Minimum payment

Once you have completed this add up your total amount owed and minimum payment columns. Make sure you list your groceries, gas, phone bill, energy bills, etc... By doing this you will have a quick reference of what your financial picture looks like. For most people the problem is that you have a lot of credit card debt. We live in a society where we want stuff now and as a result we use our credit card to finance every thing and worry about paying it back later. If that is you and you are looking at your financial picture it may look like later is now here. Recognizing the problem is the first step in solving the problem. If this is you than I suggest that you put your credit card up. Take them out of your purse or wallet now. Put them in a secure place. By doing this if you go shopping and want to purchase something you have to pay cash for it. If you don’t have the cash you can’t purchase the item. If you feel like you can’t live without using your credit card than put it in a freezer bag and put it in your freezer. When you put it in the freezer it will take the magnetic strip on the back of your credit card about 3-4 days to thaw out. Hopefully by then your compulsive purchase will have left your system.

For next month think about how you can reduce your debt. Think of areas where you can cut back on, i.e. eating out, entertainment things of that nature. While you are thinking about that I want you to figure out how to save $1,000.00 for an emergency fund. If you are paid on an hourly basis maybe you could work overtime. Have a rummage sale and sell the items you don’t use any more. Get a part time job. Most important if you are married both of you must be in agreement to recognize the problem, set up a budget, and to payoff your debt.

I don’t want to be a fear monger but I want to warn you that an economic storm is brewing on the horizon and it will be a storm like no other storm before it. We must prepare for it and this is the purpose of getting our financial house in order. I suggest you read a book by Larry Bates entitled The New Economic Disorder. Read this book and decide for your self if there is a storm brewing on the horizon.

Credit Saving Tip:
This time instead of doing a money saving tip I would like to do what I call a “Credit Saving Tip.” With the economy and the job loss being so bad I thought I would tell you how to check your credit reports. In these bad economic times fraud and identity theft is on the rise and if you check your credit report once a year to see if somebody is opening credit related things in your name this is one way to catch fraud or identity theft.. It is a good way to catch errors or something you forgot to pay and it got put on your credit report.

Under Federal Law you are entitled to one free copy of your credit report annually from all three credit reporting agencies.

From the Internet:
www.annualcreditreport.com

By Phone:
877-322-8228

Either way you can obtain a free copy annually from each of the three main credit reporting agencies. The three main credit reporting agencies are as follows:

EQUIFAX
EXPERIAN
Trans Union

Once you get your credit report check it over to make sure the information listed on it is accurate. If you find something inaccurate then report it to the credit reporting agency right a way. They will investigate it and let you know their findings and how they will correct the problem.

I should note that they will offer you your FICO Sore and that is not free at this time through this internet address or phone number. It use to be $7.95. However, there are internet sites that you can get a free copy of your FICO Score but I am not familiar with them or how safe these sites are. I would suggest to you that you go to www.clarkhoward.com and his website will give you links to check your FICO Score.

Your FICO Score is how your credit rating is determined. They take your amount of credit you have and subtract the amount debt you have against it and assign a credit score. That is why when you payoff a credit card you do not want to close out that account. If you do it can hurt your FICO Score. I suggest once you pay off your credit card you use it once every six months to keep it active. You could fill up your car with gas and pay for it with your paid off credit card and then pay the balance off in full right a way.

I should tell you what a FICO Score is. FICO stands for Fair Isaac Company, the company that created this credit score. Your FICO Score tells a prospective creditor your ability or potential risk for repayment of a loan or a line of credit.

FICO SCORE (from www.answers.com –WIKI Answers)
A FICO score is a numerical evaluation of your creditworthiness as a borrower. If you take a loan (such as a mortgage) out, this score helps the lender evaluate your ability and willingness to pay back that loan.
The FICO score attempts to determine the likelihood you will repay your bills based on a number of factors. Your FICO scores are computed by credit bureas based on your history. The three major credit reporting bureas are Experian, Trans Union, and Equifax, each of which computes a score based on a unique model.
While credit bureaus do not reveal how exactly the FICO score is computed (which has been ruled acceptable by the Federal Trade Commission), the following factors are known to be among the determinants of your FICO score:
• Amount of Credit Used vs. Amount of Credit Available (e.g., have you maxed out several credit cards?)
• Late Payments on Credit Cards
• Employment history
• Length of Time at Current Residence
• Negative Credit Events (e.g., bankruptcies, collection agencies, etc.)
Note that never having had a credit card or loan isn't necessarily good for your credit score, as you will simply have no credit history on which to judge your FICO score.

Money Saving Tip:
Drew’s Homemade Baby Wipes

½ roll paper towel (cut in half)
1/8 to1/4 cup baby shampoo
1/8/ to ¼ cup baby oil
2 cups luke warm water
1 plastic container

Mix ingredients together. Cut the roll of paper towel in half, remove the cardboard insert from the paper towels and place in the container. Pour mixture over the paper towels.

Ms. Drew told me that she always used Bounty or Brawny for the thickness and one roll makes two batches, therefore, it really is economical. The rest of the ingredients you can purchase at the Dollar Store. Her children have allergies and she has been using these wipes for almost 17 years.

Money Saving Tip:
Powdered Dishwasher Soap

½ cup of 20 mule team borax
½ cup of Arm & Hammer Super Washing Soda
¼ cup Kosher Salt
¼ cup Citric Acid

Put ingredients in covered air tight container and shake up untill mixed well.
1 tblsp per load.

For Rinse Agent:
Fill rinse agent compartment with white vinegar.

www.debtfreeadventure.com

Money Saving Tip:
Powdered laundry detergent

1 cup grated Fels Naptha Laundry Bar Soap
½ cup Arm & Hammer Super Washing Soda
1/2cup 20 Mule Team Borax

Mix and store in airtight container or bag. For light loads use 2 tablespoons. For heavy loads use 3 tablespoons.

To make a large batch, grate six bars of Fels Naptha Laundry Bar Soap, then add 3 cups of Super Washing Soda and 3 cups of 20 Mule Team Borax. Mix well and store in a covered container.

I have been using this Powdered Laundry Soap for a few weeks now and I don’t use any fabric softener, bleach, or dryer sheets. You can get all three of the ingredients at Meijers.
These items are found in the laundry soap aisle. Just a side note, I found a rotary grater at Meijers for $9.99.

If you cannot find them you can go to www.soapsgonebuy.com or call (888)858-7627.

I would like to ask you a personal question. If you were to die today do you know where you would go? Would you have everlasting life or would you have death and condemned to Hell. This is a choice that you make. Do you have a personal relationship with our Lord and Savior Jesus Christ? It says in Romans Chapter 6 Verse 23 “For the wages of sin is death: but the gift of God is eternal life through Jesus Christ our Lord.” If you desire God, and you believe with all your heart, your sins are forgiven. “For God so loved the world that he gave his only begotten Son, that whosoever believeth in him should not perish, but have everlasting life” (John 3:16). What is your relationship my friend? Do you have one with our Lord? Would you like one with our Lord? If you do all you have to do is say a prayer to our Lord Jesus Christ. Invite Him into your life, confess that you are a sinner and ask him to forgive you of your sins. You must understand that if you do this you must live His way and not the world’s way.

Heavenly Father
I come to you today to surrender my life to you. I ask that you hear me as I recognize that I am a sinner and I want you to forgive me for my sins. I choose today to follow you with all my heart. I ask that you guide me and help me along this new path of my life. Amen.

If you prayed this prayer it is not religion. It is the person Jesus. Trust him. Love him. Follow him. As you believe this good news your sins are forgiven and God will change your life. Find some place to get alone and thank God for being your Savior. I would like to hear from you so I can get in touch with you. I urge to get a King James Bible and start reading it. I urge you to find a good Bible teaching church such as, Faith Baptist Church in Saginaw Michigan. Make sure where ever you attend church that they preach the sermons from the Bible and you can take your Bible to follow along with the Pastor as he reads from it.