Matt Bell's Blog, page 13

Profitable Ideas: Buying a House for Your Kids, The Credit Score Date Night, and More

Weekly list of curated personal finance articles from around the web.

Why your parents should buy you a house (Sherwood). I’m not sure I agree with all of this, but it’s an interesting thought exercise.

How to ensure financial misery (The Best Interest). And by the same token, doing the opposite of all this should help you do the whole money thing well.

Over-involved in your college kid’s life? It’s understandable but not helpful, experts say (CNN). A big part of helping our kids launch well is giving them the space to find their own way. 

Those online accounts you no longer use? For your own safety, get rid of them (Wall Street Journal). “The more online accounts you have, the bigger the target on your back—and you may have more accounts than you realize.”

The power of super citizens (The Garden of Forking Paths). It’s not a substitute for giving financially, but wow, what a difference giving of your time can make.

Hey baby, can I get your number? And by that, I mean your credit score (Wall Street Journal). “I feel like we’re closer because we had that conversation.”

Leaving screens behind: a review of “The Opt-Out Family” (Institute for Family Studies). Managing screen time is every parent’s battle. Here are some suggestions.

Putting pets in your will is not longer just for eccentric billionaires (Wall Street Journal). Have you named a guardian for your Mexican red-legged tarantula? See also, Alain Delon’s family refuse to put down pet dog the actor wanted to be buried with (CNN).

To weigh in on any of the above, just leave a comment below. And if you haven’t done so already, sign up for a free subscription to this blog.

How Serious Are You?

When Hal and Dee were in their mid-fifties, they found themselves with $50,000 of credit card and tax debt. That would have been bad enough, but they had been there before, which only made it worse. They had been riding a financial—not to mention emotional, spiritual, and marital—roller coaster for years.

Repeating history

Early in their marriage, they got behind on the payments for their first house. They had just become Christians, and Hal especially thought somehow, some way, God would swoop in and bail them out. They had faith, but took no action. They lost that house to foreclosure.

Many years later, there they were again, right back in debt. Hal had been running a business that remodeled homes and built luxury spec homes. His last project didn’t go well. They still had a strong faith, only this time they realized they needed to take some strong action as well.

Charting a new course

Fueled by a commitment to pay back all of their debt, and at the urging of some close friends, they closed Hal’s business, sold their home, put most of their possessions in storage, and moved into a basement apartment in the home of some friends.

Take a minute and re-read that last sentence. Can you imagine doing what they did? It brings to mind the words from Proverbs 3:27-28.

Do not withhold good from those who deserve it, when it is in your power to act. Do not say to your neighbor, ‘Come back later; I’ll give it tomorrow’—when you now have it with you”.

The profit on Hal and Dee’s home allowed them to pay off much of their debt. Living virtually rent-free for three years enabled them to pay off the rest of their debt and save for a down payment on the townhouse where they now live.

None of that was easy. But those tough decisions marked a very important turning point in their marriage, their finances, and their faith.

Hal says, “We don’t know what lies ahead. But we know that God’s hand is on us. We know that we can trust him no matter what. Through this whole process—downsizing, redoing our lives—we can look back and see where God’s hand was every step of the way. We can count on the fact that God loves us, his grace is sufficient, and his timing is perfect.”

Crazy thoughts

Are you struggling with your finances? What is “in your power to act”? What crazy, radical, bone-rearranging action do you sense God calling you to take? Sell your house? Take in a roommate? Go from a two-car household to one-car household? Take on a part-time job?

It may be scary and it may be uncomfortable. But it may be just the step of faith you need to take in order to begin moving in a better direction.

Do you know someone who could use a financial reset? Why not email them a link to this article along with some words of encouragement?

Profitable Ideas: Yet Another (Big) Data Breach, Beware the Wealth Effect, and More

Weekly list of curated personal finance articles from around the web.

Hackers may have stolen the Social Security numbers of every American. Here’s how to protect yourself (LA Times). A security freeze at the three national credit bureaus is your strongest line of defense.

So much about real estate commissions just changed. Here’s what to know. (Wall Street Journal). Going forward, agent fees are subject to negotiation.

Online sports betting hurts consumers (Slow Boring). I’ve said it before and I’ll say it again: I’m not a fan of sports betting.

What is the wealth effect? (Physician on Fire). The psychology of money is endlessly fascinating.

Is identity protection worth buying from my insurance? (Clark Howard). Better to put some up-front protections in place.

Why worry? (Sound Mind Investing, via FaithFi). The market threw a little fit last week. What was your response?

What to do when markets drop (Vanguard). Speaking of the market’s fit…

Credit card autopay can benefit consumers (a little) (Wall Street Journal). When a nudge is not enough.

Study: it only takes seven minutes on TikTok to ruin your self-esteem (Relevant Magazine). Social media is today’s primary conduit of consumerist messages. Parents, have you established rules around screen time and social media? Need help? Pick up a copy of Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management.

To weigh in on any of the above, just leave a comment below. And if you haven’t done so already, sign up for a free subscription to this blog.

To Get Out of Debt Faster, Fix Your Payments

Finances seem to always top the list of what people are stressed about, and debt is usually the top financial stressor. If you have credit card debt, there’s a remarkably simple step you can take to greatly speed up the process of getting out from under that debt. Just fix your payments.

Let’s say you have a $1,000 balance and you commit to going no further into debt. Let’s also say you pay the minimum amount that the credit card company requires each month.

If you do that, your required monthly payment will actually decrease a little bit each month. This month, it may be $40. Next month, it might be $39, and then $38.03, and on and on.

Isn’t that incredibly kind of your credit card company? I mean, who else that you owe money to asks for less each month?

Beware The Declining Minimum Payment

Of course, it isn’t kindness at all. It’s math. Your monthly payment is based on a percentage of your balance. If your balance is going down a little each month, then your required minimum payment will go down a little each month, too.

Paying this declining minimum payment each month is what will keep you in debt for approximately… forever!

In our $1,000 balance example, assuming your credit card charges 18% interest and requires a minimum monthly payment of 4% of the balance, paying the declining minimum payment would take you nearly six years to pay off that debt. And it would cost you nearly $475 in interest.

Charge $1,000 worth of stuff, pay $1,475 for it? Not a good idea.

Put In The Fix

Here’s a better plan. Fix your payments. If you can afford $40 this month, you can probably afford $40 next month. Paying this fixed amount will get you out of debt way faster.

Sticking with our example of a $1,000 credit card balance, if you fix your payments at $40 per month, you’ll go from a nearly six-year payoff plan down to a less than three-year payoff plan. Just by continuing to pay the amount that you paid last month, you’ll wipe out more than three years of credit card payments. And you’ll pay about $200 less in interest.

One of the reasons it’s easy to get in the habit of paying the declining minimum each month is that the required payment goes down by such a small amount each month. It’s easy to miss the fact that declined.

So, write down this month’s required minimum. Then, next month, when your credit card company showers you with kindness and asks for a little less, tell them, “Thanks, but no thanks. I’d like to be out of debt before I have grandkids, so I’m sending you what I sent you last month.”

Of course, you don’t need to include a note. Just send them the money — at very least, the same amount you sent last month. Even better if you can add some money to that fixed minimum.

The Best Debt Payoff Calculators

To compare the payoff time frame and interest payments of making declining minimum payments versus fixed payments, use this Bankrate.com calculator. To see how long it’ll take to get out from under several debts, use the Accelerated Debt Payoff Calculator on my web site. It assumes fixed payments and allows you to run what-if scenarios based on making more than the fixed minimum payments each month.

Feeling stressed about debt? Commit to getting debt-free. Fixing your payments is a very simple step that’ll greatly speed up the process.

If you’d like to help your kids avoid future problems with debt, pick up a copy of my latest book, Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management. There’s a chapter devoted to helping your kids learn what they need to know about credit and debt before they leave home.

Who else do you know who would benefit from this article? Why not send them a link? And if you haven’t done so already, sign up for a free subscription to this blog by clicking here. Twice a week, you’ll receive ideas and encouragement for using money well.

Profitable Ideas: Normal Market Behavior, Locking Down Your Data, and More

Weekly list of curated personal finance articles from around the web.

This is normal (A Wealth of Common Sense). Why the market’s recent tumble isn’t necessarily reason for concern.

Criminals are targeting students with these common back-to-school scams. Here’s what to watch for. (CBS Money Watch). Teach your kids not to let their digital guard down.

This midwestern city with a famous name is suddenly a housing hot spot—and it offers free college tuition (realtor.com). This is a stunningly generous benefit for residents of my hometown (I’m pretty sure this scholarship wasn’t available when my family lived there!)

Wait, my homeowner’s insurance limits what? (Kiplinger). It’s important to know what your policy covers before you need it.

Our data isn’t safe. Resist giving it up whenever you can. (The Washington Post). So many businesses, doctors offices, and other organizations ask for information they don’t really need. 

Focus on these few, important parts of your auto insurance (Flow Financial Planning). There may be too much emphasis on how to save money, and not enough on making sure you’re adequately protected.

The well-off people who can’t spend money (The Atlantic, vis MSN). A lot of people probably wish they had this problem, but it’s a problem nonetheless. 

Forget your resume and cover letter. This is what actually gets you a job (Fast Company). Being well qualified is table stakes; but it’ll take more than that to tilt a hiring decision in your favor. 

To weigh in on any of the above, just leave a comment below. And if you haven’t done so already, sign up for a free subscription to this blog.

Finding Meaning In Our Work

Whatever you do, work heartily, as for the Lord and not for men, knowing that from the Lord you will receive the inheritance as your reward. You are serving the Lord Christ. – Colossians 3:23-24

In the opening scene from the movie About Schmidt, Warren Schmidt, played by Jack Nicholson, is staring at a clock on the wall of his office, counting down the minutes until his final day at work will be over and his retirement will begin. He has spent his career working as an actuary for an insurance company where he rose to the position of assistant vice-president.

At the end of his last day, Schmidt sits in the midst of his boxed belongings, watching the clock, waiting until 5:00 p.m. when the workday and his career will be over.

At a retirement dinner that evening a long-time colleague toasts him, telling Schmidt he should feel “rich” to have devoted his life to something so meaningful. The look on Schmidt’s face says he’s not so sure. He once dreamed of having his own business, but instead chose the security of a steady paycheck.

A universal longing

Shortly after Schmidt’s retirement, his wife dies. The sudden changes—retirement, the loss of his wife of over 40 years—leave Schmidt wondering even more about the meaning of his life.

“I know we’re all pretty small in the big scheme of things,” he writes to Ndugu, a six-year-old Tanzanian orphan he sponsors in response to a television advertisement. “And I suppose the most you can hope for is to make some kind of difference, but what kind of difference have I made? What in the world is better because of me?”

Our culture would have us believe life is about competition. It’s a quest for more — more than we have now and more than others have. But as Nicholson’s character expresses so well, it’s contribution we long for, a sense that we’re making a difference with our lives.

The paths to meaningful work

I used to think there were just two types of jobs in the world: meaningful jobs and all the rest. Meaningful jobs were ones in which the work itself helped people or solved some of the world’s great problems. Any other type of work was just a job. I now see it differently.

Some do get the chance to heal people, eradicate diseases, or do other jobs that most would agree are inherently meaningful. However, there are many types of work where great meaning can be found.

For some people, the satisfaction of providing for their family makes their work meaningful. For others, their relationships with co-workers give their work meaning.

For still others, meaning comes from how they use the fruits of their labor. For example, I know a corporate attorney who lives far beneath her means in order to contribute significant time and money to a ministry that keeps kids out of gangs and helps homeless people get a new start.

For some couples, their joint decision to have one parent stay home to focus on their kids adds meaning to both of their lives.

Maybe meaning is an inside job

When we struggle to find meaning in our work, one possible cause is that we think meaning is something our work should bring to us instead of us bringing meaning to our work.

In his book, “Authentic Happiness,” Psychologist Martin Seligman tells the story of a hospital orderly who meticulously selected pictures for the walls of a room where a close friend of Seligman’s lay unconscious. The orderly explained, “I’m responsible for the health of all these patients. Take Mr. Miller here. He hasn’t woken up since they brought him in, but when he does, I want to make sure he sees beautiful things right away.”

This orderly viewed his work as integral to the healing of patients, whereas another might think of his work as menial and meaningless. The first orderly saw his job as a calling; the second simply as a source of income. The tasks are the same, but the perspective is completely different.

How do you view your work? Is the work you do inherently meaningful? Or, is your job a means to some other meaningful end? Or, is it the way you do your work—your interactions with co-workers or customers, or the satisfaction of doing your work well—that brings meaning?

Who else do you know who would benefit from this article?  Please forward a link.  And if you haven’t done so already, you can sign up for a subscription to this blog by clicking here.  Twice a week, you’ll receive ideas and encouragement for using money well.

Profitable Ideas: A Richer Life, Fun Frugality, and More

Weekly list of curated personal finance articles from around the web.

Unlock a richer life by embracing your limits (Becoming Minimalist). Lots of great insights in this post!

They turned 18 and immediately had a credit score of over 700 (Wall Street Journal). I’m a big fan of this idea, as long as we teach our kids how to use credit cards responsibly. See also, Four steps for smart credit card use. 

These homeowners are “hacking” their pools and lawns to earn extra cash (CNN). Airpnl?

Is college still worth it? (A Teachable Moment). College isn’t for everyone, and for those who go, it’s important to understand what will make the biggest difference. 

The sports gambling disaster (Institute for Family Studies). The more we understand about the impact of sports gambling, the more there is to be concerned about. See also, Credit scores fall and bankruptcies climb in states with legal sports gambling (Money).

When ‘saving money’ actually costs us more on purchases (MoneyNing). As I like to say, “It isn’t a deal unless it’s a discount on something you were going to buy anyway.”

$656,000 of frugal things I still love doing (Mr. Money Mustache). This guy is extreme, and having a blast along the way. A fun read.

When should I drop comprehensive and collision coverage? (Clark Howard). Learn “the ten rule” to find out.

To weigh in on any of the above, just leave a comment below. And if you haven’t done so already, sign up for a free subscription to this blog.

Overcoming a Handyman Handicap One Faucet at a Time

In our previous house, when the water from the faucet in our upstairs bathroom went from flowing freely to flowing slowly, at first it was just an annoyance. But when it slowed so much that it could barely rinse a toothbrush, I got worried.

My mind filled with fears of having to replace every last bit of plumbing in our house. I envisioned our plumber’s kids graduating from college courtesy of our life savings.

Such are the mad thoughts to one who is home maintenance challenged.

But then a few semi-rational thoughts made their way into my mind. None of the other faucets were running slowly, so it couldn’t be a whole-house plumbing problem, right?

Grabbing a wrench, and a computer

After ruling out the possibility that one of our kids tampered with the knobs underneath the sink, I turned to the Internet. Still fearing what I might discover, I forced my trembling fingers to type, “fixing one slow faucet.” With several results mentioning “aerator,” a term I thought only applied to poking holes in your yard for reasons that are still a mystery to me, I discovered that unscrewing the tip of the faucet and soaking the parts in vinegar may solve the problem. And to my amazement, it did!

At first, I felt like the worst player on a little league team who sticks his glove in the air out of self-defense and miraculously catches the game-winning fly ball.

But then I felt proud of myself for figuring out the problem and saving the $125 our plumber would have charged. It motivated to learn how to do more around the house myself, and I’m intent on teaching our kids how to fix stuff, too.

Raising handy kids

In order to help our kids grow up to be handy around the house, I’m involving them in the projects I’m learning how to do.

Several years ago, the handle on one of our closet doors stopped working. It turned but wouldn’t move the latch that enabled us to open the door. After a lot of wiggling and some fidgeting with a screwdriver, I got it open. At that point, I taped the latch, and we lived with it like that for a while.

Finally, I decided to buy a new handle. I was about to open the package, read the instructions, and then replace the handle, figuring that if I really applied myself, the job would probably take me about a week and a half. 

But then I stopped myself and decided this would be a good learning opportunity for our then fourteen-year-old. Still, some festering micro-manager tendencies tempted me to first open the package, read the instructions, and then supervise the job. Catching myself again, I handed the unopened package to my son and challenged him to figure it out, offering him $5 for the job.

He had the handle installed in no time, learning a simple handyman skill all people should probably know (although I still don’t) and gaining a lot of confidence and satisfaction in the process. 

You can do it — they can help

More recently, a fairly new toilet of ours stopped working properly. The manufacturer said they would send a part along with instructions on how to remove the defective part from inside the tank and replace it with the new part. I had serious doubts that I could do the job, but after watching the video they sent (about 10 times), I did. And it works!

The more household projects I take on, the more confident I’m getting. I’m not ready to remodel any rooms on my own just yet, but it’s satisfying (and it saves some money) to do relatively simple jobs myself.

There’s plenty of helpful advice available online, including from Home Depot, Lowe’s, the Family Handyman, and This Old House. But you can just type questions into the Internet as well, which is what I did to fix our faucet.

What advice do you have about becoming handier around the house?

To subscribe to this blog, just click here.  Twice a week, you’ll receive ideas and encouragement for using money well.

Profitable Ideas: The Great Wealth Transfer, Saving Early and Often, and More

Weekly list of curated personal finance articles from around the web.

Talking inheritance (FaithFi). Boomers are expected to transfer trillions to their heirs by 2030. If you’re going to leave some money behind, it would be helpful to have a conversation with those who will receive it.

Finance apps can be great for budgeting. But, beware hungry hackers (USA TODAY). Make sure the budgeting app you choose uses a sophisticated encryption methodology and is read-only, meaning you can see your data but you can’t move money around.

Budgeting according to the Bible (Compass—Finances God’s Way, via FaithFi). For some practical guidance on this, see past articles I’ve written in the Planning section of my site.

Should students take a gap year before college? (The College Investor). A good list of the pros and cons.

If you’re going to play the stock market “game,” you have to know the rules (Sound Mind Investing). They aren’t hard and fast “rules,” necessarily — more like “how things work.”

All generations wish they had started saving earlier for retirement (Yahoo Finance). In my book, Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management, I show how your kids could have their retirement largely funded by the time they finish high school!

The dangers of the prosperity gospel (Christian Post). The prosperity gospel has become more subtle, and as a result, it’s easier to fall under its influence. Here are some cautionary signs to look for. 

Knowledge vs. skill (A Wealth of Common Sense). Want to get better at what you do?

To weigh in on any of the above, just leave a comment below. And if you haven’t done so already, sign up for a free subscription to this blog.

Taking Your Finances From Good to Great

“Few people attain great lives, in large part because it’s just so easy to settle for a good life.” – Jim Collins, “Good to Great”

On the first page in the first chapter of his book, “Good to Great,” Jim Collins makes the intriguing statement above. While it’s a business book, focusing on how some companies manage to break from their pack of competitors to achieve remarkable, sustained success, Collins believes the lessons are applicable on a personal level as well.

Let’s take a closer look at how they apply to our use of money.

Something bigger than you

Lots of business leaders revel in the prestige and perks of the corner office. I once worked for a company that had a past CEO who was over the top in his love of power. During a leadership retreat, he walked out on the balcony of his hotel room, looked up, and was dismayed to see one of his direct reports standing on a balcony higher than his. The CEO demanded to be moved to a higher floor.

By contrast, Collins’ first finding is that companies that make the leap from good to great do so with what he calls a Level 5 Leader at the helm.

Level 5 Leaders exhibit a rare mix of extreme personal humility and intense professional will. Whereas leaders at lesser companies (“comparison companies”) tend to put themselves first, Level 5 Leaders “channel their ego needs away from themselves and into the larger goal of building a great company.”

“Level 5 leaders are a study in duality: modest and willful, humble and fearless.”

I know a guy who came home with a new motorcycle one day. No discussion with his wife. No thought as to whether they’re saving enough for their kids’ education.

By contrast, I’ve written before about a friend who married into $50,000 of non-mortgage debt. Every time his wife mentioned “my debt,” he corrected her by saying, “It’s our debt.” That comment has Level 5 Leader written all over it.

There’s a certain selflessness required from anyone who wants to achieve not just success but meaningful success.

As University of Pennsylvania psychologist Martin Seligman, author of “Authentic Happiness,” writes, “A meaningful life is one that joins with something larger than we are—and the larger that something is, the more meaning our lives have.”

Level 5 money managers arrange their finances around goals that are bigger than themselves, such as their faith, their family, and their contribution to the world.

The window and the mirror

Another fascinating finding about Level 5 Leaders has to do with giving credit and taking responsibility.

At comparison companies, when something goes wrong, the leaders typically blame other people or circumstances beyond their control. When something goes right, it’s all because of them.

Level 5 Leaders take the opposite approach. When something goes wrong, they take responsibility. When something goes right, they credit their team, the economy, and even luck.

Collins calls this “the window and the mirror.” Comparison company leaders look out the window when something goes wrong and look in the mirror when something goes right. Level 5 Leaders look out the window when something goes right and look in the mirror when something goes wrong.

Think about your finances. Are you struggling under the weight of too much debt? How did that happen?

I’ve met many people with heavy debt loads who have been through some horrendous circumstances such as divorce, unemployment, or medical issues. Understandably, some blame those circumstances for their financial problems. But some also accept responsibility for not saving enough or not using a budget to guide their spending. It’s been my experience that those are the ones most likely to get and stay out of debt.

Level 5 money managers own their financial challenges and are quick to share the credit for their financial successes.

Taking the long view

One last characteristic of Level 5 leaders is that they are in it for the long run, wanting “to see the company even more successful in the next generation, comfortable with the idea that most people won’t even know that the roots of that success trace back to their efforts.”

“We found that for leaders to make something great, their ambition has to be for the greatness of the work and the company, rather than for themselves.”

If you’re married, what are you doing to make sure your spouse will be just fine financially if something happened to you? Does he or she know the passwords to your household’s online accounts? Have you involved him or her in investment decisions? Do you have enough insurance so that your family wouldn’t face a financial hardship without you?

If you have kids, what are you doing to set them up for greater success than you have achieved? Are you teaching them about hard work and delayed gratification? When they’re on their own, will they be able to navigate life successfully? Or have you made things too easy for them?

Level 5 money managers are all about the long-term success of their families.

Can you learn to be a Level 5 Leader?

Collins believes there are some people who probably never will become Level 5 Leaders. They’re simply too focused on what they can get from other people and from life.

But he suspects that a larger group of people could become Level 5 Leaders. For some, it might take a catalytic event – an illness, for example – to prompt the sort of introspection that often leads to more others-centered behaviors. Another route is putting into practice the key behaviors of all “Good to Great” companies. Change your behavior and it’ll change the way you think. That’ll prompt more Level 5 behavior, which will further enhance the way you think, and around it goes in a very positive cycle.

How are you applying Level 5 Leadership to your finances? How could you do a better job?