Matt Bell's Blog, page 15

Profitable Ideas: The Hidden Costs of a Home, Investing in Quality-of-Life, and More

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

Hidden costs of owning a home are surging for Americans (CNN). One of the most common mistakes I see on budgets is having nothing or not enough allocated to home maintenance and repairs. Today, that’s an especially important line item.

Do you have a “deeper yes”? (The Best Interest). Knowing what matters most will do wonders in helping you know what to say no to.

5 critical skills they didn’t teach you in college (Fast Company). Common denominators among those who get the job and advance.

How to reduce your risk when using personal-finance apps (Wall Street Journal). We live in a “there’s an app for that” world. Here’s how to live in that world safely.

Considering time and quality of life (Meaningful Money). Where do you draw the line between wisely saving for the future and spending the money to make memories with loved ones now? It’s a question worth asking, regularly.

We live in a consumerist society, here’s what you need to know (The Woke Salaryman). How often do you use things until they fall apart?

Does the brand of gasoline really matter? (Clark Howard). This is one of those cases where you can be penny wise and pound foolish.

Is maximizing credit card rewards worth it? (Of Dollars and Data). It can be profitable, but it’s not for everyone.

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.

The Single Most Powerful Antidote to Our Consumer Culture

Every day of our lives, we are the unwitting recipients of countless messages designed to foster discontentment. And they work really well, convincing us that we need something more in order to be happy. In order to be worthy of love or respect.

According to one study, more than 60 percent of us always have something in mind that we look forward to buying. That’s what makes the following words seem so out of synch with our daily experience.

But godliness with contentment is great gain. For we brought nothing into the world, and we can take nothing out of it. But if we have food and clothing, we will be content with that. – 1 Timothy 6:6-8

What? Content with only food and clothing? Why, that’s downright un-American! Or so it seems. But do you know what else it is? It’s liberating.

Driving toward contentment

A number of years ago, my wife and I decided to give away one of our cars. It needed a cost prohibitive repair, so we gave it to a ministry that fixes cars and then gives them to needy families. The car had 165,000 miles on it and a number of dents. It had been hit a couple of times while parked in our former neighborhood in Chicago. A tree branch even fell on it once, denting the roof. Because of its high mileage, we never bothered to fix the dents.

When I was working in corporate America, I would drive into the parking lot of my office building and pass lots of new cars. Driving that old car gave me frequent opportunities to practice contentment, and there were definitely days when I needed extra practice!

We could all use a little more practice giving thanks, especially when gratitude isn’t the first emotion on our heart or in our mind.

Rejoice always, pray continually, give thanks in all circumstances; for this is God’s will for you in Christ Jesus. – 1 Thessalonians 5:16-18

What helped me was reminding myself why we were avoiding the temptation to buy a nicer car. Having a paid-off car gave us the financial freedom to build savings targeted toward being able to leave my corporate job one day to write and speak full-time—something my wife and I both felt was the direction God was leading us. The more I dwelled on that bigger purpose, the more thankful I felt.

In the process, I saw firsthand that gratitude drives contentment and serves as a powerful antidote to our culture’s constant encouragement to want something more.

Instead of always having something in mind that we look forward to buying, what if we always had something in mind that we were thankful for?

What are you thankful for? And if you really want to challenge yourself, think of something you own that you’re eager to replace. Try to find something about that to be thankful for. What comes to mind? Let me know by leaving a comment below.

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Profitable Ideas: Keep Your Number to Yourself, Less Stuff Rules, and More

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

When companies ask for your Social Security number, try saying no (Wall Street Journal). Organizations are free to ask, but you’re free to say no.

The global loss of the u-shaped curve of happiness (After Babel). Lengthy article, but on an important topic. While it doesn’t offer an explanation for why so many of today’s young people are so unhappy, other research suggests that social media is at least partly to blame.

16 frugal habits to save big bucks—when you’ve already tried everything else (Wealthy Nickel). There’s bound to be an idea here that you can put to use.

How to stay motivated at work when you’re not receiving the recognition you deserve (Fast Company). Depending on your boss, you may have to find your own reasons to celebrate a job well done. See also, Finding meaning in our work. 

Raising money-savvy kids (Creative Planning). Two financial advisors draw from the experiences of raising their own kids. 

10 helpful rules to own less stuff (Becoming Minimalist). You’ve had the spring yard sale. Here’s how to keep the space you just freed up.

I didn’t think I needed an estate plan until this happened (Kiplinger). Are your documents in order?

Is it wrong to want more money? (Relevant Magazine). Looking at the cultural quest for more through a filter of faith.

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 NOT to Invest

I overheard a conversation about investing recently that made me a little crazy. I heard several perspectives that I completely disagreed with, ways of approaching investing that I think can be far more harmful to a person’s portfolio and peace of mind than helpful.

Since I didn’t feel like I could insert myself into the conversation, I saved my rant advice for this post.

A little background

I’ve been studying the principles of wise money management for more than 25 years. However, for much of that time, out of the many topics that exist within personal finance, I would have been the first to admit that investing was my weakest link.

All of that changed in 2012 when I joined the staff of Sound Mind Investing (SMI), a Christian company that’s been publishing an investment newsletter for over 30 years. I’ve learned a ton about investing since then, and it is mostly those ideas that made me so concerned about what I overheard.

There were four main issues.

1 – Short-term thinking

I heard several comments about what certain stocks were doing on that particular day. However, the daily movements of the market or a particular stock or fund are, for the most part, nothing more than noise. Historically, the market has been positive just slightly better than half of the individual days that the market has been open. In other words, on any given day, you have about a 50-50 chance of making money. But the longer your holding period, the more the odds move in your favor.

Bottom line: Don’t get wrapped up in the market’s daily fluctuations; think long-term.

2 – Market timing

I heard lots of talk about selling certain stocks at their peak. But how will they know when a stock is at its peak? Or when a stock on their buying list is at its low?

Think about the market overall. In any given year, it’ll typically have lots of ups and downs on its way to its year-end result. Which one of the peaks would turn out to be the market’s high for that year? Which one of its valleys would turn out to be its low? It’s impossible to know.

Fortunately, you don’t have to. SMI once did a study that compared the results of two investors we called Lucky Lew and Steady Eddy. Both invested $3,000 each year for 30 years. Lucky Lew miraculously invested his full $3,000 at each year’s lowest point. Steady Eddy just invested $250 at the same time each month, regardless of what the market was doing.

At the end of 30 years, Lucky Lew’s average annual return had outperformed Steady Eddy’s by just 0.7%—10.1% to 9.4%. And keep in mind, Lucky Lew’s approach is impossible. Literally. But Steady Eddy’s approach is one anyone can follow.

3 – Not considering/acknowledging the downside

I didn’t hear any discussion about what they would do when the market heads south, as it will. All I heard was talk about the upside—how this stock or that is destined to grow.

But someday the market will turn. As surely as nighttime follows daytime, bear markets follow bull markets.

And it’s a well-documented phenomenon that losses feel more painful than gains feel good. That may explain why a lot fewer people had money in the market by the end of the 2007-2009 bear market than at the beginning. Fear and pain drove them out.

To be sure, the losses were brutal. Between Oct. 2007 and March 2009, the market fell 50%.

Some people couldn’t take it, so they sold, thereby locking in their losses. And some of those folks never got back in. According to Gallup, 65% of adults in the U.S. owned stock before the Great Recession. By the time it ended, just 55% owned stock. Those who lingered on the sidelines missed out of one of history’s greatest bull markets.

If some of the people who left the stock market had decided in advance about what they would do during the next market downturn, maybe they wouldn’t have missed the incredible recovery that followed.

What can you do? Answer this question: “What will I/we do when the next bear market hits?” Make a decision (if you’re married, make sure your spouse is in on the decision) and write it down. Then, when the next bear market arrives, read what you wrote and follow your own instructions. Ideally, your answer is that you will continue to follow your investment strategy, which means you’re following a strategy you can live with in good times and bad. Speaking of which…

4 – Not having an objective process in place

For the most part, what I heard in the way of rationale for choosing specific investments were opinions. If subjective criteria drive the decision to invest in a company, how in the world will you know if and when to sell?

It’s important to follow an objective investment strategy and understand how it is likely to perform under various market conditions. My sense/fear is that many people with money invested in the market are not investing this way.

Do you have a strategy you trust? Are you following an objective, proven process or are you picking investments based on subjective criteria? If you’re using a reliable process, you should be fine sticking with it when things get rough. But if you’re going on gut feel or a hot tip from a friend, what will you do when times get tough?

Investing can be a humbling activity. None of use should ever get too confident in our abilities or complacent about how the market is performing. Watch out especially for the four issues I just highlighted.

If you have kids at home, getting them started with investing would be a wonderful gift to them. I devote a chapter to that topic in Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management.

Profitable Ideas: Happy Money, A Lifestyle of Generosity, and More

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

How much happiness can your salary buy? Researchers can’t agree (Wall Street Journal). “Money matters for happiness, but not enormously.”

“No-buy pledge” catches on with TikTokers. Here’s what to know and how to start (CBS Money Watch). It’s a great way to become more aware of your spending habits and learn to spend more intentionally. See also, Radical ways to accomplish your financial goals 

10-year-old’s before-school side hustle brings in thousands of dollars (CNBC). The entrepreneurial instinct runs strong in this one.

Before your teen starts a summer job, have ‘the talk’ about taxes (MarketWatch). A rude awakening to the world of adulting.

The smartphone generation isn’t all right (Acton Institute). Are our kids living “a phone-based existence”? Are we?

How U.S. college students feel about their finances (Visual Capitalist). The case for teaching your kids about money, and avoiding college debt. (Have you picked up a copy of Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management?)

Why Clark is prepared to break his ‘no debit cards’ rule (Clark Howard). Even with new fees, I think the safety of credit cards makes them the better choice.

Where to stash your cash (Morningstar). For savers, interest rates are still favorable. Here’s how to choose among several good options.

Cultivating a lifestyle of generosity in children (Generosity Now). I had the pleasure of being a guest on this podcast, talking about a topic that’s near and dear to my heart. See also, The impact of teaching generosity on a child’s mental and emotional well-being (I Like Giving).

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.

Raising the Next Generation of Wise Money Managers

It was a privilege to record an episode of the Generosity Now podcast recently, talking about a topic of importance to all parents—raising our kids with biblical financial perspectives and practices.

Please listen to the conversation (and pass this along to any parents you know!).

Our conversation was based on my latest book, Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management.

Profitable Ideas: Money Touches Everything, The Science of Vacationing Well, and More

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

Money pervades everything (The Guardian). “Arguments about money are rarely about money.”

The dos and don’ts of lending money (NPR). When friends or family ask for financial help, beware the many landmines. 

Stocks up, gold down in Americans’ best investment ratings (Gallup). Stocks are gaining favor, but more people still see real estate as the best investment. See also, Is Your Home an Investment? 

Why it pays to be a double major in college (Wall Street Journal). “Just as a diversified financial portfolio can help investors withstand shocks in the financial market, ‘that seems to be the case with human capital as well.’”

Exploring the wisdom of the Tightwad Gazette (Due). Lots of good tips here.

Even a fender bender can now cost thousands of dollars to repair (MarketWatch). With so much tech in today’s cars, fixing even seemingly minor damage can generate quite a bill.

How to have a great vacation: What science tells us (Wall Street Journal). Just in time for your summer trip planning.

The levers that money can’t pull (More to That). A long read, but filled with helpful insights about the role that money can play in living a fulfilling life.

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.

Money and Marriage: Keeping No Financial Secrets

A divorce attorney once told me that when money is the issue that comes between couples, as it often is, the most common problem is that the spouses were living separate financial lives. Often, unbeknownst to the other, one was taking their relationship to the edge of a financial cliff, usually by racking up a lot of debt. By the time the other finally found out, it was too late. Not only were they in deep financial trouble, but all trust and respect had been lost as well.

That’s one reason why I recommend full financial disclosure before marriage and complete ongoing financial transparency after marriage. As you move through life and toward the accomplishment of your financial goals, it’s so important to work together, with financial openness and teamwork.

One in money, one in marriage

In the Bible’s classic teaching on love, the apostle Paul said, “love rejoices in the truth.” However, according to several studies, from 30 to 50 percent of all married people believe it’s okay to keep financial secrets from their spouse. Not exactly a good idea for building a strong marriage!

A far better approach is to set up your financial life in a way that fosters transparency, like combining checking and savings accounts.

Also, make sure all of your household’s income and expenses are recorded in a place where both of you can see all of that information. Whether you track your finances on a sheet of paper, with an Excel spreadsheet, or through an online tool like Quicken Simplifi, make sure both of you have easy access to the information and that you review the information together regularly.

Set your house in order

A related tool that I strongly recommend is Set Your House In Order from the ministry of Compass—Finances God’s Way. It’s one part Bible study and one part practical guidance for organizing all of your financial documents and putting them in one place for the benefit of your spouse should something happen to you.

I went through this study a few years ago with a friend. It prompted some great time in God’s Word and helpful financial accountability. We both feel that we will have made life so much easier for our spouses should they one day have to manage the finances of our respective households without us.

What about buying gifts?

Whenever I teach a marriage workshop and encourage couples to set up their finances with complete transparency, someone usually asks, “If we combine our finances, how can we surprise each other with gifts?”

My recommendation is to set up multiple gift budgets, including one for the gifts you’ll buy for your spouse throughout the year, another for the gifts he or she will buy for you, and another for the gifts you as a couple will buy for others. If you have kids, set up a fourth gift budget.

When you want to buy your spouse a gift, you could withdraw the budgeted amount from an ATM and buy the gift with cash. Then wait until after you give the gift to categorize the expense.

You could also use the budgeted amount to buy a gift card and then make your purchase with that card. The gift card expense gets posted to your budget as a gift expense, but your spouse won’t know where you bought their gift.

What about you? What do you do in your marriage to foster financial oneness? And if you use joint checking and savings accounts, how do you surprise each other with gifts?

Are you engaged or newly married, or do you know someone who is? Why not buy a copy of Money & Marriage: A Complete Guide for Engaged and Newly Married Couples?

Profitable Ideas: The Top Skill of the Future, Subtle Signs of ID Theft, and More

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

The most important skill of the future is being ‘indistractable’ (Nir and Far). It’ll help in our careers and in every important relationship.

Seinfeld on when money became everything (A Wealth of Common Sense). A lot longer ago, Jesus identified money as His chief rival for our hearts. Still, it’s eye-opening to see how people’s values are changing.

How (and why) to talk money at your family dinner table (Kiplinger). Your kids are a lot more interested than you may assume.

Negotiate a higher salary by avoiding these 5 mistakes (MoneyNing). Not negotiating is the biggest mistake of all.

Visualizing the tax burden of every U.S. state (Visual Capitalist). When you combine income, property, and sales taxes, how does your state stack up?

8 subtle signs your identity has been stolen (Lifehacker). Some signs of ID theft are obvious. Here’s a helpful list of not-so-obvious ones to watch out for.

6 home expenses you have to budget for (beyond your mortgage) (Clark Howard). By far, the biggest mistake I see on people’s budgets is not allocating money (or not enough money) for home and vehicle maintenance and repairs.

Tell the college student in your life to look out for this scam (Kiplinger). If you have a child heading to college in the fall, be sure to let them know about this.

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.

The Importance of Being Known—Financially and Otherwise

Like many of you, I was shocked by the suicides of fashion designer Kate Spade and TV personality Anthony Bourdain that both happened six years ago next month. On one level, their deaths showed what a fallacy it is that fame and fortune assure happiness. I couldn’t help but recall this quote from actor Jim Carrey:

I think everybody should get rich and famous and do everything they ever dreamed of so they can see that it’s not the answer.

On another level, they are a stark reminder that depression is an equal opportunity tormentor. It doesn’t care what type of car you drive or where you go on vacation. Faith certainly helps provide hope, but it doesn’t make you immune from depression.

I don’t know what specific issues haunted Spade or Bourdain. But I do know that money woes are common sources of deep, sometimes debilitating discouragement.

As I’ve written before, when I woke up to the reality of my financial mess when I was in my mid 20s, I struggled through a tough season of depression. I looked forward to the nighttime when I could sleep and I dreaded the sight of sunlight in the morning, knowing I’d have to face the reality of my situation for another long day.

It wasn’t the first time I was engulfed by a thick fog of depression, nor was it the last.

Well-meaning friends who’ve never experienced it tend to offer kind yet unhelpful advice. Because May is mental health awareness month, I’d like to suggest the following for any readers who are feeling the weight of a heavy burden, whether it’s about money or something else.

First, whatever you’re going through, you’re not the only one. Shortly after becoming a Christian and early in my nearly five-year journey out of debt, I began doing volunteer work with a stewardship ministry. It was eye-opening to see how many people have financial trouble. I really thought my situation was unique.

I looked around and saw people driving nice cars, wearing nice clothes, and looking like they’re doing just fine. But I soon discovered that a lot of those people are not doing fine at all. That isn’t an indictment against them; it’s just a reminder that if you feel like you’re on the outside looking in, you’re not.

Second, help is available. There are some fantastic ministries available with well-trained, compassionate people who are eager for the opportunity to be a help and encouragement to you. Maybe your local church has a stewardship ministry. Start there. (See if there’s a local Good $ense ministry by contacting them directly). Or, some national ministries that offer assistance include:

CompassCrown Financial Ministries

The ministries will help you with the practical, as well as the biblical principles behind their advice.

Third, cultivate the lost art of friendship. We all need someone to talk to, a safe friend we can tell the truth to—and not just about financial concerns. If you’re married, hopefully your spouse is one such person. Mine certainly is. But men also need a good guy friend or two. Women need another woman or two. Men are notoriously bad at the whole friendship thing.

Interestingly, while writing this, one of my best friends called. We cultivated a friendship through a seven-year small group when I lived in Chicago. Five of us would meet on Friday nights, run together, study the Bible, and just hang out. We laughed together and cried together. But we’re scattered around the country now. We connect on Zoom about every three weeks and get together about once a year. It’s always a rich and meaningful time. But we certainly aren’t doing life together anymore.

Since moving to Louisville, I’m making progress in finding my group of guys by being involved in two men’s groups and serving as a deacon. Between work, the fast pace of family life with three kids, and what often feels like countless household responsibilities, it’s easy to believe there just isn’t time. But it’s important, so I’ve been carving out time to meet friends for lunch and I have a thriving Friday morning golf “ministry.”

One insight to emerge from the tragic deaths of Kate Spade and Anthony Bourdain is that they were lonely. Being surrounded by people isn’t enough. We all need to be known by a close friend or two.

Leading or joining a church small group would be a natural place to start.

Fourth, find ways to help others. Looking back, I’m amazed that the first stewardship ministry I applied to volunteer with accepted me. I was a new Christian and just starting the process of getting out of debt. I guess they needed help. I’m so thankful they let me serve.

Being part of that ministry taught me a ton about money—practical things, and biblical principles. By working with people who had financial issues, I saw firsthand that lots of people struggle with money, including people you’d never suspect struggle with money. Teaching the biblical principles and practical steps I was learning helped reinforce those ideas in my own life. Plus, it was deeply satisfying work, which showed me more of God’s purpose in my journey.

There’s something very healthy about getting the focus off ourselves and helping others. Since I had made some big mistakes with money, I could relate to the people who came in for help, which I think helped me build trust. It was all a very positive cycle of learning, trying to apply what I was learning, taking all of that and passing it along to others, learning more, trying to apply more, passing it along, and around it went.

You could do the same thing. Join a local stewardship ministry team if one is available where you live. Or start a blog, sharing your journey—all that you’re learning, struggling with and applying, and the progress and setbacks along the way. I’ll bet a lot of people will be helped and encouraged by it. I know it will help you as well.

Have you experienced any significant financial struggles that have left you discouraged or even depressed? What steps did you take that others might benefit from hearing about?