Matt Bell's Blog, page 17

Profitable Ideas: College Decision Time, The Most Important Concept in Finance, and More

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

9 ways to help your teen with the college decision (US News). A good guide for what can be a gut-wrenching decision.

Financial flexibility (The Best Interest). Don’t paint yourself into a corner.

Facing mortality, more Americans wrote wills during the pandemic. Now, they’re opting out (USA TODAY). Human nature strikes again. We do what feels urgent. Do you have a will?

IRS: over $1 billion in unclaimed 2020 tax refunds expire soon (Money). Did you forget to file your taxes—for 2020?

Good for them? (Humble Dollar). How much to leave to the kids? It’s an important question.

Tiptoe through the tulips (Finding Joy). “As we move through the world in our flawed humanity, it’s important to be self-aware. If we recognize our tendencies to get in our own way, we can put guardrails in place to help us stay on track.” 

The war within (Real Smartica). To invest well, use an objective, process-driven approach and stay with it.

The most important concept in finance (A Wealth of Common Sense). I’m not sure it’s the most important concept, but it’s in the top five for sure. 

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One of the Sweetest Concepts in All of Money Management

Some words and phrases just feel good. Summer vacation. Sleeping in. Cubs win.

Financially speaking, one of my all-time favorite words is margin.

And it feels even better than it sounds.

Think of it as financial breathing space, a wonderful gap between income and expenses.

It reduces stress, provides the flexibility to give or save more, and is good for the soul.

Do you have financial margin? If not, here are some key ways to move toward it.

Start with the right framework

There are only five things you can do with money: Spend it, use it for debt payments, save it, invest it, and give it away.

Unfortunately, that’s the order many people follow, which makes it difficult to give generously, save adequately, and experience financial margin.

Far better to put those priorities in this order: For every dollar you receive, give some away, save some, invest some, and then spend what remains on your lifestyle. Along the way, avoid all debt with the possible exception of a reasonable mortgage.

Debt is one of the biggest roadblocks that keeps people from enjoying financial margin.

If your mortgage requires too much of your income, consider something radical.

If you have a financed car, make this your last car loan.

If you have other forms of debt, commit to getting out from under it. It may take a while (It took me five years), but it’ll be so worth it.

Go big

Some expense categories loom larger than others. Getting these right will go a long way toward helping you experience margin.

We already talked about how much to spend on housing: No more than 25% of gross income—even better if you can keep it to no more than 20%. Do that on one income and you’ll be a pro at this whole financial margin thing.

We also talked about transportation. The sooner you can become a no car payment household, the sooner you’ll have margin.

Those are usually people’s two biggest expenses. But then there’s all the rest. Look for ways to spend smarter, more intentionally, in all of them. Lots of little changes, like how much you spend on TV services, add up to a lot and point the way toward a life of margin.

Do you have financial margin? If so, what have been the keys to achieving and maintaining it?

Profitable Ideas: Return on Sleeplessness, Your Work Matters, and More

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

Return on sleeplessness (Best Interest). Are you investing in a way that allows you to rest well?

Why we should talk about money more often (Darius Foroux). Disclosure begets disclosure, and before you know it, money isn’t such a taboo topic any more. 

Turning pro: the difference between amateurs and professionals (Farnam Street). Are you trying to create something great? Your mindset matters.

The best way to get things done (Of Dollars and Data). Are you all about getting a lot done, or getting the right things done?

4 retirement tips young adults can implement NOW (MoneyNing). Time is an invaluable asset.

Imagine it’s your last year. What would you do differently? (Becoming Minimalist). Don’t write this off as trite. Considering this scenario can be a big help in setting priorities.

A solution to the retirement crisis? Americans should work for more years, BlackRock CEO says (CBS Money Watch). When do you expect to retire?

Our work done to God’s glory matters to Him, for all eternity (Eternal Perspective Ministries). God is at work in our work. All we have to do is notice.

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An Irrational Financial Act

Of all the things we can do with money, giving it away seems completely, utterly irrational, doesn’t it? After all, we work hard for what we earn. And after paying all the bills and putting a little aside for the future, there just isn’t anything left to give, right?

Well, it turns out that generosity is an essential part of a financial life that works well. Here are three reasons why.

Generosity is part of our design

The Bible says we were each made in God’s image, and since God is endlessly generous, that means generosity is woven into the fabric of our spiritual DNA.

When we don’t give, or give only token amounts, or give from a sense of guilt or obligation, we deprive ourselves of one of life’s great joys. But when we give generously with grateful hearts, we live in concert with our design. It’s no wonder that researchers who study human happiness have found that generous people are generally happier and find life more meaningful than those who are not generous.

Generosity reminds us of our priorities

The Bible says,

“Where your treasure is, there your heart will be also” – Matthew 6:21

I remember a time when my wife, Jude, wanted to give some money to a friend doing missionary work in a country that I wasn’t sure I could find it on a map. Up to that time, I never thought of that country. It wasn’t on my radar screen at all.

However, after we started sending some money there, I noticed every time the country was in the news. And I took great interest in each letter Jude’s friend wrote about her work.

My heart went there because some of our money was going there.

Giving regularly and generously to support God’s work in the world is a very powerful way to keep our hearts focused on God.

Generosity leads to blessings

My friend Michael was in the alley in back of his home one morning when he saw a homeless man picking through the garbage. Prompted by a message he heard in church the previous weekend, Michael struck up a conversation with the man. Then he offered him some money.

As he reached into his pocket, Michael was dismayed to discover that all he had was a fifty-dollar bill. That was a lot more than he intended to give. But since he had already committed to giving the man some money, he gave it anyway. Clearly, it was a lot more than the man expected as well, because when he saw how much money it was he cried.

Later that morning Michael was at a building supply store purchasing materials for some renovation work he was doing. As he waited in a long line, a store employee approached him and unexpectedly gave him a certificate for 10 percent off his purchase. Michael was the only one in the line to receive a certificate. When the cashier rang up his purchase, it came to $490. Michael was stunned. The 10 percent savings covered all but $1 of what he gave away that morning.

Now he was the one with tears in his eyes. Out of the many customers in line, why was he the one given a discount? Why would he get back almost exactly what he had given away that morning? He doesn’t know for sure, but all he could think of was that maybe it was God’s way of expressing his pleasure at seeing Michael’s kindness toward the man in the alley, and encouraging him to continue down the path of financial generosity.

Giving from the heart

I am very confident that giving in order to get something from God is nothing less than an affront to God. I want nothing to do with the prosperity gospel.

Biblical generosity is motivated by gratitude; it’s a response to God’s generosity.

Still, many passages of Scripture clearly state that there are blessings that flow from generosity, such as Proverbs 11:24:

“One man gives freely yet gains even more. Another withholds unduly but comes to poverty.”

Some people trace material blessings to their giving. Others experience blessings related to their health, relationships, sense of peace, and more. Still others find it easier to live within their means and experience financial freedom when they start giving.

It seems irrational. It doesn’t make sense on a spreadsheet. It’s one of those hard-to-explain but impossible-to-deny realities that there is a link between generosity fueled by a grateful heart and blessings. We were simply designed to live generously, and our lives work best when we live as we were designed to live.

Those are three of the key factors that motivate our generosity: We were designed to live generously, doing so reminds us of our priorities, and it leads to blessings. How about you? What motivates you to live generously?

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Profitable Ideas: The Tipping Point, Best Password Protections, and More

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

How much should you tip? 5 people share their habits (Time). Tipping has gotten complicated—what to do with the dreaded tip screen.

Here’s how to cut your cable and cell phone bills (Fast Company). Make sure you’re talking with the right person, and other good moves for negotiators.

How to protect your child against identity theft (Wall Street Journal). If you’re not vigilant, it can be years before a problem is detected.

Did your child earn money last year? You can open a Roth IRA for them. (Flow Financial Planning). As I write in Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management, if your child can get $2,000 to $3,000 into a Roth by the time they’re 18, they could end up with more tax-free money for retirement than the average person has after working for an entire lifetime.

How big tech rewired childhood (The New Statesman). It wasn’t that long ago that the concern about screen time was focused on materialism. Today, it’s about so much more. 

Which is better: your browser’s password manager or a standalone service? (Consumer Reports). Reasons why a standalone service may be better.

What the Bible really says about how to handle your money (Relevant Magazine). Not surprisingly, this isn’t just about what we do with money. It’s about our heart.

Five ways to trigger an IRS audit or notice (Washington Post). It’s interesting that extraordinary generosity looks suspicious to the IRS.

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.

You’ll Never Know What You Can Get Unless You Ask

I am constantly amazed at what you can get just by asking.

I’ve written before about an experience we had with our van. It needed a costly repair that seemed to be due to a manufacturing defect. Just by asking, I got not just the amount of the repair reimbursed; I got more than the cost of the repair.

Here are two other experiences I’ve had with making a request.

Questioning a rate hike

First, our home security company notified us that the quarterly amount we pay for monitoring would be going up. The amount of the increase was so small—about $11 per quarter—I was tempted to just pay it. But I decided to call the company instead.

I very politely mentioned that we’ve been long-time customers and recently received word that our monitoring fee would be going up. I simply said, “I’m wondering if there’s anything you could do for us about that.”

The customer service rep asked me to hold for a couple of minutes so she could look over our account. When she came back on the line, she said she was able to make an adjustment so our rate would not go up. It took all of five minutes.

Asking for better flights

Next, we were planning a family trip to New York City several years ago. Using miles, I was able to get tickets for all five of us for free. The only catch was that we’d have to use connecting flights both ways.

I was feeling somewhat concerned about that. I didn’t like that there was an element of risk. What if one of the flights was cancelled or delayed? What if we missed our connections? I didn’t want anything to go wrong.

So, I called to see how much more it would cost to change to non-stop flights. It was a lot, so I resigned myself to having to keep things as they were. But then I was notified that our flight times had been changed. They weren’t changed by a lot, but the connection on the trip back home seemed tight, especially for a family of five.

So I called again, mentioned the changes the airline had made, and very politely asked whether anything could be done on our behalf. The customer service representative switched us to a non-stop flight. Even better, it left a little later in the day, which gave us more time in New York on our last day.

I was about to thank her and hang up, but I decided to ask if she could do anything for us on our outbound flight. That, too, had been changed by the airline, but we still had plenty of time to make our connection. Still, I went ahead and made the request.

To my amazement, she switched us to a non-stop for that part of the trip as well—no added cost, no extra miles required. It got us to New York at around 2:30 in the afternoon instead of 7:30 in the evening—again, giving us more time to enjoy the city. All I had to do was ask.

Learning to ask

I often tell our kids, it’s amazing what you can get if you’ll just ask. The keys are to be polite and be willing to accept a “no.” Don’t get all entitled or demanding. Just make your request and see what happens. I’ve had far more positive outcomes than negative.

I hear from many people that they’re hesitant to make such requests. They just don’t feel comfortable with it. I get that.

My recommendation is to practice. Make little requests. In a store, if you’re having a hard time finding something, don’t just ask what aisle it’s in. Ask someone to show you where it is. At a grocery store deli counter, ask for a sample of something. At a restaurant, if you see an empty table you like better than the one you’re about to be seated at, ask for the other one. Getting some little wins will give you the confidence to make bigger requests.

As I point out in, Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management, encouraging your kids to practice making requests can teach them an invaluable skill. An easy way to practice is to take them to garage sales. If they find something they want to buy, encourage them to offer less than what the sticker says.

When one of our sons was about eight, I took him to a used LEGO store where he found a set he wanted to buy. I encouraged him to offer a bit less and the person working the counter readily agreed. In another LEGO story, when our other son was about six, he bought a LEGO product he wasn’t happy with. He felt that the packaging was deceptive. So, I helped him find a customer service number. He called, explained the situation, and the company sent him a different product for free.

What’s been your experience with this? What have you gotten just by asking? Or, if you’re hesitant to make requests, why?

Profitable Ideas: Acceptable Lifestyle Creep, The Case for College, and More

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

Acceptable types of lifestyle creep (Mr. Stingy). Regular readers know I don’t love the word “frugal.” As long as you’re living generously and saving/investing adequately, there’s nothing inherently wrong with doing some trading up.

Choosing simplicity in a world obsessed with more (Becoming Minimalist). This one adds some helpful context to the first article. Definitely don’t want to get trapped on the “more, always more” train.

The rise of financial dopamine culture (Portfolio Charts). You’re familiar with fast fashion. Now there’s fast finance, and our dependency is the goal.

Field of dreams (Finding Joy). Avoiding the pressure to over-schedule your kids.

Show this chart to anyone who tells you college isn’t worth it (Axios). Not every kid should go to college, but the case against college still faces one very high hurdle.

The job more parents are taking to get a discount on their kids’ college tuition (CNBC). This employee benefit can be very valuable.

Which is best: 529 college savings plan or Roth IRA? (Saving For College). There are pros and cons to both. However, especially if you live in a state that offers a state income tax deduction for contributions and now that some of any unused 529 account balance can be transferred to a Roth, I’d say 529 plans win in most cases.

Can I really reduce my income tax by paying my kids wages for doing a variety of jobs? (MarketWatch). It’s not as easy as it may seem.

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.

‘We Actually CAN Afford It!’

Sheila has long been an expert at living beneath her means. Even when she was making a relatively low salary and living in an expensive city, she never worried about not having enough. She always had money in the bank.

Because she grew up as one of five kids with a stay-at-home mom and schoolteacher dad, frugality became part of who she is. However, she operated more from a sense of fear than freedom, allowing herself to buy only what she needed and only at the lowest possible cost.

When she and Mike got married, he had been using a simple spreadsheet to guide his spending. As they used it to guide their joint finances, Sheila began to see that her standard response to pretty much any spending opportunity—“we can’t afford it”—was based on an unwarranted fear that they really couldn’t afford it. Seeing on paper that, yes, in fact, they can afford it—whether a restaurant meal or a better brand of clothing—was a completely new experience. It gave her a sense of freedom around money she had never known before.

That’s the most powerful, counterintuitive truth about using a budget. It isn’t the restrictive, ball & chain non-budgeters imagine. It’s a tool that helps create a wonderful sense of financial freedom.

I thought about that the other day while waiting for one of our vehicles to be serviced. We budget $300 per month for vehicle maintenance and repairs—$150 per month per vehicle. Some months, we don’t spend a dime. Others, like this month, we’ll spend more. By allocating $300 per month toward taking care of our vehicles, that’s $300 per month that’s not available for anything else. When we need to spend some money on maintenance or repairs, we usually have the money readily available.

I thought about it, too, this past Christmas. We budget a certain amount for Christmas gifts. Because this is an expense we incur mostly at the end of the year, we transfer one-twelfth of our annual Christmas gifts budget into a dedicated savings account each month. Then, when Christmas rolls around, we have enough money already set aside that buying gifts is especially enjoyable.

No matter what your financial situation—whether struggling or thriving—a budget will improve your financial life, give you far greater peace of mind, and even improve your relationships.

The plans of the diligent lead to profit, as surely as haste leads to poverty. – Proverbs 21:5

What questions do you have about using a budget? If you don’t use one, why not? If you do, what issues do you tend to bump up against?

I can’t say I have all the budget answers, but I have used a budget for a long time, I genuinely like using a budget, and I’d be happy to take a stab at answering any questions you have about budgets.

In my new book, Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management, I devote a chapter to this topic, showing parents how to teach even the youngest of kids some important early principles of budgeting.

Profitable Ideas: Money-Saving Habits, Overcoming Your Fear of Investing, and More

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

10 little shopping habits to help you save money (No Sidebar). I especially like the sixth suggestion.

Why you’re scared of investing (and how to overcome it) (Darius Foroux). To be sure, investing can bring fear. Here are some steps to help keep it from holding you back.

The powerful benefits of Roth conversions (Best Interest). Good primer on an important and somewhat complicated topic.

Prosperity theology vs. stewardship principles (Good Sense). It’s helpful to know how to spot prosperity theology.

No, you don’t owe me a favor (Adam Grant). Part of living generously is knowing how to receive from others.

Why you should plan to get less done (Range Widely). Minimalism is coming for your to-do list, and it’s a good thing.

Why investing earlier may help younger workers avoid retirement worries that plague older generations (CNBC). There’s a whole chapter devoted to teaching your kids how to start investing in Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management. Time truly is an invaluable asset.

Simplifi review 2024: automated budget management by Quicken (Marriage, Kids and Money). This is the budget tool we’re using in our household since Mint is going away. It isn’t perfect, but so far it’s suiting our needs.

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 Healthy Is Your Financial Environment?

We may have gotten past the global Covid-19 pandemic, but there’s another pandemic that’s been going on a lot longer — a global pandemic of obesity. In the U.S., more than 42% of adults area classified as obese.

What’s to blame? In part, it’s our “food environment,” according to Andy Bellatti, cofounder of Dieticians for Professional Integrity. “Unhealthy foods are cheaper and they’re everywhere,” he said. “If you go to any store, you can buy a candy bar at the checkout but not a piece of fruit.”

In a similar way, our financial environment impacts our use of money, often in unhealthy ways. So, in order to manage money well, it’s important to do what we can to control our financial environment. Here are some aspects that we can do something about.

What to decrease

The marketing lists we’re on. Take a look at the last 20 email messages you received. How many were promotions? Being on the email list of companies you like can be helpful in saving money, but it can also lead to what I call financial death by discount if they tempt you to overspend.

What to do? Always remember, a deal isn’t a deal unless it’s a discount on something you were going to buy anyway. So, if the number of promotional emails you receive is prompting you to spend more than you should, unsubscribe from most, if not all, of those marketers’ lists.

The time we spend on social media. Regularly taking in the highlight reels of our friends’ lives can be hazardous to happiness. It can also hurt our financial health, according to Sarah Fallaw. She’s the founder of DataPoints, a company that studies the affluent, and also the daughter of the late Thomas Stanley, author of one of the best personal finance books I’ve read, The Millionaire Next Door. She told MarketWatch that “social indifference” is an important key to building wealth.

“…the research we’re doing demonstrates that those who ignore trends have higher net worth, regardless of their age, income and percentage of wealth that they inherited. Building wealth means ignoring what others are doing.”

What to do? Limit the time you spend on social media. Or set an example for using social media more constructively. Instead of mostly posting pictures from your family’s best moments, especially the ones that involved spending a lot of money, ask questions to foster dialogue and community.

The time we spend on other media. Boston College Sociologist Julie Schor found that the more TV people watch, the less they save. (It’s a fair assumption this applies to all entertainment-related screen time.) And it isn’t just due to the impact of advertising messages. It’s exposure to the unrealistically expensive lifestyles of the people featured in the programs.

What to do? Take your cable/streaming package down a notch so you have less reason to watch, or make it less convenient to watch by moving your television to a less prominent part of your house. One of the best decisions we made when we moved into our current house was putting our one and only TV in the basement.

What to increase

Positive financial role models. Some of the early friends I made after I became a Christian and started turning my financial life around had—and continue to have—a big impact on me. They are people who live well within their means. The people we spend time with shape us in ways we don’t fully appreciate—either positively or negatively.

What to do? Start to notice people who are living differently—keeping cars longer than most people do; enjoying simpler, less expensive activities; and generally living more modestly. Get together with them and let them know that in a world of overspending they stand out for keeping things real. They probably won’t mind talking about it.

(See The Pull of the Neighborhood — Four Ways to Keep Your Financial Footing.)

Time in God’s Word. This is the single most proactive thing we can do to travel each day through our consumer culture with our sanity and solvency intact.

Take to heart the apostle Paul’s warning not to worship and serve created things instead of the Creator (Romans 1:25). Remember Jesus’ exhortation that “life does not consist in an abundance of possessions” (Luke 12:15). And keep in mind that it’s the better part of wisdom to maintain a reserve (Proverbs 21:20).

Memorizing Scripture creates something of an internal gyroscope, which helps us stay true to our values as we get bombarded by messages aimed at pulling us off course.

What other steps have you taken in order to shape your financial environment in constructive ways?