Category Archive Stewardship

Maximize Employer Benefits 5 tricks

If you have a decent job you probably have some benefits you are not taking advantage of or maybe not even aware of.  This article will show you 5 ways to maximize employer benefits.  There may be many ways you are leaving money on the table by not taking advantage of benefits that you employer is offering.

1. The 401(k) – Maximize it for employer contributions

maximize employer benefits

Maximize employer benefits and get more money

A 401(k) is an employee sponsored retirement account.  Many companies match your contributions at one level or another which means you may be leaving money on the table if you are not using this plan.  Find out what your company does for a match and at least contribute the maximum amount they match.

For example if your company matches 100% up to 4% of your salary like mine does then you should at least contribute 4% of your salary because you are doubling your money.  If the company match is 50% up to 4% you should still contribute 4% because a 50% return on your money is still better than most you will get on the market and more than you are paying on any debt you have, unless you are into Frankie the Shark for some money in which case you should pay him first.

Read more about 401(k)s.

2. FSA – Use it to reduce taxes.

A Flex Spending Account allows you to set aside up to $2500 pre-tax dollars to pay for medical expenses in a given year.  That means you subtract up to $2500 from the money you are paying taxes on.  Keep in mind you can only roll over $500 dollars of that money the rest is use it or lose it; And the Affordable Care Act eliminated the ability to use an FSA to pay for over the counter products to soak up any extra you would have at the end of the year so be careful.

Think about any prescriptions you have or glasses you may need as well as any co-pay you may have to determine how much you may need and aim low because if you don’t use it all it goes back to your employer.

3. Dependent Care Spending Accounts – Reduce more taxes.

These accounts are very similar to the FSA but The dependent care account reimburses dependent day care expenses necessary while you (and your spouse, if you’re married) are attending school on a full-time basis or working. Typically, these would be day care expenses for children, but you can also use this account to reimburse day care for other dependents, such as spouses, parents, or grandparents, who cannot care for themselves. Your dependent must live in your home at least eight hours a day.

There are a lot of technicalities on this one so make sure you understand the detail of how it works.  For example I put money into pay for preschool but could not pay for the whole year (as I thought) because the period spanned over two calendar years and I was only able to pay for the calendar year I was in.

4. Tuition Reimbursement – Why not get paid to go to school

Many companies offer tuition reimbursement of some kind if you wish to get a degree or further your education.  Many require it to be in the field you are working in and some require you to work for the company for a number of years after you last take the reimbursement but you can often pay the money back.

5. Professional Development – Get paid to get better at what you do.

Many professional companies have training budgets.  Our managers tell us that it often goes unused because no one takes advantage of it.  If your field offers certifications the company may pay for the training or it may pay for the testing required for the certification.

There may be other ways you can maximize employer benefits; it it all depends on what your company has to offer.  Take a look and ask around.  Often there are benefits that are almost secrets in companies.

Betterment Review

I have been using Betterment since February of 2012 for my long term investment and savings.  I have wanted to do a Betterment review for a while but wanted to break it in before I gave my opinion.  Betterment is a website that makes investing simple enough for everyone.  It makes investing stress free and easy.  I have tried picking my own stocks but fees ate up whatever profit I may have gained.  Betterment’s fees are incredibly low and they allow you to set a risk level you are comfortable with for all you different savings goals.

Getting Started

If you are trying to save money you know now is a bad time.  Low interest rates are great if you are looking to buy a house but if you want to save your money low interest rates are not your friend.  Unless you have 50,000 or more to invest a lot of firms won’t even talk to you.  This is one of the reasons I love betterment.

Betterment breaks down your accounts by the goal you are looking to achieve.  So, when you create a new account it will ask you to select a goal.  Like Safety Net, IRA, Educational.

Then you simply answer a few questions about your goal.  How much would you like to have in that goal at what time?  Do you need 20K in 10 years for a child’s education?  How much can you start with? Based on those questions Betterment will recommend a portfolio on a simple Stocks(Risky but rewarding) v. Bonds (More secure but less reward) scale.  So, for our down payment goal which we hope to use in the next few years we are less risky and have 80% in bonds but in our daughters college accounts which won’t be needed for 10 years at least we use 80% stocks.  It will also tell you how much you need to deposit each month to reach your goal and that can be automatically done through Betterment as well and automatically drafted from your selected checking account.

Customer service was remarkable when I called Betterment to see why I couldn’t have more than three goals. (This was early on the now allow many more) I got a real person almost right away who was very helpful and got me into the beta test for more goals.

Returns

So far the best thing about Betterment besides the automation, which I am a big fan of has been the returns.  Keeping in mind that past performance does not indicate future performance and all that we have had some great returns for our the college funds.  The total balance has some more conservative accounts like our house down payment account but over all I have been very please with the returns.  The functionality of the site is superb making it very easy to get started saving with more than .25% interest rate or whatever banks offer these days. They even let you try it out for 30 days free.

Results

Our overall rate of return has been 8.7% but our college funds are over 17%.

Fees

The fees are simple and inexpensive as well.

  • If you deposit less than $100 per month it is a flat $3
  • If you auto deposit at least 100$ a month your fee is a flat .35%
    $5000 = $1/month
  • If you have $10000 or more across all of your goals your fee goes down to .25%
    $10000 = $2/month.
  • Over $100,000 in all of your goals and your fee is only .15% and you get many other options to customize your plan.

Over all if you are ready to make the move into having your money make money for your Betterment is a great way to get started.

This article contains affiliate links… You get $25 and I get $10 if you sign up through these links…Betterment

 

Please give me my idol

Am I asking God to give me my idol?

I have been seeking a new job recently and have had some very promising leads. I am hoping to have a decent pay raise when I take a new position and I have found myself thinking about all the things I will be able to do with this new money; how much better it will make my life; how much safer and more secure I will be. All things I should be relying on God for, not a job.

It is amazing how easily these little bits of sinfulness can slip into our lives; it is no wonder that Martin Luther called the human heart an idol factory and why Jesus said it is hard for a rich man to enter the kingdom of Heaven. It is hard for us who have so much to realize how much we need to rely on God for our daily bread.

We Americans, even the poorest of us are in the among the richest in people in the world and because we don’t want for many necessities we don’t think daily about how desperate we are and how much we cannot do ourselves.
Personally, I was looking for this job to be my functional savior against my lack of satisfaction. I am not satisfied in my God and those wonderful things he has given me. Sure, I say how much I am thankful every night when I pray over our meal or with my daughters before bed but the words have a hard time sinking in to my stony heart.

I often talk about the story of the rich young ruler from Matthew 19.

And behold, a man came up to him, saying, “Teacher, what good deed must I do to have eternal life?” And he said to him, “Why do you ask me about what is good? There is only one who is good. If you would enter life, keep the commandments.” He said to him, “Which ones?” And Jesus said, “You shall not murder, You shall not commit adultery, You shall not steal, You shall not bear false witness, Honor your father and mother, and, You shall love your neighbor as yourself.” The young man said to him, “All these I have kept. What do I still lack?” Jesus said to him, “If you would be perfect, go, sell what you possess and give to the poor, and you will have treasure in heaven; and come, follow me.” When the young man heard this he went away sorrowful, for he had great possessions.

And Jesus said to his disciples, “Truly, I say to you, only with difficulty will a rich person enter the kingdom of heaven. Again I tell you, it is easier for a camel to go through the eye of a needle than for a rich person to enter the kingdom of God.” When the disciples heard this, they were greatly astonished, saying, “Who then can be saved?” But Jesus looked at them and said, “With man this is impossible, but with God all things are possible.” (Matthew 19:16-26, ESV)

We are so attached to our possessions that although we would deny it with our words our hearts are very much like this rich man.  Jesus is pointing out the idol that sat at the altar of this young mans heart and he refused to cast it down.  What I find interesting is that the disciples were astonished that it was hard for a rich man to enter the kingdom of heaven.  How often to we assume that material success is a sign of God’s approval?  I have heard it when it comes to money and the individual. “God is blessing me with this new car because of my obedience” Applied to churches “They must be doing something right because they have a huge crowd”

Jesus makes it pretty clear here and other places that external circumstances are not a direct indication of God’s approval or disapproval.  ” For he makes his sun rise on the evil and on the good, and sends rain on the just and on the unjust.” (Matt 5:45)

This story serves as an example to me and hopefully to us all that our things are never to be more important to us than our Lord.  It is not our jobs or our family that ultimately provides they are conduits through which God provides our needs.

 

Image by itineranttightwad

What is a 401(k)?

What is a 401(k)?

401k

Photo by 401k 2013

As I have written previously I work with a lot of college students in our church as a part of my ministry there.  There are always questions about 401(k)s; What they are how they work.  The fact is that many people simply don’t understand this very important retirement vehicle.

So, what is a 401(k)?  It is a savings plan named after the section of the law that created it.  It allows an employee to take a portion of their pre-tax income, up to $17,500 for 2013,(Those over 50 are allowed to add $5,500 to that amount) to a qualified employer sponsored investment plan.  Many employers choose to match their employees contributions to some degree adding additional money to the pot.

So, what do those things mean?  Pre-tax dollars means that the money contributed to your 401k are not counted as income when you are taxed.  If your paycheck was $1000 and you contribute $100 to your 401k then you only pay taxes on $900. ($1000-$100)  This allows you to save money up front on taxes.  Because you will pay taxes on the money when you retire it is called a tax deferred plan.  This also begs the question “Will taxes be higher now or when I retire”  I would guess taxes have no where to go but up since we are only paying for 2/3 of the government we have now and we will eventually have to pay for the remainder.

Employer match

This is one of the sexiest aspects of the 401k plan.  With the average 401k plan employers contributed 4% of the employee’s salary most commonly in the form of a direct match.  An employer will match dollar for dollar every dollar an employee contributes up to a certain percent, the average is 4%.  Meaning that if Joe contributes 4% of his paycheck to his 401k the company contributes the same amount to his 401k.  This work out to be a 100% return on investment; Joe doubles the money in his 401k.

Not all employers do a direct percentage match some match $.50 on the dollar or some other amount but knowing how your 401k plan works is important to making the most of your plan.  As in our above example Joe’s employer matches up to 4% of his salary.  This means that if Joe is contributing less than 4% to his own retirement then he leaving his employers money on the table.

Getting your money out of your 401(k)

Getting your money out of a 401(k) can be difficult or have penalties depending on the circumstances of your plan.  Traditionally, you can only make withdraws from a 401(k)  under certain circumstances.

  • When the employee retires, becomes disabled or is no longer employed by the employer who sponsored the plan.
  • The employee hits age 59.5
  • The employee experiences a hardship as defined under the plan, if the plan permits hardship withdrawals
  • Upon the termination of the plan

With some plans it is possible to take a loan of 50% of the vested value of the account but not all plans allow for this option.

Summary

A 401(k) is a retirement plan that has some great aspects and that also has some drawbacks.

Pros:

  • Most employers contribute additional money to the retirement of the employee.
  • Tax benefits.

Cons:

  • Mandatory withdraws at age 70.5
  • Taxes are likely to be higher when you actually have to pay them on the money in the account unless you believe you will be in a lower tax bracket when you are pulling money from your account.

Obviously, I can’t cover everything there is about 401(k)s but hopefully this gives a basic idea about what they are and how they are used.

 

Photo by  401k 2013

Give to everyone? Is Jesus Kidding?

Give to everyone?

Image by jorgempf

Are we really called to give to everyone?  Luke 6:30 and Matthew 5:42 are two scriptures I would really like to remove from the Bible, if I am being honest.

Give to everyone who begs from you, and from one who takes away your goods do not demand them back.

I live in a city and people are begging all the time, on every freeway off ramp, on every street corner.  I have been approached multiple times in parking lots with stories of running out of gas and loss of debit card, and a dead cell phone.  How am I to handle these things as a Christian?  These scriptures make it fairly clear that I am to give to anyone who begs (some bibles say “asks”), but Paul says that anyone who doesn’t work doesn’t eat.  So, it is not as straightforward as just giving to everyone, at least I don’t want it to be.

I want to handle my money responsibly, but I also want to be obedient to Jesus and not be selfish with my money.  How do we handle this dilemma.  I will be upfront that I don’t know if I have a solid correct answer.  This article is more about exploring the issue.  If you are looking for a hard and fast answer: move along.

Why do we not want to give to everyone?

As with many things, asking why we feel a certain way can be very helpful.

  • I don’t like the idea I’m being ripped off.
  • I don’t want to be made a fool of.
  • I don’t want to be parted with my hard earned cash under false pretenses.

I give all the time when people I know are in need because I know them and their situation.  They aren’t faking it.

The gospel answers to these questions, of course, come from a proper understanding of stewardship; It isn’t my money in the first place, it is God’s.  He has the right to require it of me anyway he likes, if I am to call myself a believer.  Does it matter if the individual is sinning by lying to me.  That is up to God to handle and he will either by forgiving them and making them his children or by allowing them to bear the punishment for their sins.

So, am I simply worried about being a bad steward of God’s money? Maybe, but them I am reminded of a story I have heard about CS Lewis.

One day, Lewis and a friend were walking down the street and came upon a begger who reached out to them for help. While his friend kept walking, Lewis stopped and proceeded to empty his wallet. When they resumed their journey, his friend asked, “What are you doing giving him your money like that? Don’t you know he’s just going to squander all that on ale (beer)?” Lewis paused and replied, “That’s all I was going to do with it.”

If I am honest, even if I gave $20 to everyone beggar on every off ramp holding a sign that says “stranded” I would still give away less money than I waste on frivolous things.

Is there a biblical reason not to give to everyone?

Money is at best a temporary solution to the issue facing the person asking.  Giving money to a person on the street is a great way for us to feel better about ourselves without actually doing any good for the person we give the money to in many cases.  It seems to me that in the biblical context people knew more about one another.  If you saw the same person begging in the same place every day for a year you could assume they were not able to work.  You could ask if you didn’t already know their story.  However, in our day that is very unlikely.

Paul was pretty clear in saying that if a man doesn’t work he doesn’t eat.  Laziness was not acceptable.  But how do we know if that is the case if we don’t have a relationship with the people in need?

As Christians we are called to give and help above and beyond.  That is why Jesus called us to give to everyone who asks.  He didn’t qualify it because he knew we would look for any excuse at all to not obey.

What do you think?  What are your considerations when it comes to giving to everyone that asks of you?

Teaching kids about money

This entry is part 1 of 2 in the series Kids and Money

Teaching kids about MoneyTeaching Kids About Money is not a New Law

Teaching kids about money through a gospel lens is is something I am still working on figuring out.  Our daughters 7 and 5 are still learning how to count money let alone spend it.  However, I want them to understand early how money plays a role in our life.  I want them to see Christ as sufficient and to not think money will fulfill their life.  It shouldn’t be that hard right?

But, as I researched some articles to write this I discovered something.  Most of the articles I found from big time Christian resources were no different the advice you would read from secular sources: Teach them to save early, teach them how interest works against you, make them earn their money so they understand the value of it and show them how to spend it properly.  The only thing that set them apart from secular resources was talk of the tithe.

In their book Give Them Grace: Dazzling Your Kids with the Love of Jesus Elyse Fitzpatrick and Jessica Thompson say, and I am paraphrasing because for the life of me I can’t find the quote, “If your parenting isn’t any different than a Jew, Muslim or a moral humanist you are not parenting as a Christian.”  We can have all the steps and rules we want when it comes to our money and we will only create little pharisees.  Our parenting, in every way, should always call us back to the cross and the gospel of Jesus Christ.

Honestly, I started to write this article as a to-do list just like the ones I read..  That is why I was so irritated by what I found when doing my research.  There are already tons of those articles out there here are a couple:

Bible Money Matters

Faith and Finance

Teaching Kids about Money – We can’t assume the Gospel.

But, like so many of our sermons these articles assume the gospel instead of preaching it.  The gospel calls us to give as we have been freely given.  I believe the gospel calls us not to be selfish with out money. The Gospel calls us to give what we have cheerfully and sacrificially.  The Gospel calls us to make Jesus the center of our life and live like he is completely sufficient.  The question is how to do instill those principles in our children when we are living like it isn’t true.  We work hard to get more to keep up with our neighbors and perhaps to give more but only to “sanctify the rest” so we can feel good about spending it however WE want.

Even by following a list of to-do’s, like the ones above, we need to be careful that we are not teaching our children to rely solely on their own wisdom to provide for all their needs, lest when financial trouble befall them they blame God because they feel like they followed all “His rules” and it didn’t work.  Then God becomes a liar in their eyes because they equate good financial advice with the gospel.

Those of us who sinfully find our security in money love to look at the book of Acts and brush off the “socialist” lifestyle they lived as being simply a description of how they lived and not instructional as to how Christians are to live.  However, giving statistics of Christians bear out that we have a lot to learn from those in the early church.

Maybe I will write a list of ideas on the practical side later because I do believe there is a need for that , right now I feel like the church needs to turn its eyes back on the cross when it comes to money.  I know I do.

Where is your missing money?

Where is you missing money?

Image by Ano Lobb

We all have missing money.  You get to the end of your week and you know you had enough money to pay for everything you needed, but somehow you are coming up short.  Where is your missing money?

Look, I have been talking, writing and lecturing about personal finance for years now and it still happens to me.  I know exactly how much extra money I have in my various accounts.  I know that we deposit extra into our main bank account to ensure we don’t overdraft.  I know we have extra paychecks a few times a year so I know there is technically extra in the account we pay our bills from.  So, I spend it because I know it is there.  That is where my missing money is; living it up outside of my budget.

My guess is you have a few dollars floating around outside your budget.  We all do. This problem arises when you allow money to sit idly in an account somewhere doing nothing.  It will run away from you when you aren’t paying attention.  Money wants to be spent, or used in some way and it will find a way to get what it wants.  What can you do to keep your hard earned dollars from becoming missing money?  I am glad you asked.

 Give your money something to do.

The secret to keep your money from going missing is to give it something to do.  You money, like most of us, wants to feel like it has a purpose.  You need a plan for all of your money, give it something to do.  It doesn’t matter if it is paying off debt, paying for your bills, or being put in a nice quiet interest bearing account or investment to make more money for you.

Alright, the metaphor has gone far enough.  I recommend you automate everything with your bank to make sure all of your money is going somewhere and doing something.  Here are a few ideas.

  1. Recurring bills that are the same each month. (mortgage, car loan, insurance etc…) — Have an account where money goes to pay these bills that you can’t spend from.  Each month set up an automatic payment with your bank to pay these bills’ total balance each month.

  2. Recurring bills that are not the same every month (utilities) — Call each of your utilities and see if you can make them stable.  Many utilities will let you pay the yearly average of your bills all year.  That way you know exactly how much you are going to pay each month.
  3. Any money left in your budget — Use it to pay off your debt if that is your goal, or put it in an interest bearing or investment account so you can’t spend it.  That way it isn’t in a place where you can spend it on frivolous things.

Following these types of ideas will keep you from asking “Where did my money go?”  It just won’t be available to spend.

What other ideas do you have?  Tell us in the comments.

Marriage and Money and Grace

Marriage and Money

Image by penywise

Last week I had an article with financial questions for marriage.  These questions were meant to get good conversations started regarding marriage and money.  I have handed them out in pre-marriage classes for a few years now and they have gotten good reviews from the couples that have used them.

It is incredibly important for engaged couples to discuss spiritual, sexual and financial histories, but there must be grace for mistakes made with money just as there would be for ones sinful sexual history.

It is understood fairly well in our churches today that there is grace for sexual sin.  Our sinful nature, being what it is, all couples have some sort of sexual sin in their past that they have to work through.  We talk about it and plan for it.  However we don’t offer the same opportunity to financial sins, we just don’t think it that serious.

That is because sexual sin doesn’t hang over our heads as obviously as our financial sins can.  After all, as long as you are no longer sleeping with other person it is easy to think of those sins as in the past, not comprehending  how they affect you every day.   However, if you enter a marriage having lived selfishly with your money for years, you may come into the marriage with a substantial amount of debt.  That debt will be staring you in the face every day until it is paid off which can be years after the honeymoon is over.

That can be a burden on a marriage, one spouse may begin to believe that they are paying (literally) for the sins of the other’s past.  Our culture or our church does not do a good job of dealing with this aspect of marriage and money.  For the general culture it is because crushing debt is as ubiquitous as premarital sex, and just as acceptable.  For the church?  It is partially because we have understood financial issues from the perspective of the culture, or perhaps it is because we just don’t talk about such things, or perhaps it is because we don’t have a good understanding of how the grace of God applied to that area of our lives as well.

My wife understood when we got married that she was getting my debt.  It wasn’t a crushing amount, but it existed and since she came into our marriage without any debt it would have been easy for her to be arrogant about our financial situation.  It may have been easy, but it wouldn’t have been Christ like.  It took a few years to understand, but she had her own set of issues related to money.  As we come to understand one another’s sins better it is a an opportunity to extend the grace of God to one another all over again.  And that is what we are called to do in all areas of not just with marriage and money.

We have to understand the spiritual side of money, Jesus talked about it a lot and it wasn’t just how to save more and spend less.  He talked about the effect it has on our hearts.  He talked about what money can meant to us.  But he also says “My grace is sufficient” for that as well.  We are called to have that same grace with one another.

More budgeting: Biblical Stewardship

This entry is part 4 of 4 in the series Creating a Budget
More than a budget: Stewardship

Image by McGoo84

Biblical stewardship is more than a good budget, saving and giving the right amount of money.  It is about having a proper biblical relationship with money.

Our problems with money don’t begin when we spend more than we make; they begin when we forget that God must be at the center of this part of our lives.  When you have no bigger purpose for your cash than your own enjoyment, you are already in money trouble.  –Paul David Tripp, Sex and Money: Pleasures That Leave You Empty and Grace That Satisfies

I liked to say, when I was a youth pastor, “There is a non-smoking, virgin section of hell.”  My point was that being a follower of Christ is more than just not doing the wrong things, or even doing the right things.  It is easy to fall into this same trap with money.  Most people who write about the money miss this point entirely.  I wrote about money years ago and I missed this point a lot.  It is why I want to write about biblical stewardship now.  You can spend less than you make, pay off all of your debt and give the magic amount to your church and still not have God in the center of your financial life.

We each have some sinful way of looking at money; I look at money to keep me safe.  I look at money to be my functional savior and it ends up being my master.  How many of us are now working harder than we want to work to pay for things we purchased long ago or things we think we need to keep up with our neighbors.  We can easily become slaves to our desire for money.

Some people have shunned money and taken on a poverty theology some have tried to use Jesus as their personal ATM loving money more than God.  Both of these ideas are sinful and will lead us toward a sinful way of handling our money.  We need to look at money as a tool to be used and stewarded just like anything else in our lives.  Money should be used properly to the glory of God and that should be our goal as Christians.

Parable of the Sower and Stewardship

The Parable of the Sower and Stewardship

The parable of the sower is one of the toughest parables for me to read.  Jesus really focuses in on my personal idols and it is a good but terribly difficult process.

As for what was sown among thorns, this is the one who hears the word, but the cares of the world and the deceitfulness of riches choke the word, and it proves unfruitful.
(Matthew 13:22 ESV)

This parable, particularly the section about the seed choked out by the “Cares of the world and the deceitfulness of money” is a strong warning to any Christian, like myself, who is interested in personal stewardship.  It is easy for us to focus too much on money as an end in itself and not merely a means to an end.  The end we should be focusing on is the progress of the gospel of Jesus Christ.

Parable of the Sower

Image provided by funny-p

From a personal point I struggle with loving money and caring to much about things of this world.  I wrestle with finding a balance between planning for the future of my children and being charitable with my money.  I love my church, but when we were presented with the opportunity to purchase our church building, needing a huge down payment, my gut clenched.

I struggle with being charitable and giving to the work of God my church is doing.  When the opportunity arises my love of money (in the bank especially) starts to reach out to choke me out.  I know a lot of people struggle with this balance because I hear from them in my personal finance classes all the time asking how to balance the need for money in our culture with the Bible’s call to not serve money instead of God.

I don’t have a hard and fast answer. I wish I did. I have found that a Godly spouse is invaluable in pointing out your sinfulness and I constantly ask my wife if I am holding on too tight.  She is good about telling me when I am being too stingy.

Me: Do you have an amount in your head you think we should give?

Wife: Yes, you go first.

Me: I was thinking X.

Wife: Oh, I was thinking 2X.

That usually helps me to know that the thorns are coming to choke me out.

I wish I had better answers for this topic; it is one that I am constantly processing and one I will probably write about more as time goes on.  Jesus is constantly calling is to something greater than the temptations of this world.  He constantly calls us to lay up our treasure in heaven and not in this world.  Balancing that with the reality of needing money to survive should drive us to constant prayer and vigilance to ensure we are focusing our efforts in the right place.

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