Buying toys

For those of us out there that are trying to do right things with money such as get out of debt, save, invest, and give (you know - wealthy people activities), all of us probably deal with seasons in our lives in which we want to go out and buy some "toys."

Toys can range from sports cars, motorcycles, sports equipment, RV's, campers, etc. Toys are all the things that we really want NOW but can't necessarily afford today (or wouldn't be a wise purchase to make). In a previous post, I put together a listing of my family's current needs and wants. Fortunately over the last several weeks, I've been able to check off a couple of these need items from our list.

Well, at the bottom of our goals and wants list, I have listed the installation of a ball and hitch on our (debt free) Odyssey van as well as the purchase of a pop-up camper. I've got the impulse to really get these 2 items done sooner than later while my daughters are still young and would enjoy this type of family activity. When they get to be teenagers, I know they probably would not enjoy camping as much. Another benefit (for us) of owning a pop-up camper is saving on hotel bills (over the long term) due to making trips to Ohio and Michigan to see my family, summer vacations, etc.

An additional benefit I see with this camper purchase is a restructuring and a rethinking of our vacation time. Instead of taking one BIG summer vacation trip, we could just take a few days here and there throughout the year and get away on a more regular basis.

My biggest requirement on this purchase is that it needs to be a cash purchase - zero debt! So, over the last 8-10 days, I have been scouring Craigslist looking for a deal! If I can find just the right used pop-up camper, I'm planning on walking into the deal with cash in my hand and doing some serious negotiation.

This cash purchase is going to be a bit of a stretch for our family on the front end, but I believe it will save us money on the back end. More importantly, though, I believe having a "toy" such as this will bind our family together in a positive way.

Doing rich people stuff

When Dave Ramsey talks about personal money management, whether it's through his radio show, FPU, Live Events, or books, one HUGE emphasis he makes time and time again is that we need to think like rich people and do rich people stuff.

Doing rich people stuff includes things like:

1. Zero debt
2. Live on less than you make
3. Give generously
4. Always ask "how much," not "how much a month"
5. Drive used, paid for vehicles
6. Have a plan; monthly budget
7. Set goals - think short and long term
8. Save, save, save

So are you thinking like a rich person or a poor/middle class person? Start thinking like the rich, and soon you'll be there over time!

Seth Godin on personal finance

I'm a big fan of marketing guru Seth Godin and I've read a number of his books and tried some of his marketing ideas for my side business (www.mystaffarranger.com).

I was catching up with some of my favorite blogs yesterday, and I was pleasantly surprised to see some sound personal financial advice from Seth. Boy, he sure sounds like a Dave Ramsey fan!

Check out Seth's personal finance post here.

Great post, Seth. Hope your a Dave fan! If not, your advice is awesome anyway. It's time for America to wake up and get out of debt as quickly as possible, especially with America's current financial challenges.

Getting Unstuck - follow-up

One of the great benefits of blogging is that it's somewhat therapeutic - blogging is very related to journaling in the sense that you're getting your thoughts down in writing, giving you more clarity on what you need and desire.


A few posts ago, I blogged about feeling stuck personally and financially and the steps I was preparing to take to get unstuck. Here's a brief update on where I'm at:

1. Emotionally and mentally I feel much better than last week. I have accepted that our current situation is just a season of our lives that will pass, probably in 2-3 months. My brain is now focusing on solutions not my family's problems! That's a huge step.
2. I purchased the 4 books I mentioned in that previous post. Already halfway through the 4-Hour Workweek - great book; I highly recommend it.
3. I sat down with my wife and we went over the June budget together. That went well, and I also shared with her my little needs/goals picture chart. So far, so good.
4. One of our big needs is tires for my Jeep. I placed an order for those and they should be installed at the end of the week.
5. My oldest daughter's behavior is improving as a result of 3-4 weeks of counseling, so things are being to look up for the Jones' family.

Just remember, action is the key to getting yourself unstuck. Small goals with identifiable action steps will begin to clear the logjam from your life.

Financial Peace University Update (Session 13)

On Sunday afternoon, we had session 13 of Financial Peace University, our final week! This was the bonus lesson and "graduation day" for those that have gone through the class. Session 13 is on the topic of "The Great Misunderstanding." This lesson covered giving and stewardship.

Here's what Dave Ramsey's organization has to say about this 13th session of FPU:

Week 13 - The Great Misunderstanding

Dave teaches us the importance of being good managers over the blessings we have been given and the need to share them. Congratulations on finishing the class!

Key Points

1. The Great Misunderstanding, the paradox, is that we believe that the way to have more is to hold on to what we have more tightly.
2. A steward is a manager, not an owner.
3. Give the first 10% of your income to your church or favorite charity.

This was an awesome lesson taught by Dave. It was a very emotional time for many of us, especially after Dave set us up with stories about his middle daughter and son. Thanks for making me cry, Dave!

Getting Unstuck - needs and goals

In yesterday's blog post, I mentioned that today I was going to post a listing of our current needs and goals list that we're working on for the remainder of 2008. OK, so here we go!




CURRENT NEEDS

1. New set of tires for my 1995 Jeep Grand Cherokee - approx. $600-700
2. New headliner for my Jeep interior - approx. $200-300
3. I need an eye exam and new glasses - $200-300

GOALS AND WANTS

1. 3-month Emergency Fund: $12,000
2. Dave Ramsey Financial counseling training: $4,000+
3. 10-year wedding anniversary trip: $2,500 (est.)
4. Ball and hitch install on our 1998 Honda Odyssey: approx. $280
5. Used Pop-up Camper $2,000 - 3,500

The current needs that we have should be relatively easy to take care of over the next couple of months. The goals and wants may take us a little longer than I like, but we'll just enjoy the journey as we go through the process!

Getting unstuck - creating forward momentum

In a couple of previous posts, I expressed a few of my current financial frustrations. I have felt "stuck" financially, especially after a devastating tax season, not receiving my stimulus check yet, and unexpected emergency-type expenses. Now that my family is debt free, I feel like I'm having a "wilderness" type experience; a time of testing to see if the Jones family is really committed to being debt free and building wealth over the long haul. I find myself wavering, beating my head against the wall trying to get the financial log jam broken so we can move forward in our family's finances.

I have faith and belief that we will move out of our current financial state soon, but I'm doing some things right now to hopefully get momentum moving along faster. Here's what we're doing:

1. My wife felt that she needed to go back to work part-time to help pay for some of our current unexpected expenses. She started that job about a week and a half ago.
2. Yesterday, I ordered 4 books from Amazon.com that I really want to read some books to help get me "unstuck," mentally. The books I ordered were: The 4-Hour Workweek, Get Unstuck! The Simple Guide to Restart Your Life, Seven Practices of Effective Ministry, and Creating Customer Evangelists: How Loyal Customers Become a Volunteer Sales Force.
3. Over the last 2 days, I have been putting together a picture needs and goals chart; I'm trying to get clear in my mind what our financial priorities are for the remainder of 2008.
4. Since it's the end of the month, I will be working on our June budget. I plan on having my wife work with me on seeing what we can trim out of our budget, and I plan to share with her my needs/goals picture chart. I'd like to post multiple copies of this around the house as reminders to us on what we want to accomplish right now.

Tomorrow, I'll post the list of these picture needs and goals that we will be working toward through the rest of 2008.

Book Review - Thou Shall Prosper (Part 3)

In a previous post, I wrote an brief "overall" review on the book Thou Shall Prosper by Rabbi Daniel Lapin. This book comes highly recommended by both Dave Ramsey and Dan Miller.

In this post, I continue going through each commandment in more detail. Today, we're going to look at The Second Commandment - Extend the Network of Your Connectedness to Many People.


Lapin suggests in this chapter that friendships lead to wealth, rather than the reverse. Here are some of his key points regarding building relationships:

1. Honor the relationship with your parents and learn from them.


2. Health and human companionship do go hand in hand.


3. Try to win friends not in order to influence people for your benefit, but for the sheer joy of forming and maintaining human relationships. This cannot be faked!


4. Find opportunities to make friends - civic clubs, Rotary International, synagogue, church, etc.


5. Forge friendships by creating ongoing obligations. This may seem materialistic, but constantly creating and discharging obligations nurtures and sustains a friendship.


6. Only crowds of people can create wealth - locate yourself in the heart of large populations of people who share your values. Then begin connections.


7. Improving connections enhances wealth creation.


8. Helping others improve their lives helps you improve your own life.


9. Don't be a "wage slave" - be in business for yourself.


10. Be proud of and let people know what you do.


11. Choose your friends and customers carefully.


12. Service doesn't mean servility.


13. Love others, not just yourself.


14. To learn how to serve, learn how to be served.

This book's second commandment could be summarized thus: Make lots of new friends, try to help them, and make sure that they all know how you could help them and that you are eager to do so.

Financial Peace University Update (Session 12)

On Sunday afternoon, we had session 12 of Financial Peace University. We were off last week due to the Mother's Day holiday. Session 12 is on the topic of "Real Estate and Mortgages."

Here's what Dave Ramsey's organization has to say about this 12th session of FPU:


Week 12 - Real Estate & Mortgages

Dave teaches us the best way to buy and sell a house, the difference between 15- and 30-year mortgages, and the best ways to finance a home. Tuck this lesson away somewhere safe for when you are ready to buy or sell a home.

Think keeping your mortgage for a tax deduction is a good idea? Think again! The tax "savings" isn't really worth it in the end.

Key Points

1. When selling a home, think like a retailer.
2. When buying a home, think like an investor.
3. Never get more than a 15-year fixed mortgage. Don't tie up more than 25% of your income in house payments.

The effect of money challenges on the family

Over the last three years, our family has accomplished amazing goals in the area of personal finances:

1. Sold our house at a good price before the housing dip. This enabled us to pay off almost half of our debt right off the bat!


2. Over the next 18 months, we were able to pay off the remaining debt. We became completely debt free on June 15, 2007!


3. My side business (music arranging/typesetting) had its best year ever in 2007. This enabled us to quickly pay off our remaining debt and start saving a larger emergency fund.


4. Paid a large chunk of taxes in April 2008 - fortunately we were able to cash flow this through our larger emergency fund. This completely cleaned us out, though, financially!

Even though we have accomplished these amazing goals, I have found myself completely and utterly frustrated with our financially situation. I know I should feel blessed and excited about the future, but with inflation occurring in food, gas prices, and the overall rise in the cost of goods and services, our dollars are not stretching as far as they did 2-3 years ago! I feel stuck on moving forward with our financial goals when the money coming in is not going as far as it once did.

OK, so with all of these frustrations weighing on me on a regular basis, little disagreements on spending between my wife and I have been occurring more and more frequently over the last several months. Unfortunately, these disagreements are happening in front of our children.

Over the last two years, my wife and I have seen disturbing behavior problems in our oldest daughter. These behavior problems have escalated to the point that we have sought family counseling to intervene in our situation. I know that I'm personally responsible for my daughter's issues right now, especially in my possibly obsessive compulsive patterns regarding our finances. I believe the more I can relax in these areas of personal finances, I will communicate a more relaxed household.

I'll be working on this area of my life for the next several days, weeks, and months to come!

The Leverage of Time and Money

I'll be honest, I'm in a period of frustration dealing with work time and money! After the federal and state government confiscated almost $10,000+ of our income in 2007, I'm sick and tired of being broke, sick, and tired! There's got to be a better way to earn actual hourly income and passive income without giving myself a heart attack!

I'm in the process of rethinking how I'm doing what I'm currently doing and gaining more leverage between my time and money.

One of the tools/mentors that I'm currently looking at is Tim Ferriss, the author of The 4-Hour Workweek, I plan on buying this book in the next few days.

I encourage you to check out Tim's web page link here, and see his You Tube video below. Enjoy!

When will I get my stimulus package payment?

If you're like me, since May 1st, you have been checking your bank accounts or mailbox for your stimulus check. Am I right?

Last night, I decided to visit the IRS's website to see what their official statement was on receiving our payments, and here's what they say:

Economic stimulus payments will be issued according to the last two-digits of the main filer's Social Security number. For joint filers, the payments will go out based on the person listed first on the return. Payments will be made by either direct deposit or paper check, consistent with how people filed their 2007 tax return.

If you have questions after reading the below schedule of payments, please contact1-800-829-1040.

People who use direct deposit also will be among the first to receive the payments starting April 28. Direct deposits will be made daily and completed by the date listed below:


DIRECT DEPOSIT

Last two SSN digits: Payments will be transmitted no later than:
00 through 20 May 2
21 through 75 May 9
76 through 99 May 16


Paper checks will also go out based on Social Security number. For Social Security numbers ending in 00 through 09, the paper checks will be mailed starting May 9 and will continue through May 16. A similar process will be repeated in the following weeks.

PAPER CHECK

Last two SSN digits: Payments will be mailed no later than:
00 through 09 May 16
10 through 18 May 23
19 through 25 May 30
26 through 38 June 6
39 through 51 June 13
52 through 63 June 20
64 through 75 June 27
76 through 87 July 4
88 through 99 July 11


People who file a return after April 15 will receive their economic stimulus payment, but probably later than the schedule shows. A return must be filed by October 15 in order to receive a stimulus payment this year.

A small percentage of tax returns will require additional time to process and to compute a stimulus payment amount. For these returns, stimulus payments may not be issued in accordance with the schedule above, even if the tax return was processed by April 15.

Financial Peace University Update (Session 10 and 11)

On Sunday afternoon, we had to combine sessions 10 and 11 of Financial Peace University due to the Mother's Day holiday this coming Sunday. Session 10 is on the topic of “From Fruition to Tuition.” Session 11 is on the topic of "Working In Your Strengths." Our class seemed to really enjoy Dave's teaching on session 11; it really is a great one!

Here's what Dave Ramsey's organization has to say about these tenth and eleventh sessions of FPU:

Week 10 - From Fruition to Tuition

Dave takes the confusion out of retirement investing. He teaches about the Roth IRA, how much to put into various plans (i.e. SEPP, 401k, 403b), and how to best fund our children's college education. There are many ways to save for college - the ESA, 529 Plan and the UTMA/UGMA Plans.

Key Points

1. Independence in retirement is up to you. Don't depend on Social Insecurity.
2. Fund college education only after you are funding your retirement.
3. If you don't have a will, get one TODAY!

Week 11 - Working In Your Strengths

In this lesson Dave teaches the importance of doing with our lives that which we love. Do you look forward to Monday? If not, how can you work toward that dream job that doesn't feel like a job at all?

Key Points

1. The average job in America is now 2.1 years in length.
2. The key to power in our careers is to first look at ourselves.
3. Plan your work around your life rather than planning your life around your work.

Platinum Tickets - awesome benefits

In yesterday's post, I mentioned that I would be following up, today, with the awesome benefits my wife and I received with our "free" platinum tickets.

Here's all the good stuff we experienced:

1. Walked right into Kemper Arena at 11:15am past a huge line at the front doors!
2. At the check-in table, we each received a "goodie bag" with 5-6 autographed books by Dave, coffee mugs, mints, etc.
3. We both personally shook hands with Dave. We also could have had our picture taken with him if we had brought a good camera! My phone camera was just not cutting it in a dark room!
4. We ate a great lunch of prime rib, roasted red-skin potatoes, green beans, roll, salad, and chocolate cake - it was tasty!
5. After lunch, we sat through a Q & A session with Dave - I could have asked Dave a question, but I couldn't come up with anything creative at the time!
6. We sat in the front, 3rd row during the Live Event; I didn't realize how big a benefit this was until I sat down. Last year, we sat in the nose bleed section!
7. During Dave's 2 breaks, we had complimentary snacks and drinks provided in the Platinum room - awesome benefit. I was stuffed when I left Kemper on Saturday night!

Winning these Platinum tickets made the event a great day of fun for us!

Dave Ramsey Live in Kansas City

This past Saturday, May 3rd, Dave Ramsey was live here in Kansas City at Kemper Arena for his Total Money Makeover Live Event. Kansas City is a huge radio market for Dave, and the crowd really turned out to see him. Kansas City now holds the record attendance to date for Dave's Live events - somewhere between 11, 500 - 12,000! Way to go KC!

This was the second year in a row that my wife and I attended. We weren't originally planning to attend since we went last year, but a number of different changes have taken place, including the following:

1. I became the church staff coordinator/leader for Financial Peace University back in January.
2. My wife and I attended a luncheon with Dave's team back in March, where we were given a plan to promote Dave's Live event in our church. Part of that plan included discounted tickets for church members.
3. Additionally, the church would benefit by receiving a free Financial Peace Leadership Kit (retail $300+) and DVD player if we could get 30 church members to sign-up.
4. If we were able to get 50 or more to register, we would receive 2 free platinum tickets.

My church registered 57 people to attend, so we obtained all of these freebies!!! My wife and I were able to attend using our Platinum tickets, which gave us these great benefits:

1. Lunch with Dave - You will enjoy a catered banquet with Dave in the Platinum room. During the banquet, there will be a Q and A session.
2. Gifts - Guests will receive an autographed copy of The Total Money Makeover, as well as other specialty gifts.
3. Platinum Break Room - During the Live Event breaks, you will have access to the Platinum room for complimentary beverages and light appetizers.
4. Priority Seating - Platinum guests will have the best front and center seating during the event.

Tomorrow, I'll comment on all of these great benefits we received with the Platinum tickets. It was awesome!

It's time to get serious about gas

It's time for this country and our government to get serious about gas prices. We can longer afford the stranglehold that the Middle East, Central and South America have on the United States.

Over the last few days, I have heard a couple of news reports regarding a number of options we could pursue domestically to begin getting control of the current price of oil and our dependence on foreign oil. Here is what is being currently suggested:

1. Federal and State reprieves on gasoline taxes. In the State of Missouri, the State House has already given initial approval of this and, of course, the presidential candidates are all chiming in on the Federal gas tax.
2. One northern state governor (Montana?) is proposing to process coal to create gasoline; apparently this is very doable.
3. A large oil deposit has recently been discovered in North or South Dakota (?). Apparently, this oil deposit may be larger than the one in Saudi Arabia. Of course, the environmentalists have issues with this one. I say, it's time to start pumping some oil!
4. Anwar up in Alaska has a large oil deposit that we can't access due to environmental restrictions.

We need to start putting some pressure on our federal and state governments about taking proactive action to get our current gas prices under control. These gas prices are really beginning to crunch/crush the budgets of middle income and lower income families.

It's also time for environmentalists to get realistic about the needs of the citizens of this country and its overall economy. The needs of the many outweigh the needs of the few!

Here's what President Bush is proposing, but he's getting stonewalled by Congress:

(In a Rose Garden press conference, Bush recommended a host of economic fixes:)
* More oil drilling in the United States.
* Turning mothballed military bases into oil refineries.
* Passage of the Colombia free-trade agreement.
* Eliminating farm subsidies for multimillionaire farmers.
* Additional investment in alternative fuels and nuclear energy.
* Possibly suspending the federal 18-cent-a-gallon gasoline tax.

Are you Twittering?

For a number of weeks now, I have had a Twitter account, but I haven't seriously tried this application out. Over the last few days, though, I have decided to really try this social "marketing" tool out and see what it can do.

Short explanation of twittering: they are "mini-blog" type posts about what you are doing at certain times during the day, such as:

just woke up; preparing to go to work...

The key is that the tweets and twitters are short and sweet, without any real care for correct grammar, etc.

This is what I see in the beauty of twitter:

1. Let others know what is happening to you on a regular basis. You can post the humdrum to the dramatic.
2. You can twitter on the go with mobile phones, blackberry's, palms, etc. (I haven't really got this going quite yet).
3. You can stay up with other friends and acquaintances by checking out their tweets and twitters.

On the left side of my blog, check out my twitter updates.

You can also create your own free Twitter account at http://www.twitter.com/. If you do, come follow my world at https://twitter.com/larryjones2001.

Financial Peace University Update (Session 9)

On Sunday afternoon, we had our ninth session of Financial Peace University. Session 9 is on the topic of “Of Mice and Mutual Funds: Understanding Investments.”

Here's what Dave Ramsey's organization has to say about this ninth session of FPU:


Week 9 - Of Mice and Mutual Funds

Dave explains the difference between stocks, bonds, mutual funds, CDs, annuities, and where we can get the very best return on our hard-earned money.

Key Points

1. The best way to invest is to be OUT OF DEBT first.
2. Don't put all your eggs in one basket - diversify.
3. Only work with investment advisers who have the heart of a teacher.
   

Book Review - Thou Shall Prosper (Part 2)

In a previous post, I wrote an brief "overall" review on the book Thou Shall Prosper by Rabbi Daniel Lapin. This book comes highly recommended by both Dave Ramsey and Dan Miller.

Now, over the next several weeks, I would like to go through each commandment in more detail, so let's review Lapin's 10 Commandments for making money:

1. The First Commandment - Believe in the dignity and morality of business


2. The Second Commandment - Extend the Network of your connectedness to many people


3. The Third Commandment - Get to know yourself


4. The Fourth Commandment - Do not pursue perfection


5. The Fifth Commandment - Lead consistently and constantly


6. The Sixth Commandment - Constantly change the changeable, while steadfastly clinging to the unchangeable


7. The Seventh Commandment - Learn to foretell the future


8. The Eighth Commandment - Know your money


9. The Ninth Commandment - Act rich: give away 10 percent of your after-tax income


10. The Tenth Commandment - Never retire

OK, so here's some more detail on The First Commandment - Believe in the dignity and morality of business.

Lapin suggests in this chapter that making money is more difficult to do if, deep down, you suspect making money to be a morally reprehensible activity. Jewish tradition views profit and wealth creation as a moral activity if, of course, your occupation is a moral one to begin with!

Step one in increasing your finances is to begin mentally and spiritually accepting these two beliefs:

1. you are in business


2. the occupation of business is moral, noble, and worthy

Lapin asserts that if you feel really good about your profession, that you bring others along with you because of your enthusiasm. Making more money changes you as a person. You become a slightly different person, and people notice this change.

This could be expressed in a mathematical equation:

Old you + More money = New you,

or to put the equation a different way:

More money = New you - Old you

In order to acquire more money, you need to work on far more than merely learning new skills. You need to work on changing yourself and belief system.

Society teaches today that if you own a business and are earning an incredible amount of money, you must be cheating or stealing from others. Lapin totally rejects this notion. Are there bad, corrupt business out there? Sure, there are a few bad apples, but the majority of businesses are providing valuable goods and services to people and their communities.

In our business and occupations, we all must believe that we are providing valuable goods and services to others. This is a morally excellent way of life!

The Gas Bubble

I'm sure all of us have noticed over the last several weeks, that gas prices keep slowly and steadily getting higher and higher with no relief in sight. Along with gas prices, we have seen the cost of goods and services go up as well due to the cost of gas and diesel fuel.


As I was driving to work this morning, I was listening to one of our local talk shows on the radio (The Darla Jaye Show), and there was a special guest expert on this particular program giving his take on the current gas price rise.

He mentioned that there were 2 main factors driving up the cost:

1. A declining dollar value
2. Oil speculation by commodity traders

This particular expert believes that if the dollar begins to strengthen, again (and it is showing signs that it will soon), then oil speculators will get out of the market, and "The Gas Bubble" will burst, causing gas prices to dramatically fall.

Let's hope this bubble busts, soon!

To read more of this story on Darla Jaye's show blog, follow this link.

Financial Peace University Update (Session 8)

On Sunday afternoon, we had our eighth session of Financial Peace University. Session 8 is on the topic of “That’s Not Good Enough: How to buy only big, big bargains.”

Here's what Dave Ramsey's organization has to say about this eighth session of FPU:


Week 8 - That's Not Good Enough!

Dave teaches us his personal techniques on how to negotiate and get the very best deal when buying something. This is a fun lesson because it helps open our eyes to the advantages of being able and WILLING to negotiate, especially on big-ticket items.

Find a Deal!
Looking for a deal? Check out these great places online for good prices and peer reviews!

1. www.froogle.com - Google’s search engine for hot deals!
2. www.pricegrabber.com - Comparison shopping from all over the web!
3. www.epinions.com - Great real-world product reviews and opinions.
4. www.ebay.com - You can find just what you need—in someone else’s attic!

Key Points:

1. Don't be afraid to negotiate. Be willing to walk away.
2. Always use the power of cash.
3. Remember the places where you can find great deals.

Getting your financial life organized

Over the last several months, I've been spending a little time each week trying to get my family's financial life organized.

Now that we're completely debt free and now focused on trying to "win" with our money, I want to double back and be sure that my family is now on a solid, financial foundation as we move forward.

Here's some of the activities I've been involved in over the last several months to shore up our foundation:

1. purchased a medium-size fireproof safe to have a safe, secure place to put all the important legal documents I would be putting together for a strong financial foundation.
2. purchased will and other legal documents online; my wife and I filled these out and had them officially signed and notarized.
3. purchased more disability and life insurance to protect my family if I should become injured or pass away unexpectedly.
4. secured copies of my wife's and my birth certificates.
5. secured copies of our marriage license.
6. secured miscellaneous additional legal documents important to the family.

What I have remaining to complete in this area:

1. secure my daughter's gift certificates
2. purchase a portable hard drive to store important documents, files, photos, and store this in our safe.
3. be sure all my paper legal documents (will, listing of assets, etc.) is completely clear and complete
4. write down instructions to my wife or family members so they know exactly where to go and what to do in case of my death or both of our deaths.
5. put together my personal notes, journals, and instructions to access my 2 personal blogs for "posterity" purposes to my family.
6. put together any and all recordings I have ever created with my playing trumpet, conducting, and music arranging for "posterity' purposes for my family
7. put together any original music and arrangements I have ever written for "posterity" purposes.

As you can see, this will probably be a continual, ongoing projects for my family!

Larry

Financial Peace University Update (Session 7)

On Sunday afternoon, we had our seventh session of Financial Peace University. Session 7 is on the topic of "Clause and Effect."

Here's what Dave Ramsey's organization has to say about this seventh session of FPU:

Week 7 - Clause and Effect


There are tons of different types of insurance: health, homeowner, car, life, disability, among many others. You have to make insurance a priority for you, learn what you need, and get it now. One of our best tips is to shop for a policy with a higher deductible and bank the extra for an emergency.


Dave recommends Zander Insurance for your term life, disability, and health insurance needs and also for Identity Theft Coverage.



Key Points:

1. Make insurance coverage a priority to avoid a financial disaster.
2. Learn the types of insurance you really need and get them NOW!

Financial Peace University Update (Session 6)

On Sunday afternoon, we had our sixth session of Financial Peace University. Session 6 is on the topic of "Buyer Beware: The Power of Marketing on Your Buying Decisions." I think this DVD is the most humorous so far that we have viewed, but it was also very eye-opening to how marketers prey on our emotions.



Here's what Dave Ramsey's organization has to say about this sixth session of FPU:

Week 6 - Buyer Beware!

You are being marketed to and you need to develop power over purchases and the various marketing methods that businesses are using on you. Phrases like "90 days same as cash" and "No interest until 2009" are meant to lure you into debt and you could end up paying substantial stupid tax - mistakes with ZERO's on the end! Also, for major purchases (larger than $300) ALWAYS wait 24 hours and if you are married, ALWAYS communicate with your spouse.

The Church of Oprah - an Idea Virus is spreading throughout the Christian world right now

I admit from the beginning that this blog post is totally off-topic from personal finances, but I think it's important enough to spread the word.

You may have already had someone send you this YouTube video link via e-mail. Yesterday, my wife received 5-6 emails alone from friends and family regarding this YouTube video about The Church of Oprah. This is seriously scary stuff. If you haven't seen this, yet, I would encourage you to watch the video below.

My wife has watched Oprah for years, and even subscribes to the O Magazine. My wife is discerning and totally understands and comprehends when the opinions she expresses on her talk show don't always "jive" with what we believe as born-again believers. I've always believed she (Oprah) was a "new ager" and never a true born-again believer, in spite of all the loving and generous things she does around the world to help needy people. Just remember that the Bible speaks of Satan as being an "angel of light." Hmmmm, that sounds familiar; anyone ever heard of The Angel Network!

Anyway, check out this video about Oprah, and pass the word on to other believers. Keep this Idea Virus moving!

Larry

Book Review - Thou Shall Prosper (Part 1)

Over the last several weeks, I've been reading the book Thou Shall Prosper by Rabbi Daniel Lapin. This book comes highly recommended by both Dave Ramsey and Dan Miller.

I'll say this from the beginning, this is a deep book and not an easy read (it was written by a Rabbi!), but I'm so glad I persevered and made it all the way through. The last 2 chapters were the best of the entire book.

For today's post, I'm just going to give a quick overview of what the book is about.

Introduction: This book is essentially a Jewish outlook on making money and creating wealth.

Lapin contends that God's chosen people have long been known to be excellent business people and good money managers, due to certain fundamental principles detailing how the world works being deeply ingrained in the Jewish people since the time of Abraham. These certain fundamental principles all come from the Bible and Jewish oral tradition.

The essential "framework" in which Lapin constructs his book is his Ten Commandments for making money.

1. The First Commandment - Believe in the dignity and morality of business
2. The Second Commandment - Extend the Network of your connectedness to many people
3. The Third Commandment - Get to know yourself
4. The Fourth Commandment - Do not pursue perfection
5. The Fifth Commandment - Lead consistently and constantly
6. The Sixth Commandment - Constantly change the changeable, while steadfastly clinging to the unchangeable
7. The Seventh Commandment - Learn to foretell the future
8. The Eighth Commandment - Know your money
9. The Ninth Commandment - Act rich: give away 10 percent of your after-tax income
10. The Tenth Commandment - Never retire

I'll post more on this book over the next couple of weeks.

Larry

Financial Peace University Update (Session 5)

On Sunday afternoon, we had our fifth session of Financial Peace University. Session 5 is on the topic of "Credit Sharks in Suits." This session is a combination of humorous stories from Dave when he has dealt with creditors in the past, but also some disturbing testimonials from other people that have gone through difficult times with bill collectors. In this DVD, you can definitely tell that Dave loathes the majority of bill collectors, and his business is doing all it can to push for tighter restrictions on this industry.


Here's what Dave Ramsey's organization has to say about this fifth session of FPU:

Week 5 - Credit Sharks in Suits

Dave teaches us how to check and clean up our credit report and deal with collection agencies. Knowing how to deal with creditors gives us the confidence to work our Debt Snowball.


Stop those annoying telemarketer calls! Use the government's National Do Not Call Registry to protect your number from unsolicited calls.


Stop all of the "pre-approved" credit offers that fill up your mailbox! You can have the credit bureaus turn away companies who check your credit report in order to send you unsolicited credit offers.


One in 12 Americans will fall victim to identity theft today. Anyone can be a victim, costing valuable time and money. Zander Insurance has designed the “Identity Safeguards” plan to protect you.

Key Points

1. If you are unable to pay the minimum payments, use the Pro-Rata plan.
2. Always budget for your necessities before paying off any debt.
3. Check your credit report for errors every two years.

Sunday morning Advance article - early preview

To all my FPU class members:

Bro. Paul has blessed me this week by allowing me to write "his" column in the Advance for this Sunday. How cool is that! The article's focus (of course) is on personal finances and promotion of the Dave Ramsey Live event on May 3.

I thought I would give you all a preview of the article before Sunday morning. Check it out.


Larry's Advance article for March 30, 2008:

Money is an excellent servant, but a horrible master.

In Romans 12:2 we read, "And do not be conformed to this world, but be transformed by the renewing of your mind…" I'm afraid that many Christians today, have been conformed to the world's image when it comes to money. Approximately 70% of American families live paycheck to paycheck, and the average typical household debt totals more than $38,000. We have too much month at the end of our money!

It may surprise you to learn just how much the Bible says about finances. There are more than 2,350 verses on how to handle money and possessions, and our Lord said more about money than almost any other subject. He knows how important it is to be in control of our money, instead of it controlling us.

Over the last three years, my family and I have undergone a total money makeover, living on less than we make and aggressively paying off all of our debt, while still continuing to give above the tithe to our church. God has done an amazing work in our lives, and we invite you to join us on the journey of Financial Peace.

Our financial counselor through this process has been best selling author and nationally syndicated radio talk show host, Dave Ramsey. Dave makes financial talk simple, giving you a step by step plan to get out of debt and then save, invest, and give like never before.

Dave will be in Kansas City for his Total Money Makeover Live Event on Saturday, May 3 at Kemper Arena. Our church has been given a special discount rate of $23 per ticket, and I invite you to sign-up through the church and attend this life changing event. Once the live event is over, we will be offering additional Financial Peace University classes.

For more information on this event, please see the article in this week's Advance, or stop by the table in the main lobby after the service.

Larry Jones
Associate Worship Pastor

Putting my situation in perspective

After my rant yesterday regarding my income tax situation for this year, I started to "cool off" a little and try to put my situation in perspective as compared to the rest of the world. I'm rich and wealthy enough that the government has to tax my brains out!

We are so blessed here in the United States, that it really is easy to lose perspective with the poverty and scarcity around the world.

To help me put things in perspective, I ran across this cool website where you can plug in your annual income, and it ranks your income against the rest of the world's population.

Check out the website: Global Rich List

Here's how I ranked:

Your Rich List Position = 45,439,321
You are the 45,439,321richest person in the world!
You're in the TOP 0.75%richest people in the world!

After seeing this comparison, I have nothing to complain about, anymore!

Larry

Uggh - it's tax season! Render unto Caeser what is Caeser's!

I'm admitting right up front here that I've been really angry over the last few days! I believe, though, that it's righteous indignation!

My family and I been doing everything in the right way - I've been trying to build a solid part-time business to gain additional income in order to pay off all of our debt, and start building up our 3-6 month emergency fund. I know (in the back of my brain) that there will be taxes associated with this additional income and I try to plan for that eventuality. I try to keep up with my quarterly tax filing the best I can (I have to file quarterly because I'm a minister and a business owner). I save all of my receipts and take all deductions that are due me, my family, and my business.

Over the last week, I've been spending a lot of time getting all of my personal and business paperwork together to do my taxes. During the evenings Monday through Thursday, I totaled up all my receipts and prepared all my numbers to enter into TurboTax on Friday.

So on Friday, I entered all of my numbers into TurboTax and definitely got sticker shock on my Federal taxes this year! I think my additional business income threw us into another tax bracket! What we owe in federal and state taxes this year on April 15 will totally wipe out all of our savings! We'll be back working on Baby Step 1!

I know what we have been working on and trying to accomplish over the last 3 years will be worth it in the end, but the government has really stolen my joy over the last week! I feel that I have totally been ripped off. My family and I are living a comfortable, debt-free, old used cars, no big flat screen TV kind of life, I'm trying to provide for my family to give us a stronger financial foundation, and then the government swoops in and takes away all of our savings!

I wish everyone had to pay quarterly taxes like we do, so that you can all experience the actual pain of paying the government. The majority of you out there that have your taxes deducted from your paychecks can't really comprehend how painful our tax burden has become. If everyone had to file quarterly taxes, there would be a revolution in this country!

Larry

Dave Ramsey Live is coming to Kansas City

About 3 weeks ago, my wife and I attended a luncheon here in the Kansas City Metro area put on by Dave Ramsey's organization. The purpose of the luncheon was to encourage metro area churches to promote the upcoming Total Money Makeover Live event on Saturday, May 3rd. The two representatives from the Lampo Group explained that the desired progression for getting Dave's message into churches was this:

1. Drive as many church members to the Live Event as you possibly can in order to give them an overview of Dave's financial program.
2. After church members have attended the Live Event, promote additional new classes of Financial Peace University.

After hearing Dave's representatives say this, the light bulb went off in my head regarding the future of Financial Peace University at First Baptist Raytown. Even though we had just begun one class of FPU at the end of February and have had an incredible response (approximately 86 students!), my own personal desire and goal has been to offer multiple classes during the week all year round. I started to get the vision of getting hundreds of our church members down to the Live Event and then enroll them in FPU immediately afterwards.

We have begun initial promotion of the Live Event, yesterday, with hall posters, a small article in the church bulletin, and a lobby sign-up table. This coming Sunday, we are going to hit it even harder with a video promotion at the end of both services, a plug from the pastor, and I have the privilege of writing the "pastor's bulletin article" this week. I would love to see 200-300 of our church members attend and catch the vision of getting their financial houses in order.

Churches receive a special $23.00 rate per ticket for general admission, so this really is a good deal!

Larry

A Rainy Day Fund is always a great idea!

On the way in to work each morning, I usually listen to one of our local talk radio stations. Over the last couple of days, I keep hearing a news story about how the mayor of Kansas City, Missouri, the Honorable Mark Funkhouser (affectionately known as "The Funk"), is in the process of building up the city's "Rainy Day Fund."

I don't agree with all of the Funk's policies, but on this one, I have to give the mayor a big "thumbs up!" Way to go, Mr. Mayor!

Hmmm, I wonder if the Funk is a Dave Ramsey listener?

Larry

Tax Rebate - I misunderstood the news!

OK, I've dug a little deeper into this stimulus package rebate, and here's what the IRS is saying:

How much will you get? The actual amount depends on the information contained on your tax return. Eligible individuals will receive between $300 and $600. Those who are eligible and file a joint return will receive a total of between $600 and $1,200. Those with children will get an additional $300 for each qualifying child. To qualify, a child must be eligible under the Child Tax Credit and have a valid Social Security number.



So, for a family of 4, the rebate could be up to $1,800 with the addition of $300.00 per child if you qualify. I stand corrected. The Kiplinger's Tax Rebate Calculator was right when I plugged in our numbers a few weeks ago.

Larry

Financial Peace University Update (Session 4)

On Sunday afternoon, we had our fourth session of Financial Peace University. Session 4 is probably the longest DVD in the FPU program, 100 minutes, on the topic of "Dumping Debt." This makes sense, though, since dumping debt is really Dave Ramsey's signature topic and what has made him a multi-millionaire.

Here's what Dave Ramsey's organization has to say about this fourth session of FPU:

Dumping debt is one of the most straight forward lessons, but it is usually one of the most difficult. Debt has only become accepted as normal in America over the last 20 years. The key to eliminating debt is remembering that it is only 20% head knowledge and 80% behavior. Remember that you always spend more with plastic- cash hurts more! Make a commitment to never use credit cards again. This is the first and most important step to dumping debt.

Because we have accepted the debt myths that society has taught us, many of our families, churches, and even government institutions have been handcuffed by debt! It's time to lead a money revolution and push back against what "normal" is now. As Dave talks about, I want to be weird! I'd rather "look" poor right now, and be a millionaire by my 50s and 60s so that I can live and give like no one else!

Larry

Food prices are definitely on the rise!

For those of you "nerds" out there that attempt to budget for food (groceries and a little for dining out), I'm sure you're probably like me and become frustrated when your spouse comes home from the grocery store having spent more money than you budgeted for. You may have seen this happening over the last several months.


Or, you go to a restaurant and notice your final bill is $5.00+ more than it used to be, and you start over spending your dining out budget line item. I really noticed this starting to happen a few weeks ago when we ate at Chipotle. Our family of 4 could normally eat here for around $18.00. When we ate there a couple of weeks ago, the final bill was around $24.00. We ordered what we normally eat there.

So, I think that gas prices have finally caught up with the prices of our normal goods and services! Hopefully, with gas prices continuing to rise, we won't get hit with too many more food price increases in the near future. They can be real budget busters.

Larry

Financial Peace University Update (Session 3)

On Sunday afternoon, we had our third session of Financial Peace University. We had another great day with beautiful weather and fairly decent attendance. I'm wondering, though, if the time change slightly affected us, or was it this week's lesson "Cash Flow Planning" (the dreaded "B" word - budget).


Here's what Dave Ramsey's organization has to say about this third session of FPU:

Dave teaches us step by step how to put together a zero-based monthly budget and how to complete all of the financial management forms. Taking control of your money takes time, effort and patience. Check your progress at LEAST once a week and give your budget 90 days to really start working. Plus, get a refresher on how to balance your check account!


Key Points:

1. Spend all money on paper before the month begins.
2. Use the Envelope System for successful cash management.
3. Give your budget 90 days to really start working.
   

Putting together a detailed budget is hard work, but it is so worth it in the end. Dave is right on track when he speaks about people out there selling books that basically tell you not to even mess with budgets because they don't work (i.e. David Bach). I love some of the principles that people such as David Bach teaches, but on the concept of budgeting, Ramsey is right, Bach is wrong (and this is speaking from 5+ years of experience doing it both ways!)

“If you go to work on your goals, your goals will go to work on you. If you go to work on your plan, your plan will go to work on you. Whatever good things we build end up building us.” - Jim Rohn (American Speaker and Author. He is famous for motivational audio programs for Business and Life. )

Larry

Update to the Blog

For your convenience, I just added a "Feed Blitz" widget to the upper left hand corner of the blog page. Instead of subscribing to the feed in a reader or coming back to this web page on a regular basis, you can just add your e-mail address to my Feed Blitz account and automatically receive an e-mail when I add an new post to my blog.

The Light Bulb Finally Came on

At least once or twice a week, I try to scan as many financial blogs as I can stay current with what's happening out in the personal finance world. In the "Stupid Tax" section of Dave Ramsey's site, I ran across this little gem about bank programs that are supposedly designed to help you, but in reality are another way for the banks to nickel and dime us so that they get rich.

If we just pay attention and become better managers of our finances, we won't encounter the type of problem that Sharon got herself into. Enjoy the article.

You can also view the original article here.


The Lightbulb Finally Came On

By Sharon in Houston

A few years ago my credit union created an overdraft fund of $500 to cover me. Seemed like a great deal.

In less than a year, I was hooked and used it every payday. I paid $29 each time and soon became "clever" enough to make sure I only incurred one $29 charge every payday. Rarely did I not use the $500 overdraft feature.

One day a lightbulb came on in my head: "Wait a minute. I'm paying the bank to play with the same $500 over and over and over." I added it up. The bank's generous initial investment was $500. I used this feature at least 24 times a year, so it cost me $696. Plus, if I had to guesstimate all the other times I incurred the fee (about 20), that part adds up to $580. So, to play with the same $500 month after month, year after year, cost me about $1,300!

For 2008, I broke free of this crazy program. I did it! I gave the bank their $500 back, and the service was removed from my account. No more going up to the $500 mark and taking the chance of going over, thereby incurring more than one $29 fee. No more running to the bank to get that last $500 and having to pay everything else with cash. No more paying the bank $1,300 a year for the "privilege."

My STUPID TAX for the past 3 years is at an end. Blessed be.

WE'RE DEBT FREEEEEEEE! - more of the Jones' Family Story

On Friday, June 15, 2007, my family and I finally became completely debt free! It's a powerful feeling of release to be out from under the thumb of the banks that you owe money to!

Getting to this point, though, has taken some sacrifice, especially in our culture of buy now, pay later. First we sold our house. We had to be on a strict budget and monitor our cash flow on a regular basis. Part of the debt we wracked up was due to starting and launching my business, so I had to put the business on hold and place it on a slower growth track, while I back tracked to clean up our mess!

Now moving forward from this point, we have more available cash flow to sink into the business to make it more profitable, plus we have more cash flow to work on Baby Step 3 - large emergency fund of 3-6 months of expenses.

You know, being debt free really is a spiritual issue. Here are the ways I believe becoming debt free is relevant to our spiritual walk:

1. It shows the Lord we are good stewards of what He has given us.


2. It helps us grow in our reliance and faith in Him to provide for our needs.


3. It breaks the god of materialism in our lives.


4. It frees up more available cash flow to give to your church, the poor, and to those in need.


5. It makes us wise, according to the book of Proverbs.


6. It teaches us patience and self control (fruits of the Spirit).


7. It teaches us to be on the same page with our spouses on family finances.


8. It places us in a better place mentally and physically because we are no longer stressed out about having enough money to pay the bills!

I'm sure I could list even more, but you get the idea. Being debt free is awesome. As Dave always says, just get gazelle intense about it and create a plan to win with your finances.
For more information on Dave Ramsey and becoming debt free, visit DaveRamsey.com.

Financial Peace University Update (Session 2)

On Sunday afternoon, we had our second session of Financial Peace University. We had another great day with beautiful weather and good attendance.


The second session/DVD viewing is titled "Relating With Money - Nerds and Free Spirits Unite."



Here's what Dave Ramsey's organization has to say about this second session of FPU:



The importance of working together in relationships and how we handle money is the key to this lesson. Men and women think very differently about money. The "nerd" and the "free spirit" must learn how to work together. Write your budget down, iron out the wrinkles, budget together (with your spouse or with someone who will hold you accountable), and set boundaries. The most common pitfall people face is trying to get out of debt without doing a budget. Always discuss changes with your spouse in a "budget committee meeting."


Another key component to this lesson was a discussion of how to educate your children in dealing with finances. Dave Ramsey's company has a number of resources to help educate your children about money, including his Financial Peace, Jr. kit for kids (which includes a chore/commission chart and Give, Save, and Spend envelopes) and his Junior book series. My wife and I purchased all of these items, and they have been helpful in imparting financial wisdom to our daughters.

Larry

Tax Rebate Calculator - correction

Over the weekend, I was reading an e-newsletter from U.S. Legal Forms, and in the newsletter they mention something about a $600 per person cap on the Tax Rebate. For a married couple filing jointly, they said your maximum rebate would be $1, 200.00.


So, I think there's possibly a problem with the Kiplinger on-line tax rebate calculator. Instead of my family receiving $1,800, it looks like we may only be getting back $1,200.


If I uncover any more significant information on the tax rebate, I'll keep you posted.


Larry

Tax Rebate Calculator

Over the last several weeks in the media, there have been many questions surrounding the specifics on the tax rebate that President Bush and Congress have put together.

To be honest with you, I have paid moderate attention to the discussion, but I have somewhat assumed that my rebate was not going to be very substantial.

Then, I ran across this nifty little tax rebate calculator at Kiplinger.com. After I ran my numbers and specific information through it, I was pleasantly surprised to find out that I should be receiving approximately $1,800 (probably $900 each for both my wife and myself).

Now, I'm not holding my breath that I'm going to get that exact amount, but whatever amount we do receive will most likely be higher than I ever anticipated.

When we do receive our money back from the government (yes, it's my family's money, not the government's money!), I plan on using it to continue funding our large ER fund - Baby Step 3 on the Dave Ramsey plan.

Hey, You. Get a Second Job! (part 3)

In two previous posts, I discussed the issues surrounding my music arranging business as a second income stream. As the business grew and expanded, the income generation went up to help my family get out of debt faster.


One thing I forgot to mention in this discussion of additional income streams is that my wife also got a part-time job for a period of time (approx. 6 months) to help us get out of debt even faster. When my wife had our first child over 7 years ago, she stopped working outside the home, but when both our daughters were in the same school last year, she had blocks of time in her schedule when she could work a part-time job. My wife probably averaged $350-$400/month of income during this time, but hey, I'll take it to get out of debt even faster! So with my wife working, we had three income streams for a period of time to accelerate our debt reduction.

When you finally get gazelle intense (as Dave Ramsey would say) about getting out of debt, you need to have a serious game plan about generating additional income streams to get out of debt as quickly as possible. The longer you put it off or the longer it takes you, the less likely it's going to happen.

As Larry the Cable Guy says, "Get 'er done!"

Financial Peace University Update (Session 1)

Yesterday afternoon, we had our very first session of Financial Peace University and it has become a huge hit in our church and community!

We currently have 91 people registered to take FPU and 84 people were in attendance, yesterday! What an awesome way to kick off the very first class of FPU at First Baptist, Raytown, MO. A lot of people in the class are already pumped about making some big financial changes in their lives.

The first session/DVD viewing is titled "Super Saving" which deals with Baby Steps 1 and 3 in the Dave Ramsey approach:

Here's a quick summary of The "Baby Steps" (taken from http://www.mdmproofing.com/iym/babysteps.html)

1. Make minimum payments on all your bills. Squeeze your budget until you've accumulated $1,000 cash. This is your beginner Emergency Fund.

You'll never make headway in your quest to get out of debt if you don't have at least a little something to fall back on. That "little something" is called an Emergency Fund, and that's what this first $1,000 is for (or $500, if you make less than $20,000 per year). Put everything else on hold. Make only minimum payments on all your debts; take on a second job if necessary; fore go retirement-plan contributions (temporarily) if you can. Get your emergency fund together first. Get it together fast.

If you already have more than $1,000 in savings, and in anything other than a retirement account, withdraw everything except the $1,000. Use these proceeds for Baby Step #2, regardless of penalty (if the money were in CD's, for instance, there would like be a penalty for early withdrawal).

Once you have accumulated the $1,000 (or $500), keep it someplace where you cannot easily get at it.

It must be available, but not easily available.

It must be available, but not easily spendable.

Why?

"Sometimes," Ramsey instructs, "you have to protect yourself from you."

2. Pay off your debts in order of smallest balance to largest. "Snowball" the payments as you go.

Write down all your debts except your home. (If you're into spreadsheets, something like my DebtTracker spreadsheet will come in really handy here!) Arrange them in order from smallest balance to largest. Do everything you can to pay off the smallest debt listed (take on a second job, or sell stuff if you have to!) while making minimum payments on everything else.

Once that first debt is paid and gone, then "snowball" that monthly payment money: Apply it to the next-smallest debt (in addition to that debt's normal payment) on your list. When that one is paid off, then take that monthly payment amount and start applying it toward your next debt. Get the picture? The more debts you clear off, the more your "snowballed" payments are increasing, and the more headway you'll make — faster — on your larger balances.

Check my Debt Snowball page for a more thorough discussion of this part of the Baby Steps. And take a look at ExcelGeek's Debt Snowball / Rapid Payoff Calculator spreadsheet if you want a kick-butt way to set up and track your Snowball.
What's the rationale behind paying off your debts in this manner? Ramsey writes: "The reason we list the debts from smallest balance to largest is to have some quick wins. sometimes behavior modification is more important than math. This is one of those times." Furthermore:

When you pay off a nagging $52 medical bill or that $122 cell-phone bill from eight months ago, your life is not changed that much mathematically yet. You have, however, begun a process that works, and you have seen it work, and you will keep doing it because you will be fired up about the fact that it works.

One important caveat: If you're working on this second Baby Step and some emergency arises which forces you to spend any part of your emergency fund, immediately stop this step and return to Baby Step #1. Stay there until you've refunded your Emergency Fund in full.

3. Create a full-fledged Emergency Fund containing 3 to 6 months' worth of expenses. Bad luck and rainy days are a part of life. Expect them. Prepare for them.

If you'll keep three to six months' worth of bills and living expenses in a savings or money-market account, then you'll have gone a long way toward erasing the "what if" stress from your life. The emergency fund allows your family to always be ready for whatever life hurls at you. Sure, that Murphy guy might still stop by your residence every so often, but he won't be able to run roughshod over your financial life the way he used to. Ramsey takes the analogy a step further: "Don't forget that the emergency fund actually acts as Murphy repellent."

You must also flip a mental switch regarding your e-fund: It is there for bonafide emergencies. Nothing else.

Ramsey elaborates: "Beware not to rationalize the use of your emergency fund for something that you should save for and purchase. Something on sale that you 'need' is NOT an emergency. Prom dresses and college tuition are NOT emergencies," he says. [Aside: This, of course, is where Mary Hunt's Freedom Account concept enters the picture.]

In any event, get your full e-fund together, and you'll be in a financially-elite class. You won't need your credit cards any longer ... even for emergencies. And the next time your car's alternator detonates?

"What used to be a huge, life-altering event," Ramsey says, "will now become a mere inconvenience."

4. Direct 15% of your annual pre-tax income into your retirement plans. Utilize tax-advantaged accounts such as 401ks and Roth IRAs, if eligible.

Now it's time to get your retirement funds in shape. Contribute the maximum amount you can, your target being contributions of a full 15 percent of your household's gross (pre-tax) income. If you have tax-advantaged plans (401k or Roth IRA, for example) available to you, then exploit them to their fullest extent. If your company matches any part of your contributions, do not consider this as part of your 15 percent. Additionally, do not include expected Social Security benefits in your retirement calculations. "I don't count on an inept government for my dignity at retirement, and you shouldn't either," Ramsey says.

At this point, if you haven't already done so, it is time to begin seriously educating yourself about mutual funds, stocks, and the financial markets.

"Getting older is going to happen," Ramsey says. "You must invest now if you want to spend your golden years in dignity."

5. Take care of college funding. Fully fund Educational Savings Accounts and/or utilize 529 plans.

If you have kids, then you'll have college to worry about. The earlier you start, and the more attention and funding you're able to give to it, the better off you and your kids will be. Since college tuition inflation averages around 7 to 8 percent per year, your investments will need to (hopefully) do better than that. Always use tax-advantaged accounts (such as 529 plans or Education Savings Accounts) to their fullest extent to assist with this. These plans do have certain income limits and other restrictions and/or fees, so be sure to check the fine print before diving in.

Regardless of how you save for college, do it. Saving for college ensures that a legacy of debt is not passed down your family tree. Sadly, most people graduating from college right now are deeply in debt before they start. If you start early or save aggressively, your child will not be one of them.

6. Become financially "ultrafit" and 100% debt-free: Pay off your home early.

For most people, the mortgage payment is the single largest monthly payment they will ever have. Just imagine what you can do with that money when you've paid it off. Imagine how you'll feel when you make that last payment. Round up every spare dollar you can find and put it toward your mortgage, regardless of all the oft-quoted benefits of mortgage-interest tax detectability. (How wise is it to continually pay, say, $5,000 in interest to a bank each year, just so that you won't have to pay $1,500 in taxes to the government? The small minority of folks who own their homes debt-free probably don't mind paying that $1,500 a bit.)

For more comments regarding home, home loans, and their affordability, you might refer to my "Home, Expensive Home" article from Aug. 30, 2002.


7. Get to the point where your money works harder than you do: Build wealth (mutual funds, real estate, etc.), have fun, and give!

With every bit of your debt zeroed-out and your savings tanks on the full mark, you can finally reach for the "pinnacle point" — that moment in your life where your money works harder than you do. What would it be like to exit the Rat Race and live entirely off the returns of your savings and investments? Find out: Invest more, and more, and more. Invest more to continue to grow your wealth. Give more so that you can continue to grow your soul.


I realize that some people view the Dave Ramsey approach as too simplistic, but I believe for the "average" person, this approach makes a lot of sense. If you follow his plan, then over time you will build wealth. At retirement you will probably be in the top 5-10% of the wealthiest American citizens. As Dave mentioned in the DVD yesterday, there's a fine line between hording and saving, so you have to check your attitude your entire financial journey.


Larry

TrafficJam.com

I just found out about a great new site and resource that contains relevant, popular links to a variety of different blogs in the blogosophere.

If you want to read more about finance and investing information, go on this new site and click on that specific category ranking in the upper right 'box' on TrafficJam.com.

Head on over to http://www.trafficjam.com/ and check it out!

Larry

What I'm reading right now - Automatic Millionaire (part 2)

Today, I'm continuing with more excerpts from The Automatic Millionaire.

On page 33-35, I really liked what David says in the following excerpts:

Are You Earning More...And Saving Less?

Over the years, I've watched people I love increase their earnings but often not their freedom. I've got one friend who's worked extremely hard and seen his income go from $50,000 a year to more than $500,000. But while his lifestyle has increased along with his income, his savings haven't...He's succeeding at a level that most Americans can only dream about, but in reality he's caught up in the same rat race as a person who earns a fraction of his salary.

What about you? Chances are that you're earning more than you were ten years ago. But are you saving more? Are you getting ahead or running harder just to stay even. Is your income helping you become more free or less free?

Why Most Americans Have So Little Saved

Aside from the equity they may have in their homes, most Americans really don't have any savings to speak of. On average, most of us have less than three months' worth of expenses in the bank.

Why so little? The answer is simple...most of us waste a lot of what we earn on "small things." I put quotation marks around "small things" because the phrase is misleading. The so-called small things on which we waste money every day can add up in a hurry to life-changing amounts that ultimately can cost us our freedom.

I Owe, I Owe...It's Off To Work I Go

It doesn't have to be this way. Most of us don't really think about how we spend our money - and if we do, we often focus solely on the big-ticket items while ignoring the small daily expenses that drain away our cash. We don't think about how many hours we had to work to earn the money that we so casually spend on this or that "small thing." Even worse, we don't realize how much wealth we might have if, instead of wasting our income, we invested just a little of it.

What I'm reading right now - Automatic Millionaire (part 1)

The first time I read this book was about 3-4 years ago, and I was blown away by the simplicity of the Automatic Millionaire system. I totally believe in almost everything David talks about, but before you implement these automatic strategies, you really need to (at the very least) be completely debt free.

Over the next several blog posts, I'll highlight some specific strategies from the book that are definite "must-dos" for a strong financial future.

On page 32-33, I really liked what David says in the following excerpts:

"...The trick to getting ahead financially, he said, is watching the small stuff - little spending habits you have that you'd probably be better without.

Most people have a hard time believing this. Why? Because they are taught the opposite. We live in a society where it's become almost patriotic to spend every penny of our paychecks. In fact, we often spend our pay increases even before we get them. Merchandisers know this; they run ads every November and December specifically designed to get people to spend their year-end bonuses. Even the government promotes this idea..."
{Larry's comment: hmmm, sounds familiar - ever heard of a stimulus package!}

"Unfortunately, there's a problem with this. If you are living paycheck to paycheck, spending everything you make, what you're really doing is running an unwinnable race.

Here's what the race looks like:

GO TO WORK...MAKE MONEY...SPEND MONEY...
GO TO WORK...MAKE MONEY...SPEND MONEY...
GO TO WORK...

Notice how it always comes back to GO TO WORK. This is the endless treadmill that most people are on. Some people call it the 'rat race.' It's a race in which hardworking people bust their butts, working forty to fifty hours a week or more - and wind up with almost nothing to show for it because at the end of the month their paycheck is already spent.

It's an unfair, vicious cycle, and you don't want to fall into it. If you are already there, you want to get out...fast. When you spend everything you make (or, even worse, spend more than you make), you subject yourself to a life of stress, fear, uncertainty, debt, and even worse - bankruptcy and the threat of future poverty."

Financial Peace University Update

In an earlier post, I mentioned that I am in the process of coordinating our church's very first Financial Peace University class.

Our first class meets this Sunday afternoon, February 24, and I'm happy to announce that we have currently 72 people signed up, and I'm sure we'll have a few more enroll before Sunday! This number just blows my mind, but I know that even more people in our church and outside our church need this material.

The next 13 weeks is going to be an awesome experience, and I'm just blessed to be able to play a small role in Financial Peace coming to First Baptist, Raytown, MO.

Larry

Dave Ramsey Intro Video

I was poking around YouTube today, and I ran across this video of Dave Ramsey. This is a really good introduction or synopsis of the Dave Ramsey plan. I hope you enjoy it.

Larry

Hey, You. Get a Second Job! (part 2)

Today, I continue with my story about my business as a second job.

Even though my music arranging business ended up as a second stream of income, I really did everything backwards.

This was the process I originally went through 5-6 years ago:

1. Had a little bit of debt.
2. Came up with a "great" business idea.
3. Started my business and realized I didn't have enough money to get it up and running in a "big," professional manner.
4. Refinanced our home to get more money out of our house. Went through $2,000-$3,000 rather quickly!
5. Took out a $25,000 personal loan to "pay off" 2 small car loans, a couple of credit cards, and used remaining money (approx. $4,000-$5,000) to attempt to grow my business. My big concern at the time was figuring out a way to lower my payments down to a "manageable" amount and still get some money out to grow the business.
6. After spending all of this money, the business was painfully slow in growing. Many months, I was funding business expenses through my regular income.
7. After many stressful months of this plan not working, my wife and I sold our house, used our equity to pay off half of the debt, and then the next 18 months to pay off the remaining $12,000.

This would have been a Smarter Financial course of action:

1. Had a little bit of debt.
2. Came up with a "great" business idea.
3. Started my business and realized I didn't have enough money to get it up and running in a "big," professional manner.
4. Decided to grow the business more slowly. Educated myself on growing a business through books, mentors, etc.
5. Went out and got a second job with a steady monthly part-time income.
6. Paid off our current debts as quickly as possible.
7. Once the debts were paid, we saved enough money to cash flow my business start-up in a smarter way. The business started to grow; attracted more clients; quit my initial part-time job.
8. We didn't have to sell our house! We still have equity in a home!

Even though hindsight is 20/20 and I wish I had done things the smarter way, I have no regrets in how things turned out. I feel like I learned a lot over the past 3-5 years. I learned my lesson the hard way, and I'll never do "stupid" again when it comes to home purchases, debt, and starting a business.

Larry

Hey, You. Get a Second Job!

Here's a two-step, fool proof way to get out of debt really quickly:

1. Control your spending, by getting on a tight, no frills budget.
2. Go out and get yourself a part time job in order to clean up your mess!

Here's my own lengthy version of my 2nd job story.

Part of the reason my wife and I got into so much debt 4-5 years ago was that I came up with a "brilliant" idea for a business that I could build by leveraging myself with a whole bunch of debt, thinking I could grow myself out of the debt really quickly (kind of sounds like the government!).

You can see my music arranging and typesetting business site at www.mystaffarranger.com.

Anyway, This was a really STUPID mistake, and I don't think the Lord honored and blessed the business (at first) because I was being a horrible steward of His money. When we started doing right things with money (i.e. getting on a tight budget and paying down our debt), the Lord blessed us and I started picking up more and more clients. I started being more and more selective about how much money I was spending on advertising and where I was spending that money.

To make a long story shorter, my business expenses came down and my revenues went up! Any profit that I was making with MyStaffArranger.com went directly toward debt reduction and taxes. I was able to use my part-time business as a "2nd job" to generate additional income and get out of debt faster.

Tomorrow, I'll complete my thoughts about the 2nd part-time job and debt reduction.

Larry