Who's Your Daddy? MasterCard or The Master?

“No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other. You cannot serve both God and money"(Matthew 6:24) This whole debt freedom thing is about more than just money. Debt freedom is about showing the world who we serve as Christians. It's about showing them what we believe through our actions. How can we declare that God is Jehovah Jireh, our provider, but yet and still our lives are laced with debt? Whether it's credit cards, car payments, student loans, etc., those are not blessings, they're curses that we've bestowed upon ourselves. Not only do they keep us from enjoying God's blessings, but they bind us from doing the work that God has called us to do. We're too broke to tithe, feed the hungry, sponsor missionaries, build shelters, clothe the naked, care for orphans...Do we care that the work of the Kingdom has fallen short?

The word says that we either hate the one and love the other, we're either devoted to one and despise the other. Our willingness to rely on a debt system, shows the world that we don't really believe that God is our provider. We say that we love God, but our actions, according to His word, say that we despise Him. What are we going to do about it? Are we willing to turn the tables and despise debt instead of our God? Or will we continue to look for ways to provide for ourselves, no matter what the cost?

At the end of the day, God wants to be our source. In fact, I believe that He is our source. We just have to allow Him to work in our lives. God knows your heart and can see your needs. Will you be patient enough to allow Him to provide for you? Instead of reaching for the credit card when the next emergency comes, go to God. Tell Him that you don't want to go into debt, and you need Him to provide. He will do it, if you let Him. God's system is based on sowing and reaping. If you're sowing into debt more than you're sowing into God, you're probably reaping more bills and payments than you are blessings. The banks may be great at selling their products, but God is greater at delivering His promises...EVERY time. So which will it be: MasterCard or The Master? Only one of them has your best interest at heart. Which will you choose?

Change requires action!

Live free!

Arianne

The Rich Plan

Luke 14:28 “Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it? There is a difference between hoping to get out of debt, and planning to get out of debt. In order to get out and stay out of debt, we have to create a strategic plan for doing so. Unfortunately, those that continue to hope for debt freedom probably won't get very far. Once you decide to get out of debt, you then need to orchestrate actions that will help you achieve the desired result. How do you do that? By setting a budget and sticking to it!

I know, I know, the dreaded "B" word. I think the word budget has gotten a bad rap. The first word that used to come to my mind when I heard the word budget was restriction! And who wants to feel restricted, especially when it comes to money that you've worked for? Well, that's exactly what debt does. It limits the amount of money that you can control and enjoy. On the other hand, a budget actually gives you more authority. You set the boundaries by determining how much you're going to spend in each category. A budget doesn't have to include only your bills. It should include entertainment, shopping, and whatever else you like to do in your free time. If doing those things strain you financially, then simply reallocate. You are free to design the plan however it best fits you. That's good news!

A budget is not only your plan for getting rich, but it's your road map to freedom as well. Without one, your money will continue to control you. With a plan in place, you are able to tell your money where to go, instead of having it fall where it may. Remember, your budget can and should include both bills and extracurricular activities. After all, you should be able to reward yourself for all of the hard work that you're doing (without going into debt of course)! So get to work, your freedom depends on it!

Change requires action!

Live free!

Arianne

The Interest Match

One of the ways that I've been able to pay off loans at least 2 years early is by paying more than the minimum amount due. I would start off by paying just $5 or $10 more, and then would continue to increase that amount the closer I became to paying of the balance completely. A dollar here and there may not seem like a lot at the time, but it's more about challenging yourself to go above and beyond. Once you see that you can "spare" $5 or $10, challenge yourself to add another $5 or $10 a month and more. To start off, I instituted something that I call an "interest match." It has worked really well on my car and student loans, and I hope to eventually apply the same method to my mortgage. For instance, if your loan payment is $100 per month, a portion of the $100 will go towards the principle balance, while the other portion goes towards the interest. Let's just say that $70 goes to the principle, while $30 goes towards interest. Your payment of $100 only reduces the amount that you owe by $70 instead of the full $100. Over the course of 12 months, that's a loss of $360 that could have gone towards the principal balance owed. Multiply that out over the course of 5 years, and that equates to a total loss of $1800. Can you think of something better to do with $1800 than to give it away to a bank? I know I can. What a nice vacation that would be! The point is, add the interest amount to your minimum payment. In this case, we would pay $130 per month instead of the minimum of $100. That way the principle balance is reduced faster, which in turn will also reduce the amount of interest paid over time as well. Don't get me wrong, you will still lose money by having to pay interest. However, the sooner you pay the loan off, the less money you will lose over time. You might as well take advantage wherever you can.

I often heard that you should pay more than the minimum balance, but I never knew how much more or if a few extra dollars would even matter. I can tell you firsthand that it does make a difference. This is just one way to get you started. If you have any outstanding loans, take a look at your more recent statement and see just how much of your payment went to the principle, and how much went to interest. If you're able, I challenge you to make an interest match on your next payment and stick to it for several months. You should notice a bigger decrease in both your principle and interest payments over time. Once you get into the habit of paying more, you'll be able to apply it to all other loans and debts until you've finally paid everything off. Don't settle for the minimum. Your freedom is worth so much more!

Change requires action!

Live free!

Arianne

Swiper, No Swiping!

Now, I have to tell you that switching over to using cash is one challenge that I've not yet taken up. I can't even tell you how many times I've seen it, read it, or heard about it, but I just have not gotten myself together to do it. Why? Because I'm a chronic swiper! I've just gotten so used to using a debit card that I absolutely despise having to carry cash around. Not to mention it makes your wallet a lot heavier than if you just carried a piece of plastic right!? And, people can't really tell if you have money or not when you use a debit card since the actual transaction goes on behind the scenes. It's like magic! Who doesn't love a magician?! OK seriously, I think I'm actually going to try it this time. I'm doing a pretty good job at paying down my debt, but it's definitely time to kick it up a notch. I love a challenge, and this whole cash thing is going to be one. The one comment that I've read in several different articles is that you simply have to do what's best for you. The area in which you're more likely to overspend is probably a good start. Perhaps you'll commit to paying for groceries, entertainment, and restaurant food in cash. Of course setting up a budget for this is going to take some trial and error at first, but it can be done. Using cash will help us develop better discipline when it comes to our spending. If you know you only have $20 to spend on entertainment for the week, you'll probably end up picking dinner or the movie, but not both because it will put you over budget. If you don't know what you're spending in these areas now, monitor your receipts for the next 2 weeks or so to get a feel. At least you'll be in the ballpark once you finally switch over.

One of the things that I've learned through this process is that money management is an on-going journey. No matter where you are right now, you can always get better and find new ways to maximize what you have. I'm willing to take on a new challenge that will hopefully propel me further ahead and closer to freedom. Are you?

If anyone is already using this method, please share with the rest of us. We'd love to hear from you! For everyone else that is joining me in the challenge, repeat after me: "Swiper, No Swiping!"

Change requires action!

Live free!

Arianne

Checking in!

Hello Everyone! I'm just checking in on your progress thus far! We've talked about a lot the last two weeks, and hopefully you're not overwhelmed. The point isn't to try to do everything at once, but just to realize that there a lot of options to get you started. Once you get going just run with it. Every day won't be perfect, as we all give into impulses from time to time. It's OK. Just pick up where you left off and keep going. The more you practice being a great money manager, the quicker you'll become one and the closer you'll get to your goals.

Don't let the numbers scare you. When you first calculated what your net worth should be, you might have thought "wow, I'm way off and I'll never get there." Let's change that to, "wow, I'm way off, how do I get there?" Can you save more or put more towards debt each month? Whatever suits you, put everything in motion by setting a realistic timeline and go after it. I may not be where I should be yet, but at least I have a goal in sight that I'm working towards just like you.

Don't forget to make the process fun! After all, we're working towards freedom here and that's a very positive thing! Keep a daily chart and give yourself rewards points for saving, using coupons, paying off debt, etc. Get a group of friends and make a competition out of it. I've seen lots of weight loss challenges, so why not have debt reduction challenges? I surely wouldn't mind it if all of my friends were rich. That's why I'm sharing this information with all of you! So let's continue to encourage and support one another. If you haven't started yet, pick a strategy and get going. We're all rooting for you! :-)

Change requires action!

Live free!

Arianne

The 80/20 Rule of Financial Freedom

The Pareto Principle, also known as the 80/20 rule, states that roughly 80% of effects come from 20% of the causes. You may have heard this term used in the business world to some effect that 20% of the people do 80% of the work, or 20% of sales come from 80% of the customers, etc. The actual numbers may turn out to be a little less or a little more, but you get the picture. Well, I want to show you how to apply that same principle to your finances. We want 20% of our income to do 80% of the work for us as we head towards financial freedom. The formula that I use is as follows: 10% tithe + 5% 401(k) + 5% savings = 20% (the remaining 80% is used for day-to-day operating expenses)

(To calculate your percentage, simply add the total dollars that you've contributed to each of those categories over the last month, divide it by your gross monthly income, and multiply that number by 100).

If you remember the S.I.N.G method, the above breakdown actually takes care of 75% of the process, which is pretty close to 80%! My tithe qualifies as Giving, the 401(k) contribution qualifies as Investing, and the direct savings takes care of...you guessed it,  the Savings. The strategy here is to have money accumulating for you as you continue to pay down your debts. That way you'll already have a head start when you're able to really focus on increasing your net worth. 

Now, I have heard other sources say that you should stop contributing to your 401(k) or stop giving/tithing until you're out of debt, but that's not the route that I've chosen (mind you, I've had a positive net worth for over a year now in spite of a mortgage and paying down school loans). However, you may find that my method isn't right for you at this time, and that's OK. I'm just sharing the practices that have helped me thus far.

No matter which road you decide to take, just pick one and get moving. The point is, you have to start somewhere. The sooner you start, the quicker you'll reach your goals. Once you reach the first goal, keep the momentum going until you get to the next one, and the next one, and so on. You can do it! Your financial freedom awaits!

Change requires action!

Live free!

Arianne

 

 

 

Take the Money and...S.I.N.G.!

You may have heard phrases like "take the money and run" or "laugh all the way to the bank," but I want you to S.I.N.G your way to Kingdom wealth!

Save - Why do you need to save? Simply because life happens. Unexpected car repairs, medical bills, major appliance breakdowns, you name it, we've all been there. However, the impact is greater for people that aren't prepared. If you're already in debt, with no emergency fund, the last thing you need is an unexpected expense. They say, when it rains it pours...how big is your umbrella? Will you be able to s.i.n.g. in the rain, or will you get drenched? Pay yourself first and save at least 10% of your income so that you can be protected from the storms of life.

Invest - Don't just spend what you have, make more of it. Investments are things that have the potential of bringing a return. If your employer has 401(k) matching you should be contributing the maximum match amount at a minimum. That's "free" money earned with each paycheck. Investments can also come by way of obtaining a skill that will make you money on a part-time basis. Whatever you choose, let your money work for you and not against you.

Name your Number - You must set financial goals. They are your road map to financial freedom. Imagine riding around in your car with no set destination. What a waste of time, money, and energy that would be. The same principle applies to your finances. If you don't set a financial destination, your money will aimlessly wander and you will have made no progress. Take the time to set savings, investing, and spending goals, and go after them.

Give - Give and you shall receive. Whatever you sow you shall reap. Pick your scripture of choice and just do it. Not only does God require us to give, but generous people live happier lives. Why? Because there is freedom in giving. I find great security and pleasure knowing that I have enough to take care of myself and someone else. Giving is about your heart and not about the size of the gift. In God's eyes, no gift is too small. Start where you are, and you'll start your journey towards freedom.

Your journey towards financial freedom doesn't have to be gloomy. After all, you're on your way to building Kingdom wealth! That's definitely something to S.I.N.G. about!

Change requires action!

Live free!

Arianne

I've Got My Mind on My Money and My Money on My Mind!

Growing up, one of my favorite lines in Snoop's song Gin and Juice was when he said "I've got my mind on my money and my money on my mind." Back then it was just something cool to rock to over a tight beat. But after studying the rich, I discovered that there was actually some validity to what he said. Rich people make it a point to plan and analyze their money on a daily basis. Don't believe me? Check out Exhibit A and Exhibit B.   By now you should have calculated both your net worth and what your net worth should be. The latter of the two may have shocked you a little, or a lot in my case. But don't worry, because now that we have a goal in sight we can start working towards it. But first, we have to align our minds with the goal so that our actions will follow. How do we do that?

  1. Start by scheduling a financial review for the same time each day. Whether it's 30 minutes before you go to bed, first thing in the morning, during your lunch break, make time to do it. By the end of the week you will have dedicated at least 3.5 hours working towards financial freedom, which is probably more than you're currently doing. Over time, you'll increase the time that you spend because of the progress that you're making (I'm always trying to find ways to get things paid off more quickly).
  2. Get a book like "The Total Money Makeover" by Dave Ramsey to help you map out your road to freedom. It's the book that I've used, and highly recommend.
  3. If you're using mint.com or some other online source to help keep you focused, download the app to your phone so that you can keep up with your goals while you're on the go.
  4. Before you leave home each day, and I mean before your hand turns the doorknob, I want you to stop and say aloud, with confidence, "TODAY I CHOOSE TO BE WEALTHY!" Trust me, it works. You will have turned your mind into money management mode for the day. Try it for the rest of the week and see how you do.

Becoming a money manager is one not only a must, but it will actually accelerate your progress. I've already paid off one degree 4 years ahead of schedule, and I'm working on the next one. Even if you can't do all four tomorrow, at a minimum, start with number 3 and work your way through the other items. In order to live free, we have to set our minds on freedom. You have point A and point B, and now it's time to start closing in on your goals. You can do it!

Change requires action!

Live Free!

Arianne

Start with the End in Mind

ImageAfter you have calculated your net worth (see The Starting Block), you're ready for the next step...goal setting. Just like if you were trying to lose weight, you would find out your current weight, and compare it to where you should be by using the Body Mass Index (BMI). Once you find out where you should be, you have a target to shoot for. Financial fitness requires the same process. You're not where you want to be financially, but do you know where you should be? Here's one way to find out... The author of The Millionaire Next Door came up with this formula:

(age X gross annual income)/10 = Net Worth

Multiply your age by your gross annual income. Then divide that number by ten. Voila! This is what your net worth should be.

If you don't know your current net worth (point A), it'll be difficult to come up with a plan to get to where your net worth should be (point B). I can't stress enough that your journey to financial freedom will require continuous action and commitment. You will become more conscious about where you money goes and what it's doing than ever before. And guess what? Rich people dedicate their time towards managing their money! So you're on the right track.

Tomorrow we'll talk about becoming a Money Monitor, and how it will accelerate your progress towards financial freedom. If you haven't done so already, calculate your current net worth, re-read The Starting Block for ideas on how to do that, and then calculate what your net worth should be so we can get going.

Change Requires Action!

Live Free!

Arianne

The Starting Block

Welcome to the starting block. I hope you're here because you've decided to join me in the pursuit of financial freedom. If so, it's time to get educated, motivated, and committed to a new way of life! The starting block is where we face the facts. You'll need to take a full assessment of where you are right now. Total up all of your assets, liabilities, investments, and savings, and that will give you your net worth. A free site like www.mint.com can calculate your totals for you in a matter of minutes. I'm sure there are others that you can use, but that's just one of my favorites.

If you have a positive net worth, congratulations, you're on you're way! If you have a negative net worth, no worries, our first goal is to get you on the plus side. No matter where you start, our goal is to continue to increase that amount through a combination of debt reduction, saving, giving, and investing.  But first things first...in order to draw your road map to financial freedom, you'll need to identify your starting point. Over the next day or two, spend about 30 minutes on a site like mint.com and calculate your net worth so we can get started.

Remember, change requires action. On your mark, get set, go!

Live Free!

Arianne