Modern society makes it easy to retain debt, but the Bible is clear on the subject. Romans 13:8 says we should “Let no debt remain outstanding…” Although it sounds simple, we all know that tackling the debts that build up in the form of a mortgage, car payments, student loans and credit cards can be incredibly challenging. Fortunately, the Bible provides guidance on the topic of Christian debt management.

Borrow Wisely

When it is sometimes necessary to borrow money, it should not be done carelessly or on a whim, and we should be sure to use the funds wisely.

In 2 Kings 4:1-6, the Bible tells the story of a widow who was facing the loss of her children to slavery. She needed money, but the only solution available was borrowing jars from her neighbors.

Although the woman borrowed jars from others, the result was enough income to repay her debts to the creditors and protect her children. The Bible tells us to avoid debt whenever it is possible, but recognizes that sometimes it is not possible to avoid debt.

The key lesson is that it is important to apply wisdom to each transaction. Borrow only with the purpose of investing in the future, such as taking a student loan to pay for the education that will provide the opportunity to avoid debt in the future, or an investment in a home that will provide shelter for your family.

Repay the Debts Promptly

“The borrower is slave to the lender” Proverbs 22:7

Whenever it is not possible to avoid debt, it is important to repay the funds promptly. Just because you opted for a 30 year mortgage does not mean you must take 30 years to pay it off. Not only will you have the burden of debt lifted sooner, you can also save quite a bit of money as well.

Keep Trying

“sluggards do not plow in season; so at harvest time they look but find nothing.” Proverbs 20:4

When it comes to Christian debt management, a key tip that the Bible provides is that it is important to keep trying and working hard. Even if you have fallen behind on your debts, it is important that you make every effort to get back on track by working directly with your creditors and lenders.

If this doesn’t work, speak with a one of our advisors for a free consultation to see if you might qualify for any programs to help you regain control of your finances.

If you take a look at the financial state of society at large, you may be tempted to believe that living without any debt is impossible in modern times. However, Christian finance need not mimic that of the secular world. As Christians, we are called to a higher standard in the way we manage our finances, especially when it comes to spending. If we adhere to God’s word in our spending habits, it is very possible to live a debt free life.

A Needed Conviction

Living without any debt requires a great deal of conviction and commitment to Christian finance principles as laid out in the Bible. Romans 13:8 says “Let no debt remain outstanding, except the continuing debt to love one another…” This principle goes contrary to modern financial standards where living on credit is the expected norm. In fact, not having a credit record can actually work against you in today’s financial world as we discuss in another article. As a consumer, you may find it difficult to make major purchases on credit such as a vehicle, house or commercial property without having pre-established credit.

The Real Problem

Owning credit cards and establishing a credit record is not the problem per se. Just because you have a credit card does not mean that you are in debt. It is a lack of control over credit card spending that will lead to debt and financial difficulties. Credit cards increase your buying power, making it easier to acquire the things you need. Unfortunately, credit cards also facilitate buying the things you want, which often goes above and beyond what you need.

The real problem is not the credit card, it is the inappropriate use of them. Carrying balances, paying one account with another, impulse purchases and the like are what truly turn a simple credit card purchase into an overwhelming burden. This is why it is important to identify your wants from your needs.

The pull of materialism is very strong in society today, making it difficult to control one’s desires. Marketers spend billions of dollars to teach society that they need to continue buying the newest and coolest item on the market. If you’re not constantly on guard against this pull, it can be very easy to let your credit card spending get out of control.

Wise spending entails being selective in the items you buy. As a Christian, our financial spending should go deeper than mere material gain, remembering that “we brought nothing into the world, and we can take nothing out of it.” (I Timothy 6:7) By keeping your financial priorities in line with Christian principals, you will be able to enjoy the financial blessings you have while living a debt-free life.

Credit Card Free vs Debt Free

Although it certainly is possible, you may not be able to live a completely credit card free life in modern times. However, you can live a debt free life. If you exercise greater control over your spending habits it is possible to become and stay debt free. Using your credit cards wisely and paying your bills on time will keep you from going into debt. You should also budget your spending to help you live within your financial income.

Many people who have fallen into this vicious cycle are finding relief through the Christian debt relief programs offered by FaithWorks Financial for assistance in overcoming bad spending habits and becoming debt free. If you are in need of bettering your financial situation, help is available.

“Blessed are those who find wisdom, those who gain understanding.” Proverbs 3:13

While we are huge proponents of avoiding the use of credit cards in any fashion, we realize that is not what many of our readers choose to do so we’ll take a look today at the responsible use of credit cards.

A huge push by the marketing campaigns of credit issuers focuses on the points you can earn by using the advertised card. Those offers often seem way too good to pass up. After all, if you plan on spending the money anyway, why not earn points you can use towards other things?

In order to be wise in your decision making, there are a few questions you should ask yourself about any credit card that offers you points.

1. Do you tend to carry a balance on your credit card?

If so, the interest you will be paying will quickly outweigh the benefits of the credit card points.

2. Are you paying more for the annual fee on the card than you are receiving in point benefits?

For example, if you racking up $50 worth of points but your card has an annual fee of $60, you’re better off without the card.

3. Are the points good toward anything you need?

Some credit cards offer points that can be redeemed in the form of a discount in particular stores or in trade for things in their catalogue. If you don’t need any of the things you’re being offered, the points are not worth their while.

4. Do the points expire?

It can take a long time of point accumulation to get anything of value in return. By the time you have racked up enough points it is possible that they have expired.

5. Does your debit card already offer incentives?

Many people use their credit card on a regular basis in order to earn points. However, they may be passing up the opportunity to use a debit card that gives them an instant discount — like the Target debit card. you may have better incentives already available, without the annual fees and interest rates of credit cards.

6. Does your card have spending requirements before they begin awarding points?

If so, you may find yourself using that plastic card even when you don’t need to, or justifying an unnecessary purchase since you have to hit their minimum spend limit.

We realize that credit card incentives are very appealing, and sometimes they really do make sense. If you are a disciplined person and can find a card that offers points toward something you regularly use, pay that credit card off in full every month, and take advantage of the points you earned before they expired, great! However, that tends to be more the exception than the norm. It is just like the casino and gaming industry, some will absolutely win, but the entire system is designed in the favor of the credit issuer.

If you must use a credit card, be wise as you choose a card and don’t let incentives that appeal to your emotions overrule a sound decision.

"A gray head is a crown of glory; It is found in the way of righteousness." — Proverbs 16:31

When you work for a large company, saving for retirement is often as easy as enrolling in your company’s 401k program or working for the company long enough to qualify for a pension. Some companies even match the contributions you make to your retirement account. When you’re self-employed, planning and saving for a Christian retirement requires a little more effort.

Types of savings plans plan for the self-employed

There are several types of saving plans available to those who own their own businesses or work as freelance writers, designers, artists or consultants. Below are just a few to consider:

1. SEP IRA — A Simplified Employee Pension (SEP) IRA is an easy way for any self-employed person to save, no matter what their income. This type of account can be opened at most any bank or financial institution and there are few, if any, fees associated with these account. You are allowed to contribute up to 25% of your earnings, up to a cap that increases annually. (The 2013 limit is $51,000.) Your contributions are tax-sheltered until you withdraw the money at retirement.

2. Solo 401k. A solo (or traditional) 401k allows you to contribute both as an employee and as a boss. The maximums are currently $5,500 as an employee ($6,500 if you are over age 50) and 25 percent of your income as a boss. Both amounts are discretionary, so you can contribute a lot in a good year to help reduce your tax liability and scale down your contribution in a lean year. As with the SEP IRA, your contributions are not subject to income tax until you withdraw the money.

3. Simple IRA. A Savings Incentive Match Plan for Employees (SIMPLE) IRA is a good choice for a self-employed person who plans on hiring employees at some time in the future. With a Simple IRA, you can continue to contribute to the same plan even after your company grows. The current maximum contribution to a Simple IRA is $11,500 ($14,000 if you are over 50), but you’re required to match 3% of your employees’ contributions. Like the SEP IRA, your contributions are tax-sheltered until retirement. However, this plan has a hefty penalty (25% compared to the SEP’s 10%) if you have to withdraw your funds before retirement.

If you’re self-employed and having trouble finding extra money each month to set aside towards planning for a Christian retirement, perhaps we can help. Faithworks Financial is a Christian debt relief company. If credit card bills and other installment payments are keeping you from creating a secure future for you and your family, a debt management plan can help you pay off those debts so you can start paying yourself and saving for your retirement. Call us at 877-232-5109 to discuss your options with one of our caring Christian debt counselors.

As Christians, we fully understand the “reason for the season.” It is our time of the year to consider God’s great sacrifice through his son Jesus Christ, our opportunity to reflect upon the sheer magnitude of God’s grace toward us.

Unfortunately, consumerism has taken over our society. It is estimated that the average person sees thousands of advertisements a day. Whether it’s on a billboard, the side of a bus, in a store or on television, we are surrounded by the message that in order to feel good we should spend. This is especially true now that the Christmas season is well underway. We tell ourselves that we must buy things for the people we care about, even if it means putting it on a credit card.

One great thing about attempting to manage finances according to Christian principals is that we understand the importance of the holiday. We know that spending money is not what Christmas is all about. It is important for anyone trying to get out from under debt to celebrate Christmas on a budget.

Fortunately, plenty of people are managing to have a joyous Christmas on a budget and have come up with easy ideas for making it possible to enjoy Christmas without breaking the bank.

Here are a few tips to help you stay on track this Christmas! 

1. Avoid credit cards from Thanksgiving day through January 1.
2. Budget in the cost of groceries for your Christmas meal. If you will have people over, it’s okay to ask them to bring a dish to share. In fact, most people are glad to know they’ll get to enjoy their favorite holiday dish.
3. Divide the cash you have by the number of people you have to buy for and make a list that includes the person’s name and how much you’re going to spend on them.
4. The mailman, hairdresser and next door neighbor will be perfectly satisfied with a thoughtfully chosen card.
5. Don’t buy more edible items than you need. Peanut brittle, little chocolate Santas, egg nog and the other holiday favorites can really add up quick. One great pie with Christmas dinner will easily take the place of those costly little snacks.
6. If you have children, think about what they actually need. If they will be needing a new pair of shoes in the next few months, now would be a great time to make the purchase so that it can be appreciated as a Christmas gift.

Stick to your Christmas budget and come January you’ll be very grateful that your New Year’s resolution does not involve paying off 2013’s Christmas debt!

With the cost of education skyrocketing over the past decade, you will probably want to begin saving as soon as possible if you plan to help your children with the cost of their college education. Whether you want your child to attend a Christian college or a secular school, you probably want to add a budget line item for their college savings so that it is a regular part of your financial plan.

For the 2012-2013 academic year, the average cost for a standard academic year of college (including books, tuition, room and board) was $22,261 for in-state public tuition and $43,289 for a private school, according to collegedata.com. Despite the expense, it is possible to fund a college education on less than $50 per week.

Start Small — Finish Big

The earlier parents establish a saving plan for college, the more time there is to watch investments grow. Even small regular deposits over 18 years can pay for the first full year of college or more. For example, if you start making monthly deposits of $50 into an account earning 2% (the top rate for most accounts today) when your child starts first grade, your investment will grow to more than $8100 before high school graduation. Double that to $100 a month and the account will be worth $16261 — more than enough to cover the first year if your child lives at home.

Take Advantage of Tax Incentives

A saving plan that allows tax-free distributions called the Coverdell Savings Plan allows parents to put up to $2000 a year (that is less than $40 a week) into an interest-earning account. The funds are not tax-deductible; however, your child will not pay tax on the earnings as long as the money is used before the child reaches the age of 30 and the money is spent on education.

Series EE Government Bonds

With interest at such low rates, some people don’t consider government savings bonds a great investment. However, this is one tool where you are guaranteed that your invest will at least double in a twenty year window.

You buy EE Bonds at half the face value — $25 for a $50 bond, $50 for a $100 bond, and so on. These bonds start earning money immediately and interest is compounded twice each year, so you earn interest on interest. You can pay tax on the earnings each year, or wait until your child cashes the bonds to pay for college.

Interest rates are fixed, but if the interest surges in the future, you can sell the bonds early and buy new bonds at a better rate. There is a penalty of 3-months earnings if you cash out within the first five years. Unless interest rates return to 4% or 5%, cashing out probably isn’t the best option.

Another Look at Simple Savings

If you watch interest rates carefully and convert simple savings accounts into a CD Laddering plan when interest rates go up, you can earn more money. Even increasing your weekly deposits slightly can make significant differences. For example, if you start your savings account with $1000 today in an account paying only .25%, and make weekly contributions of $40 over the next ten years, your balance will grow to more than $22,000.

One popular savings challenge that makes its way around the internet every now and then is the weekly savings challenge. The basic premise is to deposit an increasing amount each week. Start with one dollar the first week, two dollars the second, up to fifty-two dollars the last week of the year. Even without interest, you save almost $1400 each year.

We suggest following the same goal, except in reverse. This way, it will get easier and easier to save the money. Plus, you’ll get more of a return on the interest you are earning, assuming you are using a savings account. If you use that money to buy bonds, you are on the way to doubling your investment.

There are many ways to fund an education from 529 state sponsored plans and Coverdell accountsm to CDs and government bonds. The key is to get started early!

Whether you are thinking of buying a homestead or considering buying property as an investment, the option of purchasing a foreclosure has likely crossed your mind. Understanding the pros and cons of buying foreclosed property will help you make better decisions.

Bankers and realtors use the term “distressed property” to describe homes that are either already involved in the foreclosure process or that are subject to repossession soon. There are three general types of distressed property.

Foreclosed

Foreclosed property is owned by the financial institution that issued the mortgage. This means that homeowners stopped making payments and the bank went through the legal processes to reclaim the property.

While selling prices can be significantly less than market value (30% to 85%), buyers must be cautious.

Usually when an individual has gone through a foreclosure, they had other financial obligations go awry as well. Because of this, some foreclosed properties may have liens attached to them from other creditors.

If the property is part of a bankruptcy filing, settling the purchase could take years to resolve.
A few states allow borrowers to pay the full balance at any point prior to auction, effectively stopping the foreclosure.

If you are considering a foreclosed home, verify the home is unoccupied, free from liens and not subject to any settlement agreements. Of course, if the price is substantially below market-value, you could make an offer, providing you have protection against loss if the property is pulled from the market for any reason.

Auction-ready

After lenders satisfy all legal requirements for foreclosure, homes go on the auction block. Typically the auction is held on the court house steps at the county seat where the home stands. Starting prices may be fixed or open.

A fixed starting price means that the bank sets a base price that is the lowest amount they are willing to accept. This might be the balance due on the original loan or a discounted figure based on property condition.

An open bidding platform means that the bank is ready to get the property sold and is willing to accept the highest bid offered — even if it does not cover the loan balance. Some banks do this because the state where the property is located allows banks to recover the difference through a judgment against the prior homeowner. Sometimes the property needs extensive repair and it is a financial liability to the lender. In either event, these are often very good investment opportunities.

Buying property at auction means that you have cash in hand, a certified check or a letter of credit from your bank. Loans are generally not accepted on this type of purchase.

Pre-foreclosure

When a bank notifies a homeowner that foreclosure is imminent, but not in progress, this is called pre-foreclosure. Homeowners can legally list the property for sale themselves or list with a licensed realtor, as long as they disclose the mortgage status to potential buyers.

Finding property for sale in pre-foreclosure status generally means you should be ready for a quick closing. Sellers who want to avoid bankruptcy or repossession are usually willing to discount the property. Financing options for homes in this category are similar to other on-the-market homes. Most qualify for FHA, VA or Conventional loans if they are well-maintained or need minimal repairs.

It might seem harsh to haggle for a bottom-dollar price when someone else is struggling financially. The best way to approach this type of transaction is with the understanding that it can be beneficial to both parties.

Things to Keep in Mind

1. Inspect all property before you bid or make an offer, extensive damage must be repaired before FHA, Conventional or VA loans receive approval.
2. If you need financing, check with your lender to find out what type of loans are available for distressed property.
3. Understand your state and local laws about occupancy. Some states do not allow eviction if a tenant has a current legal lease.

FaithWorks Financial provides counseling services for debt management and financial planning. If you are trying to get your financial house in order before you can purchase a home, contact us for a free debt relief consultation.

Todays article is a continuation of our Retirement Planning Basics series.

You may also enjoy:    Traditional IRA       401(k)

Planning for a Christian retirement involves good stewardship and seeking wise counsel. It is crucial to fully understand any investment vehicle before getting started, especially when planning for your retirement. This article will cover the basics of the Roth IRA, but be sure to do your due diligence and consider speaking with a financial advisor before making any commitments.

Understanding the Basics

Like many other retirement plans, the Roth IRA is a tax-advantaged, interest-earning account. Unlike the 401(k), there are no employer or government matching fund elements. All money that goes into a Roth IRA comes from your job income. You can deposit into your Roth IRA as long as you are earning money from work activity, regardless of your age.

The primary difference between the IRA and the Roth IRA is that the Roth IRA is not tax-deffered at the time of deposit, you still need to pay taxes on the funds you deposit. However, whereas a you pay your taxes at the time of withdrawal with a traditional IRA, your withdrawals are not taxed with the Roth IRA.

Flexibility and Freedom

On the surface, the Roth IRA might not sound so beneficial, but the structure gives you flexibility and freedom that other accounts don’t offer. Since you have already paid taxes on this money, you can withdraw any amount, any time, for any reason without a penalty as long as you leave all dividends in the account. No fees, no taxes, no hoops to jump through. When God says “Go”, you are ready. This makes the Roth IRA preferable to individuals who are uncomfortable with risking a penalty if they need to access their funds before age 59 1/2.

Quick Facts

• There is no mandatory withdrawal — you can leave the money to heirs; they pay no inheritance tax.
• You can withdraw interest earnings without tax/penalty to purchase your first home (up to $10,000) or if you become disabled.
• You pay taxes, but no penalty, for interest earnings used to pay for secondary education for yourself or family members.
• Accounts must be designated as a Roth IRA when opened.
• Deposits are not tax deductible; you must report interest earnings on annual tax return.

Is A Roth IRA Right For Me?

Though you will want to seek wise counsel as well as prayerfully consider any investment, a Roth IRA is thought to be especially beneficial for young adults who are planning for a Christian retirement. This is because young individuals are likely not at the height of their career, and are likely in a lower tax bracket than someone who is more established. The longer that the account is open, the more compound interest the funds earn. Many people starting their careers who earn less than well-established professionals don’t rely on tax deductions and typically aren’t negatively impacted. Also people in higher-tax brackets appreciate the tax advantages for their heirs.

Though there are limits and exceptions not discussed in this article, the Roth IRA can be a great route to consider if flexibility and access to your money is important to you.

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We realize how difficult the Christmas season can be financially, so we’re teaming up with several great Christian bloggers to give away a $1,000 Visa gift card right in time for Christmas.

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Whether you are on solid financial footing and give regularly, or are struggling just to put food on the table, it is important to review your giving. The key to good Christian financial planning is balance and a grateful heart. Setting giving goals that are both practical and generous requires you to take a step back and look at your money habits.

Analyze your Budget

Start by figuring out what you can afford to give regularly. Though the traditional tithe is 10% of your income, there is no reason that you should not give to your full capacity, whether it be above or below that amount. Each person must come up with a figure based on his or her budget. Look for areas you can cut back. For example, if you budget 50 dollars a week for restaurant meals, consider eating at home more and then donating half that number.

Give It before You Miss It

The book of Matthew offers a bit of wisdom in this matter.

Chapter 6: 3-4: “But when you give to the needy, do not let your left hand know what your right hand is doing, so that your giving may be in secret. Then your Father, who sees what is done in secret, will reward you.“

Sometimes giving more requires a little slight of hand. Start with your employer. Ask about setting up charity donations deducted right from your paycheck. This is an effective way to track your giving for tax purposes, as well. It also encourages others to follow your lead. Your employer might even decide to match any donations – doubling the offering.

Look for charities that will automatically withdraw the funds from your bank account. This gives you the pleasure of seeing the payment go out without having decide how much to give each month.

Think Outside of the Box

If your budget is as tight as you can make it, then look for other ways to give.

Learn to super coupon – Couponing is not only a great way to save money, but can also be an awesome opportunity to help the less fortunate. Consider hosting a food drive in which all of the items have to be the product of a coupon deal. See who can provide the most (usable!) items at the lowest cost and award a small prize.

Give time instead of money – Giving doesn’t have to be monetary. Check at your church for volunteer and missionary opportunities. Call the local shelter, food bank or kitchen to see if you can lend a hand. Giving time allows you to help people in your community and make friends in the process.

Give as a family – Create activities that your whole family can do to such as collecting cans to recycle or setting up food drives two or three times a year.

Deuteronomy 16:17: “Each of you must bring a gift in proportion to the way the Lord your God has blessed you.”

In other words, if you cannot afford the traditional 10% tithe at this time, give what you can afford by setting achievable goals. With prayerful consideration and practical budgeting, you can enrich your life while helping others.