I received a question last week from someone wanting a Biblical response to the concept of lending money.  Since I have made Romans 13:8 (“Let no debt remain outstanding, except the continuing debt to love one another…” (NIV)) a bit of a mantra for my counsel on personal finance, it is only fitting that this question would eventually come up.  If I’m telling you to avoid borrowing money as much as possible, then what is my stance on lending money if you are a Christian?  I thought this was an excellent question, and it is one I truly wrestle with because I know people are going to borrow money.  I also know borrowing money in most cases is not a sin.  Having put that out there, what does the Bible say about lending people money?

First, let’s get a couple of foundational things out of the way.  Biblically, a lender becomes master of someone who borrows from them.  This is pretty clear from Proverbs 22:7.  Someone who borrows money is figuratively picking up the chains of debt and the lender is not responsible for their choice to do so (generally speaking).  Having said that, the Bible speaks a LOT about those who are in debt and that they should free themselves from it (see Psalm 37:21, 1 Corinthians 7:23).  The Bible is also pretty clear that co-signing for someone to borrow is a bad plan because co-signing generally means the person wanting to borrow money can’t handle the weight of those chains, even under pretty decent circumstances (see Proverbs 6, Proverbs 11:15, Proverbs 17:18, etc.).  But let’s say someone who is an excellent candidate for a loan (is that an oxymoron?) approaches you and asks to borrow $10,000.  What is your Biblical response, assuming you have the $10,000 to lend? [Read more…]

I thought I’d pick another semi-controversial topic for my post this week.  Why?  Because I love the debate and discussion, and ultimately the gained education from bringing up these topics with you guys.  You’re a smart bunch and you’re always willing to share with each other.  Plus I always learn some new perspectives on things.  Today, I want to share my thoughts on car leases and why they make absolutely no financial sense .  I know, I know – I’m just begging for some of you to disagree with me before I even get started.  But that’s exactly why the comments section is at the END of the post.

Just to be sure we’re working from the same definition; let me give you a quick run-down of what an auto lease actually is.  In simplest terms, an auto lease is a long-term rental agreement between you and a car company.  You make monthly payments and take care of the car but technically the car company still owns it.  At the end of an agreed-upon lease term (usually two or three years), you have the option to purchase the car at its “residual value” (fancy term for the amount the car company estimated its market value would be at the end of the lease) or turn the car back in.  See – you don’t own a leased car – you simply “rent” it.

So why is this a bad financial plan?  Let me get to that part after I mention a few good things about leasing a vehicle: [Read more…]

Having a good credit score makes life easier.  You can borrow money easier than someone who has bad credit (if you really want to do that), you will have an easier time renting, you might pay less for insurance, you don’t have to worry about employers or potential employers labeling you or not hiring you if they run a credit check, etc., etc., etc.  There are many perks to having a good score.  However (and it is a BIG ONE), what is the REAL value of having a good credit score?  I devoted an entire chapter of my book to this topic, titling the chapter, “I Don’t Care About Your Credit Score…and You Shouldn’t Either” to make it obvious my stance on the issue (and to rile up a few people who want to argue the point).

I do not care if you have good credit or bad credit because credit is not the target I’m aiming for.  I’m aiming for freedom.

I could make this the shortest post ever at Humorous Homemaking because you know I’m not going to condone or encourage debt, even if it is “90 days same as cash” or some other no interest loan.  However, let me explain WHY I don’t believe in these “free money” programs and why they simply don’t make sense.  Let’s go through five reasons: [Read more…]

Have you noticed gas prices recently? If not, that means you either live in a major city where you don’t own or need to own a car…or you live under a rock.  Gas prices are HIGH!  Seriously people, when you have to drive a lot, filling up your tank hits the budget hard!  In light of that lovely fact, I thought I’d write a post about buying a car, which might have a car windscreen sunshade, so you can get better gas mileage.  This idea is not new, and it comes up every time gas gets expensive.  But what are the costs people don’t consider?  Is it really worth trading in your existing car for one that sips the gasoline rather than asking for regular refills?  Let’s find out together. [Read more…]

Stacy and I have been seeing a commercial on TV quite a bit lately.  It is of “the Fonz” (Henry Winkler) promoting reverse mortgages (see the Youtube video here) and talking about how great they are for seniors who want to enjoy retirement. Well, a friend of ours just so happened to ask what a reverse mortgage is and how it works, so I thought I’d give you a run-down of what a reverse mortgage is, how a reverse mortgage works, and whether or not it is a good idea for you.  I know, I know, that means there will probably be some controversy, but I look forward to the healthy (repeat, HEALTHY) debate.  So let’s dive in.

First, let’s define what a reverse mortgage is.  A reverse mortgage is a loan supported by the Department of Housing and Urban Development (HUD) where a homeowner age 62 and above can borrow against the equity in his/her home. A reverse mortgage is only valid on a primary residence. This loan allows seniors to get a lump-sum amount, monthly payments or as a revolving line of credit. As common sense might tell you based on its name, a reverse mortgage is where the bank pays you money for your house.  To keep things simple, we won’t get into the details of how much can be borrowed other than to say you can’t borrow more than the house is worth.

One of the most common excuses I get for people who tell me they “can’t budget” is that their income varies from month to month.  Sometimes I hear it from someone who gets paid hourly and sometimes works overtime.  Sometimes I hear it from someone who is a commissioned salesperson.

Sometimes I hear it from someone who owns their own business and gets paid based on business profits.  These are three extremely different situations, but the approach to budgeting is actually pretty similar.  Let’s break it down.  Before we do, though, let me say one thing about those who are self-employed or partially-self-employed.

You must keep your business and your household finances separate.  Even if every penny you earn comes from your small business and you are the only employee, keep good records and keep things separate.  As you pay yourself a salary, make record of this.  This good recordkeeping is the only way you’ll truly know how your business is performing and allow you to make a household budget.