Friday, August 23, 2013

"COUNT THE COST" Of Purchasing And Owning a Car














28 For which of you, intending to build a tower, does not sit down first and count the cost, whether he has enough to finish it— 29 lest, after hehas laid the foundation, and is not able to finish, all who see it begin to mock him, 30 saying, ‘This man began to build and was not able to finish’? Luke 14:28-30 NKJV

I never thought I’d have a segment to write which was this personal in nature. On the other hand, I am glad I did. It just shows that no matter what our own children see or hear, they do not always consider the information as applicable to themselves.


I share this because only a few months ago, my daughter and I had a conversation about buying a car. Specifically, one day she approached me and asked, “Dad, I was told that I could buy a car for $110 a month if I could get you to co-sign." My daughter is 22, a full-time college student with a minimum wage (15-hours-or-less per-week) job.


Needless to say she had my attention. I responded in dismay and asked what made her think she can afford a car, and she responded that a car-salesman told her that he could get her a loan, but she would need a co-signer. After I paused again and displayed a look of utter frustration--particularly with the entire auto industry—I said to my daughter, “Honey, it is time we talked about costs and borrowing money!”


Using my
Kingdom Life Approach Financial Model, I began to illustrate how I+P=V is the universal strategy I use before making any purchasing decisions. I explained what the acronym stands for, how each letter represents a specific financial consideration, and how anyone can use this approach as well.

I further explained how
“P” requires you to ask certain and specific questions that will help guide you in your decision-making process. Three central questions that should always be asked and that apply to almost every purchase consideration are:

  1. Is This Purchase One That I Want Or Really Need? And, If Needed, Why?

  2. How Does This Purchase Fit In With The Accomplishment Of My “P” (Purpose)?

  3. After Careful Review Of My Entire Financial Budget, Can I Honestly Afford This Purchase?

After this discourse, I then introduced my daughter to the LPI Financial Evaluator, for calculating the true cost for purchasing a car. The calculator factors in every car-related consideration, such as down-payment and loan terms, insurance premium, annual registration and property taxes (where applicable), annual estimated maintenance costs, monthly driving distances and related mileage and gas consumption, and even an average monthly cost for washing and detailing your car.

With the help of this tool I showed my daughter that the $110 loan payment she assumed would be her only expense for 72 months, is only 20% of the total estimated monthly expense, which is actually closer (for the make and model she had in mind) to $850 per month. Finally, I was showed her that the $600 per month that she now earns was simply not enough income to purchase a car at this time, let alone truly qualify for an auto loan.


Using this conclusion, I saw this as an opportunity to share with her what the Bible says about debt. I showed her where the Bible actually discourages us from becoming surety or serving as a co-signer for anyone, which includes family. Proverbs 22:26 says,
"Don't agree to guarantee another person's debt or put up security for someone else." A loss of your job, an emergency expense or other purchases all put at risk your ability to repay what you borrowed which places the co-signer at risk for a debt they did not incur but are now responsible to repay. This can adversely affect relationships, even among loved ones, like nothing else can.

I decided at this point that I should offer her a few options that might work better, that is, are more cost-effective and align better with pursuing one’s
”P.” For example:

  1. Set a Goal to Save For the Cost of Your First Vehicle
    While this option is usually the least desirable when someone wants immediate gratification, it is often the best first option for all purchases. The exceptions are typically buying a home, a car and paying for college.

  2. Buy an Older Model Vehicle for Cash and Gradually Upgrade
    This does not result in getting that late-model, fully-equipped and never-driven vehicle you may have wanted, but it does solve the issue of immediate transportation. And, depending on your pace for saving for an upgrade, you can eventually purchase the car of your dreams without ever financing it.

  3. Ask Your Parents, Other Relatives and Friends Whether They Have a Vehicle to Sell You
    Again, it may not result in getting you that dream car, but you might find that good and reliable transportation was only an inquiry away. You may have a relative that no longer drives a particular vehicle they own or that someone you know no longer wants a vehicle they own and are willing to let you have it now with very reasonable and non-financing payment terms.

    In the end, by using one of these options you may avoid incurring high, long-term debt that could derail your efforts to make other more important purchases relating to your “P,” and that signal poor overall stewardship of what God has entrusted to you. Of course, these are but a few thoughts. Remember, the real objective is not making any purchase without counting the cost first.


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Thursday, August 8, 2013

Factors Most Affecting Your Giving, Spending and Saving in 2013: A Mid-Year Check-Up.







by Willie Thomas Butler

If you are like most Americans who make resolutions each year, you’ve probably made one involving your finances. If so, then perhaps now is a time to reevaluate your strategy…

Have You Considered All The Cost?


You may have committed to save more and spend less, or better yet, give even more to charity than you have done in the past. On the other hand, if you made no such resolutions, how do you determine your financial priorities? At the top of any list should be those financial obligations for which you have little to no control. These consist of your federal, state and local income taxes, additional payroll withholding's (such as Social Security and Medicare, healthcare premiums and retirement contributions) or varying local property, excise or special utility taxes. Of course, some individuals will also have to consider estate taxes, sales taxes and other revenue taxes incurred for other specific reasons throughout the past year.

Combined, these can diminish as much as 40% off some taxpayers’ annual income, leaving them with only 60% to actually budget for the year. Add to this your average gasoline, food and other retail spending activity for the year coupled with additional taxes and fees for annual memberships, online shopping, and a myriad of other activity, and another 10%-15% of your income could easily be consumed in taxes.

How Have You Fared So Far?


Sobering news, I hope. Imagine having more than 50% of your annual income redirected towards taxes, and having little to no control over the choice to pay it. And, to the charitable-minded, particularly the Christian, just how much might this impact your giving to your church or to others in need?

Statistically speaking, the median income of Americans in 2011 still hovers around $49,000 annually. In that range, the average (single) American may end up paying anywhere from 0% - 30% in just federal and state income taxes this year. Fortunately, with most of our legislated tax deductions and credits still in place, a good percentage of taxpayers—especially married and head of households may not incur more than a 10% - 14% adjusted income tax liability.

However, remember that there are many ways that taxes are incurred. A heavy-spending consumer type will still incur significant tax obligations on just about all of their regular and daily purchases, including food, restaurant dining, entertainment, phone service contracts, and clothing and appliance purchases.

A Better Planning Method For Kingdom Representatives


Because of these facts, I have a suggestion. Why not try this simple yet powerful formula: I call it I + P = V.™ In short, this formula will enable anyone using it to quickly assess the best way to manage their personal finances more purposefully. The acronym stands for Imposed Monetary Obligations + Pursuit-of-Purpose = Voluntary Obligations, or I+P=V™. Though simple to remember, this financial concept will help you immensely in learning how and why you should set goals that truly matter.

Your Plans and Priorities Are Important For Many Reasons


This financial planning formula provides a guaranteed way for a truly committed Christians to become an effective steward and to strategically exercise control over the spending-craze encouraged through the world’s economic system. Why is this important? Because in the eyes of God, you are His earthly steward with whom He has deposited certain of His treasure.

“The earth is the Lord’s and everything in it, the world, and all who live in it…” (Psalm 24:1) NIV. Because of this truth, the Lord expects that believer’s will acknowledge His ownership and our possession of the many good treasures, which include our time, our talent and our finances; and that we should manage what has been entrusted to us according to His expectation. This principle is best reflected in the story Jesus shared with His disciples in the Parable of the Talents, found in Matthew 25:14-30.

You can learn more about this formula in my book The Kingdom Life Approach: A Purpose-Driven Strategy for Living Your Best Life Ever. You can read free excerpts online via GoogleBooks, AmazonBooks, or BarnesandNoble.com, and through my publisher Xulon Press. Or, you can also visit the LifePlanning Institute’s website at http://www.MyLPI.org to obtain additional information about our programs, courses and other books and materials.

Consider Adopting A Kingdom Living Strategy


In the Kingdom of God—which, as a believer you are a citizen—the principle of love as expressed through giving is at the core of God’s, therefore, our true nature. Keep in mind that we were made in His image and likeness. This is what we read in John 3:16: “God so loved the world that He gave His only begotten Son…” Sound familiar? Well, has giving been at the top of your priorities in 2013?

The Bible also teaches us that God has a plan for each of us. Therefore, will knowing this have any effect on your plans for giving, spending and saving in the remainder of the year? In Jeremiah 29, the prophet wrote as God declared to him, “For I know the plans I have for you…, plans to prosper you and not to harm you, plans to give you hope and a future. “

Sounds to me that the wise steward would benefit from first knowing Gods’ plan before venturing out to spend or even save what is within their possession to manage. If so, then it leads to one last question? Are you going to serve God as one of His wise and faithful stewards in 2013?

If your answer is yes and you’d like help to accomplish this, the LifePlanning Institute is here to assist you. Try http://www.MyLPI.org. If you have a different point of view, please take a moment and share it with us. In fact, please help us to collect even more views by sharing this article with others.



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Tuesday, August 6, 2013

Let Prudence Be Your Guide












One thing we can all agree upon about today’s technology is that is makes life simpler in many ways. Gone are the days of balancing checkbooks, using public-telephones (generally speaking) or waiting for mail to be delivered to us. Most things today can be done using a Smartphone or other portable electronic device, and the manufacturers of these devices could not be happier.




But along with simplicity and ease of use has come a level of complacency where we no longer weigh the consequences of our decisions but rather accept whatever terms and conditions get us what we want when we want it. We have become an instant society that demands that everything we see and desire be obtainable instantaneously as well. But is this ever really in our best interest?

Our Ultimate Goal Is Kingdom Accountability and Consideration



In Luke 14:28 we are warned that sometimes the path of least resistance can prove to be harmful to ourselves and even to others, such as loved ones.


“For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it?” (ESV).

Applying this exhortation to our decision-process today, how often do we run out and buy things without really considering the immediate ad long-term affect of our choices? Have you purchased anything recently with cash, or have you been buying your major ticket items using credit or some type of long-term financing. If yes to the latter, then welcome to the club. Most Americans buy using credit and related financing just as businesses do and, of course, our various federal, state and local governments. In other words, it is no wonder that you may do just as you see others do. This is why I think it very important that someone say “Enough is enough!” In a world where buying a home or paying for college is designed to accommodate an average repayment taking 20-30 years at a cost ranging from 25%-100% more than what is borrowed, there is an unsustainable practice underway that is destined to fail. And along its path it takes well-meaning people and destroys them under the weight of significant debt loads and repayment obligations.

Let Prudence Be Your Guide



God’s exhortation to those who love Him and consider themselves His children is, in simple terms, to always Count the Cost of our decisions. Choosing if and when to buy a home, purchase a car, go to college or even when to marry and start a family are all decisions that our Heavenly Father wants to be part of. The questions you must ask, therefore, are will you allow Him to guide you in all of your decisions, or will you be selective and keep Him from leading and instructing you in some areas of your life?

Why not let God help you in every decision you make from this point forward? Or, at the very least, why not follow our series titled Count the Cost? I promise you, we’ll ask the right questions and provide what we believe to be sound yet practical advice for everyday living. Try us and see for yourself!


ENDING THOUGHTS:

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