5 Options to Avoid Debt Next Christmas

A client of mine recently mentioned that he had dropped $7,500 on gifts this Christmas.  That’s a lot of money.  This man has a large family, and he had a very good business year. Maybe he was making up for leaner Christmases during covid, or perhaps he wanted to celebrate a great increase in the volume of his business.  Either way, he spent a lot of money.

5 options to avoid debt next Christmas with a Christmas background

Americans tend to spend more money on Christmas presents, food, decorations, and trees than they have saved, and wind up dealing with after-Christmas debt each January.  Here are some numbers that illustrate this:

Average spending per couple$1,864
Average money spent on each child$330
Average cost for a Christmas tree$200
Average after-Christmas debt$1,242

 If you are an average family who spends $1,864 all-in for Christmas, you need to save $155 per month to avoid being in debt in January. Of course, you do not have to spend that much on Christmas, and you should not unless it fits into your budget.  Whatever amount you decide that you can spend for Christmas 2023, you should start saving now.  That is easier said than done, and it is unlikely to happen without plan. 

What are your options for starting to set aside money now for Christmas 2023?

  1. Christmas club account. Christmas clubs allow you to set aside an equal sum of money each week, month, or paycheck. Money cannot be withdrawn without penalty until November.  The interest rates are on the low side; however, the plan is simple, it pays interest, and payments can be deducted from your paycheck.  This was popular when I was a child, and I had such an account for many years.
  2. Opening a savings special account just for Christmas.  The idea is the same as the Christmas club, but you have access to the money at any time. So, you must be able to resist the temptation to withdraw the money for other expenses that arise during the year.
  3. Creating a sub-account in an existing savings account.  A sub-account allows you to save money for special events, such as Christmas, by automatically transferring money each month or pay period.  To learn more about savings sub-account: https://www.iwillteachyoutoberich.com/blog/tip-using-sub-savings-accounts-for-unexpected-expenses/#:~:text=What%20is%20a%20sub%2Dsavings,each%20of%20my%20sub%2Daccounts.
  4. Budgeting the money.  If you have great self-control, you can simply budget the amount you need and not spend it on other things.  Most people don’t have that much self-control so another option will work better.
  5. Buy presents throughout the year.  This is the strategy that I employ.  I start shopping in the summer for gifts for my eight grandchildren.  This allows me to pay for gifts a few at a time. This method works well, if it is done in conjunction with a budget.  You must track your spending and stay within your budget.

Budgeting is important to manage your finance and control your spending on all categories.  If you struggle with budgeting, I have many blog articles on creating budgets under the Finance tab.  I have also published a Bible study, Honoring God with Your Money, to help you learn and implement godly principles of money management.

Make Tax Time Simple With These Tips

Income tax returns are not due for three months, but your preparation should start now. Here are my tips to make tax time easier for you.

  1. Get a large envelope (11″ x 14″) to put your tax documents in.
  2. Watch the mail for envelopes marked “Important tax information enclosed. For now, put these documents into your envelope.
  3. Gather tax information that was provided during the year and put into the envelope.
  4. Make a quick estimate of your deductions. For most taxpayers, the largest deductible expenses will be home mortgage interest and charitable donations. Add those values. If the sum is much lower than your standard deductions, then don’t bother with adding up your other deductible expenses, unless you had extraordinary health care costs for the year.
  5. Be prepared to get a smaller refund, or to owe more, this year. Tax law changes may result in you having a larger tax liability.

Tax information being sent out in January includes:

  • W-2’s and 1099’s for earned income
  • Social security payments
  • Mortgage interest statements
  • 1099’s for dividends, interest, retirement income, and IRA withdrawals
  • Statements on rental income and expenses from property managers
  • 2021 state income tax refund statements
  • Receipts for charitable donations larger than $75

Other tax information was provided to you during the year. This includes property taxes you paid on homes, vehicles, motorcycles, and boats. You likely received receipts throughout the year for donations that you made to charities that were less than $75 each and donations of non-monetary goods and services made to charitable organizations.

The 2022 standard deduction levels were increased, making it less likely that you will benefit from itemizing. The 2022 standard deductions are:

  • Married couples filing jointly = $25,900
  • Heads of households = $19,400
  • Single individuals and married couples filing separately = $12,950

Major Tax Changes for 2022:

  • Smaller child tax credits and credits for child and dependent care. These credits were temporarily increased by the American Rescue Plan of 2021. They have now reverted back to 2020 levels.
  • Charitable donations are no longer deductible without itemizing. The American Rescue Plan allowed up to $300 for a single taxpayer and $600 for a married couple filing jointly to be deducted without itemizing.
  • Income from side hustles will be reported to the IRS. To be fair, we were always supposed to report ALL income earned from side jobs and hobbies. New regulations will require all third-party payment processors, such as Etsy and PayPal, to send 1099’s to all vendors who have generated more than $600 in revenue in a calendar year. Recently, the IRS announced that it will postpone enforcement of this regulations for one more year. This year, 1099’s will only be sent to vendors who earned more than $20,000 or had 200 or more transactions.

So, watch the mail for tax documents and start reviewing your paperwork for information that will be needed to complete your tax return.

Oh, and while you’re thinking about taxes, get an 11″ x 14″ envelope and write on it “2023 Tax Info.” Use it to collect receipts for donations, property tax bills, and other documents received during the year. This will give you a head start for next year.

Watch for blog in early February on preparing your information for your accountant.

5 Changes To Instantly Save Money

Inflation has slowed to 7.1%. Still, Moody’s Analytics estimates that the average family spent $396 more per month this fall than they did in 2021 for the same goods and services. The Census Bureau calculated the median household income at the end of 2021 as $69,021. The average worker received a raise of 4.8% in 2022. For a family earning $69,021, the raise was $3,313 for the year, or $276 a month. That translates to a take-home increase of about $201. After paying $28 tithe on the extra salary, they have an extra $173 per month. That’s a nice sum, but it falls $223 short of the average increase in monthly costs.

If you are in this situation, now is the time to rework your budget and try to cut $223 from your normally re-occurring expenses. If you manage your money well and live below your means, you likely have some room in your budget. However, it is still important to examine your expenses and make cuts where you can.

Here is a plan to cut on spending without feeling deprived.

  1. Cut back on technology expenses. Most home today have an internet and cable television plan, in addition to a cell phone plan, and perhaps a landline telephone. The average household spends $116 on internet and cable and another $114 on cell phones, and many spend much more than that. This is a good time to research your options and see if you can find a more economical plan. Tom’s Guide offers an analysis of the best cell phone plans for 2023 to help you make a wise decision (https://www.tomsguide.com/best-picks/best-family-cell-phone-plan, and cabletv.com has analyzed the best home internet plans (https://www.cabletv.com/blog/best-cheap-internet-packages). Let’s assume for this example that you are able to reduce your technology expenses to $170 per month, saving $60.
  2. Reduce streaming services. Two-thirds of all American households subscribe to Netflix, sixty percent to Amazon Prime, and nearly half to Hulu and Disney+. The cost of these plans is about $42 per month, plus the costs of any movie rentals that are not covered by a plan. When you are researching cable television packages, try to find one that includes free movies that you enjoy. If you do so, you can cancel these subscriptions and save $42 per month. Even if you don’t find a plan with free movies, you can cancel two or three of these subscriptions and save up to $27 a month.
  3. Reduce food waste. RTS (Recycle Track System) estimates that the average household wastes $1,866 in food each year. That’s more than $155 per month. The biggest culprit is produce which goes bad. Meat and dairy products are also highly perishable. Reduce food waste by planning meals before you shop and making a point to use perishable food items in a timely manner. We will assume, that with some effort, you can reduce food waste by $80 per month.
  4. Unplug appliances and electronics when not in use. Estimates are that the average household could save $15 per month by unplugging the coffee pot and other kitchen appliances when not in use.
  5. Reduce money spent eating out. Fast food prices jumped about 15% in 2022. The average lunch out now cost more than $11 for one person, while a sit-down lunch will run closer to $20 with tip. If you cut out two fast-food lunches and one sit-down lunch per month, you will save $42 per month.

These five changes will save you enough money to make up for the loss of purchasing power from inflation. If you find that you need, or want, to reduce your spending more, coffee and beverages on the go are another source of potential savings. A large soda or a cup of regular coffee at a drive-up restaurant will cost you $2 or more, while a specialty beverage could cost you $4 – $6. If you buy one beverage each workday, you are spending between $44 and $132 per month. This amount could be significantly reduced by brewing coffee at home and buying other beverages at the grocery store.

God expects us to be faithful stewards of the financial resources He entrusts to us. Money allows us to meet the needs of our families and bless others. However, it can be a cause of great stress if it is not managed properly. Prayerfully ask God to help you budget and manage your money, and rely on Him to meet all your needs.

To learn more about how to honor God with your money and build treasure in Heaven, please click the Finances categories tab to find many blogs on money management, budgeting, and stewardship. My book Honoring God with Your Money is a great tool for financial money management. Click here to sign up for my quarterly newsletter on managing your money: newsletter signup

If you have never accepted Jesus Christ as your Savior, you may not understand what it means to rely on God to meet your needs. Please click on Basics of Salvation in the tool bar above to learn how you can accept the wonderful free gift of salvation.

Money Won’t Buy You More Time

As I read Psalm 49 this week, it brought to mind the lyrics of Dust in the Wind, “Now don’t hang on. Nothing last forever but the earth and sky, It slips away and all your money won’t another minute buy.”

Psalm 49: 6 – 9 expresses a similar sentiment this way, “Those who trust in their wealth
And boast in the multitude of their riches,  None of them can by any means redeem his brother, Nor give to God a ransom for him— For the redemption of their souls is costly,
And it shall cease forever that he should continue to live eternally, and not see the Pit.”

There is great truth in both the Psalm and the lyrics by Kansas. Money cannot buy us a longer life or a future in Heaven. Only faith in the blood of Jesus Christ can provide assurance of eternal life.

Photo by Jordan Benton on Pexels.com

Another stanza of Dust in the Wind goes like this, ” Same old song. Just a drop of water in an endless sea. All we do crumbles to the ground, though we refuse to see.”

If you live seeking riches, power, and pleasure, then your works will be futile and meaningless, as expressed above by Kansas or in Psalm 49:10, “Life the fool and the senseless person perish, and leave their wealth to others.” The psalm continues, “For when he dies, he shall carry nothing away; His glory shall not descend after him.” (Psalm 49:16)

If you want your life to have meaning after you are gone, you need to live a life of selflessness and trust in God. Put your faith in Jesus Christ, serve your fellow man, give money to those who are less fortunate, and spend your money as God leads you. Then you will build eternal treasure in Heaven. No, you cannot take your wealth with you, but as Randy Alcorn says, you can send it on ahead of you.

Are you living a life that pleases God and will secure you a place in Heaven? If you are not, you should make it a priority to give your heart to Jesus. Not only will you have the promise of eternal life, you will have a more fulfilling life on earth. Please click on Basics of Salvation in the tool bar above to learn how you can invite Jesus to be your Lord and Savior.

To learn more about how to honor God with your money and build treasure in Heaven, please click the Finances categories tab to find many blogs on money management, budgeting, and stewardship. My book Honoring God with Your Money is a great tool for financial money management.

Grocery Shopping Amid Empty Shelves and Rising Inflation

The government announced last week that the inflation rate for December 2021 was 7%.  This is the highest rate of inflation since 1982.  Two of the hardest hit sectors were energy and food.  MarketWatch reports that prices for eggs have increased more than 20%, beef and chicken prices are up 13 – 15%, and coffee is up 10%. 

To make matters worse, grocery prices are expected to rise another 5% in 2022.  The biggest increases are expected to be for steak, chicken, mayonnaise, eggs, cereal, and vegetables.

Additionally, grocery shelves are emptier than we are used to seeing them.  Inflation and shortage combine to make feeding your family more challenging than we are used to dealing with in America.  And it is wreaking havoc on family budgets.

To keep your budget in balance, you must (1) find ways to keep your grocery spending within your means or (2) cut expenses in other areas and allocate more money for groceries.

Photo by Kevin Malik on Pexels.com

So, I am offering these ideas to help you eat well and stay within your budget.

  1. Eliminate waste. Americans waste on average one pound of food per person per day.  To reduce your food waste:
    • Plan meals and shop using a list.
    • Check the vegetable bins in your refrigerator daily to assess what needs to be eaten and plan meals accordingly.
    • Keep a food log, so you know when you cooked each dish.  Check log to see what needs to be eaten first.
  2. Make the most of leftovers—turn leftovers into soups, casseroles, and sandwich fillings.
  3. Buy cheaper cuts of meat and cook in a crockpot or instapot to tenderize.
  4. Buy store brands. You may have to try multiple stores to find the brands you like best.
  5. Shop at multiple stores to get the best buys and find items that were out of stock at your usual store.  Plan trips, though, to save gas and time.
  6. PLAN, PLAN, PLAN—but be prepared with backup plans, as shortages are expected to continue.
  7. Plant a garden and grow some of your own produce.
  8. When you find a good price for produce, stock up and freeze or can the excess.
  9. Shop at Discount stores, such as Wal-Mart, Costco, and Dollar General.
  10. Buy less than perfect or ugly produce.  Prepare immediately or process to eat later.
  11. Purchase meat that is nearing its sell-by date and has been marked down. Cook immediately or freeze.
  12. Invest in food storage dishes to keep leftovers.
  13. Invest in a vacuum sealer to freeze uncooked meats and leftovers to be eaten later.
  14. Search Pinterest and other internet sites for new recipes using ingredients that you have on hand.
  15. Challenge yourself to come up with new recipes using items you have in your pantry.
  16. Ask God for wisdom to help you make wise shopping decisions.  “If any of you lacks wisdom, let him ask of God, who gives to all liberally and without reproach, and it will be given to him.” James 1:5

I hope that you will find some of these tips to be helpful as you navigate empty grocery shelves and higher food prices.

What grocery saving tips can you add to this list?

You will find additional information on creating budgets and managing your finances in many of my other blog posts by clicking on the Finances tab on the right. If you have money questions you would like me to answer, you may email me at susan.ball5@aol.com or write your question in the Comment section.  

Those who email me will be signed up to receive my free quarterly newsletter with money management tips, encouraging stories, and Scripture inspirations.  For those desiring a better understanding of Biblical principles of money management, I have written a book Honoring God with Your Money. It is available on Amazon and from Barnes and Noble.

Pepperonis as Quarters

Pepperoni Pizzas
Photo by Polina Tankilevitch on Pexels.com

In a different phase of life, my husband and I bought a pizza franchise and opened a restaurant in the little town of Orange, VA.  Our good friend, and pizza mentor, Jerry told us that we should look at “pepperonis as quarters.”  An individual pepperoni probably costs a penny or less–I never did the math, but I got the point.  Wasting food costs me money, and small wastes add up quickly and take money out of my pocket.  Little things matter whether you are trying to make money in your business or trying to live within your means on a tight budget.

In my current job, I am a consultant in a small business development center.  I meet with people each week who would like to start businesses.  Many of these dreams will be derailed or postponed due to poor credit and/or lack of financial resources to get a business started.  Often these people have plenty of income, yet they have failed to live within their means.  Some of them have made big financial mistakes, such as buying a house that they cannot afford, but many are in trouble because they have failed to control small expenses.  They forget that lunches out and $4 cups of coffee can make a big dent in their budgets.

As a Christian, I am a steward of all that God has entrusted to me.  When someone mentions stewardship, money management is probably the first thought that comes to mind.  Stewardship, however, encompasses all phases of your life, including how you use your time and how you use your talents.  We can relate the “pepperonis as quarters”  adage to time and talents, as well as to money.  Saving a few moments here and there throughout your day can add up and allow you more time to play a game with your child, read a book for pleasure, relax with your spouse, or start a new project.  Honing your talents little by little can help you gain speed and proficiency.

I Corinthians 4:2 tells us, “Moreover it is required in stewards that one be found faithful.”  I hope that this word will encourage you to look for small ways to be a better steward of your time, talent, and money.

Preparing for the Holiday Season

We are a few weeks into fall, and the holidays are just around the corner. The holiday season will not be back to “normal” this year, as covid-19 continues to wreck havoc with schedules and supply chains.  It’s always a good idea to start early and have a plan.  This year, planning ahead is more important than ever.  Here’s some steps to help you have a blessed holiday season.
1) Savor time spent with family.  Many of us will feel a bit more comfortable traveling this fall and having guests in our homes than we did last year.  Make up for lost time.  Invite family and friends for simple meals, fellowship, and games.  Spend less energy planning the “perfect” event and more time enjoying being together with those you care about most.
2) Focus on the real reason for the holidays.  Take time to reflect on how God has blessed your family during the past year.  Even in challenging times, we are a blessed nation.  Thank God for the blessings He has bestowed on you and for the gift of His Son, whose birth brought hope to a darkened world.
3)  Avoid revenge spending.   Many people have put their spending into high gear this year to make up for fewer opportunities to indulge in 2020.  Economists have dubbed this phenomenon “revenge spending.”  This is not a good idea.  Spending more will not make your holidays merrier, and it might eat into savings accumulated last year.
4) Budget.  In the next few months, you will be shopping for food, candy, gifts, and decorations for fall, Halloween, Thanksgiving, and Christmas.  Plan now for spending, in accordance with your budgets.
5) Set aside time.  Plan to take a few days off from work or set aside some Saturdays to begin shopping, planning menus, and start decorating.
6) Delegate.  Share duties with your spouse, children, and family and friends with whom you will celebrate.  They may come up with great, new traditions to include in your celebrations for many years to come, and you will save a lot of time.
7) Plan ahead and be flexible.  The past year and half have taught us that we don’t know what the future holds from day to day.  Covid-19 has presented us with new challenges and obstacles.  Celebrations had to altered last year and that may be true again. 
8) Start early.  Covid-19 has played havoc with the supply chain.  We experienced shortages last year, and we will again this year.  Transportation of goods is taking longer.  If there are items that are “must-haves” on your list, order early and be prepared to accept substitutes.

Photo by Kristina Paukshtite on Pexels.com

This is reprinted from my new quarterly blog which focuses on helping you manage your money in ways that reduce stress and honor God. Click here to subscribe to my quarterly newsletter: http://eepurl.com/hG1VjT

I would love to hear about how you plan to celebrate the holidays this year. What will you differently to make this year special for your loved one?

Lessons in Money Management

My parents raised nine children on a single income, so careful money management was a priority.  I don’t recall them ever formally sharing money management lessons. Rather, they instilled good money management habits through their example and casual conversations.  One of the ways they taught us good money management skills was by a allowing my sisters to make some of our spending decisions at an early age. The lessons I learned include:

  1. Spending for one thing means less money for something else.  When I was about 13, my parents decided to give us each $20 per week allowance.  In 1972, $20 was a significant amount of money. In fact, it is equivalent to about $130 today.  The catch was that the money had to cover all of our discretionary spending.  We were free to pack lunches for school, but if we wanted to buy lunch, it came out of our allowance.  We were also responsible for buying our own clothes and paying for movie tickets and other recreation.  We learned to manage money and make hard decisions.  If I wanted a new pair of shoes, I might have to pack my lunch for a whole week.
  2. Shop the sales.  My mother was a master shopper.  She watched sales and clipped coupons.  I have seen her leave a department store with multiple shopping bags of clothes for which she paid less than $20 in total.  She loved to search the clearance racks for a blouse or sweater that everyone else had overlooked, and she loved the challenge of finding the perfect skirt or pair of slacks to go with it.  She would go to every clothing store in the mall in search of what she needed to ensure that she got the best bargain. Mom knew what month to shop for appliances or furniture, and she knew when the “white” sales (linens) would be going on.  She loved to shop the after-Christmas sales, and she often bought outfits in January which she would give to us the following Christmas. With four daughters born in a 4 ½ year span, she knew one of us would be able to wear the skirts and sweaters she bought.
  3. Buy quality and keep belongings until they wear out.  My mother believed it was worth spending a bit more to get better quality.  She bought traditional styles that would not go out of fashion, and she wore her clothes until they were worn out.  Similarly, Dad taught us to keep cars until the costs of repairs exceeded the car’s value.  He and Mom purchased a car when they married in 1955; my middle school principal purchased the car from them in 1974.  They added a second car in 1965, as I was starting first grade.  I drove that car until my junior year of college, when I was rear ended while driving it.
  4. Save up for major purchases.  I don’t recall my parents ever taking out a loan to purchase a car.  Of course, a new car was a true rarity in our household.  I do recall, however, a couple of occasions when my father borrowed cash from his life insurance policy to cover a major purchase.  He explained that the interest rate was very low, and he was, in essence, paying it back to himself.
  5. Balance your checkbook regularly and know where your money is going.  Balancing the checkbook before we had computers could be a time-consuming activity.  My mother always sat at the kitchen table to balance the checkbook.   Canceled checks were returned to the payer in those days. Mom would tape the canceled checks to the check stubs in a large, three-ring binder.  She would mark them off on the bank statement and determine what checks she had written that had not cleared.  Mom balanced the checking account to the penny, and she was never satisfied until it balanced.
  6. Count the true cost of debt.  My parents bought their final home in 1971 for about $35,000.  The monthly payment of $238.  I believe the interest rate was 7 ¼%.  Mom marked off each payment on an amortization schedule. When there was sufficient money, she would make an extra principal payment or two.  I remember her explaining to me that when she paid extra money toward the principal, she was saving more than one payment, as the balance went down and less interest accrued from then on.  I also recall multiplying $238 by 360 payment and realizing that, if they made each payment as scheduled, the $35,000 house would cost them about $86,000.  This was an eye opener and provided an ideal opportunity for us to talk about homes as investments that would increase in value, whereas a car would lose value over time.  My mother paid off the house in about 13 years.  While my father appreciated not having a mortgage payment, he did fuss more than once over losing the tax deduction of the interest.
  7. Establish credit early and manage it well.  When I graduated from high school, my parents bought me a sewing machine.  Mom then declared that I needed a sewing cabinet, which I would have to buy myself. We went together to the Singer store and picked out a cabinet.  I believe the price was $125.  She instructed me to put $25 down and helped me apply for a credit card.  When the bill came, I paid off the balance in full.  At the age of eighteen, I had established some credit of my own.  I never used that credit card again, but it was the key to allowing me to get a Sears card a few years later.
Calculator, currency, and note pad.
Photo by Karolina Grabowska on Pexels.com

These money management principles have served me well. Steve and I have tried to instill them in our own children. I hope that they will help you to manage your money better and have less financial stress in your life.

For more money management tips and information on creating budgets, please check out my other blog posts under the Finance tab. For those desiring a better understanding of Biblical principles of money management, I have written a book Honoring God with Your Money. It is available on Amazon and from Barnes and Noble.

If you have money questions you would like me to answer, you may email me at susan.ball5@aol.com or write your question in the Comment section.   Those who email me will be signed up to receive my free quarterly newsletter with money management tips, encouraging stories, and Scripture inspirations. 

Your Credit Score is How Low!!!!

Are you one of the 16 percent of Americans whose credit score is so low that it is negatively impacting your life?  A very low credit score can make it nearly impossible to qualify for a home mortgage or a business loan.  You may be able to get a loan to purchase a car, but you will be assessed a high rate of interest.  Those with very low credit scores pay more for auto insurance than those with average or good scores.  If you are one of these people, it is important to take immediate steps to improve your credit score.  It will take some effort and time, but it is a very achievable goal.

Credit score ratings

I recently helped a man write a business plan and develop a cash flow forecast to open a restaurant.  He had many years of restaurant experience, along with some of his own money to invest, and other income to help support his family.  Everything looked good.  In our first meeting, I asked him his credit score, and he assured me it was in the mid-600’s.  A score in the mid-600’s considered to be Fair—not great but certainly high enough for him to qualify for the loan.  Unfortunately, he was quite wrong in his assessment. He applied for a loan and the banker pulled his credit report, which revealed a credit score of about 450. 

By any measure, a credit score of 450 is Bad.  In fact, a score of less than 579 is viewed as very poor credit.  The man was shocked and embarrassed by his low credit score.  He had qualified for a mortgage less than a year earlier, so it is likely that his credit rating was at least Fair at that time.  So, what happened?  I don’t know the answer, as he didn’t share his credit report with me. I did provide him with guidance in regard to reviewing his credit report to see if it contains errors, correcting any errors, and being diligent in managing his credit.  If you are in a similar situation, these steps can help you.

The first thing you need to do is review the report for errors. Any errors should be reported to credit report agency.  Most credit reports and scores are generated by Equifax, Experian, and TransUnion.  You should check your report with each agency at least once a year and report any errors that your find immediately.  Errors might include information for someone who is not you but has a similar name, incorrect information about loans that have been paid off, and credit that you applied for but did not accept.  You should also check for evidence of identity theft.

Here are links for filing disputes with each of the major credit report agencies:

Getting any errors corrected can have a significant impact on your credit score.  Unfortunately, it will take a little time for the agency to investigate your dispute and correct any misinformation.

If your score is low due to poor management of your finances, such as late payments, missed payments, and charge offs, you should follow these guidelines to better manage credit and improve your score:

  • Be sure to make at least the minimum payment on all accounts every month.
  • Make payments by the due date.  Late payments and skipped payments hurt your score.  The later the payment, the larger the negative impact on your score.
  • Don’t open any new credit accounts–don’t buy a car, don’t refinance your home, don’t apply for any new credit cards.  Every new account increases your available credit and lowers your score, at least temporarily.
  • Don’t close any older accounts.  If you recently opened accounts you don’t need, you might want to close them. But, keep open your oldest accounts. Length of credit history improves your score.
  • Keep your credit card balances at 50% or less of the amount of credit extended.

Within a few months, you should see an improvement in your credit score.

The man above will have to put his dreams of opening a restaurant on hold for a while.  It is too bad.  However, if he can get any errors corrected, and if he commits to taking the steps above to improve his credit, he may be able to qualify the loan he needs in 6 – 12 months.  It will take a real effort and determination on his part; however, if he keeps his goal in his sights, I believe he will reach his goal.

God desires that His people pay their bills on time, honor their commitments, and don’t allow money to rule their lives.  If you are struggling to manage your finances, seek Christian counsel and pray diligently for God’s guidance.  You will find additional information on creating budgets and managing your finances in many of my other blog posts by clicking on the Finances category on the right.

If you have money questions you would like me to answer, you may email me at susan.ball5@aol.com or write your question in the Comment section.  Those who email me will be signed up to receive my free quarterly newsletter with money management tips, encouraging stories, and Scripture inspirations.  For those desiring a better understanding of Biblical principles of money management, I have written a book Honoring God with Your Money. It is available on Amazon and from Barnes and Noble.

Financial Impact of Divorce

As my husband and I approach our 40th anniversary in two weeks, I have been thinking a great deal of the blessings of a long marriage in both financial and non-financial terms. That will be the subject of my next blog. Today, I want to talk about the devastating financial impact divorce can have on both members of a couple. This was on my mind even before I read the sad announcement today that one of the world’s wealthiest couples is divorcing.

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Bill and Melinda Gates are ending their marriage after 27 years. Their wealth is staggering, and both of them will emerge from the divorce with more money that most of us can comprehend. Hopefully, they will amicably divide their great resources and continue to be generous in their philanthropic endeavors.

For most couples, however, divorce negatively impacts their finances and significantly lowers their standard of living. The costs of obtaining a divorce are staggering. In a relatively amicable dissolution, it is estimated that each partner incurs legal fees in excess of $10,000. Those costs can be much higher if the proceedings are hostile and protracted. Considering that the average household savings in the U.S. is about $42,000, a divorce can wipe out 50% or more of the savings accumulated by the couple.

With their savings significantly depleted and about half of the income they previously enjoyed, each member of the couple must strike out on their own. There are now two rents to be paid and two sets of utility bills. Each spouse winds up with a considerably lower standard of living. There will likely be additional childcare expenses, and perhaps travel expenses, if one spouse moves to a new city or state. Many divorced people struggle for years to achieve the standard of living they enjoyed while married.

Women are hit particularly hard, as they are often the custodial parent. The non-custodial parent typically helps with some of the expenses by paying child support. However, there is often resentment by both parties. It is very rare for either parent to be satisfied with the child support mandated by the courts. The custodial parent struggles to meet the needs of the children, and the non-custodial parent struggles to make the child support payment and provide for his or her own needs. This is not God’s plan, and it is not good for either the parents or the children.

Of course, the devastation of divorce is much more-far reaching than just the financial impacts. And the blessings of a till-death-do-us-part union are much, much greater than the financial blessings. God’s Word tells us that marriage is for life. When Jesus was questioned about divorce, He responded, “Because of the hardness of your heart he wrote you this precept. But from the beginning of the creation, God ‘made them male and female.’ For this reason a man shall leave his father and mother and be joined to his wife, and the two shall become one flesh’; so then they are no longer two, but one flesh. Therefore what God has joined together, let not man separate.” (Mark 10: 5 – 9)

If you want God to bless you in both your marriage and your finances, it is important to make decisions that honor God. That includes loving your spouse and doing all that you can to have a long, prosperous marriage.

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