Does the End Justify the Means?

I've read my fair share of financial books but there are a couple which really stick out in my mind as having a major impact on my outlook. One of these is Rich Dad, Poor Dad by Robert Kiyosaki.

There are many things I have been able to take away from this book which have challenged my thinking. The greatest challenge however is Kiyosaki's idea of "good" debt and "bad" debt. Kiyosaki believes that you should leverage other people's money to make money for yourself. How you leverage other people's money is by borrowing from them, another way to say you have to go into debt. Although I understand his outlook and it does make sense to me I really had to stop and match up this concept with concepts from the Bible. This is something I touched on briefly in my post on "what is debt?" but I would like to go into more detail here.

The logic behind leveraging debt makes sense. If you buy an apartment complex with borrowed money from the bank and turn a profit on that regularly, a profit that more than pays for the monthly payment you now have to the bank, then this processes will gain you money in the short term and probably in the long term. Mathematically it's sound.

Another example is leveraging 0% offers to make money. It is argued that you should take 0% offers on credit cards or other debt opportunities because this can also make mathematical sense. If you have $2,000 on a credit card with 0% interest it would make more sense to put $2,000 in an interest bearing account than to pay off that $2,000 credit card.

I tend to be a very logical person who likes to run the numbers on everything. I think that's why it was so hard for me to see the truth in this instance. The truth is, the end doesn't justify the means. Just because going into debt could earn you more money or because it makes mathematical sense when you run the numbers, doesn't make it right. This was, and sometimes still is, a very hard concept for me to grasp.

God is very clear about his stance on debt in the bible, just check it out for yourself (Romans 13:8, Proverbs 22:7). Although it never says going into debt is a sin, it makes a very clear case for why you don't want to do it. It doesn't make any concession for debt that makes you money or for debt that doesn't have an interest rate.

The really tricky part in all of this is truly applying it to my life. What does that mean about buying a house? It can't possibly mean that you shouldn't buy a house until you can pay for it 100%.... right? Well, from reading what the bible says, I have to conclude that's exactly what it means. The same thing goes for buying cars or furniture or education.

As you know by now, if you've been reading this blog, I do have debt. So I have not followed what the Bible has to say on this. To be honest with you, even now knowing what the Bible has to say I don't think I would follow it when it comes to the house. The truth is I'm impatient and don't want to wait the 5 or 10 years it would take to save up that kind of money. It's harsh reality but I have to be honest with myself.

I'll just leave it as something I'm working on. I'm not perfect yet. I hope to not get into debt again, now that my choices are made. I will work hard on getting out.

Paint By Numbers

As it nears the end of the month, my husband and I tend to look over the monthly budget and see how we're staking up. So far, we're under in 3 out of our main 4 categories. Under by enough that it looks like it will balance the one category we've gone way over in; Pets. As you may remember, one of our goals for this year is to stay under budget in all categories. It seems like it would be easy to do, but it always eludes us.

My husband likened this to painting by numbers last night, which I thought was a good analogy. We can see what colors (money) we have to work with, and where we want them to go (amount budgeted per category), but when we start painting we can't seem to stay within the lines.

Neither of us is sure why. It seems like something just always comes up that we're not expecting.

This month, for instance, we got one of our dogs neutered. We knew this expense was coming up but we weren't quite sure when we'd be able to do it. There was some extra room this month so we decided it was time and we bit the bullet. Of course, this put is over our monthly budgeted pet amount. (Although, I am happy to report, we cut the cost in half by checking with more than one vet for pricing.)

We were throwing some ideas around to fix this issue in the future, like coming up with a list of long-term expenses we know will be coming up and starting to work those into our budget. Christmas would be one such expense. I'm just curious what other people do for these things. Anyone out there have any ideas?

Decluttering

Decluttering can be a great way to find some extra room at home as well as make some money.

My husband and I are in the process of trying to fix up our house, which includes finishing the basement. In preparation for this we were down there a couple nights ago to help envision what we want to accomplish. One of the things that came up in are planning was decluttering. It can be truly amazing to see how much clutter can accumulate in the span of a year or two.

Long story short, we ended up going through all our stuff and sorting it into 4 categories:

• Keep
• Donate
• Sell on E-bay
• Trash

We now have a large pile of stuff to donate to Goodwill next time we head into town. We also got rid of a big box of trash and I have another big box of things to sell on E-bay.

It seems the main money maker of this stuff is actually my old Super Nintendo games. I have to admit, it's hard to give my old games up, especially my favorites (Earthbound, Secret of Mana, and Zelda), but I have to be honest with myself as well. I'm probably never going to play these games again. I've resigned myself to just look back on them with fond memories of yesteryear. I have to say I was a bit amazed at how much I can get for one game in particular, Earthbound. It seems this was rather rare and I happen to have not only the game but the player's guide as well, both in mint condition. According to E-Bay I should be able to pull down about $150 for the pair. Not to shabby.

I'm going to try and keep track of how much money I'm able to get from this decluttering adventure and then post that at a later date.

FAFSA Time!

It's that magical time of the year again for those of us entering a new year of college. Oddly enough this not only includes myself but also my niece this year. I can honestly say I never thought I'd be in college the same time as my niece. That makes me feel a bit old. But I digress...

For those of you that may not know, FAFSA (Free Application for Federal Student Aid) is the necessary government paperwork that every student must fill out if they hope to get grants, student loans, and scholarships (in most cases). Grants such as the Pell grant are given out on a needs basis and is also first come first serve. That means the sooner you fill out the FAFSA the more likely you are to get aid.

Since I already know that I'm not going to qualify for need-based aid there isn't too big of a rush on my part, but I will still complete it as soon as possible, after my taxes are done this year. That way my scholarships can be renewed without delay for next semester.

By the way, you did read that right. I have two scholarships this semester. It turns out the surprise scholarship from last semester has carried over and will be a help this semester as well. It was perfect timing as my company is now pushing back on educational reimbursement and has declined paying their half of my tuition this semester.

To make things a little easier on you, you can fill out the FAFSA by clicking on this link:

http://www.fafsa.ed.gov

Just a warning, as all things in government seem to be, this is a long and arduous process. Good Luck!!

2009 Financial Goals

One thing you should know about me is that I'm a very goal oriented individual. I have specific goals for where I want to be professionally, personally, and fiscally at different points in my life. Thankfully, my husband indulges my goal oriented ways and we sat down earlier this week to hash out our financial goals for 2009.

We have a lot of things we want to accomplish. To be honest, I'm not sure we can do it all, but I would rather set my goals high and not reach them or be pleasantly surprised than set my goals low and reach them. That being said, here are our goals for 2009:

• Pay off our auto loan (our last consumer debt)
• Install a sliding patio door off our dinning room.
• Fix our Garage door (it's been broken since we bought the house)
• Update our Bathroom
• Update our Kitchen (this does not include new appliances)
• Partially finish the basement
• Save 3 months worth of income in our Emergency Fund
• Completely stick to our budget at least 1 month (we always seem to go over in one or more areas but it evens out cause we are then under in other areas)
• Increase our net worth to $80K or more
• Be content with all our financial decisions throughout the year

Like I said, it's a lot to try and accomplish but I'm somewhat bolstered by our accomplishments from 2008. You may notice that a trip to Ireland is not one of the things listed on here. After some discussion my husband and I decided to put that off until later in our lives and focus on fixing up the house. We would like to move in the next couple of years and we both agreed that investing in our house at this point in our lives should be the priority. Maybe a trip to Ireland will make it onto the list in 2010. We'll see.

What about you? Do you come up with yearly financial goals? If so I'd love to hear what others are looking to accomplish in 2009.

Accomplishments of 2008

I know I haven't been blogging very long but I have been keeping track of our finances for a while now. I finally got a chance today to sit down and look at what my husband and I have been able to accomplish in 2008. I thought I might share that because when you're in the middle of the every day grind of trying to be frugal it can become tedious and easy to lose focus. Stepping back and getting a big picture like this is nice and helps me to keep on track. So, here is what we've been able to accomplish this last year:

• Reduced our number of debts from 5 down to 2.
• Increased our savings by $2,000.
• Paid off about $10,000 worth of debt.
• Refinanced our mortgage to a lower fixed rate and change to a 15yr term.
• Nearly doubled our net worth.

Overall I'm pretty happy to see how far we've come over the last year. I'm also very excited to see what we'll be able to do in 2009.

The Secret Millionare

If you know me, you know I have a few personal favorite shows that I try to watch each week; Heroes, Smallville, Extreme Makeover Home Edition, and my new favorite, The Secret Millionaire. This is kind of like FOX's answer to Extreme Makeover Home Edition.

One of my last posts was on why I wanted to be financially free and what that means to me. This show really fulfills my vision of what that is. These are millionaires who take time to volunteer in their communities or the communities surrounding them and find ways to donate their funds in order to enrich people's lives. If you'd like to watch any of the episode's online you can do that here. I linked to one of my personal favorites, episode 2.

This is a brand new TV show that just came out early December and is trying to get the ratings to stay on the air so, if you like what you see, I encourage you to tune in to FOX whenever it shows in your area. Here is the synopsis FOX gives on their website:

Challenged with living on minimum wage, the millionaires will immerse themselves in situations beyond their comprehension. They work with with community members and befriend those in need. Then they decide who of their new-found friends, neighbors or co-workers should ultimately receive their extraordinary gifts, at least $100,000 of their own money. The millionaires include an internet mogul who last year at age 25 sold his company for $300 million, a co-owner of a multi-million dollar magazine-publishing business, a successful Southern California lawyer, an owner of a restaurant empire, a Baltimore socialite & former NFL cheerleader as well as a software inventor worth $50 million.

Happy New Year!

Happy New Year and a belated Merry Christmas to everyone!