Buying A Home?

Owning a home is a wise investment for a personal finance portfolio. If you live in the home for 2 years prior to selling it, making it your primary residence, the profit or gains you make off of the increase in value of the home are not taxable.

When to buy a home is the next best question to ask. It is highly recommended to put off buying a home until you are debt free and save up a healthy down payment for your home purchase.

Many people feel that renting is a waste of money. I believe renting, while saving and preparing for a home purchase is very wise. What is unwise is buying a home too early, then getting overwhelmed with the mortgage payment and other debts and running the high risk of foreclosure. Click the link for an interesting article about mortgage defaults and foreclosures.

The best plan is to be debt free and have a healthy down payment where the mortgage payment is 25% – 35% of your take home pay on a 15 year fixed rate mortgage.

 Why a 15 year mortgage? The better question is why a 30 year mortgage? Let’s compare: As of today, the 30 year mortgage rate is 6.29% and the 15 year rate is 5.97%. Not much different. Let’s use a $150,000 mortgage with no down payment as an example.

30 Year Mortgage                                                 15 Year Mortgage

Loan:                     $150,000                                 Loan:                    $150,000

Note:                     $927                                          Note:                    $1263

Tot. Int. Paid:      $183,892                                  Tot. Int. Paid:     $77,340

Tot. Payments:   $333,892                                  Tot. Payments:   $227,340

For $336 more per month you pay off your mortgage 15 years earlier and save $106,552 in interest payments. Most people with a 30 year mortgage try to pay extra on the house note anyway, but statistically, over 80% who plan to pay a 30 year mortgage down early, do it consistantly.

In the article referred to above, it states,

“Many homebuyers have been forced into default or foreclosure because they haven’t been able to sell their homes or end up owing more than their home is worth.”

This is a risk we ran into when we refinances our home to consolidate debt and got a mortgage for 100% of appraised value! We didn’t know it at the time, but we were at HUGE risk for falling in the category of the above statement. The article also says,

“The company said the delinquencies were not due to borrowers struggling with mortgage interest rate resets, as many had expected. Instead, the delinquencies have been largely due to people losing their jobs or similar factors, the company said. Those homeowners have been unable to refinance because the value on their home has fallen and the credit crunch has cut off other borrowing options.”

This is why it is recommended to go with a 15 year fixed rate mortgage and keep the payments between 25% – 35% of take home pay. This, combined with a emergency fund of 3 – 6 months expenses would keep many homeowners out of risk of default or foreclosure.

A home should be a blessing for any family. But, “The blessing of the LORD makes one rich, And He adds no sorrow with it.” – Proverbs 10:22

There is a high risk of sorrow when we get into a big mortgage in addition to a high debt situation.

 

Unity in Finances

Many couples do finances many different ways. I think the bible has an argument for both husband and wife being equally involved in financial matters.

“Who can find a virtuous wife? For her worth is far above rubies. The heart of her husband safely trusts her; So he will have no lack of gain. She does him good and not evil all the days of her life.”

Proverbs 31:10-12

This tells me that we, as men should draw everthing we can from our virtuous wives. We should definately trust them and the input they provide for our finances. As a result, as promised above, we will have no lack of gain.

This is encouragement also for wives to be involved in family financial matters. Your gifts are important for the success of your family. God has given you authority over the home and God’s Spirit speaks to you about this area. Husbands are wise to recognize the potential that results from bringing the wife on board for home finances.

There is more than financial gain that is available for husband and wives to operate as “one flesh” in family finances. Time spent agreeing on values and goals concerning finances gives couples the opportunity to build communication skills and intimacy in the marriage.

We firmly believe this biblical principle is a great beginning on the road to having a healthy Christ centered marriage that God intended!

Generations…

“A good man leaves an inheritance to his children’s children, But the wealth of the sinner is stored up for the righteous.”

Proverbs 13:22

Ever notice that it says “children’s children?” You know what it takes to ensure that your children’s children get that inheritance? The key to reaching your grandchildren with your inheritance is making sure you have passed not only money to your children, but also the wisdom and integrit to handle that money properly.

Schools are not teaching very well, I don’t remember learning anything about it there. In general, parents are teaching very well either. Again, I never got many lessons from my parents about finances.

Also, with each generation,reports of personal debt, personal savings rate and bankruptcies are on the rise. (BK’s dropped in 2006 with the new laws, but over decades they have risen.) As of 2004, some reports have an average income of retired people of around $25,000 – $35,000/year. A modest income for the twighlight years and not much if considerable debt is carried into retirement.

We are soooooo glad that we were exposed to this great information and decided to act on it. Now, we will make sure to impress upon our child (children) the importance of good stewardship of finances according to the Bible.

So, ultimately, this scripture is FAR MORE than just passing some money down to your family. Its about guiding and teaching them the wisdom and integrity needed to make sure the inheritance makes it to the grandkids. Who knows, maybe that wisdom and integrity will help them with other life issues, other than just money.

“Begin with the End in Mind” – Stephen R. Covey

This is from “The 7 Habits of Highly Effective People” and its a good word of wisdom.

What will you need in the end? You’ll need a good nest egg that will support your lifestyle in your retirement years. Wouldn’t it be great to be able to do what you love in your twighlight years after a long productive working career? Wouldn’t it be great to pass down a legacy of wisdom, integrity and a little bit of financial blessings to your children and grandchildren? (Oooh, that reminds me….)

So, what do we have to do to ensure we have a good nest egg at the end of our career? SAVE NOW! Compound Interest is your best friend in retirement savings!

Got kids? They plan on going to college? Want to pay cash for their college? What do you have to do to pay cash for your kids college? SAVE NOW!

We won’t go into the many tax sheltered programs for both retirement and college savings.

These are just two examples of things that have us bound financially. I’m sure we can come up with more. Its easy to recognize that debt payments probably are the #1 thing that keeps us from saving. Lack of planning is another. Both kept us from a solid retirement or the ability to pay cash for college.

So, what are some dreams or plans you have for the future? Why not get out of debt and make those dreams and plans come true? Or maybe you are stuck in a J-O-B and would instead like to pursuit a calling or a gift. But, you can’t change careers right now cause this one “pays the bills.”

Here’s another challenge & encouragement: Close your eyes and think what it would be like to get rid of all your payments except the mortgage. Do the math, look at the numbers, add up the figures. How much is it each month? It’s alot, isn’t it? What else could you do with that money? Could you save more? Could you have more fun? Could you GIVE more? Could you pass down a legacy to your children and grandchildren?

Count The Cost = Budget

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—

Luke 14:28 (NKJV)

This scripture is the motivation for our BLOG name. But, it is also the motivation for an important habit of being a good steward of God’s resources. That habit is a written budget, also called the written spending plan. Check out this short article for more information.

We highly recommend the “Zero balance budget.” Before we learned about this type of budget, our budget was an estimate of our income compared to an estimate or average of all of our monthly bills. As long as our income was more than our average bills for the month, we thought we were fine. We did this anytime we changed jobs or bought a new house or new vehicle, just to make sure we were not over extending ourselves.

Then we learned an even better method. This better method was to do a zero balance budget every month or every pay period. It works like this: each pay period we write our exact income for that period at the top of the page. Next, we gather all bills due for that pay period and pay them on paper before the pay period begins. When the bills are done and hopefully we have some money left, we spend each and every dollar that remains on paper, until we have a zero balance.

Here’s an example:

INCOME:                  $1,000

     Tithe:                       $100   ($990) 

     Mortgage/Rent:     $200   ($790)

     Groceries:                 $90    ($700)

     Car Loans:              $150    ($550)

     Insurance:                $50    ($500)

     Utilities:                  $100    ($400)

     Gas:                         $100    ($300)

     Clothing:                   $20    ($280)

     Taxes:                       $50     ($230)

     Retirement:            $100    ($130)

     School Loan:            $50      ($80)

     Credit Card:             $40      ($40)

     Entertainment:       $40        ($0)

This should be done for each pay period, depending on the frequency of which you get paid. This habit was key for us getting out of debt. We were able to see where we spent money and we had a plan. When you start doing a written budget, it will seem as if you received a raise.

Hopefully, if you are on the road to getting out of debt, you will be able to find ways to cut back and sacrifice TEMPORARILY, in order to put more money toward paying down debt.

Why pay off debt? Because the borrower is servant to the lender! Check out this article for more information. 

  

 

Abundance vs. Slavery

The thief does not come except to steal, and to kill, and to destroy. I have come that they may have life, and that they may have it more abundantly.

John 10:10 (NKJV)

 

The rich rules over the poor, And the borower is servant to the lender.

Proverbs 22:7 (NKJV)

 

You can’t be a servant to anything, except Christ, and live an abundant life. Debt has stolen, killed and destroyed families and marriages. Research that made us take an honest look at our financial position included:

• Psychology Today reports that the #1 cause of divorce in America is money conflicts.

• The Barna Group reports that 9% of born again Christians tithed their income to local churches in 2004.

• Census Bureau reported that the average household income in America from 2002-2004 was $44,473.

• USA Today reports that the average household has $84,454 of personal debt.

I just realized that if we continued in the direction we were going, we would definately not be able to experience any form of abundant life in our finances. Our debt prevented us from contributing to retirement, saving for kid’s college and giving to our local church.

It was slow and silent. The death of our hopes and dreams didn’t come crashing down in an instant, they were slowly but surely eroding away because we were not diligent in handling our resources that God provided.

We invite you to check in periodically and if God lays it on your heart to be better steward of His blessings, we hope you find the information here helpful.

Our Mission & Vision

 Be diligent to know the state of your flocks,  And attend to your herds…

Proverbs 27:23

The biggest part of a financial turn around is just paying attention to your finances.  We are a blessed nation, but surveys and statistics indicate we are not getting the most out of what God has given us to care for.

Our intention is to help you be diligent to know the state of the resources God has blessed you with and help you attend to your finances. We’ll do this by sharing our experiences and pointing you to solid, biblical information on how to live the life God intended for your family’s finances.

Our Mission: To encourage, motivate and educate individuals and families in The Body of Christ to be diligent in attending to their finances in order to build up The Kingdom of Heaven here on earth.

Our Vision: To see every person and family live the life God intended concerning their personal finances.