Christian Finance Blog

I wrote about the purchase and acquisition of ShareBuilder by ING Direct last year in December. I wondered back then how they would integrate together. Well, ING finally took a step in the right direction.

You can now access your ShareBuilder account from your ING account. All you have to do is login your ING Direct account and click on “Access your ShareBuilder account(s)”. Then you will login with your ShareBuilder account and you can now see your account value in your ING Direct account.

And on a side note, yes it does say “Kill Student Loan” on there as a nickname for one of my savings accounts. I know it sounds a little violent but it’s only because I’m passionate, intense, and vehement about getting out of debt! The only debt I have left is credit card debt (all at 0%) and my student loans at 6.8%. A month ago I transferred a large portion of my student loan debt to a 0% balance transfer on a credit card.

So what I’m doing is paying the minimum on the 0% credit card and then transferring every month the amount it would take to pay off the card in 12 months into ING Direct to maximize the interest I can get. I’m also making extra payments to my student loan every month. I plan on being completely debt free by September 2009! I can’t wait!

If you’re interested in getting $25 for opening an ING Direct savings account or Electric Orange checking account, shoot me an email and I’ll send you a referral. Help a brother out!

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freedom: the power to determine action without restraint.

As we celebrate America’s birthday and independence, let this be a personal financial freedom day for you! We are so blessed in this country to be able to worship freely, have access to free education, and have the freedom to be as hard-working or as lazy as we want to be. We truly have “the power to determine action without restraint” in this country. All this because of the sacrifices of our military men and women past and present. Always remember to throw up a prayer for them today and every day.

In the same way the United States declared their independence from England, let this be your personal independence day from debt! Let this be the day that you decide to take a stand and get out of the dependence on debt. How do you do this?

Let’s take a look at the people of the British colonies. They were being taxed and levied by the English government and they didn’t like it. They got mad enough to declare their independence from Great Britain. Your situation is no different. The credit card companies are “taxing” you like crazy and ripping you off with high interest rates. It’s time to get mad. It’s time to start your own revolutionary war against debt!

So mark this day on your calendar as your own declaration of independence from debt and within a year or two you’ll look back and see how much progress you’ve made! I’ll be along for the ride to help as much as I can. I’m fighting the same battles you are. Keep reading and God bless! That’s enough history lessons for today!

Did you know that the world’s richest man’s credit score is only 718? How can a billionaire like Warren Buffet have an average credit score? Even my credit score is higher than his! He really doesn’t need to even borrow money since his net worth is “only” about $62 billion. He can just pay with cash! But what’s the explanation for his average credit score?

Well, the FICO (Fair Issac Corporation) score doesn’t take into account wealth or assets. What the FICO credit score (which is the score that most lenders use) takes into account is your payment history, amounts owed, length of credit history, new credit, and types of credit used (in order of importance). It measures how much of a risk you are to a lender and has a range between 300 and 850.

The FICO credit score is important because it’s not only used by lenders (which affects interest rates on loans). Potential employers can check your credit and you may be passed up for a job because of poor credit. Landlords can also check your credit and might not rent to you. Most insurance companies are also now basing your insurance policy on your credit score. Utilities companies and cell phone companies can even use your score.

So what can you do to improve your score (or establish a score if you don’t have one?) The best thing you can do is to pay your bills on time. This includes utility bills, rent, cell phone bills, and any installment loan payments (car loans, mortgages, student loans, etc.). Pay your credit cards on time every month, or better yet, pay them off every single month. Keep your debt-to-credit limit ratio (the amount owed versus the total credit limit) low.

If you don’t have a credit score (common among younger people), you can take some steps to establish your credit. Consider taking out a credit card with a low credit limit and use it to buy things that you would buy anyway (like gas) and pay it off every month. If you’re in school, you could also consider taking out a small student loan. The longer your credit history, the better, so as your credit ages, your score will improve. I’m not saying that you should go take out lots of loans and credit cards just so you can establish your credit. Don’t borrow if you don’t have to. But you can take some steps now to establish or improve your credit. Knowing is the first step!

Source: MyFico

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Recently I said goodbye to an old friend. I’ve only known her for a few years, but they were a painful few years and I couldn’t wait to get rid of her. It was just something about her. She was always asking for money every month. I even paid her a little extra hoping she would go away. Finally I got fed up and said, “I don’t want you in my life anymore!” And so I paid her off just recently. What a relief! Her name was Car Debt.

My car is paid off and it sure does drive differently! I paid off my car loan in about two and a half years, rather than than the five years it was supposed to take! It just didn’t make any sense to have a whole bunch of cash laying around making 3% when my car loan was costing 6.5%. So I decided to use my cash, nearly deplete my emergency savings, and just pay the thing off. I figured with the car payment gone, I could rebuild my emergency fund pretty quickly. Best decision I’ve probably ever made.

I’m still on my quest to pay off debt. I plan on being completely debt free by the end of 2009! The only debt I have left is a credit card at 0% that will be paid off at the end of this year and those pesky student loans! Remember that “the borrower is slave to the lender”. King Solomon.

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Here’s a real easy Quick Tip for you! This is not my idea. This is from David Bach. Do you want to know how to shave 7 years off of your 30-year mortgage? This is not a get rich scheme or anything illegal at all! All you have to do is say the words “biweekly mortgage plan”.

This plan let’s you pay your mortgage “biweekly”, or in other words, “twice weekly”. This will split your mortgage payment into two for each month. So, for example, if your mortgage payment is $1000, there will be two payments of $500 each. What this does is it adds an extra payment a year. It may not seem like much, but in the end, it will shave your mortgage by seven whole years! What a quick and easy way to save a ton of money in interest payments! Plus your home will be paid off quicker!

So go call your bank or mortgage company and ask for the biweekly mortgage plan! Many banks are now offering this. Some banks do charge for this but the saved money and time is worth it in my opinion!

Source: CBS

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I ran across an interesting CNN article on emergency savings.

Here are the vital statistics:

Only 40% of Americans have a separate savings for emergencies

Only 19% of those aged 18-24 have separate emergency funds

Only 23% of people with less than $25,000 in annual household income have them

31% of African Americans and 32 percent of Hispanics have them

58% of those with annual income of $75,000 or more have emergency funds

This is some sad news indeed on the financial state of this country. However, it is pretty expected since this is a debt nation with a negative savings rate. We are spending more than we’re earning and borrowing the rest. The sad fact of this survey is that the people who need an emergency fund the most, don’t have them. That’s why people have to resort to rip-offs like payday loans and credit card advances!

Another interesting thing to note about the survey was that 81 percent of those surveyed believed their rainy-day savings would be sufficient to cover emergency expenses this year. Are we delusional or what? How can 81% say that their emergency fund will cover emergencies when only 40% even have one? We really need to change our thinking in order to get into financial shape as a nation. It’s going to be hard, because it’s so ingrained in the culture, but it isn’t impossible. If you can change, and then teach your children the right way to manage money, we can change as a nation. It will be a slow process, but it begins with you. God Bless!

Here’s the link to the CNN article.

It’s pretty much common knowledge now that everyone should have an emergency fund of 3-6 months (some experts say even more) of expenses in liquid savings (money that’s easily accessible). But unfortunately, common knowledge isn’t necessarily common practice and many people just don’t have anything in savings. The key to getting out of debt is to have some sort of emergency savings that acts as a cushion against life’s hurdles. Without this cushion, you will be forced to use your credit card or payday loans and go deeper in debt.

If you’re struggling with debt, you absolutely need to have an emergency fund. It is extremely important. Here’s a great plan to get out of debt from Dave Ramsey:

Step 1: Stop borrowing. Simple enough.

Step 2: Save $1000 and put it in the bank. This is the beginning of your emergency fund. You want to do this before you start attacking your debt because this will act as a cushion to protect you for emergencies.

Step 3: Start attacking your debt using the “debt snowball”. We’re going to pay off all your debts except your mortgage. List your debts on a sheet from smallest to largest (in amount, not interest rate). Then start attacking the smallest debt and pay minimum payments on the rest. Once that’s paid off, take that payment and add it to your next debt and so on until all your debts are paid off.

Step 4: Fully fund your emergency fund which is 3-6 months of expenses. You can download an emergency fund worksheet from Bankrate. It’s a PDF that you can view or print. To get the 6 month emergency fund, you just need to multiply each line by 6 instead of 3.

Step 5: Then start investing and grow your net worth.

This is not my plan. This is from Dave Ramsey who is a great Christian finance guy. I’m going to do a review on one of his books so stay tuned for that.

A great place to put your emergency fund is a high yield online savings account. I’ll have another post on some of the savings accounts that I use.

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Here’s today’s verse of the day:

⁷The rich rules over the poor,
And the borrower is servant to the lender.

Proverbs 22:7 (NKJV)

Some wise words indeed from King Solomon and so true. When you look at society today, this country is definitely a debt nation. The savings rate continues to be negative which means that the American people are spending more than they’re saving. That’s not good and it’s hard to shake especially when we’re surrounded by it and it’s so engrained in the culture.

All I have to say is that you don’t have to “keep up with the Jones’s”. You have to fight the temptation to show off with your possessions because we came into this world with nothing and we will leave it with nothing as well. I would rather have money saved up and not have to live paycheck-to-paycheck than to “act like” I have money by borrowing, borrowing, and borrowing. Examine your assets. Do you really own anything? The title to your car and house has your bank’s name on it. The borrower is truly slave to the lender and until we get out of this mentality to spend, spend, spend, we as a nation will continue to be in debt. I mean, the government can’t even get out of debt and that just goes to show you that it is really part of this culture today.

Now I’m not saying that all debt is bad. I’m in the camp that says there’s “good debt” and there’s “bad debt”. Taking out a loan to pay for your education is good debt. Taking out a loan to buy a party boat to show off to friends is bad debt. I think that taking out a mortgage on a house can be good debt just because of the skyrocketing real estate prices in some areas. As long as you’re living below your means and buying a house that’s relatively affordable, owning a home can be the best investment you make. But if you can’t afford the payments with a 30-year fixed rate mortgage, you can’t afford that house. It’s generally unwise and risky to take out these interest-only loans and adjustable-rate- mortgages. Just don’t do it.

So next time you apply for a loan, remember that you are slave to the lender for the life of the loan. Not all debt is bad but make sure you really need what you’re trying to buy and that your investment will pay off some time in the future.