Every once in a while, I am either asked this question, or it comes up in a discussion:

Should I tithe off my income tax refund?

The purpose of this post isn’t to discuss the validity of the tithe today.  It is directed towards those who practice the act of tithing.  I’ve included a brief history and definition of the tithe, but an in depth study is beyond the scope of this writing.  I will provide more information on this topic in the future!

What is a tithe?

Tithe simply means “a tenth”.  In the Bible the Hebrew word was ma ‘aser, and in the New Testament the Greek was apodekato.

Strong’s Concordance gives the following definitions:

• to give, pay a tithe of anything
• to exact receive a tenth from anyone
• tenth part
• payment of a tenth part

Tithing in the Bible:

The first mention of tithing in the Bible is in Genesis 14:

Then Melchizedek king of Salem brought out bread and wine; he was the priest of God Most High. And he blessed him and said: “ Blessed be Abram of God Most High, Possessor of heaven and earth; And blessed be God Most High, Who has delivered your enemies into your hand.” And he gave him a tithe of all.

The law of first mention states that the first mention or occurrence of a subject in Scripture establishes a pattern, with that subject remaining unchanged in the mind of God throughout Scripture.

It is also interesting to note that tithing was established before the law. Therefore, it can be inferred that it did not end with the law.

“You shall truly tithe all the increase…” – Deuteronomy14:22

“Then the LORD said to Aaron: ‘You shall have no inheritance in their land, nor shall you have any portion among them; I am your portion and your inheritance among the children of Israel. Behold, I have given the children of Levi all the tithes in Israel as an inheritance in return for the work which they perform, the work of the tabernacle of meeting.’” – Numbers 18:20-21

What “increase” in included in the tithe:

The Bible says to tithe off your increase.  The definition of increase according to Strong’s is “revenue”.  Taking it a step further, the definition of “revenue” is the top line figure before deductions are made…in other word “gross income”.

Based upon my research, I believe the best model is to tithe off your gross income throughout the year.  Therefore, when you receive a tax return this is money you’ve already tithed from and it would not be necessary to tithe again (however, that doesn’t mean you can not…or give a freewill offering).

That being said, there are many that faithfully tithe off their net income.  I believe the Lord honors that as well!  In this case, you should tithe with your returns because you would not have done so yet.

Conclusion:

According to the definition of tithe, increase, and revenue I believe the best model is to tithe off the gross.  This would make a tithe off any income tax return redundant.  However, if you choose to tithe from your net income, you should tithe off your income tax return as well.  Whatever model you choose, remember that giving is an act of worship, so honor God with your giving.

God loves a cheerful giver!

Here are some other great posts about tithing:

What is tithing? by Christian Common Cents
To Tithe of Not to Tithe by Good Steward Keys
A Personal Tithe Testimony by Debt Free Adventure

I haven’t had an idea for the deal or frill series for a while.  This was a guest post I received.  Not only was it an awesome comparison, it fits nicely into the deal or frill series.

This is a guest post from Crystal of Budgeting in the Fun Stuff: A Personal Financial Blog about the Next Financial Step. It’s an open fiscal diary and a personal finance blog rolled into one…

For anybody who hasn’t heard of Angel Food Ministries, they are a non-profit business that sells pre-decided boxes of food at a discount once a month. Since they get bigger discounts for bigger orders, they welcome absolutely everyone to participate. They make tons of money and pay big wages to the founders, but that is why they are not classified as a charity although they do give some food away.

We started trying Angel Food Ministries this year to lower our overall food budget. Our expenses did fall about $150 a month for January and February, but we liked the January Menu WAY more. Here’s what we received and how much it would have cost from Kroger’s:

Angel Food Ministries January 2010 Menu
Signature Box – $30 from AFM

Kroger’s Prices as of 1/21/10

$5.50 1.5 lb Choice Beef Roast (YUM)

$5.00 2 lb Baby Back Ribs

$5.00 2.5 lb IQF Split Chicken Breast (We don’t like bones)

$4.00 2 lb Mac & Beef Dinner Entrée (So-so)

$3.00 1.5 lb Fully Cooked White Meat Breaded Chicken Patties

$1.78 1 lb Lean Ground Beef

$4.25 1 lb Bratwurst with Cheese

$1.00 1 lb Frozen Sliced Carrots

$1.00 1 lb Frozen Whole Kernel Corn

$1.25 8 ct Frozen Heat and Serve Pancakes

$1.75 10 ct Whole Wheat Dinner Rolls

$3.00 3 lb or 4 ct Large Russet Baking Potatoes

$1.00 32 oz 2% Shelf Stable Milk

$1.25 Dozen Eggs

$4.00 Pie

—–

$42.78 Total for Krogers

January Special #17 lb Assorted Meat Grill Box – $23 from AFM

$20.00 2 lb Ribeye Steaks (4 x 8 oz) (YUMMY)

$6.50 2 lb Pork Roast (GOOD)

$3.50 1.5 lb Lean Hambuger Steak Patties (4 x 6 oz) (AWESOME)

$5.00 1.5 lb Italian Sausage with Cheese

—–

$35.00 Total for Krogers

January Special #5Premium Fresh Fruit and Veggie Box – $22 from AFM

$2.50 1 Large Golden-Ripe Pineapple

$3.30 1 3 lb Combo Pack (Washington Apples, Granny Smith Apples, and Oranges)

$0.60 2 Large Tree-Ripened Ruby Red Grapefruit

$1.00 1 Large Premium Haas Avocado

$0.75 1 lb California Carrots (Cello Bag)

$3.00 3 lb North Carolina Sweet Potatoes

$2.50 2 lb New Crop Red A-Size Potatoes

$1.50 2 lb Large-Medium Yellow Onions

$0.70 1 head Large Green Cabbage

$3.30 1 (8 oz) Package New Crop Georgia Shelled Pecan Halves

—–

$19.15 Total for Krogers

Everything tasted as expected and the fresh fruit and vegetables were really fresh. Overall, we were VERY happy with January, so we ordered two Signature boxes in February. Here’s what each box had:

Angel Food Ministries February 2010 Menu

Signature Box – $30 from AFM

Kroger’s Prices as of 1/28/10

$13.00 2 lb Top Sirloin Steaks (Too thin)

$5.50 1.5 lb Boneless Pork Roast (YUM)

$5.50 2 lb Boneless, Skinless Chicken Breasts (disproportional but great)

$6.00 2 lb Lasagna with Meat Sauce (Okay)

$3.00 1.5 lb Fully Cooked Boneless Chicken Drumsticks (YUCK)

$1.78 1 lb Lean Ground Beef

$1.00 1 lb Frozen Baby Lima Beans

$1.00 1 lb Frozen Green Beans

$1.00 1 lb Pasta

$1.11 25 oz. Pasta Sauce

$3.00 4 ct Large Russet Baking Potatoes

$1.00 32 oz 2% Shelf Stable Milk

$1.25 Dozen Eggs

$3.00 Snack Cookies

—–

$47.14 Total for Krogers

Overall, AFM is a good value IF you like everything in the box you want to order. We skipped March since the menu didn’t look very good for us, but we’re trying again in April since that menu looks great. I love the grab-bag mentality, so I think we’ll keep this up whenever the menus look yummy to us.

For those of you who don’t like AFM, there is also Food Share America and several others you could possibly try.

I thought it would be fun to publish a mini-series called “Manners & Money”. This series will discuss situations in which manners, etiquette, or the social norm dictates our money decisions.  Dave Ramsey, author of Total Money Makeover often says Normal is broke…I’d rather be weird. Easier said than done Mr. Ramsey!  Too often, peer pressure and social acceptance cause us to do things with our money we would rather not do.  Do you breach social protocol or  stick you your financial game plan?  Are your frugal ways socially acceptable?  Do you care?  Let’s discuss!

Upcoming topics are

• Tipping
• Re-Gifting
• Splitting Checks
  
• Gift Registries
• Corporate Solicitations & Donations

If you have another topic you’d like to see discussed, I am open to suggestions and guest post submissions!

Last summer, as I was plowing through debt with gazelle-like intensity, I decided I was going to do something radical.  I was going to completely cut off my cable in an effort to save time and money.  This was a big move for me as I always have my television on…even if it was just background noise.

My plan was to shut off my cable for the summer months and speed up some debt payoffs.  I would use the extra time for reading and to devote to side projects I’ve been wanting to get started.  On July 1^st 2009 I called the cable company and told them to shut off my cable effect on July 6^th.  I wasn’t sure how successful this project would be and I didn’t want to set myself up for failure by starting 4^th of July weekend.  I calculated the difference in my cable bill, and using online bill pay I immediately allocated the additional funds to the next debt in my snowball.

Most of the television shows I like are available online.  The first couple of weeks went by relatively quickly as I got caught up on the latest season on NCIS.  I was also able to watch the latest season of Hell’s Kitchen and Survivor (Hi, my name is Lakita and I am a reality TV junkie…).

The Hulu Effect

I decided to check out Hulu and see what other shows may be available.  However, there were some interesting side effects

1. When I ran out of shows to watch, I started watching shows I wouldn’t normally watch…just because.
2. Sometimes I felt obligated to watch shows that were in my queue.  The irony is, unless they are about to expire, I can really watch them whenever I want

I had to remind myself I was doing this to save time as well as money!

As time went on, I missed television less and less.  Between summer travel and side projects, I was able to stay occupied, however I didn’t know if the slower pace of the “off season” would cause me to miss cable, or at least television.  I resolved I was going to take advantage of the government coupons for digital antennas.  I received my DTV coupon, but I let it expire!

At the time of this writing, I’ve been cable free for 7 months and counting.  Eventually I’ll get a digital antenna and someday I’ll probably return to cable.  But for right now, I’m in no hurry.

The financial savings are undeniable: $70/month applied directly to OPERATION DESTROY DEBT.  Rather or not I saved time could be argued.  There was a period of time when I actually watched more television online (like when I discovered LOST and watched the first 5 seasons over the course of a month).  There are other times where I would come home and work on side projects, study or read.  I think my productivity increased, but not until the latter months.

If you want to increase your cash flow – cut the cable!  You may not have to cut it completely like did, but if you decide to, you may find out that you don’t miss it as much or at all.

Have you cut or decreased your cable bill? (Or thought about it…)
What effects did it have on your finances?

I am NOT a fan of debt, so why in the world wouldn’t I pay off my student loan with “gazelle like” intensity?

The screenshot below will explain why I considered a less than aggressive payment strategy for my student loans.  Think back to 2002-2003, college consolidation loans hit an all time low interest rate.  Everyone was talking about consolidating!  I couldn’t surf the Internet or watch TV without hearing about consolidation before the new rates applied.  I consolidated and got locked into a 3.75% fixed interest rate.  I don’t remember what it was before, but if I had to guess it would be around 6-8%.

Typically, I would recommend paying off debt before investing.  For example,  someone with credit card debt at 8% APR may be tempted to invest and hope for a 10-12% return.  The problem is, you have a guaranteed debt vs. a probable return….it is apples and oranges.  But what if you could guarantee the interest earned could be greater than the interest paid?

My original plan was not to include my student loan in my debt snowball because I was sure I could find an investment vehicle that would guarantee higher than 3.75.  I got an ING Direct account in the good ol’ days when the APY ranged from 4-5%  and 5% CDs were available at every bank.    Well, in preparing this article I search for CDs, Money Market Accounts, and High Yield Savings Accounts that offered a 4-5% rate of return…and here is what I found out…they don’t exist!  At least not in 2010.  It’s a different world than it was 7 years ago.  Here are the highest rates from bankrate.com at the time of this article:

• 5 yr CD: 3.49%
• 5 yr Jumbo CD: 3.20% (If I had $100,000 for a jumbo CD, my student loan would be paid off!)
• Savings Account: 1.50%
• Money Market Account ($10,000 balance to open): 1.50%

I even looked at government bonds (which are not guaranteed, but very low risk) and the rate of return is not above my loan interest rate of 3.75%

When I first started writing this article it was titled: Why I’m NOT in a Hurry to Pay Off My College Loans but when I took a close look at the numbers my game plan started to change.

My theory was that I could find some sort of savings account with a rate of return higher than my loan interest rate.  I would save the money and at the end of the year I would apply a percentage of the interest towards my student loan and reinvest the rest.  This plan was erroneous for the following reasons:

1. I was comparing fixed rate interest vs. variable rate interest: My loan interest rate is 3.75%.  Period.  However, the interest rates of CDs and Savings accounts vary over time.  So even if I was able to find a 5 year CD at 5% interest (virtually impossible), there is no guarantee that I would be able to find the same interest rate again after the initial CD matures.

2.  When an inflation is calculated, the difference in savings practically diminish.  The graph below is from US Inflation Calculator however, I have plotted the average inflation rate over time (2000-2009) to be 2.87%.  So a CD with an APY of 5% is only generating 2.13% return when inflation is factored in.  Considering the average rate of inflation, I would need a return of 6.62% just to break even.  I think it is safe to say nothing guarantees that high yield.

The bottom line – it is still  DEBT!  The Bible says the borrower is slave to the lender, and we are admonished to pay back what we borrow.  Do I really want to be bothered with this monthly payment for the next 10-15 years?  I don’t think so!

Also, there is risk involved in prolonging repayment.  God forbid, but in the case of financial hardships that debt still has to be paid when it could have been paid off years ago.  The unique thing about student loans is it’s pretty easy to get financial hardship deferments (almost too easy), however…while your loan is deferred that interest is still accumulating adding to your mountain of debt.  Furthermore, student loans are not dissolved in bankruptcy (no, I am not advocating bankruptcy but I do realize for some it is a reality).

So, will I be adding my student loans to my debt snowball?  I’m leaning towards yes!  However, I also want to increase my retirement savings as I am nowhere near maxing that out.  Gazelle like intensity on the student loan debt?  Maybe a jack rabbit!

Are you paying off your student loans as quickly as possible or investing at the same time?

“I want to be clear: We do not excuse or condone folks who’ve acted irresponsibly.” – Barack Obama

ADVANCE NOTICE OF INCREASE IN INTEREST RATE REQUIRED- In the case of any credit card account under an open end consumer credit plan, a creditor shall provide a written notice of an increase in an annual percentage rate (except in the case of an increase described in paragraph (1), (2), or (3) of section 171(b)) not later than 45 days prior to the effective date of the increase.

Translation: The credit card company must give you at least 45 days notice if they plan on raising your interest rate (annual percentage rate or APR). Furthermore, the credit card company must let you know (in plain English, not lawyer speak) that you have the option to opt-out of the new rates. Opting out means you’ll surrender your rights to use the credit card and will pay off the card and it will be closed.

PROHIBITION ON ISSUANCE- No credit card may be issued to, or open end consumer credit plan established by or on behalf of, a consumer who has not attained the age of 21, unless the consumer has submitted a written application to the card issuer that meets the requirements of subparagraph.

APPLICATION REQUIREMENTS- An application to open a credit card account by a consumer who has not attained the age of 21 as of the date of submission of the application shall require–

i. the signature of a cosigner, including the parent, legal guardian, spouse, or any other individual who has attained the age of 21 having a means to repay debts incurred by the consumer in connection with the account, indicating joint liability for debts incurred by the consumer in connection with the account before the consumer has attained the age of 21; or

ii. submission by the consumer of financial information, including through an application, indicating an independent means of repaying any obligation arising from the proposed extension of credit in connection with the account.

Translation: If Jr. wants a shiny new credit card when he goes off to college, he needs to ask mommy or daddy OR be able to prove that he is financially able to repay any credit extended.

Personally, as one of many undergrads who racked up a few thousand dollars in credit card debt, I welcome this restriction. However, Baker from ManvsDebt makes a strong point when he states 18 year olds now require co-signer to obtain credit cards, yet still maintain rights to catch bullets with their face.

INDUCEMENTS PROHIBITED- No card issuer or creditor may offer to a student at an institution of higher education any tangible item to induce such student to apply for or participate in an open end consumer credit plan offered by such card issuer or creditor, if such offer is made–

(A) on the campus of an institution of higher education;

(B) near the campus of an institution of higher education, as determined by rule of the Board; or

(C) at an event sponsored by or related to an institution of higher education

Translation: No more T-shirts, phone cards, and Frisbees for filling out credit card application on college campuses

A written statement in the following form: ‘Minimum Payment Warning: Making only the minimum payment will increase the amount of interest you pay and the time it takes to repay your balance.’, or such similar statement as is established by the Board pursuant to consumer testing

Translation: Card issuers must tell you how much and how long they are going to milk you for if you only pay the minimum.

This is something that the consumers could figure out on their own with a debt payoff calculator. Hopefully, seeing the numbers will encourage a speedy repayment.

IN GENERAL- In the case of any credit card account under an open end consumer credit plan under which an over-the-limit fee may be imposed by the creditor for any extension of credit in excess of the amount of credit authorized to be extended under such account, no such fee shall be charged, unless the consumer has expressly elected to permit the creditor, with respect to such account, to complete transactions involving the extension of credit under such account in excess of the amount of credit authorized

Translation: Card issuers can’t allow you to charge over your limit, then smack you with a fee for going over. However, you can opt in for over-the-limit “convenience” service. In that case, you can (and should) be charged.

Limit on Fees Related to Method of Payment- With respect to a credit card account under an open end consumer credit plan, the creditor may not impose a separate fee to allow the obligor to repay an extension of credit or finance charge, whether such repayment is made by mail, electronic transfer, telephone authorization, or other means, unless such payment involves an expedited service by a service representative of the creditor.

Translation: Issuers can’t charge you an arm and a leg because you want to pay your bill by phone or over the Internet.

These fees were always ridiculous to me so I’m glad it is not illegal. One of my creditors wanted to charge me $13 to pay by phone. I would refuse and insist on making the payment over the Internet at which time the phone charge was waived.

Retroactive Increase and Universal Default Prohibited- Chapter 4 of the Truth in Lending Act (15 U.S.C. 1666 et seq.) is amended-

Definitions:

Universal Default “in a nutshell” says that if you are more than 30 days late on any payment to anyone, the interest rate on your credit card could increase.

Scenario: Jane has 3 credit cards. Due to unforeseen circumstances she gets behind on her payments for CREDIT CARD A. Because of this, CREDIT CARD B & C add insult to injury by raising her interest rate from 15% to 25%. Never mind the fact she was never late on a payment on CARDS B & C. That is universal default…and it is now illegal.

Retroactive Rate Increase is when credit card companies increase interest rates on purchases made in the past consequently affecting your outstanding balance. Sound unfair? The Obama administration thought so, and it is now prohibited.

An increase due solely to the fact that a minimum payment by the obligor has not been received by the creditor within 60 days after the due date for such payment, provided that the creditor shall

(A) include, together with the notice of such increase required under section 127(i), a clear and conspicuous written statement of the reason for the increase and that the increase will terminate not later than 6 months after the date on which it is imposed, if the creditor receives the required minimum payments on time from the obligor during that period; and

(B) terminate such increase not later than 6 months after the date on which it is imposed, if the creditor receives the required minimum payments on time during that period.

Translation: If you are 60 days late of paying your bill, creditors are allowed to raise your interest rate. However, the rate must return to what it was previously after 6 months of consecutive on-time payments.

Better Translation: Pay your bill on time!

Note: This portion is implemented in “phase 3” and does not go into effect until July 2010.

IN GENERAL- Upon receipt of a payment from a cardholder, the card issuer shall apply amounts in excess of the minimum payment amount first to the card balance bearing the highest rate of interest, and then to each successive balance bearing the next highest rate of interest, until the payment is exhausted.

Translation: Credit card companies will be required to apply excess payments to the highest interest balance first, as consumers expect them to do.

Due Dates for Credit Card Accounts-

IN GENERAL- The payment due date for a credit card account under an open end consumer credit plan shall be the same day each month.

WEEKEND OR HOLIDAY DUE DATES- If the payment due date for a credit card account under an open end consumer credit plan is a day on which the creditor does not receive or accept payments by mail (including weekends and holidays), the creditor may not treat a payment received on the next business day as late for any purpose.’.

Translation: The billing date must remain the same each month, if that date happens to fall on a weekend or holiday, then the bill will be due on the next business day without penalty.

There is more to the 2009 CARD ACT, if you like, read the entire text of H.R. 627: Credit Card Accountability Responsibility and Disclosure Act of 2009 or you can read the CARD Reform fact sheet (shorter version with key points). So what does this mean to you? Only time will tell. These laws were put in place to protect consumers but there may be side-effects. Credit cards may become harder to obtain and awards may be scaled back.

What about you?

Has the new CARD Act changed the way you use credit cards? Has it impacted you in some way? What part of the CARD Act stands out to you?

I’d love to hear from you in the comments

Yield:  Sometimes a full stop is not required, but you’ll need to slow down and take a look before proceeding.  As you continue on your financial journey, you’ll come across some of these yield signs.  Coming to a complete halt isn’t always necessary but you’ll want to slow down and take a look.  For example:  Where should I place my emergency savings fund?  What is the best investment strategy for retirement?  Should I hurry to pay off my student loans? Slow down and weigh your options but don’t stop saving/investing!

Sharp Turn Ahead: On this lifetime journey it’s inevitable that you’ll encounter a turn or two.  It can be dangerous to take a turn too fast.  Slow down, gather your bearings, and watch out for obstructions that might be around the bend.  Proceed, but pay close attention.  Examples of turns on your finance journey: marriage, childbirth, and change in employment status.

Hospital \ Emergency Services:  If you find yourself in need of assistance go in the direction that will get you the help you need.  For example, financial counseling can be found at the National Foundation for Credit Counseling.

Rest Stop Ahead: The journey is long.  You’ll need to maintain a steady pace to endure.  Use rest stops to relax, reenergize, and gather your bearings.  Once you feel refreshed, continue on the journey.  I’ve witness people try to attack debt with such zeal, but without rest, they become weary and give up.   As you reach milestones and markers in your financial journey, it is OK to treat yourself.  Celebrating the small victories will give you the endurance to continue.

What about you?

Have you seen any of the signs above on your financial journey?  Are there other signs that haven’t been mentioned?

What about this one?  I’d love to hear your creative ideas for what the sign below could mean on a finance journey!

Whether you’re goal is to pay off debt, beef up your emergency fund or cross some other hurdle in your financial journey, nothing speeds up the process quicker than an increased cash flow. You can only increase your cash flow in two ways: spend less or earn more. Below are some ideas that I’ve personally implemented to get started. They’ve worked for me, and hopefully they’ll work for you!

1. Review your insurance policies. Are you paying for more coverage than you need? Are you missing out on any discounts (military, organizations, etc)? How much would you save on your car insurance by raising your deductible? (Note: I don’t recommend raising the deductible unless you have funds in place to cover the cost should something happen). Are you paying for more life insurance than you need? Again, I am not recommending that you haphazardly slash all your insurance policies, but I am suggesting you take a look at them and make sure you are paying for what you need…no more, no less.
My story: I was constantly being charged overage fees on my cell phone. These quickly racked up to $200-$300…after the second month of these astronomical bills, I increased my monthly payment by $20 for the unlimited minutes plan. When my contract expired I switched to another service provider with an unlimited voice & data plan. Savings: $30/mo from the previous unlimited plan

2. Lowering your cable bill can significantly increase your cash flow. So you’ll miss a few shows…motivate yourself by thinking about your long term goals. Do your homework and get ready to make some changes. Before calling your current provider, find out if there is a competing service offered in your neighborhood (satellite, cable, etc). Ask about their prices and if they have promotions for new members. Armed with this information, call your current provider, tell them you want to lower or cancel your service. Often times they will make concessions to keep you as a customer. They may offer you a promotional rate for 3-9 months. At this point it is up to you rather you want to keep your service and take a lower rate, temporarily increasing your cash flow, cancel the service altogether, or switch to another provider.

My story: I opted to completely turn off my cable. I realized most of the shows I watch either come on broadcast stations or I can watch on the Internet.  I was offered some very tempting deals to keep my service, but in the end I decided to cancel anyway.  Savings: $60/mo

3. Sell it on Ebay! Do a full inventory of your possessions. What do you own that you can sell? I’ve successfully sold used military uniforms, computer parts, martial arts equipment, and instruments on Ebay. Do you have slightly used clothing? Shoes? Purses? Try selling them as a whole lot.  Some items ship & sell better than others, so do some research to make sure what you’re selling is worth the effort.

My story: I was sold 2 whole life policies (yes 2!!!)….after much research I surrendered both of them after 4 years and took the cash value. For my current situation, term or no life insurance makes the most sense as I don’t have any dependents. Savings: $50/mo plus one time cash value of the surrendered whole life policies

4. Cell phone plans: If you are reading this, chances are you are in the 82.4% of Americans that own a cell phone category. Review your usage for the last couple months. If you are consistently under your quota, consider switching to another plan to save money. Also research smaller providers (Cricket, Metro) to see if they have lower monthly plans. With cell phone companies competing for our business, it is a buyer’s market. Most companies offer unlimited nights & weekends, free incoming calls, and mobile to mobile. Review your calling patterns and figure out what works for you. Do you talk to the same people all the time? Perhaps T-mobile’s myFave network would suit your calling pattern. There are many T-Mobile prepaid plans that could save you a great deal of money as well. Alternatively, if you find yourself consistently going over on your usage, you’ll either need to change your talk habits or spend more now to save later.

My story: I made over $75 on Ebay selling martial arts & electronic equipment I have not used in years.  As of the date of this writing I have pulled approx 10 more items that I will be listing for sell that will probably generate another $200 – $300.

What about you?
There are many more ways to increase cash flow than what is listed here. Have you used any of the methods listed above?  Perhaps you have more ideas?  I’d love to hear your success stories and ideas in the comments below!

A journey of a thousand miles begins with a single step.
- Lao-tzu

Congratulations!  You have made a conscious decision to DO SOMETHING about your finances.  Um…now what?

These steps are designed to guide you through the first steps of your financial journey.  Perhaps you stumbled across this page and this isn’t your scenario…maybe you are further along in your personal finance journey.  I’d still love to hear about your first steps in the comments.

1. Declare TODAY that you will no longer be a slave to debt!  Go on…say it out loud.  Make this declaration to yourself, the Lord, and an accountability partner.

This is my declaration: Lord TODAY, I will tip the scales in my favor.  I will be a good and faithful steward over ALL you have blessed me with

Action steps

a. Write your own declaration & place it somewhere you will see it on a regular basis (car, wallet, mirror etc)
b. Find an accountability partner.  This needs to be someone you can trust and will encourage you on the journey.

2. Pull your credit report from http://www.annualcreditreport.com.  By law, you are authorized one free credit report a year from Equifax, Experian, and TransUnion.  You can either pull them all at once, or pull one every four months.  If you have not looked at your credit report in a while, I would suggest pulling all three.

Action steps

a. Examine your credit reports for any errors.  If you notice any accounts that do not belong to you, contact the credit company to report the error.  According to a 2004 survey from the national organization of state Public Interest Research Groups (U.S. PIRG)  around 80% of credit card reports contain errors.  Do not skip this step.

3.   Print the last 3 months of bank statements.  Determine where your money is going.  Determine where you can cut spending.  This extra cash will be used to pay off debts and start an emergency savings fund.

Action steps

a. Highlight & categorize spending.

b. Look for areas you can cut back (eating out, subscriptions, cable, etc).  Depending on the gravity of your situation, be prepared to make sacrifices, but be realistic.

c. Theoretically, how much are you saving with the proposed cuts?  Make a note of that number…you’ll need it a little later.  Allocate a percentage for debt payoff and a percentage to fund an emergency savings account.  How much you use to save vs. payoff debt will be determined by your own preferences and risk tolerance.  Conventional personal finance wisdom suggests at least $1,000 in an emergency fund, so if you don’t have that…concentrate at least most of your new cash flow there.

4. If you are behind on any bills, call the creditors to make payment arrangements. Be prepared to negotiate.  Stay calm, courteous, and professional.  Do not promise more than you can afford.  If you are making timely payments you can skip this step.

4b. List all debt (including personal loans), the interest rate, and the amount.  List them in order of priority.  Focus all extra income (that percentage you allocated in 3c) to paying this debt.  Pay the minimum on all others.  For starters, I’d suggest the debt snowball method outlined by Dave Ramsey in Total Money Makeover in which you pay the debt with the smallest balance first.

Action steps

a. Make a list like the one above.  Using the percentage allocated to payoff debt in 3c.  How long is it going to take you to pay off the first debt in your list?  You can use one of this debt calculator to figure it out.  Make a note of that date and mark it on your calendar.

5. Set up an emergency savings account. This should be in a different bank from the one do your normal transactions from.  I recommend a high yield savings account online bank like ING Direct or FNBO Direct.  If you do not have any savings, set a goal of $500 or $1,000.  Give yourself a time limit to meet that goal.  I will save $_________ in ________ months. Using the percentage allocated for savings in 3c to set an attainable goal.

Note: I’ve personally used ING direct since 2004 and I love them!  Great customer service, the ability to setup sub-accounts, and no minimum to open an account or outlandish fees are just a few of the things that make them a top-notch choice for me.

6. Evaluate your plan every 30 days.  Keep in touch with your accountability partner, and remember to reward yourself every once in a while for the small victories.

Stay encouraged!

Start your journey with this FREE Personal Finance Journey worksheet >>>

What about you?
Are you beginning your financial journey or a few miles down the road?  I’d love to hear from you!  What additional tips, suggestions, and words of wisdom do you have for those who are starting their journey?

“Health is not valued till sickness comes.”

Please answer honestly, this will be for you to retain. Many of the questions are subjective, they are designed to get you to think about the impact of financial decisions and debt.  On a sheet of paper, number 1 through 12, for each question write yes or no.

1. Are your debts adding negative pressure to your home life?

2. Is your FICO credit score less than 620? (Also answer “yes” if you do not know your score)

3. In the past year, have you been charged an insufficient funds or overdraft charge from your bank more than 3 times?

4. In the past year, have you used a payday or title loan?

5. Have you ever made unrealistic promises to your creditors or given them false contact information so they could not bother you?

6. Does the pressure of your debts make you careless of the welfare of your family?

7. Do you ever fear how you would financially support yourself and family if you lost your job?

8. Do you typically pay the minimum required on debts?

9. Have you ever borrowed money without giving adequate consideration to the rate of interest you are required to pay?

10. Do you usually expect a negative response when you are subject to a credit investigation?

11. Have you ever developed a strict regimen for paying off your debts, only to break it under pressure?

12. Do you often find yourself unable to account for the money that has been spent?

Count the number of questions you answered “yes” to and write that number below

______________

There is no score to determine how “good or bad” your situation may or may not be.  Obviously, the more questions answered “yes”, then the more work will need to be done to improve your financial health.  Isolate the problem areas.  What action steps can be done to transition that yes to a no.  Record the number of “yes” responses.  Map out your action plan and take the assessment again in 6 months.  Has the number of “yes” responses gone down?

At one point, I answered yes to over half of these questions, I am happy to report that today I can answer “no” to all of the above questions.

If you answered yes to most of these questions, you may want to contact a professional debt management company.

It’s your turn!

What additional questions would you ask?  How would you rate your “debt health”?  Good, fair, poor?
Do you know someone in “poor financial health?  What can you do to help them?