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July 19, 2015  

Review: Simple Living in Light of Eternity Seminar

Neil with Simple Living seminar teacher Dennis McCallum

Neil with Simple Living seminar teacher Dennis McCallum

Last week we attended a conference with a seminar on simple living in the areas of personal finance, time management, and parenting (as related to the first two). The teacher, author and pastor Dennis McCallum, fleshed out a well-researched rationale for adopting a simple life, which matches our own philosophy of flexibility. He also included helpful lists of “possibilities” and practical ideas. Enjoy a summary of each below.

The Harrowing Alternative to Simple Living

The session defined simple living as freeing yourself from unnecessary pursuits and expenses in order to have more resources for what you consider important. For us this includes having time and money for ministry, family, and charity. But whatever your “why” is, you can have more of it by making financial and time commitments flow from your priorities, rather than the other way around.

A life ruled by debt and over-scheduling is apparently the new American norm:

  • Average hours working per household rising. The average workweek is closer to 50 hours per week compared to 40 in 1970. Plus with 50% more 2-income households compared to 40 years ago, the total working hours per household has significantly increased.
  • Frantic pursuit of kids’ achievement. One measurable indicator is the increase in sports-related injury, including overuse injury. Sports are now more competitive, year-round, or kids play many sports at once. Vicarious living and hope of scholarships because of parents’ debt are cited as reasons.
  • Out of control spending. According to federal research, the average credit card debt per adult is $15,706; mortgage: $156,333; student loans: $32,953.
  • Time scarcity increasing. The Economist’s article “In Search of Lost Time” (Dec 20, 2014) exposed “time scarcity” as a predominant problem of the rich. Harvard Business School survey found 94% of professionals worked at least 50 hrs a week, and almost half worked over 65.
  • Sad rich people. An overwhelming amount of research documents the phenomenon of increased rates of depression, anxiety, loneliness, at-risk children, and other unwelcome outcomes amongst the middle-class and affluent in our nation. Apparently the pursuit of happiness through consumerism is working. Find more details in our post Increase Your Usefulness, Not Your Lifestyle.

The Surprising Benefits of Simple Living

“Simple living” doesn’t mean you sleep on the floor, dine mainly on peanut butter, and only wear gray crew-neck tees. As McCallum pointed out, “Simple living is fun, healthy, good for kids, makes people happier, and makes possible the awesome vision of New Testament-style church.” In addition to having more time and money for the pursuits you value, studies are finding kids from simpler families fare much better in college and the career world than their helicoptered counterparts . Over-scheduled, over-pressured kids don’t gain the opportunities to make decisions and think for themselves. Meanwhile, simple living provides a great model for kids on multiple levels. We can show them that humans are made for love relationships, not for frenzied achievement and materialism. We can teach our kids how to live well as they observe our practices and priorities.

A less complicated lifestyle can mean anxiety and more contentment, which is after all The Secret to True Financial Freedom. The simple liver can become a generous giver, and Proverbs 19:17 says “If you help the poor, you are lending to the LORD–and he will repay you!” I imagine God gives good interest rates.

Sound good? Before we get super-practical, why not think outside the mold with these big-picture possibilities:

  • Take jobs that pay less and require fewer hours, so we will have more time to invest in relationships. Get a reasonable career that provides adequate income. Don’t borrow for degrees that won’t lead to a career.
  • Start young: don’t let yourself foolishly drift into this trap when it’s hard to change.
  • Couples live on only one income while children are young, even if it means moving to a smaller house and driving well-used cars. (I know this is not possible for everyone. That’s why these are “possibilities.”)
  • Stop saying we’re barely making it when in fact we live at one of the highest levels of income in the world. Recognize when we’re succumbing to greed.
  • Stop stressing success for our kids. Instead urge them to grow spiritually. Save money for kids’ college instead of pressuring them to win scholarships.
  • Admit we are not short on time, but in fact have the same number of hours in our week as everyone else in the world (and likely have more time-saving conveniences).
  • Avoid buying a house at the upper limit for which you qualify.
  • If financial control is slipping away, get credit counseling. Don’t wait till you’re on the verge of bankruptcy.

And finally, some best practices (with links to our posts on these topics):

So there’s simple living made simple! I definitely recommend checking out this seminary for more details. The audio, Powerpoint, and additional resources will soon be available for free here. All research sources are included in these materials. Many of the bullet points were taken directly from “Simple Living in Light of Eternity” by Dennis McCallum, 2015.

What do you think about the trends of helicopter parenting and time scarcity? Do you have other ideas for simplifying life?

 

 

April 30, 2015  

Everything You Ever Wanted To Know About Money

In an effort to think through my philosophy and theology of money, I recently read Money, Possessions, and Eternity by Randy Alcorn. It’s about what [the author thinks] the Bible says about every possible financial topic you could imagine and then some. This book is so incredibly thorough that it should be called Everything You Ever Wanted to Know (and some things you didn’t) about Money, Possessions, and Eternity.

To save you 400 pages of reading, here’s my review. Despite being comprehensive, it’s not about a 7-step financial plan or any other specific guidelines except tithing. I should warn you, this book could really shake up your financial plans. It led to me think through our goals in a different light and makes me want to be more generous. I recommended the book to a friend and it motivated her to broach a very difficult financial topic with her family and make some major (and good) changes. This is a powerful book; handle with caution!

“Materialism is Stupid”

Critiquing our consumer culture, Alcorn keeps it real: “We must understand that materialism is not simply wrong. It is stupid” because “you’ll never see a hearse pulling a U-haul.” Jesus made the same point a little more eloquently: “What good will it be for a man if he gains the whole world, yet forfeits his soul? Or what can a man give in exchange for his soul?” (Matthew 16:26).

The second part is probably the most unique compared to other books about money. Alcorn makes an interesting case for viewing money and possessions in light of eternity (hence the title). Basically, if you believe in the afterlife then why not invest your money in whatever you can take with you? Mainly this means helping people by caring for others’ spiritual and material needs. He also describes a pilgrim’s mentality because it navigates the “in but not of the world” balance well: “Material things are valuable to pilgrims, but only as they facilitate their mission….We must cultivate the pilgrim mentality of detachment, the traveler’s utilitarian philosophy concerning things.” If you’ve ever felt bogged down by the clutter in your home, I think you understand his meaning. Stuff can be a burden. Contentment is key.

The Hot Tithe Debate

The third section is about generosity. He calls tithing the “training wheels of giving” and makes a strong appeal for why believers should give 10% at the very minimum. I come from the rare church that doesn’t teach the tithe; he goes on at length about why you can’t write off the tithe by calling it legalistic or Old Testament. He makes some good points and, rules aside, I agree it would be good to give at least 10% of your income and that grace should lead to greater generosity than the law. But the figure is from the Old Testament; New Testament believers gave more than this in some examples but we don’t read about any requirements.

Debate aside, this book made me want to be more generous. But I have to point out that he wants it both ways when it comes to Old Testament financial advice. He preaches the tithe but dismisses the Proverbs statement about leaving your children’s children an inheritance, saying it no longer applies in part because we don’t follow all the OT laws about leaving a double portion to the firstborn male and yada yada yada.

His Take on Typical Money Topics

The final section deals with common financial topics like his thoughts on debt, saving, retiring, insuring, investing, and leaving an inheritance. See Ramsey vs. Alcorn Throw Down for a summary. About investing vs. giving he asks, “Are we truly obeying the command to love our neighbor as ourselves if we’re storing up money for potential future needs when our neighbor is laboring today under actual present needs?” This is a real tension, but he tends to overlook Bible passages about being a shrewd money manager. Plus a big advantage to pretending to be poor is that you don’t need nearly as much to retire because you maintain a low-cost lifestyle regardless of income.

Practical Take-away

He critiques financial dependence on grounds similar to ours, but he is also a pastor who loves his work and has no desire to retire early.

He’s got good stuff on choosing a lifestyle below your means, giving generously, and practical ideas for battling materialism and teaching children about handling wealth well. He suggests determining “to live on a certain amount of money each year, an amount that allows some room for discretionary or recreational spending. All income beyond that I will give to God’s kingdom purposes.” This sounds great but again, where do saving for retirement or college funds fit in? He paid off his mortgage early, has a retirement account, and helped his daughters with college costs, so he clearly doesn’t give away literally every dollar that he doesn’t spend on his immediate needs.

The Appendix “Practical guidelines to control spending” had some really good tips. My favorite was to “pray before you spend.” If you want to buy something, especially if it’s outside of your routine expenses, why not pray about it? Maybe God will answer by providing the item for free and at a lower cost from an unlikely source. Maybe He will show you that you don’t really need or want it, especially since praying will delay impulse buying. Maybe nothing will happen and you can proceed with whatever you see fit. But why not ask? This approach could get weirdly super-spiritual, but that isn’t his meaning. I’ve seen certain provisions come in just as I wanted or needed them.

Overall, I’d recommend this book to anyone who believes in heaven and wants to think more deeply about why to resist materialism, pursue financial goals, and be generous.

What do you think about giving away money? What’s the best financial book you’ve read?

April 27, 2015  

Ramsey vs. Alcorn Throw Down

Should I leave an inheritance or give away most of my money during my lifetime?

Should I pay off the mortgage early or invest that money in retirement accounts and college funds?

How much life insurance is enough?

How much retirement savings is enough?

How much money should I give away?

These are hot topics for those who are living below their means and have income to work with. We’re such money nerds we’ve even been known to discuss these topics during our monthly date nights. Once you get your spending under control, have a yearly budget, and have implemented some practical thrifty ideas, it’s time to start thinking about building and sharing wealth. As I mentioned in Resolve Your Reasons This Year, I recently read Money, Possessions, and Eternity by Randy Alcorn (2004) and chased it with Dave Ramsey’s latest, The Legacy Journey (2014). Both authors are Christians and wrote these books at least in part to share what they believe the Bible says about money. Their messages are strikingly similar in some areas while very different in others. Reading them back-to-back was challenging and thought-provoking, which is why I’m comparing and contrasting their views for you.

Before getting into the details, I want to fairly convey the purpose of each book. Alcorn’s book is not a how-to book. He is a full-time pastor with some thoughts on practical financial principles, but the book is mainly a treatment of the Scriptures on money-related topics. The subtitle of Ramsey’s book is “a radical view of Biblical wealth and generosity.” This is the famous financial adviser’s first book to delve into the Scripture’s teaching on money, but he only deals with a few passages he believes are often misunderstood. The main topics of his book are leaving an inheritance and giving generously. His book is A LOT shorter!

Ramsey’s book aims to counter the “toxic messages” that rich people are evil, their wealth always takes away from others’ fortune, and that they should be judged for enjoying their wealth while also giving generously. He provides practical examples of what to do with “extra income” beyond a set amount one agrees to live on. He suggests setting ratios on the overflow for giving, (taxes), investing, and “lifestyle” (= fun). Basically, his book is for people with money. Normal people who are approaching steps 6 (early mortgage pay off) and 7 (build wealth and give) will benefit from his book and it may help them make decisions about investments, budgeting extra income, giving, and leaving an inheritance.

Alcorn’s book basically assumes the reader will not become wealthy since he advocates giving away most extra income immediately, after investing something for retirement, children’s college, and leaving room for modest discretionary spending. With the exception of the tithe he avoids specific, numeric advice to leave room for personal decision-making. He says he struggles all the time with the tension of how much to save for retirement vs. how much to give away now. Clearly he prefers to err on the side of generosity. He critiques “financial independence” on some of the same grounds we do, which is why we’ve coined financial flexibility. We’re managers, not owners, of the wealth God’s given us, and we always want to depend on God financially and otherwise. And we want to use money to help others as well as meeting our needs.

Here’s the throw down of their positions on different financial topics, with my two cents, too:

Ramsey Alcorn Pretend to Be Poor
Debt No consumer debt.Get rid of student debt ASAP.

15-year mortgages recommended; pay off early after steps 1-5.

 “We shouldn’t normally borrow and should always pay off debt as soon as possible”

“Not all debt is the same” e.g. mortgages can be reasonable. He paid his off early.

 No consumer debt, including cars.

Get rid of student debt ASAP by living like a student.

15-year mortgage; pay off early if possible.
Insurance Get term, not whole life insurance. Most Americans are over-insured.Life insurance should meet family’s needs for a period of time but not indefinitely.

Don’t replace depending on God & Christian community with insurance.

 Get term, not whole life insurance.
Investing for retirement Once consumer debt is paid and 3-6 emergency savings funded, invest 15% of income in retirement accounts. People think they need enough to live a high-expense lifestyle indefinitely to retire.

Don’t replace depending on God & Christian community with retirement account.

Tension between meeting others’ present needs and our future needs; seek the Lord.

 Get your employer match.

Invest 15% after consumer debt paid & emergency fund in place.

Conflicted about investing more vs. paying off house early.

Investing makes more sense mathematically but we like the flexibility of no debt.
Giving 10% minimum.

Not over 10% until out of consumer debt.

Occasional extra giving after out of consumer debt.Set an amt to live on & set a giving ratio for “overflow.”

“Go crazy” with giving once you get to step 6 or 7 (see above).

Leave a golden goose (principle) that will continue to lay eggs.

 10% minimum.

Set an amt to live on that includes some recreational/discretionary spending, and investing for retirement/college funds, and give away the rest.

Your lifetime is your opportunity to give; leaving isn’t giving; aim to leave as little as possible beyond small gift amounts.

 10% or more recommended.

Live on less without being miserly.

Extra giving: prayerfully respond to needs as they arise.

Time is also an important resource; therefore, we do not plan to build wealth at the expense of spending time to help others now.
Inheritance A good man leaves an inheritance to his children’s children.

Only to be given to children who are following the Lord & agree on how to use the money for God’s kingdom.

The golden goose should be kept to lay eggs to give away.

 Only leave small gift amounts.

You don’t know what your children will do with wealth; it is more likely to ruin than to help.

Don’t set up a foundation; how can you tell God the principle is untouchable?

 ??? Not there yet in our financial journey.

As of now we’d leave money for our children’s care since they are young.

Overall, the normal income person could come away from the books with very similar applications. Give at least 10%, and more when you can (I don’t believe there’s anything magical about 10% but it’s a decent baseline). Get out of debt and stay out. Don’t over-insure. Plan for retirement and kids’ college. The big difference is their take on investments for building wealth and giving. I can see why, as a pastor, Alcorn has a different take on these issues than Ramsey, who has advised very wealthy people. I tend to agree with Alcorn’s interpretations of challenging money’s passages, but don’t like how he explains away Ramsey’s key verse about leaving an inheritance to your children’s children. I’ll post a more in-depth review of Alcorn’s book next since he deals with a lot of interesting principles that don’t fall into these categories.

Which author do you tend to agree with more? What financial questions do you wrestle with? Have you thought about leaving an inheritance?