Tag Archive | financial flexibility

Frugal For a Season

We’ve posted extensively about our reasons for being “frugal,” or not maximizing our expenses. We want to live purposefully and generously. We want to invest time and money into our family, friends, and community now and as our financial flexibility increases. However, I use quotations around frugal and even hesitate to quote my own blog title anymore, because our thriftiest days are behind us.

I’ve already chronicled my fall from homemade-yogurt-making diva to grocery delivery slacker. Blame it on the third kid, middle age, or financial frivolity, but I simply don’t have time for my semi-crunchy lifestyle of yore. (I did recently make granola for the first time in years, but only because I was on one of my dreaded anti-sugar crusades.)

I’m not even sure what to call our former “frugality” because much of what is today deemed extreme frugality was standard fare a generation ago. My mom hung laundry, cloth diapered, composted, thrifted, and side-hustled without seeming to think twice about it. Not to mention Neil’s grandparents raising 5 kids in a small bungalow with a postage stamp yard, because that was normal.

And then there’s us. Third kid, we buy a minivan and a bigger house with a bigger yard. Spend $$$ on gymnastics, etc. (but so did my frugal mom for me; it comes full circle). I hung my once frugal head in shame while ordering extra Christmas gifts for the third kid so she won’t steal the middle child’s presents.

Looking back over 16 years of adulting (read: marriage), we were frugal for a season. And for a reason: we paid off student debt and our first home. We got the investment snowball rolling. Started college funds. Travelled. Gave to charities. All of which would have been much harder to do one income had we taken on car payments, consumer debt, or a huge mortgage.

Now I’m left searching for a new term to label our lifestyle. The phrase financially efficient comes to mind. This is, like our title, both subjective and tongue-in-cheek, since there’s absolutely nothing efficient about having three children, and in many ways, this choice was the end of all efficiency for us (See “We Hate Money, or We’re Having a Third Kid“). But our growing responsibilities and expenses led us to re-evaluate what is worth saving our pennies over, and what is not.

Now, as the stock market and time have been working their magic on investments, and as our income has grown, and as we’re pulled in more directions than ever, saving dollars in my old crunchy ways seems less worthwhile. A decade ago we were newly settled into our first home, had recently paid off our student loans, and were enjoying our first Christmas with an infant (hello, college fund). Now we’re discussing the details of Roth conversion ladders because a period of more flexibility is not so very far away.

A few thoughts come to mind as I look over our financial journey, and the many personal finance articles I’ve read over seven years of blogging. On the debate between growing income versus cutting spending: it’s more about your values and priorities than numbers. I.e., what do you want and need to focus on? How much did hanging laundry and cloth diapering speed our progress? Only slightly. But having chosen to stay home with the babes, I wanted to do what I could. And it’s better for the earth (says person who now buys the 300 pack of paper plates).

What did help was buying a home we could afford, putting 20% down, and paying it off early. Paying our student loans off early as well. Avoiding car payments and other consumer debt. And with the cushion provided by no debt except a smaller mortgage, we got those investments rolling, because the first $100,000 really is the hardest. Many smaller things like cooking at home, camping for some vacations, and buying secondhand didn’t hurt, either.

I’d also point out that the posts you see about extreme frugality or no-buy challenges usually reflect a very limited period–a season. Sure, many people could live on a limited income for a year or two. You defer home upgrades & large purchases, and use your stash of clothes and cosmetics for a couple years. There is a real value in breaking needless shopping habits, learning contentment, and rethinking how you consume. Considering how we’re inundated with ads and influencers suggesting we need to constantly “improve” ourselves and our lifestyle, these frugal challenges have their place. And funds directed toward bigger goals have a lasting impact. Just don’t feel bad if your average spending doesn’t match up to an catchy headline.

More important than the number you spend, save, or even give, is the why behind what you do. Do you have financial goals? Are you happy with how you’re spending? These are topics we like to revisit near the beginning of the year as we look at our budget and plan for the future.

How has your approach to personal finance changed over time? What are your goals this year?

A Pretend to Be Poor Investing Primer

So, you’re about to graduate, you got your first job, and you’re ready to invest for retirement. Congrats! Or maybe you’re finally starting to crawl out of student debt, but you don’t want to neglect retirement, either. Good for you! Perhaps you’ve got it all–all the expenses, that is. Kids, a mortgage, student loans, car payments….what does investing look like for you?

Getting started with investing can be overwhelming and confusing. I used to think of the stock market as a realm only rich people understood. I didn’t realize that investing is how regular people “get rich,” i.e. build wealth. Indeed, investing is what’s behind the “pretending” part of Pretend to Be Poor. Rather than allocating resources toward a lot of fancy gadgets, showy cars, or pricey vacations, we’d rather live simply and build wealth that will allow for more flexibility in the future.

Even once you get why to invest, it’s easy to feel intimidated by this seemingly abstract world. Where do I start? What should I invest in? Will I get ripped off? Will I have to start obsessively checking the stock market every day? I’m no expert, but I’m happy to share a few simple principles of investing, from one lay person to another.

Where should you start?

The place to start depends on your benefits. If you have an employer match in a 401k or 403b, start there. It’s like “free money,” or, more accurately, it’s part of your compensation. For example, the employer may contribute 3% of your salary if you contribute 6%. 401k contributions are made on pre-tax income. You can contribute up to $19,000 of pre-tax income per individual per year. But at the very least start maxing out that match!

If you don’t have an employer-matched option, start with an IRA. Individuals can contribute $6,000 to an IRA each year. There are two main types of IRAs: Traditional (pre-tax) and Roth (after tax). With the traditional, you’ll contribute on pre-tax income, and pay taxes later when you withdraw (like the 401k). With the Roth, you pay taxes on your income now, so you will not have to pay taxes later when you withdraw. There are pros and cons to each. Consider whether you are likely to be in a higher tax bracket while you are contributing, or later when you withdraw.

If you are on a typical American lifestyle-inflation plan where your expenses will increase with your income, you may want to pay those taxes now and go with the Roth. If you plan to keep expenses fairly stable as time goes on, and keep them well below your current income, then your “income” when you start withdrawing will be a lower later on.

How much should you invest?

Dave Ramsey recommends directing 15% of household income to investments as the 4th baby step after paying off all but mortgage debt. Others say the sooner you start investing the better, so don’t even wait to pay off debt to get started. It really depends on your comfort level with debt (and what interest rates you are paying).

Time is a key ingredient in growing investment so starting ASAP is wise. I highly recommend contributing enough to get your employer match from the day you get your first job, at the bare minimum. Work up to 15%, and then try to max out accounts as you’re able. If you reach that goal, look into index funds through a low-fee brokerage service such as Vanguard.

One strategy we’ve used to increase investments is to direct “extra” income to retirement. So when we get a bonus, we give at least 10% to our church/charitable causes, we may spend a little on an extra, but the bulk goes straight toward retirement. You might use the same approach to allocating side hustle money, gift money, or your household’s second income, if you’re able.

What should you invest in?

Index funds are a good, low maintenance, low cost approach. Index funds split your investment across lots of companies at once so your fund has diversity and stability. You can also be super lazy, as there’s no trading of individual stocks. Because they don’t require a lot of babysitting these funds have lower fees compared with other types of accounts. Many employer-based plans will have index funds to choose from.

Fees vary widely between different types of accounts and brokerage firms, so be sure to compare. And doesn’t it make sense to pay less fees and keep more of your money? It’s also wise to compare the performance of various index fund options before investing. For more on how to choose an index fund, read this.

What to watch out for

Annuities: these funds guarantee a certain annual income in retirement, but at a huge price. It’s really a type of insurance. While it seems nice to have a guaranteed income, there are lots of fees and charges, and they are less fluid and flexible. Your earning power is much great with an index fund. Do yourself a favor and avoid annuities like the plague.

Really, you’ll want to be wary of advice from anyone selling a financial product. Naturally they’ll have their own stake in the game. Many companies are cutting out the need for human brokers by using robo-advisors, and this is how they are able to provide lower fees. If you want to get professional financial advice choose a fee-only fiduciary. These pros are paid the hour rather than based on a commission for selling products. Radio personalities such a Dave Ramsey and Clark Howard offer lists of trusted financial services providers, searchable by location and type.

Individual stock-trading: while some people “get rich quick” day trading, it’s kind of like gambling in Vegas. Do you really think you’re the rare whiz who is going to beat the house? Your chances of beating the market consistently over decades are slim to none. Even stock market geniuses like Warren Buffet recommend index funds! Trading individual stocks simply isn’t a strategy for building a retirement fund.

High fees: even for solid types of funds, fees can vary widely between different brokerage firms. Be sure to compare fees before choosing a product or firm.

Wrapping it up

Of course, there are countless technical details about how to optimize your investments for tax advantages, balancing stocks with bonds depending on your age, sequencing returns, converting funds, and more. For more in-depth information on investing, check out The Simple Path to Wealth or The Legacy Journey. But when you’re getting started, the main principles are investing are quite simple:

  1. Get your employer match if you have one.
  2. Invest in low-fee index funds (401k or IRA).
  3. Keep investing and let the compounding interest do the work.

What other questions do you have about getting started with investing? Or what books or blogs did you find helpful for learning about it?

This post contains affiliate links.

Inflate Your Usefulness, Not Your Lifestyle

Lifestyle inflation is a popular personal finance metaphor for the phenomenon of expenses endlessly rising to match (or surpass) income. It captures the predicament of the 37% of Americans living in one of the world’s richest countries who claim to be too broke to save. And it describes what those pretending to poor want to avoid. Bloated spending not only causes financial problems, it also makes people less useful. It ties up time and money so that it all has to be spent on lifestyle maintenance, leaving less room for meaningful pursuits like family, friends, and volunteering. Plus, when life is centered on convenience and acquisition, people miss out on the satisfaction of becoming handy, resourceful, and helpful.

But those of us who don’t inflate our lifestyle also face potential danger. Have you ever thought about what you are inflating instead? We need to invest in something we can put stock in, and I don’t mean the stock market. If all you inflate is your bank or retirement account, you’re missing out. Saving and investing are worthy, responsible steps that we preach. But we all know there’s more to life than money. Most people think this “more” is freedom: from the 9 to 5, having to worry about money, or keeping up with the Joneses. Freedom is depicted as early retirement, working for yourself, traveling-hacking, or otherwise finding happiness outside materialism.

These are all appealing replacements to lifestyle inflation. But will they pay the dividends of a joyful and productive life? It’s easy to place false hope in the financial freedom or frugal ecstasy so often promised. A growing body of research documents the correlation between increased wealth and decreased interpersonal skills, emotional health, and happiness:

  • Lonely At The Top, by Thomas Joiner, documents the tragic pattern of men achieving success and wealth, only to find themselves without companionship.
  • In the Boston Globe article “Why It Matters That Our Politicians Are Rich” Britt Peterson reports, “Rich people have a harder time connecting with others, showing less empathy to the extent of dehumanizing those who are different from them. They are less charitable and generous. They are less likely to help someone in trouble.”
  • Richard Ryan’s report in The Annual Review of Psychology (2001) found that a focus on financial and material goals correlated to a lower sense of well-being and found money is not a reliable predictor of happiness.
  • Madeline Levine’s The Price of Privilege states the “newly identified at-risk group is preteens and teens from affluent, well-educated families.” These privileged kids are more likely to suffer from depression and other emotional ill health.

Yikes! There is a real gravity toward these scary outcomes for the wealthy. Pursuing wealth for different reasons doesn’t make us immune. Let’s heed these warnings and not let the journey to so-called freedom make us slaves to side hustles and financial goals. We want to remain flexible while increasing our financial flexibility, and the key lies in what we’re inflating along the way.

To us pretending to be poor is about inflating our usefulness at the same time we invest for future needs. Our financial journey isn’t just about us, or even our family.  If we get to “retire” early, that’s just icing on the cake, because we’re using our time and money to build a good life NOW. And the good life is not just about geeking out over spreadsheets, net worth, and shopping at ALDI. It’s not just about finding happiness in frugal hacks and free pleasures. The good life is about helping others.

The outcome of inflating your usefulness isn’t to leave yourself destitute, but to do good, to be rich in good works, to be generous and ready to share,  storing up for themselves the treasure of a good foundation for the future, so that they may take hold of that which is life indeed” (1 Timothy 6:18, 19). So how can deflating your lifestyle inflate your usefulness?

  1. Work to live, don’t live to work. A good work ethic is important, but working constantly while ignoring family, friends, faith, and those in need is not a balanced or healthy life. If you’re hustling for the proverbial dangled carrot, maybe it’s time to free yourself from the rat race, not necessarily by retiring early, but by deflating your usefulness so you don’t need that carrot.
  2. Get useful by DIYing. Some people feel excited when they find the next new product that will make their life easier. Don’t get me wrong, I love my microwave and dishwasher. But others seek accomplishment in spending less, and this often results in becoming more useful. For example, I love Indian food, but I don’t love spending money at restaurants. So I’m learning to make Indian food. Neil enjoys riding his bike because it’s free exercise and saves on transportation costs. For both of us these money-saving measures are enjoyable in part because we feel accomplished after a challenge.
  3. Share the usefulness. Now that you have amassed helpful DIY skills, you can help other people. When someone need helps with a broken car or house, you can help. When someone loves Indian food, you can cook. You are saving other people money, perhaps teaching them useful skills, and feeling satisfied by widening your sphere of usefulness. Even if you don’t have amazing skills, simply by making time to help others you will find a world of needs to meet. Volunteering for an after school program, the high school group at church, to help a friend move, or to babysit are all ways we’ve found to be useful. Other ideas include volunteering at a nursing home or hospice center, Habitat for HumanityBig Brothers Big Sisters, English tutoring for refugees, mentoring teens in prison, or taking a short-term missions trip. (I’m going to India this summer!)
  4. It is better to give than to receive. Freeing up money to give to charitable or faith-based causes is hugely rewarding, and, need I mention, helpful! For example, donating to disaster relief in Nepal would expand your usefulness to a global scale. Yes, you have to do a little research to make sure an organization is trustworthy. But there are lots of reputable places and you can check them out on charitywatch.org or ministrywatch.org. Or visit a local food bank, after school program, or homeless shelter and check it out yourself.
  5. Be a good friend. The research on sad, rich Americans should be sobering. Thankfully the antidote is simple and free: have friends. Caring about other people and sharing life together can keep you grounded and balanced throughout your financial journey. You’ll avoid ending up lonely at the top, and you’re bound to be useful if you’re a good friend.

Titus 3:14 describes usefulness well: “Our people must learn to do good by meeting the urgent needs of others; then they will not be unproductive.”

What DIY success are you most proud of? What have you learned from sharing your time or money with others? 

The Secret to Financial Freedom

What is the secret to true financial freedom?

I already said I don’t believe in financial freedom/independence. Most people define financial freedom as never having to worry about money again, living off investment income instead of work. For many the secret to achieving this means earning more; for a few it means living on less. For most it requires 40+ years of toil and fading faith in Social Security. But according to the Bible’s ancient insight the only real financial freedom comes from contentment.

Take it from a first-century Roman prisoner who wrote about financial freedom. I’ve visited the Mamertine prison and it’s just a dank, dark hole in the ground. So for the apostle Paul to write about contentment from there is shocking. He said, “I have learned to be content whatever the circumstances. I know what it is to be in need, and I know what it is to have plenty. I have learned the secret of being content in any and every situation, whether well fed or hungry, whether living in plenty or in want. I can do all this through him who gives me strength” (Philippians 4:11b-13).

Paul describes real financial freedom as being content whether you are rich or poor, whether you have too much or not enough. So often we think the key to curbing our spending is a new detailed budget, a cash envelope system, or more self-discipline. Any of these approaches could help, but we have to be operating from a basic position of contentment rather than feeling deprived. Otherwise we’ll feel self-pity because we’re constantly denying ourselves of good things. Contemporary marketing has done much to catalyze this false belief the human heart is already predisposed to.

If you’ve started implementing some of the practical ideas on this blog maybe you’re starting to feel deprived. Or maybe it doesn’t seem to make a big difference since skipping Starbucks isn’t paying dividends just yet. But feelings of self-pity, denial, or deprivation don’t make for good long-term motivation. Maybe you’ve experienced this with dieting. When it comes to money, marketing teaches that when you feel bad about yourself, you should buy something. “Treat yourself! You deserve it!” is the message of modern advertising, a marked change from “you need this” or “this will improve your life” techniques of yesteryear. The latter messages are now considered insulting to today’s consumer who is supposed to have achieved a fulfilled and happy life through materialism already.

When people today talk about financial freedom they mean you don’t need to earn money ever again. But countless celebrity stories have proven there’s never enough money to make you happy—because money isn’t what brings real satisfaction. Fulfillment in the richest sense come from following God by loving others. Because Paul was serving others even in prison, he could honestly say he was content, regardless of his financial circumstances. True financial freedom is trusting God to meet your needs, material or otherwise, as you work hard as a good manager of His resources.

Should we be content to stay in our current financial and work situation all our lives? By contentment I don’t mean complacent. The same author addressed this question in his historical context: “Were you called while a slave? Do not worry about it; but if you are able also to become free, rather do that. You were bought with a price; do not become slaves of men” (1 Corinthians 6:21, 23, emphasis added). No, the Bible does not support slavery, but we can’t get into that right now.

Today, we could apply this to employees. If your current work situation works, don’t worry about it. If work feels like soul-sucking slavery to The Man (and you don’t just have a bad attitude), then why not “become free”? Free means flexing that financial flexibility. Why not put yourself in a position where you can be content with lower expenses so you can consider doing work you’re more passionate about, or even just hate slightly less?

The average American sees 5 gazillion ads per day and this is a huge challenge to contentment. But you already know the secret–that material things will never make us truly happy and we need a lot less than we think we do. It’s actually quite fun to “pretend to be poor.” It’s fun to fix things up instead of buying new ones, which will probably crap out sooner because new stuff is poorly made. It’s fun to rock old clothes that you’ve kept so long they are finally back in style, and brag about how you’ve had them since high school. It’s fun to drive an older car and perform the lost art of cranking windows. “Pretending to be poor” is a whole lot more fun than pretending to be rich, with all the heartache and bank-ache that comes with debt.

A friend described the perspective change from deprivation to contentment this way: “I walk into Target and think, ‘I can have anything I want. I could buy whatever I wanted.’ And then I realize I don’t want any of that crap. Thinking this way takes the power [of discontentment] away.” Part of fostering this attitude is realizing how little value “that crap” adds to your life. The principle of diminishing returns is acutely applicable to material possessions. While our lifestyle is far from ascetic, it’s slightly less extravagant than average. This actually makes us more content and useful, as well as more flexible.

So what could you do with this flexibility? How about:

  • Get out of debt.
  • Have one parent stay at home with young children.
  • Work for a church or non-profit for half your current salary.
  • Volunteer full time to help those in need.
  • Take your children on a short-term mission trip.
  • Become a missionary.
  • Substantially fund causes you care about.
  • Choose a job based on your priorities rather than just the paycheck.

How do you combat the feelings of self-denial that come with spending less? What do you think of our definition of financial freedom?

10 Things They Don’t Tell You About Decluttering

I felt a bit frazzled during a recent purge. It was all worth it when my mother-in-law, a total neat freak, noticed that “you’ve been cleaning up lately” after seeing my basement. “All the rooms are so clean!” Music to my ears.

There are approximately one million articles about the benefits of decluttering , and I contributed one  or two to that mess. I genuinely enjoy clearing our home of excess and find it makes life easier in the long run. However, there are some drawbacks I’ve experienced throughout the process.

I imagine these are the very reasons people stop short with this task, or don’t get around to it in the first place, so let’s just all acknowledge that decluttering and minimizing is hard! And that’s why we need one million articles reminding us why it’s good.

So don’t to be surprised when it’s hard. This is all a normal part of the process. Here’s what I experienced:

  1. You will neglect other chores. Dishes, laundry, yard work, vacuuming…something’s gotta give if you’re going to go through all your things and then sell or donate some of the excess.
  2. You will feel more stressed initially. The joys of owning less are more of a long-term promise. In the short-term, you will actually feel more stressed out or overwhelmed as you make time ot go through your stuff, and have to make decisions about what to pitch. After you’re done, you’ll have a backlog of laundry and other chores to catch up on.
  3. You will think about stuff too much temporarily. Minimalism promises less focus on material possessions, but the actual process of minimizing requires thinking about stuff more. I found myself absentmindedly thinking about whether I needed to keep a particular item when I should’ve been focused on other things.
  4. Your kids will not cooperate. They’ll make crazy messes while you try to reduce the mess potential of your home. Especially with the stuff you are trying to go through, which will make it tempting to keep that stuff because they’re playing with it! They also might request stuff back after it’s entered the donation truck! You know, stuff that they told you they hated and never use. This was a little embarrassing but the attendant was very kind about it.
  1. You may have to go over an area more than once. I’ve gone through my closet and kitchen twice this year, and I always find more I can part with. Something I may have been on the fence about 6 months ago can probably go if I haven’t needed it in that time. I’d love to minimalize once and for all, but realistically, it’s more of an ongoing process that gets quicker and easier each time.
  2. Your house may not look that different. If you have children or a messy partner, they will continue leaving stuff around the house. Even if there is a lot less stuff in your home.
  3. You may not be able to find stuff. The second half of decluttering is supposed to be organizing. But sometimes when you do a lot at once, it’s hard to find it next time you need it! It took me 10 minutes to find Neosporin after moving our medicine cabinet. I’ve also found myself looking for clothes I got rid of.
  4. Your kids will cry months later, too. You know the toys they never touched, so you gave them away? When my kids spot those in old pictures, they suddenly spout tears and profess their eternal love for that item. Although the storm passes, it’s not my favorite part of decluttering.
  5. Your spouse may not like it. Just because you’re on a mission to clear your space doesn’t mean the rest of your family will automatically be on board. And there may be some areas that are simply off limits. It doesn’t matter that I don’t think my husband (a cube-dweller) doesn’t need 5 pairs of old, dirty pants for working on cars. He thinks he does, and it’s not worth marital strife to fight over “minimalism.”
  6. You may regret some purging. Out of sight, out of mind? You won’t even miss the clutter? Sometimes I wonder if I got too over-zealous with a few items, especially when I find myself looking for them. In the long run, it’s insignificant and I could replace the item if I really wanted to. I’m sure I hang out to more that I don’t need, than vice versa.

Lest my warnings de-motivate you, let me remind you of just a few of the many benefits:

  1. Someone else can use it. Whether I decide to sell, donate, or just give it to a friend, I love knowing someone can put my excess to to good use.
  2. Find what you need easier (in the long run). I’m not just talking about finding rarely needed items in a basement box. I’ve decluttered my kitchen and now it’s so much easier to find the items I need every day.
  3. Less to clean. I still have plenty of messes to tackle but clearing out the extra toys, clothes, and household items means there is less for my children to make a mess with!
  4. Use what you already have. I was longing for a new summer dress when I found one I’d forgotten about in storage. And I’m a lot more likely to actually wear it now that I’ve donated the stuff I never wear.
  5. Freedom from the burden of maintaining and storing stuff. Less stuff (to a point) means more flexibility.
  6. Your mother-in-law might be impressed, or even think you’re a cleaner person than you actually are!

How you experienced any difficulty with decluttering? What is your favorite benefit?

Earn More vs. Spend Less Throwdown


What’s more important: increasing income or decreasing spending? The debate rages on, but unfortunately many answers miss the crux of the matter.

After a year and half of talking a lot of thrift, we recently broached the income side. To be honest, much of our financial progress has been supported by an above-average income. Yet we’re a one-income family living on less than half our take-home pay. We spend less than average and that makes an impact, too.

Many argue that you can increase your income by greater magnitudes than you can slash spending. But people often find their budget feeling tight even after their income grows. If you spend more than you make, it doesn’t matter how much you make. You never get ahead.

So what’s more important—your income side or your spending? Whichever one you need to work on. It depends on the person. I can’t tell you which that is for you, but I hope the case studies and questions below will help.

Consider two case studies of real-life families:

Family 1 was often running low on money despite having a very good income. They cited their house, having a baby, and medical expenses as some of the reasons for having cash flow problems. They were right that their spending was the problem, but were citing reasonable expenses instead of looking to the ones they could decrease.

Over time, resources from Dave Ramsey helped motivate them to reassess. They were eating out multiple times each week. They were paying for gym memberships they didn’t use. They were buying convenience items. One partner was smoking. They had a car payment and student loans. Once they started cutting back in these areas, they were able to pay off their car and student loans early. They built enough equity to stop paying PMI. The smoker quit. They started cooking at home. They identified that the problem was spending, acted accordingly, and have continued to make huge strides toward financial flexibility.

Family 2 was often close to broke, but one spouse’s father would cover what they couldn’t on a monthly basis. He even gifted them a down payment on a house. The only problem was that they couldn’t really afford the monthly mortgage payments. When they had their first child, the wife left her job to stay home. The husband worked in a field with limited earning potential. They still had student loans from his associate’s degree.

While their bills were paid, they had a serious income problem: part of their income was coming in the form of regular gifts. While this was very generous, it was ultimately unhelpful. It didn’t allow the family to attack their finances from the income side, which desperately needed attention. Both partners were capable of earning more but weren’t sure how to make it happen.

See how landing on just income or just spending doesn’t solve the problem for all situations?

Do You Need to Hustle?

If you’re underearning, dissatisfied with your job, or aren’t making enough to get by, you need to work more, harder, and/or smarter. You absolutely need to attack the income side so you can gain flexibility and not have money be the limiting factor in every life decision. You need a raise, a career move, a second job or other side hustle. Here’s how we stopped underearning by overstaying at the same company.

Know when it’s time to move on. Research your value in the market. Negotiate a raise if you’re underpaid. Assess what you’d be willing to do to make more money: would you work overtime, change companies, relocate, change careers, or start a side hustle or small business?

At some point, working more, harder, or sometimes even smarter becomes undesirable as it detracts your time and physical and mental energy from what you’d rather be doing. A common belief states if you could possibly make more money, you should. I disagree. There’s a lot more to life than pushing your earning potential to its outer limits, at any cost to other areas of your life. Always keep your real worth in the balance with your net worth.

Do You Need to Cut Back?

Do you have a good income and still find yourself broke? Do your expenses rise steadily alongside your income? Do you know how much you spend on average in a month? Are impulse purchases, going out, or recreational shopping frequent for you?  Look to your spending for solutions.

I sense that people from relatively affluent homes are more likely to need to work on this side. People with the advantages of the middle and upper-middle class are more likely to earn good incomes. They’re also more likely to be acclimated to a “comfortable” lifestyle that may have taken decades for their parents to build, but they aim for as soon as they land their first job.

Whatever your background, don’t dismiss the expense side of the equation until you have a handle on how much you spend, and on what. It’s easy to say, if I only made as much as her, or if we could just catch a break from special expenses cropping up, then we could get ahead. But if you’re making decent money and not saving it or paying down debt, more money isn’t going to fix the problem.

In summary, my answer to the income vs. expenses debate is that you need to work on the area where you’re weaker until you gain traction. In some cases, you’ll need to work on both. But you simply can’t assess which one it is for you unless you have a good picture of your financial situation. We approach this by tracking our spending and creating an annual budget.

Review the last few months of your income and spending to catch a snapshot of both angles. If you cut, cut, cut, and there’s still not enough income, increase the input. If you earn, earn, earn and never find it to be enough, it’s time to decrease the output. Underearning and overspending are both a waste of precious resources.

A healthy financial situation looks like being happy with both your income and spending, while staying open to improving both sides. Once you reach this point you’re free to focus more on the angle that’s your strength.

What are your financial strengths? How have you improved your weaknesses? Any other takes on the income vs. expense debate?

Can You Touch Your Financial Toes?

Neil trying to touch his toes (for real).

Don’t let this happen to your money!

During my years as a gymnastics coach, I learned two principles about physical flexibility: some people are much more naturally flexible than others. But anyone can increase their flexibility through regular stretching. The same truths about physical flexibility apply to fiscal flexibility, but with even more capacity to increase your financial stretchiness. Because your money habits are easier to change then your DNA!

Financial flexibility is an accounting term that describes “a company’s ability to react to unexpected expenses and investment opportunities.” We find this concept useful for personal finance as well. What options would open up if you could live on half your current income? How easily could you weather a job loss or unexpected illness?

Whether you are counting down to financial independence or just starting to get out of debt, focusing on financial flexibility allows you to enjoy the journey and live for your values, not just your job. So let’s break down the definition and consider how flexible your finances are by considering how poised you are to respond to unexpected expenses and opportunities.

Responding to Unexpected Expenses

Do you have an emergency fund? Perhaps the worst financial advice I’ve heard is that you should have a credit card for emergencies. No, you should have an emergency fund for emergencies! Everyone should have an emergency fund of at least $1,000, but preferably enough to cover six months’ expenses.

We all know that “life happens.” You may get in a car accident. You or your child could get sick and rack up medical bills. Sometimes people get laid off. Bad things happen to good people, but smart people are prepared for inevitable bumps in the road of life.

Do you have any debt? In our view, personal debt makes you inherently less flexible. It limits your options because it increases your expenses and the amount of income you must make to survive. It means your money is spoken for before you even earn it, because it actually belongs to someone else. The proverb “The borrower is slave to the lender” expresses the emotional impact of debt well.

Carrying consumer debt is a highly inflexible position. You are effectively paying extra for your expenses since you are charged interest. It’s also a difficult trap to escape since accumulating interest makes repayment progressively harder over time.

There are times when debt is an appropriate financial decision. Neil took $25,000 in student loans to complete a five-year engineering program. Considering his earnings since graduation, he’s enjoyed a good return on this investment. But we also decided to reduce the amount of interest owed by paying them off early.

Carrying student debt makes it harder to take risks required to grow your career. Having no student loans made it easier for Neil to leave a good job at a Fortune 500 company and change industries into a more rewarding job. It also helps allow me to stay home with our young children. And we’ve been freed to focus on other goals, like saving for our children’s education.

Mortgage debt may also be reasonable, but keeping it in proportion with your income is key. Common advice is to limit mortgage payments (PITI) to no more than 25% of your monthly income. Pre-paying the mortgage makes sense to us as we wish to gain the flexibility that comes with lowered expenses, while others prefer to direct those funds to increasing investments.

Responding to Opportunities

The second side of touching your financial toes is responding to opportunities. Have you ever said “no” to a great opportunity because of money? Do you limit your travel, volunteering, giving, or fun because of money?

Unless you’ve already achieved financial independence, you probably answered yes. While we can’t do whatever we want without any concern for money, the lens of flexibility allows us to make values-based spending a reality. On the one hand, we are not constricted by the burdens of excessive debt and over-spending. At the same time, we refuse to pursue financial independence at the expense of our big-picture purposes.

Try to get a vision for how your options would increase along with greater financial flexibility. Maybe you want to focus on family, pursue a different career, or become self-employed. Pursuing financial flexibility should make you more available to spend time in ways that are rewarding and meaningful.

For us, financial flexibility allows us to travel on several family vacations and church retreats each year. It allows us to forgo side hustling in favor of spending time with family, friends, and our volunteering commitments. Flexibility encourages us to be generous, even if it means saving less, because we know we have ample resources to share.

As flexibility increases, saying “no” to opportunities should come from your values rather than your bank balance. We say “no” to over-spending on what we don’t value, like frequent dining out, overpriced children’s activities, or driving new cars. But we also feel free to say yes to pricey opportunities like short-term mission trips, having children, or sponsoring children in poverty. These endeavors are well-worth their cost, but if we were bogged down with debt or lacked sufficient savings, we would miss out or end up in debt.

How close are you to touching your financial toes? If you have emergency savings and little to no debt, you pass the stretch test! If not, remember that flexibility is a trait anyone can work to increase. Dream about the opportunities flexibility would open for you, and then make a plan for progress. Focusing on flexibility celebrates that every step is an inch closer to touching your toes.

Have you ever said “yes” to an expensive opportunity? What was invaluable about it? What is your next step toward touching your financial toes?

I’m Off to India!


So I’m leaving for India in 2 days! I can’t believe it’s finally here. I’ve experienced a huge range of emotions about this trip in the year since I was invited to go, from extreme excitement to major nerves to downright dread. For about 8 months it didn’t even seem real, and now I can’t wait to be there. I’m weary of preparing; I just want to do what I’ve been anticipating for so long.

Though I’ve been brewing lots of ideas for money-related posts, I’m in full-time India mode. I’ve set aside all the personal finance thoughts swirling in my mind to steep myself in what I’ll teach in India. I’ve prepared two conference teachings, a personal testimony, and some other materials should I be asked to speak at the last minute. My bag is 95% packed. I have one errand to run. Yet I feel wildly unprepared. Who wouldn’t? I could get ready for this trip forever. But as with personal finance, and so many other areas of life, you could read about it and prepare forever. At some point you just have to do it. Take the first step toward your goal.

And so, I’ll step onto that plane. I’ll keep studying hard and praying hard. And then some day next week, I’ll step onto the podium, open my mouth, and start speaking. If I waited for these teachings to be perfect, no one would ever hear them. I’ll teach women I’ve never met who are from a culture foreign to me. I can’t rely on humor, allusions, or certain illustrations as I might here. I can’t rely on my wording because I’ll teach through a translator. I could do a great job or completely bomb it. But it isn’t about me, and honestly, I won’t even know whether it’s well-received. My hope is that God will use what I’ve prepare to encourage the women who have taken an equally big step to attend the conference.

During hectic times I’ve wished I could just prepare for India—nothing else. Of course, this isn’t how life works. My kids still need a mom. My husband still needs a wife. My friends still need a friend. Thankfully everyone has been incredibly helpful–except my 1-year-old! Even my son has encouraged me that it’s going to be great, I’ll have so much fun, and he won’t miss me at all (um, thanks?).

The same holds true for money: we could all be great with our money if life didn’t get in the way. We could save way more if we didn’t have anything else going on. We’d spend so much less if we didn’t have kids who get sick or cars that break or houses to repair. It helps to remember this is what money is for—meeting our needs, and those of others.

I’ve had to remind myself of this as I spend a hefty sum on this trip (ameliorated by many generous donations!). It doesn’t make sense from a purely financial perspective. However, it aligns exactly with our goal of financial flexibility—taking opportunities that fit in the bigger picture of our life purposes. In fact, this is why we aim for flexibility instead of financial “freedom.” I’ve wanted to go on an international missions trip for 10 years. When the opportunity finally came, the price tag didn’t stop me because we are willing to spend on what we value, and we’re able to in part because we’ve reduced spending on what we don’t value. God also provided funds for the trip through many generous donations, including a nearly-free car that Neil was able to fix up and sell. While we try to be good stewards of our money, the donations and car sale profit was pure grace. We didn’t deserve any of this help.

I am hoping to gain some insight into pretending to be poor as I see another side of the world, though I can’t predict what I’ll discover. Surely I’m bound to learn something, and I can’t wait to share it when I return. I’m not sure that I’ll have wifi or the ability to post while I’m there. And I doubt Neil will be able to post amidst keeping these babies alive for two weeks without me. So until then, namaste!

How does travel fit in with your priorities? And what have you learned from traveling?

Are Short-term Missions Trips a Scam?

Neil meeting our sponsored child.

Neil meeting our sponsored child 2 years ago.

I’ve already alluded to my upcoming  short-term missions trip to India this summer. While staying in India is relatively inexpensive, flying an open jaw there in late August is not, and we’ll also do a fair amount of flying in-country, which also hikes the price. Friends and family have generously donated toward my trip, and I cannot express my gratitude enough. In addition to taking the edge off the $3500 price-tag, knowing that a host of comrades are behind me offers inexpressible moral support.

Neil also “raised” a portion of the cost by flipping a car. With fairly minimal effort, he turned an $1800 profit on a car a co-worker sold him at a killer friend price. More on this soon.

But short-term missions trips invariably raise questions about the best use of funds, and as this is a fair objection I’ve wrestled with myself, I hope this post will provide some answers. The trip may also raise an eyebrow from a personal finance perspective and here I’ll address why it’s worth the money to us.

Couldn’t that money be better used over there?

Could the $3500 cost of the trip feed a lot of hungry kids, dig some clean-water wells, or fund many micro-loans? Absolutely. I care about those causes, and we donate monthly toward poverty relief and church-planting in India & Ethiopia. In fact, generosity is one of our goals for pretending to be poor. You can read about why to give away money in these posts:

I also believe this trip will change my sense of agency and urgency regarding these causes. Neil’s (somewhat less expensive) trip to India two years ago spurred him to help raise the awareness and funding to sponsor an entire rural village, bringing in food, clean water, hygiene education, agricultural development, education for children, skills training for adults, and spiritual leadership for those interested. The Adopt-a-Village program is a $75,000 total commitment over five years. This far exceeds what it cost Neil to witness the stark needs in a rural village first-hand, though it was certainly not a poverty tourism trip.

Who is this guy?

Who is this guy?

I’m hoping the trip will change not only my commitment as a donor and an advocate for people in need, but also bring some perspective to my admittedly cushy life. I know I shouldn’t complain when the store is out of the exact type of milk I want; I know I shouldn’t bemoan the “heat” when my thermostat reads 82 degrees and I “have to” decide whether to turn on the air conditioning. Friends who have visited  testify that nothing puts our first-world problems into their proper place like visiting a developing area.

Another reason I consider it worthwhile to go is that the organization, India Gospel League, invites people to “come and see.” They operate on a streamlined budget, with relatively little spent on overhead, administration, staff, etc. They know the needs firsthand and what our trip costs could accomplish if spent elsewhere. Yet they invite us because:

  1. They invite sponsors to see where their money goes each month. Visiting overseas is by no means requisite to entrusting an organization with money. However, IGL’s value of eyewitness trips indicates a level of transparency.
  2. They invite sponsors to meet their sponsored children and/or villages. Neil’s trip highlight was meeting our sponsored child. I’m hoping to meet him as well, and imagine this will impart a new passion for praying for him and writing him. We’ve certainly sent him a lot more gifts and letters since Neil met him.
  3. They invite foreigners to teach the Bible, for a couple reasons:
    1. People like to hear those from other countries speak. We’re the same way, right? Maybe they achieve better conference attendance by bringing in cross-cultural speakers.
    2. As an American, I’ve had more ready access to Bible teaching than the average village woman in India. This doesn’t make me more qualified; I’ve simply been blessed with advantages like literacy, Bible classes, and other resources.
  4. They understand these trips strengthen partnership and interdependence, which is IGL’s vision for their relationship with foreign churches. They are very emphatic about outside financial support being temporary, and using funds effectively. For example, “barefoot pastors” receive outside support for two years, at which time their church takes over financial support. Programs like vocational training, elementary through post-secondary education, and micro-loans all “teach people to fish” rather than simply giving hand-outs.

There are many other things we could do with the money I’ll spend on the trip. However, it is for opportunities like these that we want to be financially flexible.

Can I really do anything useful in two weeks?

Along with my team, I’ll teach two women’s conferences of 50-100 women who pass the knowledge and convictions to the women in their villages. So while teaching a couple times through a translator seems like a pittance compared with the world’s needs, there is potential for a ripple effect. Again, I don’t feel qualified as a great speaker, but I trust that IGL understands how to leverage our efforts, and God certainly does.

We’ll also visit two house churches and do a song and dance (literally) for the children’s home at the mission base. We’ll play with kids, meet our sponsored children, tour IGL’s facilities, and interact with adults. Neil served lepers lunch while there; others prayed with cancer patients. The main reason I don’t think this trip is a scam or waste of time is that the Indian leaders have ongoing, established work there through local churches. We are just partnering by bringing our resource of Bible teaching at their request.

If you’re interested in sponsoring a child, pastor, micro-loan, or otherwise donating to India Gospel League, check out their web site to learn more. It’s a great way to inflate your usefulness instead of your lifestyle by improving someone else’s life significantly.

What do you think of short-term missions trips? Or spending on travel in general?

Waste Less, Want Less

Okay, Pretenders: open your refrigerator and—if you have the stomach for it—find all the expired, old, and rotting food it contains. I’m sure your parents pulled the starving kid in other country card enough for a lifetime. But this might hit closer to home: perhaps you can’t buy something you want or give more generously because you’re wasting hundreds of dollars each month on things you throw away or don’t really need.

One of my favorite adages, which I quote frequently to the chagrin of my family, is Ben Franklin’s pithy “waste not, want not.” And it goes way beyond letting some leftovers go bad. Americans have strayed ironically far from this founding father’s wisdom. In the U.S. we are wasters by default; we think nothing of throwing away 251 million tons of trash annually. That’s 4.3 pounds of garbage per person per day, not including recycled or composted material.

This issue of waste is central to our financial problems. Just think about why so many personal finance bloggers and readers are engineers. My (engineer) husband says it’s because engineering is all about reducing waste by figuring out how to do more with less. And that’s very much what being thrifty is about, too. It’s like getting the best deal, all the time, on everything, so you can do what you want with your money (i.e. financial flexibility).

According to a recent TIME article “America’s Clutter Problem” by Josh Sanburn, “Americans have more possessions than any society in history.” For example, the U.S. is home to 3% of the world’s children, but buys 40% of the world’s toys. The equilibrium between population and possessions is similarly off when it comes to food, clothing, electronics, petrol, or just about any consumable you could imagine. We have more buying power than most, but also waste A LOT of everything.

We throw out TVs, not because they are broken, but because they aren’t big enough and flat enough. We throw away clothes not because they are completely worn but because they aren’t stylish enough—according to arbitrary standards we’ll laugh at in a few years. We throw away food not because it’s contaminated but because we forgot to eat it. I’m guilty, too, but it’s outlandish to waste like we do.

I’ve been reading Farmer Boy by Laura Ingalls Wilder to my son and it’s astonishing how little the family wastes. They save the ashes from their stove all winter, and combine them with animal fat saved for months to make soap. They save rags to braid into rugs, or to trade for new dishes from the tin peddler. When a July frost threatens to kill the corn, every family member spends hours outside in the middle of the night, splashing water on 3 acres of corn plants to save them.

And sometimes I’m too lazy to sew a button back on a shirt.

I doubt any of us can go from producing 4.3 pounds of garbage per day to zero. But certainly we could waste less, and subsequently, want less. Wasting less means spending less by using what you already have. This in turns leaves you with more money to give, save, and invest as you seek financial flexibility. So what can you waste less of? Some of the top resources we waste are:

  1. Food. Make a menu, shop with a list, and keep perishable foods in a visible place. Put leftovers in clear containers. Pack them for lunch instead of going out to eat.
  2. Energy. Turning off the lights, setting back the thermostat, keeping the AC off, hanging clothes to dry…simple steps like these can save you hundreds each month on gas and electric bills.
  3. Gas (petrol). We don’t do anything extreme to limit our driving, but try to bike or carpool when we can to reduce fuel costs. Plus it’s more fun to bike or ride with a friend.
  4. Electronics. We simply don’t need to upgrade computers, TVs, or phones every year (or several years). The global impact of our wasted technology is huge and takes the biggest toll on the most impoverished.
  5. Money. Spending money on products or services you don’t need or get real happiness from is a waste. Maybe you waste on recreational shopping, an outrageous cell phone bill, a bad life insurance policy, frequent restaurant dining, or cable TV that you don’t have time to watch. Decide what is really worth your money and what spending has simply become a habit. Tackle one area at a time; a few minutes’ hassle could save a lot over time.

While any one act of wasting less may not save a ton of money, the habit of reducing waste, along with the attitude of being content with what you have goes a long way toward meeting financial goals. Wasting less turns the tide from always wanting more to actually building wealth.

What could you waste less on? What goal will you put your “waste less” savings toward?