Dear Chuck,
I am a new elder at our mid-sized church, serving on the finance committee. I’ve learned that our church is on the verge of financial trouble. We need a turnaround to survive the next five years. Can you give me some counsel from your experience helping churches?
Feeling the Burden for Our Church
Dear Feeling the Burden for Our Church,
Outreach Magazine published the results of the 2024 State of the Church Giving Survey. This was one of their key findings: “Despite an overall increase in giving, the report showed that 55% of churches reported a decrease in giving due to inflation.”
I shudder to think of the impact on our nation and the world should Christian generosity decrease as our economic challenges increase. This is an important issue for all of us who care about the Gospel and sharing God’s truth with the world, whether it is support for small, mid-sized, or large churches or strategic missions and ministries.
Steps for a Financially Troubled Church
Over the 48 years of our existence, we have served hundreds of thousands of churches in the United States and around the world through our materials and programs now available in more than 60 languages. God has shown us what will be helpful to the transformation of your church. I will lay out a few of my suggested steps and offer helpful resources.
First, meet with your elders, pastors, and church staff to pray for God’s wisdom and direction. There is usually no quick fix. Seek to get everyone aligned in trusting the Lord and following a plan together.
Second, it is vital to roll out a vision to the congregation while maintaining credibility and hope.
Integrity with donors, suppliers, the community, employees, and staff is key. If the church makes promises, deliver on them. Otherwise, credibility will rapidly decline, and it will take years to reestablish what was lost.
Third, be sure systems are in place to control cash flow. Positive cash flow is essential. The first priority should be payroll, followed by utilities, rent, or mortgage. After these obligations are met, partial payments should be made to vendors who provide vital goods and services, who threaten to pursue collection procedures, or whose survival is threatened because of payments owed by the church. Sometimes, a difficult decision is made to eliminate or restrict money to certain ministries or departments that consume cash but produce very little.
Next, review the overhead carefully. You may need to suggest that a hiring freeze is implemented until revenues are improved. Do not quickly add new staff or replace those who leave. Employees may have to take on multiple responsibilities; consider using volunteers. Examine the spending practices, attitude, and dedication of staffed positions. Is each needed to fulfill the ministry goals of the church?
Clear and honest communication is essential. Leaders, staff, department heads, and the congregation should be informed and updated regularly. Offer suggestions on ways to improve the situation, encourage their commitment to help, and allow them to voice opinions.
Look for ways to generate cash without putting pressure on your congregants. Sell unnecessary assets and temporarily eliminate any activity that involves a financial obligation. Retreats, trips, outings, etc., must be restricted until the crisis is solved.
Seek outside help and counsel. Be careful not to be taken in by consultants who may or may not be able to help. Receive, evaluate, pray over, and discuss all ideas and suggestions; then vote to move forward in faith and unity.
Stewardship Training Is Essential
It is a pastor’s responsibility to help the congregation learn Biblical financial principles. The topic of money, possessions, and management is addressed in the Bible more than any other subject except that of love. It seems quite obvious that God emphasized financial stewardship training as an integral part of a well-rounded spiritual education. Christians should be the best managers of money because of the guidelines provided in His Word.
The church must first recognize that God owns everything. All blessings come from Him. Money is not our possession; it is God’s. We are merely stewards (managers). He allots different amounts to us based on His plan and purpose for our lives, and we will be held accountable for the way we manage it. When leadership understands this, they will more effectively project that truth to those whom God has placed under their spiritual care.
A pastor must challenge and motivate his flock to apply God’s method of handling money. Many are not equipped and silently suffer from personal financial challenges. There are a number of financial lessons on which to concentrate, but four are particularly important for churches:
One way to radically impact a church is by training a dedicated group of people to lead small groups. A church-wide rollout on Biblical financial training can be taught at all age levels for all socioeconomic groups. Crown.org provides online small group facilitator training here. More materials can be found here.
Additional Resources for Pastors or Elders
Thank you for your question. Let us know if we can be of any direct help in implementing these suggested steps. We have seen God completely transform lives and entire congregations following these guidelines. I pray it will be the same for you.
Do you want more tools and tips on financial stewardship? Are you interested in receiving ministry updates from around the world? Sign up to receive the Crown Newsletter emails by using the form on the homepage at Crown.org.
This article was originally published on The Christian Post on July 26, 2024.
Dear Chuck,
My elderly father recently asked why so many young people have credit card debt. He commented, “Seems like they’re so preoccupied with the present they can’t think about their future?” Can you give me some facts and insights to prepare me for my next talk with him?
Credit Card Facts
Dear Credit Card Facts,
I understand your father’s concern. He is from a generation that would never consider borrowing money to go out to dinner or buy clothes. America has moved from a nation that feared debt to a nation that embraced debt as normal to a nation that has become addicted to debt.
When people carry a credit card balance month to month, they are borrowing, with interest, to pay for basics like food and clothing. Inflation has taken a toll on many households, but phones, computers, and television have radically impacted the way people spend money. For many, their purchases have become their meaning and purpose in life.
Bankrate.com reports that over half of Americans are in debt. 36% have more credit card debt than emergency savings, and 35% would have to borrow to pay for an emergency expense greater than $1000. See more debt data here. Good debt is backed by assets and can increase in value or generate income over time. Bad debt is used to purchase items that lose value. When bad debt strains resources, it negatively impacts the individual, their family, their legacy, their community, and their nation. But don’t get lured into the “good debt” trap either.
God provides resources for us to manage according to His financial principles, not to spend as we desire. When we take our eyes off the Lord and His leading, money becomes the driving force of life. Because of this, it is important to examine our financial motives.
“All the ways of a man are pure in his own eyes, but the Lord weighs the spirit.”
(Proverbs 16:2 ESV)
Answering a few questions is helpful to understand my point about our motivations regarding money.
Motives Matter
It is vital to consider whether the decisions you make truly please God or yourself. Many people work, give, spend, save, and invest without ever considering their motives—the reasons why they do what they do.
Rich or poor, we all have the same responsibility: to keep our priorities straight, to commit our work to the Lord, to avoid wasting our lives on things that will not last into eternity, and to be good and faithful stewards.
16th-century theologian Martin Luther wrote that as a practical matter, there are three conversions a person must experience to be fully committed: a conversion of the heart, a conversion of the mind, and a conversion of the purse.
Every dollar spent on materialistic consumption is a dollar less to invest. In the long run, there are consequences.
“A society that tends to focus greater attention on investment than on personal consumption tends to be a more prosperous society in the long run. This is true whether that investment is aimed toward meeting the needs of others (through charity), through reinvestment in production or market investments (which, in turn, create wealth), or through savings. This focus on creation of wealth through investment (as opposed to the reduction of wealth caused by over- consumption), when combined with an attention to the needs of others, allows for a greater ability to meet those needs and a fulfillment of the creative capacity inherently placed within humans as they were made in the image of our Creator,” explains Ken Boa.
“If you read history you will find that the Christians who did most for the present world were just those who thought most of the next. . . . It is since Christians have largely ceased to think of the other world that they have become so ineffective in this. Aim at Heaven and you will get earth ‘thrown in’: aim at earth and you will get neither.” (C.S. Lewis, Mere Christianity)
Your father’s comment, “Seems like they’re so preoccupied with the present they can’t think about their future,” reminded me of this verse, which instructs us to keep an eternal perspective:
“If then you have been raised with Christ,
seek the things that are above, where Christ is, seated at the right hand of God.
Set your minds on things that are above, not on things that are on earth.
For you have died, and your life is hidden with Christ in God.
When Christ who is your life appears, then you also will appear with him in glory.”
(Colossians 3:1–4 ESV)
If credit card debt is holding someone you know in bondage, a valuable and trusted resource is Christian Credit Counselors. They can help consolidate debt to get one on the road to financial freedom.
This article was originally published on The Christian Post on July 19, 2024
Dear Chuck,
My wife and I have lived frugally from the day we married. As a result, we have no debt, except for low monthly house payments. Could you give me some advice on proper goals for our long-term investing?
Senior Investors
Dear Senior Investors,
Congratulations on your good stewardship. It is a joy to offer you counsel from a Biblical perspective, with a few tips of my own.
Goal setting is a necessary prerequisite to effective investing. Each of us is expected to wisely manage the money God puts in our hands. However, we are warned not to make money the object or purpose of our lives.
“Do not toil to acquire wealth; be discerning enough to desist.
When your eyes light on it, it is gone,
for suddenly it sprouts wings, flying like an eagle toward heaven.”
(Proverbs 23:4–5 ESV)
We should seriously pray, seek wise counsel, and decide where we want to end up financially. Although money should not be an end in and of itself, it is a tool to be used to accomplish short and long-term goals.
Perspectives on Investing
Seekingalpha.com defines long-term investing as a strategy of buying and holding investments for a period of over 10 years. They list the following benefits:
A Gallup poll conducted in April shows that Americans rank the best long-term investments as follows:
Risk
A general rule is that the closer you get to retirement, the less you should put at risk. Diversify, for we cannot predict the future. As King Solomon wisely penned in Ecclesiastes:
A certain level of risk is involved. In Matthew 25, the stewards put their master’s money to work and were commended. How you pursue your long-term goals will ultimately depend on your temperament and your personal tolerance for risk.
Avoid Procrastination
According to a 2023 Bankrate survey, more than half of working Americans think they’re behind where they should be with their retirement savings. More than one in three say they are “significantly behind” on their retirement savings. One in four have not contributed to retirement in over a year. Only 16% feel they are ahead of where they should be in contributing to their retirement plan, including 6% who feel “significantly ahead.” 21% feel they are right on track. “Compared to our survey about a year ago, there has been no progress on this front. Those closer to retirement age are among those feeling this sense of urgency the most,” said Mark Hamrick, Bankrate Senior Economic Analyst. Check out Bankrate’s retirement plan calculator.
Here are several reasons for investing that need to be determined before setting goals:
Goals must:
As you establish goals, check your motivation, and consider the following:
The most important thought to consider is how to invest in eternity. Don’t let the things of this world dim your vision of your eventual destination.
“Do not lay up for yourselves treasures on earth,
where moth and rust destroy and where thieves break in and steal,
but lay up for yourselves treasures in heaven,
where neither moth nor rust destroys and where thieves do not break in and steal.
For where your treasure is, there your heart will be also.”
(Matthew 6:19–21 ESV)
Store up treasures in heaven. It is the one investment that guarantees rewards!
“As for the rich in this present age, charge them not to be haughty,
nor to set their hopes on the uncertainty of riches,
but on God, who richly provides us with everything to enjoy.
They are to do good, to be rich in good works, to be generous and ready to share,
thus storing up treasure for themselves as a good foundation for the future,
so that they may take hold of that which is truly life.”
(1 Timothy 6:17–19 ESV)
Do you want more tools and tips on financial stewardship? Are you interested in receiving ministry updates from around the world? Sign up to receive the Crown Newsletter emails by using the form on the homepage at Crown.org.
This article was originally published on The Christian Post on July 12, 2024.
Dear Chuck,
I’m in a pickle. My wife and I both drive very nice cars. The problem is that I’ve fallen behind on payments, and my wife doesn’t know it. Should I sell the car?
Behind on Car Payments
Dear Behind on Car Payments,
Open up to your wife—sooner is better than later. Ask for her counsel and help before you make a rash decision. Transparency builds trust. Having both of you praying, talking, and seeking the best solution together is a double win.
Without knowing more about your overall financial picture, my sense is you need to sell one or both as soon as possible. Then buy something used and dependable that you can afford by paying all cash. Or try doing what my wife and I did. We got by with one vehicle for an entire year by simply planning ahead. It took some effort, but it was worth the challenge. If public transportation is an option for you, try doing without two vehicles as you work to get your finances healthy.
Understanding the Cost of Owning Your Car
The typical cost of owning a car comes to $762 a month. That adds up to $9,144 per year, including payments, insurance, taxes, repairs, and gasoline.
Four Reasons Owning a Car Can Make You Poor:
From a GOBankingRates article published at yahoo!finance:
A $69/Month Car Payment?
Buying and driving good used cars has many financial benefits:
I had been driving a 2007 Toyota that I purchased in 2009 during the “cash for clunkers” initiative implemented by the federal government. They incentivized dealers to overvalue trade-ins in an effort to get older cars off the road due to their higher contributions to air pollution. This drove the price of used cars down significantly. I was able to buy the vehicle I wanted for $3,000 under full retail value at that time. Follow me here. After driving the vehicle for 15 years, the used car market had completely changed. COVID caused a shortage of new cars which drove the price of used cars much higher. The value of my 2007 Toyota, now 17 years old, was now only $5,000 less than I originally paid for it!
I never paid any interest on a loan or any major repairs. My cost per mile driven over 15 years was very, very low. Consider this. Driving the same car for 180 months that only cost me $5,000 would be the equivalent if I had financed the car at zero percent interest for $69/month for 72 months. My cost per month over the period of ownership would be the equivalent of paying $27 each month besides gas and maintenance.
Avoid Becoming “Car Poor”
Rebecca Lindland, Cars Commerce auto data and insights director, thinks consumers should focus on the total cost of a vehicle instead of just the sticker price. “Go into your car shopping journey understanding what payment you’re comfortable with, understanding what size vehicle you need, really knowing your requirements and then not overspending, because just like, there’s nothing worse than being house poor, there’s nothing worse than being car poor,” she advises.
She says that because trade-ins are in short supply, shoppers may receive great offers. The downside is that buyers are looking at higher prices for used cars or trucks.
“There’s a shortage of specifically one to five-year-old vehicles. But the silver lining is that if people are trading in a vehicle from one to five years old, it’s actually worth almost 23% more than it would have been in 2020,” she adds.
Strategy for Eliminating Car Payments
Many cannot imagine paying cash for a car, so here are some tips.
If you’re currently making payments on a car:
If you have no payments but want/need to buy a newer/different vehicle:
Set and achieve your goals with the help of a personal business coach. Crown’s online Budget Coaching program matches you with a certified coach who will work with you to develop a customized plan to put you on the road to financial freedom.
This article was originally posted on The Christian Post on
July 5, 2024.
Dear Chuck,
We want to renovate our home by using some of the equity we’ve accumulated. Our home is in a highly desirable area and has tripled in value. We have several years left on our current mortgage. How can we be good stewards of this renovation?
Renovation Without Regrets
Dear Renovation Without Regrets,
I take it you are considering a 2nd mortgage for the renovations. Let’s focus on what it looks like to be a wise steward if you choose that financing option.
Understanding 2nd Mortgages
Home equity increases with each mortgage payment, certain home improvements, the location of the home, and inflation. It is the difference between what a home is worth and how much is still owed on it. If a house is worth $400,000 and $200,000 is still owed, the equity is $200,000. Most lenders will allow you to borrow 85% of a home’s value (including the 1st mortgage).
Far too often, people borrow against the equity in their home and use it for unwise purchases, like an RV, a vacation, or a business startup. Keep in mind that it is called “2nd” because if a bankruptcy or foreclosure occurs, it is paid off after the original mortgage. If the sale of the home only covers the payoff of the 1st mortgage, the 2nd mortgage is viewed as a personal loan that you are responsible for paying. Although the cash given in this kind of loan can be used for anything, it is safest to use equity to build more equity.
What Is a 2nd Mortgage?
Types of 2nd Mortgages
Wise Stewardship of the Renovation
First, determine if you can afford this project. Establish a budget for what the total renovation will cost. Next, look at your budget. Apply your debt-to-income ratio (debt payments divided by monthly income) to determine how much of your monthly income should go to housing. Lenders like a ratio of less than 43%. You should be comfortably beneath this ratio for the 1st and 2nd mortgages combined. Otherwise, abandon the idea of using any type of 2nd mortgage, and wait until you have saved enough to pay cash. Because you may be close to paying off the 1st mortgage completely, consider waiting until you own the home without a 1st mortgage.
If you are comfortable increasing your debt with a 2nd mortgage, consider contacting the lender of your original mortgage since they’ve got your record of payments. Compare rates, upfront and closing costs, and annual fees (for HELOCs) with other companies. Avoid prepayment penalties. If you’re offered a lower rate for a HELOC with higher borrowing limits, use constraint, or you’ll drain the equity.
You can also use your equity to purchase a 2nd home—details here. With a home equity loan, you can put the money toward the down payment and closing costs.
The interest paid may be tax deductible, depending on how the funds are used. “The IRS stipulates that for the interest to be deductible, the loan must be used to buy, build, or substantially improve the residence that secures the loan.” Dennis Shirshikov, head of growth at Awning.com, said, “If buying property adjacent to you that enhances the primary home, you may get a tax break.”
My Suggested Steps
Yellow Flags
The risks of a 2nd mortgage include added debt, the risk of foreclosure, and variable interest rates with HELOCs. Consider the following:
Consider the times, pray, and seek wise counsel. If you’re married, make sure you are united in the decision. Ask God for wisdom; He gives it generously without reproach.
“By wisdom a house is built, and by understanding it is established;
by knowledge the rooms are filled with all precious and pleasant riches.”
Proverbs 24:3–4 (ESV)
For extra guidance and support, Crown’s online Budget Coaching program matches you with a certified coach who will work with you to develop a customized plan.
This article was originally published on The Christian Post on June 28, 2024.
Dear Chuck,
My wife is miserable with her job, but unfortunately, her income is needed at this time to pay off a lot of debt. We need some guidance for a career transition, as her nerves are frayed every day.
Looking at Career Options
Dear Looking at Career Options,
It is very painful to be miserable at work—been there, done that. However, my first reaction was not about the job but the statement that you have a lot of debt. It is time to launch an aggressive effort to pay down your debt so that you eliminate the pressure you are under regarding her career and income. It sounds as if she is working just to keep the family finances afloat. Once that pressure is removed, career changes take on an entirely different perspective.
Don’t jump out of this job too soon. Be patient as you work together to put your plan in place.
“Do not be anxious about anything, but in everything by prayer and supplication with thanksgiving let your requests be made known to God. And the peace of God, which surpasses all understanding, will guard your hearts and your minds in Christ Jesus. (Philippians 4:6–7 ESV)
Here is some general advice for anyone making a career change.
Guidance for a Career Transition
Make a list of the things you like and dislike about your job. Perhaps you are working outside of your gifts and talents. Crown has a career assessment that helps people understand their unique design by analyzing personality, skills, interests, and values. It is an excellent tool for giving hope and direction to those who are bored, frustrated, or seeking the right field or career direction.
Develop a Resume
Do you have a current resume? If not, begin the process of developing one. It is generally the first impression someone hiring gets to see and is extremely important for any successful job search. For help writing one, check out these articles: “Writing a Resume” and “Creating a Resume That Best Reflects You.”
Tap into Your Relationships
The most effective method of finding a new job is through your contacts. These could include family members, friends, business relations, business contacts, and your church family. Summarize your job search in a few sentences so they can do more than just wish you well. For example: “I am looking for a job in advertising sales with an online company. I need a base salary plus commissions. I’m willing to relocate but prefer to work from home. See the Tap the Hidden Job Market Through Networking section of the linked article.
Compile a Reference Pool
This is a list of people who know your work ethic, habits, experience, performance, and history. Choose a variety of people—clients, competitors, managers, or high-level colleagues who will feel comfortable speaking positively about you.
Transform Your Job or Look Elsewhere
Seek the possibility of finding a more preferable position within the company. If you are bored, ask for a new challenge, or request a transfer to an area you desire. If additional skills or training are required, management may offer to pay for it. If the problem is working with difficult people, attempt to be a peacemaker to transform the work environment. If this does not help, make a plan to find a new job. If asked to compromise your integrity, find a new job.
Look While Employed
I believe that the best time to look for a job is when you are employed. Most jobs today are found through personal referrals which is why relationships are so valuable. Check out this website’s list of the “9 Best Job Search Websites.” Many recruiters actively work with Linkedin.com. You may find this Forbes article helpful.
In some rare cases, you may be able to discuss your desire to find a new job with your current boss or team. Avoid this, however, if you work in a hostile environment or in a company that is not built upon trust and mutual respect.
Pray
While waiting, pray with and for your wife. Encourage her to consider implementing the following:
If His will is not clear, a time of private prayer and fasting will be beneficial. He knows exactly what you need. Trust Him to open doors and move mountains to get you there.
If credit card debt is a source of frustration, a valuable and trusted resource is Christian Credit Counselors. They can help consolidate debt to get you on the road to financial freedom.
This article was originally published on The Christian Post on June 21, 2024.
Dear Chuck,
I have the opportunity to buy a home from an older couple who needs to move to a retirement/assisted living situation. It’s a great house—one we can easily afford. The problem is that our home was foreclosed on in 2008 due to the Great Financial Crisis. Although we have recovered financially, I am occasionally plagued with fears of making another mistake. It was a major strain on my marriage… Should I go ahead and buy it?
Plagued by Financial Fear
Dear Plagued by Financial Fear,
It may feel like you are the only one, but by some estimates, half of all Americans have experienced some sort of financial hardship or failure. I had both in my young adult years, related to mistakes with money. Before you and your spouse decide to buy this home, which, by the way, sounds like a great idea, let’s talk about your fears.
A Priceless Lesson Learned
You and I both know that we can learn from our mistakes. Pain is one of our very best teachers. Judging from your description of your “recovery,” it sounds like you don’t plan on repeating your past financial mistakes. Unfortunately, even though we can become wiser through our mistakes, we can also become paralyzed by the fear of failure. Not until you are able to put the fear behind you can you say that you have “fully recovered” in all aspects of what you went through in the foreclosure of your home.
Fear works against us. It prevents us from doing things that could bless our families and potentially have positive outcomes. Sometimes, we get so preoccupied with the past that we cannot see our own progress or present successes. We can even lose hope for the future. Fear keeps us in bondage. It is a stronghold that can stunt our spiritual maturity and keep us from experiencing an abundant life.
God is aware of our limitations and the mistakes we make. Thankfully, He is greater than our weaknesses and our mess-ups. Nothing takes Him by surprise, and nothing is too hard for Him to redeem.
Remember that the Apostle Paul was weak and tired of the thorn in his flesh. But he said it kept him from becoming conceited. Three times, he pleaded with the Lord to have it removed. But the Lord answered, “My grace is sufficient for you, for my power is made perfect in weakness.” Paul continued by saying, “Therefore I will boast all the more gladly of my weaknesses, so that the power of Christ may rest upon me. For the sake of Christ, then, I am content with weaknesses, insults, hardships, persecutions, and calamities. For when I am weak, then I am strong.” (2 Corinthians 12:9–10 ESV)
Overcoming Failure
To renew your mind, use the 3 R’s: Repent, Rest, and Rejoice.
No matter your failure, remember this: “And we know that for those who love God all things work together for good, for those who are called according to his purpose.” (Romans 8:28 ESV)
King David committed grievous sins, but the Psalms are filled with his praise of the Lord and heartfelt repentance.
Letting failure consume your thoughts can prevent you from moving on and making yourself available for what God has in store ahead. We are prone to protect our pride, so we must take on an attitude of humility and admit that we will never always be right. Life is always going to be filled with both successes and failures. Once we accept this fact, knowing that the Lord will never leave us or forsake us, it’s easier to move forward and continue on with life.
To Buy or Not to Buy?
Before making an offer, pray for unity with your spouse and guidance from God. Ask Him to bless the house for His purposes. Your mistake was more than 16 years ago; it is time to move ahead with faith in God and be wise stewards of what He has provided.
Resist the urge to compare yourself to others. Choose to abide in Him; unite your heart with His so your desires align with His. When you follow God’s plan, you live without fear of failure.
Crown’s Budget Coaching program can offer additional encouragement and support in analyzing your financial status. Your coach will work with you to develop a customized spending plan and debt elimination strategy to help overcome your fears and allow you to follow God’s plan.
This article was originally published on The Christian Post on June 14, 2024.
Dear Chuck,
I heard “buy now, pay later” data will soon be reported to credit bureaus. I hope this is true! My daughter got into financial trouble during her first year out of college by getting sucked into these easy payment plans. How do I help her and her friends open their eyes to the dangers of this type of debt?
Concerned Mom
Dear Concerned Mom,
Easy credit leading to financial challenges has been around for a long, long time. I grew up in the age of “layaway.” You could select what you wanted to purchase and make interest-free payments for a few weeks or months. However, the buyer was not allowed to take possession of their purchase until the final payment was made. Today, that plan has been modified to make it even more enticing and risky.
Buy Now, Pay Later
The use of buy now, pay later (BNPL) plans is growing fast. Sometimes, it is used to cover basic necessities. Total BNPL spending last year came to $75 billion, a 14% jump from the previous year. Experts expect usage to double or even triple over the next five years.
More than one-third of U.S. adults are estimated to have used a BNPL service, where purchases are divided into several interest-free installments. With only a few questions to answer and flexible requirements, buyers are given a plan to split their payments over several weeks.
Bankrate senior industry analyst Ted Rossman says, “BNPL terms vary widely. Sometimes it’s four interest-free payments over six weeks, other times the plan can stretch on for many months or even years. And while some of those longer plans charge a low interest rate — or no interest at all — other times there is an interest rate and it can be even higher than what a credit card would charge.”
Unfortunately, in a recent survey, 56% admit to overspending, missing payments, regretting purchases, or facing challenges getting a refund or returning items. The most common reasons people use BNPL services:
Pros/Cons of BNPL plans
Discernment and Self-Control
If used responsibly, BNPL can help in financing a large expense without interest charges. The key is discerning needs from wants and understanding the terms. Self-control is needed to avoid overspending and entrapment to debt. It goes without saying that couples must be transparent about their purchases so that they don’t get overwhelmed with multiple payments.
Phantom or Shadow Debt
BNPL has been described as phantom debt, a term some economists use to describe debt that is not centrally monitored.
A problem exists in regulating how data is given to the major credit bureaus: Equifax, Experian, and TransUnion. As a result, lenders may not know how many loans a consumer has outstanding. “It’s hard to know how much of this debt is out there,” says Ted Ross, senior industry analyst at Bankrate. “It’s this kind of shadow debt that’s hanging over people.” Tim Quinlan, senior economist at Wells Fargo, told CNBC, “Because no central repository exists for monitoring it, growth of this ‘phantom debt’ could imply total household debt levels are actually higher than traditional measures.”
To see how they are currently reported and how it may impact credit scores, see here.
A Problem of Fraud
BNPL can invite synthetic identity fraud. Cecilia Seiden, VP of market strategy at TransUnion says, “This is when fraudsters use a combination of legitimate but unconnected pieces of personally identifiable information (PII) to fabricate a person or entity and use it to apply for credit with a low bar to entry, like BNPL… Once a synthetic identity is established and begins to build credit, institutions often have no idea what their level of exposure is.”
“Buy now pay never” is how some have begun to refer to these programs as they look for ways to rip off the business that extended them the loan.
Protection for Customers and Businesses
On May 22nd, The Consumer Financial Protection Bureau (CFPB) ruled that BNPL lenders are credit card providers and must provide consumers some protections and rights given under conventional credit cards, such as the ability to investigate disputed charges and pause payments during that time, get a refund for returned products purchased with a BNPL loan, and receive bills that disclose fees. Many lenders already conduct business in this way.
Proper reporting would help reveal or thwart fraud in either direction. In addition, responsible BNPL consumers could improve their credit score which would enable them to gain access to other credit products, even securing a mortgage.
Biblical Perspective on Debt
“The rich rules over the poor, and the borrower is the slave of the lender.”
(Proverbs 22:7 ESV)
Many are in debt today because they have not managed funds appropriately. Applying Biblical financial principles to everyday life and teaching others likewise will bring much-needed attention to the growing problem of excessive debt in our nation. Training in responsible spending, contentment, and constraint is necessary for people everywhere. When we begin to acknowledge that everything belongs to God, we will gain a mindset of wise stewardship.
I hope this helps your daughter and you.
If credit card debt is holding your daughter, or anyone else you know, in bondage, a valuable and trusted resource is Christian Credit Counselors. They can help consolidate debt to get one on the road to financial freedom.
This article was originally published on The Christian Post on June 7, 2024.
Dear Chuck,
Our 11-year-old son was invited to try out for a competitive baseball travel team. We have three children, and I’m not convinced it’s the best use of our time and money. My husband and I are divided over the decision. Where do you fall on the issue?
Divided About Kids’ Sports
Dear Divided About Kids’ Sports,
This one hits close to home as I once coached one of our son’s competitive baseball travel teams. Before I share our experience, let’s look at the bigger picture of the growing trend of competitive sports programs for children as young as eight years old.
Get on the Same Team
I can offer some data and perspective to assist you in getting united. Foremost is motive. Be sure your child (not the parent) is the one most interested in the sport. Too often, I have seen a parent wanting the child to excel far more than the child desires. Both parents should be on the same team—that is the team of what is truly best for your child and family.
Financial and Emotional Pressure
I don’t know your financial situation, but a 2022 survey by Lending Tree revealed that 60% of families say youth sports are a financial drain. Parents can easily spend $10,000 a year for a child to play on a travel team. For those who don’t know what a travel team is, it is typically a group of select players with advanced ability who play in local, regional, state, or national tournaments against other select teams.
Some families feel the pressure to hire a private coach, which can be very expensive. Travis Dorsch, who played briefly in the NFL, found that kids in youth sports perceive more pressure when parents spend a greater percentage of the family income. The focus often shifts from fun, skill, and competency to winning.
Besides the cost, competitive youth sports are time-consuming. Children may suffer burnout and risk injury. Parents can be influenced by the delusion of college scholarships and the dream that their child may one day become a professional athlete. Unrealistic expectations to perform and continually improve can add to already prevalent stress and anxiety in youth today.
I suggest you read and use these helpful guidelines set by NATA (National Athletic Trainers’ Association). When children focus on one sport too early, they miss the experience of trying others that they actually may prefer. “Inside the High-Stakes, Zero-Sum Game of Youth Club Sports” is a revealing look into the life that some experience in club sports.
Pros of Select Sports Teams:
Cons
Too Much Too Soon?
Costs often exceed the expected, once uniforms, gear, private coaches, food, travel expenses, gifts, trophies, etc., are totaled. It is easy to get out of hand and lose all perspective.
Some people postpone saving for retirement and investing to afford a club sport. Others forego family vacations and cut back on entertainment. Some parents admit to spending more on team sports than they did for a college education. Elite team sports can rob children from exploring music, ballet, theater, art, agriculture, robotics, debate, speech, etc. It is important to keep a healthy perspective on raising children. The major consideration for people of faith should be how it conflicts with regular worship and church activities. See “Why We Pulled Our Kids From Club Sports” at the gospelcoalition.org.
Our Experience
One of our sons played select baseball from ages 9–12. His team only lost five games over those four seasons. He had some championship trophies that were tall and impressive. Four of the players in the league (one teammate) went on to be drafted by professional baseball teams, although none of them were able to make a lasting career out of it. One pitched in the College World Series finals. Our son has fond memories of it; however, he was burned out by age 13. He dropped out of baseball and took up tennis and other outdoor activities that he enjoyed. Some of the boys on our team said it was their greatest memory of their formative years. None of our other three sons wanted to be on a select sports team. Those big trophies were later discarded, and only memories remained.
What Are You Willing to Sacrifice?
Rather train yourself for godliness;
for while bodily training is of some value, godliness is of value in every way,
as it holds promise for the present life and also for the life to come.
1 Timothy 4:7b–8 ESV
Only you can decide what sacrifices you are willing to make for club sports. Take time to pray, study, and discuss the topic thoroughly. The invitation to try out is exciting, but do not compromise your family’s needs and beliefs. Prioritizing a relationship with Christ with regular corporate worship sets the course for life. It has eternal value. Be sure it is not lost in the midst of pursuing a sports dream.
Do you want more tools and tips on financial stewardship? Are you interested in receiving ministry updates from around the world? Sign up to receive the Crown Newsletter emails by using the form on the homepage at Crown.org.
This article was originally published on The Christian Post on May 31, 2024.
Dear Chuck,
My husband has Alzheimer’s. Should I use my retirement to fund his care? It will go quickly due to his medical bills, and I won’t be able to leave my daughters anything. An alternative is to have him go on Medicaid should I pass away first.
Struggling with Senior Care
Dear Struggling with Senior Care,
I am very sorry you are having this painful trial. It would be so helpful to have more information related to your ages, your daughters, and your comprehensive financial picture. Regardless, I will do my best to give you counsel and point you to some helpful resources. Please consider me just one source, and seek the counsel of more trusted advisors.
Financial Programs for Alzheimer’s Patients
Over 5.5 million Americans are affected by Alzheimer’s disease and dementia. Some require 24-hour supervision, which drains funds and caregivers. The cost, worldwide, of dementia care is nearly one trillion dollars. Supposedly, mid-to-late-stage Alzheimer’s patients commonly qualify for Medicaid benefits; but because the program is handled by each state separately, benefits vary by location. It pays only if income and assets are below certain levels. The following options are worth looking into and are explained more fully at the website: Paying For Senior Care.com:
If not yet 65, your husband may qualify for Social Security disability benefits.
I do not know your situation, but you may benefit emotionally and financially by continuing to work. Caring for yourself is vital to avoid becoming overwhelmed or discouraged. Join a support group, or start one in your church or community. Make a list of those you can call on when needed. Notify neighbors of your situation.
Next Steps
Learn how to protect your assets when your husband needs additional care. Here’s an article on protecting them for your spouse should you die first. Planning for the future and end-of-life care is important for all stewards to implement sooner rather than later.
According to alz.org, the health and long-term care costs for people living with Alzheimer’s and dementia are projected to reach $360 billion in 2024. This does not include the value of informal caregiving. Medicare and Medicaid are expected to cover 64% of the total cost. Out-of-pocket spending is an estimated 25%. For more detailed information see the link above.
Your Daughters’ Needs
Consider giving an early inheritance. You will experience the joy of blessing your girls and alleviate some of your concerns about the unknown future needs of your husband. Just make sure you have enough funds set aside for your future care so as not to be a burden for them. Some gifts impact Medicaid eligibility. The federal government has a five-year look-back period in which the transfer of assets is scrutinized. I cannot overemphasize the importance of knowing all the details before you take any steps. You might consider consulting with a professional Medicaid planner or talking with someone your church or a trusted individual recommends. At the very least, do some careful research.
Another option is to pay off your home mortgage, do repairs and maintenance, and eliminate outstanding debt. From what I have read, this does not violate the look-back period. The benefit is that it makes your home more comfortable and marketable when it comes time to sell or pass it on to your daughters. Again, study the look-back-period rules and loopholes well.
Remember to meditate on the promises of God. He knows your pain, and He is near to all who call upon Him.
“Listen to me, O house of Jacob, all the remnant of the house of Israel,
who have been borne by me from before your birth, carried from the womb;
even to your old age I am he, and to gray hairs I will carry you.
I have made, and I will bear; I will carry and will save.”
Isaiah 46:4 ESV
I’d like to invite you to join a free Crown Bible study on the YouVersion app. We have several devotionals regarding money and stewardship that will help bring God’s Word into your daily life and provide some much-needed encouragement during this difficult time.
This article was originally published on The Christian Post on May 24, 2024.
