Money
101: A practical guide to cars, homes, retirement, tithing and
more
Buying a car: New
or used depends on you
Owning a car is a fact of life for most Americans. Though owning
a car is a necessity for most people, the following should be
considered before purchasing a car.
Consider what you can
afford. A car that costs $20,000 or more is too much to pay for
most people. When payments, insurance and maintenance are factored
in, the car will actually cost more than $500 a month, which exceeds
many people’s budget.
Honestly evaluate your
real need for a car. If you determine your need justifies a purchase,
buy a used car — in most cases it’s a better value.
Shop for value, not
always the lowest price. Save for your car and pay cash. If you
must borrow, go through an institution other than the dealership.
This will allow you to negotiate with the dealership on a cash
basis.
Only 15-17 percent
of your net spendable income (income after deducting tithe and
taxes) should be allotted for automobile expenses.
Don’t get rid
of your old car until it is paid off. Rather
than trading in your old car, sell it yourself.
Purchasing a house:
Buying the American dream
Since the cost of housing is perhaps the greatest expense you’ll
ever incur, you must study your personal situation, research the
possibilities and pray for the Lord’s guidance in order
to make educated decisions about whether to buy or rent. The following
guidelines will help you do that.
Devise and live on
a budget to determine if you can afford to buy a house. Realize
that buying a house within your budget may require you to settle
for a smaller house than you desire. Borrow
the least amount of money necessary and pay it off as quickly
as possible.
Before purchasing a
house ask yourself the following questions:
-
Is
your job secure?
-
How
long do you plan on living in the area? If you’ll be there
for more than five years buying might be a good option.
-
What
is the economy in your area? You don’t want to be stuck
with a house you can’t sell.
One of the essential
foundation blocks of a biblically oriented financial plan is a
debt-free house. Your circumstances will determine if you should
buy a house — but don’t put yourself in jeopardy just
to own one.
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Life insurance:
Planning for the future
Buying insurance is like storing grain for winter months (Proverbs
6:6-8). When it is used properly, insurance is a wise investment
and allows one to pay a little now to cover future major expenses
due to illness, death, accident or theft.
One liability of insurance
is that it costs money, so one must reduce current spending in
order to provide for the future. Another liability, say some,
is that it can divert one’s dependency from God.
If you decide to get
insured, a good way to determine the type of insurance you need
is to consider two things: the amount of insurance you need and
the amount you can afford.
To do that, consider
the ages of your children. The younger they are, the longer they’ll
need to be supported if you die. Also consider your debt, current
lifestyle, income and any other sources of after-death income
besides life insurance.
One of the most important
insurance decisions you can make is choosing an insurance company.
After all, the timely payment of your benefits depends on that
company’s stability.
Things to avoid when
it comes to buying insurance:
-
Double
indemnity clause — it pays double if you die in an accident.
But this is an extra expense you probably don’t need because
most people die of natural causes, not accidents.
-
Premium
waivers — they represent a large expense for a very small
benefit.
-
Feeling
pressured — learn to buy what you need, not what the agent
wants you to have.
Previous items excerpted
from Crown FinancialMinistries pamphlets.
Estate
Planning 101
Confused by estate planning terms? Uncertain how different
types of plans work together? Understanding the four primary estate
planning techniques is essential.
Joint ownership
planning
When an asset is held in joint names as “joint tenants with
right of survivorship” or as “tenants by the entirety”
(husband and wife), upon the death of a named joint tenant, the
asset passes to the survivor free of probate and without regard
to what your will or trust might say.
Beneficiary designation
agreements
Certain written agreements or contracts are authorized by law
to transfer an asset at death with a “beneficiary designation.”
This includes “payable on death” designations at financial
institutions or the traditional beneficiary designations in IRAs,
other retirement accounts, life insurance policies, etc.
The asset is transferred at death of the owner (free of probate)
to the named beneficiary or beneficiaries.
Living trusts
A living trust is a private agreement that avoids probate of assets
titled in the name of the trust. Assets not transferred
to a trust are controlled by a person’s will. A trust usually
contains the estate distribution plan, and also provides “lifetime”
direction and protection for assets in the event of incapacity.
Will
A will is a document that takes effect on death and describes
how your assets are distributed. A will must be probated, requires
public scrutiny, and must meet formal requirements of state law.
Assets not passing through joint ownership planning, beneficiary
designation agreements, or a trust will usually pass by your will
through probate.
Written for PrimeLine
January 1997 by Randall K. Barton, president & CEO of Assemblies
of God Financial Services Group.
Three words for
becoming a good steward
Patience
Patience as a virtue can profoundly affect stewardship decisions.
If you are hasty to be rich, you will make bad business and investment
decisions (Proverbs 28:20). To provide leadership in your
home by modeling patience — saying “no,” or
saying “let’s wait” — will provide your
family a framework for business and financial decisions that will
result in impressive returns for a lifetime and provide for their
needs in the long-term.
Balance
Balance is a universal principal of stewardship. Abundance in
life does not come from focusing all of your energy, all of your
time and all of your efforts to fulfilling a single role or reaching
a certain goal in life. To the contrary, balance in life leads
to abundance. We all know men who have invested and poured their
entire life into a business, a ministry, or a person only to find
the rest of their life in chaos or ruin. A good steward balances
all aspects of life, and through that balance experiences abundance.
Generosity
Generosity is one of those “church” stewardship words
that for some means, “I’ve got something the preacher
wants!” However, generosity as a stewardship principle has
little to do with giving anything up. In the beginning, a seed
of faith is sown, a gift is given, but generosity, at its heart,
is trusting and letting God multiply that which He has entrusted
to you. It is that paradoxical principle of stewardship that does
not compute if you put the numbers into your financial planning
program or budget. However, it miraculously works in the lives
of biblical stewards and their families every day.
Provided by Assemblies
of God Financial Services Group.
E-mail your comments
to pe@ag.org.
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