Thursday, October 30, 2008

Checking In

Well, I am just checking in. This has been another busy week for my family. We have had something on every evening, which is definitely not my favorite. However, in the midst of all of the craziness I have had so many "budgeting" conversations! For instance, my friend Rachel commented about taking a "break" from budgeting because she has had three weeks of family in town. It is an interesting problem and one that we all face in the holiday season. She just had her company early, but it is such a great issue for all of us to address. How do you afford to feed and house your extended family over the holidays without killing your budget?

I also had another conversation with a friend about how to scale back your budget when either your income level changes through a job transition, or maybe you go from a two income family to a single income family. In this climate of layoffs and economically rocky times, asking this question may save your family from a lot of difficulty.

A question I personally have been thinking about is what is the best way to stretch your groceries till the next payday. I don't know about your family, but for us it felt like October 31st was never going to get here. I am so excited to have my pantry and refrigerator stocked again, but so many have already put groceries on the credit card this month and are now trying to figure out how to pay for them.

All around me there are just so many questions in this very turbulent time. Now, this is great if you happen to be writing about finances, but if you are living in the middle of a financial mess... it's not that much fun. But the great news is that if you are in a financial crisis in your life, there are so many practical steps you can take to change the direction your finances have been going.

So, I will be back soon to talk about some solutions to these questions, but in the mean time have a wonderful weekend. And if you happen to have some more questions, send them on :)

Sunday, October 26, 2008

The Pumkin Patch

What a beautiful fall weekend. It has been such lovely weather here in Tulsa and after several weeks of sickness and a very busy week last week, it was so lovely to just enjoy our weekend and to visit the pumkin patch. I am posting a lot of photos, so I hope you don't mind as I share pictures of my darling kiddos. I know I haven't posted in a few days, but I am just really finding that I need a break from blogging right now. We have had a lot going on in the evenings and as we face this coming week, I just feel like I need to prioritize and follow my heart... and for me that means working on my book during my free time, rather than blogging. I will probably check back in throughout the week, but I am not going to post a "real" post till next week. So have a wonderful week and I hope you enjoy the pictures.
I LOVE this picture! It is everything beatiful that is growing in the friendship between Ava and Luke. It has definitely taken some time and Mommy intervention, but they have become such good friends and have really learned how to play together.

This is sweet Ava and her dear friend Ellie. During this picture they were singing "Happy Birthday" at the top of their lungs :)

Noah and Ava in a very sweet hug... now if I could just get Ava to look at the camera...

This is more like Noah and Ava in real life. Ava is the girliest girl, and Noah is all boy... but he still tries at every opportunity to teach her to wrestle. She never does "get it" but she squeals with laughter, and then sometimes tears... but she just adores her big brother.

Darling Luke and Noah. Some of the pumkins there were as big as Luke.

Now this is the face of trouble :) He is such a sweet boy though, but he is definitely a free spirit... not naughty, just a lot of fun and energy.

Princess Ava on her pumkin throne. She looked like a little pixie amongst the pumkins.

My big Noah. We have been going to this same pumkin patch since Noah was little and it was just amazing to look at him climbing on the pumkins and to see how big he is. How did he get to be Six years old!

Looking up to Daddy. I just love this picture. Such a little guy with his wonderful Daddy. Just off of the picture was a huge tractor and that was all Luke cared about for the rest of the visit. Luke loves tractors, and cars, and especially trains.

Luke and Mommy :) When it comes to Luke, its just sunshine and happy thoughts.
And so from my family to yours, have a really wonderful week.
God bless,
Tracy









Wednesday, October 22, 2008

The Seat of Scorn, and The Tree of Abundance

"Blessed is the man who walks not in the counsel of the ungodly, nor stands in the path of sinners, nor sits in the seat of the scornful..." Psalm 1:1

Now, I have to say, most of my counsel these days is with my children, I don't often have the opportunity to stand in the path of sinners (in other words, to linger in their ways), but I have to confess, I sometimes sit in the seat of the scornful. I was reading the first chapter of Psalms the other day and just felt the Lord convict my heart. It is a very politically charged climate here in America, and I have yet to walk away from any conversation about politics and feel refreshed and uplifted. Instead, I usually find that in some way my heart has gotten into scorn: I question people's motives, I doubt their sincerity, I get frustrated with the media. But the end result is that I find myself feeling dry and yucky.

Just like Psalm 1:4 talks about, my life becomes dry and full of chaff. There is something about the seat of scorn that just sucks all of the life out of your soul and leaves you with nothing but chaff to give. I don't know if you have felt like this lately, but if you have... there is a good chance that you are sitting in the seat of scorn. What are the words coming out of your mouth concerning your boss? the economy? the government? If they have been filled with scorn, then you have been allowing those words to suck all of the abundance and prosperity from your soul.

But the solution is so simple, meditate on the Lord. Speak about Him and His goodness and His truth. Psalm 1:2 says, "But his delight is in the law of the Lord, and in His law he meditates day and night." The law of the Lord to us through the New Covenant that Jesus put in place is the law of the Spirit of life in Christ Jesus. So when we meditate (which means to chew on, to speak about, to think about) on the Spirit and His life and even what He is saying about our lives and finances, then we will be like a well watered place.

Verse 3 promises that we "...shall be like a tree planted by rivers of water that brings forth its fruit in its season, whose leaf also shall not wither, and whatever he does shall prosper." Now that is a promise!!! I want that kind of abundance flowing in my life and it all comes down to what I am doing with my thought life and what I am doing with my mouth.

So, for me, I am repenting of sitting in the seat of scorn, and asking the Lord to wash all of the chaff from my life that that has produced. And today, I want to challenge you to do the same (if you need to) and ask the Lord to flow with His rivers of refreshing again in your heart. Throughout history elections have come and gone, financial crisis has come and gone, nations have risen and fallen, but no matter what happens around you, God's promise to you as His child remains. He never changes. He is always good, and as verse 6 promises, He knows all of our ways. So delight in Him today, and watch as your life becomes an oasis to everyone around you.

Have a wonderful day.

Tuesday, October 21, 2008

Finding the Balance When You Are the Boss

Cynthia emailed me this question a few weeks ago concerning the unique needs of trying to set up a budget when you own your own business or are on a commission based income. I have already written a few blogs on this subject ( Feast or Famine , Finally Breathing , Your Business , The Power of Percentages ) but I felt like this question is so relevant to so many people that is bares revisiting.

Cynthia wrote, “We desperately need a budget and it has been difficult for us to budget because we own our own business. I need to create a budget for the business as well, but it's really the net personal income that I need to manage.

I'm going to use your example of the $50,000 net annual income ($4166.67 monthly)

$4,166.67 income
$3,166.67 hypothetical expenses
$1,000.00 left over to go into a surplus, not an escrow account

Then should we make any additional money over the $4,166.67 goes into the escrow account.
Here is my question:
If I am taking last year's figure of $50,000 and make the same or less amount of money... what do I put in escrow? Isn't the example assuming I will make more than I did the previous year?

My problem is that I know by the end of the year, we make enough to pay our household bills and more. The problem is some months there is enough money to pay the bills, other months there is way more money.
I guess I'm just not seeing the whole picture.”

Cynthia’s question is exactly the reason why you would set up what I call an “escrow account” and why it will work for you. As she states in her question, she is already living successfully on her income and there is enough money to pay the bills. The whole idea of an escrow account is not that you are going to make more money, but rather that it will help you to live on the median of what you actually make rather than have an abundance one month and not enough the next.

The principle of the escrow account (which I explain in detail in Finally Breathing) is that it acts as a storage for when you have months of surplus. The idea is that you have based your budget on a very realistic estimate of what you are going to make this year. Remember, it is better to be conservative in this estimate because overestimating means that you will end up spending more than you make which equals debt. So with a conservative income estimate you will then subtract taxes and divide that number by 12 to give you an estimate of your monthly salary on which you can base your budget.

However, when you own your own business (especially when you are starting out) the income rarely comes in in dependable monthly amounts. In fact, I could say it NEVER
comes in in dependable amounts. The only thing you do have an idea of is how much you are expecting to earn for the year. So our numbers are going to be based on that estimate which basically says that even if you make $1500 this month and $7000 next month, at the end of the year you will make around $50,000 (take home pay). So divide $50,000 by 12 and you get $4166.67. So every time your monthly income is above $4166.67 take the additional money and put it into your escrow account. When your monthly income falls below $4166.67 then you will draw money from your escrow account to make up the difference.

Now if you do own your own business, it may be that you set up your business finances to serve as the escrow account and you simply just draw a salary. This is actually the way it works in most businesses, especially well established businesses. However, if it is a very small business (like you are the owner and there is no one else), you will need to look at the expenses of your business and take them into consideration. Most very small business owners will pay bills for the business and draw everything left as salary and this is exactly when you need a personal escrow account. If you don’t want to leave it in the business, then go ahead and draw it as salary. The point is not to consume everything that you bring in in the really good months, and an escrow account will keep you from doing that.

And if they are all really good months and your income from the business never dips below what you need for your budget, then Praise Jesus!!! And, you probably do not need an escrow account for your income right now. If you are in a position where you continually make more than enough for your budget and then just make even more some months, then the surplus money can just go into savings, or giving, funding your dreams, or whatever the Lord leads you to do with that money. But I would suggest increasing your budget and giving that money purpose like “Retirement Savings” by making it a purposeful part of your budget. Money with no purpose just tends to get consumed and disappears. But the bottom line is, if you don’t need an escrow account, then don’t overcomplicate your life by trying to set one up. However, if your income does fluctuate below what you need for your budget, then an escrow account can actually be the key to simplifying your life.

I hope this has helped Cynthia, and again, if any of you are lost when I talk about escrow accounts then please go back and read my previous blogs on this topic as I went into much more detail on them. And if you are still lost, I would love to hear your questions.

God bless today and I will be back tomorrow.

Monday, October 20, 2008

Preparing for Future Expenses

What a lovely weekend it was here in Oklahoma! It was just perfect fall weather: cool, with clear blue skies, and no wind. It was such a nice weekend for my family because we were able to play outside, and just relax and take the weekend off. Noah got sick again last week and we had to keep him out of school for most of the week. So this weekend I also sterilized everything in my home, and washed all of the linens, and just cleaned everything. Noah is finally better and will be returning to school on Monday and I am just so excited to be done with sickness.

Anyway, over the past few weeks I have received a couple of questions through email that I haven’t had time (or energy with being sick myself) to answer. So this week I am going to try to answer those questions on my blog. They are questions that I am sure many people have and hopefully the answers will be helpful to you as well.

Jessica wrote me with the following question:
“I have been reading your blog for a few months. I love it. I was searching and couldn't find anything on how to save for larger expenses that don't have a definite date for replacing the item. For example, a furnace, we will just use it till it stops working. The heating guy said 1 to 5 years to expect to need a new one. How would one go about saving for something like that?”

I love this question because it means that she is already thinking ahead (and if her furnace looks anything like the one in my picture, she definitely needs to be :) ). It is very difficult to be motivated to put money away now for something that seems so far away, yet it is such a smart financial move to do so. Matt and I have done exactly this on many occasions, most recently for the writer’s conference that he attended. But truly saving for a major purchase such as a new furnace, tires for your vehicle, major auto repairs, co-payments for elective surgery, dental work, home improvement projects, etc is all done the same way.

The first thing to determine is an estimate of when you will need the money. The question for Jessica is, what will she do if she doesn’t have all of the money saved and needs to replace the furnace? If the answer is that she will have to put it on a credit card and pay interest on that money until she gets it paid off, then I would begin an aggressive saving plan to save for the entirety of the furnace as soon as possible. If she can cover whatever balance she hasn’t saved by drawing from a separate savings account or by another means then she might be able to relax her deadline for saving the entirety.

So let’s say Jessica’s furnace is going to cost $2000.00 to replace, and she decides that she would like to have that money within 2 years to cover the cost of a new furnace. Within 1 year she will have half of the money for the furnace and she decides that she will take a loan from her emergency savings account if the furnace should go out before her 2 year savings plan is completed. She can then continue to pay off the furnace by monthly payments to her emergency fund until the furnace is paid for.

So if you are saving for a similar project to Jessica's furncae, the first step is to open a savings account specifically for that project. Or if you would prefer, you can just use your regular savings account but start a separate ledger (where you track your money) to specifically track your savings for this project. But if you use a savings account at a place like INGdirect (which I highly recommend), then you can even rename your account so that you know exactly what it is for.

The next step is to take your estimated cost for your project and divide it by your deadline for saving the money. So for Jessica she would take the cost of $2000.00 and divide it by 24 months which would be $83.33. She would then take her monthly budget and make a space in her budget for that $83.33. Now if you are on a “tight” budget this may take some effort, but remember there is always a way.

Recently, Matt and I needed to “squeeze” something into our budget and this is how we did it. We took a little money from our entertainment budget, and reduced our grocery budget by $10 and re-evaluated some bills to see if we could reduce them. I took advantage of a fantastic deal on diapers and stocked up, and so I was able to contribute part of my “baby money” that had gone to diapers to our project. Ask God for creative ideas to make it work in your budget. He really loves to be a part of your life, and He really does have all the wisdom that you need to make your budget work. Remember, every $5 helps and can contribute to successful debt-free living.

I hope this helps, Jessica. If you have more questions please feel free to ask. I do have another blog on this topic that you can read here. But I really do think it is wonderful that you are already thinking ahead and making a plan in your finances for the future. That really is what budgeting is all about.

God bless, and I’ll see you all tomorrow with a new question.

Wednesday, October 15, 2008

Home Sweet Castle?

I recently heard a comment that 20 years ago doctors bought 3,000 square foot homes and today they are buying 10,000 square foot homes! I know American’s have gotten fatter, but seriously, what are they doing with all of that space? I actually know some people who own a home that approaches 10,000 square feet and the truth is, they just never go upstairs. They live in the living room, kitchen, and their bedroom and the rest of the home is just for show. To me, I can understand that size home if you have a lot of company, but most of these homes are just trophies. It is a totally bizarre concept to me, but it is one that many American’s have bought into, and many of them are in bankruptcy as a result.

But I don’t just see it on the upper end, I see this same symptom in couples just starting out. They want brand new, the biggest they can “afford”, and a lot of them are in trouble as well. Their debt just keeps escalating, and in the current housing market, they are in some deep trouble. They can’t sell their home to get out of the huge payment because nothing is selling, and they are stuck just sinking deeper and deeper into debt. In fact, I recently had a friend comment to me that she couldn’t budget because their expenses were always greater than their income!!! What???? I am so glad I was on the phone, because my facial reaction would not have been discreet. Literally my mouth was hanging open. Fortunately, I managed to pull myself back together and just very kindly reminded her that that is actually exactly what a budget is for. But the shocker is that she lives in a gorgeous home, in a beautiful neighborhood, and from all outward appearances is doing well financially. What in the world is going on?

I honestly think that so much of the current crisis is directly tied to three things: 1)We have bitten off more than we can chew when it comes to our mortgages 2) We are not on a budget 3) We have no idea what we can actually afford to pay for a mortgage or for our lives. As a result, we are maxing out our credit cards, living lives we can’t afford, and praying for a miracle. Well, before you get yourself into the same situation as my friend, I want to talk today about how to figure out what kind of mortgage you can afford.

If you go to visit a bank or mortgage broker, they will typically tell you that “industry standard” is that your mortgage payment should not be more than 28% of your gross income. This is known as your “front end debt-to-income ratio”. Under this “standard” if you are making $3,500.00 a month, they think that you can afford a mortgage payment of or below $980.00 a month. There is also another number that they consider and that is your “back end debt-to-income ratio”. This is your overall debt scenario, in which they will take into account your car payments, credit card payments, other loans, cell phones, etc. Items like insurance and utilities are not included. Most lenders want this number to be below 36% of your gross income. So if you make $3,500.00 a month and you divide it by 36%, you get $1,225.00. So if you add up all of your monthly minimum payments, plus your new house payment, then the lender will want that number to be below $1,225.00. That doesn’t leave a lot of room for debt.

Of course, lenders want to give you the loan, especially if you have good credit and a good job history, so many of them are willing to offer loans that will far exceed this percentage. You may even be able to get a loan as high as 50% of your debt-to-income ratio. However, as I have said before, you should never take a loan based on what they are willing to give you, but rather based on what your budget tells you you can afford.

And here are some things that you need to factor in that your bank and broker will not take into consideration: First of all, are you a giver? No mortgage broker is going to ask you what percentage of your income you give to your local church, charity, or to missions each month, but it has a huge impact on your financial picture. If you are giving 10% of your income away each month then you cannot consider this “livable” income to take into account what size home you can afford. So, right off the top you need to subtract your giving from your monthly salary. If you give 10% (for example :) ) and you earn $3,500.00 a month, then you need to subtract $350 from your gross monthly income. Your income would then be $3,150.00 on which to base your percentages.

Furthermore, if you are committed to saving money then this is a further deduction from your gross monthly income. I have written several blogs on savings that I would love you to read including Small Beginnings , Our European Adventure , Debt vs. Savings , and The Storehouse Blessing , but the bottom line is, if you aren’t saving money, then you are heading for debt. Unexpected expenses happen all the time in life, and if you don’t have a savings plan for those expenses, then they will end up on a credit card and you will end up in a hole. I am passionate about savings, and I just want to plead with you to not cut your savings in order to get into a bigger home. Your savings are such a vital part of enabling your dreams and your dreams for your family. Yes, your savings can help you get into your new home, but you don’t want it to be the last place you ever go because you are so financially strapped into your home.

So if you look realistically at these factors, you can see that this can have a large impact on what size mortgage you can “afford” to carry. Many Christians have really struggled in particular with the aspect of giving because there just never seems to be any money left over after bills. It is so wonderful to be a giver, but you need to be practical about what affect your giving will have on the size home that you can buy. Now, I know that the Lord is so incredibly gracious, and this is the moment when I feel like everyone wants to bust out with “God will make a way where there seems to be no way”, and yes, He loves to bless His children, but God is also really smart with finances… He is the beginning of ALL wisdom after all.

So many times what we want God to do for us is actually to provide for us to get OUR way, rather than His. He loves to bless His kids, but sometimes that means getting into a smaller, more affordable starter home that you can prosper in and eventually outgrow, rather than a large dream home that is going to overwhelm your finances and leave you constantly in need of a “miracle”. Many times it is our desires that lead us rather than the Holy Spirit, and we need to realize that although God wants only good for our lives, His prosperity is so much more than a bigger home. In fact, if living in a smaller home means that you work less and get to spend more time with your family, or that you have more surplus income to take vacations, or to give more, or be a blessing to your kids, then I think that is absolutely God’s blessing on you. Don’t let the size of your house be the only measure of you…. Love big, embrace life, and be grateful for what you have, and for what you can afford. Don’t despise small beginnings, especially in the size of your first home. Life is so much bigger than the size of your house, but as so many have discovered, a house that is too big can actually keep you from getting to live the rest of your life.

But even though the percentages that I have talked about today are the numbers that a lender will present to you, the best measure of what size loan you can afford is always going to be based on your complete budget. The debt-to-income ratios may govern their decisions in giving you the loan, but your budget should always govern what size of loan you are willing to commit to. And let me just add one more thing… if you can’t afford a large house, don’t let your realtor even take you there. They always start out with the best so that you are ruined for anything else. Know your budget and let it be the guide even as you search for your home sweet home. Don’t get seduced into loving a home you can’t afford and sacrifice your peace and your financial future for a bigger bathroom, or an upstairs you never visit :)

God bless.

Tuesday, October 14, 2008

Time to Begin

Wow, there is so much to write on with so much happening in the world! It has really been a financial roller coaster for anyone following the stock market and global markets over the past two weeks. There are dire predictions and forecasts, really a lot of gloom and doom out there right now. I have to be honest however, for me, I have taken more of a “let’s see in a month’s time, or maybe three month’s time.” It is difficult to really give this crisis the weight that all of the financial “prophets of doom” are saying it deserves. I think that is because, even though I do believe that a correction in the market was absolutely necessary, I still believe firmly in the power of individual choices.

Once again, if you have been making wise financial decisions, with no debt, you are living within your means, and you are doing what God has called you to do… what do you have to panic about? I know that many people are fearful of the “trickle down” effect, but once again, since this crisis is mainly affecting the credit markets (at the moment)… if you have great credit because you are making smart decisions and paying your bills on time, then you are not really going to feel the effects. The people that this is going to affect the most are the people who really should not be borrowing money in the first place. And even if that is you, what this turn is telling you is: get your budget in order, live below your means, save aggressively, pay down debt, and when the market turns again you will be in a much better financial place, and have a better idea of what you can afford to borrow (if you still want to). And as history has shown, the market can turn very quickly…

It was just a year ago on October 9th, 2007, that the stock market reached its all time high at 14,279 and now a year later it has come tumbling down to close at 8,451 last Friday. People all over the world are panicking and pulling their money out of the market. In fact, last week investors pulled over $43 Billion out of mutual funds. Two weeks ago that number was “only” $6 Billion dollars. If you look at those numbers, it is easy to see exactly where the “crash” came from. It wasn’t based on value. It was based on panic. Fear has set in and people are taking staggering losses on their money in order to “secure” what they have left. However, if you look at market without the eyes of fear, you will see opportunity instead of pessimism.

In just one year the market has moved almost 6,000 points! Now, I think the 14,279 number was definitely based upon an inflated market, but I also think that the 8,451 number is a severely undervalued number. To me, it is the number of opportunity. Every investment book that you will read will tell you that you don’t sell when the market is low. In fact, it is the time to buy.

So I would like to suggest today, if you don’t have a retirement account… they are currently on a huge discount sale. If you can just control your fear and realize that you are buying a long-term investment, not one to micromanage with each turn of the market, then you can buy with peace right now that you are getting a great deal J This opportunity doesn’t come around often, and I promise you 10 years from now, you will so regret not buying in right now. I am not an investment broker, but I would recommend looking into buying into a mutual fund like the Vanguard Target Retirement Fund. They have a couple of different funds based on your age and when you would like to retire. The older you are and the closer to retirement, the more they limit your risk. It is a fantastic way to invest as a beginner if you have no idea what you are doing.

Of course, you need to follow the peace of the Holy Spirit, but just make sure it’s not your fear that is talking to you. These really are amazing days that we are living in, amazing in a negative way to the rest of the world, but to those who walk in perfect peace, they are also days of opportunity. Even if that opportunity is just a wake up call to get your finances in order, to aggressively pay down debt, to spend less than you make, and to start saving for your future. There has never been a better time to begin.

Sunday, October 12, 2008

A Princess Party


My darling Ava Joy is 4 years old! I can hardly believe it. The party was a wonderful success, thanks in large part to my Mom who stepped in and saved the day. Praise the Lord, my fever was gone by Saturday, but I was still pretty weak. My Mom just brought the whole beautiful party together. Ava had such a lovely time and I was just so glad that she finally had a birthday party without tears. In fact, she totally enjoyed herself.

So, I am still in recovery myself, but I did want to share pictures from the "Princess Tea Party". I know you will wish you were there :) The first picture is a picture of the "cake"... although we actually had cupcakes instead of a cake because to Ava cake is just a means to and end.... which is the icing.

This is my beautiful girl on her special day. She came dressed as "Belle" from "Beauty and the Beast"... afterall, it was a tea party.

Noah was the honorary boy at the tea party, but he did a great job in celebrating his sister. Although at one point I did have to remind him that ladies at tea do not want to swordfight in the yard. He, of course, came dressed as a pirate.

Ava and her dear friend Ellie enjoying some fancy fruit snacks.
Noah was such a good sport, he even drank from the tea cups. I was really proud of him.Ava Joy blowing out her candles. She by then had changed outfits about 3 times as all of the little girls played dressup. She finally ended up in her beautiful new Tinkerbell outfit that her Aunt Marlene gave her. So cute.
And this is the whole beautiful party, her dear friends Ellie, Evie, and Madison, and of course, Noah. It really was a lovely day.

Finally, my darling Ava today getting a "manicure" with Mommy. Ava probably messed her nails up 3 times before the lady was through painting them, but we had a wonderful time together. She is such a delight to my heart and I was so thankful to feel better to be able to enjoy her special day. By the way, the manicure for her only cost $5! She even painted beautiful little flowers on her nails. She sat in my lap the whole time and just kept saying, "Don't my nails look beautiful Mommy?" It really is a gift to be a Mommy, and I feel like I have been given the best gifts in the world with my 3 darling children. However, I am very glad to have a break from birthday parties for a few months. Me, and my budget :)

Thursday, October 9, 2008

A Chilly Morning

For those of you checking in here to check up on me, thank you so much for your thoughts and prayers. Unfortunately, I am still running a fever. It just hovers right above 100 degrees... not enough to really burn this off, just enough for me to ache all over. This morning I bundled my children up in their fleece winter clothes because I couldn't stop shivering and didn't realise that I still had a fever. I was so praying that I would wake up well today. My Mom came to pick up Ava and Luke so that I could rest. "It's not that cold," she observed looking at Luke and Ava's outfits. "They've been sick Mom, I don't want them to get chilled," I replied. She just lovingly smiled and bundled them into their car seats. Well, sure enough, I came back inside and I was absolutely shivering... and then I took my temperature and realized why I was so cold. My poor hot kiddos.

Anyway, thanks for your prayers. I am just praying that tomorrow I am better. The birthday party is getting closer and closer and I am feeling a little desperate. Matt and my Mom both said they would help me clean and run errands tomorrow if I am still sick. I so do NOT want to cancel the party. I just keep thinking that in five years time, I won't remember that I was sick, but I will remember what I did for Ava Joy's fourth birthday... Birthdays live forever :)

So, on to the party... I'll make sure to update you on the other side.
God bless

Wednesday, October 8, 2008

A Different Perspective

And she is down... and out of the game. Unfortunately for my sweet family, and for blog land, the bug that has plagued my boys all weekend has finally caught the girls. Luke started with a croup like cough on Friday night and it has just gotten worse and worse. Noah started running a fever on Saturday night... but Ava and I were still good. Unfortunately, yesterday we both started coughing. I still was hanging in there, but fever has found me tonight and I am out of the game. So... pray for Matt :) because he is still up and running and until Mommy is better, he is completely in charge. Thankfully, Noah is completely better. He burned a high fever and it just seems like that is all it took and he has had no other symptoms (why can't all of our immune systems work that way?). Luke's croup is better but seems to have migrated into a cold. However, at least he isn't waking up all night long fighting for air.

Anyway, a long detailed explanation for why I won't be blogging for the next few days. I think I might just take the rest of the week off to recover. Also, it is Ava's 4th birthday on Saturday and there is a party to plan... even smaller than the pirate party, but nevertheless, there must be cake :) I am going to do a princess tea party for her and she is beside herself with excitement... or she was until she started with fever. But prayerfully we will all be better by Saturday to enjoy her birthday cup o' tea.

In the mean time, as you watch what is happening in the economy right now, just remember that your future is not controlled by this moment. You are in bigger hands and your destiny goes beyond what happens with the financial markets of the world. This panic will pass and although we are looking at some very serious recovery time on the other side, I firmly believe that the market will eventually recover. The economy will come to a balance and will see brighter days again, but even if it doesn't our lives are still in God's hands. The only thing that you have control over is are you doing what you are supposed to be doing. Keep doing that and remember what Jesus said in Matthew: "Don't worry about your life, what you will eat or what you will drink... For your heavenly Father knows that you need all these things."

Times of stretching and difficulty come and go, and it is in these times that it is so good to sit and read your Bible (and don't groan like I just told you to go and take some medicine! It is actually even better for you than the "Nyquil" that I am about to take). As you read you will be reminded of the brutally difficult times that those amazing men of faith went through and yet still sang God's praises in the midst of it. In the good times, it is easy to sing praises. In the face of adversity, it is your lifeline to praise Him. When you praise Him you remember who made the heaven's, who owns the cattle on a thousand hills, who knew you from your mother's womb, who knows the end from the beginning, and who works everything for good. Praise brings a whole different perspective, and it is a perspective that we all need right now.

Our God is bigger, and He says not to worry... so as for me, I'm believing my wonderful Father for healing tonight and receiving what Jesus already did to make provision for that healing for me and for my family. I am praising Him for the way He takes care of me and my family and I am excited to see the good that He is working on our behalf.

God bless and I will see you soon... or maybe after the birthday party :)

Tuesday, October 7, 2008

Budgeting for A New Home

As I write tonight I am faced with a quandary. I know that many of you have gone back and read my early blogs on setting up a budget and have a budget in place, but I also know that there is a lot of information there if you haven’t already read them. When my book is completed I will have an easy solution to this dilemma. I will simply say, go read chapter “whatever” in my book :) However, my blog is not as concise as my book will one day be, so… for today I am going to summarize setting up a budget. Please keep in mind that if this is the budget that you are going to use for bill paying and as a road map to your finances, then you are going to need to invest a little more time in setting it up. It’s not hard and it really is so worth any effort you put into it. Setting up a budget will literally pay you back every month in saved income!

So to do a thorough job on the budget please refer to the following blogs:
To determine your monthly expenses read the following-
Expense Categories - Finding the Holes
Average Spending – Learning for Life
Managing Bills that Vary – Changing Seasons
Infrequent Bills and Expenses – A Plan for the Infrequent

To determine your monthly income read the following according to your income, although I recommend everyone read the blog “Simplicity” as it explains a lot-
Salary/Monthly paycheck - Simplicity
Hourly Wage/Weekly paycheck – By the Hour
Bi-Weekly – Every Other Friday
Commision – Feast or Famine , Finally Breathing
Self-Employed – Your Business , The Power of Percentages
Examples of varying income scenarios – Weekly, Salary and Commission

And then to actually make your budget and put your plan into action read these-
My Budgeting Plan – A Plan to Stop Juggling
How to Balance – Finding Balance
How to Use a Budget? – Directions for the Journey

However, for this topic of using your budget to determine what kind of mortgage you can afford, I am going to simplify the budgeting plan into it’s basics. Which is: take your monthly income (after taxes) and then subtract all of your monthly expenses (rent, insurance, groceries, eating out, entertainment, savings, giving, utilities,… everything!).

Then for the purpose of determining what size house payment you can afford you need to look realistically at your utility bills. In an apartment, your water bill will be minimal, but in a house that bill will double, triple, or even more depending on the house size and the size of your yard. The other two bills that will increase exponentially are your gas/heating bill and your electricity bill. Again, as you increase square footage that bill will increase as well. So if your apartment is 900sq ft. and your new home is 1800 sq ft then you should double your budget for electricity and your gas bill as well. So many people forget to take this into account in their plans for purchasing a new home and it can affect your budget by hundred’s of dollars! I have many people talk about the shock of paying their first utility bill in their new home. It may not seem like a big deal on this side, but it can quickly make your new home feel like a noose around your neck.

So having adjusted your utilities in your budget you can now look at your surplus (how much money you have left over). If there isn’t any surplus, then your new mortgage payment cannot exceed what you are currently paying in rent. If you are in the “red” meaning that you are spending more than what you have in income, then you need to make adjustments to your budget just to continue down this process or you will wind up in serious debt. You can adjust your budget by decreasing what you spend in entertainment, or getting rid of cable TV, or selling a vehicle to get rid of the payment. At this point it is a matter of what are you willing to do to own your own home?

But if you have a surplus then add this to your current rent payment and you should have a very good idea of the kind of payment that you can afford to make on your mortgage. By looking at your payment in this honest and very practical way, you will be sure that once you get into your beautiful new home you can still afford to live your life. As many people are discovering, it is so much worse to get into your “dream” home only to loose it to foreclosure because you can’t afford to live there, than to stay where you are and save for an affordable first home. The best financial future for you and your family starts with being honest with your current financial situation even if that means buying a smaller home, and nothing brings financial honesty like a budget :)

Happy budgeting and I will see you tomorrow.

Monday, October 6, 2008

Owning the Process... and then Owning Your Home

Buying a home is such an exciting adventure, but it can also be one of the most stressful times of your life. Amidst the paperwork, and house hunting, and sudden immersion into the totally foreign world of mortgages, and realtors, and escrow accounts, and down payments… it can be very overwhelming. I am not promising to be your comprehensive guide through the jungle this week. There are very thick books that have been written on this topic… and I don’t feel like another writing one :) However, I do want to present you with some thoughts that you may not have considered, and help you in preparing your budget so that you are better equipped to navigate the jungle.

As I mentioned last week, Matt and I have a dear friend who is a mortgage broker named David. One of the first questions that he asks his clients who have come to him for a loan is, “Based upon your budget – what mortgage payment do you feel that you can afford?” Now David is not your typical mortgage broker. He will do everything in his power to help you in what you are trying to do, but he will also give some tremendously wise counsel along the way (We love you David). But his question is at the heart of what has fueled our mortgage crisis in America, and it is the primary question that needs to be answered for anyone considering buying a home.

Too many people approach buying a home with the mentality that they will see what the bank will lend them and then decide how much to spend on a home. Well friends, let me just tell you that many of those people are sitting with their houses in foreclosure right now. The bank doesn’t know your finances. It doesn’t know your spending habits, how much you give each month, whether or not your children are in daycare, or private schools. They only look at the big picture of debt ratio, credit scores, and pre-tax income. So just because they are willing to lend you the money does NOT mean that you should borrow that amount.

Only your budget with your specific financial responsibilities, bills, and needs can give you the answer of what kind of payment you can afford. From that answer, you work backward in estimating closing costs, property tax and insurance (your lender should be able to help you with this process) in order to figure out the price range for a home you can afford. But it really should begin with your budget telling you what you can afford rather than the bank telling you what they are willing to lend you.

So tomorrow we are going to look again at setting up your budget, but this time with a specific goal of determining what purchase price you can afford to pay for a home. Again, I just want to reiterate that people go to school to understand all of the in’s and out’s of this process. I am not trying to tell you how to do it all, but I am trying to give you the vital information that you have to have to survive in the housing jungle. The bottom line is, if you want to own a home, you have to take ownership of your finances. Especially when not “owning” your finances means you may not get to own your home for very long.

I'll see you tomorrow.

Friday, October 3, 2008

Maybe Monday?

So I am about halfway through my next "mortgage" blog and I am just not going to be able to get it up tonight...
and realistically, probably not tomorrow night either...
so maybe Monday :)
But in the mean time, you hopefully aren't buying a home this weekend, so relax and have a wonderful weekend. And if you are buying a house this weekend... well, maybe you should wait until Monday ;)

Castles in the Sand

I have always loved making sand castles on the beach. From my earliest memories, I remember making sand droplet castles with my Mom and Dad and brother. My Dad would always build these lovely castles with deep moats that would fill with water. But being made of sand on a beach with a strong tide is a very precarious predicament for a castle. We would always search for yesterday's castles the next morning and there would be hardly a trace. I guess if you really want a lasting castle you need a better location, a stronger foundation... and it would help if it wasn't made of sand.

I know it won’t come as a surprise to you when I say that we are facing an enormous problem in the mortgage industry in America. Houses are going into foreclosure at an astronomical rate. Loans are becoming exponentially more difficult to secure than they have been in the past. Financial titans Fannie Mae and Freddie Mac faced bankruptcy as a result of all of the bad loans that they were holding… until the government stepped in and basically did a hostile takeover of Fannie Mae and Freddie Mac. However, in that process the government took over an 80% ownership of Fannie Mae and Freddie Mac stocks. And it is what happened to the previous owners of those stocks that is currently driving the banking crisis.

You see, banks and investment firms from all over the world were heavily invested in Fannie Mae and Freddie Mac. So when the US government forcefully took over 80% of the shares, a shareholder who had owned 5% of the entire company now only owned 5% of 20% of the company. So if your 5% was worth 20 billion dollars, it is now only worth about 4 billion dollars. That is a lot of money lost friends! And that is why banks all over this nation are failing and an investment giant like Lehman brothers has gone bankrupt. And it is also why the government is now asking for 700 billion dollars to try to stem the hemorrhaging of the banking industry. This is a very simplistic summary of what is happening in the fiscal world. But to me, this crisis really comes back to a lack of financial awareness by individual Americans. This all started in the mortgage industry because quite simply, we borrowed more than we could afford because no one told us “no.”

All over America, people are pointing fingers at corrupt mortgage lenders for doing sub-prime loans. This basically means that a person doesn’t have good credit, isn’t a good candidate for a loan because of a lot of debt, or bad credit history, or they just can’t afford it, but the lender gives them loans anyway and does it with balloon payments (you start out with a small monthly payment, which you think you can afford, and then your interest on your payment “gradually” increases, but as many have discovered… it can quickly get out of hand), or the very evil “negative amortization loan” which is so evil I shudder to even talk about it (you start out paying less in monthly payment than the cost of interest on your loan. So your balance on your loan actually grows because the interest that you are not paying is added onto your loan amount. Negative amortization loans typically have a cap for how much can be added to your loan and when you reach that cap they raise your payment to fully cover the total of the loan and what ever interest your balloon has reached. You can see why so many have gone bankrupt as a result of these loans. It is a loan made of quicksand and marketed as the easy road to home ownership.)

All of this to say… I don’t think you should ever sign any kind of contract until you really know what you are doing. People in America have relinquished responsibility for their finances to banks, to mortgage lenders, to investment houses, and it is costing them dearly. It is time to get educated on your mortgage and it is not as complicated as they want you to think. If you feel overwhelmed and ignorant, then you will blindly trust and if you blindly trust then they will make more money. But even though it is sometimes a fight to educate yourself on what is happening with your money, it is a battle you have to fight.

When Matt and I were buying our home, our mortgage broker was also one of our best friends in the world (he still is). But I still peppered him with questions and then came home and studied and then went back and asked more questioned. We trusted and loved our friend, but we needed to understand what was happening with our finances.

No matter how much you trust someone, don’t sign a contract without fully understanding what that contract is saying. Get a second opinion. Ask everyone you know. The more you understand what you are getting yourself into, the less chance you have of getting in over your head. Our friend was so incredibly patient (with me in particular) and we really were so blessed to have a mortgage broker who totally had our best interest at heart. However, by the end of the process, I could sign those papers with confidence. I understood our loan, our interest rate, how long it would take us to pay off that loan, and what all the fees were for. And I also knew that we were getting a loan that we could afford. We felt great about the process, and even better about our home because we had done the numbers and figured out our budget for the new home before we even committed to buy the home. We not only loved our home, it was a home we could afford.

And that is what I am going to talk about tomorrow… how do you budget for a new home? What should you consider when looking at buying a new home? And what is the best way to move towards home ownership? I know that many of you are staying put for now in an economy that is very hostile towards selling your home… but some of you may even be facing foreclosure right now, and I would love to help you so that this never happens again. And just to be honest, some of you have no business buying a house until you have worked out your budget and gotten a handle on your debt.

Yet a budget is more than just a method for staying out of debt, getting out of debt, and managing your money… it is also a wonderful guide for making wise financial decisions for the future. I am convinced that if everyone in America had a budget and actually knew what was happening in their finances that we wouldn’t be in our current economic situation. For that matter, if the government could just get on a budget… :) but that feels like a cheap shot. Regardless, it is time for all of us to own up to our financial responsibility and that starts with understanding our own finances. If you own a house, it is really important to understand your mortgage, and if you don’t own a house, it is never too soon to start educating yourself about the process.

And hopefully by the end of this “series”, you will know better than to build your castle out of sand on an unstable beach in an unsable market. Just think of budgeting as the best foundation for your home, and getting a well-researched and solid mortgage (or even better-paying cash) as the pillars that will anchor your home no matter when the tide comes. America has built her castles in the sand, but it is time to learn from our mistakes and move to higher ground. The bad news is it will be a little more of a climb to get to there, but the good news is you won't have to rebuild your castle after the tide comes in.

See you tomorrow,
Tracy

Wednesday, October 1, 2008

From the Party

What a week it has been so far! The markets of the world are being driven by fear, and the rest of us are just spectators at the stampede. I have no idea how this all will resolve, but again and again I am thankful for the peace that passes understanding which guards my mind and heart. (Philippians 4:7) I read yesterday again about so many people withdrawing from the stock market and moving their money to the safety of bonds. The only problem is that they are doing it at a point where the market is at an extreme low point and are losing thousands and even millions of dollars. Again, all because of fear. I’m not going to “preach” the same sermon again (if you missed them you can see my recent blogs on the subject here and here), but it is definitely tragic to watch the financial future of so many imploding in panic.

I actually don’t have a blog ready for today, because instead of blogging last night I went on a date with my husband! Yea for a date night! It is so nice to leave the house without the kids and just have uninterrupted conversation. It is also so fun to be married to your best friend. You remember how much fun it is on date night!

So instead of a blog, I thought I would share with you some pirate party photos. Several of you have requested them, so I hope you enjoy them:

This is my little pirate family, including the lovely pirate Belle. Ava could not be convinced to wear a pirate costume. She insisted on being a "Pirate Princess."


Matt took on the motley crew as he played the part of the pirate captain. I laughed so hard as he defended himself against a hoard of pirates. Thankfully they all had styrofoam swords, or Matt may have ended up with bruises. Although he actually fared quite well :)

This is my big 6 year old boy opening presents, which in spite of sword fights, and treasure hunting, was still his favorite part.

All in all, one very happy party for one darling boy. Have a wonderful day and God bless.