A Word or Two On Giving

a man giving cooked meal at home

As we get closer and closer to the holiday season, giving season, I want to give a word or two on giving. I give; you give; we all give. We give of our time, our talents, and our money. We give gifts for birthdays, during the holidays, and at weddings. Our tithes are given, and we give to the annual United Way campaign and even the PTA. With all this giving, do we really give the way we should, and more importantly, do we think about giving like we should?

Giving is Good

When I teach spending plan classes, one of the things I do is ask the class what the three things that money is good for?. I have categorized all we do with money into three categories and have written about them here. I ask this question to help them to see and think differently about spending and planning to spend their money. It’s good to spend money; I just believe in planning to spend money. The same with giving – giving is good.

I get some interesting answers from the class. Sometimes someone will blurt out, “money is good for earning, or it’s good for wasting, or we make money; money is good for making, right?” 

I really get a kick out of the initial responses. 

Eventually, after we get over the initial answers, someone will say spending or a category of spending like gas, shopping, or groceries. Then, someone says saving or investing, which takes care of the second category, saving/investing. And then, however, we get stuck. We cannot think of that other category, that other thing we have all done with money – giving. At this point, I continue with the class and tell them we will come back to the third thing later. Usually, I tell them but rarely does anyone guess the answer correctly.  It’s good to give. 

According to Dictionary.com, giving is the act of presenting voluntarily and without expecting compensation; to bestow. Also, to devote or contribute generously of: to give of oneself; to give of one’s abundance and, to make a gift or gifts; to contribute. 

Giving is Biblical

Giving is also biblical. In 2 Corinthians chapter 8 verses 13-14, Paul writes to the church in Corinth:

 13 Of course, I don’t mean your giving should make life easy for others and hard for yourselves. I only mean that there should be some equality. 14 Right now you have plenty and can help those who are in need. Later, they will have plenty and can share with you when you need it. In this way, things will be equal.

Giving is about equity. It’s about being a good steward of what you have been given.

Giving is something that we are prompted and not pressured to do. We are often pressured to give during your local United Way campaign or to another cause. In our current economic environment, there is a great need for giving, and many asking for gifts. 

Accordingly, when giving and deciding who and what to give to, give on purpose and give to vision.  

Give on Purpose

When we give on purpose, we give an established amount for an intended desired result. Giving on purpose is not haphazard but done with a goal in mind. What it is not is giving because of pressure or because of how you feel. You are giving an amount, whether time or money, that you believe will have the intended result. Ask yourself what the cause is. What is the organization doing? Can they do more and then contribute to the cause on purpose.

Give to Vision

When we give to vision, we give to something or someone that is going somewhere. They see a positive that others have not yet seen, the wildest dreams. We are inspired by vision, inspired by these dreams. When vision is visualized, it makes you happy to think about it and see it becoming a reality.

You can give to whatever you like.  It is your gift and I encourage you to give.  However, giving on purpose and giving to vision allows your gift to be maximized. You are being a good steward of what has been given to you when you give in this way.  And it will help you to systematically give and be confident giving more.  Thinking about giving in a different way, you will give like no one else. Comment below, I would love to hear from you.

Point Of Sale Installment Loans: What’s the Deal with Buy Now, Pay Later, and Your Money

You make a purchase at your favorite retailer, maybe online, and opt for the buy now pay later option at checkout. Do you know what you just did? Also known as point-of-sale installment loans, many have grown fond of “buy now, pay later” services. 

If approved, which takes seconds, you make a down payment of the overall purchase amount. Then you pay the remaining due in a series of interest-free installments. You can make payments via check, bank transfer, debit card, or credit card automatically.

Increased Popularity of Buy Now, Pay Later

Point-of-sale loans gained popularity by positioning as a trendier credit-card alternative for millennials with few strings attached. The loose credit rules helped attract users. Buy now, pay later loans have increased from $2B in 2019 to $24B last year. They gained traction, with consumers seeking the flexibility of paying for goods and services over time but maybe untrusting of other credit and loan products.

According to a 2021 study by the Strawhecker Group, 39% of Americans say they’ve tried buy now, pay later at least once. 

The quick growth of buy now, pay later is driven primarily by younger consumers, with two-thirds of borrowers considered subprime. Nearly half of generation Z shoppers and 70% of millennials are more likely to make a purchase if they can buy now, pay later. The thinking behind buy now, pay later is consumers can get the things they want and need immediately while also getting extra time to pay for them.

Buy now, pay later can be an appealing way to pay for smaller purchases when shopping online. Its popularity grew during the rise of e-commerce in general.

What’s the Deal with Buy Now Pay Later?

Point of sale or buy now, pay loans are essentially an interest-free loan that gives consumers the flexibility to pay for goods and services over time. Often buy now, pay later does not charge fees, but they have a fixed payment schedule comparable to any similar type of unsecured personal or consumer loan. A point-of-sale loan will allow you to sport that $400 Kate Spade handbag and pay for it later in monthly installments. Buy now, pay later encourages consumers to purchase and borrow more. As a result, borrowers can quickly end up taking out several loans within a short timeframe at multiple lenders. 

Point-of-sale loans are not new. Banks have been offering them subtly at furniture stores and orthodontists’ offices for years. However, this type of lending has become increasingly popular in recent years as technology has improved.

Your Credit and Point of Sale Loans

As buy now, pay later has become more popular, users have become more prone to overspending and missing payments. Although consumers are choosing buy now, pay later loans as a competitive alternative to high-interest credit products, it does not help you establish and build good credit, and you miss out on any perks.

Buy now, pay later financing offered through credit card companies may carry lower fees or interest rates than the regular variable APR charged on outstanding balances. Typically, buy now, pay later doesn’t affect your credit score; however, late payments or failing to pay can damage your credit score. Some buy now pay later companies only require a soft credit check for approval, which doesn’t affect your credit score. Others may conduct a hard inquiry of your credit, knocking a few points off your score.

Point-of-sale loans are different than a purchase with a credit card because when you use a credit card you are only required to make the minimum payment due on the card each month. Interest accrues on the remaining amount until you pay it off unless your card has a 0 introductory APR.

Point of Sale Regulation

The Consumer Financial Protection Bureau CFPB), Last week CFPB outlined plans to regulate the buy now, pay later business. Regulators believe that buy now, pay later poses risks to consumers because they lack protections. They also and encourage over-borrowing and loan stacking or getting approval for multiple loans or lines of credit simultaneously within a short period. Loan stacking generally happens online and can be done by either individuals or businesses.

Regulators plan to regulate buy now, pay later like credit card companies. That means the buy now, pay later industry may have to add pricey safeguards and do more credit checks.

Be More Aware of Buy Now, Pay Later

There are some things that I want you to be aware of with buy now, pay later.

First, be aware of the repayment terms. Some loans may require you to pay the remaining balance with biweekly payments. And others may give you three or six months or longer to pay. Knowing how your payments will help you when creating your spending plan. Also, this will ensure that you can afford your payments and make them on time. A missing or late payment could result in late fees and be reported to the credit bureaus, which could hurt your credit score.

Inflation is causing people to increasingly struggle to pay for necessities up front and fail to repay their loans. During the pandemic, shoppers used buy now, pay later to buy luxuries. Now, 15% of buy now, pay later users are using buy now, pay later to pay for gas and groceries.

Also, remember that though you may be approved for a 0-interest point-of-sale loan, it’s not guaranteed. Point-of-sale loan companies can charge interest on purchases that can easily match or outpace what you might spend on a credit card. And unlike credit cards, you are not earning any rewards on purchases.

Finally, consider return policies and point-pf-sale loans may affect your ability to return something you purchased. The merchant may allow you to make the return, but you may not be able to cancel the point-of-sale arrangement until you provide proof that the return has been accepted and processed. 

There you have it, the ins and outs of point-of-sale loans. Be sure to weigh the advantages of point-of-sale installment loans against the benefits of using other financing options. And remember cash still works. What has been your experience with buy now, pay later or pint-of-sale loans? Comment below, I would love to hear from you.  

Secured and Unsecured Debt

What is the difference, if any, between secured and unsecured debt? Both are debt, and isn’t debt, debt? What makes unsecured debt different than secured debt? Well, let us take a look and see.

What is Unsecured Debt

Unsecured debt is a finance term that refers to any debt obligation that is not collateralized. Collateral is something of value you own or an asset you put up to secure a loan or debt obligation. With unsecured debts, there is no tangible property or other product attached to that debt.

In the case of unsecured debt, a lender loans money without the security that an underlying asset provides. 

With unsecured debts, lenders don’t have the right to any collateral for the debt. If you fall behind on your payments, they don’t have the right to take any of your assets. However, the lender may take other actions to get you to pay. For example, they will hire a debt collector to collect the debt. If that doesn’t work, the lender may sue you and ask the court to garnish your wages or take an asset. The lender can also put a lien on another of your assets until you’ve paid your debt.

Examples of Unsecured Debt

Typical unsecured debts include credit cards, medical bills, student loans, and store credit cards where you do not have to put up any material as security for the debt.   

Also called signature loans or personal loans, borrowers often use unsecured debt for purchases such as computers, home improvements, or unexpected expenses. 

An unsecured loan means the lender relies on your promise to pay it back and nothing more. For this reason, unsecured debt carries more risk for the lender, making the loan more expensive. The more additional risk a lender must take on, the higher the rate of interest a borrower must pay, making unsecured loans subject to higher interest rates. Additionally, you have set payments over an agreed period, and penalties may apply if you want to repay the loan early. 

What is Secured Debt

In contrast to secured debt, if the creditor can take an item of property away from you to cover the debt, you are working with a secured debt. The creditor will sell the asset if the lender must take your asset because the account becomes delinquent. If the selling price for the asset doesn’t completely cover the debt, the lender may pursue you for the difference.

The fundamental difference between secured and unsecured debts is that tangible items are attached to the debt. Debts such as mortgages and car payments usually have tangible items attached to them, i.e., your house or car. Secured debts are tied to an asset and considered collateral for the debt. Lenders place a lien on the asset, giving them the right to take the asset if you fall behind on your payments. So, for example, your mortgage loan is secured by your home, and auto loan by your vehicle.

In a secured debt situation, as the borrower or person seeking the loan, if you were to file bankruptcy, failed to pay the debt obligation, or failed to meet the terms for repayment, the asset that secured the loan that you put up to cover the loan, would cover the debt.

Debt and Bankruptcy

The big difference between the two types of debts happens or is applicable when someone files for bankruptcy. In Chapter 7 Bankruptcy, you can choose to keep the product or property and pay off the debt in some way. But if it is decided that you cannot pay at all, you also have the option of giving the product or property back and paying off your debt that way. On the other hand, in Chapter 13 Bankruptcy, you are allowed to keep the merchandise or property, but you will be allowed to pay off your debt according to the Chapter 13 plan.

There you have it—the difference between unsecured and secured debt. There is a difference, and it can be a big one. Know what you are getting when you take on debt. Is it secured or unsecured? Comment below. I would love to hear from you.

Pick a Day, Choose a Time and Prepare a Place

Managing money obligations, spending, and financial decisions take time. It’s kind of like a second or third job. You could call it bookkeeping; I call it – working on your money. I tell clients that if they don’t work on their money, someone else will, and later they will wonder where their money went and what happened to it. I tell them to pick a day, choose a time, and prepare a place, keep reading.

Below are some tips to help you when working on your money. I believe that we all do some type of bookkeeping currently but maybe not in this manner. I hope that the tips will help you consistently work on your money.  

Pick A Day of the Week to Work on Your Money

First things first, pick a day of the week when you will work on your money. It could be Sunday or Saturday morning unless you have young kids because they are probably waking you up. It could be Monday or Thursday. Whatever is good and convenient for you, pick a day and stick to it. This is the day that you will be working on your money.

And although the day should be convenient for you, if it stops being convenient after a while and stops working for you for whatever reason, change it. One of the things that I know about working on your money is that you set the parameters. It’s your day, and it’s your money.

Working your money is all about you.

Say the same day.

Choose a Convenient Time to Work on Your Money

After you pick a day, it’s time to choose a time. Again, this time should be convenient for you. Be specific with your time, 8am until 9am. And if you are not a morning person, don’t pick mornings. Whatever time you decide, this is the time that you will work on your money, planning your spending, paying bills, and reviewing financial goals.  

Say the same time. 

Prepare a Place to Consistently Work on Your Money

Picking a day and choosing a time is probably the easy part but preparing a place is where it starts to get somewhat tricky. Now it’s time to prepare a place to work on your money. The site should be comfortable with few distractions.

For example, I love music, and if I had music playing while trying to focus on something, I would not be able to because I would be distracted a lot.

Anyway, you will need a table or desk to spread out and work on your money. You also need to prepare the place with everything you need to work on your money; pen, pencil, marker, paper, spreadsheet, calendar, computer, and anything else you need. 

You should have and keep everything you need at the place so you can consistently sit down on the appointed day and time and be undistracted, plan your spending, pay bills and work on your money.

This will help you develop a regular schedule for working on your money; you must stick to it and be consistent. Consistency in your money management practices is one of the GoldenRules. Another is pick, choose, prepare. Getting started will be time-consuming, but it will become easier once it’s set up to meet your needs and you get into the habit of working on your money. If you did nothing in the beginning but just sit there on the picked day and chosen time and at the place you prepared, sit there anyway. Even if just for 5 minutes and once you consistently do this for a while, it will become a good habit and easier.

Say, the same place.

After you Pick a Place, Choose a Time, and Prepare a Place

After picking a day, choosing a time, and preparing a place, you are ready to start working on your money. You track spending, pay bills, and record expenses when working on your money. You are also reconciling your spending plan with your actual spending, determining what went wrong, planning for major purchases, saving, investing, and more. All the fun stuff it takes to manage money well and what I believe we all should do more of.    

Now say, the same day, time, and place.

Managing money obligations, spending, and financial decisions take time. Work on your money on the day you pick, at the time you choose, and at the place that you prepare. Sit down, plan your spending, pay bills, manage money, and reach financial goals. Get into the habit. Doing this will help you manage your money. Picking a day, choosing a time, and preparing a place seem like simple things, but they can help you get into the habit of working your money. And you know what they say, habit is what keeps you going. What keeps you going? Comment below. I would love to hear from you. 


Tips to Organize Your Financial Life

For someone with a history and pattern of financial chaos, the first step toward better money management could be to just organize your financial life. Organizing your financial life requires a clear picture of where you are and where you want to go with your money. I believe you must know where your money is going, and where it’s being spent, to manage it effectively. Knowing where your money is going is one of my GoldenRules of financial management. Additionally, you must know where you are in terms of income, and debt. You will also need some SMART financial goals to lead the way to a better financial future. To help you accomplish this task, set up a system to track your expenses, income, and pay bills. 

Getting organized can be overwhelming and can stop the best of us even before we start. To help you get organized, use the organization tips below.

Tip #1. Get Organized by Setting Up a Tracking System

Set up a system to track expenses appropriately for your needs. The system could be as simple as a piece of paper and pencil or a spreadsheet on your personal computer. Before you do anything with your money, you must know where you are spending it and where it’s going. Again, this is a GoldenRule to managing money better.

In this case, knowing is more than half of the battle. I believe knowing allows you to see your spending and adjust it to help you meet your financial goals and not overspend. It’s a must for managing money effectively. You must know where your money is going before you can manage it effectively. 

Tip #2. Track Your Spending

If you have not already done so, start documenting your spending. Use that paper and pencil or spreadsheet and document, document, document. Once a week or even every day. Once a week will be less time-consuming, but from experience, it’s easy to forget some days, and daily, at least when starting, maybe the better way. However, tracking your spending will get easier the more you do it because you are creating a good habit.

Tip #3. Set Up a Consistent Place to Work Your Money

Whatever way you decide to track spending, you need a place to do that. Therefore, set a place where you will weekly or daily record your expenses, pay bills, and compare financial goals to reality. I call this “working your money”. Working your money is one of my GoldenRules to manage money better.

I believe in working your money. Please know that working your money takes time, it’s a job. However, you must work your money because if you don’t, someone else will, and you will be wondering where your money went and how you spent it on that.

Also, when working your money, compare your spending plan with your actual expenses. Comparing will help you stay focused on your system and organize your financial life. And be consistent. Pick a day and time to work your money, Sunday after church, Monday after work, Saturday morning, unless you have kids because they will be up before you. 

Tip #4. Don’t Make Your System Too Complicated (KISS)

In setting up your system, it is helpful to be as thorough as necessary for your needs but not too complicated to where you get bogged down, bored, and do not continue with it. The key is to have a system that is not intimidating to you. One of the goals of the process, besides organizing your financial life, should be to help you learn to manage your finances. As a money nerd, it’s hard to keep it simple sometimes, but try to use the KISS principle, for Keep It Simple Sweetie.

Tip #5. Organize Your Financial Life by Using a Spending Plan

If you are an over spender and cannot stick to your spending plan, perhaps setting up two bank accounts can help. Set up one account that you would use to pay bills and another discretionary account for discretionary expenses. The amount is based on your spending plan and used for discretionary expenses only. Using a spending plan is another GoldenRule.

Be aware that setting up a system that works well for you may take some trial and error. It is important to be patient and to make a commitment to working your money. Sometimes a perceived problem in the plan could be reluctance on your part and turn into a great opportunity. 

Final Thoughts on Organizing Your Financial Life

There are huge benefits to organizing your financial life. Ultimately organizing your financial life will help you make better financial decisions. Additionally, I believe that organizing helps you to be a better steward of your money. Additionally, the plan can help you develop a healthy relationship with money. You will start to see money as a tool to help you achieve financial goals. How do you organize your financial life? Comment below, I would love to hear form you..