Saturday, June 27, 2009

I'm Picking Up Bad Vibrations

With apologies to the Beach Boys, I have been picking up bad vibrations at a number of reputable financial sites concerning the coming change in the laws affecting credit cards and how the bank and card issuers are responding to this threat. Now, more than ever, keep an eye on your credit cards and any changes in credit limits, fees, or interest rate changes that might occur between now and February when the new law takes effect.

This story begins with the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). Some pretty conservative commentators, such as Mish Sedlock, have dubbed this law the Debt Slavery Act of 2005 because it made bankruptcy, particularly as it affected credit card debt, more difficult than in the past. The banks asked congress for the moon and they got it. The result was a torrent of plastic, issued to all the wrong people, including college students who were too young to buy a beer. The universities, by the way, received kick backs from the card companies for allowing this nonsense on campus.

Check out the parody song, Where Credit is Due, based on the disco hit, Lady Marmalade, from the 1970s.

The card companies encouraged their customers to run up large balances and only make minimum payments. Reach your limit? No problem, we’ll just increase it. Of course they added fees, late penalties, and raised interest rates without warning. In some bankruptcy trials, the judges discovered as much as half the card balance was an accumulation of fees and penalties.

As in all such political problems the pendulum started swinging in the other direction. The Credit Cardholders’ Bill of Rights act has been signed into law and will take effect in February 2010. The banks and credit card companies are already lowering their exposure to loss by lowering credit limits and paying customers to close accounts. They are not only being driven by changes in the law but by fear of the growing unemployment rates. From what I understand, banks have modeled their credit card business to handle up to 10% unemployment. If the unemployment rate exceeds 10% by any significant amount, then the banks will need more federal bailout money. They know that unemployed people, even people who have never misused their card in the past will use that credit limit as a lifeline if they loose their job. Their customer will make the minimum payment for as long as possible, but they day of reckoning will come and the card company will loose.

In a recent survey 1/3 of the responded noted that their credit card companies have made one or more of the following changes to their accounts.

19% said the card’s interest rose
14% said fees increased
12% said their minimum payment increased
9% said their rewards program was cut back.

There is more bad news. In the course of my studies, I have discovered that some of my friends have played sophisticated games with 0% interest offers. They move some or all of their balances from card to card, avoiding interest charges while postponing payment. This practice is coming to an end. Many of the majors have raised the fee for transferring a balance to a different card from zero to 4%. Without double checking the number, I believe J.P. Morgan just raised their charge to 5%.

In the past, the ideal credit card customer carried a balance from month to month and made something more than the required minimum charge. These people, much to their shock, are discovering that their credit limits are being lowered by the banks. This not only lowers the bank’s exposure to loss but it also lowers the customer’s FICO score. One of the most important factors in the calculation of a FICO score is the balance to limit ratio. That ratio needs to stay under 1/3. Example: If your credit card has a $15,000 limit, keep your balance under $5,000. Of course when the bank lowers your credit limit that act can kick your balance to limit ratio over 1/3. When this happens, the bank can and will increase the interest rate on your card due to the drop in the FICO score that their unilateral action triggered.

Adam Levin, a former director of the New Jersey Department of Consumer Affairs notes, “It’s all about fee generation.” The credit card companies are trying to find as many little ways to increase their profitability as possible. An example of new fees instituted by one card are foreign service transaction fees charged for buying a ticket on a foreign owned airline, even though the transaction was denominated in dollars. The bottom line is keep a close eye on that plastic between now and next February. We might be in for some nasty surprises.

Here are the links to two of the most recent articles I have read on this subject.

I am not exactly sure what this passage has to do with this post but it has been on my heart lately. It speaks of kingly generosity and the financial cost of discipleship, good subjects for any season

Second Samuel 24

[16] And when the angel stretched out his hand upon Jerusalem to destroy it, the LORD repented him of the evil, and said to the angel that destroyed the people, It is enough: stay now thine hand. And the angel of the LORD was by the threshingplace of Araunah the Jebusite.
[17] And David spake unto the LORD when he saw the angel that smote the people, and said, Lo, I have sinned, and I have done wickedly: but these sheep, what have they done? let thine hand, I pray thee, be against me, and against my father's house.
[18] And Gad came that day to David, and said unto him, Go up, rear an altar unto the LORD in the threshingfloor of Araunah the Jebusite.
[19] And David, according to the saying of Gad, went up as the LORD commanded.
[20] And Araunah looked, and saw the king and his servants coming on toward him: and Araunah went out, and bowed himself before the king on his face upon the ground.
[21] And Araunah said, Wherefore is my lord the king come to his servant? And David said, To buy the threshingfloor of thee, to build an altar unto the LORD, that the plague may be stayed from the people.
[22] And Araunah said unto David, Let my lord the king take and offer up what seemeth good unto him: behold, here be oxen for burnt sacrifice, and threshing instruments and other instruments of the oxen for wood.
[23] All these things did Araunah, as a king, give unto the king. And Araunah said unto the king, The LORD thy God accept thee.
[24] And the king said unto Araunah, Nay; but I will surely buy it of thee at a price: neither will I offer burnt offerings unto the LORD my God of that which doth cost me nothing. So David bought the threshingfloor and the oxen for fifty shekels of silver.
[25] And David built there an altar unto the LORD, and offered burnt offerings and peace offerings. So the LORD was intreated for the land, and the plague was stayed from Israel.

Wednesday, June 24, 2009

Of Mice and Men (Part II)

In the last post I examined a problem. I wish I had an easy solution, but I don’t. I think that in some ways, young college graduates have it harder than I did in 1973. I graduated into the teeth of a pretty nasty recession and the first oil shock. However, I did not have any student debt or any other kind of debt. Generally speaking, in those days, between dad’s savings and the student’s part time jobs, educational expenses did not require borrowed money. Since then the cost of education has consistently outpaced inflation and the actual buying power of the American worker has declined slightly. Even the children of solid, responsible, middle class families need to borrow in order to obtain a college degree.

If this were 1973, I would tell a young person burdened with student debt to get a haircut and find a real job. That was the advice I gave myself. In that wretched economy, I couldn’t find a good job, but I did find a job packing rolls of cloth into burlap sacks in a textile mill. While this job was not exactly what I had in mind while attending Furman University, it paid a living wage. I was able to pay my rent, car expenses, utilities, and for some inexpensive entertainment and still have a little money left over for savings. I believed that in time something would “open up” and in time something did. Those days are gone. Renfrew Bleachery was shut down in the late 1980s. Today only the “cloth room” (the area where finished goods were inspected and packaged) and the warehouse remain. These structures are currently serving as warehouse space for a trucking firm. Everything else is gone.

Seth Godin,, is an author, marketing guru, self made internet millionaire, and currently a vice president of Yahoo. He believes that development of useful technical skills, networking, and self promotion will ultimately be of greater value to the unemployed college graduate than finding a menial job that does not pay a living wage. Here is a list (directly from Seth’s blog) of activities that he believes will turn an unemployed college graduate into the kind of prospective employee corporate recruiters dream about in a year or less.

• Spend twenty hours a week running a project for a non-profit.
• Teach yourself Java, HTML, Flash, PHP and SQL. Not a little, but mastery. [Clarification: I know you can't become a master programmer of all these in a year. I used the word mastery to distinguish it from 'familiarity' which is what you get from one of those Dummies type books. I would hope you could write code that solves problems, works and is reasonably clear, not that you can program well enough to work for Joel Spolsky. Sorry if I ruffled feathers.]
• Volunteer to coach or assistant coach a kids sports team.
• Start, run and grow an online community.
• Give a speech a week to local organizations.
• Write a regular newsletter or blog about an industry you care about.
• Learn a foreign language fluently.
• Write three detailed business plans for projects in the industry you care about.
• Self-publish a book.
• Run a marathon.

In 1973 a young man would rather sleep in a cave with a family of bears than return to his parents’ home following graduation. This wasn’t all that difficult for me and my roommate when renting a 2 bedroom duplex in Travelers Rest, SC at the cost of $100.00 a month. Today, much to the distress of both parent and child, boomerang children are the norm. I still think it is better for all concerned if a young graduate can find a job, any job, that can defray the cost of life in the real world, but that is not always possible.

A college degree is still pretty much a requirement for any chance at the good life and I still believe that any American who wants a college education can obtain a degree, although not necessarily at the college of their choice. Scholarships and work study grants are much better options than student loans. There are a lot of them available but they are very difficult to obtain. Still, if it requires a hundred hours of research and a hundred hours spent filling out forms at a financial aid office, to generate one $10,000 scholarship, that works out to $50.00 an hour, tax free! Not a bad return on time invested. Even an entry level job with a decent employer will provide educational benefits. My employer covered 100% of tuition for my Master’s degree. Five years in night school is not much fun, but it beats the loss of two years’ salary and an accumulation of student debt.

Seth Godin calls the period of time between the conception of a new idea and its realization in the material world, the dip. In the developmental cycle of a new technology this period of time is called the valley of death. If you find yourself in a valley of death, for whatever reason, it is going to take a greater variety of skills and more perseverance than it did in 1973, but with the Lord’s help, it can be done.

Matthew 6

[9] After this manner therefore pray ye: Our Father which art in heaven, Hallowed be thy name.
[10] Thy kingdom come. Thy will be done in earth, as it is in heaven.
[11] Give us this day our daily bread.
[12] And forgive us our debts, as we forgive our debtors.
[13] And lead us not into temptation, but deliver us from evil: For thine is the kingdom, and the power, and the glory, for ever. Amen.

Of Mice and Men (Part I)

I am close to changing my mind on one of my 10 rules for young couples. I have always thought student debt with and only with a plan was OK. Now I am not so sure this is a good recommendation without further caveats. A plan goes something like this; I will major in electrical engineering and minor in computer science with the intent of finding a job with one of the major defense contractors developing new robotic weapons systems. Another plan might be; I will major in nursing with the intent of obtaining a MSRN in geriatric medicine in order to serve the aging baby boomers in their declining years.
The problem is well defined in poetry, “The best laid plans of mice and men go oft awry.” Recently, Seth Godin, quoting a report by the National Association of Colleges and Employers annual student survey observed that only 20 percent of 2009 college graduates who applied for a job actually have one. A lot of well laid plans went awry, but the student debt still needs to be paid. This statistic does not address the college dropouts who are saddled with debt and don’t have a degree.
What does this all mean in practical terms? I have read the $20,000 in college debt is a pretty common number at graduation. If my calculation is correct, $20,000 at 6% for 10 years works out to a monthly payment of $222.04 without any additional fees or extraneous charges. Given a take home salary of $2,000 a month this is not an unduly burdensome sum. However, given a take home salary of $0.00 this debt is devastating and it doesn’t go away. Not even bankruptcy clears a student loan. In fact death is not going to get rid of that debt. The bank can come after your 15 year old Honda Civic and your stereo system after your passing to help cover your debt. Really! $20,000 probably represents a number of small bridge loans that covered some short falls in cash flow while attending a public university with in state tuition. How about those students graduating from expensive private schools with debts in the low six figures? $100,000 is crippling even for a young person with a good job. It guarantees no house, no new car, and probably no wedding for close to ten years.
There are state and Federal government programs that lead to partial forgiveness of student loans. Typically these programs require service in public education, law enforcement, or the military. Programs such as Teach America require service in dangerous urban slums or isolated impoverished rural settings. Some of the state programs are threatened by the recent collapse in tax revenues and may default on their promises.
Some relief is coming in the form of Income Based Repayment starting July 1, 2009. See for more information. This still does not make debt go away. It will stretch payments out from 10 years to 25 years and forgive what has not been paid after 25 years. Of course, stretching out payments leads to larger total payment. $20,000 at 6% for 25 years lowers the monthly payment to $128.86. However that leads to a total payment of $38,658.08 for $20,000 in borrowed money.
The following passage is taken from the Kaddish, the Jewish prayer thought by some to have been in the mind of our Savior when he taught the Lord’s Prayer.

Upon Israel and its rabbis and their students.
And upon all their student’s students,
And upon all those who engage in the Torah,
In this Holy place and in all other places,
May they and you have much peace,
Grace and kindness and mercy and long life,
And plentiful nourishment and salvation,
From before their Father in Heaven and earth,
And say, Amen.

Sunday, June 21, 2009

Today, I think things are going to be OK


I just returned from a brief vacation to the Outer Banks. We stayed three nights in Manteo on Roanoke Island and three nights on the beach in Buxton. I talked to the landlords and merchants about the state of our economy and more importantly the state of their economy. I was somewhat heartened by what I saw and heard. Most folks, while horrified, by the events in Washington, D.C. and New York City have concluded that things were not all that bad on the Outer Banks. Our hostess at the B&B in Manteo felt that occupancy was holding up OK, but rising insurance costs were threatening her business. She was thankful for her husband’s military pension. The owner of an estate and antique jewelry store though business was OK, but he was worried. The general theory is that people who might have travelled to Europe or Hawaii are staying close to home, so things are generally OK on the beaches of North Carolina. I noticed that when I called and asked about three nights on the beach, that ocean view rooms were available and I was offered 20% in discounts. When I was waiting at the check in counter, I heard the desk agent tell a customer that a week’s stay was the minimum during peak season. Some mixed messages here. Prices subject to relatively inelastic demand such as gasoline and food (both at the grocery store in Buxton and the restaurants) are climbing, while prices on items on sale in the knick knack and souvenir shops are significantly discounted and still don’t appear to be moving as well as in years past. Americans seem to be finding a way to live without colored glass dust catchers and pirate flags. A few souvenir shops and restaurants have recently gone out of business or are having going out of business sales, but at most of the stores it looked like foot traffic was OK even if the volume and profits were down a bit.

The work ethic and optimism of the local entrepreneurs encouraged me. They thought they were going to be OK. They were not going to give up. More importantly, I watched families on vacation. Screeching little children were running around the pool and in the surf. Boys were wrestling and hitting each other with pool toys, while their sisters were pretending to be ballerinas. Fathers were playing catch with their offspring, fishing, or just drinking beer. Moms were lying on the poolside chaise lounges catching some rays, or reading romance novels, or networking with other moms. Grandparents were doting on their grandchildren. Young couples were playing huggy bear and kissy face. Teenagers were practicing with members of the opposite sex. Boys with surfboards and sometimes tattoos were trying very hard to be cool. While eating home made ice cream and watching a parrot named Tarkay perform, I heard three teenaged girls discussing the absurdity of covering their bathing suits after leaving the beach. Evidently someone wanted to dress their daughters in burkas.

I heard Rings by Cymarron “Ring, ring, telephone ring.” for the first time in years while sitting on a rocking chair in front of a knick knack shop. A sweet little song, it reminded me of a time long ago. Someday the teenagers trying to make sense of each other I saw in the pool and on the beach will have memories of this time in their life. In not all that many years, they will be sitting on a rocking chair or shopping with their grandchildren and some song I have never heard will bring a tear to their eyes and a smile to their faces.

Life and faith are not unlike the ocean. Always changing but forever the same.

Here is the link to “Rings.” If you are old, listen and remember what it was like to be young. If you are young rejoice in your youth and give thanks to the God who made you.

Friday, June 12, 2009

Hey, Let's Be Careful Out There

Unfortunately, basic financial literacy is not taught in our schools. It should be. If I was a conspiracy theorist, I might believe that our government wants high school graduates who are ignorant, helpless, and willing to give up their freedoms to a totalitarian state. I suspect the truth is more prosaic. I doubt most public school teachers know much more about finances than their students. I also suspect that many teachers, who are either artists or are primarily motivated by compassion and altruism, consider the pursuit of filthy lucre beneath their standards. Until fairly recently, the Church has also largely failed in its responsibility to turn out fully functional members of the Body of Christ in this important area of life. Thankfully, this trend is changing. In an earlier post, I recommended three national ministries devoted to helping believers understand and use money wisely. Today, let me add a fourth, Jordan Goodman at

Around the time I turned 50, I decided I should get serious about learning the art of investment. Please, don’t wait until you are 50. If you are 16 years old, the time to start is today. Before I became serious, I purchased small amounts of two different mutual funds. The first fund I purchased lost a significant portion of its value. However, I noted that the broker received his commission and gained even as I lost money. Eventually, this fund did break even. I sold my shares, but I would have been as well served if I hid the money under my mattress. Later, my CPA, a wonderful Christian woman and friend recommended an “Investment Adviser.” I should have been suspicious. I asked my CPA why she did not involve herself in similar activities. I noted that many other CPAs also sold investment vehicles. She told me that this would create a conflict of interests between her rewards as a saleswoman and her clients’ best interests. The recommended adviser sold me a mutual fund for my ROTH IRA. I later learned that this particular fund was one of the worst in America and it came loaded with 12B-1 fees. Anyone who attempts to sell you anything with 12B-1 fees is not your friend. Needless to say this fund lost money and has never recovered, but again the saleswoman did pretty well. My CPA made a good faith effort to help me, it just didn’t work out.

Beyond the self interest of the commission salesman, we have recently seen some pretty egregious frauds. What Bernie Madoff did with his Ponzi scheme, not only wrecked the lives of individuals who trusted him, but he ruined the trust funds of a number of Jewish charitable institutions, and universities. He even stole from a charity that helps holocaust victims and their families.

I decided, “Why should I pay someone else to lose my money when I could lose it on my own?” I set out to learn how to invest. I was even willing to pay someone to teach me. No such classes or teachers exist. There is a reason for this. Almost all investment advisers are nothing more than commission salesmen. Some of them sell an active stock management service, some mutual funds, and some sell annuities and similar insurance products. Be certain that when you talk to one of these people they are not interested in teaching you anything. The Chinese have a saying, “Give a man a fish and feed him for a day. Teach a man to fish and feed him for a lifetime.” These people want to continue to sell you fish for the rest of your life. They, under no circumstances, want you to learn how to fish for yourself. Also, you can be pretty certain that these characters will look at you and see a need that can be fulfilled by one of their products, probably the one that pays the largest commission.

Most brokers and financial advisers are not considered “fiduciaries” under current law. What this means is they are under no legal obligation to act in your best interests. They can put their interests or the interests of their firm ahead of your interests. They can not legally sell an inappropriate product to a client, but they can feather their nest at your expense. Consider, after the death of my father-in-law, my mother-in-law sought a financial adviser to help order her affairs. This gentleman is a member of her church. He is an annuity salesman. Needless to say, he counseled my mother-in-law to cash out a few small annuities her husband purchased through his job and liquidate some other investments in favor of an annuity offered by his company. Unfortunately, my mother-in-law took his advice. He did not do anything illegal or even unethical. He did, however, enjoy an enormous pay day at the expense of a confused frightened old woman. In essence, he sold her something that allows her the option of putting her money in a mutual fund or in Treasury Bills. Needless to say the money is in Treasury Bills. My mother in law could have accomplished the same end for $59 or less at a discount broker.

Failing to find a professional willing to help me, I did what most of us would do. I talked with a coworker who managed, over the course of several years, to earn more on the market than he did as a GS-14. Of course that was before the dotcom bust. During that debacle he managed to lose more than he had gained. He knew I was a hopelessly old school, suspicious, and conservative soul and so steered me towards Richard C. Young’s Intelligence Report, a monthly subscription newsletter. I have subscribed on and off over the following years. When he offers subscriptions at a significant discount, I subscribe. Richard Young is pretty good but he has made some colossal mistakes. However, if you were to follow his basic advice, 50% in bonds, cash, and foreign currency, 45% in 32 different stocks, and 5% in gold, a few colossal mistakes would not trash your entire portfolio. I find his stock tips interesting, but what I have found of more value are the explanations of how he reached his conclusions. Using this information, I have applied the same techniques to free investment reports on individual stocks supplied to account holders on my broker’s web site. In a few instances, I have used these techniques to buy a stock before it was recommended by Richard Young. This makes me feel like I might be learning something. My coworker also recommended the American Association of Individual Investors. Although their magazine is very inexpensive, I did not find it to be of very much value. They do, however, do a good job of reviewing investment books by various authors. A word about reading books by various authors; much of the information in these books is time sensitive. An individual company may be one of the best managed organizations in the world one year and a train wreck the next year. Just ask IBM. However, the basic techniques of analyzing a company’s potential value are relatively timeless. Finally, I have also read exactly one book on technical analysis. While these techniques really work, they are a little too rich for my blood. Still, I try to view charts from a technical perspective, even if I am temperamentally unsuited for executing buy or sell orders on the basis of the statistical analysis of a wiggling line.

Of course, I have learned there are retail mutual funds that are well managed and not at all just a ploy to separate a fool from his money. I also know there are hedge fund managers, investment advisers, and even insurance salesmen who fear God and walk the narrow way. Separating the wheat from the chaff is a tricky business. This is complicated by the fact that many of the best advisers limit their clientele to the very wealthy. Not many of us have a spare million dollars that we will not need over the course of the next few years. The article link below will provide you with some questions to ask anyone who wants to help you manage your money. It also indicates that our latest financial crash will likely lead to reforms and tighter regulation of the retail investment business.

I feel as though I have learned enough to tell my story but not enough to be able to teach the specifics of what I am learning to others. I encourage you to do your own reading, studying, and exploring. Remember, learn to listen to everyone but to hear from God. Then, every day write down something, however short, in your little notebook and pray that the God who owns the silver, the gold, and the cattle on a thousand hills will give you wisdom, as he has promised in his Word.

During the early 1980s my wife and I really enjoyed watching Hill Street Blues. The show possessed skillfully crafted plot lines and well drawn, believable characters. It also seemed to have just the right balance of yacking and whacking necessary to entertain both of us. Near the beginning of every show, Sergeant Phil Esterhaus would hold a shift meeting with all the uniform and plain clothes officers. He would review all the recent crimes that occurred in their precinct, suspects still on the loose, and dangerous locations that needed extra patrol. As he dismissed his troops he would always add “Hey, let’s be careful out there.

I can’t think of a better way to end this essay.

Matthew 10

[16] Behold, I send you forth as sheep in the midst of wolves: be ye therefore wise as serpents, and harmless as doves.

Some the information in this blog entry comes from an excellent article written by Jennifer Levitz published by The Wall Street Journal (linked below). Most of the information comes from the school of hard knocks.

Sunday, June 7, 2009

Simple Things are Hard (Part II)

I don’t like the line of reasoning I started to develop in the last post. I don’t like it because of its general applicability. Really, although I can not retire, I am in a better financial situation than most of my peers. I bow my head and thank God for his generosity in this matter. However, those of you who know me could point out that:

Food In = Fat Stored + Exercise

Could I be in denial about the connection between the country fried steak smothered in sausage gravy I plan to eat at the Cracker Barrel restaurant this morning and the shape of my body? Could the shape of my body have something to do with the condition of my heart? Although not always so, often when we are in denial, we are in denial about sin. In this case one of the seven deadly sins, gluttony. In the case of financial problems, if there is a root in sin, it would likely be found in avarice or envy, again two of the seven deadly sins. Avarice in the hearts of bankers and the managers of insurance giants like AIG has severely damaged the economy of the entire world. Envy in the heart of the American consumer who coveted his neighbor’s house, his neighbor’s SUV, his neighbor’s plasma television, and all things that pertaineth unto his neighbor, led him step by sinful step into bankruptcy. Again, let me state that sin is not always the root problem. I feel nothing but compassion for that poor man who is going to lose his house because he tried to do right by his employees while suffering from cancer.

It occurred to me that there are groups of people who have considerable experience dealing with denial and sin. Twelve step programs have significant success dealing with substance abuse and, yes, even debt. Thanks to Wikipedia for the following list.
1. We admitted we were powerless over alcohol—that our lives had become unmanageable.
2. Came to believe that a Power greater than ourselves could restore us to sanity.
3. Made a decision to turn our will and our lives over to the care of God as we understood Him.
4. Made a searching and fearless moral inventory of ourselves.
5. Admitted to God, to ourselves, and to another human being the exact nature of our wrongs.
6. Were entirely ready to have God remove all these defects of character.
7. Humbly asked Him to remove our shortcomings.
8. Made a list of all persons we had harmed, and became willing to make amends to them all.
9. Made direct amends to such people wherever possible, except when to do so would injure them or others.
10. Continued to take personal inventory and when we were wrong promptly admitted it.
11. Sought through prayer and meditation to improve our conscious contact with God as we understood Him, praying only for knowledge of His Will for us and the power to carry that out.
12. Having had a spiritual awakening as the result of these steps, we tried to carry this message to alcoholics, and to practice these principles in all our affairs.
While the above list is specific to Alcoholics Anonymous and contains some details I would change such as, “God as we understand him,” and “powerless,” I think the principles are sound and useful to consider and apply to problem areas in our own lives.

I know I need a savior. I don't even meet my own standards, nor am I convinced by my own excuses. I believe that God's standards are considerably higher than my standards. I need grace. I want God to be a part of my life. I want his advice and counsel in the important decisions I make in my life. In order to clear away the fog of denial and allow God a free hand in my problem areas, I certainly need to continuously make a moral inventory. This is not always easy. I would rather pretend that I just don’t know why things happen or blame them on the sinfulness of another rather than confront my own shortcomings or sinfulness.

I have a couple of friends who are sufficiently close and trustworthy to act as my “father confessor.” Getting honest with my self, my God, and my authentic brothers has always been a part of Christianity. Asking for forgiveness, confessing one’s selfishness and sinfulness, and trying to make things right is difficult but of enormous value. If you don’t believe me, just asked anyone who has been married for more than a year about the importance of confession, repentance, and forgiveness.

Finally, what good is any of this if it ends with us? Is not our purpose in this valley of tears to care for, counsel, support, and encourage those whom God places in our path? Are we not all tasked to become wise and to share that wisdom with others? As I realize my purpose, my life will become more meaningful, and I will find healing in my mind, body, soul, and spirit.


Matthew 20

[30] And, behold, two blind men sitting by the way side, when they heard that Jesus passed by, cried out, saying, Have mercy on us, O Lord, thou Son of David.
[31] And the multitude rebuked them, because they should hold their peace: but they cried the more, saying, Have mercy on us, O Lord, thou Son of David.
[32] And Jesus stood still, and called them, and said, What will ye that I shall do unto you?
[33] They say unto him, Lord, that our eyes may be opened.
[34] So Jesus had compassion on them, and touched their eyes: and immediately their eyes received sight, and they followed him.

Friday, June 5, 2009

Important Things are Simple, Simple Things are Hard

I am always looking for good ideas for this blog, surfing the internet, reading financial articles, watching video exposes of the credit industry, and reading bloggers who write rants not unlike your humble servant. I watched a video that must have been some kind of cable TV special. It wasn’t very good. Two couples and two individuals were going to receive financial makeovers from a panel of experts. This show introduced the victims, gave the experts an opportunity to yell at them a bit, and gave the audience a brief introduction (as in four lines on a Power Point slide) letting them know where this was headed over the course of the next three months. The people needing the makeovers had very different stories, one couple were very successful entrepreneurial high rollers, who lived large, $400 bottles of wine, and limousine rides to Las Vegas casinos "Laissez Les Bon Temps Roulez," then the economy and their businesses crashed. One small businessman ruined his credit by protecting his employees while he recovered from cancer. This story just broke my heart. If I had been in that audience I believe I would have started a collection for the poor guy.

It dawned on me that all four of these very different stories had one thing in common, denial. All of these people got themselves into very serious trouble one step at a time. When the experts pointed out what was obvious to the audience, the victims continued to deny the reality of their situation. It wasn’t really a guilty defensive of their behavior, it was denial.

If we are unable to confront the simple facts of our condition, it is a certainty things will not get any better by themselves. Can you, can I, be comfortable with the reality of a situation? Start right now. Look at the following equation.

Money In = Money Stored + Money Out

Pretty simple isn’t it? Most of our money in will be in the form of our take home salary, but there are other sources, interest, dividends, capital gains, gifts, and pensions. Money stored includes both “real money” in bank accounts, credit unions, and money market funds and “imaginary money” that needs to be converted into “real money” before it can be spent on a late model, low mileage BMW 4Z. Imaginary money would include the equity in your home, stocks, bonds, gold doubloons, and footballs signed by John Riggins. Money out is the sum of the real money you spend every month and the imaginary money that disappeared in the stock market crash. Watch this equation with unblinking eyes. As long as money in exceeds money out, there is nothing to worry about, money stored will increase. If money out, for whatever reason, exceeds money in, it is important to examine that fact with unblinking eyes.

It is at this point that each of us must take responsibility for our situation whether it was caused by our own sinful behavior, bad judgment, or events that are wholly beyond our control. If I close my eyes, encourage my wife to sprinkle pixie dust around the room, and wish very, very hard that the stock market will rebound; I will not be able to retire any sooner. If I continue to draw a salary, save, invest, and learn more about money, the day may come when I will be free.

Living in delusion, pretending that something did not happen, pretending we have no responsibility to improve the situation, telling ourselves, “The devil made me do it,” or any attempt to live in some kind of cognitive dissonance is a recipe for disaster.

I hope to continue this line of thought in future posts.

I was looking for a good scripture about staying awake and alert. This one comes to mind.

Matthew 25

[1] Then shall the kingdom of heaven be likened unto ten virgins, which took their lamps, and went forth to meet the bridegroom.
[2] And five of them were wise, and five were foolish.
[3] They that were foolish took their lamps, and took no oil with them:
[4] But the wise took oil in their vessels with their lamps.
[5] While the bridegroom tarried, they all slumbered and slept.
[6] And at midnight there was a cry made, Behold, the bridegroom cometh; go ye out to meet him.
[7] Then all those virgins arose, and trimmed their lamps.
[8] And the foolish said unto the wise, Give us of your oil; for our lamps are gone out.
[9] But the wise answered, saying, Not so; lest there be not enough for us and you: but go ye rather to them that sell, and buy for yourselves.
[10] And while they went to buy, the bridegroom came; and they that were ready went in with him to the marriage: and the door was shut.
[11] Afterward came also the other virgins, saying, Lord, Lord, open to us.
[12] But he answered and said, Verily I say unto you, I know you not.
[13] Watch therefore, for ye know neither the day nor the hour wherein the Son of man cometh.