Really Simple Financial Advice

I heard Dave Ramsey give a caller some really simple advice on his show this morning. He said, "Don't buy stuff you can't afford." It reminded me of this video.

Security Freeze on Credit Reporting

After Todd's post on credit reporting agencies security freezes, I'm consindering putting the freeze on.

How We Saved on Health Insurance

At budget time we always look for ways to steward our resources better. Last year at this time our insurance agent told us that our health insurance premiums were going to be increasing 19%. WOW! That's a lot of money!

Bob, who is responsible for human resources, wasn't satisfied with this outlook. So, he began to look for possible alternatives that would give us the same level of care but at a lower cost to the church without raising the costs for our staff. Pretty lofty goals I know.

He found an alternative called a Health Savings Account (HSA) or High Deductible Health Plan (HDHP). This insurance is designed to shift some of the cost and responsibility for health care to the individual employee. It shifts the cost by lowering premiums for employers while at the same time raising deductibles for emloyees (i.e. $2,000 for individuals and $4,000 for families).

To compensate for the higher deductibles, employees are allowed to put pre-tax dollars into a Health Savings Account that they can use to pay uncovered health costs up to the deductible amount. Employers are also allowed to make contributions to these accounts. These accounts are owned by the employee and money used for health care costs is non-taxable. Money stays in the account year after year. Once the deductible amount is met, allowable health care costs are covered at 100%.

What we discovered was that we could switch to the HSA plan, keep the same provider network, make contributions equal to 75% of the staff member deductible to each participating staff member's HSA, and still save money over the 19% increase on our old health plan.

So, by contributing 75% of the deductible to the staff member's HSA, we met all of our goals of lowering costs to the church, not raising costs for the employee, and maintaining the level of care. We switched to the plan early in 2008.

For more information about HSAs, I recommend that you contact your insurance provider.

Warren Buffett is Buying American Stock

In this op-ed Warren Buffett says he's buying American stocks for his own personal portfolio.

Warren's words of wisdom: "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful." I love that.

Although there is a lot of fear and uncertainty in the market right now and no one is real sure how long it will be in this funk, history shows that its times like these that are the best opportunity for investing for the future. Buy low, sell high.

Like Warren says in the article, these are investments for the future (maybe 5 to 10 years out).

Don't use cash you need immediately or can't afford to lose like your emergency fund or mortgage payment. Remember, investing has risks of loss.

Instead of trying to pick individual stocks, it might be better to buy shares of a good mutual fund slowly and steadily over time.

Is Your Accounting Team Disconnected?

I recently attended Tim's breakout at ICC called "Creating a Staff Culture that Rocks". In his session, the question was asked (Paraphrase) Does your accounting team feel disconnected or alienated from the rest of the staff?

It seemed like an odd question to me until I heard the context. At this church, the accounting staff was hired from the outside. They didn't attend the church.

I've heard of other churches who hire their accounting staff from the outside or encourage their accounting staff not to attend the church. I admit that I don't totally understand the rationale behind this. If they don't have a stake in the ministry, What's their motivation to do their best work? How can they pull hard for the mission, vision, and values of the church if they aren't involved? Isn't it just a job to them? What motivates them to keep confidential information confidential? What keeps them from circumventing internal controls for personal gain?


I love that we hire a great majority of our staff, including our accounting staff, from the inside here at GCC. I love the way our entire staff is treated like a family. We all attend church here. We all tithe here. We're all invited to all staff meetings like our weekly all staff meeting called SWAT (Staff Working as Team). We're all asked to serve in the church. We're all motivated to pull together for our mission vision and values. We're all informed about what's going on and what's coming up. No one is disconnected or alienated from the rest of the staff team.


What's the benefit of this connection?


As an accounting staff, we love Jesus and we love GCC. We do our best to be effective, efficient, timely, and accurate. We're upset when things don't reconcile to the penny. We do our absolute best to keep confidential information confidential. We do our best to adhere to our system of internal control and prevent fraud or abuse. Its more than just a job for us. We're "helping people take their next step toward Christ...together".


I think its especially important for the accounting staff to be part of the church and staff family. After all, the financial resources of the church are entrusted to their care. They need to care about what's entrusted to them.

FASB Chairman Lessons from Credit Crisis

The Financial Accounting Standards Board Chairman Bob Herz offers Lessons Learned, Relearned, and learned again from the credit crisis in this article. It's long and technical, but an interesting read. He addresses some of the accounting and reporting issues involved. He has an interesting take on "Mark to Market" or "fair value" accounting.


Quote that caught my attention:

"As I said, at the heart of this chain of events was the explosion of novel mortgages and other loans. While lax and fraudulent lending practices were seemingly the prime culprit, there are two sides in a lending transaction and many consumers eagerly snatched-up "too good to be true" loans, without understanding the consequences. At its height, the frenzy was reminiscent of the investment craze in dot.com stocks. In both cases, misplaced investor enthusiasm was, in my view, due at least in part to widespread financial illeteracy in our country, along with a belief that somehow this time the situation was different and prices would rise forever."



Takeaways for me:

• Average American Financial illiteracy is a major problem. That's why I love what Dave is doing and what GCC is doing through Financial Peace University
• Just because the sweetheart loans were offered didn't mean they had to be accepted
• If it sounds too good to be true, it probably is
• "Perverse incentives often lead to perverse outcomes"
• Remember the risks - In our financial markets potential gains come with potential losses
• You can't assume investment prices will rise forever. Investment prices go up and down.
• Individuals are responsible for the transactions they enter - "No matter how promising the markets may currently seem, even the most sophisticated investor needs to consider all opportunities from a perspective of "caveat emptor" or "buyer beware""

"Accounting has consequences-but can we handle the truth? Accounting has consequences, its meant to, otherwise why do it? External financial reporting is not merely a compliance exercise, nor is it an opportunity for spin. Rather the primary intent is to inform investors and the capital markets [readers/users]. What you measure matters! And, accountability requires honest accounting and informative disclosure, even when the news is bad."