Tag: money

  • Life After Debt

    Americans borrowed less for an 11th consecutive month in December, paying off credit cards while increasing borrowing for cars and other products. link

    This is great news. For 11 months in 2009 the American people not only covered their bills, but they paid down debt. The irony of that is clear. 2009 was a horrible year financially for a lot of people.

    This next line in the USA Today article clears up why the stock market tumbled on this news.

    The mixed picture raises hopes that Americans may soon return to spending, a necessary condition for economic recovery. link

    Our national economy, jobs in America, and some would tell you the future our our nation itself… depends on you and I going deeper and deeper into debt to buy stuff we don’t need with money we don’t have. Cute, eh?

    Maybe we should all collectively just hold on to our money for another 11 months and enjoy this recession a little more so we can all get out of debt?

    Think about it like this. In the worst economic year in decades and we collectively covered our monthly bills and paid down our debts for 11 straight months. This is great news! And it also reveals that debt is a head issue and not always a money issue.

    I know for our family 2009 was a hard year. We had to wrestle through stuff we didn’t like to wrestle through. But the flip side is that we are way better off financially for it. Less debt, more savings, and an attitude of frugality we hope lasts a lifetime.

  • Things are looking up

    You want this chart to keep going up

    It may not look like it yet where you live, but there are signs of life in America that things are looking better.

    As the chart above shows- stocks have been rebounding for basically 12 months.

    You want this chart to start going down

    The unemployment rate, while still horribly high, has begun to turn… following the comeback of Wall Street.

    As church folk, we know that these two charts are closely tied to people’s ability/willingness to give. When people feel good about their money [and 401k, and for retirees, their investments] than they become more generous. Once unemployment starts to turn, then happy times should come in the offering plate… and begin trickling into staff dollars and budgets.

    The upside of 2009’s double crotch kick

    Let me explain what I mean by the double crotch kick.

    First, going into 2008-2009 pretty much every church in the country was re-evaluating and re-thinking how they do ministry. This was a crotch kick as we all wrestled through the realities that our ministries probably need to change significantly to adapt to culture faster and reach more people.

    Second, 2008-2009 were rough years financially. While not in every single church, most churches saw a dip in contributions. This was a swift kick to the groin because you either had to cut staff or cut programming (or sell assets at the bottom of the market) to balance the budget.

    The upside, just like in real life, is that getting kicked in the crotch twice in a row causes most people to wise up and get ready to fight.

    As I talk to ministry people all over, almost universally they have come through 2008-2009 with a new sense of calling and determination.

    While the signs of life haven’t trickled into every corner of the church just yet. It is awesome to report that there are signs (more than the two economic ones I’ve shown here) that things are truly looking up.

    May we take to heart lessons learned in the hard times. And may we never again need to get kicked in the crotch twice to be awoken from our slumber.

  • A visual guide to giving

    CharityWhoCares-3

    HT to Mint

  • The money crunch

    MoneyCrunchWe’re having a crunch month. It seems like during every calendar year there is one time when the vacuum cleaner has been attached to our accounts and we suddenly find ourselves going from “feeling comfortable” to “How much do they give for blood these days?” That’s about how things are for our family right now.

    • Semi-annual and annual bills just got paid.
    • All the regular bills paid, but were higher than budgeted.
    • Bought a car. (paid cash, huge win!)
    • Silly kids are growing and needed clothes!
    • Travel expenses, haven’t been reimbursed yet.

    Even as a family who lives rather simply we come on tough financial times from time-to-time. In this case, we got through it because we had budgeted for it to happen and had the cash on hand to make it through. We’ve had times in the past where we didn’t plan so well and literally had to depend on the kindness of our church to eat. You live a little and you get a little wiser, I guess.

    In some ways I wish we felt this crunch more often. These times in the calendar are refreshing! I rest in our routine. I rest in our budget. I rest in simple things. I rest knowing that when we make things even simpler it is better for our family. I rest knowing that we’re not touching our long-term savings to ride out a short-term crisis. I like wincing when we give to our church. I like scrutinizing what we spend. Actually, I kind of like even noticing what is being spent because all-too-often I get into habits where I don’t see how much we are spending.

    Of course, I’m really thankful because I know three things are true. First, I know that things will go back up from here. We have an annual low point, this is it, and we can budget ourselves out of it again. Second, I know who provides for me. God sustains us no matter what. Kristen and I will never forget the mystery bags of vegetables we received in Oroville. God is our provider. Third, while we have less cash than we’d like we also have less debt than we had a year ago.

  • 3 Musketeers of Church Staff

    three-musketeersThere’s a lot of smack talk about church staffing these days. Senior pastors rightfully elevate the role of various staff members and do their best to put all staff on the same “level” as themselves in people’s eyes. There are even a few places where church leaders will acknowledge that the childrens ministry professional, youth worker, and music minister are equally valuable. Within the non-denomination world this is emerging as a style of government where the paid staff are the elders.

    All for one and one for all: Brilliant. Biblical. Awesome.

    I agree with the premise. As a person sitting in the pews my family is ministered by all staff pretty much equally. Certainly, there is headship and we acknowledge that one of the staff is “in charge.” But that is really just a role, isn’t it? It’s not that being the leader is necessarily harder or more important. It’s a different role, equally important and dependent to the others. And in many cases each person on staff has an equal level of education while each chose a slightly different career path. So the education argument seems to prove that most staff is equal. Another argument is that the preacher should  get more money than the rest of the staff. Really? As if the stuff taught to the kids and teens isn’t as important as what’s preached? This merely shows the ignorance in the process of how churches work on a week-to-week basis. As someone who has done a lot of roles on church staff I can tell you that there is nothing more or less difficult about preparing a sermon. In fact, its a lot easier than preparing curriculum for 5-6 age levels. So, again, the argument that somehow the person preaching is more valuable to the church organization falls apart. The day-to-day reality is that all of the church staffing roles are equally important.

    Don’t believe me? Watch your senior pastors face when you tell him the chidlrens worker or worship leader are AWOL on a Sunday morning.

    The real question is… when will that be reflected on pay day?

    If church staff are equally valuable to the organization why is there inequality when it comes to taking care of staff? Why does the senior pastor make 2-3 times what the childrens worker makes? Why does that person get perks not available to the rest? Why does that person get more time off? Sabbatical? Conference budget? Book budget? Car allowance? Special tax perks. It may shock you to know that most associate level staff makes less than half what the senior pastor makes… before the perks kick in.

    This gets really strange when staff have kids the same age. The staff all have equally important roles but can’t afford to live in the same neighborhood. One family sends their kids to private school, goes on lavish vacations, and never have to worry about their kids getting new clothes. The rest of the staff live paycheck to paycheck. They watch Extreme Makeover: Home Edition and wonder when someone will turn in their house?

    I’d like to ask you to consider a new way. What if every pastoral team member made the exact same amount of money? (Perks and all.) What if they weren’t just equal in importance, recognized 1-2 times per year, but were recognized in the one way that would keep those associate level people in the game for life?

    Want to attract talent? Pay them. Want to keep staff? Pay them. Want to change a community by having talented people in place for a generation? Pay them.

    All for one and one for all. Brilliant. Biblical. Awesome.

  • The Internet is Not Flat

    full-20earth2Every time I go to a networking event with social media types I hear the hopeful phrase, “The World is Flat.“ The premise with the world is flat is that in the internet age the start-up entrepreneur has an equal shot at making it against the powerhouse media conglomerates or the big company on top of any given industry. The phrase the world is flat is like fly paper drawing the bugs to the trap. Anyone who wants to get-rich-quick loves that phrase.

    While it is true that start-ups can take on and defeat the big dogs today, (this has always been true) it isn’t because the world is flat.

    Start-ups take out big dogs because of these two factors:

    1. The winner in a space is always smarter. I’ve met up with loads of developers, entrepreneurs, and wide-eyed bloggers hoping to make a million on their idea. I OFTEN am left with the impression that they are investing in a dumb idea or have ruined their ability to take out their competitor because of a horrible business plan or having sold out their long-term hopes for short-term VC dollars. Recently, I’ve met start-up owners who are extraordinarily smart but lack the funding to make their idea happen. And I’ve met start-up owners who are dumb, but have well-funded projects. Bing.com thinks they can beat Google if they outspend them. It’s a stupid strategy and will be a billion dollar failure. Mint.com has a great business model and took out Microsoft Money by making money on the back-end (advertising) and giving the product away for free to customers. (Last week Intuit bought Mint.com. A 28-year old entrepreneur who started the thing in his apartment just sold his baby for $170 million to the company he was about to take out. Delicious irony.)

    2. The winner always contains costs. I am continually shocked when I hear the type of money people invest in developing technology. Half a million on development, 10 million on marketing. Eighty thousand to add this piece. On and on. These ideas are destined for failure before they have a single customer. Stupid. Stupid. Stupid. Very few companies can invest a million and make a billion. But loads can invest a million and lose it all with only the manager getting fired.

    All of the internet is boiled down to a single formula and yet even the smartest companies manage to screw it up. Every single internet entrepreneur talks about ROI, but only a couple seem to truly be driven by minimizing the I. Each space has a finite amount of return. The false assumption is that everything on the internet can be a gold mine of infinite return– it’s a stupid assumption. Each niche only has a certain amount of customers/revenue. Therefore, the only way to maximize return is to minimize the I. Investing $500,000 in a technology that may return $2,000,000 in revenue over 4 years is almost a 0% return after expenses. At best it’s a 2:1 ratio. (You could do better at the horse track.) But a start-up investing $5,000 in that same $2m space has a ROI ratio potential of 400:1. I’ll take that guy!

    The internet world is not flat. The world is flat for smart people and people who are willing to work for free to make their dreams happen. The world is as dangerous as ever for everyone else.

    The internet world is full of fast talkers. That’s another thing I’ve learned at networking events. The same adage from the high school locker room is true among internet types, “He who talks the biggest game probably scores the least.” As with any new gold rush industry, for every good business person out there there are 10 shysters.

  • Funding the Dream

    vision-dream

    Like any person who comes up with a lot of ideas… I’m used to getting shot down. The pill of reality I swallow every day is that only about 1 in 20 of my ideas are worth seeing to fruition. Thankfully, God has put people with the gift of discernment in my path so I don’t go insane.

    Knowing that– I know this phrase to be true: A vision unfunded is merely a dream.

    A lot of people in my life are learning that their vision is merely a dream. Tough economic times mean that their ministry, their business, their job, or even their early retirement dreams are now unfunded. Grandiose plans usurped by a new need for freelance or part-time work. The people they trusted/hoped/prayed to fund their vision disappointed them.

    Kristen and I are chosing which visions to fund and its hard! We have to look inside ourselves and ask which are dreams (the big house, living abroad) and which are visions worth funding. (our local church, building short/long term savings) Hard choices which reveal what’s really important. As you think of that with a wider lens of millions of people doing the same thing you see why the people in my life are struggling when families like ours our choosing one vision over another. It’s painful to witness.

    What does this all mean? I don’t know for sure. But I do know that even when the funding isn’t there vision, dreams, and big ideas are still worth having. The world won’t change without visionaries and dreamers. Even unfunded ones.

  • 3 Positive Effects of Recession on the Church

    3-positive-of-recession

    Nearly every day I encounter someone who tells me their churches budget was cut, people at their church are about to lose their jobs, or otherwise their church is encountering hard financial times.

    That’s not purely a bad thing. Here are three positive things that a lack of money bring to a church.

    1. A gut check for the staff. If you’ve worked in a church you know that there are people who are on staff because they are absolutely convinced God wants them there and there are people who are there because its a job. When budgets get slashed, programs get cut, and necessary and unnecessary stuff gets trimmed to cut costs… each staff member has to examine herself and ask, “Why am I here? Do I really want to be here?” Some will double down their efforts and some will check out. Both are positive for the church going forward.

    2. A gut church for the parishoners. Along the same lines the people who attend the church have to face the same choice. When their beloved program is dismantled because of a lack of funding they have to ask themselves, “Am I here for that program, or am I here because this is where God wants me?” When they see a staff member lose benefits or their job or even their house, they re-examine their financial priorites automatically. “Am I being faithful to God with my money? Am I being a good steward of what I earn?” This is a positive outcome!

    3. A gut check for the dreamers. I can’t help but think of the mid-2000’s boom in church growth. With the last coughs of the Field of Dreams model [If you build it, they will come… and give!] of church growth, congregations built massive additions, added satellite campuses, and even reached out to buy up struggling churches. For the most part this was done during good times and using credit. Now those churches see double digit decreases in giving and are stuck in a catch-22 scenario. Admit they were wrong to buy on credit and sell property or trim programs and staff to try to ride out the dip. This is a positive outcome for the church, even if it means they go bankrupt. The healthy and faithful congregations will make it. The ones who depended on their own talents will fail.

    A bonus positive: A side effect of the extended recession is that I am seeing a massive wave of volunteerism in the church. As churches trim their budgets and people in the pews realize that they need to step up, the church as a whole is seeing an increase in volunteers in key church leadership positions.

  • When the lowest common denominator matters

    number-oneI often live in a lofty world of ideals, philosophy, whimsy, and sweeping generalizations. Phrases like “vision drives decision” and “you need to find a place where your dreams, skills, and income converge” all sound well and good. People like those phrases. They share them on Facebook and Twitter. They quote them in blogs posts. They fit nicely into talk outlines. They send me emails letting me know how meaningful that was in their situation. But there are definitely times when the lowest common denominator matters.

    – When your ministry is out of money…

    – When the boss is deciding the budget…

    – When no one shows up…

    – When moral is at an all-time low…

    – When you’ve just been laid off…

    – When your start-up is almost bankrupt…

    – When your child gets sick…

    – When war breaks out in your backyard…

    What’s interesting about a recession, about crisis, about personal turmoil– is that you learn that at the end of the day that the lowest common denominator is more important than ideals, vision, and philosophy. You could have a great vision for your church. But, without cash that vision is just a dream, that philosophy is just an academic exercise, and your ideals are just snotty.

    A person swears up and down that they are a pacifist. But when war rages in their neighborhood and takes the life of a loved one, they will fight. People will say that numbers don’t matter in youth ministry. But when no one comes to their retreat, the boss is looking to cut their budget, and the board is looking to fire them… they will quote numbers like a Baptist after and altar call.

    A person will say, “I’d never work do that kind of work.” But, if you get hungry enough you will.

    When crisis hits people get tribal. They protect what is most core to them. And they lash out to defend. They make decisions that seem out of character. That’s when lowest common denominator becomes all that really matters.

  • Getting Started in Investing, part 3

    money_stuff3

    “Hey honey, are you spending more money at the grocery store or something?“ This was something I found myself saying to Kristen over and over again in our tenure in youth ministry. With a growing family it just seemed like every month we made a little less money. We had a budget. We did our best to control spending. But before we knew it our expenses exceeded our monthly income and we had too much month and not enough paycheck. At first it was $100 here or there. But by the end we found ourselves several hundred dollars per month short each month. This slowly depleted our savings and towards the end, with no savings, we had little choice but to use a credit card to make ends meet.

    In Part 2 of this series we talked about dealing with the monster of debt & savings. But this is how we acquired this debt in the first place! It wasn’t that we didn’t control our spending and lived a lavish lifestyle worthy of acquiring debt. It was that the price of groceries, gas, utilities, and taxes that shot up by 3-4% per year and our income remained stagnant. As years go by this compounded and we actually made less than we thought.

    COLA stands for “Cost of living adjustment.” I need to spell it out because so few of us in ministry never experience it. Some churches try to call it a raise, it is not. Each year actuarialists at the federal government determine cost factors and determine what increase in income you would require in order to maintain the same standard of living. In other words… not getting COLA means that each year you take a pay cut! The assumption by utilities and tax boards is that you will receive this increase, which is why all of your expenses “magically” go up by about that amount each year. It’s not optional or imaginary, it happens.

    Here’s an example of the last 5 years and what a COLA should look like for a typical youth workers income. For someone hired in 2004 with a base salary of $35,000, this is what the last 5 year’s would look like.

    Year COLA Adjusted Income
    		 Non-Cola Adjusted Income
    2005 (4.1%) $36,435 $35,000
    2006 (3.3%) $37,637 $35,000
    2007 (2.3%) $38,503 $35,000
    2008 (5.8%) $40,736 $35,000
    2009 (6.2% est) $43,262 $35,000

    And this isn’t even considered a raise in salary! This is just to keep up with inflation over the last 5 years. Looking at it from a monthly budget perspective, the difference between a COLA adjusted and non-COLA adjusted income is $636 per month. So if this employee feels like there is a lot less paycheck to go around… it is because there is! They are being faithful to a ministry that is paying them a decreasing amount every month.

    Just to rub some salt in the wound, here is what it would look like if over that same period you averaged a modest 3% raise with your COLA.

    Year COLA Adjusted 3% Annual Raise
    2005 (4.1%) $36,435 $37,485
    2006 (3.3%) $37,637 $39,487
    2007 (2.3%) $38,503 $41,580
    2008 (5.8%) $40,736 $45,229
    2009 (6.2% est) $43,262 $49,391

    Yes, that would mean that this same employee would be taking home $1200 more per month than the employee who did not receive a raise or COLA just 5 years into a tenure. How much more comfortable would you be with $1200 more in your pocket per month? This isn’t excessive, this is just what your peers experience in the business and government sector. This is what your neighbors receive. This is what it is expected you receive.

    In all honesty, this is the difference between a sustainable income that will keep you in ministry for decades and an income that will bury you in financial burden and burn you out in five years. If you want to be in ministry for a long time, you need to get at least a COLA annually or you are accepting a pay cut.

    But my church is in financial trouble, what do I do?

    Listen, I know that no one goes into ministry to get rich. Having worked for years in Michigan I know what its like to work at a church in recession. (Michigan’s recession started in 2005, now it is deep in a depressionary state.) But while the short-term makes sense to take a cut here or there or not accept a COLA or raise… you are really not helping the church. In fact, what you are doing is contributing to the problem by having a staff stressed out with money worries!

    So, what do you do? Some negotiation options. Provide some reasonable alternatives to cutting your pay. (Remember, no COLA is a pay cut!)

    – Tell them no.

    – Tell them to cut somewhere else.

    If they have no choice but to suspend your COLA or even cut your pay here are some options that I would suggest.

    1. Get the leaders to spell out the plan to you. “With decreases in monthly giving this is where we are at, this is what we are doing to get things in line.” Find out how your COLA fits into their plan. If they don’t have a plan, ask them to formulate one so your family doesn’t suffer from their lack of foresight. Be a leader to those leaders.

    2. Have the leaders acknowledge verbally that they are asking you to accept a pay cut. Get them to be honest, is this a result of poor performance or is this the result of poor planning, unexpected expenses, unexpected decreased giving, etc. Often times church leaders are so passive-aggressive that they will suspend stuff like COLA or increases because they feel you are under-performing but won’t actually tell you this to your face. If that’s not the case… get them to spell that out to you. Because accepting a pay DECREASE feels a lot like punishment.

    3. If COLA simply isn’t possible, tell them you will accept a suspension of COLA in lew of receiving it now. Ask them to sign a promisary note for their plan. If you didn’t get a 2008 COLA and won’t get a 2009 COLA, that’s a 13% DECREASE in income to you. If they can’t provide you with a 2010 COLA, will they promise you $10,000 in make-up and 3 months notice for you to find a new ministry?

    4. Negotiate for a lesser COLA. The 2009 increase is likely to be over 6%! If they can’t swing it, meet them half way at 3%.

    5. Accept the suspension of COLA as a loan. Again, ask them to enter into a promisary note with you. If they don’t have the increase now allow them the option of paying it back to you over time.

    6. Negotiate for time off to earn income somewhere else. In lew of a COLA for 2008-2009, ask for 4 weeks of paid time off where you can supliment that income by working at a camp, another ministry, or even a part-time job. Would they allow you to work 8 hours less per week so you could get a job at Starbucks?

    Some of these may seem extreme. But remember the goal… your goal is to do ministry for a LONG time. And a big part of being in ministry for the long haul is not constantly being stressed out about money. There are times when you should be meek and humble. But when it comes to feeding your family you should be aggressive to protect them. The reality is that during your career you will earn much less than your peers in for-profit business. Demanding that your ministry pay an annual COLA is hardly robbing a ministry. In fact, it is investing in their most valuable resources… their staff.