Tag: money

  • Getting Started in Investing, part two

    money_stuff2

    Here’s a scenario for you. You are serving at a church and things go sour. I mean, they go really sour. Meetings are arranged behind your back. Students stop coming to events and making excuses to avoid you. Your weekly staff meeting with the pastoral team becomes a finger pointing competition. And all roads are leading back to you. You’ve done nothing wrong but everyone hates you. You leave the meeting and head back to your office. You know your ministry at this church is coming to an end. You have felt it ending for a long time. And you are sweating the reality that a job search is imminent.

    All spiritual realities aside. In these moments, and all vocational people in a church will one day be in these moments, there are two positions you can be in.

    Position A: You can make a rational decision, knowing that you will be financially OK whether you stay at this ministry or not.

    Position B: You can make an irrational decision, knowing that if you get fired you are screwed financially.

    [Of course, I’m simplifying this as there are lots of options.] The point is that when things hit the fan at work you need to be able to make a decision that is ultimately best for you and your family. And being knee deep in debt with no savings is not going to help.

    Having worked in churches for nearly 10 years I know that there is rarely much margin between income and expense. And this makes saving money hard and acquiring debt easy. Add to that mix that many people in youth ministry brought college debts into ministry… and you have a recipe for disaster!

    So, practically speaking, what can you do?

    #1 Most Important Thing: You need to figure out how to get a few grand in the bank. You hear every single personal finance person say this and there is a good reason. Having 2-3 months living expenses in the bank allows you the freedom to make decisions that are best for you and not just what will get you through the next couple of months. Living paycheck to paycheck just leads to you acquiring more and more debt. I believe for folks in ministry this is more important than paying down debts… our jobs are just that insecure. And this goes beyond just job issues. I don’t think you can seriously build a budget until you have this little bit of breathing room.

    With almost no margin, how do I get that much cash in the bank? Some ideas…

    – Sell stuff. Have a garage sale. Have a bake sale. Sell used books on Amazon. Sell your baseball cards on Ebay. Sell your extra car.

    – Make more money. We’ll talk more about this in another post. But practically speaking, if there is no margin between what you bring in and what goes out you will need to find another source of income. For Kristen and I this meant that Kristen watched a child from the church four days a week. It wasn’t much… but it helped us widen the margin. If you’re single… you’ll need to look for alternate forms of income. Again, we’ll talk more about this in part five.

    – Spend less money. That’s easier said than done, I know. Our friends mocked us, but in Michigan Kristen and I learned that by heating our house less we could find a bit of margin. Also, cutting back on things you don’t really use that much can make a big difference. Remember this is just temporary until you get a few grand in the bank. 6 months without DVR or trips to Starbucks will be worth it.

    – Decide a dollar amount to save per paycheck. I take great pleasure in transfering a prescribed dollar amount to savings every payday. But if you lack the discipline to do that, there are more forceful options. If you have direct deposit simply direct a set amount to your savings account so you never actually see it as spendable income! A more manual way to do this is to ask the person who cuts paychecks at the church to write you two seperate checks. One goes in checking and the other goes in savings. If you really lack discipline… go ahead and have the take out your tithe/offering too!

    #2 Most important thing: You need to stop using your credit cards. When Kristen and I got married we didn’t have any debts. About a year later we bought a car and went into debt big time to make it happen. But that wasn’t the really dumb thing. The dumb thing is that a few weeks later I said “yes” to an offer for a Discover Card. That thing has been a thorn in my side ever since. At first we paid it off every month and I only used it for gas purchases. Then, we took 3 months to pay for a laptop. Then we bought some furniture. And started using it everywhere we went. Then the monthly balance was so high I couldn’t make myself pay $1000 per month so we let the debt build a little. Before we knew it, it was almost maxed out and we were screwed! The point is… until you take the first step and take using the credit card as part of your buying habits… it’ll own you.

    – Stop carrying it with you if its a temptation.

    – I like using plastic for every purchase, that’s why I use my debit card.

    – Come up with a repayment plan on your own. Currently, we dedicate one of Kristen’s paychecks to savings and one to paying down debt each month.

    – As you pay down the balance, call the card company and ask them to lower your limit. While you’re at it ask them to lower your interest rate.

    – Try to pay at least double the minimum payment… you need to get the principle down ASAP to incur less interest payments.

    – Once you get a few grand in the bank, turn all your efforts to getting rid of credit card debts. If you have more than one debt, pay the one with the highest interest rate off first.

    #3 Most important thing. Reward yourself! Look, our jobs are hard. And I think some of the reason so many of us get ensnared in debt and no savings is because we overcompensate and reward ourselves too much. I think there is ample reason to celebrate your successes and take time to celebrate. My beef with Dave Ramsey’s style of personal finance is that he’s too aggressive. He sets you up for a fad diet… and once you reach your goals you have starved yourself so much that you are liable to go buy something stupid just because you can. I go for a more reasonable style of savings/debt repayment. I’m OK with it taking a few months longer if it means I make sustainable changes to my life. That’s why we reward ourselves regularly along the way. We save up a little something outside of our “plan” and then do fun things! Our family has a date night each week… it’s frivolous, but it is a nice reward. I think you deserve to treat yourself for doing a good job! I know in youth ministry there aren’t many other people who will reward you, so reward yourself.

    Here’s the good news. Getting a few grand in the bank will probably only take you 6 months if you make it a legit goal. And from there you can turn your DVR and your heat back up! But a little bit of pain is going to go a long, long way for you sustaining in youth ministry into your 30s and beyond.

  • Getting Started in Investing, part one

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    I’d like to let my youth ministry friends in on a dirty little secret. While pay has dramatically improved for youth workers in the past two decades the most consistent reason people leave youth ministry once they reach their mid 30s and above is mounting financial pressure. In other words, there are some glass ceilings on the personal income side of things that will eventually cause you to look for higher paying work in the church or not in the church if you don’t plan ahead. Plan ahead and you relieve the pressure bit by bit. Don’t plan ahead and that pressure builds and leads to a catastrophic failure.

    Here is a short list of those pressures:

    – Housing expenses skyrocket: That rental gets old, doesn’t it? Buying a house can be great when you land in the same place for 10 years or more. But buy and sell a house a couple of times when you change jobs and you’ll quickly see that’s a bad strategy for financial security.

    – Retirement savings becomes important: Most churches either don’t offer a retirement plan for their associate staff or it is extremely inadequate. Even if you are in a denomination that pays into a pension fund… getting ordained in order to get vested in that fund can be more costly than the pension you’d earn in the long run! (And with many mainline denominations tanking financially, you really need to wonder if that money will be there in 30 years.)

    – Kids get more expensive as time goes on: When you first have babies you think diapers and formula is a blow to your budget. Just wait! Eventually those kids will need braces, outgrow clothes every two weeks, want to go to camp, need a car of their own, and gulp… want to go to college.

    – Medical insurance won’t cover it all: Again, when you are young and/or first married this doesn’t seem important. But with premiums soaring churches are cutting back on benefits. So as you age into needing good insurance chances are your church is increasing co-pays and other out-of-pocket expenses.

    – Pressure to keep up with your peers: There’s only so long you want to live like college kids. Eventually, you are going to want grown up furniture, go on nice vacations, and have a little extra something here and there. I don’t mean that you’ll get more materialistic as time goes on… but you just get sick of scrounging.

    If you do nothing, eventually these pressures will leave you with no other option but to leave the ministry. You can do everything right in the 9-5 activity of working at your church. But if you don’t have a plan to address these mounting pressures, it will sneak up on you and the pressure will grow so intense that you may have no other option but to leave the job you love for a job that pays better. If the choice is lose your family or lose your ministry you will chose lose your ministry 100% of the time, right?

    My goal for this series is to encourage those in youth ministry– you don’t have to bail out!

    If you want to join along I will help you with a few basic strategies that will lessen these pressures. My hope is to help you stay in youth ministry longer. While things like soul care and youth ministry strategy are super important for staying in it for the long haul… I’m going to help you deal with the dirty little money secret that could eventually knock you out of ministry.

    Part two: Dealing with debt and savings

    Part three: COLA-  and I don’t mean Pepsi or Coke.

    Part four: 401ks, IRAs, 529 and other numbers that are important

    Part five: Outside income opportunities

  • Digging out and shaking off

    Calendar shows April 15, taxes due

    Digging through paperwork and trying to find missing reciepts for tax time exposed that there was one big area of my life that I had just ignored for 6-7 months: The move’s impact on our finances.

    We did fine through the move. We’re doing fine now. And like I’ve mentioned before, we’re taking all the right steps to be in great shape into the future. That’s not the point of this post at all.

    The point of this post is simple –– there are areas of your life that you simply have to take control. You can’t ignore stuff and hope that it’ll be alright. Nor can you just pretend that it will all go away if you just put it into a nice little pile. In our case, we were fortunate and when I finally did open the vault everything will be just fine when about 5 checks clear the bank. But it could have been a lot worse.

    The same is true for a lot of things in life. I’ve had a longstanding weakness of avoiding things I didn’t want to deal with and foolishly hoping that they would just fix themselves. I’ve even tried to outsmart myself and those around me by over-doing some areas while completely ignore others.

    I have a feeling I’m not the only one who does this.

    – People ignore a project at work and try to distract their failure with success in another area at work.

    – Men tend to focus on work to avoid family issues. (Sorry for the generalization there)

    – We keep our schedules too full to avoid dealing with our walk with God.

    – We focus our ministry around a big event or a mission trip to distract from a larger problem we don’t want to deal with.

    – Kids will pay attention to the TV so they can pretend you didn’t tell them to clean their rooms.

    – High school kids will join a club or even get a job to avoid going to a youth group they are bored with.

    dog_shake_waterThe thing is, Tax Day is coming. The things that we avoid will eventually need to be addressed. It doesn’t matter how much we ignore areas of our life which make us uncomfortable… eventually we’ll just have to deal with them. And it is way better to deal with those things today than it will be tommorow. That’s where accountability comes in. We all need people in our life who lovingly help us draw boundaries. When we were kids we had those people built in as parents, teachers, and church leaders helped keep us on track.

    Adults need to find people in their lives whom they are willing to allow to go there and ask the hard questions. “Adam, what is it that you’re avoiding?” What a tremendous question for self-reflection!

    If you find yourself concentrating too much on one area of your life to avoid another… my only advice comes from my dog. Shake it off.

  • The McLane Stimulus Plan

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    Since it’s clear the Obama Administration is going to be giving 100% of the stimulus money to failed companies like GM and AIG and nothing in cash to the middle class, Kristen and I had to make our own bail out plan. (Sorry for the dig on Obama, I was a big fan of Bush’s free money system!)

    Our challenge was pretty simple. How do we live on 70% of our income for the next 24 months? If we could do that, this is what we would have at the end of it.

    – No debt

    – 3 months living expenses in the bank as a rainy day fund

    – 1 months living expenses in the bank as general savings

    – Still faithfully giving to our church

    Our 2008 scenario was like this. Prior to moving to California we lived at about 105% of our income. Basically, we had been swallowed by inflation and struggled to recover. Each month we went a little deeper into debt. When we moved to California we had about 4 months where we lived at 200% of our income. Why? We had two houses, we moved 2500 miles, and stuff like that.

    Our plan, live on 70% of what we bring home after taxes. Roughly, the breakdown looks like this. (+/- 2% per month)

    10% of our income to paying off debt accumulated in 2007-2008. (Our credit cards jumped from 17% to 29.99% last year, we alone in that?)

    10% of our income to savings.

    10% of our income to regular charitable giving.

    This is where the McLane plan differs from the pop culture financial planners. Most of them would say, “Concentrate on paying off the highest interest thing first, then focus on savings.” I’m not going to lie… I can’t bring myself to not save and spend that much paying down debt while not putting anything into savings.

    We’re about 3 months into this plan. It seems to be working for us. For those in love with budgeting, it’s a semi-budget. It leaves about 20% of our money as flexibility… which really works for us.

  • And you thought our housing market fell?

    Check out this story too… 3000 abandoned cars at the Dubai airport with the keys in the ignition!

  • Two Kinds of Medium Sized Church People

    Here are some more thoughts on the medium-sized church crisis. My post the other day attracted a fair amount of comments and attention… and I was pretty frustrated that people jump to the issue of money.

    I only think that the money problems of current are bringing the Medium-sized church crisis to the forefront. At the end of the day I’m meeting two types of churchoers. Once you cut past the nice fluff they say about their churches and preacher they are really either small church people or megachurch people.

    What does this mean for medium-sized church? My experience in medium-sized churches is that there is a tension between these two types of people. One is resistant of anything “small church” so stuff that is appealing to the small church is annoying to them and visa versa. Eventually, misguided and unaccepted tension results in hurt feelings, bitterness, disappointment, and a range of other typical medium-church angst.

    And that angst is why I’m saying the medium church is in crisis… Eventually, church leaders must chose to lead their church one direction or the other: Lead towards smaller environments or toward becoming a megachurch. The cultural division is causing this squeeze. The financial crisis merely accelerates the trend.

    A Personal Example

    In Romeo, we mislabeled these cultural issues as a “personal preference issue” instead of a cultural issue. Big mistake! Our small church folks didn’t mind if the worship team wasn’t professional sounding or if the church basement was a bit too homey for potlucks. Small church people find those things endearing… maybe even spiritual.

    Meanwhile, the megachurch people wanted everything to be like the megachurch they used to go to and they wanted the church to become. Everything was compared to the megachurch down the road or the stuff they saw on TV or enjoyed at a conference or read about online. To the megachurch people, the failure of the small church people to realize all that Romeo could become was an abomination… a spiritual failure at worse and a lack of vision at best.

    See… this isn’t about money at all. Maybe I’ll be called a heretic for this? But, I will tell you what 10 years of church ministry has taught me about giving. Giving has 0% to do with what people are taught from the Bible and 100% to do with whether or not they feel that their money will further a cause they believe in. People are just sophisticated like that. They see right through the pleas for cash to your motivation. When motivations converge they give. When they disagree they give somewhere else. Christians are extremely generous… but they won’t give to a church simply because they go there.

    Next, let’s talk about money. I’ve only hinted at it, lets hit it straight away next time.

    Then, I want to talk about the superiority of small church and megachurch missions in our culture. This is the core reason for the crisis.

  • Open Letter to the NCAA

    Dear NCAA,

    Congratulations on another year of controversy! Congrats to Tim Tebow and the Florida Gators. They are the BCS Champions but not the National Champions. This year we clearly don’t have a National Champion because your system is broken.

    Congrats to USC. Congrats to Texas. Congrats to Utah. Congrats to Florida.

    Each legitimately claim they are National Champions this year! That’s right, with 5 BCS games, 4 of them ended with a team legitimately and openly claiming they should be the National Champion. (The fifth game played by Cincinnati and Virginia Tech didn’t deserve to be a BCS game. The Holiday Bowl was really the fifth BCS game. Did you watch it? It was a great game! How did the Orange Bowl go? I didn’t hear anything about it. Was it on TV?)

    And yet the BCS claims this is somehow fair? Just because the bowls make bucketloads of money doesn’t make them right! It’s time you, the NCAA, kicked the BCS to the curb.

    We all know that in every other NCAA Division IA sport there is a playoff. And we also know that in every other division in college football there is a playoff which ends with a national champion. It’s time the players of Division IA determined who the champion will be on the field instead of in a vote.

    Here’s are two simple solutions:

    Option A: After Thanksgiving weekend take the top 16 teams based on the AP/Coaches polls and put them in a simple bracket based purely on their rankings. #1 plays #16 and so on. With 4 rounds the best team may not win, but the hottest team will. Since win did the #1 team in the AP/Coaches poll win the Division IA basketball championship?

    Option B: Set up a system where each of the top 11 conference champions get an automatic bid to the playoff. Then have a committee chose 5 at-large teams and place them in a 16 team bracket. Just to clarify, that’s the Big 10, Big East, Big 12, ACC, Conference USA, Mountain West, MAC, Pac 10, SEC, Sun Belt, and WAC. Yes, that means that teams like Notre Dame don’t get an automatic bid. Tell the Irish to get over the 1960s slight and join the Big 10. How will those conferences determine who is their champion? It seems like most of them are smart enough to figure that out. Playoff. Conference Champion. Rock, paper, scissors, who cares? They pick their best team and you take that.

    What about the money? In case you didn’t know… March Madness makes a bucketload of money for everyone involved. Just share it. Champion gets 4 shares. 2nd place 3 shares. Final 4 teams get 2. Everyone else gets 1 share. How is that not fair?

    For the bowl games not included in the playoff allow them to pick teams like they do now and have exhibitions. Their fans will still come. They will still be on TV.You know that line of arguement is

    What about the big bowls? Do what you do now! Pick 8 bowls to be the Saturday of Christmas. In case you haven’t noticed all of the non-football fans will go to the mall and all of the football fans will stay home and watch TV. You’ve got 4 BCS games on New Years so that’s covered. Then the Championship game could be the weekend between the NFC/AFC Championship and the Super Bowl. I don’t know about a lot of other football fans, but I’m willing to move New Year’s day to line those final 4 games up with the NFL’s schedule. Do we have to talk to Congress about that? Let me know… I know some people over there. President Obama emails me all the time.

    It’s about the money! Fair enough… trust me… give us a playoff and it’ll be just as big as March Madness. Rabid fans really will go to 3 bowl games! Ask the guys in Vegas to kick in a few bucks.

    Who gets the championship? This is where the fairness ends. Make the championship game the Rose Bowl every year. It really is the grand daddy of them all. The Rose Bowl is beautiful… make it there every year. Tell the Big 10 and Pac 10 to earn their way in and get over it.

    Thanks for your consideration. Get to work on that and let me know.

    God Bless America and God Bless the NCAA,

    Adam McLane

  • Don’t Bail Out US Automakers

    All of a sudden, the czar’s of the old guard Big 3 are interested in Washington again. (By Big 3 I mean Ford, GM, and Chrysler, not the real big 3 of Toyota, Honda, and Ford.) The news is full of stories of their CEO’s begging for federal bailout money to keep afloat. I can hear the words from here, “We only want $25 billion.” They probably each took their own corporate jets over there and are staying at $10,000 per night suites.

    Here’s why giving the Big 3 $25 billion is a bad idea:

    #1 Their problem isn’t bad loans, it’s bad labor contracts. I lived in Detroit for 5 years and I was totally sickened by labor practices. Over the last few generations an entitlement attitude has run rampant among workers. In short, until they can clean house and only keep the best workers regardless of union status or seniority any bailout will just be wasted on pouring more money into a broken vessel. Most people don’t know this, but they pay people not to work! They want federal dollars to keep paying people not to work! For $25 billion we need a federal right to work law. People should have a choice whether to join a union or not. Closed shops should be outlawed in every state… especially Michigan. Face a fact… unions were great at one point, but have helped bankrupt the auto industry.

    #2 Their problem isn’t bad loans, it’s over-generous retirement plans. In the last few year’s they have gotten wise and started buying people out. But the Big 3 are levied with a tax their competitors don’t pay… pensions. (Most have been structured on 401k plans since day one.) Until they can shed those pension problems the federal government shouldn’t give them a dime. I don’t think that they should just fore go the pensions. I think, once and for all, they should sell those debts off and let someone try to make a buck on distributing those dollars.

    #3 Their problem isn’t bad loans, it’s trying to sell cars people don’t want. Have you walked on a car lot lately? The Chrysler cars mostly look like space ships. The Ford ones look like Tonka trucks. The GM ones look like cars from the 1980s. I know that’s judgmental and I’m uneducated. But I was recently looking to buy a new car and literally laughed on most of the “U.S. Automaker” lots. For 20+ years they have whined about “foreign cars” on their market. The reason people aren’t buying them isn’t because they hate America, it’s because Honda, Nissan, Toyota, Volkswagen, and the rest are selling cars people want to drive.

    I have no doubt that the auto industry will get bailed out. They will become federally subsidized, just like the airline and farming industries. If it’s not the $25 billion today it’ll be $100 billion next week. My only hope is that in getting the money they will start to repair the damage.

    Meanwhile, I hope Michigan continues to look for a new economy. I hope they invest in the health care industry, technology, and financial industry. Michigan is full of amazingly brilliant people who want to succeed. Let’s hope that they get it sorted out soon!

  • Quick Note to Investors

    The sky isn’t falling. As all of that money pours out of Lehman Brothers, Fannie Mae, Freddie Mac, and other financials today… just be reminded of one thing. That money is leaving one place and going somewhere else. As you know, there’s a bull market somewhere. It’s not like all of those investors are taking that money and putting it in their savings account.