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Money 101: A practical guide to cars, homes, retirement, tithing and more

Buying a car: New or used depends on you
Owning a car is a fact of life for most Americans. Though owning a car is a necessity for most people, the following should be considered before purchasing a car.

Consider what you can afford. A car that costs $20,000 or more is too much to pay for most people. When payments, insurance and maintenance are factored in, the car will actually cost more than $500 a month, which exceeds many people’s budget.

Honestly evaluate your real need for a car. If you determine your need justifies a purchase, buy a used car — in most cases it’s a better value.

Shop for value, not always the lowest price. Save for your car and pay cash. If you must borrow, go through an institution other than the dealership. This will allow you to negotiate with the dealership on a cash basis.

Only 15-17 percent of your net spendable income (income after deducting tithe and taxes) should be allotted for automobile expenses.

Don’t get rid of your old car until it is paid off. Rather than trading in your old car, sell it yourself.

Purchasing a house: Buying the American dream
Since the cost of housing is perhaps the greatest expense you’ll ever incur, you must study your personal situation, research the possibilities and pray for the Lord’s guidance in order to make educated decisions about whether to buy or rent. The following guidelines will help you do that.

Devise and live on a budget to determine if you can afford to buy a house. Realize that buying a house within your budget may require you to settle for a smaller house than you desire. Borrow the least amount of money necessary and pay it off as quickly as possible.

Before purchasing a house ask yourself the following questions:

  • Is your job secure?
  • How long do you plan on living in the area? If you’ll be there for more than five years buying might be a good option.
  • What is the economy in your area? You don’t want to be stuck with a house you can’t sell.

One of the essential foundation blocks of a biblically oriented financial plan is a debt-free house. Your circumstances will determine if you should buy a house — but don’t put yourself in jeopardy just to own one.

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Life insurance: Planning for the future
Buying insurance is like storing grain for winter months (Proverbs 6:6-8). When it is used properly, insurance is a wise investment and allows one to pay a little now to cover future major expenses due to illness, death, accident or theft.

One liability of insurance is that it costs money, so one must reduce current spending in order to provide for the future. Another liability, say some, is that it can divert one’s dependency from God.

If you decide to get insured, a good way to determine the type of insurance you need is to consider two things: the amount of insurance you need and the amount you can afford.

To do that, consider the ages of your children. The younger they are, the longer they’ll need to be supported if you die. Also consider your debt, current lifestyle, income and any other sources of after-death income besides life insurance.

One of the most important insurance decisions you can make is choosing an insurance company. After all, the timely payment of your benefits depends on that company’s stability.

Things to avoid when it comes to buying insurance:

  • Double indemnity clause — it pays double if you die in an accident. But this is an extra expense you probably don’t need because most people die of natural causes, not accidents.
  • Premium waivers — they represent a large expense for a very small benefit.
  • Feeling pressured — learn to buy what you need, not what the agent wants you to have.

Previous items excerpted from Crown FinancialMinistries pamphlets.


Estate Planning 101
Confused by estate planning terms?  Uncertain how different types of plans work together? Understanding the four primary estate planning techniques is essential.

Joint ownership planning
When an asset is held in joint names as “joint tenants with right of survivorship” or as “tenants by the entirety” (husband and wife), upon the death of a named joint tenant, the asset passes to the survivor free of probate and without regard to what your will or trust might say.

Beneficiary designation agreements
Certain written agreements or contracts are authorized by law to transfer an asset at death with a “beneficiary designation.” This includes “payable on death” designations at financial institutions or the traditional beneficiary designations in IRAs, other retirement accounts, life insurance policies, etc.  The asset is transferred at death of the owner (free of probate) to the named beneficiary or beneficiaries.

Living trusts
A living trust is a private agreement that avoids probate of assets titled in the name of the trust.  Assets not transferred to a trust are controlled by a person’s will. A trust usually contains the estate distribution plan, and also provides “lifetime” direction and protection for assets in the event of incapacity.

Will
A will is a document that takes effect on death and describes how your assets are distributed. A will must be probated, requires public scrutiny, and must meet formal requirements of state law. Assets not passing through joint ownership planning, beneficiary designation agreements, or a trust will usually pass by your will through probate.


Written for PrimeLine January 1997 by Randall K. Barton, president & CEO of Assemblies of God Financial Services Group.


Three words for becoming a good steward

Patience
Patience as a virtue can profoundly affect stewardship decisions. If you are hasty to be rich, you will make bad business and investment decisions (Proverbs 28:20).  To provide leadership in your home by modeling patience — saying “no,” or saying “let’s wait” — will provide your family a framework for business and financial decisions that will result in impressive returns for a lifetime and provide for their needs in the long-term.

Balance
Balance is a universal principal of stewardship. Abundance in life does not come from focusing all of your energy, all of your time and all of your efforts to fulfilling a single role or reaching a certain goal in life. To the contrary, balance in life leads to abundance. We all know men who have invested and poured their entire life into a business, a ministry, or a person only to find the rest of their life in chaos or ruin. A good steward balances all aspects of life, and through that balance experiences abundance.

Generosity
Generosity is one of those “church” stewardship words that for some means, “I’ve got something the preacher wants!” However, generosity as a stewardship principle has little to do with giving anything up. In the beginning, a seed of faith is sown, a gift is given, but generosity, at its heart, is trusting and letting God multiply that which He has entrusted to you. It is that paradoxical principle of stewardship that does not compute if you put the numbers into your financial planning program or budget. However, it miraculously works in the lives of biblical stewards and their families every day.


Provided by Assemblies of God Financial Services Group.

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