February 2010 - Posts
Tithing: what does it mean to Christians today?
For many Christians, the season of Lent (from Ash Wednesday through Easter Sunday) is a particularly important part of the church year. It is a time when believers are often called upon to give up or take on something in order to enhance their spiritual growth and walk with Christ. Pastors will often call upon churchgoers to give of their “time, talent or treasure” for a variety of charitable projects and ministries during the forty days of Lent.
In the year 604 Pope Gregory I (The Great) defined Lent as "The spiritual tithing of the year", a time of solemn spiritual and physical preparation for our own acceptance of salvation through Christ's sacrifice. Tithing is a sensitive subject, one that usually refers to the amount of money one gives each Sunday to the church, and it is often stated that 10% is the “required” tithe amount for Christians. The question is, 10% of what? Does tithing 10% refer to giving up ten percent of pretax or after tax income? What about all those other deductions – you know the ones that come out of your check for things like insurance and your 401(k)? And what do you do if money is tight? Many spiritual writers will tell you that you should give to your church first … but its impossible not to worry about the electric bill, groceries, etc., when one has just given away a chunk of an already small paycheck. Sure … Christians are called to have faith, but that is always easier in the theoretical sense … and much harder in difficult financial times.
What exactly does the biblical command to “tithe” really mean? The Hebrew and Greek words for “tithe” both simply mean “a tenth.” The original biblical tithe consisted solely of the increase from land (grain, oil, wine) and herd animals and was given to provide food for festivals and to provide welfare food for widows, fatherless, orphans and the poor. The original biblical tithe was more of a command to give to those less fortunate than it was a legalistic 10% formula … in fact, the poor often received from the tithe rather than gave. Obeying an arbitrary, legalistic command which forces impossible choices during difficult times runs contrary to common sense and other biblical commands such as “good stewardship” of one's resources.
Which brings us back to the exhortation to give of one's “time, talent or treasure.” If “spiritual giving” is defined as giving 10% (or whatever one can) wholeheartedly of one's time, as well as one's abilities and talent … not just of one's monetary income, then the command makes greater sense for a larger number of believers today. Exactly the percentage given, or how that percentage is arrived at is a matter of conscience. Giving responsibly and cheerfully of one's abilities, income and time means that the giving affects more than just our disposable income. Charitable giving, or “tithing” should always be something that comes from the heart, not just the wallet.
Yesterday, at Apple Computer's annual shareholder's meeting, a conservative investor commented that the “glaciers were not melting, climate change was not real, and Board Member Al Gore had become a laughingstock, ” which turned a rather ordinary shareholder's meeting into a session that focused an unusually large amount of time on “green” issues!
The comments prompted a quick reply from a second shareholder in support of Mr. Gore position on climate change, and Apple, Inc.'s environmental performance went on to oddly take over more than a third of the meeting. While its certainly not unheard of for companies to discuss these issues at corporate shareholder events, it is not a topic that often dominates, and shunts aside, other financial issues. Most of the time, “environmentalists” are given their five minutes at the podium; whatever “green” proposal is on the table is quickly voted on and the meeting moves on.
Not with Apple's meeting yesterday. There were two shareholder proposals to be voted on, one calling for the company to set greenhouse gas reduction goals and do a better job of environmental and corporate responsibility reporting in general. A second proposal would require the company to establish a permanent committee on sustainability.
CEO Steve Jobs commented, "… we don't trumpet" all the good things we do, we just try to do the right thing,” which prompted a debate about the value of some of the product environmental reports posted on Apple's website. The company says the reports "show the complete environmental footprint of every new Apple product so you can see how each one affects the planet." The validity and context of Apple's information was questioned at length by several investors, who pointed out that, without providing the source data and methods used to generate the reports, it's very difficult to fairly evaluate whether Apple is acting aggressively to evaluate and control carbon emissions,or to “greenwash” the issue to make itself look attractive to the environmentally conscious.
During the discussion, Mr. Jobs said that the company “… is a clear leader in areas like removing toxic chemicals from products and recycling ….” He is right, but the company hasn't always been responsive to environmental issues without being forced to do so. Not very long ago, Apple found itself at odds publicly with Greenpeace over environmental policy. While the problems associated with achieving environmental sustainability remain daunting, its good to see investors keeping Apple's feet to the fire.
Our small business start up adventure continues …
It really is quite amazing (everyone tells us so) just how much we've accomplished in the 21 days since we took the frightening step of signing a 6-month lease on a 1200-foot retail sales space and committed the majority of our tax refund money to starting a small business! Our plan was to set everything up and hope to be open for business by March 1st.
In the past three weeks, we have managed to purchase, paint and set up all of the seven-foot tall, double sided shelving units that we purchased used – giving us lots of space to display the various items we have for sale. We obtained the necessary business license and sales tax number. A glass display cabinet was found, which needed some repair to serve as our cash register counter and bought a clearance cash register (and figured out how to work it!), found places for the eight tables we have! We met our neighbors, small shop owners that sell everything from antiques to eclectic, vintage clothing, one who sells beads and the materials to make your own jewelry and many others. Oh yes – we took out an ad in the local merchants' newspaper as well – now it really seems official!
Several hundred cases of accumulated inventory was trucked in, sorted, priced (mostly) and placed on display and we opened for business four days ago (February 20)! Certainly not the GRAND opening we envisioned, with boxes cluttering the back of the store and about 40 boxes of inventory that remains stacked on tables in our back room, unopened. We don't yet have our window sign, the telephone service is waiting to be installed and we can't yet take credit card payments … but the store is OPEN FOR BUSINESS!
What a relief! We decided, after being told by several of our small business neighbors, that we should stick an open sign in the window whenever we were in the store, even as we are organizing and setting up, since the shop “browsers” (especially on the weekends) would then come in search of bargains! The store generated sales of $200 in two days on a weekend that we are told was unusually slow!
We still have a few things to accomplish … I have to finish the web page for the store, paint and hang a sign in the window, get the telephone and credit card services working … and clean, sort and organize a lot more!
But it feels like success …
We opened for business, and the customers came in ...
And bought things …
(I'll keep you posted on our small business adventure as it continues!)
Are payday loans an effective economic indicator of financial health?
As an unscientific indicator of the financial health of this country, I have been watching the growth of “payday loan” outlets explode over the past twenty years. Since payday loans were first made legal in the 1990s, the number of outlets has increased to over 23,000 in the 23 states that allow payday loans. Compare that with approximately 12,400 McDonald's Restaurants or 11,000 Starbucks' and you get a sense of what I'm taliking about! Payday loan outlets cater to those financial consumers who cannot get a loan anywhere else. Face it: why would anyone pay an average fee of $17.50 to get a two week loan of only $100 if they had a better alternative? When you calculate the equivalent annual percentage rate on the average payday loan, that comes to 455% per year!
Payday loans were first legalized in the 1990’s. The idea is simple: Allow almost anyone to take out a small loan and charge them a flat fee with a short deadline. The average loan is $350 and average loan fee is over $50. The borrower writes out a post-dated personal check and the payday loan outlet holds it until the original loan is paid off. The borrower must pay back the loan or the chek is then presented for payment. If the check bounces, then the consumer must deal with the consequences of a bounced check (and the fees from the check being presented to the bank at least twice). Many borrowers get into even more trouble by never paying off the original loan and instead paying the loan fee to take out another loan to pay off the first. This is called loan “churning.” Some outlets even offer this as a loan option, where the loan is automatically renewed, and a fee debited from the borrower's checking account, every two weeks indefinitely! A payday loan of $300, renewed five times before it is paid off, would amount to $315 in fees!
While its critics attack the payday loan industry as "legal loan sharks," representatives of the industry paints a far different picture, claiming the service helps people avert a cash emergency. "I really think that this industry is a classic example of the marketplace making a need that somebody or someone fills," says Vicki Woodward, a vice president for Advance America, a leading national chain of payday lenders. Woodward, who also serves as the spokesperson for the Community Financial Services Association of America, the trade group that represents most of the payday loan industry, says payday lenders fill a void left by banks, which do not typically offer small loans to troubled consumers.She also cites growing charges for bounced checks, ATM machine usage and credit card late fees as reasons for growth in the payday loan industry. It is worth noting that the fees associated with other emergency solutions are high as well: a late credit card payment could trigger a $37 fee, for example. Overdraft fees for checking accounts can be $25 or even more.
Regardless of the reasons why, and despite the reforms Congress has deployed, the industry will doubtless continue to flourish. As an economic indicator, the success of the payday loan industry runs counter to prosperity – and until the outlook for the poorest consumers and those unable to qualify for other (cheaper) forms of credit improves – the success of the industry will continue.
Have a Pet? Here are some ideas to help combat high veterinary costs
About a month ago, I answered an ad on Craigslist for “free puppies.” After exchanging a few emails (and pictures) with the owner of the six-week old lab mix puppies, we decided to go and take a look. They were adorable! (Who can resist puppies, anyway?)
We ended up adopting two – cute brown and fuzzy, fun and energetic and full of mischief. Our kids fell for them immediately. They seemed the perfect addition to our family.
That is, until a week after they arrived, one of the puppies (we had named him “Nutmeg”) seemed a bit ill. We took Nutmeg to a local vet, figuring that he probably needed to be de-wormed … and it was time for his first round of shots anyway … and were dismayed when the vet told us the diagnosis – Parvo. Parvovirus is a viral disease that affects puppies much more frequently than it affects adult dogs. The virus grows quickly, and attacks the intestinal lining cells, causing diarrhea, vomiting, weakness and immune system suppression. In very young puppies it can infect the heart muscle and lead to "sudden" death.
We had no choice. Our “free” puppy was hospitalized for two days, and the bill added up to over $1,100! Unbelievable! Poor Nutmeg. And my poor wallet!
This got me to thinking, and with a little research, I discovered that Americans spend approximately $18 Billion each year on vet bills! I wondered if there is anything we can do to keep veterinary bills under control. It turns out that there are some positive steps we can take to help keep our bank account balances healthy!
According to Roseann Trezza, the executive director of Associated Humane Societies, Inc., the key to keeping pet health care costs down is using common sense and preventive care.
- Cultivate a relationship with your veterinarian. Taking your pet to the same doctor each time ensures that he or she gets consistent care. As an established patient, your vet will also be much more likely to “work with you” to pay for emergency care, should the need arise.
- Plan ahead. Don't wait for an emergency to seek care. As I discovered with Nutmeg's illness, its much more expensive and difficult to seek health care in a time of crisis.
- Consider alternatives to “for-profit” veterinary practices. Humane society or university vet clinics may offer thriftier medical services than private practitioners. Ask other pet owners for their opinion of clinics that you consider.
- Keep careful records of your pet's shots and other health-care services. If you switch vets, you won't risk having costly procedures duplicated if you can't recall what was done.
- Check to see if your vet offers a “puppy plan.” Some veterinarians offer anaconomical plan that, for one price, pays for everything your new pet needs for the first six-months of life.
- Spay or Neuter your pet. It has been shown that pets that have been spayed or neutered has decreased chances of getting a variety of serious illnesses. It's also generally known that such animals have fewer behavioral problems.
- Take care of your pet's teeth. It sounds funny, but brushing your pet's teeth is a good way to avoid costly dental diseases later. Oral bacteria can lead to serious problems and complications.
- Just as you would for yourself or a family member, get a second opinion when the vet recommends a costly or risky procedure for your pet. In any case, ask questions. Don't accept anything you don't completely understand.
- Shop around for pet medicines. A quick Google search yielded several online pharmacies (http://www.nationalpetpharmacy.com; http://www.drsfostersmith.com; http://www.1800petmeds.com). The “DrsFosterSmith.com” site offered everything from Yogurt Drops for your doggy to a mini "jukebox" that plays "Love Me Tender" to your bird. Your vet may also have samples of some medications.
- Consider purchasing pet health insurance. Pet health insurance works in much the same way as human health insurance. There's usually a deductible and copay and certain pre-existing conditions or breed restrictions may apply. Some of the insurance carriers I was able to find are PetCare Pet Insurance (1-866-275-PETS) and VPI Pet Insurance (1-800-USA-PETS or 888-899-4VPI).
The bottom line? You can do something to avoid breaking the bank taking care of your pet. You don't have to be rich, just careful and informed.
The Chilean mint has issued coins with the country's name spelled incorrectly.
The general manager of the Chilean mint has been dismissed after thousands of 50-peso coins were issued with the name of the country spelled wrong.
The BBC reported this morning that a batch of coins produced in 2008 by the national mint of Chile, in South America were produced with the country's name misspelled! The coins, which are worth about 10 cents each, were minted with the country's name spelled "CHIIE." Since the error was not discovered until the end of 2009, the coins remain in general circulation and are the subject of interest by collectors. Residents have also been saving the coins in the hope that they will become collector's items and appreciate in value. The Chilean mint has stated that there are no plans to attempt to remove the coins from circulation.
The error has cost the mint's general manager, Gregorio Iniguez and several other employees their jobs.
This is certainly not the first time that a national mint has made a glaring error when producing currency and coinage. Even an institution as old and venerable as England's Royal Mint (which has not had a documented error in over three centuries), recently produced a batch of 20 pence coins that do not have the date stamped on them. The London Daily Telegraph reported that the number of incorrectly produced coins numbers between 50,000 and 200,000 coins! Just as in Chile, the error went unnoticed until after the coins had already entered circulation.
A London company that specializes in unusual coins is offering £50, or about $75 to anyone who finds one of the coins (which have a face value of only about 30 cents in the hope of selling them to collectors for an even higher price.
Our small business adventure continues this week ...
I have discovered that there are a huge number of things to accomplish when starting out in business. We are knocking them off, one at a time … and hoping we haven't forgotten anything. Projected (hopeful) opening day: March 1st.
This week we have inhaled paint fumes, strained muscles, swept and mopped and driven our minivan all over Leon and Gadsden counties in search of bargains while spending as little (of our limited budget) as possible. Its amazing to me just how easily the money gets spent when starting a new business! We have stretched our “tax refund financing plan” to the fullest extent possible without becoming completely broke, and we still haven't put a single item out on a shelf or table for sale yet!
Its been an exciting and stressful ten days since we signed our lease and officially became small business owners. We have, I believe, been judiciously economical in our purchases. We acquired thirteen seven-foot tall double-sided metal shelving units for $22.50 apiece, a lighted display cabinet for only $60 and purchased six folding plastic tables for about $40 each. The cash register came new from Office Depot for only $50 (we found a closeout model). Since we already owned four folding tables and two large shelving units, and since our landlord left the two (very, very large) antique display cabinets (approximately 8 feet wide, 5 feet tall and 3 feet deep) in the store (I suspect that it was more from avoidance of muscle strain on his part than as a gift to us!) we have a fully furnished shop for about $1,000 after buying the paint and lumber needed to clean up the space, set the shelving units in place and paint away the rust spots! Not bad, as I'd only budgeted $1,500 for the project.
That part is done … the fun part starts now.
Over the next five days the three or four hundred boxes of accumulated inventory will be trucked via rental truck (another $150) to the store to be opened, sorted and placed in some (hopefully) organized way on the shelves and tables. After that, we have to take care of the business license ($15), place an ad in the local paper (about $100) and spend whatever we have left over on signs, flyers and business cards.
Only 18 days left until opening day.
Effectively planning your financial life is not unlike a well-played chess game!
As I played a game of chess yesterday evening against an unknown internet opponent, it occurred to me that there are many similarities between a well-played game of chess and a well-ordered financial life. Chess is a game where careful planning, development of resources and risk-taking at the right time often leads to victory. It seems to me that the same can be said of financial planning.
In the classic chess book, “Logical Chess: Move By Move,” Irving Chernev teaches the art of analytical chess thinking by examining each chess position as the game develops and determining the “best” move at every point. Although more suited to chess beginners than seasoned players, Chernev's makes the point that the right move at any given point in a game is always determined by the requirements of the position on the board. Before every move, assess the situation at hand and have a goal in mind. Since there are only certain actions that will lead to reaching that goal, a careful step-by-step approach helps eliminate the irrelevant choices and help focus on the moves that are productive.
As with chess, financial planning requires careful planning and goals in order to be useful. Strategic Planning for the short and long-term:
Write down your long-term goals as well as things you feel you need to accomplish in the next few months or years. It is important to understand what you are working for and how your goals fit together. Don't make moves without a plan! Always ask yourself the “what if” questions and try to anticipate the results of your actions. Make sure that you know how your short term goals fit into your overall financial strategy.Always have a “Plan B”:
Realize that, as in a chess game, your opponent will not always follow the script that you have imagined. Life has a way of throwing the unexpected at you! Be ready to adapt to a changed situation and make the right moves!Seek active play:
If you play a “passive” game of chess, only reacting to your opponent's moves without having a strategy of your own, then you will likely lose, or at best draw. If you play simply to survive and avoid checkmate, then you miss out on the rewards the game has to offer. In planning your financial life, you must sometimes take action to improve your position (i.e., getting a better job, investing, buying a home, etc.). Learn from your mistakes:
The Polish Grandmaster Savielly Tartakower is often quoted as saying that “the winner of a chess game is the player who makes the next to last mistake.” it is impossible to always choose the best move – sometimes it is necessary to adapt and correct for mistakes. What seemed to be a good move when played can turn out to be a liability, as many homeowners found out during the recent financial crisis. One error, or even many errors rarely spells disaster so long as you adapt your play to account for the changing situation you find yourself in!Choose the risks you take carefully:
There are few things more beautiful than a surprise “sacrifice” in a chess match. The unexpected queen sac – leading to a checkmate is very satisfying but, as any chess master knows, a sacrifice takes planning and strategic understanding. Only the opponent is surprised! When considering risk, by investing money, changing careers or moving to a new area, always be aware of the pros and cons. Carefully choose the risk that you take on and, plan for the unexpected. Ask lots of “what-if” questions and know what to do when your opponent makes a different move than the one you expected!
Few well-played chess games are short. Planning your financial life is much like planning a chess game, and in many cases, victory goes to the one who can overcome challenges and uncertainties the best. As in chess, life is sometimes a game of mental tenacity. Hang in there! Even when things are difficult, there is often good news right around the corner, especially if you work hard and have a solid long-term strategy.