Ten Things the Government Needs to Learn About Budgeting That I Learned From Running a Church

Here we are again. It’s crunch time and the politicians are making a big fuss about the budget. Democrats blame the Republicans, Republicans blame the Democrats, the sky is blue, grass is green… Such is life.



In the past two years, I have become the Senior Pastor at a small church here in Phoenix. As a youth pastor for years, I never had to worry much about the budget, the elders and Senior Pastor did that. Now, it’s my job and I’ve learned that it is harder than I ever realized. Running a church is really just running a small business from a financial point of view*. Running a Government is no different from running a small business, either, just a matter of scale.


I’m still trying to get my mind around all of the issues of the business side of church, but here are some lessons I’ve learned that might just help Congress.


1. It’s easy to nickel and dime your way to deficit spending.


Most of the issues I’ve encountered when it comes to going over budget aren’t about the big expenses. Yes, occasionally an AC compressor will give out in July or an irrigation accident will destroy a neighbor’s yard and require repair, but the truth is, it’s all the little expenses here and there that build up. Paper is $35 a case. Toner is $120 a cartridge. We chose to print a hundred of those posters and suddenly, we are over budget. Workday projects, repairs, and maintenance always cost twice what you expected and necessitate three trips to Home Depot. Whoops, we did it again. This is what makes budgeting so hard, because $28 here and $55 there doesn’t sound like much until you do it too many times.






2. It’s easier to spend when it’s someone else’s money


My family is all about debt-free living. We don’t use credit cards, we don’t get car loans, and we try very hard to consider our expenses so we don’t overspend. However, when it comes to making choices of what to buy or not to buy at work, it’s easier to think, “Oh, we’ll just move the money over from another area to cover it,” or, “This item is on sale and we’ll surely use it someday, so we’ll go ahead and buy it now and replenish the fund later.” The problem is: it’s much easier to be brutally realistic about finances when you are talking about paying the rent to keep the roof over your head and paying the electric bill to keep your own lights on.



3. You don’t reduce the deficit, cut it entirely and work on paying off debt.


My earliest recollection of politics comes from the budget fights of the early eighties. I remember the politicians saying, time and time again, “We must cut the deficit.” Even as a teenager, that sounded very weird. I wasn’t even good at math, but I knew that a negative is a negative whether it was $1000 or $1 billion dollars. That’s like trying to dig yourself out of a hole by using a trowel instead of a spade. Either way, you’re still digging a deeper hole. Nope, you gotta learn to live within your means and NEVER spend in the negative.






4. There’s always a bunch of good things to do with the money, but not always a bunch of money to do good things with.


Church is all about this. There’s always someone who has a ministry need. The homeless need fed. The orphans need shoes. People in Africa need medicine. People in Japan just had a natural disaster. Poor families need Christmas presents. Missionaries need sent. Tots need toys. Trees need angels. Drives need canned food. On and on and on and on. All of these are good things, and all cost money. The simple truth is we just cannot do them all. We have to say, “No,” to some of them. That hurts, that’s difficult, and that’s absolutely necessary.


5. Look at your priorities.


Yup, that’s what this comes down to. Prioritizing. Sounds easy, right? List all your bills in order of urgency. Begin dividing up your money to pay for those. Then, create a rainy day fund and put a good percentage of money into that account to cover unforeseen problems. Then, if (IF) there is money left over, begin adding those things you want to do in priority order. Parcel out any remaining funds for those items until you run out of money. Then, say, “I’m Sorry,” to the rest of the items.






6. Consider other options to pay for things.


So, there are good things leftover from your list (see items 4 & 5 above). Gosh, there is one of them that you really, really want to do. It’s such a good idea, but we just don’t have the money in the budget for it. Great. Let’s do it. Here’s how: go to the people and sell it to them. Tell them what a great idea it is and why we should do it. If they’re on board, then they’ll help pay for it. If not, then back to the drawing board. What other ways might we fundraise for this? Who else can we get behind this idea that might help? Where else can we cut or where else can we earn the money to make it happen? What if the church as a whole doesn’t provide for it, but individuals within the church who are passionate about it get creative and make it work?


This leads us to an especially important message for the American People and our Silly Politicians. Are you ready… Wait for it…


The Government is not the only one who can provide money for good things to happen! Whoa! Step Back! You mean that private investors can do charity? You mean that churches and community groups can be responsible for some of this stuff? You mean families can actually help each other? You mean communities can get together and make something work? All of this without our Mommy the Government doing it for us?


Abso-stinkin-lutely!



7. Good stewardship matters for good character.


I know you may not believe it, but church is not about money. Our message is one of hope and truth. We point people to a righteous God. But, our message gets awfully muddled when we misuse the money that is entrusted with us. Why would someone trust us to listen to our message if we aren’t open and transparent about something as basic as our finances? Why would someone believe that God wants us to care for the poor if the church community spends all its money on events for themselves? Where is our integrity when we say we care about the poor in third-world nations who live on less than a dollar a day, but we spend $50 million on a new building for our church to meet in? As a church, the message is simple: people see the way we spend our money and it reflects on their perception of the truth of our message.


Dear Congress, this applies to you. America was once a shining beacon in the world. Is it anymore? If we expect people in developing nations to believe that democracy works, we’d better be showing them that it does. Our message of the American Way is marred by our financial failures.


8. Someone has to pay the bills and it ain’t fair to leave it for someone else.


A house of cards is bound to come tumbling down someday. It’s funny, but there is a parable about building your house on sand versus building it on solid rock. Now, Jesus wasn’t talking about our budget there, but the lesson still rings true with our finances. We may be able to spend in a deficit for a few years (or generations if you are the government). We can get away with it for a little while, but eventually the bills are going to be called in. It will be time to pay up. It just isn’t right to spend freely now, knowing our children will one day face crushing austerity measures and crumbling economy, just so we selfishly can have everything we want now. For a household, this may mean bankruptcy. For a church, it could very well close us down. For a nation, the end results are almost unthinkable.






9. Brutal Realism is Required.


This is true of thousand dollar family budgets, hundreds of thousand dollar church budgets, multi-million dollar industry budgets, and trillion dollar governments. When it comes time to cut, EVERYBODY must give a little. Pet projects must go by the wayside. If they are good, then maybe they can return someday. This is probably the biggest problem we face as a nation. Everyone agrees that the budget must be cut, but nobody is willing to give away their pet project. The arts community wants the budget cut, just not the National Endowment for the Arts. Soldiers want the budget cut, just not a dime from the military. Teachers want the budget cut, but nothing from the schools. Seniors talk about how they lived through tight times in the depression, but the AARP isn’t about to discuss ANY changes to Social Security or Medicare. It doesn’t matter whether you are a Republican or a Democrat, you want everyone else to tighten their belt, just not you. It’s time to cut everywhere. It’s hard, but sometimes you have to go through EVERY line item on the budget and make adjustments. It hurts, but it is necessary.


10. Yes, budgeting is Hard – Quit Whining About It.


I hate numbers. I detest accounting. I loathe detail work. So what? It’s my job and I have to buckle down and do it. Every year, we have to look at the budget. We have to crunch numbers. We have to make hard decisions. We have to give up things. We have to say, ‘No.’ So, I get a cup of coffee, treat myself to a donut that I’m not allowed to have, I sigh a little; and then I get to work.


Dear Congress and Mr. President (of any administration and any party). Despite what you may have been led to believe, we did NOT send you there to enrich yourself. We sent you there to make hard decisions and to be leaders. Please listen clearly to the following Public Service Announcement: “Suck It Up!!!” Quit whining, work together, give till it hurts, and tell the lobbyists and your own constituents, “I know you want this, but we just can’t afford this, so the answer is No.”






There are some who would say all of this is naïve. Sure, this stuff applies to households and small businesses, but the government just doesn’t work that way. Well, they are right about that last part: it doesn’t work. What we are doing with our money doesn’t work; it is a house of cards that is past due for a collapse. We, the American people of any party, truly are naïve if we think this can continue much longer.


I don't have all the answers, and trust me, this is still a work in progress in my own life.  But, I do know that this lesson will be learned someday... The easy way or the hard way.



* Oddly enough, I wasn’t required to take a single class in Bible College or Seminary called How To Run A Small Business 101.

Financial Tip # 4: The Death of a Thousand Rose Petals

Marcus Aurelius Antoninus became emperor of Rome at the ate of 14 and was only emperor for four short years. Anyone who has spent any time with teenage boys could have told you that to give him that much power at that young of age would result in debauchery. He was so bad in fact that he disgusted the hedonistic Roman people. And that’s saying something.

During one of his infamous parties, he was said to have arranged for the ceiling panels to be pulled aside and thousands of rose petals dropped on his guests. There were so many rose petals that some of them were suffocated.

A single rose petal weighs in at just around 1/16 of an ounce. Yet, enough of them on top of you can crush you.

And this is where we get into our financial tip for the day:

A single sheet of paper weighs less than 1/200 of a pound and yet enough paper can crush you…Financially.

If you are ever going to get control of your day-to-day spending, your monthly budget, or your lifetime of financial investment; you have to get control of your paper!!! You must get organized.

This is probably the hardest of the financial tips for me to give because it is the one that I struggle with the most. I am a cluttered person. Anyone who has seen my desk can tell it is true. When my wife and I decided to take control and go debt free, we began sorting through our old paperwork. Months worth of unopened mail was placed in a plastic bin and we opened them one item at a time. We found lots of bills that we had paid, but just left the paperwork on the counter. We found sales , ads, and junk mail that should have been thrown away long ago. We found invitations to a party we missed. Worst of all, we found two checks that had been sent to us as refunds. Both were long since expired and of no further use. Our disorderly conduct had cost us money.

To control your budget and get out of debt, you must open your mail every day (or at least several times a week). Prioritize your bills by date and throw out the trash. In fact, I sort my mail over the trash so I don’t set anything down that we don’t need.

Place the bills in a tickler system so that you can pay them in order when your paycheck comes in.

Then, you need a filing system. Label everything. When you pay the bill, staple the receipt to the bill and place it in a file folder labeled for those items. If you are paying off collections, demand a payoff letter from them and then, when you pay it off, keep a copy of the checks you used so you can prove it later.

If your personality type is not one for doing this sort of tedium, you are going to hate it. But, I can promise you that it will save you hundreds and even thousands of dollars over your life time and also cut your stress when it comes time to purchase a home, pay taxes, or deal with collectors who have already been paid.

Like those little rose petals, out of control paperwork will smother you. Control your paperwork and it won’t crush you.

Disclaimer: I am not a trained financial advisor, I just play one on this blog. Seriously. Get good financial advice in life. My information comes primarily from personal experience, working in consumer lending in the banking industry, and watching friends, family, and parishioners struggle. But, much of this is common sense, most people just don't use their common sense when it comes to financial matters.

P.S. I apologize for the break in this series. I was completing homework for school. Talk about papers suffocating you.

Financial Tip # 3 – Keepin’ Up with the Jones

Did you see? The Jones family just bought a new car for Mrs. Jones. We should get a new car too. Our old one is approaching 50,000 miles and it’s brown. I don’t like brown cars. I saw an ad on T.V. yesterday that says that Global Lincoln-Mercury-Kia-Mazda-Ford-Chevy-Mercedes is having a sale. And, since I mentioned a T.V. did you see that Dave got a new 90 inch 3-D Plasma TV. Best Buy is selling those for only five thousand dollars. That’s a savings of almost $2000 off the normal price. Heck, with the money we saved, we could go on a cruise like the Taylors did last month.

It may not be that obvious, but keepin’ up with the Jones family is killing us financially. I watch it in my congregation and in my group of friends. I saw it at the company I used to work for. Whenever someone gets a new car, a new computer, a new T.V., a new cell phone, or some other new toy; several other people immediately go out and get one too. And then, since everyone else is doing it, then even more people have to go get theirs too.

The idea is: if they can afford it, then we can too. The problem with this thinking is that the Jones family is dead broke. They are buying all this stuff on credit. They are so deep in debt with credit card bills and car loans that they don’t see an end in sight.

Frankly, it all comes down to locker-room mentality: ‘Mine is bigger than yours.’ This ‘mine is bigger than yours’ competition is crushing them financially, and if you try to follow them, then you’ll be crushed too.

I used to catch a lot of flack at my old job for driving a Kia. I worked with a bunch of electronics geeks who thought a souped-up rice burner was the be-all-end-all car. If it didn’t have ground effects, a custom paint job, and a turbo; it wasn’t worth driving. You know, the Fast and Furious type. They can’t afford the payment, but they can get from here to the grocery store in 58 seconds. The dark, ugly truth, though, is that they are all drowning in payments. My Kia on the other hand is paid for.

My family has a nice big-screen television. It was given to us second hand. We saved for our computer. We are saving up a little at a time for a nice vacation next year. There is a lot less stress now, when it comes to paying bills than we used to have when we believed that debt was the way to get stuff. You can actually be at peace with money without being a millionaire.

There are two fallacies to look at here:

First – Debt is a tool to get ahead with. That’s just not true. Debt is an anchor that holds you back. Very few people are disciplined enough to really make debt work for them. And even the disciplined ones are only one financial problem away from trouble. Work hard, do without, scrimp and save to pay off that debt and you’ll be able to save and invest your money to work for you, not be its slave.

Second – Stuff makes you happy. Again, it’s just not true. You want to be happy, be debt free. Bills coming in that you don’t have money for are stressful. Credit collectors calling at all hours are nerve-wracking. All the stuff that you thought would make you happy may bring you some joy for awhile, but in most cases, it ends up in the garage sale tomorrow.

Learn to do without. Smile when the Jones’s show you their new car and tell you about their giant plasma. Congratulate them and then go drive home with your family and enjoy a movie together on your normal size T.V. Later, as you are able to walk in and plop down cash for the new toy that you saved for, you can smile again when you realize that they are still paying through the nose for the item that is now an out of date clunker, while you are paying less in cash for the newer, better model.

Don’t keep up with the Jones’ Those poor guys are broke!

Financial Tip # 2 - Don't Ask A Barber if You Need A Haircut

Don't Ask A Barber if You Need A Haircut

This cowboy wisdom can be applied throughout your financial life. Don’t ask a realtor how much house you can afford and don’t ask a banker how much of a loan you need.

Don’t get me wrong, good advice is a thing to be treasured, but you always have to consider what someone’s motivation is. Are they working for your benefit or for theirs? When it comes to your realtor and banker, you don’t usually have to wonder.

This housing boom and the following bust came largely because people trusted their banker and real estate agent on what they could afford instead of educating themselves and proceeding with caution.

The biggest issue is that they base what you need on what they think that you can afford.

Let’s look at a little banking term called DTI (Debt to Income). This is a ratio of how much money you have going out the door compared to how much you have coming in the door each month. It seems like an easy concept until you consider that different banks, mortgage companies, finance companies, credit card companies and other lenders look at this amount differently and NONE of them look at it realistically.

Here is our example today:

Mr. Jones has a job where he makes $50,000 a year. After taxes, 401k, insurance, and other payroll deductions, he actually brings home about $37,000 a year. Divide that by 12 and you get a monthly income of $3083.

Let’s say that Mr. Jones is a normal guy and has a car payment of $420 (average American car payment) and car insurance payment of $145 (average American car insurance payment). He also has a home phone bill, cell phone bill, gas, water, and electric bills totaling $600 per month. Let’s not forget cable television and internet of $120 per month. Groceries are about $300 a month and he eats out a few times a week totaling another $200 a month. He also has credit cards with a total minimum payment due of $115. His rent at this time is $1000 a month. That brings him to a total of $3083 coming in each month and $2780 accounted for in spending each month. This doesn’t take into consideration that cup of coffee at Starbucks every morning, his medicine and clothes as well as other extraneous impulse buys.

To calculate his Debt to Income ratio, you divide his debt ($2780) into his income ($3083) to get 90.2%. That’s very high. Of course the rent would come out when he buys the house, but then he’ll have a house payment, plus property taxes and mortgage insurance, so that will likely be higher. Let’s say that totals $1200 a month. His DTI is now 94.1% He’ll have no cushion in case of emergency. Kind of scary, Huh? No lender in their right mind would offer this guy a loan. Except…

Different types of lenders and banks look at his DTI differently. Most don’t count utilities. So that automatically knocks off the $600 a month from their calculation. They also don’t think about groceries and payment history as well as that cup of starbucks every day, medical expenses, etc. So that knocks off another $500 a month from their calculation.

Then, the kicker: Most of them use Gross income, not Net income. So they take the $50,000 per year and divide by 12. Now the calculation works like this:

$50,000 divide by 12 = $4167. Total expenses used in calculation: $1880. $1880 divide by $4167 = 45.1% DTI!!! Now he’s looking good. Heck, he can afford way more than a $1200 a month payment now. Let’s get him into a bigger home. Incidentally, I think that politicians use this same methodology for balancing the budget.

As a consumer, it is YOUR job to be brutally realistic about your finances. Look at your real budget. Include those cups of coffee from starbucks. Don’t forget medical expenses, cell phones, and utilities. Groceries really do cost money and so does eating out all the time.

Calculate your own DTI before deciding what you can afford and don’t trust your banker or realtor on this. You don’t need as big of a house as you think you do.

I’m not telling you that your banker or realtor is dishonest, only that they are working in their interest too and you need to be aware of that. Don’t shut off your brain and blindly accept what they say.

Think for yourself and do the math for yourself.

And be careful where you get a haircut.

Disclaimer: I am not a trained financial advisor, I just play one on this blog. Seriously. Get good financial advice in life. My information comes primarily from personal experience, working in consumer lending in the banking industry, and watching friends, family, and parishioners struggle. But, much of this is common sense, most people just don't use their common sense when it comes to financial matters.

Cry Freedom!!!

The best thing about writing a blog like this is that you have the ability to influence literally tens of people. I’ll be up front about it, I’m going to try to influence you if you read this.

In light of our recent economic issues in this country, I want to talk about money. This is the beginning of another top ten series. This one will be on money and finances. Having worked in the banking industry for more than 13 years, I have some insight and I have seen some of the most common and most terrible mistakes people make. Now, as a pastor, I know that most of the people in my congregation are in some sort of financial trouble and I can stand up and say that my wife and I have been through the financial wringer in the past and learned some lessons through the skin.

If you've been laid off, lost your home to foreclosure, had your car repoed, or been stressed by collectors, this series is for you.

I’ll bet you didn’t know it, but one of the most common topics in the Bible is money. Now, don’t run scared, there’s no organ playing and there won’t be anyone coming up and pass you an offering plate. No, the Bible is full of sound financial advice and it will be on this basis that I write this series.

On my journey to becoming a pastor, I made the commitment to preach debt free. I didn’t want debts and creditors haunting me as I taught. I was leaving a job making quite a lot of money annually and going back to college while working in ministry. I knew that, even after I got my degree, pastors don’t make a lot of money, so it seemed wise to have this goal. God provided. My wife and I sold our home and made enough from the equity to pay off most of our debts. We then worked very hard to pay off the rest. It took several years and a lot of sweat and tears, but we are there. We have one left: my student loans. We’ll get to that later.

To establish my bona-fides in this, I want to be transparent: I have been in deep debt in my life. I have known the fear of hearing the phone ring and knowing it must be a collector. I know the stress of receiving my paycheck and knowing that I don’t have enough for all the bills that are due this week. When I went to college the first time (right out of high school), I received credit card offers from every company out there. I applied for and got them too. I believed all the foolish advise out there about using credit cards to establish credit. I went on a shopping spree that lasted for years and thousands of dollars. After I was married, it took my wife and I more than a decade to get out from under that debt, and by that time, we had piled up other debt together. Thank you God, for helping us to get clear of that trouble.

The problem with debt is that you just don’t need it. People tell you that you do, but you don’t. I personally advise that you do NOT buy anything on credit except a home and an education. And then, pay those off as fast as you can. We’ll talk about that later.

The truth is, almost everyone I know has a similar story. They know that every dollar that comes in from their hard earned paycheck has to go back out the door to pay creditors. There’s that slavery.

As a banker, I worked as a loan processor and later a loan officer. I worked in all areas of consumer lending from auto finance to equity lines and loans to first mortgages and brokers. Rarely did I have a customer who was truly financially sound. Twenty to thirty thousand dollars of consumer debt was the norm and they were coming to me for more.

Near the end of my banking career, I worked for a mortgage broker. We put the broke in broker, because the company did B and C paper lending. That’s the people with bad credit to me and you. We sold 125% Equity Debt Consolidation and Home Improvement loans to people who were already in trouble. Every single day, we received 6-8 Notices of Sheriff’s Sale and Notices of Foreclosure for the people we had written loans for. That means 30-40 people every week were being financially destroyed and losing their homes by the company I worked for. My bosses didn’t care. They’d made their money and sold the loans to other investors. My conscience couldn’t handle it and I lasted just under six months.

Most of the people I have lent money to in Banking didn’t really need the money. They needed to get their finances under control. They needed to quit buying all the crap: boats, cars, second cars, motorcycles, homes, second homes, home improvements, ATV’s, TV’s, etc., etc., etc. They needed someone smack them in the head and say, “What the hell do you think you’re doing?”

They had become slaves to their debt and were using more debt as the answer. That’s like trying to dig yourself out of a hole by buying a new shovel and digging faster.

My advice to you is this: Don’t borrow money for anything except to purchase a home or get an education. If you have to borrow money for something, you can’t afford it. Period. What’s more, you don’t need it. Period. I'll give you some more information on how to actually reach this point, throughout this week.

My wife and I have weathered this recent economic downturn quite well because we weren’t up to our ears in debt anymore. We are now working on saving and investing for the future so that we can buy a home. We want a second car, but we will be saving to buy it, not going to the dealer and asking to borrow money for one. We are no longer slaves to lenders and let me tell you, it feels really good. I say this, not to brag, but to encourage you to consider this as a path for yourself. It really is possible.

Over the next ten days, I will share some tips on how to become free, to break those bonds of slavery to lenders. Just hold that image in your mind of Mel Gibson from Braveheart throwing that sword through the air and yelling, “FREEDOM.”

Disclaimer: I am not a trained financial advisor, I just play one on this blog. Seriously. Get good financial advice in life. My information comes primarily from personal experience, working in consumer lending in the banking industry, and watching friends, family, and parishioners struggle.