Matt About Money https://mattaboutmoney.com Simple. Meaningful. Success. Tue, 16 Jul 2019 00:17:55 +0000 en-US hourly 1 9092505 When Using a Target-Date Mutual Fund, Buyer Beware https://mattaboutmoney.com/2019/07/16/when-using-a-target-date-mutual-fund-buyer-beware/ https://mattaboutmoney.com/2019/07/16/when-using-a-target-date-mutual-fund-buyer-beware/#respond Tue, 16 Jul 2019 13:30:30 +0000 https://www.mattaboutmoney.com/?p=4766

Investing is arguably the most complicated and intimidating aspect of managing money. That’s one reason why target-date mutual funds have become so popular. Such funds, offered by many mutual fund companies, handle some of the most important investment tasks for you. They are now the default choice in many workplace retirement plans.

But is using a target-date fund the best way for you to invest? And if you’re using a target-date fund, are you using the right one? Let’s take a closer look.

A simple way to invest

The appeal of target-date funds is easy to understand.

All you have to do is choose a fund that contains as part of its name the year closest to the year of your intended retirement date. If you’re 30 years old and plan to retire when you’re 70, you’d choose a 2060 fund (they’re usually offered in five-year increments).

The fund’s asset allocation—that is, its mix of stocks and bonds—is designed with that target retirement date in mind. A 2025 fund, for example, would be relatively conservatively invested since it’s designed for someone who intends to retire in the year 2025. By contrast, a 2060 fund would be more aggressive.

That’s a core principle of asset allocation. The more time you have until your intended retirement, the more risk you can afford to take in a quest for a better return. The less time you have, the less risk you can afford to take.

Another key benefit of target-date funds is that they automatically adjust their asset allocation over time, becoming more conservative as their target date draws closer.

All target-date funds are not created equal

A major watch-out with target-date funds is that different fund companies may use very different asset allocations for funds designed for the same target retirement date. The companies simply have different philosophies. One may believe that a person who plans to retire in five years should still have 70% of their portfolio in stocks. Another may believe such a person should have 50% in stocks. Of course, these different portfolio designs lead to different outcomes.

The table below shows how three leading mutual fund companies’ 2010 funds performed in 2008, a year when the market fell by nearly 40%. As you can see, all suffered significant losses even though they were designed for people right on the cusp of retirement.

2008 Performance

Stock Market

-37.2%

Fidelity 2010 Fund

-25.3%

Vanguard 2010 Fund

-20.7%

T. Rowe Price 2010 Fund

-30.8%

By contrast, let’s take a closer look at how target-date funds performed in 2013, an especially strong year in the market. For this comparison, let’s look at funds that should have a very aggressive asset allocation—those designed for people who plan to retire around the year 2055.

The table below shows the performance of the same companies’ 2055 funds. While all three had good years, they also significantly under-performed the market.

2013 Performance

Stock Market

34.5%

Fidelity 2055 Fund

22.7%

Vanguard 2055 Fund

24.3%

T. Rowe Price 2055 Fund

25.9%

So, keep in mind that target-date funds may not provide the protection you assume during bear markets, nor are they designed to outperform during bull markets.

Finding the ideal target-date fund for you

If you’re going to use a target-date fund, be sure to take the following steps.

First, figure out your optimal asset allocation by completing an asset allocation questionnaire.

Then, compare your optimal asset allocation with the allocation used by the target-date fund you are using or considering.

For example, here are the current allocations used by the same three companies in their 2025 funds (just search on the name of the fund company and the target retirement date — “Vanguard 2025 fund,” for example—and then click on a tab that says “composition” or “portfolio.”)

Stocks

Bonds

Cash

Fidelity 2025

63%

32%

5%

Vanguard 2025

61%

39%

0%

T. Rowe Price 2025

64%

34%

2%

These three funds are fairly similar. Still, if you’re planning to retire in or around 2025, which one most closely matches your optimal asset allocation?

As another example, here are the current allocations used by the same companies for their 2060 funds.

Stocks

Bonds

Cash

Fidelity 2060

93%

6%

1%

Vanguard 2060

89%

11%

0%

T. Rowe Price 2060

87%

11%

2%

If you’re planning to retire in or around 2060, which one most closely matches your optimal asset allocation?

Lastly, if there is a difference between your optimal asset allocation and the one used by the fund you are currently invested in, there are two options.

First, if you have access to funds from various mutual fund companies, see if one of those companies offers a fund with your target retirement date that uses an allocation that matches or is close to your optimal asset allocation.

Second, if you are limited to funds from one company, consider using a fund with a different target date than the one closest to your intended retirement date. That may help you find a fund that uses an allocation that more closely matches your optimal asset allocation.

The bottom line on target-date funds

Target-date funds provide the benefits of setting the asset allocation for you based on your intended retirement date and then automatically changing that allocation as you near that date. Keep in mind, though, that all target-date funds are not same, so it’s important to know your optimal asset allocation and match it to a target-date fund that’s designed similarly.

Also keep in mind that target-date funds may not provide the downside protection you assumed during bear markets and are not designed to capture all of the upside in bull markets.

Do you use a target-date fund? How careful have you been to choose a fund that most closely mirrors your optimal asset allocation?

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Profitable Ideas: How to Up Your Investment Game, Keeping the Financial Peace in Your Family, and More https://mattaboutmoney.com/2019/07/12/profitable-ideas-how-to-up-your-investment-game-keeping-the-financial-peace-in-your-family-and-more/ https://mattaboutmoney.com/2019/07/12/profitable-ideas-how-to-up-your-investment-game-keeping-the-financial-peace-in-your-family-and-more/#respond Fri, 12 Jul 2019 13:30:23 +0000 https://mattaboutmoney.com/?p=7395

Weekly roundup of some of the best personal finance articles from around the web.

Why are we such poor investors (The Financial Bodyguard). How our brains, and our hearts, often lead us astray.

The thing that’s probably blowing a hole in your budget (A Wealth of Common Sense). It drives more of your financial life than you probably realize.

Your best tips for managing the family money (NY Times). I don’t agree with all of these ideas (and neither will you) but there are some good nuggets here.

The new Millennial obsession (Gartner L2). Oddly, pay-by-installment is the new credit card.

Why things break: Easy causes of business and investing failure (Collaborative Fund). Not a quick how-to article, but an interesting read, as is usually the case with Morgan Housel’s writing.

Here’s an example of the perfect résumé, according to Harvard career experts (CNBC). If you’re in the job market, here’s how to put your best foot forward.

Storm prep: How to keep your documents safe from a natural disaster (USA TODAY). This might be too late for the folks in New Orleans, but what if an especially bad storm hits your town?

5 tips on managing the ‘boomerang generation’ (NY Times). Lots of adult ‘kids’ are moving back home. Here’s how to keep the peace.

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Creating a Cycle of Positive, Lasting Financial Change https://mattaboutmoney.com/2019/07/09/creating-a-cycle-of-positive-lasting-financial-change/ https://mattaboutmoney.com/2019/07/09/creating-a-cycle-of-positive-lasting-financial-change/#respond Tue, 09 Jul 2019 13:30:48 +0000 https://www.mattaboutmoney.com/?p=4889

For far too many people, money is a source of stress or frustration.

Consider these findings from a recent Federal Reserve survey:

  • About 46% of U.S. adults said they would be unable to cover a $400 emergency expense without selling something or borrowing the money.
  • About 31% of non-retired adults reported having no pension or retirement savings at all.
  • Among respondents with a 401(k) or IRA, 48% said they were either “not confident” or only “slightly confident” about their ability to make the right investment decisions.
  • Two-thirds of people who bought a vehicle last year took out a loan to do so, and 12% of those borrowed for a term longer than the amount of time they plan to keep the car.

If you see yourself in any of those stats, or if you’re dealing with some other lingering financial frustration, maybe you’ve been looking for answers in all the wrong places.

More than knowledge

There’s a common myth that managing money well is simply a matter of knowledge and behavior. Just learn what you need to know, and then go do it.

At best, that advice is incomplete. I mean, think about it. Today, there’s no end to the amount of readily, freely available financial knowledge. If you have any question about money, you can find answers—sometimes even credible answers—with a quick Internet search.

And yet, there’s also no end to the number of people who struggle with some aspect of money.

Don’t get me wrong. We need knowledge. We need to understand the difference between a Roth and a traditional IRA, for example, and which one is best for us. But knowledge alone is not enough.

Nor is it enough to follow a set of step-by-step instructions as if building a financial life that works is as simple as building a model airplane.

The end of the line

Wise money management is often described as a linear process. Do this, then this, and then this. And do it in this order.

To a degree, that’s well and good. For example, if you have debt, other than a reasonable mortgage, I encourage you to first fix your debt payments, then build an emergency fund until it has one month’s worth of essential living expenses, and then redirect money you had been putting into savings toward accelerated debt repayment. Once your debt is paid off, redirect that money back toward savings until you have three-to-six months’ worth of living expenses saved. Once your emergency fund is fully stocked, redirect most of that money toward investing.

But it’s one thing to know what to do. It’s something else to find the motivation to actually do it.

Life change is circular

When I started teaching financial workshops, I thought I had discovered the golden key to why so many people struggled with money. People don’t really understand their financial identity and haven’t formed the right attitudes of the heart. Once a person’s attitude is right, I reasoned, the right behaviors would naturally follow.

I held onto a linear approach; I just put identity and heart attitudes—wisdom—at the front of the line.

Then my wife and I bought a house from a couple in which the man was a psychiatrist. He and I struck up a bit of a friendship, and one morning over coffee he helped me see that life change isn’t linear; it’s circular.

When you start to alter an attitude, that can, in fact, lead to behavioral change. But by the same token, a behavioral change can help change or reinforce an attitude. Knowledge is part of the mix as well.

Around and around they go. Attitudes get refined and that refines our behavior. We start doing things differently and that solidifies our new attitudes. We gain some knowledge, and that further guides us toward productive behavior, which reinforces a new attitude.

All three—attitudes, knowledge, and behavior—work together to create positive, lasting life change.

The ultimate source of wisdom

In order to bring about financial change, it’s natural to want to know what to do differently and how. The identity/attitude/wisdom part can feel intangible and too time consuming. But it’s essential, which is why reading and memorizing God’s Word is what starts the cycle of financial life change moving in the right direction.

Keep this Book of the Law always on your lips; meditate on it day and night, so that you may be careful to do everything written in it. Then you will be prosperous and successful. – Joshua 1:8

If you want to get out of debt, there are important things to know and steps to take. But first, memorize and meditate on God’s Truths about who you are (“Yet to all who did receive him, to those who believed in his name, he gave the right to become children of God.” – John 1:12). For a child of God, it makes no sense to carry debt (“The borrower is servant to the lender.” – Proverbs 22:7; “You were bought at a price; do not become slaves of men.” – 1 Corinthians 7:23).

If you want to build savings, there are important things to know and steps to take. But first, memorize and meditate on God’s teaching about the importance of maintaining a reserve (“In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.” – Proverbs 21:20) and God’s warning to not hoard (“You fool! This very night your life will be demanded from you. Then who will get what you have prepared for yourself?” – Luke 12:13-21).

Gain the knowledge and take the steps. But first, write God’s Word on your heart.

What about you?

If you could improve one aspect of your financial life, what would it be? What comes most quickly to mind? Now consider: Do you have the knowledge you need? Do you know what steps to take? But first—above all else—have you discovered what God’s Word has to say on the topic? And are you writing it on your heart through Scripture memory?

If you’re not sure what the Bible says about a certain financial topic, let me know what you’re working on and I’ll be happy to suggest some verses.

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Profitable Ideas: ‘Anchoring’ for Profit, What Millionaires Drive, and More https://mattaboutmoney.com/2019/07/05/profitable-ideas-anchoring-for-profit-what-millionaires-drive-and-more/ https://mattaboutmoney.com/2019/07/05/profitable-ideas-anchoring-for-profit-what-millionaires-drive-and-more/#respond Fri, 05 Jul 2019 13:30:04 +0000 https://mattaboutmoney.com/?p=7333

Weekly roundup of some of the best personal finance articles from around the web.

How ‘anchoring’ empowers this personal finance author to make better spending decisions (NBC News). Marketers use ‘anchors’ all the time. Create your own and you’ll save money.

How to reclaim your time to focus on work that really matters (Fast Company). How to be effective in this age of distraction.

Working teens and Roth IRAs: a perfect investing match (Vanguard). Teach your kids how to work, and then teach them how to make their money work.

Over 1,000 shopping sites, from J. Crew to Walmart, are deceiving users, study shows (Fast Company). A helpful look inside the marketer’s playbook.

Why your luxury car is unlikely to materially boost your happiness (Abnormal Returns). You actually can drive what millionaires drive, and you’d be wise to do so.

Hacking your way to the best hotel rate (NY Times). Recommended apps and strategies for those who are prone to wander.

The curious origins of the dollar symbol (BBC). Be prepared for the next lull in a conversation with this money trivia.

This is what death cleaning taught me about life (Becoming Minimalist). Lessons learned from the possessions a loved one left behind.

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Choose Your Financial Role Models Well https://mattaboutmoney.com/2019/07/02/who-are-your-financial-role-models/ https://mattaboutmoney.com/2019/07/02/who-are-your-financial-role-models/#respond Tue, 02 Jul 2019 13:30:46 +0000 https://www.mattaboutmoney.com/?p=4730

The comparison game is hard to avoid. It’s been played for a long time, and lately it’s become even more challenging.

“I think the difference today is the unending nature of knowing what ‘the Joneses’ do, given technology. Purchases, vacations, educations are all broadcast via social media and other means.” That’s Sarah Stanley Fallaw, Founder and President of a social research organization called DataPoints, co-author of The Next Millionaire Next Door, and daughter of the late Thomas Stanley, who co-authored one of my favorite personal finance books: The Millionaire Next Door.

Picking up where her father’s work left off, her company’s research has found that the people who are most successful at building wealth are those who are best at tuning out what other people do.

“If you look at some of the research that relates to self-efficacy (which means you believe you can do things) and internal locus of control (believe that things around me are driven by my actions and behavior), you see the importance of social indifference. Do I care what other people are driving, or about trends? That sort of thing…the research we’re doing demonstrates that those who ignore trends have higher net worth, regardless of their age, income and percentage of wealth that they inherited. Building wealth means ignoring what others are doing, which may be more challenging today than [ever].”

Choosing who to pay attention to

I like that phrase—social indifference. But I also wonder whether it’s possible to completely ignore what others are doing.

Adam Galinsky and Maurice Schweitzer say it isn’t. They’re social psychologists at Columbia University and the University of Pennsylvania respectively, and co-authors of the book, “Friend and Foe: When to Cooperate, When to Compete, and How to Succeed at Both.” They call the comparison game “the thief of joy,” but also say, “It’s pretty much inevitable, so you may as well learn to use it to your advantage.”

They point to comparisons that can be helpful. If you want to get better at a sport, for example, comparing yourself to people who are better than you and playing against them will tend to elevate your game.

But choosing our role models is more complicated than that, isn’t it? We don’t want to emulate those who are a success on the field but a mess off the field.

Looking beyond the surface

Choosing financial role models can be especially challenging. Our culture admires those with the outward appearance of success, and if we’re not intentional about it, we can end up doing the same thing. We can’t help noticing what our neighbors and co-workers are driving or where they go on vacation. Sometimes we can’t help wanting what they’re driving or where they go on vacation.

One of the many problems here is that we don’t really know if they can afford the life they’re living. Some probably can, but some surely can’t. We don’t see the late night arguments brought on by financial stress.

I’m thankful for several friends who could afford to live bigger financial lives, but choose not to.

Like Rob and Amy. He’s a pilot for a major airline, and yet when we met them he and Amy lived in a small two-bedroom townhouse. Over dinner one night, they said they had no immediate plans to move, even though they were expecting their second child.

They explained that living below their means gives them great freedom and flexibility. When the airline Rob works for got into financial trouble several years ago and made significant cuts to all of the pilots’ salaries, they weathered the storm without having to make any significant changes to their lifestyle. By contrast, many of Rob’s colleagues had to sell homes they could no longer afford.

Since we now live in a different state, Jude and I haven’t seen Rob and Amy for a long time, and yet they continue to influence the way we manage money.

We’re thankful to have numerous role models like that. Tom and Rachel, Dick and Sibyl, Warren (leader of the first biblical money management workshop I ever attended), and others.

One challenge in finding good financial role models is that most of us don’t typically talk about our finances, even with our closest friends. That’s a shame because we could be such good sounding boards for each other, such good accountability and encouragement partners.

Who are your financial role models? What is it about the way they manage money that challenges you and motivates you to manage money well, even if that means swimming against the current of our culture?

Money. Purpose. Joy. is a small group resource that explores some of this further, while teaching practical steps for wise money management. Watch the first video free.

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Profitable Ideas: Seven Money Conflicts in Marriage, Popular Money Apps Put to the Test, and More https://mattaboutmoney.com/2019/06/28/profitable-ideas-seven-money-conflicts-in-marriage-popular-money-apps-put-to-the-test-and-more/ https://mattaboutmoney.com/2019/06/28/profitable-ideas-seven-money-conflicts-in-marriage-popular-money-apps-put-to-the-test-and-more/#respond Fri, 28 Jun 2019 13:30:19 +0000 https://mattaboutmoney.com/?p=7286

Weekly roundup of some of the best personal finance articles from around the web.

7 common money conflicts in marriage and how to solve them (Kiplinger). What to watch out for and how to resolve these issues if they come up in your marriage.

Being satisfied with what we have (Seed Time). It’s counter-cultural and even counter-intuitive, but it does have the advantage of being biblical!

Benefits of assigning kids chores (Smart Parent Advice). Oftentimes, it seems easier to just do it yourself, but your kids will benefit (and so will you) if you get them more involved in helping out.

How I sold my car online for the most money possible (Bible Money Matters). Okay, you’ve done the right thing and kept your car for 15 years (right?). Here’s how to get top dollar when it’s time to part with your faithful ride.

How to make better (and quicker) decisions (Get Rich Slowly). Whether buying a car or a can of soup, there are endless choices. Here’s how to choose wisely.

Get happy (Humble Dollar). Time has a way of putting things in perspective.

One-third of workers are making a big mistake with their 401(k) (Money). Free is good, so why aren’t more people taking full advantage?

Mint vs. Personal Capital: Which money app is best? (Four Pillar Freedom). It turns out both are best, for different purposes.

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Fuzzy Math: What Constitutes a ‘Deal’? https://mattaboutmoney.com/2019/06/25/fuzzy-math-what-constitutes-a-deal/ https://mattaboutmoney.com/2019/06/25/fuzzy-math-what-constitutes-a-deal/#comments Tue, 25 Jun 2019 13:30:11 +0000 https://www.mattaboutmoney.com/?p=4694

Imagine you’re in a store thinking about buying a calculator that normally sells for $15 when a salesperson informs you the company’s other store, located 20 minutes away, has the same calculator available with a $5 discount. Would you make the drive? Now imagine the same situation with one exception: the calculator you’re considering normally sells for $125. Now would you drive across town to save $5?

Some 35 years ago, Daniel Kahneman and Amos Tversky, pioneers in the field of behavioral economics, set up that very experiment with about 200 shoppers. The result? Nearly 70% of people were willing to drive across town to save $5 when the full retail price was $15, whereas just 29% were willing to make that effort when the price was $125.

That’s completely irrational, right? In both situations, there was an opportunity to save $5. And yet numerous studies since then have confirmed their findings: people tend to value a high percentage-off deal on a low-cost item more highly than a deal on a more expensive item where the actual dollar savings might be just as valuable or even more valuable.

I’m embarrassed to admit that I confirmed that finding myself recently when shopping for a gift.

Before heading out for a quick shopping trip on my lunch hour, I received a coupon for $2 off a greeting card. I was happy to get that coupon since I was already planning to go to that particular store to buy a birthday card that I figured would cost $4. Great, 50% off!

However, my first stop was at a different store to buy the gift. For some reason, I didn’t even think to look for a coupon. It was only when I got back to my office that I realized I should have searched for a discount. To satisfy my curiosity, I did a quick search and found a coupon for $3.50 off. At first, I was mad at myself. Why didn’t I look for a coupon before I went to the store? But my next thought was that saving $3.50 on a $50 purchase wasn’t a very big deal.

Think about that. I was happy to get a $2 coupon for a $4 item, but I easily dismissed a coupon worth even more because it amounted to a far smaller percentage of the purchase price.

Again, completely irrational. And I write about money for a living!

I’ll give myself a little bit of credit, though, for how I bought a car a few years ago. I found a low-mileage two-year old car, researched what it was worth, and struck what seemed like a fair deal with the salesperson. At the end of our negotiation, I also asked for a full tank of gas, which he agreed to. But when I picked up the car a few days later, the tank was just half full.

I was tempted to let it go. Twenty dollars seemed so minor compared to the $18,000 I was paying for the car. Even though I felt a little embarrassed about it, I asked him to honor our deal and he agreed to top off the tank.

For many of us, it’s tempting to dismiss the opportunity to save $20 on an $18,000 purchase or $3.50 on a $50 purchase because the savings amounts to such a small percentage of the purchase price. But we would never miss the opportunity to save the same dollar amount when the savings amounts to a higher percentage of the price.

The solution? Change the way you frame the opportunity. Don’t always think in terms of percentages. Think about the absolute dollar amount, and how happy you’d be to save that much on an item that costs much less.

What are some other examples that come to your mind—perhaps situations you’ve experienced yourself—where saving a large percentage on an inexpensive item seemed more worthwhile than saving a much smaller percentage (but the same or even larger absolute amount) on a more expensive item?

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Profitable Ideas: The 7 Deadly Sins of Personal Finance, Americans’ Top Money Regret, and More https://mattaboutmoney.com/2019/06/21/profitable-ideas-the-7-deadly-sins-of-personal-finance-americans-top-money-regret-and-more/ https://mattaboutmoney.com/2019/06/21/profitable-ideas-the-7-deadly-sins-of-personal-finance-americans-top-money-regret-and-more/#respond Fri, 21 Jun 2019 13:30:07 +0000 https://mattaboutmoney.com/?p=7264

Weekly roundup of some of the best personal finance articles from around the web.

The seven deadly sins of personal finance (Get Rich Slowly). What would you add to this list?

Teaching your kids to give their money away is one of the most important lessons  they’ll learn (Business Insider). Ideas for getting kids started on the journey of generosity.

Hidden college costs (Saving For College). If you have college-bound kids, budget accordingly.

The hot trend in smartphones? Not buying a new one (CNBC). This isn’t doing Apple stockholders any favors, but it’s helping a lot of families’ bottom lines.

To anyone who wonders if their giving matters (She Picks Up Pennies). A wonderful post. Read it and be blessed.

Americans’ top regrets all center on this 1 big money mistake (USA Today). To set yourself apart, save early and save often.

How much does it cost to buy happiness? (Advisor Perspectives). Latest findings from the endless quest to explore the connection between money and happiness.

Husbands ignore future widows’ needs (Squared Away). Even if you’re a long way from retirement, it’s important to understand this.

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Let It Go https://mattaboutmoney.com/2019/06/18/let-it-go/ Tue, 18 Jun 2019 13:30:55 +0000 https://mattaboutmoney.com/?p=7260

I’ve spent way to much time in recent days feeling very wronged. And by a fellow Christian, no less. Somehow, a commitment made a few weeks ago, a couldn’t-have-been-any-clearer “yes,” turned into a “no.” 

It was something I was extremely hopeful about, something that seemed like a miraculous gift from God. For it to have ultimately not worked out felt so cruel, so wrong. 

I can’t believe what she said

I can’t believe what he did

Oh, don’t they know it’s wrong

Don’t they know it’s wrong

Well maybe there’s something I missed

But how could they treat me like this

It’s wearing out my heart

The way they disregard

– Losing, Tenth Avenue North

In response, I looked up the verse, “Let your yes be yes, and your no be no” (Matthew 5:37). I guess I wanted to feel justified in my anger. And for a little while, I did.

But then I read on and came across the following words from Matthew 6:14-15.

For if you forgive other people when they sin against you, your heavenly Father will also forgive you. But if you do not forgive others their sins, your Father will not forgive your sins.

I went from feeling deeply hurt and angry to feeling convicted. I realized that to hang on to my upset would only hurt me.

Oh Father, give me grace to forgive them

‘Cause I feel like the one losin’ 

Since this is a financial blog, let’s turn there. Are there any tough aspects of your financial situation that others had a part in? Are there difficult financial circumstances you’re dealing with that others caused or contributed to?

Of course, I don’t know your situation. It could well be that the other person really should do something to make things right. They owe it to you. But what if they never do? And what if they never even acknowledge what they did? What if they never apologize or ask you to forgive them?

The counter-intuitive, counter-cultural, counter-everything answer is to let it go. 

I know. Believe me, I know. You shouldn’t have to feel as lousy as you do. You shouldn’t have to be paying the price. It’s someone else’s tab. They should pay.

But here’s where I’ve landed after spending too much time dwelling on the unfairness of it all and then spending time in God’s Word: The best thing we can do—the most God-honoring and even good-for-us step we can take—is to choose to forgive.

Why is it so difficult?

If you find it hard to forgive others, I wonder if it’s because you have a hard time forgiving yourself. I know that’s true for me. I am nothing less than brutal toward myself about past failures, completely merciless. The other day, I remembered something I messed up when I was in high school. In high school! So vivid and painful was my sense of failure that it brought tears to my eyes.

It’s what my wife calls “stinkin’ thinkin.’” Believing lies.

So I’ve been spending time reading and meditating on the truth of God’s word. If any of this resonates with you, I recommend you do the same. 

Some go-to verses include John 3:16, which depicts the greatest act of forgiveness in the history of the world—God’s forgiveness of you and me.

For God so loved the world that he gave his one and only Son, that whoever believes in him shall not perish but have eternal life.

You’ve probably read or heard those words a thousand times. But try taking them in as if for the first time. God sent is only Son into the world to die a horrible death as an act of love and in order to forgive us for the many ways we fall short of His holy standards.

This is the starting point. And it has the power to infuse us with a forgiving spirit toward others. That’s what the next two verses are all about. 

Make allowance for each other’s faults, and forgive anyone who offends you. Remember, the Lord forgave you, so you must forgive others. – Colossians 3:13 

Get rid of all bitterness, rage and anger, brawling and slander, along with every form of malice. Be kind and compassionate to one another, forgiving each other, just as in Christ God forgave you. – Ephesians 4:31-32

One of the best ways we can steward the reality that we have been forgiven much is to extend forgiveness to others.

Is there someone you need to forgive for some aspect of your financial situation, or anything else? Why not do it today?

What comes first?

I remember reading the verse, “Where your treasure is, there your heart will be also” (Matthew 6:21), and thinking it should be the other way around. Our money follows our heart. But over time, I’ve seen the wisdom of it. We don’t need to wait for our hearts to swell with feelings of generosity before we give to this or that ministry; once we start giving, our hearts will follow. 

My sense is that the same may be true with forgiveness. Even if our hearts aren’t there right now, if we choose to forgive, our hearts will likely follow.

How has forgiveness factored in to your life, financially or otherwise?

For more on this topic, read The Heart of the Matter.

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Profitable Ideas: When a Sale Costs More, New Thinking on the Happiness/Success Equation, and More https://mattaboutmoney.com/2019/06/14/profitable-ideas-when-a-sale-costs-more-new-thinking-on-the-happiness-success-equation-and-more/ Fri, 14 Jun 2019 13:30:27 +0000 https://mattaboutmoney.com/?p=7199

Weekly roundup of some of the best personal finance articles from around the web.

Who doesn’t love sales? There’s just one problem: they lead us to make dumb choices (Ideas.TED). Unfortunately, many of us have trouble determining how much something is really worth. Marketers know that, and love that.

Tornados, hurricanes and earthquakes: What does home insurance cover after a disaster? (USA Today). Do you know how well you’d be covered?

Most Americans have financial regrets, but some don’t intend to do anything about it (MarketWatch). Learning from other people’s mistakes is a good way to help avoid making some of your own.

What is rational minimalism? (Becoming Minimalist). Minimalism isn’t as radical as you may have feared.

Don’t make these seven car insurance mistakes (The Simple Dollar). Are you paying too much?

What’s your purpose? Finding a sense of meaning in life is linked to health (NPR). This is not just a great starting point for a life lived well, it’s a great starting point for setting financial priorities. 

Happiness doesn’t follow success: It’s the other way around (Aeon). Sure, work on your job skills, but work on your happiness as well. Practicing gratitude is a good place to start.

To get a bigger paycheck after college, start working now (CNBC). Working while in school isn’t just about helping to pay for tuition.

To receive more ideas and encouragement for using money well, sign up for a free subscription to this blog.   

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