Matt About Money Simple. Meaningful. Success. Wed, 17 Apr 2019 21:57:53 +0000 en-US hourly 1 9092505 Profitable Ideas: Becoming a Financial Superhero, How Marketers Get Inside Your Head, and More Fri, 17 May 2019 13:30:34 +0000

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

Financial superpowers (A Wealth of Common Sense). If Stan Lee had come up with Money Man, here’s what he’d be able to do. It’s what we should all be able to do.

This common job advice is actually setting grads up for failure (Fast Company). The important difference between getting a job and building a career.

The latest victims of the student debt crisis — parents (CNBC). What the “PLUS” in Parent PLUS loans really means — more debt, more stress, and more years of work before retirement.

Why I’m saving and investing for the disaster to come (Monevator). It’s always something, which is why it’s important to have more than a little something set aside just in case.

Will Smith and Michael Eisner want to literally get inside your head (Fast Company). As the “target” of countless marketing campaigns, it’s good to know what you’re up against.

The impact you can have from a small space (Becoming Minimalist). Some people are waiting until someday, one day to make a difference. There’s no need to wait.

Are you a helicopter parent, a lawn mower, or worse: a payoff parent? (Kiplinger). We all want our kids to succeed, but maybe we’re doing too much of the work.

Young people, scrolling their friends Instagram feeds, feel pressure to overspend (USA TODAY). It should come as no surprise that the more time we spend on social media, the more money we tend to spend.

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3 Essential Questions About Investing Tue, 14 May 2019 13:30:14 +0000

Investing is arguably the most complicated and intimidating part of money management. And days like yesterday don’t make it seem any easier!

To invest successfully, it’s important to control what you can and let go of the rest. Consider your answers to the following questions, each one of which focuses on a key investing factor that’s well within your control.

Are you investing enough? One of the big trends within workplace retirement plans, such as 401(k) plans, is “auto-enrollment.” It used to be that participation in such plans was something you had to opt into. Now, in more and more companies, participation is the default; if don’t want to take part, you have to opt-out.

While that’s helped increase participation rates, one major watch-out has to do with your plan’s automatic contribution rate. In many cases, the percentage of salary is pretty low — like 3%. And a lot of employees, assuming their employer has their back, never really figure out if that’s enough (it isn’t) or increase their contribution amount.

To figure out how much you should be investing, use a free online calculator to run some numbers.

Is your asset allocation correct for your age and risk tolerance? Another major trend in workplace plans is the popularity of target-date funds. Many mutual fund companies now offer such funds.

You’ll recognize them because they have a date as part of their name, such as Fidelity’s Freedom 2040 Fund or Vanguard’s Target Retirement 2055 Fund. They’re usually offered in 5-year increments, such as a 2020 fund, a 2025 fund, etc. The date is the year closest to the year when you plan to retire.

There are two wonderful things about target-date funds. First, they handle asset allocation decisions for you, choosing the stock/bond mix the fund companies believe is best for someone planning to retire at that date. Second, as you get older, the target-date funds automatically adjust their holdings, making the portfolio more conservative.

But here’s a key watch-out. Don’t blindly assume the allocation used by your target-date fund is appropriate. When the market fell by nearly 40% in 2008, many people who were invested in 2010 target-date funds—people just about to retire—lost a ton of money. Their target-date fund of choice turned out to be surprisingly aggressively invested.

Understand this: One company’s fund that’s designed for the same target retirement date as another may be designed very differently. For example, American Funds 2020 Target Retirement Fund has a 46% allocation to stocks whereas the Fidelity Freedom 2020 Fund has a 55% allocation to stocks. These funds will respond differently to the same market conditions.

To figure out how your investment portfolio should be allocated, take this simple quiz. Then, if you are using a target-date fund, find one that has a similar allocation (it might not be the one with the year closest to the year of your intended retirement as part of its name).

Are you ready for how rough the ride can get? It’s easy to make the mistake of hearing that the market went up by over 30% in a particular year, as it did in 2013, and assume it moved throughout the year in a nice smooth upward path. But it doesn’t usually work that way, and it definitely didn’t work that way then.

There were six significant downturns throughout 2013. Each time the market slipped, you can be sure some people feared the worst and bailed out, a move they certainly came to regret.

This points to the importance of using a process for selecting investments you understand, trust, and are committed to staying with in good times and bad. And it points to the importance of managing your expectations about how the market performs. While its long-term trajectory has been upward, the ride will certainly get rough from time to time.

How would you answer each of those three questions?

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Profitable Ideas: Instagram is the New Mall, Keeping Up With the Insta-Joneses, and More Fri, 10 May 2019 13:30:34 +0000

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

Instagram is the new mall (The Atlantic). Another step down the path of making it easier for us to part with our money. 

A vision of the dark future of advertising (OneZero). A glimpse into our “datafied” future.

Should you ever pay off your mortgage? (Engineering Peace of Mind). The pros and cons of two approaches to managing your mortgage, but with an important conclusion: “I have yet to meet someone who regretted paying off their mortgage.”

Starry eyes and starry skies (Epsilon Theory). A thought provoking post that may challenge some of your most closely held assumptions about the value of college.

Insurance for a learning driver (Kiplinger). What to do if you’re about to have another driver in your household.

Keeping up with the insta-Joneses (Paul Jarvis). Navigating our “social arms race.”

Before deciding on a college, look closely at the financial aid letter (NY Times). The terminology can be maddeningly confusing. Here’s your interpretation guide.

Minimalism on the path to financial independence (Becoming Minimalist). One woman’s inspiring story.

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The 5 Budget Mistakes I See Most Often and How to Fix Them Tue, 07 May 2019 13:30:20 +0000

I’ve reviewed lots of people’s budgets (or, as I prefer, “cash flow plans”) over the years. No two are exactly the same because people have different incomes, fixed expenses, priorities, and more. That’s to be expected. When it comes to budgeting, there’s no such thing as one-size-fits-all.

However, there are certain overarching approaches to budgeting that make cash flow management easier and more effective no matter what your unique circumstances are. Unfortunately, the use of these approaches is all too rare. As a result, here are five of the most common mistakes I see in people’s budgets.

1. Not budgeting based on gross income

It’s pretty common to find budget recommendations based on net income — what’s left after all the withholding (for taxes) and transfers (for retirement plan contributions) are taken care of. The thinking is that net income is the money that’s available to you so that’s what you should base your budget on.

However, gross income is the purest, most complete view of your income. I prefer to use it as the starting point because some of the withholding and transfer categories are manageable.

Take taxes, for example. About 80 percent of taxpayers get a federal refund each year and this year’s average amount is around $2,800. That’s a lot of money you might have preferred going home in your paycheck. If you typically get a big refund, estimate how much you really should have withheld by using the IRS withholding calculator. Then talk to your human resources department about having less withheld.

Of course, retirement plan contributions are manageable as well. Listing how much you contribute each month on your cash flow plan can serve as a helpful reminder to think about whether you’re contributing enough. Today, when so many workplace plans automatically set employee contribution levels — and with the default amount usually set at a low three percent of salary — it’s especially important to consider whether you’re saving enough.

2. Not putting first things first

Cash flow planning isn’t just about putting all of your monthly income and expenses down on paper. It’s about guiding your use of money in a way that enables you to live within your means and pursue the priorities that are most important to you.

One reason so many people think it’s impossible to give generously, build savings, or invest for the future is that they haven’t made those items priorities. It helps a lot to design your plan with giving, saving, and investing at the top of the outgo section. (Also see Setting Financial Priorities: A Framework for Financial Success.)

List them first on your plan and then subtract them from your income before setting your allocations for housing, transportation, clothing, and all the rest. Trying to take care of these priorities with money that’s left over after lifestyle spending is virtually guaranteed to leave you with nothing to give, save, or invest. 

3. Not budgeting for home and car maintenance

One of the best ways to keep your overall housing and transportation costs down is to keep your home and vehicles maintained and to make repairs on a timely basis. That will be a lot easier if you allocate money for those purposes in your monthly budget.

When it comes to a home, it seems there’s always something in need of attention — from a leaky faucet to ant infestation. Depending on the age and condition of your home, $200 per month is roughly the right amount to budget for maintenance and repairs. If you own a condo or townhome, you should be able to budget less. Make sure you know what you’re responsible for and what your association is responsible for.

With vehicles, $75 per car per month is about right, but again, it depends on the condition of your vehicle.

You won’t spend these full amounts every month, but some months you’ll spend a lot more. During months when you don’t spend your full home or vehicle maintenance and repair budget, let that money build up, either in your checking account or in a savings account designated for periodic bills and expenses. Speaking of which… 

4. Not budgeting for periodic bills and expenses

When my family used to live in the Chicago area, I’ll never forget the first property tax bill we received. I thought maybe one of our kids had been kidnapped and this was a demand for ransom. Property taxes in Chicago are crazy high.

That’s an example of a periodic bill or expense — a cost that doesn’t occur every month, but that needs to be paid at some point each year. If you don’t plan ahead for these big, irregular expenses, they can be real budget busters. Other examples include insurance premiums, Christmas gifts, and vacations.

Here’s what to do. Include one-twelfth of the annual cost of each such item on your monthly budget. Then transfer the total of all of these monthly amounts to a savings account dedicated to these expenses. That way, when the bill comes due, there will be money set aside for it. 

5. Not budgeting for miscellaneous expenses

Having a zero-based budget is a worthy goal. That means income minus expenses equals zero. However, creating a budget where every dollar of income is allocated to a specific outgo category is far easier than following such a budget. No matter how detailed your plan, there always seem to be some expenses that just don’t fit into one of your preplanned categories.

To cope, set a monthly budget for miscellaneous expenses. But not very much — $50 is a good limit. If miscellaneous items start running higher than that, see if some of those expenses are similar enough to warrant their own category.

Especially if you’re new to using a cash flow plan, there can be a number of frustrations that make it tempting to quit. Avoiding these five common budgeting mistakes will go a long way toward lessening the frustration factor, and that should help you stay with it.

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Profitable Ideas: The Wants/Happiness Disconnect, Marketing Endgame, and More Fri, 03 May 2019 13:30:32 +0000

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

What we want doesn’t always make us happy (Bloomberg). Are you pursuing things, and spending money on things, that won’t make you happy?

Here’s how much more money you’d have for retirement if you saved $100 a month starting at age 25 instead of 35 (Business Insider). Time is “the simplest and most reliable tool we have for building wealth.”

The root cause of your money problems could be an actual money disorder (HuffPost). Many people have destructive financial beliefs and behaviors, but at a certain point those beliefs and behaviors cross a line.

Cash is king (Humble Dollar). In “the house of the wise” is an emergency fund (Proverbs 21:20).

Give to charity without giving up your tax deduction using a donor advised fund (Peter Lazaroff). The new tax code has complicated charitable giving. Here’s a workaround.

Keeping money secrets from each other: Financial infidelity on the rise (NPR). I’m a big believer in complete financial disclosure before marriage and ongoing financial transparency after marriage.

Audi, Google, Hertz, and the Avengers: Endgame brand tie-in marketing machine (Fast Company). How much marketing did you notice in the latest Avengers movie?

4 things you should never buy refurbished (and 4 things you should) ( Sometimes used products are a good deal, but not always.

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Kids and Money: Transitioning From Teaching to Trusting Tue, 30 Apr 2019 13:30:28 +0000

I’ve had the privilege of working for some great bosses over the years. When I was in high school, I worked at a steakhouse, eventually becoming one of the head cooks. J.P. Morgan was the manager. No kidding.

The difference between J.P. and the regional manager (I still remember his name, but am choosing not to mention it) couldn’t have been more stark. 

Picture a line of customers stretching out the front door and me working the grill with steaks covering every available space. It’s hot and the pressure is on. It takes a ton of focus to keep each order in mind and time the cooking of each steak just right.

If the regional manager were there, he would invariably come by, pick up a pair of tongs, and start moving steaks around. I hated that. It conveyed a complete lack of trust.

Now picture the same situation but no regional manager. On busy nights, J.P. was more likely to be out in the dining areas talking with customers. But every now and then he would come back into the kitchen. I can still see the sense of calm on his face, and I can still hear his words. “Mr. Bell, is there anything I can do for you?” 

I loved that. It meant he trusted me and was only there to support me if I needed something. Sometimes I might ask if he would mind getting some more steaks from the cooler, but usually I would say, “No thanks, I’ve got it.” 

All of us who worked there loved J.P. and gladly went the extra mile for him. He believed in us even more than we believed in ourselves.

But he didn’t just believe in us. He made sure we were well trained and then he dialed down the training and dialed up the trust. I think that’s a good model for teaching kids about money. 

The funnel

It reminds me of a metaphor used by some of our first parenting mentors (thank you Keith and Cag!). When our kids are super young, they explained, the funnel of trust is really tight. For the most part, we’re doing everything for our kids. But as they get older, we teach them how to do things for themselves and the more they prove themselves trustworthy the wider the funnel becomes.

Something we’ve tried to be intentional about in teaching our kids about money is the need to make trade-offs. Most people can’t afford to buy everything they want, so they have to prioritize and try to get good deals on what they buy.

With one of our kids, I noticed that when I would take him to the store to buy something specific, he resisted the idea of looking at the clearance rack. The mistake I made is that I hadn’t given him a price limit; all he knew is what we were looking for. But now that we give our kids their clothing budget in cash each month, they know the limits.

(Read The Absolute Best Way to Teach Kids About Money)

On a more recent shopping trip with that same child, he was much more interested in seeing how far he could stretch his money by looking at what was on sale. Even then, though, there were a few moments when I was tempted to intervene as I saw him make decisions. I had to consciously back away. I had to remind myself that I’ve done the teaching. Now I needed to do some trusting, realizing that he would learn better by making his own decisions at this point and living with the consequences.

Trustworthy with little, trustworthy with much

I know I have a tendency toward micro-management, so backing away doesn’t come naturally. But I’m working on it. It’s given me a much greater appreciation for really good leaders like my former steakhouse boss, J.P.

And it’s helped me further appreciate the lessons from one of my all-time favorite parables, the parable of the talents. I find it very instructive that each of the three servants were entrusted with different amounts, based on their ability. Then, the two who managed wisely what had been entrusted to them were entrusted with more. 

His master said to him, ‘Well done, good and faithful servant. You have been faithful over a little; I will set you over much. Enter into the joy of your master.’

– Matthew 25:21

With our kids, we teach, we entrust based on their ability, and then, if they manage wisely what’s been entrusted to them, we entrust them with more.

If you’re a parent, what has helped you make the transition from teaching to trusting?

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Profitable Ideas: The Financial Habits You Inherited, Becoming a 401(k) Millionaire, and More Fri, 26 Apr 2019 13:30:29 +0000

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

Want a good lesson in financial planning? Study how well your parents did or didn’t do (Pete the Planner). Identifying how your parents continue to influence your financial beliefs and behaviors is the first step toward deciding whether you want to retain those lessons.

Handling the financial irresponsibility of family members (The Simple Dollar). You can’t choose your family members, but you can choose how you respond to them.

Not being financially literate could cost you a bundle (CNBC). Just reading a financial blog on a regular basis (ahem) means you’re in the game. Lots of people aren’t.

How hard is it to become a 401(k) millionaire? (A Wealth of Common Sense). A good post that shows just how beneficial it is to get started with investing earlier than later.

How to protect your digital assets (Kiplinger). Your digital life has probably become more valuable than you realize.

What’s not covered by credit card rental car insurance (MarketWatch). It’s good to know what coverage you may need well before you find yourself standing at the rental counter.

3 easy ways to go zero waste and cut your trash by 80% (Going Zero Waste). This one isn’t directly about money, but it is about good stewardship.

Doing this one thing could save you $1,100 or more per year (Considerable). It’s good to develop a healthy dislike of recurring bills.

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Who Really Owns Your Stuff? Tue, 23 Apr 2019 14:22:51 +0000

How would you describe your house? What type of car do you own? How much money do you have in your checking account?

All of those questions seem normal enough. But wait. Is any of that really yours?

My main mentor when it came to learning about and then teaching biblical principles of money, Dick Towner (former head of the Good $ense Ministry, now the Good $ense Movement), would encourage workshop participants to walk through their homes and imagine putting stickers on everything.  “Imagine,” he would say, “that on each sticker there were these words: ‘Owned by God, to be used for God’s purposes.’”

Similarly, Howard Dayton, founder of the biblical money management ministry, Compass—Finances God’s Way, encourages people to sign a “quit-claim deed,” essentially acknowledging that they don’t own anything; God owns it all.

If you’ve been around financial stewardship circles for a while, you’ve probably heard that phrase, “God owns it all.” And you’ve probably been taught that you’re a steward or manager of everything God has temporarily entrusted to your care.

But I suspect that while many of us believe on some level those ideas are true, they may not fully inform how we live. So, let’s take a few minutes to consider what it might look like if they did.

More gratitude

If we lived from the truth that everything we have is a gift from God, wouldn’t we be more grateful for what we have instead of unhappy about what we don’t have? So much of the messaging we take in every day tells us we’ll be so much happier if we owned this or that. It’s designed to make us unhappy with our current situation. It’s designed to make us believe happiness is just one more purchase away.  

One of the most important findings from the field of positive psychology is that we don’t base our satisfaction on what we have or what we’re experiencing or how much we earn. We base it on comparisons. We compare what we have to what we used to have or what others have and gauge our satisfaction accordingly.

This is such a big deal that God made “Do not covet” one of the 10 Commandments. Quitting the comparison game requires a conscious decision to do so. That can be tough, especially because of social media.

Gratitude is a central part of the solution—consciously, regularly giving thanks for the many blessings in our lives.

More sharing

I think the first part of my mentor’s sticker is what’s most familiar to people: “Owned by God.” But the second part gets less attention: “To be used for God’s purposes.”

Do a quick mental inventory of your stuff. What’s on the list? A house? A car or two? A grill? A snow blower? A set of golf clubs? A dining room table and chairs? Some type of expertise? Money in the bank? What have you used for God’s purposes and what have you never thought of in that way? 

More joy

A common mistake people make when they think of what it means to be a steward of God’s resources is they imagine God saying to them, “Here’s some of my stuff. Now don’t break or lose any of it. Be really careful with it.” Not exactly very empowering. In fact, that might have been what the third servant in the Parable of the Talents misunderstood the master’s instructions to be.

If you look at what happens in the parable, the two servants who multiplied what was entrusted to them were the ones God affirmed. And then he entrusted them with more!

It’s as if God is saying to each of us, “Here’s some of my stuff. And here’s my instruction book of what to do with it. Use it to show people who I am. Use it to help reach more people with my message of hope. Use it to love well the people I’ve put in your life. Use it to take the gifts, talents, and passions I’ve given you to make a difference in the world. Use what I’ve entrusted to you in these ways and watch me multiply it and the impact I’ll have through you. I’ll be with you every step of the way.”

Now, that’s empowering!

Learning to let go

I’ve written before about how my family’s move from Chicago to Louisville caused me to loosen my grip on place as a part of my identity. I loved Chicago and thought of myself as a Chicagoan. Moving was painful. We left family. And I felt like I lost part of my identity. 

We still miss our family, but I’ve learned to let go of seeing where I live as part of who I am. In fact, I find it freeing. I feel like I’m living more in concert with my design. After all, the Bible that we’re just passing through this place—that our citizenship is in heaven.

Loosening our grip on stuff can be freeing as well. Marketers would have us believe we are what we drive or what we wear. But we’re not. If we’ve placed our faith in Christ, the Bible says we’re children of God. That’s a stunning reality and it has nothing to do with how much money we earn or where we can afford to go on vacation.

Just as earthly parents delight in providing for their children, God delights in providing for us. And not just our basic needs. Incredibly, the Bible says God gives us all things for our enjoyment!


The culture tells us the path toward happiness is spelled M-O-R-E. More money. More stuff. More experiences. 

The Bible lays out a path toward something far more important, a path toward greater joy. The guideposts are more gratitude, more sharing, and a daily recognition that everything is a gift from God to be used for his purposes.

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Profitable Ideas: How Long to Keep Tax Records, What to NEVER Buy at Costco, and More Thu, 18 Apr 2019 13:30:06 +0000

Weekly roundup of some of the best personal finance articles from around the web—a day early this week to keep your focus on more important matters on Good Friday.

How long should you keep tax records? (Kiplinger). In a sense, tax season is never really over.

A great gift (Humble Dollar). Are your documents in order?

How to make being a stay-at-home mom a reality (Money Ning). For some couples, this may not be possible. But for many others, it is. Here’s how.

How the world’s oldest people in Asia and Europe make their money last (Next Avenue). It’s all about “ikigai” and “moai,” but you knew that, right?

7 things you should NEVER buy at Costco, according to a shopping expert (Money). Don’t assume that buying in bulk always means spending less.

Make your needs your wants, and your needs few (No Sidebar). One family’s motivating experience with simplifying their lives.

Would you rather? (Pretend to be Poor). A child’s game with very grown up implications.

Warren Buffett wants young people to know: Ignoring this is like ‘leaving a car out in hailstorms’ (CNBC). This one isn’t directly about money, but it’ll help you enjoy the benefits of wise money management longer.

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Free Indeed Tue, 16 Apr 2019 13:30:46 +0000

God paid a high price for you, so don’t be enslaved by the world. – 1 Corinthians 7:23

On this holy week, in which we remember Christ’s sacrifice and celebrate his resurrection, I’ve been thinking about the apostle Paul’s words above and how they might apply to our finances.

What comes to mind when you think of financial freedom? For many, it means choices, options. Having enough money to do what they want to do, especially without having to work anymore.

But is that the best definition? Waiting for the day when we’ll have enough money to stop working?

Maybe true financial freedom is available right now. But to attain it, we need to consider the ways in which we are not free.

Debt may be the most obvious form of financial bondage. But we can become financially enslaved in any number of ways:

  • Getting our identity from our job, our title, or our income, and the overwork that often comes with the package
  • During good times, living with some anxiety that it might all slip away
  • A sense of entitlement
  • Running on the nonstop hedonic treadmill as we try to shore up our identity or self-worth through what we buy or how much we earn
  • Envy or covetousness or jealousy
  • A felt need for control, and looking to our bank or investment accounts to tell us whether things are under control
  • Greed
  • Fear
  • Worry
  • Too little savings
  • Too much savings
  • And the list goes on

When Jesus said he came that we might have life to the full (John 10:10), I’m pretty sure he wasn’t casting a vision of retirement. He was talking about a type of freedom that’s available now.

As one who’s been involved in stewardship ministry for a long time, it’s easy for me to make the mistake of seeing financial freedom mostly as following biblical counsel to live generously, avoid the bondage of debt, maintain a reserve, build wealth slowly, live with gratitude, and more.

There’s a lot of good in all of that. But set against the backdrop of this holy week, it all seems too small.

Turn to Matthew 6. There we find Jesus running through a list of common material concerns. He doesn’t dismiss them. He simply, gently teaches us to “seek first” God’s kingdom and righteousness (Matthew 6:25-34).

What exactly does that mean? It sounds so lofty, so vague. Don’t you want more specifics, a three-step plan?

Well, maybe we shouldn’t be too quick to figure it out. Maybe we just need to pray about it, dwell on it, meditate on it.

As you do, see if anything comes to mind that might be getting in the way. Something else that you’ve put first. Some way that money has a grip on you. Some aspect of your financial life where you don’t feel free.

These prison walls are funny. First you hate ’em, then you get used to ’em. Enough time passes, gets so you depend on them. – The Shawshank Redemption.

Many people give up something each year during the 40 days of Lent as a way of remembering Christ’s sacrifice. What if this Easter we each gave up something not just for 40 days but forever—a way of thinking about money, perhaps, or a habit that has left us financially enslaved? What if we turned it over to Christ? Asked Him to take the burden from us, to help us put him first in our lives, once and for all?

In what ways are you not financially free? Since Jesus depicted money as his chief rival for our hearts (Matthew 6:24), it’s likely that all of us could identify at least one way. Why not pray about that this week and ask God to give you freedom in that area?

So if the Son sets you free, you will be free indeed. – John 8:36

Blessings to you and your family this holy week, and always.