FAQ’s
We try to touch on as many topics as possible during class, and encourage class questions! However, we recognize that we may not have time to answer all of them. Here are some frequently asked audience questions that may have gone unanswered! If you have further questions or need clarification don’t hesitate to reach out at godswaywithmoney@centralchurch.online.
God, Finances, & Tithing
How should I begin tithing?
The one area God tells us to test him in is through our finances. In Matthew 6:21 Jesus tells us that wherever our treasure is, that is where our hearts will be. At Central, we know that God wants our whole hearts, not just a portion of it. To move us closer to that goal, we have created a Generosity Challenge. Through this Challenge, you will be encouraged to begin giving or to increase your giving over 90 days. If you don’t feel you have experienced God’s blessing through the challenge, we will refund your gifts over those 90 days, with no questions asked.
When it comes to generosity, is 10% meant for the church through tithe, or does 10% include other generosity gifts?
“Tithe” means ten percent, the first portion of our income that we give God to say thank you for all He has given us. Our tithes are part of God’s plan to resource the local church to do His work here on earth. Anything over 10% is considered an offering, a gift above and beyond for different causes.
Is 10% tithing based on gross or net pay?
The Bible is calling us to give from our “first fruits” which would be based on our gross pay. But know that you are welcome to give a gift based on your net pay, if that is a first step for you.
How can I build more trust with God regarding money and finances? I’m afraid I will always be working multiple jobs and living paycheck to paycheck without room to tithe.
Tithing is a way to worship God because it shows Him that we trust His provision for our lives. God doesn’t need our money. He wants our trust, and trusting Him with our finances is a great way to demonstrate our dependence on Him. Matthew 6:31-32 invites us to experience freedom from the worry and anxiety of the unknown because God promises to provide.
How can you be generous without giving to a church specifically?
Generosity is not limited to tithes and offerings for a church. It can be expressed through the use of our time, talents, and resources toward different organizations, people, and causes.
Budgeting
How do you budget for expenses that occur quarterly/bimonthly? Do you budget for once-a-year expenditures in the month they occur, or do you amortize them over the year, reserving 1/12 each month?
Amortizing over 12 months would require a separate account where the money could live until the expense occurs. Choosing to budget for the month they occur would require a tighter budget for the months when they transpire. Your decisions require consideration of personalities and lifestyles, while discipline and planning will be necessary for either choice. One is not better than the other!
What do we do if our self-employment income differs every month? Some months vary by thousands. How do I build a plan?
Know and understand your monthly expenses. Create a budget you are comfortable with and use the excess money in the high months to help cover the low months. You can also budget/plan for lower-income, and if/when income is higher, you can save the additional income. Make sure you are saving enough in the higher months to help with the lower months. The 3-6 months savings fund can help in this area.
Should you pay for the entire balance of your credit cards before you pay bills?
All expenses need to be budgeted for. We would suggest if using a credit card that the entire balance is paid off in full, every month. This would be part of your monthly bills, not separated from your monthly bills. Expenses on a credit card may or may not be more important than those outside of the credit card. Cash flow and timing should be considered when preparing the budget.
How do you budget as a single parent and not be in poverty?
Budgeting requires that circumstances be taken into consideration. If struggling to make ends meet, resources are available to those in need. Hope For The City is passionately committed to providing care and relief to people in the Las Vegas Valley and beyond, and provides individuals and families with access to weekly food pantries. There may also be opportunities for cost savings through intensely identifying expenses that can be cut. This is not an easy process by any means, but necessary to make ends meet.
Basics
Does God’s Way With Money apply to all people who hold any job or are entrepreneurs?
God’s Way With Money is for the person who is ready to claim financial freedom. In this class, we help teach you to repair your finances using a biblical approach so you can live a debt-free life, stop living paycheck to paycheck, and save for your future! The class applies to all.
What is the difference between net and gross?
Gross income is an individual’s total earnings before taxes or other deductions, including income from all sources. Net income refers to the amount an individual makes after deducting costs, allowances, and taxes, and is typically what shows up in the bank account. Net income is the amount of money you live off of.
3-6 Months of Savings
It’s so hard to save money. Knowing there is money in savings, I go in and use some. What is a better way to not use it?
Possibly consider opening a separate account through a different bank or unlinking your accounts. This will be difficult, but worth putting the effort into! Knowing there is money in savings can provide a sense of relief, but also need to develop the discipline to live within your monthly budget.
What is your opinion of Certificates of Deposit when saving your emergency fund? Not for the entire savings amount, but a portion of it?
We do not recommend using a CD account when saving for your emergency fund. The $1,000 emergency savings should be readily available for you to use in case of an emergency. Typically, these accounts require more than $1,000, and there are penalties if withdrawn too early. If there is an option for penalty-free withdrawals (again, this is not typically the case) then this could be an option for the 3-6 months savings account.
What is the formula or recommended amount for a 3-6 months savings fund?
After completing your debt snowball, excess monies can be allocated to the 3-6 months savings fund until fully acquired. This would be 3-6 months' savings of your net income.
Where would saving for an engagement ring fall into savings plans? Is this considered a big-ticket item in the 3-6 months savings plan?
The 3-6 months of savings are typically for emergencies. This would be outside of the 3-6 months of savings. This could be saved for in an additional sub-account, similar to savings for Christmas or other annual expenses.
Retirement Savings
I have some money saved, but I also have debt. Should I pay off my debt or invest in my retirement? I do not have any retirement savings due to being self-employed.
We recommend debt be paid first. The typical retirement portfolio generates an average annual return of 5% to 8% based on market conditions, while interest rates are at an all-time high average of 19%. Using the debt snowball method would help you reach your next steps to retirement savings. Aggressively attack your debt so you can move on to the savings step.
I don’t have any other debt other than my house. Should I use my portfolio retirement account to pay off my house?
Depending on your income and mortgage payment (also considering your mortgage rate), your retirement account may benefit more by leaving the funds in the portfolio. This would be a personal choice that would need to be budgeted for. If eliminating your mortgage is a high priority, and can be properly budgeted for, then this might be a good use of your funds.
Would we need to save for retirement if we are working for PERS retirement?
This would vary depending on your needs at retirement. If you would like additional income at retirement, additional retirement savings would be necessary. However, if the PERS account is sufficient for your needs, then additional retirement savings might not be necessary.
How early can you start your retirement account?
Provided you have earned employment income, you can start a retirement account at any age. The sooner, the better!
Which is better, a 401K or Roth IRA?
A big difference between Roth IRAs and 401(k)’s lies in their tax treatment. You fund Roth IRAs with after-tax income, meaning your withdrawals are not taxable retirement income. Conversely, you fund 401(k)’s with pre-tax income. This makes your 401(k) withdrawals subject to taxation in retirement. As to which one is better, it can vary depending on your retirement strategies. If your employer offers a plan, they may have a representative that can speak to your specific situation. As a blanket statement, we would say that the longer your money is invested, the more likely that a Roth account is the best way to go. There are contribution limits to both that need to be considered as well.
Does the interest rate vary as far as retirement plans go, is the maximum 6%?
Retirement plans greatly vary depending on investments. The maximum is not 6%. Actual interest/investment income earned will vary month to month, with some months losing money and others gaining money. For our examples, we use a conservative average rate of return of 6%.
How much money do I need to retire?
This is a question we should all be asking at various stages throughout our lifetimes as the answer will change and our ability to influence the outcome will change as well as we change jobs and develop through our careers. There are many sub-questions that need to be answered that are components of the main question that can differ from individual to individual and from couple to couple. That said, the primary questions that need to be answered include:
At what age do I/we want to retire?
How much have I/we saved toward retirement?
What will my/our minimum annual cost of living be when I retire?
All reputable financial planning firms have access to retirement forecasting models that will take your specific inputs such as current savings, annual savings rates, projected retirement age, and cost of living at retirement, and generate a retirement model for you. These models provide a great foundation for financial planning discussions and goal-setting for retirement planning.
Credit Cards, Loans, & Debt
If you pay your monthly credit debt, do you get charged the interest?
No, if you pay off the balance in full each month, interest is not charged.
Should I hang onto a credit card that I’ve had for 34 years? It now has a high-interest rate of 18%, and I pay an annual fee of $100. This credit card has a high limit of over $50K. I fully pay any charges per month. I understand that having a long credit history helps my credit score.
If used as mentioned (paying off the balance in full each month), there is no need to close the account. The longevity of the credit card may play a factor in your credit score.
If your debt is under $13,000, and you have a limited income, is it best to file for bankruptcy?
There are many different layers to bankruptcy and if this is something you would consider we suggest consulting with a bankruptcy specialist or attorney. There are many different factors to consider that have ramifications before deciding to declare bankruptcy.
Is going into debt consolidation a good thing to do?
Debt consolidation can be a great tool to get your debt all in one place and possibly lower your interest rate at the same time.
I have always set aside funds in my paycheck for my 401K. Should I stop it to be able to pay the debt that I’ve accumulated?
We recommend debt be paid first. The typical retirement portfolio generates an average annual return of 5% to 8% based on market conditions, while interest rates are at an all-time high average of 19%. Using the debt snowball method would help you reach your next steps to retirement savings. If you can attack your debt aggressively and quickly, then you could jump right back into contributing to the 401k.
Is it wise to take money out of retirement savings to pay off your credit card debt?
Depending on the retirement account, you could face penalties and heavy taxation for withdrawing early. We would recommend budgeting future dollars to pay off debt versus withdrawing retirement funds.
Will the snowball effect work on collections?
Yes, you can create a payment plan with collection companies. Once a plan is made, this can be budgeted for using the debt snowball method.
Family & Finances
What do you do when your spouse doesn’t care what they spend?
This could be an opportunity for marital counseling. There are oftentimes deeper issues than spending habits driving this behavior.
How do we, as parents, teach about finances to our children?
We start by leading by example—children follow in our footsteps. Begin teaching Biblical principles at a young age and help them practice with little.
Financial Decisions
I have two cars, I owe a little on one vehicle, and on the second one, I am in a position where I owe more than I will get for it. I want to get rid of one. What should I do?
Difficult decisions need to be made! If you do not require two vehicles, selling one would be in your best interest. As to which one, this would require that you make the decision that would least impact your finances and lifestyle.
How much should you put down for a car?
If you are looking to finance a vehicle, we recommend that you first calculate the monthly car and insurance payment, and ensure that this works for your budget. Once you know how much you can afford per month, this would determine the down payment for the vehicle, depending on the cost.
Using the main steps, when and where should I stop or ease up on savings? Should I save for a down payment on a home? Or save for training for a new career?
Once you have established your 3-6 months of savings, you can decide where to allocate your excess funds—a down payment, a new career, or retirement savings! You can save for multiple items at once, you don’t have to choose one over the other.
Resources
Are there any books you recommend to help someone’s view align with God’s regarding finances?
One of our favorite books to recommend is “The Total Money Makeover” by Dave Ramsey. While this is not the only book available, we will continue to update our resource tab with more books at godswaywithmoney.com.
What are the best software options for monthly accounting of all expenses?
There are many free and paid resources available! Some that we find helpful are Mint, Good Budget, Credit Karma, Excel, Quicken, Every Dollar, and YNAB.
Is the income and spending worksheet available as an electronic excel spreadsheet?
Yes, you can find this under the “Resources” tab at godswaywithmoney.com.
Where would you open an investment account for retirement?
We know there are many options available, and this can be intimidating! Dave Ramsey provides lists of trusted services for all financial needs on his website.