Monday, September 28, 2009

Sustainable, Self Sufficiency - The Third Phase of the Revolution, Part 2

During our last chat, more of a monologue, really, I described some of the thought processes that have been driving some of my decision making during the two years since the release of IOU NO MORE.  The fact is, I have changed a great deal since then.  The principles and outline for becoming debt free have not changed, my thoughts on "Life After Debt", have changed dramatically.  I will probably elaborate on that a little in my upcoming e-book, "Debt Beat Dads".  But I'll introduce the subject here, in hopes of stimulating some thought.  BTW, we always love it when you share your thoughts.

I finished the last entry, with the fact that it was my Bible reading that has changed my views of wealth building and preparing for the future.  Specifically, my new thinking comes from the first 5 books of the Old Testament.  Even more specifically, from the latter chapters of Genesis and from the book of Leviticus.

Before I go into any detail, I might as well address all my Christian friends who will say, "We're not under the Old Testament Law, anymore.  We're under Grace."  You are exactly right.  If you will stay with me long enough, you'll see that I'm not advocating a return to Mt. Sinai, but rather I'm adapting some PRINCIPLES gleaned from Joseph and Moses, that I believe give us insight into the heart of God and provide some COMMON SENSE approaches to our own times and finances.

Phase two of the Revolution most profoundly impacts the categories of 'Giving' and 'Saving'.  Ok, I'll backtrack.  In IOU NO MORE, I conclude that money is really only good for three things; Giving, Saving and Spending.  That's it.  That's the list.  You could maybe add, burning, but the coins don't do that well.  The 'Cruise Control' spending plan is divided into those three categories.  You can see the plan in the Appendix of the book and it's available as a part of our 'Complete Forms Library' in the store.

In 2007, when I released IOU NO MORE, I promoted the traditional concept of giving 10% (tithe) and saving 10% (to 15%) of income.  I still believe that's a great place to start. My Bible reading, however, has caused me to raise the bar. Note: If you are trying to get out of debt, I still recommend saving up a $1,000 emergency fund and putting all other saving on hold until after you're debt free.

As I was reading through the Old Testament last summer, as part of my daily devotional time, I was struck by the fact that the Israeli's gave much more than a 10th of all they had.  While it's true that the tithe was the starting point, by the time you add up all the various offerings and sacrifices, the Israeli people were giving a minimum of 20% of their resources to God.  How interesting.  Most of us are not aware of that, because we rarely read the book of Leviticus.  I freely admit, it's not a page turner, but it sure was an eye opener this time through.

Similarly, the same book, affected my views on savings.  In several places, Moses describes the "interest rate" for buying back property, etc. as being 20%.  That made me go, 'hmmmm....'  The real kicker, though, for upgrading my views on savings came from the story of Joseph.  In Genesis 41(first book of the Bible), Joseph, of 'Amazing Technicolor Dream Coat' fame, after a series of dramatic events, becomes a prominent leader in Egypt.  He advises Pharoah to 'tax' the people 20% of their harvest for 7 years to prepare for disaster.  When the disaster (famine) came, Egypt had enough for her people and surplus to sell to neighboring nations. 

The implications of all those Bible passages was not lost on me.  Common sense, a rare commodity in the 21st century, said that 20% saving and giving was not in the Bible by accident.  God doesn't work that way.  To me, they have come to symbolize wisdom and generosity.  Wisdom, by saving 20% in order to be prepared for whatever comes our way, and to build wealth.  Generosity, by giving 20% to relieve the suffering of others and to advance the Kingdom of God.  I got very excited about it.

Here's how Brittan and I are working out phase 2 in our lives:  We began by increasing our giving.  We raised our weekly contributions to our local Church and we are giving to other causes, as well, mostly Christian Mission organizations.  Our goal is to raise our giving to 20% of our income.  We are at approx 15% now.

As for saving, we're doing that two ways.  1.  We are saving from our income via 401k and a money market account.  Our goal is to have at least 6 months living expenses in a money market account with easy access.  This is not an investment, it's insurance.  We're not trying to get rich off of the emergency fund, we're trying to make sure we have some security in time of crisis.

Additionally, we are storing up a minimum of 6 months (eventually, 1 year worth) of basic household supplies, like dried beans, rice, soap, toilet paper, etc.  We don't make a big deal about it.  We're not 'survivalists' or doomsayers.  We're trying to be wise.  We are not doing it all at once.  We buy a few items each time we go to the store.  We only buy things that have a long shelf life, and we buy basic or generic brands for our 'emergency store house'.  We also have a 'rotation' plan that uses up things that are getting close to shelf life and replacing them with fresh.  Again, our goal, through various methods of saving money and storing goods is to save 20% of our income.

I know it sounds crazy; give 20%, save 20% and live on 60%.  But you'd be surprised what you can do when you are DEBT FREE.  Can you imagine how the world would change if the debt free revolution really catches fire.  Just think about how much cash would flood the economy, how much money would be out there for charitable causes and how much less stress would be felt by the average family.  The pressure taken off of Government agencies would be enormous. I believe.  Oh, yes, I believe.  And I'm doing my best to live out my convictions. 

Coming up:  Phase 3, "The Road to Self Sufficiency".  Stay tuned.