Regaining Your Financial FootingMarch 24, 2009
Worried about how the economy will affect you? Certified financial planner Jerry Foster shares four basic principles that will help you sail through a financial crisis.
Worried about how the economy will affect you? Certified financial planner Jerry Foster shares four basic principles that will help you sail through a financial crisis.
Regaining Your Financial Footing
Bob: Jerry Foster is a financial planner, and together with his wife, they have been coaching a young woman on the need to have an emergency fund set aside, even if you can't save very much at all.
Jerry: This is a single mom with two young kids, you know, hardly able to make the rent, but she was finding a way to put the money away and watching her spending, and she found a few dollars every month extra that she started putting into emergency savings.
She called here – oh, this is probably just maybe two or three months ago, and she was excited, and she called because she had – her car had broke down, and she says, "I'm excited because I have the money to pay for it," and, for her, that was a victory.
Bob: This is FamilyLife Today for Tuesday, March 24th. Our host is the president of FamilyLife, Dennis Rainey, and I'm Bob Lepine. Today we will offer some practical strategies for families to have more financial victories like that. Stay tuned.
And welcome to FamilyLife Today, thanks for joining us. You know, everybody is aware, I think, of the current economic climate that we are living in in the United States. But I was thinking the other day – how many families have had their own personal economic meltdown? You know, I was thinking back to a time when Mary Ann and I, we'd been married for five or six years, and we had moved a couple of times in the same year. We had lived in Tulsa, and then we moved to Phoenix and five months later we moved to Sacramento, and at that point in my life, I owned two homes and was renting a third. I had paid for a couple of moves in the process, and – well, I was a little overextended, you know? And I remember …
Dennis: Was that when you lost your job, too?
Bob: Yeah, yeah, it was that whole environment, and I remember us having to batten down the hatches and take some pretty significant steps, as a family, to weather that crisis. And I thought, you know, we're dealing with this is as a nation in major economic markets, but I would imagine most families have lived through one or more of these kinds of personal economic meltdowns. Did you ever have one, you and Barbara?
Dennis: Yes. I got a couple of short paychecks one time, and it has a way of getting your attention. In fact, what I want us to do today is I want us to help people who are feeling the effects of this financial crisis and help them know how to think as they look toward the future. So it's a little bit of advising Bob of how he should have thought, and a lot of advising you, as a listener, of how you should be thinking as you look to the future.
And with us to do that is Jerry Foster. Jerry, welcome back.
Jerry: Thanks, good to be here.
Dennis: Jerry is a Certified Financial Planner. He is the CEO of The Foster Group, a financial planning and life coaching company in west Des Moines, Iowa, and also serves as a speaker at Cross Trainers, which is a group of men that meets there in Des Moines on a weekly basis. You and your wife, Nancy, have four children, and you guys have bee speaking at our Weekend to Remember Marriage Conferences for the past decade.
And what I want to do, Jerry, is I want to talk about Bob's situation except let's make it present day. What should a person think, how should they begin to look to the future if they are facing some impact of this financial tsunami that continues to sweep across the nation?
Jerry: Well, you know what's interesting is that when you look at basic financial principles, the principles are true whether we're in a financial tsunami, like you suggest, or we're in a time of prosperity. They are the same. They don't change. We just may approach them a little differently, and it boils down to four basic principles, and if everybody would adhere to these four principles, I don't think any of us would be facing off some of the difficulties that we're facing today.
In essence, those four principles – one would be just to think long term – set goals for the future, invest for the long term, don't worry so much about the things that we're hearing on the TV in terms of the short-term volatility that's bouncing around, and it's infecting us with all this kind of fear and that. Just think long term and, of course, that means that you have to have a plan. You have to sit down, and you have to start to think in terms of what is it that I want to accomplish and begin to work towards?
The second is probably the key to this, and that is simply spend less than you earn. That sounds pretty simple, doesn't it? But the reality is most people don't live there. It requires us really understanding what we are spending and what we are earning and then developing a spending plan, and that's the hard part. People don't like the word "budget," so a lot of times what I try to do is I rename it. We'll call it the "cash flow management system." It sounds a little better, doesn't it?
Dennis: Uh-huh, or the "envelope system."
Jerry: The envelope system, which I've been there before, yes.
Dennis: Yeah, yeah, that works.
Jerry: But, anyway, monitor it and implement it and follow it closely. The third, then, is develop an emergency fund. This is setting aside – I generally tell people to have up to six months' worth of your expenses in an account that's there in the event of an emergency. I can't tell you the number of people that we talk with that haven't even though about that. They don't have it there. They have their – they may even have plenty of money, but it's tied up in things that if they needed it, they might have to liquidate it, pay something to get the money out, and it just makes sense to have an emergency fund put aside.
The fourth, then, is the whole issue of minimizing the use of debt, and that's what gets many of us in trouble is that whole issue of buying more than we really can afford, running up those credit card bills, car loans, et cetera, but minimizing debt. And those are four very simple, very strategic principles.
Bob: All right, I've got to stop you here, because there are some folks listening going, "You lost me at 'think long term.' I mean, here is my situation, right?"
Dennis: Back to Bob's situation, I mean, he's lost his job …
Bob: I'm trying to get out from under the pile. I've got creditors who are calling and saying, "You owe us this money, when are you going to pay?" I can't think long term now. I'm thinking about how am I going to pay next week's light bill to try to keep the electricity on in the house. So – really? Think long term if I'm in that situation?
Jerry: Well, the principle is you don't throw the baby out with the bath water just because you don't happen to be there right now. It still is an issue if you implement these strategies, and what I found is success breeds success. If you start exercising these principles, and maybe it just starts with sitting down, creating a plan, knowing what you're going to shoot for.
I was talking with just a young couple, a couple 24 years old, married a little over a year, hardly making enough to even scrape by, but they wanted to implement these strategies. And so they are putting aside $10 a month into an account for – first of all, to establish their emergency fund, because they don't have an emergency fund, but they're starting with something.
What was really interesting is when we got done, and we got that set up for them, and they're looking at that $10 – now, that's not much. Most people could find $10 somewhere in their expenses, you know, one less Starbuck's coffee or whatever it is and pretty soon they can come up with $10. But they were excited about the fact that they were now putting money aside.
Nancy and I have had foster children over the years, and we have one of our foster children that's now 38 years old, and she was a mess financially when – over the years, as we've worked with her. She had so much debt, and she had no budget, and she couldn't even pay rent, and she was just a mess.
We worked with her over the years, put her on the envelope system, put her on a budget, the whole bit, and she's been putting money aside, and the other day she called me excited. She had had a first-time experience that she had never had before, and she called me up, and she says, "I got my mail today, I opened up my bank statement, and I saw something I've never seen before. I saw a line item there that said, "interest earned," and she had $1.64 of interest earned, and she was so excited because she'd never seen it before.
Jerry: And so that's why – it's those small steps, it's the little things.
Dennis: Jerry, it's interesting that we wouldn't think about building a house without having a plan. You have to have blueprints if you're going to have a builder come in and take materials and ultimately construct a house. You've got to know what it looks like in the end.
But when it comes to our lifetime together as a couple, dealing with our money, you are saying that most couples don't have a plan, they don't have blueprints, to know where they're going. And what you're calling us to do at this point is just pull back, pull out of the mainstream, pull off to the side, look at the big picture, and decide – what do you want it to look like in 10 years? And by doing so that can begin to alter our decisions today, is that what you're saying happens?
Jerry: Absolutely, because once you have a plan, and you know what you're shooting for, what it does is you know where you're going. I mean, right now, if you don't know where you're going, you're just basically – you're letting life basically do to you rather than you doing what you need to do to get to your goals.
Dennis: And all of the advertisements at that point just dictate to you your purchases and how you live rather than you being in control of your checkbook?
Bob: So you think long term, and then this issue of spending less than you earn and then maintaining emergency savings, and you've talked about how important that is.
Dennis: Yeah, and don't you think this is tougher for this young generation who are getting started in their own marriage and family where credit is easy, you can borrow, you can always charge it, and it's counter-intuitive to think about an emergency savings account for six months? That's a lot of money.
Jerry: Well, it is a lot of money, but if you don't have it, then what you end up having to do is go and borrow money and, before long, you get behind the eight ball and that, and it's really difficult to dig out.
Let me give you another example of that – the same foster daughter I was talking about – she started putting in the envelope system, putting money away and watching her spending, and she found a few dollars every month extra that she started putting into emergency savings. She called her – oh, this is probably just maybe two or three months ago, and she was excited, and she called because she – her car had broke down.
Now, I'm trying to figure out – why are you excited? Your car just broke down. I'm trying to understand then reconcile that. And she says, "I'm excited because I put the money away in my emergency account. I have the money to pay for it." And for her that was a victory, it was a major victory. Now, this is a single mom, you know, with two young kids, you know, working, hardly able to make the rent, but she was finding a way to put the money away for that emergency account, and what that did is that gave her a sense of confidence. That's what we're talking about here.
When you succeed in each of these areas, what you're doing is you're building momentum for you to accomplish a lot of your other objectives.
Dennis: Isn't it generally true, Jerry, that the closer a couple or an individual lives to the edge, it's just a matter of time until the unpredictable nature of things falling apart, breaking down, needing repair, emergencies occur and puts us over the edge?
Jerry: Oh, absolutely. I mean, when Nancy and I first got married, we were living right on the edge, and we had two premature babies, seven weeks early, and it really threw our entire life off, because we hadn't planned for that, and that created for us an incredible amount of stress as we tried to figure out how we're going to deal with that. We just didn't plan for that.
Dennis: And so what I want our listeners to hear is, as you get this emergency pool beginning to build up, it moves you away from the edge back to the center and gives you the ability to withstand a few blows and some storms in life without it tipping you, as a couple, into a very stressful situation where it could be damaging to your marriage.
Jerry: Well, you are able to think objectively. I mean, when you're living on the edge, you can't think objectively. You are living and making decisions that are being driven by that stress.
Bob: All right, let me just ask you – on this issue of debt, you know what you're talking about here, don't you?
Jerry: I've been there, yes. I mentioned here just a few minutes ago that some unexpected things took Nancy and I to the edge, and actually we got to the edge not just because of the unexpected, we got to the edge because of my irresponsibility. I had not done a plan. I did not have the discipline, and I …
Bob: So when you talk about the edge, what edge are you talking about?
Jerry: I'm talking about the edge of basically being completely in over my head.
Jerry: Pretty close to bankruptcy.
Bob: And what was the impact of that – recall for us what your marriage felt like at that time?
Jerry: Well, at that point, when I took us to the point where we had maxed out our credit card limits, borrowed against insurance policies, you know, had obligations we couldn't meet, there was a pretty significant amount of stress in our marriage, and it was due to my wife who no longer could trust me. I had basically made decisions that didn't allow her to be able to trust me in a lot of things in our marriage. And so we had to figure out how to piece that back together, and we went to a conference that was put on by Larry Burkett, and it was a conference on budgeting and getting rid of debt, and we sat in that, and I remember looking at it and thinking, "We need to change our entire life. We need to change the way we do things," and one of the things he did is he had us inventory our debt and to look at everything that we had and inventory it and then put a plan together for eliminating the debt.
And what we did is we systematically began to walk through that; took the highest interest rate, lowest balance, and we got rid of that first, and then took the same dollars and applied it to the next one, and over what really took about eight years, we worked ourselves out of that hole that we had dug for ourselves.
What's interesting, and I share this story in the Weekend to Remember conferences – what happened is that, as I began to implement these strategies, these disciplines, and began to take leadership for them in our home, Nancy was sitting back, and she was watching, and as she watched, she began to trust a little bit more, and I would take another step. And what it did is we were able to, as a result of having a plan, as a result of having discipline, as a result of the help of a FamilyLife Marriage Conference that we went to – we went and listened to the speakers and learned about conflict resolution and learned about communication.
What we did is we began to piece back our marriage, but it started with this issue of debt, and I think that – we've heard the statistics that a large percentage of marriages end as a result of this issue – financial stress.
Dennis: Were you guys near divorce?
Jerry: I think the only thing that kept us together at that point is that we had committed before we got married that divorce would never be an option, and that's one of the things I talk about in the conferences, is that you need to look at each other and say, "I will never, ever, ever leave you. That's not an option." That's the only thing that kept us in there, but we were so close that we were just hanging on by a thread.
Bob: Jerry, eight years to get out?
Jerry: It took us eight years to dig out.
Bob: That's a long time.
Jerry: When you're in the middle of it, it seems like an eternity.
Bob: And the temptation to just say, "Aw, chuck this, I'm going to live like everybody else." Did you feel that?
Jerry: Oh, absolutely. There probably wasn't a day that went by that we didn't wonder if this was ever going to work.
Bob: So what kept you hanging in?
Jerry: It was the plan. It was sticking to a plan and then, ultimately, it was our faith and belief that God was going to see us through it. I mean, these principles are based upon biblical truths, and when we understand that, when we understood that these weren't just principles or a game plan that somebody put together for us, these are truths that God had said, "You follow these, and I'll be there for you." And He was.
Dennis: I'm glad you emphasized that, because that really was what I wanted to emphasize. All these principles we're talking about are all anchored in Scripture – the Proverbs, the Old Testament, New Testament speaks of being faithful in terms of what God has given us and being good stewards, and I am reminded of Jesus's last words in the Sermon on the Mount – Matthew, chapter 7, verse 24 through 27. This is what you did right here – "Everyone, then, who hears these words of mine and does them will be like a wise man who built his house on the rock," and the rain fell, and the floods came, and the winds blew and beat on that house, and there was a financial crisis, but it did not fall because it had been founded on the rock. "And everyone who hears these words of mine and does not do them," Jesus said, "will be like a foolish man who built his house on the sand."
Now how stupid would that be? To be near a flood plain and have the rain and the wind and the floods beat against your house. Guess what's going to happen? It's going to fall, and that's what Jesus said happened here – it fell, and He described it, and He said, "And great was its fall." And the interesting thing about you and Nancy, Jerry, is not only did your house stand after eight years of being disciplined to do what Christ commanded you to do, but today what do you do for a living?
Jerry: I'm a financial planner – go figure.
Dennis: God took a blatant weakness, foolishness, and turned you into a model of grace to give help and hope to other people who are making mistakes. I just want to give people encouragement, because there are those right now hearing this story, and they're going, "Man, there's no hope for us. We could never get out of that." Well, let me tell you something – Jerry and Nancy Foster are great illustrations of how God takes people who aren't doing what's right and not doing it together but start being faithful and together you're making a difference in thousands of marriages and families all over the United States by speaking at our Weekend to Remember Marriage Conferences and you're helping people put together those plans.
Jerry: You know, one of the verses that really we held to, and I think it's a verse for couples who are in the midst of this right now, and it comes from 2 Corinthians 4:16-18. It says, "Therefore, do not lose heart though outwardly we are wasting away yet inwardly we are being renewed day by day. For our light and momentary troubles are achieving for us an eternal glory that far outweighs them all. So we fix our eyes not on what is seen by what is unseen, for what is seen is temporary, for what is unseen is eternal."
And that's what we held onto. You know, we believed that it would happen. We couldn't see it, I mean, you know, when you're in the middle of that, you don't see that there is any way out of that, but we trusted in God's truth and His faithfulness, and we didn't lose heart.
Bob: And, you know, I know it can sound like denial to some folks, but I've found myself facing whatever the challenge, whatever the hardship or trial is – I've just found myself going, "This is a light and momentary affliction," whatever it is – a health issue, a light and momentary affliction; financial challenge, light and momentary affliction.
Dennis: Compared to …
Bob: Compared to the eternal weight of glory, and I’m not trying to say that there aren't real trials you face in life, but I'm trying to say that you have to think biblically about the real trials you face in life and go, you know what? This is a light and momentary affliction.
Dennis: And that's what Jerry is really challenging us to do is to think rightly and biblically about our money and our possessions and how we are good stewards of that.
Bob: Well, and at the same time, we're going to need tools to help us not just think rightly but to help us plan wisely as we manage our family finances. In our FamilyLife Resource Center at FamilyLifeToday.com we have resources designed to help you get your financial house in order. We've got Howard Dayton's very helpful book called "Your Money Map," where he helps couples map out a strategy for being on a firm financial foundation.
In addition to that book, we've got "The Family Financial Workbook," that is designed by Crown Financial Ministries to help you lay out a spending plan or to fine-tune your spending plan. There are worksheets that help you structure and maintain the family budget, and it's a tool you can use year in and year out.
If you'd like more information about either of these resources, go to our website, FamilyLifeToday.com, the information you need is available there. You can order from us online, if you'd like as well. That's FamilyLifeToday.com or call 1-800-358-6329, 1-800-F-as-in-family, L-as-in-life, and then the word TODAY, and when you contact us, someone on our team will let you know how you can have any of the resources you need send to you.
You know, this month we have had some of our listeners who have gotten in touch with us and along with helping to provide financial support for this ministry by making a donation to FamilyLife Today, they have just been offering some words of encouragement. They have been saying, "Keep going, we're with you, we believe in you, this is important, what you're doing is vital," and you just need to know that those encouraging words mean a lot to us.
And so does your financial support of this ministry. We are listener-supported, and without that financial support, we would have to pull back on our current level of ministry activity, and we're trying not to do that in these very difficult financial times.
So thanks to those of you who have made a donation this month. If you are able to help with a donation here in March, we would like to send you a thank you gift upon your request. It's a copy of "The Jesus Film" on DVD. It's an accurate biblical account of the life of Jesus through His death, His burial, and His Resurrection taken from the Gospel of Luke. It's the most-seen motion picture of all time. One of the nice things about the DVD is it comes with a number of different foreign language tracks available – Spanish, German, Arabic, Vietnamese, and Tagalog.
You can request a copy of the DVD when you make a donation of any amount to support the ministry of FamilyLife Today this month. If you make your donation online, just type "JesusDVD" in the keycode box on the donation form, and we'll know to send the DVD to you. Or call 1-800-FLTODAY, make your donation over the phone and simply request a copy of the DVD when you do make the donation. And, again, let me just say thank you for standing with us and for your encouragement. It does mean a lot to us.
Now, tomorrow, we're going to be back to talk more about practical ways that families can deal with their family's financial picture. Jerry Foster will be back with us tomorrow. I hope you'll be back as well.
I want to thank our engineer today, Keith Lynch, and our entire broadcast production team. On behalf of our host, Dennis Rainey, I'm Bob Lepine. We'll see you back next time for another edition of FamilyLife Today.
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