Let’s breakdown the different ways to purchase items along with some pros and cons.

Cash

• Very emotional.
• Instant feedback – when there’s no more “green” in your pocket, you’re out of money.  A simple but very important concept in personal finance.
• Some argue it’s not very convenient – but so is spending more than you make using plastic.

Debit Cards

• Easy to use online without going into debt.
• Convenient
• Gives the same security as a credit card – many don’t realize this.
• Less emotional than cash – but at least it’s tied to a check according not giving an open-ended spending limit.

Credit Cards

• Little to no emotion tied to spending.
• Easy to lose track of spending
• Interest rates – need I say more?

If you’re struggling with controlling your spending, analyze how you are making purchases.  If credit cards are getting you in trouble, consider using a debit card or cash.  This will MAKE you track and control spending

Remember, personal finance is nearly 80% behavior.

Cash is emotional.  A few years back, my wife and I were going to buy a new (different) car with cash.  We were willing to spend $16k, so that’s the amount I withdrew from our savings.  Just getting that kind of cash from a bank was an adventure.  I had to go to three different locations.  Finally, I was escorted into a back office where the money was carefully counted and recounted.

Once in hand, I felt so cool concealing an envelope chuck-full of $100 bills.  I was giddy.  It followed me everywhere that day.  I even showed it off to a few colleagues.  Not to brag, only to share the spectacle of all those Benjamin’s.  It turned me, a grown adult, into a bubbly little boy.

Cash makes a connection with your “ouch sensor”.  Imagine going to an electronic store to buy a $2000 TV with a credit card.  You hand the clerk your plastic.  It’s swiped, you sign, and off you go.   But, now imagine handing over 20 $100 bills…1,2,3…18, 19, 20.  As the cashier puts the money in the register, you realize it’s leaving you never to return.  OUCH!

Using your emotion-less credit card is costing you.  Once McDonald’s started accepting plastic as payment, they found the average credit card user spent 47% more than those paying with cash.  You spend more when you swipe because there no emotion tied to the purchase.

Remember, personal finance is about 80% behavior.  You can intellectually know what you need to change to win with money.  But unless your behavior changes, nothing changes.  Feeling money again by using cash instead of credit cards can help make that change.

First of all, we have to understand that God owns everything and we are merely MANAGERS of His stuff.  (By the way, did you know the Bible talks more about money and possessions than prayer?  So, God is very interested in how we handle our money.)

Let’s say you’re the general manager of a company.  You’re in charge of handling the assets of this company responsibly.  The owner calls a meeting with you to discover you’ve been spending his money on lottery tickets.

You respond with “well, you can’t win if you don’t play” and “somebody’s gotta win”.  Sounds ridiculous, right?  How do you think owner would react?  Do you think he’d give you more to manage?  I doubt it.  In fact, you’d probably get fired.

God wants to bless you with more.  But if you’re not currently managing His assets well, the door of blessing may be closed.  Remember, he who is responsible with little will be given more.  Don’t waste money on the lottery, then wonder why you’re not prospering.

Secondly, the lottery oppresses the poor.  The vast majority of lottery tickets are sold in poor, uneducated neighborhoods.  The Consumerist recently stated in 2009 folks making $13k a year (poverty level) or less spent 9% of their income on the lottery.

As Christians, we’re called to have a heart for the poor.  However, when you play the lottery, you’re supporting a government program that preys on poor people.  Famous pastor/author, John Piper, posted this on his blog: “So, if you win (the lottery), don’t tithe your winnings to our church.  Christ does not build his church on the backs of the poor”

Americans spent $1.6 billion on lottery tickets for the Mega Millions! Meanwhile, seven out of 10 people are living paycheck to paycheck, student loan debt has now surpassed $1 billion, and savings is at an all-time low.

This begs the question: WHAT ARE WE DOING!?

Here’s the truth, you’re not going to win the lottery.  The chance of winning the Mega Millions is 1 in 176 million.  Breaking that down into a percent calculates to 0.0000005%.  Basically, it equals zero.

You have a better chance of being struck by lightning five times and LIVING than winning the lottery.  If you bought two million lottery tickets, your chance of winning is still less than 2%.

Here’s the deal, people that have $2 million don’t play the lottery.  Remember, the vast majority of rich people became wealthy by valuing integrity, hard work, and discipline.  Want to be rich?  Do rich-people stuff.  And they don’t play the lottery.

Develop a plan to win financially.  Pay off debt, save, invest, and give.  You do that over time and you win EVERYTIME.  By playing the lottery, you’re buying into a false-hope.

“But someone’s got to win”, “it’s only a dollar”, and “you can’t win if you don’t play” are statements I hear all the time regarding the lottery.  This is foolishness.  We’ll dig deeper into the spiritual side of the lottery next week.

Being a TV meteorologist, I frequently get asked to speak at schools.  Career days are my favorite.  I usually start by asking the students to tell me their passions.  What do they like to do?  What gets them excited?  I usually get a wide variety of answers from hunting to racecars to writing.

My next question is “how can you use those passions to create something of value?”  You see, millionaires have done a great job at creating value…it’s what made them wealthy!  Passion will be hard to find without loving your career/business.   And without passion, creating value is nearly impossible.

Does your job/career allow you to fully use your abilities and aptitudes?

Referring back to the book The Millionaire Mind, having a supportive spouse was number four on the list of success factors Dr. Thomas Stanley found when studying wealthy people.  Many of the qualities they described in their spouses were being understanding and down to earth, unselfish, having traditional values, and having patience.

I used to be one of the people (when I was single) that thought a spouse would just bring me down.  That having a wife was going to make less successful.  Oh, how I couldn’t be more wrong!    After nearly five years of marriage, I continually see the importance of having a supportive spouse.

Now, this does not mean if you’re single or divorced being wealthy isn’t achievable.  It is, but certainly more difficult.  Ask someone who has been divorced how it has affected his or her finances.  It’s brutal.

Proverbs 31: 10-11 “A wife of noble character who can find?  She is worth far more than rubies.  Her husband has full confidence in her and lacks nothing of value.”

Over half of the millionaires surveyed said “being well disciplined” and “working harder then most people” were VERY important in building wealth.   Wealthy people set high goals.  Discipline is being able to go after those goals without requiring external encouragement.  It’s having the ability and TENACITY to stay on track to be successful.

God blesses the diligent – Proverbs 10:4 – “lazy hands make a man poor, but the diligent hands bring wealth”.

Being lucky actually made the list of success factors in The Millionaire Mind as well.  However, it was number 27 of 30.  Ever heard the phrase “the harder I work, the luckier I become”?  That’s how many of the millionaires described their success relating to hard work and discipline.

There are no guarantees with luck.  Let’s say someone gets lucky hitting the lottery (that’d be VERY lucky if you know anything about statistics) at the age of 30.  Only with extreme discipline will that individual still be wealthy at the age of 60.

God calls us to be disciplined and diligent.  It might even make you rich – how cool is that?

Having integrity at your place of employment is just as important.  Do you show up late or leave early?  Being paid for time you’re not physically at work is stealing.  You don’t work while you’re there.  And/or you steal materials as well as use equipment for personal use.  These are all examples of cheating your employer.

But, here’s what you MUST remember…

You can’t steal from your employer and wonder why you’re not prospering.  Don’t expect a promotion if you show up late, leave early, and don’t work while you’re there.

God wants you to prosper, but He also honors integrity.

Henry Cloud wrote a book called Integrity.  He notes how integrity refers to being whole, having wholeness, and not being fractured.  When you lie, you’re not a whole person.  Your character is fractured.  “We need our gifts, but without wholeness of character, our gifts will become unusable or at least less fruitful.

One of the greatest things that can be said about you is you’re the same everywhere, not fractured.  You’re upholding the same character and integrity in every area of your life, i.e. at home, with family, at church, on the golf course, AND at work!

In fact, I don’t agree with many things that go on in Washington.  I think spending is completely out of control.  And the efficiency at which they use and allocate my tax money is absurd.

But that doesn’t make it okay for me to lie.

Cheating on your taxes, not reporting cash income, or bending the rules in any other deceitful or illegal manner when filing is LYING!  It makes you nothing more than a thief and a liar.  You’re not “pulling a fast one” or “sticking it to the man”.  You’re not smart or crafty.

Lying on your taxes doesn’t say something about the government, it says something about YOU!

Dr. Thomas Stanley wrote the book The Millionaire Mind.   It’s an extensive case study on very wealthy people, millionaires.  He came up with a list of 30 success factors he observed with these folks.

The higher a characteristic or trait was to the top of this list, the higher value these millionaires attributed it to their success.  For example, college education and GPA were on list.  Most of these millionaires did graduate from college, but the average GPA was under a 3.0.  So, college education and GPA were actually classified fairly low.

Some of the things near the top were “having a supportive spouse” and “discipline”.  However, the number one contributing factor was INTEGRITY.  These millionaires are extreme when it comes to telling the truth.  Many of them said integrity was the driving force in acquiring wealth and maintaining it.

When you lie, the only person you ultimately hurt is you!  Lying is short-term thinking.  It’s saying “I’m willing to lie to get something in my hand now, but lose in the end”.

We’ll see how integrity applies to our work-life coming up next week!

Getting a tax refund.  It’s the best; like an unexpected blessing from the government.  NO!  Let’s clear up some misnomers regarding a tax refund.  First of all, a refund is NOT a bonus.  It’s NOT a gift from Santa Claus.  It’s NOT a present from the tooth fairy.  It’s NOT a sign that you’re running your finances well.  Actually, it’s the OPPOSITE.  It’s YOUR money the government is now giving back to you.  That’s IT!

The average family living paycheck to paycheck (which is 70% of Americans by the way) gets a $3000 tax return.  That’s $250 a month they are letting the government hold onto interest free.   If you’re struggling to get an emergency fund together and/or pay off debt, you need that money!

If you’re receiving a tax refund every year, adjust your withholding.  This can easily be done by chatting with your HR department.  Shoot for a zero return.  Now, come tax time and don’t have to pay nor receive a refund, meaning you paid the exact amount of income tax, is quite unlikely.  But, getting a refund of thousands of dollars is a bad financial plan.

Let’s debunk a few statements I often hear.  Number one: “I want to get a big return so I make sure I don’t owe”.  Here’s the deal, you owe all year long.  Every time you get a paycheck, your employer takes out income tax.  Don’t fool yourself that you’d only owe at the end if you don’t get a refund.

Here’s another statement: “A tax refund is like a savings account”.  Trust me, there are SO many better places to put your money (like under your pillow).  Not that saving accounts are paying much interest these days, but the government doesn’t give you even a little extra for borrowing it at the end of the year.

If you do get a refund, don’t blow it.  That’s YOUR hard-earned money.  Apply the money to the “Baby Step” you’re on.  If you’re trying to get your $1000 in the bank (“Baby Step” 1), use your refund there.  If you’re working to pay off all your debt except your mortgage (“Baby Step” 2), throw it there.  If you’re saving to get a fully-funded emergency fun in place (“Baby Step” 3), put it there.