I’m not wealthy by any stretch, so I find it odd that anyone asks me for financial advice or how I handle my finances. But I do get by comfortably on less than 25k. So, I’m gonna throw our my general theory and practice, and then there’s the comment box where you can add your thoughts and insights. What works well for you? Do you have a system or a really durable seat of the pants? Or are you kind of like a cat falling from a tree that manages to land on its feet with a squirrel-esque hairdo?
I start with the Torah and the scriptures in general, so some of what I do has no “rhyme or reason,” but I believe Elohim (God) gave us reason and encourages it through the scriptures, so I’ll utilize whatever isn’t contradictory to that.
Key principle 1: Wealth is as good as you use it, and the tendency towards wealth is normal. Some followers of Yeshua eschew wealth as a hindrance to faith. But that’s like being averse to fitness because it might make you vain, yet most believers realize that functional fitness is simply taking care of the temple of the Ruach HaKodesh (Holy Spirit). Further, if you are doing right, and YHVH blesses you with money (as just one of many forms of blessing) why would you try to throw it away?
Money is just another resource to show your faithfulness to YHVH. I mean really, remember the parable of the talent? How pleased was the Master with the guy who did nothing with what he’d been given? I think the way we look at money is important, because if you look at money as essentially if it were radiation, something to get rid of, then you’re not going to do much good with it. What you dream of doing with money, will guide how you use it, and whether it’s good or evil. For myself, I dream of having money to build businesses (primarily), because I know how hard it can be to try to live Torah in a world where most employers ask you to break Torah. And that’s kind of at the heart of my thinking on the subject. The world holds money, do we think it does right with money? Why then would you be averse to taking more out of that system and putting it to use in the kingdom? It’s like saying hammers build strip clubs, so I don’t want to have too many hammers. Or, how about we take the hammers and build synagogues?
Principle 2: The poor think of money for spending. The middle thinks of money to save. The wealthy think of money to invest. When I first heard this, I thought it was good. Now I think it’s brilliant, but you really have to think about it. At first glance it looks like slam on the poor and to a lesser degree the conservative. But we all have to go through each experience, it’s just a matter of whether we graduate to the next. When you have little money then, yes, the first priority of money is to spend it on your needs. When you have enough to meet that, then the priority should become to save for the times when you won’t have enough. But eventually you should have enough that the money can do more than sit there, while waiting. It’s like storing water. First you drink the water with your hand. Then you put your canteen in the water for later. Then you put in a well with a windmill that supplies your water tank and you go and think about something else.
Principle 3: The estate is the foundation of wealth. An Estate is more than a place to live. It’s really another way to say your total networth (what you own, minus what you owe). But it doesn’t become very useful until you have a house. But too many people think of a house as a place to live; it’s not. It’s work-space/factory where you live. Most people have a house they can’t afford with a serious of upgrades for convenience.
What a house (and it’s land) should be seen as is a place to build wealth. First it shelters you (the poor’s need). Then you maintain it, and maybe make some improvements (middle’s saving). Then you say . . . hmmm. That garage can hold a zero-turn lawnmower and I can mow my neighbor’s yard (wealthy’s investing: investing means spending for the purpose of creating more wealth). You look at that lawn and say, why the heck am I paying for a useless plant? I can put chickens and sheep there. My lawn (an expense) gets replaced with a food source. The resource of grass now creates more wealth because my sheep are a new asset sustained by the spending of an old asset. And the manure from the sheep and chickens actually sustains the original asset (the grass). I can even milk my sheep or goats or collect eggs and sell the excess. Thus my house, which used to be an expense, becomes a source of revenue that mitigates and exceeds the expense. That’s what I mean by estate minded thinking and being a CEO. My estate is not wealth I possess; it is wealth that can generate more wealth.
That’s why it is the foundation. Once you home is paid for, what happens if you lose your “job”? Well, all you need to cover are taxes and necessities. If you have turned your estate into it’s wealth building function, then it should be approaching meeting those goals without much input. In fact, the home itself through something like Air B&B is really just an Inn that you live in. And your car is an uber machine.
See how this works? Stop thinking of your assets (estate, meaning everything you own) as possessions and think of them as assets. An economist will tell you that as asset is anything that can bring future income. So your car shouldn’t be a thing you possess, it’s something that you can use to make money. And your home is the chief of those because its pretty much the only asset that you can actually live in.
Principle 5: The point of estate minded thinking is to create something that is more than enough for you. Why? Because the “more” you can use to bless others, including your family. Estate-minded thinking means you are thinking of generations after you, and neighbors to your left and right. It’s not for your benefit, it’s for others.
From there we get into the nitty-gritty. So how do I, personally budget?
First 10%: Is my tithe. Don’t get caught up in net or gross, I do net though. But this is also a great reason to build wealth. If your income goes up, then your 10% is also bigger. That means more for the ministries that you support.
Also, just a note. I heard someone say once that tithing is meant to be based on increase, and therefore if you have debt then there is no increase until the debt is paid off. At first that sounds true, but an economist will tell you that you are still having increase regardless of debt. Suppose your estate is worth 50k. Then you buy a car on credit for 10k. What is your net worth? 50k! Because the car is worth 10k (because that’s what you paid), but it’s negated by the 10k you owe on it. But every time you make a payment you are increasing your net worth. At the end of the payment period you are 10k wealthier than when you started. You just didn’t feel it because it was masked by debt. So just because you have debt does not mean you are not increasing.
Next 10%: “Retirement” savings. Now retirement doesn’t mean I plan to stop working. It’s just in case I can’t work in a money-generating way. But further, retirement isn’t something that you burn through. This is why the concept of “investing” vs. “saving” is so important. Saving would mean I build up a “retirement” and then in that era I eat away at it. Wrong! Investing has the aim that I change money into a better ROI (return on investment) asset and then in that era I live on the return not the principle. Simple example: if you put money in a mutual fund, in retirement you don’t cash out the mutual fund, you live off the dividend and the principle keeps creating more money. So you plan to have enough mutual funds that the dividends fund your inability to work.
The point of retirement then is to have an asset (those mutual funds) that pass beyond you to your children, thus you children are better off and they can continue to build upon what you have done. They don’t start with hands cupping water, they start with the well and windmill.
In my case though, I don’t plan to invest in a retirement account. I’m doing that because I want to invest in real estate, and once in that retirement account it’s locked away until 62-65. So for now, I just “save” it in a general account, but the goal will be to move it into something with more ROI, once that appears. I would eventually do mutual funds, but only if I have 5+ years until I need it.
But if I had no real estate plans, I would probably put it in a ROTH (pay tax now, no tax later) SEP (self-employed) IRA (individual retirement account). Or at least an equity/stock mutual fund–not one that has bonds in it (because Torah teaches debt forgiveness and I don’t have a way to ‘forgive’ the bonds after 7 years. But you can see that differently since we’re talking about companies).
Next 30%: One of the things about budgeting, I’ve learned, is that everything I have will eventually have to be replaced. So if I have a chainsaw (I do), and it’s life might be 5 years, and it cost 400, then that’s $80 a year in depreciation. So I should be saving $80 a year towards replacement. Then I did that with the tractor, the washer, the dryer, the stove, the water heater, every major appliance, the barn, etc., and I come up with a number. That number turned out to be probably more than 30%, but it was close and some of those items will last longer, and some of them will be sellable for scrap. In fact, just about everything can be repurposed. I’ve got a place where I can get free-old tires that I’m planning to turn into road paving.
All of those funds together, while they’re waiting, generate interest in a good account (Kasasa gives 2% for the first 15k, and then .4% after that). So here you are saving, but generating interest, hence investing. And if most of them don’t break down soon enough, I can take the excess and apply it toward the long term goals, accelerating that portion. It also has the benefit of you being able to buy just about any one of those appliances in cash when the need comes around. Or if there’s an emergency you have a buffer of about 30% of your annual at all times. That’s pretty smart.
Next 50%: Goes to present expenses. That’s right, you should have 50% left of your income. And frankly, if I can do that at 25k, if you make more than that you should probably be able to do better.
In fairness, I don’t have a house payment or rent. Why? Because previous generations invested, that created wealth for their descendants. That’s not bad, especially if I plan to honor them by building further on it. And really, how do we honor our fathers and mothers if we don’t build on what they worked so hard to build in the first place?
That’s also called being wise. And see it works out in the practical, because I literally only have to make about $6,100 to keep a roof over our heads and food on the plate. Long term there would be repairs and such, so $6,100 wouldn’t really be enough, but it keeps me out of losing the home. Then factor in that I can produce about $1,456 from less than two dozen chickens (chickens by the way, or any animal, are also a great investment because they can reproduce. 2 dozen chickens are enough? I can increase that. Or they’re two many? You sell off your healthy chicks to someone else. And have a garden, and can produce maple syrup that worth $7 a pint. Then there’s the various tools, the B&B potential, etc. My point is that if you plan your estate into the future it has the multiplying effect that the wealthy depend on. Of course that also depends on the children being raised wise enough to not neglect the work of their fore-bearers but to build on it.
But that budget can be kind of tough. And obviously, 25k isn’t doing a lot to build on that legacy. So we add to that being smart with the resources we have. Again thinking estate (I’m a CEO)!
Walmart gets a lot of boxes. To a non-estateminded civilian, boxes sound a lot like trash. To an eco-minded-non-estateminded civilian they sound like recyclables. But walmart sells those boxes, crushed and mangled to someone else who wants them. Why? Because even mangled and crushed, the cardboard has value. A wise estate manager recognizes value.
You see tires that are worn out and think landfill? I see something that won’t decompose, and if stuffed with dirt of gravel will weigh about 300 lbs. Something that laid our like bricks should be an effective driveway cover. Or a retaining wall. You see cardboard boxed that can be recycled. I see something that laid down will block weeds for probably a year, that I can put organic matter on top of and put plants I want above. You see yard waste, I think compost; yummy yummy compost for my garden.
Matter cannot be created or destroyed (by man), so why don’t we plan our waste so it comes out in a usable form? Stop paying for useless packaging for one, but if you’re gonna get packaging put it to good use. If nothing else, if it’s not toxic, you can bury it on your own land to literally “landfill” like every ancient culture did to fill in low spots.
In my own world, we’re about to go to composting toilets. This has largely been brought on by the lack of water 40% of clean water that is flushed away, and when you’re on rainwater with 4 people, plus guests . .. that’s a problem. So why not go composting? It’s simple enough. Or use your gray water to flush, when you do need to? And while you’re at it, make your gray water from the shower, go through a filter and water your garden!
See it’s not just about cutting costs, it’s about turning cost into profit. I’m not being stingy, I’m maximizing potential. Now I don’t lose sleep over it. And I don’t tell my guests not to flush. But when you practice this stuff, your mind starts turning that way on it’s own. So it stops being effort and just becomes natural. “Well of course, I’ll take the sink water that’s next to the toilet, put it in a basin and then use that to flush. That’s as natural as putting on underwear before pants!”
Some of those things won’t be worth it to you. If you make 100k or 120k are you going to bother with maintaining a composting toilet? Maybe not, and why should you. And you’re blessing someone else by having them do it. But there’s always some waste that you generate that can make money. My brother sheds old but perfectly usable technology. That’s not because he’s wasteful, it’s just a fact of his industry. He could easily turn it toward someone else as either a blessing or another way to add to his income.
It really becomes a game. Plus, it trains your mind to see resources where someone else sees waste. “Really? You’re gonna throw that out? I’ll take it just because there’s money–err—I mean iron in that metal.” If you think about it, people think a lot about the wastes of the wealthy because they’re so obvious, but how reflexively do we pay extra for a product that is mostly packaging painted with a licensed Disney princess? Who are we to tell them about waste?
So how about you? What are your tips. How do you manage your estates? What ways have you changed your ways of thinking to make your resources go further?