Free Webinar on Retirement for Pastors

From the event organizers:

“I’m pleased to announce we are hosting a free webinar at 12pm (Eastern) on Thursday, October 5, with attorney Richard Hammar on a critical topic: retirement planning for pastors.

Unfortunately, statistics from the National Association of Evangelicals suggest that few pastors adequately save for their retirement years. Often, it’s because the pastors and their church boards don’t know where to begin. In this one-hour presentation, Rich will cover key topics that pastors and boards should know with respect to the various plan options, how they work, and how to navigate the legal and tax implications of each. The material will be relevant to pastors at any stage of the career spectrum (early-, mid-, or late-stage). And perhaps most importantly, the information will be offered in a completely neutral manner, providing pastors and boards with an objective perspective that aids their planning and decision-making.

The registration link is http://churchlawandtax.com/webinar.

If you want more background information, this free blog post explains the event further: http://www.churchlawandtax.com/blog/2017/september/planning-pastors-retirement.html

 

Student Resources

If it isn’t on your radar, and you are a current student, Denver Seminary has put together a fantastic resources page. Here is some more info and the link:capture

 

Student Life Resources Webpage: www.dsresources.squarespace.com

This web platform allows Student Life to present our buffet of assistive and developmental resources and services (it is different from the Seminary’s main website).  Please use the hyperlink above to navigate to this site, and let me encourage you to bookmark or anchor it in your “favorites” menu so you can access it with one-click.  This site is a significant resource in and of itself, and we are excited that you can now begin using it as you provide students with helpful and timely information. 

The Language of Hope

Dave RamseyI am turning in an annual report this week, and one of the questions is:

“What have been those ‘Aha!’ moments that suggest potential strategies that will have the greatest impact going forward?”

Here is what I wrote:

A real “Aha!” moment for us has been learning that often students don’t need more information. What they need is hope. We live in a world in which education and even resources are often readily available. What isn’t as readily available is someone providing students real hope that they can navigate theological education in a way that won’t leave them with a financial burden. There is real truth to the biblical admonition “Where there is no vision, the people perish.” (Proverbs 29:18)

I believe one of the reasons Dave Ramsey has become such a well-known financial teacher is that he is a very aggressive vision caster. He does “debt free screams” and develops catch phrases (Live like no one else…) to create a culture where people believe they CAN win with money. Of course he combines this with very practical instruction, but if that was the valuable part, he wouldn’t give it away online for free. The real value he offers is inspiration. Hope.

Real hope (as opposed to a wish or impossible dream) gives life. Crushed hope makes the heart sick (Proverbs 12:12). I’m realizing that while we need a collection of really practical resources and directions to give to our students, perhaps more importantly we need to give them a “hope and a future”. We need to learn the language of inspiration and motivation. We need to encourage and empower students who really want to address the issue of debt. We can plant a seed of desire in students toward a debt free future.  

I hope this blog has/will offer real hope that you can win with money. That financially your time in graduate school will be a blessing and not a burden.

You can do this. We’re here to walk through it with you.

Why are we here?

ball-and-chainWith a new year upon us, it might be a good idea to go back to our roots and remember why I started GraduateFree.com and took on this passion project.

If you feel God’s call on your life to go into occupational ministry, you are probably feeling overwhelmed by the financial obstacles including:

  • Rising Higher Education Costs
  • Changing job markets
  • Spiritualization of poor financial choices
  • The ease of debt
  • Higher overall living expenses
  • Layers of Risk

This blog is here to help you see and identify the dangers along the path. But in addition to bringing light to those areas, we want to provide a path toward a better future. That includes not only sharing wisdom on how to navigate the pitfalls, but providing real life solutions. Those solutions might be:

Budgeting

Fundraising

Going BiVO

Part Time Job

Cheaper Housing

Ministry Residency Program

Take Out $5,000 Less

The goal of seminary is for you to be equipped to GO DO. My deepest desire is for you to financially Graduate Free, so that you can fully available for ministry.

We won’t do it for you, but hopefully we can equip you for this journey. I would love to hear from you. Feel free to reach out to me at dan.macleay@denverseminary.edu

Year End Reporting

$2 bill logoThis post is a quick thank you and recap of 2015. It was my first full year of blogging. I first wrote a brief personal blog in 2007 or so, but really haven’t done anything close to this much writing in my career before.

This year I published 43 blog posts. That is right on my goal of once per week (minus breaks due to travel). My written goal is 45 posts in 2016.

We had 1,420 total unique visitors in 2016 with 1,867 views. This has very slowly and gradually been increasing.

We have had gradually increasing unique visitors every month since June.

This has been my most popular post, because there have been a few people that bumped into it through a google search related to the main story of the post.

I have some big goals for 2016. I think writing is really a skill that’s developed by writing thousands of words – nobody is born with the ‘writing gene’. I really have two main objectives:

  • I hope I’ll continue to improve my writing by developing a voice that is increasingly relevant to the reader. I’m building some feedback loops and I hope I’ll continue to hone this craft.
  • I’ll work on creative delivery solutions for this content. I’m work-shopping several ideas that should be live by summer, and I’m really excited about those.

Thank you for your readership. I appreciate it. I hope I can continue to serve you this year.

If there are topics you’d like me to research and see covered, please email me at dan.macleay@denverseminary.edu

Out of student loans and tree-house homes we all would take the latter

Twenty_One_PilotsI heard this super-catchy song on the radio this week. Twenty One Pilots is a young band and their first hit Stressed Out includes the following lyrics:

Out of student loans and tree-house homes we all would take the latter

Wish we could turn back time, to the good old days
When our momma sang us to sleep but now we’re stressed out

We used to play pretend, give each other different names
We would build a rocket ship and then we’d fly it far away
Used to dream of outer space but now they’re laughing at our face
Saying, “Wake up, you need to make money”

Wish we could turn back time, to the good old days
When our momma sang us to sleep but now we’re stressed out

I don’t want to imply meaning where it doesn’t exist, but when things like student loans begin creeping into pop culture, it means something.

Plans for 2015

Who says you can’t predict the future!

*(whispers in ear “God”)*

Oh. Well. Lord willing, here is what the Ministry Residency Program at Denver Seminary is pushing towards this year:

Ministry Residency Program:

  • 40 filled residencies with 20 partners.
  • Refine the ‘marketing’ plan to alert students of open positions.
  • Refine our existing systems, including paperwork, setting written guidelines on the hours/tuition donations and reviews of our partnership agreements.
  • Newsletter to the existing residents to build program awareness, community, and networking for open positions.
  • Put our refined systems into a handbook with the forms, processes, and plans needed to run the program.

Student Coaching:

  • Market one-on-one coaching to the student body.
  • Promote our “$1,000 less per semester” campaign to the student body to cultivate a culture of debt free living.
  • Expand our ‘Speed Bumps’ program with Financial Aid to include all students hitting specific total accumulated debt thresholds. Counsel those students on the two big questions ATS says most students don’t understand:
    • What will my payment be when I graduate?
    • How much can I expect my income to be?
  • Website:
    • Continue to use this as an agent of cultural change – writing articles that show the long term benefits of less/no debt and offer specific strategies on how to do it.
    • Improve the technical aspects of appearance, flow, etc.

Feel free to email me your thoughts: dan.macleay@denverseminary.edu

Income Based Repayment and Debt Forgiveness

IndenturedThis morning a student was referred to our Financial Coaching Program who had $127,000 in debt. Wow. As I’ve talked with several students who have accumulated large amounts of student loan debt, a common answer to “What is your plan?” is “I’ll just make the minimum payments in the Income Based Repayment plan and I’ll have the balances forgiven after 20 years.”

A quick zoom through StudentAid.gov shows that the minimum payments are affordable, so on the surface this plan seems to work. But my anti-debt antenna was going bonkers so I thought this deserved a deeper dive.

To begin, let’s define ‘large’ amounts of student loan debt. While no debt at all is far and away the best route to go, when does the total debt become burdensome? To answer that, we look at two sides of the equation – Future Income and Debt Balance. If your starting income is going to be $63,400 like these local graduates, then your definition of ‘large’ and ‘manageable’ is going to be different from a youth pastor with a starting salary of $40k. I find it helpful to think through total debt as a multiple of your starting salary. So if your starting salary is estimated at $40k, $40k in student loans is 1x, $80k is 2x, and $120k is 3x.

By casual observation, sifting through the finances of over 2,000 families over the past 12 years, indicates that you can generally manage to pay off student loans of less than 1x your starting salary in a reasonable amount of time by sacrificing – but without egregious hardship. The good news for a school like Denver Seminary is that currently about 75% of the students are graduating with that much debt or less.

However, as the debt levels go up from there, I have legitimate concerns that the students taking on this liability haven’t fully processed the financial cost. It is statements like the one in the first paragraph – folks depending on student loan forgiveness from the government as a plan for getting out of debt – that prompt this post.

2X Income

Role play with me: You graduate, land your job, and start to calculate your student loan payment options on an $80k debt with a starting salary of $40k. Those numbers look like this:

 

80k in Student Loans on 40k salary

Let’s look at the most common choices:

  1. Standard: This route is a fixed payment of $896 a month for the next 10 years. If you’re making $40k a year, that’s $3,333 a month. With a conservative amount for taxes and health insurance you should take home around $2700 a month. $896 is 1/3 of your take home pay. That leaves about $1800 for housing, transportation, food, cell phone, insurance, and skinny jeans.
  2. Extended Fixed: This extends the repayment period over 25 years while increasing the total amount paid by $50,024. I don’t think this route has much traction.
  3. Pay As You Earn/Income-Based Repayment. These options are indexed as 10-15% of your discretionary income, expected to go up as your income goes up.

Problems:

A deep dive into the numbers alerts me to a couple of major financial mountains that can cause long term financial harm:

  1. Current interest rates are 6.21%. The minimum payment just to cover the interest rate is $414 a month. Anything less than that and the balance actually rises – which is why several options show ‘Projected Loan Forgiveness’. Any repayment plan that doesn’t cover the cost of the interest essentially forces the borrower into a 20 year cycle of indentured servitude. Even Jacob when he got screwed by his father in-law only had to work 7 years.
  2. The numbers on the far right – “Total Amount Paid” don’t tell the entire story. Take the 10 year flat pay. If you didn’t have student loan debt, but rather invested the $896 for 10 years at a very conservative 8% return, you would have a total of $163,919 in cash. On the extended fixed over 25 years, you would have $499,288! That’s a half a million dollar net worth difference – its $420,000 more than and the original $80k borrowed – it is the difference between financial legacies.
  3. Most people that look at this look at the “Pay As You Earn” option and say, “$83,765 over 20 years isn’t too bad – it’s just a little more than I originally borrowed”. Again, these numbers are incomplete. As current legislation exists, the $95k in projected loan forgiveness is a taxable event. So if you’re making $60k a year, for one year you will have a taxable income of $155k – putting you into a significantly higher tax bracket. After deductions, that will leave you with a tax bill of around $27,000. I probably don’t have to tell you that most folks would have a hard time writing a $27,000 check. IRS tax liens are super nasty – to the point where Dave Ramsey says he’d rather owe the money on a credit card than owe the IRS. When you add the tax liability, the interest owed on the tax liability, the $83k in actual cash paid over the 20 years that could have been invested, the “Pay As You Earn” option begins to look a lot more expensive.

Compound interest has been compared to a snowball rolling downhill. Just get it started and it gains enormous size and momentum over time. Large amounts of debt are that illustration in reverse. As the balance of the debt gets bigger, the accruing interest becomes harder and harder to escape.

3X Income

As the total accumulated debt approaches and passes the six figure mark, it becomes closer to 3x expected income. What do the numbers look like for $120k in debt on a $40k starting salary? Here is what that scenario would look like:

 

120k student loans on 40k income

Standard repayment is around ½ take home pay. If you averaged 10% returns, investing the Extended Fixed payment would make you a Millionaire over 25 years. The potential tax liability on the Projected Loan Forgiveness of $185k would be approaching $40,000.

Depending on low Income Based payments and Loan Forgiveness to wipe out student loans is an awful game plan for life. A more realistic plan for financing higher education is needed to prevent a lifetime adversarial relationship with money.