Fixing the Financial Crisis

I just finished reading a book by John Bogle- founder of Vanguard Mutual Funds- called Enough. Bogle reminds his readers of what made the US such a prosperous nation. He urges readers to return to the roots of viewing work as a calling that you never retire from; having a stewardship versus salesmanship mentality and returning to 18th century values of frugality, thrift and contentment.

We are in the midst of a financial mess worldwide. At best, we could be in store for a nasty recession. It can get worse if habits are not changed.

World governments are going to throw trillions of dollars at deflationary pressures in hopes to prevent anything close to another Great Depression. It is likely to have some success. But every solution has the potential to cause another problem.

I have a short list of changes that need to be made to lift our nation out of financial distress and leave our kids and grandkids with a brighter future.

1. Health care needs to be reformed. I have some optimism that this is going to happen in 2009. I read Tom Daschle's book Critical. Daschle was recently appointed Health and Human Services Secretary. He knows politics and why Harry Truman and Clinton's plans to reform health care failed. Democrats have the votes to get something significant passed and there is also the political will.

Initially, the plan will be to work with the current employer provided health care structure with an option for uninsured to adopt a plan that is similar to what is offered to government employees. The Democrats goal is to eventually move to a single payer system. Surprisingly, more conservatives are moving to this camp.

Eventually, I hope that employers are not in the health care business. It is terribly inefficient. Too many workers are working in jobs that they don't prefer just for health care benefits. Too many employers are making decisions to lay off older workers due to health care costs.

Daschle wants to set up a medical board similar to the Federal Reserve board for monetary policy. This medical board will be entrusted to make decisions on what treatments are the most effective. There are plenty of valid arguments against large government intervention. But I think radical reform is the only path towards fixing a broken system. Hopefully, through trial and error a better system will emerge that can deliver quality care, eliminate waste and cut costs.

2. Push the retirement age for social security and medicare back to age 75. Politically, this will be unpopular. But we need to face reality. It is the only cure to preserve the entitlement promises made to Americans. The vast majority of Americans are able to work well into their 70s and 80s.

Social security and medicare were set up at a time when life expectancies were in the 60s. Now people are living on average to their 80s. Adding 20 years of pulling benefits out and not contributing to the taxes is completely unsustainable. The problems could be fixed by telling the population that there is a new reality. And that reality is that you need to think about retiring at 75 versus 65.

3. Tax any investment that is held less than a year at 50%. Cut the capital gains tax to zero for investments that are held longer than one year. Our investment markets have become too much like a casino. The average holding period for stocks is around 6 months. From 1935- 1980, the average holding period for stocks was over 3 years. The focus has become on speculation and trading versus investment. This is not good for investors and not good for our economy.

You can reorient this gambling/speculative mindset by taxing speculation. People can still speculate, but let them pay a big penalty to do so. Reward long-term investors which has much greater economic benefit and stabilizing force by eliminating the capital gains tax on any investment held longer than a year. We need to encourage the average holding period for stocks to increase.

These are all secular reforms. What we really need in this land is the same thing that is needed in every corner of the world. We need reformation of hearts towards God. We need people who are living and breathing for the kingdom of Christ. One day we will live under a perfect economic system. Until then, we need to live for changes that align with God's revealed will. We need to live and model biblical principles daily. This is our hope of true and lasting change.

Looking forward to a New Economy,

Ashley Hodge

Congratulations to Obama

America has a new President. He's not the one I voted for. But my impression of him as a person has been favorable (outside of his policies). He ran a terrific campaign. Made no big mistakes. He did some smart things- like participate in the Rick Warren led Values Forum. He had lots of favorable tailwinds that helped him soundly beat John McCain.

He might go down in history as one of the most popular US Presidents. He inherits the economy when stock valuations and expectations are depressed. If things get better, Obama will likely get the credit just as Reagan did when he inherited a mess in 1980.

I am always of the opinion that politicians have the ability to really screw things up and Mr. Market will do what Mr. Market will do- making some Presidents look like they are economic geniuses and others look like they have no clue. This is what it is. But hopefully, Barack will not meddle too much and let the economy prosper on its own by allowing freedom and opportunity to rule.

Aside from all that, I will be supporting and praying for Obama regularly now that he is the Commander in Chief. I hope that conservatives are not as angry and bitter towards Barack as liberals have been towards Bush. I think Barack's presidency is a great opportunity for evangelical Christians to show that they live out what the Bible teaches. The Bible teaches this in regards to supporting and praying for our President.

Romans 13:1-2, "Let every person be subject to the governing authorities. For there is no authority except from God, and those that exist have been instituted by God. Therefore whoever resists the authorities resists what God has appointed, and those who resist will incur judgment."

1. We must learn to submit to authority with a humble attitude.

We will all submit to the only One who offers true hope and change- Christ. We will submit to Him either to our pleasure and ultimate good. Or we will submit to Him unwillingly when all truth is fully revealed to our destruction. Submission to authority and to each other is one of the crucial aspects of living a biblically consistent life.

2. All leaders are established by God.

God has a plan that He is unfolding. We can be assured that nothing happens in this world outside of His control. The Bible teaches us to rest in God's plan and to be active in aligning ourselves with His purposes.

3. Do all things without complaining.

Complaining is mostly worthless. Complaining without good ideas of how to improve things for the better is worthless. Philippians 2:14 teaches, "Do all things without grumbling or complaining." I would encourage all Christians to resist the temptation to be a divisive voice regarding this election.

There are certainly things worth fighting for like the undeniable fact that life begins at conception. But minds are not ever changed by bitter diatribes. Minds are changed and persuaded when the truth is presented firmly and gently with compassion and understanding.

Pray for Barack. Pray for his stewardship of this nation. Pray that his heart is transformed by Christ- who he claims to know. Pray that this nation has a renewal or introduction to the ways of Christ. Christ is our only hope of salvation and glory- Colossians 1:27.

For His Glory,

Ashley Hodge

Biblical warnings against hoarding

That was fast. Two months ago most financial assets were worth 25%- 40% more than they are today. October was on pace to be the worst month in stock market history before it rallied over 10% the final week.

Greed has left the building. Fear is ruling the day. It is important in uncertain economic times to be tethered to the truths that are eternal. If you were following biblical principles in regard to finances, you are doing okay.

You would have heeded biblical warnings against presuming on tomorrow. A biblically based lifestyle includes the areas that I outlined in my prior blog entry.

Now that fear and pessimism are taking control of people's minds and hearts, it should be noted that the Bible has plenty to say about hoarding as well.

One verse that I stumbled across recently is Isaiah 23:17-18, "At the end of seventy years, the Lord will visit Tyre, and she will return to her wages and will prostitute herself with all the kingdoms of the world on the face of the earth. Her merchandise and her wages will be holy to the Lord. It will not be stored or hoarded, but her merchandise will supply abundant food and fine clothing for those who dwell before the Lord."

These verses can be interpreted in a lot of different ways. I see them as a clear warning that wealth that is hoarded is not honored by the Lord. The consistent message of Scripture is that capital is to be re-circulated, invested and employed for good.

We see evidence of that in Luke 12:16-21. Jesus tells the story of a man who hoards resources and calls the man a fool. In times like these, we must be constantly reminded of what our purpose is. We are created for a Person- Christ. We are created for a place- Heaven. Our task on earth is to do the maximum amount of good to the maximum amount of people as Jonathan Edwards often said. We must point people to this Person and Place.

We must walk the balance between pessimism and optimism. We should live like pessimists- frugal, moderate towards our own needs. But give and invest like optimists- not being afraid to give and invest at times when people need it most.

For His Glory,

Ashley Hodge

Lessons from Isaiah about uncertain economic times

I have been studying the book of Isaiah using some commentaries for insight- Calvin and Brueggemann.

The Scriptures often speak to me in whatever circumstances I find myself in. I found Isaiah 7 particularly relevant to current events.

There is a sense of unease with many that I talk to about the economy. Our nation has experienced problems in the housing market and lending institutions that has threatened to put a lot of banks out of business. Credit is tight. Fear and pessimism are high.

Our federal government has announced a plan to stimulate the economy that could cost taxpayers billions. The byproducts of a poor economy are more government spending, higher budget deficits and higher inflation.

What does Isaiah say to the believer in God's control over all things in this world during this time? Two verses:

Isaiah 7:4, "Say to him, 'Be careful, be quiet, do not fear...'"

Isaiah 7:9, "If you are not firm in faith, you will not be firm at all."

We have a choice: to walk in faith or fear. What a great opportunity for believers to demonstrate that our trust is in Christ and not the fickleness of world economies. It is also a good opportunity to show that biblically based financial planning works.

What are the basic principles of biblical finance?

1. Keep your lifestyle much lower than your income stream.
2. Save and give a significant percentage of your income.
3. Work hard- use your abilities to serve God and others.
4. Diversify your investment assets- have a plan to manage principal and inflation risk.
5. Be organized- don't leave your family with an estate mess.
6. Act in faith, not fear. Pray for the prosperity of the city you live in and be active in seeking the renovation of creation for God's purposes.

What has been formed by God has been deformed by sin and needs to be reformed by Christ.

For God's Glory,

Ashley Hodge

Education Reform

As I have stated in previous posts, I think the three great opportunities for reinvigorating the US economy lie in energy, health and education reform.

Education reform is a topic that I take particular interest in because I have two young children and have a passion for learning. Unfortunately, most of this passion came after age 22 when most of my formal education days were behind me.

I am the product of public schools all the way through high school and then attended and graduated from Baylor University. I have gone back to school as an adult- taking classes at Westminister Theological Seminary.

I deplore waste- even though I am sure I can be rightly accused of hypocrisy in many areas where I am wasteful. Our government wastes incredible amounts of money on public education. If people knew the truth of how much waste goes on in the name of educating children, there would be cries to overturn the entire system.

Some statistics to support my claim. There were 31 industrialized nations ranked on educational criteria. Who spends the most per child on education? The United States (some studies say Switzerland, but the US is either #1 or #2). How does the United States rank on basic skills? Should be #1 or #2 right?

Math: 19 out of 31

Science: 14 out of 31

Reading: 15 out of 31

Lots of money spent for mediocre results. Switzerland also ranks middle of the pack. The nations that get the bang for their buck are Japan, Finland, Korea and New Zealand. One of the problems is that we have created huge administrative bureaucracies. Compare public education to private education. A 2006 study in Arizona showed these results:

• Public schools in Arizona spent 50% more per student than private schools.


• Teachers made up 72% of the employees at private schools. Less than 50% of the employees at public schools.


• Public school teachers are paid 50% more than private school teachers.


• The results for private versus public school student performance is virtually the same except for Jesuit schools which hold a significant educational advantage in terms of output.

In other words, we spend a great deal more on public schools for results that aren't better than private schools. The study I read compared students in similar socio-economic categories so that the data wasn't skewed by poverty/inherit advantages.

One more story underlining the need for massive reform. Thomas Sowell writes about this in Economic Facts and Fallacies. The University of Colorado's law school was one of the best bargains around. Tuition was $6,700 per student because they used inexpensive faculty (actual practicing judges and lawyers) and spent much less on a law library than other schools- choosing to use online resources.

Yale University's law school charges $44,000 per year. So what school had a greater number of students passing the bar on the first try? University of Colorado at 92%.

The American Bar Association was horrified at these results and quickly laid more than $40 million in spending requirements to get the University of Colorado up to ABA accreditation standards. Tuition rose 154% at the University of Colorado law school and the bar pass rate fell.

What are some solutions to the educational mediocrity that currently exists in our nation? I have two that should be included:

1. School choice through vouchers.

Competition brings better products. Look at the postal service. Do you think you would be able to ship goods overnight anywhere in the the US for a reasonable fee if UPS and FEDEX weren't competiting with the US Postal Service? Milton Friedman's Foundation releases an annual report on the success of school vouchers here.

2. More emphasis on life skills- personal finance skills; discovering natural giftedness; healthy lifestyle choices- diet, exercise, sleep habits, stress management; managing time effectively.

The leaders who come up with great solutions for energy, health care and educational reform are going to lead our economy into a more prosperous, better future.

For His Glory,

Ashley Hodge

Reflections on Vacation

I just got back from celebrating a wedding of a friend/client in Kauai. It was a memorable trip. Here are some of the photos from our trip. I apologize for the choppy format.

One of my goals was to spend some time with my son talking about God's creative power and His control over all of nature. I wanted to instill in my son a love for God's beauty and a hunger for Heaven. We had some great moments together.

We took our first hike together- pictured above where Hudson has his walking stick and backpack. He's only 4, so I had very low expectations. But he was an absolute trooper. We hiked 3+ miles to a waterfall and hiked 3+ miles back to our car. He did not complain once (that I remember).

We also spent a few nights on the beach searching for crabs with flashlights and nets. This was a good teaching moment. I asked him, "Do you know that God has control over the ocean? God says this about the ocean in Job 38:11, 'This far you may come and no further; here is where your proud waves halt.'"

We talked about how big the ocean is- something he could see from the plane ride. I told him God has control over every wave. The ocean is very vast and powerful and yet the water stops at the same area every time (I realize storms, tsunamis, etc... are an exception). I explained that every wave obeys God because He is in control. I told him how God had promised not to destroy the Earth by water again.

He was very silent taking this in. Then we started walking along the beach to search for more crabs. Hudson said real enthusiastically, "Dad, all the waves are obeying God except for this one. This wave is a bad wave because it went further than it was supposed to." Oh, to have the mind of a 4-year old.

Another thing I did was take walks along the beach with my one year old girl- Hope. We were on the East side of the island so a decent crowd gathered along the beach to watch the sunrise every day. My girl was fussier than normal because she was cutting teeth. I was struck by the contrast of a few things while we walked along the beach.

Here we were in this idyllic setting. The ocean, the sound, the breeze, the sun coming over the horizon. To me it renewed a hunger for the restoration of this world and the promises that God makes to eliminate all the effects of sin (pollution, crime, disease, etc...) The contrast was one morning Hope was screaming and I couldn't get her to calm down. I thought, "Oh boy, I am sure all of these people seeking a peaceful moment to watch the sunrise are enjoying this."

But also, I couldn't walk very far without smelling cigarette smoke. I noticed the beach was littered with hundreds of cigarette butts. Paradise except for the pollution and crying baby. It was a reminder of Romans 8:19, "All creation groans with eager longing for the revealing of the sons of God." God is in the restoration business. He is restoring people and creation. Every beautiful thing that we see is only a glimpse of what He is preparing for His eternal kingdom.

For His Glory,

Ashley Hodge

Health Care Solutions

I am no expert on health care. But I recognize that there is tremendous waste and inefficiency in the current system that we have. My wife- Amy- has endured a rough 5 years of various health problems. During that time, she has been diagnosed with a degenerative neurological disease- Charcot-Marie-Tooth.

She has had 5 surgeries. I have lost count of how many MRIs, scans and doctor visits. We have been blessed to have had an insurance safety net- which we pay large premiums for through the Texas High Risk Pool because no other insurance company will cover her. Our total health care expenses have been over $200k in the last five years. Unfortunately, too much of her time is spent fighting with insurance over what expenses we are responsible for and what expenses insurance will cover.

Any family that has experienced health challenges can relate to this. Doctors have to practice defensive medicine because we live in an over litigous society. This defensive medicine leads to testing that is probably unnecessary. But who can blame the doctors? If I was in their shoes, I would do the same thing.

After some reading, thought and going through Amy's health challenges, I have some ideas for some solutions to our current health care mess. I don't think a universal health care plan adminstered by our government is the answer. That may be where we are headed. I think the solution needs to be a system that combines the free market innovation that our country excels at with sufficient regulation to make sure the incentives are in the right place.

I have 7 ideas. Many of these are borrowing some ideas that I read elsewhere.

1. Raise the annual limits on health savings accounts to $5k for singles and $10k for families and encourage their widespread use. Every family with under $200k income would receive a $5k tax credit that could be used for establishing a health savings account. All health savings contributions are tax deductible.

A family would be required to pay out of pocket for any health expenses incurred in a year that were $10k or less. A high deductible insurance policy would cover all expenses over $10k per year. The money to pay the $10k per year potential expenses comes from the health savings account. Any unused money is carried over to the next year. The health savings account becomes a supplementary retirement account. Lots of education will be needed. But I am confident that when people see health care expenses like they see any other expense, it will force competition and less waste.

2. Law requiring price lists of medical services. Don't get me started on this one. I find it ridiculous that you know what you are paying beforehand for everything you do except medical costs. You should know exactly what the costs are before you visit a doctor, order a test or have surgery.

I realize that costs may escalate if more is required than originally thought. But it makes no sense that medical pricing is so lacking in transparency. Where there is a lack of transparency, you have great potential for fraud and waste.

3. There should be a national health information system that centralizes medical information. I have read that over 60% of medical costs are due to administration. I have talked to medical professionals that are frustrated with how much time is devoted to filling out forms. Every new doctor that you see requires a new set of paperwork. This is wasteful time for the doctor and the patient.

There should be a centralized system that eliminates this. A new doctor could have your records with a few clicks and your consent. My wife's doctor gives her medical records on a jump drive that she can carry on her key chain. There has got to be a better way. Surely, we could save billions here if someone gets this right.

4. Radical changes in prescription drug distribution. One idea that sounded good to me was to develop a no-patent government drug research and development facility. Drugs are cheap to produce. What makes them more expensive is the large amount of failures for every one success. Pharmaceutical companies spend huge dollars on research. The 17-year patent process protects pharmaceutical companies but doesn't serve the public interest as it should.

What would happen if there were some facilities that were devoted to research where collaboration was encouraged worldwide to find cures for diseases? File sharing has brought huge improvements to our lives in the tech world and brought down costs. Something similar has to be possible for health care. The incentives are all wrong. I am sure many prescription drugs are necessary. But we need to have a system geared towards wellness and not profiting from creating dependencies on prescription drugs.

5. Revamp medical malpractice law. In the financial world, lawsuits are heard by an arbitration panel of 3 knowledgeable industry insiders versus a jury who may or may not have the background necessary to make wise decisions. I would be an advocate of a similar system in medicine.

There should be the establishment of some facilities that are lawsuit-prohibited. This would be a much lower cost option for consumers. Doctors could practice medicine without worrying about covering their butts all the time. Consumers could decide if some services are worth signing a waiver that releases medical staff from any potential liability. We do that for bungee-jumping, white water rafting, sky-diving, etc... Plenty of people still do those things.

Costs go way down when you eliminate the potential lawsuit issue. And you don't have to be subject to lots of unnecessary tests because the doctor is overly defensive in their treatment plan.

6. Scalable medical diagnostic testing. This is not far off. A few years ago, Andy Kessler wrote about these trends in the End of Medicine. There are some exciting possibilities. Probes that are in pills that can be eliminated safely. Low cost strips that can be used for urine samples. If something needs to be examined further, the strip changes color or gives a positive symbol similar to a pregnancy test.

There is also the possibility of a low cost mri device that you hook up to your personal computer. This device could alert you if there is something that needs further examination. If multiple millions are produced and sold, the cost falls to something that rivals any electronic device. Imagine how many lives would be prolonged and saved if early detection of cancer and heart disease was the norm. Imagine how much money this would save our health system?

7. Reorganize education requirements for doctors and allow some medical functions to be performed by trained nurses or physician assistants. Doctors spend over $150k and 12 years to become a physician. There has got to be a way to train them effectively that doesn't require so much time and money.

I would rather see a doctor with 8 years of experience and 4 years of education in a field than 8 years of education and 4 years experience. We need an overhaul of our education system. But this is a topic for a future blog. There are many functions in medicine that law requires a doctor to perform that should be delegated to a trained professional where the cost of a 12-year education is not being passed on to the consumer.

I am extremely optimistic that many of these changes are coming. There is no cure for high prices like high prices. Energy, education and health care reform have the potential to revitalize the US economy. All three areas could see dramatic price decreases if technology, innovation and wisdom are embraced. This will provide relief to so many families who need the relief.

Looking forward to a perfected, resurrected body where these issues become moot,

Ashley Hodge

Investing Quotes in my arsenal

I was reading Psalms 62 this morning. Psalms 62:1 states, "My soul finds rest in God alone." That got me thinking that this verse probably inspired Saint Augustine's famous words in Confessions, "My heart was restless until it came to rest in Thee, O Lord."

I put together a list of quotes that I have found helpful in advising people on money issues- specifically investing. A well-timed quote can say a lot without having to rely on excessive words.

So here are some of my favorites. Some of these I have heard attributed to Warren Buffet. Some to John Templeton. But they probably borrowed many of them from their mentors. They are helpful reminders after the continued rash of bad economic news.

• Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.
• There is no cure for high prices like high prices.
• You make your money in bear markets, you just don’t know it at the time.
• There are old pilots and bold pilots. But there are no old, bold pilots.
• Your money is like a bar of soap. The more you play with it, the smaller it gets.
• Gambling is investing for people who are extremely bad at math.
• You don’t know who is swimming naked until the tide rolls out.
• Economists have successfully predicted 14 of the last 3 recessions.
• The four most dangerous words in the English language: ‘this time is different’.
• Be fearful when others are greedy and greedy when others are fearful.
• Successful investing is anticipating the anticipation of others.

Perhaps the most important thing one needs to remember as it pertains to investing or anything in life- God is in control of all things in this world. Psalms 84:12, "O Lord Almighty, blessed is the man (or woman) who trusts in You."

For His Glory,

Ashley Hodge

Solutions to Energy Problems

I plan on hashing out some reform ideas on the three biggest drains on our pocketbooks: energy costs, health care costs and education.

All three of these industries if handled properly can revolutionize the US economy for the better and save Americans billions of dollars. All three areas are mired in old, traditional ways that need to be reformed.

I am going to start with energy and then address health care and education in future blogs. These are some ideas that have been swirling around in my head.

Energy independence is going to be one of the hottest election issues this Fall. Most people would agree that we are paying for oil to areas of the world that are not sharing our goals and ideals at best. We may be funding anti-American terrorism at worst.

I have 3 ideas that are very simple and need to be adopted immediately.

1. Emphasize telecommuting (working from home)

Lots of good information about telecommuting here. Some quick facts:

• Less than 5% of Americans telecommute, but 40% could telecommute.
• 70 minutes per day are wasted in an office setting chit-chatting with co-workers.
• Telecommuting saves each person approximately $900/year at $4 per gallon of gas.
• 26 days are eliminated each year in commute time.
• If 40% of the workforce telecommuted, we would cut our dependence on foreign oil by 80%.
• After an initial adjustment period (usually lasting around 60 days), telecommuters have been found to be more productive than traditional office workers; less likely to miss work; enjoy the work more.

2. Emphasize the 4-day work week

Some jobs don't lend themselves to telecommuting. Many of these jobs can offer workers 4-day work weeks instead of a more traditional 5-day work week. This will provide similar benefits as telecommuting in reducing oil consumption, traffic congestion, wasted commute time, etc...

I think you need to emphasize 10-hour work days versus 8-hour work days to make this viable. Worker productivity would need to stay high for the US economy to remain competitive. But I would venture to say that most workers would accept a trade-off of 4 10-hour days versus 5 8-hour days.

3. Go nuclear

My dad holds a PhD in physics and has worked for the Nuclear Regulatory Commission for over 30 years. So I am sure he has contributed to my pro-nuclear energy beliefs. The case for nuclear energy at this point is overwhelming.

Patrick Moore- co-founder of Greenpeace was anti-nuclear in the 1970s. He wrote an opinion piece in the Washington Post two years ago making the case for nuclear energy. Basically:

• It costs less than coal
• It is cleaner energy
• It would help us achieve energy independence by reducing our need for foreign oil

We can also drill for oil off our shores. This is supported by over 75% of the US population and would signal an important move in the direction of energy independence.

This website has a petition going with over 580,000 signatures to encourage Congress to start getting real about our need for energy reform. But ultimately, we need to reduce our oil consumption. Telecommuting, the 4-day work week and a move to nuclear energy will help accomplish this need.

Ashley Hodge

A Case for Optimism

"For I myself am an optimist. It doesn't seem to be of much use to be anything else," Winston Churchill.

I have been reading several articles lately on how gloomy the mood is in America about the future. A recent Washington Post survey found that 75% of Americans are unhappy about the direction of our country.

Let's think about this gloominess for a minute. Imagine a person who was living in 1800 coming to America in a time machine. He/she finds:

• Economic prosperity unimaginable to someone living in 1800: air conditioning; heating; dishwashers; ovens; televisions; computers; cars; airplanes; the Internet, etc...
  
  
• Life expectancy of around 80 years versus 35 years.


• Less than 1% of infants dying in childbirth versus 30% of infants dying in childbirth.


• Freedom. No slavery. No religious witch hunts. The ability to practice a mulititude of faiths and beliefs without fear of death or imprisonment.


• The ability to travel safely from California to New York without fear of death by disease or lawlessness. For that matter, the ability to travel almost anywhere in the world without huge risk to life.

The list could be pages long. We have a huge case of ungratefulness and excessive complaining disease in this country. I am hopeful that the national mood will change. I believe that the future strength of our nation depends on it.

Christians should be living by example with a foundation of optimism and hope. I have three reasons why I believe an optimistic outlook is called for:

1. The future is extremely bright.

From a biblical perspective, we are called to be optimistic. God has revealed some things about our eternal home- Heaven. We can point to a multitude of verses on this issue, but perhaps none as powerful as Revelation 21:3-4:

"Now the dwelling of God is with men and He will live with them. They will be His people and God Himself will be with them and be their God. He will wipe every tear from their eyes. There will be no more death or mourning or crying or pain, for the old order of things has passed away."

The hope of a resurrected, perfected body in a resurrected, perfected earth is our hope. This hope is an anchor to the waves of trials that toss us around and attempt to make our minds and focus unstable.

I am optimistic about life because I am optimistic about God. Am I optimistic about human nature? No. But a quick view of history shows an amazing story of God working through time and human stewardship to bring about incredible progress. Every period of history had its share of potential problems that were going to derail the planet and doom civilization. And yet God has restrained evil and promoted good to give us a partial glimpse of eternity where evil will be non-existent and good will be natural.

For this reason, I am optimistic about the future. God will do some great redemptive works through humans. His common grace causes the sun to shine on the righteous and unrighteous. We often look at the future and all we see are problems. But the future always holds difficulties mixed with opportunity. It is our job to focus on the opportunities and how we can participate with God in redeeming creation.

2. I believe there will be significant reform in energy, education and health care and these reforms will usher in a new era of economic prosperity.

There is an old saying in economics: "there is no better cure for high prices than high prices." People always have a tendency to think that prices that have risen in the past are going to continue rising at a similar rate. But then innovation occurs. Scale happens. Prices fall. The personal computer and mobile phone are two examples.

We have some bright minds in America. The economic incentives are in place. I expect mind-boggling innovation in the areas of energy, education and health care. The potential for greater efficiency at lower prices in all three industries is huge. These three industries have the potential to revolutionize the US economy for the better.

Of course, all three industries could be screwed up worse than they already are through excessive government intervention and waste. But history is on my side here. The world is moving towards greater personal responsibility and freedom. It will be hard for a society to go against that trend and remain competitive long-term.

3. Optimism attracts opportunities

I am not talking about self-help silliness here. The book of Proverbs is full of this truth. "Without vision, people perish"- Prov 29:18. "As a man thinks in his heart, so he is"- Prov 23:7. A friend of mine- Gary Randle- says, "God takes care of the birds of the air. But they don't sit around on wires with their mouths open. They go looking for worms."

We should always maintain an optimistic view of God's ability to provide for our needs no matter how dark the situation looks. God often works His greatest miracles in our lives at our times of greatest despair and weakness.

I watched a movie a few weeks back called "The Mist". It was a Stephen King film. I don't recommend the movie. It is a depressing film. Basically, an army experiment goes bad and infests a town with human sized insects that kill anyone in their path. One group holds out for a long time in a grocery store and then makes a daring escape in a car to drive out of the mist. They run out of gas.

The situation looks so dismal and bleak that they agree to have the main character kill everyone in the car rather than being eaten by these insects. He has enough bullets to kill everyone but himself. After he kills his friends and young son, he walks out of the car to meet his grisly fate. But then the cruel irony sets in. He is rescued within minutes. If only, he hadn't given up. If he would have persevered to the end...

I think the lesson is good there. Never, ever, ever, ever give up. Persevere even when odds look dismal. God is with us. Romans 8:31, "If God is for us, who can be against us?" We should be overflowing with hope, faith and optimism.

As always I preach to myself first.

For His Glory,

Ashley Hodge

Lessons Learned

I have just passed my 15th year of being in the financial advisory business.

God has been gracious to teach me some things along the way.

I want to share some lessons learned that relate to personal finance. These are lessons that we should all revisit often.

Like all wisdom in life, we need to have these concepts pounded into our minds and hearts on a regular basis. Our natural inclinations are to do foolish things with the resources that God has entrusted to us.

Proverbs 14:12, "There is a way that seems right to a man, but its end is the way to death."

Here are five lessons that I have learned along the way that if followed will help you become a better steward of financial resources.

1. Wealth is most often accumulated through hard work, patience and discipline.

Proverbs 21:5, "The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty." I have read that 50% of Americans believe that winning the lottery or suing somebody are the two top methods of obtaining wealth.

In 15 years of being a financial advisor, I have had a few clients who have experienced a financial windfall through a large inheritance or lawsuit. I have never had a lottery winner as a client. But I wouldn't expect the results to be any different. The vast majority of sudden wealth is depleted within 10 years. The amount doesn't matter.

The habits that are required to obtain wealth are the same habits that are required to maintain wealth. They include:

• Spend less than you make
• Work harder than the average person
• Save on a regular basis
• Be a patient investor- sticking to a plan despite current economic climates

One example of many is a client that I have had for 14 years. She was a school teacher who never made more than $35k per year. But she was frugal, a hard worker and a saver. And she has over $1 million invested with me. Less than 15% of that money came from inheritance. The rest is from personal savings and compound interest over the years.

2. Invest like an institution to enjoy better results over time.

There are three reasons why institutions generally perform better than individuals over time:

• Follow an investment policy (philosophy) with discipline
• Avoid emotional extremes
• Properly diversify to reduce large losses

A recently released study by Dalbar showed that institutions averaged 10% per year from 1997-2006 and individual investors averaged 6% per year during that same time frame. On an investment of $100,000 the difference is having $259,000 at the end of 10 years or having $179,000.

Most institutions follow a strategy that includes assets such as: stocks, bonds, real estate, absolute return, commodities and currency investments. They spread the risk and don't allocate a huge percentage to any one area. Each of these assets has its advantages/disadvantages. But a properly diversified portfolio can help an investor manage inflation and principal risk.

3. A simplified, organized life leads to less stress and greater effectiveness.

I was talking with one of my clients last week who had made the decisison to downscale housing by purchasing a house that was 1/2 the cost, 1/3 of the yard and less square feet. I asked her if she ever regretted that decision? Her answer, "It was the best decision I made. I have much less stress and things to worry about."

That has been my common experience in talking with clients over 15 years. Simplicity is the better path. Ecclessiastes 7:29, "God has made us simple, but we seek out our own complexities."

Speaking from personal experience, organization is key. I went through a random line-by-line audit of my tax return in 2006. I considered myself fairly organized before the audit, but there is nothing like a full line-by-line audit to expose the weaknesses in your organizational plan.

The audit turned out fine. But I spent probably 40-50 hours preparing and locating documents that were needed for the audit. Since that experience, I have started some new organizational processes. In addition to being ready for an another audit if it ever occurs, I have seen some fruit from these efforts.

For example, I update a mileage log daily. By measuring this regularly, I have noticed that my business mileage has decreased some. I start to question the wisdom of making trips that I wouldn't have questioned in the past. Some of this probably has to do with higher gas prices. But I am convinced the biggest factor is better organization.

The more important things you measure, the greater your success will be with those important things. I believe the key is to determine what is important to measure and focus on and to get rid of everything in your life that is unimportant.

Henry David Thoreau's quote has always stuck with me, "Most people live lives of quiet desperation, but I have chosen to live deliberately." Better organization leads to greater awareness. Greater awareness leads to better decisions. Better decisions leads to less stress and greater effectiveness.

4. Work until your mind and/or body quit working.

Very few people can afford to fully "retire" from paid work in their 50's or 60's. If you can't live on a 4% income stream from your accumulated assets, you probably can't afford to quit working.

I am convinced that biblical wisdom encourages leading a productive, others focused life until we die. Jesus said, "We must work the works of Him who sent Me while it is day; night is coming when no one can work"- John 9:4.

If you are in a strong financial position to make working for pay optional, you should still consider how to use your time and resources to positively affect others. If you are worried about not saving enough for "retirement", you should consider working for pay at something you enjoy and not trying to place high assumptions on your financial assets to perform above expectations.

I read this week that 27% of Americans believe that they can pull 10% per year from their retirement assets (Investment News, USA Today). You would have to be fully invested in growth assets and have a raging bull market for the next 30 years to make that doable which is likely pure fantasy.

My experience is that the people with the highest expectations are the most likely to pull out in panic when we have a bad stretch. So keep your expectations low and work as long as you can. Several studies on happiness have shown that one of the keys to happiness is low expectations.

5. Reduce or eliminate debt and build up cash reserves

When things are going well for you economically, there will be a temptation to buy things- a boat, vacation home, art, etc... But wise people make sure the basics are taken care of before purchasing luxuries. Two of those basics are:

Eliminating all debt. Romans 13:8, "Let no debt remain outstanding except the debt to love one another." You can make some financial arguments for certain debt- low interest mortgage; education; investment/business loans. But debt can lead to unexpected disasters as we have seen with the credit crisis on Wall Street this past year. You are better to strive towards a debt-free lifestyle.

Building up cash reserves. There are plenty of online banks competing for your cash with attractive FDIC-insured yields. You should strive to keep at least a year's worth of expenses in a cash account. Not only does this provide help in times of unexpected financial emergencies for your family. But it also puts you in a position to help others in need.

Obviously, you can take this to an extreme where you hoard money. Our trust should never be in our net worth. It should always be in the God who controls the future. But saving for disaster is a biblically wise goal. One example of many in the Bible is Joseph feeling led to store 20% of the grain for seven years of abundance in preparation for a great famine that was coming.

Hopefully, you have been reminded of some important ideas to concentrate on if you are reading this. I heard a sermon last week where the preacher said, "We never, never, never, never, never, never, never, ever outgrow our need to hear the gospel preached to us over and over." Our hearts are prone to wander. Likewise, we never outgrow our need to be reminded of financial wisdom.

It is probably my greatest motivation for keeping this blog. To remind myself of what I know in my heart to be true, but occasionally lose sight of.

For His Glory,

Ashley Hodge

Salvation- Process or Transaction?

I won't do this topic justice in a short blog. But this has been on my mind a lot. How are we saved from our sins? All Christians will affirm that we are saved by trusting in Christ.

Is this a process or a one-time faith transaction? I would say both. Before I am labeled a Protestant heretic let me explain what I mean.

The key to rightly understanding salvation is to understand the difference between justification and sanctification.

Here is my understanding- with the help from theologians- of the difference:

Justification is an act of God's free grace where He pardons all of our sins. He accepts us as righteous in His sight only because of the sinless perfect sacrifice of His Son- Jesus. This can only be received by faith. No amount of good works can make us justified in God's sight. It is the great exchange: our sinfulness for Christ's righteousness. Justification is the work of God the Son in saving us.

Sanctification is the work of God the Holy Spirit in perfecting us to the image of His Son. This will never happen fully on this earth. But sanctification is a process whereby we are being made holy. We are dying to sin and living to righteousness more and more as time goes by.

1. Justification works for us; sanctification works in us.
2. Justification removes the guilt of sin; sanctification removes the stain of sin.

3. Justification transfers to us the righteousness of Christ; sanctification works in us the righteousness of Christ.

4. Justification is a one-time transaction; sanctification is a process.

For me, I have always been troubled by the teaching that salvation is walking an aisle to receive Christ, saying a prayer or doing a deal. It did not square with the reality that many who repent of sin in an emotional state show no signs of a changed life afterwards.

Many verses seemed to contradict the idea that once you say a prayer who are forever eternally secure despite contrary evidence from the life you live.

I never was comfortable with a more Catholic understanding of salvation either. I knew good works were important, but how could we ever be good enough? The best of lives are still miserably sinful when compared to the standard of Christ.

For me, understanding a balanced view that salvation is a conversion event and process makes more sense. I never want to take anything away from the work of God. I believe this is 100% God's work and never rests on me.

The greek word for faith- pistis- gives a connotation of continuing faith. In other words, we are not saved only by a one time faith but a continuing faith in the promises of God. This makes sense of many biblical passages including Colossians 1:21-23:

21 And you, who once were alienated and hostile in mind, doing evil deeds, 22 he has now reconciled in his body of flesh by his death, in order to present you holy and blameless and above reproach before him, 23 if indeed you continue in the faith, stable and steadfast, not shifting from the hope of the gospel that you heard, which has been proclaimed in all creation under heaven, and of which I, Paul, became a minister.

How are we saved?

1. God the Father adopts us

2. God the Son justifies us

3. God the Holy Spirit sanctifies us

All the work of God by faith alone. But our faith must be continual in His promises.

For His Glory,

Ashley Hodge

We are Sinking in Debt, Right?

If you listen to the media, you would tend to believe that America is a nation on the brink of financial disaster. The average American family is deep in debt and there is no hope for this country so we are told.

Do a google search under "consumer debt" and you will find all types of alarmist scenarios. A question needs to be asked: Is that accurate?

I don't think so. I am going to lay out some reasons why.

I want to start by saying that getting debt free is an admirable goal. I encourage my clients to do so and am working to do so personally. Romans 13:8 instructs us to let no debt remain outstanding except the debt to love one another.

The Christian who is debt free can be in a position of less stress when poor economic times come. He/she is also in a strong position to help others who need financial help if all debts are paid. But of course it is nearly impossible to eliminate monthly obligations. If you live in a home or apartment, you will have to pay for utilities. If you drive a car, you must pay for gas and insurance. The list goes on.

Aside from the biblical call to be a pilgrim on this earth and not entangle yourself with lots of financial obligations, is this country in a terrible financial situation? I say don't believe the mainstream thought on this issue.

Here are the facts:

1. The US debt as a percentage of GDP (Gross Domestic Product) is 37%. This ranks us 65th out of 126 nations included in the CIA World Factbook. Japan by comparison has debt that is 194% of their GDP. They have problems. We are not a nation drowning in debt.

Chuck Bentley- CEO- of Crown Financial Ministries sent out a newsletter highlighting this fact. Chuck also presented a chart that compares our current debt level to 1946 when we were at 122% of GDP. Chuck's conclusion, "Our ultimate preparedness is to avoid fear or panic, reduce our vulnerability created by debt and remain dependent on Christ who is the never-changing constant in an ever-changing economy."

2. The Net Worth of Americans is increasing, not decreasing. Sure, it will decline some during recessions as it did from 2000-2002. But we remain in a strong financial position as a country. It would take a whole lot of bad scenarios for many years to reverse that. Debt matters. But debt/asset ratios are more important.

3. Debt can often be an effective utilization of money especially in a low interest rate environment. Consumer debt on depreciating assets or no assets is foolish (credit cards, auto loans, etc...). Debt to expand businesses or increase future income may be wise stewardship. Obviously, it should be entered into prayerfully. But it is wrong to say all debt is evil.

For example, one of the most proven ways to help impoverished countries raise their standards of living is to provide access to loans for businessmen/women. These are often called micro loans. The lack of capital in these countries often dooms them to poverty. When access to banking services is provided, the countries tend to be on a road to greater prosperity provided that there aren't corrupt governmental influences to impede business.

Ken Fisher wrote an article a year ago making the case that our nation is not in enough debt. I don't agree with that conclusion. But his point that stock markets perform best when budget deficits have been highest is certainly interesting.

The point is, our nation is not on the brink of financial disaster. You may sound smarter when you are pessimistic. But you have certainly been rewarded for being in the optimist camp over time as the US economy has continued to disappoint its critics and climb upward over many walls of worry.

For His Glory,

Ashley Hodge

Quick Hits

Lots of topics on my mind. I am finding it more difficult to take the time to blog as much as I have in the past. But here are some topics that have been swirling around in my head:

Prudent Bear Fund Mailer

The Prudent Bear fund is a mutual fund that invests with the conviction that stocks are overpriced and going to fall in value. It uses shorting strategies to take advantage of falling stock markets. This fund did very well from 2000-2002 when the markets performed poorly. But from 2003- 2006 lost a lot of money.

I remember receiving a mailer in late 2002 promoting the fund and thinking, "This is probably the beginning of a bull market." In hindsight, this was correct. Well, I received another mailer from the Prudent Bear fund in February of this year. Is this a market bottom?

You can do pretty well as an investor if you avoid buying funds that are being advertised heavily at the moment.

Student Debt

This was a disturbing set of statistics that was posted on a Baylor University sports board that I frequent. The average student indebtedness at graduation of some large Texas universities:

Baylor: $33k

TCU: $24k

A&M: $19k

SMU: $17k

Rice: $16k

UT: $14k

Since only 1/2 of the students that graduate have debt, you can pretty much double these figures to get a better picture of what some students are facing after graduation. I was stressed because I had $8k in debt after graduating from Baylor. But I was able to wipe that out my first year of work after college. $60k would be a much tougher task.

Eliot Spitzer

Spitzer- the governor of NY- and one of the most unpopular men on Wall Street was caught paying for sexual services in a prostitution ring. I have not been a fan of Spitzer for two reasons:

1. He always seemed like a publicity hound. He did things to further his political career and did so behind the guise of rooting out corruption.

2. His "desires" to help the small investor have actually hurt the small investor. Wall Street firms have been forced to turn away clients with less money because it is unprofitable business. More rules and regulations has a tendency to make things more confusing. And this is not a good thing for anyone except attorneys.

I have great compassion for what Spitzer and his family are going through. Spitzer has three daughters 13-18. To see your dad's picture all over the news in a negative light has got to be extremely hurtful to them for years to come. It is a great reminder to me that we should live our lives with such a healthy fear of God that our actions would not bring shame to God or our families.

I am thankful that many sinful things I have done in the past were never "news". God is graceful. This grace should lead us on a path of increasing holiness and decreasing sinfulness.

Oprah's the New Age Cult Leader

No one does more to promote the new age worldview than Oprah Winfrey. Oprah is one of the most influential figures in our society. When she recommends a book, it sells millions. Most of the books she recommends follow the same New Age transcript: Jesus is good. Buddha is good. Muhammad is good. The Universe is good. Secularism is good. We just need to take what works for us and discard the rest.

What is so troubling for the Christian is the number of professing Christians that buy into this nonsense. We lack a good foundation of why we believe what we believe in Christianity. So when someone comes along peddling New Age nonsense, Christians become susceptible.

From Gary Zukav to the Secret to Oprah's latest fad- Eckhart Tolle (author of New Earth), the pick and choose your religious beliefs is a thriving business.

Baylor Basketball

It appears the Baylor men's basketball team is headed for their first NCAA tournament since 1988- my freshman year at Baylor. Scott Drew- the coach at Baylor- has done an amazing job. He took over a program coming off the worst scandal in college basketball- a player murdered (Dennehy) by another player (Dotson) and a coach (Bliss) who tried to cover up a lot of things.

If ever a program seemed like it had a bleak future it was Baylor men's basketball. But Drew- a positive, energetic guy worked recruiting hard and convinced some good players to come to Baylor. Five years later, Drew and his assistant coaches have built a very strong program.

It is what I love about Spring- the reminder of resurrection. What appears dead- trees, grass, Baylor basketball- comes to life again. Just like our bodies will be raised from the dead when Christ establishes His kingdom on earth as it is in Heaven.

For His Glory,

Ashley Hodge

5 Keys to Financial Happiness

I saw some feature clips from a 60 Minutes episode on the topic of happiness this past week. They interviewed a professor at Harvard named Tal Ben-Shahar who has studied happiness for years. What I found so compelling about the story was that so many biblical themes were present although they were never credited to the Bible or Christian beliefs.

Denmark was given the honor as the happiest country. Why? Humility, contentment, low expectations. I found that interesting and extremely consistent with what the Bible teaches.

Ben-Shahar gave 5 keys to happiness that included the following:

1. Simplify life
2. Exercise regularly
3. Embrace the gamut of emotional experience
4. Be grateful daily for what you have
5. Continual growth- the good you see appreciates as you practice appreciation

The topic inspired me to come up with my own happiness list from my 15 years of experience as a financial advisor to many families. These are my own personal observations as to what makes people truly happy in this life.

1. Simplify

I wholeheartedly agree with Ben-Shahar here. One of my favorite verses in Scripture is: "God has made us simple, yet we seek out our own complexities"- Ecclesiastes 7:29. Walden was wise when he urged, "Simplify, simplify, simplify."

I don't believe in radical simplicity that makes life more difficult- like the Amish for example. I respect their choices to do what they do. But give me computers, electricity, air conditioning, etc... any day. But I think we need to constantly evaluate what makes us truly happy and be in a continual process of uprooting the weeds that choke our devotion to God and our general happiness.

My wife- Amy- has been a huge help to me in learning to say "no" to good things. Too many "good things" in your life will lead to the inability to be great in anything. So we need to prioritize, simplify and get rid of unnecessary stuff.

Financially, this is huge. You ask yourself what brings me the most fulfillment in life? Are there things I own that I am not using that I can get rid of?

I remember talking with a college friend of mine Eric after he and his wife sold or gave away most of their possessions to spend 3 years as missionaries to Russia. Eric commented that there was something liberating about owning so little. He could feel the stress decreasing. Most of us have experienced this after giving away or selling some possession- it is a good feeling to have less to care for.

2. Reinvent Retirement

My observation is that people who are happiest in their "retirement" years have some or all of these traits in common:

• Ability to limit withdrawals of investment income to 4% of principal base.
• Working part-time as long as the mind and body allows productive work.
• Finding purpose in the 2nd half of life. Using time and abilities towards helping others- whether it is family or community.
• Lower stress because they keep expectations modest.

They make sure their houses are built on rock and not sand. So when the storms of life come, they have a firm foundation.

Retirement is undergoing a big makeover due to baby boom generation. I think most of the changes are healthy. Thirty years ago, people retired at age 65 and then died in their 70's on average. Today, people are living into their 90's routinely. More money is needed to sustain longer life spans. Rising costs to social security and medicare put these programs at risk in the future.

A person who retires at 60 and never works again is in danger of running out of money unless he/she has saved a lot of money. The road to less stress is to work as long as you are able to in a job that brings great fulfillment. Very few people can work in jobs for 50-60 years that they don't enjoy. But as Mark Twain said, "The secret to life is to make your vocation, your vacation." When you find that kind of satisfacation and joy, you can work until you die.

So you see lots of new ways of doing "retirement". Many people take 5 years off from the workforce and then launch a new career. Some incorporate new educational training after 50. The goal should be financial freedom and not traditional retirement. Traditional retirement is a very unbiblical notion. The Bible encourages us to do productive work until the day we die- John 9:4.

3. Yale Model of Investment Allocation

I am surprised that more investors don't implement this type of investment strategy. Traditionally, we are told about investing in stocks, bonds and cash. The Yale Model (or multi-asset class model) encourages a broader amount of diversification. The idea is that if you mix different types of asset classes into your investment portfolio, it is possible to achieve greater returns with less risk.

How is that possible? David Swensen- the portfolio overseer for Yale University's huge endowment fund- explains his methodology in several books. You can read a recent Smart Money article about this investment philosophy here.

The Yale Model proposes that you spread out your investment risk among many categories of investments: fixed income; domestic (US) stocks; foreign stocks; absolute return investments; private equity; real estate; commodities; cash.

Five years ago, the opportunity to invest in many of these areas was only available to millionaires. Now, there are a multitude of options available that are attractive to small investors. Diversification is important because no one really knows what the future holds- Ecclesiastes 11:2. It is wise to devise a plan that balances inflation risk and principal risk.

4. Capture the Sweet Spot of Insurance

I see many people that are terribly underinsured. If disaster strikes, they will be in trouble financially. I also see others who rely on insurance as if it takes the place of God. They spend a fortune on insurance to attempt to eliminate many risks.

Life is full of risks. You simply cannot insure every risk. But you can manage these risks by having the sweet spot of insurance. What do I mean by this?

Here is my brief philosophy about certain types of insurances- obviously these are all generalizations so you should speak to a competent professional about your personal needs:

• Health: I believe most people should consider a policy that covers expenses over $5000 per year. Anything under $5000 per year should be paid for out of pocket or through a health savings account.
• Life: the most critical need for life insurance is for the 20 years when families are raising children. Term insurance is a cheap way to protect the family from financial catastrophe if a spouse were to die during this time.
• Disability and long-term care: the sweet spot of disability/long term care insurance is a policy that covers a percentage of your income/expenses for 5 years. The odds that you would need help past 5 years are low. If you are disabled during your working years, you would have access to social security payments.
• Home/Auto: As I feel about health insurance, I believe that you should insure some worse case scenarios: a wreck that totals your car; fire destroys your home; flood; etc... High deductibles will likely save you money over the years because these disasters usually don't happen to you over the course of a life with great frequency.

5. Have an ongoing organization plan

The Lord told Hezekiah to set his house in order for he was going to die- 2 Kings 20:1. We will all die. If we are unorganized, we are leaving a burden to our family to settle things. I urge all my clients to keep a list of important phone numbers on one sheet of paper so that a family can handle affairs quickly if there is a sudden death.

I recently went through a full line-by-line random IRS audit on my 2006 tax return. I keep pretty good records. But I promise you that this audit process was painful enough to encourage me to keep better records going forward. I have now systemized everything that has anything to do with my expenses and taxes. The audit was a blessing in that regard. It has led me on a path of greater accuracy and organization.

Life is so busy. Organization takes time. But the rewards are worth the effort. I have read that lack of organization leads to an average of 30 minutes per day searching for items that should be easy to find.

Greater organization leads to a happiness circle. Because the more you simplify, the more organized you will become. The more organized you become, the more you will resist adding more crap to your life.

I firmly believe that happiness is attainable. There are some fundamentals that we need to practice daily whether it is dealing with our finances or our lives in general. The answers can be found in God's Word. If you practice these principles, you will have greater peace and live a happier life.

For God's Glory,

Ashley Hodge

Recession? What Recession?

I am no trained economist. But I enjoy reading economic reports and attempting to make sense of the dismal science that is economics. It is a difficult profession because there are so many moving parts. Just when you think you have something figured out, along comes some information to re-adjust your view.

If you read the news and listen to the media, you would believe that the economy is heading off a cliff. Massive unemployment; foreclosures; bankruptcies and layoffs are just around the corner we are being told. But the eye test is telling me something different. In the last 30 days, I hosted three client dinners at fine dining restaurants- two in the Dallas/Fort Worth area and one in Atlanta.

I was surprised by what I witnessed. Three restaurants on weeknights absolutely packed. My clients' businesses seem to be moving along well and some of those are construction related. Maybe it is different in Atlanta and Dallas than in other parts of the country. But it definitely doesn't feel like a recession to me.

This brings me to the point of this blog. Economists tend to have loads of book smarts. But sometimes that becomes a hindrance to seeing the good things that are taking place daily. I believe that the more degreed a person becomes, the more pessimistic they become. I have no scientific studies to back this up. It is just an observation.

A lot of the opinions about the economy coming out of the top academic institutions have been pessimistic for the last 20 years. And more often than not, they have been wrong. I was attending an investment conference in the Spring of 2007 and one of the money managers made this comment, "You sound a lot smarter when your pessimistic. But history usually rewards those who lean on the side of optimism." I believe this quote has a lot of wisdom behind it.

You protect yourself from being a wild-eyed fool by being overly cautious. When you predict the sky is falling, one day you will be right (at least to a small degree). But history tells a different story. Progress, innovation, rising standards of living, wealth creation carry on despite the walls of worry that they have to overcome.

Optimism is not a foolish philosophy. Especially, if your hope is planted in the promises of God. He created this world good- Genesis 1:31. The Fall (sin) has seriously marred His perfect creation- Genesis 3. God has promised to redeem mankind and this world from the effects of sin by initiating a new Kingdom through His Son- Christ- Isaiah 65; Revelation 20.

The story of God is that He has given mankind a stewardship responsibility to not only care for the earth but to improve it- Genesis 1:28. This should give us great hope that tomorrow will be better than today. Recessions tend to be mostly mental. They snowball into significant economic downturns if people start living out of fear versus continuing to go about their daily responsibilities. If everyone takes the responsibility of stewardship seriously, we will work hard each day to make this world more like our eternal home.

For God's Glory,

Ashley Hodge

Avoiding Two Extremes

I took a seminary class last year called Apologetics. One of the assigned books to read was a book called Constructing a Life Philosophy: Opposing Viewpoints. It is an interesting read because it contains short essays from a variety of life philosophies- Atheism, Islam, Judaism, Buddhism, Hinduism, Secular Humanism, Liberal Christianity, Conservative Christianity, etc...

One of the essays that I found most interesting was called Challenging the Idea of a Life Plan by Charles Larmore. Larmore argues that the good life cannot be achieved by following a life plan. He points out that the human experience reveals that happiness is often the result of unanticipated events.

This went against the grain of everything I thought to be true. I am a financial planner by trade and I like to fool myself into believing that I can take the uncertainty out of life by managing risk or behavior appropriately. I am a huge goal-setter and often get annoyed by events that sidetrack me from achieving goals.

But the reality is that as I reflect upon my life, I have to admit that Larmore is correct. Planning is good. There is great satisfaction in dreaming big dreams and watching those dreams come true in some form. I believe that what you measure tends to improve over time.

But planning can become an idol. We can easily put our hopes in Monte Carlo simulations (a tool financial planners use to predict investment outcomes based on historical scenarios) or some crazy notion that we have control over what happens to us.

Proverbs 16:9 instructs, "The heart of a man plans his way, but the Lord establishes his steps." There are two extremes to be avoided in this area:

1. We should not be passive about life. A fatalistic view that life just happens is irresponsible. God has entrusted us with talent, financial resources, time and health. Hiding these resources in a hole of fatalistic apathy will likely meet with the same result as the slothful servant who hid his talent in the ground- Matthew 25:25-30.

2. We should not be planning zealots. We can easily get puffed up with false pride when things go our way. We can have fake pity on the poor saps who just keep having waves of adversity- probably because they don't set goals. God's path for each of us is mysterious. There will be unexpected trials and blessings along the way that seem to come out of nowhere.

The whole book of Ecclesiastes covers this topic. One of my favorite verses in that book is Ecclesiastes 7:14, "In the day of prosperity be joyful, and in the day of adversity consider: God has made the one as well as the other, so that man may not find anything that will be after him."

My word to myself: Set lots of goals; strive for holiness; seek discipline. But be joyful always; give thanks in all circumstances. Embrace structure in some form. But have a good glass of wine along the way. Life will always be a balance between what we plan and the unexpected good and bad that comes our way. The unexpected is often our greatest source of happiness, change and growth.

For His Glory,

Ashley Hodge

2008 Stewardship Goals

I am looking forward to this year. What a great time to be alive. We enjoy so many of God's blessings that past generations could only dream about. We have an awesome responsibility before us as we prayerfully consider how to allocate God's resources.

I have set some goals for stewardship in 2008 that I want to share with the hopes that it will help one person make some decisions in regards to stewardship that will have long lasting effects on their life.

As I get older- 38- I am more cognizant of my sinfulness each day. Even though I have some small victories to be thankful for in stewardship, I have many struggles where I have lost ground. The Christ-honoring life is an ideal that I fall short of in many ways.

But I know from the truth of God's word that perseverance in striving for the goal- Philippians 3:12-16- is the noblest of pursuits. Every year a new theme strikes me as I read God's Word. In 2007, the theme was perseverance. Verses about perseverance seem to jump out of every book in the Bible. The first 3 chapters of Revelation are filled with references about overcoming; conquering; the one who endures.

The persecutions and temptations are different than what the early church experienced. But the command still lives: "Therefore since we are surrounded by such a great cloud of witnesses, let us lay aside every weight and the sin which clings to us so closely and let us run with endurance the race that has been set before us."- Hebrews 12:1

Faith is a learning process. We must learn to trust His promises. And we must learn not to rely on our own understanding of the events that bring into question the meaning of it all.

Here is a review of my 2007 stewardship goals- with comments on how I did in relation to them in red. And then 2008 goals.

Goals for 2007

Money

1. Live on less than $8000/monthly for housing, auto and living expenses- fell short of this goal. Lifestyle on those items was closer to $9k/month.
2. Give over $25,000 for Christian work; Save over $25,000- was able to achieve both of these goals.

Abilities

1. Pray for clients daily. Pray for every client at least once per month- fairly consistently prayed for 5 clients per day which allowed me to pray for my client base each month.
2. Upgrade stewardship resources; offer free version of book through pdf file and create audio version that will be available at no cost. Read 12 investment/financial books- recently revised http://stewardshipmandate.com/ which will allow me to update information more easily. Did not revise book or create audio version as planned. I read only 4 investment/financial books in 2007.

Time

1. No technology from 6pm- 5am. Use this time for family; devotions; relationship building; reading; projects and sleep- did a miserable job at this goal; watched too much television in the evening.
2. Average 3 hours per day of spiritual growth; 40 hours per week of focused work; two hours per day playing with, instructing and loving on our kids- averaged 2 hours per day of spiritual growth activities- prayer, Bible study, reading, meditation; 35 hours per week of focused work; didn't keep track of time spent with my kids playing, reading, instructing. I doubt it was a focused 2 hours per day though.

Health

1. Average less than 300 calories per day of cola and processed foods. Discipline in eating foods that are healthy- did a terrible job at this goal. I gained 8 lbs in 2007 and I doubt it was muscle. Cola intake increased which is disappointing.
2. Exercise at least 4 hours per week; sleep at least 6 hours per day- I was able to accomplish both of these goals.

2008 Goals

Money

1. Spend less than $10,000/month on housing, auto and living expenses.
2. Give over $40,000 to Christian work. Save $40,000 towards financial freedom goal.

Abilities

1. Pray for 5 to 6 clients per day; use this as an opportunity to review these 5 to 6 clients needs, portfolio and goals so that every client is being reviewed prayed for monthly.
2. Revise Stewardship Mandate book online; write 2 blog entries per month- one general entry and one entry that is a work-in-process update of Stewardship Mandate. My goal here is to have this be a more collaborative effort of anyone that has valuable input into how to become a more effective steward so it is not just my ideas.

Time

1. No technology from 6pm-4am three nights per week. Use this time for relationships- family, neighbors, connecting with friends, etc...
2. Average 2 hours per day of spiritual growth activities- Bible study, prayer, fellowship with other believers; 40 hours per week of focused financial planning work; 2 hours per day of focused time with kids- playing, instructing.

Health

1. Fast on Mondays by having no soda, saturated fat or processed foods on this day. Cut soda intake to less than 18oz per day.
2. Play basketball 3 times per week; lift weights 2 times per week; sleep on average over 6 hours per night.

I pray that you will think through and commit to some stewardship goals in 2008. I pray that 2008 is a year of prosperity, joy and spiritual growth for everyone.

For God's Glory,

Ashley Hodge