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Money Management
July 10 - 12,2008
Elder Angelo D. Williams, MBA
Outline Current Economic Background The Affect on the Church Our Financial Responsibility
The need for discipline Understand our Income and Expenses Develop a Spending Plan
Eliminate the use of Credit God’s Giving Plan Other Major Financial Goals
Debt elimination Savings and Investment
Our Current Economic Environment
Oil prices are through the roof Gas prices are approaching $4.50
per gallon Home Foreclosures are at an all
time high Unemployment rate is its highest
since the mid-80’s Food prices are on the rise
Oil Prices Soar
What’s the Effect
Shock Despair Desperation Unbelief Anxiety Helplessness
Is the Church Immune? Absolutely Not Some of you are experiencing these
emotions You have prayed
You have exercised your faith You have at times given more expecting
more in return Yet, you are still in Financial Trouble Why hasn’t God come to your rescue?
Our Responsibility God entrusts certain resources to us
and in return expects good stewardship: Matthew 25:15 - And unto one he gave 5 talents, to
another 2, and to another 1; to every man according to his several ability…..
Luke 16:10-11 "He that is faithful in that which is least is faithful also in much; and he that is unjust in the least is unjust also in much. If therefore you have not been faithful in the unrighteous mammon, who will commit to your trust the true riches."
God expects us to be faithful in how we manage our money
What are we to do? You can choose to do nothing
Accept the consequences Pray for a miracle
Miracles do happen and God is able to do miraculous things
Decide to be a better steward This will be our focus for the next
several minutes
Managing Finances In the U.S., debt to income level has risen
from .6 to 1.1 between 1980 and 2006. This means as a whole, we are spending
more than we make Average savings have decreased from 9
percent in 1980 to only 1.7 percent in 2006 We can’t afford to save since we have so
much debt
What Happens if We Don’t Get it Right?
Marriage Failure A source of major conflict
Bankruptcy (Inability to repay what is owed) Increased by 71% from 1992 to 2003
Higher Interest rates The lower your credit rating, the higher
your interest rate
What Happens if We Don’t Get it Right?
Inability to help others Children Parents Saints and friends
Inability to retire People today are working longer
Unexpected expenses Can’t pay – no savings, no plan
Benefits of Proper Money Management Giving more to God’s work Saving for retirement Paying for unexpected expenses
without incurring debt Peace of mind Helping others who may have a need Freedom to make career changes Lower interest rates on debt
Today, We Have a lot of Stuff
Clothing
Cars Pocket books
Shoes
Weight loss equipment
Computers
Video games
Tools
And We Want More, and More and More
Enough is Enough
We have got to gain control of our spending
It is called discipline Discipline is a derivative of the word
“disciple” Disciples of Christ must discipline
themselves to be more like Christ This is where the hard work begins!
How to get started?
Step one Understand how much money is
coming in and how much is going out Step two
Stop Spending Step three
Develop a spending plan
Step One – What’s Coming In? Write down all income
Jobs Including odd jobs
Retirement Social Security Child Support Offerings
Include only net income after taxes are deducted
Step One – What’s Going Out? Track spending for one or two months
Write down everything that you spend money on Include the obvious expenditures
Mortgage/Rent Car/lease payment Utilities Insurance Food Gas
Include other expenses as well Lunch Offerings (including all $1 offerings) Gifts Giveaways
Spending Tracker
Spending Tracker
Tithe Mortgage/Rent Car Utilities Offering Food Insurance Gifts Giveaways Lunch/Dinner Snacks Phone/Cell Cable
Day 1 50.00$ 10.00$ 2.00$
Day 2 5.00$ 6.00$ 0.50$
Day 3 2.00$ 3.00$ 1.00$
Day 4 4.00$ 0.75$
Day 5 5.00$
Day 6 125.00$ 150.00$ 4.00$
Day 7 75.00$ 5.00$
Day 8 500.00$ 200.00$ 150.00$ 125.00$ 5.00$ 0.75$ 100.00$ 50
Day 9 10.00$ 5.00$ 5.00$ 0.50$
Day 10
Totals 75.00$ 500.00$ 375.00$ 150.00$ 7.00$ 150.00$ 125.00$ 10.00$ 10.00$ 38.00$ 9.50$ 100.00$ 50.00$ 1,599.50$
Step Two – Stop Spending Start with the easiest things you can stop
Lunch - $60.00 per month Instead of buying lunch, take a lunch from home
Expected savings - $30.00 per month Phone/cell phone
Eliminate one of the phone services Expected savings - $40.00 per month
Snacks Buy the snacks at the grocery store
Expected savings - $10.00 per month
These ideas alone have netted a total savings of $80.00 per month – enough to pay a monthly bill!
Step Two – Stop Spending Check your spending tracker and
determine what additional items you might be able to cut back Remember, the only thing that you can’t cut
back on is your tithing. Everything else can be cut
Car payments Credit Cards Insurance Even Offerings
Step Two – Stop Spending We can’t talk about stop spending
without mentioning “Credit Cards” and Credit When a family is in financial distress,
credit is used more and more just to stay afloat.
Credit is used to pay for: Gas Food Routine bills
Step Two – Stop Spending
Fifty-one percent of the U.S. population has at least two credit cards (Source: Center for Media Research).
This means most of you have at least two credit cards This includes department store cards
like Sears, Belk, J.C. Penney, etc.
Step Two – Stop Spending Average credit card interest rate is 13.42%
(Source: Bankrate.com) Average balance is $2,200 (Source:
Creditcards.com) Min. payment = $50.00/mo Payoff time = 61 months Total interest paid = $845.00
Borrowing $2,200 can cost you nearly $900.00
Bad Credit Costs
Credit Rating Interest Rates Annual feeExcellent 7.9 - 14.99 noneGood 8.5 - 16.9 noneFair 14.9 - 19.8 $20.00Bad 8.9 - 19.9 $50.00
Step Three – Spending Plan
Now that we know what’s coming in and what’s going out, it’s time to develop the means to manage the two The most common plan most people
are accustomed to is a budget We will not be discussing a budget per
se, just a means to provide routine management of your finances
Step Three – Spending Plan We can use the results from the Spend
Tracker: Include:
Tithing Offering (no set amount) Mortgage/Rent Utilities Food Car Insurance (Car, Homeowner’s/Renter’s) Repairs (home, car)
Step Three – Spending Plan
Exclude: Medical Insurance Life Insurance Vacations Cell Phone Eating Out Cable Hair Clothing Memberships Subscriptions
Step Three – Spending Plan Now, sum up all of the “includes” Subtract this amount from your net income
(What’s coming in) This is your excess The first thing to include or set aside from your
excess are emergency funds Start a savings fund that will cover unexpected repairs Start a savings fund to cover Christmas gifts
You should now prioritize the “excludes” Rank them by importance and/or costs Include all of your top priority items until you have
consumed your excess or until all of the items have been included
Prioritize Remaining items Include:
Tithing Offering Mortgage/Rent Utilities Food Car Insurance (Car,
Homeowner’s/Renter’s)
Savings for unexpected expenses
Christmas savings
Exclude: Medical Insurance Life Insurance Vacations Cell Phone Eating Out Cable Hair Clothing Memberships Subscriptions
2
1
3
45
6
Spending Plan – Final Words The plan should be reviewed at least
twice per year If you have little or no excess after
moving the higher priorities to the “Include” side, you should review more often (once per month or once every other month)
Resist the temptation to put anything on a credit card If you can’t afford it – don’t buy it!!!!! This
includes a one night stay at the Council – if you don’t have it don’t put it on credit.
Other Major Goals
Becoming Debt Free Giving More to God Savings and Investment Adequate Insurance Coverage
Becoming Debt Free
Becoming Debt Free is a worthy goal
We’ve made a good start with this plan – the next phase is total debt eradication
It will require even more discipline This is the second phase of the
financial freedom journey
Give to God This should be our primary goal. As we
free up wasted money, we should prayerfully seek to increase our giving back to God.
We are blessed when we give to God’s work Malachi 3:10 -12 …. And all Nations Shall Call You
Blessed…... It’s your giving attitude that moves God (2
Corinthians 9:7….God loveth a cheerful giver) It’s not easy being cheerful when you are
overwhelmed with debt
God’s Giving Plan We should give out of our excess, not out
of our necessity II Corinthians 8:13-15:
13 For I mean not that other men be eased, and ye burdened: 14 But by an equality, that now at this time your abundance may be a supply for their want, that their abundance also may be a supply for your want: that there may be equality: 15 As it is written, He that had gathered much had nothing over; and he that had gathered little had no lack.
It does us no good when we give to others or to certain causes, we ourselves need others to give to us.
Savings Buffer
Develop a Buffer What happens if I lose my job? How many months do I think I need
to get another job? We need to determine what our
monthly living expenses are, and then save up enough to cover us for at least three months (some financial planners want you to have a 6 months buffer).
Save for retirement
After our obligations to others, we should consider whether and how we want to make efforts for saving for retirement. Consider the ant who gathers food in the
Summer time in preparation for the coming Winter
No man knows the day nor the hour when the Son of Man will appear. We must therefore work while it is day, for when night comes, no man can work…….
Insurance Insurance is there in the event things don’t go
as we expect Accidents – creating disability Pre-mature death
Pay for funerals Ease the transition for the survivors
Unfortunately, we don’t have time to do justice to this subject
I’ll only mention we need to find a way to obtain as much insurance as we can comfortably afford
Buy Term Insurance – rather than Whole Life. Stay away from burial insurance – it is too expensive and only provides a limited benefit
Obtain some level of medical insurance
Summary We need Discipline Develop a Spending Plan Stop using credit
Pay cash Give out of your excess, not your
necessity Debt is the enemy
Get out of Debt Start a Savings and Investment Plan