Stewardship of God’s Money in Difficult Times

For

McLean Bible Church

Prince William Campus

February 2011

By Bud Moeller

The Reality of Money?If you think no one cares if you’re alive, try

missing a couple of car paymentsThe Lottery: A tax on people who are bad

at math“We can loan you enough money to get

you completely out of debt.” (Bank sign)Happiness is not having what you want

but wanting what you have

The Usual ProblemsMore month than moneyIf I only made 10% more money . . .I’ll use this new credit card to pay off this

other credit cardI’ll be dead before I can afford to retireHow can I be overdrawn, I still have

checks left!The problem lies in reconciling my gross

habits with my net income

The New ProblemsIf I can keep making this money . . .Where did all those credit card offers go?What retirement account? Oh, that

$64,000?How can I be overdrawn . . . oh those extra

banking fees for . . .But inflation is low, why can’t I make ends

meet now?

The Real Problem--Competing Masters

Matthew 6:24 (NLT): “No one can serve two masters. For you will hate one and love the other, or be devoted to one and despise the other. You cannot serve both God and money.

The “Average American” Doesn’t Do Very Well When It Comes to $$

43% spend more than they earn

Greed => Housing Crisis => Foreclosures and bankruptcies

Money #1 cause of marital conflict

Average family credit card debt $16,000 (of those who carry a balance)

34% pay credit cards off each month

48% pay only the minimum each month

Low savings rate vs. rest of world => no cushion when recession came

People have dipped into 401(k) and other retirement assets

The World’s Priorities

Earning

Spending

Debt Payment

Saving

Giving

The Steward’s MindsetGod created everything.God owns everything.We are merely trustees.

1 Chronicles 29:11-12 “Everything in the heavens and earth is yours, O Lord, and this is your kingdom. We adore you as being in control of everything. Riches and honor come from you alone, and you are the Ruler of all mankind; your hand controls power and might, and it is at your discretion that men are made great and given strength.”

God’s Priorities--Reverse of the World’s!

Earning

Giving

Saving

Debt

Spending

What Does The Bible Say?

Work--was before the fall. Genesis 2:15 “The Lord God took the man and put him into the garden of Eden to cultivate it and keep it.”

Giving is an act of worship and recognitionSaving is wiseDebt is really badSpending is where we really lose it!

Earning--Our RoleWork hard--Ecclesiastes 9:10 “Whatever your

hand finds to do, do it with all your might.”Be diligent--Proverbs 18:9 “He who is slack in

his work is brother to him who destroys.”Be purposeful--Colossians 3:23 “[Work] as

though you were working for the Lord rather than for people.”

Be grateful--Deuteronomy 8:17-18 “You may say to yourself, ‘My power and the strength of my hands have produced this wealth for me.’ Remember the Lord your God, for it is he who gives you the ability to produce wealth.”

So What Questions Should We Be Asking Re Giving?

Do I have the right attitude?—2 Cor 9: 6-7, Prov 11:24, Luke 6:38, 1 Tim 6:10 and 17

What do I care about?—Luke 12:34 “For where your treasure is, there your heart will be also.”

To whom should I give?—Galatians 6:6, Matthew 25: 35-40

What does God really want from us? Does He need our money?

Giving

What Questions Should We Be Asking Re Saving?

Why should I save?—Prov 21:20 and 6:6-8;How much should I save?—Matt 25:14-29,

1 Timothy 6:9-10, Luke 12:15-21, Prov 23:4-5, Phil 4:11-13

What should I save for my kids?—Prov 13:22, 1 Tim 5:8

When should I give it to them?—Prov 20:21

Saving

Save For . . .

Avoiding debt on major purchasesReducing/eliminating debtYour future (retirement, whatever that

means)Your children’s futureBeing able to bless others generously

How Much to Save to Retire?

Assume a spending pattern requiring $60,000/year for the rest of your life

Most planners would agree you should pull no more than 4%/year from your retirement or you’ll outlive your money

So, would require $1,500,000 to retireAnd, if you want to live better than this,

just ratio this number up or down to fitInflation? Earnings rate? Social Security?

How to Invest?

With plans and persistence--Prov 21:5With honesty--Proverbs 21:6With a watchful eye--Prov 27:23-27With diversification--Ecclesiastes 11:2,6With much prayer and God’s input--

Isaiah 48:17-18

Debt--Even Worse Than You Think

Debt is considered slavery--Proverbs 22:7 “Just as the rich rule the poor, so the borrower is servant to the lender.”

Debt was considered a curseDebt presumes on tomorrowDebt may deny God an opportunity

Debt

Spending--A Personal ChoiceBeware of idols--Romans 1:25 They

“worshiped and served created things rather than the creator.”

Guard against greed--Luke 12:15 “Beware! Don’t be greedy for what you don’t have. Real life is not measured by how much we own.”

Be content--Philippians 4:12 “I know what it is to be in need, and I know what it is to have plenty. I have learned the secret of being content in any and every situation, whether well fed or hungry, whether living in plenty or in want.”

Spending

In A Perfect World, You’d Have Been Prepared For This Storm

3-6 months of emergency savingsCredit cards paid offConsumer debt (auto, student, etc.) goneSavings banked for major future events

(vacation, next auto, education, etc.)Home ownership, with equity cushionRetirement pretty well covered

(At least the essence of a good plan!)

Most Likely, You’re Struggling

Average credit card debt ~ $8,000Car loan higher than car valueStudent loans still lingeringSavings—minimal, or not very liquidHome equity erased or below 20%Insufficient retirement savingsLittle else to leverage other than time

If You Want to Get in Financial Shape …

Need to know where you’re starting fromNeed to know how much to changeNeed to figure out what to changeNeed to decide how long to take

Essentially, you need a plan!

Measurement Tools--FinancesBalance SheetIncome StatementCredit Report

The Balance Sheet

Checking accountSavingsCar“General Stuff”“Valuable Stuff”HouseRetirementInvestments

Credit cardsCar loanOther loansIRS DebtMortgageHome Equity loan401(k) loanObligations

payable

I Have … I Owe …

Have - Owe = Net Worth

Balance Sheet

Checking $500

Savings $500

Car $20,000“Valuables”

$2,000“Stuff”

$20,000House

$600,000Retirement

$65,000Investments

$30,000TOTAL

$738,000

Credit cards $12,000

Car loan$25,000

Edu loan $60,000

IRS Debt $2,000

Mortgage $550,000

Home Eq loan $95,000

401(k) loan $5,000

Obligations $1,000

TOTAL $760,000

I Have … I Owe …

Have - Owe = Net Worth ($12,000)

Spending Plan

Fundamental tool that enables us to control our money so that it doesn’t end up controlling us

Plan for how we will allocate our financial resources

A way to reach our financial goals and live out our values and priorities

Produces freedom--there is no true freedom without limits

Building a Spending PlanWhat are your life goals?What things have changed recently?What financial goals to set, in support?Set some near-term (e.g., 6 months, 1

year, 2 years) objectives and targetsBuild a balanced plan to get there

Income Statement--Overview

What you make--IncomeMinus your GivingMinus your Taxes= Net available for other uses

Saving (current, retirement, etc.) Debt reduction Spending

The “Savings” Page

Long Term Priorities Retirement Children’s

education Special trip

(anniversary, etc.) Other (furniture,

remodeling, etc.)

Short Term Priorities Emergency fund (3-6

mos) Investments House purchase

downpmt 1st Child prep Car

Replacement/Repair Medical Insurances Vacation this year Gifts Other this year (e.g.,

TV, appliances, etc.)

Savings Elements

Emergency--should be 3-6 months of “spending,” held in a liquid account (i.e, not tied up for a lengthy period where unavailable)

Replacement--money you accumulate for periodic spending on major items that are wearing out (e.g, car, appliances, furniture)

Savings--continued

Long-Term--for items that will take years to accumulate and/or use College fund for children’s education Retirement Down-payment for home purchase Etc.

Page 3--All the “Spending” and Debt Reduction

Housing--biggest costFoodAuto/TransportChildren’s costsClothingEntertainment & RecreationPersonal CareMisc/cash

Debt Reduction Credit cards School loans Personal/bank

loans IRS debt Cash advances Etc.

Reducing Expenses

Is this an optional expense that can be eliminated?

Is this a variable expense that can be controlled and reduced?

Is this an expense that has wrongly been assumed as being “fixed”?

Debt ReductionShould be your goal after giving and

saving“Just as the rich rule the poor, so the

borrower is servant to the lender.” Proverbs 22:7

Move from paying interest to earning interest!

Debt Example

You owe $7,200 @ 18.1%(Minimum payment = 2% of the balance or $10/month whichever is greater.)

You Pay Total Paid Time

$Minimum/month $23,049 23+ years

Debt Example

You owe $7,200 @ 18.1%(Minimum payment = 2% of the balance or $10/month whichever is greater.)

You Pay Total Paid Time

$Minimum/month $23,049 23+ years$144/month $13,387 8 years

Debt Example

You owe $7,200 @ 18.1%(Minimum payment = 2% of the balance or $10/month whichever is greater.)

You Pay Total Paid Time

$Minimum/month $23,049 23+ years$144/month $13,387 8 years$144 + $100/month $ 9,570 3 years

Debt Repayment “Waterfall”

Debt Total Rate Jan Feb Mar June …

Visa 1

$600 18% $434 $178

MC $1300 21% $26 $282 $460

Visa 2

$2000 19% $40 $40 $40 $500

Total $3900 $500 $500 $500 $500

Other Keys to Debt Reduction

Be sure the plan is realistic.Incur no new debt!Modify the plan when unexpected

windfalls or pay raises come into play.As each debt is retired, celebrate!

“But, It Doesn’t Balance . . .”

Increase income--tough to do without a significant shift something (job, spare time, location)

Reduce expenses--go back and force your lifestyle to rebalance

Sell assets--something with enough value to make a dent in your debt or payment load

So, Suggested PrioritiesKeep working!Continue to give, of courseGo on a lifestyle diet to free up more $$Focus on your future needs vs. othersPut a high priority on retirement savings

(put away a whole dollar, grows tax free)Balance that with reducing high cost debtThink “cash flow” tooWork the spread (cost of money vs. yield)Make big purchases with cash vs. debt

In Huge Trouble?

Give. . . Something, sacrificiallySave. . . a little (at least)Debt. . . maximize repaymentLifestyle. . . spartan

You Need A Short-Term Plan!Forget the life goals—this is about survivalTake inventory—savings, spendable

assets, leverage, liquidation potential, income, debt, etc.

Know your bottom line and squeeze itCall your creditors before they call youForecast the future—know what will hit

you and when. Set priorities and sequence—be proactive not reactive!

Keeping Track

Envelope System

Your Credit Report--FICO Score

Not something you usually see, unless you request it

It’s how the world of lenders sees youTherefore determines the rates you get for

any credit or loansAnything over 720 is “So what?”A couple of mess-ups can stain your

record for many yearsSometimes you’re stained and don’t even

know it

Want Your Credit Report?

Go to www.annualcreditreport.com It is the only authorized source to get your free credit report under federal law

It will show your accounts, payment history, balances, dates, etc.

What it won’t do is show your FICO score. For that, you have to pay a fee. Go to www.myfico.com (Equifax and TransUnion scores. Experian availability was discontinued in February) or go straight to the rating agencies.

Impact on You--Monthly Payment

0

500

1000

1500

2000

2500

3000

3500

4000

500-599 560-619 620-674 675-699 700-719 720-850

$/Month

Assumes $450,000 mortgage, 30 years

Making Change Stick

Pick realistic goalsDefine the goals (specifically)Set a schedule (or deadline)Don’t be upset by setbacksEnlist additional help or support

(… and, of course, you’ve got to get started!)

Some Encouragement and ChallengeAction springs not from thought but from a

readiness for responsibilityObstacles are those frightening things you see

when you take your eyes off your goalA little knowledge that acts is worth infinitely more

than much knowledge that is idle “Do or do not. There is no such thing as ‘Try’” Yoda

(Empire Strikes Back)Billy Graham: “The test of a preacher is that his

congregation goes away saying, not, “What a lovely sermon!” but, “I will do something.”

The Commercial If this topic is striking a chord with you and you

want to get started, call: Nancy Hall (MBC coordinator) 703-770-4397

There’s no cost for financial counseling--except your “investment” of time to do the work

If you want the Biblical foundation (more than counseling), sign up for McLean University 501 A (Bible Study) or B (Small Group).