1 family money management: getting a grip on your finances budgeting is simply a plan to ensure that...

1

Family Money Management:

Getting a Grip on Your Finances

Budgeting is simply a plan to ensure that you know where your money goes

each month.

Larry Burkett with Kay Moore, Jesus On Money: Charting a New Course (LifeWay: Nashville 2000) pg. 48

God’s Plan for our Lives !God’s Plan for our Lives !

• That all should know Him– John 3:16

• A full and abundant life for His disciples

– John 10:10b

• Lives built on rock, not sand– Matthew 7:24-27

• Lives of service and witness– Matthew 28:19-20

• That all should know Him– John 3:16

• A full and abundant life for His disciples

– John 10:10b

• Lives built on rock, not sand– Matthew 7:24-27

• Lives of service and witness– Matthew 28:19-20

God’s Plan for our Resources !God’s Plan for our Resources !

• Every person to be found a faithful steward, acknowledging God owns it all

– Psalm 24:1 / Matthew 25:21

• Every person giving their tithe– Leviticus 27:30 / Malachi 3:10

• Every congregation on mission for God at home and around the world

– Acts 1:8

• Every person to be found a faithful steward, acknowledging God owns it all

– Psalm 24:1 / Matthew 25:21

• Every person giving their tithe– Leviticus 27:30 / Malachi 3:10

• Every congregation on mission for God at home and around the world

– Acts 1:8

Many have left God’s PlanMany have left God’s Plan

And have built their lives on the sand

And have built their lives on the sand

Average

Savings Rate:

4.09%

Average

Savings Rate:

4.09%

Debt and Financial Crisis

in America

Debt and Financial Crisis

in America

http://www.creditcards.com/credit-card-news/credit-card-industry-facts-personal-debt-statistics-1276.php#Debthttp://www.creditcards.com/credit-card-news/credit-card-industry-facts-personal-debt-statistics-1276.php#Debt

Non-mortgage debt is now $14,000 +

Non-mortgage debt is now $14,000 +

1.45 million US bankruptcies in 2009

1.45 million US bankruptcies in 2009

Credit Card Debt: $7,394

Credit Card Debt: $7,394

Average credit card interest rate: 14.97%

Average credit card interest rate: 14.97%

51% Don’t pay off credit cards monthly

51% Don’t pay off credit cards monthly

Many Americans now spending 120% of their

annual income

Many Americans now spending 120% of their

annual incomeTotal consumer debt has risen from $1.34

Trillion to $11.4 Trillion since 2002 (nine years)Total consumer debt has risen from $1.34

Trillion to $11.4 Trillion since 2002 (nine years)

Credit Card Rates

• Your Credit Card costs vary depending on how you are using them.

• The statistics about debt in our churches are no different than for society at large (including pastors and staff)

• The average church attender in SBC gives about $1000 per year (total church giving vs. SS attendance)

• Only 37 % of regular church goers give to their church• The average church attender gives less that 2.6 % of disposable income to the church

• Only 3-5 % of givers actually tithe• Church CP Missions gifts have dropped from 10.1% in

1984 to 6.6% now (probably lower in California)• In the U.S. only 30% of Protestant pastors now tithe

• The statistics about debt in our churches are no different than for society at large (including pastors and staff)

• The average church attender in SBC gives about $1000 per year (total church giving vs. SS attendance)

• Only 37 % of regular church goers give to their church• The average church attender gives less that 2.6 % of disposable income to the church

• Only 3-5 % of givers actually tithe• Church CP Missions gifts have dropped from 10.1% in

1984 to 6.6% now (probably lower in California)• In the U.S. only 30% of Protestant pastors now tithe

Debt and Giving in the ChurchDebt and Giving in the Church

The Consequences For Failed Stewardship

The Consequences For Failed Stewardship

• Personal stress and worry• Families in bondage due to

consumer debt• Broken marriages and relationships• People missing God’s blessings

through faithful stewardship• Inability to do what God wants done

with the resources He has given

• Personal stress and worry• Families in bondage due to

consumer debt• Broken marriages and relationships• People missing God’s blessings

through faithful stewardship• Inability to do what God wants done

with the resources He has given

FAMILIES

FAMILIES

The Consequences For Failed Stewardship

The Consequences For Failed Stewardship

• Churches lacking the resources needed to:– Reach their communities for Christ– Fund their ministries and facilities– Adequately pay their church staff

• A broken witness to your community• Insufficient funds to reach North

America and the world for Christ

• Churches lacking the resources needed to:– Reach their communities for Christ– Fund their ministries and facilities– Adequately pay their church staff

• A broken witness to your community• Insufficient funds to reach North

America and the world for Christ

CHURCHES

CHURCHES

10

Getting into debt is like sliding down an icy mountain.

Getting out of debt is like climbing back up that

same mountain

11

Sixteen out of 38 of Christ’s parables deal with money; more

is said in the New Testament about money than heaven and

hell combined; five times more is said about money than prayer; and while there are 500 plus

verses on both prayer and faith, there are over 2000 verses

dealing with money and possessions.” John MacArthur, Jr....

12

Living within your means

provides you with Dignity

and Independence

13

Financial Planning is the allocation of limited resources

to unlimited alternatives

Key Issue

14

Questions for your Personal Finances• Current financial situation• Upcoming issues

– Schooling, children’s education, home purchase, vehicles, etc.

• Do you tithe

15

Retirement Questions You Need to Ask• When will I retire, day and year?• How long will I live?• What will I do in retirement?• What debt will I carry into

retirement?• Where will I retire?

16

If You Don’t Have Enough to Retire on…• Die• Work longer• Retire on less• Work in your retirement

17

APPENDIX 4 (p. 12 in work book)Form for determining Net WorthDate

Husband + Wife + Joint=Total

Assets: (what God has entrusted you with)Cash on HandChecking account(s)Savings accounts(s)Credit Union SavingsBonds, stocks, securitiesCash value of life insurance policiesCash value of annuities and other retirement plansReal estate (market value)Automobiles (market value)

18

APPENDIX 4 (cont....)

Husband + Wife + Joint = Total

Furnishings, equipment, toolsJewelry, collections, heirlooms, clothingMoney owed to usOther Assets __________________________

Total Assets $ $ $ $ $

Liabilities: (What you owe)Real Estate LoanHome Equity LoanVehicle Loan(s)Life Insurance Policy Loans

19

APPENDIX 4 (cont...)

Husband + Wife + Joint = Total

401K or 403B LoansInstallment Debt (p. 15)Medical BillsOther Debts __________________________

Total Liabilities $ $ $ $ $

To find net worth:Total Assets(subtract) Total Liabilities __________________________This is your net worth $ $ $ $ $

20

12 Warning Signs of Excessive Debt

You are unable to pay each month’s bills on time

You routinely receive over-due notices because of late or missing payments

You pay the minimum amounts required on your credit card bills

You’ve reached your credit limits on your credit card bills

You’ve applied for more credit cards to keep up your spending

21

12 Warning Signs of Excessive Debt

You have used cash advance for one credit card to make payments on others

You regularly take cash advances on your credit cards to pay routine living expenses such as food, rent, or utilities

You owe more on your car than it is worth as a trade in

You postdate checks and cover them on payday or with new borrowings

22

12 Warning Signs of Excessive Debt

You don’t know the total amount of installment debt you owe

You no longer contribute to a savings account

You have no savings at allYou have no savings at all

23

Steps to Financial Freedom

1. Establish Godly Goals (pg. 14)2. Estimate Your Income3. Determine Your Expenses for

Last Year4. Make A Plan for Spending5. Keep Simple, Accurate Records

24

2 + % = Kingdom work

Average Lifestyle

20% =TaxesCitizenship

Distributions

78% =Self & Family

25

Step # 1: IN THE STARTING BLOCKS

GOALS

Goal RangesGoal Ranges

1. Within a Year1. Within a Year 2. Up to 5 Years2. Up to 5 Years

3. 20 Years or more3. 20 Years or more

26

4 REASONS TO SET GOALS1.Provide direction and purpose

2. Help to crystallize your thinking

3. Provide personal motivation

4. Help state God’s Will

27

Goals for Next Year

1. Eliminate Consumer debt2. Begin savings-emergency

fund3. Increase giving4. Begin volunteer mission

work5. Plan for college

28

Proverbs 13:22 A good man leaves an inheritance for his children's children,

but a sinner's wealth is stored up for the

righteous.

29

When Determining Your Goals:

• Reach as far into the future as you dare• Be as specific as you can• Be realistic-goals will change• Give Priority to the goals that

contribute to growth in Christian lifestyle

• They should usually benefit the whole family

• Write your goals down in priority with time lines

30

Why Are We in Debt?

• We have to have it now!• We have to have the best!• It has to be new!• It has to be the latest in kind!• After all, we have to keep up

with the Jones!p.s... The Jones’ are going into

bankruptcy1

Harold Nichel, Ph.D..., Financially Free: God’s Plan and How to Achieve It (Santa Paula: Focus For Living, 1995) p.11.

31

The wheel was invented so we could

move faster,Credit was invented so

we would have to.

32

Why Get Rid of Debt?• A 30 year mortgage will cost the

homeowner 3 times the original purchase price

• It takes 11 years to pay off $2,000 at 18.5% interest

• Interest money is forever lost. It is wasted money. It is poor Stewardship.

1 Corinthians 4:2 Now it is required that those who have been given a trust must prove faithful.Harold Nichel, Ph.D...., Financially Free: God’s Plan and How to Achieve It (Santa Paula: Focus For Living, 1995)p; 15-16

33

Possible Sources of Income Within Your Grasp• Sell your new car and buy a pre-

owned car with cash. Use the monthly payment to pay off debt

• Sell your second car, motor home, boat, etc. and use the money/payments to pay off debt

• Raise the deductible on your auto insurance premiums

34

• Have a garage sale and “lose” the excess “stuff”

• Cash in warranties and service contracts• Go to the library instead of buying books• Cut trips to the vending machines at

work• Have a baby sitting exchange with other

parents• Give up cable television if you don’t

need it for regular reception • Get rid of high interest credit cards• Drink water instead of ordering coffee,

tea, or soft drinks when dining out

35

• Turn the thermostat up in the summer and down in the winter

• Do your own maintenance when possible• Bring your lunch to work instead of

buying it• Buy clothes at consignment shops• Watch for sales• Consider Want versus Need• Cancel newspaper and magazine

subscriptions• Tighten up miscellaneous spending• What have I missed?

36

• When buying clothes:• Cash only• Family counsel before payday-

prioritize need• Shop sales, mail order catalogs,

discount houses, consignment shops, etc.

• Educate family on care of clothing• Larry Burkett with Kay Moore, Jesus On Money: Charting a New Course (LifeWay: Nashville 2000) pg. 68-69

37

• When it comes to entertainment:• Wait for movies to be released on

video• Use two-for-one coupons when renting• Buy entertainment books• Prepare meals at home• Play family games• Plan vacations in “off season”• Larry Burkett with Kay Moore, Jesus On Money: Charting a New Course (LifeWay: Nashville 2000) pg. 72-73

38

“Nuts and Bolts” of Budgeting• If you can’t get your budget in line by

your self, call a counselor at:• LifeWay Resources (800) 458-2772• Christian Credit Counseling Service

(800) 342-7686 for business help

39

Christian Money Management

End of part 1

40

Reduce Installment Debt (pg. 15)

Creditors Mo. Payt. Total Debt

Bank Card # 1 $ 35.00 $1100.00

Bank Card # 2 $ 55.00 $1600.00

Dept. Store $ 25.00 $ 700.00

Gas Card $ 30.00 $ 280.00

Hardware Store $ 20.00 $ 160.00

Bank Loan $ 70.00 $2500.00

Total Debt $235.00 $6340.00

41

If you want to feel rich, just count all of the things you have that Money

can’tcan’t buy.

42

Goals for Next Five Years (p. 14)

1. Pay cash for automobiles2. Begin investments3. Continue plans for college

43

Paying Cash for AutosAssume monthly payment of $275 per month on current automobile.

Value of Auto $ 7,000.00Annual Cash Accumulations

First Year $ 3,300.00Second Year $ 3,300.00Third Year $ 3,300.00

Cash & Trade-in $16,900.00

Benefit: $1,200 to $1,800 save per year plus interest earned on savings

44

Long Range Goals-20 or more years (p. 14)

1. Pay off house mortgage2. Continue investments3. Early retirement4. Extended mission projects

45

Estimate Income

46

Determining Your IncomeSalary $32,144.00

Self-employment income 0.00Interest Income 825.00Social Security Income 0.00Pension Income 0.00Other Income (Hobby) 1000.00 Total Annual Income $33,969.00

Less Income Taxes 2300.00Less Social Security Taxes 3141.00Less Other Deductions 0.00 Annual Spendable Income 28,528.00$ Monthly Spendable Income (Yearly Income /12) 2,377.33$

47

Increase Income or Cut Expenses?

Cost for Spouse’s EmploymentCost for Spouse’s Employmentbased on Annual Salary of $7,800based on Annual Salary of $7,800

Income tax withholdingIncome tax withholding $ 546.00$ 546.00Social Security taxesSocial Security taxes 492.00 492.00Other withholdingsOther withholdings 51.00 51.00TransportationTransportation 720.00 720.00Church gifts (wkly and mission)Church gifts (wkly and mission) 936.00 936.00Extra clothes, cleaning, etc..Extra clothes, cleaning, etc.. 520.00 520.00Additional cost of food & household ops.Additional cost of food & household ops. 2,400.00 2,400.00““I deserve it because I’m working”/giftsI deserve it because I’m working”/gifts 780.00 780.00Additional taxes due to higher tax bracket Additional taxes due to higher tax bracket 1,374.001,374.00

Total Cost to be EmployedTotal Cost to be Employed $7,819.00$7,819.00

48

Determine Expenses for

Last Year

49

How to Increase Income

SpecializingHobby or Interest

Upgrade Skills

50

KINDS OF EXPENSES

Fixed ExpensesMonthlyOther than Monthly

Flexible Expenses

51

Figuring ElectricityJanuaryJanuary $ 130$ 130FebruaryFebruary 140 140MarchMarch 100 100AprilApril 80 80MayMay 60 60JuneJune 70 70JulyJuly 90 90AugustAugust 100 100SeptemberSeptember 80 80OctoberOctober 60 60NovemberNovember 70 70DecemberDecember 100 100

TotalTotal $1,080$1,080Monthly Average 1080/12 = $ 90Monthly Average 1080/12 = $ 90

52

Sample Budget - $33,969.00Account

Current Mo. Expend.

Category Total

% of Budget Mo. Guide

Difference + or -

New Budget

Salary 32144.00 32144.00Interest 825.00 825.00DividendsOther 1000.00 1000.00Total 33969.00Taxes 5441.00 14.90 5061.38 -379.62 6943.00Other deductionsTotal 5441.00Yearly Net Spendable Inc. 28528.00Monthly Spendable Inc. 2377.33Less:Church Gifts 340.00 340.00 10.00 339.69 -0.31 340.00HousingMortgage/Rent 580.00Insurance 35.00TaxesElectricity 90.00GasWater/Sewer 22.00Telephone 35.00Maintenance 25.00OtherTotal 787.00 32.00 810.78 23.78 787.00Food 250.00 250.00 12.00 270.26 20.26 250.00

53

Sample BudgetAccount

Current Mo. Expend.

Category Total

% of Budget Mo. Guide

Difference + or -

New Budget

AutomobilePaymentsGas & Oil 70.00Insurance 50.00License/Taxes 6.00Maint./Repair 40.00Replacement 200.00Total 366.00 12.00 810.78 444.78 366.00InsuranceLife 43.00Medical 30.00OtherTotal 73.00 5.00 112.61 39.61 73.00DebtsCredit CardLoans & NotesOtherTotal 0.00 0.00Entertainment/Rec.Eating Out 35.00Baby SittersActivities/Trips 10.00Vacation 60.00OtherTotal 105.00 6.00 135.13 30.13 105.00

54

Sample BudgetAccount

Current Mo. Expend.

Category Total

% of Budget Mo. Guide

Difference + or -

New Budget

Clothing 75.00 75.00 5.00 112.61 37.61 75.00Savings/Emergency 60.00 60.00 5.00 112.61 52.61 60.00Medical ExpensesDoctor 20.00Dentist 20.00Drugs 20.00OtherTotal 60.00 4.00 90.09 30.09 60.00MiscellaneousToiletry, cosmetics 10.00Beauty/barber 10.00Laundry, cleaning 10.00Allowances, lunches 150.00Subscriptions 3.00Gifts (incl. Christmas) 20.00CashOtherTotal 203.00 5.00 112.61 -90.39 203.00School/Child CareTuitionMaterialsTransportationDay CareTotal 0.00 0.00Investments 50.00 50.00 5.00 112.61 62.61 50.00Total Expenses 2369.00

55

Sample Budget

It is not necessary that your new budget fit the guideline budget exactly, but it is necessary that your new budget not exceed Net Spendable Income. Larry Burkett with Kay Moore, Jesus On Money: Charting a New Course (LifeWay: Nashville 2000) pg. 63.

Account

Current Mo. Expend.

Category Total

% of Budget Mo. Guide

Difference + or -

New Budget

Net Spendable Income 2377.33Less Expenses 2369.00Unallocated Surplus Income 8.33

56

““I’ve called the family together to I’ve called the family together to announce announce that because of inflation, I’m going that because of inflation, I’m going to have to to have to let two of you go.”let two of you go.”

57

SOLUTIONS

•Attitude•Reduce Upkeep•Spending Habits•Credit Abuse•Wise Use of Credit

58

These Four Items Consume 73.8% of Your Budget• Tithes and offerings 13.8%• House & attendant costs 34.8%• Food 11.0%• Auto & attendant costs 14.2%

Total 73.8%

59

Determine Expenses-Paying the Bills

Account Items M’ly Avg. M’ly Plan 1 2 31. Ch. Gifts $ 280.00 310.00 $155.00 $155.002. Home Mtg. 580.00 580.00 290.00 290.003. Home Ins.4. Home Taxes5. Savings/emg. 60.00 60.00 60.006. Income Taxes7. Social Sec.8. Retirement9. Life Insurance 43.00 43.00 43.0010. Health/acc.11. Hospital Ins.12. Auto Ins. 50.00 50.00 50.0013. Loan Payt.14. Total other 75.00 75.00 75.00

Exp.. Last year for spending

60

Keep Simple, Accurate Records

61

Values of Record-keeping

• Guides Spending Decisions• Provides A Better Inheritance• Promotes Healthy Discipline

62

Simplified Item Acc. Of Budget (p. 17)Church Gifts 340.00Housing 787.00Food 250.00Automobile 366.00Insurance 73.00Debts 0.00Entertainment/Rec. 105.00Clothing 75.00Savings/Emergency 60.00Medical Expenses 60.00Miscellaneous 203.00School/Child Care* 0.00Investments* 50.00*Percentage item must be deducted from other budget categories

63

SIMPLIFIED RECORD KEEPING

Mortgage/Rent $580.00Insurance 35.00Electricity 90.00Telephone 35.00Water/Sewer 22.00Maintenance 25.00

Total $787.00

64

ITEM ACCOUNT (p. 18)

Item Account Name House / Utilities Monthly Plan for Spending $ 727.00Income IncomeAllocation $ 363.50 Allocation $ 363.50 Check Date Deposits With- Balance # Item Transactions Drawals

Balance Forward from Previous Page 400.00dept 1/1 Dept. 363.50 763.50207 1/1 Mortgage Co. 580.00 183.50215 1/10 Electric Co. 79.00 104.50216 1/10 Water Co. 20.00 84.50 217 1/10 Phone Co. 40.00 44.50dept. 1/15 dept. 363.50 408.00dept 2/1 dept. 363.50 771.50

65

Other Sheets of Interest

• Form for Determining Amount of Life Insurance Needed (p. 20 in booklet)

• Thinking Ahead About Death (p. 21)

66

Spending Evaluations

$ 1 per month @ 12% X 45 years = $21,455

$25 per month @ 12% X 15 years = $12,490

$50 per month @ 12% X 30 years = $174,748

$100 per month @ 12% X 30 years = $349,496

$100 per month @ 12% X 35 years = $643,096

$100 per month @ 12% X 40 years = $1,176,477

$100 per month @ 12% X 45 years = $2,145,470

Missing the Best Days in the Market1985-2007

Source: Westwood Holdings Group, Inc.

68

What Questions do you have for me?

559 287-7840 cell 559 256-0858

rwiltrout@csbc.comwww.csbc.com/financialmatters