faith, family, and finances: how to live faithfully within your means and keep peace in the family...

Faith, Family, and Finances:

How to Live Faithfully within Your Means and Keep Peace in the Family

Nevin DulabaumBrethren Benefit Trustndulabaum@cobbt.org

How to live faithfully within your means…Planning DebtCredit reports Socially Responsible ConsumingLooking at Scripture

…and Keep peace in the familyListening & asking open questions Engaging a difficult issue

What can we do in a 1-hour seminar?

What can we do in a 1-hour seminar?

Questions to ask

Ideas

Resources

Church of the Brethren Benefit Trust was established as the Pension Board in 1943 to set aside retirement dollars for pastors and missionaries.

BBT Ministries —

• Brethren Pension Plan• Brethren Foundation• Brethren Insurance Services• Socially Responsible Investing• Stewardship Education Seminars

Presented byNevin

Dulabaum

• Live as a Good Steward of God’s Resources• Plan Adequately for the Future• Live Simply• Save Regularly• Use Credit Responsibly• Nurture Conversation, and Stewardship Within the Family

Live Faithfully Within Your Means

Attitudes toward moneySpenderBuilderGiverSaver

More about these attitudes and others: http://newsblaze.com/story/20060313102554nnnn.nb/topstory.html http://newsblaze.com/story/20060313102612nnnn.nb/topstory.html http://www.savingadvice.com/articles/2008/09/22/102761_money-attitude.html http://lifeinc.today.msnbc.msn.com/_news/2011/05/10/6612696-4-unhealthy-attitudes-toward-mon

ey http://www.familymoneyvalues.com/index.php/wealth-builders/60-working-on-wealth-1/179-why-y

ou-need-to-understand-your-money-attitudes

What price do we pay for not being content with what we have?

We get tired.We acquire, and perhaps get saddled by,

debt.We worry.We find ourselves in conflict. We experience dissatisfaction

What price do we pay for not being content with what we have?

We get tired.We acquire, and perhaps get saddled by, debt.We worry.We find ourselves in conflict. We experience dissatisfaction

What is the cost of this discontentment at work?

What price do we pay for not being content with what we have?

We get tired.We acquire, and perhaps get saddled by, debt.We worry.We find ourselves in conflict. We experience dissatisfaction

What is the cost of this discontentment at home?

Financial Planning vs. BudgetFinancial planning — long-term look at your

financial situation and how you want that financial situation to look in the future.

Budget — steps you are taking right now to achieve your long-term financial goals.

Short Term Plan = Budget

• Start with monthly income• Allocate your first fruits• Determine what needs to be spent • Assess how you are spending your money• Allocate savings and discretionary funds

– Separate Accounts? Envelopes?• Live as a Good Steward of God’s Resources

It all starts with a plan:

Goals & Financial Plan

• 1 year• 5 years• 10 years• 20 years• Beyond• Your will• Your beneficiaries

Adjust and update as time goes on

Vision for the Future:

Categories to considerCharitable Giving Debt repayment

Housing Utilities

Food Medical

Transportation Clothing

Investments/savings

Miscellaneous

Budgeting ProcessReview and track spendingReview and track incomeDetermine areas that must be adjusted to

accomplish goalsMake adjustments and start the process

again

Review and track spendingMost people don’t track everything

“inconvenient”Identify ongoing, vs. emergenciesInclude debit/credit card expensesTools and resources to help; ultimately you need

a version that works for you.PaperElectronic

Garbage in/garbage out.Don’t make it too complicated.

Review and track incomeSmaller number of areas to track.

Be aware of the frequency or other

variations that can complicate it.

Taxes and deductions need to be

addressed properly in your budget.

The moment of truthSubtract the expenses from the income.

If your expenses are higher than the income,

start to figure out what to reduce or eliminate.

If your income is higher than your expenses,

make sure you have a plan to save and invest.

Warnings about debt:Hebrews 13:5 (NRSV)

Keep your lives free from the love of money and be content with what you have, because God has said, “Never will I leave you, never will I forsake you”

Proverbs 22:7 (NRSV)

 The rich rule over the poor, and the borrower is the slave of the lender.

Money, by itself,is not the problem…

…the problem isthe love of money

Money, by itself,is not the problem…

…the problem isthe love of money

Is Debt Unavoidable?

• Living beyond our means is unsustainable.

• Debt limits your options.

• Debt adds stress on you and your family.

More $$$?Will a larger paycheck solve a budget

crunch?The money ending before the month is a cash

management issue.Quantity of money is not the issue, control of

the money is the issue.

More $$$?Will a larger paycheck solve a budget

crunch?The money ending before the month is a cash

management issue.Quantity of money is not the issue, control of

the money is the issue.

Types of Debt

Mortgage Loans

Student Loans

Auto Loans

Consumer Loans (aka: credit card debt)

Beware of the debt trap —

especially consumer loans and credit cards!

Credit Cards

The Good,

The Bad,

and the Ugly.

Credit Cards: The GoodEasy to get

Easy to use

Safer to carry than cash

Earn “points” or cash back

Give you a credit record

Credit Cards: The Bad

High interest rates and fees

When paid late, interest rate can increase substantially — 29 percent.

Easy to use and abuse

Increase the amount you spend (12 percent on average)

Credit Cards: The Ugly• “Spend now and worry about paying for it later.”

• 29 percent of Americans admit to not paying all of their bills on time. (National Foundation for Credit Counseling, 2013 Financial Literacy Survey)

• An $8,000 debt at a rate of 18 percent interest and a 2% payment rate, will cost over $22,000.

• $15,112 — Average amount of credit card debt per household where there is debt at end of 2013.

The topics people say they are unlikely to talk about openly with someone they just met were:

• The amount of their credit card debt (81 percent) • Details of their love life (81 percent)• Their salary (77 percent)• Monthly mortgage or rent payment (72 percent).• Their health problems (62 percent)• Their weight (50 percent)• Their political views (42 percent) • Their views about religion (34 percent) • The price of a tank of gas (9 percent)• The weather (5 percent)

(Source: CreditCards.com research, January 2009)

34

Discussing card debt is taboo

In a recent financial report, consumers had an average of 1.96

cards:

35

CARDCARD

(creditcards.com )

Keys to getting out of debt:

1. Desire to be consumer debt-free.

2. Figure out what you owe.

3. Cut up those credit cards, one at a time!

Remainder to LOWEST balance credit card, until PAID OFF!

Once it’s PAID, move up to the next card, and REPEAT!

Pay Off Credit Card Debt

Discretionary income $200Less: ½ to cash reserve $100

Retiring credit card balancesrelieves stress.

It is rewarding and encouraging.

Keys to getting out of debt:

1. Desire to be consumer debt-free.

2. Figure out what you owe.

3. Cut up those credit cards, one at a time!

4. Take a hard look at your monthly expenses and lifestyle. Be willing to sacrifice in the short term to improve your long term.

Keys to getting out of debt:

5. Create a realistic budget and pay as much as you can toward the debt. Plan which will be paid first.

6. Start a regular electronic savings deposit.

7. Set up loan payments electronically.

8. Review your credit report annually.

Credit ReportsYour score will impact – • Mortgage and other loan rates. • Premiums set by insurance companies.• Could impact employment.

To have a good score, you must have credit history data that is reported; having no history of borrowing means you will have a lower credit score.

Being debt free could mean that yourcredit score will be lower.

How the score is calculated—

The score is based on the following areas:

• Payment history — 35 percent (major derogatory adds a lot).

• Debt level — 30 percent.• Length of credit history — 15 percent.• Diversity of credit accounts — 10 percent. • Number of new attempts at getting credit —

10 percent.

How to improve your credit score:

•Pay bills on time.

•Keep debt low — 10 percent of available credit limit is best. 50 percent is maximum.

•Don’t apply for unnecessary credit. Review your credit report.

www.ftc.gov/freereportswww.annualcreditreport.com

How to improve your credit score:

•Close accounts responsibly.

•Have a mix of different types of credit (don’t’ only use finance companies).

How to opt out of credit card/direct mail solicitation:

•Call toll-free 888-5-OPTOUT. (888-567-8688)

•Visit www.optoutprescreen.com

For more information see:www.ftc.gov/bcp/edu/pubs/consumer/credit/cre17.pdf

www.privacyrights.org

Tips for avoiding debt:• Eat healthy and exercise.

• Be a regular saver — build up an emergency fund.

• If you use a credit card — pay it off each month.

• Stored value cards could be a wise option.

• Plan ahead and save for big purchases, Christmas and vacation club accounts.

… and keep peace

in the family.

James 1:19-20 (NRSV)

You must understand this, my beloved: let everyone be quick to listen, slow to speak, slow to anger, for your anger does not produce God’s righteousness.

Biblical Context

Practice Listening

• What messages did you hear as a child about debt?

• How do you feel about those messages now?

• What experiences have you had with debt?

• Identify spending styles: saver, spender, builder, or giver

Family Conversation• Couples need to be committed in their

approach

• Must be open and honest about use of resources

• Big decision: how to handle basic finances• Joint or separate accounts?

Family-related Resources• Family Financial Questionnaire

• Balance sheets

What have we learned?

How will we apply it?

Evaluation