welcome why are you here?. why this workshop? you are here because... you want to help yourself you...

Welcome

Why are you here?

Why This Workshop?

You are here because...

You want to help yourself

You want to help your family

Our Resource:

Three Simple Rules:Guaranteed to Improve Your FinancesBy Theo A. Boerswww.threerules.org

Three Simple Rules

Why this resource?It’s really is simple.

It works!

It offers help for a lifetime

Its small enough that even people who don’t like to read won’t mind giving it a try.

It’s free

A Case Study

Who are Steve and JessicaThey are a fictitious couple for our illustrative purposes

They are people in your congregation

They are young folks you care about who may not be part of your congregation

They are all of us

Steve & Jessica: The story.

Get comfortable and try to focus on the story.

Steve and Jessica: Their Questions

What did we do wrong that got us into this mess?

What do we have to do to get out of this mess?

Do any mistakes come to mind?

Too much college debtFinancing the honeymoonLeasing new carsBuying used cars that were too expensive & Financing 100%Giving is not a priorityBuying a home too earlyLooking at houses they couldn't afford

more easy mistakes

Buying a house that was 30% over their budgetThirty-year mortgageBorrowing from parentsBuying furniture on creditUsing a credit card to buy clothes

The Rules

Rule One—Spend Less than you earn.If you are spending more than you earn, do you have the DESIRE to stop?

Do you have the WILLINGNESS to make a DECISION to stop

Do you have the DISCIPLINE to stop?

Rule Two

Save Now! Buy LaterA Savings plan for EmergenciesA Savings plan for Short-term needsA Savings plan for Long-term needs

Rule Three

Know DebtCredit Card DebtConsumer DebtStudent DebtMortgage Debt

Managing DebtInventory your debtPay off your credit card every month

4 Rules of Credit Use

Rule One: You only need one general credit cardRule Two: Don’t use your credit card to buy things impulsivelyRule Three: Pay off your credit card bill every monthRule Four: If you don’t pay off a card at the end of the month cut it up…plastic surgery.

Summary

Spend less than you earnSave now! Buy later.Know debt

How can you do all of this?Create a Personal Cash Flow Plan

It is important to commit to a plan of discipline

I/we am committed to spending less that I/we earn

To accomplish this goal I/we will do the following:________________________________________________________________________________________________________________________________________________________

Being committed means…

Being Committed to savingI/we are committed to saving __% of my/our gross incomeTo accomplish this goal I/we will do the following: ____________________________________________________________________________________________________________________________________________________________...

It is important to commit to a plan of discipline that will deal with the debt

I/we are committed to managing debtTo accomplish this goal I/we will do the following:__________________________________________________________________________________________________________________________________________________________________________________________

The Personal Cash Flow Plan

First, The Financial Physical (as expressed on a monthly basis)Why?Stop the BleedingHow?

By knowing what is really going onBy following the plan

Knowing what is really going on

IncomeList all family income on a blank Personal Cash Flow Plan form

ExpensesThree CategoriesThis splitting of expenses into three categories is important as we shall see in time.

Category One

These expenses are outside your control

GivingTaxesDebt retirementSaving

All of these are also known as unspendable income

Category Two

Regular living expenses that recur on a weekly or monthly basis

Category Three

These expenses occur on a quarterly, semi-annual, annual or sporadic basis.

The Worksheets

Sheet # 1 Personal Cash Flow PlanSheet # 2 Personal Asset and Debt Inventory

Part Three: Diagnosis and Prescription

Surplus/DeficitIf, after filling out the worksheet (PCFP), you have a surplus… great!

If after filling out this worksheet, you have a deficit you are violating Rule #1

You are spending more than you earn

How do you stop the bleeding?Earn more / Spend less

Earn MoreCan you get a raise in pay?Can you get a job that pays better?Can you work more billable hours where you are?Can you get a part-time job?

All questions relate to both persons if you are partnered.

Stop the Bleeding…continued

Spend lessCut up your credit CardsReduce telephone expensesReduce food expensesReduce eating out expensesReduce vacation expensesReduce gift expensesReduce cable/internet expensesReduce cash expenses

No one said this was easy!

Does this sound like it might hurt?When you need to stop the bleeding it is not an optional enterprise. If you happened upon an accident victim bleeding in front of you what is likely to happen to that person if you don’t stop the bleeding?What is going to happen to your financial life if you don’t stop the bleeding?

Still in a deficit?

Steve and Jessica needed to:Reduce more expenses

Reduce clothes expensesReduce entertainment expensesReduce lunch expenses

Still in a deficit?

What options have you?Sell assets

What assets did Steve & Jessica have?By selling an asset owned free and clear a debt could be paid off and the monthly cash flow would improveBy selling something on which they still had a loan, they could retire the loan and improve their monthly cash flow

Still in a deficit?

Increase IncomeSteve and Jessica decided Steve could use his accounting degree to do taxes and earn more toward their annual household incomeThe increase let them

Save moreGive moreAccelerate their debt reduction

Part Four: Living by the Rules

The Paycheck Management SystemEmergency Savings AccountCategory Three Expense AccountGeneral Checking Account

The Spending Management SystemFoodClothingEntertainmentVacationGiftsCash expenses

Following Rule Two

Save Now, Buy Later

Decide how much to save

Discipline to save

Following Rule Three

Know Debt1. Know how much debt you have2. Know the different types of debt

Credit card DebtConsumer DebtStudent Loan DebtMortgage Debt

Knowing different types of debt

Credit card DebtCredit card debt should be $0Consumer Debt should be less than 10% of incomeStudent Loan payments should consume less than 5% of your incomeMortgage Debt should consume less than 25% of incomeIf you are below these benchmarks you have achieved level one. Congrats!

3. Know the consequences of debt

Debt reduces your future standard of livingDebt reduces your ability to saveDebt reduces givingDebt causes personal frustration and stressDebt causes marital problems

4. Know the borrowing test

If considering a debt purchase, Ask:Am I justifying my buying decision on the basis that everyone is doing it?Is the item I am about to buy likely to depreciate?Is my loan for this item longer than absolutely necessary?Is there a possibility that I may not be able to make the payments on this loan?

Asking yourself the ?’s

Will repayment of this loan threaten my ability to save?Will repayment of this loan threaten my ability to give?Will repayment of this loan threaten my ability to take care of my family?Am I Questioning whether taking out this loan is a good decision?Does my spouse have any concern about borrowing money for this purchase.

5. Know how to get out of debt

If you…Have the desire to get out of debtMake the decision that you will do whatever is necessary andHave the discipline to stick with itYou will know the delight of living debt free.

Part Five

Living By God’s RulesWe are all here because we believe God cares about how we live and how we can live.Rule One: Spend Less Than You Earn

Don’t fall in love with money. Be satisfied with what you have. The lord has promised that [God] will not leave us or desert us. Heb. 13:5 CEV

Part 5: God’s rules, cont’d

Rule Two: Save Now, Buy Later

The wise man saves for the future, but the foolish man spends whatever he gets. Proverbs 21:20 (LBV)

Part 5: God’s rules, cont’d

Rule Three: Know DebtThe poor are always ruled over by the rich, so don’t borrow and put yourself under their power. Proverbs 22:7(MSG)The rich rules over the poor, and the borrower is the slave of the lender. (NRSV)

Or, in today’s vernacular– I owe, I owe, so off to work I go.

We need to work…

A slack hand causes poverty, but the hand of the diligent makes rich. Proverbs 10:4 (NRSV)A farmer too lazy to plant in spring has nothing to harvest in the fall. Proverbs 20:4 (MSG)

We need to Give

God wants us to be generousThe world of the generous gets larger and larger; the world of the stingy gets smaller and smaller. Proverbs 11:24 (MSG)Honor the Lord with your substance and with the first fruits of all your produce; then your barns will be filled with plenty, and your vats will be bursting with wine. Proverbs 3:9-10 (NRSV)

We need to be true

God wants us to be honest.God cares about honesty in the workplace; your business is his business. Proverbs 16:11 (MSG)It is better to be poor than dishonest. Proverbs 19:22b (TLB)It’s stupid to try to get something for nothing, or run up huge bills you can never pay. Proverbs 17:18 (MSG)

Strive to be content

God wants us to be contentDon’t weary yourself trying to get rich. Why waste your time? For riches can disappear as though they had the wings of a bird. Proverbs 23:4-5 (TLB)

Things to think about

A leech has twin daughters named “Gimme” and “Gimme more.” Proverbs 30:15a CEVIt’s better to live humbly among the poor than to live it up among the rich and famous. Proverbs 16:19 MSG

Thank you for coming

Don’t forget the resource is free fromwww.threerules.orgIn it are many more handy forms to help you and yours analyze your situation and strategize how to move forward.This PowerPoint is free from www.westminsteruc.com