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3. Counting the Cost: Relationships, Budgets & Your Life

Alistair Huong


Alistair Huong

Executive Director of AudioVerse



  • December 31, 2015
    1:45 PM
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This message was presented to the Jew I see twenty fifteen come from Chosen. In the other resources like this visit us online at W W W W N C web. Somebody father we are so thankful for the clarity of your word. And Lord as we seek to be wise stewards careful Bible students. Help us to apply these principles. In a rational reasonable way that gives glory to you. And that demonstrates. Our faith that we truly believe what you have asked us. And that we will believe that you will enable us to do even that which we find terribly difficult. And so I prayed today. Right now in particular the session as we talk about some nuts and bolts. Looking at how to prepare a budget and think about the overarching tools at our disposal I pray that you will. You will teach us. And you will guide us with for these things in Jesus name. All right. Come on in for those of you in the back. Let's begin so. Session three The title is counting the cost. Relationships budgets. And your life. I am just making this little statement at the beginning of every seminar. In case you haven't heard it before. We my wife and I we have a blog saving the crumbs of dot com where we are writing on a fairly regular basis. On financial topics personal finance lot of it is just from our personal experience. We try to keep it light hearted. Try to keep it fun and. We actually share a whole host of fairly private information. Most people consider. You know how much you earn and how much you spend and things like that quite private. But we figured that if it's going to benefit someone we actually share. All that information. And just as a little teaser in a few weeks here I'll be doing our annual financial report on how much we earn how much we spend how much we gave for the year twenty fifteen. And you can already see what we did in twenty fourteen and the years before. But this is a special one because we had a baby. And so how did we do. Did the baby break the budget. You'll have to stay tuned. Keep you in suspense. But all of the handouts. Or rather the slides that I'm using the P.D.F. hand has already been created. You can already access it right now through the G Y C app. So I know a lot of people have asked me about this. It's available on the app currently right now. So you can get it and follow along if you want but of course you'll be tempted to to read ahead and you'll spoil the surprise. And also in the handout I don't show you on the slides here but in the hand out there are direct links to articles that I've already written on topics we address in the each seminar. So when we talk about. When we talk about why we should save money and then portions of. You know living through the life and all those things. And even even specific articles. I know some have asked. Like I talked about how I have unlimited. I Phone plan that has unlimited four G. L.T.E. data on eighty's network. Phone you know. Calling texting. Unlimited everything for twenty dollars a month. I have a whole series of blog post talking about that. How I got my wife's i Phone for fifty percent off. All this kind of stuff. You can find it on the website. OK. And a lot of other stuff. How to save on electricity heating cooling. Solar panels and all the rest so. I can't cover everything here. So that's why I keep mentioning this because if you have further questions chances are it might have been addressed already and in a previous blog post. And we're always writing more stuff as well. So the title of the seminar is counting the cost where do we find this in the Bible. Jesus tells the story in Luke fourteen twenty if you thirty. For which of you desiring to build a tower does not first sit down and count the cost. Whether he has enough to complete it. Otherwise when he has laid a foundation and is not able to finish. All who begin to all who see it begin to mock him saying this man began to build and was not able to finish. This is a true. Situation for so many. And here's what I sort of cringe at. Is that the Bible Jesus Himself gives us a very clear principle that. It is wise to have a plan. Right. We see that. But what's the problem is a sometimes we associate moving forward with no plan. We say that's living by faith. That's the problem. Because guess what. That ain't faith people because faith. Takes God at His word. And what faith looks like is God. You said that we need to look ahead and we need to lay down our plants. We have done the best plan that we have been able to come cocked. And we believe you are leading us in this. And so by faith we will embark on the plan. And trust that you will make up the lack. You see the difference between that and I don't need a plan. God will provide. Yes I stand a difference. So it might be a fine nuance. And you may not necessarily be able to tell the difference if you're viewing from the outside. But internally I think this is a point for us to remember as we apply to our own lives. So what's the lesson from this story. You must have a plan. And that's what this seminar session right now is going to be all about how do we make a practical useful. Financial plan that actually moves us towards our goals. Helps us to be faithful to God and be able to avoid debt and the other pitfalls. So there are four. Roughly four types of plan going to discuss. And they all interact one with another and I'll show you how they do in a minute. Number one. I call them. Life event plants. And you can call them what you want the life of that plant. Essentially is taking our goals in life. So whatever it is in our lives that's going to cost us money. We start with the goal. OK. The end. Got to start with the End in Mind and. After we have a life event planned then we move into what I call the savings plans. And the savings plans are sort of two sides of the coin there is the long term savings plan. Things that we need five years or more down the road. And the short term savings plans things that we need. Within five years. And then after we figure how much we need to save in a savings plan and then we move down to what we commonly call. The budget. And what I call that is the monthly spending plan is the same thing synonymous with the budget. But I don't use the word budget mainly because I like. I like the rhyme. Everything's a plan. And also the word budget comes along with it. A lot of negative baggage. People associated budgets with tightening the belt. Painful cuts. Austerity. You know. We don't want that kind of connotation. What it is it's a plan to help us reach our goals. A plan is the Help us get to our destination and our monthly spending plan is is a part of the roadmap. And then finally. This is not exactly a plan but it's a context in which these plans are created and executed. And that is within the context of relationships. And so let me just show you in the next. In the next life so this is how they relate. Everything is going to start with a life events and life events again. Are the goals that we have for our lives looking forward. And that will feed into our long term and short term savings. OK. And then from the long term and short term savings. It moves us into our monthly spending so you notice is like a funnel we're starting with the big picture. What are the goals we want to accomplish in our lives. And then the filters down into let's break this down. OK what are the long term things I need. Short term things and from there. If lows into our monthly spending which is what we will be looking at on a more regular basis. And then the monthly spending. Feeds back into the long term a short term savings column. And then we have a nice little loop. Of feedback. It comes back over the monthly spending. And then there's a nice little loop there you like that animation they do. And then all of this happens within the context of relationships. The fact is we mention this very briefly earlier this morning and that is relationships. You know and money. Can't really be separated. You know if you are in a family. Guess what the family's finances were no matter how you slice it. They're going to intersect. And also if you will you want to think about it this way if you have life goals. Life plants. Is going to affect your relationships. And so we can't deny this aspect of the money picture. OK So this is going to be our outline of the day. What we're going to be talking about. So let's start with life event plans. And this is. These are the goals. All right. These are the things that we set. We want to set up for ourselves going into the future things that we want to be able to afford. So college. And a career. I think for a lot of students that's a pretty big. A wedding. That's another example that's a major life event to talk about more about than a minute. A home purchase that's a biggie. Buying a car going on a vacation having a baby. That's what we my wife and I we just had a baby this year. Debt payoff of course. Mission work. And I might add in here Mission projects that you want to fund or mission work if you want to go. And I might also mention this. You know. I want to I want to make sure I can afford going to G Y C next year. I'm not sure. Well stick it in a plan. It's a life event next year I want to go to G. Y.C. put it on your life event plan and figure out how we can make it work. OK so if you have children your children's education. That's a big item to pay for the future and then of course retirement is one of the biggest ones. So obviously these are this is not an exhaustive list. A life event could be anything. If you want to start a business. If you want to have a big celebration of some sort. Maybe it's a big fiftieth anniversary for your parents in whatever it is. You just need to have a plan. Think ahead and say here's what I want to accomplish. Write it down on paper or on a computer. And let's move it. Make a plan to actually be able to achieve it. So once we have these life events. Listed. What are the. What's the information we need to know about them. These are the questions to ask. OK. How much money will it cost. I mean that's a pretty basic question but that's really what Jesus was saying. How much is it going to cost to build this tower and substitute tower with whatever it is you put on the plan. How much is it going to cost me to retire. Right down the road whenever your retirement horizon might be. How much is it going to cost me to put my kids through school. Or have a down payment on my house. You've got to have a dollar amount. And the question here is not just how much will it cost what can I afford. And at this point you might have a reality check and realize. You know what. What it is I really want is way beyond what's rational and reasonable within my budget and at that point. You can adjust. Before you. Overcommitted. You see you don't want to start building the tower and the end of realizing. Sorry don't get. I don't have enough to finish the next question when do I need this money. Very important you've got to have a timeframe. Because you know. If you're retiring in five years. That's a much bigger deal than if you're twenty or twenty five and you've got forty forty five years. So you've got to know when you need this money. And how much do I need to start saving right now. And that's the pacing of the savings and we'll talk more about that when we get to our long term and short term savings plans. So going through these questions and laying down these plans it helps us not to go crazy. What I mean by crazy let me give you just one example. Let's talk about weddings for a moment. This is the two thousand and twelve real wedding study from the Web site the Not dot com of the Wedding Channel dot com. And this number right here twenty eight thousand four hundred twenty seven dollars what the national average cost of a wedding. And you might not see the fine print says. Excluding the honeymoon. So wouldn't it be a surprise if you say Right and. Let me back up a minute. When we talk about weddings. Weddings. And having babies tend to be the two want to of the biggest moments in our lives where we throw all reason out the window. You've heard of before right you're the bride is your day. Do whatever you want. You know it's only going to come around once and you know just live it up and. That's the message. And so would it to be a surprise of you realize oh I have the beautiful wedding the I love then bam twenty thousand dollars. So having a having a life events plan asking those questions. Helps prevent the sticker shock. You can realize hey wait a minute. I want to have a nice wedding. But I don't have twenty thousand dollars to spend. So that's what. That's what it can help us do so this is my wedding day. I got of course through a wedding picture in there if I'm talk about weddings. And so you want to know how much we spend. We spend three thousand dollars on our wedding. All right and my wife actually wrote an entire series on how we did that. And you know. Three thousand dollars for a wedding you know we were we were pleased with that. But I know many people who spend far less. And you know. By the way if you look at the picture. It wasn't a courthouse wedding. Three thousand dollars we actually have people we actually have real food and it wasn't just an online thing. So. So three thousand dollars. So it's possible to even spend less than this and that I'm not going to go anymore on this you can read our blog for more information. And so that's that's life events. You got to plan based on your goals. And this is really the point. You've got to start with the end in mind and create a plan to help you arrive there. So this this brings us to long term and short term savings plans. So what is a proper purpose of a savings plan well. The life events determine what we say for right we've got to. That's what the target is a let's start with that helps us to keep the end in mind. You know. A wedding day I would say that's a pretty noble aim. And ready or not here it comes and so might as well have a plan to arrive all in one piece. It prevents the need to resort to debt because you know the twenty thousand dollar wedding. The reality is people just borrow money. They look at it like I've got to have this beautiful day. I don't care of his twenty thousand dollars or more or less. And so they borrow money. And so if you plan ahead. You can still have a beautiful wedding present Lord please have a nice wedding. But you don't have to finance it with debt. And then it gives us a target to say for rather than simply want not to spend we're going to come back to this point because this is sort of a fundamental principle of why. I structured our financial plans in this way. So that's the purpose of the savings plan. And it feeds or. The life events feeds into our long term and short term savings. So long term savings are things that we won't need for five years or more. Or more than five years short term things that we need in less than five years so that's sort of the cutoff. When we say. Long term where we remain five years in a long term savings this is the place where you can afford a little bit more risk and you want to put your money in some higher yielding accounts. Different type of investments. Our For short term savings things under five years you want to make sure your money is secure. And this is getting into a little bit of investing and we'll talk more about this tomorrow. But this is just a little bit of common sense don't put all your eggs in one basket. You've heard the saying. So long term. You want your money to work for you more. You want your money to grow and have a longer runway. But if it's short term. Your goal is to save that money and keep it from disappearing. So long term savings is going to be a monthly savings. Which means you're going to pace yourself. Because it's a long haul this is a marathon right here. OK so you've got to have the plan of how much I need every month for me to achieve my goals at the State of time. Whereas short term savings. It's a sprint. And so you just knock them out as fast as you can. In the order of priority. OK So these are the general differences. Of long term and short term savings. And so these are some examples of things that would go in either column. They may be different for you but long term savings would be things larger debts. And when I say larger debts it might be things like student loan or a mortgage. These are bigger debt smaller debts would be things like car loans and credit cards. A short term savings. Your emergency fund. I could spend a whole hour talking to you about emergency fund its uses. Why it's important and all of that but it's very important. Emergency fund. That's definitely a short term. College Fund. That's a long term thing. If you want to buy a house. Long term. But it might be a short term for you you might want to buy a house in under five years. So you see these things can can flip flop. And then what is vacations and trip to Generally you don't plan those out. Farther than five years in advance. If you plan your wedding five years out of dance good for you sort of unusual but I guess it's possible. And of course retirement is usually the longest horizon. And then other things. Cars toys gadgets big purchases those will be short term things. So this gives you somewhat of an idea of the difference between the two. And so I want to walk you through another hypothetical scenario. And introduce you to Miss Fannie and of course fictional character but I think using an example can help make the principles much clear. And as you can see here. She's a registered nurse. All right. So this is Fanny's long term savings plan. OK. She's got student loans that she needs to pay off yes thirty five thousand. And she wants to pay it off in ten years and this is how much she has to pay per month. Hundred ninety dollars. She also wants to buy a house in ten years. She wants out twenty thousand dollars saved up for the down payment that's one hundred sixty dollars a month. And then she wants to save for retirement she wants seven hundred fifty thousand dollars that's in forty years she's about twenty five years old two hundred twenty dollars per month. This is the total amount she needs. And this is how much she needs to save per month. So the bottom line is that she must save a minimum of seven hundred seventy dollars each month to reach her long term goals. And this is an important point because her long term savings there's like a list of three things. But it's hard to keep track of all there's this and then that. And the other thing and how much was it again this plan gives us. One number to shoot for. I need seven hundred seventy dollars a month. That's it. OK so it gives us focus. So here's a short term savings. Short term savings plan. This is where things get a little bit interesting. She got credit card debt and thousand dollars you want to pay it off. Emergency Fund nine thousand dollars. A.S.A.P.. And this is for about three to six months of her living expenses as recommended minimum amount. She's getting married in August. Three thousand dollars for that three hundred seventy five dollars per month. And by the way. You know she might be you know. We can substitute other things this is just an example it might not be a wedding. She might be saving up for next trip to G Y C next year. You know you can't substitute these things for other items that she's saving for. And she got a mission ship coming up in October five hundred dollars car loan. Her car loan comes up in two thousand and seventeen she still got five thousand dollars to pay. And if she wants a new computer in two thousand and twenty fifteen hundred bucks and. This is how much. Approximately she needs per month. So it's over nine hundred dollars a month and she needs twenty thousand dollars for the short term plan. All right. So the long term plan it was pretty straightforward. She needs this much and she has this much time and this is how much you need to save per month for the short term plan. There are a few issues here. OK Let's take a look at what some of them are number one. She's got credit card debt. And she wants to pay it off as soon as possible because the interest is really high and she wants to get out of debt and then she got an emergency fund that she wants to save up for and she wants it as soon as possible. Well. How are you going to drum up ten thousand dollars. As soon as possible that what does that mean that's one issue. All right. The wedding. OK this will make sense three thousand dollars she just divide out by how many months between now and then and that's how much you need to say for month mission trip five bucks same thing divided out how many months he's got a car long this is not necessarily divide. Five thousand divided by the number of months. This is just the amount of the car loan payment that she's been making. And the new computer you just divide it out and twenty five dollars a month. So we talk about the car loan a little bit. And this is where you may start picking up stones to throw up me. Because when you look at a line that says car loan. At least in my mind. The first thing that comes to mind is. Nobody should ever have a car loan and this is one of the biggest myths that's pushed upon the American and maybe Western civilization as a whole public. And that is a you cannot buy a car without a loan and in the next session. We'll talk specifically about what is. What are the rules for acceptable debt. And what is not acceptable debt. And why it's that way. And I'll just spoil the surprise. A car doesn't pass the test. And so whenever I see that there is a car loan on the line here I immediately asked the question OK so let's take a look at that and see if we can turn that for the good. Instead of just paying interest on a car. So we've got these issues that have been highlighted and. As you will see. As we deal with the car situation. It'll actually answer a lot of questions about the other things. And so this may not be your situation I understand but this is an example. OK so you can apply it. How you will. So let's take a look at the car situation for frugal Fannie Being a frugal lady. Of course she drives a Honda. Right. So she's got a two thousand and twelve Honda Accord. E.-X. which is worth. About thirteen thousand dollars according to Kelly Blue Book. And by the way if you want to check the value of a car Kelley Blue Book is the place to go. And this is actually a real number. A two thousand and twelve Honda Accord. Literally today. With average mileage and all that is would be worth about thirteen thousand dollars. And she owes five thousand dollars on the car. OK So you notice. The cars were thirteen thousand and she still owes five thousand. And I don't remember how much the car was worth before. And if you do know. You will be able to very clearly see how much a car decrease in value from two thousand to of the twenty fifteen. And you will realize that you have paid a lot more money for a vehicle that really isn't worth what you paid. So that's the reason why we should borrow money for cars so what should she do sell a car and. I need a positive because I know that a lot of us have an emotional attachment to our car and I understand you've got to remember. It's just a car. And there are things are more important than just the car. And let's see how selling the car helps frugal family towards your goals. So she sells a car for thirteen thousand she gets a blue book value on the car. She pays off her loan five thousand dollars. OK so that's subtracted out of the thirteen thousand. And then she spends twenty five hundred dollars to buy a temporary car. Key word or tempo or a RE because everyone's like. I could never drive. Such a junky cheap car as what. It's temporary. OK. You just do this for a little bit and we'll see how it actually helps you get ahead and you can end up with a nicer car. In a few short years. So right here. She has fifty five hundred dollars. Free cash. Freed up just by selling a car and wiping out a car loan. You notice what how she did that. So let's go back. Her short term savings. All right. So we were right here with a car loan she just scratched out. It's gone. Five thousand dollars loan. Gone. And she got an additional eight thousand dollars back. OK she spent it. Twenty five hundred dollars to buy a car so she has fifty five hundred dollars left. She took a thousand dollars. Bam credit card is gone. Emergency fund. She basically covered half a very mergence the fund. She needed nine thousand now feeling these forty five hundred dollars left and all that because she was willing to say bye bye to her beloved Honda Accord. And she was now. She is now driving a temporary cheaper car. And by the way you can still get a pretty nice cover twenty five hundred bucks. So I'm not asking you to drive a beater. Junkie car. Where the wheels fall off. But twenty five hundred dollars if you shop well you can actually get a pretty nice one. And so here's the key. All right so there's that car right that car issue I gave of the super nice. Honda Accord and how will I ever live myself again well notice this. She was paying forty four hundred fifty dollars a month towards her car payment. Instead of paying that to the bank. She just pays herself. That amount. And she doesn't change the timetable at all she just saves it up to the same time two hundred seventy. A to twenty seventeen. And guess what that told ten thousand dollars ten thousand dollars. And so by the time that she would have paid off original car loan. Because she was willing to sell the car a step down for a temporary time to a lower cost vehicle. She would have saved up. Ten thousand dollars in the same amount of time instead of just paying a five. And there's more. You remember she's driving a twenty five hundred dollar car. When it comes time that she saved up ten thousand. She sells that car. I don't know how much you get back let's just say a thousand dollars are being conservative here should target more than that or two or two thousand I don't know. And so she'll have eleven or twelve thousand dollars to buy another car. And by that point guess what eleven twelve thousand dollars. She can buy a car still use though. That is nicer and newer than the two thousand and twelve car here it originally had doesn't make sense what I'm saying yes or no. So the point is a temporary decrease in the luxury in your life. And we are not compromising the utility. Because you still got a car to take you to work right. And just for two years. You drive. The cheaper car. And within two years. You can pay cash for a car that's nicer than the one that you gave up. OK. So this is what I mean. Of having your goals in place. All right savings goals. And so that was a slight detour. About how she can manage her. Her savings. So we scratched a few things off here. And so we've still got these other things that we have to deal with and in particular that emergency fund what are we going to do about it she still needs forty five hundred bucks. This is where it's time to get creative. All right. Forty five hundred dollars believe it or not you probably got it sitting around in your spare bedroom in your garage in your closet somewhere. Have a garage sale. Sell it. Sell your stuff. Even a or Craigslist I should put it on there just sell your stuff on Craigslist. She's a nurse. Not everyone can take extra shifts of work but she can take a few extra shifts of work out a side job. By the way you can consider going canvassing. That's a great side job for avenues to do. Somebody should have said a man out there. You can get creative and you can do other things right you can have hobbies that instead of just costing you money. Have hobbies that actually make you money. You love making crafts. You've heard of at sea is it. Guess what your hobby to make something that you enjoy can actually become profitable for you. All right. And there's somebody. Crushing in my stomach right now. Still paying attention of course. And so let's just say that with a combination of those things she sold some of her extra shoes. She and I don't know how much she would get for those but she's got a lot of shoes so she got forty five hundred bucks from her shoes and or whatever else she did. Craigslist at see all these kinds of things. And she got a forty five hundred dollars OK so let's just suppose that that that happened. So this is now. Her new savings plan. Her her emergency items up here that needed to be taken care of A.S.A.P.. She took care of them A.S.A.P.. OK she she took she took the knife and she cut out the long. And as a result. She's on her way to a better and brighter future. So she's still got a wedding. Mission trip. She's saving up for a new car now. Computer. She needs fifteen thousand dollars total as she needs nine hundred dollars a month. OK. So for a savings. The short term savings. This is not the. The figure that we care about primarily this figure right here. OK. And so the bottom line we've got long term or short term savings so the short term is we. This is a sprint now for the short term. We want to get to fifteen thousand dollars. As soon as possible and as we go. We're just going to save up for the things that are in order of priority we just go down the list. And then for the long term savings. Seven hundred seventy dollars each month. So that's it. We have. We boiled it down so you notice what we did we start with our life events these are the goals we have in life. We organize it in such a way. And we've asked the right question we assigned dollar amounts we projected to the future we lay down the plans when do we need this. And of course plans change. We're not saying this is set in stone. But at least you've got something to adjust from. Instead of just wishing that things would turn out well. And then when we boil it down to its very essence. We've simply got two numbers that we're focusing on K. short term on a fifteen Grant long term. I need to have a pace for this marathon I'm running seven hundred seventy dollars each month. That makes it very easy to focus. So if for some reason you have a windfall some sort of special gift or inheritance or something and somebody gives you fifteen thousand dollars guess what you don't say. Oh fifteen thousand dollars. One of what do I need to go spend this money on. You already know. Right. You already know where the fifteen thousand going to go. So it saves your hand from going into that cookie jar. When it's safe or something else. So Fannie saving plan. OK It reveals the clear priorities in our life. And that's important because it's taking real life. And putting dollars to it and giving us a plan to achieve. The things we want in life. All extra money like what I just talked about has a place to go instead of being spent. It gives a target number to say four in monthly spendings. And we'll talk about the monthly spending plan next. And it gives a final target number for total savings. Any surplus can be given away. And I want to come back to this point. The whole point that we're talking about a saving up for our needs. We don't need more than what we need I mean by definition we have enough. And so if we reach this target if she reaches all of our savings goals. And that's all. Every dollar after that can just flow into the treasury of God and. This isn't. That's where I want to be. All right. A budget is telling your money where to go instead of wondering where it went. So that's what we are trying to do. Telling our money where to go. So let's talk about the monthly spending now. Again this is what most people call. The budget. The Big B. word. And so we've got long term saving the short term savings and now we have those two figures. Seven hundred seventy dollars a month for long term savings and the fifteen thousand dollars a month. This now. Tells us in our monthly spending. How much extra do I need to be able to manage to squeeze out of my earnings. After I pay for all of my bills. OK. So that's the answer. But that's a question we're asking. So let We list our projected monthly income so this is how we construct our monthly spending plan and you start of the top with your projected monthly income. And so most people who have a regular paycheck. You pretty much know. Or you figure I work so many hours in this my hourly wage in my take home pay right after the taxes are withheld and whatnot. It's pretty straightforward for many of us but if you have a regular income say you're a contractor. You have your own business. You're going to have to project. As best you can you take a broad view you average things out you. You know when you're high and low seasons are. If you have seasonal activity. And you do the best you can. OK. And you just project what you think will come in and then you list your projected monthly expenses. And now how do we know how much our monthly expenses are first session we talked about. You've got to track your spending. You've got to have a detailed tracking of what your spending is and Ellen White confirm that the Spirit of Prophecy. We read that quote earlier. We want to sign dollar amounts to each category of expenses for the next month. You're categorizing your expenses. And the goal is to reduce spending so much can go towards savings as possible and this is where my spending plan a little bit different a lot of spend a lot of budgets. They give you recommended percentages. Like you should be spending twenty five to thirty percent on housing. Twelve percent to fifteen percent on the on the lights and utilities and whatnot. And it's almost like. When I look at is like oh I'm only spending ten percent of my housing. When I go to figure out way to spend twenty five percent because I'm not doing it right. Well that's not the way I think about it. The reality is the way we look at it. My home. Is that the ideal spending for any category is zero. That's the ideal obviously that's not always possible right. And you just simply up. Allow the expenses in your life. As they become necessary. So if you are able to spend far less than what the typical budget recommends. Good for you. The key is do you have your needs met. That's the key. And so for an example in our home. We pay zero dollars for electricity. So are our budget line item for our electricity is erode. And we. The reason is because we've saved up we invested in solar panels I told the story earlier some of you may have heard it. And so the electric company actually pays us. So maybe it's maybe isn't ideal. Maybe getting paid for your electricity is ideal. But you see the point. If you think in the manner of let's see how we can economize to still provide for my family and have our needs and have a comfortable life and all of that. While reducing the need to spend. It's far more effective and efficient than simply shooting around in the dark and say OK well I guess I need to spend thirty percent or whatever the recommendations might be. And then the aim is to hit the targets that we have derived from our savings plans. OK And then you just want to review it monthly that's why we call it the monthly spending plan your view of monthly to make sure you're not spending more than you have allocated. And then you just adjust for the next month. So this is the monthly expense or spending plan. So this is Fanny's current spending. She's a nurse and take home pay about thirty six hundred dollars. And you notice that all of our expenses taken together and this is a sample. Budget. Income and Expense and business it would be called an income statement or P. and L. statement. And she's got ninety percent of her expenses. Taken up with all of these things and then. She's got a ten percent savings rate. So for most people. If you listen to the financial world. She's doing actually pretty good ten percent a lot of people a pat on the back and say. Keep it up. You're doing pretty good. If you had fifteen percent twenty percent is like whoa you are like rocking it. But there's a problem. She's doing good by the typical measure. But let's take a look and compare with her savings plan. OK. Let's review her savings goals. So she's got a ten percent savings rate which means she is saving three hundred sixty dollars per month for long term savings. But she needs seven hundred seventy dollars a month to reach a long term goals. And she needs fifteen thousand. For short term goals. So if we just do the math. You apply three hundred sixty dollars to seven hundred seventy you haven't even topped up best through a seven hundred seventy dollars. So you've got nothing for your savings. Short term. And when is she ever going to reach fifteen thousand She's never going to get there. So you see how the savings plan. Now. Helps inform us when we're doing our spending plan. It gives us a target. It's like. I don't just say oh I've saved ten percent I'm doing pretty good well ten percent may not get you where you want to go. OK so what. What is she going to do. What our options. OK Looking at the situation she's got this is the big picture before her now she's got several options number one she can adjust receiving schools. She was she can go back and say you know what maybe this is too much is spent on a car. Maybe this is too much to spend on a wedding or retirement. House down payment What have you she might adjust her goals. Downward. That's one option. The other option if you can increase your income. Work more shifts over time find a new job whatever negotiate a raise three. She could live up your name she's frugal fan after all and cut her spending right. Or she could do a combination of these things. But one thing that should not be on the table. Is debt. Because guess what. Debt is like the Get Out Of Jail Free card. If we use it except it's not free by the way. So it's like if we keep that option on the table. It becomes the go to option. All too often. I can just pull out my credit card and solve all of my problems. Well we just don't realize we're just kicking the can down the road and we're going to suffer for later. And so just take this off the table. Take it off the table and see if we can adjust ourselves in our living instead. So as I mentioned before. My preference generally is to cut the spending. But of course increasing our income is good too. So let's just suppose she can't raise her income. OK. And she wants to maintain her goals. So where does she need to be in her savings. And her spending. In order for her. These goals. So this is a savings. Driven spending plan now. She's looking at her goals over here and saying OK you how can I manage my expenses. So that I can hit those goals. I really want to have a nice wedding. And I really need to save up for it and not have to go into debt. So she figures that once she gets up to thirty five percent savings rate. She can save for everything that she needs. So that goes up from three hundred sixty dollars a month to twelve hundred sixty. Now she can apply her seven hundred seventy dollars a month towards a long term savings and have an extra four hundred ninety dollars per month tours of short term savings. And she will reach. Fifteen thousand dollars in three years. Which if you look back and also because once things get start paying off a sort of a snowball the actually gets faster as you go. She can a ticket she can attain all of her goals. So the key here. She needs to be able to save thirty five percent. Instead of ten percent. Wow that's a lot right. So this is not where we're seeing the full circle. So the long term or short term savings that tells us OK. How do we have to manage our spending. And then once a man or spending we take a look at the short term savings. And there's a feedback loop here that we have just as we go. So that's the illustration for that so what this means. Is she needs an extra nine hundred dollars per month. And that sounds like a whole lot of money. If you break it down that's just through thirty dollars per day. OK. Still it's going to be. She's going to have to make some changes. And this is the point sometimes for us to reach our goals. It's simple to understand and look at the numbers. But it may not be so easy to do. All right. So I'm not saying is going to be easy but there are some times. Need to take a reality check and see what we can actually what we're willing to accomplish. To meet our goals are. So here's what she did. And this is just an example of some of the options that Fannie has to cut her spending down so that she can save thirty five percent. OK. This might be different for you. Actually I'm sure it'll be different for you. But just some examples. So hard times and offering she's been getting fifteen percent. That doesn't change. So ring. She says four hundred dollars in rent. How does she do that. She gets a roommate. I know as a single person sometimes it's very difficult. Right to give up the space. Understand I've been there done that. But this can be a temporary thing in a stand. You can look at it and say. I have these goals and you just have to weigh is and more important for me to reach these goals or the more import for me to have my own place. That's a question you have to answer. But that's an option right. Leave that often on the table and sofa in her case she decided to get a roommate. So she splits a rent and half. And she has a roommate. Utilities and cell phone she saved one hundred dollars from there. She switched from horizon to a prepaid plan or something like that. She saved a lot and also for you till it is now because she got a room it. She says and utilities to one hundred dollars a month. Food OK. She says fifty dollars a month on food. Listen. You know how much that is. That's like eating out one less time a week. OK. And she spending two hundred fifty dollars a month on that or. Which is still enough. You know he's still able to eat. She just eats out less once a week. Transportation. Two hundred dollars she say one hundred fifty dollars. She commutes. Now she car pools. That's an option. If she's close and so driving she rides a bike or she walks or takes public transport. There are options. Groups. There are options for her and she save that much just on gas and maybe her her old car you know she replaced her car she got a fuel efficient car. I don't know what that might be look like insurance. This is one of the things about insurance you always. It always pays a shop around. Sometimes you'd be amazed that you are paying several times and more than what you need to be for the same or lower coverage than what you could get with another insure so she shopped around for all or different insurance plans and she saved eighty bucks on that. OK personal effects and personal effects might be a hygiene products and clothes and stuff. Twenty dollars a month. As I buy and one less pair of shoes or something. All right. And recreation. Fifty dollars she just canceled her cable subscription Bam fifty bucks a month right there. So these are just examples of things that she could do. Your situation may look different. You probably have other options on your table. You don't have to do exactly like what I'm suggesting. But the point I'm trying to illustrate. Is that there are options out there that sometimes we are not willing to consider. Because we think I can live without that or I must have this. But it all comes back to what is the higher priority for you to have this luxury or or this certain lifestyle that you feel you are entitled to or you need versus the goals that you have set is a more important to pay for that mission trip. Have that wedding. To pay for the house down payment what not OK. It's a value. Comparison. And this is what the plans help us to do. So that brings us to the end of the spending plan section but I do want to sort of recap. How we view budgets differently. OK so. Most of the time when we think about budgets. It's usually spending control. Meaning. You need to spend less money. And so you have a budget to control your spending. But the way we look at it is. We're trying to maximize the savings. And there's a big difference in our perspective here. Because when you're saving as a goal. It answers the question of why. So you're in the department store or Black Friday and you see a computer or dress or whatever and like I need that. Well. How do I know. Why shouldn't I buy that dress. Why shouldn't I buy that gadget. If we're looking at our budget simply as a method of spending control. Will say I shouldn't buy it because I shouldn't spend this money. Well what have you got a special gift or birthday gift or a Christmas gift and you have a extra twenty bucks or whatever and like. I have the money so I'm not overspending. But if the goal is. I have this target that I'm saving for it as a question of why action by the stress is because it was set me back from being able to achieve the financial goals of my family and I have agreed on. You see the difference. It's the difference between the means. Versus the end. So spending control is like. We're trying to not run out of money to not spend beyond our means. Whereas the end is. What's the goal that we're trying to achieve so the illustration I think of is like imagine I said today. You know we're going to go on a road trip. And my goal on this road trip is to not run out of gas is that even a goal. It's almost like a prerequisite. It should go something more like this on this road trip. My goal is to go to the Grand Canyon. And it is assumed. It's an assumption that you're not going to run out of gas because or else you're not going to get to the Grand Canyon. So that's just a purpose when you look at a savings first and then you're spending is derived to achieve the savings goals. Is the means of this is the question. OK. It keeps the focus on a savings rate as I mentioned earlier that's the number one most important thing to wealth building. And it makes achieving goals or achieving goals makes budgeting more motivating. So how motivating is it. To stand there and say I shouldn't spend this money. Because it's not in the budget. That's the way we view budgets right like I just can't spend this money is not in the budget. I know I sure that I really want to. I just shouldn't. But wouldn't it be far more motivating to say. You know what if I can spend. If I don't spend this. It gives me two months to get me to my goal two months faster. I can imagine two months earlier getting that vacation that I want to save up for. You see the difference in the motivation factor. And that's why we view. Budgets differently so. In the last few minutes here of the seminar. We do need to talk about relationships. And this is the context in which all of this happens. Because one of the goals. The goals have to be agreed upon with the family. Long term short term savings plans. Got to be agreed upon with the family. Monthly spending. You've got to be in cahoots. All right with the people that are in your life. So relationships form. The context in which money decisions happen. So I'm going to talk to singles and I'm going to talk to those who might be engaging them going to talk to those who are married. So if you're single. Remember who you marry is the single largest financial decision you'll ever make. He were here. Financial decision. Financial incompatibly of the financial in compatibility is one of the most common contributors to divorce. It may not be the sole cause. But always finds itself in all of those stories. OK. Money issues can bankrupt of marriage figure Tilly. And literally. OK I don't need to share the horror stories with you but I think you understand that. Make sure to find someone who is financially compatible. This is so important. So if you're single How do you know how do you know if they're compatible. OK. We spent a whole seminar talking about this right but I think the relationships of Mars next door. And actually he told me is dealing with managing conflict. So if there are conflicts. Based on my seminar. After this. Listen a pastor Kjell and he'll sort you out. So how do you know if you're compatible. Well. Take a look at their career. Is this guy just living in Mom's basement and playing Play Station. Or is he actually being serious with his career. Does he have debt problems or her. OK. Watch their shopping habits. Gentlemen. You can tell who is a high it means lady. By the stores that they frequent. OK. What are their family's money habits like the apple never falls far from the tree. And you can take that one to the bank. And what kind of gifts to they expect from you. OK that's a that's a very practical one. What kind of gifts to they expect this is what I need to share with you that story that I hinted at Wednesday night on stage. You know my wife. I was ready to propose to her and. I bought her a watch. Except I didn't pay anything for it. You see I bought it on Amazon. And Amazon must be achieved Washington actually was a nice watch. It wasn't diamonds or anything like that it was a nice watch it looks nice and all that. But I had some other point system that I had on earned all these points I was able to get this watch for free. And I know some of these. Some of the ladies would think like. If any man does that. He's outta here. Right. Like. So insincere. Horrible. I can't believe it. And to a degree I do feel guilty. But she said yes OK so it still worked. So here's here's my point though with a story. More than the watch. My wife loved the fact that I didn't pay for it even more. OK. So what I'm trying to say. The point is not the gift. In and of itself. But is there a compatibility in the TS. And the the mindset towards gift giving and the money. Between you and your prospective spouse to be. So as in terms of my wife we look at the situation and. I realize that that is a value that she would appreciate it. OK. Men don't do this to the ladies. If this is not their way because you just got to understand what the compatibility is with them. So obviously some ladies. You know. Anything less than an actual a watcher a gift that you prepay for with a hard earned cash would be less than adequate it might not be enough. But others might be like my wife. OK. That's up to you to determine based on. Evaluating the compatibility between each other so if you're engaged. Remember. Now is the time to make sure there are no money secrets. OK. This is a short period of time beef between singleness and married life. There should be no money secrets. So you need to have the money talk. You need to discuss openly your views on money. You should be transparent and honest. So after we got engaged my wife said I need to talk to you and I was Iowa boy. I knew she need to talk to me about something about money. And I was thinking the back of my mind. OK this is where she tells me she's got this massive loan. And some massive money secret. And it's going to be like you better sit down for this. And so she did. She's like sit down the need to tell you something. But on the contrary. What she told me was that she has saved up a huge sum of money. And she realized that it could. She has all this money am I going to want her for her money now. Right. And the fact is she was not a doctor she was a nurse she worked as a nurse for only two years. And then she was a self-supporting where she worked at Wildwood and other places like it. But she managed to save of this war chest and her goal was to buy a house in casual talk about that more in the next session and. You might even be able to figure out how much she saved up in the next session. But she had this talk with me. And she was worried. What my response would be. And so I looked at the number and I asked a few questions and. My response was not. I can't believe you have so much money. I can't why didn't you tell me. It wasn't like that and I don't know why I did this. But somehow the Lord knew. And so I told her you know what you have been putting your money in the accounts they have earned like no interest. You could have had like twice the amount that you have now. Looking back I'm like why didn't she slapped me. But on the contrary my wife actually prior to that moment she you know was looking at my spending habits and she was actually concerned that I spent too much money which you know I have a phase and I am still the spender of the family. I confess to that. And so she was worried. How this was going to change things that he just going to want to spend a dollar. How is he going to view this is going to change things. And when I came back I explained to her. You were very safe with your money. But you actually could have earned a lot more and not really jeopardize the safety. By you know put in a CD that's a little higher yielding or you know something like that and she realized. Yeah this is there I go for me. She's like I'll do all the saving. You can figure out the rest. And you can. You can do the investing. And so we have the money talk and. As a result of that talk we were able to agree on our money goals before we got married. How much are we going to spend on this wedding. If we get all this extra What are we going to do with it. Who are we going to give the money to first and then what are we going to save the money for what I was going to school we going to. You know are we going to borrow money for me to go to school or are we going to work our way through. Is she OK with working. You know all of these things we've got to talk about and. If you aren't clear on where each of the stand on money you aren't ready to get married. That's just the fact. And plan the wedding together it will uncover a lot I know a lot of men and women's thing. Let them deal with it and then they get the bill. Like maybe I should have participated more. So plan the wedding together and it becomes clear through the process. It's like a mini experiment of how you can make plans for other events later in your life because you've got your whole life ahead of you. And you got to make sure you guys are compatible. So if you're married. OK let's conclude here we go. Few more minutes remember. Money is a team sport. Money is a team sport you can't just go out on your own got a teenager with you so you have become one flesh and that means your bank accounts to K.. So I need to make this common and that is when I say your bank accounts to. It doesn't necessarily mean you've got to merge all your accounts. Necessarily. You can have quote unquote separate accounts. As long as you both have access to each other's accounts. The point here is no secrets. If you're married to this woman or man. If you're keeping secrets from her. Shame on you. This is not appropriate. OK So if you've got two different accounts. It's OK. Just make sure you have access to each other's information. And I know I know that there are some families that's the way to help prevent one family member from spending the whole family's money. So that might be something that needs to be put in place. If that's what works in your family. But just make sure everyone has the passwords accounts. Everyone can see the statements there's no secrets that's the bottom line. OK And then you should have one primary person be the financial caretaker. You don't have too many cooks in the kitchen so to say. But you want to create and review your savings and spending plans to gether you want to work on your goals. Together. But one person can be the primary executor of the plan that the family. The family council has agreed upon. OK. And pick whoever is better at math. Just just just saying. And the set a dollar amount over which no purchase occurs without join discussion. So this is very important because it gives some level of freedom. You know whatever the dollar amount that you agree on. It's a rule. You're not going to harp on someone's case because they spent in zero five dollars on something that they didn't talk to you about first. But they're not going to go out and spend five thousand dollars without telling you either. Right it's an agreement in the family firm and. You know for some families. You know. The dollar amount might be really high. Because you know everyone's on the same page. So that's something between you and your spouse to work out together. So include some fun money for each other in the budget this is important. Crisis isn't. You know Jesus doesn't want to just to be constrictive and deprive ourselves we talked about this in the last session. It's OK to have some money for appropriate recreation and things for the family and make sure to celebrate the victories together. OK if you get out of debt you pay off your house celebrate it make it a big deal. Help the kids see that the family is in this together. Make the finances a point of unity for the family rather than the point of conflict. So if you. If you have the goals. Right. Listen on paper. The kids can know about it the husband or wife agree on it when you reach the goals you can celebrate. OK And so it becomes a point of joy finances is not like oh drudgery Oh we have enough money. Oh we're complaining and. And we have conflict and we're arguing about it again. It's more like. Hey how are we to raising the money that we're going to give to this church plant project in Africa or something. Right it could be. How close are we to paying for our trip to G Y C next year. Right. Make it a point of unity or sponsoring a child in another country make it something that we can drive towards a goal. Instead of always slapping each other's hand saying don't buy that don't do. Don't do that while you're spending that money. Don't make that the conversation of about money in the home and. You never know it might even become fun. You might even decide to start your own finance blog too. So let me just share this final life hack real quick we're we're about out of time here. So there's a life had just to throw out there just as Speier you what. What is possible. OK So let's say you get married and for just one year after getting. Working and invest all of the second plus the cash when it gives you might be done saving for retirement completely. It is a potential. Not a guarantee but it is something that could happen. For example you suppose you get married at twenty five let's see both of your twenty five and both spouses work and less a one income plus all of the wedding cash gifts from the wedding equals fifty thousand dollars. Let's just suppose. One year income. Plus all the wedding guests fifty grand. If you invested at eight percent will talk about eight percent tomorrow I know there were some questions about that if that's realistic or not and then. In forty years when they turned sixty five that fifty thousand dollars has turned into almost one point two million. So just one year and they don't save another dime. OK. And notice. This will yield. One point two million at a four percent withdrawal rate with it which is what most people recommend as a safe. Rate of with drawl. That's forty thousand dollars a year. And notice forty thousand dollars a year is nearly fifty thousand nearly what you put in just that one time. This is the power of compound interest that we talked about earlier. And having the family firm on the same footing. Make maybe tightening the belt for a short period of time. And then guess what you don't have to save another dime for forty years. And this is this is an opportunity for freedom for the family to do more for the Lord. So this is a summary we have our life events. Plans. Long term short term saving plans feeds into our monthly spending. Of a feedback loop here with our savings plans. And all happening within the context of relationship so let's summarize were quick and then we'll end up so we go back here. You must have a plan or you will never reach your destination. That's the goal of that's the point of Christ or you count the cost. When you're trying to build a tower. Financial plans or Vilar priorities in life. It's about real life. And achieving real goals. In real life it's not just theoretical math problems anymore. Plan ahead for life events instead of relying on debt. Very important. Spending decisions. Right here. Helps us. GOAL FOR wish to shoot for marriage is the most important financial decision we will make. And money is a team sport husband or wife must be united So these are summary. Points for the session. So this session of a three here. And I am a little bit over so let me pray. And let you go far than Haven't we thank you for giving us guidance even. Drowsy sleepy and warm afternoon I pray that you will guide us as we seek to make appropriate plans to attain the goals that you set before us and be with us in the remainder of the conference and here we pray. Jesus this message was recorded at the Ministry of the Seventh Day Adventist church centered to download or purchase other resources like this visit us online web.


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