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Logo of 2016 Michigan Camp Meeting: The Harvest is Great

Financing Yourself- Part 1

Jeff Allen
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  • June 12, 2016
    9:30 AM
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Not only will you are I think what we are all. Referring to is you are. Your words your stuff. Away. For a minute. You're with her. Prize. All right well let's go ahead and get started here. Like anybody else but. While you're at the financing yourself class A Hopefully everybody is in the right place all right yes and no not everybody quite knows what we're going to be talking about what this week we're going to tell you about all sorts of things today we're going to be taking a look and we're going to be talking about what is money we're going talk about the United States how wealthy we are how unwealthy we are and how we kind of fit into that picture we're going to talk a little bit about how many of you have ever heard of Dave Ramsey before we're going to talk a little bit about Dave Ramsey we're anti-rust some of his ideas. The general conferences also put out nice resources called faith and finance we're going to incorporate a lot of those ideas all week so if you come today and you haven't heard something that you are you know just dying or hoping to hear Don't worry we have all week to talk about it and if there's a particular topic you really want to know let's talk afterwards and I can tell you know maybe we're going to be looking at that on Wednesday or Thursday or some like that if there's a particular thing that you really want to make sure you. Make sure that you get to that one OK let's go ahead and start here to tell you little bit about myself. There's a picture of me and my family up there I have like this portrait of myself that looks all professional and my wife's like you can't use that because it's not cool you don't look cool and so. She mails me the picture and says You got to use this picture so it's a picture of my wife my two little boys I have a six year old and I have a three year old this was taken last fall it's over Lake. They're actually up here can't meeting so I probably have one of them across the hall here in our other ones out in the primary class so I am a licensed certified public accountant in the state of Michigan. Previously I worked nine years of in public accounting so mostly on the audit side so I have a lot of audit experience. I do have tax experience but I'm not a tax expert disclaimer big disclaimer there so if you want to come and ask me about your super detailed tax question I might say I just don't know. But my audit experience a lot of you're familiar with a couple of places I've audited we do a lot of work for the seventh heaven a stretch so I have audited the General Conference auditing service they come into the audit for Glod here and then we do the audit on top of them so I've actually audited glop about seventeen other academies all across the nation and also the General Conference itself so I've been out to the General Conference on a couple of years of auditing on top of G.P.S. out there as well so. I was always fun to get out there and see everything that they have and learn more and more about the church's finances because I'm a nerd like that. Recurrently though I am the assistant controller assistant treasurer from Century and medical products that's out We're based out in Williamson Michigan where our national medical supply company medical device manufacture we have plants in Hell Michigan. North Carolina and then we also have a wholly owned subsidiary out of Mexico Mexico so doing all sorts of fun accounting work nationally and internationally they were a client of mine and about eighteen months ago they needed extra help so I actually left public accounting to go work for them. I am also currently the treasurer for the Lansing Seventh Day Adventist Church I have been for about. The last five years. A little bit more about me I've served as an elder an adventurer leader a children's ministries assistant of E.B.'s actor. And that's that's really important with finance right but you know what when when you've got little kids and your wife the personal minister that the person the children's ministry leader you are the. Definitely the de facto assistance so. And there's always a need for acting so anyways but I'm also a general personal finance and through easiest I really really enjoy the stuff I spend a lot of time reading blogs I love reading the books on it I love learning more and more Sometimes I feel like I hit this dry spell where I can learn more and I find something else I'm like I can't believe I didn't know this and so hopefully this week what I can do is I can share some of these things with you hopefully you can get fired up hopefully we can answer your questions we can take care of any problems that you might be having in your life OK. Let's go ahead and get started TODAY we're going to talk about where does all the money go and that's where we're going to focus on. How rich is the United States of America how rich is the United States of America well we're the fourth largest country by landmass that means something right all the space tons of space Russia Canada China number one two and three but the United States falls in number four so just by sheer space we have a ton of land where the number two country with the most natural resources valued at forty five trillion dollars number one is Russia seventy five definitely rich. We're the number one largest economy in the world seventeen point nine trillion dollars That's what the U.S. G.D.P. is so G.D.P. stands for gross domestic product so what that means is that if you take the total value of what the United States produces in goods and services in a year that's what that me. Eighteen trillion dollars Look at this number two is China eleven point four trillion number three Japan at four point one Germany three point three United Kingdom at two point eight You can add up number three through five in the United States is still larger than them combined So definitely the United States is a land that is truly wealthy we are ranked number nine the richest country in the world in two thousand and fourteen. In the US A is estimated to have a net worth of one hundred eighteen trillion dollars when you include human capital in that number staggering as in That was your big numbers I had abbreviated because it wouldn't fit very well on the screen going all the way across all the commas. We have a military spending budget of almost six hundred billion dollars in two thousand and fifteen that is more than the next ten largest countries combined. Mind boggling how much money we have and how much we spend in the United States our federal government has a spending plan of three point eight trillion dollars each year that's more than what are we to see Germany at number for their entire economy produces three point three of goods and services a year the United States just our government alone spends that much money. The median price of a home in the United States is almost one hundred ninety thousand dollars. Thirty two percent of the population held a bachelor's degree or higher in two thousand and thirteen just to put that in perspective an eight hundred ninety our country awarded almost sixteen thousand basters agrees in two thousand and nine one point six million bachelor's degrees were awarded truly the United States is a country that is wealthy in rich. This the median household income fifty two thousand dollars in two thousand and fourteen the average household income seventy two thousand dollars in two thousand and four. These are big numbers right. In one thousand one just to put this in perspective of how far the United States is transition there were only ten thousand motor vehicles in the United States in two thousand and eight there were two hundred thirty six million that means we have enough cars for not only for every citizen to have one but for some of them to have more than one. We can't even I don't know about you can you drive more than one card at a time I mean I can't. In one nine hundred forty five there were fewer than ten thousand televisions in the United States in two thousand and eight there were almost three televisions per American truly we've advanced not only with money we've advanced with technology as well. But I have a question for you today is the United States really rich. Is it really rich What do you think Raise your hand yet you think we're really rich I just showed you three different sides to who are worth one hundred eighteen trillion dollars with human capital. Yet we think. Why is the debt so big why have we increased so much but why do we still feel like we're missing something. Are we like Trani trillion dollars and. We don't we have all this stuff. We're living behind Are you under means. But I thought we had all this stuff would we have like enough cars for everyone to have more than one. Very good you're already beating me to it. Is the USA really that Rich There's the number we just heard our federal debt nineteen trillion dollars You know I typed this on the slides maybe about a month ago I wanted to get you an up to date number but it's already it's already old it's already too low you can actually go online and Google national debt clock. And it's spinning faster than you can even it's just it's mind boggling and this is just what our federal government is spending this isn't what you and me are spending this isn't what everybody else is personally spending. That works out to about fifty nine thousand dollars of debt per citizen. One hundred fifty nine thousand dollars of debt per taxpayer course we have more citizens and we have taxpayers and everybody is a tax payer that's a huge number so if you pay taxes that anybody pay taxes last year yeah they Congratulations you're one hundred sixty thousand and four you can start out. We have one hundred in one trillion dollars in total unfunded liabilities very controversial number but it's very very true so if you were to take the value of Social Security Medicare Medicaid all the promises that our country has made to other countries its citizens our citizens and if you were actually to put a number on that one hundred in one trillion dollars is what you have to have in the bank in order to make good on all those promises. Now we spent a lot as a government three point eight trillion dollars But is it anywhere close to one hundred one trillion it's not even close. To eight hundred forty six thousand dollars per taxpayer so you thought you were bad at one hundred sixty thousand right now let's talk about the stuff that's not on the books. You're almost a negative millionaire. Six point one trillion dollars of debt is held by other countries can be alarming isn't it. The richest one percent of Americans actually own thirty five percent of the wealth in this country just one percent Hope thirty five percent the richest twenty percent own eighty five percent of the wealth so just looking at some numbers here so if we were just a block up our room here we have our our four folks right here. That's cry. Right they control eighty five percent of the well the rest of you you get to fight for that fifteen percent. That's how our demographic is broke up in America. Seven hundred twelve billion dollars in credit card. That's fifteen thousand dollars per household in two thousand and fifty I'm not going to ask any polls or anything in this class to see where you're at that's the average. Eight point one trillion dollars of mortgage debt that's one hundred sixty five thousand dollars per household so we saw just a little bit ago that the average price of the home in America is one hundred eighty eight thousand so then that means one hundred sixty five thousand is debt so we don't have a lot of equity in our home and it's all it's all mortgage financed. One trillion dollars in auto loan debt that's about twenty six thousand dollars per household. And I know some some cars are fifty thousand and some cars are ten thousand you start doing all the the averaging out and it works out to about twenty six thousand perhaps will. Here's a real staggering number though one point two trillion dollars in student loan debt that's forty seven thousand dollars per household this number is very concerning to a lot of economists right now you know one of the most concerning things about student loan debt is that you can get a loan from the federal government but you cannot get rid of the loan even in a bankruptcy. You can get rid of credit card debt you can get rid of mortgage debt all sorts of ways to your other to student loan debt is with you until you die. Cannot go away actually have a story about this. I was in public accounting we hired on a new associate and he went to Michigan State University I'm not knocking schools or anything like that don't disclaimer and everything right and he was. He was a member of the crew team that's the rowing team and lived in the frat house. The whole nine yards the whole college experience at a Big Ten university he walked out of M S you he did it all in for your say wasn't one of those students that took you know twelve years to go to college but he walked out in four years any old one hundred six thousand dollars for an accounting degree. And I remember when he told me I was like. A shocked that it costs that he spent so much and he you know he standing there talking to me like I don't even know where it all went like that might do that's a lot of Q.W. or even across the street or something but. He yeah it was all gone so you start looking at the map with them and. You know he was an entry level accounting accountant so he wasn't doing terrible but half of everything he made half of everything he made had to go to pay for student loans for the next fifteen years that doesn't sound like freedom to mean as a silent freedom. I told myself I hope you had a really good time in college because you paid a lot for that he was going to be able to get a house any time soon he actually had a few aunts and was like I don't even know how I could you know possibly bring anything to this relationship financially other than a huge load of debt so very very troubling for him so if you get paid twice a month one of his checks went to loans the other check he could actually keep based on the numbers he had going there he would actually been living in poverty. Seven dollars and twenty five cents is the current federal minimum wage that works out to about fifteen thousand dollars annually if you can work all forty hours a week. U.S. poverty level threshold in two thousand and fifteen one person here one person family twelve thousand to person fifteen three percent twenty four percent twenty four thousand as you can imagine the single mom that is able to find full time work at minimum wage makes fifteen thousand and two kids twenty thousand are you empowering. Forty six. And seven million Americans are in poverty in two thousand and fourteen forty six point seven million population is two hundred thirty six. So is the United States really really wealthy. It's a tough question huh it sure doesn't seem like it but is it only the United States is it only the USA. Here's a list of our most indebted nations in the world United States isn't even on the top number one Japan two hundred twenty six percent of G.D.P. Remember we talked about G.D.P. the value of what the entire country produces in goods and services in a year Japan would have to work they have to take everything that they produce and make for two point what three years in order to pay off their debt Zimbabwe two hundred two percent Greece Greece in the news at all in their financial problems hundred sixty one percent of G.D.P. that that that that that number fifteen will get down to the United States at one hundred three percent of G.D.P.. Japan let's take a look at them for a second have you heard about them in the news at all lately I read The Wall Street Journal every morning because I find it very interesting like I told you I'm a nerd with finance. There and have actually introduced negative interest rates negative interest rates. So I mean what are we getting our bank accounts right now point zero zero zero zero zero zero one percent or something like that you know. You know you know I'm a Corporate Controller and I'm looking at millions of dollars in a bank account and I'm shaking my head when I get the monthly statement like why we made one hundred twenty dollars this month. But at least we're not like Japan were actually paying for the privilege to put our money into the bank. See this is what happens when you have no economic growth for twenty years you start doing things that are radical that have never been seen before in world history negative interest rates. Janet Yellen the federal chair chairman right now chairwoman of the Federal Reserve has said that this isn't going to happen the United States but it's in Europe now it's in Japan it's something to keep in mind. Of course we have Zimbabwe. This is an interesting situation of currency hyper inflation I'll actually pass this around I was in Zambia about a. Star here and pass passes around I was in Zambia my sister in law was a medical missionary over there for about six months so my wife and I went to visit her over Christmas in Zambia is on the Zimbabwe border so we were able to go in and actually visit with her and I picked up this currency I paid like five dollars and a couple pairs of white socks or something to get them as a souvenir. Because their and their their money was inflating so fast they're printing hundred trillion dollar notes. They the money couldn't be produced fast enough for how fast the cost of things were rising. This money that we're passing around actually has an expiration date on it the money would expire and this is one hundred billion dollars. So you know I felt pretty rich I have two of them so I'm worth two hundred billion dollars which probably couldn't really buy a roll of toilet paper. It's the worst case in World History of hyperinflation it's an inflation rate of seventy nine point six billion percent in two thousand and eight. I had to type the word billion because it wouldn't fit with the percentage sign. Very interesting. Of course Greece and also all of us that said we'd heard about Greece they're basically bankrupt right they couldn't make the payments this is a sovereign nation can't make the payment. Needed bailouts from other eurozone members major riots though resisting spending cuts can't afford what they have but nobody wants to give them nobody wants to give anything. To sound like things that could be happening here before long in our country. So how did things get this way though how did things even really get this way was going to propose today that I think it's consumption attitudes I think it's a concept of living for the here and now only. Living in a materialistic culture. Impulsive spending habits lack of financial education you know praise the Lord that everybody is here in this room today because it means you care about financial education. Little to no self-discipline. No lack of self-control. You know ninety percent of personal finance is behavior only ten percent of it is really like what's in your brain and what's math it's really quite easy when you really boil it down but it's getting control of ourselves that's the hard part it always says it doesn't matter what it is in life getting control of ourselves as always the hard part. So let's talk about consumption attitudes for a second consumer spending in the United States accounts for about seventy percent of the U.S. economy seventy percent not big business consuming. Thirty two percent of household income is spent on housing. Twelve point three percent of household income is spent on transportation. Five point four percent of income is spent on entertainment. And then what really kicks me here is only three point seven percent is spent on charity giving to churches and not for profits we spend more on entertainment in America than we do and giving to causes of God or even not for profits. Living for this here and now we have savings rates check out the savings rates in our countries thirteen percent for those of us over age fifty five six percent for those forty five to fifty four three percent thirty five to forty four negative two percent for any. And under the age of thirty five. I don't have a negative savings rate. Use that pretty much to buy everything right so you spend everything you get and then you get a credit card to spend the rest. We live in a very payment minded culture. How many of you have gone into a car dealership and maybe the last you know last five years to to buy a car and I have. Yet what's one of the questions that the dealer wants to ask you first. How much can you afford how big of a payment do you want do they ask you like you know this cars going to be twenty thousand dollars or thirty thousand I know what how big of a payment can you afford a boat everything's painted based right payment based and when we think about life in those payment type situations this is why things actually start to cost so much in our economy. Because if we can afford three dollars more it makes the actual price of the addict go up another three thousand. Materialistic culture twelve point seven That's the magic number the average number of credit cards per U.S. household. The amount the U.S. spends annually on imported toys twenty three point six billion dollars That's more than the next ten highest countries combined I think the United States has something where they like to spend more than the next ten highest combine. One in eleven American households own self storage space That's up seventy five percent from one thousand nine hundred five the storage industry produces more revenue than Hollywood. Storage space so we're buying all this stuff we don't have anywhere to put it so we go store and then we pay for it again and again and again to be stored. Impulsive spending habits over ninety percent of people who shop today make occasional impulse purchases purchases that they didn't intend to buy initially it never made an impulse purchase and put both my hands up totally guilt that we are ninety percent. Up to twenty percent of the average household the grocery bill comes from items that were purchased on impulse alone. I didn't. Remember this and I'm being recorded so I hope my parents never hear this story but. I remember going to the grocery store with my parents Rose big Meyer fans my mom was especially. And I remember the time we rolled out with two grocery carts full and I remember being coming home in my dad seeing us pull in you like what was the total and I'm like I'm telling you because I know that a lot of the stuff that went into those carts were not things we were even to be eating. The average person over the course of a lifetime will spend over one hundred ten thousand dollars on impulsive purchases just think if we could reign in eighty percent of it to ourselves we could send a kid to college we could pay off a house we could buy cars we could finance all sorts of causes in our churches just with controlling our impulses along the primaries in one impulse purchases made though is because it makes somebody feel better right we've all done this we all know it's true oh yeah. I feel good when you leave in your trunk for three days and you forgot about it right. A lack of financial education in America FINRA two thousand and twelve study if there is a governmental agency that regulates the financial markets markets but the industry S five multiple choice questions in only thirty nine percent answered at least four correctly out of twenty six thousand people that was actually down from forty two percent being able to answer it three years before that question is covered basic items like interest calculations. Mortgage payments and investments. Only thirty nine percent. Twenty eight percent of consumers learn finance from their parents and you learn finance from your parents remember. Yeah a lot of us I did too. And we're not knocking our parents but it's just how it works right we also I mean we learn spiritual things from our parents everything we learn really comes from our parents for the most part. Only five percent of people said in the survey that they were taught by a teacher. Only five percent so you can see why we struggle with things like this in America just the weren't. Forty percent would give themselves sees these an ass on their grasps of personal finance concepts. Little or no self-discipline or control we have it in America we have this problem the inability to delay gratification. Out of it because we didn't learn it younger years of life. Spending makes us feel happy we like that feeling that I was you know a lot our brains do the work we let our feeling do the work. We struggle with identifying needs from wants sometimes and we've all dumbest we're all guilty of this I'm guilty of it we've all done it. Definitely is hard. Work all enough for your wants not to hurt you yeah good advice when we're unwilling to form positive habits you know that it only takes thirty days to form a new habit just thirty days four weeks so I'll give you a perfect example this. Last fall I had to say all scales not mean so friendly anymore and he did do something and he did do something so I decided to start running and I remember thinking that first week was brutal like every time you're right I'm. Quitting tonight you know where is the ice cream. And what you hold off and you didn't do it and then you get to pass the first week oh I lost a pound you know this isn't worth it's going to take forever to get to the second week it gets a little easier you get to the third week and you're like shown some progress look at this going to go buy some running shoes in and I are certain invest in yourself a little bit more you get to the end of the first month then you're like I am on board I'm committed the cookie won't bother me any more and you're like gung ho on it this is like anything any sort of habit that we can form we can do this in thirty days whether it be starting our Bibles better whether it be personal finance and how we spend it runs the whole game. So where does all the money go it gets spent right we spend a lot of it on housing we spend a lot of it on cars we spend a lot of it on self. What can we do what can I do you want tell you what you're in the right place because you care about personal finance education or you would have come to something like this it can mean right you would have been interested all this is the right place to come were learned about personal finance. So let's get started I'm going to tell you what we're going to learn in this course and all it's kind of a little bit of a teaser of a of a first of presentation right we're talking about what money is we're going to wear this today still how it works and how you can use money appropriately and we're going talk about budgeting tomorrow we're going to talk about a budget hole isn't about budgeting but budget everybody's favorite thing right RAISE YOUR HAND IF YOU LOVE budgeting. There's some but not a lot right. But budgeting is really the foundation of personal finance we have to be able to tell the money where to go if we want to go where we want to go right. We're going to talk about giving in stewardship We're going talk about that specifically on Wednesday what is our role is stewards. God's money because everything that we touch it's not ours it's God's it's just been given to us to manage we're just managers. We're going talk about stocks and bonds we're going to have a banking a bank accounts retire all loans we're going to talk about for a one K. for all three be. About soup all those sort of letters that don't make any sense to anybody but the people that wrote those laws right. We're going talk about insurance so we'll be talking about. Stocks and bonds banking loans on Thursday is probably I'm just trying to give you an idea because I know that there are so many different can meeting present I'd love if you came to every one of them but my feelings totally are hurt if you have a specific topic you want to hear that's what I really want to hear I hope you come all week but I want you to build now when we're doing things we'll talk about insurance and we'll talk about the machine conference and how they help out as well on Friday. And we're going talk about whatever else you want OK your questions happy my plan is not to take our sessions right to the very last second every time because I want you to be able that feel free to ask questions if you have things you want to talk about personally afterwards you don't feel comfortable that for the whole class make sure you have a chance to do that that's why I'm here. Some good. All right so let's get started we have just a little bit to talk about today in Iraq and I had time yet when OK OK What time do we go to. Ten forty five so we're born right through. What is money. What is it we talk about it will touch it will really stop to think about what it is. Here's a definition of what money is money is a current medium of exchange in the form of coins in banknotes is it. Not much to it. Money replaces the bartering system can I get. Three people divine I just blew a quick demonstration here to get three people to volunteer will come up you know he's help keep him away come on right up. Lisa Lisa wants to come up. So what was your name Michele all right Mrs lessons have you line up here one two three nice nice row here OK. All right so we'll do a demonstration about what money is because I think a lot of us have just never stopped to think about it before so let's pretend here that Joel is as not a Pastor Joel as something else why should you'll be what it was pushing his career be. What's at. A beekeeper. That's OK I will let you be the beekeeper the OK Well let's let's talk about Lisa what should Lisa be let's let Lisa be the teacher OK let's assume Joel has some kids do. We still be a teacher Michelle what you want to be. Let's suppose Michelle is going to be the doctor OK OK So we've got a doctor a teacher in the beekeeper and the beekeeper OK so the beekeeper he has money OK I'm going to this is a Lego I stole this from my three year old last night OK. But this is just the concept that anything can be money so it doesn't matter what it is this could be money if we wanted to because it's just going to be a medium of exchange. So the money starts at the beekeeper OK beekeeper has all these kids you know they want to get stung all day long right so what's he do he sends them where to school. Does the teacher let's say the teacher has allergies to honey. Does he really have anything that he can provide or learn not really but he does have one hand. So he can pay. Her money to teach his kids right so he passes it down the line she's happy she says Absolutely I'm glad to take this Lego in exchange for teaching your kids. But something happens what happens to her. Oh she gets sick to she know how to take care of herself all the way no so she passes it down to the doctor right. DOCTOR really really really likes honey OK. She's she's she knows a lot of. Alternative medical means to treating some of these medical problems so she needs honey for her practice So what does she do with the money. She passes I let her do it passes a back down to the beekeeper. See not everybody needed each other's things or services so all we have done is we've traded our time in we've monetized it into a simple object and so nowadays you can sit down THANK YOU THANK YOU Nowadays we do it with money right. Currency never heard the word currency before. Currency is just a system of money that's in general use in a particular country so United States we call that the U.S. dollar. In Zambia you call it the Zambia Ximian kwacha. Canada it's called the dollar. In China it's called the red beanie. All sorts of different names for it. In Mexico you call it the peso So every country has their own type of money their own type of currency. Virtually all currencies in existence on earth today are called that currencies you say fee at. And it's not the car that comes from Italy. It's not the car that comes from Italy. It is a Latin term for it Shelby OK so. The currency we can make the Lego Afia currency suppose I'm the U.S. government and I'll say this show this is going to be theone currency it shall be currency I've now declared that Lego's are money in America that's IT dollars to it. It's backed by the strength of the government the issues it not it's worth in gold or silver well pass these around here for you to look at this is me stealing my next life yes perfect There's the U.S. dollar the dollar bill pass this around here around to look at some of these sort of these are a little different these are older. Pass these around. Take a look at it and tell me what looks different on it to you. It's older but it's not very old and I bet there are plenty of you in the room they have seen it and used it before. You see what's different on the top of it. It's a subtle change that's happened in our currency and I'm not trying to scare everybody and I'm not trying to predict the one you know all the financial collapse of the world or anything like that. But there is something different on top of it. You never stop and look at your money before what is. What is this once and the top. Silver certificate but is a look really similar to what's up on the screen. Yet what we have in our wallets today and what's on the screen is called the currency it's been. By nothing but the government saying it's money. We're passing around is a piece of paper that you used to be able to take the bait and you could actually exchange it for silver. And it looks just like the dollar what's the year on it what's the year on that when you got your hand in. One thousand nine hundred fifty seven so a long time ago. This academy was already here when that money was floating around right. Now. An. Interesting. Federal Reserve Note So the money that we buy that we used to buy and sell it today is not backed by anything it's only money because the government said it's money. It's worth no more than the paper that it's printed on but we all use it. To pass along. Our services right. Well I know that many of you may not agree with what I say and that's fine but gold and silver but seven think about gold and so over again to is it worth something because we said it's worth something. Same concept right. If we all decided that it wasn't worth something someday would it be worth something. You. Really don't. Feel. Right yeah the yet the things that will be worth something are probably the things that we can use right. You know I kind of I spent a lot of time thinking about the gold stuff before in my life and you know I start thinking about it and I'm like am I going to be on a walk in a Wal-Mart with fifteen hundred dollar coins. And go point that thing down probably not. So you know this is why I love my wife the shows keeps things in context from a shows you worry too much about that kind of stuff you just need a trusting the Lord and he's going to take care of take care of us in the end of time so. Right. Right yeah exactly so yeah. Yeah. Yeah yeah and you know and I'm not a prophet or a son of a prophet so knowing how how it all play out and I I don't know but I just know that you know we think about it we'll try to do our best will be good stewards of what we have right now. Little Take Care us. Were legal. Goals. Or you want me to. Your. Well if he's wondering what are the implications if we actually went back to a gold standard so Richard Nixon took a took us off the gold standard fully one nine hundred sixty four when on live television right I remember right I wasn't around but when I remember seeing it so we're all done with that why do you think you did it. There wasn't enough. We had promised at the Bretton Woods Conference that we would have all this gold that our currency would be good and you could use it all over the world while turns out we did a really good job of printing the stuff but we didn't do a good job about getting the gold to back it so eventually get down to where we only have you know ten cents on the dollar of goal like well sorry everybody we can keep our promise there's just but we're still good because we're the U.S. our money still good because we said it's good. So you know I'm telling you all this not so much because I'm saying our money's worth. It's no good or we shouldn't use it anymore just trying to keep it in context and we talk about money and personal finance that. Is just a tool just a tool. In Peru. I'm not sure. Yet writing in Peru I'm not so sure I know that happens and probably at least ten countries every day so. Let's keep going and I want to use appearance time here but so two weeks ago I was in Chicago I was there for a treasury management conference and this is just a side note I think it's really cool like I said I'm a nerd and this kind of stuff and there's a museum at the Chicago Federal Reserve branch you can go to I believe it's free and they had a stack that's a million dollars and one dollar bills in a cube that's like this big by this big and it's a serious spins it's really interesting to see these kind of things and actually when I was there they were passing out for FREE. Passes around to free so if you if you're planning your trip to Chicago here's your promo you can actually go in the past the shredded money in this thing says on the back that it's this big contains thirty four bills of mixed nomination approximate value three hundred sixty four dollars. So if you want to take the bag and try and put it all together I'm happy to split it with you. I suspect we'll be talking in a decade or later. But yeah so that's what they do. The other was interesting and then from the case they show you different sizes of what it looks like with different bills and you know million dollars and one hundred dollar bills if it's in a small briefcase. So how does money work how does money work does anyone know what the picture that is up there on the screen you're seeing that on the news it's always on C.B.S. It seems their embassy or someone's What is it is. The Federal Reserve it's the bank of banks in the United States it's the government's bank Federal Reserve is the bank of the U.S. government and regulates the nation's financial institutions it's an independent agency. Yet Federal Reserve gets to print the money. The Treasury is in charge of dispersing and collecting the money that makes sense. Well let's keep talking maybe I'll help you out here the Federal Reserve's an independent agency OK it which means it makes its decisions on its own it doesn't need approval from any branch of government. It's constantly explaining itself Have you ever seen Janet Yellen before Ben Bernanke here Alan Greenspan they were the they're the chair people of the Federal Reserve to him are tired. They have to constantly explain themselves but they are pretty much independent Their job is to regulate the money supply in the United States. It's not. Believe it's nine. Right right and when one of them speaks usually. If you see the stock market the Dow Jones go down for the day it's probably because the chairperson said something that didn't sound so great to the markets that's an enormous amount of power that somebody has with just their words. The world listens to the Federal Reserve. Very interesting So the question though is before what is the difference between the Federal Reserve and the Treasury other than that they are physically in a different spot in Washington D.C.. The Treasury Department is in charge of actually like overseeing the I.R.S. So they bring in the money and then they're also in charge of spending the money when the federal government buys things. In. Yeah and that's why your dollar says Federal Reserve Note. Because it's a debt it's a debt instrument we're just passing around our government's debt as money. Buying. Yeah. Yeah. Yeah and a print. So what a lot of times will happen is when you hit a snag when I actually get to hear when we get to it it's come up yes like come on how does the Federal Reserve work it's broken up twelve different branches all over the country Michigan is actually part of the Chicago branch so yes right there. Yeah except the U.P.A.. Yeah sorry dollar to the Yoopers there. So it's broken up those twelve Bronx their job is to keep an ear to the economy and then they go back to Washington and then they're supposed to basically come up with the monetary policy for the country at large that's their job. It's a quasi governmental entity makes you feel better about their right what's a quasi governmental entity. Can't answer your question. The. The concept behind it is the this is the big What's supposed How supposed to work as the Federal Reserve is supposed to serve. They're supposed to help regulate interest rates are going right now so this is what the Federal Reserve supposed to do if the economy needs to grow faster and create jobs remember two thousand and eight two thousand and nine what was going on in our economy what oh is terrible right people were losing jobs people couldn't make payments anymore so the. Federal Reserve has two mandates one to keep employment is best as you can and they've defined that as five percent unemployment or better and it keep inflation low but growing meaning they wanted it two percent just that's it they just wanted a two percent OK So their job when they need to is the Federal Supply more credit for lending by lowering the interest rates. So when things get bad interest rates go down because they're trying to spur people to spend money to make investment. What's happened what was interesting about two thousand and two thousand and nine is that that didn't do enough for the first time in history the Fed couldn't do it with just interest rates they brought it all the way down to zero basically and you and me were sitting home say. I'm not going to spend my money because we're too scared by spam I am I never get always my job and you know you get this big cycle going on so what they did is they started buying government securities government securities is just the government's debt because you know our government spends about trillion dollars more a year than what it actually brings in right so how does all that stuff get by while they issue loans they take out loans from everybody in the Federal Reserve being able to print money just buys it. So that's how the Federal Reserve and the federal government kind of work hand in hand. When the economy's growing too fast they want to and void inflation the Fed supplies less credit for lending so interest rates do what they go up because now we're like man if I buy that house at twelve percent my payments can be like two thousand dollars a month think I'll wait so the Federal Reserve is now affected our behavior and what they want us to do you know make the price of homes no longer skyrocket but slow see how that works Same with cars. And I'll stop buying the government that believe the government out to their own and. Make interest rates rise in the make rather than the Federal Reserve buying the debts that make you and me want to buy and through bonds you know for kids for education for college or to give as gifts or banks. For the average person the money actually money interactions are pretty simple they're usually between our employer where we earn money we're trading our time. For the money. Between banks where we store and borrow money. Between stores and suppliers where we spend money. Between charity when we give away money. In investment firms when we invest money so for you and me it's not as complicated as the Federal Reserve it's pretty simple right we get it we save it we spend and invest it we get. Big circle it happens every two weeks every month often you get paid. And how does money work we have different forms of it we have cash we have paper and coins right. We have checks which are basically just permission for someone to take money from our bank account so the check is. We have a debit card for electronic payment directly from our personal bank account swipe. Of a credit card for electronic payment but with someone else's money. Right. And we have loans usually when we pay with a loan it's because it's a payment from a third party and we're usually buying something expensive right remember if you lessoning out a loan for a car did you you know who suppose the car is twenty five thousand did you get the twenty five thousand from the bank first did you ever even see the twenty five thousand not you never even saw a sign a piece of paper bank transferred it writes the car dealership. But what did you end up with though you ended up with the car and a piece of paper called. A loan or a payment book yeah. Exactly that's pretty much it right you think of any other ways that we really move money around. It's really such a simple concept one step Thank you. So I want to talk to you quickly about money in that it's a moral has no guiding principles of its own is this thing in this tell you what to do. Not really write. If you have your Bible with you I wanted to say a verse with you and I have it up on the screen because I think sometimes this gets misinterpreted. It's misinterpreted quite often actually. Sadly it gets misinterpreted by Christians the most. First Timothy Chapter six verse ten. Want to make sure we at least open our Bibles once today we will definitely be opening up more more in some of our next sessions. First Timothy Chapter six. Chapter ten is anybody have it would anybody be willing to read it. Go ahead for the love of money all kinds of people only some great in their got greedy and future health maybe ever right so money is the root of all evil right. Now. It's the love of money that's the root of all evil how many times have you heard someone say the root of money at the root of evil is money money is the root evil that the Bible's us says for the love of money Dave Ramsey one of our authors up here they have a book up here he actually said it's all about whose hands the money is in really like that quote. It's the love of money. Where does the evil come from does it it's when we're pursuing money and just and Leslie right that's when people get in trouble that's when the bankers take the risk that's when people get hurt that's when people lose their homes right when it's the love of money. That people are after. Exactly in that's when money becomes an idol right. So we're obviously some of these are pretty simple right bad uses of money self-indulgence gratification uplifting ourselves despair and helplessness from poor use. And about you I mean I've spent money in bad ways before too I'm sure we can all relate to this when we do something wrong unwilling to help the cause of God for always pursuing and it's our idol it's kind of hard to have what the circuit. Cannot serve God and. Good uses of money though will help strengthen relationships. It will bring a sense of hope and freedom to lives and it will provide freedom to give generously. I don't one of the greatest feelings for me personally is that when I'm able to help when there's a call that's for something bigger right and you know the call may be you know we have we heard the other night seven hundred thousand dollars and we have seven hundred grants and around I doubt many of us do either but when you can give something to help it. You know and. So in this course we want to learn how to have happiness using money want to learn how to avoid selfish use of money. How financial freedom can be obtained using money and how strong character can be developed using money that's out there. So we're going to go over the basics we're going over the nuts and bolts we're going to talk about you know interest rates and bank accounts and IRAs and those types of things the technicals but remember ninety percent of personal finance is behavior right and how we apply it to our lives. Money does not cause these things to happen it's how we use the money that shows these things in our lives. We tell the money what to do money doesn't in this thing tell us what to do know well can we tell it what to do you bet. So Dave Ramsey I asked him and I go how many of you have ever heard of Dave Ramsey he said elsewhere it's a hand come up right they were is a radio show host you can listen to him on mostly AM radio he's on a lot of traditional sort of Christian radio stations. And it's actually a great place to get started I think if you're learning how to get started in personal finance drams he has some great tools out there. Wondering with him on everything obviously but he definitely has the nuts and bolts out there he's got a good first start. He actually has a course published called Financial Peace University. And I think we had someone in a room back here right now our resident Dave Ramsey expert here. And so I went through Financial Peace University probably about twelve years ago it's a D.V.D. course you normally sit in with other people a lot of times our churches all actually offer it and teaches the nuts and bolts of personal finance how to get out how to save money really good very inexpensive. This is not the book this is a different book that he had written but I would highly recommend that if you want to learn more that you think about looking into some of these things. We're actually going to initially this is on his website so I feel OK sharing some of his information I'm not making money on the deal so it's OK he actually has what's called seven the seven baby steps of personal finance and I really think that they're very very very helpful as we're starting out his first step is he says you need to take it a thousand dollars and start an emergency fund. What's an emergency fund. An. Expected emergencies right it's like when I you know I need to go on vacation right it's unexpected right no. New ME I thought Disney was like an emergency I have a six year old three year old you know. How about when the water heater goes to goes down and doesn't work any more than emergency. Unless you like cold water. What about when. You know the water pump goes on your car. Then the emergency it's emergency if you King it to work right it's hard to keep making money if you don't have a way to get there. His second step we're going to have our emergency fund mourn to some minute second step is to pay off all debt using a debt snowball and tomorrow we're going talk about the debt snowball and how it works and what budgeting tarmon talk about how to get out of debt. And how to do it smart how to do it efficiently and how to do it effectively. Step three so after you've completed step one after you've completed step two you move on to Step three right through to take that emergency fund you build it up with three to six months of expenses in savings it's not three to six months of income it's three to six months of expenses. So you make one hundred thousand and eight a year but you spend a full hundred thousand right so it's not as daunting as it seems. Why do you think you would need three to six months of savings anyways. The big one you think you need six months of expenses saved up to fix a lot here probably not not unless you've got like some really cool geothermal solar pumping out on all but No really you're saving up now for the big thing the biggest thing that a loss of income which is a loss of a job right. After you have that. Move into investing fifteen percent of your household income into Roth IRAs and pretext retirement we're going to spend a lot of time talking about retirement at something like near and dear to my heart it's one of the things that I. Totally a nerd about and I always wonder like what is retirement where did it come from I don't I don't remember seeing retirement in the Bible anywhere so why do we do it you know that's something we're going to talk about and we're going to study that together and we're going to see what counsel has to Santa as well. College funding for children you want to send your kids to school and I do and now everybody differs on this to my wife like no we did it ourselves go our kids do it or they you know I don't sell them I know we can do that so you know every household will be different but there's going to talk about ways to do it sometimes the answer is not just save up a big pile of cash sometimes the answer is save up some cash sometimes the answer plus have your kid have a job plus trying to get a scholarship plus this plus this plus this so college doesn't have to be you know I need to save up one hundred forty thousand dollars to send my kid to school in six years now maybe I need to save up twenty thousand into a couple other things team it all up and I have a college plan. Step six and Dave Ramsey's plan is to pay off the home early. Be nice. In the last step build wealth and give. You magine if you were all the way through Step six how much giving you could do maybe you could be the one to do the seven hundred thousand. And one. So so mother's emergency fund briefly here before we wrap up what is an emergency fund we already kind of talked about a couple these things for unexpected events in life that cannot be planned for. Now I want to challenge you we talked about the car breaking down. Your cars. Always break now. Is it rich should it really come as an emergency to us when a car breaks down oh I thought my car would last for decades now so would we be wise if we were starting to think about ways to save money knowing knowing that the car is going to break down again we don't know when. But is it really an emergency if we're planning for it now and now just write the check in a fixed. Where should it be kept where we keep an emergency fund should be easily accessible in a fully insured bank account simple just a savings account nothing more of that now there's more things we can do with it and you can talk to these guys here the Boggo has They'll tell you all that you know all six different ways of setting up an emergency fund but really what it comes down to is which need to be able to get to it you seem to already checked and go to an A.T.M. when we need to pay for something. What should it be used for and I Robot now car to maybe have a flooded basement can you really plan for a flooded basement has anyone ever had a flooded basement before yeah OK cool and that's never been me Lord. But that's what the road is the funds for I suppose. Yeah I can't plan for that right not for vacations it's not for that unbeatable sail it's not for the R.V. that's going on sale or the boat that's going on sale on the Fox I don't try to get rid of them. Those are things we should save up one by this is just for those things that I just don't know what it's going to be. I told you we'd get done a little bit early because I want to make sure we can answer more questions at the end if you have any so what are we a couple minutes early cool I made it to the end. So we have. These. You know. How it would work. OK So the U.S. government so let's talk about how the U.S. government works OK So you have the I.R.S. What's their job their job is to bring in money right Their job is to bring in money. Whose job is it to spend the money. Yes our wonderful lawmakers Congress right they're the ones that say we're going to spend it on this and they dole it out to all the different agencies and departments of the government who actually do the buying right. So we bring in two point eight trillion dollars a year for the Internal Revenue Service right our favorite person coming up or fifteenth. And then the government sends out three point eight trillion So where's another trillion come from. Mons OK So so the trillion dollars has to come from somewhere so what the Treasury Department does is they. They broker bonds you've ever heard of you know savings bonds. While they have all their bonds to you in the banks biome they're the big bonds you mean by the small bonds you know same concept though so they're going to go on the Get treasuries jobs to say all right we need to send out three point transfer you get this other trillion OK so. They're going to sell bonds and banks are going to buy am and then there's going to be this gap because not everybody you know you just can't get a trillion dollars from just banks you know that aren't going to buy it you know your pension funds are not going to buy it so this is the Federal Reserve likes to step in. In the Federal Reserve they'll gobble up that trillion if they want to keep interest rates low OK if they don't they won't go up so much in the Treasury has to pay a higher interest rate for the bonds that they can get rid of see how that works. So that's part of the Federal Reserve's role and that's what they were doing Definitely and. That and the financial crisis as they were coming in when the deficit was just out of control and they were buying all those. Government that's. And it proves for X. number of your thirty years. So it's. Time. Yep Yep that's the natural Treasury bond comes do what they do they need to pay it off and you think they just pay it out a savings account and they don't have it so it just gets refinanced and so they just saw a new bond that you know. That is how business it is allow businesses run. You know what. I believe they want to give to you know your age. Oh yeah yeah that's very common. Keep it down the road interest only you know why ever pay it off it's you with inflation it's going to be work was in the future you know comment or the price you're talking. About. But. What. Was interesting is that what it used to take what. We. Were going to be used to. Or they sit in the. Kids or. This is. How we did it in those events not by impulse buying cars. But that I think the thing that I want to mention for us here is I think the. Biggest. Problem is you get kids one home. I mean given the size of tips to the kid nobody. Knows. This. Morning. We're going. To give this church Yeah. Yeah. Yeah you're exactly on you know being in a being involved in a lot of church financial discussions and being a church treasurer You know you can see the demographics of of how ties and offerings work and it's it's not it's not always encouraging. But yeah I think you know this is impossible to get out and it's you. Know it does take it is. Not. It's she graduated a year and. She's rising. And well it's. Three years ago and just this year she was forgiven. You know this ability you know there's a very very small window of ways to go. And not everybody likes all the the ways you know obviously we would prefer to be disabled to get out a student but just like a lot of us would want to go into the military to get out of that that's another way to do it. So once a year you know if that absence that makes. You a little. But yeah. Yeah it's a selection you're right. So you know obviously Democrats have an idea Republicans have an idea libertarians have an idea they all have an idea of how to fix fix the problem. But what I personally think the fix the problem is educating people. Because if you if you know how to interact with. Before you interact with that you're going to have a problem. You know what to do. You know you're not going to go get the German pope German Poca dancing major Maybe if you know it's going to cost one hundred thousand but you're going to make twenty thousand when you're done now and I say in college should be the determination of you know your career should determine exactly what you do to make your money but you should definitely thought about it. We. Were. Were. Really. Yeah yeah there's a there's a. But there is there is an investment that we can all make that will last eternally right. My own all that is investing in because I've got it in the work that's before us. Absolutely if that's all we have in life. I've been to Necker agua I've been to Africa and I can tell you having just a little piece of land with a little garden and a little something to call your own you're blessed more than ninety five percent of the rest of the world. Just this book that we have. That. We got on. So that you know a lot right got so and buy a house OK with. It. You have it right that's got so and respect it we don't. Fret. Benyus or does that come out in the words Fear not what you did was anything. That we remember that that was going to keep us call to the store because the arms go up you know we're each one of us in this room but the last stop quote quote We've lost it is always movie your tyrant song but we're going to want to get what we were trying to cling onto the ship with. That's what. I don't have it all not make it not you gotta work on your relationship cause the truth so often that you're just a man and you know the date Oh boredom bought the have. Too much you bought about the artwork but you don't know what it's not you are you are right I've. Been single. Well. And have been every heard will be touched differently by the Holy Spirit some some may tell you to sell mean tell me not to sell. Exactly you never know and that's why it's important that we just know. That to education over these things they tell grandparents to do to find their grandchildren education you know years down the road buying what like buying savings by buying. What's Behind think there are a growth Oh yeah when I want to buy that stuff. That's just me I wouldn't buy a. Car. Yeah I've got my stuff in the now before. Just because usually the fees are really they're hidden they're high it's not going to grow as much and if you just want something to grow just buy an index fund and open a five twenty nine we're talking about this but open a five twenty nine plan for. You know your grandkid and the money there. Yeah. Like the My We can talk afterwards maybe got rid of time you know we are so. Yeah but if you have questions afterwards i'm here we can chat about the fun stuff the technical details but otherwise I really hope to see you all here I hope you learned something today and tomorrow we'll start to get in the budgeting and we'll start talking about the details the stuff that the council like. Thank you but several were pretty gather and we'll go ahead and dismiss your heavenly Father word we do thank you so much for today thank you for watching over us we thank you that you are in control of truly everything financial. WARD We we want to be good stewards that's why we're here more we want to learn more we want to make sure that we're wise with what you've given us and swear I pray that you would direct our classes together or that you direct us in our homes and you would direct our families as well for this in Jesus' name. This media was brought to you by audio for years a website dedicated to spreading God's word through free sermon audio and much more if you would like to know more about how do you first or if you would like to listen to more service leave to visit W W W. Dot org.

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