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Logo of 2016 Michigan Camp Meeting: The Harvest is Great

Financing Yourself- Part 2

Jeff Allen

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  • June 12, 2016
    2:00 PM
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Well let's go ahead and get started today I don't have a whole lot of slides today is going to be a bit more interactive we're going to work on some numbers we're going to crunch some numbers and everyone brought your ten to your big calculator with your I Yeah OK it's on your cell phone now so it's on the charger back at the Cape OK That's OK we'll work through some things together we're going to give you some tools to take with you today. And then I want to make sure you leave time at the end if you have questions as a group we can talk about questions some of our best discussions come from just questions that you guys have that you bring up that maybe I haven't thought of or you haven't thought of so open for that and leave time with the answer if you want to personally afterwards we will be talking a little bit more about budgeting today and sometimes that's a real personal issue so if you have personal questions and make sure we have time afterwards to talk about the other some good all right let's go on today we're going to talk about telling the money where to go OK telling the money where to go let's take a quick recap of what we talked about yesterday though yesterday when we were all here together we talked about we noticed that the United States is actually very wealthy but it's also very very in that country right what was the magic number one thousand trillion dollars actually recorded one hundred and one trillion dollars off the books we learned that character affects our relationship with money we talked this about that financial education is important and it's important that we're all here because now we're all learning about financial education we talked about the few people actually understand financial matters remember the thinner study that we take a look at that they took in two thousand and twelve only thirty nine percent of folks could actually answer for questions about personal finance correctly we talked about what money is we talked about how it works and we talked about how they use it passed around some samples yesterday and I have them again here today if you will look after words about money that was out in Zimbabwe the hundred bill. Dollar note. Hyper inflation we looked at some old U.S. currency it was actually backed by so over but nowadays we have what's called the what currency meaning it's backed by nothing other than the government saying use it in then we also introduced the Dave Ramsey seven baby steps All right will be working and we'll be looking at his baby steps all through the week I think they provide great guidance for putting together a solid financial planning. So let's take a look at them again this morning the first one we talked about yesterday was that thousand dollars to start any merge and see fund that was step one if you have nothing if your and up to your eyeballs you have nowhere else to start the very first and most important thing is just some money in the bank right that way when we have a problem we have an emergency we don't go to the credit card to fix the problem we go to our savings account to fix the problem right. Step to paying off all of our debt using the debt snowball we're going to talk about the debt snowball today we're going to build one up on the chalkboard and we're going to build one right out so we can see how it works cept three taking three to six months of expenses and building it up into savings Step four investing. Part of our income or retirement. College funding for children if we have any Some of us don't have children but some of us do have grandchildren so that's something the Think about to hang off the home early Could you imagine if you didn't have a whole house payment how much money you have left over every month it's a very big number isn't it. In building wealth in giving if you have no payments in line if you have only money coming in if you have a budget if you have a financial plan you imagine how much more you could be giving how much more you could be giving to the Cause of God. We talked about the thousand dollar mergence the fund yesterday we talked about what it was for it was for what the. Unexpected events right the basement floods right what are we going to do but we don't want to go use the credit card and get more deeper in that to get the problem fixed that's why you have an emergency fund to help get us started where should we keep it we should keep it in an easily accessible fully insured bank accounts I know someone you think you know well all that money is just sitting in the bank it's going to earn point zero zero zero zero zero zero zero one percent you know I might only make three cents a year and it's true but can you imagine if you had to use your credit card and head to pay twenty two percent interest on the fix rather than taking the money out of your bank account right cost a lot more than three cents right. What's that. Yeah yeah in a homeowner's insurance would definitely pick in and how but you know how long you think it might take to get reimbursed on some of those things and it could take a while you really want to leave you know three feet of water in your basement for three months while you're waiting. Yeah then I will help you put the transmission in your car yeah absolutely what if a family member has a medical problem. A lot of us wouldn't be really willing to stand by and watch them suffer when we know we could help right that could be an emergency. Yeah yeah exactly so maybe the question is maybe you need to go take F M L A That's Family Medical Leave Act. Where you're allowed to take up as well weeks off of your job without having to basically be terminated but your employer doesn't have to pay you during that time so how do you take care of your bills if you're helping somebody else right what the emergency fund should be used for we just talk about it to be a broke down car flooded basement not for a vacation and it's not for those unbeatable deals and know that you know all those cases of you know of food at the A.B.C. is a great deal right now but it's probably not the best use of the emergency fund right. Right. So yes absolutely that's what an emergency. So let's take a look today I promise you we're going to take a look at getting out of debt and we're going to take a look at budgeting today so we're going to take a look at using the debt snowball What's a snowball you know you know what it is. Also now right. Get it it's not quite the snowball where you take it up and you smash it your sister's face right now. It's the kind of snowball more like an avalanche type of a snowball you start small Right it's like when you build a snowman and then you roll it and your role in the for long the thing so big you can push it in the M one. It's that kind of snowball but it's that kind of snowball going down a hill so it's building on its own. So in order to to build a good debt snowball you have to take a list of all of our debts excluding the house for now OK excluding the house we'll take the small spots. It will be our it will be its first priority but I'm on the top of our list interest rates are irrelevant so maybe you have a debt that's twenty five percent interest maybe you have a debt that's two percent interest doesn't matter this want to see what the smallest one is we're going to take them from smallest to biggest OK The only caveat here is that if you have a debt to the I.R.S. the Internal Revenue Service we don't want to be in debt to them not ever and I actually have a story about the I.R.S. It's not my personal story than goodness so I had a client they were actually not for profit we did the audit foreman he done me on it for a long time for them they kept the books terrible the audit was always impossible to do it was always a mess we had to do a lot of the book even we had to write him up for all sorts of you know internal control problems and findings and so you get the jest you know right they they just really didn't have their act together well they actually owed some line to the I.R.S. didn't pay it didn't pay at the place as payroll they had maybe five grand in the in the bank not very much right well. One day they went to make payroll and there was no money in the bank. This is where the this is why the I.R.S. gets paid first the I.R.S. has the power power to do what's called Leving they can levy your bank account so you can see it one day they can go in there suck it dry if you owe them anything the next day you go do it no money. Well in this client's case they actually had a real problem because it also written a whole bunch of checks to pay bills the day before too so anything happens to all those checks mount thirty five dollars fee thirty five dollars fee thirty five dollars thirty five thirty five pounds over ten fifty five dollars. Fifty five now you bounced or fifteen hundred hundred Hundred see how bad it can get so now their problem of having little cash flow now turned into now oh five now we just had to pay five hundred dollars in bank fees on top of it. All because you are arrested and to papers. Oh yeah the I.R.S. Yeah well they say it's the prevailing rate but. I don't think that they're charging what uni get on our bank account. Prime plus whatever they want. Us around six percent right now is what the charging But what's interesting is the you also have to pay a penalty so they they charge you penalties for not paying you might have a penalty for not paying you'll have a penalty for doing it on time you know if your day late and then they'll add that to the balance and then you can pay interest on top of that so it's just. Yeah it's compound a daily So it's a mess you know that's why I put it up here the I.R.S. has to be amassed with pay them first OK And then we're going to use all of our resources to pay off the smallest debt then move on to the next one at a time makes sense. As the cash flow increases. Because we're not going to have those payments that are going to you made anymore we can take those payments and we can now start applying them the next that in the four along we have a huge amount of money applying to the last lot thank you so let's talk for a second now see if I can write on the chalkboard I know it's kind of in the corner so he can see let me know what are some things nowadays that have payments attached to him. That related you think of anything even in your life maybe that you've ever financed or had to go alone for they had payments of that. Credit card. Was at hour long. So. You know. We're not counting it for what we're doing here but it is definitely a debt right. Anybody ever owed money to the hospital. In the US. He lacks. A home equity line of credit. It's this nice name called a he pretty clever right home equity line of credit. For a one Kalends. Or a one Kalen zero fun actually you know what happens with a four zero in Kaon is maybe you have a twenty thousand dollars for a one K. from your employer where they've been put money into your tyrant Maybe you've been putting money into in a what you take a hardship loan sometimes that you can take it for anything but you say you're for a hardship loan maybe you borrow let's normally take half so say take ten thousand of it you need it for something real bad you know. And so you use it and then you know you're slowly making your payments bag but then let's say you lose your job. So your sever sever employment with your current lawyer you have ninety days to pay the entire balance back or the I.R.S. considers. A distribution which means you not only have to pay the full tax on the ten thousand that you didn't pay when you put the money on but you also have to pay a ten percent penalty. Who. I think it's ten. Yet twenty Yeah yeah. You don't want touch those Anything else. Utilities being up just being behind on utilities. Were Here in us. Personal loans what kind. Oh. Yeah. You're right in there you're normally a real nice fair interest rate right thirteen percent fourteen percent. Anything else there are some that we don't have up here that I know that some of us have done the whore who pay check won't those are real cool right. Everybody wants to own own money to Gweedore it. Oh yeah big cation loans. Timeshares. You know you can get a loan for a timeshare. I'm surprised Disney hasn't invented Disney finance yet you know of a separate arm of their corporation where they'll actually finance your education at. Being. Now we're getting a little close to Cam waiting aren't. The Army me the boat. You mean us. Yep yep yep the R.V.. Has anybody ever financed a piece of furniture before. I remember the first thing I ever finance in my life was a mattress. All right. What do you think what do you think drew me to it though. But what a low payments or the lack there of or how on. Same as care twelve months you don't have to pay this thing or yeah even better you know two years two years your mattress you don't like it anymore you haven't paid for it. You know absolutely in the great thing about those types of loans furniture loans mattress loans is that the interest in the payments do start up twenty four months down the road the interest is occurring the entire time. Right yes if you don't get paid off in that twenty four months you're now like two years behind her say on the payments who are right anything else. What's. Not which up to the next bracket meaning fees not quite a debt but definitely something to think about talk about employers Yeah yeah. Debt consolidation. That consolidation sounds great but what happens and consolidation. You know the interest rates lower but there's these nice things. And nobody does anything for free nowadays right we're going to remember that oh it's free. Really. You know. Car lease is. What's at. Partment we're not going to put an apartment up on as a debt but that's kind of like an ongoing payment but yeah I see what you're getting and. That's true you know you know you'd be in debt if you had to build a dent Carli says or kind of an interesting thing because you get a what do you get out of a car lease what makes it so appealing to get a car lease. You know low payments you get a brand new car. Brand new car you can drive around that forty thousand dollars Chevy Traverse the had no money in the bank to buy right off with a nice easy low payment of four fifty right. Yeah design or ten thousand miles because after that you get paid forty cents a mile. You know. You know you know so you lease the car now you have a more expensive thing driving around which the insurance company says Wow you crash that thing that's going to cost a lot more than the five thousand dollars car you discovered oh we're in trouble. But you know it's change your insurance right you can change the yes that's the truth sure you can go insurance shopping which is one thing we'll talk about today as well. You know they want full comp and full coverage for if you get hit so I'll sit you you dear they want to make sure that what you think they care about that though your money in a member when you drive a new car off the lot is a GO UP UNTIL you know your. Negative So they want to make sure that the insurance is going to cover that so they are made whole not you know Carol Q. OK. But. Just just to get out of her A I have a friend that just least a truck you know you ride in and of course you're jealous instantly right things so nice now. And. Boy Like how many miles and you know your lease and you know it's nowhere close to nothing but the dealer told me that I have a truck so you can turn a manner early and like like well so what happens when the market tanks and they don't want your truck. Anyways. Some a thing about yeah so there's all sorts of different things right all sorts of different things so let's talk about what this debt snowball would look like we'll take a couple of these items here OK. So if we're going to build the debt snowball everybody write down what they want right here and then interest this year. You know kind of bad i got a really nice chalkboard all dirty now. So it's unlikely that in life we have all of these debts all at once right we probably have a good handful of them right so let's build our debt. Snowball. So the first thing we gotta do when we build the debt snowball is we have to take stock like we just did of the different types of debts we have how much it cost to pay it off. So the total payoff. You need to know the minimum payment. And then we're going to calculate our new payment. One two three four things. Let's say we did a really cool thing where we bought that piece of furniture. Let's say that we still owe five hundred dollars on a bad boy. The minimum payment every month and dollars and right now we're just going take stock we'll talk about that last comment. Let's say we also bought a refrigerator. Thirty days a miscarriage. Cost a thousand dollars we got a real good deal minimum payment fifty dollars So pay that thing off in what three years probably with interest rate. Then we have the credit card. We're fortunate we're better than the rest of America we owe three thousand on it. The statement says we owe fifty dollars every month we'll pay it off and seventeen years. You have a car loan we did pretty good. Actually have bad credit so they only gave us five thousand. But we owe two hundred dollars a month on it. But spring came and we had to buy a boat. Had to have the fishing boat. We bought it used seven thousand. We paid seven thousand for it we got it used Craigslist awesome the zero to fifty credit union gave us the loan. And then our favorite down here. Silly math. Student loan. Fifteen grand on him. One hundred one. C We just did we built what's going to be our debt snowball. We have our items the amount that we owe on them from smallest building up to the largest. We didn't care about interest rates if we care about interest rates which when you think of the lowest on this list. Yeah which one thing I mean the lowest interest rate. In loans student loans right now are one and a half two percent I think something like that they're not real big right but the balance gets big really fast right. It's also kind of ironic that when you look at the payment also gets bigger but the student loan payments probably actually one of the smaller ones of all why's that you panic forever it's like a pet you keep it around forever and we shred it. Yeah the interest rates low and you get at least ten to fifteen years to pay for it sometimes twenty. Yeah. You are asked to ask a doctor about student loans and this mess or a Maza doc in them or when she told me what would it cost her school I was. Well. All right so now let's suppose we sit down and we figure out what our goal is so what are we paying every month you probably can't see an ounce to love. Seven ten we're making payments right now seven hundred ten dollars a month and we owe how much. We're in debt thirty one thousand five hundred dollars total. We're paying seven hundred hours seven hundred ten dollars a month now let's suppose we decide we're going get serious on this we want to get this stuff gone you think it's going to gone in a month. It's pregnant take a while right it's going to take determination. Let's suppose though that we can come up with maybe you know we build a budget which will look at a minute and let's just say we can come up with maybe an extra hundred hundred ninety dollars a month to throw the throw towards this debt problem OK. So if we're going to take our minimum payment area add one hundred to it what are we going to pay on this guy we're going to pay two hundred. On you think it's going to take here in the furniture on pain two hundred dollars a month. But few months right he's gone now we feel good we've got want off the list check furniture loan done and done so now we have this two hundred dollars now we're going to move on we're going to take this full two hundred and we're going to move him towards paying off the appliance loan so how much are we going to have towards him now. Now we're going to pay to fifty on him once again take spiritedness. But we're four months four months so how deep are we now six months about six months and we've gotten rid of two of our debts are not a lot of dollars but who are not now. Well we'll take the two hundred and then we'll add to the fifty so be going to fifty N.M.. Well we took our one ninety Yeah you know sorry. We decided we could come up with an extra one line. One a plus ten gives us two hundred plus that because if you now. You're still Yup Yup because we've been making the minimum payments just fine on everything else right or live in the happy life of the Joneses and you know we can we can afford the minimum payments right but now we've described up with a little bit extra to get serious on it OK but one ninety nine we're going to look at a budget we're going to how we can come up with that one nine hundred S. a couple minutes so we've got the one ninety we took the pen our minimum payment now we're paying two hundred paid him off. He's gone he's gone but a check mark. I'm happy days. Now we're going to take their two hundred we're going to add him to our minimum payment of this now we're going to be paying to fifty and he's gone in a couple months. Now we're moving on to the credit card OK So we have our two fifty we're going to add what to it. So we're going to be now be paying three hundred a month. Probably a little bit less because we've made a little bit of a you know a small payment right right so it's a little bit less. Cross them off the fridges paid for the credit cards paid for of though what happened. The freezer broke down right in the middle of this whole process what are we going to do. Oh it's right we're going go get the emergency fund right where you get the thousand dollars cash or put aside so our debts are not going to grow right. We might have to slow down our one ninety to get something to help requests or emergency fund but we're not making our problem worse in the meantime right. Now we're out of the car. Five thousand we're paying three hundred we are paying two hundred so now what are we up to her pay on that car. Five hundred. Now there's an interesting thing with cars and boats now that we're down here and you can cheat a little bit in some of these areas too if you want to get out at even faster. Maybe you realize this car is just too expensive What can you do you can sell it. You could sell I mean you have you don't have any money it's about a new car but you could probably get a smaller low to get it through right so maybe you sell the car you pay off the five thousand you go to your credit union a Thousand Island to get you a reliable junker and if you don't work and so you could you could save four thousand right there but they are like oh it's five thousand not that much it's going to be paid off maybe we're actually. Towards the end of the wife alone anyways maybe maybe it makes more sense than just to keep it you know but maybe look at the bone you're like men I use that thing maybe point two times a year. And tell my feelings towards both Unser that not everybody is the same I think boat owners you say there's the happiest day of owning a boat is the day you sell it. So maybe you decide you know let's just get rid of the boat but on Craigslist sell it you want to get out of debt maybe you're like a fisherman term it may be that you're living on them when they need to keep it you know but for most of us this probably for fun right so Anyways let's say we're going to keep the boat OK. So we take our for our cars now paid off the boat to fifty a month what are we up to now paying on the boat. Seven fifty a month right but it's paid off for probably thirty six months and the horde your right. Now we go after who. Sail in May So she's won fifty we've got her seven fifty what are we up to now. Nine hundred a month. They are while you're at a sale. But it is possible now right you mention how much less time is going to take to get rid of that student loan at nine hundred a month versus only one fifty a month we're not talking fifteen years anymore we're talking like you need to and I that but here's the real fun part what happens when it's all paid off. How much you have. You have nine hundred dollars a month that you can use for something else savings giving in so we have our stewardship team. Absolutely yeah. Yes. That's a good question so if you don't have room in the budget for something the question is what happens when the freezer does die and you need to get the new freezer in to get a fix or something like that well we don't want to warn the debt we don't want to buy a new appliance and we don't want to mourn the credit card so what do we do we have the emergency fund let's say we get it for four hundred it's a small chest freezer or something like that you know you can get that at Menards or Home Depot for four hundred bucks so maybe you need to stop the whole extra one ninety for two months until you can replenish it get yourself back up to that thousand dollar mergence of fun money so make sense but you still have the full benefit of were else you were rarity at in the chart. Well. How reliable is Craigslist. Yes my wife she sells all sorts of stuff on her list and we buy stuff and Greg. You do have to be careful though I sold the car in Craigslist a guy at oh we sold our many van and all broke citing people right solar minivan and Craigslist and I had a friend that did a lot of Craigslist and he basically says you don't take cashiers checks you don't take personal checks you only take cash. Only cash. Cash or sex a lot of times are fraudulent now on Craigslist. You know we actually had a friend that just just like a week and a half ago tried to sell something on Craigslist. They're selling a pool table basement and you know they got someone to hold my Craigslist and they said you know absolutely we're going to send a moving company we want to come pick it up from you know we're going to come you know we're hearing a cashier's check we're going to sanity in the mail. But they got the cashiers checked Unfortunately they decided to go to the bank well the bank didn't even exist so when you start going in the bank you're like where is this bank yet wasn't real. So. Oh yeah you can I mean cashiers checks are just they just look fancy you know they've got some purple and blue and yellow next minimum or whatever but what times are yeah they can easily be made fraudulent. You so what on purpose well now. OK. Well yeah. You. Can still take the go. That's true you know a lot of a lot I've also heard of other people what they'll do if they're going to sell something expensive on craigslist is they'll actually meet at the buyer's bank to make the transaction to make the trade and then I do as you walk in the other you go up to a teller they make their withdrawal they give you the money or they can give a cashier's check your the bank you know it's the debt and then you can make the transition in the park and not knowing when. Yeah you know someone serious you know you heard Mr going to get a deal so most people are most people are happy to do good. Yes. Where transfers are are their immediate Yup So if you go to your bank and you say I want to make a wire transfer once the money once they click the button and it goes it's done you can you know back it's final. You know running a finance department where I work you know we make wire transfers every day and it's always something to be concerned about and you know I probably get at least two right two to three fraudulent e-mails a day of somebody sending me a fake invoice somebody saying you know send the money right away someone got a whole of the very similar email address to the president of our company in I got an e-mail from and says Jeff are you in the office today I need a wire transfer sent for thirty thousand like right now. But you can sometimes tell in the language of some of these things because this is not a company president talks are one thing he is never you know signing any e-mail to me sincerely Thomas like you goes but you know so you get you get to listen to the tone sometimes of an e-mail and it can give you a clue as to whether it's fake or not and I just push delete like you know open over wasn't for real. Lot of misspellings Yes sorry. Yes. Yes yes. Yes and I'm a let you add to it too and I get to it. We have a resident Dave Ramsey expert with us. All right so let's keep going on here for I get off on Craigslist changing right. So let's keep going here. So we need to figure out how much we actually have in order to pay off that right so we need to figure out how much money we have coming in. We need to figure out how much money we have going out so that we know if we have anything to work with right and we might need to adjust our ins in our. Out in order to make it work so what we're going to try and come up with right now in our situation is we're going to try and come up with where can we find this extra one ninety OK in maybe that non the number of more than one hundred maybe you can hear tonight in three minutes or a new five ninety the bigger you can get that number the faster it can go. In minus out equals either a surplus or deficit all the cool accounting words love it when I can use an accounting brains. So where does the money come from where does our money come from wages right we go to work we trade our Time for Dollars. Some of us have interest dividends capital gains brokerage accounts. Rents some of us have rental properties or a house that we used to live in that we rent out it's income to us right royalties as suspect not many of us have royalties but what if you read a book and you know the publisher keeps science science selling it forever you're going to be getting what in the mail royalty checks. Social Security budget some of us the room get Social Security checks right pensions and I bet some of us are getting pensions Sadly though the number of us that will be getting pensions in the future is going on. A new A T S and it does everybody want to new it is. This farm out annuities are very similar to pensions basically what you can do is you if you have a lump of money you can turn it over to an insurance company or not for profit you know what they'll do is they'll pay you X. amount of dollars or set amount time usually it's the rest of your life or you and your spouse's life and income. Lot of times and lawsuit settlements you end up with a new type of. Deposit somewhere to get someone. Where does the money go so this is a really cool chair and I know it's law and everybody can't see a real great but. This was actually published by the Department of Labor and it's actually has the numbers that are on it are not just estimates they're actually what people are traditionally spending nowadays so you can see our biggest category over here is in housing almost seventeen thousand dollars a year in housing that's about just like we said yesterday about thirty four and a half percent. Of our expenses goes to housing huge number transportation down here fifteen percent health care entertainment insurance everything else food groceries we spend money on all sorts of things in order to live right. One thing I don't like about this chart is it doesn't have ties and offerings but as the government publishing remember my disappoint. Oh. All right absolutely already get a raise right or if we change jobs that can increase income right so let's talk about budgeting for a second. Right. Current in some you know sometimes it's important for us to think about those big things that are coming you now the average life of a furnace is fifteen years so if you go downstairs and look at your furnace tonight. You now clear the dust off the installer tag and you find out that the thing was put in in one thousand nine hundred five. It's still working which are you doing now should probably be thinking about saving up to replace it. For a. While. Just. To the next single next and the next. Yeah absolutely Well let's go ahead let's talk about budgeting here. What's the definition of budgeting it's an estimate of end come in expenditure for a set period of time so can you make a budget for a week. Two weeks. Paycheck to paycheck monthly semiannually annually. Now something actually. You can you can set a budget for whatever you want so I'll tell you personally what I like to do is I like to make an annual budget figure out what I'm going to make in the year and then what everything's going to cost for your I like to see the big number of what something is going to cost for year what am I going to spend. My house and here I like to know the big No I don't want to just know the monthly number as a kind of keeps it in perspective when you're like wow you know four thousand dollars that he my house me when I keep it at seventy instead of seventy two. So you can help guide your behavior some and then you can take those and you can just divide by twelve and get down to what you need to put aside every month. Now. So we can keep our eyes on different things with the different bills that we have to make sure that we're still getting a fair shake rate. Nice thing about utilities a lot of times the picture on a budget plan so if you want to you know the look at the say it looks like you spent X. last year we're going to take you this year and we're just going to pay the same amount every single month so you don't have to worry about when you get to where the bill goes to seven hundred in the summer it's only seventy but let's just pay the whole thing system helps with budgeting. We. Need. A whole lot less right yeah don't you a star on the garbage bill and it really I mean literally you're literally throwing your money away right now. When. Did you still get a statement every month OK. So she's saying is that even when you get on a budget plan with the utility company sometimes you might pay the same amount but if it's off or something's wrong in your house you might actually have more going on than what you actually can charge so you get to the end of the twelve month period they do it they send you a catch a bill we're either zero or you can get a check if they actually owe us so like I told you yesterday I'm the treasurer for the Lansing church and I operate. On. A consistent bill so the way I was at the same amount right now are sent on a credit balance but I get the statement every month and I still look at to make sure yet still credit still a credit going down getting used so in this case that's what they're saying. Yeah in that and I don't happen to so if you have a really big credit balance rather than sending a check or to say all right no payment this month. Budgeting is a tool that helps us tell the money it helps us tell where the money comes from and also helps us tell the money where to go and it's a critical component of any meaningful financial success can't really do it out knowing what you have and where it's going. So where you start with a budget where you don't make a first or a first draft and I have here for us a handout here we can see if I can pass a couple eased. Past the South Korea. And yen sorry limitations of free seminar this is a free budget tool that you can find out on the web and I believe the government publishes it again. And it can help us good ole paper and pencil. Everybody gets one. No fill this out together will percent we'll pretend that we're all the same family OK but you'll have the till you can take it with him put your own numbers on it later if you like. Consumer die go. Is everybody so with the debt snowball can I take this off the board. So let's get started what do we have on this budget what's the first WHAT'S IT want to know at the very top last know the period that you're looking at right let's what's next month it was just write down July two thousand and sixteen right. Now wants to know what our income is once know what our paycheck is so yesterday we looked at what the median income was in America and we found out that the median income in America is. Well if he took a year and. We put that out. So divide that over twelve months that means we have an income of. About four thousand three hundred thirty three dollars a month that's gross salary there's a difference the difference here is why it's if you don't like the government before you're really going on now I can hear a minute. There's this wonderful thing called what it says and we have federal. And the state of Michigan we have state taxes. And then we have what's called PICA. Thank you but let's assume that you are in the you make fifty two thousand dollars year and you're married let's assume that you are just in the fifteen percent tax bracket OK for federal. Little oversimplified I know. But fifteen percent of our gross is going to go to federal taxes. In the state of Michigan four point two five percent. Is going to go to the governor. In FICA this is where you get your Medicare Medicaid and also your Social Security it's a combined rate of seven point six five percent. So twenty six point nine percent of everything you make. Those the government is why people tell you the first three the four months of the year that you have your job you don't even make anything at all goes the government. And it does depend on your tax bracket. So we're assuming we're at fifty two thousand probably keep us close to the fifteen percent. Tax bracket in America right now thirty nine once it. Hit So if we take that if we take out our taxes twenty six point nine percent a four three three works out to one thousand one hundred sixty five dollars a month. In Texas meaning we have three thousand one hundred and sixty eight hours to work with. So that's the number we can write on our sheet paychecks three thousand one hundred sixty eight dollars. Now because we're doing a stewardship seminar and it's not on the free sheet I want you to write write write here this my expenses this month I want you to write tithes and offerings. And offerings and just hand write it in or here. Would type be honest. Or. Order. Who would it be. Are we opening a debate on how to how we type. We're going to tithe I'm gross in our example here OK. So we're going to pay four hundred thirty three dollars for tide. Now we're not rich or don't make a lot of money we're also very heavily in debt what is important that we still give offering right. So we're going to get off the hook easy today and you can if you know ours and. So we'll have a grand total what's it's like already three or. Four hundred eighty three dollars so we can write that down and she has an offerings for eighty three rent or mortgage mortgage rates are low right now rents very favorable let's say five fifty. So let's write down five hundred fifty dollars for her our mortgage. Let's say our utilities are favorable hundred dollars a month that's twelve hundred dollars a year. Very possible he live in an apartment by the way Internet cable and phones I have scoured I have scoured I have scoured personally and I am convinced that the best I can get. My cable bills forty dollars a month we're going to use forty dollars a month. Is it for our for Internet novices Yeah this is just for cable at your home this isn't even cell phones room. But you could get a Metro P.C.S. contract fairly inexpensive. I think the average cell phone bill in America is over two hundred dollars a month. Lot of times some of the smartest thing to do a cell phone bills as you team it up you get other member other people on your plan so you can share that's what we do. So anyways cable internet Comcast I can't get any cheaper than forty dollars a month they tell me I can get it cheaper if I get cable T.V. that I'm opposed so forty dollars A better to get groceries and household utilities let's say four hundred right now and four hundred there. Meals out two hundred or going to see why we can't do much more this is a. Let's say gas for our cars two hundred dollars a month. Car Maintenance fifty dollars a month because we're going to be a little proactive here right when all things are going to break down. I want you to write a thing at the very bottom here what you write loans. You know what you're right seven hundred ten dollars. OK That was our minimum payments that we had to make in our debt snowball right. Now paying more for our loans and we are for paying for it. Flip the page over. Just forty dollars This is just an example but now you know it's to say no for now we're that we're trying to keep it simple it's not always going to be the right numbers I know. Let's say our health expenses eighty five dollars. Will Soon we have really great health insurance at work which I'm sure we all do right. Clothing and shoes were really good at thrift you know scouring the thrift shops and. Getting the great deals at the grad sale so let's put down eighty dollars a month. When you think about this right eighty dollars isn't very much but when you translate that to a year that's a thousand dollars. So all said and done here if my math was good we have income of three thousand one sixty eight. And we have expenditures of two thousand nine hundred seventy eight hours. How much does it leave left over. Hundred ninety. So how much do we have to pay extra towards our debts no ball one hundred ninety. See in order to make a good budget though we have to stop and we have to figure out where where our bills are coming from so great places to figure these things out is credit card statements bank statements bills that you get in the mail you know your credit card statements in your even your debit even your bank statement will tell you who you're buying stuff from right. Look at a year look at two years look at three years and you've got your whole year figured out you don't need to look at twelve years worth twelve months worth. Plan for your next month's expenses based on what you learn. This so the scenario you just did worked out really good because there is something left over what are you going to do when there's nothing left over what happens when the numbers negative one ninety. You know job. Yeah you are you know we just made a really really simple on it. What you want to hold. You should check in with your spouse big disclaimer here my wife made me put this in last night. Before making the list final this isn't Moses bringing it down from the mountain stone you have to make sure that that it's flexible with your spouse. Oh yeah make sure you know there's lots of ways to look you know in. Bank statement your hair card statements are going to review a lot to you about your spending habits these that you're saying that you didn't know about. Yeah yeah yeah a lot of times you get free checking accounts relieve if you just have direct deposit go into it at least once a month whether it be your Social Security check or your paycheck this once a month you get a free checking. Example here of our budget that we just took a look at together. What if I have your regular income. But if you have your regular income so what if you're self-employed or you live on commissions or I work we have one hundred eighty sales reps that they all met they all make their living on commissions some months they do really well in some Once they don't do really well. So what are these guys do or what if you're self-employed if you're self-employed business of a self-employed. Your FICA tax everyone of us as an employer they're also paying seven point six five percent just because you're self-employed doesn't mean you don't have to pay your seven point six five plus another seven point six fifteen point three percent to five if you're self-employed up to one hundred twenty thousand and one. Income can be unpredictable so you have to make a plan you have to know how much money you need each month in order to cover the necessities OK you need to list the items in the budget in order of importance What's the most important thing in our budget that we could possibly come up with. Has an operating yet they're very important food. Shelter I mean think about the four walls we've got to make sure we're dry that we're fed. That that that that the media Runnels when the money and when the money is received you pay the items in order listed importance and. Get to the regular budget first so that you figure out how you're spending and then you can start ranking OK. And when you get the money that comes in your pay in order. Self employment tips is one of the things I always recommend people if you're self-employed is it just open up a separate checking account. Treat it like a business nice and simple that way keep your business type stuff separate from your personal stuff and. Pay yourself employment taxes from the striking count governmental mandate that you read that you pay on quarterly at least fifteen point three percent you also have to pay your estimated federal and state taxes as well. Hey yourself a paycheck from this account stretch yourself check something left over right deposit in your regular check account nowadays you might you have the same financial institutions you just transfer. Record keeping is much easier if you're in your account you your taxes will cost less to have prepared and you have good records on your long electronic budgeting so paper and pencil helps us understand the budget process but electronic budgeting in today's age probably a bit more realistic right electronic spreadsheet can save us time and or reduce errors Microsoft Excel never heard of Microsoft Excel is pretty inexpensive you know works really well if you don't want to pay anything though you can go up to Google who has their own free version of a spreadsheet you know thing going as for Google everything's free now with a model. And sound on the cloud you can access it from any computer in the world. Who would arrive they have their own word for Microsoft Word it looks just like word in Excel but it's not. Budgeting tools obviously like we just said paper and pencil. The envelope system was a personal favor as anyone ever heard of the envelope system. My wife and I have been out of debt for years and years and years and years I don't set to brag I'm just one I want to be encouraging for everybody here that might not be. My wife still carries around an envelope package with things so she can buy groceries so she can buy dog food so. Just you know six or seven different blokes of different things it makes it easy because there's no record keeping Have you when you have cash and when you're standing in Myers and you're feeling in the twenty's in your like this isn't good at a cash you either put something back if you want to stand budget or you realize when you take it from another envelope if you want to get those loans so horses you to stand budget. And we have money left over you know you can reallocate your envelopes right up and seven stone but you know how much you have and you know when you're getting close to Spain the budget when you can't physically hay for it because you don't have enough money right. Now to this day she still cares that around and she wouldn't want to do it any other way you know you will I don't mean this way if. If I don't spend the four hundred on groceries you want now. Yeah you know we know your debit card you can see. It's wipes. Websites and smartphone apps Mint dot com. And every dollar dot com This is a new site that they have Ramsey just created as part of his free platform I have not looked at it yet I have looked at Mint and basically what they do is you you you set up an account I log in it's on the cloud and you type in your you can put in your bank account credentials if you have a credit card you can put in your credit card credentials type in your password and it will pull in all your transactions for you and you kind of helps you organize things you can see how you're spending it and these are totally free. And you know they're really helpful a lot of times you get him on your phone as an app so that if you're you want to open an us see what you spend or what's in your bank account so maybe you're like staying in there like would to have enough to buy it you can check and see so you don't just swipe or write a check and then bounce a check and pain other thirty five dollars for whatever you're buying. They're going to want your logon credentials though for to these to your online banking platform you know. If you don't think you know OK. OK it's probably pretty small. Yeah I think. Thank you. OK. OK. You. Know Social Security number. And their DOS Quicken well. Yeah personal. That's what I like to use to quicken I am kind of a clown potentiality sort of you know I like I don't like having things out in the cloud. This is about as close as I like to get one local computer that has my stuff on it and I still type in my password every time when I want to go out find all my information and just don't like someone having it you know so quick and I think it cost probably about sixty bucks you can download it or you can get a CD-ROM a lot on your computer and. Were truly good really does it last three years you get three or subscription for auto downloads from your bank account. Now you last so. You know so. That's something. I know. It's going to. OK. All. You. Want there is a plethora of free things out there just a plethora if you just go to Google and you type in you know free budget template booming all sorts of things I had one were not time doesn't show it to you but we can work afterwards if you're still interested. So we can we like it quick and again make sure you do a reality check with your spouse so the both of you can agree. Hire a professional with need it. We live in a world where we're afraid to pay for you know want to pay for things sometimes but sometimes we need to pay for things to get our problems taken care. Back to debt pay off again make sure list all those debts smallest to largest build the budget and include the debt payments. Pay off the small step first and work up to the larger debts adjust the budget as debts are paid off and cash flow increases and seek ways to increase income if needed or bring in the debt snowball concept back around into the budget in concept. So how can we increase income real quick will run through a couple ideas here you get extra hours where shift right start with worry or do yet it's easiest way to pick up more income the second job if you need to. Get a part time job and if you're not working at all maybe just a part time job will help speed up a debt snowball have a garage sale so I tell you this two weeks ago my wife had a grad so we have all this junk in here it's not fair but. Some of you in the room know my wife and I know it can get back to her but it's OK. She cleared five hundred dollars at a garage sale. You mention five hundred dollars an hour that's novel I would've taken care of the furniture alone like that. Consignment shop sales and wife made me put this one on here because she's a consignment shop so a lot of places like I do is take and drop it off and they have an electronic app where you can see how much they've sold and when you want to go pick up the check. E.-Bay I've sold stuff on e Bay before stuff sitting around your house you don't need anymore maybe stuff you find you can sell even blogging there are people that make a whole career off blogging Nowadays people making six figures blogging mind boggling yet to be a really good writer I. Teach lessons maybe you know one instrument maybe not tutoring there's so many different ways that you can make extra. Ways that you can cut costs so you can ink if you're increasing here you're cutting costs here spread that you can cut up your credit cards to stop adding to the problem first and foremost. You can buy used if possible. A lot of goodwill stickers in our house. Borrow when it's appropriate now OK with borrowing is make sure you're appreciative make a meal plan stick to it. You know you've got this meal plan that the thing that's on a refrigerator every single day and my wife has money you know Sunday Monday Tuesday Wednesday all listed out and that's what we do. Netflix Amazon Hulu those things are cheap if they do cost money we know we don't you know our lives Anyways that's a different sermon. Cable television. Cable cost one hundred forty dollars a month or something like that last I heard from people. In tennis free. Yeah cell phones. Are so expensive so expensive actually nowadays if you want to get a cell phone that's not a smart phone they have to go get a special case in the back and showed. You. Memberships downsize your car your boat are these houses use coupons. Shop insurance power policy regularly it least every few years you need to take a look to make sure that your rates aren't just out of control brainstorm with your spouse my is my final you can get rid of something you don't even need. Yeah lots of others real quickly here two slides left three to six months of expenses this is our step three of our baby steps now so after we've cleared out the debts we've got ourselves on track we need to make sure we go from a thousand dollars a month up to that three six months of expenses in savings building a full emergency fund determine if that is expenses it's not income for three to six months so it's not as big as you think it is. Most families it's around ten to fifteen thousand dollars. I would do it when you get ten to fifteen or in the bank lose your job it's not as big of a deal you don't have to take the first job that comes actually that pays minimum wage you can wait a little while the find it. Helps protect against the big financial storms a leaky roof a job loss major medical problem. I will throw this in here this is where will differentiate from Dave Ramsey for some people that like to get a little bit a yield this is a boggle heads concept. Is guys are real real number nerds. Who take their emergency fund strategies really for most everybody keeping it in just a savings account is simple enough but sometimes what these guys like to do is act with your an emergency funds and I'm throwing this out there just for anybody that wants something a little different than just the basics they'll take their first one to three months the put it in an online savings account Ally Bank synchrony bank G.M.C. you get one percent on that right now so I personally use synchrony it's spun off by G. Capital two years ago and yet like one point zero five percent. Fully f.d.i.c insured it online transfer money back and forth you need takes a couple days to get it. These guys will take the next four to six months and they'll put it in a laggard CD so you have a one year to your three or four year five year CD plan so that you're always getting the best rates when you when they renew you just put it into another five year we can talk about that more questions about it. And then we'll take the next seven nine months and I'll put in I bonds you open a Treasury Direct dot gov account you can buy treasury debt directly no fees you can get i bonds at one point six five percent and you don't pay any taxes until you sell it no taxes at all if you use it for education. And the rate in just with inflation so inflation goes up to twenty percent so if you're buying. That's it that's the end a minute over I apologize I was trying to leave time at the end and it didn't work we have good questions though. This this this one OK. All right picture picture snap. And I go back one more here they go. All right can we have a word of prayer quickly and then if anyone has questions I'm happy to stay after and we can ask them in person and let's go ahead have a word of prayer the Germany father Lori thank you so much for this day and thank you so much for all of us are willing to learn more about financial resources how we can be good stewards ward and I pray that you will help us each and every day to to have that stewardship mindset. Always going about your business to the neutral bus as if we are one prison Jesus' name. This media was brought to you by audio Foose a website dedicated to spreading God's word through free sermon audio and much more if you would like to know more about audio verse or if you would like to listen to more sermons leave a Visit W W W audio first or.

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