Money Management

July 10 - 12,2008

Elder Angelo D. Williams, MBA

Outline Current Economic Background The Affect on the Church Our Financial Responsibility

The need for discipline Understand our Income and Expenses Develop a Spending Plan

Eliminate the use of Credit God’s Giving Plan Other Major Financial Goals

Debt elimination Savings and Investment

Our Current Economic Environment

Oil prices are through the roof Gas prices are approaching $4.50

per gallon Home Foreclosures are at an all

time high Unemployment rate is its highest

since the mid-80’s Food prices are on the rise

Oil Prices Soar

What’s the Effect

Shock Despair Desperation Unbelief Anxiety Helplessness

Is the Church Immune? Absolutely Not Some of you are experiencing these

emotions You have prayed

You have exercised your faith You have at times given more expecting

more in return Yet, you are still in Financial Trouble Why hasn’t God come to your rescue?

Our Responsibility God entrusts certain resources to us

and in return expects good stewardship: Matthew 25:15 - And unto one he gave 5 talents, to

another 2, and to another 1; to every man according to his several ability…..

Luke 16:10-11 "He that is faithful in that which is least is faithful also in much; and he that is unjust in the least is unjust also in much. If therefore you have not been faithful in the unrighteous mammon, who will commit to your trust the true riches."

God expects us to be faithful in how we manage our money

What are we to do? You can choose to do nothing

Accept the consequences Pray for a miracle

Miracles do happen and God is able to do miraculous things

Decide to be a better steward This will be our focus for the next

several minutes

Managing Finances In the U.S., debt to income level has risen

from .6 to 1.1 between 1980 and 2006. This means as a whole, we are spending

more than we make Average savings have decreased from 9

percent in 1980 to only 1.7 percent in 2006 We can’t afford to save since we have so

much debt

What Happens if We Don’t Get it Right?

Marriage Failure A source of major conflict

Bankruptcy (Inability to repay what is owed) Increased by 71% from 1992 to 2003

Higher Interest rates The lower your credit rating, the higher

your interest rate

What Happens if We Don’t Get it Right?

Inability to help others Children Parents Saints and friends

Inability to retire People today are working longer

Unexpected expenses Can’t pay – no savings, no plan

Benefits of Proper Money Management Giving more to God’s work Saving for retirement Paying for unexpected expenses

without incurring debt Peace of mind Helping others who may have a need Freedom to make career changes Lower interest rates on debt

Today, We Have a lot of Stuff

Clothing

Cars Pocket books

Shoes

Weight loss equipment

Computers

Video games

Tools

And We Want More, and More and More

Enough is Enough

We have got to gain control of our spending

It is called discipline Discipline is a derivative of the word

“disciple” Disciples of Christ must discipline

themselves to be more like Christ This is where the hard work begins!

How to get started?

Step one Understand how much money is

coming in and how much is going out Step two

Stop Spending Step three

Develop a spending plan

Step One – What’s Coming In? Write down all income

Jobs Including odd jobs

Retirement Social Security Child Support Offerings

Include only net income after taxes are deducted

Step One – What’s Going Out? Track spending for one or two months

Write down everything that you spend money on Include the obvious expenditures

Mortgage/Rent Car/lease payment Utilities Insurance Food Gas

Include other expenses as well Lunch Offerings (including all $1 offerings) Gifts Giveaways

Spending Tracker

Spending Tracker

Tithe Mortgage/Rent Car Utilities Offering Food Insurance Gifts Giveaways Lunch/Dinner Snacks Phone/Cell Cable

Day 1 50.00$ 10.00$ 2.00$

Day 2 5.00$ 6.00$ 0.50$

Day 3 2.00$ 3.00$ 1.00$

Day 4 4.00$ 0.75$

Day 5 5.00$

Day 6 125.00$ 150.00$ 4.00$

Day 7 75.00$ 5.00$

Day 8 500.00$ 200.00$ 150.00$ 125.00$ 5.00$ 0.75$ 100.00$ 50

Day 9 10.00$ 5.00$ 5.00$ 0.50$

Day 10

Totals 75.00$ 500.00$ 375.00$ 150.00$ 7.00$ 150.00$ 125.00$ 10.00$ 10.00$ 38.00$ 9.50$ 100.00$ 50.00$ 1,599.50$

Step Two – Stop Spending Start with the easiest things you can stop

Lunch - $60.00 per month Instead of buying lunch, take a lunch from home

Expected savings - $30.00 per month Phone/cell phone

Eliminate one of the phone services Expected savings - $40.00 per month

Snacks Buy the snacks at the grocery store

Expected savings - $10.00 per month

These ideas alone have netted a total savings of $80.00 per month – enough to pay a monthly bill!

Step Two – Stop Spending Check your spending tracker and

determine what additional items you might be able to cut back Remember, the only thing that you can’t cut

back on is your tithing. Everything else can be cut

Car payments Credit Cards Insurance Even Offerings

Step Two – Stop Spending We can’t talk about stop spending

without mentioning “Credit Cards” and Credit When a family is in financial distress,

credit is used more and more just to stay afloat.

Credit is used to pay for: Gas Food Routine bills

Step Two – Stop Spending

Fifty-one percent of the U.S. population has at least two credit cards (Source: Center for Media Research).

This means most of you have at least two credit cards This includes department store cards

like Sears, Belk, J.C. Penney, etc.

Step Two – Stop Spending Average credit card interest rate is 13.42%

(Source: Bankrate.com) Average balance is $2,200 (Source:

Creditcards.com) Min. payment = $50.00/mo Payoff time = 61 months Total interest paid = $845.00

Borrowing $2,200 can cost you nearly $900.00

Bad Credit Costs

Credit Rating Interest Rates Annual feeExcellent 7.9 - 14.99 noneGood 8.5 - 16.9 noneFair 14.9 - 19.8 $20.00Bad 8.9 - 19.9 $50.00

Step Three – Spending Plan

Now that we know what’s coming in and what’s going out, it’s time to develop the means to manage the two The most common plan most people

are accustomed to is a budget We will not be discussing a budget per

se, just a means to provide routine management of your finances

Step Three – Spending Plan We can use the results from the Spend

Tracker: Include:

Tithing Offering (no set amount) Mortgage/Rent Utilities Food Car Insurance (Car, Homeowner’s/Renter’s) Repairs (home, car)

Step Three – Spending Plan

Exclude: Medical Insurance Life Insurance Vacations Cell Phone Eating Out Cable Hair Clothing Memberships Subscriptions

Step Three – Spending Plan Now, sum up all of the “includes” Subtract this amount from your net income

(What’s coming in) This is your excess The first thing to include or set aside from your

excess are emergency funds Start a savings fund that will cover unexpected repairs Start a savings fund to cover Christmas gifts

You should now prioritize the “excludes” Rank them by importance and/or costs Include all of your top priority items until you have

consumed your excess or until all of the items have been included

Prioritize Remaining items Include:

Tithing Offering Mortgage/Rent Utilities Food Car Insurance (Car,

Homeowner’s/Renter’s)

Savings for unexpected expenses

Christmas savings

Exclude: Medical Insurance Life Insurance Vacations Cell Phone Eating Out Cable Hair Clothing Memberships Subscriptions

2

1

3

45

6

Spending Plan – Final Words The plan should be reviewed at least

twice per year If you have little or no excess after

moving the higher priorities to the “Include” side, you should review more often (once per month or once every other month)

Resist the temptation to put anything on a credit card If you can’t afford it – don’t buy it!!!!! This

includes a one night stay at the Council – if you don’t have it don’t put it on credit.

Other Major Goals

Becoming Debt Free Giving More to God Savings and Investment Adequate Insurance Coverage

Becoming Debt Free

Becoming Debt Free is a worthy goal

We’ve made a good start with this plan – the next phase is total debt eradication

It will require even more discipline This is the second phase of the

financial freedom journey

Give to God This should be our primary goal. As we

free up wasted money, we should prayerfully seek to increase our giving back to God.

We are blessed when we give to God’s work Malachi 3:10 -12 …. And all Nations Shall Call You

Blessed…... It’s your giving attitude that moves God (2

Corinthians 9:7….God loveth a cheerful giver) It’s not easy being cheerful when you are

overwhelmed with debt

God’s Giving Plan We should give out of our excess, not out

of our necessity II Corinthians 8:13-15:

13 For I mean not that other men be eased, and ye burdened:   14 But by an equality, that now at this time your abundance may be a supply for their want, that their abundance also may be a supply for your want: that there may be equality:   15 As it is written, He that had gathered much had nothing over; and he that had gathered little had no lack.

It does us no good when we give to others or to certain causes, we ourselves need others to give to us.

Savings Buffer

Develop a Buffer What happens if I lose my job? How many months do I think I need

to get another job? We need to determine what our

monthly living expenses are, and then save up enough to cover us for at least three months (some financial planners want you to have a 6 months buffer).

Save for retirement

After our obligations to others, we should consider whether and how we want to make efforts for saving for retirement. Consider the ant who gathers food in the

Summer time in preparation for the coming Winter

No man knows the day nor the hour when the Son of Man will appear. We must therefore work while it is day, for when night comes, no man can work…….

Insurance Insurance is there in the event things don’t go

as we expect Accidents – creating disability Pre-mature death

Pay for funerals Ease the transition for the survivors

Unfortunately, we don’t have time to do justice to this subject

I’ll only mention we need to find a way to obtain as much insurance as we can comfortably afford

Buy Term Insurance – rather than Whole Life. Stay away from burial insurance – it is too expensive and only provides a limited benefit

Obtain some level of medical insurance

Summary We need Discipline Develop a Spending Plan Stop using credit

Pay cash Give out of your excess, not your

necessity Debt is the enemy

Get out of Debt Start a Savings and Investment Plan