The Money Stuff—Round Two for TeamMates McLean Bible Church January 2011 By Bud Moeller

1. The Money Stuff—Round Two for TeamMates McLean Bible Church January 2011 By Bud Moeller

2. Top 10 New Year’s Resolutions • Lose weight/get fit • Pay off debt • Save more money • Quit smoking/drinking • Get a better job/education • Enjoy life more/take a trip or vacation • Reduce stress • Volunteer to help others • Learn something new • Get organized

3. The Usual Problems • More month than money • If I only made 10% more money . . . • I’ll use this new credit card to pay off this other credit card • I’ll be dead before I can afford to retire • How can I be overdrawn, I still have checks left! • The problem lies in reconciling my gross habits with my net income

4. The New Problems • If I can keep making this money . . . • Where did all those credit card offers go? • What retirement account? Oh, that $64,000? • How can I be overdrawn . . . oh those extra banking fees for . . . • But gas and food are down, why can’t I make ends meet now?

5. The Real Problem--Competing Masters Matthew 6:24 (NLT): “No one can serve two masters. For you will hate one and love the other, or be devoted to one and despise the other. You cannot serve both God and money.

6. The “Average American” Doesn’t Do Very Well When It Comes to $$ • 50% of households with head = 55-64 years old carry a credit card debt balance • Low savings rate vs. rest of world => no cushion when recession came • People have dipped into 401(k) and other retirement assets • 43% spend more than they earn • Greed => Housing Crisis => Foreclosures and bankruptcies • Money #1 cause of marital conflict • Average family credit card debt $16,000 (of those who carry a balance)

7. Giving Saving Debt Payment Spending Earning The World’s Priorities

8. The Steward’s Mindset • God created everything. • God owns everything. • We are merely trustees. 1 Chronicles 29:11-12 “Everything in the heavens and earth is yours, O Lord, and this is your kingdom. We adore you as being in control of everything. Riches and honor come from you alone, and you are the Ruler of all mankind; your hand controls power and might, and it is at your discretion that men are made great and given strength.”

9. Spending Debt Saving Giving Earning God’s Priorities--Reverse of the World’s!

10. What Issues Do We Face as A Teammates Generation? • Giving—what should we be giving? • Releasing our young financially • Saving wisely (vs. hoarding) • Providing for our future • Wills/Trusts • Others that you may care to raise?

11. Giving So What Questions Should We Be Asking Ourselves? • Do I have the right attitude?—2 Cor 9: 6-7, Prov 11:24, Luke 6:38, 1 Tim 6:10 and 17 • What do I care about?—Luke 12:34 “For where your treasure is, there your heart will be also.” • To whom should I give?—Galatians 6:6, Matthew 25: 35-40 • What does God really want from us? Does He need our money?

12. What About Giving To Our Kids? • We’re given a special trust as stewards/managers of all—but especially our children • We’re to teach, encourage, guide • But we’re not responsible for their decisions—just for teaching • Great motives but bad outcomes • Allow them to fail—God may be teaching • Don’t help if mismanagement exists

13. Help Them With Buying A House? • Where are you re your home debt? • Are you trying to control? • Son-in-law may feel inadequate • May create a dependency • If help with down payment, it must be a gift, not a loan • And how many young people wish they hadn’t bought recently?

14. Saving What Questions Should We Be Asking Re Saving? • Why should I save?—Prov 21:20 and 6:6-8; • How much should I save?—Matt 25:14-29, 1 Timothy 6:9-10, Luke 12:15-21, Prov 23:4-5, Phil 4:11-13 • What should I save for my kids?—Prov 13:22, 1 Tim 5:8 • When should I give it to them?—Prov 20:21

15. Save For . . . • Avoiding debt on major purchases • Reducing/eliminating debt • Your future (retirement, whatever that means) • Your children’s future • Being able to bless others generously

16. Let’s Talk About Your Future • Over 10,000 baby boomers/day turning 65; continuing for next 19 years • Only 15% have a pension that guarantees a steady payout (old system) • Typical 401(k) balance is $150,000 • Full Social Security is at age 66 • 2/3 age 55-64 still have a mortgage • 22% owe more than their house value • Health care expenses are soaring

17. Why Is Retirement So Hard To Do? • Remember the “work to 65, die at 68” days? No longer. Need 30 years of money, not 3. • Do you need more or less income at retirement? Good discussion to have. • If you want to make sure you don’t outlive your money, take your retirement nest egg, multiply by 4%, and that’s what you’ll live on forever (with inflation) • So to have $80,000/yr takes $2 Million

18. Investing • Yes, have an emergency cash fund (3-6 months of expenses) • Otherwise, maximize retirement accounts vs. after tax savings • Example: Prefer $18,400 or $13,500? • Have to beat inflation and accumulate • Simple rule—120 minus your age => %investment in equities, balance in fixed income (not cash or money market) • U.S. isn’t the shiniest pot these days

19. Who Should Help You? • None of us have time to focus on money stuff every day—except those who do it for a living • Finding a broker/financial advisor—use a referral from a friend • The more you throw in the pot for them to manage, the better person you’ll get and more attention/better solution • Retirement (all), after-tax investments, savings, maybe even mortgage/loans

20. Annuities • Sound good on the surface (you get an annual payment until you die) • Some protect the downside risk • But they’re usually very conservative so don’t yield much • And the fees are very high • So they’re typically not very attractive • Might be better off putting the same money directly into your retirement plan

21. So The Solution Is? • Work hard to hang onto your job. Average unemployment time for 55+ year olds is 45 weeks • You can do “make-up” contributions • You can make a double December mortgage payment to accelerate payoff • Most likely, you’ll have to work much longer than you think • And delay retirement withdrawals as long as possible (70 ½)

22. So, Suggested Priorities • Keep working! • Continue to give, of course • Go on a lifestyle diet to free up more $$ • Focus on your future needs vs. family • Put a high priority on retirement savings (put away a whole dollar, grows tax free) • Balance that with reducing high cost debt • Think “cash flow” too • Work the spread (cost of money vs. yield) • Make big purchases with cash vs. debt

23. Question: Should I Pay Off Mortgage With Retirement Money? • Getting out of debt is a good principle • But home mortgage is (usually) scriptural debt (i.e., it’s not that bad) • Consider refinancing to get a lower rate • Compare that rate to earnings rate on retirement • Work the spread (if I can earn 6%+ on retirement vs. pay 4%, I come out way ahead)

24. Long Term Care Insurance? • Covers in-home or “nursing home” costs • Average premium 55-64 is $2,200 • But costs are rising—30%-40%/year! • Who needs it? The “middle income” • Wealthy will self-insure • Low income will have Medicaid • Prepare for 20+ years of payments! • Canceling could wipe it out, as does a “healthy death”

25. Wills/Trusts—Important? • Many people die without a valid will—90% of lawyers do! • 7 out of 8 men die before their wives—is your wife prepared? • What if you don’t have a will? Every state is different • Is your will valid? • What about trusts? • Do you have a plan for what will happen?

26. General Questions?? • Have time for some Q&A as a group • I’m happy to take questions offline as well (e-mail is moeller@prodigy.net) • And MBC’s Financial Counselors can spend time to get into more depth with you as well

27. The Commercial • If this topic is striking a chord with you and you want to go further, call: • Nancy Hall (MBC coordinator) 703-770-4397 • There’s no cost for financial counseling--except your “investment” of time to do the work • If you want the Biblical foundation (more than counseling), sign up for McLean University 501 A (Bible Study) or B (Small Group). Classes start this weekend!