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Objective – Provide Tools For:

Welcome to Financial Freedom “ There is probably no area where we have a greater opportunity to make a mess of our lives than in this area of our finances. …….If we do not get control of our money according to God’s principles, we will never manage our time and talents well for God’s purpose.”.

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Objective – Provide Tools For:

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  1. Welcome to Financial Freedom“There is probably no area where we have a greater opportunity to make a mess of our lives than in this area of our finances. …….If we do not get control of our money according to God’s principles, we will never manage our time and talents well for God’s purpose.”

  2. Objective – Provide Tools For: • Establishing personal goals • Understanding what we are spending • Developing a Spending Plan & Debt Reduction Plan • Controlling expenses

  3. Cultural Myths • Things bring happiness. • We can have everything we want, and we shouldn’t have to wait for what we want. • Debt is expected and unavoidable. • Our self-worth is directly connected to our possessions and what we do. • A little more money will solve all our problems. • Life should be easy and fair.

  4. The Steward’s Mindset • God created everything – Genesis 1:1 …God created the heavens and the earth • God owns everything – Psalm 50:12…the world is Mine and all it contains • We are managers of what He has given us – Genesis 1:26-30….Let’s make man in Our image…and let them rule over …all the earth…

  5. Five Areas Of Our Financial Lives • Earning • Giving • Saving • Debt payment • Spending

  6. A Budget Is: • The tool that enables us to control our money so that it doesn’t end up controlling us. • A Spending Plan for how we will allocate our financial resources. • The Spending Plan is the way to reach our financial goals.

  7. The Benefits of a Spending Plan • Gives us FACTS • Avoids WASTE • Keeps our VALUES and priorities in check and should reflect our financial goals • Leads to FINANCIAL FREEDOM

  8. The Culture Says: • “Our value is measured by our position, achievement and our paycheck.” • “A little more money will solve all our problems.”

  9. Earnings - The Bible Says • Be enthusiastic & serve God. Colossians 3:23-24 • Provide for those dependent on us. 1 Timothy 5:8 • Be grateful. Deuteronomy 8:17-18

  10. Earnings: Salaries # 1 (Net Take-home Pay) Is The amount of the paycheck after all taxes and deductions.

  11. Earnings: Variable Incomes Take a CONSERVATIVE estimate of our after-tax annual income—based on our income of the past few years—and divide by twelve. Example: $30,000/12 = $2,500 per month

  12. Earnings: Two-Income Strategy • Income #1: Basic Lifestyle Expenses • Giving • Savings • Housing • Food • Clothing • Transportation • Basic household • Debt payment

  13. Earnings: Two Incomes • Income #2: Extras • Additional giving • Additional savings • Accelerated debt repayment • Other non-essentials • Entertainment • Gifts • Vacation

  14. Earnings: Questions • What happens to raises, bonuses, overtime pay, income from an extra job, or money received as gifts?

  15. Three Cultural Myths About Giving • “Give if it benefits us.” • “Give if there is anything left over.” • “Give out of a sense of duty.”

  16. God Wants Us to Give: • As a response to God’s goodness – James 1:17 • To focus on God as our source of security – Matt. 6:19-21 • To break the hold of money

  17. For Those Not Giving: • Begin by giving something. • “Each of you must give as you have made up your mind, not reluctantly or under compulsion, for God loves a cheerful giver.” 2 Cor. 9:7 (NIV)

  18. Saving - Two Cultural Myths: • “If we have it, spend it; and if we don’t have it, spend it anyway.” • “It is futile to save.”

  19. Saving: The Bible Says: • It is wise to save. • Proverbs 21:20 • It is sinful to hoard. • Eccl. 5:10

  20. Savings Is: • Money we keep • Future spending

  21. Compound Interest Example • $100 @ 6% = $6.00 interest • $106 @ 6% = $6.36 interest The extra $0.36 is compound interest.

  22. Setting Goals • Financial Goals will help us decide how much to save each month • Review goals often for motivation • Prioritize goals • Be realistic and make goals achievable • Goals should reflect our values • Goals must be quantified

  23. Three Kinds of Savings • Emergency savings • Savings for major purchases • Long-term savings

  24. Key Question: If giving is so right and saving is so wise, why are they so hard to do?

  25. Cultural Order for Using Money • Lifestyle (Spending) • Debt • Saving • Giving

  26. God-Honoring Order For Using Money • Giving • Saving • Lifestyle is based on what is left

  27. Transitional Order For Using Money • Give. . . SOMETHING • Save. . . a LITTLE • Debt. . . MAXIMIZE repayment of consumer debt • FRUGAL Lifestyle

  28. Debt - Cultural Myth: “Debt is Expected and Unavoidable” Facts: 33% of Americans don’t have a CC 36% pay balance in full every month 31% carry a balance

  29. The Cautious Debtor: • Avoids entering into debt • Is careful when incurring debt • Always repays debt

  30. Biblical Guidelines: • Repay debt – Psalm 37:21 “The wicked does not repay….” • Avoid debt – Proverbs 22:7 “….The borrower becomes the lender’s slave.”

  31. Three Spiritual Dangers of Debt: • Presumes on the future – James 4:14 “….you do not know what your life will be like tomorrow….” • Denies God the opportunity to teach us or provide for us. • Promotes envy and greed – Luke 12:15 “…be on guard against every form of greed…”

  32. Five Kinds of Debt: • Auto • Home • Education • Business • Credit card

  33. Credit Card Studies: • The amount families spent with a credit card rose between 20% and 30% compared to paying cash • Average on groceries - $32.96 using cash vs. $43.49 with credit • Average spent on non-essentials at grocery $9.08 with cash vs. $18.72 with credit • McDonald’s - $4.50 cash vs. $7.00 credit

  34. Credit Card Rules: • Use a credit card only for budgeted items • Pay the balance in full every month • If you violate rule one or rule two, put away the cards • Select a card with no annual fee • Consider a debit card instead of a credit card • Keep a list of all credit card charges for awareness • Have only one card to reduce temptation

  35. Debt Example You owe $9,000 @ 13% (Minimum payment = 4.5% of the balance starting at $405/mo.) You PayTotal PaidTime $Minimum/month $11,817 11.1 years $405/month $10,352 2.2 years $405 + $100/month $10,054 1.7 years

  36. Principles for Accelerating Debt Repayment: • Pay off the smallest debt first. • As each debt is repaid, roll the amount you were paying to the next largest debt. • Incur no new debt!

  37. Debt Reduction Plan

  38. Debt Repayment is a Great Investment • Guaranteed • Immediate • High rate of return

  39. Spending - Four Myths: • “Things bring happiness.” • “Our possessions define who we are.” • “The more we have, the more we should spend.” • “Spending is a competition.”

  40. Spending - Three Biblical Principles: • Beware of idols – Dt 5:7-8; Rom 1:25 • Guard against greed and seek moderation – Lk 12:15; Prv 30:8 • Be content – Phil 4:12

  41. Key Question: Are we willing to be content with our true needs vs. what the culture says we need?

  42. Spending: Mortgage/Taxes/Rent: • Consider the issue of renting vs. owning • Thinking of prepaying mortgage? • Beware of basing a mortgage on two incomes • Exercise caution toward equity loans • Consider an extended household

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