Stewardship of God’s Money in Difficult Times For McLean Bible Church Prince William Campus February 2011 By Bud Moeller

1. Stewardship of God’s Money in Difficult Times For McLean Bible Church Prince William Campus February 2011 By Bud Moeller

2. The Reality of Money? • If you think no one cares if you’re alive, try missing a couple of car payments • The Lottery: A tax on people who are bad at math • “We can loan you enough money to get you completely out of debt.” (Bank sign) • Happiness is not having what you want but wanting what you have

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 inflation is low, 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 $$ • 34% pay credit cards off each month • 48% pay only the minimum each month • 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 Does The Bible Say? • Work--was before the fall. Genesis 2:15 “The Lord God took the man and put him into the garden of Eden to cultivate it and keep it.” • Giving is an act of worship and recognition • Saving is wise • Debt is really bad • Spending is where we really lose it!

11. Earning--Our Role • Work hard--Ecclesiastes 9:10 “Whatever your hand finds to do, do it with all your might.” • Be diligent--Proverbs 18:9 “He who is slack in his work is brother to him who destroys.” • Be purposeful--Colossians 3:23 “[Work] as though you were working for the Lord rather than for people.” • Be grateful--Deuteronomy 8:17-18 “You may say to yourself, ‘My power and the strength of my hands have produced this wealth for me.’ Remember the Lord your God, for it is he who gives you the ability to produce wealth.”

12. Giving So What Questions Should We Be Asking Re Giving? • 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?

13. 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

14. 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

15. How Much to Save to Retire? • Assume a spending pattern requiring $60,000/year for the rest of your life • Most planners would agree you should pull no more than 4%/year from your retirement or you’ll outlive your money • So, would require $1,500,000 to retire • And, if you want to live better than this, just ratio this number up or down to fit • Inflation? Earnings rate? Social Security?

16. How to Invest? • With plans and persistence--Prov 21:5 • With honesty--Proverbs 21:6 • With a watchful eye--Prov 27:23-27 • With diversification--Ecclesiastes 11:2,6 • With much prayer and God’s input-- Isaiah 48:17-18

17. Debt--Even Worse Than You Think • Debt is considered slavery--Proverbs 22:7 “Just as the rich rule the poor, so the borrower is servant to the lender.” • Debt was considered a curse • Debt presumes on tomorrow • Debt may deny God an opportunity Debt

18. Spending Spending--A Personal Choice • Beware of idols--Romans 1:25 They “worshiped and served created things rather than the creator.” • Guard against greed--Luke 12:15 “Beware! Don’t be greedy for what you don’t have. Real life is not measured by how much we own.” • Be content--Philippians 4:12 “I know what it is to be in need, and I know what it is to have plenty. I have learned the secret of being content in any and every situation, whether well fed or hungry, whether living in plenty or in want.”

19. In A Perfect World, You’d Have Been Prepared For This Storm • 3-6 months of emergency savings • Credit cards paid off • Consumer debt (auto, student, etc.) gone • Savings banked for major future events (vacation, next auto, education, etc.) • Home ownership, with equity cushion • Retirement pretty well covered • (At least the essence of a good plan!)

20. Most Likely, You’re Struggling • Average credit card debt ~ $8,000 • Car loan higher than car value • Student loans still lingering • Savings—minimal, or not very liquid • Home equity erased or below 20% • Insufficient retirement savings • Little else to leverage other than time

21. If You Want to Get in Financial Shape … • Need to know where you’re starting from • Need to know how much to change • Need to figure out what to change • Need to decide how long to take • Essentially, you need a plan!

22. Measurement Tools--Finances • Balance Sheet • Income Statement • Credit Report

23. Checking account Savings Car “General Stuff” “Valuable Stuff” House Retirement Investments Credit cards Car loan Other loans IRS Debt Mortgage Home Equity loan 401(k) loan Obligations payable The Balance Sheet I Have … I Owe … Have - Owe = Net Worth

24. Checking $500 Savings $500 Car $20,000 “Valuables” $2,000 “Stuff” $20,000 House $600,000 Retirement $65,000 Investments $30,000 TOTAL $738,000 Credit cards $12,000 Car loan $25,000 Edu loan $60,000 IRS Debt $2,000 Mortgage $550,000 Home Eq loan $95,000 401(k) loan $5,000 Obligations $1,000 TOTAL $760,000 Balance Sheet I Owe … I Have … Have - Owe = Net Worth ($12,000)

25. Spending Plan • Fundamental tool that enables us to control our money so that it doesn’t end up controlling us • Plan for how we will allocate our financial resources • A way to reach our financial goals and live out our values and priorities • Produces freedom--there is no true freedom without limits

26. Building a Spending Plan • What are your life goals? • What things have changed recently? • What financial goals to set, in support? • Set some near-term (e.g., 6 months, 1 year, 2 years) objectives and targets • Build a balanced plan to get there

27. Income Statement--Overview • What you make--Income • Minus your Giving • Minus your Taxes • = Net available for other uses • Saving (current, retirement, etc.) • Debt reduction • Spending

28. Long Term Priorities Retirement Children’s education Special trip (anniversary, etc.) Other (furniture, remodeling, etc.) Short Term Priorities Emergency fund (3-6 mos) Investments House purchase downpmt 1st Child prep Car Replacement/Repair Medical Insurances Vacation this year Gifts Other this year (e.g., TV, appliances, etc.) The “Savings” Page

29. Savings Elements • Emergency--should be 3-6 months of “spending,” held in a liquid account (i.e, not tied up for a lengthy period where unavailable) • Replacement--money you accumulate for periodic spending on major items that are wearing out (e.g, car, appliances, furniture)

30. Savings--continued • Long-Term--for items that will take years to accumulate and/or use • College fund for children’s education • Retirement • Down-payment for home purchase • Etc.

31. Housing--biggest cost Food Auto/Transport Children’s costs Clothing Entertainment & Recreation Personal Care Misc/cash Debt Reduction Credit cards School loans Personal/bank loans IRS debt Cash advances Etc. Page 3--All the “Spending” and Debt Reduction

32. Reducing Expenses • Is this an optional expense that can be eliminated? • Is this a variable expense that can be controlled and reduced? • Is this an expense that has wrongly been assumed as being “fixed”?

33. Debt Reduction • Should be your goal after giving and saving • “Just as the rich rule the poor, so the borrower is servant to the lender.” Proverbs 22:7 • Move from paying interest to earning interest!

34. Debt Example You owe $7,200 @ 18.1% (Minimum payment = 2% of the balance or $10/month whichever is greater.) You PayTotal PaidTime $Minimum/month $23,049 23+ years

35. Debt Example You owe $7,200 @ 18.1% (Minimum payment = 2% of the balance or $10/month whichever is greater.) You PayTotal PaidTime $Minimum/month $23,049 23+ years $144/month $13,387 8 years

36. Debt Example You owe $7,200 @ 18.1% (Minimum payment = 2% of the balance or $10/month whichever is greater.) You PayTotal PaidTime $Minimum/month $23,049 23+ years $144/month $13,387 8 years $144 + $100/month $ 9,570 3 years

37. Debt Repayment “Waterfall”

38. Other Keys to Debt Reduction • Be sure the plan is realistic. • Incur no new debt! • Modify the plan when unexpected windfalls or pay raises come into play. • As each debt is retired, celebrate!

39. “But, It Doesn’t Balance . . .” • Increase income--tough to do without a significant shift something (job, spare time, location) • Reduce expenses--go back and force your lifestyle to rebalance • Sell assets--something with enough value to make a dent in your debt or payment load

40. 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. others • 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

41. In Huge Trouble? • Give. . . Something, sacrificially • Save. . . a little (at least) • Debt. . . maximize repayment • Lifestyle. . . spartan

42. You Need A Short-Term Plan! • Forget the life goals—this is about survival • Take inventory—savings, spendable assets, leverage, liquidation potential, income, debt, etc. • Know your bottom line and squeeze it • Call your creditors before they call you • Forecast the future—know what will hit you and when. Set priorities and sequence—be proactive not reactive!

43. Keeping Track

44. Envelope System

45. Your Credit Report--FICO Score • Not something you usually see, unless you request it • It’s how the world of lenders sees you • Therefore determines the rates you get for any credit or loans • Anything over 720 is “So what?” • A couple of mess-ups can stain your record for many years • Sometimes you’re stained and don’t even know it

46. Want Your Credit Report? • Go to www.annualcreditreport.com It is the only authorized source to get your free credit report under federal law • It will show your accounts, payment history, balances, dates, etc. • What it won’t do is show your FICO score. For that, you have to pay a fee. Go to www.myfico.com (Equifax and TransUnion scores. Experian availability was discontinued in February) or go straight to the rating agencies.

47. Impact on You--Monthly Payment Assumes $450,000 mortgage, 30 years

48. Making Change Stick • Pick realistic goals • Define the goals (specifically) • Set a schedule (or deadline) • Don’t be upset by setbacks • Enlist additional help or support • (… and, of course, you’ve got to get started!)

49. Some Encouragement and Challenge • Action springs not from thought but from a readiness for responsibility • Obstacles are those frightening things you see when you take your eyes off your goal • A little knowledge that acts is worth infinitely more than much knowledge that is idle • “Do or do not. There is no such thing as ‘Try’” Yoda (Empire Strikes Back) • Billy Graham: “The test of a preacher is that his congregation goes away saying, not, “What a lovely sermon!” but, “I will do something.”

50. The Commercial • If this topic is striking a chord with you and you want to get started, 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).