Lesson Four: Time Value of Money David Murphy, Ph.D., CPA, CFP® Introduction: I. The Bible and Interest A. Parable of the Ten Talents (Matthew 25:14-29) B. Usury and Interest (Leviticus 25:35-37) II. Tool or Enslaver A. ToolB. Invest $1,000 at 5% Interest Today. C. How Much Will You Have in Five Years?III. The Talent Principle Year Amount A. $1,050.00 B. $1,102.50 C. $1,157.63 D. $1,215.51 E. $1,276.28 F. $1,340.10 G. $1,407.10 H. $1,477.46 I. $1,551.33 J. $1,628.89 K. $2,653.30 L. $4,321.94IV. Enslaver Owe $9,000 on an 18% Credit Card and Make the Minimum monthly Payment of 1.5% or $10 How Many Months to Pay Off the Credit Card? V. Financial Slavery A. You Would Pay Off the Credit Card in 960 Months B. 80 Years C. $129,600 in Interest VI. Inflation A. A General Increase in Prices B. Everything, Except Money, Becomes More Valuable (More Expensive)C. Historic Inflation Rates Average Inflation Rates: Time Period Average Inflation Rate 1913-2004 3.14% 1945-2004 4.12% 1950-2004 3.93%VII. Cause of Inflation A. Increase in the Money Supply B. Isolated Island Economy 1. One product – grass skirts2. Production – 100 skirts per year3. Money supply – 100 conch shells4. Price of one skirt – 1 conch shell C. What Happens if the Supply of Conch Shells Doubles? 1. Inflation – the price of grass skirt would increase to 2 conch shells per skirtVIII. Inflation – The Bad A. Prices Increase Faster than Salaries B. Strain on Family Budgets IX. Inflation – The Good A. Debts are Repaid with Cheaper DollarsX. Understanding Interest A. Principal B. Interest C. Interest Rates D. Nominal Interest Rate E. Periodic Interest Rate F. APR XI. Interest and Principal A. Principal – the amount of money borrowed or lentB. Example – if you borrow $1,000 then the principal on the loan is $1,000 C. Interest – the amount paid or received as a fee for borrowing or lending money D. Example – if you borrow $1,000 and have to repay $1,100 then the interest on the loan was $100 1. Interest rate is usually determined by and percentage rateXII. Interest Rates A. Interest Rate = f(Inflation expectation + risk) B. Nominal – Interest rate stated on the face of a loan document C. Periodic – A rate of interest applied to a loan or credit card that is calculated for a time period other than a year, such as weekly, monthly or even daily XIII. APR—Annual Percentage Rate A. APR is Not the Face Interest RateB. The Following Fees ARE Generally Included in the APR:1. Points - both discount points and origination points 2. Pre-paid interest3. Loan-processing fee 4. Underwriting fee 5. Document-preparation fee 6. Private mortgage-insurance C. The Following Fees are SOMETIMES Included in the APR: 1. Loan-application fee 2. Credit life insurance XIV. Simple Interest A. Annual Interest = Amount (Interest Rate) Time B. ExampleC. What is the Annual Interest on a $3,000, 12% Loan? D. Interest = $3,000(.12)1 = $ ...

1. Lesson Four:
Time Value of Money
David Murphy, Ph.D., CPA, CFP®
Introduction:
I. The Bible and Interest
A. Parable of the Ten Talents (Matthew 25:14-29)
B. Usury and Interest (Leviticus 25:35-37)
II. Tool or Enslaver
A. ToolB. Invest $1,000 at 5% Interest Today.
C. How Much Will You Have in Five Years?III. The Talent
Principle
Year Amount

2. A. $1,050.00
B. $1,102.50
C. $1,157.63
D. $1,215.51
E. $1,276.28
F. $1,340.10
G. $1,407.10
H. $1,477.46
I. $1,551.33
J. $1,628.89
K. $2,653.30
L. $4,321.94IV.
Enslaver
Owe $9,000 on an 18% Credit Card and Make the Minimum
monthly Payment of 1.5% or $10
How Many Months to Pay Off the Credit Card?
V. Financial Slavery
A. You Would Pay Off the Credit Card in 960 Months
B. 80 Years
C. $129,600 in Interest

3. VI. Inflation
A. A General Increase in Prices
B. Everything, Except Money, Becomes More Valuable (More
Expensive)C. Historic Inflation Rates
Average Inflation Rates:
Time Period Average Inflation Rate
1913-2004 3.14%
1945-2004 4.12%
1950-2004 3.93%VII. Cause of Inflation
A. Increase in the Money Supply
B. Isolated Island Economy
1. One product – grass skirts2. Production – 100 skirts per
year3. Money supply – 100 conch shells4. Price of one skirt – 1
conch shell
C. What Happens if the Supply of Conch Shells Doubles?
1. Inflation – the price of grass skirt would increase to 2 conch
shells per skirtVIII. Inflation – The Bad
A. Prices Increase Faster than Salaries

4. B. Strain on Family Budgets
IX. Inflation – The Good
A. Debts are Repaid with Cheaper DollarsX. Understanding
Interest
A. Principal
B. Interest
C. Interest Rates
D. Nominal Interest Rate
E. Periodic Interest Rate
F. APR
XI. Interest and Principal
A. Principal – the amount of money borrowed or lentB. Example
– if you borrow $1,000 then the principal on the loan is $1,000
C. Interest – the amount paid or received as a fee for borrowing
or lending money
D. Example – if you borrow $1,000 and have to repay $1,100
then the interest on the loan was $100

5. 1. Interest rate is usually determined by and percentage rateXII.
Interest Rates
A. Interest Rate = f(Inflation expectation + risk)
B. Nominal – Interest rate stated on the face of a loan document
C. Periodic – A rate of interest applied to a loan or credit card
that is calculated for a time period other than a year, such as
weekly, monthly or even daily
XIII. APR—Annual Percentage Rate
A. APR is Not the Face Interest RateB. The Following Fees
ARE Generally Included in the APR:1. Points - both discount
points and origination points 2. Pre-paid interest3. Loan-
processing fee 4. Underwriting fee 5. Document-preparation fee
6. Private mortgage-insurance
C. The Following Fees are SOMETIMES Included in the APR:
1. Loan-application fee 2. Credit life insurance
XIV. Simple Interest
A. Annual Interest = Amount (Interest Rate) Time
B. ExampleC. What is the Annual Interest on a $3,000, 12%
Loan?
D. Interest = $3,000(.12)1 = $360

6. XV. ExampleA. What is the Interest on a $5,000, 18%, 3 Month
Loan?
B. Interest = $5,000(.18)(3/12) = $225
XVI. Pay-Day Loan Interest
A. Assume that a coaching client borrowed $300 on a “no-
interest” payday loan that requires that $350 be repaid in two
weeks. What is the annual interest rate on that loan?
B. Interest = Amount (Interest Rate)Time
C. Interest Rate = Interest / (Amount)(Time)
XVII. Interest Rate = $50 /($300)(2/52) = 4.33 = 433%
XVIII. Compound Interest
A. Interest on Interest
B. “The Most Powerful Force in the Universe”XIX. Example
A. Invest $1,000 for Five Years with 5% Compound Interest . . .
Beginning End of
Year of Year Interest Year
1 $ 1,000.00 $ 50.00 $ 1,050.00

7. 2 $ 1,050.00 $ 52.50 $ 1,102.50
3 $ 1,102.50 $ 55.13 $ 1,157.63
4 $ 1,157.63 $ 57.88 $ 1,215.51
5 $ 1,215.51 $ 60.78 $ 1,276.28
XX. Time Value of Money
A. Future Value = Present Value (Future Value Factor)B.
Calculating Future Values
C. Formula Approach1. Future Value = Amount (1+Interest
Rate)Time2. Future Value = $1,000(1.05)33. Future Value =
$1,000(1.15763)4. Future Value = $1,157.63
D. Table Approach1. See CD ROM disk—Future Value Table
2. Future Value = $5,000(1.276) = $6,380
XXI. Present Value = Future Value (Present Value Factor)A.
Calculating Present Values
1. Formula Approacha. Present Value = Future Value /
(1+Interest Rate)Timeb. Present Value = $1,000 / (1.05)3c.

8. Present Value = $1,000 / (1.15763)d. Present Value = $864
2. Table Approacha. See CD ROM b. Present Value =
$1,000(.864) = $864
XXII. Effect of Interest Rates
A. Assume that you must select between two different
investment alternatives.
B. Investment 1 – $3,000, 10 year, 7%
C. Investment 2 -- $3,000, 10 year, 9%
D. What is the Differences in the Return On These Two
Investments?
E. Hint – Use Table 2 from the CD ROM disk and compute the
future values
XXIII. Effect of Interest Rates
A. Investment 1 -- $3,000 (1.967) = $5,901B. Investment 2 --
$3,000 (2.367) = $7,101
C. Difference $1,200XXIV. Effect of time
A. Let’s take a look at two brothers. The both graduated from
college in engineering, got married right out of school and
began their families. Bill scrimped and saved $1000 a year
from the time that he was 25 years old until he was 65. He
invested the money each year in a no-load mutual fund that

9. earned an average 10% return. That means that he invested a
grand total of $40,000 over those 40 years. Dick was more of a
spender and didn’t want his family to miss out on anything.
Consequently he didn’t start saving until he was 45 years old.
By then the kids were out of the house and putting away $1,000
a year didn’t hurt nearly as much. Dick invested in the same
mutual fund that yielded a 10% return.
B. How Did their Investments Turn Out?C. Bill and Dick
XXV. Einstein and the Rule of 72
A. E = mc2
B. Rule of 72
C. Speaking of the Rule of 72 Einstein said “It is the greatest
mathematical discovery of all time.”
D. 72 / Interest Rate = Time to Double Your Money
E. 72/5 = 14.4 yearsXXVI. Annuity
A. Ordinary Annuity – An equal sum of money paid or received
at the end of equal periods of time.
B. Annuity Due – An equal sum of money paid or received at
the beginning of equal periods of timeC. Future Value of an
Annuity Due
D. How much money would you have at the end of 10 years if
you invested $2,000 at the beginning of each year for 10 years

10. and earned an 8% annual return?
E. Hint – Use table A6
F. FV = $2,000 (15.645 ) = $31,390
XXVII. Why?
A. Interest is the Key to Financial Literacy
B. Answer Coaching Client Questions
C. Teach Clients to Use Interest to Make Wise Financial
DecisionsXXVIII. Conclusion
XXIX. Resources
A. Time to pay off a credit card calculator available at Fox
Business News at
http://calcxml.foxbusiness.com/do/det01?skn=147
B. CD ROM – Time Value of Money Tables
C. CD ROM – Using a Financial Calculator

11. Lesson Three:
Personal Financial Statements
David Murphy, Ph.D., CPA, CFP®
Introduction:
Luke 14:28-30—
I. Money Basics – Personal Financial Statements
A. Road Map to Success
1. Taking a Trip
a. Destination
b. Starting point
2. Personal Financial Statements
a. Tell where your client is right how (starting point)
b. Balance Sheet
c. Cash Flow Statement

12. B. Personal Balance Sheet
1. Picture of Financial Position at a Point in Time
2. Items of Value – What You Owe = Net Worth
3. Items of Value = Assets
a. Assets = Cash and other property with a monetary value
b. Common Assets
· Liquid Assets
· Cash
· Cash value of a life insurance policy
·
Real estate
· Home
· Vacation property
· Land
· Personal possessions
· Automobile
· Furniture
· Clothing
· Value at market value not historical cost

13. · Investments
· Assets set aside for long-term use
· Retirement fund
· Education fund
4. What You Owe = Liabilities
a. Liabilities = amounts owed to others
b. Common liabilities
· Current liabilities = liabilities that must be paid within the
next year
· Medical bills
· Credit card balances
· Current portion of auto loans
· Current portion of student loans
· Long-term liabilities = Liabilities that do not have to be paid
in full until more than one year in the future
· Non-current balance of auto loans
· Non-current or deferred student loans
· Mortgage

14. 5.Sample Personal Balance Sheet
C. Cash Flow Statement
1. A summary of the cash inflows and outflows over a period
of time, usually a month or a year.
2. Total Cash Received – Total Cash Outflows = Cash Surplus
or Deficit
3. Statement Components
a. Income or cash inflows
b. Cash outflows
· Fixed expenses
· Variable expenses
c. Surplus
d. Allocation of Surplus
4. Sample Personal Cash Flow Statement
D.
Analyzing Personal Financial Statements
1. Vertical Analysis
Expenditure Guide for a Family of Four
Gross Annual Income
$ 30,000
$ 40,000

15. $ 60,000
$ 80,000
$ 100,000
$ 120,000
Deductions from Gross
Tithing
10%
10%
10%
10%
10%
10%
Taxes
2%
16%
20%
24%
26%
28%
Savings
2%
3%
4%
5%
6%
8%
Net Spendable Income
$ 25,800
$ 28,400
$ 39,600

16. $ 48,800
$ 58,000
$ 64,800
Suggest Expense Percentages
Housing
39%
38%
37%
32%
30%
29%
Food
16%
15%
14%
12%
12%
11%
Transportation
15%
14%
14%
14%
12%
12%
Insurance
5%
5%
5%
5%

17. 5%
5%
Debt
0%
0%
0%
0%
0%
0%
Entertainment
4%
4%
5%
5%
6%
8%
Clothing
4%
4%
5%
5%
6%
7%
Medical Expenses
4%
4%
4%
4%
4%
4%
School & Child Care
5%
6%
6%
6%
7%

18. 8%
Investments
3%
4%
5%
7%
8%
10%
Miscellaneous
5%
6%
5%
10%
10%
6%
Total
100%
100%
100%
100%
100%
100%
2. Horizontal Analysis
3. Debt Ratio

19. a. Shows the relationship between debt and net worth
b. Lower is better
c. Liabilities divided by Net worth
4.Current Ratio
a. Indicates the capacity of a person to meet their current
financial obligations.
b. Higher is better
c. Liquid assets divided by Current liabilities
5. Liquidity Ratio
a. Indicates the number of months over which living expenses
could be paid in an emergency arises
b. Higher is better
c. Liquid assets divided by Monthly expenses
6. Debt-Payment Ratio
a. Indicates how much of a person’s monthly income goes to
cover debt
b. Most financial advisors recommend a debt-payment ratio of
less than 20 percent (excluding mortgage payments)
c. Monthly credit payments divided by Monthly take-home pay
7. Savings Ratio
a. A measure of how much is saved each month

20. b. The national savings ratio is close to zero
c. Most financial advisors recommend a savings ratio of 10
percent
d. Amount saved each month divided by Gross pay
8.
Sample Analysis
a. Facts
· Amount saved = $648
· Current liabilities = $2,000
· Gross pay = $5,400
· Liabilities = $25,000
· Liquid assets = $4,000
· Monthly credit card payments = $540
· Monthly expenses = $4,000
· Net worth = $50,000
· Take-home pay = $3,600
b. Calculations
· Debt ratio = $25,000/$50,000 = 0.50 = 50%
· Current ratio = $4,000/$2,000 = 2.0 = 200%
· Liquidity ratio = $4,000/$4,000 = 1.0 = 100%
· Debt-payment ratio = $540/$3,600 = 0.15 = 15%
· Savings ratio = $648/$5,400 = 0.12 = 12%
B. Problem
Using the following data, prepare personal financial statements
and calculate the personal financial ratios.

21. II. Conclusion
III. Resources
1. Personal financial ratios keep you on track at
www.bankrate.com/brm/news/retirement/20071003_personal_fin
ance_ratios_a1.asp.
2. Farrell, C. J. (2006). Personal Financial Ratios: An elegant
road map to financial health and retirement. FPA Journal.
January.
Lesson Two:
The Psychology of Money
David Murphy, Ph.D., CPA, CFP®
Introduction:

22. I. Psychology of Money
A. What Does the Bible Say?
1. Proverbs 23:7
2. Matt 15:10-11, 15-20
B. Why Psychology and Money
1. American Psychological Association (2004) determined that
financial concerns are the number one cause of stress in
American’s lives.
2. Money is the number one source of disagreement in the early
years of marriage.
3. Disordered money behaviors have a significant negative
effect on wellbeing.
4. Money issues are the number one cause of divorce in the
United States.
5. Financial problems affect job performance in as many as 15%
of American workers.
6. Individuals who are materialistic report:
a. Lower Levels of:
· Self-actualization
· Vitality

23. · Happiness
b.
Higher Levels of :
· Anxiety
· Physical symptoms
· Unhappiness
C. Dysfunctional Money Behavior
1. Maladaptive patterns of financial beliefs and behaviors that
lead to clinically significant distress, impairment in social or
occupational functioning, undue financial strain or an inability
to appropriately enjoy one’s financial resources (Klontz, et al.
2008)
D. Financial Wellness
1. Maintaining reasonable and low debt, having an active
savings and/or retirement plan, following a spending plan,
experiencing high levels of financial satisfaction, and
experiencing low levels of financial stress (So-Hyun and
Grable, 2003)
E. Theory of Reasoned Action (Fishbein and Ajzen)
1. Overview
a. Behavior = f(Intention)
b. Intention = f(Attitude, Subjective Norms)
2. Attitudes are Beliefs

24. a. Money is the root of all evil.
b. Love of money is the root of all evil . . . (1 Tim 6:10)
c. Attitudes about money are independent of income.
d. Money problems are rooted in early experiences with money.
e. Money behavior is learned behavior that is used to meet
psychological and emotional needs.
f. Money memories
3.
Subjective Norms
a. The influence of other people in one’s social environment on
one’s intentions
b. Parents
c. Peer group
d. Church
e. Society
4. Intentions
5. Precursor of Behavior
6. Behavior
Attitude Intention Behavior

25. F. Money Personalities
1. Psychopathologies
a. Hoarder
b. Spender
c. Worrier
d. Avoider
e. Planner
f. Dreamer
g. Money Monk
h. Money Midas
2. Management Style
a. Independent
b. Cooperative
G.
Money Personalities in Relationships
1. Money is the number one source of disagreements in the early
years of marriage.
2. Money stress is the number one cause of divorce.
3. Understand your money personality.
4. Understand your spouse’s money personality.
H. Money and Happiness
1. Can money buy happiness?
a. What happens to lottery winners?

26. b. Initial good feeling
c. Not significantly happier than non-winners
d. Less pleasure in ordinary activities than non-winners
e. Development of severe depression in some cases
2. Lack of evidence showing a relationship between material
wealth and happiness
I. Psychology of Change—Romans 12:2
1. Stages of Change Model
a. Precognition
b. Contemplation
c. Preparation
d. Action
2.
Components of Change
a. Importance
· Is it worthwhile
· Why should I?
· How will I benefit?
· What will change?
· What will it cost me?
· Will it make a difference?

27. b. Confidence
· Can I do it?
· How will I manage it?
· How will I deal with ___ and ___ and ___?
· Will I succeed?
c. Readiness
· Should I do it now?
J. Stages of Grief (Kübler-Ross)
1. Denial—Should throw away my 401K statement without even
opening it?"
2. Anger—“Why did this happen to me? It is unfair that Wall
Street benefited at my expense."
3. Bargaining—“Just give me one relief rally and I can make it
all back and sell."
4. Depression—“The market sucks, no one is hiring anywhere.
Why should I bother?"
5. Acceptance—“It's bad but these things don't last forever. I'm
going to work on my career and portfolio to be prepared for the
opportunities when they do come."
II.
Conclusion
A. To Be an Effective Christian Financial Coach You Need:
1. Faith and a strong prayer life

28. 2. Patience and charity
3. Understand how your client thinks about money
4. Understanding of sound financial concepts
III. Resources
A. Fishbein, M. and I. Ajzen. (1975). Beliefs, attitudes,
intentions and behavior: An introduction to theory and
research. Reading, MA: Addison-Wesley.
B. Raghubir, P., and J. Srivastava. (2008). Monopoly Money:
The Effect of Payment Coupling and Form on spending
Behavior. Journal of Experimental Psychology: Applied, Vol.
14, No. 3, pp. 213-325.
C. Johnson, W. and R. F. Krueger. (2006). How Money Buys
happiness: Genetic and Environmental Processes Linking
Finances and Life Satisfaction. Journal of Personality and
Social Psychology, Vol. 90, No. 4, pp. 680-691.
D. Mellan, O., and S. Christie. (2004). The Advisors Guide to
Money Psychology, 2nd Ed. Shrewsbury, NJ: Investment
Advisor Press.
E. Financial Psychology Corporation at
www.kathleengurney.com
F. Loantz, Bivens, Klontz, Wada and Kahler. (2008). The
Treatment of Disordered Money Behaviors: Results of an Open
Clinical Trial. Psychological Services, Vol. 5, No. 3, pp. 295-
308.
G. So-Hyun, J. and J. Grable. (2003). The Meaning and

29. Measurement of Personal Financial Wellness: A Summary of
Professional Insights. Consumer Interests Annual, Vol. 49, p.
1.
Lesson One:
Introduction to Financial Coaching
David Murphy, Ph.D., CPA, CFP®
Introduction:
I. God Cares About Money
A. Money is only mentioned about 140 times in the Bible
B. Money-related topics are mentioned over 2,000 times
C. God cares about you and money
· Matt 6:33
· Matt 6:31-32
· Matt 6:24

30. II. AACC Cares About People and Their Money
A. Program Overview
1. Introduction to Christian Financial Coaching
2. Psychology and Money
3. Understanding Personal Financial Statements
4. Understanding Interest
5. Developing spending plans
6. Spending and debt
7. Investing
8. Major Purchases – Automobile
9. Major Purchases – Home
10. Protecting Assets
11. Retirement Planning
12. Taxes
III. Introduction to Christian Financial Coaching
A. The Role of a Christian Financial Coach
1. Definition of a CFC
· A CFC is a Christ Follower who has been called to the special
ministry of helping others develop the skills needed to make

31. wise financial decisions, and to lead those facing financial
burdens to a place of financial wholeness.
2. Role of a CFC
· Coach
· Teacher
3. Mission
· The AACC is committed to assisting Christian financial
counselors and the entire ‘community of care,’ financial
professionals, pastors, and caring church members with little or
no formal training. It is our intention to equip Christian
financial counselors with Biblical truth and financial
management knowledge and skills that ministers to persons
experiencing financial stress and helps them move to personal
financial wholeness, financial management competence, mental
stability, spiritual stability and wisdom.
4. Vision
· The vision of the AACC is a world in which all Christians
serve only one master, Jesus Christ, and are free of all forms of
financial bondage and stress. The AACFC envisions a world in
which every Christian has access, through their local church, to
quality financial counseling, and training in financial
management skills.
5. Christian Financial Coaches Are Not . . .
· Lawyers
· Registered investment advisors
· Sales representatives
6. Ethics

32. · Standard 1 – Integrity. A CCFC shall offer and provide
professional services with integrity.
· Standard 2 – Objectivity. A CFC shall be objective in
providing professional services to clients.
· Standard 3– Competence. A CFC shall provide services to
clients competently and maintain the necessary knowledge and
skill to continue to do so in those areas in which the CFC is
engaged.
· Standard 4 – Fairness. A CFC shall perform professional
services in a manner that is fair and reasonable to clients,
principals, congregations and employers, and shall disclose
conflict(s) of interest in providing such services.
· Standard 5 – Confidentiality. A CFC shall not disclose any
confidential client information without the specific consent of
the client unless in response to proper legal process, to defend
against charges of wrongdoing by the CFC or in connection with
a civil dispute between the CFC and client.
· Standard 6 – Professionalism. A CFC’s conduct in all matters
shall reflect credit upon the profession.
· Standard 7 – Diligence. A Board Certified CCFC shall act
diligently in providing professional services.
7. Model for Ethical Decision Making
a. A good model for ethical decision making
· Identify the ethical dilemma
· Identify the possible alternatives
· Evaluate the positive and negative outcomes of each
alternative

33. · Make a decision
b. A better model for ethical decision making
· What would Jesus do?
B. Financial Literacy in America
1. The financial literacy quiz
a. What is 10% of 1,000?
b. How much would each person received if you divided a $2
million lottery equally between five people?
c. Assume that you invest $200 in an account that pays 10%
interest compounded annually. How much money would you
have in the account at the end of two years?
d. Troubling statistics
· Americans are number one, out of people in 38 countries, in
feeling that they have no money left after paying for their basic
living expenses.
· Only one in four Americans with income of at least $75,000
per year feel they are doing well financially.
· The United States has the lowest savings rate in the
industrialized world.
· Only 28 percent of Americans think that they will be able to
afford a comfortable retirement (May 2008).
· 76 percent of undergraduates have credit cards with an
average debt of $2,000. In addition they will amass about
$20,000 in student loans before they graduate.
· According to TransUnion (December 2008) total bankcard

34. debt per bankcard borrower was $5,710.
· The average credit card indebted young adult household
spends about 24 percent of its income on debt payments.
· Total U.S. consumer debt in 2007 reached $2.55 trillion in
2007. You would have to pay about $1,275,000 per year, every
year, since Christ’s birth to pay that debt off (assuming no
accrued interest).
· There were 819,115 personal bankruptcy declarations in 2007.
In 2008 that number rose to 1,086,130.
· In 2008 over 1 million families lost their homes in
foreclosure, a 63 percent rise over 2007.
IV. Life Phases
A. Early-Earning Stage
1. 20s to 35-40s
2. Post college years
3. Pay off student loans
4. Learn to manage money and budget
5. Short and Medium term savings objectives
6. Major acquisitions
· Car
· First home

35. 7. Begin thinking about educational funding for children
8. Insurance is used to provide income security
9. High level of risk tolerance
B.
Established Earning Stage
1. 35-40 to 55
2. Planning priority is usually educational funding for children
3. Lower level of risk tolerance
· Percentage of equity investments in portfolio begins to decline
C. Preretirement Phase
1. 55 to retirement
2. Planning priority is adequacy of retirement fund
3. Begin thinking about legacy planning
4. More conservative asset allocation
D. Retirement
1. 65+ to death
2. Cash flow becomes the financial focus
3. Long-term care issues develop

36. 4. Legacy planning (estate and gift)
5. Insurance is used to an estate planning tool
6. Very low risk tolerance
V. Conclusion