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3 budgeting and snowball updated
- 2. ACT YOUR OWN WAGEMANAGING MONEY GOD’S WAY INTRODUCTION
- 3. Why Are We Here Today 1. Break the bondage of debt that prevents us from achieving our true potential 2. Retrain our brains to kingdom minded goals 3. Learn to live like aliens 1 Peter 2:11-17 4. Give out of our abundance of blessings 5. Learn to be responsible in our affairs 6. Learn to leave a legacy
- 4. HOW DO WE DO THIS?
- 6. Slow and Steady wins the race
- 7. ACT YOUR OWN WAGEMANAGING MONEY GOD’S WAY BUDGETING
- 9. The Big Picture “The dividing line between the wealthy and the poor is ‘Monthly Payments’.”
- 10. Change Your Prospective • Manage your time – Think in time not dollars. – Who should you promise your future labor to? – Think of your life from the end of it instead of inside of your current situation.
- 11. Stay On Your Feet “Every lesson worth knowing will cost you Blood or Money” Video
- 12. End the Roller Coaster Weeks Bills Are Due Weeks Bills Are NOT Due $500.00 $500.00 $500.00$500.00 Budgeting Flattens The Roller Coaster
- 13. The Accrual Method • Use last year’s financial statements to calculate your annual expense for life - EVERYTHING • Divide that amount by 12 to get a monthly number • Calculate additional costs for accrued expenses • Load the flat amount into an account each month
- 14. Things to Accrue for • Tires • Vehicle Maintenance • Medical Deductible • Insurance – Life – Auto – House • Gifts • Christmas • Next Automobile • College Fund • HVAC • Roof • General House issue • Appliance Replacement
- 15. The Accrual Method Examples Tires - 1 set per year at $500.00 ($500.00 / 12 months = $42.00 per month accrual) Christmas – $1000.00 per year ($1000.00 / 12 months = $84.00 per month accrual) Roof – $5,000.00 / 15 Yrs (180 months) ($5,000.00 / 180 Months = $28.00 per month accrual)
- 16. Building a budget What is a Budget? “An estimate of income and expenses in a period of time.” Focus on the word “Estimate” – it is important to understand that being exact is not the point, the point is that you have to have a plan. It will take months to get budgeting nailed down, the key is to start.
- 17. Building a budget 2 Phases of budgeting: 1. What do I currently Spend? 2. What do I want to Spend?
- 18. Budget Guidelines • Tithe/Charity -------------------------- 10 - 15% • Saving -------------------------- 5 - 10% • Housing -------------------------- 25 - 35% • Utilities -------------------------- 5 - 10% • Food -------------------------- 5 - 15% • Transportation -------------------------- 10 - 15% • Medical -------------------------- 5 - 10% • Personal -------------------------- 5 - 10% • Recreation -------------------------- 5 - 10% • Debt -------------------------- 5 - 10%
- 19. Building a Budget – How To: 1. Print out 3 months of bank statements. 2. Categorize the expenses into broad general lists. 3. Think in terms of category: • Fixed Expenses • Semi-Variable Expenses • Highly Variable Expenses
- 20. Building a budget 1. Calculate your monthly expenses using the accrual method 2. Set up a separate checking account for paying bills each month 3. Load the checking account with the amount of money it will take to pay your bills for one month. 4. On the first day of the following month – deposit the month’s bill amount into the checking account. 5. On the first day of the following month – deposit the amount you have allocated for savings into an appropriate account
- 21. In Your BOOKLETS
- 22. ACT YOUR OWN WAGEMANAGING MONEY GOD’S WAY BUILDING A SNOWBALL
- 23. How the Debt Snowball Works Align your Debt from smallest to Largest Each time one note pays off roll the amount you were spending into the next debt.
- 24. Debt Snowball = Bigger Shovel 1. Start the process 2. Increase your capacity 3. Increase your capacity again 4. And Eventually….
- 25. You can move the world
- 26. The Effect of Interest Interest – Buys other people’s Junk Principal – Buys your Junk
- 27. The Effect of Paying Additional Principal 100% of your money – Buys your Junk
- 28. How to Apply • Apply ALL additional payment directly to principal • Reduces the amount you owe them • YOU WILL STILL OWE A PAYMENT NEXT MONTH • DO NOT “PAY UP FRONT” MONTHLY PAYMENTS • Note in writing on your bill AND the check
- 29. If you can plan for it then it is NOT an Emergency! EMERGENCY • Health Problem • Car wreck • Loss of a job • Death in the family • Tax Bill • Blown out Tire NON-EMERGENCY • One-Day Sale at Belk • Dead Battery • Roof Replacement • HVAC Replacement • Insurance • CHRISTMAS
- 31. Emancipation • e·man·ci·pa·tion • noun • the fact or process of being set free from legal, social, or political restrictions; liberation.
- 32. The First Blesses The Rest PRINCIPAL OF THE FIRST
- 33. Where Is Your Compass?
- 34. To GIVE Like Nobody Else!
Editor's Notes
- SG Leader Notes: You will have to elaborate in your own words what each bullet point means to you. Unlocking your potential can mean numerous things to people based on their point of view. Everyone filters the world from their own “word view” – examples are that an engineer will filter things from a technical and modularized prospective whereas a nurse will filter things from a compassionate loving prospective. Unlock your Potential – This small group is designed to help you break the bondage of debt that prevents you and your family from achieving its true potential. Free Your Mind - Remove the financial strain from your decision making process… Imagine if you were able to approach decisions without having the “can we afford that” filter? Question: “Have you ever wanted to send someone on a mission trip?” Question: “Would you like to give a car to someone?” Question: “Do you know of a family in need that you believe you should be helping?” BIG Question: “Has The Lord told you to do something and your response was ‘But – I can’t afford that’?” Free Your Actions – Ideas are only as good as the results they produce. Becoming financially free will breathe life into your dreams. You can afford to take risks that “you can afford to take”, so this small group will help you to “afford” to take more risks. Give out of our abundance of blessings. – Act Your Own Wage’s big financial goal is to fully fund this Church’s general budget from increased tithes and offerings from people that go through this class. Learn to be responsible in our affairs. – We will learn about Life Insurance and how a Will is one of the most important documents that you can have. Produce true FREEDOM. Freedom is defined as: “The power or right to act, speak, or think as one wants without hindrance or restraint; the quality of being independent of fate or necessity.” Freedom can never truly be understood until you have cast off all bonds that hinder your thinking. Freedom has little value to someone that has never fought for it… 7. Leave a legacy Legacy is something that lives longer than you do. It can be many things, your children, an inheritance, but the focus of this small group will be to help you see how you can make a lasting imprint on your community and the people around you. “Far better it is to dare mighty things, to win glorious triumphs, even though checkered by failure, than to rank with those poor spirits who neither enjoy much nor suffer much, because they live in that grey twilight that knows neither victory nor defeat. We have too much to do to sit on the sidelines. We need to step out of gray twilight into bright sunshine so we can all see the dawn of a new day.” – Theodore Roosevelt
- SG Leader Notes: Tell the Compass story. This story is about setting your compass on the goal you have made… The Story: Imagine that you are walking through a large city – one where there are high-rise buildings on both sides of the street. As you walk between these buildings – your goal is to make it to the prize at the end of the street. But there is a problem – as you walk there are people hanging out of all of the windows, and standing on each street corner grabbing you and waving you in in an effort to divert your attention. If you don’t have your compass set on the prize you will be distracted and ultimately divert from your goal. Staging: Make sure that you tell this story in front of the small group – walk down an isle or across the front of the room as you tell this story and paint a graphical picture of how this may look as your walk across the room.
- SG Leader Notes: “Misery Loves Company” is the picture this graphic paints. Take this opportunity to comfort the class that if they have debt they are in the vast majority of the country. People are daily breaking out of this bondage and there is nothing preventing each one of your class mates from breaking out as well. Debt in America: The average American has $75,600.00 in debt – remind them that most people rent and have no mortgage expense. 1 – Mortgages 2 – Student Loans 3 – Credit Cards The staggering figure is the 44% who have more debt than they have cash to pay for that debt. That means that they are not liquid, if the collectors come calling they will be unable to satisfy their responsibilities.
- SG Leader Notes: On your way to the SG today pay special attention to a shiny bank building somewhere and take a mental note of it. Take this time to paint the picture of that building to the SG. Questions: Have you guys ever seen the (the bank name goes here) building out on the main highway? Have you ever wondered how they afford to build that building and employ all those people? Answer: MONTHLY PAYMENTS! Interest on loaned money is the key – the question is which side of the coin do you want to be on? For the Christian lending is not a good thing, but generosity is a wonderful thing. What does the bible say about a generous giver? 2 Corithians 9:6-7: “The point is this: whoever sows sparingly will also reap sparingly, and whoever sows bountifully will also reap bountifully. Each one must give as he has decided in his heart, not reluctantly or under compulsion, for God loves a cheerful giver..”
- SG Leader Notes: Re-Iterate the time picture that you painted earlier… Who have you promised your future labor to? Change their prospective – ask the group to interview their grandparents or an elderly person that has influence in their lives to help them categorize what is important. Some things to spur discussion that I have learned from wise people: “Take time to Play more.” “The dividing line between the wealthy and the poor is ‘Monthly Payments’.” “You will never look back on your life and say ‘I wish I had worked more’.” “Finances is the #2 cause for all divorce in the nation.”
- SG Leader Notes: If you have an internet connection this link is to a You Tube video of a Gazelle killing a Cheetah. The video is somewhat graphic (not too bad) but does a great job of showing how the enemy prowls around trying to kill and destroy our finances. All we have to do is stay on our feet to win the battle. How do we stay on our feet? Have an emergency fund. Plan for “unplanned” expenses. Communicate openly about monthly expenses with your family.
- SG Leader Notes: Let’s face it – 12 months of financial transactions is too much to ask anyone to do, so lets make sure that you make the goal attainable… The right answer is to keep track of things throughout the year as they hit and add a little bit of money to your budget each time these things come around. First off have them use only a couple months of expenses to nail down a starting point. As unforeseen expenses come along have them make not of that expense in a notebook and add 1/12th of that expense to next month’s budget… That way next year when the same thing hits you again you are already ready for it.
- SG Leader Notes: This slide is an effort to help your SG understand how to calculate the amount of money to set aside inside of a month for certain expenses. TOTAL EXPENSE / 12 MONTHS = MONTHLY ACCRUAL
- SG Leader Notes: So many people have heard “Every Dollar has a name”, “Stupid Tax”, and “Living outside your means” as the main phrases for personal finance… It is very important at this point to understand that those phrases have a negative connotation and are very intimidating to people. Recommending that someone budget themselves suggests that their finances have been out of line for years – this can cause resentment, and woundedness. Make sure that you paint the picture that to get budgeting under control is going to take several iterations until they get the hang of it, and failure is just required in order to figure out the right answer.
- SG Leader Notes: In order to start a plan you first have to know where you are today. Understanding this will quickly uncover any “holes” in your expenses and open your eyes to your own priorities. One comment I often hear when we start categorizing our spending is “I had no idea I spent 1000.00 a month at Walmart”. I don’t have any idea what that could be for. This question leads to point number 2 on the slide – “What do you want to spend at Walmart?”. Answering what you want to do with your money is the key to making it go where you want it to. We get to choose if we want our money to drive us, or if we want to drive our money.
- SG Leader Notes: These guidelines are very general ranges that the SG can use to determine how well their personal finances fit inside of an “Average” family. These percentages are easy to calculate once you have your expenses broken down into category. In next week’s class you will give them a calculator they can use to calculate their expense percentages. Percentage calculation: (Expense Category / Income) * 100 = % of your income Example where the mortgage is 20% of total income: (500 Mortgage / 2000 income) = 20%
- SG Leader Notes: Most personal budgets can easily be broken down into Fixed, Semi-Variable, and Highly Variable expenses. 3 months of expenses will give enough scale to determine a range of expenses for each category and is easily attainable for your small group. An attempt to categorize 1 year of expenses will be a large undertaking and can cause people to give-up before they even get started. Some Examples to help them understand are: Fixed Mortgage Car Payments Insurance Childcare Tithe Debt Repayment Semi-Variable Utilities Fuel Medical Home Maintenance Highly Variable Entertainment Gifts Retail Dining Out
- - Draw this on the board
- Rolling additional money to the Principal of a loan does 2 things. 1 – Reduces the amount of money you owe 2 – Reduces the amount of money you pay interest on
- Envy comes from the root of all sin which is Pride Sin handcuffs us and prevents us from achieving our full potential Freedom comes when we can cast off the things that handcuff us and exchange those things for Living Water!
- Envy comes from the root of all sin which is Pride Sin handcuffs us and prevents us from achieving our full potential Freedom comes when we can cast off the things that handcuff us and exchange those things for Living Water!
- Every company out there has monthly payment plans The key to investing is consistency and repetition – businesses know this and capitalize on it
- SG Leader Notes: Tell the Compass story. This story is about setting your compass on the goal you have made… The Story: Imagine that you are walking through a large city – one where there are high-rise buildings on both sides of the street. As you walk between these buildings – your goal is to make it to the prize at the end of the street. But there is a problem – as you walk there are people hanging out of all of the windows, and standing on each street corner grabbing you and waving you in in an effort to divert your attention. If you don’t have your compass set on the prize you will be distracted and ultimately divert from your goal. Staging: Make sure that you tell this story in front of the small group – walk down an isle or across the front of the room as you tell this story and paint a graphical picture of how this may look as your walk across the room.