Mastering Your Money - Laying the Foundation

Laying the Foundation              


 Matthew 7:24-27

²⁴ Therefore whosoever heareth these sayings of mine, and doeth them, I will liken him unto a wise man, which built his house upon a rock: ²⁵ And the rain descended, and the floods came, and the winds blew, and beat upon that house; and it fell not: for it was founded upon a rock. ²⁶ And every one that heareth these sayings of mine, and doeth them not, shall be likened unto a foolish man, which built his house upon the sand: ²⁷ And the rain descended, and the floods came, and the winds blew, and beat upon that house; and it fell: and great was the fall of it.

I.                  VARIOUS WAYS PEOPLE LOOK TO GET RICH

1.    By winning it.

The number-one way average, hardworking people try to get rich in America? They play the lottery. Since 1964…Americans have plunked down more than $500 billion on lottery tickets.

 

2.    By marrying into wealth.

A very small percentage of people marry into money and most of them end up paying for it for the rest of their lives.

 

3.    By inheriting it.

There is a temptation to wish they leave early….. :-)

 

4.    Sue for it.

 

 

II.               STEPS TO BUILDING WEALTH.

Regardless of the size of your paycheck, you probably already make enough money to become rich.

1.    Develop a small emergency savings.

 

2.    Retire Debt.

·       Borrow money to make money not to loose it.

 

·       If you pay just the minimum due each month on an $8,400 credit balance, you will wind up having to make 365 monthly payments before it goes to zero. That’s thirty years and five months’ worth of payments.

 

i.                   Stop digging the hole.

ii.                 Find out how much interest you are paying.

iii.              Ask for a lower rate.

iv.               Consolidate your debt.

 

v.                 Rank your cards.

·         Make a list of the current outstanding balances on each of your credit card accounts.

·         Divide each balance by the minimum payment that particular card to get a payment ranking number.

·         For example, a card with a $500 balance and a minimum payment due of $50 will have a rank # of 10.

·         Start paying card with lowest Rank Number first.

 

3.    Buy a Home.

Benefits of Home Ownership

i.                   Forced Savings.

ii.                 OPM.

iii.              Tax Breaks.

iv.               Pride of Ownership.

v.                 It’s a Great Investment.

TIPS

·         Go to www.eloan.com and calculate how much you can afford to spend on a home

According to the FHA, a good rule of thumb is that most people can afford to spend 29 percent of their gross income on housing expenses—as much as 41 percent if they have no debt

·         Decide to pay off early by making extra payment a year or increase your mortgage by 10% each month,

·         Go to www.bankrate.com and use its calculator to see how much you can save by making your mortgage payments biweekly

 

4.    Determine your Debt/Savings/Investment Plan

Questions:

i.                   Do I put all my available cash on Debt Retirement and start saving when all my debts are paid off?

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ii.                 Do I save all that I need and then begin paying my debts off?

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iii.              Do I save while paying of debts?

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5.    Save a Minimum of 3 to 6 Months Income.

 

i.                   You should at least work one hour a day for yourself

 

 

If you are going to put in roughly 90,000 hours at work over the course of your lifetime (which is what the average person does), shouldn’t you work one hour a day for yourself?

 

Let’s ask how much it will cost you if you don’t Pay Yourself First. If you invested just $200 every two weeks for 35 years in a retirement account that earned an annual return of 10 percent, what would you have? The answer is that you would have more than 1 million dollars. Actually, a lot more. The exact figure is ________________

 

ii.                 If you want to be:

·         Dead Broke: Don’t Pay Yourself First. Spend more than you make. Borrow money on credit cards and carry debt you can’t pay off.

·         Poor: Think about Paying Yourself First, but don’t actually do it. Spend everything you make each month and save nothing. Keep telling yourself, “Someday . . .”

·         Middle Class: Pay Yourself First 5 to 10 percent of your gross income.

·         Upper Middle Class: Pay Yourself First 10 to 15 percent of your gross income.

·         Rich: Pay Yourself First 15 to 20 percent of your gross income.

·         Rich Enough to Retire Early: Pay Yourself First at least 20 percent of your gross income.

 

 

6.    Build for the Future.

 

7.    Automate Your Wealth

i.                   Be as smart as the Government

The government is pretty smart. It figured out years ago that people couldn’t budget, so it set up a system to make sure it got “paid first.” Not only did the government arrange to get paid first, it automated the process so there wouldn’t be any slip-ups

ii.                 Don’t focus on Budgeting alone.

 

There’s a very simple reason why budgets don’t work in the real world. They aren’t fun.

 

Any system that is designed to control your normal human impulses is ultimately bound to fail.

MASTERING YOUR MONEY 4

Old School Automated Notes

Luke 16:1-13

He also said to His disciples: “There was a certain rich man who had a steward, and an accusation was brought to him that this man was wasting his goods. ² So he called him and said to him, ‘What is this I hear about you? Give an account of your stewardship, for you can no longer be steward.’ ³ “Then the steward said within himself, ‘What shall I do? For my master is taking the stewardship away from me. I cannot dig; I am ashamed to beg. ⁴ I have resolved what to do, that when I am put out of the stewardship, they may receive me into their houses.’ ⁵ “So he called every one of his master’s debtors to him, and said to the first, ‘How much do you owe my master?’ ⁶ And he said, ‘A hundred measures of oil.’ So he said to him, ‘Take your bill, and sit down quickly and write fifty.’ ⁷ Then he said to another, ‘And how much do you owe?’ So he said, ‘A hundred measures of wheat.’ And he said to him, ‘Take your bill, and write eighty.’ ⁸ So the master commended the unjust steward because he had dealt shrewdly. For the sons of this world are more shrewd in their generation than the sons of light. ⁹ “And I say to you, make friends for yourselves by unrighteous mammon, that when you fail, they may receive you into an everlasting home. ¹⁰ He who is faithful in what is least is faithful also in much; and he who is unjust in what is least is unjust also in much. ¹¹ Therefore if you have not been faithful in the unrighteous mammon, who will commit to your trust the true riches? ¹² And if you have not been faithful in what is another man’s, who will give you what is your own? ¹³ “No servant can serve two masters; for either he will hate the one and love the other, or else he will be loyal to the one and despise the other. You cannot serve God and mammon.”

 

STEWARDSHIP Responsibility to manage all the resources of life for the glory of God, acknowledging God as provider.

 

Stewardship Means

1.   Everything Belongs to God.

 

Psalm 24:1

¹ The earth is the Lord’s, and all its fullness, The world and those who dwell therein.

 

Psalm 50:10-12

¹⁰ For every beast of the forest is Mine, And the cattle on a thousand hills. ¹¹ I know all the birds of the mountains, And the wild beasts of the field are Mine. ¹² “If I were hungry, I would not tell you; For the world is Mine, and all its fullness.

 

2.   He Let’s us Manage His Resources.

3.   We Must be Wise with Our Resources.

4.   We must not be Wasteful.

5.   We Must be Faithful.

 

Tell Bush Story

Jim and Sue

·       Jim asked to meet David a 23 year old financial planner

·       Jim early 50’s was planning to retire next month

·       David Bach Judged Jim wrong

·       Worked for same company 30 years

·       Never made over $40,000 per year

·       Not good with budgets

·       Joint income that year $53,946.00

·       No Debt

·       Paid for house $450,000

·       Paid for rental House $325,000

·       401K $610,000

·       Wife 2 Retirement Plans ($72,000

·       Wife Municipal Bonds $160,000

·       $62,500 Cash in Savings

·       2 Million in Assets

·       $26,000 year in Rental Income plus Pension

 

1.   They Got Good Advice.

2.   They Decided to Pay Themselves before paying their Bills.

3.   They Became Honest and realized they lacked discipline.

4.   They Automated savings.

5.   They began to save enough to buy a home.

6.   They Paid Home off early.

7.   They paid for all consumer items cash.

8.   They never bought new vehicles.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I.           THE CURRENT FINANCIAL STATE OF MOST AMERICANS

American Family Financial Statistics	Data
Average American family savings account balance	$3,800
Percent of working Americans who are not saving for retirement	40 %
Percent of American families who have no savings at all	25 %
Average amount saved for retirement	$35,000
Average American household debt	$117,951
Average American family home value	$160,000
Average amount owed on home mortgage	$95,000
Average American household annual income	$43,000
Average credit card debt	$2,200
Percent of American workers who postponed their retirement age this year	24 %
Percent surveyed who are very confident about having enough money for retirement	18 %
Percent of American adults who do not have a bank account	7.7 %
Percent of American adults who have an emergency fund to fall back on	38 %

http://www.statisticbrain.com/american-family-financial-statistics/

II.        PREMISE FOR THIS SERIES

 

1.   You can end up rich living on a modest salary.

2.   You can get rich as a regular employee.

3.   Budgeting is not the only key to wealth.

4.   Pennies matter and dollars really matter.

5.   You are the second most important person in the world.

6.   Where you live matters.

7.   You must Automate your wealth.

 

III.      THE FIRST STEP TO WEALTH BUILDING

 

1.   Get Control of Where Your Money Goes

o   Remember money has a current and future value

o   What you spend today will not be invested for tomorrow

Example 1 Ages:  _____________

Dollar Amount of Unnecessary Expense ______________

Per Day(s)                                                   ______________

Annual Return on interest if invested       ______________

Number of Years                                        ______________

Total Dollars Spent                                     ______________

Interest Forfeited                                        ______________

Real Cost of Expense                                ______________

 

Example 2 Ages: ______________

Dollar Amount of Unnecessary Expense ______________

Per Day(s)                                                   ______________

Annual Return on interest if invested       ______________

Number of Years                                        ______________

Total Dollars Spent                                     ______________

Interest Forfeited                                        ______________

Real Cost of Expense                                ______________

 

Example 3 Ages: ______________

Dollar Amount of Unnecessary Expense ______________

Per Day(s)                                                   ______________

Annual Return on interest if invested       ______________

Number of Years                                        ______________

Total Dollars Spent                                     ______________

Interest Forfeited                                        ______________

Real Cost of Expense                                ______________

 

Example 4 Ages: ____________

Dollar Amount of Unnecessary Expense ______________

Per Day(s)                                                   ______________

Annual Return on interest if invested       ______________

Number of Years                                        ______________

Total Dollars Spent                                     ______________

Interest Forfeited                                        ______________

Real Cost of Expense                                ______________

 

Example 5 Ages: ____________

Dollar Amount of Unnecessary Expense ______________

Per Day(s)                                                   ______________

Annual Return on interest if invested       ______________

Number of Years                                        ______________

Total Dollars Spent                                     ______________

Interest Forfeited                                        ______________

Real Cost of Expense                                ______________

 

IV.     TIME TO TRACK

 

1.   Write down every penny you spend for the next week.

2.   At end of week analyze where money is going.

3.   Determine How much it will cost you at Retirement Age.