Matt Whiting May 2012

Introduction Perspectives on debt Many ways to financial trouble Few ways to financial freedom One step at a time (10 steps total) Advanced topics 2 Week 1 Weeks © 2012 Matthew S. Whiting

We all deal with money … … yet few have formal financial training The economy has been weak for years … … making good financial management crucial Money problems are the #1 marriage issue* Singles often have severe money challenges Worry about finances detracts from Christian walk … … and Christian testimony * underlying cause is spiritual, but more on that later 3 Wk 1

Should we discuss finances in church? The Bible has many references to money 800 scriptures related to money according to Dave Ramsey ( 2,350 references to money in one form or another according to Crown Financial ( Jesus used many parables in the Bible and nearly half relate to money Money issues are often an indication of underlying spiritual issues 4 Wk 1 © 2012 Matthew S. Whiting

Three categories of people vis-à-vis finances: Make so much they almost can’t get in trouble Don’t make enough to subsist on Everyone else (most of us!) The 1 st category does not need this class The 2 nd category requires new job skills, church benevolence, etc. The 3 rd category needs to wisely manage their financial resources according to God’s plan 5 Wk 1 © 2012 Matthew S. Whiting

Worldly perspective 1 Economy built on debt/credit since WW II Why wait when you can buy with a loan? It isn’t my fault it is the {bank, credit card issuer, etc.} who extended me credit Declare bankruptcy and start over 1. Larry Burkett, Debt-Free Living, (Chicago: Moody Press, 1989) chapter 8. 6 Wk 1 © 2012 Matthew S. Whiting

Biblical perspective and principles 2 The debtor is in servitude to the one who lends to them. Proverbs 22:7 “The rich ruleth over the poor, and the borrower is servant to the lender.” Scripture permits borrowing, but cautions of the danger and has strict rules governing borrowing. Debt is not normal Avoid surety – debt not collateralized The borrower has an absolute commitment to repay loans 2. Larry Burkett, Debt-Free Living, (Chicago: Moody Press, 1989) chapter 8. 7 Wk 1 © 2012 Matthew S. Whiting

Larry Burkett, Debt-Free Living, (Chicago: Moody Press, 1989) Larry Burkett, Randy Southern, “The World’s Easiest Guide“ to Finances, (Chicago: Moody Press, 2001) Larry Burkett, Ron Blue, Wealth to Last, (Nashville: Broadman and Holman Publishing, 2003) 8 Wk 1 © 2012 Matthew S. Whiting

Personal traits that lead to debt Ignorance Indulgence Poor planning Events (somewhat) beyond our control Job loss Medical issues Natural disasters Major discretionary expenses 9 Wk 1 © 2012 Matthew S. Whiting

Ignorance - Proverbs 22:3 “A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished.” Indulgence Greed Lack of patience, desire for instant gratification Look to things rather than to God for happiness Poor planning - Luke 14:28-30 “For which of you, intending to build a tower, sitteth not down first, and counteth the cost, whether he have sufficient to finish it? Lest haply, after he hath laid the foundation, and is not able to finish it, all that behold it begin to mock him, Saying, This man began to build, and was not able to finish. 10 Wk 1 © 2012 Matthew S. Whiting

Job loss/death or disability of primary earner Be valuable to your employer Continually learn new skills Carry adequate life and disability insurance Medical issues Maintain good health Carry major medical insurance at a minimum Natural disasters Adequately insure house and cars 11 Wk 1 © 2012 Matthew S. Whiting

Major discretionary expenses Purchase of a home  Too soon  Too much (>25% of net spendable income) Purchase of too much car or too many cars “Scheduled” disasters  Failure to prepare for the known unknowns  Lack of an emergency fund 12 Wk 1 © 2012 Matthew S. Whiting

Accept financial reality Income – Expenses ≥ 0 Getting into trouble takes time – getting out does also You need a plan You need to work together if married You may need outside help 13 Wk 1 © 2012 Matthew S. Whiting

1. Balance the budget 2. Establish short-term emergency fund 3. Pay off consumer debt 4. Establish long-term emergency fund 5. Develop “large purchase” savings plan 6. Pay off mortgage 7. Save for retirement 8. Save for college 9. Invest the surplus 10. Share the surplus 14 Week 2 Week 3 Week 4 Week 5 Week 6 Wk 1 © 2012 Matthew S. Whiting