It’s All God’s Money Living Grace Community Church November, 2014

Review of Week 1 – It’s All God’s Money Everything belongs to God God promises to meet all our needs Wealth… and the ability to make wealth… comes from God The pursuit of riches can deceive Be content with what you have The key to contentedness is to avoid comparison Managing God’s money well requires consistent communication with God… and with your spouse

Debt What God says about debt Romans 13:8 Owe nothing to anyone except to love one another; for he who loves his neighbor has fulfilled the law.

What God says about debt Deuteronomy 28:1-2 Now it shall be, if you diligently obey the LORD your God, being careful to do all His commandments which I command you today, the LORD your God will set you high above all the nations of the earth. All these blessings will come upon you and overtake you if you obey the LORD your God:

What God says about debt Deuteronomy 28:12 The LORD will open for you His good storehouse, the heavens, to give rain to your land in its season and to bless all the work of your hand; and you shall lend to many nations, but you shall not borrow.

What God says about debt Deuteronomy 28:15 But it shall come about, if you do not obey the LORD your God, to observe to do all His commandments and His statutes with which I charge you today, that all these curses will come upon you and overtake you:

What God says about debt Deuteronomy 28:43-44 The alien who is among you shall rise above you higher and higher, but you will go down lower and lower. He shall lend to you, but you will not lend to him; he shall be the head, and you will be the tail.

What God says about debt Proverbs 22:7 The rich rules over the poor, And the borrower becomes the lender's slave.

What God says about debt What if… Your lender doesn’t abide by Biblical principles?

What God says about debt What if… Your lender doesn’t abide by Biblical principles? Someone else who has financial influence on your life (typically your employer) doesn’t abide by Biblical principles?

What God says about debt What if… Your lender doesn’t abide by Biblical principles? Someone else who has financial influence on your life (typically your employer) doesn’t abide by Biblical principles? God has a less financially lucrative… but more rewarding… plan for you?

What God says about debt When is debt permissible? When buying an appreciating asset A house

What God says about debt When is debt permissible? When buying an appreciating asset A house As an investment for a constant stream of income A business

What God says about debt When is debt permissible? When buying an appreciating asset A house As an investment for a constant stream of income A business A college education (not recommended)

The Plastic Genie

Facts about credit cards About 1.2 billion credit cards in use in the US today

The Plastic Genie Facts about credit cards About 1.2 billion credit cards in use in the US today $880 billion in credit card debt was outstanding in August, 2014

The Plastic Genie Facts about credit cards About 1.2 billion credit cards in use in the US today $880 billion in credit card debt was outstanding in August, 2014 About 23% of all households do not have a credit card

The Plastic Genie Facts about credit cards About 1.2 billion credit cards in use in the US today $880 billion in credit card debt was outstanding in August, 2014 About 23% of all households do not have a credit card About 30% of all households pay off their balance every month

Do not use credit cards Pay off the balance each month Carry a balance each month. Average balance = $15,600 Annual Interest = $2,300

Getting out of Debt Arrange a date for the Genie with Ms. Shredder

Getting out of Debt Arrange a date for the Genie with Ms. Shredder We must spend less than our take home income if we want to get out of debt

Getting out of Debt A Strategy List all of your debts, from smallest to largest

Getting out of Debt A Strategy List all of your debts, from smallest to largest Make minimum payments on all except your smallest debt

Getting out of Debt A Strategy List all of your debts, from smallest to largest Make minimum payments on all except your smallest debt Pay everything you can on the smallest debt until it’s gone

Getting out of Debt A Strategy List all of your debts, from smallest to largest Make minimum payments on all except your smallest debt Pay everything you can on the smallest debt until it’s gone Make minimum payments on all except your next smallest debt

Getting out of Debt A Strategy List all of your debts, from smallest to largest Make minimum payments on all except your smallest debt Pay everything you can on the smallest debt until it’s gone Make minimum payments on all except your next smallest debt Pay everything you can on the next smallest debt until it’s gone

Getting out of Debt A Strategy List all of your debts, from smallest to largest Make minimum payments on all except your smallest debt Pay everything you can on the smallest debt until it’s gone Make minimum payments on all except your next smallest debt Pay everything you can on the next smallest debt until it’s gone Continue until you are debt-free

Getting out of Debt – An example Assume the following: $6,000 4-year car loan at 8% Credit card #1 - $200 balance, minimum payment of $10 per month, 12% interest Credit card #2 - $1,000 balance, minimum payment of 2% / $10 per month, 21% interest Credit card #3 - $2,000 balance, minimum payment of 2% / $10 per month, 18% interest

Getting out of Debt – An example If we pay the minimums… Car loan will take 4 years to pay off. Interest = $976

Getting out of Debt – An example If we pay the minimums… Car loan will take 4 years to pay off. Interest = $976 CC #1 will take 23 months to pay off. Interest = $22

Getting out of Debt – An example If we pay the minimums… Car loan will take 4 years to pay off. Interest = $976 CC #1 will take 23 months to pay off. Interest = $22 CC #2 will take over 29 years to pay off. Interest = $3,642

Getting out of Debt – An example If we pay the minimums… Car loan will take 4 years to pay off. Interest = $976 CC #1 will take 23 months to pay off. Interest = $22 CC #2 will take over 29 years to pay off. Interest = $3,642 CC #3 will take over 29 years to pay off. Interest = $4,562

Getting out of Debt – An example If we pay the minimums… Car loan will take 4 years to pay off. Interest = $976 CC #1 will take 23 months to pay off. Interest = $22 CC #2 will take over 29 years to pay off. Interest = $3,642 CC #3 will take over 29 years to pay off. Interest = $4,562 Total loans = $9,200. Total interest = $9,202

Getting out of Debt – An example Assume we pay $100 over the minimum each month… CC #1 will take 2 months to pay off. Interest = $1

Getting out of Debt – An example Assume we pay $100 over the minimum each month… CC #1 will take 2 months to pay off. Interest = $1 CC #2 will take 10 months to pay off. Interest = $93

Getting out of Debt – An example Assume we pay $100 over the minimum each month… CC #1 will take 2 months to pay off. Interest = $1 CC #2 will take 10 months to pay off. Interest = $93 CC #3 will take 22 months to pay off. Interest = $445

Getting out of Debt – An example Assume we pay $100 over the minimum each month… CC #1 will take 2 months to pay off. Interest = $1 CC #2 will take 10 months to pay off. Interest = $93 CC #3 will take 22 months to pay off. Interest = $445 Car loan will take 34 months to pay off. Interest = $806.

Getting out of Debt – An example Assume we pay $100 over the minimum each month… CC #1 will take 2 months to pay off. Interest = $1 CC #2 will take 10 months to pay off. Interest = $93 CC #3 will take 22 months to pay off. Interest = $445 Car loan will take 34 months to pay off. Interest = $806. Total loans = $9,200. Total interest = $1,344

Getting out of Debt – An example Benefits of paying an additional $100 per month All debts (including the car) are paid off in 34 months

Getting out of Debt – An example Benefits of paying an additional $100 per month All debts (including the car) are paid off in 34 months Save over $7,800 in interest

Getting out of Debt – An example Benefits of paying an additional $100 per month All debts (including the car) are paid off in 35 months Save over $7,800 in interest In month 35 we are saving $316 per month