FINANCE, It’s a Personal Thing ! WHICH WAY IS NORTH ?

TIME IS MONEY $$$

, , , , , , , , , , , , , ,558 AGEBENRETURN ARTHUR RETURN BEN AND ARTHUR---BOTH SAVE AT 12% PER YEAR! BEN STARTS AT AGE 19 AND ENDS AT AGE 27 ARTHUR STARTS AT AGE 27 AND STOPS AT 65

6001,298, , ,454, , ,629, ,085, ,824, ,217, ,043, ,366, ,288, ,532,16...AND HE NEVER CAUGHT UP! AGE BEN RETURN ARTHURRETURN

18% interest is not 3 times better than 6% interest!

$1,000 one time investment, no withdrawal Age 25 to Age 65 (40 years) 18%12%6% % = $750,378 12% = $ 93,050 6% = $ 10,285

Money Management Strategy: Financial Statements and Budgeting

Long Term Save and Invest Future Income Lost Interest

Major Money Management Activities Creating and implementing a plan for spending, and saving (budgeting). Creating personal financial statements (balance sheets and cash flow statements of income and outflow). 3-4 Storing and maintaining personal financial records and documents.

Report Measure Maintain Provide

Assets Liabilities Assets – Liabilities Net Income Fixed & Variable

Lower Higher <20% 10%

Future Emergency Fixed Variable Variances Flexible

“Baby Steps” Step One: $1,000 in an “Emergency Fund” Step Two: Pay off all debt (except the house) utilizing the “ Debt Snowball” Step Three: 3 -6 months expenses (necessities only) in savings

“Baby Steps” Step Four: Invest 15% of Household Income into ROTH IRA’s and Pre-tax retirement plans Step Five: College Funding Step Six: Pay-off Home Early Step Seven: Build Wealth! (Mutual Funds/ Real Estate)

The Amazing Free Car Story We normally buy: $18,000 car: 7 years at 10% payments of $300 Value after 7 years $800 OR $6,000 car: 7 years at 10% payments of $100 Value after 7 years $400 The other $200 per month saved at 10% 7 years = $24,190. NOW WHO MADE THE CORRECT CHOICE!!

The Amazing Free Car Story No Car Payments! At Year Seven the car is junk, in either plan, but in our plan: Savings$24,190 One year old car for cash$16,000 Left in savings$ 8,190

The Amazing Free Car Story Another Seven Years: Save $300 per month from year 7 to year 14 plus interest on $8,190 (10% return) The car is junk, again. Savings$52,245 One year old car for cash$25,000 Left in Savings$27,245 No Car Payments! So Here we go again! We will have “Free Cars” the rest of our lives just because we purchased a lower priced car one time 14 years ago.

MAJOR COMPONENTS OF A HEALTHY FINANCIAL PLAN Teach My Children Retirement Funding Life Insurance Written Cash Flow Plan Will and/or Estate Plan Debt Reduction Plan Tax Reduction Plan Emergency Funding Charitable Giving Health Insurance Disability Insurance Auto Insurance Homeowners Insurance

IAMNOWHERE I AM NOWHERE