1. Part Two: Debt Reduction and Savings
Lets Talk Money!
Part Two: Debt Reduction and Savings

2. Week 1 Recap Financial Principles Budget Goals (50/20/10/20)
Plan (Luke 14:28-30)
Protect/Stewardship (Proverbs 27:23)
Provide (1 Timothy 5:8)
Budget Goals (50/20/10/20)
Income ≥ Expenses
Reduce/Eliminate Debt
Increase Savings
Include Dreams

3. DEBT
Dave Ramsey Talks About Debt

4. Debt Debt = Something owed by one party to another
Lender = Master, Debtor = Slave
Debt payments reduce buying power
Debt causes missed opportunities
Debt kills/stalls dreams

5. Reducing Debt
Cash Over Card- Use a finite amount of cash to keep spending under control.
Want Versus Need- Prioritize; If you’re not willing to wait and save, it’s not that important.
Reduce Impulse Buys- Shop with your eyes not your card. Stores are designed to make you buy impulsively.
Avoid Interest- Make credit card payments in FULL each month.

6. Reducing Debt
Snowball Method- Pay off the smallest loan first and add the previous payment to the next smallest loan.
• $9,000 car loan at 3.00%
• $10,000 credit card debt at 18.99%
• $15,000 student loan at 4.50%
Avalanche Method- Pay as much as possible on the loan with the highest interest rate first, while making minimum payments on the rest.

7. Reducing Debt Car Home Student Loans
20% down/ 4 year term/ payment < 10% monthly income
Continue making payments to yourself after payoff
Buy the next car with the cash saved
Home
Save for a down payment (Instant equity/lower payment)
Fixed rate mortgage
Payments+HOA+Insurance+Taxes< 28% of monthly income
Student Loans
Apply for ALL applicable scholarships/FAFSA
Total loans < Starting salary

8. Saving Why Should I Save?
Life Happens- Protect yourself from unplanned expenses and debt
Be Prepared for Opportunities- new job; college; investments; vacation
Enjoy the Fruits- Retire on your terms
Be a Blessing to Others

9. Saving How Can I Save? How Much Should I Save?
Out of Sight/Out of Mind- Automate savings
Set Goals- Start small and reward yourself
Set Aside “Extra” Money- Tax Return/Gift/Bonus
Save on purpose
How Much Should I Save?
Start with a $1000 EMERGENCY fund
6-8 months of expenses
Accomplished in 20 months following 50/20/30

10. Saving Savings Vehicles
Savings Account- Easy access to money, low interest rate
Money Market Account- Check writing ability, minimums/fees may apply, higher interest rates than typical savings accounts.
Bank CDs- Fixed rate and maturity date, early withdrawal penalty, longer terms have higher interest rates
FDIC Insures $250k per bank, per depositor.

11. Saving Savings Account
Brick and Mortar Banks- Very low rates ~.02% APY
$1000 for 5 years = 1,010.50
Online Banks- Higher Rates/No In-Person Transactions
Ally Bank 2.2% APY
Marcus by Goldman Sachs 2.25% APY
Synchrony 2.25% APY
$1000 for 5 years = 1,118.95
“Compound interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t, pays it.” – Albert Einstein

12. Saving Money Market Account Interest rates vary: 1% - 2.5%
Check writing/debit card ability
Number of transactions limited
Max of 6 (not including deposits and in-person transfers)
Minimum balances may apply.
FDIC insured

13. Saving Certificate of Deposit (CDs)
Interest rates vary based on length
1yr (2%)/ 2 yr (2.5%)/ 5 yr (3%)
Early withdrawal penalties
Only use what you can afford to do without
If rates are equal use savings account
Ladder CDs
Lock in higher rates with longer terms
Maintain liquidity with shorter terms

14. IT’S TIME TO
LEVEL UP
OUR FINANCES!!!