1. Financial Foundations 101

2. Money What is money (what does it represent?)? – It is a “medium of exchange” Money is used in place of bartering.

4. It’s getting a little too complicated!

6. Ecclesiastes 10:17-19 17 Blessed are you, O land, whose king is of nobility and whose princes eat at the appropriate time—for strength and not for drunkenness. 18 Through indolence the rafters sag, and through slackness the house leaks. 19 Men prepare a meal for enjoyment, and wine makes life merry, and money is the answer to everything.

7. Risk The probability of a negative consequence; The chance of injury, damage, or loss from a given activity/choice

8. Opportunity Cost The Opportunity Cost of a decision is defined as the value of next best alternative Before making a decision, you have to decide if both the risk of a negative consequence and the opportunity cost are too high. If they are, then you have to consider another option!

9. Directives to Take Risks Ecclesiastes 9:10 - Whatever your hand finds to do, do it with all your might; for there is no activity or planning or knowledge or wisdom in Sheol where you are going. Ecclesiastes 9:12 - Moreover, man does not know his time: like fish caught in a treacherous net and birds trapped in a snare, so the sons of men are ensnared at an evil time when it suddenly falls on them. Ecclesiastes 11:1 - Cast your bread on the surface of the waters, for you will find it after many days. Matthew 25:24-27 – And the one also who had received the one talent came up and said, ‘Master, I knew you to be a hard man, reaping where you did not sow and gathering where you scattered no seed. 25 And I was afraid, and went away and hid your talent in the ground. See, you have what is yours.’26 “But his master answered and said to him, ‘You wicked, lazy slave, you knew that I reap where I did not sow and gather where I scattered no seed. 27 Then you ought to have put my money in the bank, and on my arrival I would have received my money back with interest.

10. Cautions against taking unwise risk-taking Proverbs 21:5 – The plans of the diligent lead surely to advantage, but everyone who is hasty comes surely to poverty. Proverbs 19:2 – Also it is not good for a person to be without knowledge, and he who hurries his footsteps errs. Proverbs 28:20 – A faithful man will abound with blessings, but he who makes haste to be rich will not go unpunished.

11. Credit Inflationary Risk 1. Inflationary Risk – this is the risk that the value (or purchasing power) of the currency will decline, and what you pay them back will not be as valuable as what they initially loaned you. Economic Risk 2. Economic Risk – the risk that we may fall into a recession or depression and that will negatively affect your ability to repay the loan. Liquidity Risk 3. Liquidity Risk – this is the risk that by lending their money to you, they limit their opportunities to invest in the future. Basically, their money is tied up with you! Credit Risk 4. Credit Risk – this is probably the largest risk when it comes to lending money to individuals. This risk refers to the possibility that you will not be able to pay back the loan.

12. Interest Rate The price that banks charge for loans is known as the interest rate. 2 Banks have 2 options when it comes to dealing with the risk involved with lending you money: 1. 1. Don’t issue the loan 2. 2. Charge a higher price – higher interest rate If the bank determines that they are taking on more risk by giving you a loan, they will raise the interest rate to a level that compensates them for the additional risk!

13. The credit risk is different, since this is tied to your ability to pay back the loan.

14. Debt DEBT IS EQUIVALENT TO BORROWING FROM YOUR FUTURE! Most of us assume that our future will be bright, rosy, and perfect; with money falling from the sky! So… * We are willing to borrow from our future to pay for something we desire, today * We have no problem borrowing for wants, rather than strictly for needs

15. Bankruptcy is an extremely popular way to deal with debt in this country… Psalm 37:21 – The wicked borrows and does not pay back, but the righteous is gracious and gives. Romans 13:8 - Owe nothing to anyone except to love one another; for he who loves his neighbor has fulfilled the law. Debt is not something that is forbidden in scripture, but they way that it is used today is nothing like what we see in the bible and is even sinful in many aspects:

16. In scripture, borrowing was only used to meet pressing needs or possibly to expand a business… Nehemiah 5:2-5 2 For there were those who said, “We, our sons and our daughters are many; therefore let us get grain that we may eat and live.” 3 There were others who said, “We are mortgaging our fields, our vineyards and our houses that we might get grain because of the famine.” 4 Also there were those who said, “We have borrowed money for the king’s tax on our fields and our vineyards. 5 Now our flesh is like the flesh of our brothers, our children like their children. Yet behold, we are forcing our sons and our daughters to be slaves, and some of our daughters are forced into bondage already, and [a]we are helpless because our fields and vineyards belong to others.”

17. Being in debt comes with very serious consequences: Proverbs 22:7 – The rich rules over the poor, and the borrower becomes the lender’s slave. 2 Kings 4:1,7 - Now a certain woman of the wives of the sons of the prophets cried out to Elisha, “Your servant my husband is dead, and you know that your servant feared the Lord; and the creditor has come to take my two children to be his slaves.” Then she came and told the man of God. And he said, “Go, sell the oil and pay your debt, and you and your sons can live on the rest.” Matthew 18:23-35 - Parable of the Unjust, Forgiven Slave *

18. What Affects Your Credit Score? Here is the current breakdown of a credit score: - 35% Payment History - 30% Amounts Owed - 15% Length of Credit History - 10% New Credit - 10% Types of Credit Used Here are some items that will be used in the future to determine credit worthiness: -Child support payments owed -Payday loans -The current standing of utility bills -Rent -and even cell phone bills.

19. Whether it be credit cards, a car loan, a mortgage, or even student loans, you have to examine the risks involved, including the opportunity costs, and decide if you can still honor God as a faithful steward of His resources! Proverbs 3:9-10 9 Honor the Lord from your wealth and from the first of all your produce; 10 So your barns will be filled with plenty and your vats will overflow with new wine. 1 Corinthians 10:31 – Whether, then, you eat or drink or whatever you do, do all to the glory of God.

20. Keep in touch! kcrumbley@knsfinancial.com http://knsfinancial.com facebook.com/knsfinancial twitter: @knsfinancial