Financial Freedom Workshop - Session 4

You can download the free PowerPoint and teaching matierials at: www.LisbonWC.org/free.htm

Welcome!

FINANCIAL FREEDOM WORKSHOP

Session 4

Developed using the books:Your Money Map: A Proven 7 Step Guide to True Financial Freedom and The Total Money Makeover.

REVIEW

- Hopefully you have been tracking all your expenses since this workshop began.

- Use these figures to make your spending plan more accurate.

- Make adjustments in amounts and categories so that income and expenses are balanced.

- Stick to your plan!

- This will be the most beneficial thing you will learn in this workshop.

- I am available for personal financial counseling.

Intro

- So far we have focused on getting out of debt.

- Tonight we will begin to plan for the future once you are debt free.

- If you are not there yet, see this as a goal that will give you hope that financial freedom is possible!

THE ROAD TO FINACIAL FREEDOM

MONEY MAP

Destination #1

- Begin using a spending plan

- Save $1,000 for emergencies

Destination #2

- Pay off credit cards

- Increase savings to one month’s living expenses

Destination #3

- Pay off all consumer debt

- Increase savings to three month’s living expenses

Destination #4

- Begin saving for major purchases (home, auto, etc.).

- Begin saving for retirement.

- Begin saving for children’s education.

- Begin saving to start a business.

(If this is a goal for you.)

Today we will focus on the fist half of destination #4: Major purchases and saving for retirement.

Proverbs 21:5 “Steady plodding brings prosperity.”

SAVING FOR MAJOR PURCHASES

- At this destination, you have gotten all debt out of your life except for your home.

- You have to live life from this point on hating debt and committing never to get in it again.

- The way you do this is by planning ahead and saving for major purchases.

Your saving priorities.

- Priorities for major purchases will be different for each person.

- Last time we spoke of how to get out of auto debt.

- Saving for your next car could be a good first step for many to stay out of debt.

- The stage of life you are in and your families situation will also affect your priorities.

- Also consider where your plans for your life. Where is God directing your path?

Reasonable down payment for a home.

- At least 20%

- Monthly payments will be smaller

- Eliminates need for expensive PMI (Private Mortgage Insurance)

- $65 - $70 per month per $100,000 borrowed (Cost avg. $840 - $1,680 per year)

- PMI is basically foreclosure insurance

Steady saving adds up.

- When you get out of debt and begin to save, interest becomes your ally

- It begins to work for you.

- Saving for a major purchase may take more time than the previous destinations.

- Stay on course and keep your goal in mind.

Compounding interest is a friend.

- Before, interest on your debt made it difficult to pay off your debt.

- Now interest on savings will accelerate you progress.

- The sooner you start to save the better.

- If you save $1000 a year at 10% interest, you will save $526,985.

- This will earn $4,392 each month.

- If you wait just one year to start saving, you will lose $50,899.

INVESTING FOR RETIREMENT

- “USA today reported recently that 56% of Americans of not systematically prepare for retirement age by investing” (Dave Ramsey).

- “The Consumer Federation of America found that of people making less that $35,000 per year, 40% said the best way for them to have $500,000 at retirement age is to win the Lotto” (Dave Ramsey).

- “Wealth Builder magazine’s poll found that 80% of Americans believe their standard of living will go up at retirement. Talk about living in a fantasy! (Dave Ramsey)

Don’t rely solely on a company or the government.

- The Social Security retirement age is being pushed back.

- It isn’t enough to live on in the world today.

- It was never intended as a retirement plan

- It was started as a way to help order people living in poverty.

- “A recent survey said more people under age thirty believe in flying saucers than believe they will receive a dime from Social Insecurity” (Dave Ramsey).

Start early!

- We mentioned earlier that compound interest makes all the difference in saving for retirement.

Two Savers Example

- Alice started saving $1,000 a year for retirement when she was 21 years old. She saved this much for 8 years and then stopped at age 29 but let the amount build interest until she was 65. She paid a total of $8,000 into her retirement plan.

- Ben waited until age 29 to start saving $1,000 a year for retirement and saved that much per year until he retired at age 65. He paid a total of $37,000 into his retirement plan.