Financial Freedom Workshop - Session 5

Download the free Powerpoint and teaching materials at www.LisbonWC.org/free.htm

FINANCIAL FREEDOM WORSHOP

Destination 4

Developed from the book Your Money Map: A Proven 7 Step Guide to True Financial Freedom.

- How is your spending plan progressing?

- Anyone finished their’s yet?

Intro

- Last time we looked at the first half of Destination 4

- Now let’s look at he second half

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.)

Proverbs 21:5

“Steady plodding brings prosperity.”

CHILDREN’S EDUCATION

Assignment from last week

- Do you have kids to send to college? If so, find out how much you have saved so far for their college fund.

Average debt.

- The average college senior has $19,000 in school loans, $3,300 in credit card debt, plus what they owe on their vehicle.

- Those who finish graduate school owe an average of $39,000.

- Money magazine and CBS Market Watch both quote the alarming statistic that 39% of Americans with kids don’t save a dime toward college. 4% have saved less than $1,000, and 25% have saved between $1,000 and $10,000. That means 68% have saved nothing or next to nothing!” (Dave Ramsey).

Start Now!

- Last time we learned the value of compound interest over time.

- The longer you are saving, the more interest multiplies your efforts.

- It’s best to start when they are born.

- This way you can give a little per month over time instead of trying to pay catch up later.

- “If you start investing early, your child can go to virtually any college if you save $166.67 per month in an ESA” (more details below) (Dave Ramsey).

Avoiding school debt.

- Paying for education is a way for parents and children to grow closer together.

- “The inflation of goods and services averages about 4% per year while tuition inflation averages about 7% per year” (Dave Ramsey).

- Whatever plan you use, you have to make at least 7% on your money just to keep up with the rising cost of education.

- “USA Today reports that 37% of the few who actually save for college do so in a simple savings account yielding less than 3%” (Dave Ramsey).

- Educational Pre-Payment options:

~ ESA (Educational Savings Account)

- Limited to $2,000 invested per year per kid

- Limited to people who make less than $200,000 per year.

- Very flexible (you can choose the mutual funds)

- For most people, your child’s college educational costs will be covered if you start an

ESA fully funded (166.67 per month / per child) if your child is under eight.

~ State sponsored 529 plans and Pre-Paid Tuition plans

- The only 529 that is good is the one that lets you control how it is invested.

- Don’t go with the ones that are limited to certain funds or automatically change over

time to bonds.

- “529 ‘flexiable plans’ ... Allow you to move your investment around periodically within a

certain family of funds” (Dave Ramsey).

- Only advantage to a 529 is that you can put more than $2,000 per year per kid in it.

- Dave Ramsey STRONGLY advices using the ESA over the 529.

- If you ax out your ESA, this may be your next step for saving more.

~ Coverdell Educational Savings Accounts

~ Roth IRA’s

WHAT CHILDREN CAN DO

Choose an affordable school

- “In some areas of study and in a very few careers, where you graduate from will matter, but in most it won’t” (Dave Ramsey)

- Most employers look at the degree most of all, not the school.

- Help your kids understand the importance of going to a school they and you can afford.

- Student loan debt can be a burden that follows you kids half of their adult life.

- The selection of a cheaper school can make a big difference and save years of repayment on student loans.

- Another option: attend a local community college the first two years.

Work!

- Have them work to save money for their college.

- Encourage them to work part-time while in school.

- Full-time summer jobs.

- Dave Ramsey says, “Take a high-rejection, high-paying summer sales job ... A friend of mine once made $40,000 selling in one summer”.

- When students work for college, they appreciate it more, are more serious about their studies, and develop a solid work ethic.