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.
- If you have saved for your child’s education, you may want to make you contribution a match to what they earn.
- You could even treat it like other scholarships and make it dependent on their grades.
Apply for every scholarship
- There are hundreds of millions of dollars in scholarships given out each year.
- Most of these are not academic or athletic.
- “Lists of these scholarships can be bought online and there are even a few software programs you can purchase” (Dave Ramsey).
- There was one lady that took this advice and worked the system. “She literally applied for 1,000 scholarships. She was turned down by 970, but she got 30, and those 30 scholarships paid her $38,000. She went to school for free ...” (Dave Ramsey).
Other Options
- “Have your child think of companies that might be looking to hire someone with the degree they want. Have them ask the company to pay their way through school while they work for them” (Dave Ramsey).
- “Look into companies that have work-study programs. Many companies offer to pay for school and have struck tuition deals with local colleges to attract a labor force” (Dave Ramsey).
- “UPS, for instance, has a program in many cities where you can work 20 hours per week sorting boxes at night, and they will pay your tuition for school during the day” (Dave Ramsey).
- Look into what the military has to offer.
- Most can get a free four-year education by serving in the military for four years.
- The military isn’t for everyone, but some who would have made this their first choice have used the military to get a free education.
- The National Guard can help with tuition as well.
- Look into the governments “underserved areas” programs. The government will pay for school or pay off your student loans if you will go to work in an underserved area” (Dave Ramsey)
- Bernice Moore has a granddaughter that is paying off her Master’s Degree in education teaching in an inner city school in New York City.
Don’t give up on a debt free education
- It is possible to go to college today without a student loan.
- “USA Today says that ... in 2006, 65.6% of students took loans” (Dave Ramsey).
- This means 34.4% didn’t.
- “Student loans have become normal, and normal is broke” (Dave Ramsey).
- If you end up taking a student loan, only use it for school expenses, not living expenses while in school.
- Too many get in the mindset of thinking, “I’m going deep in debt so what difference will a little more make.”
- This mindset will double the amount your student loans.
- You have to hate and avoid debt every way possible.
STARTING A BUSINESS
[Note to instructor: If you choose not to go into the details of this section, a Word document is prepared in the materials that you can pass out to those that are interested.]
A recent survey found that 72% of Americans have considered starting a business, and 51% of those would like to launch one within the next five years.
Prepare yourself financially
- Proverbs 24:27 says, “Develop your business first before building your house.” (TLB)
- One of the most common reasons for the failure of start-up businesses is lack of capital - not enough cash saved up.
- Starting a business with debt invites added pressure to be profitable quickly.
- Most businesses require several years to become profitable.
Identify a good business opportunity
Assignment from last week
- Have you ever wanted to start a business? Think about what kind it would be.
- Research business opportunities for which you are well suited.
~ Ones you would enjoy
~ One you can afford to start
~ Ones that meet your personal goals
- Gain some experience in the business before launching into ownership.
- Start a new business part-time first.
- Never quit your job until your business can provide your needed income.
- Start by building up a client base working out of your home.
Pray for a mentor
- Ask God to provide you a mentor who really understands the business you are considering.
- Work for someone in the field you are looking to start a business in.
Draft a business plan
- 80% of all business start-ups do not survive beyond the second year.
- Many fail because they do not have a written business plan.
- A business plan should include the following:
~ Funding: Determine how you will finance the start-up costs of the business - inventory, equipment, buildings, advertisement, etc.
~ Organization: Choose between sole proprietorship, a partnership, or a corporation.
~ Marketing: Identify your competition and determine how you will promote the business.
~ Employees: Decide how many and what skills they will need.
~ Financial projects: Estimate your income and expenses.
Setup your accounting
- Many start-up businesses fail to keep accurate accounting records.
- It is best to get a separate business checking account for depositing all business income and paying all expenses.
- Track profit and loss of the business and each job using a computer.
- If you have a business that works buy the job or contract, every job must make a profit.
- You have to build the cost of tools or equipment into the estimate.
- Grow slow and without debt
- Debt will choke and kill a new business
- It may be better to turn down a job than to go deep in debt buying equipment and vehicles.
- If you are self employed, a good rule of thumb is to set aside about 30% of your net income for taxes and withholding.
Business partnerships
- The Bible cautions against partnership with those who do not know Christ as savior.
- “Do not be bound together with unbelievers; for what partnership have righteousness and lawlessness, or what fellowship has light with darkness? Or ... What has a believer in common with an unbeliever?” 2 Cor. 6:14-15 (NASB).
- Dave Ramsey tells people to never have a partnership. It is better to cut people in on profit sharing but have just one person making the decisions.
- One person called into his show asking how to buy out a business partner.
- He was working 60 hours a week and his partner was barely putting in 30.
- Since he was a partner, he could not fire him yet he still got half the profits.
- since the first partner was making the business profitable, it was almost impossible to buy out the other partner.
- His only options were to live with it or close the business.
Assignment for next week
- Do you own your home? Find out how much you owe on it and how long it will take to pay it off at your current payment rate.
YOU CAN DO IT!
Tommy (32) Grocery Store
Co-Manager
and Casey (29) Pounds
Legal Assistant
We got into debt because we did not understand how it works - plain and simple. It just wasn’t something our families talked about. I think my parents never taught me how to handle money because they were never taught themselves. My wife and I decided to stop this cycle. We are now changing our family tree.
Our change began about six years ago. After going through some testing, my doctors informed me I had several brain and spinal cord lesions. I spent six weeks in the hospital and missed about three months of work. Needless to say, we weren’t in a very comfortable or secure position - financially or otherwise. This all occurred around Christmas-time. Our families pooled their money and gave it to my wife, Casey, and me instead of buying Christmas presents for each other.
When the worst was behind us, we spent one evening thinking about the financial state we were in. At the time we had quite a bit of debt and were stressed beyond mention. We wanted to buy a house at the time, and we realized we couldn’t afford it because of the student loans, credit cards, and car debt. Thinking about it was so painful, it made us cry. We didn’t want to rely on other people - be it family or financial lenders - when life threw us curve balls. We wanted to take back control of our money and our lives.
After following Dave’s plan and getting gazelle-intense with our Total Money Makeover, we paid off $48,000 in just eighteen months! It felt so amazing to rid ourselves of the shackles of debt. We were finally able to start making some dreams we had realities. For years, my wife and I had wanted to go back to school to get our culinary degrees. We started saving and are now paying for our education WITH CASH! We thought it was ridiculous to have to keep praying for something AFTER experiencing it. Now we will be able to graduate with no debt and immediately start a new catering business.
Believe me, this is not a get-rich-quick plan, but rather a life-changing process. We are going to take the Crock-Pot approach for our business and our future, which, by the way, works well since chef’s don’t use microwaves.
