The Good $ense Budget Course

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The Good ense Budget Course

• Session 3
• Saving and Debt

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Savings Is

• Money you KEEP

• Not money we have lost or given up
• Future spending

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Compound Interest Is

• Interest earning interest, earning interest

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Compound Interest Example

• 100 _at_ 10 10 interest
• 110 _at_ 10 11 interest
• The extra 1 is compound interest.

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Three Kinds of Savings

• EMERGENCY savings
• Replacement savings
• LONG-TERM savings

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Individual Activity

• Spending Plan Application

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Key Question

• If giving is so right and saving is so wise, why
  are they so hard to do?

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Cultural Order

• Lifestyle
• Debt
• Saving
• Giving

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God-Honoring Order

• Giving
• Saving
• Lifestyle

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Transitional Order

• Give. . . something
• Save. . . a little
• Debt. . . maximize repayment
• Lifestyle. . . spartan

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Debt
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Cultural Myth

• Debt is expected and UNAVOIDABLE.

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The Cautious Debtor Is

• One who avoids entering into debt,
  is careful and strategic when incurring debt, and
  always repays debt.

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Biblical Guidelines

• Repay debt
• AVOID debt

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Three Spiritual Dangers of Debt

• Presumes on the future
• Denies God the opportunity to TEACH US
• Fosters ENVY and greed

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Five Kinds of Debt

• Auto
• Home
• Education
• Business
• CREDIT CARD

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• There is no wise use of a credit card.

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Credit Card Studies

• Family spending using a credit card versus cash
• Amount spent (with a credit card) rose between
  20 and 30.
• Pocket camera purchase using cash versus a credit
  card
• Cash group paid an average of 29.58
• Credit card group paid an average of 52.67

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Two Reasons Credit Card Users Spend More

• Using a credit card is psychologically different
  than using cash.
• No RECORD of how much weve charged until the end
  of the month

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Credit Card Rules

• Use only for BUDGETED items
• Pay the balance in full every month
• If you violate rule one or rule two, cut up your
  cards

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Credit Card Tips

• Have only one card
• Consider the use of a DEBIT card
• Consider deducting the amount from your checkbook
  balance

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Individual Activity

• Credit Cards

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Debt Example

• You owe 7,200 _at_ 18.1
• (Minimum payment 2 of the balance or 10/month
  whichever is greater.)

You Pay Total Paid
Time Minimum/month 23,049
30 years 144/month 13,387 8 years 144
100/month 9,570 3 years
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Key Question

• Is God big enough and are you committed enough to
  find a little over 3 a day somewhere in your
  expenditures?

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Principles for Accelerating Debt Repayment

• Pay off your SMALLEST debt first.
• As a debt is repaid, roll the amount you were
  paying to the next largest debt.
• Incur no new debt!

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Individual Activity

• Spending Plan Application

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Debt Repayment a Great Investment

• Guaranteed
• Tax free
• Immediate
• High rate of return