1. Basic Budgeting, Debt Elimination, & Deferred Compensation Basics Brought to you by your 457 Plan Partners

2. What We Are Going To Talk About Today?  How to develop & stick to a budget  How to get out & stay out of debt  Why is it important to become debt free  How to budget for your retirement savings  Q & A

3. Building your personal budget  Budget worksheet (handout)  Know your sources of income  Live within your means  Plan to pay off debt as part of your budget

4. How Does Being Debt Free Benefit Me?  Removes the financial obligations that bind you  Strengthens your financial position; Security  Upgrades your lifestyle  More options  Peace of mind  FINANCIAL INDEPENDENCE!

5. How Do I Become Debt Free?  K.I.S.S.: Keep It Simple & Straightforward  Know where your money is, and where it’s going  Develop a budget  Pay Yourself First  Determine a Payment Enhancer  Prioritize your debt  Focus on attacking one debt at a time  Apply the Payment Enhancer  Repeat until ALL debt is eliminated

6. What Is A Payment Enhancer?  Simply, any money that you can put toward your debt beyond the minimum monthly payment  Second income  Cut-backs  Raises  Unexpected monies  Payment Enhancer MUST be financially comfortable!

7. How Do I Prioritize My Debt?  Always remember: K.I.S.S.  Highest monthly payment  Lowest monthly payment  Highest interest rate  Lowest interest rate  Highest balanced owed  Lowest balanced owed  Whatever works best for you!

8. Let’s See What This Looks Like! An Example

9. Some Assumptions  Typical debt structure  Four debts total: -Two car payments -Two car payments -Two credit card payments -Two credit card payments  Various balances and interest rates  Monthly payments are at 2% of principle  Payment Enhancer of $ 200 monthly

10. Example Note: The figures shown are representations of typical debt, and are to be considered illustrative for the purposes and are to be considered illustrative for the purposes of this presentation. of this presentation. TotalMonthlyInterest DebtOwedPaymentRate Car 117,25046511.99 Credit Card 17,94311214.99 Credit Card 25,385498.99 Car 224,6785134.98

11. Prioritizing The Debt TotalMonthlyInterestRanking DebtOwedPaymentRateOrder Car 117,25046511.993 Credit Card 17,94311214.992 Credit Card 25,385498.991 Car 224,6785134.984 Remember K.I.S.S. – Prioritize based on the simplest method. simplest method.

12. Determine Payoff Schedule K.I.S.S.: Chose to prioritize payoff schedule by focusing on monthly payments. focusing on monthly payments. Ranked in descending order. Ranked in descending order. TotalMonthlyInterestRanking DebtOwedPaymentRateOrder Credit Card 25,385498.991 Credit Card 17,94311214.992 Car 117,25046511.993 Car 224,6785134.984

13. Add The Payment Enhancer  Add Payment Enhancer  Make minimum payments only on other debt  Continue this method until the first debt is completely eliminated  Repeat method on all debt until all debt is eliminated TotalMonthly Enhanced Total DebtOwedPayment Credit Card 25,38549+200=249 Credit Card 17,943112+0= Car 117,250465+0= Car 224,678513+0=

14. Debt Elimination In Action! TotalMonthly Enhanced TotalDebt OwedPayment Free! Credit Card 25,38549+200=24921.62 / mo. Credit Card 17,943112+0= Car 117,250465+0= Car 224,678513+0=

15. Debt Elimination In Action! TotalMonthly Enhanced TotalDebt OwedPayment Free! Credit Card 25,38549+200=24921.62 / mo. Credit Card 17,943112+249=36122.00 / mo. Car 117,250465+0= Car 224,678513+0=

16. Debt Elimination In Action! TotalMonthly Enhanced TotalDebt OwedPayment Free! Credit Card 25,38549+200=24921.62 / mo. Credit Card 17,943112+249=36122.00 / mo. Car 117,250465+361=82620.88 / mo. Car 224,678513+0=

17. Debt Elimination In Action! TotalMonthly Enhanced TotalDebt OwedPayment Free! Credit Card 25,38549+200=24921.62 / mo. Credit Card 17,943112+249=36122.00 / mo. Car 117,250465+361=82620.88 / mo. Car 224,678513+826=133918.43 / mo.

18. Debt Elimination In Action! TotalMonthly Enhanced TotalDebt OwedPayment Free! Credit Card 25,38549+200=24921.62 / mo. Credit Card 17,943112+249=36122.00 / mo. Car 117,250465+361=82620.88 / mo. Car 224,678513+826=133918.43 / mo.

19. Debt Elimination In Action! After applying the debt elimination method to the debt structure in this example, this person becomes DEBT FREE in 82.93 months. That’s less than 7 years!

20. Debt Elimination In Action! Once debt free, you now have a positive monthly in-flow of $ 1339! That’s $ 16,068 a year!

21. Debt Elimination In Action!...recap  Stop acquiring debt  Determine a Payment Enhancer  Develop and follow your payoff schedule  Be patient  Be disciplined  Focus on the why you want to become debt free  You can be debt free in a few short years!

22. What Now?  PAY YOURSELF FIRST  Accelerate paying off your home (optional)  Save and pay cash for things  Save for college, - etc.  Invest in the market - 457 Plan  Help others – Charity, Church, etc.  DO WHATEVER YOU WANT TO DO!

23. Deferred Compensation Illustrations  Never too early to start  Difference between starting at different ages  Effect on your paycheck  Future account growth estimates

24. Questions? ?