Seven Steps for Debt Elimination and Financial Peace Don L. Milne Zions Bank Financial Literacy Manager

How Do You Compare? 77% of Americans live paycheck to paycheck. (CareerBuilder, Sept. 2010) In 2007 the savings rate in America was minus 2%. (Federal Reserve Bank of St Louis, Nov. 2009) The median IRA balance is $29,000. (Employee Benefit Research Institute, Jun. 2010) The average American family (including those without debt) has over $30,000 in consumer debt. (Utah Foundation, Feb 2009) Families with credit cards have an average of $10,000 of credit card debt. (Indexcreditcards.com, Feb. 2010) Utah’s bankruptcy rate was #1 in the nation for much of the past decade. What are the three most important criteria to consider when investing? JumpStart Answer: Risk, Rate of Return, Liquidity.

Components Of Change KNOWLEDGE A habit can be defined as an intersection of knowledge, skill and desire. The Seven Habits of Highly Effective People, Steven R. Covey Change SKILLS DESIRE

Making the Switch DIRECT The Rider MOTIVATE The Elephant SHAPE The Path Switch: How to Change Things When Change Is Hard, Chip and Dan Heath

7 Steps for Financial Peace 1 Save a $1,000 emergency fund 2 Pay off all consumer debt 3 Save 3-6 months of expenses 4 Save 15% of income for retirement 5 Save for children’s college education 6 Pay off home mortgage early 7 Build wealth and give to others The Total Money Makeover, Dave Ramsey

1. $1,000 Emergency Fund Get one ASAP Sell something Earn more Squeeze that budget Decide with spouse what an emergency is. Remember that long term this needs to equal 3-6 months of expenses (step 3)

2. Snowball Debt Debt consolidations don’t work for most people. Pay minimum payments on all but smallest debt. Use all money budgeted for debt elimination on smallest debt. As each debt is paid off, use all available money on next smallest debt.

Can You Live Without Debt? Don’t borrow for stuff that goes down in value. Cash is always cheaper than credit. Your children will do what you do, not what you say. It is easy to overspend when using debt.

Envelope System Each payday divide and place cash in envelopes for: Food Entertainment Clothing Household items Mad money

Teaching Kids: Commissions, Not Allowance Kids 20-40-40 Budget 20% Giving 40% Savings 40% Spending

What Is Your Money Profile? Spender Mike Tyson Dave Ramsey Nerd Free Spirit Warren Buffet Saver Paul McCartney

Components Of Change KNOWLEDGE A habit can be defined as an intersection of knowledge, skill and desire. The Seven Habits of Highly Effective People, Steven R. Covey Change SKILLS DESIRE

Making the Switch DIRECT The Rider MOTIVATE The Elephant SHAPE The Path Switch: How to Change Things When Change Is Hard, Chip and Dan Heath

What Do I Do Now? Use Envelopes Take the pledge: “I’m done with debt.” Use a monthly Zero Based budget Identify the step you should work on. When done, go to the next step.

Zions Bank, Your Partner for Financial Literacy April - ABA’s National Teach Children to Save Day for K-12 October – ABA’s Get Smart About Credit Day for high schools Free one hour Dave Ramsey Super Saving Seminars for adults 13 week Dave Ramsey Financial Peace University classes for adults and older children don.milne@zionsbank.com