Stewardship of God’s Money in Difficult Times For McLean Bible Church Prince William Campus February 2011 By Bud Moeller

The Reality of Money? zIf you think no one cares if you’re alive, try missing a couple of car payments zThe Lottery: A tax on people who are bad at math z“We can loan you enough money to get you completely out of debt.” (Bank sign) zHappiness is not having what you want but wanting what you have

The Usual Problems zMore month than money zIf I only made 10% more money... zI’ll use this new credit card to pay off this other credit card zI’ll be dead before I can afford to retire zHow can I be overdrawn, I still have checks left! zThe problem lies in reconciling my gross habits with my net income

The New Problems zIf I can keep making this money... zWhere did all those credit card offers go? zWhat retirement account? Oh, that $64,000? zHow can I be overdrawn... oh those extra banking fees for... zBut inflation is low, why can’t I make ends meet now?

The Real Problem--Competing Masters Matthew 6:24 (NLT): “No one can serve two masters. For you will hate one and love the other, or be devoted to one and despise the other. You cannot serve both God and money.

The “Average American” Doesn’t Do Very Well When It Comes to $$ z43% spend more than they earn zGreed => Housing Crisis => Foreclosures and bankruptcies zMoney #1 cause of marital conflict zAverage family credit card debt $16,000 (of those who carry a balance) z34% pay credit cards off each month z48% pay only the minimum each month zLow savings rate vs. rest of world => no cushion when recession came zPeople have dipped into 401(k) and other retirement assets

The World’s Priorities Earning Spending Debt Payment Saving Giving

The Steward’s Mindset zGod created everything. zGod owns everything. zWe are merely trustees. 1 Chronicles 29:11-12 “Everything in the heavens and earth is yours, O Lord, and this is your kingdom. We adore you as being in control of everything. Riches and honor come from you alone, and you are the Ruler of all mankind; your hand controls power and might, and it is at your discretion that men are made great and given strength.”

God’s Priorities--Reverse of the World’s! Earning Giving Saving Debt Spending

What Does The Bible Say? zWork--was before the fall. Genesis 2:15 “The Lord God took the man and put him into the garden of Eden to cultivate it and keep it.” zGiving is an act of worship and recognition zSaving is wise zDebt is really bad zSpending is where we really lose it!

Earning--Our Role zWork hard--Ecclesiastes 9:10 “Whatever your hand finds to do, do it with all your might.” zBe diligent--Proverbs 18:9 “He who is slack in his work is brother to him who destroys.” zBe purposeful--Colossians 3:23 “[Work] as though you were working for the Lord rather than for people.” zBe grateful--Deuteronomy 8:17-18 “You may say to yourself, ‘My power and the strength of my hands have produced this wealth for me.’ Remember the Lord your God, for it is he who gives you the ability to produce wealth.”

So What Questions Should We Be Asking Re Giving? zDo I have the right attitude?—2 Cor 9: 6-7, Prov 11:24, Luke 6:38, 1 Tim 6:10 and 17 zWhat do I care about?—Luke 12:34 “For where your treasure is, there your heart will be also.” zTo whom should I give?—Galatians 6:6, Matthew 25: zWhat does God really want from us? Does He need our money? Giving

What Questions Should We Be Asking Re Saving? zWhy should I save?—Prov 21:20 and 6:6-8; zHow much should I save?—Matt 25:14-29, 1 Timothy 6:9-10, Luke 12:15-21, Prov 23:4-5, Phil 4:11-13 zWhat should I save for my kids?—Prov 13:22, 1 Tim 5:8 zWhen should I give it to them?—Prov 20:21 Saving

Save For... zAvoiding debt on major purchases zReducing/eliminating debt zYour future (retirement, whatever that means) zYour children’s future zBeing able to bless others generously

How Much to Save to Retire? zAssume a spending pattern requiring $60,000/year for the rest of your life zMost planners would agree you should pull no more than 4%/year from your retirement or you’ll outlive your money zSo, would require $1,500,000 to retire zAnd, if you want to live better than this, just ratio this number up or down to fit zInflation? Earnings rate? Social Security?

How to Invest? zWith plans and persistence--Prov 21:5 zWith honesty--Proverbs 21:6 zWith a watchful eye--Prov 27:23-27 zWith diversification--Ecclesiastes 11:2,6 zWith much prayer and God’s input-- Isaiah 48:17-18

Debt--Even Worse Than You Think zDebt is considered slavery--Proverbs 22:7 “Just as the rich rule the poor, so the borrower is servant to the lender.” zDebt was considered a curse zDebt presumes on tomorrow zDebt may deny God an opportunity Debt

Spending--A Personal Choice zBeware of idols--Romans 1:25 They “worshiped and served created things rather than the creator.” zGuard against greed--Luke 12:15 “Beware! Don’t be greedy for what you don’t have. Real life is not measured by how much we own.” zBe content--Philippians 4:12 “I know what it is to be in need, and I know what it is to have plenty. I have learned the secret of being content in any and every situation, whether well fed or hungry, whether living in plenty or in want.” Spending

In A Perfect World, You’d Have Been Prepared For This Storm z3-6 months of emergency savings zCredit cards paid off zConsumer debt (auto, student, etc.) gone zSavings banked for major future events (vacation, next auto, education, etc.) zHome ownership, with equity cushion zRetirement pretty well covered z(At least the essence of a good plan!)

Most Likely, You’re Struggling zAverage credit card debt ~ $8,000 zCar loan higher than car value zStudent loans still lingering zSavings—minimal, or not very liquid zHome equity erased or below 20% zInsufficient retirement savings zLittle else to leverage other than time

If You Want to Get in Financial Shape … zNeed to know where you’re starting from zNeed to know how much to change zNeed to figure out what to change zNeed to decide how long to take zEssentially, you need a plan!

Measurement Tools--Finances zBalance Sheet zIncome Statement zCredit Report

The Balance Sheet zChecking account zSavings zCar z“General Stuff” z“Valuable Stuff” zHouse zRetirement zInvestments zCredit cards zCar loan zOther loans zIRS Debt zMortgage zHome Equity loan z401(k) loan zObligations payable I Have …I Owe … Have - Owe = Net Worth

Balance Sheet zChecking $500 zSavings $500 zCar $20,000 z“Valuables” $2,000 z“Stuff” $20,000 zHouse $600,000 zRetirement $65,000 zInvestments $30,000 zTOTAL $738,000 zCredit cards $12,000 zCar loan$25,000 zEdu loan $60,000 zIRS Debt $2,000 zMortgage $550,000 zHome Eq loan $95,000 z401(k) loan $5,000 zObligations $1,000 zTOTAL $760,000 I Have … I Owe … Have - Owe = Net Worth ($12,000)

Spending Plan zFundamental tool that enables us to control our money so that it doesn’t end up controlling us zPlan for how we will allocate our financial resources zA way to reach our financial goals and live out our values and priorities zProduces freedom--there is no true freedom without limits

Building a Spending Plan zWhat are your life goals? zWhat things have changed recently? zWhat financial goals to set, in support? zSet some near-term (e.g., 6 months, 1 year, 2 years) objectives and targets zBuild a balanced plan to get there

Income Statement--Overview zWhat you make--Income zMinus your Giving zMinus your Taxes z= Net available for other uses ySaving (current, retirement, etc.) yDebt reduction ySpending

The “Savings” Page zLong Term Priorities yRetirement yChildren’s education ySpecial trip (anniversary, etc.) yOther (furniture, remodeling, etc.) zShort Term Priorities yEmergency fund (3-6 mos) yInvestments yHouse purchase downpmt y1st Child prep yCar Replacement/Repair yMedical yInsurances yVacation this year yGifts yOther this year (e.g., TV, appliances, etc.)

Savings Elements zEmergency--should be 3-6 months of “spending,” held in a liquid account (i.e, not tied up for a lengthy period where unavailable) zReplacement--money you accumulate for periodic spending on major items that are wearing out (e.g, car, appliances, furniture)

Savings--continued zLong-Term--for items that will take years to accumulate and/or use yCollege fund for children’s education yRetirement yDown-payment for home purchase yEtc.

Page 3--All the “Spending” and Debt Reduction zHousing--biggest cost zFood zAuto/Transport zChildren’s costs zClothing zEntertainment & Recreation zPersonal Care zMisc/cash zDebt Reduction yCredit cards ySchool loans yPersonal/bank loans yIRS debt yCash advances yEtc.

Reducing Expenses zIs this an optional expense that can be eliminated? zIs this a variable expense that can be controlled and reduced? zIs this an expense that has wrongly been assumed as being “fixed”?

Debt Reduction zShould be your goal after giving and saving z“Just as the rich rule the poor, so the borrower is servant to the lender.” Proverbs 22:7 zMove from paying interest to earning interest!

Debt Example You owe 18.1% (Minimum payment = 2% of the balance or $10/month whichever is greater.) You Pay Total Paid Time $Minimum/month$23, years

Debt Example You owe 18.1% (Minimum payment = 2% of the balance or $10/month whichever is greater.) You Pay Total Paid Time $Minimum/month$23, years $144/month$13,3878 years

Debt Example You owe 18.1% (Minimum payment = 2% of the balance or $10/month whichever is greater.) You Pay Total Paid Time $Minimum/month$23, years $144/month$13,3878 years $144 + $100/month$ 9,5703 years

Debt Repayment “Waterfall” DebtTotalRateJanFebMarJune … Visa 1 $60018%$434$178 MC$130021%$26$282$460 Visa 2 $200019%$40 $500 Total$3900$500

Other Keys to Debt Reduction zBe sure the plan is realistic. zIncur no new debt! zModify the plan when unexpected windfalls or pay raises come into play. zAs each debt is retired, celebrate!

“But, It Doesn’t Balance...” zIncrease income--tough to do without a significant shift something (job, spare time, location) zReduce expenses--go back and force your lifestyle to rebalance zSell assets--something with enough value to make a dent in your debt or payment load

So, Suggested Priorities zKeep working! zContinue to give, of course zGo on a lifestyle diet to free up more $$ zFocus on your future needs vs. others zPut a high priority on retirement savings (put away a whole dollar, grows tax free) zBalance that with reducing high cost debt zThink “cash flow” too zWork the spread (cost of money vs. yield) zMake big purchases with cash vs. debt

In Huge Trouble? zGive... Something, sacrificially zSave... a little (at least) zDebt... maximize repayment zLifestyle... spartan

You Need A Short-Term Plan! zForget the life goals—this is about survival zTake inventory—savings, spendable assets, leverage, liquidation potential, income, debt, etc. zKnow your bottom line and squeeze it zCall your creditors before they call you zForecast the future—know what will hit you and when. Set priorities and sequence—be proactive not reactive!

Keeping Track

Envelope System

Your Credit Report--FICO Score zNot something you usually see, unless you request it zIt’s how the world of lenders sees you zTherefore determines the rates you get for any credit or loans zAnything over 720 is “So what?” zA couple of mess-ups can stain your record for many years zSometimes you’re stained and don’t even know it

Want Your Credit Report? zGo to It is the only authorized source to get your free credit report under federal lawwww.annualcreditreport.com zIt will show your accounts, payment history, balances, dates, etc. zWhat it won’t do is show your FICO score. For that, you have to pay a fee. Go to (Equifax and TransUnion scores. Experian availability was discontinued in February) or go straight to the rating agencies.

Impact on You--Monthly Payment Assumes $450,000 mortgage, 30 years

Making Change Stick zPick realistic goals zDefine the goals (specifically) zSet a schedule (or deadline) zDon’t be upset by setbacks zEnlist additional help or support z(… and, of course, you’ve got to get started!)

Some Encouragement and Challenge zAction springs not from thought but from a readiness for responsibility zObstacles are those frightening things you see when you take your eyes off your goal zA little knowledge that acts is worth infinitely more than much knowledge that is idle z“Do or do not. There is no such thing as ‘Try’” Yoda (Empire Strikes Back) zBilly Graham: “The test of a preacher is that his congregation goes away saying, not, “What a lovely sermon!” but, “I will do something.”

The Commercial zIf this topic is striking a chord with you and you want to get started, call: yNancy Hall (MBC coordinator) zThere’s no cost for financial counseling--except your “investment” of time to do the work zIf you want the Biblical foundation (more than counseling), sign up for McLean University 501 A (Bible Study) or B (Small Group).