1. Welcome Making Money Work
Making Money Work: A Christian Guide For Personal Finance
Welcome
Debt Management
A frog goes into a bank and ask the teller—Ms. Paddywack—if he can get a loan. Ms. Paddywack inquires if the frog has any collateral. The frog hands Ms. Paddywack a trinket. She goes to the bank president’s office and states that a frog wants a loan. The bank president asks “does the frog have any collateral?” Ms. Paddywack says yes, he’s got this trinket. The bank president looks at the item and says “that’s not a trinket, it’s a knick nack Paddywack, give the frog a loan.”
Copyright 2008 Willie Glenn Page, Inc.

2. Making Money Work Debt Management
“Live within your income even if you have to borrow money to do it”—Josh Billings, Humorist (Charles J. Givens, Wealth Without Risk, Simon And Schuster, Copyright 1998 by Charles J. Givens, page 97).
Behind Mark Twain, Josh Billings (the pen name for Henry Wheeler Shaw) was perhaps the most famous humor writer and lecturer in the U.S. during the second half of the 19th century. It is from Josh Billings that we get the term “Just Joshing” or “Just Joshin.” Today's text messengers often use the term “JJ” for “just joking.”
The title of Charles Givens’ book “Wealth Without Risk” can be said to be a “Just Joshing” comment, or at least an ironic one since wealth cannot be built without assuming some risk.

3. Copyright 2008 Willie Glenn Page, Inc.
Making Money Work
Debt Management
While God does not prohibit borrowing, God does discourage it.
Proverbs 17:18—“A man void of understanding striketh hands, [and] becometh surety in the presence of his friend” (KJV).
“Surety is simply taking on an obligation to pay later without a certain way to pay it”—Larry Burkett, The Financial Guide For The Single Parent, Copyright 1997 by Larry Burkett, Moody Press, Chicago, page 218.
Proverbs 22:7–“The rich ruleth over the poor, and the borrower [is] servant to the lender” (KJV).
Surety is a rare Biblical term. It is mentioned in Genesis, Job, Psalms, and Proverbs in the Old Testament (Hebrew Scriptures) (KJV). It is mentioned in Acts and Hebrews in the New Testament (KJV). It is also mentioned several times in the Apocrypha (Hidden or between).
Copyright 2008 Willie Glenn Page, Inc.

4. Copyright 2008 Willie Glenn Page, Inc.
Making Money Work
Proverbs 22:26 (NIV)— “Do not be a man who strikes hands in pledge or puts up security for debts.”
Want to improve your health? Study personal finance and avoid debt!
Copyright 2008 Willie Glenn Page, Inc.

5. Copyright 2008 Willie Glenn Page, Inc.
Making Money Work
Debt Management
Principal = borrowed money.
Interest = the amount you pay on principal (borrowed money).
Interest = Principal x Interest Rate x Time.
Copyright 2008 Willie Glenn Page, Inc.

6. Copyright 2008 Willie Glenn Page, Inc.
Making Money Work
Debt Management
Cardinal rules:
Borrow as little money possible at the lowest interest rate possible and for the shortest timeframe possible.
Live within your means.
Establish an emergency fund to avoid debt—e.g. $1,000 then 3-6 months expenses and then 6-9 months expenses.
Practice delayed gratification—save for items and pay cash.
Credit cards—pay the balance off in full each month or consider canceling the cards in order to control your deficit spending.
Understand the difference between “Good Debt”—helps to build your future net worth—and “Bad Debt”—diminishes your future net worth.
Avoid “impulse buying”—understand the difference between needs, wants and desires.
Copyright 2008 Willie Glenn Page, Inc.

7. Differentiating Between Needs, Wants And Desires
Making Money Work
Differentiating Between Needs, Wants And Desires
Need
Want
Desire
To drink:
Water
Bottled Water
Cola
To tell time:
Use free available clocks
An inexpensive watch--Timex
An expensive watch--Rolex
Transportation:
Use public transportation
Used car
New car—Rolls Royce
How long can a person live without food? More than a month How long can a person live without water? Approximately one week, depending upon conditions.
U.S. Environmental Protection Agency.
Copyright 2008 Willie Glenn Page, Inc.

8. Can Drinking Tap Water Make You A Millionaire?
Making Money Work
Can Drinking Tap Water Make You A Millionaire?
Your values determine your perceptions of needs, wants and desires. Everyone has different values.
Opportunity cost is the cost of passing up the next best choice when making a decision.
Copyright 2008 Willie Glenn Page, Inc.

9. Understanding “Opportunity Costs” For Needs, Wants And Desires
Making Money Work
Understanding “Opportunity Costs” For Needs, Wants And Desires
Copyright 2008 Willie Glenn Page, Inc.

10. Understanding “Opportunity Costs” For Needs, Wants And Desires
Making Money Work
Understanding “Opportunity Costs” For Needs, Wants And Desires
Copyright 2008 Willie Glenn Page, Inc.

11. Understanding “Opportunity Costs” For Needs, Wants And Desires
Making Money Work
Understanding “Opportunity Costs” For Needs, Wants And Desires
Need
Want
Desire
To drink:
Tap Water
Bottled Water
Cola
Cost/year = $2.85
Cost/lifetime = $216.86
Cost/year = $890.15
Cost/lifetime = $67,651.56
Cost/year = $1,223.77
Cost/lifetime = $93,006.78
If savings is 8% growth over 76 years:
$2.85 (Need Cost) - $1, (Desire Cost) = $1, at 8%/year for 76 years = $5,278,966.47
$ (Want Cost) -
$1, (Desire Cost) = $ at 8%/year for 76 years = $3,848,795.99
$0.00 (-$93, in opportunity costs)
Copyright 2008 Willie Glenn Page, Inc.

12. Complete The SS44 Values And Spending Exercise (CD-RW).
Making Money Work
“Opportunity Costs” is the cost of passing up the next best choice when making a decision.
Realistically, few people will go through life only drinking tap water. Few people will be able to invest for 76 years during their lifetime.
The purpose of this example is to point out how a shift from “spending on wants and desires” to “spending on needs and then saving and investing the difference” can have a profound impact upon your finances.
Skill challenge:
Complete the SS44 Values And Spending Exercise on the CD-RW Workbook.
Your values determine your perception of needs, wants and desires. Everyone has different values.
Complete The SS44 Values And Spending Exercise (CD-RW).
Copyright 2008 Willie Glenn Page, Inc.

13. Copyright 2008 Willie Glenn Page, Inc.
Making Money Work
Calculating The “Opportunity Cost” For An Expensive Watch Using The Rule of 72
Need
Want
Desire
To tell time:
Use free available clocks
An inexpensive watch--Timex
An expensive watch--Rolex
e.g. $10,000
The Rule of 72:
At 10% interest, money doubles every 7.2 years.
If a person works 28.8 years, their money should double 4 times.
Copyright 2008 Willie Glenn Page, Inc.

14. Copyright 2008 Willie Glenn Page, Inc.
Making Money Work
Calculating The “Opportunity Cost” For An Expensive Watch ($10,000 Original Cost)
Using The Rule of 72
1st 7 years
2nd 7 years
3rd 7 years
4th 7 years
$20,000
$40,000
$80,000
$160,000
Sam Walton
Started Wal-Mart in 1962 in Bentonville, Arkansas
Sam’s Club
Forbes Magazine ranked Sam Walton as the richest man in the United States from (estimated $53 Billion)
Sam Walton drove a 1950 era pickup truck. He could have afforded a Rolls Royce. $100,000 doubled every 7.2 years over 28.8 years would net $1,600,000.
“The Sam and Helen R. Walton Award was created in 1991 when the Waltons made a gift of six million dollars which included an endowment in the amount of three million dollars to provide annual awards to new church developments that are working in creative ways to share the Christian faith in local communities.”
Sam Walton said, “I'd hate to see any descendants of mine fall into the category of what I call ‘idle rich’...I hope they'll feel compelled to do something productive and useful and challenging...working on cures for cancer, or figuring out ways to bring culture and education to the underprivileged, or becoming missionaries for free enterprise in the Third World. Or maybe — and this is strictly my idea — there's another Walton merchant lurking in the wings somewhere down the line”-- (Wickipedia-The Free Encyclopedia).
Copyright 2008 Willie Glenn Page, Inc.

15. Copyright 2008 Willie Glenn Page, Inc.
Making Money Work
“Compound Interest” Works As A Powerful Ally To Build Wealth—It’s Antithesis “Bad Debt” Works To Destroy Wealth.
Good debt: you borrow 8% from a bank in order to produce 18% profit from your business. Home loan—less than 30% of your income. Education.
Credit cards that are paid off monthly with no interest charges.
Bad debt: credit cards that are not paid off in their entirety each month.
The average American family’s debt is $12,000—Dr. Lee Warren, B.A., D.D. “American Consumer Debt”.
The average credit card holder carries about $8,500 in debt and pays around $1,700/year in interest and fees—according to Robert Manning—professor at the Rochester Institute of Technology and author of “Credit Card Nation”.
On average, Americans pay back around 14-16% of their credit card balances each month—cardweb.com. If you only pay the minimum each month, it will take over 52 years to pay off the debt.
Americans—about 7% of the world’s population, we consume around 50% of the world’s resources.
We need to stop buying to be, and be for God.
Pay off all of your “bad debt” as soon as possible—you will be happier, healthier and wealthier!
Copyright 2008 Willie Glenn Page, Inc.

16. 4 C’s Of Credit (What Creditors Look At)
Making Money Work
4 C’s Of Credit (What Creditors Look At)
Collateral— “secured loan”—an asset of value the lender can take from you if you fail to repay the loan.
Capital—items of value that could be sold to repay the loan—e.g. investment accounts, your home (in some states).
Capacity—ability to repay a loan. Income and employment history.
Character—your credit record. Do you have a history or paying bills on time.
Copyright 2008 Willie Glenn Page, Inc.

17. Copyright 2008 Willie Glenn Page, Inc.
Making Money Work
Credit Report—your credit history, a record of your personal financial transactions. Tells lenders any credit you have, loan amounts, your credit card balances and limits, history of paying bills. It covers the last 7 to 10 years. It may be checked when you get a cell phone, buy a car, rent an apartment, apply for a job, etc. You are entitled to a free credit report every year—correct any mistakes.
Credit Score—based on the 4 C’s. It is a number that reflects your creditworthiness at any point in time. The most popular credit score is the FICO score which ranges from 300 to 850—a score of 680 or more is considered good.
The 3 main credit reporting agencies: Equifax, Experian, and TransUnion.
Copyright 2008 Willie Glenn Page, Inc.

18. Copyright 2008 Willie Glenn Page, Inc.
Making Money Work
You may request one “free” annual copy of your credit report at or by calling —sponsored by Equifax, Transunion, and Experian.
You may get free personal information from including your credit rating, home value, budget information, and mortgage information.
Copyright 2008 Willie Glenn Page, Inc.

19. Copyright 2008 Willie Glenn Page, Inc.
Making Money Work
Order of expenditures per $ of income earned:
1. Tithe (example: 10% to God)
$10.00
2. Savings (example: 10% to your 401K)
3. Federal taxes (example: 25% Federal taxes)
$25.00
4. State Taxes (example: 7% to your state’s tax program)
$7.00
5. FICA Taxes (e.g.: 6.2% Social Security % Medicare Ins. = 7.65%;
or self employed 12.4% Social Security + 2.9% Medicare = 15.3%):
$7.65
$15.30
6. Balance to spend on other items--employed by others:
Self-employed:
$40.35
$32.70
North Carolina 6.0% to 8.25% sliding scale tax rate based on filing status and taxable income. Some states have no state income tax.
The Federal Insurance Contributions Act (FICA) tax is a U.S. payroll employment tax. FICA is imposed by the federal government on both employees and employers to fund Social Security and Medicare--federal programs that provide benefits for retirees, the disabled, and children of deceased workers. Social Security provides benefits for old-age, survivors, and disability insurance—OASDI (Old Age, Survivors, Disability Insurance). Medicare provides hospital insurance benefits.
Copyright 2008 Willie Glenn Page, Inc.

20. Copyright 2008 Willie Glenn Page, Inc.
Making Money Work
Budgeting
Small children can start with 3 jars labeled “giving”, “saving”, and “spending.” For each dollar, they put 10 cents in giving, 10 cents in saving, and 80 cents in spending.
Teenagers might want to use an envelope system similar to the jar system above for all of their expenditures.
Most people do not like to talk about their budget. Those that do on average “save twice as much”—Stephen Brobeck, executive director of the Consumer Federation of America in Washington, The News & Observer, Raleigh, NC, Too much debt, not enough savings are new bogeymen, March 23, 2008.
Copyright 2008 Willie Glenn Page, Inc.

21. Basic Budgeting Beginning Steps
Making Money Work
Basic Budgeting Beginning Steps
Step 1: List Financial Goals—
Short-term Goals (one year goals)—e.g. immediately save $1,000 and then 3-6 months expenses and then 6 to 9 months expenses in a liquid emergency fund account. Take full advantage of employer-matching funds up to the full “matching limit.” Pay off all credit card debt. Pay off credit cards in full each month.
Mid-term Goals (2 to 5 years)—e.g. purchase a used car within 3 years. Pay off all student loans. Save 20% for a down payment on a home purchase.
Long-term Goals (over 5 years)—e.g. After maximizing savings up to the full employer match in retirement savings accounts, invest in a Roth IRA. Eliminate all debt—car payments, home mortgage, etc.
Copyright 2008 Willie Glenn Page, Inc.

22. Basic Budgeting Beginning Steps
Making Money Work
Basic Budgeting Beginning Steps
Step 2: Conduct A Credit Card Debt Analysis
Suggestion: open up the “SS13.a Calculator—Debt Management.xls” and click on the “Credit Card Analysis” sheet tab to prepare your own credit card debt analysis.
Copyright 2008 Willie Glenn Page, Inc.

23. Basic Budgeting Beginning Steps
Making Money Work
Basic Budgeting Beginning Steps
Step 3: Conduct A Cash Flow Analysis
Analyze all income and expenditures. Use pay stubs, check books, billing statements, and any other statements showing money flowing into and out of your accounts.
List all “fixed” expenses—e.g. those that have little or no flexibility such as rent and insurance.
List all “discretionary expenses”—e.g. those that can be easily changed such as dining out, entertainment, vacations, hobbies, etc.
“Total Income” – “Total Expenses” = a “cash surplus” (discretionary income) or a “cash deficit.”
Suggestion: open up the “SS13.a Calculator—Debt Management.xls” and click on the “Cash Flow Statement” sheet tab to prepare your own cash flow analysis.
Copyright 2008 Willie Glenn Page, Inc.

24. Basic Budgeting Beginning Steps
Making Money Work
Basic Budgeting Beginning Steps
Step 4: Determine Your Net Worth
This is a listing of what you own and what you owe. The goal is to increase your net worth each year.
Compare your net worth statement each year to prior years.
Adjust your spending/or saving habits as needed.
Suggestion: open up the “SS13.a Calculator—Debt Management.xls” and click on the “Net Worth Statement” sheet tab to prepare your own net worth analysis.
Copyright 2008 Willie Glenn Page, Inc.

25. Copyright 2008 Willie Glenn Page, Inc.
Making Money Work
Budget
If you are unable to live within your means—
you are deficit spending — you should prepare a very detailed budget.
Use the “Making Money Work SS13 Calculator-Budget.xls” worksheet for a more detailed household budget (Making Money Work Book CD-ROM calculator).
Copyright 2008 Willie Glenn Page, Inc.

26. Copyright 2008 Willie Glenn Page, Inc.
Making Money Work
Budget Guidelines
Copyright 2008 Willie Glenn Page, Inc.

27. Steps To Becoming Debt Free
Making Money Work
Steps To Becoming Debt Free
Pray—when you work, you work. When you pray, God works.
Stop accumulating debt. Destroy credit cards if necessary and pay by cash, check, or debit card. Practice “delayed gratification.” Be happy with what you have. Do not spend “tomorrow’s money” today. Institute the 24-hour rule: before buying anything over $50, wait a day to make sure your really need it.
List all of your assets and determine if any need to be sold and the proceeds used to reduce/or eliminate debt.
List all of your liabilities—know where you stand financially.
Establish a written budget. Analyze spending habits to determine where you can cut back or eliminate expenses.
Establish a debt-repayment plan. By looking at the debt amount and interest rates charged, decide which debts you should pay back first. Typically, you save the most money by paying off the highest interest rate charges first. As each credit card is paid off, use the savings to pay off the next card(s) until all are paid in full.
Copyright 2008 Willie Glenn Page, Inc.

28. Steps To Becoming Debt Free
Making Money Work
Steps To Becoming Debt Free
If you have a line of credit with a low rate, you might consider using it to pay off higher interest rate debt such as credit cards—warning: only do this if you are certain you can make the payments and do not put your home at risk.
Earn additional income to pay down debt—e.g. non-working spouse gets a job, working spouse gets an additional part-time job.
Consider an extreme change in lifestyle—e.g. the elimination of non-wealth producing activities such as luxury vehicles, boats, etc. Moving to a smaller house with a lower mortgage payment.
Work hard at reducing your debt and never give up—the Lord said, “I am with you always.”
Support groups such as Debtors Anonymous helps correct spending habits and stop impulse buying.
The National Foundation for Consumer Credit offers free or low cost credit counseling.
Copyright 2008 Willie Glenn Page, Inc.

29. Copyright 2008 Willie Glenn Page, Inc.
Making Money Work
SS12 Calculator-Liquid Assets Versus Current Liabilities.xls (Making Money Work Book CD-ROM calculator):
The % of current liabilities to current assets should be less than 50%--for individuals and companies.
SS14 Calculator-Loan Payment.xls (Making Money Work Book CD-ROM calculator):
Exercise:
Given the following:
You wish to purchase a car. It cost $5,000. You have a 20% down payment. There are 12 payments per year at a 12% interest rate. Your loan is for 36 months.
How much are your monthly payments?
What are your total payments over the life of the 36 month loan?
How much will you have to pay in interest charges over 36 months?
Answers:
How much are your monthly payments? $132.86
What are your total payments? $4,782.86
How much will you have to pay in interest charges? $782.86
Suggestion: work, save your money and pay cash for a car when possible to avoid the interest charges.
Copyright 2008 Willie Glenn Page, Inc.

30. Chance of defaulting within 2 years
Most lenders use scores calculated by Fair Isaac Corp.—uses a formula with 22 pieces of data. Scores range from 300 to They predict how likely you are to pay bills on time.
Chance of defaulting within two years, by credit score
Credit Score
Chance of defaulting within 2 years
Credit Score up to 499
83%
70%
51%
31%
14% 5% 2%
800+ 1%
Consumer Report: A person with a credit score of 720 and up would be eligible for a 5.55% interest rate on $150, year mortgage and a $856 monthly payment. Someone with a score of 620 to 674 could pay $1,034/month for the same loan.
If you are in the 580 to 620 range, you will probably still qualify for a mortgage loan, but at a higher rate.

31. Copyright 2008 Willie Glenn Page, Inc.
Making Money Work
Copyright 2008 Willie Glenn Page, Inc.

32. Copyright 2008 Willie Glenn Page, Inc.
Making Money Work
Luke 19:8-10—Zacchaeus said to Jesus “‘Here and now, sir, I give half my possessions to charity; and if I have cheated anyone, I am ready to repay him four times over,’ Jesus said to him, ‘Salvation has come to this house today!”’
Romans 13:7-8--“Discharge your obligations to all men; pay tax and toll, reverence and respect, to those to whom they are due, Leave no claim outstanding against you, except that of mutual love.”
Debt is a burden affecting not only your living, but also your giving.
Debt prevents you from being able to give everything God intended for you to give!
Copyright 2008 Willie Glenn Page, Inc.

33. Copyright 2008 Willie Glenn Page, Inc.
Making Money Work
Please complete the “Chapter 4 Debt Management--Extra Learning Module” (CD-RW).
Copyright 2008 Willie Glenn Page, Inc.