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Nevin Dulabaum Brethren Benefit Trust ndulabaum@cobbt.org

Building a Solid Financial Foundation. Nevin Dulabaum Brethren Benefit Trust ndulabaum@cobbt.org. How do we build a solid financial foundation. Attitudes Talking about it/proactive management Debt Credit Score Budgeting. What can we do in a 45-minute seminar?.

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Nevin Dulabaum Brethren Benefit Trust ndulabaum@cobbt.org

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  1. Building a SolidFinancial Foundation Nevin Dulabaum Brethren Benefit Trust ndulabaum@cobbt.org
  2. How do we build a solid financial foundation Attitudes Talking about it/proactive management Debt Credit Score Budgeting
  3. What can we do in a 45-minute seminar?
  4. What can we do in a 45-minute seminar? Questions to ask Ideas Resources
  5. Church of the Brethren Benefit Trust was established as the Pension Board in 1943 to set aside retirement dollars for pastors and missionaries. BBT Ministries — Brethren Pension Plan Brethren Insurance Services Brethren Foundation Socially Responsible Investing Stewardship Education Seminars
  6. Presented by Nevin Dulabaum
  7. How do we build a solid financial foundation Attitudes Talking about it/proactive management Debt Credit Score Budgeting
  8. Attitudes toward money Spender Builder Giver Saver
  9. Attitudes toward money Are you surprised by who the exercise says you are? Do you agree/disagree? Why? How has who you are been shaped by your past? What might you affirm/change in the future?
  10. How do we build a solid financial foundation Attitudes Talking about it/proactive management Debt Credit Score Budgeting
  11. Avoid Roadblocks Ordering, directing, commanding: "I earn the money. I'll spend it any way I want." Warning, threatening: "OK, now you've had it.“ Preaching, moralizing: "Some people never seem to know when to quit." "Your mother should have taught you the value of a dollar.“ Advising: "Why don't you try to be more careful?“ Judging, criticizing, blaming: "I would have thought you'd have known better." "Now see what you've done.“ Name-calling, ridiculing, shaming: "You idiot!" "You ought to be ashamed of yourself.“ Interpreting, psychoanalyzing, assuming: "How come your mistakes always cost big bucks?“ Rescuing, intervening: "Give me the checkbook. I'll have to do it if I want it done right."Adapted from StrongerMarriage.org
  12. Set aside a regular time to discuss money – don’t sidestep the issue. Don't blame each other for financial problems. Keep each other up to date about all personal assets and debts. Regularly talk about ways of managing your money better. Divide regular financial tasks as evenly as possible. Make sure you discuss and agree about the use of any extra money (such as tax refunds). Involve your children in family money decisions. Write short- and long-range financial goals together. Respect family member differences and work toward decisions everyone agrees with.Adapted from Cornell Cooperative Extension Service
  13. Family Conversation Couples need to be committed in their approach Must be open and honest about use of resources Big decision: how to handle basic finances Joint or separate accounts?
  14. How do we build a solid financial foundation Attitudes Talking about it/proactive management Debt Credit Score Budgeting
  15. Warnings about debt: Hebrews 13:5 (NRSV) Keep your lives free from the love of money and be content with what you have, because God has said, “Never will I leave you, never will I forsake you” Proverbs 22:7 (NRSV) The rich rule over the poor, and the borrower is the slave of the lender.
  16. Money, by itself,is not the problem… …the problem isthe love of money
  17. More $$$? Will a larger paycheck solve a budget crunch? The money ending before the month is a cash management issue. Quantity of money is not the issue, control of the money is the issue.
  18. More $$$? Will a larger paycheck solve a budget crunch? The money ending before the month is a cash management issue. Quantity of money is not the issue, control of the money is the issue.
  19. Is Debt Unavoidable? Living beyond our means is unsustainable. Debt limits your options. Debt adds stress on you and your family.
  20. Types of Debt Mortgage Loans Student Loans Auto Loans Consumer Loans (aka: credit card debt)
  21. Beware of the debt trap — especially consumer loans and credit cards!
  22. Credit Cards The Good, The Bad, and the Ugly.
  23. Credit Cards: The Good Easy to get Easy to use Safer to carry than cash Earn “points” or cash back Give you a credit record
  24. Credit Cards: The Bad High interest rates and fees When paid late, interest rate can increase substantially — 29 percent. Easy to use and abuse Increase the amount you spend (12 percent on average)
  25. Credit Cards: The Ugly “Spend now and worry about paying for it later.” 29 percent of Americans admit to not paying all of their bills on time. (National Foundation for Credit Counseling, 2013 Financial Literacy Survey) An $8,000 debt at a rate of 18 percent interest and a 2% payment rate, will cost over $22,000. $15,112 — Average amount of credit card debt per household where there is debt at end of 2013.
  26. Discussing card debt is taboo The topics people say they are unlikely to talk about openly with someone they just met were: The amount of their credit card debt (81 percent) Details of their love life (81 percent) Their salary (77 percent) Monthly mortgage or rent payment (72 percent). Their health problems (62 percent) Their weight (50 percent) Their political views (42 percent) Their views about religion (34 percent) The price of a tank of gas (9 percent) The weather (5 percent) (Source: CreditCards.com research, January 2009)
  27. In a recent financial report, consumers had an average of 1.96 cards: CARD CARD (creditcards.com )
  28. Keys to getting out of debt: Desire to be consumer debt-free. Figure out what you owe. Cut up those credit cards, one at a time!
  29. Pay Off Credit Card Debt Discretionary income$200 Less: ½ to cash reserve $100 Remainder to LOWESTbalance credit card, until PAID OFF! Once it’s PAID, move up to the next card, and REPEAT!
  30. Retiring credit card balancesrelieves stress. It is rewarding and encouraging.
  31. Keys to getting out of debt: Desire to be consumer debt-free. Figure out what you owe. Cut up those credit cards, one at a time! Take a hard look at your monthly expenses and lifestyle. Be willing to sacrifice in the short term to improve your long term.
  32. Keys to getting out of debt: Create a realistic budget and pay as much as you can toward the debt. Plan which will be paid first. Start a regular electronic savings deposit. Set up loan payments electronically. Review your credit report annually.
  33. Tips for avoiding debt: Eat healthy and exercise. Be a regular saver — build up an emergency fund. If you use a credit card — pay it off each month. Stored value cards could be a wise option. Plan ahead and save for big purchases, Christmas and vacation club accounts.
  34. How to opt out of credit card/direct mail solicitation: Call toll-free 888-5-OPTOUT. (888-567-8688) Visit www.optoutprescreen.com For more information see: www.ftc.gov/bcp/edu/pubs/consumer/credit/cre17.pdf www.privacyrights.org
  35. How do we build a solid financial foundation Attitudes Talking about it/proactive management Debt Credit Score Budgeting
  36. Credit Reports Your score will impact – Mortgage and other loan rates. Premiums set by insurance companies. Could impact employment. To have a good score, you must have credit history data that is reported; having no history of borrowing means you will have a lower credit score. Being debt free could mean that your credit score will be lower.
  37. How the score is calculated— The score is based on the following areas: Payment history — 35 percent (major derogatory adds a lot). Debt level — 30 percent. Length of credit history — 15 percent. Diversity of credit accounts — 10 percent. Number of new attempts at getting credit — 10 percent.
  38. How to improve your credit score: Pay bills on time. Keep debt low — 10 percent of available credit limit is best. 50 percent is maximum. Don’t apply for unnecessary credit. Review your credit report. www.ftc.gov/freereports www.annualcreditreport.com
  39. How to improve your credit score: Close accounts responsibly. Have a mix of different types of credit (don’t’ only use finance companies).
  40. How do we build a solid financial foundation Attitudes Talking about it/proactive management Debt Credit Score Budgeting
  41. Financial Planning vs. Budget Financial planning — long-term look at your financial situation and how you want that financial situation to look in the future. Budget — steps you are taking right now to achieve your long-term financial goals.
  42. It all starts with a plan: Short Term Plan = Budget Start with monthly income Allocate your first fruits Determine what needs to be spent Assess how you are spending your money Allocate savings and discretionary funds – Separate Accounts? Envelopes? Live as a Good Steward of God’s Resources
  43. Vision for the Future: Goals & Financial Plan 1 year 5 years 10 years 20 years Beyond Your will Your beneficiaries Adjust and update as time goes on
  44. Categories to consider
  45. Budgeting Process Review and track spending Review and track income Determine areas that must be adjusted to accomplish goals Make adjustments and start the process again
  46. Review and track spending Most people don’t track everything “inconvenient” Identify ongoing, vs. emergencies Include debit/credit card expenses Tools and resources to help; ultimately you need a version that works for you. Paper Electronic Garbage in/garbage out. Don’t make it too complicated.
  47. Review and track income Smaller number of areas to track. Be aware of the frequency or other variations that can complicate it. Taxes and deductions need to be addressed properly in your budget.
  48. The moment of truth Subtract the expenses from the income. If your expenses are higher than the income, start to figure out what to reduce or eliminate. If your income is higher than your expenses, make sure you have a plan to save and invest.
  49. How do we build a solid financial foundation Attitudes Talking about it/proactive management Debt Credit Score Budgeting
  50. Evaluation
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