Summary: Learn to save for future expences and break the cycle of going deeper into debt.
You can download the free PowerPoint and teaching matierials at: www.LisbonWC.org/free.htm
FINANCIAL FREEDOM WORKSHOP
Developed using the books:Your Money Map: A Proven 7 Step Guide to True Financial Freedom and The Total Money Makeover.
- Hopefully you have been tracking all your expenses since this workshop began.
- Use these figures to make your spending plan more accurate.
- Make adjustments in amounts and categories so that income and expenses are balanced.
- Stick to your plan!
- This will be the most beneficial thing you will learn in this workshop.
- I am available for personal financial counseling.
- So far we have focused on getting out of debt.
- Tonight we will begin to plan for the future once you are debt free.
- If you are not there yet, see this as a goal that will give you hope that financial freedom is possible!
THE ROAD TO FINACIAL FREEDOM
- Begin using a spending plan
- Save $1,000 for emergencies
- Pay off credit cards
- Increase savings to one month’s living expenses
- Pay off all consumer debt
- Increase savings to three month’s living expenses
- Begin saving for major purchases (home, auto, etc.).
- Begin saving for retirement.
- Begin saving for children’s education.
- Begin saving to start a business.
(If this is a goal for you.)
Today we will focus on the fist half of destination #4: Major purchases and saving for retirement.
Proverbs 21:5 “Steady plodding brings prosperity.”
SAVING FOR MAJOR PURCHASES
- At this destination, you have gotten all debt out of your life except for your home.
- You have to live life from this point on hating debt and committing never to get in it again.
- The way you do this is by planning ahead and saving for major purchases.
Your saving priorities.
- Priorities for major purchases will be different for each person.
- Last time we spoke of how to get out of auto debt.
- Saving for your next car could be a good first step for many to stay out of debt.
- The stage of life you are in and your families situation will also affect your priorities.
- Also consider where your plans for your life. Where is God directing your path?
Reasonable down payment for a home.
- At least 20%
- Monthly payments will be smaller
- Eliminates need for expensive PMI (Private Mortgage Insurance)
- $65 - $70 per month per $100,000 borrowed (Cost avg. $840 - $1,680 per year)
- PMI is basically foreclosure insurance
Steady saving adds up.
- When you get out of debt and begin to save, interest becomes your ally
- It begins to work for you.
- Saving for a major purchase may take more time than the previous destinations.
- Stay on course and keep your goal in mind.
Compounding interest is a friend.
- Before, interest on your debt made it difficult to pay off your debt.
- Now interest on savings will accelerate you progress.
- The sooner you start to save the better.
- If you save $1000 a year at 10% interest, you will save $526,985.
- This will earn $4,392 each month.
- If you wait just one year to start saving, you will lose $50,899.
INVESTING FOR RETIREMENT
- “USA today reported recently that 56% of Americans of not systematically prepare for retirement age by investing” (Dave Ramsey).
- “The Consumer Federation of America found that of people making less that $35,000 per year, 40% said the best way for them to have $500,000 at retirement age is to win the Lotto” (Dave Ramsey).
- “Wealth Builder magazine’s poll found that 80% of Americans believe their standard of living will go up at retirement. Talk about living in a fantasy! (Dave Ramsey)
Don’t rely solely on a company or the government.
- The Social Security retirement age is being pushed back.
- It isn’t enough to live on in the world today.
- It was never intended as a retirement plan
- It was started as a way to help order people living in poverty.
- “A recent survey said more people under age thirty believe in flying saucers than believe they will receive a dime from Social Insecurity” (Dave Ramsey).
- We mentioned earlier that compound interest makes all the difference in saving for retirement.
Two Savers Example
- Alice started saving $1,000 a year for retirement when she was 21 years old. She saved this much for 8 years and then stopped at age 29 but let the amount build interest until she was 65. She paid a total of $8,000 into her retirement plan.
- Ben waited until age 29 to start saving $1,000 a year for retirement and saved that much per year until he retired at age 65. He paid a total of $37,000 into his retirement plan.