Your Own Personal Budget

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Your Own Personal Budget

• Getting Started

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Readers Theatre Where is our money going?
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According to a recent USA Today article, 59 of
Baby Boomers have credit card debt, 56 have car
payments.Dave Ramsey.com
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When surveyed, 75 percent of the Forbes 400
(richest people) said the best way to build
wealth is to become and stay debt free.Dave
Ramsey.com
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Then what is the answer?

• Do what you know your Grandma would tell you and
• SAVE, SAVE, SAVE

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What are we looking at?

• How to get started budgeting after high school
  and college
• Configuring your first actual budget
• Giving and Investing
• Owning your first home

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Getting Started

• Dare to dream big
• Decide what is important to you
• Relate to your goals that youve set
• Set goals and write them down
• Long and short term
• Resolve never to give up saving

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Beginning Your Budget

• A budget is when you spend all of your income on
  paper before you receive it
• It is simply a plan that you create and attempt
  to stick to
• Figuring out your Net Spendable Income (NSI)
• Recommended Program is Microsoft Excel
• A budget requires discipline and flexibility
• Fixed income
• Variable income (requires estimations)

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Best Types of InvestingAccording to
www.daveramsey.com

• Growth-stock mutual fund
• For a family that needs security and increase
• Good for one lump sum investing as well
• Be sure the mutual fund you choose has at least
  a 5-year track record. I prefer mutual funds with
  a 10- to 20-year track record. (Dave Ramsey)
• Roth IRA is also a recommended option

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CD vs. Annuity

• CDs offer greater security
• The government guarantees up to 100K in
  deposits, and the state is liable if the risk
  pool goes broke

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Recommended Websites

• www.crown.org
• Calculating your budget based on your income
• Calculating interest on loans (mortgages) based
  on number of years vs. interest
• Moms actual income calculator
• www.daveramsey.com
• Debt consultation
• Managing your income

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Starting Budget Percentagesof your NSI

• 32 - Housing
• 13 - Food
• 13 - Automobile
• 5 - Insurance
• 5 - Debt
• 6 - Entertainment

• 5 - Clothing
• 5 - Savings
• 4 - Med/Dental
• 7 - Miscellaneous
• 5 - School/childcare
• 5 - Investments

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Sample Budget on 45,000.00after giving 10
given

• Monthly income 3,375.00
• 1080.00 - Housing
• 438.75 - Food
• 438.75 - Automobile
• 168.75 - Insurance
• 168.75 - Debt
• 202.50 - Entertainment

• 168.75 - Clothing
• 168.75 - Savings
• 135.00 - Med/Dental
• 236.25 - Miscellaneous
• 168.75 - School/childcare
• 168.75 - Investments

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Tips for using a spread sheet for Budgeting

• Leave a column space between each expense column
  for abbreviated explanations
• Change the colors of expenses from the color of
  your balances
• Learn to use the formulas for faster operation
• Its worth the time to learn

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Heres a portion of what it might look like on
screen
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Sample of the Math Code for the Balance Cells

• Cell d6 has this code
• When you type this in it does the math for you,
  and provides the balance left to spend
• d4-d5

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Now, using your grid sheet

• Divide into groups of at least two
• Do a budget giving each of those percentages for
  the income that is assigned to each of you

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What is working mom actually making?

• Monthly income 1400.00
• After giving and taxes 1120 (NSI)
• Misc. 50.
• Childcare400
• Clothing 150

• Trans/Parking 125
• Extra Food/Lunch 80
• Dining out (rather than cooking at home) 100
• Leaves 165.00 income

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Ready to Buy instead of Rent?

• Tips for getting ready to purchase your first
  home

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Calculate your mortgage

• 100,000.00 House
• 15-Year Mortgage
• At 8 Interest
• 100.00 extra Monthly Payment
• Totals 172,017.71
• 12 years (151 payments) 158,617.26
• Monthly payment 955.65

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How about a 30 Year Mortgage?

• 100,000.00 House
• 30-Year Mortgage
• At 8 Interest
• 100 extra payment
• Total interest 164,160.52
• Totals 264,160.52
• Monthly Payment 682.18

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Do your own calculations atwww.crown.org
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Thirty year vs. Fifteen

• Total estimated savings in interest equals
  73,566.09
• When the 15-year is at 8 and
• The 30-year is at 7.25

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Thirty year vs. Fifteen

• More principle is paid sooner on a 15 than a
  30-year
• A 15-year may make it easier to afford the
  selling and purchase process of a new home

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According to a recent USA Today article, 59 of
Baby Boomers have credit card debt, 56 hve car
payments.Dave Ramsey.com
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Myths and Truths At www.daveramsey.com

• Myth The debt management companies on TV/Radio
  like Ameri Debt will save me
• Truth You may get out of debt, but only with
  your credit trashed
• a debt-consolidation firm whose internal
  statistics estimate that 78 percent of the time,
  after someone consolidates his credit-card debt,
  the debt grows back.

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Myth vs. Truth

• Myth Debt Consolidation saves interest, and you
  have one smaller payment
• Truth  Debt consolidation is dangerous because
  you treat only the symptom

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Bankruptcy information fromwww.christian-credit-
counselors.com

• Chapter 13 Must be filed in federal court
• Current fees total almost 300.00
• Stays on credit report for 10 years
• With steady income you may keep a mortgaged home
  and car
• Allows you to use your income to pay on a
  three-to-five year period

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Chapter 7

• Known as straight bankruptcy
• Liquidates all of ones assets
• Exempt property Automobiles, work related tools,
  basic household furnishings.
• Some of your property may be sold by a court
  official, a trustee, or turned over to your
  creditors
• A discharge is possible every six years

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Moral?

• Debt is Dumb

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Myth vs. Truth

• Myth Debt is a tool and should be used to help
  create prosperity
• Truth Debt isn't used by wealthy people nearly
  as much as we are led to believe

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Myth vs. Truth

• Myth I can get help with debt reduction and debt
  management by working with a financial planner
• Truth Most financial planners don't get paid for
  debt counseling services

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Myth vs. Truth

• Myth Only the rich can be debt free
• Truth Anyone can become debt free and true debt
  management is plain common senseTrue debt
  management is 20 knowledge and 80 behavior

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Henry Ford said

• Debt is a lazy mans way of purchasing things.
• www.daveramsey.com

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Recommended Money Management Goals

• Be flexible and save as much as possible each
  month
• Accumulate Three months worth of your NSI into
  an emergency fund
• Take the rest of what you would be saving, and
  invest in a Growth Stock Mutual Fund

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Recommended Money Management Goals

• If in debt, have at least 1,000.00 in an
  emergency fund
• Attack your smallest debt with every extra dime
• Then snow-ball that money that you had been
  paying onto your next smallest debt

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Recommended Money Management Goals

• Once out of debt, take all the payments youve
  been making and then build your three months of
  NSI in your emergency fund
• After that, take the same amount of payments and
  invest in a good Growth Stock Mutual fund

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Recommended Money Management Goals

• If you can get out of debt soon
• If you learn the discipline of saving
• If you invest in a Mutual fund
• You should retire with no financial worries
• You will be free to give, and leave a sizable
  inheritance for your family after you