Tools for the Journey

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Tools for the Journey
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Which of you wishing to construct a tower does
not first sit down and calculate the cost to see
if there is enough for its completion? Otherwise,
after laying the foundation and finding himself
unable to finish the work the onlookers should
laugh at him and say, This one began to build
but did not have the resources to finish.
Luke 1428-30
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Personal Budgeting Statistics

• According to the Wall Street Journal nearly 70
  of consumers live paycheck to paycheck.

• A Marist Institute poll published in the USA
  Today stated that 55 of Americans always or
  sometimes worry about their money.

• According to CNN, the average credit card debt
  per household reached a record 9,312 in 2004.
  That's an increase of 116 over the past 10 years.

• Only 25 of Americans feel that they are well
  informed about managing their personal finances.
  (1)

• Approximately 40 of families live off 110 of
  their incomes. (2)

The plans of the diligent are sure of profit,
but all rash haste leads certainly to poverty
Proverbs 215
(1) FleetBoston (2) The Observer Jan 12, 2004
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Personal Budgeting Statistics

• According to ADP, 20 of workers would not be
  able to make a mortgage, utility, or credit card
  payment if they missed a paycheck.

• Money magazine states that 75 of families will
  have a major negative financial event (10,000)
  in any ten-year period.

• A survey by Thrivent Financial for Lutherans
  estimates that one in five pre-retirees age 50 to
  64 has less than 5,000 accumulated for
  retirement.

• According to studies performed by Empty Tomb,
  Inc., in 2003, Catholics gave 1.2 to their
  churches.

• Fifty percent of all marriages end in divorce,
  and money issues are pointed to as a significant
  cause of many breakups. (1)

Honor the Lord with your wealth, with first
fruits of all your produce Proverbs 39
(1) http//www.family.org/cforum/fosi/marriage/div
orce/a0037056.cfm
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Personal Objectives
TO BECOME A GOOD STEWARD OF GODS BLESSINGS

• To understand where you spend your money
• To gain control of out-of-control spending
• To reduce debt, increase savings, establish
  emergency fund, increase Net Worth, etc.
• To feel better about future purchases
• To improve ability to help others
• To improve communication with your spouse

Then he said to the crowd, "Take care to guard
against all greed, for though one may be rich,
one's life does not consist of possessions.
Luke 1215
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Practical Tools for the Journey

• Develop a Balance Sheet

• Track your spending

• Create a budget

• Debt Paydown Tool

but everything must be done properly and in
order 1st Corinthians 1440
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The Balance Sheet
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Balance Sheet

• Net Worth is a snapshot of your financial worth
  and will help you reflect on the direction you
  have taken in buying, investing, or insuring
  against financial risks.

• Net Worth Assets less Liabilities (What you own
  less what you owe)

• What should be included in a balance sheet

Assets CashChecking AccountsRetirement
Accounts Stocks BondsProperty Vehicles
Household Contents
Liabilities Credit CardsMortgagesHome Equity
LoansStudent LoansVehicle LoansPersonal
LoansOther debts
Precious treasure remains in the house of the
wise, but the fool consumes it. Proverbs 2120
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Sample Balance Sheet
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What can you learn?

• Do you have an adequate emergency fund?
• Did you discover any surprises, like excess debt
  or forgotten assets?
• Is your insurance coverage adequate to cover the
  value of your property?
• Are your invested assets working for you to
  increase your net worth?
• How does your debt compare to your assets?
• Debt-to-Asset ratio
• Are you building financial resources to help you
  achieve your long-term goals?
• Track over time to see how your balance sheet
  improves

source www.uwex.edu
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Tracking Your Money
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Basic Tracking Steps
The Basics

• Gain online access to your checking, savings,
  loan accounts.

• Choose a tool to track your spending to create
  a budget.

• Review transaction categories the tool offers
  adjust as desired.

• Download transactions into planning tool.

• Review all transaction history to ensure proper
  categorization of spending. Fix any
  miscategorizations.

Taking it to another level!

• Keep receipts and split out categories for
  general merchandise vendors.

• Utilize excel tool for spending trends and
  budgeting

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Tracking Budgeting Tools
Ministry Supported

• Yodlee.com (free)
• Quicken Desktop (software purchase)
• Excel Budgeting Tool (free)

Other Tools

• Mint.com (free)
• Microsoft Money (software purchase)

• Quicken Online (free)
• Mvelopes (monthly fee)
• You Need a Budget.com (monthly fee)

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Yodlee.com
On-line financial transactions database that
aggregates all your different financial accounts
into one view. Yodlee can connect to bank
accounts, retirement accounts, credit card
accounts, etc.
Strengths
Weaknesses

• No service fee
• Free transaction downloads
• Strong login security
• Ability to group accounts
• Free Billpay
• Robust alerts settings
• Easy to create a budget
• Can split transactions
• Can add sub-categories

• Only allows one budget period
• Cannot create categories
• No account reconciliation
• Must remember where you left off with transaction
  categorization

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Yodlee.com
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Yodlee.com
To change category simply click and select from
list
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Yodlee.com
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Quicken Desktop
Desktop checkbook ledger used to track and
budget spending activities.
Strengths
Weaknesses

• Desktop solution
• Manual downloads are free
• Account reconciliations
• Can split transactions
• Can add/delete categories
• Customized cash flow reports
• Keeps transactions in separate window until you
  have categorized

• Software purchase
• Possible bank fee for auto downloads
• Only allows one budget period
• Budget tool is more difficult to use

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Quicken Desktop (Main View)
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Quicken Desktop (Cash Flow Report)
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Quicken Desktop (Cash Flow Report)
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Quicken Desktop (Downloading Transactions)
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Budgeting
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Creating a Budget

• Design your budget based on your objectives, e.g.
  increase giving, build emergency fund, paydown
  consumer debt, save for car purchase, etc.
• Review guides these are guidelines only,
  every family is different.
• Review spending trends seasonality of various
  categories, e.g. electricity, gifts, property
  taxes, insurance, etc.
• Develop a zero sum budget for your spending
  accounts (checking credit card).
• Make 1st pass budget starting with priority
  categories, followed by fixed expenses, and
  moving to discretionary categories.
• Make 2nd pass adjustments to discretionary
  categories to get to zero sum cash flow for the
  month (checking credit card).
• Family plan discussion agreement.
• Analyze adjust based on results.

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Budgeting Tips

• Dave Ramsey Tips
• Start with what you have
• Evaluate your financial priorities
• Budget as a Team! The Nerd vs Free Spirit
• Make allowances in your budget and pace your
  spending
• Budget for emergencies
• Talk about your money

• Additional Tips
• A good budget starts with good data
• Be conservative but challenge yourself (this may
  take some time)
• Set appropriate expectations do not be
  unrealistic
• Establish a monthly review process how did you
  do vs budget?
• Reward yourself for success (budget it!)
• LIFE HAPPENS! Keep reviewing and adjusting
  accordingly

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Budget Guidelines (From Crown Financial
Ministries)
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Budgeting in Quicken
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Budgeting in Quicken
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Budgeting in Quicken
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Budgeting in Yodlee
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Budgeting in Yodlee.com
Simply type in budget an save
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Excel Budget Tool (Actuals)
When a new period of actuals begins simply copy
over the column
Must hand key in actuals advanced users will be
able to automate this.
Checks Balances
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Excel Budget Tool (Budget)
Simply handkey budget figures in the gray areas
Budgeted Balances
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Excel Budget Tool (Actuals vs Budget)
When a new period to compare begins simply copy
over the column
How did I do?
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Excel Budget Tool (Actual Budget)
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Analyze Adjust

• Review Budget vs Actual the week following end of
  month.
• Determine where you missed your budget and why.
• The why may be a result of mis-categorization
  of spending activity.
• Did your budget and spending activity adequately
  address your priorities, ie giving, savings,
  discretionary spending, etc.
• Adjust your budget as needed.
• Do you need to add categories/sub-categories
  after the first month is the time to do it.
• This process will take several months to master.

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What to Expect

• Shock this may uncover some unrealized very
  negative spending habits.
• Frustration with the initial setup (learning
  something new) and with the changes in spending
  habits you may need to make.
• Sense of empowerment you will gain more control
  over your finances and will have a sense of
  accomplishment.
• Sense of prudence you will become a better
  steward of Gods Gifts.
• Happier spending you will feel better about
  some of the discretionary purchases.

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Homework for Next Week

• Obtain online access to all your accounts.
• Select a tracking tool purchase or setup
  account.
• Review learn categories in the tool add or
  change as you like.
• Download transactions into tool correct
  categorization issues.
• Run monthly category cash flow reports and study
  current spending habits
• Create a 1st pass budget for October.

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September 26th Workshop

• Sign up for a 30 minute slot these will be
  hands-on discussions.
• Time will be tight so be prepared.
• Bring any tools that will aid in the discussion
• Laptop (We will have several here with internet
  connections)
• Print-outs of excel model or excel model saved
  on a thumb drive.
• List of questions

By wisdom is a house built, by understanding is
it made firm And by knowledge are its rooms
filled with every precious and pleasing
possession. Proverbs 243-4
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Contacts
Johnnie Goodner - Email jgoodner_at_yahoo.com -
Quicken support - Yodlee support -
Supplemental schedules support
Tim Hess - Email tjhess_at_gmail.com - Yodlee
support
Travis Collier - Email travis.collier_at_gmail.com
- Spiritual Director
John Peterson - Email jpete8015_at_aol.com -
Ministry Lead - Quicken support
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QA