This month’s
presentation is taken from a book by Dave Ramsey call the Total Money
Makeover. I highly recommend this book
to you and claim no credit for his excellent advice.
Dave Ramsey's
TOTAL MONEY MAKEOVER
For more information on the book or
forms for working his plan simply type Dave Ramsey into your search bar.
Normal American families often feel like a gerbil on a wheel. The money comes in, goes out, comes in, goes
out at such a constant rate that we become inured to how it happens, we just
know it does. The obvious result is that
we end up with too much debt, too little savings and no sense of control over
our lives.
90% of
people in our culture buy things they can’t afford. The first big Excuse/Lie we use to rationalize our behavior is : I don’t have the time let alone enough money to
work on a serious budget. The Reality is that you don’t have the time or the money not to do
it! The Big Question
is really simple. You’ve been doin’ it
your way long enough . . . so how’s that workin’ for ya?
Your biggest challenge is that person you see every time you
look in the mirror. You have to get that
person under control! Then you are ready
to win this self-imposed battle.
It’s time to rediscover God’s plan that Grandma’s & Great
Grandma used. It is the simplest
way of handling money. Notice I said simple,
not easy.
Getting out of debt isn’t rocket
science. Handling money is 80%
behavior & 20% head knowledge.
The Total Money Makeover is not a
theory. Yes, I know there are lots of programs
and books and seminars out there. But we’re
here to tell you that this one works every time. We’ve used it and it works.
It is simple. It’s
based on a series of prices that must be paid.
Once those prices are paid, the bills will be paid as well. Most people are willing to pay only some of the price --
consequently they walk away thinking that this program is just one of
many failed systems. What they’re not
dealing with is that they can’t get the benefit of the system if they don’t use
it completely.
Most people find themselves in three basic categories. The first is a burdensome,
depressing debt. It’s like indentured
servitude. Notice I didn’t say
slavery? Slavery happens against the
will of the enslaved. Indentured
servitude is entered into by agreement. In the very early years of our
country people would enter such an agreement in order to gain the funds for
passage to this country. The terms were set in advance with the master agreeing
to supply passage, housing and food with the indentured servant agreeing to repay
the master with a set number of years of complete loyalty and service at the
expense of true freedom and a considerable forfeit of life’s energy to satisfy
the debt. When our eyes get bigger
than our pocketbook and sign on the dotted line agreeing to pay over time, plus
interest, we are signing over our freedom to make any further choice that would
interfere with our complete loyalty to that debt.
The second category is a false and very seductive
situation where debt is no longer crushing the life out of you, but it has not
been altogether eliminated. The debtor
is not truly free but the relief from fear and uncertainty is genuinely joyful. I call this place Nowhere Land. This is the place where most people give up
the fight by succumbing to the relative ease they feel with the elimination of
some debt. They become complacent about
“just this one thing”. “After all,
haven’t we sacrificed and strained against that burden long enough to enjoy a
little freedom?” Sadly, at this point,
it is common for people to slowly slide back down into debt, fear and
uncertainty.
The third category is a bright
hopeful place where a person lives free of debt and stay free to build a
promising future for themselves and their family where debt is conquered and
never entered into again. Ordinary
People use this system with
extraordinary results. They get out of
debt and regain control of their lives.
The price:
As with all good
things, there is a price to be paid for living in category three. It’s called sacrifice. Both you and your spouse must jointly
sacrifice for the short term so you can get out from under that tremendous
burden of debt and begin building your future.
Like I said
before, this system is simple but definitely NOT easy. But the Money
Makeover motto is, “If you will live like no one else -- later you can live
like no one else.”
Face it: It’s not your parents
fault, it’s not your children’s fault, it’s not your friends fault, and in most
cases it’s not solely your spouse fault.
It’s your fault!
The biggest part of the problem is
denial. 90% of solving a problem is realizing
there is one. Need a yardstick to see
how you measure up? Here it is. If you are in debt, you have a problem!
If you are
serious about freeing up your life, be aware that family & friends will not
only participate in your fantasy/denial, they’ll encourage it. Nobody wants to give up the good stuff or the
good times especially if they’re not the ones paying for them.
The first step is to acknowledge your wrong doing and commit to change your ways.
The second step is to identify the obstacles to change.
Expect that change will be painful. You have been living beyond your means for some time
now. There will be a lot to give up and
it will be a considerable time before you can even consider reintroducing those
things back into your life. Your
decision should be based upon truth and true principles. A righteous sacrifice is when we give up
something good for something better. An
unrighteous sacrifice is when we give up something good for that which is not
good. Are you willing to sacrifice
instant gratification and self-inflected bondage for personal freedom and peace
of mind? Or is it better to sacrifice
personal freedom and peace of mind for instant gratification and self-inflicted
bondage.
Most people will not seek change
until the pain of current circumstances has exceeded the pain of change.
Keep in mind
that the height of stupidity is to do the same thing over and over again expecting
a different outcome.
Same behavior – Same outcome.
Now is the time to make the change before the pain
of not changing searches you out in the form of:
·
Layoff
·
Downsized
hours
·
Accident
·
Change
in the world/government/financial landscape
I promise
that if you will discipline yourself and follow these simple steps to the end
of your debt, pain and all, you will be debt free and, miracle of miracles, you
will also have a savings.
DEBT IS NOT A TOOL
Sadly, our
current culture has been burdened with a fallacy that is destroying marriages,
families and laying bare the ugly hand of greed. We are constantly being told that debt is a
tool. We are barraged daily with the lie
that leveraging our current financial safety against some instant gratification
or promise of a self-indulgent future “happiness” is the path to all things
wonderful. We’re bludgeoned with shame
for not being cool enough, fashionable enough or not keeping up with everybody
else. We’re encouraged not to think of these
burdensome obligations as debt, just “easy” monthly payments. Consider these myths, then take a deep breath
and administer a dose of truth.
Myth:
Debt consolidating
saves interest, and you only have one smaller
payment.
Truth: Debt consolidation is dangerous because you’re only treating
the symptoms. You are in debt because
you lied to yourself and exceeded your ability to pay. Making your bill pile look and feel like you
have done nothing wrong doesn’t make it right.
Odds are your attitudes about money didn’t change but your level of
discomfort sent you looking for some other way to continue your lifestyle. With
this attitude you’re headed right back where you started. Consolidation puts you squarely in category
two with no groundwork, no sacrifice born of commitment and hard work. Regression is almost a given. A
major barrier to being debt-free is your view of debt.
Myth:
Debt is an
unavoidable lifestyle. Everybody had
debt.
Truth: This tired old lie is
intended to line the pockets of those who get you to believe it. These folks have sold this lie so
aggressively that our society can’t imagine not being in debt. It’s called “conditioning”. We have been conditioned to believe that a
person can’t have a car without payments, a house without payments, a life
without credit cards or just plain no payments on anything! Truth: Ordinary people with ordinary wages can
and do live debt free.
To
illustrate the concept of conditioning there was a study done on a group of
monkies living together in a cage. A
Pole was placed in the center of the cage and bananas were placed on the top of
it. As soon as the monkeys spotted the
bananas they immediately began to climb
the pole. But when they did, they were
hit with a blast of water from a fire hose.
Within a very short time they became conditioned to believe that it was
hopeless to even try.
Next, a new
monkey was introduced into the group. He
had never been conditioned to avoid the pole or the bananas so up he
started. The fire hose didn’t have to be
used on this little guy. The others in
the cage ran to him, pulled him off the pole and punished him for trying. Not only were they conditioned not to try,
they wouldn’t let anyone else try either.
Family, friends and associates will react much the same way when you
start to change you attitude and behavior.
Children don’t like to do without all the whistles and bells they’ve
been used to. Friends and associates
feel shunned when you cut back or eliminate activities and spending habits you
used to share with them. Then when you
begin talking about successful experiences and future plans for absolute
freedom all kinds of emotions crop up.
Here is Myth that needs to be dispelled: Money is evil.
Truth: That
scripture has been misquoted so many times we’ve been conditioned to believe the
misquote is the real thing. Let’s take a closer look and see what it
really says.
1 Timothy 6:10
For the love of money is
the root of all evil: which while some coveted after, they have erred from the
faith and pierced themselves through with many sorrows.
Did you
catch that? It’s the love of money
(and the stuff it can buy) that is the root of all evil. Coveting it and what it can buy for us will
indeed pierce us through with many sorrows.
Just to be clear, coveting means to desire ardently something another
person has and we do not; to crave or long for.
Money is merely a tool. And like all tools, it’s up to you to use it for the purpose
it was intended. Take for example a pipe wrench. It’s heavy and strong and meant to be
used on pipes either to seal them or open the up. It is a perfectly wonderful tool that renders
a great service in the hands of a skilled workman. However, if that workman took that same pipe
wrench and start hitting himself over the head with it, it would cease to be of
help. In fact, it would become weapon
against him.
Let’s take
a look at another scripture found in Jacob 2:17-19
17 Think
of your brethren like unto yourselves, and be familiar with all and free
with your substance, that they may be rich like
unto you.
19 And after ye have obtained a hope in Christ ye
shall obtain riches, if ye seek them; and ye will seek them for the intent to do good—to clothe the naked, and to
feed the hungry, and to liberate the captive, and administer relief to the sick
and the afflicted.
“When it
comes to wealth or abundance, the Lord is not counseling against it, however he
does give us a very clear understanding of what it is to be used for. He counsels
the Saints not to seek for worldly riches except to do good. We must not put seeking
worldly riches before seeking the kingdom of God , which holds the riches of
eternity.” (lds.org)
I think that’s
all pretty clear. Seeking wealth for the
sake of self-aggrandizement and personal pleasure is the bad side of the
coil. There is nothing wrong with
obtaining riches as long as we remember the will of God.
Finical ignorance
The average
family makes $50,000 a year. If they never got a raise throughout their working
career, they would earn $2 million in a forty year work life. The tragedy is no one teaches the average
person how to manage that money because debt is promoted as a lifestyle and
we’re dumb enough to think that’s a perfectly logical concept. In this case the
old adage, “what you don’t know can’t hurt you” is really stupid.
To
overcome this ignorance a person needs to – with no shame:
1.
Admit
that you are not a financial expert because you have never been taught.
2.
Learn,
understand and commit to this money make over program.
·
Just
like the steps to repentance, your commitment to getting out of debt and
staying that way is solidly in your heart and mind you will never succeed.
3.
Make
it a lifetime quest to remain debt free and independent of the indentured
servitude that is debt.
4.
Don’t try to keep up with the Joneses because they are most likely broke
too. There’s always be somebody that
makes more, has more, or appears to be better off than you are. Just remember those Jones are trying to keep
up with their own set of Jones too! And
more than likely it’s killing them too.
Remember:
Your goal
needs to be solidly set, based in raw honesty with yourself and your spouse.
BEGIN WITH SINCERE
PRAYER
Yes, this
is a program of repentance.
16 And thus mercy can satisfy the
demands of justice, and encircles
them in the arms of safety, while he that exercises no faith unto repentance is
exposed to the whole law of the demands of justice; therefore only
unto him that has faith unto repentance is brought about the great and eternal plan of redemption.
17 Therefore may God grant unto you, my
brethren, that ye may begin to exercise your faith unto repentance,
that ye begin to call upon his holy
name, that he would have mercy upon you;
26 But this
is not all; ye must pour out your souls in
your closets, and your secret
places, and in your wilderness.
27 Yea, and
when you do not cry unto the Lord, let your hearts be full, drawn out in
prayer unto him continually for your welfare, and also for
the welfare of those who are around
you.
28 And now
behold, my beloved brethren, I say unto you, do not suppose that this is all;
for after ye have done all these things, if ye turn away the needy, and the naked, and visit not
the sick and afflicted, and impart of your
substance, if ye have, to those who stand in need—I say unto you, if ye do not
any of these things, behold, your prayer is vain, and availeth
you nothing, and ye are as hypocrites who do deny the
faith.
29 Therefore,
if ye do not remember to be charitable, ye are as
dross, which the refiners do cast out, (it being of no worth) and is trodden
under foot of men.
Watch over you
budget with sincere prayer
Stick to your budget
with sincere prayer
Ask for divine guidance
to gain & use the funds to accomplish your goals
It is God’s plan
that you be out of debt and self-reliant
1.
Budget:
·
Prepare
a Monthly budget that both you & your spouse agree upon.
I know that in some cases
this is a big challenge that could take a book all by its self. If it becomes something too big to overcome,
sincerely pray together for answers and solutions. If all else fails, work with bishop.
·
The
minute you see the budget getting out of whack - get
together & bring it back in line.
·
The budget must balance each month.
·
Example – If you spend more on food -- get
together & trim more somewhere else.
If gas goes up
– get together & trim more somewhere else.
2.
Get current with all your creditors.
·
Get
on the phone and get so relief from the harassment by negotiating a reasonable
payment
·
Dave
Ramsey’s book gives excellent information on how to get this step done.
·
The money make over
is a series of steps.
BABY STEP #1 – Develop an
emergency fund.
·
Save
$1,000 FAST for emergency fund.
·
You
know how your parents always told you to save for a rainy day? They were right. No matter how sunny today may seem, it’s a
guarantee that sooner or later it’s going to rain.
You need an
emergency fund. Life on this planet was
designed to be a time of challenging and proving.
·
Children
happen
·
Cars
blow up
·
Transmissions
go out
·
You
need to help bury a loved one
·
Jobs
end
·
Medical
expenses occur
Even the
Scriptures even tell us that stuff happens in a full and productive life. So be ready.
Proverbs 14:4 Where no oxen are, the crib is
clean: but much increase is by the strength of
the ox.
See what I’m sayin’?
Stuff happens. Get the tools and
get to shoveling.
That $1,000
won’t catch all the big things but it will catch a lot of the small ones.
REMEMBER:
This $1,000 is only for real emergencies. NO CHEATING.
·
Christmas
is NOT an emergency!!!!
·
regular car
maintenance or repair is not an
emergency.
·
Kids
grow out of clothes. That’s not an
emergency.
These are
not emergence they are a line item in the budget.
You must
break the cycle of dependence on credit cards. Those credit cards and easy access to credit
is what got you into this mess in the first place. Your whole purpose is to cut them into
ribbons and lay them to rest once and for all.
Why do we do this before anything
else? To keep you from having to stop
paying down your debt.
When you continue
to use cards or borrow on “easy” signature loans, all you’re doing is adding to
your debt. Money that could be going
toward paying down your debt is detoured back into the money pit you claim to
abhor! How can you ever pay things off
if you continue to add to your indebtedness?
Murphy’s Law says
"Anything that can go wrong, will go wrong". This program is a MURPHY repellent! Use it liberally.
WAYS TO GET THE $1,000
QUICKLY:
Both of you
work on it.
·
Use
any savings and add to it.
·
Work
extra hours
·
Save
it from your tax return
·
Have
a garage sale
·
Sell
something on the internet, Nickel Saver, swap meet, etc.
·
Get
a part time job
Try to do it in one month.
After you
have acquired the $1,000, hide it or you will spend it bit by bit.
Ways to hide
it -- get creative.
·
Put
it in a separate savings account from your other funds
·
Hide
it in the back of a closet in a picture frame with a “break glass only in case of emergency”.
·
You’re
a smart person, do what will work best for you
BABY STEP 2 - Debt snow ball.
STOP BORROWING --
from this day forward you do not borrow
from anyone or anything! No more credit
cards, no more “easy” payment plans, not more loans of any kind.
·
List
all your bills smallest to largest except the house payment. (forms for Ramsey’s plan can be found on
line)
·
Medical
bills
·
Cars
payment
·
Credit
cards
·
Etc.
1.
Pay
the minimum on each bill. The idea is
not to continue this way, but to start on an even footing with everyone and
still make payments every month.
2.
Start
paying off the smallest bill first, with all the extra money you can find. Pour every extra cent onto that bill. Make it go away as fast as humanly
possible.
3.
When
you have paid off the smallest debt, then take that payment and all the extra money
you can come up the same thing with your second smallest debt.
4.
Then
move onto the third smallest and so on.
Each time you pay off one obligation you’ll be able to using more and
more money to beat back the debt and end it once and for all.
This takes discipline but you can do
it. Soon you’ll start getting excited about paying
off the debts. As you begin to feel the
enormous weight of those obligations being lifted from your shoulders, you’ll also
feel a renewed sense of hope and buoyancy.
Summery for Snowball System:
·
Use
a budget
·
Get
current with your creditors before you start (see book)
·
Pay
debt off smallest to largest
·
Make
the sacrifices necessary to make it happen
·
Give
this program TOTAL focused intensity. Without that kind of focus you cannot
succeed.
The attitude has to be, “To the exclusion of virtually everything
else, “I’m getting out of debt!!”
Just trying won’t
do it. This is not an easy thing to
do. Repentance never is.
Can’t get the snowball rolling because
the budget has no extra money left?
·
GET
RADICAL!!! - GET INTENCE!!
Righteous vs. unrighteous sacrifice:
Lets take a look at the difference between a righteous sacrifice and an
unrighteous sacrifice.
1.
A
righteous sacrifice occurs when a person gives up something good for
something better.
2.
Think
about it for a minute. Name some
righteous sacrifices you have made that genuinely changed thing for the better.
3.
An
unrighteous sacrifice on the other hand is giving up something good for
something of lesser value. Debt is an
unrighteous sacrifice because we give up our financial stability, peace of mind
and our ability to live an abundant life for temporary gratification. Worse, that sense of gratification soon fades
as we start wanting newer, shinier, different things. Cloths wear out, or go out of fashion. Cars and toys loose their “new smell”. And there is always someone beckoning to us
to come live the good life for just 12 (or more) “easy monthly payments”.
Get that Snowball rolling!
·
Sell
something (Make a righteous sacrifice)
·
Do
what you did to get the money for the emergency fund.
·
Sell
little used items on the internet.
·
Sell
items in the classifieds
·
Sell
the expensive car & get a good cheap used one. use the difference in the payments to add to
the snowball
·
Sell
the second car.
·
Sell
the boat or other big toys
RULE OF THUMB:
Cars or toys that cannot be paid off in 18 to 20 months? SELL
IT!!!
·
Sell
the house if it takes over 40% of your monthly income
·
Can
you refinance your house at a lower interest rate, shorter loan time and lower
monthly payments?
·
Sell
so much stuff the kids thing they are next!
·
Get
the money to pay off the smallest bill & take that payment and combine it
with the payment on the second bill.
*****You can’t love
anything more than the idea of getting out of debt.*****
BABY STEP 3:
Kick Murphy out
1.
Once you’re out of debt, keep that $1,000 emergency fund
safely tucked away somewhere.
2.
Make you makeover permanent
-- begin funding your emergency
fund with the old snowball method. Put
the snow ball money into the emergency fund until it is fully funded at $5,000
to $25,000. (see book for your dollar
amount according to your income)
REMEMBER this money is to pay for emergent
expenses.
·
This
money is not to be treated like income. Example:
if you get laid off, this money is not to be used as if it were your
regular income. It is to be used very
sparingly. Another good reason for food
storage! With basic maintenance covered
by the fund and food storage you can survive until you can find some kind of work.
·
Remember
the rules for what actually constitutes an emergency.
·
Any
money used from this fund MUST be replaced.
When it come to the amount necessary
for this fund, the
feeling of risk is different for men and women because they look at risk
differently. Council together and
sincerely pray to meet a satisfactory compromise that will most effectively
benefit your family.
The worst time to barrow money is when times are bad. Honestly assess your ability to pay your
creditors back. You fought your way to
this place of freedom and managed to save this emergency fund. Don’t blow it now.
Emergency
fund Items should only be used for:
·
Large
medical deductible
·
Home
owners or car deductibles after an accident
·
Unforeseen
medical problems
·
Blown
transmissions or car engines
·
Job
loss or cutbacks
1.
Do not use the
emergency fund without discussing it with your spouses. You both sacrificed to establish it so both
of you need to be in on how and when it is spent.
2.
Always
sleep on it before using it.
3.
Look
for some other way to cover the proposed expense.
IF FUNDS ARE USED:
·
Go
back to BABYSTEP # 1 until that emergency money account is fully funded again.
·
DO NOT RATIONALIZE the use of the emergency fund
·
Save
for things you want to purchase. You
surely know how to do that by now.
·
56%
of Americans say they would borrow on their credit cards if a rainy day came.
WRONG ANSWER!
NOT ANY MORE!!!
·
The
fund will make it so you can live like no one else.
·
Keep
the fund in something liquid and easy to get at without penalties.
·
No
CDs
·
No
investments
·
It’s
better to give up the interest you might gain to keep your cash liquid and
readily at hand.
I encourage
you to get Dave Ramsey’s book. His
thorough, practical, no nonsense approach to all thing money has proven its
worth again and again. We have used it,
our children are using it now. It’s easy
to read, easy to understand and chock full of everything you need to be a
success. Well, everything by your own
dedication. But you will be heartened by
lots of real life experiences of people that overcame their debt and are now
free.
·
Our
purpose is to teach how to get out of debt and stay out of debt
·
Mr.
Ramsey takes the program to even greater understanding
·
Education
funds
o
Retirement
investing
o
home
loans
o
&
many other things
***** HOWEVER PLEASE FOCUS YOUR TEACHING ON THE “GET OUT OF DEBT” PHASE
OF THIS PROGRAM--ONLY! YOU ARE
NOT A FINANCIAL ADVISOR! YOU ARE A TEACHER/PRESENTER. IT IS YOUR JOB IS TO PRESENT A METHOD THAT
WILL ASSIST YOUR WARD MEMBERS IN BECOMING SELF-RELIANT - NOT AN ADVISOR IN THEIR PERSONAL AFFAIRS. IF CLASS MEMBERS SHOULD REQUIRE FURTHER
ASSISTANCE, REFFER THEM TO THEIR BISHOP.
·
Our
focus as Provident Living Leaders is to offer
the most basics information necessary to help people become independent.
·
Once they have become independent, it
is incumbent upon them as individuals and families to seek out and secure any
further goals.
