LIFE SKILLS Program Budget Class

Week 4

Welcome Back!

Pray

Read Announcements

Questions before we begin?

Agenda for Today

Today’s Biblical Principle: Giving

Discuss Debt

New tool to introduce: Debt Sheet

Credit Report

Bible Lesson

Mark 12:41-44 (NIV): The Widow’s Offering

41Jesus sat down opposite the place where the offerings

were put and watched the crowd putting their money into

the temple treasury. Many rich people threw in large

amounts. 42 But a poor widow came and put in two very

small copper coins, worth only a fraction of a penny. 43 Calling his disciples to him, Jesus said, ‘I tell you the

truth, this poor widow has put more into the treasury than

all the others. 44 They all gave out of their wealth; but she,

out of her poverty, put in everything – all she had to live

on.’”

Discussion

Everything we have is a gift from God

• The very poor widow offered two copper coins

• She gave all she had

What is your reaction about the woman’s devotion to

giving?

What are we communicating to God when we give?

Discussion

“Stewardship” is the way we manage all our time, abilities,

and money. Nothing of value happens in human life

without these three currencies.”

• Do you believe that to be true?

We often only think of giving in terms of money

• What are ways we can give back to God with our other “currencies”

(time and abilities)?

*Cloughen, Rev. Charles. “One Minute Stewardship Sermons”. pg 2-3

Challenges to consider

1) If you aren’t giving of your money currently, start giving

to a cause this week

• Give even if it is only $2 (“two copper coins”)

• Consider increasing your giving over time

You will be blessed through your giving

2) Find a way to give of your time and/or abilities to help

someone in need this week

Financial House

Biblical Principles

Monthly Spending Plan

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Debt: Teaching Principles

The negative consequences of debt overwhelmingly shadow any value debt may have

In order to start to overcome the burdens of debt one must hold the following views:

Debt does not change your self-worth

Debt is a way to purchase something you cannot afford

Debt makes certain assumptions about the future that you have no control over

Debt creates a temptation not to give

Debt makes you a servant to your creditors which distracts you from your true master (God)

Debt Facts

Debt has become an all too common part of life

Some alarming facts:

• 80% of Americans are in debt* • Only 44% of those in debt have a mortgage*

• 4 out of 10 people have unpaid Credit Card balances* • 3 out of 4 people hold a credit card+

• The average person has 3.4 of them+

• 1 out of 3 people carry an Auto loan+

• Our country loves debt as well • The US National debt passed 19 trillion dollars in 2016 and is continually rising

*http://www.msn.com/en-us/news/money/a-whopping-80-percent-of-americans-are-in-debt/ar-BBllyhK

+http://www.gallup.com/businessjournal/188984/americans-big-debt-burden-growing-not-evenly-distributed.aspx

Taking on Debt While in the Program

While in the Life Skills Program, Love INC strongly

advises you to not take on any further debt

Please talk with your Life Skills Leader or teachers before

making any decisions regarding debt

Debt Sheet

To best address your debt you must know:

• what debt you have

• how much you owe

• the terms of the debt

The Debt Sheet helps you organize this information in

order to take action

DEBT SHEET

A summary of money owed to creditors / family / friends and bills that have a balance due.

(Include credit cards, medical bills, etc.)

Name:______________________________ Date Debt Sheet filled out:_______________________(Update as needed) Page 1 of 2

To Whom Owed (Creditor) Creditor's Address Total Amount

Owed

Monthly Payment Plan # of

Pay'ts

Left

Rate of

Interest Due Amount of

Date Payment

Debt: Examples of

• Home Mortgage or Past Due Rent

• Past due utilities

• Car loans

• Student Loans

• Credit cards

• Collection agencies

• Past due cable, internet or phone bills

• Loans from family/friends/coworkers/employers

• Past due property taxes or income taxes

• Retail store credit cards

• Lawyers

• Medical debts- dental, hospitals, doctors, eye doctors, ENT, etc.

• Past due Child Support

• Private school bills

• Furniture/appliance/equipment/game

rentals

• Payday/Cash advance loans

• Home repair bills

Secured Debt vs Unsecured Debt

Secured Debt:

• Debt backed by collateral

• Lender can repossess item(s) if agreed upon terms are not met by

the borrower

• Examples: Mortgage, Auto Loan

• Interests rates are typically lower

Secured Debt vs Unsecured Debt

Unsecured Debt

• Not backed by collateral

• Example: Credit Card

• Note: If you stop making payments the creditor can still take legal

action

• One Example: Collection Agencies

• Interest rates tend to be higher

Debt Sheet

You may know about a lot of the debts that you currently

have (mortgage, credit cards, student loans etc)

• One way to help you better understand your current debt situation

is to view your Credit Report

Note: Debt to family, friends, or individuals will not show up

on your credit report

Credit Report

Detailed report of an individual's credit/borrowing history

3 major credit reporting agencies

• Equifax

• Experian

• TransUnion

1 free credit report from each of these agencies per year

• Note: It is wise to order 1 at a time so you can order from the other

2 throughout the year

Credit Report: What is included?

1)Account Information

• Detailed account information

• Open Accounts – credit accounts with balance owed

• Closed accounts – credit accounts without a balance

owed

• Revolving Accounts – charge accounts that have a

credit limit and require a minimum payment each month

Credit Report: What is included?

2) Inquiries • List of companies that have requested to see your credit history.

3) Negative Information

• Bankruptcies, liens, garnishments, other judgments

• Remain on credit file for 7 years

• Records of collections

Credit Report: What is included?

4) Personal Information

• Personal data

• Addresses

• Employment history

5) Dispute File Information

• How to dispute information found on your credit report

• Summary of your rights

• Remedying effects of identity theft information

Credit Report

Will not include your Credit Score

Credit Scores are available from certain websites or some

credit card companies

Note: The best way to improve your Credit Score is a

history of consistently paying your bills on time

Credit Report

Your Credit Report may have an overwhelming amount of

information.

Don’t get discouraged if you are having trouble

understanding the information.

Ask questions

Go through the Credit Report with a highlighter and

highlight each open or revolving credit and circle the

balance due

Statement of Financial Condition

A tool used to calculate your net worth

• Why do we calculate net worth?

• It gives an indication of Financial health

On this form you will list your Assets and your Liabilities

• Assets: Things you own that are of value

• Liabilities: Things you owe on (debts)

Assets: Examples of

• Cash on Hand

• Checking Account

• Savings

• Stocks & Bonds

• Collectables

• Home

• Other real estate

• Accounts receivable

• Automobiles

• Recreational Vehicles

• Furniture

• Jewelry

• Other Personal Assets

• Retirement Savings

• Other Assets

Liabilities: Examples of

• Credit Card Debt

• Automobile Loan

• Home Mortgage

• Other Real Estate Mortgages

• Personal Debts to Relatives/Friends

• Business Loans

• Educational Loans

• Medical Bills

• Life Insurance Loans

• Bank Loans

• Other Debts & Loans

Statement of Financial Condition

To calculate your Net Worth:

Your Assets - Your Liabilities = Net Worth

As your total debts decrease (or your assets increase) your net worth will increase

Net Worth

- $0 +

Let’s take a look at an example of a completed statement

Gary and Lisa’s

Statement of Financial Condition

ASSETS (Present Value):

Cash on Hand $90.00

Checking Account $475.00

Savings (HSA) $107.00

Stocks & Bonds

Collectables (stamps, coins, antiques, etc.)

Home (1st mortgage) $130,000.00

Other Real Estate

Accounts Receivable

Automobiles: 2 cars $4,000.00

Recreational Vehicles: Trailer $10,000.00

Furniture

Jewelry $400.00

Other Personal: Fixer Upper cars (3) $2,700.00

Retirement Savings (IRA, Pension, 401K)

TOTAL ASSETS: $147,772.00

LIABILITIES (From Debt List)

Credit Card Debt $5,400.00

Automobile Loans: Trailer $12,000.00

Home Mortgage $122,000.00

Other Real Estate Mortgages

Personal Debts to Relatives/Friends

Business Loans

Educational Loans $2,800.00

Medical Bills

Life Insurance Loans

Bank Loans

Other Debts and Loans $450.00

TOTAL LIABILITIES: $142,650.00

NET WORTH (Total assets minus total liabilities): $5,122.00

Statement of Financial Condition

Statement of Financial Condition

Your Statement of Financial Condition should be updated at

least quarterly to show progress

Do not get your “Net Worth” confused with your

personal worth

Over the last 4 weeks you have been introduced

to all the tools we need to complete the

construction on our “Information” Pillar

Remember to keep them up to date

each week

Are there any questions?