LIFE SKILLS Program Budget Class

Week 7

Welcome Back!

Pray

Read Announcements

Questions before we begin?

Agenda for Today

Today’s Biblical Principle: Life’s Challenges

Types of loans/debt

Working with Creditors

Bible Lesson

Job 1 (The Message)

1-3 Job was a man who lived in Uz. He was honest inside and

out, a man of his word, who was totally devoted to God and

hated evil with a passion. He had seven sons and three

daughters. He was also very wealthy—seven thousand head of

sheep, three thousand camels, five hundred teams of oxen, five

hundred donkeys, and a huge staff of servants—the most

influential man in all the East! 6-7 One day when the angels came

to report to GOD, Satan, came along with them. GOD singled out

Satan and said, “What have you been up to?” Satan

answered GOD, “Going here and there, checking things out on

earth.”

Bible Lesson

8 GOD said to Satan, “Have you noticed my friend Job? There’s

no one quite like him—honest and true to his word, totally

devoted to God and hating evil.” 9-10 Satan retorted, “So do you

think Job does all that out of the sheer goodness of his heart?

Why, no one ever had it so good! You pamper him like a pet,

make sure nothing bad ever happens to him or his family or his

possessions, bless everything he does—he can’t lose! 11 “But

what do you think would happen if you reached down and took

away everything that is his? He’d curse you right to your face,

that’s what.” 12 GOD replied, “We’ll see. Go ahead—do what you

want with all that is his. Just don’t hurt him.” Then Satan left the

presence of GOD.

Bible Lesson 13-15 Sometime later, while Job’s children were having one of their

parties at the home of the oldest son, a messenger came to Job and said, “The oxen were plowing and the donkeys grazing in the field next

to us when Sabeans attacked. They stole the animals and killed the field hands. I’m the only one to get out alive and tell you what

happened.” 16 While he was still talking, another messenger arrived and said, “Bolts of lightning struck the sheep and the shepherds and fried

them—burned them to a crisp. I’m the only one to get out alive and tell you what happened.” 17 While he was still talking, another messenger arrived and said, “Chaldeans coming from three directions raided the camels and massacred the camel drivers. I’m the only one to get out

alive and tell you what happened.” 18-19 While he was still talking, another messenger arrived and said, “Your children were having a party at the home of the oldest brother

when a tornado swept in off the desert and struck the house. It collapsed on the young people and they died. I’m the only one to get

out alive and tell you what happened.”

Bible Lesson

20 Job got to his feet, ripped his robe, shaved his head, then

fell to the ground and worshiped: 21 Naked I came from my mother’s womb,

naked I’ll return to the womb of the earth.

GOD gives, GOD takes.

God’s name be ever blessed.

22 Not once through all this did Job sin; not once did he

blame God.

Reflection

In a short period of time Satan:

• Takes all of Job’s wealth (money and possessions)

• Kills almost all of his servants (friends)

• Kills all 10 of his children (family)

We all experience challenges (few greater than Job)

Questions to wrestle with

Age old question: Why do good things happen to bad

people?

Why did God allow Satan to turn Job’s life upside down?

Is it ok to be frustrated (and even angry) about our

challenges?

Why do we sometimes need challenges to grow?

Final Thoughts

Challenges are opportunities to trust God

God has a plan for each of us and is ALWAYS working on

our behalf

Do not try and face challenges alone

1) Turn to God

2) Find a positive support system

Loans

We are going to spend some time talking about various

types of loans

We will also discuss how to appropriately and effectively

communicate with creditors

Debt Consolidation Loans

Combines many debt payments into one monthly payment

Why do people consolidate debt? • Lower monthly payment

• Simplifies debt paying- only paying one creditor

Why is this usually a bad idea? • Can be expensive

• Service fees

• You will pay more in interest

• Even though the interest rate is often lowered the term length is increased

• You lose flexibility

• It will be harder to renegotiate terms or make alternative payment plans

• Risky if you are unable to make the payments

Debt Consolidation Loans

Consolidating debt treats the symptom but does not

address the root problem

• It is estimated that 78% of the time, after someone consolidates

credit card debt, the debt grows back

The Debt Snowball Method is a better alternative to debt

consolidation

• This will be discussed in detail during Workbook

Payday / Cash Advance & Rent-to-Own Loans

DO NOT USE

Tempting for a couple of reasons: 1) the promise of “quick cash”

2) one’s situation is desperate

Typical fee is $15 per $100 borrowed for a two week period • 390% APR! (Annual Percentage Rate).

If the loan is not paid in two weeks, you must renew the loan at this rate plus added fees for non-payment

• The probability of having to roll over the loan multiple times is very high.

Video: Pay day loans briefly explained: • https://www.youtube.com/watch?v=3rOVmUnUM7A

Title Loans

DO NOT USE

Allows you to receive instant cash in exchange for the Title of your vehicle

Why is this a bad idea? • Similar terms to Payday loans

• High interest rates

• Loan Must be paid off in full • High probability of rolling over the loan = more fees

• Your vehicle can be repossessed if the loan is not paid in time

Video: Title Loans briefly explained • https://www.youtube.com/watch?v=wriLs6iECvE

Home Equity Loans or Line of Credit

Allows you to take out a loan using your home as collateral

(similar to a Title Loan)

• Can foreclose on your home if not paid, even if the amount not

paid is seemingly small

• Risky!

Loan terms are usually between 5-15 years

• The loan must be paid in full at the end of the term

May include up front costs and service fees

Refinancing a Mortgage Changes the terms and interest rate on your existing

mortgage

Up front costs

• Origination fee

• Appraisal fee

You have to consider how long you plan to live in the home

• The longer you live there the more benefit there potentially may be

• Remember: Plans can change!

Refinancing a Mortgage An alternative option…

If you have extra money to put towards your mortgage than

“pretend” it has a shorter length than it actually does.

• There is no change in contract and therefore no obligation to higher

payments each month

• Ex: Pay your 30 year mortgage as if it were a 20 year mortgage

Should only be considered if all debts and other obligations

are securely taken care of

Dealing with Creditors

Some of you may:

• be facing debt that you will not be able to pay on

• be strained by the terms and monthly payments of a debt

• have not paid on a debts in a long time.

• Collection agencies may be calling

As hard as it may be it is important to be proactive with the

creditors in which you have debt

Why contact creditors?

Contacting creditors shows a willingness to work with them

• You are taking ownership of your debt

Avoiding creditors can cause them to be uncooperative

Sometimes a creditor will work with you to

1) Renegotiate the terms

2) Decrease the amount you owe

Debt is a multi-trillion dollar industry

• They can afford to work with you

How to Contact Creditors

Before you start, ask God for favor, wisdom and patience

• Do not call when you are stressed, overwhelmed, or angry

Spend some time thinking about the desired outcome

• “What result will I be happy with?”

• “What will work for me financially?”

• Thinking through these questions ahead of time can keep you from

making an impulsive decision

How to Contact Creditors

Call the creditor and ask for the collections department.

• Introduce yourself.

• Inform them that..

1) You are enrolled in a Budgeting Program

2) You intend to repay them, but are requesting their assistance

3)The credit account and others will be closed and no other ones will

be opened.

Contacting Creditors

During the phone call you should write down:

• Name(s) and the employee ID number(s) of whom you are

speaking to

• Direct phone numbers

• Company address

• Email Address or Fax Number

• *The details of what was discussed

Chances are you will not come to a solution on the first call

• Having the above information gives you credibility and keeps them

honest about what was discussed

Contacting Creditors

Let them make an offer

• Their offer may surprise you

• Request the agreement in writing prior to sending in payment

• If it is not in official writing it is not guaranteed

• Do not give out bank account information

• It is best to pay using a money order or cashier’s check

Before hanging up:

• Repeat back to them the details of the conversation

• Ask them to repeat what the “next steps” will be

Making a Lump Sum Payment

Creditors are often quicker to negotiate a lump sum

payment

• Why? Guarantees that they are receiving money from you

Most creditors will take a lump sum payment even if it is a

fraction of what was owed

Save up before hand

• Negotiating a final payment only works if you have the money

available

Paying off Debt

The journey to becoming debt-free is likely a marathon not a sprint

• It may take time to feel “successful”

• Stay committed

• Celebrate the small victories (paying off a debt, no new debt, lower balances)

“How do you eat an elephant?”

One bite at a time!

With more time in the program you will begin to develop the best game plan for you

Are there any questions?