Spending Plan
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Document Sample
OPENING
PRAYER
1
HOUSEKEEPING ISSUES
INTRODUCTION
REST ROOMS
BREAKS
CELL PHONES
CLEAN UP
CHAIRS AND TABLES
EVALUATION FORMS WITH
RECOMMENDATIONS
2
Agenda
My background
Why are we here
What do we hope to accomplish
Partnership
Maryland Saves
Stewardship
Understanding credit
Mortgage Crisis
Buying a home
Potential tax savings
3
Welcome!
Our Mission
Bridgeway Community Church
TO EDUCATE AND EQUIP THE BODY
OF CHRIST TO BECOME BETTER
STEWARDS OF GOD’S ASSETS
THROUGH EDUCATION, COUNSELING
AND FAITHFULLNESS”
4
CCCS OF MD & DE MISSION
“To promote economic self-sufficiency to
individuals, families and communities
through financial education and counseling”
5
Consumer Credit Counseling
Service of MD & DE
CCCS of MD & DE Services
Budgeting
Debt Management Plans
Housing Counseling
Pre-file Bankruptcy Counseling
Pre-discharge Bankruptcy Education
Financial Literacy Education
6
God’s word
Matthew 6:24 “ No one can serve two
masters; for either he will hate the one
and love the other, or he will hold to
one and despise the other. You cannot
serve God and Mammon”
7
What are your goals
Learn to become a better steward of Gods
assets?
Learn how to budget?
Buy a home?
Save for retirement?
Become a millionaire?
Financial security for you and family?
Do you have financial goals?
8
GOD WANTS US TO BE PROSPEROUS
Exodus 36:1 - God gives us abilities and skills
Genesis 39:2-3 - God gives us success –– Joseph prospered
Psalm 75:6-7 - God gives us promotion
Jeremiah 29:11 – “For I know the plans I have for you”, declares the
Lord, plans to prosper you and not to harm you, plans to give you hope
and a future”.
Ecclesiastes 5:19 – Moreover, when God gives any man wealth and
possessions, and enables him to enjoy them, to accept his lot and be
happy in his work – this is a gift of God.
Deuteronomy 8:18 – But remember the Lord your God, for it is he who
gives you the ability to produce wealth….
Genesis 24:35 – Abraham was wealthy
Job 1:1-3 – Job was wealthy
9
SPIRITUAL CONDITIONS FOR PROSPERITY
Deuteronomy 29:9 – Carefully follow the terms of this covenant so that you
may prosper in everything you do.
Psalm 1:1-3 – Blessed is the man who does not walk in the counsel of the
wicked …….. Whatever he does prospers.
Malachi 3:9-10 – “You are under a curse – the whole nation of you – because
you are robbing me. Bring the whole tithe into the storehouse, that there may
be food in my house, Test me in this”, says the Lord Almighty, “and see if I will
not throw open the floodgates of heaven and pour out so much blessing that
you will not have room enough for it”.
Matthew 6:33 – “But seek first His kingdom and His righteousness…
Proverbs 13:21 – Misfortune pursues the sinner, but prosperity is the reward
of the righteous.
Joshua 1:8 – Do not let this Book of the Law depart from your mouth;
meditate on it day and night, so that you may be careful to do everything
written in it. Then you will be prosperous and successful.
10
CHARACTER CONDITIONS FOR PROSPERITY
Leviticus 19:11,13 – “Do not steal. Do not lie. Do not deceive one
another. Do not defraud your neighbor or rob him”.
Exodus 20:17 – “You shall not covet your neighbor’s house. You shall
not covet your neighbor’s wife, or his manservant or maidservant, his
ox or donkey, or anything that belongs to your neighbor”.
Proverbs 25:28 – Like a city whose walls are broken down is a man
who lacks self-control.
I Timothy 6:9-10 – People who want to get rich fall into temptation
and a trap and into many foolish and harmful desires that plunge men
into ruin and destruction. For the love of money is a root of all kinds of
evil.
11
STEWARDSHIP
Matthew 25:21 – “His master replied, ‘Well done, good and faithful
servant! You have been faithful with a few things; I will put you in
charge of many things. Come and share your master’s happiness!
Luke 16:10 – “Whoever can be trusted with very little can also be
trusted with much….”
Proverbs 28:20 – A faithful man will be richly blessed, but one eager
to get rich will not go unpunished.
Romans 13: 7 – Give everyone what you owe him: if you owe taxes,
pay taxes; if revenue, then revenue…..
12
GIVING
I Timothy 6:17-19 – Command those who are rich in this present world
not to be arrogant nor to put their hope in wealth….command them to
do good, to be rich in good deeds, and to be generous and willing to
share.
Proverbs 11:25 – A generous man will prosper; he who refreshes
others will himself be refreshed.
Proverbs 28:27 – He who gives to the poor will lack nothing, but he
who closes his eyes to them receives many curses.
Philippians 2:4 – Each of you should look not only to your own
interests, but also to the interests of others.
13
DEBT
Proverbs 22:7 – The rich rule over the poor, and the borrower is
servant to the lender.
Psalm 37:21 – The wicked borrow and do not repay, but the righteous
give generously; those the Lord blesses will inherit the land but those
he curses will be cut off.
Romans 13:8 – Let no debt remain outstanding, except the continuing
debt to love one another…..
Proverbs 17:18 – A man lacking in judgment strikes hands in pledge
and puts up security for his neighbor.
14
SAVING & INVESTING
Genesis 41:34-36 – They should collect all the food of these good
years that are coming and store up the grain under the authority of
Pharaoh, to be kept in the cities for food. This food should be held in
reserve for the country, to be used during the seven years of famine
that will come upon Egypt….
Proverbs 30:25 – Ants are creatures of little strength, yet that store up
their food in the summer;
Proverbs 21:5 – The plans of the diligent lead to profit as surely as
haste leads to poverty.
Proverbs 13:22 – A good man leaves an inheritance for his children’s
children
15
Facts
A $5000 credit card balance take 21.5 years to payoff
If you save $350 per month for 30 years at a 10% return you
would have approximately $765,000
48% have a difficult time making ends meet
36% have more expense than income
50% have no emergency, 3 months or more
58% have never analyzed retirement needs
12% have no checking or savings account
62% never looked at a credit report
64% never looked at their credit score
70% felt they had good finance knowledge only 46% passed a
test about finances
16
THE TEN FINANCIAL COMMANDMENTS
Thou shall save – direct deposit is best
Thou shall give – tithes & offerings
Thou shall help those less fortunate than yourself
Thou shall not overspend
Thou shall budget
Thou shall not covet your neighbor’s lifestyle
Thou shall diversify – business, stocks, real estate
Thou shall have financial advisors
Thou shall have good credit
Thou shall not be in debt
17
What are your goals
Becoming a good steward of Gods assets?
Setting a budget so you can tithe?
Get out of debt?
Buy a home?
Save for retirement?
Become a millionaire?
Financial security for you and family?
Do you have financial goals?
18
Startling Statistics
Household debt is $13.8 trillion or $45,000 for
every man woman and child in the USA. (Consumer
and Mortgage)-Federal Reserve
Consumer Debt is 2,596 billion dollars or $8,467
for every man, woman and child in the USA – Federal
Reserve
Personal savings is 6.4%,was –1% 2years ago and
was 11% in 1987
Congregational giving is approximately 2.2%
Startling Statistics
Bankruptcies rose past one million up 28% from
same time last year ( ABA)
Foreclosures up 23% over same time last year
(Realty Trac)
National Debt/Gross Domestic product is 75%,
the highest since WWII years (Bureau of Economic
Analysis)
Unemployment 9.4% highest since 1982
Credit Card Debt up 500% in 10 years, in 2009 we
realized the first downward trend in 20 years
FACTS
780 BILLION IN CREDIT 3RD,4TH AND 5TH
CARD DEBT MORTGAGES COMMON
2.5 TRILLION IN LIMITS 34.3 BILLION IN
RATES FROM 9- 24 % TO 25 DELINQUENCY
– 36% BANKRUPTCY 1.7 MILLION
3.5 BILLION PIECES OF PAST 12 MONTHS
SOLICITATION PER YEAR NEW BANKRUPTCY BILL
AVERAGE BALANCE 9k PENDING
568 MILLION CARDS AVERAGE BANKRUPTCY 10K
AVERAGE # CARDS AVERAGE AGE 26
CARRIED 5.2 AVERAGE STOCK MARKET
LEADING REASON FOR RETURN 11.5%
DIVORCE, FINANCES 90% have no financial plan
9% HAS A NEGITIVE NET
WORTH
21
Facts continued
If you have a credit card balance of
$5000 and paid 2% minimum payment
it would take 21.5 years to pay off
If you saved $4000 per year @ 10%
average return for 30 years you would
have $763424
The average return on the stock market
history is 8.5%
22
Money and Life
It’s About Stewardship
“Be willing to do today
what others won’t do,
so you can live tomorrow
like others can’t live.”
23
Signs of financial bondage
Can no longer achieve God’s will
Impulse buying
No plan/budget
Can no longer pay bills
Cannot help others
Cannot meet family needs
Bondage of work
No money
Out of control
24
THREE GOLDEN RULES
TITHE FIRST
PAY YOURSELF
HAVE A SHORT TERM AND LONG TERM
PLAN
25
FINANCIAL FITNESS
CHECKLIST
ARE YOU USING MORE OF YOUR INCOME TO PAY DEBT
DO YOU MAKE ONLY MINIMUM PAYMENTS ON CREDIT CARDS
ARE YOU NEAR YOUR CREDIT LIMITS
ARE YOU PAYING BILLS WITH MONIES MEANT FOR OTHER THINGS
DO YOU OFTEN PAY BILLS LATE
ARE YOU DIPPING INTO YOUR SAVINGS TO PAY BILLS
DO YOU HAVE A SAVINGS PLAN
DO YOU PUT OFF VISITS TO THE DOCTOR DUE TO NO MONEY
HAVE COLLECTION AGENCIES CALLED YOU LATLEY
ARE YOU WORKING MORE THAN ONE JOB TO MAKE ENDS MEET
ARE YOU BORROWING MONEY OR USING CREDIT CARDS TO PAY FOR
THINGS YOU USED TO BUY WITH CASH
IF YOU OR YOUR SPOUSE LOST YOUR JOB, WOULD YOU BE IN
FINANCIAL TROUBLE RIGHT AWAY
DO YOU WORRY ABOUT MONEY A LOT
HAVE YOU FORGOTTEN TO DO A BUDGET OR A SPENDING PLAN
26
Paul said in 1Timothy 5
God requires Christians to operate between 2
points
Romans 13:8 “Owe nothing to anyone
except to love one another for he who
loves his neighbor has fulfilled the law”
Psalms 37:21 “ The wicked borrows
and does not pay back but the righteous is
gracious and gives”
27
Families and Financial Distress
Single parents
Retired seniors
Recently divorced people
Unemployed/under-employed people
Recently married couples
Families with children
Blended families
28
How to better communicate
about money
Establish common goals
What is important to the entire
household
Set ground rules for financial decisions
Make commitment to be open and
honest
Identify common problems
29
NEEDS,WANTS,DESIRES
Definition and examples
First step in budget reduction
Ask yourself these questions
How does Needs, Wants and Desires
relate to Overspending and Impulse buying??
Is this purchase a need, want or desire??
Homework- analyze 3 months of Credit Card
Statements with N W D
30
Why is a spending plan important
It is what God wants
Better Stewards of God’s assets
Enables you to tithe
Enables you to begin saving
Helps save money for an emergency
Helps you achieve financial freedom
31
Why Is a Spending Plan
Important? (cont)
Establishes financial controls
Helps avoid overspending
Budgets for emergencies
Helps achieve Goals
Controls impulse buying
32
Preparing a spending plan
PAST
Review your spending habits
Understand how to spend and save
Look at the last 3 months of
Cash spent
Checking account
Credit card usage
33
How can I track my spending
PRESENT
Write down all purchase
Track your cash in a small book
Track your checks written
Track credit card usage
Track fees in small book (ATM)
Transfer to a computer for comparison
Compare month to month
34
A good spending plan can
FUTURE
Reveal your financial condition
Income vs. expense
Establish financial direction
Breaks down financial control and direction
Stop overspending
Stop impulse buying
35
What do I learn from
tracking my expenses
Where money goes
How much I eat out
Entertainment
Clothing
Funding priorities
Savings
How much debt I reduced
36
Expense tracking
Track your Cash- Use a small book . Keep it
in your pocket and write down all cash, ATM
charges on a daily basis.
Review your credit cards- Need, want or
desire?? Review your spending habits. Are
you living on them???
Review your checking account
Count all three – Add all 3 together, this is
your spending level vs. your income
Track monthly – track on computer, buy
software, take charge 37
BUDGETING INCOME
List your income
Get a total disposable income
Total net income x 52 weeks spouse1
Total net income x 52 weeks spouse 2
Divide by 12 = monthly income
Gives total income
38
Income
Job income/Wages
Retirement income
Child support
Dividends/interest
3/5 year average bonuses, tips, commission
Tax refunds
Government program
No overtime
39
Budget analysis
List monthly fixed expenses
List monthly variable expenses
Review for area to reduce expenses
Review area that needs to be increased
Tithe first, pay yourself second
Set short, intermediate goals and long
term goals
40
Budgeting SMART
A budget must be
S = Specific
M =Manageable/Moveable
A = Attainable
R = Reasonable
T = Timely
41
Budget Analysis
Fixed Expenses Variable Expenses
Tithe Entertainment
Savings Restaurants
Housing Clothing
Utilities
Health clubs
Cable
Internet Pet care
phone Charity/donations
Cell Emergency funds
Insurance Vacations
Food Bank charges
Car payment Postage
Gas Other
Repairs Cleaning services
Parking
Babysitting
Transportation
Laundry Gifts
Medical _____________
Medicine _____________
Dental _____________
Loans
Credit cards
Lunches
Tuition
Childcare
Total
Total
42
Reducing Daily Expenses
1) Utilities
2) Cable
3) Internet
4) Phone
5) Insurance
6) Food
7) Lunches
8) Entertainment
9) Restaurants
CCCS your partner in
education,counseling and debt
repayment
Reducing Daily Expenses
1) Utilities $80
2) Cable
3) Internet
4) Phone
5) Insurance
6) Food
7) Lunches
8) Entertainment
9) Restaurants
CCCS your partner in
education,counseling and debt
repayment
Reducing Daily Expenses
1) Utilities $80
2) Cable $80
3) Internet
4) Phone
5) Insurance
6) Food
7) Lunches
8) Entertainment
9) Restaurants
CCCS your partner in
education,counseling and debt
repayment
Reducing Daily Expenses
1) Utilities $80
2) Cable $80
3) Internet $40
4) Phone
5) Insurance
6) Food
7) Lunches
8) Entertainment
9) Restaurants
CCCS your partner in
education,counseling and debt
repayment
Reducing Daily Expenses
1) Utilities $80
2) Cable $80
3) Internet $40
4) Phone $60
5) Insurance
6) Food
7) Lunches
8) Entertainment
9) Restaurants
CCCS your partner in
education,counseling and debt
repayment
Reducing Daily Expenses
1) Utilities $80
2) Cable $80
3) Internet $40
4) Phone $60
5) Insurance $30
6) Food
7) Lunches
8) Entertainment
9) Restaurants
CCCS your partner in
education,counseling and debt
repayment
Reducing Daily Expenses
1) Utilities $80
2) Cable $80
3) Internet $40
4) Phone $60
5) Insurance $30
6) Food $150
7) Lunches
8) Entertainment
9) Restaurants
CCCS your partner in
education,counseling and debt
repayment
Reducing Daily Expenses
1) Utilities $80
2) Cable $80
3) Internet $40
4) Phone $60
5) Insurance $30
6) Food $150
7) Lunches $50
8) Entertainment
9) Restaurants
CCCS your partner in
education,counseling and debt
repayment
Reducing Daily Expenses
1) Utilities $80
2) Cable $80
3) Internet $40
4) Phone $60
5) Insurance $30
6) Food $150
7) Lunches $50
8) Entertainment $25
9) Restaurants
CCCS your partner in
education,counseling and debt
repayment
Reducing Daily Expenses
1) Utilities $80 + 40
2) Cable $80
3) Internet $40
4) Phone $60
5) Insurance $30 + 20
6) Food $150 +150
7) Lunches $50
8) Entertainment $25
9) Restaurants $100 +100
TOTAL $615 $310
CCCS your partner in
education,counseling and debt
repayment
Save big when shopping
Get a Sunday paper
Pre plan menu
Shop Alone
Don’t buy bulk, unless justified
Make a list
No impulse buying
Use coupons
Don’t go hungry
Take an inventory of pantry and freezer
53
Expense Allocation Chart
Housing 23-33%
Food 12-29%
Transportation 7-10%
Entertainment 4-6%
Savings 5-10%
Insurance, Medical 7-10 %
Church/Charity 5-10%
Personal Debt 8-18%
Clothing 4-7%
54
Trick yourself to wealth
I.R.S. refunds $2300
Save a Dollar a day $ 365
Coupon clipping $ 730
Cut $10 a week $ 520
Auto deduct $50 mo $ 600
TOTAL $4515
6% x 20 years this equates to approx $300,000
55
Compound Interest
“ The most powerful force in the world
is compound interest”
Albert Einstein
Insanity – doing the same thing over and
over again and expecting different
results
56
Rule of 72
Rule of 72
A formula that shows you how long it takes to
double your money
Example
72 divided by 4% interest rate = 18 years
72 divided by 6% interest rate = 12 years
72 divided by 12% interest rate = 6 years
57
Rule of 72
Year Rate of return 6% Year Rate of return 12%
1 $10,000 1 $10,000
13 $20,000 7 $20,000
25 $40,000 13 $40,000
19 $80,000
25 $160,000
58
Compound Interest
Assumptions
$2000 per year X ten years = $20,000
Invested for 20 years
20 years the $20,000 is worth $178,504
$4000 per year X ten years = $40,000
Invested for 10 years
10 years the $40,000 is worth $79,098
59
Saving Money Fact
If you saved $5.00 per week (with no
interest) you would save $5200 IN 20
Years
Rate Investment 20Yrs 30 Yrs
6% $5200 $9624 $20,924
8% $5200 $12268 $31039
10% $5200 $15,817 $47082
60
10 Commandments of Investing
1)Set clear goals
2)Know your finances well
3)Question Authority
4)Don’t be a follower
5)Be humble
6)Be patient
7)Use moderation in investing
8)Knowledge is power, know your investments
9)Don’t be a high risk taker, know your risk tolerance
10)Don’t worship mere men
61
Credit and Debt Management
“Today, there are three kinds of
people: the have's, the have-
not's, and the have-not-paid-for-
what-they-have's.”
Earl Wilson
62
Personal financial statement
Assets Liabilities
Checking/savings Accounts payable
account Loans
Accounts receivable Taxes
Marketable securities Credit cards
Pension/401k Real estate
Real estate Misc debt
Vehicles/boats
Furniture Total liabilities
Total assets Net worth
Total assets/liabilities
63
Debt to income Ratio
Monthly income
Take home pay, alimony, commissions,
dividends, interest, other income
Minimum debt payments
Auto payment, loan payments, credit cards, past medical
care. (Regular monthly payments)
Payments divided by monthly income equals your debt to
income ratio
SEE THE HANDOUT. HOW DO YOU STAND
64
How is my debt to income ratio
0 to 10%
Excellent keep up the good work
10.1 to 19.9%
Not bad, but as you approach 20% you are starting to place strain on your budget
20 to 24.9%
Your debt may already be a problem. Start a spending plan now even if this is
temporary.
25 to 37%
Immediately review your spending habits and develop a budget. Look for ways to cut
spending now. Look at all options to reduce your debt
37.1% or Greater
Get counseling. Your ratio is way too high. Budgeting and tracking your spending are
not options at this point. Debt Management programs may be a good alternative.
ACT NOW!
65
Pros and Cons of CREDIT
A needed financial tool
Costly to use
Can lead to over spending
Total consumer debt in the U.S. now at
$2.03 Trillion as of May 31, 2007.
66
CREDIT REPORT CONTAINS
YOUR FINANCIAL RESUME
Personal
Credit Accounts
Public Record
Inquiries
FRAUD FREEZING YOUR REPORT
Pin code
DISPUTING ITEMS LETTER
67
OBTAIN YOUR REPORT
Yearly from Equifax, Experian, and
Trans Union
www.annualcreditreport.com
If denied credit
Potential Fraud
Free copy yearly starting in 2005 thanks
to the Fair and Accurate Credit
Transactions Act (FACTAct)
68
CREDIT SCORE
A number that summarizes your report
Used by Lenders
Determines your level of creditworthiness
Qualifies you for higher/lower rates
Higher Insurance rates
Higher interest rates
Promotions lost
69
How Scores Are Calculated
Credit Score breakdown
35% Payment History
30% amount Owed
15% Length of Credit History
10% New credit
10% Type of credit
70
CREDIT SCORE
* FAIR ISAACS CREATOR • DETERMINES YOUR
LEVEL OF
* 350-850 CREDITWOTHINESS
• QUALIFIES YOU FOR
* PREDICTS FUTURE NOT HIGHER/LOWER RATES
PAST
• DETERMINES
* SUMMARY OF YOUR INSURANCE RATES
REPORT
* USED BY LENDERS • COULD IMPACT
PROMOTIONS
71
IMPROVE YOU REPORT
IMPROVE YOUR SCORE
Check for Accuracy
YOU are responsible
Pay bills on time
Review quarterly
72
How An Improved Score Can
Save You Money
Car Loan: 48 Mos.
Loan Principal: $10,000
Current Score: 500-599
Improved Score: 690-719
Current Score Improved Score
Av. Nat’l APR 18.4% 7.9%
Monthly Pmt $295.84 $243.66
Total Interest $4,200.64 $1,695.63
Savings on monthly pmt $52.18
Savings over life of loan $2,505.01
73
Bankruptcy
Purpose: to provide new start to those
overwhelmed by debt with no means to repay
Intended to be a last resort
Bankruptcy filings often precipitated by job
loss, divorce, illness, death in family
74
Types of Bankruptcy
Chapter 7 – provides for discharge for
all unsecured debt. Can only receive
discharge once every 8 years
Chapter 13 – a 3-5 year repayment plan
Chapter 11 – for businesses
75
Bankruptcy Continued
Law change October 2005
Means test
Budget and Credit Counseling
Certificate
Pre Bankruptcy discharge Certificate
60 months of payments, no free rides
76
Mortgage Crisis
77
Definitions
Glossary Of Terms- see handout
Deed-in-Lieu
Deferred Payments
Forbearance
Foreclosure
Modification
Refinance
Short Sale
Mitigation – To act in such a way as to cause an
offense to seem less serious
78
What to do
Call your mortgage company for resolution!
Attempt a refinance
Modification
Forbearance
Reverse Mortgage
Look for foreclosure events
Contact an attorney
Contact a reputable counseling service
Get everything in writing
79
My Refinance was declined,
why?
Equity position
Delinquency
Investor owned-I/O and Arms
80
What not to do
Stop looking for a resolution
Avoid calling your mortgage company
Ignore warning letters
Sign a contract under duress
Sign documents without counseling
Sign a contract with blank lines
Never sign over your deed
Give up
Walk away from your home
Procrastinate
Sign documents without reading them
Make a payment to anyone but the lender
Make a deal with unsolicited sources
81
Where to turn
Consumer Credit Counseling Services Of Maryland
and Delaware Inc.
www.cccs-inc.org
Maryland Hope Hotline
www.mdhope.org
Making homes affordable
www.makinginghomesaffordable.gov
Federal Government
www.ftc.gov
State Attorney General
Better Business Bureau
82
Where to turn
Investigate counseling companies for help
Insure they are a true non profit
Do they charge upfront fees?
Are they local?
Can you get both phone and in person counseling?
Did you call the BBB or Attorney General for
complaints?
Get a Mortgage counseling session
83
FRAUD AND SCAMS
Fraud- any misrepresentation or omission of
information during a mortgage process
You can sue for damages
Call 1-888-784 0136 ,Department of Labor, if you
think you are a victim of mortgage fraud or a victim
of a rescue scam
84
RED FLAGS
Guarantees to stop foreclosure
You are told not to contact your lender
Needs fees before they can start service
Only accepts wire transfers and certified funds
Lease back your home and repurchase later
Make mortgage payments directly to them
Tells you to transfer the title to them
Offers cash for the house below the market
Offers to fill out all paperwork for you
Pressures you to sign papers
85
FIRST TIME BUYER
IS THE TIME RIGHT
86
Own Your Home
Advantages
Usually good investment
Tax Incentives
Equity buildup
Pride of ownership
Privacy
87
Own your home
Disadvantages
Long term commitment
Maintenance
Lack of flexibility
Usually more expensive than renting
High up front costs
Foreclosure
Property taxes
88
Renting
Advantages
Possible lower housing cost
Shorter term commitment
No/minimal maintenance repair costs
89
Renting
Disadvantages
No Tax incentives
No fixed housing costs
No equity build up
Less Privacy
90
NAR/MAR FACTS
Average price of homes in US are down 20%+/-
Rates are now at avg of 4.75%
Buyers market
Great 1st time homebuyer programs
Selling your home for less you are buying new for less
Over a 6 year period the average owners still has 85% increase
in home value
Renters assets rose $4500 vs. buyers $185,000 in past 5 years
www.mdrealtor.org www.realtor.org
NOTE: PLEASE CHECK THE WEB SITES ABOVE FOR UP TO
DATE STATISTICS THEY MAY HAVE CHANGED
91
The Buying Process
TIMELINE FOR TRACKING SALES
FROM DATE OF CONTRACT THROUGH DATE OF SETTLEMENT
PLEASE NOTE DOWN AND KEEP TRACK OF ALL CONTRACTUAL DEADLINES AND OTHER IMPORTANT DATES.
GIVE A COPY TO YOUR CUSTOMERS AND/OR CLIENTS SO THEY ARE ALSO ABLE TO TRACK THE PROGRESS OF THEIR PURCHASE/SALE.
PROPERTY ADDRESS: ___________________________________________________ BUYER: ______________________________ SELLER: ____________________________
1. Contract 3. Seller Requests 5. Deliver 7. Buyer 9. Last day 11. Buyer to
13. Schedule 15. Deadline to 17. Pre-
Resale Packet for Buyer’s Request Responds To for Buyer to Receive 19. Day of
Acceptance Settlement Deliver Condo Settlement
HOA + Condo for Repairs to Seller’s Decision Review HOA Written Loan Settlemen
Date/ Send Docs to Buyer Walk –Thru
Seller/LA Re: Repairs Docs Commitment
___/___/___ Notice
Date when final ___/___/___
signatures and initials Owner must obtain from ___/___/___
are on all pages of Courthouse or from ___/___/___ ___/___/___ ___/___/___ ___/___/___ ____/___/___ ___/___/___
Within 3 Days ___/___/___
contract & addenda Management Co. Within 3 days of Within 5 days of 30-45-60 days 15 Days Prior to 5 days Prior Buyer Brings
From Date of 30 days Prior to
Turn paperwork and Must be delivered to Receipt of Seller’s Receipt of Docs From Contract Date Settlement + 7 day to Settlement Certified Funds
Inspection Settlement
good faith deposit check Buyer w/in 20 days of Decision to make or from Seller Review Period Seller Gives
into Processing Contract Ratification not make Repairs Possession to
Department Buyer
13
START 1 3 5 7 9 11 15 17 19
RATIFIED
THE
2 4 6 8 10 12 14 16 18
CONTRACT FINISH
LINE!
2. Buyer to
4. Home 10. Conduct 16. Last Day 18. Client To
Have Made 6. Seller Responds 8. Deadline to 12. Appraisal 14. Agent to
Inspection Well and/ or for Buyer to Review
Mortgage To Request for Home Deliver HOA Received by Order Termite
Takes Place Septic Review Condo Settlement Sheet
Application Inspection Repairs Docs to Buyer Lender Inspection
Inspection Docs
___/___/___ ___/___/___ ___/___/___ ___/___/___ ___/___/___
___/___/___ ___/___/___ ___/___/___ ___/___/___
Usually within Within 10 days Within 5 Days Of Receipt 20 days From Title Co. Faxes HUD-1
30 days prior to 30 days from Date 30 days Prior to Within 7 Days of
7-10 days of Of Contract Date By Seller of Buyer’s list Contract Date + 1-2 Days before
settlement of Mortgage Settlement Receipt of Docs
Contract Date of Repairs 5 days to review Settlement
Application from Seller
92
Monthly Mortgage Payments
$ borrowed rate P&I Payment
180,000 6.5 $1138
200,000 6.5 $1264
220,000 6.5 $1390
240,000 6.5 $1516
260,000 6.5 $1642
Note: payment above does not include, Property tax, HOA,
insurance.
Under this analysis a $5000 increase in the amount
financed will increase your payment by $31.50 P&I
93
Projected Tax Savings
$200,000 MTG @ 6.5%, 30 yr fixed
RENT BUY
Income $60,000 $ 60,000
Standard deduction 5,000
Interest Deduction 0 - $ 13,392
Property tax 0 - $ 3500
Taxable Income $55,000 $ 43,108
Tax Due (@35% rate) $19,250 $ 15,088
SAVINGS $4162 or $347 a month
NOTE THESE ARE PROJECTIONS ONLY,SEE YOUR TAX ADVISOR
94
Expense reduction ideas
Reduce Fees Hot water heater
Money pits cover
Big house Seal duct seams
Big cars Programmable
Investment thermostat
properties
Seal drafty windows
Tight budgets means and doors
less non essentials
Cable TV Fuel additives
Lunches
95
Expense reduction ideas
Increase Insurance Coupon clipping
deductible Florescent bulbs
Insure only house Review deductions
not land from pay
Unplug electric items Turn jarred items
Compare fees upside down
Shop Rates Ketchup/vinegar
www.money.com Brass cleaner
www.bestrate.com Stale potatoes chips
Flatten toilet paper Phones 96
Avoid Fees
Over limit $39 Car rental Ins
ATM Fees $2.50 Heavy bag fees
Foreign C.C. fees Paper ticket fees
Late fees Change flight fee
Bad deposit fee Talking to Airline
Checking Acct Fees Gift card fee
Bi weekly payment Hotel fees, internet,
resort fee, bell fees
Broker fee
97
Saving Web sites
Shopzilla.com
Gasbuddy.com
Pricegrabber.com
Magazinepricesearch.com
Sortprice.com
Smartbargin.com
Couponcabin.com
Annualcreditreport.com
Couponbug.com
www.moneyanswers.com
Edeals.com
Ruelala.com
Couponmom.com
Bluefly.com
Salescircular.com
Overstock.com
Dealnews.com
bigwords.com(text books)
Bilshrink.com (cells)
Gasprices.mapquest.com
Retailmenot.com(coupons
Energystar.com
Accuquote.com(home ins)
Gethuman.com(cust. Ser.)
Insurance.com(life)
Kayak.com(travel)
Insweb.com(auto)
us.lastminutetravel.com
Myfico.com (credit score)
Taxcalculatorkiplinger.com
Healthinsurance.com
www.ssa.gov/estimator
www.66ways.org
www.energysavers.gov
www.energynear.gov
WWW.ANGELFOODMINISTRIES.COM http//tax-coalition.org/programs.cfm
98
Websites Continued
www.ftc.gov
www.quickenonline.com
www.livingto100.com
www.kiplinger.com
www.thestreet.com
www.investinginbonds (bonds)
www.morningstar.com ( stocks and funds)
www.myfico.com (credit score)
www.kiplinger.com (tax calculator)
www.ssa.gov (Social Security Calculator)
www.ehealthinsurance.com (health insurance)
www.coverageforall.org (health insurance)
www.medicare.gov (Medicare)
www.accuquote.com (life ins)
www.insure.com (life ins)
www.insweb.com (auto ins)
www.accucoverage.com (home ins)
www.naic.org/cis (commissioner cust. service complaints for ins)
99
Debt Consolidation Loan:
Risks & Benefits
Creating more DEBT to pay DEBT
Loss of Property if secured
Running up cards again
Lower interest rate
Reduce reliance on credit, IF close old
accts
100
Strategies to Reduce
Credit Card Debt
Consistent Monthly Payment
ALWAYS pay more than minimum
Avoid Cash Advances
Avoid purchasing with credit cards
during repayment period
Adhere to a Spending Plan
101
Contact Information
Consumer Credit Counseling
Service of MD and DE, Inc.
Jim Harris
CCCS - 1-800 642 2227
CCCS Website www.CCCS-inc.org
Email - Jharris@cccs-inc.org
102
