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Debt Calculators

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					           Living on the Edge: Faithful Stewards for God’s Kingdom

                                                   DEBT
o How does God view debt?

Proverbs 22:7
7
    The rich rule over the poor,
      and the borrower is servant to the lender.

    -   Deut 28:43-44

Pay to all what is owed to them: taxes to whom taxes are owed, revenue to whom revenue is owed,
respect to whom respect is owed, honor to whom honor is owed. Owe no one anything, except to love
each other, for the one who loves another has fulfilled the law. (Romans 13:7, 8)


o What does debt reveal about our attitude? - James 4:13-16

    -   Debt can weight us down, cause us to miss opportunities to be generous, and to store up treasure in
        Heaven.
    -   However, while discouraged, debt is never explicitly prohibited in the Bible.

o Is any debt permissible? Possibly, if the following can be answered with a “yes”:
           o Is the asset an appreciating asset?
           o Value of item exceeds amount owed with a large margin of safety
           o The debt service is reasonable on the budget
           o Efforts are being made to pay down the debt as quickly as possible (Prov. 3:27-28)

Types of debt:
   - Credit card (Pay off balances)                             -   Auto (70% of cars are financed in the US)
   - Mortgage                                                   -   Investment
   - Home Equity Line of Credit/Loan                            -   Business
   - Student

Guidelines:
After giving and taxes, no more than 38% of your income should be spent on housing. 25-30% is a good target.
Total additional debt should not exceed 5-10% of your income after giving and taxes. The goal is to have no
debt at all. The mortgage is an exception, but zapping should also be a high priority.

o Interest rates really matter!
Debt            Interest Rate        Term           Total Cost with Interest
$10,000                 5%           5 years        $11,323
$10,000                 10%          5 years        $12,748

How to get out of Debt:

    1) Pray
        Prepared by Jim Mahoney                                                                   Page 1
    2) Establish a written budget- Income problem,                7) Pay off debt from highest to lowest interest
         spending problem, or both?                                   rate- However, I recommend you knock off
    3) Stop accumulating all debt                                     some of the smaller debts first, regardless of
    4) List all assets – Are there items you can                      rate as this will encourage you.
         sell?                                                    8) Be content with what you have
    5) List all liabilities (everything you owe)                  9) Consider earning additional income- Can the
    6) Establish a debt repayment schedule for                        shopping and TV watching!
         each creditor (use online calculators if you             10) Consider a radical change to your lifestyle
         like)                                                    11) Don’t give up. It will take time.
---------------------------------------------------------------
Dave Ramsey’s Seven Baby Steps



Baby Step 1



$1,000 to start an Emergency Fund


An emergency fund is for those unexpected events in life that you can’t plan for: the loss of a job, an
unexpected pregnancy, a faulty car transmission, and the list goes on and on. It’s not a matter of if these events
will happen; it’s simply a matter of when they will happen. Learn more




Baby Step 2



Pay off all debt using the Debt Snowball


List your debts, excluding the house, in order. The smallest balance should be your number one priority. Don’t
worry about interest rates unless two debts have similar payoffs. If that’s the case, then list the higher interest
rate debt first. Learn more




Baby Step 3



3 to 6 months of expenses in savings


Once you complete the first two baby steps, you will have built serious momentum. But don’t start throwing all
your “extra” money into investments quite yet. It’s time to build your full emergency fund. Learn more




Baby Step 4


         Prepared by Jim Mahoney                                                                      Page 2
Invest 15% of household income into Roth IRAs and pre-tax retirement


When you reach this step, you’ll have no payments—except the house—and a fully funded emergency fund.
Now it’s time to get serious about building wealth. Learn more




Baby Step 5



College funding for children


By this point, you should have already started Baby Step 4—investing 15% of your income—before saving for
college. Whether you are saving for you or your child to go to college, you need to start now. Learn more




Baby Step 6



Pay off home early


Now it’s time to begin chunking all of your extra money toward the mortgage. You are getting closer to
realizing the dream of a life with no house payments. Learn more



                 DANGER: STEP #7 CAN BE MISINTERPRETED - ME FIRST, OTHERS LATER, IS NOT THE
                 WAY TO LIVE!
Baby Step 7



Build wealth and give!


It’s time to build wealth and give like never before. Leave an inheritance for future generations, and bless others
now with your excess. It's really the only way to live! Learn more

---------------------------------------


Debt calculators:
http://www.bankrate.com/calculators/index-of-debt-management-
calculators.aspx?ec_id=GOOG_ag_Debt_Calculators_ky_Broad_k_debt_calculators


What is your credit card balance?                                          3000
                                                                       $

         Prepared by Jim Mahoney                                                                    Page 3
What is the interest rate on your credit card?                              12%


How is your minimum payment calculated?                                     Interest + 1% of balance


Your minimum payment:                                                        60.00
                                                                        $

What fixed payment could you make each month?                           $

Select a payment schedule based on:
                                                                               Minimum payment
                                                                               Fixed payment

                                                                          Clear All



                    It will take you 208 months to be rid of your debt. In that time, you will pay
                                               $2,544.87 in interest.

         Are you applying for a new credit card ?
         Considering doing a balance transfer from one card to another?
         Received a notice from your bank that your credit card interest rate is increasing ?
         Trying to negotiate a lower rate with your credit card provider?

In any of those situations, it's important to know what the different rates mean. Even a relatively small
difference in interest rates adds up to hundreds of dollars in interest per year. See the chart below for a rough
estimate of what you'll pay in a year's period in interest, on a variety of balances ranging from $1,000 to $10,000:

Balance                            18.9%                        11.9%                                  5.9%
$1,000                             $189.00                      $119.00                                $59.00
$2,000                             $378.00                      $238.00                                $118.00
$3,000                             $567.00                      $357.00                                $177.00
$4,000                             $756.00                      $476.00                                $236.00
$5,000                             $945.00                      $595.00                                $295.00
$6,000                             $1,134.00                    $714.00                                $354.00
$7,000                             $1,323.00                    $833.00                                $413.00
$8,000                             $1,512.00                    $952.00                                $472.00
$9,000                             $1,701.00                    $1,071.00                              $531.00
$10,000                            $1,890.00                    $1,190.00                              $590.00




         Prepared by Jim Mahoney                                                                                Page 4
Emergency Fund:                Proverbs 21:20
20
     In the house of the wise are stores of choice food and oil,
       but a foolish man devours all he has.

     •   Keep 3-6 Months of expenses in emergency savings. This should be your top priority after paying down
         all non-mortgage debt.
     •   These savings should be held in a savings account or other safe investments…not in stocks! Certificates
         of deposit (CDs) may be appropriate depending on the size of your emergency fund.

The Home Mortgage:

     •   Types: ARMs, Balloons, Fixed, Interest-Only- I recommend fixed rate mortgages
     •   Terms: 15, 20, 30 year
     •   Prepayment ability
     •   Interest Rate
     •   Principal, down payment, and home prices
     •   Beware of ARMs, variable rate mortgages, interest-only mortgages, and reverse mortgages! Very few
         people know what they are doing with these financing structures.
     •   Mortgages calculators: - how much can I afford      -monthly payment     - amortization schedule
                 - owning versus renting      - reasons to own a home     - refinancing
     •   A crash course in real estate!
             o Realtors vs. for sale by owner                          o Not a liquid investment
             o Escrow                                                  o Fees/commissions
             o Home insurance and property taxes                       o Inspector
             o Location, location, location                            o Appraisals



                                                            Co-signing:           Proverbs 17:18
Bankruptcy:            Psalm 37:21
                                                             18
                                                               A man lacking in judgment strikes hands in
21
     The wicked borrow and do not repay,                    pledge
      but the righteous give generously;                        and puts up security for his neighbor.

http://www.crown.org/pamphlets/pdfs/Bankruptcy.pdf


Recommended Links for Tools and Calculators:

http://www.daveramsey.com/category/tools/

http://www.crown.org/Tools/

http://www.mint.com/

www.annualcreditreport.com




         Prepared by Jim Mahoney                                                                   Page 5
                                 LIST OF DEBTS
                             as of ___________________




                  Contact Name               Payments    Monthly     Date           Interest
To Whom Owed                       Pay Off
                  Phone Number                 Left      Payment     Due              Rate




                                                                   Crown Financial Ministries 2/03




   Prepared by Jim Mahoney                                                           Page 6
                             U N E M P L O Y M E N T FACT SHEET
When you find yourself unemployed, there are several things you should do.
1. Trust God.
   ! Check your spiritual pulse. Are you currently walking with the Lord and trusting Him?
   ! Spend extra time in Bible study and prayer.
   ! Be sure to read Psalms and Philippians; both can provide comfort and inspiration.
2. Make a list of your assets as a person and as an employee.
   How many different ways can you market these assets?
   ! Identify your transferable skills and career focus.
   ! Conduct some sort of self-analysis. By discovering your strengths for the workplace, you
     will be able to present these to a future employer. You may want to consider taking a Career
     Direct® Complete Guidance System online assessment (CareerDirectOnline.org) or purchas-
     ing the helpful book, Finding the Career That Fits You. Information on these and other
     career resources is available on the Web at Crown.org.
   ! Outline your work history to show the responsibilities you have had and the types of work
     you have done.
   ! Develop a résumé; keep it to one page unless you have been employed 10 years in the same
     field. Be ready to tailor it to fit particular job openings.
3. Get involved with an accountability/support group.
   Don’t try to handle it all on your own.
   ! Share with God and other believers your feelings of loss, anger, depression, and stress.
   ! Pay special attention to the needs of your spouse and children during this trying time.
   ! Seek out at least one primary support relationship besides your spouse to help serve as
      a career coach.
4. Develop a short-term financial plan.
   ! Immediately take stock of your finances, including savings, spendable assets, and
      income, including severance pay or state unemployment compensation.
   ! Set up a short-term budget.
      J Know your bottom-line monthly needs, including how much money is required to
         pay your bills.
      J Cut expenses in every way possible.
      J Make arrangements with creditors to reduce payments on a temporary basis.
      J Project your cash flow and available assets in light of this short-term budget. Determine
         how long you can afford to be without a job.
   ! Call on believers if you need financial assistance or help getting through this transitional
      period.
      J Many churches have resources available to help with food, clothing, and other needs.


                                                                                        UPI01 08/07


   Prepared by Jim Mahoney                      1                                       Page 7
5. Network through every possible contact.
   ! Use leads from people you know to make direct contact with potential employers.
   ! Consider having business cards printed, and on the back put key phrases regarding your
      career objective and/or major qualifications.
   ! Get involved in a church-sponsored job network group.
   ! Set and meet goals for daily calls and personal contacts.
   ! Search the Internet for job-listing Web sites such as CareerBuilder.com, Monster.com,
      Careers.org, and Intercristo.com.
6. Take care of yourself.
   ! Eat well, get enough sleep, and exercise regularly.
   ! Avoid drinking or eating in excess.
7. Maintain a normal daily routine.
   Do whatever it takes to make “finding a job” your full-time job.
   ! Get up and get dressed for work.
   ! Physically go to your “office,” whether it be a room in your house dedicated to job
      search or the local library.
   ! Covenant with your spouse or a friend to call you and hold you accountable to your
      goals and to encourage you in the process.
   ! Spend six to eight hours per day looking for work.
   ! Relax, read, and relate to family members and others.
8. Learn to serve others.
9. Continue to trust God and wait patiently for Him to provide your next job.
   ! If you have the financial resources, use this opportunity to learn new skills.

                                                                                      Resources on next page




   Prepared by Jim Mahoney                      2                                             Page 8
                                   Job-Related Resources
     One Christian employment information service is Intercristo.
                                         INTERCRISTO
                                          PO Box 33487
                                      19303 Fremont Ave N
                                        Seattle WA 98133
                                         (800) 251-7740
                                        www.jobleads.org
     Crossroads Career Network is a job networking organization based in Georgia.
                            CROSSROADS CAREER NETWORK
                              300 Colonial Center Pkwy Ste 300
                                       Roswell GA 30076
                                        (770) 558-8187
                                   www.crossroads-career.net

                                           Crown Resources
      Crown Financial Ministries has volunteer Money Map Coaches throughout the country who
offer their services at no charge to Christians who desire to establish budgets that will help them
get out of debt and honor God through their finances. The coaches, ministering under the authori-
ty of their local church, have been trained in godly principles of finance to help people become
worthy stewards of what God has entrusted to their care. Establishing and maintaining a budget is
beneficial at any time but especially when you find yourself unemployed.
     .
                     Career Direct® Complete Guidance System Assessment
                                       1-800-722-1976
                                  www.CareerDirectOnline.org




   Prepared by Jim Mahoney                       3                                       Page 9

				
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