The Debt-free Lifestyle.pptx

Towards a FinanciallyLiterate DepEd

“Rather go to bed without dinner than to rise in debt”

Benjamin Franklin

The Truth…

“People today are ADDICTED TO BUYING.”

“Too many people spend money they haven’t earned to buy things they don’t want to impress people they don’t like.”

-Will Rogers-

Five Harmful Financial Traps

Trap #1 Lack of Knowledge

Five Harmful Financial Traps

Borrowers are slaves.

Five Harmful Financial Traps

People who are deeply in debt did not plan to be so. Often they are ignorant about financial matters, They do not know how to use their money wisely, and often fall into financial traps.

Five Harmful Financial Traps

Trap #2 Easy Credit

Five Harmful Financial Traps

One trap is easy loan offered by unscrupulous money-lenders to uneducated minimum wage earners, factory workers, and even office workers.

Five Harmful Financial Traps

Because wages are not enough to make both ends meet, workers borrow from each other and from unscrupulous individuals or bogus financiers.

Five Harmful Financial Traps

These loan sharks make sure they get hold of ATM cards. Workers end up pawning their ATM Cards. They usually charge very high rates.

Five Harmful Financial Traps

Trap #3 High Interest Rates

Five Harmful Financial Traps

Usury or interest is a nashakh or neshekh in Hebrew which is describes as “bite of a snake”.

Five Harmful Financial Traps

If you are borrowing at high interest rates or paying at high interest is like being bitten by a serpent which may eventually lead to death.

Five Harmful Financial Traps

On the other hand, if you’re making money by lending at high interest, take not of the warning of Solomon: “Income from charging high interest rates will end up in the pocket of someone who is kind to the poor.”

Five Harmful Financial Traps

Trap #4 Guaranteeing other’s debt

Five Harmful Financial Traps

Some people incur loans because they think they can help by borrowing for others. This is when helping is bad.

Five Harmful Financial Traps

As Filipinos, we feel obliged to help another in need, especially when that person is a relative. Instead of saying no, many of us borrow money to cover for another.

Five Harmful Financial Traps

As Filipinos, we feel obliged to help another in need, especially when that person is a relative. Instead of saying no, many of us borrow money to cover for another.

Five Harmful Financial Traps

Trap #4 Incurring credit card debt

Five Harmful Financial Traps

The most harmful and pervasive financial trap id the unwise use of your credit cards.

Five Harmful Financial Traps

Discipline and organizational skill are needed to monitor credit card purchases. Many are not able to pay their bills on time, so they end up owing huge amounts to credit card companies.

Five Harmful Financial Traps

The great danger of the credit card habit is that:

Five Harmful Financial Traps

1. It lulls you into thinking you have money when you really don’t;

Five Harmful Financial Traps

2. You end up buying something you don’t have cash to pay for; and

Five Harmful Financial Traps

3. You tend to buy more, pay more, worry more, and fight more.

Five Harmful Financial Traps

You buy more. Credit card users end up spending 25 percent more than they intend.

Five Harmful Financial Traps

You pay more. If you don’t pay the bill in full by the due date, your credit card company will impose an interest of 3 to 5 percent per month.

Five Harmful Financial Traps

You worry more. “Peace is the softest pillow” People who do not have debts sleep better.

Five Harmful Financial Traps

You fight more. Money matters occupy much married couples’ quarrels.

Five Harmful Financial Traps

You fight more. Money Magazine polled 1,010 married adults aged 25 and over. Survey results showed that 70 percent of couples argued about money more than others.

Five Harmful Financial Traps

You fight more. Many marriages break up when couples become broke.

Five Harmful Financial Traps

You fight more. The holy vow of matrimony, “Till death do us part” becomes “Till debt do us part”.

Five Harmful Financial Traps

You have less freedom. When you’re in debt, you’re enslaved to your creditor.

Five Harmful Financial Traps

You have less peace. After you borrow today, how sure are you that you will still have your job next month or next year?

Five Harmful Financial Traps

You have less time. You’ll also have less time for your family because you have to work doubly to pay back your loan. You’ll not even have time for your social life.

Five Harmful Financial Traps

You have less joy. When you’re tired from trying to pay off your debt, you’ll have less joy in life.

Easy to Remember Principles

A,B,C,D,E,F,G,H,I,10

Easy to Remember Principles

Principle A: Administrator, Not Owner

Principle A: Administrator, Not Owner

Everything we have comes from God. All material and non-material things are merely entrusted to us.

Principle A: Administrator, Not Owner

If we only realize that we do not truly own anything, even those that we have bought with money we earned- then we would look at material things differently.

Easy to Remember Principles

Principle B: Budget Instead of Impulse Spending

Principle B: Budget Instead of Impulse Spending

You must first know how much your income is, how much your expenses are, and try to fit them together.

Principle B: Budget Instead of Impulse Spending

“Money is like fat- there’s plenty of it, but it’s always in the wrong places”

Principle B: Budget Instead of Impulse Spending

It’s not a matter of how much you earn. Its how much you save.

Principle B: Budget Instead of Impulse Spending

You may just be a domestic helper, yet you may be able to own land if you manage to save by living way within your means.

Principle B: Budget Instead of Impulse Spending

Do millionaires go bankrupt?

Principle B: Budget Instead of Impulse Spending

Somewhere between 60 percent and 80 percent of athletes in the NBA and NFL go bankrupt within five years of retirement despite making an average of $5.15 million and $1.9 million per season.

Principle B: Budget Instead of Impulse Spending

Former NBA player Antoine Walker earned $110 million and lost it all.

Principle B: Budget Instead of Impulse Spending

NBA player Vin Baker went broke despite the $93 million that teams paid him during an AllStar career.

Principle B: Budget Instead of Impulse Spending

Mark Brunell made $50 million over the course of his NFL career and is now $25 million in debt.

Principle B: Budget Instead of Impulse Spending

Many millionaires lose their millions because: 1. 2. 3.

They do not know how to budget their millions. They fail to plan for the future and to set aside a portion of their income regularly. They assume that the avalanche of blessings will keep coming.

Principle B: Budget Instead of Impulse Spending

If income exceeds expenses, then there is surplus and more happiness.

Principle B: Budget Instead of Impulse Spending

If income is less than expenses, then there deficit and sadness.

Principle B: Budget Instead of Impulse Spending

Your total expenses should be less than your income.

Principle B: Budget Instead of Impulse Spending

Simple Steps to Proper Budgeting

Principle B: Budget Instead of Impulse Spending

1. List down all your income- salary, bonuses, love gifts, consultation fees, etc.

Principle B: Budget Instead of Impulse Spending

2. List down all your expenses everyday for the next thirty days. Jot down every single thing you paid for everyday.

Principle B: Budget Instead of Impulse Spending

3. Categorize the kind of expenses you have listed down.

Principle B: Budget Instead of Impulse Spending

4. Determine which categories are priorities or the most necessary expenses.

Principle B: Budget Instead of Impulse Spending

5. Determine how much you want to spend on each category per month.

Principle B: Budget Instead of Impulse Spending

6. Stick to the budget as if you’re life depends on it.

Principle B: Budget Instead of Impulse Spending

Some people have successfully used a proven system- use of envelopes labeled according to the categories in their budget.

Easy to Remember Principles

Principle C: Cut Your Credit Card (if necessary)

Principle C: Cut Your Credit Card

Progressive countries are moving into cashless transactions, avoiding the carrying of checkbooks and the risks of holding excessive cash money.

Principle C: Cut Your Credit Card

Credit cards are good and convenient, especially when travelling and during emergencies.

Principle C: Cut Your Credit Card

However, credit cards may delude you into thinking you have more money than you really have.

Principle C: Cut Your Credit Card

The promise of instant gratification lures you into the trap of debt and financial slavery.

Principle C: Cut Your Credit Card

When a CEO was questioned about giving credit cards to people who couldn’t manage their cards well, causing them to pay a lot of interest and penalties, he replied: “That is where the money is.”

Principle C: Cut Your Credit Card

LOANS rearranged spells LASON (Poison)

Principle C: Cut Your Credit Card

1. 2. 3. 4.

Tips for using credit cards: Get one credit card only Buy in cash Pay the total bill in time Don’t be greedy for points.

Principle C: Cut Your Credit Card

Remember: Whether you are rich or poor, educated or not, you can be enslaved by the credit card habit.

Principle C: Cut Your Credit Card

Worse than credit cards loans The 5-6 is a notorious loan method in which one borrows PhP5 and pays back PhP6.

Principle C: Cut Your Credit Card

When to borrow or not to borrow?

Principle C: Cut Your Credit Card

1. Don’t borrow to buy anything that depreciates. (cars, appliances, gadgets) Better save first before buying.

Principle C: Cut Your Credit Card

2. It’s OK to get loans to buy house or unit. But be wary of banks or financing companies fixing the interest rates for only one or two years.

Principle C: Cut Your Credit Card

The rule of the thumb is: Your monthly amortization should not be 5 percent more than your current monthly rent.

Principle C: Cut Your Credit Card

3. Don’t borrow to pay off your debt. (Unless it is at interest that is lower than your existing one.)

Principle C: Cut Your Credit Card

4. Don’t borrow at high interest rates. (A difference anything higher by 6 percent is too high)

Principle D:

Demolish Debt (Pay It Off ASAP)

Principle D: Demolish Debt (Pay It Off ASAP)

It’s better to tighten your belt now rather than later.

Principle D: Demolish Debt (Pay It Off ASAP)

Endure hardship now while you’re still young, able, and healthy.

Principle D: Demolish Debt (Pay It Off ASAP)

Your financial freedom starts only as soon as you pay off your current loans. It means giving up movies or fine dining for the next few months or years, do it.

Principle D: Demolish Debt (Pay It Off ASAP)

Schedule your payments, and plan what you need to give up. Your goal is to have a clean slate as soon as possible, so you can start rebuilding your life and become financially free.

Principle D: Demolish Debt (Pay It Off ASAP)

How got out of debt?

Principle D: Demolish Debt (Pay It Off ASAP)

1. If you have assets to sell, sell them.

Principle D: Demolish Debt (Pay It Off ASAP)

2. Don’t run away.

Principle D: Demolish Debt (Pay It Off ASAP)

3. Negotiate.

Principle D: Demolish Debt (Pay It Off ASAP)

4. Budget your money well.

Principle D: Demolish Debt (Pay It Off ASAP)

5. Simplify your lifestyle.

Principle D: Demolish Debt (Pay It Off ASAP)

6. Manage the resources God has given you.

Principle E:

Education, the Greatest Wealth Equalizer

Principle E: Education, the Greatest Wealth Equalizer

How does one escape poverty? One of the best ways is by getting good education.

Principle E: Education, the Greatest Wealth Equalizer

An education helps one to be gainfully employed, set up a small business, or do well professionally.

Principle E: Education, the Greatest Wealth Equalizer

Ways to increase financial quotient: •Read books

Principle E: Education, the Greatest Wealth Equalizer

Ways to increase financial quotient: •Seek the professional advice of financial experts

Principle E: Education, the Greatest Wealth Equalizer

Ways to increase financial quotient: •Watch educational television programs

Principle E: Education, the Greatest Wealth Equalizer

Ways to increase financial quotient: •Attend seminars on financial management

Principle E: Education, the Greatest Wealth Equalizer

Ways to increase financial quotient: •Browse the Web for information

Principle E: Education, the Greatest Wealth Equalizer

Ways to increase financial quotient: •Ask friends who are wise financial managers

Principle F:

Family Planning

Principle F: Family Planning

Planning is critical part of life.

Principle F: Family Planning

Family planning is planning not just the number of children we’ll have, but also planning to give our children the best opportunities in life.

Principle F: Family Planning

Family planning is planning not just the number of children we’ll have, but also planning to give our children the best opportunities in life.

Principle G:

Grateful to God, Generous to Others

Principle G: Grateful to God, Generous to Others

Gratitude is the winning attitude that makes us generous to others and content with what we have.

Principle G: Grateful to God, Generous to Others

Warren Buffet said, “The happiest people do not necessarily have the best things. They simply appreciate the things they have.”

Principle H:

Honest, Hard Work (Not Easy Money)

Principle H: Honest, Hard Work (Not Easy Money)

Better be poor and honest than to be dishonest and rich. Proverbs 26:6

Principle H: Honest, Hard Work (Not Easy Money)

Wealth from get-rich-quick schemes quickly disappears; wealth from hard works grows overtime. Proverbs 13:11

Principle H: Honest, Hard Work (Not Easy Money)

Don’t run after easy money. The greedy person is driven here and there by many wants.

Principle H: Honest, Hard Work (Not Easy Money)

Don’t fall for “get rich quick” schemes. If something sounds too good to be true, then it is too good to be true.

Principle H: Honest, Hard Work (Not Easy Money)

Don’t gamble. Ninety-nine percent of people who gamble or buy lotto or sweepstake tickets lose their money.

Principle H: Honest, Hard Work (Not Easy Money)

The stock market-is it investing or gambling? It’s an investment if you spend a lot of time and energy studying it.

Principle H: Honest, Hard Work (Not Easy Money)

The stock market-is it investing or gambling? It’s a gamble if laypersons just buy and sell based on rumors, tips, and hearsay.

Principle H: Honest, Hard Work (Not Easy Money)

Honest, hard work reaps rewards Work hard and become a leader, be lazy and become a slave.

Principle H: Honest, Hard Work (Not Easy Money)

Lessons from parents: 1. Always save.

Principle H: Honest, Hard Work (Not Easy Money)

Lessons from parents: 2. Don’t borrow money from anyone.

Principle H: Honest, Hard Work (Not Easy Money)

Lessons from parents: 3. Don’t borrow clothes, not even from your sisters. If you only have two dresses, those are the only ones you will wear.

Principle H: Honest, Hard Work (Not Easy Money)

Lessons from parents: 4. Learn to sew and work with your hands.

Principle H: Honest, Hard Work (Not Easy Money)

Lessons from parents: 5. Always live well within your means. Don’t save what is left after spending, but spend what is left after savings.

Principle I:

Invest for the Future, Invest also in Eternity

Principle I: Invest for the Future, Invest also in Eternity

You need to have a vision for the future, and you need to see time as an invaluable resource.

Principle I: Invest for the Future, Invest also in Eternity

Never depend on a single income, rather, make investments to create a second income.

Principle I: Invest for the Future, Invest also in Eternity

How to invest in eternity? • by giving portions of their income to the Lord • share the Gospel • give to the needy

Principle 10:

10:20:70 Lord 10%, Save 20%, Spend 70%

Principle 10: 10:20:70

God blesses generous givers.

Financial debt is certainly an all-important issue that must be dealt with decisively in our lives.

Thank you po!