1
Thank you for choosing to take a step toward being a better
manager of the resources God has given to you.
You may not know how to make a budget, or live without debt.
You may not have support from friends and family who are in the
same boat. You may not know the process of taking baby steps to
success. We want to help you take the rst step. Dave Ramsey is
one of the best resources on providing simple steps to get out of
debt and managing what God has given to us. We have included his
forms and articles to get you started.
Is what we do with our money really any of God’s business? The
Bible has much to say about money. Many of those passages are
included in this booklet. Please allow the Holy Spirit to speak to you
as you read these verses.
If you need help lling out the forms, please contact Brookwood
Care Ministries. You can set up an appointment by contacting us at
nancialcare@brookwoodchurch.org or 864.688.8355.
You may also be interested in going through Financial Peace
University. In Financial Peace University you learn how money
really works from budgeting and dumping debt to building wealth.
This 9-week class is oered several times a year. For more
information or to learn more about upcoming classes, please visit
brookwoodchurch.org/events.
God bless you,
Finance Department
Brookwood Church
TABLE OF CONTENTS
What Does The Bible Say About Money 1
The Truth About Budgeting 5
Monthly Cash Flow Plan Instructions 6
Monthly Cash Flow Plan Forms 7
The Seven Baby Steps 11
The Truth About Debt Reduction 14
Get Out of Debt with the Debt Snowball Plan 15
The Truth About Debt Consolidation 18
Making Dave’s Advice Work For You 19
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WHAT DOES THE BIBLE
SAY ABOUT MONEY?
God Owns Everything, and We Are
His Managers
Deuteronomy 8:17-18
You may say to yourself, “My power and the strength
of my hands have produced this wealth for me.” But
remember the LORD your God, for it is he who gives you
the ability to produce wealth...
Psalm 24:1
The earth is the Lord’s, and everything in it, the world, and
all who live in it.
Haggai 2:8
“The silver is mine and the gold is mine,” declares the
LORD Almighty.
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!”
Romans 11:36
For from him and through him and to him are all things...
1 Corinthians 6:19-20
...You are not your own; you were bought at a price...
God Is Generous
Deuteronomy 6:10-12
When the LORD your God brings you into the land he
swore to your fathers, to Abraham, Isaac and Jacob, to
give you—a land with large, ourishing cities you did not
build, houses lled with all kinds of good things you did
not provide, wells you did not dig, and vineyards and olive
groves you did not plant—then when you eat and are
satised, be careful that you do not forget the LORD, who
brought you out of Egypt, out of the land of slavery.
Matthew 7:11
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If you, then, though you are evil, know how to give
good gifts to your children, how much more will your
Father in heaven give good gifts to those who ask him!
Luke 6:38
Give, and it will be given to you. A good measure,
pressed down, shaken together and running over, will
be poured into your lap. For with the measure you use,
it will be measured to you.
John 3:16
For God so loved the world that he gave his one and
only Son, that whoever believes in him shall not perish
but have eternal life.
Romans 8:32
He who did not spare his own Son, but gave him up for
us all-how will he not also, along with him, graciously
give us all things?
2 Corinthians 8:9
For you know the grace of our
Lord Jesus Christ, that though
he was rich, yet for your sakes he
became poor, so that you through
his poverty might become rich.
2 Corinthians 9:8,11
And God is able to make all
grace abound to you, so that in
all things at all times, having all
that you need, you will abound
in every good work. You will be
made rich in every way so that
you can be generous on every
occasion, and through us your generosity will result in
thanksgiving to God.
1 Timothy 6:17
Command those who are rich in this present world not
to be arrogant nor to put their hope in wealth, which is
so uncertain, but to put their hope in God, who richly
provides us with everything for our enjoyment.
1 John 3:16-18
This is how we know what love is: Jesus Christ laid
down his life for us. And we ought to lay down our lives
for our brothers. If anyone has material possessions
and sees his brother in need but has no pity on him,
how can the love of God be in him? Dear children, let
us not love with words or tongue but with actions and
in truth.
Wealth Is Fleeting, and
Accumulation Is Dangerous
Proverbs 23:4-5
Do not wear yourself out to get rich; have the wisdom
to show restraint. Cast but a glance at riches, and they
are gone, for they will surely sprout wings and y o to
the sky like an eagle.
Proverbs 30:8-9
Keep falsehood and lies far from me; give me neither
poverty nor riches, but give me only my daily bread.
Otherwise, I may have too much and disown you and
say, ‘Who is the LORD?’ Or I may become poor and
steal, and so dishonor the name of my God.
Ecclesiastes 5:10-15
Whoever loves money never has
money enough; whoever loves
wealth is never satised with his
income. This too is meaningless.
As goods increase, so do those
who consume them. And what
benet are they to the owner
except to feast his eyes on them?
The sleep of a laborer is sweet,
whether he eats little or much,
but the abundance of a rich man
permits him no sleep. I have seen
a grievous evil under the sun:
wealth hoarded to the harm of
its owner, or wealth lost through
some misfortune, so that when
he has a son there is nothing left
for him. Naked a man comes from his mother’s womb,
and as he comes, so he departs. He takes nothing
from his labor that he can carry in his hand.
Mark 10:25
It is easier for a camel to go through the eye of a needle
than for a rich man to enter the kingdom of God.
Luke 6:24
But woe to you who are rich, for you have already
received your comfort.
Luke 16:25
But Abraham replied, “Son, remember that in your
lifetime you received your good things, while Lazarus
received bad things, but now he is comforted here and
you are in agony.”
WHOEVER LOVES
MONEY NEVER
HAS ENOUGH
Ecclesiastes 5:10
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1 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. Some people,
eager for money, have wandered from the faith and
pierced themselves with many griefs.
Heaven, Not Earth, is My Home
Psalm 39:5
...the span of my years is as nothing before you. Each
man’s life is but a breath...
Psalm 90:10
The length of our days is seventy years-or eighty, if
we have the strength; yet their span is but trouble
and sorrow, for they quickly pass, and we y away.
Philippians 3:20
But our citizenship is in heaven...
1 Timothy 6:17-19
Command those who are rich in this present world
... to do good, to be rich in good deeds, and to be
generous and willing to share. In this way they will lay
up treasure for themselves as a rm foundation for
the coming age, so that they may take hold of the life
that is truly life.
Hebrews 11:25-26
[Moses] chose to be mistreated along with the people
of God rather than to enjoy the pleasures of sin for
a short time. He regarded disgrace for the sake of
Christ as of greater value than the treasures of Egypt,
because he was looking ahead to his reward.
Matthew 6:19-20
Do not store up for yourselves treasures on earth,
where moth and rust destroy, and where thieves
break in and steal. But store up for yourselves
treasures in heaven, where moth and rust do not
destroy, and where thieves do not break in and steal.
Matthew 19:27-29
Peter answered him, “We have left everything to
follow you! What then will there be for us?” Jesus
said to them, “I tell you the truth, at the renewal of
all things, when the Son of Man sits on his glorious
throne, you who have followed me will also sit on
twelve thrones, judging the twelve tribes of Israel.
And everyone who has left houses or brothers or
sisters or father or mother or children or elds for my
sake will receive a hundred times as much and will
inherit eternal life.”
Our Hearts Follow Our Money
Matthew 6:19-21
Do not store up for yourselves treasures on earth,
where moth and rust destroy, and where thieves
break in and steal. But store up for yourselves
treasures in heaven, where moth and rust do not
destroy, and where thieves do not break in and steal.
For where your treasure is, there your heart will be
also.
Matthew 6:24
No one can serve two masters. Either he will hate the
one and love the other, or he will be devoted to the
one and despise the other. You cannot serve both
God and Money.
Mark 10:21
Jesus looked at him and loved him. “One thing you
lack,” he said. “Go, sell everything you have and give
to the poor, and you will have treasure in heaven.
Then come, follow me.”
God Prospers Us Not to Raise
Our Standard of Living, but Our
Standard of Giving
Luke 3:11
John answered, “The man with two tunics should
share with him who has none, and the one who has
food should do the same.”
Acts 4:32, 34-35
All the believers were one in heart and mind. No one
claimed that any of his possessions was his own,
but they shared everything they had. There were
no needy persons among them. For from time to
time those who owned lands or houses sold them,
brought the money from the sales and put it at the
apostles’ feet, and it was distributed to anyone as he
had need.
Romans 12:13
Share with God’s people who are in need. Practice
hospitality.
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2 Corinthians 8:7, 13-15
...Excel also in the grace of giving. Our desire is not that others might be relieved while you are hard pressed,
but that there might be equality. At the present time your plenty will supply what they need, so that in turn
their plenty will supply what you need. Then there will be equality, as it is written: “He who gathered much did
not have too much, and he who gathered little did not have too little.”
2 Corinthians 9:10-11
Now he who supplies seed to the sower and bread for food will also supply and increase your store of seed
and will enlarge the harvest of your righteousness. You will be made rich in every way so that you can be
generous on every occasion, and through us your generosity will result in thanksgiving to God.
James 2:15-16
Suppose a brother or sister is without clothes and daily food. If one of you says to him, “Go, I wish you well;
keep warm and well fed,” but does nothing about his physical needs, what good is it?
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Myth: I don’t have time to work
on a budget.
Truth: You don’t have time not
to make a budget!
The dreaded “B” word. Budget.
The only other word that starts
with “B” that might generate a
worse reaction in most people is
the word bankruptcy.
Unfortunately, the word budget
has gotten a bum rap —it is basically
just a PLAN. When you budget, you’re
spending on paper, on purpose, before the
month begins.
But many people view a budget as a straight jacket that keeps
them constrained. Freedom and budget just don’t seem to go
together.
However, when you see that a budget is just spending
your money with intention, you’ll actually experience more
freedom than before. Many people say they’ve found even
more money when they created a realistic budget and stuck
with it.
Here are some pointers:
• Give it three to four months to start working. It
won’t be perfect the rst time you do it.
• Spend every dime on paper before the month
begins.
• Over-fund your groceries category. Most people underfund
that category.
• Husbands (if applicable) need to loosen up and quit using the
budget as a whipping tool on their wives.
• If married, spouses need to do the budget together. The preacher said
“... and you are ONE.”
When you are spending your money on purpose, you will be on your way to a Total
Money Makeover. You will be on the road to changing your family tree forever!
MYTHS AND TRUTHS ABOUT BUDGETING
from daveramsey.com on August 3, 2009
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MONTHLY CASH FLOW PLAN (Instructions)
Every single dollar of your income should be allocated to some category on this form. When you’re done,
your total income minus expenses should equal zero. If it doesn’t, then you need to adjust some categories
(such as debt reduction, giving, or saving) so that it does equal zero. Use some common sense here, too. Do
not leave things like clothes, car repairs, or home improvements o this list. If you don’t plan for these things,
then you’re only setting yourself up for failure later.
Yes, this budget form is long. It’s really long. We do that so that we can list practically every expense
imaginable on this form to prevent you from forgetting something. Don’t expect to put something on every line
item. Just use the ones that are relevant to your specic situation.
Every main category on this form has subcategories. Fill in the monthly expense for each subcategory, and
then write down the grand total for that category. Later, as you actually pay the bills and work through the
month, use the “Actually Spent” column to record what you really spent in each area. If there is a substantial
dierence between what you budgeted and what you spent, then you’ll need to readjust the budget to make
up for the dierence. If one category continually comes up over or short for two or three months, then you
need to adjust the budgeted amount accordingly.
Use the “% Take Home Pay” column to record what percentage of your income actually goes to each
category. Then, use the “Recommended Percentages” sheet (Form 6) to see if your percentages are in line
with what we recommend.
Notes:
• An asterisk(*)beside an item indicates an area for which you should use the
envelope system.
• The emergency fund should get all the savings until you’ve completed your full
emergency fund of three to six months of expenses (Baby Step 3).
• Don’t forget to include your annualized items from the “Lump Sum Payment Planning”
sheet (Form 4), including your Christmas gift planning.
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MONTHLY CASH FLOW PLAN (Form 5)
Budgeted Item Sub Actually % of Take
Total Total Spent Home Pay
CHARITABLE GIFTS _______ _______ _______
SAVING
Emergency Fund _______ _______
Retirement Fund _______ _______
College Fund _______ _______ _______ _______
HOUSING
First Mortgage _______ _______
Second Mortgage _______ _______
Real Estate Taxes _______ _______
Homeowner’s Ins. _______ _______
Repairs or Mn. Fee _______ _______
Replace Furniture _______ _______
Other _________ _______ _______ _______ _______
UTILITIES
Electricity _______ _______
Water _______ _______
Gas _______ _______
Phone _______ _______
Trash _______ _______
Cable _______ _______ _______ _______
*FOOD
*Grocery _______ _______
*Restaurants _______ _______ _______ _______
TRANSPORTATION
Car Payment _______ _______
Car Payment _______ _______
*Gas and Oil _______ _______
*Repairs and Tires _______ _______
Car Insurance _______ _______
License and Taxes _______ _______
Car Replacement _______ _______ _______ _______
PAGE 1 TOTAL _______ _______
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MONTHLY CASH FLOW PLAN (Form 5 – continued)
Budgeted Item Sub Actually % of Take
Total Total Spent Home Pay
*CLOTHING
*Children _______ _______
*Adults _______ _______
*Cleaning/Laundry _______ _______ _______ _______
MEDICAL/HEALTH
Disability Insurance _______ _______
Health Insurance _______ _______
Doctor Bills _______ _______
Dentist _______ _______
Optometrist _______ _______
Medications _______ _______ _______ _______
PERSONAL
Life Insurance _______ _______
Child Care _______ _______
*Baby Sitter _______ _______
*Toiletries _______ _______
*Cosmetics _______ _______
*Hair Care _______ _______
Education/Adult _______ _______
School Tuition _______ _______
School Supplies _______ _______
Child Support _______ _______
Alimony _______ _______
Subscriptions _______ _______
Organization Dues _______ _______
Gifts (incl. Christmas) _______ _______
Miscellaneous _______ _______
*Blow Money _______ _______ _______ _______
PAGE 2 TOTAL _______ _______
MONTHLY CASH FLOW PLAN (Form 5 – continued)
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Budgeted Item Sub Actually % of Take
Total Total Spent Home Pay
RECREATION
*Entertainment _______ _______
Vacation _______ _______ _______ _______
DEBTS (Hopefully -0-)
Visa 1 _______ _______
Visa 2 _______ _______
Master Card 1 _______ _______
Master Card 2 _______ _______
American Express _______ _______
Discover Card _______ _______
Gas Card 1 _______ _______
Gas Card 2 _______ _______
Dept. Store Card 1 _______ _______
Dept. Store Card 2 _______ _______
Finance Co. 1 _______ _______
Finance Co. 2 _______ _______
Credit Line _______ _______
Student Loan 1 _______ _______
Student Loan 2 _______ _______
Other _______ _______ _______
Other _______ _______ _______
Other _______ _______ _______
Other _______ _______ _______
Other _______ _______ _______ _______ _______
PAGE 3 TOTAL _______ _______
PAGE 2 TOTAL _______ _______
PAGE 1 TOTAL _______ _______
GRAND TOTAL _______ _______
TOTAL HOUSEHOLD INCOME _______
ZERO
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RECOMMENDED PERCENTAGES (Form 6)
How much of your income should be spent on housing, giving, food, etc.? Through experience
and research, we recommend the following percentages. However, you should remember
that these are only recommended percentages. If you have an unusually high or low income,
then these numbers could change dramatically. For example, if you have a high income, the
percentage that is spent on food will be much lower than someone who earns half of that.
If you nd that you spend much more in one category than we recommend, however, it may
be necessary to adjust your lifestyle in that area in order to enjoy more freedom and exibility
across the board.
ITEM ACTUAL % RECOMMENDED %
CHARITABLE GIFTS ___________ 10 – 15%
SAVING ___________ 5 – 10%
HOUSING ___________ 25 – 35%
UTILITIES ___________ 5 – 10%
FOOD ___________ 5 – 15%
TRANSPORTATION ___________ 10 – 15%
CLOTHING ___________ 2 – 7%
MEDICAL/HEALTH ___________ 5 – 10%
PERSONAL ___________ 5 – 10%
RECREATION ___________ 5 – 10%
DEBTS ___________ 5 – 10%
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THE SEVEN
BABY STEPS
Begin your journey to nancial peace
Get out of debt the same way you learned to
walk—one step at a time. Dave has taught these
principles to millions via radio, books, Financial
Peace University, live events and online.
Here’s the process:
Baby Step 1
$1,000 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.
This beginning emergency fund will keep life’s little Murphies from turning into new debt while you work o
the old debt. If a real emergency happens, you can handle it with your emergency fund. No more borrowing.
It’s time to break the cycle of debt!
Baby Step 2
Pay o 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 payos. If that’s the case, then list the higher interest
rate debt rst.
The point of the debt snowball is simply this: You need some quick wins in order to stay pumped up about
getting out of debt! Paying o debt is not always about math. It’s about motivation. Personal nance is 20%
head knowledge and 80% behavior. When you start knocking o the easier debts, you will see results and
you will stay motivated to dump your debt.
Baby Step 3
3 to 6 months of expenses in savings
Once you complete the rst 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. Ask yourself,
“What would it take for me to live for three to six months if I lost my income?” Your answer to that question is
how much you should save.
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Use this money for emergencies only: incidents that would have a major impact on you and your family.
Keep these savings in a money market account. Remember, this stash of money is not an investment; it is
insurance you’re paying to yourself, a buer between you and life.
Baby Step 4
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.
Dave suggests investing 15% of your household income into Roth IRAs and pre-tax retirement plans. Don’t
invest more than that because the extra money will help you complete the next two steps: college savings
and paying o your home early.
Why shouldn’t you invest less than 15%? Some people choose to invest a small amount, if anything, because
they want to get a child through school or pay o the home in a hurry. But the kids’ degrees won’t feed you
at retirement, and if you throw all your money into your mortgage at this point, you’ll end up having to sell the
house and buy the book 72 Ways to Prepare Alpo and Love It. Bad plan.
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.
In order to have enough money saved for college, you need to have a goal. Determine how much per month
you should be saving at 12% interest in order to have enough for college. If you save at 12% and ination is
at 4%, then you are moving ahead of ination at a net of 8% per year!
Never save for college using:
• Insurance
• Savings bonds (only 5-6% growth)
• Zero-coupon bonds. (only 6-8% growth)
• Pre-paid college tuition (only 7% ination rate)
The best way to save for college is with Education Savings Accounts (ESAs) and 529 plans. Remember,
college is possible without loans!
Baby Step 6
Pay o your house 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.
As you attack this last debt, you will gain momentum much like you did back in the second step of the debt
snowball. Remember, having absolutely no payments is totally within your reach!
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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!
Golda Meir says, “You can’t shake hands with a clenched st.” Vow to never hold your money so tightly that
you never give any away. Hoarding money is not the way to wealth. Save for yourself, save for your family’s
future, and be gracious enough to bless others. You can do all three at the same time.
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THE TRUTH ABOUT DEBT
REDUCTION
By Dave Ramsey
Myth: Only the rich can be debt free.
Truth: Anyone can become debt free. True debt
reduction is plain common sense and hard work.
Many hard-working people get into debt because
of mistakes. I work with those people every day. I’m
talking about them—those who are willing to keep
working hard—when I promise that there’s hope to get
out of debt and have a nancially peaceful future.
Beware of Quick Fixes
But then there are lazy people who look for a quick x,
such as debt consolidation or debt management.
Real debt help is not quick or easy. Laziness is a
character aw. You need to be willing to work and
sacrice in order to x the situations that you created
with your own irresponsibility. If you are not willing,
then you cannot be helped.
Are you willing to get another job and work a few
80-hour weeks? If you are in nancial stress because of
something you’ve done, you need to get yourself out of
the mess by working. If you think that it is too hard, you
will never get out of the debt that you brought upon
yourself.
Laziness is a sickness, and it will get you absolutely
nowhere in life. We all make mistakes, but the question
is whether you are willing to take responsibility for
your mistakes! You need to learn from your mistakes
or you and your children will be doomed to repeat the
cycle. How badly do you want to be out of debt?
How to Get Out of Debt
We’ve developed a little process called the debt
snowball to do one thing at a time and keep the debt
reduction process simple. I have been broke. I know
how scared I felt, and I know how fast I wanted to get
out of debt. I know how you feel, and I have learned
that what really works is unbelievably erce, focused
intensity.
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GET OUT OF DEBT WITH
THE DEBT SNOWBALL PLAN
from daveramsey.com on August 1, 2009
Myth: I should pay o the debt with the highest interest rate rst to get out of debt quickly.
Truth: You should pay o the smallest debt rst to create the greatest momentum in your debt
snowball.
The math seems to lean more toward paying the highest interest debts rst, but what I have learned is that
personal nance is 20% head knowledge and 80% behavior.You need some quick wins in order to stay
pumped enough to get out of debt completely. When you start knocking o the easier debts, you will start to
see results and you will start to win in debt reduction.
Debt Snowball Plan
The principle is to stop everything except minimum payments and focus on one thing at a time. Otherwise,
nothing gets accomplished because all your eort is diluted. First accumulate $1,000 cash as an emergency
fund. Then begin intensely getting rid of all debt (except the house) using my debt snowball plan. List your
debts in order with the smallest payo or balance rst. Do not be concerned with interest rates or terms
unless two debts have similar payos, then list the higher interest rate debt rst. Paying the little debts o rst
gives you quick feedback, and you are more likely to stay with the plan.
Build Momentum
Redo this each time you pay o a debt, so you can see how close you are getting to freedom. Keep the old
papers to wallpaper the bathroom in your new debt-free house. The New Payment is found by adding all the
payments on the debts listed above that item to the payment you are working on, so you have compounding
payments which will get you out of debt very quickly. Payments Remaining is the number of payments
remaining when you get down the snowball to that item. Cumulative Payments is the total payments needed,
including the snowball, to pay o that item. In other words, this is your running total for Payments Remaining.
Debt Free!
You attack the smallest debt rst, still maintaining minimum payments on everything else. Do what is
necessary to focus your attention. Keep stepping up to the next larger bill. After the credit debt is taken care
of, you are ready for the next Baby Step in your Total Money Makeover.
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DEBT SNOWBALL (Instructions)
Now it’s time to knock out that debt! List your debts in order, from the smallest balance to the
largest. Don’t be concerned with interest rates, unless two debts have a similar payo balance.
In that case, list the one with the higher interest rate rst. As you start eliminating debts, you’ll
start to build some serious momentum. These quick wins will keep you motivated, so you’ll be
able to stay on track.
The idea of the snowball is simple: pay minimum payments on all of your debts except for the
smallest one. Then, attack that one with gazelle intensity! Every extra dollar you can get your
hands on should be thrown at that smallest debt until it is gone. Then, you attack the second one.
Every time you pay a debt o, you add its old minimum payment to your next debt payments.
So, as the snowball rolls over, it picks up more snow. Get it?
Redo this sheet every time you pay o a debt so that you can see how close you’re getting to total debt
freedom. Keep the old sheets for encouragement—or to wallpaper the bathroom in your debt-free house
someday!
The “New Payment” is the total of the previous debt’s payment PLUS the current debt’s minimum. As these
payments compound, you’ll start making huge payments as you work down the list.
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DEBT SNOWBALL (Form 10)
Item Payo Payment Payment
____________________________________ ___________ ___________ ___________
____________________________________ ___________ ___________ ___________
____________________________________ ___________ ___________ ___________
____________________________________ ___________ ___________ ___________
____________________________________ ___________ ___________ ___________
____________________________________ ___________ ___________ ___________
____________________________________ ___________ ___________ ___________
____________________________________ ___________ ___________ ___________
____________________________________ ___________ ___________ ___________
____________________________________ ___________ ___________ ___________
____________________________________ ___________ ___________ ___________
____________________________________ ___________ ___________ ___________
____________________________________ ___________ ___________ ___________
____________________________________ ___________ ___________ ___________
____________________________________ ___________ ___________ ___________
____________________________________ ___________ ___________ ___________
____________________________________ ___________ ___________ ___________
____________________________________ ___________ ___________ ___________
____________________________________ ___________ ___________ ___________
____________________________________ ___________ ___________ ___________
____________________________________ ___________ ___________ ___________
____________________________________ ___________ ___________ ___________
____________________________________ ___________ ___________ ___________
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THE TRUTH ABOUT
DEBT CONSOLIDATION
from daveramsey.com on August 1, 2009
Myth: Debt consolidation saves interest, and you
have one smaller payment.
Truth: Debt consolidation is dangerous because you
treat only the symptom.
Debt consolidation is nothing more than a “con”
because you think you’ve done something about the
debt problem. The debt is still there, as are the habits
that caused it – you just moved it! You can’t borrow
your way out of debt. You can’t get out of a hole by
digging out the bottom. True debt help is not quick or
easy.
Larry Burkett, noted nancial author, says debt is
not the problem; it is the symptom. I feel debt is
the symptom of overspending and undersaving.
Our nancial coaches will not recommend debt
consolidation for a client. Why? Because debt
consolidation doesn’t work.
Debt Consolidation Statistics
A friend of mine works for a debt consolidation rm
whose internal statistics estimate that 78% of the
time, after someone consolidates his credit card
debt, the debt grows back. Why? He still doesn’t
have a game plan to either pay cash or not buy at all.
He also hasn’t saved for “unexpected events” which
will also become debt.
Debt consolidation seems appealing because there
is a lower interest rate on some of the debt and a
lower payment. However, in almost every case we
review, we nd that the lower payment exists not
because the rate is actually lower but because the
term is extended. If you stay in debt longer, you get a
lower payment, but if you stay in debt longer, you pay
the lender more, which is why they are in the debt
consolidation business.
Debt Consolidation Example
For example, let’s say you have $30,000 in unsecured
debt, including a two-year loan for $10,000 at 12%,
and a four-year loan for $20,000 at 10%. Your
monthly payment on the $10,000 loan is $517 and
$583 on the $20,000 loan, for a total payment of
$1,100 per month. The debt consolidation company
tells you they have been able to lower your payment
to $640 per month and your interest rate to 9%
by negotiating with your creditors and rolling the
loans together into one. Sounds great, doesn’t it?
Who wouldn’t want to pay $460 less per month in
payments?
But they don’t tell you that it will now take you six
years to pay o the loan. This may not sound that
bad to you at rst unless you realize how much more
you will actually pay in additional payments. You will
now pay $46,080 to pay o the new loan vs. $40,392
for the original loans, even with the lower interest
rate of 9%. This means you paid $5,688 more for the
“lower payment.” Not such a good deal after all. This
example shows you why they are in the business –
because they make money o of you.
The Real Way to Get Out of Debt
The answer is not the interest rate; the answer is a
Total Money Makeover. The way you get out of debt
is by changing your habits. You need to commit to
getting on a written game plan and sticking to it.
Get an extra job and start paying o the debt. Live
on less than you make. It is not rocket science, but
it is emotional, which is why most people need help
getting through it from someone like Dave Ramsey.
Don’t try debt consolidation!
19
MAKING DAVE’S ADVICE WORK FOR YOU
from daveramsey.com on September 13, 2011
Wherever you are right now, these four tips will help you make your money—and Dave’s advice—work for
you!
Write It Down
Dave is a big fan of writing down your goals. He talks and writes about it often. There’s just something about
writing things down that adds power and tangibility to them. A dream is just a dream until you write it down ...
then, it’s a goal! When it comes to budgeting, give every dollar a name by spending it on paper, on purpose
before the month begins. And remember, the dullest pencil is sharper than the sharpest memory!
Start Small
You know how to eat an elephant, right? One bite at a time! It’s like losing weight or getting in shape. If you try
big, crazy, extreme plans or diets, you’re setting yourself up for disappointment. Don’t try to take shortcuts.
Get on a plan that works, and stick to it. That’s what Dave’s seven Baby Steps are all about: adjusting your
position a little bit at a time until you’ve completely turned things around.
Get Intense!
You’ve got to get wired up and red up about where you want to go! Do what it takes to keep yourself
motivated, whether it’s listening to people scream “We’re debt freeeee!” on Debt-Free Fridays, reading
powerful success stories, or making stu with cut-up pieces of your credit cards. Continually think about why
you’re doing what you’re doing. One way to do that is to keep a photo of your loved ones in your checkbook
or envelope system, and remind yourself: I’m changing my family tree for them.
Get Support
Personal nance is only 20% head knowledge. It’s 80% behavior change. That will make all the dierence!
That’s why it’s important to surround yourself with people who have the same goals, so you get the support
and accountability you really need. There are thousands of Financial Peace University classes starting all
over the nation. Take the step to get plugged into a community of support and encouragement that’s a whole
lot of fun for all involved. Find a Financial Peace University class in your area. This class is oered several
times a year through Brookwood. For more information or to learn more about upcoming classes, please
visit brookwoodchurch.org/events. You can attend the rst lesson for free! Connecting with our new FPU
Facebook page is another great way to get daily motivation to work your way through the Baby Steps!
As the season changes, it’s your chance to give yourself a fresh start! Good intentions won’t change anything,
but intentional action will do wonders. Jump in with both feet, and start doing the little things that make a big
dierence in your life!
20
“This class has changed our lives so much. It has literally brought us peace as far as money management.”
Michael V.
“It has taught us how to make every dollar count. Life changing.” Julie A.
“This course has completely changed the way my husband and I handle our nances. We have not used a
credit card in months and this will be our rst “cash only” Christmas. No more debt increase for us!!”
Renee N.
“I will only pay cash! There is so much freedom when you are debt free. If I can’t aord it, I don’t need it.”
Carol J.
“This class strengthened our marriage and changed our lives. As a result of this class we are now debt free
except for our home and survived the reduction of hours and income with my husband’s job.”
Lora C.
