Here is part two from a presentation on personal finances by Kevin Slater and Dave Jackson (part one: 3-Step Spending Plan). Both men are Certified Financial Planners.   It is easy to imagine that all of our problems would be solved if we "just had ___ more money." But we have seen people with six-figure incomes living month-to-month and falling deeper into debt. We have also seen people who live very normal, contented lives on less than $20,000 per year.   To help people get on track, we created the following ten-step plan. It is designed to be done in this order so that people avoid very common pitfalls. Start at the beginning and move to the next step AFTER you have completed the step. Do not skip ahead (common temptation).  

1. Give regularly, cheerfully, and sacrificially.

God asks us for our first fruits. It may help to give as often as you get paid (monthly, biweekly or weekly). Make giving one of your regular "payments" while you are paying your bills.

2. Create a "baby" emergency fund of $1,000.

If you are about to be laid off or if you're expecting a child, your fund should be larger. One thousand dollars is just a starting place to make sure you have some buffer in place. 

3. Create a spending plan.

Be organized and purposeful, but simple. See the plan we discussed earlier and spend less than you earn. If you go to Mars Hill and need help with this step, email the Financial Coaching Ministry.

4. Take advantage of full company match for your retirement plan.

If your employer matches 5 percent, save 5 percent. You are giving yourself a raise in doing so, and addressing a major long-term need at the same time. Take the free money!

5. Pay off all non-mortgage debt.

Including auto loans, student loans, home equity loans, credit cards, boat loans, personal loans, lunch money loans...ALL of them. Step Five is a great struggle for most Americans, and the step that most people want to debate. Americans spend more than we have (thus, the debt). Stop being a slave to your creditors.    In order to accomplish this step, we recommend using the "Debt Snowball" to do this. Pay the minimum due on all of your debts and the maximum you are able on your smallest debt. The goal is to pay it off as fast as you possibly can. Once you pay off the smallest one, continue the process by focusing on the next smallest debt.  As you pay off the debt, you will discover a sense of freedom, and you will have more money freed up to pay off the remaining debt faster. This is such an important step, we recommend that you be creative in finding ways to pay off debt faster, such as selling some of the possessions that got you into debt, getting a new job, reducing the number of vehicles you own, etc.

6. Increase annual retirement savings to 15 percent (including the company match) of your income.

Americans have the lowest savings rate in the world. Many people will be forced to make huge lifestyle changes in their seventies simply because they did not save.

7. Add to your emergency fund.

Bump up your stockpile so that it equals three to six months of expenses (not including taxes and retirement savings). The more people who are dependent upon your income, the larger this fund should be.

8. If your goal is to be a homeowner, save enough for a 10 percent down payment.

(If you don't plan on owning a home, skip to step 10.) Yes, this is Step 8--we are suggesting that you be debt free before you buy a home. Incidentally, there is nothing in Scripture that says you must be a homeowner; renting may be a better alternative for you. Houses are not generally high-returning investments, if you include all of the costs associated with them. That said, we also understand the many non-investment benefits of being a home owner.

9. Purchase a home based on a FIXED mortgage...

...With monthly payments (principal and interest) that are less than or equal to 25 percent of your monthly income. Do not put yourself in the position of being in financial purgatory just to make your payments every month. You won't enjoy your home very long if you are up at night worrying about how you will cover your mortgage. It is estimated more than 2 million people will lose their houses in the next three years simply because they spent more than they could afford.

10. Considering other ways you can glorify God with your finances

Some ideas:

• Increase your monthly giving
• Create college account (for your kids, grandkids, or someone elses kids)
• Pay down mortgage
• Buy gifts for others
• Travel
• Fun items (God is not opposed to you having fun--he created joy)

Some will argue against the order of this process, based upon rates of return comparisons. We suggest that a large part of spending and budgeting is dealing with our emotional response with money. This plan deals with those realities, and hopefully it will help people find joy in the process. Credit Dave Ramsey as an inspiration for many of these ideas. Pastor Jamie recommends his advice.