personal finance
Download
Skip this Video
Download Presentation
Personal Finance

Loading in 2 Seconds...

play fullscreen
1 / 19

Personal Finance - PowerPoint PPT Presentation


  • 119 Views
  • Uploaded on

Personal Finance. Major Justin Knutzen. Personal History. 2007: I was leading a “Successful” life…. Personal History. 2008: I started thinking about getting married We openly discussed our finances and found Student Loans still unpaid 8 years after college Three vehicle payments

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' Personal Finance' - oma


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
personal finance

Personal Finance

Major Justin Knutzen

personal history
Personal History
  • 2007: I was leading a “Successful” life…
personal history1
Personal History
  • 2008: I started thinking about getting married
    • We openly discussed our finances and found
      • Student Loans still unpaid 8 years after college
      • Three vehicle payments
      • Line of Credit on the house
      • Major credit card debt
      • A Signature loan with a high interest rate

Over $100,000 in Non-Mortgage Debt!

personal history2
Personal History
  • We had no liquid savings
  • We had very little retirement savings
  • Our debt would not permit us to have the wedding that we wanted
time for a change
Time for a Change
  • I started to research personal finance
    • I read books by the following authors:
      • Dave Ramsey
      • Suze Orman
      • Robert Kiyosaki
      • James Cramer
      • Thomas Stanley
  • We started a budget with a plan to pay off our debts
  • Changed our lifestyle
key lessons learned
Key Lessons Learned
  • Learned difference between “Need” and “Want”
  • Learned an important word… NO!
  • A Budget is critical
    • Plan for where your money will go Before you get paid
  • A debt reduction plan is important
  • “Emergencies” happen, a credit card is not a plan
  • Open communication about our finances is critical
budget
Budget
  • Income

Total Pay (Gross Income)

Minus Gov’t Deductions (Taxes, Soc Sec, Medicare)

Minus Other Deductions (uncontrolled, ex: Alimony)

Equals your Personal Disposable Income

Added to spouses income = Total Disposable Income (TDI)

  • Charity (10% of TDI)

Place of Worship

AFAF

Combined Federal Campaign

Other

budget1
Budget
  • Housing (30% of TDI)

Rent/Mortgage

Utilities (gas, electric, water, trash, phone, cable, internet)

Insurance (homeowner/renter)

Maintenance (for homeowners)

  • Transportation (17.5% of TDI)

Car Payment / Replacement savings

Gas

Maintenance (oil, tires, repairs, etc)

Taxes and Licensing

Insurance

budget2
Budget
  • Food (10% of TDI)

Groceries

Dining Out

  • Savings (10% of TDI)

Emergency Fund

Retirement

College Fund

budget3
Budget
  • Personal (10% of TDI)

Clothing

Personal Care

Entertainment

Vacation

Pocket Money

  • Debt (7.5% of TDI)

Credit Cards

Student Loans

Line of Credit

budget4
Budget
  • Insurance (5% of TDI)

Medical

Dental

Disability

ID Theft

Term Life Insurance

Long-Term Care (Over the age of 60)

debt elimination methods
Debt Elimination Methods
  • High Interest
    • Organize debts by interest rate
    • Pay off highest interest first
    • Roll payments into next highest, etc, until debt free
  • Debt Snowball
    • Organize debts by amount owed
    • Pay off smallest debt first
    • Roll payments into next largest debt, etc, until debt free

Northwestern University, Kellogg School of Management Study: Closing debt accounts led to higher success rate of paying off debt than paying high interest first

retirement savings
Retirement Savings
  • Traditional Thrift Savings Plan (TSP)
    • Every $100 contributed reduces take home pay by $75
    • Money withdrawn in retirement is taxable
    • Better option for those planning to be in a lower income tax bracket in retirement
  • Roth TSP
    • Every $100 contributed reduces take home pay by $100
    • Money withdrawn in retirement is tax free
    • Better option for those expecting to be in a higher tax bracket in retirement

Calculations assume 25% tax bracket

tsp funds
TSP Funds
  • Varying range of risks
  • Follow measureable index (Except G and L funds)
  • Low administrative expenses (0.027% in 2012)
tsp funds1
TSP Funds
  • Common Stock Index Fund “C Fund”
    • Follows Standard and Poor’s 500 Index (S&P 500)
      • 500 large to medium-sized companies
    • Price affected by gains/losses in the prices of the stocks and dividend income
  • Fixed Income Index Fund “F Fund”
    • Follows Barclays Capital U.S. Aggregate Bond Index
      • Broad index representing the U.S. bond market
    • Price affected by interest income on securities and gains/losses in the value of securities
tsp funds2
TSP Funds
  • Government Securities Fund “G Fund”
    • Special U.S. Treasury securities specifically issued to TSP
      • Interest rate based on weighted average yield of all outstanding Treasury notes and bonds with 4 or more years to maturity
    • Earnings are based entirely on interest from the securities and affected by increases/decreases in U.S. Treasury security rates
  • International Stock Index Fund “I Fund”
    • Follows Morgan Stanley Capital International EAFE (Europe, Australia, Far East) Index
      • Stocks of companies in developing countries
    • Price affected by stock gains/losses, dividend income, and foreign currency changes in relation to the U.S. dollar
tsp funds3
TSP Funds
  • Small Capitalization Stock Index Fund “S Fund”
    • Follows Dow Jones U.S. Completion Total Stock Market Index
      • Small and medium size companies not in the S&P 500
    • Price affected by gains/losses in the prices of the stocks and dividend income
  • Lifecycle Funds “L Funds”
    • Diversify investments into G, F, C, S, and I Funds
    • Automatically modify investment mixes according to targeted retirement dates
conclusion
Conclusion
  • Today, my wife and I are debt free
  • We will have a full six month emergency fund when we PCS in July
  • My wife has asked to stay home with our children after we PCS…
    • With no debt and a full emergency fund, she can
ad