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Seven Steps for Debt Elimination and Financial Peace. Don L. Milne Zions Bank Financial Literacy Manager. How Do You Compare?. 77% of Americans live paycheck to paycheck. (CareerBuilder, Sept. 2010)

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seven steps for debt elimination and financial peace

Seven Steps for Debt Elimination and Financial Peace

Don L. Milne

Zions Bank Financial Literacy Manager

how do you compare
How Do You Compare?
  • 77% of Americans live paycheck to paycheck.

(CareerBuilder, Sept. 2010)

  • In 2007 the savings rate in America was minus 2%. (Federal Reserve Bank of St Louis, Nov. 2009)
  • The median IRA balance is $29,000. (Employee Benefit Research Institute, Jun. 2010)
  • The average American family (including those without debt) has over $30,000 in consumer debt. (Utah Foundation, Feb 2009)
  • Families with credit cards have an average of $10,000 of credit card debt. (Indexcreditcards.com, Feb. 2010)
  • Utah’s bankruptcy rate was #1 in the nation for much of the past decade.

JumpStart Answer:

Risk, Rate of Return, Liquidity.

slide3

Components Of Change

KNOWLEDGE

A habit can be defined as an intersection of knowledge, skill and desire. The Seven Habits of Highly Effective People, Steven R. Covey

Change

SKILLS

DESIRE

making the switch
Making the Switch
  • DIRECT The Rider
  • MOTIVATE The Elephant
  • SHAPE The Path

Switch: How to Change Things When Change Is Hard, Chip and Dan Heath

7 steps for financial peace
7 Steps for Financial Peace

1 Save a $1,000 emergency fund

2 Pay off all consumer debt

3 Save 3-6 months of expenses

4 Save 15% of income for retirement

5 Save for children’s college education

6 Pay off home mortgage early

7 Build wealth and give to others

The Total Money Makeover, Dave Ramsey

1 1 000 emergency fund
1. $1,000 Emergency Fund
  • Get one ASAP
    • Sell something
    • Earn more
    • Squeeze that budget
  • Decide with spouse what an emergency is.
  • Remember that long term this needs to equal 3-6 months of expenses (step 3)
2 snowball debt
2. Snowball Debt
  • Debt consolidations don’t work for most people.
  • Pay minimum payments on all but smallest debt.
  • Use all money budgeted for debt elimination on smallest debt.
  • As each debt is paid off, use all available money on next smallest debt.
can you live without debt
Can You Live Without Debt?
  • Don’t borrow for stuff that goes down in value.
  • Cash is always cheaper than credit.
  • Your children will do what you do, not what you say.
  • It is easy to overspend when using debt.
envelope system
Envelope System
  • Each payday divide and place cash in envelopes for:
    • Food
    • Entertainment
    • Clothing
    • Household items
    • Mad money
teaching kids commissions not allowance
Teaching Kids: Commissions, Not Allowance
  • Kids 20-40-40 Budget
    • 20% Giving
    • 40% Savings
    • 40% Spending
slide11

What Is Your Money Profile?

Spender

Mike Tyson

Dave Ramsey

Nerd

Free Spirit

Warren Buffet

Saver

Paul McCartney

slide12

Components Of Change

KNOWLEDGE

A habit can be defined as an intersection of knowledge, skill and desire. The Seven Habits of Highly Effective People, Steven R. Covey

Change

SKILLS

DESIRE

making the switch13
Making the Switch
  • DIRECT The Rider
  • MOTIVATE The Elephant
  • SHAPE The Path

Switch: How to Change Things When Change Is Hard, Chip and Dan Heath

what do i do now
What Do I Do Now?
  • Use Envelopes
  • Take the pledge: “I’m done with debt.”
  • Use a monthly Zero Based budget
  • Identify the step you should work on. When done, go to the next step.
zions bank your partner for financial literacy
Zions Bank, Your Partner for Financial Literacy
  • April - ABA’s National Teach Children to Save Day for K-12
  • October – ABA’s Get Smart About Credit Day for high schools
  • Free one hour Dave Ramsey Super Saving Seminars for adults
  • 13 week Dave Ramsey Financial Peace University classes for adults and older children
  • don.milne@zionsbank.com