10-70-20 PLAN

1. 10-70-20 PLAN A Plan for Success

2. SUCCESS • Success begins with DESIRE • Success requires a PLAN • Success takes TIME

3. Four Ingredients: • A plan to save • A way to control living costs • A solution to over-extended debts • A way to properly plan for the future

4. TOTAL EARNINGS From Gross Earnings Subtract Net Income Or Working Income 1. Savings 10% 2. Living Expenses 70% 3. Debt, Investing, giving, etc. 20% 1. Tithe 2. Income & Social Security Tax

5. EXAMPLE Gross Income (annual) $30,000 Tithe (10% of gross) - 3,000 Taxes (15% of gross) - 4,500 Net Working Income $22,500 10% Saving $2,250 70% Living Expenses $15,750 20% Debt Reduction $4,500 TOTAL $22,500

6. SAVINGS - 10% • First Goal: Emergency Fund • At least 3 months income • Accessible, interest bearing account • Second Goal: Cash Buying

7. LIVING EXPENSES - 70% • House Payment (mortgage or rent) • Property taxes • House insurance • Utilities • House repair and upkeep • Car Expenses • Payments • Gas, Oil, Etc. • Insurance • Repairs

8. Things to be included in the 70% (cont’d) • Medical Expenses • Life Insurance • Recreation • Gifts • Food • Clothing and Dry Cleaning • Reading Material • Furniture • Miscellaneous

9. Things to WATCH CAREFULLY • Furnishings and equipment • Expensive foods (eating out) • Life insurance: • Buy protection and/or annuities! • Insurance is not designed as a savings plan. • Clothes • Shop, attend sales • DO NOT overbuy on a limited income.

10. Things to WATCH CAREFULLY (cont’d) • Car • DO NOT buy more than you can afford. • Should you buy used or new? • House • DO NOT get into more house than you can afford. • Your income will determine size and kind you can afford.

11. DEBT REDUCTION - 20% • Getting rid of back bills without pain is IMPOSSIBLE • Get credit cards under control • Face current debt problem head-on

12. Debt Reduction Plan • Start by making a list of creditors (see worksheet #4) • Calculate the payment schedule

13. LIABILITIES - 20% of Working IncomeAnnual $4,500 Monthly $ 375 (A) (B) (C) (D) Creditors Balance Due % of Total Debt Monthly Pmt. 1. Sears $ 4,500 30% $112.50 2. J.C. Penny $ 4,000 27% $101.25 3. MasterCard $ 3,500 23% $ 86.25 4. Discover Card $ 3,000 20%$ 75.00 $15,000 100% $375.00

14. How to work the plan (cont’d) • Go to your creditors with your plan • Stay with plan after debts are paid off • Consider God first • Consider children’s education • Consider retirement • Consider house pay-off early • Consider buying of cars • Consider investments

15. Summary for success:God is owner - man is manager • Keep your priorities right • God FIRST • Family SECOND • Other things will fall in place

16. Summary for Success (cont’d) • Work toward being debt free • Concentrate on all debts with exception of house and car first • Concentrate on cash fund with which to buy bigger items • Remember children’s education fund • Remember retirement • Work toward buying a car with cash • Work toward paying off house early • Seek God’s guidance in all you do

17. “. . . he who trusts in the LORD will prosper”Proverbs 28:20.