Simple 3 Rules Financial Counselor & Workshop Leader Training Mannual

Three Rules

THREE SIMPLE RULES THEO A. BOERS

Financial Counselorand

Workshop Leader

Theo A. Boers is an entrepreneur and a businessman whoset up a Financial Counseling Ministry at his church inthe early nineties. After counseling hundreds of familiesand training many counselors he decided to summarizewhat he had learned in this book. He wrote it especiallyfor young people and young couples,

Second Edition

reading this book they would avoid financial difficulties.

Free copies of this book may be downloaded atwww.ThreeRules.org

Training Manualcomments regarding this book and any relatedfinancial questions to the author at:

[email protected]

Simple

]|xHISBN 0-9749105-0-3

krb

Three Rules Financial Counselor and Workshop Leader couples, Training Manual Simple

Copyright 2003

Theo A. Boers

All rights reserved. No part of this book may be reproduced in any form, except for the inclusionof brief quotations in a review, without permission in writing from the author.

Scriptures marked as NIV are taken from the Holy Bible New International Version Copyright© 1973, 1978, 1984 by the International Bible Society.

Scriptures marked as The Message are taken from The Message. Copyright © 1993, 1994, 1995,1996, 2000, 2001, 2002. Used by permission of NavPress Publishing Group.

Scriptures marked as CEV are taken from the Contemporary English Version Copyright © 1995by American Bible Society.

Scriptures marked as The Living Bible are taken from the Life Application Bible for Students:the Living Bible, Copyright © 1992 by Tyndale House Publishers, Inc.

Free copies of Three Simple Rules Guaranteed to Improve Your Finances! may be downloadedat www.ThreeRules.org

Printed copies of this manual and the Three Simple Rules book are available at cost of printingand shipping. Check our web site for details.

Second Edition, printed September 2004

INDEX

FIRST BANK of TABS

Financial Counseling

Pre-Marriage Mentoring

Financial Workshop

Case Studies

SECOND BANK of TABS

Case Study Answers

Forms

Financial Workshop Tools

Appendix

Introduction

The Financial Counselor and Workshop Leader Training Manual is a self-teaching course on:

(a) How to become a Financial Counselor.

(b) How to do Pre-Marriage Financial Mentoring.

(c) How to conduct small group Financial Workshops.

It consists of this manual and the book written by the same author entitled Three Simple RulesGuaranteed to Improve Your Finances. If you haven’t already done so you should read ThreeSimple Rules before proceeding with this manual.

This manual is based on material that the author, who has been involved in financial counselingfor over ten years, has used in a classroom environment to teach financial counseling for overseven years.

The Financial Counselor section of this manual prepares the reader to offer Financial Budget andDebt Counseling from a Christian Perspective to individuals and/or families. It providesappropriate Bible verses, simple tools for setting up counseling sessions and concreteinformation on counseling dos and don’ts.

The Pre-Marriage Mentoring section of this manual will prepare the reader to offer a pre-marriage mentoring session focused on the couple’s compatibility in the area of finance-relatedvalues.

The Financial Workshop section of this manual will prepare the reader to conduct a structuredfour week financial workshop for small groups.

The Three Simple Rules book is an integral part of all three aspects of this manual.

Three Rules


Section One:

Financial

Theo A. Boers is an entrepreneur and a businessman whoset up a Financial Counseling Ministry at his church inthe early nineties. After counseling hundreds of familiesand training many counselors he decided to summarizewhat he had learned in this book. He wrote it especiallyfor young people and young couples, in the hope that byreading this book they would avoid financial difficulties.


Counselingcomments regarding this book and any relatedfinancial questions to the author at:

[email protected]

Simple

]|xHISBN 0-9749105-0-3

krb


Financial Counseling

Introduction………………………………………………………pg. 1

Why is Financial Counseling NecessaryWhy People Have Financial ProblemsThree Simple RulesTypes of Counseling SituationsCounseling ObjectivesWhat People Think Causes Financial ProblemsThe Client’s CommitmentThe Client’s GoalsNo Magic WandsRecognize Your LimitsCounseling from a Christian Perspective

Dos and Don’ts……………………………………………pg. 11

Where to CounselWhen to CounselSession LengthCautionsConfidentialityCounseling TechniqueSet Healthy Limits

The Counseling Process……….………………………………pg. 15

Meeting Number OneMeeting Number TwoMeeting Number ThreeMeeting Number Four and beyond

Conclusion………………………………………………...pg. 32

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Why is Financial Counseling Necessary?

Personal bankruptcies hit an all time high of 1.6 million in 2003. On a per capita basis this rateof bankruptcy is 10 times greater than it was during the Great Depression.

Last year over 9 million people, who averaged $16,000 in unsecured debt, sought help from debtcounseling agencies. Experts estimate that for every person who seeks council there are 4 whoare still in denial.

Why are record numbers of Americans filing bankruptcy and seeking debt relief?

The primary cause of the rampant rise in personal financial problems in the last 20 years hasbeen the ever increasing easy availability of credit. Financial institutions have been “selling”money in ways we have never before experienced.

Houses can now be financed for 125% of value.

Cars can be bought and financed at 0% interest.

Everything from carpets to carports can be purchased with no down payment, no interest and nopayments for 6 – 36 months.

Credit cards companies now aggressively pursue non-traditional markets such as collegestudents, senior citizens, the working poor and even the recently bankrupt.

Almost anyone can borrow money to buy almost anything.

Credit card balances of “revolvers”, people who do not pay off their balance every month, is nowover $12,000.

We now live in a world where we are no longer reminded that if we buy now we have to paylater. Instead we are repeatedly told to:

“Master the possibilities with Master Card.”

“Visa. It’s everywhere you want to be.”

The message is subtle but it sinks in. Master Card and Visa can help you live a better life, dowhat you want to do and go where you want to go. The message is totally directed at personalself-gratification. There is no hint of personal responsibility, no reference to interest rates, fees,penalties and payback time except for in the fine print.

As a result of all this easy credit an unprecedented number of families are now struggling withserious financial problems and the consequent tension it creates in marriages.

This manual is designed to help you help these families.

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Why People Have Financial Problems

The number one reason people have financial problems is because they spend more than theyearn!

That raises the obvious question of “Why do people spend more than they earn?”

Working with many clients over the years has identified three major reasons that cause people tospend more than they earn: lack of discipline, lack of contentment and lack of goals.

1. Lack of Discipline

Lack of discipline is a behavioral problem. Behavioral problems have a lot to do withpersonality. Some personality types have a difficult time being disciplined aboutanything. Obviously, you can not change the client’s personality. However, being awarethat the underlying problem is lack of discipline will influence how you go about helpingthe client address the problem.

Some symptoms that will help you recognize a lack of discipline situation are:• client has no idea where all the money goes.• client unknowingly buys stuff he/she/they can’t afford.• check book is frequently overdrawn.• compulsive spending.• there is no set time to pay bills.• there is no budget.

2. Lack of Contentment

Lack of contentment is a spiritual problem. We all have this in one degree or another.Again, being aware that the underlying problem is lack of contentment will influencehow you go about helping the client address the problem.

Some symptoms that will help you recognize a lack of contentment are:• client makes minimum payments on one or more credit cards• client has more house than he/she/they need or can afford.• client has more expensive cars than he/she/they need or can afford.• client spends more money on clothes, etc. than he/she/they can afford.• buying decisions are driven by wanting what others have.• buying decisions are driven by the need to impress others.• client is of the opinion that they deserve more than they have.

3. Lack of Goals

Many people do not have specific goals. Many people who do have a sense of what theirgoals are have no idea or plan for how they will accomplish their goals.

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This is especially true in the financial area. That is why many people reach theirretirement years basically broke.

When you ask people if they would like to be financially free almost all of them will say yes.When you tell them that step one toward that goal is to become totally debt free they look at youwith a blank stare because they don’t even believe that to be possible.

That is part of the counselor’s challenge. As a counselor you have to reverse what people havebeen hearing all of their lives and that is that debt is normal.

You have to reverse that perception and help your clients to understand that they will never befinancially free until they owe no man anything!

Sometimes you will need to get your clients’ attention by whacking them over the head with theproverbial two by four. I sometimes do that by projecting where they will be, based on theircurrent spending habits, in five, ten or fifteen years. Generally, the projection is so scary that Iget their attention so that we can begin to set some goals and lay out plans for how to accomplishthem.

Lack of discipline, lack of contentment and lack of goals are not the only reasons that peoplespend more than they earn. Budgeting is another contributing factor. Budgeting isn’t easy - it’scomplicated. The reason budgeting is complicated is because:

• Some bills are monthly, some are quarterly, some may be semi-annual or annual andsome, like doctor or dentist bills, are just unpredictable.

• Some people are paid weekly, some bi-weekly, some monthly and some are oncommission.

As a result, matching up money coming in and money going out is difficult. This manual and theThree Simple Rules book will provide detailed information on how to teach your clients how toaddress these complicated variables.

Other reasons why budgeting is difficult are:

• Many people have simply never been trained to budget their money.

• Budgeting takes time.

• Balancing a budget means making choices - a lot of people don’t like making choices.

• People assume that their lifestyle, whatever it is, is the minimum acceptable lifestyle.We all become accustomed to our standard of living whatever it is. Financial advisor

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Andrew Tobias states, “A luxury once sampled becomes a necessity.” Therefore, whenour budget tells us we have to cut back in certain areas it’s a difficult thing to do.

Three Simple Rules

As Christian Financial Counselors, our goal is to help people who are experiencing financialdifficulties to understand how to apply three of the Bible’s basic money management principles.

The three principles are:

1. Spend less than you earn.

Don’t fall in love with money. Be satisfied with what you have. The Lord has promisedthat he will not leave us or desert us. Hebrews 13:5, CEV

2. Save now! Buy later.

The wise man saves for the future, but the foolish man spends whatever he gets.Proverbs 21:20, The Living Bible

3. Know the consequences of debt.

The poor are always ruled over by the rich, so don’t borrow and put yourself under theirpower. Proverbs 22:7, The Message

As you get involved in financial counseling you will discover that much of the financial hardshipand heartache that you will see is a result of people violating these three God-given principles.

Types of Counseling Situations

In financial counseling it is our objective to help the individual or the family work through aparticular financial problem.

There are at least six common types of counseling situations. They are:

1. Young couples, perhaps newly married, who need some help setting up a budget.

2. People who need help thinking through a “major” financial decision. For example,perhaps they found a house they would really like to buy, but they are not sure they canafford it.

3. People who tell you that things are always tight and would like some help just thinkingthings through. Perhaps all they really want to know is if they are doing anything wrong.

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4. People whose circumstances have changed and cash flow went from positive to negative.Perhaps this was the result of a loss of job, a particularly severe illness, or a divorce.

5. Probably the most frequent situation that you will see will be people who have had amonthly negative cash flow for quite some time and it’s beginning to catch up with them.

6. One more type of counseling situation that you may experience is an individual or afamily that is so significantly behind on loan payments that they are being threatenedwith foreclosure and/or repossession.

Situations 1 - 3 are people who are looking for advice. It is frequently possible to give them thatadvice in one or two meetings. In many situations you may want to ask them to read some or allof Three Simple Rules and then meet to discuss their particular issues.

Situations 4 - 6 will take longer. They will require analysis, review of options, making ofdecisions and then helping the client to develop the discipline necessary to carry out thosedecisions.

Counseling Objectives

What do we hope to accomplish as a result of agreeing to provide financial counsel?

Obviously, the primary objective of financial counseling is to help clients eliminate currentfinancial problems and to help them prevent future financial problems. However, there are somesub-objectives of which you should be aware:

The first one is to simply give them hope – to help them understand that there is a way out of thismess. I’ve had many clients walk into my office convinced that they had no choice but to filebankruptcy only to learn that they did have options. That gave them hope.

A second objective is to help the clients define their goals. Many people have never done thatbefore. Helping them define their goals and then focusing on accomplishing those goals willhelp them stay on the right financial track.

A third objective is to teach them some basic money management skills. Many people havenever even been taught the basics.

Another objective is to teach them that the Bible has a lot of very practical advice when it comesto money. Advice, which if not followed, causes financial problems.

I say all this because you may not be successful in accomplishing the primary goal. We’ll talkmore about that later. However, that does not mean that the time you invested was wasted.

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What People Think Causes Their Financial Problems

If you were to ask first-time clients, “So, what’s the problem?” many of them will tell you thatthey just don’t make enough money. In a sense they are right. They don’t make enough moneyto pay for their excessive spending habits. But inevitably, not making enough money is not thereal problem. It isn’t that they don’t make enough money. The real problem is that they spendtoo much money.

I know that’s true because I’ve counseled people who made $30,000 per year and people whomade $130,000 per year and they all say the same thing: they don’t make enough money. Mostpeople think that more money will solve all of their financial problems. Perhaps that’s whylottery tickets are so popular. Unfortunately, we know that even with lottery winners moremoney is not the answer.

For this reason, whenever we begin to look for solutions to a financial problem we always firstlook at where we can reduce expenses. (More about that later.)

The Client’s Commitment

When I first meet with a counseling client I always ask them what to them seems like a strangequestion. The question is this, “Will you do whatever it takes to fix this problem?” The answeris generally, “Of course we will.” Unfortunately, I know from experience that many of them willnot. Old habits are just too hard to break.

I ask them the question anyway, “Will you do whatever it takes to fix this problem?” This allowsme to help them understand that I can’t fix their problem. I can only give them advice. Theyhave to fix the problem. I can show them the “how to,” but they are responsible for the “will to”and the “will do.”

I then share with them something I learned from Pastor Henry Wildeboer. He frequentlyincorporates the Four D’s into his messages.

The Four D’s

He suggests that having the Desire to change something in your life is not unusual and not hardto do. Everyone desires something: to lose weight, to stop smoking, to spend quiet time withGod every day, etc. Having desire is normal and not difficult.

Then comes Decision: the Decision to do something that will get you where you want to be.Decision is a little bit harder than Desire, but still not terribly difficult. We all make manyDecisions every day.

But then comes Discipline. Discipline is tough. Discipline means actually doing what it is wemade a Decision to do. Not only once, but over and over and over again. Discipline is where the

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rubber hits the road. Unless we have the Discipline we will never accomplish what we want toaccomplish. It’s that simple.

But if we do, if we do have the Discipline to do what we have to do to get what we want to go,we will experience DELIGHT! That’s the fourth “D” of Pastor Henry’s little talk and it appliesin almost all areas of our life, including attaining financial freedom.

The Client’s Goals

Another area I cover in the early part of the counseling process is encouraging the client toidentify specific goals. Obviously they want the pain of financial problems to go away but I tryto get them to be much more specific. As a result they will often identify goals like:

• stopping the creditor calls.• having some savings.• buying a better car so they won’t have unreliable transportation.• being able to help send their kids to college.• saving some money for retirement.• etc.

The reason I believe it is so important to encourage them to identify their goals up front is so youcan remind them of those goals later on in the counseling process. As you work with them overa period of weeks or perhaps months there are going to be times when they want to give up.

Changing old spending habits is tough.

They may have to make some very difficult choices like:• seriously cutting back on their spending habits in certain categories.• selling a car, boat or motorcycle.• moving to a smaller house.• working more hours.

That’s when I remind them of their goals. Would they rather keep the boat or would they ratherget that nasty collection agency off their back? That frequently brings them back to reality.

No Magic Wands

People you counsel also need to understand that you do not have a magic wand. They also needto understand that it is their problem, not your problem and they have to do the heavy lifting tosolve the problem. Don’t let them make their problem your problem.

You are there to help them analyze their situation, to make recommendations and, to the extentthat they will let you, hold them accountable, but you can not fix their problem.

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Counseling from a Christian Perspective

For many people, money is considered to be a secular commodity. After all, money has to dowith buying and selling, business and the marketplace. However, what they forget is thatChristianity also has to do with the things of everyday life. Jesus talked a lot about money andcertainly used everyday life examples in most of his parables.

If we were to counsel from a purely secular perspective we would focus on doing whatever isnecessary to solve the financial problem. However, when we counsel from a Christianperspective we are going to recognize that violating God’s money management principles mayhave caused the problem and that applying these principles and asking for his help is a key tosolving the problem.

From a practical standpoint the following will differentiate Christian financial counseling fromsecular financial counseling:

1. We will open the counseling session with prayer asking for God’s guidance and wisdomas we work through this problem.

2. We will apply Scriptural principles to financial decisions. For example:

• We will encourage the client to be absolutely honest in all their financial dealings.

Who may stay in God’s temple or live on the holy mountain of the LORD? Onlythose who obey God and do as they should. They speak the truth and don’t spreadgossip; they treat others fairly and don’t say cruel things. They hate worthlesspeople, but show respect for all who worship the LORD. And they keep theirpromises, no matter what the cost. They lend their money without charginginterest, and they don’t take bribes to hurt the innocent. Those who do thesethings will always stand firm. Psalm 15:1-5, CEV

• We will deal with the concepts of needs vs. wants. God has promised to supply all ourneeds, not necessarily all of our wants, if we live within his will.

You can be sure that God will take care of everything you need, his generosityexceeding even yours in the glory that pours from Jesus. Philippians 4:19, TheMessage

• In the process of dealing with needs vs. wants we will refer to the Scriptural concept ofcontentment.

Do not want anything that belongs to someone else. Don’t want anyone’s house,wife or husband, slaves, oxen, donkeys or anything else. Exodus 20:17, CEV

•We will recognize a need to give back to God irrespective of whether we can “afford it.”

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You have been treated generously, so live generously. Matthew 10:8b, TheMessage

•We will not consider bankruptcy an easy out.

An evil person borrows and never pays back; a good person is generous and neverstops giving. Psalm 37:21, CEV

3. We will close the counseling session with prayer asking for God’s guidance and wisdomas we work through this problem. In some cases it may be appropriate to encourage theclients to repent of their mistakes and to ask for God’s forgiveness.

One Caution - There is obviously much opportunity to refer to God’s Word in the process offinancial counseling. The caution is that you need to earn the right to share God’s Word withyour clients. This means you need to build rapport and create a trust and respect level. Youshould never “preach” at your clients. Your clients came to you because of a financial problem.A better understanding of God’s Word will inevitably be a part of the solution, but you have notearned the right to start talking about the solution until they agree that you understand theproblem.

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Dos and Don’ts

Recognize Your Limits

If you are not an attorney, do not give any legal advice.

If you are not an accountant, do not give any accounting or tax advice.

If you are not a marriage counselor, do not deal with marriage issues that may be intertwinedwith the financial issues. Financial problems and marriage problems are frequently interrelated,one causing or contributing to the other. If you are a marriage counselor by profession you canuse your own judgment to what extent you want to do marriage counseling. If you are not amarriage counselor but detect some tension in the marriage you should suggest that your clientsmake an appointment with a marriage counselor or a pastor.

If you detect some tension resulting from differences of opinion between husband and wife youmay want to ask them to complete the Values Questionnaire (located in the Forms section). Thisprocess may help to point out some areas the couple needs to work through with a pastor ormarriage counselor.

If you are not an investment advisor, do not give investment advice. However, if you are aninvestment advisor I would urge you to stay far away from any advice that could in any way beperceived as a conflict of interest. If you can somehow gain from any advice that you might givea counseling client, no matter how good that advice might be, you have crossed the line. Thiswill come back to hurt you or the organization (church, etc.) that you represent. The financialcounseling business is not a good place to be prospecting for investment clients.

Where to Counsel

Setting a safe and appropriate environment for your counseling sessions is important. I wouldstrongly advise that you not meet in your home or your client’s home. If you meet in your homethe client may be uncomfortable because your home may be much nicer than his or her home. Ifyou meet in the client’s home you may lose control by having to compete with kids, dogs andtelevision sets.

I do most of my counseling at my business office. Other places that are appropriate are a quiet,private room at your local library or a quiet, private room at your church. I almost alwayscounsel at my church if I am counseling someone who is not a Christian. This just helps me tounderscore that I am counseling from a Christian point of view.

There are some times that it is appropriate for you to meet at a restaurant. However, I only usethat option for “get acquainted” sessions or situations where we are just going to talk over arelatively simple situation. Obviously, if we are going to get into the nitty gritty of a financial

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analysis a restaurant is not private enough and doesn’t have the room to lay out the necessarypaperwork.

When to Counsel

You are the counselor. Chances are that you are volunteering your time to help others.Therefore the short answer is that you should counsel based on your availability. Within reason Iwould encourage you to offer to meet based on when it is convenient for you.

I typically meet with counseling clients once per week in the early stages. Sometimes I meetthem during the day, sometimes in the evening and sometimes before or after a church service.In all situations I recognize my responsibilities to my family and to my day job before agreeingto meet with a client.

Session Length

Typically a counseling session will last one to one-and-a-half hours. If they run any longer thanthat you are probably not being very productive.

Cautions

1. Do not counsel family members or friends.

Rightly or wrongly, finances in our culture are a very private matter. As a result, friendsand relatives may not tell you what you need to know. It is also possible that they willtell you stuff that you really didn’t want to know.

2. Do not counsel the opposite sex alone.

This one should be self-explanatory.

3. Do not counsel half of a couple.

Finances are a family matter. If there are financial problems significant decisions willneed to be made to correct the problem. Both spouses should be part of that decisionmaking process.

4. Do not solve the client’s problem by giving them money.

If you are like me you will feel sorry for some of the people you counsel. That in turnmay tempt you to give them money. Don’t do it. You are an advisor and you do notwant to create a dependency. If there is a critical cash need refer them to the deacons oftheir church.

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Confidentiality

You will want to keep some records, notes and copies of budgets as you work through thefinancial situation. You will need them as you develop your recommendations. However, youneed to have a place where you can keep this information under lock and key so as to protect theconfidentiality of your clients.

Counseling Technique

1. Ask questions and listen. This is especially true in the first several meetings. You needto figure out what created the problems before you can begin to address them.

2. DON’T LET THEM MAKE THEIR PROBLEM YOUR PROBLEM. They would likethat. They would like to just leave their problem with you for you to fix, but that won’twork. All you can do is show them what they have to do if they want the problem to goaway.

3. Keep it simple. Many people who are drawn to becoming financial counselors are theanalytical type. Most are quite comfortable with numbers and may know a lot of stuffabout money and money management that not everyone needs to know. Therefore, keepit simple. Don’t overwhelm your client with everything you know. Address what theyneed to know.

Healthy Counseling Relationships

You are probably reading this manual because you want to become a volunteer financialcounselor. As a financial counselor you will deal with people who are experiencing seriousfinancial difficulties. You are offering to help, but you need to be careful that you do notbecome consumed.

Both you and your client need to understand that you may have the “how to” but they have tohave the “will to” and they have to commit to the “will do.” You may be able to walk alongsidethem but you can’t solve their problem for them. That is something that only the client can do.

The following is an excerpt from an article written by Mike Taylor in a 1998 edition of“Counselor’s Corner,” a publication of Christian Financial Concepts, Inc. In this article Mr.Taylor outlines six steps that will help you to keep your counseling relationships healthy.

1. Pray for God to grant you a wise and discerning spirit. Call to me and I will answeryou and tell you great and unsearchable things you do not know. (Jeremiah 33:3) He willhelp you to distinguish between the person being crushed by life’s circumstances and theone avoiding personal responsibility in life. Paul writes, “Let your speech always be withgrace, season, as it were, with salt, so that you may know how you should respond toeach person.” (Colossians 4:6)

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2. Clearly communicate that you are volunteering your time to help, but you are not a“rescuer.” Your role as a volunteer counselor is to help people apply biblical principlesto everyday problems. You are trained to show “how,” but the the counselee must takeresponsibility for applying your objective insights.

3. Make homework assignments and hold the person(s) accountable for completing thestudy work. The goal of Christian counseling is not only seeing financial freedomactualized but long-term life changes under the lordship of Jesus Christ. Such behaviorchange is unlikely in a person who is unwilling to study.

4. Prepare yourself that many – perhaps the majority – of the counselees will beunwilling to do the hard work that long-term solutions require. Some may show upfor a session or two and never come back. That is discouraging. Jesus faced a similarsituation: “As a result of this many of his disciples withdrew, and were not walking withHim anymore” (John 6:66). Be careful not to measure the success of your counselingministry in numbers.

5. Stay focused on your area of expertise – biblical financial counseling. If you’re not aprofessionally trained marriage counselor, don’t get involved in marital conflicts. Ifyou’re not a trained CFP, don’t pretend to know everything about investing and estateplanning. If you’re not trained as a tax specialist, don’t give advice that could get yourcounselee’s in trouble with the IRS. When you step outside the boundaries of yourtraining, you are flirting with trouble.

6. Watch your time investment. When you begin spending more time on a case than thecounselees themselves, you may be heading for trouble. You counsel; allow thecounselees to do the legwork.

Remember that volunteer financial counseling is a marathon – don’t try to run it at a sprintspeed. May God grant you wisdom and insight as you faithfully serve those He sends your way.

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The Counseling Process

The counseling process will generally consist of a series of meetings. The number of meetingswill vary depending on the complexity of the situation and the clients’ ability and willingness todo what needs to be done. The following is an outline of what is likely to happen at thesemeetings.

Meeting Number One

Prior to the first meeting give or send your client(s) a copy of Three Simple Rules and ask yourclient(s) to read the Introduction and Part One.

Also give or send your client(s) a copy of the Personal Financial Habit Assessment (located inthe Forms section) and ask them to complete it and bring it to the first meeting.

The purpose of the first meeting is:• for the counselor and the client to get to know each other.• for the client to understand the counseling process.• for the client to understand the two primary forms, the Personal Asset and Debt Inventory and

the Personal Cash Flow Plan.• for the client to understand that there will be homework between sessions and that they will be

expected to do it.

At the first meeting:

1. I like to start with 5 - 10 minutes of small talk just to make the clients comfortable.

2. Open with prayer. (Ask God’s blessing on your time together.)

3. Give them an overview of the counseling process. Explain that this will probably take atleast 3-4 meetings and that they will have to do some homework between meetings.

4. Ask them if they did the homework and what they thought of what they read.

Some questions to ask:

• “What did you think of Steve and Jessica’s story? Can you tell me some of the mistakesthey made?”

• “Have you made any of the mistakes Steve and Jessica made?”• “What did you learn from reading Part One of Three Simple Rules?”• “How do you plan to apply what you learned?”

Ask them for the completed copy of the Personal Financial Habit Assessment. Youmight scan it but I would suggest not commenting too much on it at this time. Reviewingthe Personal Financial Habit Assessment will give you a quick and early read on the

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habits that may be causing their financial problems. If they answered “No” to any of thequestions 1-8, this may be a suspect area. If they answered “Yes” to any of questions 9-16, this may also be a suspect area.

If they did not do the homework, that is a big red light. If they did not do the homeworkbefore the first meeting, chances are they are not going to work very hard betweensubsequent meetings. You may need to point out that unless they do what you ask themto do, you may not be able to help them.

5. Ask them if you can take some notes so that you will be able to help them better.

6. Complete the top part of the Client Profile. (Located in the Forms section.) Follow theClient Profile as you ask questions and gather information about their financial situation.

7. Ask some general questions to determine their assessment of their financial situation:

“Why are you here and how can I help?”

“When did the problems start?”

“What do you think caused the problem?”

8. Ask some questions to assess their expectations and commitment:

“What do you hope to achieve as a result of this process?”

“If your financial situation was perfect, what would be different?”

“What are your three primary financial goals?”

“How badly do you want to accomplish these goals? Are you willing to do whatever ittakes?” (If you don’t we’re wasting our time!)

Explain that for things to get better some behavior and habits will have to change.

9. Explain the 4D’s of changing a condition from what it is to what you want it to be. Thisapplies whether we are trying to stop smoking, lose weight or eliminate a financialproblem.

• Desire (Having a desire for change is easy.)• Decision (Making a decision to do what is necessary to change is not difficult.)• Discipline (Having the discipline to do what needs to be done is where the rubber hitsthe road.)• Delight (If we hang in there with the discipline we will have the delight ofaccomplishing our goal.)

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10. Ask some specific questions to get an overview of how they manage their money:

“How often do you get paid?”

“What happens to the paychecks?”

“How many checking accounts and savings accounts do you have?”

“Who pays the bills? When? How often?”

“How much cash do you go through per week?”

“Did you have to pay additional taxes or did you get money back as a result of last year’stax return?”

“How is your credit record?”

“Are there bills that are past due?” (Helps determine the urgency of the situation.)

“Is there anything that is close to repossession or foreclosure?”

“Are you current on your taxes?”

11. Explain the Financial Physical Concept.

Explain that before we can make recommendations on how to correct their financialsituation we need to totally understand their financial situation. We call that the financialphysical.

Explain the two forms that we use to help us understand the financial situation.

•Personal Asset and Debt Inventory (X-ray) - The Personal Asset and Debt Inventory islike an x-ray. It gives a picture at a point in time.

• Personal Cash Flow Plan (Stress Test) - The Personal Cash Flow Plan is like a StressTest. It tells us what’s happening over time.

Complete parts of each form starting with the Personal Asset and Debt Inventory.Complete the parts that they know, primarily for the purpose of getting them comfortablewith the forms. (Forms are available in the Forms section.)

Part Two of Three Simple Rules has more information on how to complete these twoforms.

If in the process of explaining and completing the Personal Cash Flow Plan it becomesobvious that the client has no idea how much they are spending in some or all of the

18

categories, suggest to them that they refresh their memory by going through theircheckbook and their credit card statements for the last three months.

Prior to reading the following section, pull a copy of the Personal Asset and DebtInventory and the Personal Cash Flow Plan out of the Forms section and refer to them asyou review these instructions.

PERSONAL ASSET & DEBT INVENTORY

Assets

Try to establish value for assets but don’t be too concerned about exact value. If theclient does want to get a good estimate on the value of their car, you can refer them towww.nadaguides.com.

Do not include furniture, clothing, etc.

The primary purpose of analyzing assets is to get an idea of approximate value andwhether any assets could be turned into cash.

Debts

Try to get as accurate a picture of the client’s debt as possible.

Have the client look up the last statement or call the company if necessary to get anaccurate balance.

Make sure the list is complete. People have a tendency to “forget” about some loans theymay have.

Probe for money owed to parents, other relatives, doctors/hospitals, student loans, loanson 401K (Replacement Pension Plan in Canada), loans on life insurance, etc.

PERSONAL CASH FLOW PLAN

Income

Don’t be shy about asking them about their income.Probe for all income sources.Income needs to be defined on a monthly basis.

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Expenses

Explain why we use three categories of expenses. (See Three Simple Rules for arefresher if necessary.)All expenses need to be defined on a monthly basis.

CATEGORY ONE EXPENSES

Giving

Explain why giving is listed first.Honor the Lord by giving him the first part of all your income, and he will fill your barnswith wheat and barley and overflow your wine vats with the finest wines. Proverbs 3: 9-10, The Living Bible

Do not focus on their giving amount at this time. This is something you can come back tolater in the prescription phase.

Taxes

The easiest way to compute tax liability is to start with information from the clients’paycheck(s). Assuming that they were not significantly over- or under-withheld in theprior year and assuming that nothing has changed in their status, the current withholdingsshould be pretty accurate.

If this is not the case, there are a number of internet sites that can be used to helpcalculate tax liability. One of these is www.quiken.com/taxes/tools

Certain low-income families are eligible for Earned Income Tax Credits (US only).Check the latest IRS rules on the internet or check with an accountant.

Debt Retirement

The information necessary to complete this section should be on the debt side of thePersonal Asset and Debt Inventory.

Savings

Most of your counseling clients will not be saving on a regular basis.

This section is an opportunity to reinforce the need to save on a regular basis.

Emergency Savings Account ––• For emergencies like a broken refrigerator, major car repairs, unexpected dental bill,etc.

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• Build up an emergency account until it equals 5% of annual income.• If some of the money is used it needs to be replenished.

Short-Term Savings Account ––• For big ticket items that will be needed in the next three to five years like cars,furniture, appliances, major home repairs, etc.• Amount needed in this account will be based on short-term goals.

Long-Term Savings Account ––• For children’s education, retirement, etc.• Amount needed will be based on long-term goals.• Any regular contributions to a 401K (Replacement Pension Plan in Canada) or IRA(Registered Retirement Savings Plan in Canada) should be listed here.

Focus on the savings accounts in the order listed. Fund the emergency account beforebeing concerned about the other two.

Use the Savings Comparison Chart (located in the Financial Workshop Tools section) todemonstrate the importance of starting a savings plan early. The number one ruleregarding saving and investing is to get started.

CATEGORY TWO EXPENSES

Housing

Taxes and insurance may already be included in the mortgage payment under the debtretirement section of Category One if they are included in the mortgage payment. If thatis the case, do not list them again.

Food

Do not include bought lunches or eating out. These are found in the miscellaneous andentertainment sections below. Typically, this category will include everything purchasedat the grocery store including toiletries and cleaning supplies.

Car

Car loans are listed in the debt retirement section of Category One Expenses.

Insurance

If medical insurance is provided by an employer, only show the portion of the premiumfor which the client is responsible.

21

Entertainment

This is an area where clients frequently do not know how much money they spend. Anestimate is acceptable for now.

Tuition/Childcare

Christian School tuition is a possible area of conflict between husband and wife. Referthem to a pastor or a marriage counselor if you detect conflict over this issue.

Miscellaneous

Probe for “other” expense categories that may be unique to this particular client.

CATEGORY THREE EXPENSES

Any expenses that do not occur on a regular weekly or monthly basis should beaccounted for here.

For many of these expenses, you will need to estimate the annual cost and then divide bytwelve to estimate what the monthly budget should be.

12. Assign Homework

Read Part Two and The Addendum of Three Simple Rules.

Complete both forms as much as possible.

What they should bring to the second counseling session:

Recent typical pay stub(s)Personal Asset and Debt Inventory (Completed as much as possible)Personal Cash Flow Plan (Completed as much as possible)

13. Schedule the next counseling session. The second counseling session should bescheduled for one or two weeks later. I like to stay with the same day, time and place soas to minimize confusion.

14. Close with prayer.

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Meeting Number Two

Prior to the second meeting you will want to review your notes from the first meeting and yourclient’s Personal Financial Habit Assessment. This review will refresh your memory of yourclient’s situation and give you some insight into how your client tends to make money decisions.

The purpose of the second meeting with your counseling client is to understand their financialsituation as accurately as possible.

By the end of the second meeting it is your goal to understand:• what they have in the way of assets.• what their liabilities are.• how much income they have and where it is coming from.• how they are spending their money.

In the process of finalizing the financial forms, be sure that the numbers remain their numbers,not your numbers. You can question their numbers if you believe they are high or low, but theyhave to remain their numbers.

To accomplish that you will do the following at the second meeting:

1. Some small talk.

2. Open with prayer.

3. Review that they did the homework.

Some questions to ask:• “What did you learn from reading Part Two or the addendum pages of Three SimpleRules?”

• “How do you plan to apply what you learned?”

The counselor should be familiar with the addendum forms in case questions arise.(Many of the forms are available in the Financial Workshop Tools section.)

Depending on what you think their problem is, ask them specific questions aboutaddendum exhibits that relate to their problem.

4. Review forms.

Start with the Personal Asset and Debt Inventory.

Go through all the numbers making sure that you understand their numbers, that they arecomplete, and that they make sense.

24

Review the Personal Cash Flow Plan.

Go through all the numbers making sure that you understand their numbers, that they arecomplete, and that they make sense.

5. ID missing numbers. If there are missing numbers and they do not know them ask themto look them up at home and call you as soon as they have them.

6. Review their goals again (see Client Profile) to see if you understand them correctly andto remind them of what this is all about.

7. Assign Homework

Clients:Read Part Three of Three Simple Rules and prepare your own diagnosis and prescriptionof your situation.

Counselor:Prepare your diagnosis of your client’s situation and your recommended prescription.You will share this with your clients at Meeting Number Three.

8. Schedule the next session.

9. Close in prayer.

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Meeting Number Three

The purpose of the third meeting (assuming you are ready to do this) is to help your clients tounderstand their financial situation and for you to share recommendations for corrective action.

Before the meeting you will want to rewrite or reprint (if you used computer forms) the budgetforms based on the numbers they gave you because at this point they will probably be somewhatmessy.

Before the meeting, you will also prepare your diagnosis and prescription.

At the meeting:


2. Review that they did their homework.• “What according to them is the diagnosis of their financial situation?”• “What should be the prescription?”

3. Give them your diagnosis and prescription of their financial situation. Put it in writing.Be very specific and frank. You can use the Diagnosis and Prescription form (located inthe Forms section) as a guide. Some examples of a Diagnosis and Prescription areprovided in the Case Study Answers section.

Tell them what you think is the cause of the problem in simple, direct, frank, no beating-around-the-bush terms.

Help them understand their current financial situation.

Start by focusing on the bottom line of the Personal Cash Flow Plan.

If it is negative, that is obviously a problem that needs to be corrected.

Then focus on line items where they are not accomplishing their goals (Savings, Giving,Debt Retirement, etc.).

Next, focus on the Personal Asset and Debt Inventory.

Compare their total assets and their total debts. Help them understand the concept ofequity.

Break their debt down into credit card, auto, mortgage and other.

4. Review their goals again. (Located in the Client Profile.)

Talk about what has to happen if they are to accomplish their goals.

26

5. Offer optional solutions that will help them correct the problem that is preventing themfrom accomplishing their goals.

In most cases the obvious problem is that they spent or are spending more than they earn.

Help them develop a balanced budget using the following approach:

(a) Test each expense category to see if it can be reduced. (This is the mostimportant and the most difficult part of the process. Most clients will tell you thatthey can’t possibly reduce expenses. This is where you have to remind them oftheir goals. Hopefully, accomplishing their goals will become the incentive forthem to do what they have to do.) Start at Category Two because it is unlikelythat Category One expenses can be reduced. Refer to the Expense Guidelinesaddendum in the Three Simple Rules book for some recommended categorypercentages.

(b) Evaluate whether there are assets that could be sold so that the proceeds can beused to pay off debt.

(c) Can income be increased?• change jobs• more overtime• additional part-time job• offer day-care• children get part-time jobs• rent out a room• etc.

Do not explore whether income can be increased until all options in (a) and (b)have been exhausted. Typically, increasing income without tackling expensereduction will result in future expenses catching up to the new income level.

If part of the solution is to increase income by working additional hours it shouldtypically be structured as a short-term solution to earn additional money for theprimary purpose of reducing or eliminating debt.

(d) Many clients will suggest debt restructuring (refinancing their home, home equityloans or a debt consolidation loan) as the solution to their debt problem. In mostcases this should be strongly discouraged. This solution may offer a short termfix but it generally does not serve as a long-term solution. The result willtypically be temporary because unless the client(s) change their spending habits,chances are that one year from now they will again have the same credit cardbalances that got them into trouble in the first place. Plus, if they use a homeequity loan to restructure or consolidate their debt, their home may be subject toforeclosure.

27

These four steps are deliberately in this order. Do not make the mistake of reversing thisorder, which many of your clients will be inclined to do. Unless the bad habits thatcaused the problem in the first place are corrected, there will not be any long-termsolutions.

In the process of going through this exercise it is important that you let the clients makethe decisions. You can attempt to lead them to the correct decisions but they have tomake the decisions because they are the ones who are going to have to execute the plan.They may execute their plan but they won’t execute your plan because they won’t believeit can be done.

In many cases the decisions that need to be made will be too complicated for the clientsto make at this meeting. If that is the case, focus on helping them understand what theoptions are and suggest that they think about what they want to do so that they can tellyou what they decided at the next meeting.

Again, the client will not like most of the options that you give them and they mayexpress that. When that happens keep reminding them that implementing these options isthe only way they will accomplish their goals.

There is an old saying that applies in this situation:

“If you always do what you’ve always done you will always get what youalways got. If you want something different you have to do somethingdifferent.”

You may need to remind your clients several times that if their behavior doesn’t change,neither will their circumstances!!!

If they do not change their behavior they will in all likelihood never achieve their goals!

In fact, for emphasis you may want to calculate what their financial situation will looklike in five, ten or fifteen years if they do not take the appropriate action now.

Once the tough decisions have been made and you have updated the Personal Cash FlowPlan to show the impact of these decisions, you should have a balanced budget. Abalanced budget allows adequate funds for the necessary expenses while stillaccomplishing your client’s goals in the area of saving, giving and debt retirement.

However, just having a balanced budget is only half the battle. All we’ve done so far ismake the “Decision” to have a balanced budget. We still have to execute the“Discipline” to actually change the habits that created the financial problems in the firstplace.

We will address that in Meeting Number Four.

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6. Assign HomeworkRead Part Four and Five of Three Simple Rules.

7. Schedule the next session.

8. Close in prayer.

29

Meeting Number Four and subsequent meetings as necessary

We will assume that you now have a balanced budget that your clients agree will accomplishtheir goals.

What we mean by a balanced budget is that the Personal Cash Flow Plan no longer has a deficitand that the client’s goals of debt retirement, saving and giving are being met.

The purpose of the fourth meeting is to help your client learn how to exercise the “Discipline”that will change the habits that will help them live according to their balanced budget.

This is also where the Personal Financial Habit Assessment comes in again. By now you shouldhave highlighted the “bad habits” that need to be corrected. Again, if they answered “No” to anyof questions 1-8, this may be a suspect area. “Yes” answers to questions 9-16 may also besuspect areas.

1. Review the Personal Financial Habit Assessment with your client to help themunderstand the habits that are contributing to the problem and therefore the habits thatneed to be changed.

Explain that the Three Rules were designed to help them change those habits.

2. Review that they did their homework:• “What did you learn about the Paycheck Management System?”• “What did you learn about the Spending Management System?”• “Which one of the Three Rules will it be hardest for you to follow? Why?”• “What did you think about Part Five - Living by God’s Rules?”(Use this question to reinforce the fact that when we violate God’s rules for our livesthere will be a consequence.)

3. Help your client think through how to follow Rule One – Spend Less than You Earn.

The Paycheck Management System is a critical component to helping your clients spendless than they earn. Unless your clients immediately deposit or direct-deposit paychecksinto the appropriate accounts, the chances of accomplishing their goals is greatlydiminished.

Talk about how to:• set up special accounts. (Savings, Reserve, General)• calculate the appropriate amounts for each account.• distribute every paycheck into the appropriate bank account. (Direct deposit is best.)

Once the Paycheck Management System is in place you can focus on helping your clientsimplement the Spending Management System. When you are focusing on the SpendingManagement System do not overwhelm your clients. They may have poor spendinghabits in a lot of different areas.

30

I like to start by focusing on the Budget Busters. For most families the Budget bustersare:

• Food• Clothing• Eating Out• Entertainment• Vacation• Gifts• Cash

See Part Four of Three Simple Rules for ideas on how to help your clients get certainspending areas under control.

You will probably be most successful by focusing on a maximum of three spending areasat a time. In some cases you may want to focus on only one spending area until it isunder control. Remember, you are trying to change engrained habits and changing habitsis hard to do. Once you have worked on and been successful in a few of the spendingareas you can move on to others.

4. Help your client think through how to follow Rule Two – Save Now! Buy Later.

There are two keys to having a successful savings plan.

The first key is DECIDING how much to save. That step should have been accomplishedduring the process of completing the Personal Spending Plan for this client.

The second key is DISCIPLINE. Your client has to have the discipline to execute theplan. The Paycheck Management System we talked about earlier is the best way to helpyour client accomplish their savings goals.

5. Help your client think through how to follow Rule Three – Know Debt.

The reason it is important to Know Debt (understand debt) is so that wise decisions canbe made about debt. There are five keys to really understanding debt.

The first step is to Know how much debt you have. This step should have beenaccomplished in the process of completing the Personal Asset and Debt Inventory.

The second step is to Know the consequences of debt. The consequences of debt are:

(a) Debt reduces your future standard of living.(b) Debt reduces your ability to save.(c) Debt reduces your ability to give.(d) Debt creates personal frustration and stress.(e) Debt results in relational problems between husband and wife.

31

The third step is to Know the different types of debt:

• Credit Card• Consumer Debt• Real Estate Debt• Student Debt

The fourth step is to Know the borrowing test. If and when you do decide to borrowmoney there are a few questions that you should ask yourself. Any question to whichyou answer “yes” is a warning light that should cause you to reconsider your borrowingdecision.

Am I seeking contentment with this purchase?

Am I borrowing money to pay for an impulsive purchase?

Am I borrowing money to pay for a purchase driven by pride/ego?

Am I justifying my buying decision on the basis that everyone is doing it?

Is the item I am about to buy likely to depreciate?

Is my loan for this item longer than absolutely necessary?

Is there a possibility that I may not be able to make the payments on this loan?

Will repayment of this loan threaten my ability to save?

Will repayment of this loan threaten my ability to give?

Will repayment of this loan threaten my ability to take care of my family?

Am I questioning whether taking out this loan is a good decision?

Does my spouse have any concern about borrowing money for this purchase?

The last key is to Know how to Get out of Debt! That should be everyone’s goal. Thesteps for getting out of debt are listed on the “How to Get Out of Debt” page of theFinancial Workshop Tools section.

Once you are satisfied that your client understands the basics of how to implement the ThreeRules, subsequent meetings may be scheduled as much as three months later, primarily to seehow things are going and for the purpose of accountability. In the interim, you may want to stayin touch with your client by phone to see how it’s going and for encouragement.

32

Conclusion

Now that you are familiar with the entire cycle of Financial Counseling it’s time to get your feetwet. However, before meeting with real clients we are going to start by looking at some casestudies of typical counseling situations.

There are five case studies located in the Case Studies section. Read the story, answer thequestions and then compare your answers to those in the Case Study Answers section.

Once you have completed the Case Studies you are ready to work with actual counseling clients.To learn more about where to get actual counseling clients see the section entitled “How to Starta Financial Counseling Ministry in Your Church” located in the Appendix section of thismanual.

For additional support, we’ve also provided you with some Counseling Session Agendas. Go tothe “Getting Started” section of the Appendix and you will find brief outlines of each meetingthat will help you to prepare and keep yourself on track during the meeting itself.

And one final reminder. You are not alone. If at any time you get confused or have a questionabout how to handle a unique situation you can always contact us through our website atwww.ThreeRules.org.

Three Rules


Section Two:

Pre-Marriage



Mentoringcomments regarding this book and any relatedfinancial questions to the author at:

[email protected]

Simple

]|xHISBN 0-9749105-0-3

krb


1

Pre-Marriage Financial Mentoring

Researchers have told us for years that family financial problems are the number one cause ofmarriage failure. The good news is that there is something we can do about it. The two primarycontributing factors to these financial problems can be addressed. As a result, many of thesefamily financial problems can be prevented provided they are addressed prior to or early in themarriage.

The two primary contributing factors to family financial problems that need to be addressed are:

1) Different Values

The two people who are about to be married may have significantly differentvalues when it comes to money. This may be a result of personality or it may be aresult of upbringing or both. One may be a spender, the other may be a saver.One may believe in giving, the other may not. One may have a problem withdebt, the other may think it is normal. Frequently young couples are not awarethat this is the case prior to the marriage. In their pre-marital bliss they are eitherin denial or they figure they will deal with it later.

2) Lack of a Financial Plan

The lack of a financial plan is the second contributing factor to family financialproblems. In the absence of a financial plan we tend to spend based on perceivedneeds rather than based on what we can afford. The best time to get into thehabit of living within our means, building savings and minimizing debt is beforewe get into financial difficulty.

The Pre-Marriage Financial Mentoring process outlined in this manual is designed to addressboth of these issues. It attempts to ferret out these value differences and give the couple anopportunity to talk about them before they tie the knot. It also walks them through the stepstoward creating a Personal Cash Flow Plan that can be used to determine what they can affordand what they need to postpone.

This section assumes that you (the mentor) have read the Three Simple Rules book as well as theFinancial Counseling section of this manual.

In our church it is our policy that our pastors will not marry a couple unless they do a number ofthings. One of those “things” is to meet with a financial mentor. That is why this Pre-MarriageFinancial Mentoring material was developed.

The Pre-Marriage Financial Mentoring sessions typically occur three to twelve months before thewedding. They generally consist of three sessions lasting one to one-and-a-half hours each. Itwould be ideal if the mentoring program extended well into the marriage but from a practicalstandpoint, once the couple is married, the leverage to motivate them to participate in this

2

process is gone. I typically offer to meet with them at any time in the future and some takeadvantage of that offer.

Process:

Since this program is a normal part of the marriage process at our church, the couple is told tocontact the financial counseling ministry for an appointment. When the bride-to-be calls (yes,it’s usually the bride-to-be) the couple is assigned to one of our mentors. The mentor calls thecouple and arranges a mutually convenient time to meet.

The mentor will then mail a letter to the couple confirming the date and time as well as directionsto the agreed-upon meeting place. (See sample letter in this section.)

The mentor will also include two copies of the Values Questionnaire (located in the Formssection) along with the letter. The couple is asked to complete the Values Questionnaireindependent from each other and to bring the forms to the meeting.

Typically there will be three meetings over a period of three weeks. I like to set the meetings forthe same day of the week and at the same time and place.

Meeting Number One

At the first meeting the mentor will:

1. Spend 5 – 10 minutes in informal talk for the purpose of making everyone comfortablewith each other.


3. Use the Values Questionnaire as the agenda for the main part of the first meeting.

I typically start by asking the bride-to-be what her answer was to the first question. ThenI will ask the groom-to-be the same question.

If they do not have the same answer we talk about whether that will become a problemand suggest that they spend some more time with that issue. That could happen on thespot or later.

If they agree on the answer I make a judgment as to whether their answer is appropriate.

In the case of Question 1 it doesn’t really matter how they answer, just as long as theyagree. However, in the case of many of the other questions there is definitely a right anda wrong answer.

3

For example, if they agreed that they needed zero credit cards or one credit card I wouldconclude that that is an appropriate answer. If they agreed that they should have sevencredit cards I would not agree that that is an appropriate answer and I would discuss thedanger of credit cards.

Once we are finished with the first question I would address the next question to thegroom-to-be and then to the bride-to-be. I continue alternating until we are done with allof the questions. This typically takes about one hour.

In the process you will likely discover some areas where there is disagreement and orareas where both of them could be agreeing to make decisions that could result infinancial disaster. That is where I typically focus my time. If the problems are seriousenough I make a note to visit the area again in future sessions or suggest that they seekother counsel for the sake of their marriage.

4. An Early Wedding Gift

Once we have gone through the Values Questionnaire I give them an early wedding gift -a copy of Three Simple Rules - Guaranteed to Improve your Finances. I explain theThree Rules and refer them to the Scripture verses in Part Five of the book that supportthe Three Rules.

5. Assign Homework:Read the Introduction and Parts One and Two of Three Simple Rules.

Meeting Number Two

At the second meeting the mentor will:

1. Open in prayer.

2. Ask them if they have any questions about the homework assignment.• “What did you learn from reading Parts One and Two of Three Simple Rules.”• “How do you plan to apply what you learned?”

3. Introduce the two primary Family Financial Planning Forms:

• Personal Asset and Debt Inventory

• Personal Cash Flow Plan

The objective of this meeting is to familiarize the couple with these two forms so thatthey can complete them as a homework assignment. The forms can be partiallycompleted based on the numbers that the couple knows. The rest they may have toresearch as part of the homework assignment.

4

See the Counseling Section of this manual for more information about how to explainthese two forms.

4. Discuss GoalsAny additional time can be used to talk about goals the couple may have regarding:• Saving.• Giving.• Debt Management and Debt Retirement.

5. Assign Homework:• Complete the Personal Asset and Debt Inventory.• Complete the Personal Cash Flow Plan.• Read Parts Three, Four, Five and the Addendum of Three Simple Rules.


The objective of the third meeting is to:

• Make sure that the two primary Family Financial Planning Forms are fully completed,• That the numbers on these forms are realistic, and• That the Personal Cash Flow Plan is balanced while accomplishing the couple’s saving goals,

giving goals and debt retirement goals.

At the third meeting, the mentor will:

1. Open in prayer.

2. Ask them if they have any questions about the homework assignment.• “What did you learn from reading Parts Four and Five of Three Simple Rules.”• “Do you have any questions about completing the two forms?”• “How do you plan to apply what you learned?”

3. Review the Family Planning Forms.• Touch on each number in the two forms, first in the Asset and Debt Inventory and thenin the Cash Flow Plan.• Anything that does not look complete or realistic should be addressed.

4. Future Planning.• Teach the couple the importance of reviewing The Financial Plan periodically aschanges occur in income or expense. For example, when they decide to start a family,this may increase expenses and reduce income and preparations would need to be made.

After asking if they have any questions about anything we covered, I ask if I can pray fortheir future together and then we end our session in prayer.

Dear John and Kelley,

I’m looking forward to meeting with you at 7:30 PM on Monday September 30.

I have enclosed two surveys, one for each of you.

Please complete the enclosed surveys independently prior to that time and bring them with youto our get together. You are certainly welcome to talk about your answers prior to our meeting.

We will meet at my office which is located at 3215 Memory Lane.

Directions:

_________________________________________________________________

_________________________________________________________________

_________________________________________________________________

_________________________________________________________________

Looking forward to meeting you.

Tom Counselor

Three Rules


Section Three:

Financial



Workshopcomments regarding this book and any relatedfinancial questions to the author at:

[email protected]

Simple

]|xHISBN 0-9749105-0-3

krb


12nd Edition

Revised 10/04/04www.ThreeRules.org

Three Simple Rules Financial Workshop

The Three Simple Rules Financial Workshop is designed to be offered once per week for fourweeks.

The objective of the workshop is to:

(a) help participants understand the importance of the Three Simple Rules.

(b) give an overview of basic budgeting principles.

(c) teach participants how to create a budget unique to their circumstances.

(d) introduce several simple systems that will assist participants in living according to theirbudget.

(e) share the Biblical perspective of handling money.

The four week workshop could be offered as part of an Adult Sunday School Curriculum or as astand alone weekday evening education series.

The material is sufficiently flexible that class time can range from 45 minutes to 1 1/2 hours andclass size can range from as little as six to as many as thirty.

The following pages describe how to conduct the four-session financial workshop. The ThreeSimple Rules book is an integral part of this workshop. The instruction pages assume that theworkshop leader has read the book and the Financial Counseling section of this manual. It is alsoassumed that each workshop participant will receive a copy of Three Simple Rules at the end ofthe first session.

The following announcement was designed to recruit people to attend the financial workshop.

Need a little help getting your financial house in order? You are invited toattend the Three Simple Rules Financial Workshop. This four-sessionworkshop is being offered on (day of week) at (starting and ending time)starting on (date) at (location). At this workshop you will learn about the threesimple rules that are guaranteed to improve your financial situation. You willalso learn how to give yourself a financial physical and how to identify andchange the financial habits that are preventing you from accomplishing yourfinancial goals. Call (person) at (phone number) for more information.

The following pages outline the Objective and the Talking Points for each session.

A PowerPoint Presentation for the Financial Workshops is available free of charge. Just [email protected] and ask for the Workshop PowerPoint Presentation. We would also behappy to give you a digital version of this section so that you can customize it to your situation.

22nd Edition


Session One – The Three Rules

(Note: The symbol (PPt) is a reminder to go to the next Power Point page. If you are using anoverhead projector you may want to make transparencies of the pages in the Financial WorkshopTools Section and the Forms Section.)

Objective – To help the group understand the three simple rules and how to apply them.

Preparation –• read or reread the Introduction and Part One of Three Simple Rules.

Handout Materials Needed – Bring along a copy of the following for each participant:• Three Simple Rules book• Student Notes Cover Page for Session One (See the back of this section.)• Financial Opinion Survey (Forms Section)• Personal Financial Habit Assessment (Forms Section)

Talking Points:

1. Welcome to Week One of the Three Simple Rules Financial Workshop. (PPt)

• The workshop is based on the book - Three Simple Rules - Guaranteed to Improve YourFinances.

• You will all receive a copy of the book tonight.

• We will cover Part One of the book tonight.

• The rest of the book will be covered over the next three sessions.

• Since each part of the book builds on the previous parts you will benefit the most if youcan attend all four sessions.

2. Give each participant a copy of the Financial Opinion Survey.

Let them know that this is simply a chance to start thinking through some of the questionsthat will be discussed in the next few sessions. Ask participants to individually answerthe questions. Collect the answers and tell them you will summarize the answers andshare the results with them next week.

3. How the Three Simple Rules Book Came into Existence.

The author is an entrepreneur and a businessman who set up a Financial CounselingMinistry at his church in the early nineties. After counseling hundreds of families and

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training many counselors he decided to summarize what he had learned in this book. Hewrote it especially for young people and young couples, in the hope that by reading thisbook they would avoid financial difficulties.

4. Some Questions (PPt)

Q. Should a Christian’s Spending Habits be different than a non-Christian? (PPt)

A. Giving (firstfruits)A. Contentment (want what you have)A. Christian Education may be part of the budgetA. Christians need to question their buying motives

Q. What is your favorite Bible verse about money? (PPt)

A. See Part Five of the Three Simple Rules book for some Bible verses about money.

Q. Would Jesus drive a BMW? (PPt)

A. This is an opportunity to talk about testing our decisions from the perspective ofWWJD – What Would Jesus Do?

5. Steve and Jessica’s Story (PPt)

• Read the Steve and Jessica story from the Introduction of Three Simple Rules to thegroup. (Read through to the end of the paragraph on the third page that starts with “Earlylast year…”)• Ask audience to write down Steve and Jessica’s financial mistakes, as you tell the story.• After telling the story ask the audience to ID Steve and Jessica’s financial mistakes.• Review the mistakes list. (PPt)• For some startling information regarding Steve and Jessica’s credit card debt situation,see “Steve and Jessica’s Credit Card Debt” located in the Financial Workshop Toolssection. Share this information with the class.

Encourage further group discussion regarding Steve and Jessica’s financial mistakes byasking:

Q. Do you think these financial mistakes are typical? (PPt)

Q. Which mistake do you think is most dangerous? (PPt)

Q. What caused Steve and Jessica to make these mistakes? (PPt)

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6. Talk about the Personal Financial Habits Assessment. (PPt)

• Introduce by explaining that many financial problems are simply a result of bad habits.• In order to fix the problem we have to change the habits (just like a diet).• Hand out blank forms. Have audience take the test.• Tell them how to score the test. (PPt)(Questions 1 – 8 are good habits, therefore the correct answer is Yes; 9 – 16 are badhabits, therefore the correct answer is No.)

Group discussion regarding habits:

Q. What is the most difficult Good Habit to maintain?

A. For many people it is Savings and/or knowing how much cash they spend.

Q. What is the most difficult Bad Habit to break?

A. Anything dealing with debt. (7 of the 8 bad habits deal with borrowing money.)

7. Introduction to The Three Rules (PPt)

1) Spend Less than You Earn. (PPt)2) Save Now! Buy Later. (PPt)3) Know Debt. (PPt)

Explain that we will now look at each of the three rules in detail.

8. Rule One –– Spend Less Than You Earn. (PPt)

This is the key rule because it makes complying with the other rules possible.

Most financial problems are a result of people spending too much money.

Q. What happens when you spend more than you earn?

A. Debt and probably no savings and minimal giving.

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TIPS for spending less than you earn.

(a) Understand your paycheck. (PPt)

Q. How many hours does it take to pay for a $100 item if you earn $10 per hour?

A. See Part One of Three Rules. Explain that a large part of your paycheck ispre-spent because of Giving Commitment, Taxes, Savings Commitment andCommitment to repay Debt.

(b) Can’t afford it? Don’t buy it. (PPt)

Q. How do I know if I can afford it?

A. “Do I have the cash to pay for it?”

A. “Will I need this money for anything else in the future?”

(c) Don’t buy on impulse. (PPt)

The bigger the ticket the longer you should wait.

(d) Biggie size your fries, not your house and car. (PPt)

This is often the biggest mistake made by young couples.

(e) Think Used! (PPt)

Almost anything can be purchased used and you’ll save a lot of money!

(f) Pay Cash. (PPt)

Paying Cash limits your spending!

Consequences of not paying cash• People who use credit spend 35% more than people who pay cash.• Interest increases costs.• Debt reduces future standard of living.

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(g) Plan your spending. (PPt)

Use a Personal Cash Flow Plan. (We’ll talk about that next week.)

In the remaining three sessions, we will talk more about additional ideas that will help youspend less than you earn.

9. Rule Two –– Save Now! Buy Later. (PPt)

Stores used to talk about “Buy Now –– Pay Later”. They don’t anymore because it soundstoo negative.

Sandy Kelley wrote a book called Two Incomes and Still Broke. She mentions in thebook that “It’s not how much you make –– It’s how much you keep.” This is goodadvice!

Types of Saving Accounts:

Emergency Savings Account (PPt)

• Allows you to pay for unplanned expenses such as doctor bills and car repairs.

• Add money to this account every payday until it equals five percent of your annualincome.

• Fund this account first.

Short-term Savings Account (PPt)

• Allows you to pay cash for the big-ticket items (cars, new roof, etc.) you plan to buy inthe next five years.

• Compute the amount you need to save in this account based on the big-ticket items youplan to buy in the next five years.

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Long-term Savings Account (PPt)

• Allows you to plan for items you will pay for in the future, such as your children’sEducation, Weddings, Full time ministry/retirement, etc.

• Compute the amount you need to save in this account based on your unique long-termneeds.

Recommendation: Save 10% out of every paycheck and divide that as appropriatebetween your emergency savings, short-term savings and long-term savings.

In the remaining three sessions, we will talk more about the discipline of saving.

10. Rule Three –– Know Debt. (PPt)

Explain the difference between Know Debt and No Debt.

What we mean by “Know Debt” is that you need to understand debt.

What we mean by “No Debt” is to be debt free.

In this course we will talk about both.

Right now we want to focus on Knowing and Understanding debt.

Q. What is Debt? (PPt)

A. Anytime we owe something to someone else we have a debt.A. That makes us a debtor or a borrower.A. The Bible says, “the borrower is servant to the lender.”A. Therefore we can conclude that as long as you are borrowing money you are enslaved.

Q. What are the consequences of Debt? (PPt)

A. Debt reduces your standard of living because you have to make payments.A. Debt reduces your ability to save because you have to make payments.A. Debt reduces your ability to give because you have to make payments.A. Debt causes frustration and stress.A. Debt causes relational problems between husband and wife.

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Q. How do you get rid of Debt? (PPt)

A. You have to have a plan. (We will talk about that more later.)A. You have to apply the 4D’s. (PPt)A. You have to have the Desire.A. You have to make a Decision.A. You have to exercise the Discipline.A. Then you will experience the Delight.

The 4D’s apply to anything we want (lose 20 pounds, learn a new language, stop smoking,become financially free etc.)

We’ll talk more about this whole business of debt as we go through the next three lessons.

11. Summary (PPt)

Review the Three Rules with Scripture.

12. Assign Homework: (PPt)

Read Part Two and the Addendum of Three Simple Rules.

Identify any questions you may have from the reading assignment.

13. Hand out a copy of Three Simple Rules.

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Session Two – A Financial Physical

Objective – To help the group understand how to give themselves a financial physical.

Preparation –• take the Financial Opinion Surveys that the class completed in Session One and tabulate howthe class responded to each question.• read or reread Part Two of Three Simple Rules.• review the Three Simple Rules Addendum in case questions arise.

Handout Materials Needed – Bring along a copy of the following for each participant:• Student Notes Cover Page for Session Two (See the back of this section.)• Blank copy of the Personal Asset and Debt Inventory (Forms Section)• Blank copy of the Personal Cash Flow Plan (Forms Section)

Talking Points:

1. Welcome to Week Two of the Three Simple Rules Financial Workshop. (PPt)

2. Share summary results of the Financial Opinion Survey.

Go through each statement and share how the majority of the group answered.

Talk about the fact that how the group answered the questions and what they actually domay vary (most people know the right answers to the opinion survey but they do notnecessarily live that way.)

3. Opening Questions: (PPt)

Q. If your financial situation was perfect, what would be different?

Q. Is it true that “it should be a Christian’s goal to be out of debt”? (PPt)

4. Homework Review

Q. Does anyone have any questions about Part Two of Three Simple Rules?

Q. Does anyone have any questions about the Addendum of Three Simple Rules?

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5. The Importance of Personal Goals

Encourage the class to identify and share with the group specific goals they have in thearea of finance. Obviously they want the pain of financial problems to go away but try toget them to be much more specific. Some example goals might be:

• having savings.• being able to do a better job in the area of giving.• not living from paycheck to paycheck.• having reliable transportation.• getting out of debt.• being able to go on a family vacation.• stopping the creditor calls.• being able to help send their kids to college.• saving some money for retirement.

The reason it is important that participants focus on personal goals is that they might havesome tough decisions ahead if they discover that they need to make significant financialadjustments. However, keeping these goals in mind will help them focus on the rewardof living on a balanced budget.

6. How to give yourself a Financial Physical

Teach the class how to give themselves a financial physical. (See Part Two of ThreeSimple Rules.)

Teach about the concept of a Personal Asset and Debt Inventory using Steve andJessica’s as an example. (PPt).

Teach about the concept of a Personal Cash Flow Plan using Steve and Jessica’s as anexample. (PPt).

Note – In the power point there are two screens devoted to the Personal Asset and DebtInventory and four screens devoted to the Personal Cash Flow Plan. This will allow youto take one section of the form at a time.

Explain the purpose of each form.

Spend time on every line item in both forms so that everyone will understand how tocomplete these forms for their personal situation.

Define each term as necessary.

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Be sure to spend some time on unique income situations i.e. bi-weekly income,commissions, etc., or make yourself available after class if people have specificquestions.

7. Q and A

Make sure that everyone understands the purpose of both forms.


• Write down at least three personal goals in the area of your personal finances.

• Complete the two forms for your personal situation. (Provide blank forms of thePersonal Asset and Debt Inventory and the Personal Cash Flow Plan for eachparticipant or couple.)

• Read Part Three of Three Simple Rules.

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Session Three - Diagnosing Your Financial Situation

Objective – To help the group understand how to diagnose their own financial situations.

Preparation –• read or reread Part Three of Three Simple Rules.

Handout Materials Needed – Bring along a copy of the following for each participant:• Student Notes Cover Page for Session Three (See the back of this section.)• Blank copy of the Diagnosis and Prescription Form (Forms Section)

Talking Points:

1. Welcome to Week Three of the Three Simple Rules Financial Workshop. (PPt)

2. Have some fun with Money Trivia. (Located in Financial Workshop Tools section.)

3. Homework Review

Q. Who would like to share the personal goals that you identified for yourself?

Q. Do you have any questions about completing the Personal Asset and Debt Inventory?(PPt)

Q. Do you have any questions about completing the Personal Cash Flow Plan? (PPt)

Q. Which expense category was the hardest to quantify and why?

A. Typical expense categories that are difficult to quantify are:• Taxes• Food• Cash• Clothing• Gifts

Q. How did it feel to give yourself a Financial Physical? What did you learn?

4. Diagnosing Your Financial Situation (PPt)

Last week we talked about how to give yourself a Financial Physical.

Now we are going to talk about how to use that information to diagnose if you have anyfinancial problems.

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The three primary questions we use to diagnose our financial situation are:

1 – Are we spending less than we earn? (PPt)

If we are not, we have a problem!

2 – Are we saving for future needs? (PPt)

If we are not, we have a problem!

3 – Is our debt under control? (PPt)

If it is not, we have a problem!

5. To help us understand how to do a diagnosis, let’s diagnose Steve and Jessica’s situation.(PPt)

Q1 – “Are they spending less than they earn?”

Q2 – “Are they saving for future needs?”

Q3 – “Is their debt under control?”

Q. What is your diagnosis of Steve and Jessica’s situation?

A. Steve and Jessica: (PPt)• spend more than they earn.• have no savings.• are not giving.• have too many credit cards.• make minimum credit card payments that consume 4% of income vs. a goal of 0%.• have consumer debt payments that consume 12.5% vs. a goal of less than 10%.• have student debt payments that consume 7% vs. a goal of less than 5%.

6. Now that we’ve done a diagnosis, and have discovered some problems, we need to writea Prescription.

Steps to Writing a Prescription (PPt)

Step One – If Credit Card Rules are being violated cut them up. (PPt)

Step Two – Examine each expense and reduce it as necessary. (PPt)

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Step Three – Repeat Step Two. (PPt)

Step Four – Repeat Step Three. (PPt)

Step Five – Sell assets (motorcycles, boats, RV, garage sale, Ebay etc) and useproceeds to reduce debt and payments as necessary. (PPt)

Step Six – Downsize (cars, house etc.) to reduce debt (PPt)

Step Seven – Increase Income if necessary. (PPt)

Q. What would be your prescription for Steve and Jessica? (PPt)

A. Cut up the credit cards.A. Reduce expenses.A. Reduce expenses.A. Reduce expenses.A. Sell the boat.A. Sell a car.A. Increase Income.

7. Wrap-up

The process starts with a financial physical.

Then we do a diagnosis.

Then we do a prescription.

Next week we will talk about following the prescription.


• Do a diagnosis and a prescription on your own situation. (Students should be given ablank copy of the Diagnosis and Prescription form located in the Forms section.)

• Read Parts Four and Five of Three Simple Rules.

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Additional Topics if you have time:

1. Money Saving Tips

Ask for money saving tips from the group.

Share the following Money Saving Tips with the group:• Alter credit card behavior. Pay cash whenever possible.• If you already have a credit card balance, transfer to a card with a low interest rate.• Find a card that does not charge an annual fee.• Brown bag it.• Shop for the best phone plan for your needs.• Cell vs. home phone. Do you need both?• Clip coupons.• Shop Garage Sales.• Shop Goodwill, etc.• Shop for stuff on e-bay.• Refinance your house at lower interest rate.• Bundle your insurance.• ID needed items and plan how much can be spent BEFORE going shopping.• Always use a shopping list.• Shop once per week or less. (Have you ever wondered why milk is at the back of the

store?)• Only buy planned for items.• Compare price and quality before buying, especially on expensive purchases.• Return poor quality or defective items to the seller.• No Rent to Own. (2 – 3 times more expensive)

2. Ways to Increase Income

Ask for income generating ideas from the group.

Share the following income increasing ideas with the group:• Change jobs.• Ask for a raise.• Add part time job.• Use special skills to moonlight.• Have a garage sale or sell stuff on e-bay.• Barter.• Take in a border.• Offer to baby-sit/daycare.• Kids can and should work!

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Session Four - Living by the Rules

Objective – To help the group understand how to Live by the Rules.

Preparation –• read or reread Part Four and Five of Three Simple Rules

Handout Materials Needed – Bring along a copy of the following for each participant:• Student Notes Cover Page for Session Four (See the back of this section.)• Certificate of Completion (See Forms Section)

Talking Points:

1. Welcome to Week Four of the Three Simple Rules Financial Workshop. (PPt)

2. Homework Review

Q. What did you learn about yourself when you did a diagnosis of your financialsituation?

Q. Any questions about the diagnosis phase?

Q. How did the prescription phase go?

Q. Did you have to make any tough decisions?

Q. Any questions about the prescription phase?

3. Some Questions and Answers about Living by the Rules – (PPt)

Q. Is it easier for a family that makes $80,000 per year to live by the rules than it is for afamily that makes $40,000?

A. Either family can live by the rules provided that they adopt a lifestyle based on theirincome.

Q. Two families have an annual income of $40,000.

Family One has $25,000 in consumer and credit card debt.

Family Two didn’t incur any consumer or credit card debt.

Q. Which family will have a more difficult time living by the rules? Why?

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A. It will be harder for Family One. Family One will have to reduce their standard ofliving by the total of their debt payments.

Conclusions:

• Financial problems are the result of prior decisions because prior decisions areconsuming today’s dollars.

• It’s easier to live by the rules if we haven’t violated the rules in the past.

• If we have violated the rules in the past we will need to pay the price for a while untilthe impact of prior decisions is eliminated.

4. Following Rule One – Spend Less Than You Earn. (PPt)

Rule One is the most important rule because if you violate it you will probably alsoviolate the other two rules.

Q. How do you know if you are following Rule One?

A. The first step in following Rule One is to have a balanced Personal Cash Flow Plan.(PPt)

A. The second step in following Rule One is using the Paycheck Management System.(PPt)• Special accounts. (Savings, Reserve, General, Special or Envelopes)• Learn how to calculate the appropriate amount for each account.• Distribute every paycheck into the appropriate account.• Direct deposit is best.

A. The third step in following Rule One is using the Spending Management System.(PPt)

Two Keys to managing your spending:

(a) Manage the Budget Busters (Food, Clothes, Entertainment, Gifts, Cash)

Budget Busters can be controlled by:• envelope system.• special bank accounts.• ledger/log.• self-imposed rules. (eg - limit number of trips to the ATM, cut up the credit

cards)

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(b) Change Habits as necessary (trips to ATM, impulse buying, credit cards, usingdebt to balance your budget)

Changing habits may require an accountability partner.

Change is tough!• there must be dissatisfaction and pain with the present situation.• there must be a vision that things can get better.• there must be an understanding of how to get to that better future.• the pain of getting there must be less than the pain currently experienced.

A. The fourth step in following Rule One is to think through Big Ticket Purchases. (PPt)

Use the following two examples to explain the long-term impact of Big TicketPurchases.

Houses• Two House Buying Scenarios – Appendix of PPt.• How Much House Should You Buy? – Addendum of Three Simple Rules.

Cars• Three Car Buying Scenarios – Appendix of PPt.• How Much Car Should You Buy? – Addendum of Three Simple Rules.

Additional Discussion regarding Spending Less than We Earn – as time allows:

Needs vs. WantsAsk these questions to stimulate group discussion:

Q. What is the purpose of a car?

A. To get you from Point A to Point B.

Q. Since a $5000 car will get us from Point A to Point B why do we pay $10,000 or$15,000 or $20,000+ for a car?

Q. Is air conditioning in your car a need or a want?

Q. Is air conditioning in your house a need or a want?

Q. Is a second car in your family a need or a want?

Q. Is a 2000 square foot house a need or a want?

Q. Is an annual trip to Disney World a need or a want?

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Q. Does it make sense to spend money we do not have to buy things we really don’tneed?”

A few comments:

Our “wants” are often influenced by what our peers have and by what we see on TV.We should never borrow to try to match someone else’s standard of living!We have much more than previous generations.We have more than 80% of the people in the world.We believe that having just a little bit more will make us happy. It’s a lie!!!

Debt has made it possible for children to start where their parents arrived after workingfor 25 years. The result is increased debt, little savings and minimal giving.

5. Following Rule Two – Save Now! Buy Later (PPt)

Q. How do you know if you are following Rule Two?

A. You have made the decision to save 10% of your income. (PPt)A. You are exercising the discipline to save 10% of your income. (PPt)

Additional Discussion re Save Now! Buy Later – as time allows:

Q. What is the purpose of savings?

A. Spending on future needs.

Paycheck Management System is the key to funding savings accounts.

Use the following exhibits to further discuss saving concepts:

Review Savings Comparison Chart (PPt Appendix/Addendum of Three Simple Rules)

Review Savings Calculator (PPt Appendix/Addendum of Three Simple Rules)

Review Seven Simple Investment Rules (PPt Appendix/Addendum of Three SimpleRules)

6. Following Rule Three – Know Debt (PPt)

Q. How do you know if you are following Rule Three?

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A. You Know how much debt you have. (PPt)A. Your credit card debt is “0”.A. Your consumer debt payments take less than 10% of your income.A. Your student loans take less than 5% of your income.A. Your mortgage debt takes less than 25% of your income.

A. You Know the consequences of debt: (PPt)

(a) Reduces future standard of living.(b) Reduces saving.(c) Reduces giving.(d) Frustration and stress.(e) Relational problems.

A. You Know the different types of debt: (PPt)

Credit CardConsumer DebtMortgage DebtStudent Debt

A. You Know the Borrowing Test: (PPt)

If and when you do decide to borrow money there are a few questions that you shouldask yourself. Any question to which you answer “yes” is a warning light that shouldcause you to reconsider your borrowing decision.

The Borrowing Test (PPt Appendix/Part Four of Three Simple Rules)



Am I borrowing money to pay for a purchase driven by pride/ego?

Am I justifying my buying decision on the basis that everyone is doing it?





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A. You Know how to Get out of Debt! (PPt)(See How to Get Out of Debt – PPt Appendix/Addendum of Three Simple Rules.)

And most important…

You have a Plan to Get out of Debt!

Additional Discussion on debt – as time allows:

Q. Is debt a sin?

A. Not necessarily, but debt fostered by lack of contentment is a sin. (Thou shalt notcovet…)

7. Overall Workshop Review

Q. Any questions about anything?

Q. What do people say causes their financial problems?

A. We don’t make enough money.

Q. What is the real reason people have financial problems?

A. They spend too much money.

Q. Why do people spend too much money?

A. Lack of Discipline. Lack of Contentment. Lack of Goals.

Q. What are the 4D’s?

A. Desire, Discipline, Decision, Delight

Q. What are the four credit card rules?

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A. Rule One – You only need one general-purpose credit card. Rule Two – Don’t use your credit card to buy things impulsively. Rule Three – Pay off your credit card bill every month. Rule Four – If you don’t pay off a credit card at the end of the month, cut it up.

Q. How has your thinking about money changed?

8. Review Three Rules with Scripture. (PPt)

9. Hand out Completion Certificates.

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Session One – The Three Rules

Notes:

Homework:• Read Part Two and the Addendum of Three Simple Rules.• Identify any questions you may have from the reading assignment.



Session Two – A Financial Physical

Notes:

Homework:• Write down at least three personal goals in the area of your personal finances.• Complete the Personal Asset and Debt Inventory and the Personal Cash Flow Plan.• Read Part Three of Three Simple Rules.



Session Three - Diagnosing Your Financial Situation

Notes:

Homework:• Do a diagnosis and a prescription on your own situation.• Read Parts Four and Five of Three Simple Rules.



Session Four - Living by the Rules

Notes:

Three Rules


Section Four:

Case Studies



comments regarding this book and any relatedfinancial questions to the author at:

[email protected]

Simple

]|xHISBN 0-9749105-0-3

krb


Case Studies

Don and Joyce

Don and Joyce’s StoryPersonal Asset and Debt InventoryPersonal Cash Flow Plan

Karin

Karin’s StoryPersonal Asset and Debt InventoryPersonal Cash Flow Plan

George and Georgette

George and Georgette’s StoryPersonal Asset and Debt InventoryPersonal Cash Flow Plan

Christa

Christa’s StoryPersonal Asset and Debt InventoryPersonal Cash Flow Plan

Johnny

Johnny’s StoryPersonal Asset and Debt InventoryPersonal Cash Flow Plan

www.ThreeRules.org

Don and Joyce’s Story:

Don and Joyce are both 45 years old. They have been married 23 years and have threechildren ages 18, 16, and 10. Don and Joyce are active participants in their church. Theyare youth group leaders and attend a weekly Bible study with several other couples. Theyused to tithe their income, but stopped several years ago because they decided they justcould not afford it.

Don works at a warehouse where he makes $22 per hour. There is frequently anopportunity for overtime but Don enjoys getting home at 3:00 PM so he typically doesnot sign up for over time.

Joyce works 20 hours per week cleaning houses. She averages $14 per hour and proudlytells the counselor that she is really making more than $20 per hour because she doesn’thave to pay taxes. When probed about the “no taxes” she explains that she always getspaid in cash.

Don has a 401K investment plan at work and his employer will contribute $0.50 for every$1.00 he invests. He was taking advantage of this program until 3 years ago. Don andJoyce know the benefit of this program but they see no way to contribute at this time.

Since Joyce pays no taxes and Don over withholds they typically get a $2,000 to $3,000tax refund every spring. It has been their tradition to use this money to go on a springbreak vacation to Disney World every year. The entire family looks forward to thisannual event.

Don really enjoys fishing and bought a bass boat several years ago. Since their old vanwas not powerful enough they bought a new van to pull the boat. The down payments onboth the new van and the bass boat were paid for from a loan they were able to get fromJoyce’s mom. Joyce drives a 12-year-old Pontiac that is worth about $3000 and requiresfrequent repairs.

Since both Don and Joyce have income they each agreed to be responsible for certain oftheir household expenses and if they have any money left at the end of the month theyagreed that they can do with it whatever they want. Don has money left at the end of themonth more frequently than Joyce.

Don and Joyce send all three of their children to a Christian school. Their church paysfor about half the cost. Joyce went to a Christian School and feels strongly that herchildren should have a Christian education. Don’s not so sure. In fact he thinks theyreally can’t afford it.

Don and Joyce have always considered themselves to be very generous parents. Theyfeel that kids shouldn’t have to work and there isn’t much that the kids want that theydon’t get.

www.ThreeRules.org

Since they haven’t been able to make the payment to Joyce’s mom lately and since theyhave gotten some calls about payments that are late, Don and Joyce realize that they haveworked themselves into a difficult situation and have come to you for assistance.

After reviewing the above information, and the forms that follow (Personal Asset andDebt Inventory and Personal Cash Flow Plan), how would you counsel Don and Joyce?

Start by identifying their problem.

________________________________________________________________________

________________________________________________________________________

What is the cause of their problem?

________________________________________________________________________

________________________________________________________________________

What are their goals?

________________________________________________________________________

________________________________________________________________________

What options do Don and Joyce have to balance their budget and accomplish theirobjectives?

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

PERSONAL ASSET AND DEBT INVENTORY www.ThreeRules.org

DON AND JOYCEASSETS (What we own) DEBT (What we owe)

Description Value Description Payment Rate Balance Owed

Car # 1 Van $20,000 Car # 1 Loan Don's Van $500.00 $18,000

Car # 2 Joyce's Car $3,000 Car # 2 Loan

Real Estate $140,000 Mortgage Loan $750.00 7.50% $118,000

Boats $6,000 Personal Loan Joyce's Mom $250.00 $5,000

Motorcycles Personal Loan

RVs Personal Loan

Other Credit Card Visa $125.00 19.90% $6,250

Emergency Savings Credit Card Master Card $60.00 19.90% $3,000

Short Term Savings Credit Card Discover $50.00 19.90% $2,500

CD's Credit Card Penneys $45.00 22.00% $2,000

IRA, 401k $23,000 Credit Card Kohls $75.00 23.00% $3,750

Mutual Funds Credit Card Best Buy $70.00 23.90% $3,500

Stocks, Bonds, etc. Student Loans

Cash Value Life Ins Other Boat $250.00 12.00% $4,500

Other Other

Other Total Payments/Debts $2,175 $166,500

Total Assets $192,000 Net Worth -- Assets minus Debts $25,500

PERSONAL CASH FLOW PLAN www.ThreeRules.org

INCOME (PER MONTH)DON $3,813JOYCE $1,386INCOME 3 $0

TOTAL INCOME $5,199

CATEGORY 1 EXPENSES (PER MONTH) CATEGORY 2 EXPENSES (PER MONTH) CATEGORY 3 EXPENSES (PER MONTH)

GIVING HOUSING PROPERTY TAXES *CHURCH $0 RENT (SEE CAT 1 FOR MORTGAGE) HOME INSURANCE *OTHER $0 PROPERTY TAXES HOME MAINTENANCE $100

TAXES INSURANCE CAR INSURANCE *FEDERAL TAX $750 UTILITIES (GAS, ELEC, WATER) $140 CAR MAINTENANCE $150SOCIAL SECURITY (US ONLY) $150 GARBAGE PICK-UP $15 CLOTHING/HIM $25MEDICARE $52 TELEPHONE/CELL PHONES $60 CLOTHING/HER $25STATE/PROVINCIAL TAX $150 FOOD CLOTHING/KIDS $150CITY TAX FOOD $500 DOCTOR $20

DEBT RETIREMENT CAR DENTIST $20CAR LOANS $500 GAS $150 EYE CARE $20MORTGAGE LOAN $750 INSURANCE (IF PAID MONTHLY) $100 LIFE INSURANCE *PERSONAL LOANS/PARENTS $250 INSURANCE HEALTH INSURANCE *CREDIT CARDS $425 HEALTH (IF PAID MONTHLY) VACATION $200STUDENT LOANS 0 LIFE (IF PAID MONTHLY) GIFTS (BIRTHDAYS, ETC.) $100OTHER LOANS/BOAT $250 ENTERTAINMENT GIFTS (CHRISTMAS) $100

SAVINGS ENTERTAINMENT $100 HOUSEHOLD $25EMERGENCY ACCOUNT $0 EATING OUT $100 HARDWARE $25SHORT TERM SAVINGS $0 BABYSITTERS OTHERLONG TERM SAVINGS $0 CABLE/INTERNET $65

TUITION/CHILD CARE TOTAL CATEGORY 3 EXPENSES $960TOTAL CATEGORY 1 EXPENSES $3,277 TUITION $600 * Leave blank if included in prior column.

DAY CARE/CHILD SUPPORTMISCELLANEOUS

SUBSCRIPTIONS $20LUNCHES $100

Future Needs: PET SUPPLIES/VET $25HAIRCUTS, ETC $30 TOTAL EXPENSE $6,442CIGARETTES (Category 1+2+3)MISCMISCMISC SURPLUS/DEFICIT ($1,243)CASH (WALKING AROUND MONEY) $200 (Total Income - Total Expense)

TOTAL CATEGORY 2 EXPENSES $2,205

CATEGORY 1 % OF INCOME 63% CATEGORY 2 % OF INCOME 42% CATEGORY 3 % OF INCOME 18%

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Karin’s Story:

Karin is 45 years old and has been divorced for nine years. Her children are grown, andon their own. She had two years of Junior College before she got married. She has beenworking a full-time night shift at a local factory for twelve years where she makes $13.50per hour. Since she realized that she was having a difficult time making ends meet, sherecently took a part-time job at a local fast food restaurant. She works the breakfast shiftfrom 6:00 AM till 9:00 AM five days per week. She earns $7.75 per hour at therestaurant plus receives a free breakfast.

Karin’s husband left her for another woman and filed for divorce. The court awardedKarin child support but now that the children are on their own, that has stopped. Eventhough her former husband is now quite well-to-do, Karin does not receive any supportfrom him.

Karin was given ownership of the house as part of the divorce settlement. Several yearsafter the divorce she sold the house and used the $30,000 equity to buy a new car andused the balance as a down payment on a manufactured home in a manufactured homecommunity. The manufactured home is over 1800 square feet and has three bedrooms.Since she wanted a clean new start she gave away her old furniture and used store creditto furnish her manufactured home. At this point the car is seven years old, has over100,000 miles and is starting to become costly on repairs. Although she enjoys living inthe manufactured home community she is beginning to consider some options concerningher housing situation. She’s even wondering if she should move back to the area whereshe grew up.

Because things have been tight, Karin has run up several credit card balances. She wouldreally like to get another car but that would introduce a new payment which she can notafford.

Not sure where to turn, Karin asked her Pastor at the small local church she attends foradvice. He suggested that she meet with a Christian financial counselor.

Assuming you were that counselor, after reviewing the above information, and the formsthat follow (Personal Asset and Debt Inventory and Personal Cash Flow Plan), howwould you counsel Karin?

Start by identifying her problem.

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www.ThreeRules.org

What is the cause of her problem?

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What are her goals?

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What options does Karin have to balance her budget and accomplish her objectives?

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KARINASSETS (What we own) DEBT (What we owe)


Car # 1 $2,000 Car # 1 Loan

Car # 2 Car # 2 Loan

Real Estate Mfd Home $60,000 Mortgage Loan Chase $500.00 14.00% $55,000

Boats Personal Loan


RVs Personal Loan

Other Credit Card Visa $100.00 19.50% $5,000

Emergency Savings Credit Card Hudsons $40.00 21.00% $2,000

Short Term Savings Credit Card Target $25.00 22.00% $1,000

CD's Credit Card

IRA, 401k etc. Credit Card

Mutual Funds Credit Card


Cash Value Life Ins Other Art Van $450.00 18.00% $15,000

Other Other

Other Total Payments/Debts $1,115 $78,000

Total Assets $62,000 Net Worth -- Assets minus Debts ($16,000)


INCOME (PER MONTH)FACTORY $2,340FAST FOOD $504INCOME 3

TOTAL INCOME $2,844


GIVING HOUSING PROPERTY TAXES *CHURCH $50 RENT (MFG. HOME PARK) $300 HOME INSURANCE *OTHER PROPERTY TAXES HOME MAINTENANCE

TAXES INSURANCE $50 CAR INSURANCE *FEDERAL TAX $400 UTILITIES (GAS, ELEC, WATER) $90 CAR MAINTENANCE $100SOCIAL SECURITY (US ONLY) $138 GARBAGE PICK-UP CLOTHING/HIMMEDICARE $46 TELEPHONE/CELL PHONES $70 CLOTHING/HER $50STATE/PROVINCIAL TAX $96 FOOD CLOTHING/KIDSCITY TAX FOOD $125 DOCTOR $10

DEBT RETIREMENT CAR DENTISTCAR LOANS GAS $80 EYE CAREMORTGAGE LOAN $500 INSURANCE (IF PAID MONTHLY) $60 LIFE INSURANCE *PERSONAL LOANS INSURANCE HEALTH INSURANCE *CREDIT CARDS $165 HEALTH (IF PAID MONTHLY) $48 VACATIONSTUDENT LOANS LIFE (IF PAID MONTHLY) GIFTS (BIRTHDAYS, ETC.) $25OTHER LOANS $450 ENTERTAINMENT GIFTS (CHRISTMAS) $25

SAVINGS ENTERTAINMENT HOUSEHOLDEMERGENCY ACCOUNT EATING OUT HARDWARESHORT TERM SAVINGS BABYSITTERS OTHERLONG TERM SAVINGS CABLE/INTERNET $47

TUITION/CHILD CARE TOTAL CATEGORY 3 EXPENSES $210TOTAL CATEGORY 1 EXPENSES $1,845 TUITION * Leave blank if included in prior column.


SUBSCRIPTIONSPRESCRIPTIONS $10

Future Needs: LUNCHESPET SUPPLIES/VET TOTAL EXPENSE $2,995HAIRCUTS, ETC $10 (Category 1+2+3)CIGARETTESMISCMISC SURPLUS/DEFICIT ($151)MISC (Total Income - Total Expense)CASH (WALKING AROUND MONEY) $50

TOTAL CATEGORY 2 EXPENSES $940


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George & Georgette’s Story:

George and Georgette are both 50 years old. They have been married for 30 years andhave 3 grown children that are all out of the house and living on their own.

George presently works on the maintenance staff at the local high school. Georgettedecided to go back to work when her last child entered college. She now works as a part-time social worker, about 20 hours per week. Their combined income is $40,000.

Seven years ago, George and Georgette bought a small tw-bedroom house in a niceneighborhood near their oldest daughter. They still owe $72,000 on that $100,000 house.They repaired the roof two years ago and still owe $2411. They also have $13,000 worthof loans on their present cars. Blue book value of their cars is presently $9,000.

As George and Georgette get a little older they are starting to look forward to retirementand spending their free time with their grandchildren. However, as they look at theirfinances, they fear they may never be able to afford to retire. As of right now, theirsavings is $0.00.

They came to you for assistance. They wonder if it’s too late for them to start a retirementsavings plan.

When you start asking them questions you discover the following:

1. They have a tax refund coming of $1200.

2. George has 6 weeks of vacation saved up that he can cash out if he wants to.

3. One of the reasons the car payments are so high is because they both includecredit life insurance.

After reviewing the above information, and the forms that follow (Personal Asset andDebt Inventory and Personal Cash Flow Plan), how would you counsel George andGeorgette?


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www.ThreeRules.org


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What options do George and Georgette have to balance their budget and accomplish theirobjectives?

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GEORGE AND GEORGETTE


Credit Card

Other

Other

Net Worth -- Assets minus Debts $21,589

$2,411Other Roof Loan

Total Payments/Debts $1,125 $87,411

$71 18%

Credit Card

Credit Card

Credit Card

Credit Card

Credit Card

Personal Loan

Personal Loan

9%

Personal Loan

$6,000

Mortgage Loan $614 6.50% $72,000

Car # 2 Loan CU $215

$109,000Total Assets

Stocks, Bonds, etc

Cash Value Life Ins

Other

Other

IRA, 401k etc.

Mutual Funds

Other

Other

Other

Other

CD's

Other

Bank Savings Account

Car # 2 Car $4,000

Real Estate Residence $100,000

DEBT (What we owe)

Car # 1 Truck $5,000 Car # 1 Loan CU $225 9% $7,000

ASSETS (What we own)


INCOME (PER MONTH)GEORGE @ $12.18/hour $2,111GEORGETTE @ $14.10/hour $1,222INCOME 3

TOTAL INCOME $3,333


GIVING HOUSING PROPERTY TAXES *CHURCH RENT (SEE CAT 1 FOR MORTGAGE) HOME INSURANCE *OTHER $252 PROPERTY TAXES HOME MAINTENANCE $16

TAXES INSURANCE CAR INSURANCE * $72FEDERAL TAX $281 UTILITIES (GAS, ELEC, WATER) $82 CAR MAINTENANCE $100SOCIAL SECURITY (US ONLY) $255 TELEPHONE/CELL PHONES $47 CLOTHING/HIM $25STATE/PROVINCIAL TAX $118 FOOD CLOTHING/HER $25CITY TAX $41 FOOD $290 CLOTHING/KIDS

DEBT RETIREMENT CAR DOCTOR $10CREDIT CARDS $0 GAS $170 DENTIST $20PERSONAL LOANS $0 INSURANCE (IF PAID MONTHLY) EYE CARECAR LOAN $440 INSURANCE LIFE INSURANCE *MORTGAGE LOAN $614 HEALTH (IF PAID MONTHLY) $33 HEALTH INSURANCE *OTHER LOANS $71 LIFE (IF PAID MONTHLY) $35 VACATION $50

SAVINGS ENTERTAINMENT GIFTS (BIRTHDAYS ETC.) $25EMERGENCY ACCOUNT $0 ENTERTAINMENT GIFTS (CHRISTMAS) $10SHORT TERM SAVINGS $0 EATING OUT $50 HOUSEHOLDLONG TERM SAVINGS $0 BABYSITTERS HARDWARE

CABLE/INTERNET $31 OTHERTOTAL CATEGORY 1 EXPENSES $2,072 TUITION/CHILD CARE OTHER

TUITIONCHILD CARE/SUPPORT TOTAL CATEGORY 3 EXPENSES $353

MISCELLANEOUS * Leave blank if included in prior column.Future Needs: SUBSCRIPTIONS

PRESCRIPTIONS $25LUNCHES $10PET SUPPLIESHAIRCUTS ETC TOTAL EXPENSE $3,308CIGARETTES (Category 1 +2+3)MISCMISCMISCMISC SURPLUS/DEFICIT $25CASH (WALKING AROUND MONEY) $110 (Total Income - Total Expense)

TOTAL CATEGORY 2 EXPENSES $883


Christa’s Story:

Christa is 25 years old. She graduated from a private college 3 years ago and started working fora small advertising agency in her home town. She is very involved in her local community andvolunteers at the rest home down the street from her house. She also loves attending her churchand spends time with friends from the young adult group.

Christa earns $36,000 per year at her advertising agency. She’s hoping to get a raise this year,but finances are tight for her company. They do provide a matching investment in her retirementplan up to 3 percent allowing Christa to set aside $100 each month towards her 401K. She reallyenjoys her job and feels this is a great place for her to gain a lot of hands-on experience beforemoving on to a larger agency.

Upon graduating from college, Christa immediately lined up her present job. However, beforestarting, she and some of her best friends decided to treat themselves to a cruise as a graduationpresent. Her parents chipped in $1000 towards the cost as her graduation present and Christa putthe other $1000 on her credit card.

Christa’s parents had allowed her to use one of their cars throughout college. However, that dealended on graduation day and Christa needed to get some wheels. She decided to buy a 1-year-oldHonda Civic for $12,000. They had a great payment plan that would allow her to pay off her carin just 4 years time without stretching her budget too much.

Christa’s parents encouraged her to focus on her studies and enjoy her college experience, so shedidn’t work during college. She had scholarships that paid for about a 25% of her tuition and herparents paid for room and board, but she still had to take a $10,000 loan out each year, leavingher with $40,000 of debt. After a one-year grace period, Christa’s college debt payments kickedin. She was shocked to think she’ll be paying for college for the next 10 years, but all of herfriends are in similar situations so she just decided this was normal.

Last year, Christa’s company was able to send her to a conference in Chicago. She had anopportunity to make a presentation and meet with a lot of other advertising executives. Lookingat her closet before she left she decided she didn’t have any clothes that were dressy enough forthis trip, so she went shopping. She looked great at the conference, but now had a $700 bill atExpress.

Six months ago, Christa brought her car in for a tune up and discovered she needed a newmuffler system. That cost $500 which she also had to put on her credit card.

Christa received her bank statement a few weeks ago and was shocked to see her bank accountwasn’t growing. It was shrinking!! She had always planned on buying a house after working afew years and that just didn’t seem possible with the direction she was headed. Her churchoffered financial counseling so she thought she just might check that out.

After reviewing the above information, and the forms that follow (Personal Asset and DebtInventory and Personal Cash Flow Plan), how would you counsel Christa?


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What are her goals?

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What options does Christa have to balance her budget and accomplish her objectives?

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CHRISTAASSETS: What we own DEBT: What we owe


Car # 1 $6,500 Car # 1 Loan $295.00 9.00% $3,200


Real Estate Mortgage Loan

Boats Personal Loan


RVs Personal Loan

Other Credit Card VISA - car repair $30.00 18.90% $350

Emergency Savings Credit Card VISA - vacation $50.00 18.90% $300

Short Term Savings Credit Card Express $30.00 23.90% $500

CD's (GIC's) Credit Card

IRA, 401k (RRSP, RPP) 401K $3,600 Credit Card


Stocks, Bonds, etc. Student Loans College $395.00 3.50% $33,500

Cash Value Life Ins Other

Other Other

Other Total Payments/Debts $800 $37,850

Total Assets $10,100 Net Worth -- Assets minus Debts ($27,750)

( ) equals Canadian equivalent


INCOME (PER MONTH)CHRISTA $3,000INCOME 2INCOME 3

TOTAL INCOME $3,000


GIVING HOUSING PROPERTY TAXES *CHURCH $200 RENT (SEE CAT 1 FOR MORTGAGE) $600 HOME INSURANCE * $6OTHER PROPERTY TAXES HOME MAINTENANCE

TAXES INSURANCE CAR INSURANCE * $85FEDERAL TAX $310 UTILITIES (GAS, ELEC, WATER) $60 CAR MAINTENANCESOCIAL SECURITY (US ONLY) $186 GARBAGE PICK-UP CLOTHING/HIMMEDICARE $43 TELEPHONE/CELL PHONES $60 CLOTHING/HER $50STATE/PROVINCIAL TAX $106 FOOD CLOTHING/KIDSCITY TAX $40 FOOD $150 DOCTOR

DEBT RETIREMENT CAR DENTIST $10CAR LOANS $295 GAS $40 EYE CAREMORTGAGE LOAN INSURANCE (IF PAID MONTHLY) LIFE INSURANCE *PERSONAL LOANS INSURANCE HEALTH INSURANCE *CREDIT CARDS $110 HEALTH (IF PAID MONTHLY) VACATION $100STUDENT LOANS $395 LIFE (IF PAID MONTHLY) GIFTS (BIRTHDAYS, ETC.) $50OTHER LOANS ENTERTAINMENT GIFTS (CHRISTMAS) $100

SAVINGS ENTERTAINMENT $80 OTHER - Home Decorating $30EMERGENCY ACCOUNT EATING OUT $40 OTHERSHORT TERM SAVINGS BABYSITTERS OTHERLONG TERM SAVINGS $120 CABLE/INTERNET



SUBSCRIPTIONSPRESCRIPTIONS

Future Needs: LUNCHES $20PET SUPPLIES/VET TOTAL EXPENSE $3,406HAIRCUTS, ETC $20 (Category 1+2+3)CIGARETTESMISCMISC SURPLUS/DEFICIT ($406)MISC (Total Income - Total Expense)CASH (WALKING AROUND MONEY) $100



Johnny’s Story:

Johnny graduated from high school 4 years ago. He was able to take some work study classes duringhigh school and learned a lot of home craftsmanship skills. After school finished he immediately gota job as a construction worker. His parents asked if he was interested in going to college, but hewanted to take a break from school. Maybe he would go back in a few years.

Another friend of his also got a job right out of high school and they found a duplex to move intotogether. By splitting rent and utilities, they felt they were making some pretty good financialdecisions so they splurged and got the complete cable package. They can now watch Sportscenterand ESPN all day long!! Neither of them know how to cook, so they order pizza or Chinese at least2 nights a week and eat it on the couch watching sports. Johnny and his construction crew friends goout for lunch everyday to the local fast food joints.

Johnny drove an old truck of his dad’s all through high school that he bought for $500 hissophomore year. Two years ago, that truck finally died and Johnny decided to buy a brand newDodge. Johnny’s dream had always been to have a truck with an awesome sound system so he wentright over to Best Buy to check out their options. They had an offer going that you could take 15%off your purchase if you got a Best Buy credit card, so Johnny got a $1000 car system for $850.

After listening to his car stereo system for a couple of months, he realized his home system justwasn’t good enough anymore. He decided to go back to Best Buy and get a new equalizer, speakers,DVD, etc. Since he was now a ‘preferred customer’ he was able to get 10% off his purchase if hespent over $1000. He spent $1500 and put $1350 on his Best Buy credit card.

Last year, Johnny and his roommate decided to buy brand new snowmobiles. They had beensnowmobiling since they were little boys and wanted to have their own so they wouldn’t have toborrow their parents’ anymore.

Johnny thought he had everything under control, but his parents got a little nervous when he boughtthe brand-new snowmobile and started asking some questions. Johnny had assumed his paymentswere very typical, but they warned that if he kept going in this direction he might be headed towardsome trouble. They pointed out that he had mentioned his desire to buy a house and he and hisgirlfriend seemed pretty serious. He might want to be able to support a family some day. Theyrecommended he talk to someone from their church about his situation. Although Johnny didn’tattend church very often, he thought it might be a good idea to talk things through.

After reviewing the above information, and the forms that follow (Personal Asset and DebtInventory and Personal Cash Flow Plan), how would you counsel Johnny?

Start by identifying his problem.

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What is the cause of his problem?

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What are his goals?

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What options does Johnny have to balance his budget and accomplish his objectives?

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JOHNNYASSETS: What we own DEBT: What we owe


Car # 1 $14,000 Car # 1 Loan Truck $496.00 9.00% $11,273

Car # 2 Snowmobile Loan $165.00 12.00% $3,500


Boats Personal Loan


RVs Personal Loan

Other Snowmobile $5,000 Credit Card Best Buy - Car $20.00 19.90% $700

Emergency Savings Credit Card Best Buy - House $40.00 19.90% $1,000

Short Term Savings Credit Card


IRA, 401k (RRSP, RPP) Credit Card




Other Other

Other Total Payments/Debts $721 $16,473

Total Assets $19,000 Net Worth -- Assets minus Debts $2,527


PERSONAL CASH FLOW PLAN

INCOME (PER MONTH)JOHNNY $2,167INCOME 2INCOME 3

TOTAL INCOME $2,167


GIVING HOUSING PROPERTY TAXES *CHURCH RENT (SEE CAT 1 FOR MORTGAGE) $450 HOME INSURANCE * $15OTHER PROPERTY TAXES HOME MAINTENANCE $50

TAXES INSURANCE CAR INSURANCE * $100FEDERAL TAX $126 UTILITIES (GAS, ELEC, WATER) $75 CAR MAINTENANCE $50SOCIAL SECURITY (US ONLY) $130 GARBAGE PICK-UP CLOTHING/HIM $40MEDICARE $35 TELEPHONE/CELL PHONES $80 CLOTHING/HERSTATE/PROVINCIAL TAX $75 FOOD CLOTHING/KIDSCITY TAX $27 FOOD $50 DOCTOR

DEBT RETIREMENT CAR DENTISTCAR LOANS $496 GAS $50 EYE CAREMORTGAGE LOAN INSURANCE (IF PAID MONTHLY) LIFE INSURANCE *PERSONAL LOANS INSURANCE HEALTH INSURANCE *CREDIT CARDS $60 HEALTH (IF PAID MONTHLY) $15 VACATION $50STUDENT LOANS LIFE (IF PAID MONTHLY) GIFTS (BIRTHDAYS, ETC.) $75OTHER LOANS $165 ENTERTAINMENT GIFTS (CHRISTMAS) $75

SAVINGS ENTERTAINMENT $80 OTHEREMERGENCY ACCOUNT EATING OUT $60 OTHERSHORT TERM SAVINGS BABYSITTERS OTHERLONG TERM SAVINGS CABLE/INTERNET $35



SUBSCRIPTIONSPRESCRIPTIONS

Future Needs: LUNCHES $100PET SUPPLIES/VET TOTAL EXPENSE $2,714HAIRCUTS, ETC (Category 1+2+3)CIGARETTESMISCMISC SURPLUS/DEFICIT ($547)MISC (Total Income - Total Expense)CASH (WALKING AROUND MONEY) $150



Three Rules


Section Five:

Case Study



Answerscomments regarding this book and any relatedfinancial questions to the author at:

[email protected]

Simple

]|xHISBN 0-9749105-0-3

krb


Case Study Answers

Don and Joyce’s Diagnosis and Prescription

Karin’s Diagnosis and Prescription

George and Georgette’s Diagnosis and Prescription

Christa’s Diagnosis and Prescription

Johnny’s Diagnosis and Prescription

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Don and Joyce’s Diagnosis and Prescription


1. Spending way more than their income.2. No Savings.3. Debt is out of control.


1. Spending money without any concept of whether they can afford it.2. No discipline.3. No contentment.


1. To have a good time.2. To be generous with their kids.3. Joyce wants the kids to go to Christian School.4. They would like to tithe.5. They would like to contribute to their 401K.6. They would like to take family vacations.

What options do Don and Joyce have to balance their budget and accomplish theirobjectives?

1. Cut expenses by the following amounts:

Entertainment $ 75Eating Out $ 75Lunches $100Cash $100Home Maintenance $ 75Car Maintenance $100Clothing $100Vacation $150Gifts $150

Total $925

2. Sell Assets

BoatJoyce’s Car

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By selling the boat and paying off the boat loan, they will save $250 per month inpayments and still have $1500 in cash.

Selling Joyce’s car and combining the proceeds with the cash raised by selling the boatwill allow them to pay off Discover and Penney’s and save another $95 per month.

They could consider selling the van and downsizing to a $7-10,000 used vehicle andsaving an additional $200 per month or they could use that money to buy a secondvehicle if Joyce absolutely needs one.

3. Increase income

Don has the option of working overtime. If he worked 10 hours per week at $33/ hour hewould earn $1430 per month. After tax, this would contribute over $1000 per month tothe family income

Since their current deficit of $1263 per month can be offset by cutting expenses andselling assets, this new income can be used for saving and giving.

Other Suggestions:

1. Joyce needs to start reporting her income and paying taxes. God requires thatwe be honest.

Lord , who may dwell in your sanctuary? Who may live on your holy hill?He whose walk is blameless and who does what is righteous, who speaks thetruth from his heart. Psalm 15:1-2 NIV

2. Don should stop over-withholding and use the additional income to retiredebt.

3. Don and Joyce should decide who will be responsible for paying the bills. Allincome should be recognized as joint income and all bills paid out of thatincome. They should sit down once per month so that they both will knowwhere they are financially.

4. Don and Joyce should sit down and explain some of their financial mistakes totheir kids. This will be a great learning experience. They should also create anew family rule that anyone over 12 should earn at leat part of their spendingmoney and help pay for their own clothes.

5. Since Don and Joyce have not managed their debt they should cut up all theircredit cards until they have their debt situation under control.

6. They should put all savings into the emergency account until it equals 5% oftheir income.

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Karin’s Diagnosis and Prescription


1. Spending more than she earns.2. No savings.3. Too much debt.


The divorce contributed to her problem, but the primary culprit is bad financialdecisions. These primarily have to do with housing.

What are her goals?

1. Get another car.2. Eliminate financial stress.

What options does Karin have to balance her budget and accomplish herobjectives?

Although there are a number of expense areas where Karin could cut back, herexpenses are not out of line except in the area of housing. Between her loanpayment, rent in the manufactured housing community and insurance, her housecosts are $850 per month.

The primary decision that created Karin’s financial problems was the purchase ofa new manufactured home significantly bigger than she needed and then toborrow money to furnish this large home. Karin should consider taking in tworenters or selling the home.

If she could generate $700 per month from two renters, she would be able toeliminate her monthly deficit and use the balance to make payments on a reliableused car and put the balance in savings.If she elects to sell the home, she should be able to rent a small apartment andsave $350 per month.

By trading in her current car for a reliable used car, Karin should also be able toreduce car maintenance by $75 per month.Karin does not have any assets that could be sold to pay off debt.

Since Karin is already working a full time and a part time job, it is not likely thatshe can increase her income unless she can find a part time job that pays betterwages.

Karin should consider checking with the deacons at her church. Perhaps they

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could help her purchase a reliable used car at a good price from a church member.The deacons may also be able to help Karin with car maintenance to keep thesebills as low as possible.

Since Karin has tended to use credit card debt in the past to get through the toughspots, it would be a good idea for Karin to cut up her credit cards and use all“extra” money to retire the credit card balances as quickly as possible.

Once she does that, she will have an additional $165 per month that she could putinto an emergency savings account.

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George and Georgette’s Diagnosis and Prescription


George and Georgette did not plan ahead.


Lack of a savings plan.


To be able to retire so that they can spend time with their grandchildren.

What options do they have to balance their budget and accomplish their objectives?

George and Georgette have several options:

1. Cut Expenses

Reduce tax withholdings. $100Reduce food budget. $ 90Cut eating out in half. $ 25Drop cable and internet services. $ 31

$246$246 per month invested at 9.0% for 15 years equals $93,087

2. Sell House

Use tax refund and cash out from banked hours to fix up the house.

Sell the house $100,000Pay off mortgage $ 72,000Pay off cars $ 13,000Pay off roof loan $ 2,400

Cash Balance $ 12,600

Buy a used manufactured home $ 40,000Down payment $ 12,600Finance $ 27,400Payment at 9.0% for 15 years $ 278Park Rent $ 275

Total $ 553

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By selling the house and paying off the car loans and the roof loan, they willreduce their monthly payments by $1125. After we subtract their new housingcosts ($553), they have $572 left that they can save and invest.

If they invest half in George’s 401K, it will grow to $242,442 in 15 yearsassuming a 9 % return. If they invest the other half in a savings account paying5% they will have $20,000 in 5 years. This money can be used to pay for futurecars etc.

3. Increase Income Option

If George worked 5 hours overtime, he would net an additional $237 per month. IfGeorge worked a part time job, 10 hours per week at $8 per hour, he would net anadditional $277 per month.

If Georgette increased her hours to 32 hours per week, she would net anadditional $391 per month.

If they took in a border at $400 per month, they could earn an additional $4800per year.

$237 per month invested at 9.0% for 15 years equals $ 89,682$277 per month invested at 9.0% for 15 years equals $104,818$391 per month invested at 9.0% for 15 years equals $147,956$400 per month invested at 9.0% for 15 years equals $150,000

If George and Georgette do all of the above, they will have a nest egg of $733,485 by thetime they turn 65.

Christa’s Diagnosis and Prescription


Christa’s expenses exceed her income.


Christa spends too much money.

What are her goals?

Christa wants to buy a house, but doesn’t have any down-payment money.

What options does Christa have to balance her budget and accomplish her objectives?

1. Cut expenses

Get rid of cell phone $ 40Reduce entertainment expense $ 20Reduce eating out $ 20Reduce walking around money $ 25Reduce vacation $ 50Reduce gifts $ 75Reduce home decorating $ 30

Total $226

2. Sell car and buy used

Christa can sell her Honda for $6500. She can use $4350 to pay off her loan and creditcard debt. She can then use $1500 to put a down-payment on a used car. She can buy an$8000 used car and only pay $225 per month and pay for the car in just three years. Shecan use the remaining $650 to start a savings account.

After these changes, Christa will be saving an additional $200 per month. This moneycan be put into savings accounts, starting with the emergency account until it equals 5%of her income.

3. Increase income

Even though Christa loves her job, she recognizes they can’t afford to pay her what she isnow worth thanks to her increased experience. She could look for a job at a bigger adagency that pays $40,000 per year instead of $36,000. This would add $333 of grossincome per month.

Christa could also see if the rest home where she volunteers has any job openings.Although volunteering is a generous thing to do, she could explore if she could be paidfor the time she spends there. If she worked just 10 hours per week at $8.00 per hour, shecould increase her gross income by $346 each month.

By increasing her income along with cutting expenses, Christa will have approximatelyan additional $175 per month that she can start using to save for her house.

Johnny’s Diagnosis and Prescription

Start by identifying his problem.

1. Johnny’s expenses exceed his income.2. Johnny doesn’t have very much savings.3. Johnny isn’t giving.

What is the cause of his problem?

1. Johnny is spending too much money buying toys.2. Johnny bought too much car and too much snowmobile.

What are his goals?

1. Johnny still wants to maintain his hobbies and fun activities.2. Johnny wants to save for an engagement ring.3. Johnny wants to buy a house in a few years.

What options does Johnny have to balance his budget and accomplish his objectives?

1. Cut Expenses

Lower cell phone plan $ 20Lower entertainment budget $ 40Eat out less $ 10Pack a lunch for work $ 75Reduce walking around money $ 50

Total $195

2. Cut Expenses more

Get rid of cable $ 35Reduce vacation savings $ 25Reduce gifts $ 25

Total $ 85

3. Sell truck and buy cheaper truck

By selling his truck, Johnny can pay off both his car loan and $700 off his Best Buycredit card and have $2000 to put towards buying a used vehicle. Johnny can buy aused truck for $4000 and finance $2000 at the car dealership. His new payment eachmonth would be just over $100. This would save him $500 per month in payments.Johnny will now have a surplus of $350 each month that he can use to accelerate debtpayment and start saving.

Three Rules


Section Six:

Forms




[email protected]

Simple

]|xHISBN 0-9749105-0-3

krb


Forms

Certificate of Completion

Client Profile

Diagnosis and Prescription

Financial Opinion Survey

Permission Agreement

Personal Asset and Debt Inventory

Personal Cash Flow Plan

Personal Financial Habit Assessment and Interpretation

Values Questionnaire

This certificate is aw

arded to

for successful completion of the

Financial Workshop

Instructor SignatureD

ate of Com

pletion

Simple

Three Rules

Theo A. Boers

.

krb

krb

krb

www.ThreeRules.org

Client Profile

Name ______________________________________________________________

Address ______________________________________________________________

City _____________________________ State ___________ Zip _____________

Home Phone __________________________ Cell Phone ________________________

Email _________________________________ Fax ________________________

Kids Names and Ages ______________________________________________________

Work (his) _______________________________________ Phone_________________

Work (hers) _______________________________________ Phone_________________

Preliminary

1. Why are you here and how can I help?

When did the problems start?

What do you think caused the problem?

2. What do you hope to achieve as a result of this process?

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

If your financial situation was perfect, what would be different?

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

www.ThreeRules.org

What are your three primary financial goals?

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

3. How badly do you want to accomplish these goals? Are you willing to do whatever ittakes? (If you don’t we’re wasting our time!)

4. 4D’s of Change• Desire• Decision• Discipline• Delight

Specifics

1. How often do you get paid?

________________________________________________________________________

2. What happens to the paychecks?

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

3. How many checking accounts and savings accounts do you have?

________________________________________________________________________

________________________________________________________________________

www.ThreeRules.org

4. Who pays the bills? When? How often?

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

5. Did you have to pay additional taxes or did you get money back as a result of last year’stax return?

________________________________________________________________________

________________________________________________________________________

6. How is your credit record?

________________________________________________________________________

________________________________________________________________________

7. Are there any bills that are past due? Anything close to repossession or foreclosure?

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

8. Are you current on your taxes?

________________________________________________________________________

________________________________________________________________________

www.ThreeRules.org

Diagnosis and Prescription

What financial goals have been discussed?

________________________________________________________________________

________________________________________________________________________

What financial problems, if any, did the financial physical reveal?

________________________________________________________________________

________________________________________________________________________

What is the cause of the problems identified?

________________________________________________________________________

________________________________________________________________________

What actions can be taken to eliminate these problems and accomplish the financial goals?

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

Continue on reverse as needed.

www.ThreeRules.org

Financial Opinion Survey

Answer the following questions honestly based on your personal opinion.

1. In today’s world, a typical family needs ___ credit cards.

2. The best way to buy a car is to [ ] buy new [ ] buy used [ ] lease.

3. It’s OK to take out a loan to purchase a car. [ ] Yes [ ] No

4. It’s OK to buy furniture on payments. [ ] Yes [ ] No

5. It’s OK to borrow money to pay for vacations. [ ] Yes [ ] No

6. It’s OK to borrow money for a boat, RV or motocycle. [ ] Yes [ ] No

7. It’s better to buy a home than to rent. [ ] Yes [ ] No

8. A mortgage term of _____ years is normal and OK.

9. A family should save ___ percent of their income for future needs.

10. A family should give ___ percent of their income back to God.

11. Does it make sense to give when you are struggling to repay debt? [ ] Yes [ ] No

12. Living on a budget is important. [ ] Yes [ ] No

Answer the following only if married:

13. [ ] Husband [ ] Wife [ ] Either should assume primary responsibility for paying bills.

14. A household’s financial situation should be reviewed:[ ] weekly, [ ] monthly, [ ] quarterly, [ ] annually.

15. It’s okay for husbands and wives to have separate bank accounts. [ ] Yes [ ] No

www.ThreeRules.org

Permission Agreement

I hereby give permission to __________________________ to share my financial

information with the deacons at _________________________________ Church.

Date _________________________

_____________________________Signed


ASSETS: What we own DEBT: What we owe





Boats Personal Loan


RVs Personal Loan

Other Credit Card

Emergency Savings Credit Card

Short Term Savings Credit Card


IRA, 401k (RRSP, RPP) Credit Card




Other Other

Other Total Payments/Debts

Total Assets Net Worth -- Assets minus Debts



INCOME (PER MONTH)INCOME 1INCOME 2INCOME 3

TOTAL INCOME


GIVING HOUSING PROPERTY TAXES *CHURCH RENT (SEE CAT 1 FOR MORTGAGE) HOME INSURANCE *OTHER PROPERTY TAXES HOME MAINTENANCE

TAXES INSURANCE CAR INSURANCE *FEDERAL TAX UTILITIES (GAS, ELEC, WATER) CAR MAINTENANCESOCIAL SECURITY (US ONLY) GARBAGE PICK-UP CLOTHING/HIMMEDICARE TELEPHONE/CELL PHONES CLOTHING/HERSTATE/PROVINCIAL TAX FOOD CLOTHING/KIDSCITY TAX FOOD DOCTOR

DEBT RETIREMENT CAR DENTISTCAR LOANS GAS EYE CAREMORTGAGE LOAN INSURANCE (IF PAID MONTHLY) LIFE INSURANCE *PERSONAL LOANS INSURANCE HEALTH INSURANCE *CREDIT CARDS HEALTH (IF PAID MONTHLY) VACATIONSTUDENT LOANS LIFE (IF PAID MONTHLY) GIFTS (BIRTHDAYS, ETC.)OTHER LOANS ENTERTAINMENT GIFTS (CHRISTMAS)

SAVINGS ENTERTAINMENT OTHEREMERGENCY ACCOUNT EATING OUT OTHERSHORT TERM SAVINGS BABYSITTERS OTHERLONG TERM SAVINGS CABLE/INTERNET

TUITION/CHILD CARETOTAL CATEGORY 1 EXPENSES TUITION TOTAL CATEGORY 3 EXPENSES

DAY CARE/CHILD SUPPORT * Leave blank if included in prior column.MISCELLANEOUS

PRESCRIPTIONS SUBSCRIPTIONS

Future Needs: LUNCHESPET SUPPLIES/VETHAIRCUTS, ETC TOTAL EXPENSE CIGARETTES (Category 1+2+3)MISCMISCMISC SURPLUS/DEFICIT CASH (WALKING AROUND MONEY) (Total Income - Total Expense)

TOTAL CATEGORY 2 EXPENSES

CATEGORY 1 % OF INCOME CATEGORY 2 % OF INCOME CATEGORY 3 % OF INCOME


Personal Financial Habits Assessment

When you answer these questions, it is important that you do so 100% truthfully. If you do notanswer them truthfully, you are only kidding yourself.

1. Are you living on a budget? [ ] Yes [ ] No

2. Do you know how much debt you have within $1000? [ ] Yes [ ] No

3. Are you saving on a regular basis? [ ] Yes [ ] No

4. Do you balance your checkbook monthly? [ ] Yes [ ] No

5. Are you happy with your giving? [ ] Yes [ ] No

6. Do you pay off your entire credit card balance each month? [ ] Yes [ ] No

7. Do you make all your loan payments on time? [ ] Yes [ ] No

8. Do you know how much cash you spend every week? [ ] Yes [ ] No

9. Do you buy things on impulse? [ ] Yes [ ] No

10. Do you have more than one personal credit card? [ ] Yes [ ] No

11. Are you making payments on automobiles? [ ] Yes [ ] No

12. Are you making payments on a boat, RV or motorcycle? [ ] Yes [ ] No

13. Do you owe money to relatives? [ ] Yes [ ] No

14. Do you ever get a cash advance on a credit card? [ ] Yes [ ] No

15. Have you ever taken a cash advance against your paycheck? [ ] Yes [ ] No

16. Do you ever use your credit card because you can’t afford to pay cash? [ ] Yes [ ] No

Personal Financal Habit Assessment Results

If you answered “Yes” to questions 1-8 and “No” to the rest, you have a perfect score of 100%.Congratulations!

If you answered “No” to any of Questions 1-8, that is an area that will need some work.

If you answered “Yes” to any of questions 9-16, that is also an area that needssome work.

www.ThreeRules.org

Values Questionnaire

1. Husband [ ] Wife [ ] should assume primary responsibility for paying our bills.

2. We should plan to save ____% of our income for future needs.

3. We need ___ credit cards.

4. We should [ ] buy new cars [ ] buy used cars [ ] lease our cars.

5. It’s OK to take out a loan to purchase a car. [ ] Yes [ ] No

6. It’s OK to buy furniture on payments. [ ] Yes [ ] No

7. It’s OK to borrow money to pay for vacations. [ ] Yes [ ] No

8. It’s better to buy a home than to rent. [ ] Yes [ ] No

9. We should mortgage our home for ___ years.

10. We should plan to give ___ % of our income back to God.

11. We should live on a budget. [ ] Yes [ ] No

12. We should own everything in common. [ ] Yes [ ] No

13. We should review our financial situation[ ] weekly [ ] monthly, [ ] quarterly, [ ] annually.

14. We should discuss any unbudgeted purchase over $__________.

15. We should pray about any purchase over $__________.

16. We should live on one income after we have children. [ ] Yes [ ] No

17. We should send our children to Christian School. [ ] Yes [ ] No

18. We should agree to agree on all of the above. [ ] Yes [ ] No

Three Rules


Section Seven:

Financial Workshop



Toolscomments regarding this book and any relatedfinancial questions to the author at:

[email protected]

Simple

]|xHISBN 0-9749105-0-3

krb


Financial Workshop Tools

How Much Car Should You Buy?

How Much House Should You Buy?

How to Get Out of Debt

Money Trivia

Savings Calculator

Savings Comparison

Seven Simple Investment Rules

Steve and Jessica’s Credit Card Debt

Steve and Jessica’s Finanical Mistakes

Steve and Jessica’s Personal Asset and Debt Inventory

Steve and Jessica’s Personal Cash Flow Plan

The Borrowing Test

How Much Car Should You Buy?

The following page will help you answer that question. It outlines three car-buyingscenarios.

Ralph, Tom and Bill each bought a car.

Ralph bought a new car for $20,000, paid $2000 down and financed the balance for 5years at 9.75% interest.

Tom bought a used car for $12,000, paid $2000 down and financed the balance for 3years at 10.5% interest.

Bill bought a used car and paid cash.

Even recognizing that Tom and Bill will have more repair costs over the years, ourillustration indicates that Ralph’s cost per year is almost two times Bill’s cost. Thatdoesn’t even include the fact that Bill’s cost to insure a $12,000 used car will be a lot lessthan Ralph’s cost to insure a $20,000 new car.

Your initial reaction to a savings of $2000 per year might be that it isn’t that significant.That all depends on how you look at it. If Bill was to invest that $2000 annual savings hewould have over $200,000 in an investment account after 30 years.

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Three Car-Buying Scenarios

Ralph Tom BillNew Used Used

Financed Financed Cash

Purchase Price $20,000 $12,000 $12,000

Downpayment $2,000 $2,000 $12,000

Amount Financed $18,000 $10,000 $0

Term in Months 60 36 0

Interest Rate 9.75% 10.5% 0.0%

Monthly Payment $380.24 $325.02 $0.00

Repairs over 3 years $0 $1,500 $1,500

Loan Balance $8,179 $0 $0after 3 years

Resale Value $12,000 $6,000 $6,000after 3 years

Net Cost $11,868 $7,701 $6,000

Cost per Year $3,956 $2,567 $2,000

Notes:

Used cars assumed to be 3 years oldNet Cost = Downpayment + Total Payments + Repairs + Payoff – Resale Value.

How Much House Should You Buy?

The chart on the following page demonstrates two house-buying scenarios. Ralph buys ahome for $120,000 and finances it for 30 years at 8.5%. Bill buys a home for $70,000and finances it for 7 years at 7.5%. They both put down $20,000. Their payments areapproximately the same.

After 7 years Bill’s home is paid in full and he sells it and buys a $120,000 home with$70,000 down. He again finances the balance for 7 years at 7.5% so his payments staythe same.

At the end of 14 years Bill owns his $120,000 home free and clear. At this point Ralphstill owes $80,557.

From year 15 through year 30 Bill no longer needs to make a mortgage payment, so heinvests an amount equal to the mortgage payment he used to make, at an average returnof 7.5%.

At the end of 30 years both Ralph and Bill own a $120,000 home free and clear.However, in addition to his home, Bill has an investment account of $283,174. The only“penalty” Bill had to pay to accomplish this was to live in a $70,000 house for 7 yearswhile Ralph lived in a $120,000 house.

(Although both homes probably appreciated during this time period we kept the valuesconstant to make the illustration more simple.)

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Two House-Buying Scenarios

Year 1 Ralph Bill

Purchase Price $120,000 $70,000

Downpayment $20,000 $20,000

Term in Years 30 7

Interest Rate 8.5% 7.5%

Monthly Payment $768.91 $766.91

Year 8

Payoff Balance $93,079 $0

Purchase Price $120,000

Downpayment $70,000

Term in Years 7

Interest Rate 7.5%

Monthly Payment $768.91 $766.91

Year 15

Payoff Balance $80,557 $0

Year 30

Assets (House) $120,000 $120,000

Investment Account $0 $283,174

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How to Get Out of Debt

1. Stop accumulating new debt. (Get rid of the credit cards. Resolve to not takeon any new debt.)

I/We agree to stop accumulating new debt.

2. Figure out where you are. (Personal Asset/Debt Inventory)

I/We have completed a Personal Asset/Debt Inventory.

3. Set a goal for debt reduction.

It is our goal to eliminate $______________ of debt by ____________(date).

4. Create a Personal Cash Flow Plan and look for expenses that could bereduced. Apply this money to debt repayment.

I/we are committed to reducing expenses by $_________ and using themoney to reduce debt.

5. Identify assets that could be sold to reduce debt.

I/We have identified $_________ worth of assets that can be sold to reducedebt.

6. Increase income and apply to debt repayment.

I/we will increase income by $__________ and use the money to reduce ourdebt.

7. Snowball debt repayment. (Apply all extra money to your smallest debt. Assoon as that debt is paid off apply that debt’s payment and all extra money toyour next smallest debt. Keep doing this until all or your debt is paid off.)

I/we are committed to using the snowball method to getting out of debt.

8. Don’t give up.

I/we are committed to seeing this process through until we haveaccomplished our debt reduction goal.


Money Trivia

Credit Cards Facts:

• 1947 - First Credit Card• 1950 - Dinners Card (27 restaurants in NYC)• 1950 - American Express• 1958 - Bank Americard (Later became VISA)

Have you ever really looked at a dollar bill?

Right Side• eagle represents strength• arrows and an olive branch (war and peace)• “e pluibus unum” means in diversity there is unity

Left Side• The pyramid represents strength and permanence of our country.• The pyramid has been left unfinished to signify that our country is unfinished.• The triangle above the pyramid represents the trinity.• The eye surrounded by the sunburst represents God.• “Novus ordo seclorum” means He has favored our undertakings.• “Annuit Coeptis” means a new order for the ages.

Roman numerals = 1776

The statement “In God we Trust” has been on every bill and coin in the US since1864 and became the official motto of the United States in 1956.

Ironic because it is in the area of money that we trust God the least.

Is it true that the Bible says that money is the root of all evil?

NO – “the love of money is a root of all kinds of evil. Some people, eager formoney, have wandered from the faith and pierced themselves with many griefs.”1 Timothy 6:10

What is a FICO score?

• credit scoring system developed by Fair Isaac & Co. begun in the late 1950s.• your credit record boiled down to one number.• every one has a FICO score.• a score of under 600 means you have poor credit.• a score of 600 –650 means your credit is marginal.• a score of 650 – 800 is good.


• the lower you score the more you will pay to borrow money.• insurance premiums can also be higher for people with a low FICO.

Ponzi Scheme

A Ponzi Scheme develops when someone offers a high rate of return on aninvestment but uses the next investor’s money to pay prior investors. Ultimately aPonzi Scheme collapses because it runs out of money.

A Riddle:

Q: Ten years ago, Jim found a coin dated 425 BC. He took it to a coin collectorwho took one look at it and told Jim it was a fake. How did the coin collectorknow?

A: In 425 BC, no one knew that it was “BC” therefore, that would not have beenwritten on the coin.

Did you know?

• Paying off a 22% credit card is the same as earning 22% on your money!

• If you have a $2000 credit card balance that charges 21% and make theminimum payment (2% or $20, whichever is more). It will take 32 years to pay itoff. You will have paid a total of $10,000.

• If you save $100 per month and invest at 10% = $325,000 after 35 years.

• Most mortgages are paid off after 7 – 8 years.

• Mortgage balance after 5 years of a 30 year mortgage @ 7% interest = 94% oforiginal.

• In 1950, average housing costs consumed 14% of income.• In 2000, average housing costs consumed 35 – 40% of income.

• Great Depression - 5 bankruptcies per 1000 people• 2000 - 52 bankruptcies per 1000 people

•In 1950, American Savings Rate was 10 – 12%•In 1998, American Savings Rate was negative.

Savings Calculator

This Savings Calculator will help you to determine how much you needto save per month in order to accumulate a savings account of $10,000based on a specified time period and expected rate of return.

For example, if you wanted to have a savings account of $10,000 in 10years and you anticipated an average interest rate return of 5% youwould need to save 64.40 per month.

Once you know what you have to do to save $10,000 you can quicklycalculate how much you need to save monthly to accomplish anysavings goal.

For example, if it is your goal to save $20,000 all you have to do ismultiply the monthly savings amount for $10,000 by 2.

www.ThreeRules.org

Savings Calculator Chart

Interest Rate 10 Years 20 Years 30 Years 40 Years

5% $64.40 $24.33 $12.02 $6.55

6% $61.02 $21.64 $9.96 $5.02

7% $57.78 $19.20 $8.20 $3.81

8% $54.66 $16.98 $6.71 $2.86

9% $51.68 $14.97 $5.46 $2.14

10% $48.82 $13.17 $4.42 $1.58

11% $46.08 $11.55 $3.57 $1.16

12% $43.47 $10.11 $2.86 $0.85

Savings Comparison Chart

(Assumes 10% Return)

Ralph and Bill are the same age. They both believed in saving. However, Ralph decidedto start saving at an early age. Bill decided to wait until he could afford it. Ralph saved$1200 per year for ten years. Bill waited for ten years and then started saving $1200 peryear and continued for 30 years. Even though Bill contributed $1200 per year to hissavings account for 30 years he never caught up to Ralph.

See the next page for the result of these two approaches.

That is why the time to start saving is now!

www.ThreeRules.org

Savings Comparison Chart(Assumes 10% Return)

Value of Value ofYear Ralph Savings Account Bill Savings Account1 $1,200 $1,2602 $1,200 $2,6463 $1,200 $4,1714 $1,200 $5,8485 $1,200 $7,6926 $1,200 $9,7227 $1,200 $11,9548 $1,200 $14,4099 $1,200 $17,11010 $1,200 $20,08111 $22,089 $1,200 $1,26012 $24,298 $1,200 $2,64613 $26,728 $1,200 $4,17114 $29,401 $1,200 $5,84815 $32,341 $1,200 $7,69216 $35,575 $1,200 $9,72217 $39,132 $1,200 $11,95418 $43,046 $1,200 $14,40919 $47,350 $1,200 $17,11020 $52,085 $1,200 $20,08121 $57,294 $1,200 $23,34922 $63,023 $1,200 $26,94423 $69,326 $1,200 $30,89924 $76,258 $1,200 $35,24825 $83,884 $1,200 $40,03326 $92,272 $1,200 $45,29727 $101,500 $1,200 $51,08628 $111,650 $1,200 $57,45529 $122,815 $1,200 $64,46030 $135,096 $1,200 $72,16631 $148,606 $1,200 $80,64332 $163,466 $1,200 $89,96733 $179,813 $1,200 $100,22434 $197,794 $1,200 $111,50735 $217,573 $1,200 $123,91736 $239,331 $1,200 $137,56937 $263,264 $1,200 $152,58638 $289,590 $1,200 $169,10539 $318,549 $1,200 $187,27540 $350,404 $1,200 $207,262

www.ThreeRules.org

Seven Simple Investment Rules

1. Don’t invest in stuff you don’t understand.

2. Don’t expect to get rich overnight.

3. If you are going to invest in individual stocks as opposed to mutual fundsmake sure you know more about that company than the experts on WallStreet.

4. Exercise discipline and patience vs. reaction and panic.

5. Invest regularly.

6. Never invest solely on a tip. Most inside information is either old orwrong.

7. Diversify! DIVERSIFY!! DIVERSIFY!!!


Steve and Jessica’s Credit Card Debt

Total Credit Card Debt $9,500Monthly Payments $241/monthInterest 18% – 23.9%

Assuming Steve and Jessica stop creating any new debt and continue with their currentminimum payments ($241 per month), ask the class:

“How long do you think it will take them to pay off their debts?”

The answer is that it will take over 9 years to pay off their debts.

During that time they will pay:

$9,500 of credit card debt$7,873 of interest

Grand total of $17,373.

This assumes that they continue with the current minimum payments.

However, as the debt balance drops, the bank will reduce the minimum payment. If they fall intothis trap it will take even longer to pay off this debt and will cost even more interest.

Total Credit Card Debt $9,500Monthly Payments 2% of DebtInterest 18% – 23.9%

Assuming Steve and Jessica stop creating any new debt and only make the decreasingminimum payments, ask the class:

“How long do you think it will take them to pay off their debts?”

The answer is that it will take 94.5 years to pay off their debts.

During that time they will pay:

$9,500 of credit card debt62,298 of interest

Grand total of $71,798.

www.ThreeRules.org

Steve and Jessica’s Financial Mistakes

1. Too much college debt.

2. Financing the honeymoon.

3. Leasing new cars.

4. Buying used cars that were too expensive & financing 100%.

5. Giving is not a priority.

6. Buying a home too early.

7. Looking at houses they couldn’t afford.

8. Buying a house that was 30% over their budget.

9. Thirty-year mortgage.

10. Borrowing from parents.

11. Buying furniture on credit.

12. Using a credit card to buy clothes.

PERSONA

L ASSET A

ND DEBT INVENTO

RY

STEVE A

ND JESSICAA

SSETS (What w

e own)

DEBT (What w

e owe)

DescriptionV

alueDescription

Payment

RateBalance O

wed

Car # 1Steve's

$11,250Car # 1 Loan

$375.009.00%

$8,170

Car # 2Jessica's

$9,000Car # 2 Loan

$304.0010.00%

$6,595

Real Estate$138,000

Mortgage Loan

$795.008.50%

$99,000

BoatsFishing Boat

$2,500Personal Loan

Parents$75.00

8.00%$4,700

Motorcycles

Personal Loan

RVs

Personal Loan

Other

Credit CardV

isa$50.00

18.00%$2,500

Emergency Savings

Credit CardDiscover

$50.0018.00%

$2,500

Short Term Savings

$0Credit Card

Babies R Us$50.00

21.00%$2,000

CD's Credit Card

Sears$31.00

21.00%$1,500

IRA, 401k etc.

$6,400Credit Card

Van's

$43.0023.90%

$800

Mutual Funds

Credit CardPier O

ne$17.00

23.90%$200

Stocks, Bonds, etc.Student Loans

$425.008.00%

$20,942

Cash Value Life Ins

Other

Other

Other

Other

Total Payments/Debts

$2,215.00$148,907

Total Assets

$167,150Net W

orth -- Assets m

inus Debts$18,243

PERSONA

L CASH FLO

W PLA

N

INCOM

E (PER MO

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The Borrowing Test

If and when you do decide to borrow money there are a few questions that you should askyourself. Any question to which you answer “yes” is a warning light that should cause you toreconsider your borrowing decision.



Am I borrowing money to pay for a purchase driven by pride/ego?Am I justifying my buying decision on the basis that everyone is doing it?









Three Rules


Section Eight:

Appendix




[email protected]

Simple

]|xHISBN 0-9749105-0-3

krb


Appendix

Starting a Financial Counseling Ministry at Your Church

Deacon PolicySample letter to deacons

Debt Counseling Agencies

ResourcesInternet SitesBooksNewsletters

Getting Started

www.ThreeRules.org

Starting a Financial Counseling Ministry at Your Church

Obviously the first thing you will need to start a Financial Counseling Ministry at yourchurch are prospective counselors. The characteristics of individuals who typically makegood Christian counselors are:

• Comfortable with numbers• A heart for people• Have their own house in order• Have a Christian Testimony

You may know some people with these characteristics who you can approach directly oryou may want to advertise in your bulletin.

Running the following ad in your bulletin will hopefully generate the response that youneed.

Financial problems are the number one cause of marriage failure and otherbroken relationships. Most financial problems can be corrected. Help usreach out to our members and to our community. We are looking for twoor three people who are willing to be trained as financial counselors.Training starts ______________. Call _____________________ at_______________ if you are interested in working with us in this ministry.

Once you have some prospective counselors you will need to do some training or askeach counselor to go through this self study course.

When we do group training we generally spend about seven hours. My favorite format isFriday from 6:00 – 9:00 PM and then Saturday from 8:00 AM to 12:00 noon. Grouptraining should be led by someone who has been counseling for some time.

Once you have trained counselors you can begin to advertise for clients. These are somesample ads we typically run in our church bulletin.

Do you have a friend, co-worker or neighbor who could use some helpgetting their financial house in order? Our Financial Counseling Ministry isavailable to help. Call ______________ at _________________, for moreinformation. This service is free.

Are you running out of money before you run out of month? Our FinancialCounseling Ministry is available to help you. Call _______________ at_________________ for more information or to set up an appointment.

If you would like to create a brochure about your financial counseling ministry, thesample copy on the next page will be helpful.

Seven Steps to FinancialFreedom

What is the “Seven Steps FinancialCounseling Ministry”?

The Seven Steps Financial CounselingMinistry is a ministry that provides one-on-one Christian financial counseling tomembers and friends of the __________Church. This counseling is provided bya group of volunteers who have beentrained to help those who would likeassistance in taking charge of managingtheir finances in a biblical manner.

What does “financial counseling”from a “Christian Perspective” mean?

Providing financial counseling from aChristian perspective means that welook at how to make our moneydecisions based on the principles taughtin God’s Word – the Bible. Scripturehas much to say about what we do withour money. There is a lot of practicaladvice in the Bible about money.

Why is the ministry called “SevenSteps”?

We call it “Seven Steps” because wehave identified seven Biblically basedsteps, which, if followed, we believewill lead to financial freedom.

What are the “Seven Steps”?

1 – Understand that God is the Owner ofEverything. (II Chronicles29:11-12)

2 – Understand Man’s Role as Managerof God’s Creation. (Psalm 8:6)

3 – Freely You Have Received, FreelyGive. (Matthew 10:8)

4 – Set Some of Your Income Aside forFuture Predictable Needs.(Proverbs 21:20)

5 – Be Content to Live on the Rest.(Hebrews 13:5)

6 – Avoid Debt. (Proverbs 22:7)

7 – Trust and Obey. (Proverbs 3:5-6)

What types of financial problems does“Seven Steps” deal with?

The most frequent type of problem wedeal with our situations where expensesregularly exceed income, either resultingin debt, or caused by debt. However, acounselor would be happy to meet withyou to discuss any type of financialproblem.

What can I expect if I meet with a“Seven Steps” counselor?

Normally, you would meet with a“Seven Steps” counselor a minimum ofthree times over a period of three to fourweeks. Each meeting will last about onehour.

At the first meeting, our objective willbe to share our seven-step approach withyou and get to know you. At the secondmeeting, the counselor will ask you tobring in specific numbers regarding yourincome, expenses, assets and debts. Theobjective of this second meeting is tomake sure that the counselorunderstands your financial situation.

Once the counselor has all the numbersneeded, he or she will put together aspending plan (also known as a‘budget’), designed to help youaccomplish your goals. This spendingplan will be shared with you at the thirdmeeting. The counselor will also offerrecommendations and suggestions.

Who are the Counselors in the “SevenSteps to Financial Freedom”ministry?

They are men and women who weregifted by God in the area of financialadministration. They have been trainedto help others get their ‘financial house’in order.

What about confidentiality?

Be assured that your privacy andconfidentiality are important to us. Wetake God’s admonition seriously whenHis word says, … do not betray anotherman’s confidence, or he who hears itmay shame you and you will never loseyour bad reputation. (Proverbs 25:9b-10)

Don’t let pride rob you of this help thatis available to you. The Bible says…Therefore, there is no condemnation forthose who are in Christ Jesus. (Romans8:1) You will be treated with love andrespect.

How much does it cost to meet with a“Seven Steps” counselor?

There is no charge for this service. The“Seven Steps to Financial Freedom” is aministry of _________________ Churchand the members who participate in theministry as counselors.

What do I have to do to set up anappointment with a “Seven Steps”counselor?

All you have to do is call ___________at the church at _____-_____-_______.We will take it from there.

If you or someone you know couldbenefit from this ministry, we wouldlike to hear from you.

www.ThreeRules.org

Deacon Policy

You should discuss with your deacons when they should refer clients to the FinancialCounseling Ministry and when the Financial Counseling Ministry should refer clients tothe deacons.

Due to the confidential nature of counseling, it is highly recommended that you getpermission from your clients before sharing any of their information with the deacons. APermission Agreement is available in the Blank Forms section for your use.

If the deacons refer a client to you and want feedback, provide information to the deaconsin a written form. A sample letter follows this page.

In our church, the deacons refer clients to the Financial Counseling Ministry beforegiving them financial assistance for the second time.

The deacons may also be able to orchestrate support for your clients through othermembers of your church. For example, there may be situations where the deacons canrecruit church members to help your counseling client with a used car, furniture, anappliance, job or perhaps child care on a temporary basis.

www.ThreeRules.org

To: First Church Deacons

I had the opportunity to meet with Mickey and Minnie Mouse to review their financialinformation. My conclusions are as follows:

1. Mickey and Minnie manage their money very well. They are aware of where theirmoney is going and they do not appear to be spending excessively in any category.

2. Given their current limited income, resulting from Mickey losing his job, they areexperiencing negative cash flow of approximately $1,200 per month.

3. Short term belt tightening could reduce their negative cash flow by $700 per month.

4. Belt tightening would leave them with negative cash flow of approximately $500 permonth.

5. Mickey and Minnie tell me they are contributing $500 per month to the church.

6. From an asset standpoint, Mickey and Minnie have approximately $43,000 equity intheir home, approximately $12,500 in a 401K and approximately $15,000 in cash valuelife insurance.

7. Additional income opportunities are limited to additional part time employment for eitherMickey and Minnie.

Call me if you have any additional questions.

John Counselor

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Debt Counseling Agencies

There are many debt counseling agencies that advertise in newspapers, by direct mail, onthe radio and on television. Many of them are just fronts for people in the debtconsolidation business.

In researching a debt counseling agency it is important to confirm exactly what servicethey are offering you. Some questions to consider are:• Is this a non-profit organization?• Are there fees for their services?• Are they being paid by the creditors?• How will any program I enroll in affect my credit rating?

Some terms:Debt Counseling: Often free, many organizations will offer to help you understand whatyour options are to get out of debt.Debt Consolidation: This option typically results in a new loan that is used to pay offexisitng debts. While lowering interest rates, the client is often required to put their homedown as collateral on the new loan. If client defaults on that loan, the client risks losingtheir home. This is NOT a recommended means of lowering debt.Debt Management: This option simplifies the clients’ finances by allowing them to paytheir debt management agency one payment each month. That agency then disburses thefunds to the various creditors. Working with the creditors, the agency is often able tolower interest rates and reduce calls from the creditor.Debt Settlement: This option involves the debtor and creditor to come to an agreementto settle the debt for less than what was originally owed. Debt counseling agencies willoften negotiate this on behalf of their client.

Some examples of debt information sources are as follows:

GreenPath Debt Solutions is a non-profit organization that has been helping consumerssince 1961. Also known as Consumer Credit Counseling Service, this is an organizationthat works with people that have excessive debt. In some cases, they can lower creditcard balances and/or interest rates. They will also manage your client’s checkbook for anominal fee. They can be located at http:// www.greenpath.com

Consumer Credit Counseling Service of Greater Atlanta also offers debt counseling. Theybegan in 1964 servicing the Atlanta community, but now offer nationwide phone and on-line counseling while still offering face-to-face counseling in Georgia and Florida.Recommended by Crown Financial Ministries, they offer free consultations for creditcounseling. Their web site is http://www.cccsatl.com.

Another organization is Myvesta, previously known as Debt Counselors of America.They are a non-profit organization that offers Consumer Education. They can be locatedat http://www.dca.org.

www.ThreeRules.org

Resources

Internet Sites

A few of my favorite web sites dealing with money management are:

• Crown - www.crown.org

• Christian Stewardship Association - www.stewardship.org

• Sound Mind Investing Newsletter - www.soundmindinvesting.com

Books

A few of my favorite books dealing with money management are:

• Your Money Counts - Howard Dayton

• Money, Possessions and Eternity - Randy Alcorn

• Financial Peace - Dave Ramsey

Newsletters

A couple of my favorite newsletters dealing with money management are:

Sound Mind Investing (SMI) NewsletterBox 22128Louisville, KY 40252-0128(502) 426-7420

Money MattersCrown601 Broad Street SEGainesville, GA 30501(770) 534-1000


www.ThreeRules.org

Getting Started

So, you have now made it to the back of the manual. We are going to assume that you’ve readthe financial counseling section and the case studies and have your first appointment set up withyour first client. But the question may still remain:

What EXACTLY am I supposed to do?

While each situation will be different, here are some Counseling Session Agendas to aid you inkeeping on track and focused throughout your meetings. Each agenda contains a brief outline ofthe meeting with important tips and reminders for the meeting.

Also, don’t forget about our website at http://www.ThreeRules.org. There is a specialCounselors’ Corner just for you with access to fresh copies of any of the forms you might need.You can also contact us from that link with any general or specific questions that may come up.

So, be encouraged, you are not alone!


www.ThreeRules.org

Meeting Number One

Before the Meeting:• Send your client a copy of Three Simple Rules and the Personal Financial Habit Assessment.(Forms Section) Ask them to read the Introduction and Part One of Three Simple Rules and tocomplete the Personal Financial Habit Assessment. Ask them to bring both to the first meeting.

Locate all the necessary forms for the meeting, make copies as needed:• Steve and Jessica’s Mistakes (Financial Workshop Tools section.)• Blank Client Profile (Forms section)• Blank Personal Asset and Debt Inventory (Forms section)• Blank Personal Cash Flow Plan (Forms section)

Agenda:

1. Spend some time getting to know each other.


3. Give them an overview of the counseling process:• 3 – 4 meetings• homework

4. Homework Check:• What did you think of Steve and Jessica’s story?• What were some of the mistakes they made?• Have you made any of the mistakes Steve and Jessica made?• What did you learn from reading Part One of Three Simple Rules?Collect the Personal Financial Habit Assessment. Briefly review, but no major commentsneed to be made at this time.

5. Complete the Client Profile. Start with name, address etc. and then follow through withthe entire 3 page profile. Take notes.

6. Explain the Personal Asset and Debt Inventory and the Personal Cash Flow Plan and thencomplete parts of both to familiarize the client with the forms.

7. Assign Homework:• Read Part Two and The Addendum of Three Simple Rules.• Complete both forms as much as possible. (Give client the forms started in Step 6.)• Bring a recent pay stub and the completed forms next time.

8. Schedule next meeting and close with prayer.


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Meeting Number Two

Before the Meeting:• Review notes from previous meeting.

Locate all the necessary forms for the meeting, make copies as needed:• Diagnosis and Prescription Form (Forms Section)

Agenda:

1. Small talk and opening prayer.

2. Homework Check:• What did you learn from reading Part Two and the Addendum of Three Simple Rules?• Any questions about Part Two or the Addendum?• How do you plan to apply what you learned?• What did you learn in the process of completing the forms?

3. Review forms and try to fill in missing data. Begin with Personal Asset and DebtInventory and move on to Personal Cash Flow Plan.

Ask the clients if they have any questions about the forms. Make sure they understand allthe expense categories. Make sure you understand all their numbers.

The objective of this session is to get all the numbers for both forms so that both you andthe client can move on to the Diagnosis and Prescription phase. If any numbers aremissing you may have to have your client call you.

4. Review goals from the Client Profile with your client. Make sure you understand themso you can take them into consideration in the Prescription phase.

5. Assign Homework:• Read Part Three of Three Simple Rules.• Write your own Diagnosis of your situation and some Prescription options. (Provide a blank Diagnosis and Prescription Form from the Forms section.)

6. Counselor Homework: Write your Diagnosis and Prescription for the client.

7. Schedule next meeting.



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Before the Meeting:• Review notes from previous meetings.• Review the client’s Personal Financial Habit Assessment so you can offer constructive adviceabout habits that need to be changed.• Complete your own Diagnosis and Prescription of the client’s situation. Be sure to put this inwriting. Diagnosis and Prescription Forms available in the Forms section. (See the Notes onMeeting Number Three in the Financial Counseling section of this manual for tips on writing thisDiagnosis and Prescription.)

Agenda:


2. Homework Check:• What is your Diagnosis of your financial situation?• What Prescription options have you thought about?

3. Share your Counselor Diagnosis. Use the Personal Financial Habit Assessment to pointout the habits that have caused their existing situation.

4. Review client’s goals (from Client Profile)• ID what needs to occur for your client to achieve their goals.• contrast where they are and where they want to be.

5. Share Counselor Prescription Options• Cut expenses.• Sell assets.• Increase income.• Consider debt restructuring. (Remember, this is an absolute last resort!)

6. Explain to them what will happen if they don’t do something different. Be specific!

7. Assign Homework:• Decide which prescription options will be implemented. Bring to the next meeting.• Read Part Four and Five of Three Simple Rules.

8. Schedule next meeting.



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Meeting Number Four

Before the Meeting:• Review all notes from previous meetings.

Locate all the necessary forms for the meeting, make copies as needed:• The Borrowing Test (Financial Workshop Tools)• How to get out of Debt (Financial Workshop Tools)

Agenda:


2. Homework Check:• Which of the Three Rules will be the hardest for you to follow? Why?• What did you think about Part Five – Living by God’s Rules?• Which prescription options did you decide to implement?

3. Redo the Personal Cash Flow Plan based on the new decisions.• Does it balance?• Does it accomplish the client’s goals?

4. How to Follow the Rules:

Rule One: Spend Less than You Earn.Explain Paycheck Management System as necessary.Explain Spending Management System as necessary.

Rule Two: Save Now! Buy Later.Review your client’s DECISION regarding how much they plan to save per month.Talk about the importance of having the DISCIPLINE to stick with the plan.

Rule Three: Know Debt• Know how much debt you have – review how much debt your client has.• Know the consequences of debt – review what debt could do to your client.• Know the types of debt – review the types of debt from bad to worst.• Know the Borrowing Test – review the Borrowing Test with your client.• Know how to get out of debt – review the How to get out of Debt Plan with you client.

5. Schedule future meetings as needed.


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