Basic Budgeting, Debt Elimination,

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Basic Budgeting, Debt Elimination, Deferred
Compensation Basics
Brought to you by your 457 Plan Partners
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What We Are Going To Talk About Today?

• How to develop stick to a budget
• How to get out stay out of debt
• Why is it important to become debt free
• How to budget for your retirement savings
• Q A

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Building your personal budget

• Budget worksheet (handout)
• Know your sources of income
• Live within your means
• Plan to pay off debt as part of your budget

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How Does Being Debt Free Benefit Me?

• Removes the financial obligations that bind you
• Strengthens your financial position Security
• Upgrades your lifestyle
• More options
• Peace of mind
• FINANCIAL INDEPENDENCE!

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How Do I Become Debt Free?

• K.I.S.S. Keep It Simple Straightforward
• Know where your money is, and where its going
• Develop a budget
• Pay Yourself First
• Determine a Payment Enhancer
• Prioritize your debt
• Focus on attacking one debt at a time
• Apply the Payment Enhancer
• Repeat until ALL debt is eliminated

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What Is A Payment Enhancer?

• Simply, any money that you can put toward your
  debt beyond the minimum monthly payment
• Second income
• Cut-backs
• Raises
• Unexpected monies
• Payment Enhancer MUST be financially comfortable!

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How Do I Prioritize My Debt?

• Always remember K.I.S.S.
• Highest monthly payment
• Lowest monthly payment
• Highest interest rate
• Lowest interest rate
• Highest balanced owed
• Lowest balanced owed
• Whatever works best for you!

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Lets See What This Looks Like!

• An Example

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Some Assumptions

• Typical debt structure
• Four debts total
• -Two car payments
• -Two credit card payments
• Various balances and interest rates
• Monthly payments are at 2 of principle
• Payment Enhancer of 200 monthly

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Example

• Note The figures shown are representations of
  typical debt,
• and are to be considered illustrative
  for the purposes
• of this presentation.

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Prioritizing The Debt

• Remember K.I.S.S. Prioritize based on the
• simplest
  method.

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Determine Payoff Schedule

• K.I.S.S. Chose to prioritize payoff schedule by
• focusing on monthly payments.
• Ranked in descending order.

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Add The Payment Enhancer

• Add Payment Enhancer
• Make minimum payments only on other debt
• Continue this method until the first debt is
  completely eliminated
• Repeat method on all debt until all debt is
  eliminated

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Debt Elimination In Action!
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Debt Elimination In Action!
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Debt Elimination In Action!
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Debt Elimination In Action!
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Debt Elimination In Action!
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Debt Elimination In Action!

• After applying the debt elimination
• method to the debt structure in this
• example, this person becomes
• DEBT FREE in 82.93 months.
• Thats less than 7 years!

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Debt Elimination In Action!

• Once debt free, you now have
• a positive monthly in-flow of 1339!
• Thats 16,068 a year!

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Debt Elimination In Action!...recap

• Stop acquiring debt
• Determine a Payment Enhancer
• Develop and follow your payoff schedule
• Be patient
• Be disciplined
• Focus on the why you want to become debt free
• You can be debt free in a few short years!

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What Now?

• PAY YOURSELF FIRST
• Accelerate paying off your home (optional)
• Save and pay cash for things
• Save for college, - etc.
• Invest in the market - 457 Plan
• Help others Charity, Church, etc.
• DO WHATEVER YOU WANT TO DO!

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Deferred Compensation Illustrations

• Never too early to start
• Difference between starting at different ages
• Effect on your paycheck
• Future account growth estimates

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Questions?

• ?