Post on 23-Feb-2016
description
Finding Financial Freedom
Wait patiently
Interdependent Truth
• Work Gloriously• Wait Patiently• Live Simply• Give Generously• Celebrate Community
Wait Patiently
• Impatience is very costly
Wait Patiently
• Impatience is very costly• When patience runs out somebody is going to get hurt...
Proverbs 22:7
“The rich rule over the poor and the borrower becomes the lender’s slave.”
Romans 13:8
“Let no debt remain outstanding, except the continuing debt to love one another.”
Case Study
• After working out the numbers you figure that you can buy a car for about R2200/month.
(Excluding maintenance, insurance, running costs etc.)
That means that you could finance:
• A car for R100 000
That means that you could finance:
• A car for R100 000 • @ 11%
That means that you could finance:
• A car for R100 000 • @ 11% • Over 60 months (5 years)
That means that you could finance:
• A car for R100 000 • @ 11% • Over 60 months (5 years) • Monthly payment of R2174
That means that you could finance:
• A car for R100 000 • @ 11% • Over 60 months (5 years) • Monthly payment of R2174• You pay R30 455 in interest.
OR - You could finance:
• A car for R50 000 • @ 11% • Over ??? months (v 5 years) • Same monthly payment of R2174• You pay ??? in interest.
The comparisonPrice R100 000 R50 000Interest Rate 11% 11%Monthly Payment
R2174 R2174
Term 60 Months (5 years)
23 Months (< 2 years)
Total Interest R30 455 R6 409
Because you have learnt to save...
• You then save your R2174 for the remaining 37 months @ 5% = R87 136.
Because you have learnt to save...
• You then save your R2174 for the remaining 37 months @ 5% = R87 136.
• (Actual savings could be even higher if you had placed this money in your bond, should you have one.)
Let’s assume at least 50% depreciation in tradable value over the 5 years.
• R100 000 option: After 60 months you have a car to trade in @ R50 000
Let’s assume at least 50% depreciation in tradable value over the 5 years.
• R100 000 option: After 60 months you have a car to trade in @ R50 000
• R50 000 option: After 60 months you have a car to trade in @ R25 000 and R87 136 saved for a total of R112 136
Let’s assume at least 50% depreciation in tradable value over the 5 years.
• R100 000 option: After 60 months you have a car to trade in @ R50 000
• R50 000 option: After 60 months you have a car to trade in @ R25 000 and R87 136 saved for a total of R112 136
• For the exact same monthly expense you have a 124% improvement!
For the boffins...
• Where interest rates go up the advantage will become even greater.
For the boffins...
• Where interest rates go up the advantage will become even greater.
• While maintenance may be more, this is somewhat offset by lower insurance.
For the boffins...
• Where interest rates go up the advantage will become even greater.
• While maintenance may be more, this is somewhat offset by lower insurance.
• If the 5 year depreciation is more than 50%, which is not unlikely, the percentage improvement of “option B” would be even greater.
It is not a Trick
• It is nothing less than a lifestyle choice shaped by your values!
It is not a Trick
• It is nothing less than a lifestyle choice shaped by your values!
• You learn to be your own banker, using money from your savings to finance future needs.
• Biblical counsel is not just “spiritual”, it is financially smart.
• Biblical counsel is not just “spiritual”, it is financially smart.
• It is either extravagance or impatience that gets too many of us into a spiral of debt.
• Biblical counsel is not just “spiritual”, it is financially prudent.
• It is either extravagance or impatience that gets too many of us into a spiral of debt.
• If you do not develop the discipline of saving,
you can never avoid the inevitability of debt.
Different Kinds of Debt
• Consumer debt
Different Kinds of Debt
• Consumer debt• Debt on depreciating assets
Different Kinds of Debt
• Consumer debt• Debt on depreciating assets• Debt on appreciating assets
Escaping Debt
• If you are in a hole, stop digging!
Escaping Debt
• If you are in a hole, stop digging!• Develop a repayment plan, starting with your most expensive debt.
Escaping Debt
• If you are in a hole, stop digging!• Develop a repayment plan, starting with your most expensive debt.
• Make yourself accountable to someone you trust.