Take it to the Bank

What Are The Causes Of Financial Problems?

Three Angels Broadcasting Network

Program transcript

Participants: Cordell Thomas

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Series Code: TITTB

Program Code: TITTB000015


00:01 On Take it to the Bank,
00:02 you'll find ways to get out of debt.
00:09 Solve your credit card problems.
00:14 How to make and stick with the budget?
00:20 Simple ways to save.
00:24 Buying or selling a home and many more financial matters
00:29 on Take it to the Bank.
00:32 Hi, my name is Cordell Thomas,
00:34 and welcome to Take it to the Bank.
00:36 We're gonna talk about a couple of things today,
00:38 that will support what we've talked about previously,
00:41 but in reference to stress, what causes stress,
00:43 some of the top issues that are relevant
00:45 surrounding stress
00:46 and how it would impacts the family.
00:48 We found out that,
00:49 what is the number one stress causer
00:52 in the United States around families is finance.
00:55 In fact, the top three stress source
00:58 that get to families and break up families
01:01 has to do with relationships within the family
01:04 and all of those relationships within the family
01:05 have to do with money.
01:08 So the top one is financial issues.
01:10 Number one is stressor is being in debt
01:13 or not being able to pay, certain things or losing a job,
01:16 those type of issues.
01:17 Second relevant issue has to do with jobs
01:22 and the work environment.
01:24 There's a lot of stress going on
01:25 in people's work environs,
01:26 and all you need to do is ask your friends
01:28 and see what's going on.
01:30 What happened in Michigan, when late '80s, early '90s
01:33 when the automotive industry went through a major change,
01:36 a lot of individuals were getting pink slips
01:39 or the layouts were happening
01:40 and people were uncertain
01:42 of what was going on their lives.
01:44 Now machines are whole different place,
01:46 because of how many jobs were related
01:49 to the automotive industry, very interesting.
01:52 As I lived through it between 80, 1988 and 1994,
01:58 and I saw the dynamics of people
02:00 and how there was an increase in violence within families.
02:06 And we saw some statistics that were relevant
02:08 and supported some of those issues.
02:09 So finance and debt can cause a lot of stress
02:14 and now we want to focus on in this program,
02:18 the relevance of what causes those financial problems.
02:23 What is the cause underlying that top stress factor
02:27 of finance.
02:28 As we're gonna talk through six specific issues.
02:32 Those six issues are:
02:34 The first one would be poor personal planning.
02:38 We'll go into it a little bit more depth
02:39 on that one in a minute.
02:41 Well, number two is unemployment or loss of income.
02:45 Number three would be expensive emergencies.
02:50 Number four would be bad financial advice.
02:53 Number five, risky investments.
02:56 I will talk a lot about that in a minute
02:58 and number six,
03:00 inadequate planning for retirement.
03:02 Those are the six issues we're going to talk about.
03:07 Now when we talk about these causes
03:10 of financial problems,
03:12 a lot of things resonate.
03:15 When we look at what's going on out there
03:18 and the causes of stress.
03:19 A lot of these causes of stress we talked about
03:23 could be an irritant, it could be a variety of things
03:25 but more so it has to do with finances.
03:28 And you are going to find that a lot of what we talk about
03:31 is helping to prevent certain financial issues
03:34 to happen before they do.
03:36 Because I am sure that you receive calls
03:38 and the mail with the pitch like saying,
03:40 "We'll protect you from scammers,
03:41 who would run up huge debts on your credit cards
03:43 without you knowing.
03:45 Just send us your credit card numbers
03:46 and we'll take care of you."
03:48 If someone calls you on the phone
03:50 and asks you for credit card number,
03:51 there is a problem,
03:53 because most legitimate business owners
03:54 do not ask for it.
03:55 They may ask for an identifying number,
03:58 they may ask for something separate,
03:59 but they do not ask for credit card numbers
04:02 or any type of financial or private information
04:05 that you would have.
04:07 You know that's a warning sign, so you try not to,
04:10 or you try to avoid those type of problems.
04:13 Now the facts are, offers of credit protection
04:16 or insurance against fraud
04:17 are attempts to get your personal data.
04:20 And if someone calls you out of the blue
04:22 that you don't know,
04:24 that's a warning sign to stay away from them.
04:27 They are just after your identity,
04:30 and after your money,
04:32 and after any type of finance, financial issue
04:36 that they can get their hands on.
04:38 So watch those type of things, so let's go through it.
04:41 Number one, we talked about
04:43 had to do with personal planning.
04:45 Poor budgeting is one of the reasons
04:48 why many people get into these financial strains.
04:52 If you are spending more money than you bring in,
04:55 you are setting yourself up.
04:57 If you are single and you are doing so,
04:59 it's a simple issue of figuring out
05:01 where your money is coming from
05:02 and figuring out where your money is going.
05:05 Those are the major items to think about.
05:08 A budget that solve that issue because you have your income,
05:11 your paycheck, your expenses, your rent, the car now,
05:13 and whatever the case may be.
05:15 Now, as you look at these issues,
05:18 it can be solved relatively easily.
05:20 Now, if you are married
05:21 and you are running to this type of issues,
05:23 you have a relationship with someone
05:24 and you're spending more than you bring in,
05:27 that causes a whole host of other problems.
05:30 That can even lead down to divorce
05:32 and a variety of other things,
05:33 so when you're talking about planning.
05:36 If you are married, look at a prenuptial agreement.
05:39 Whoa, Cordell, prenuptial agreement,
05:41 we are married, we are Christians.
05:42 Did you know
05:43 some of the statistics on divorce?
05:45 When you know,
05:47 then you'll probably make some substantive change.
05:49 I am going to get into that later time,
05:51 but did you know that we're around 30 to 33 percent
05:54 in divorce rates and that have to do with finances?
05:59 These are significant issues
06:00 and it can cause break up in relationships
06:03 if we don't address the issue.
06:06 Use of credit cards,
06:08 use of loans to pay certain debt.
06:12 One of the things that people used to offset
06:16 short-term concerns and short-term expenses
06:19 is to use credit cards to pay that off.
06:21 And you know that you are in a danger area
06:23 when you are using credit to pay off certain thing
06:26 that you should be using your paychecks
06:29 or the income to take care of.
06:32 In most situations if you're doing that,
06:33 it can tell several things are at stake.
06:36 It means that you are not preparing for
06:38 or taking care of future possible emergencies.
06:43 And we're gonna talk about expensive emergencies
06:46 in the next couple of steps,
06:47 but in this situation you are setting yourself up.
06:50 If you're using debt to pay off,
06:54 using credit to pay off debt,
06:55 you're running into a dangerous area.
06:58 Because once that interest start piling up,
07:01 it becomes more difficult to pay off,
07:02 and then the whole cycle repeats itself.
07:05 And then of course,
07:07 what you must do to alleviate some of these problems
07:09 is to deal with a household budget.
07:11 Household budget is key.
07:12 We try to emphasize this on an ongoing basis.
07:16 If we don't deal with budgets,
07:18 if you don't deal with knowing where things are
07:20 and knowing how much money is coming in
07:22 and how much goes out, and where it goes.
07:25 And if you don't have a buffer between your expenses
07:28 which should be lower than your paycheck.
07:31 We hope that's the case.
07:32 If you are upside down
07:34 and you're spending more than you bring in,
07:37 I would say
07:38 take a serious look at trying to cut those expenses.
07:40 What type of expenses you might ask.
07:42 Well,
07:44 if you cannot make your mortgage payment,
07:46 why don't you cut back on you cable bill
07:50 or your satellite bill,
07:51 or try to talk to your cell phone company
07:54 and get rid of your landline,
07:56 and try to cut out certain things
07:57 that may not be necessary at this point in time.
08:00 Let's look at needs versus wants.
08:02 Your need is shelter, clothing.
08:05 Shelter, clothing and food.
08:07 If you have those three things, you have your needs met.
08:09 So let's try to keep a roof over your head,
08:11 but then at the same time
08:13 let's take a look at specific issues
08:15 that drive the stress that we are talking about,
08:19 this financial stress.
08:20 Cut back on those expenses you don't need
08:22 and try to look at a way to invert that bubble
08:27 from being spending more than you have,
08:29 to spending less than you bring in.
08:34 Now, the second key concept that we should look at
08:36 is there is understanding your paycheck
08:39 where it's coming from,
08:40 and possibly developing other revenue streams.
08:45 For example I play the piano, I play the violin.
08:48 And at times people ask me to help teach
08:51 their young people an instrument,
08:53 and I picked that up.
08:55 It can pay if you look at the statistics that are out,
08:57 they can pay between $35 an hour up to $60 an hour.
09:00 That's revenue, that's extra income,
09:02 that's something that you can do
09:04 to bring more money and if it's necessary
09:06 and you're currently not meeting those expenses
09:09 on an ongoing basis.
09:11 So those are things that you should think about
09:13 concern yourself with.
09:14 And then of course, looking down
09:16 on where your money goes, expenses.
09:18 This is a simple budget that we're talking about
09:19 at this point and it tells you that,
09:22 okay, where is my money going.
09:25 Certain banks have the ability online
09:29 to actually track your expenses,
09:32 track where your money goes,
09:34 track where your income comes in
09:35 and give you graphics.
09:37 So you got a pie chart of where your money goes.
09:39 This much goes to rent,
09:40 this much goes to the mortgage payment,
09:42 this much goes to car payments,
09:43 this much goes to household improvement,
09:45 this goes to a variety of different,
09:47 to heat, gas, light, those type of things,
09:49 and then it gives you a better ability
09:52 to track what happens, track where the money goes
09:55 and get a context of where things are going.
09:58 One of the great things that are out there right now
10:00 is in reference to cell phones.
10:03 Cell phones and as well iPads, they provide you these apps
10:08 that you can use to track your expenses.
10:10 Expensify, mint.com,
10:12 many of these are associated with helping you get a grab of,
10:18 a grasp of your finances.
10:21 Grab or grasp whatever you can use
10:23 that makes it better for you, use it.
10:27 That the context is
10:28 understanding where your money goes
10:30 is key to bringing in line your budget.
10:34 And then of course,
10:36 don't spend more than you bring in.
10:40 That's key and ensuring that will help you have that buffer,
10:45 additional funds that you can put into savings
10:49 and prepare for that unexpected emergency.
10:53 Unemployment and loss of income is a next step
10:58 to take a look at.
10:59 And it also goes back to why we budget now?
11:02 Some people are not quite sure
11:08 of if their job will last a year,
11:11 another 10 years.
11:12 You remember way back in the day,
11:13 the baby boomers could go to work
11:15 and work at a job for 45 years and retire
11:18 and get the golden watch is no longer the key
11:20 with millennials and gen-xers coming into play,
11:23 the whole dynamic of the work environment
11:26 has changed.
11:27 So you no longer have the capacity to trust
11:29 that you'll be in one job for 45 years.
11:32 As a matter of fact as the gen-xers are,
11:36 and I think that's where I'm at,
11:37 that's my generation.
11:39 We are more apt to go through seven to ten different jobs
11:42 through the course of our lifetime.
11:44 And as risk takers based on when we were born,
11:47 we were latchkey kids and coming home
11:51 because both parents were out working
11:53 and bringing in revenue.
11:54 So gen-xers by their profile are more risk takers,
11:58 so you find that my group and my generation
12:02 would actually go to work
12:03 initially between the ages of 20 to 35, 20 to 40.
12:06 But during that timeframe, they're getting ideas
12:09 of how they can begin their own business
12:11 and develop their own concept
12:13 and they branch off later off in life
12:16 with a business concept and a thought process
12:18 of what they can do to be successful on their own.
12:21 So we find that most people now and especially with millennials
12:25 now that are coming into the work environment
12:27 are more apt to be selective in the jobs that they go into.
12:31 They are more apt to change jobs
12:34 on an ongoing basis based on their skill
12:37 and their education, so you no longer
12:40 going to be doing one job for 45 years.
12:46 Retirement is always key.
12:48 Planning for retirement
12:49 is the other thing we'll talk about
12:50 is something that most people are not planning for.
12:53 But we're getting ahead of ourselves.
12:54 Unemployment and loss of income
12:57 is another relevant area to discuss.
12:59 A complete loss of income and cash can destroy
13:03 even the best-laid budgets.
13:06 It's key to understand, that you lose a job,
13:11 they tell you many investment gurus
13:14 and financial literacy trainers will tell you it's important
13:18 to have an emergency savings of between three to six months.
13:22 Now let me ask you the question.
13:25 How long are most people unemployed as you took a look
13:29 of the past three to four years?
13:32 I can tell you and we work with EDD,
13:34 different organizations that help people find jobs
13:39 and work through the context of job loss.
13:43 It will tell you that most people
13:44 are getting unemployment insurance
13:47 for the course of up to two years.
13:50 People are unemployed for even a lot longer than that,
13:54 so if you go through a job loss with the state of the economy,
13:58 you will probably be looking for work
14:02 for an extended amount of time.
14:04 And so that three to six month emergency savings account
14:07 will be burnt out.
14:09 How do you handle those specific issues
14:11 when you take a look at--
14:14 this long timeframe where you don't have a job
14:19 and you don't have income coming in?
14:22 Well, that's a major issue.
14:23 You don't have any type of income coming in,
14:25 and that's what causes a lot of stress.
14:29 So what are some of the resources
14:32 we can go through when you're dealing with that?
14:34 Well, if you have a well-laid budget,
14:36 you're putting money away.
14:38 I would suggest that is not even three to six months
14:42 worth of expenses.
14:44 But you're dealing more so with three to eight months,
14:48 eight to ten months,
14:50 putting away as much as you possibly can
14:53 into a savings account
14:54 that you can access if you necessarily have to.
14:58 You can help to phrase some of those concerns.
15:00 So if you have three to six months worth of savings
15:03 or ten months worth of savings,
15:05 you can actually go and do a part-time job somewhere,
15:08 you can go and do some other type of work.
15:10 You can teach the piano if you that type of skill.
15:13 You can do a variety of things that may not bring in
15:15 as much money as you would have liked it to,
15:18 but at least it's not cutting into your expenses,
15:22 cuttings into your savings as quickly as it would
15:24 if you just don't have anything coming in.
15:27 So look for multiple streams of income
15:30 during those times you're down
15:32 and you don't have the specific job
15:34 you had to go to on a daily basis.
15:37 You can get the meaning
15:38 because you can talk to many people as I have
15:40 about job loss,
15:42 and it is very depressing to hear the comments
15:44 they have to say about going through that experience.
15:47 I know that I have--
15:50 went through back about ten to twelve years ago,
15:54 the company that I was working with consolidated.
15:57 And so the job positioning that I had,
15:59 the position that was labeled
16:00 as a strategic marketing manager went away,
16:03 and so they no longer needed one,
16:05 and so you were out and I had a great severance package
16:08 and I took that severance package and I traveled.
16:11 So many different things you can do
16:13 as you go through the job loss
16:14 because many companies provide you
16:17 a large sum of money if they have that to
16:21 as a severance package or a pay out
16:23 as you leave the job.
16:26 Now, what I will tell you in all of these is
16:29 don't do what I did, because back in that day
16:33 I took that severance package which is substantive
16:35 and I traveled Europe.
16:37 Do I regret it?
16:38 No, because I enjoyed myself, I was single at the time.
16:41 I didn't have major over expenses
16:43 and I didn't own a home.
16:45 So I didn't have those specific problems to deal with
16:48 at that time.
16:50 And I enjoyed the trip.
16:51 I saw places that I've never imagined
16:54 and experienced something that I will never regret.
16:57 But I do regret this that a portion of that money
17:00 that I got as a severance to that job
17:03 should have been put away into some type of retirement
17:07 or some type of investment, because using up that money
17:12 at that time was fun,
17:14 but I look back and that was a time
17:16 that I could really dug into a retirement account
17:20 that could have paid many dividends for me later on.
17:24 But that's just my advice, okay.
17:26 Unemployment and loss of income,
17:27 there are many things that we can do.
17:30 There are things I would suggest you do,
17:32 and I would ask you to do one thing
17:34 is don't get depressed, don't let it get you,
17:36 don't let the stress get to you.
17:38 Take an active role in finding something else
17:41 that can bring in additional revenue,
17:43 additional paycheck, additional moneys
17:45 that can support
17:46 as you are using up that emergency savings,
17:50 and with God's help you will find something soon
17:55 to help support you and your family
17:58 get through the crisis that you're dealing with.
18:01 Number three would have to do with expensive emergencies.
18:05 Even the greatest financial planner
18:07 deals with expensive emergencies.
18:11 Costly emergencies that have to deal with medical expenses,
18:15 that have to do with educational costs.
18:18 I never realized this, but when I want away to school,
18:22 to college, the funness of being away from home
18:26 I guess after getting through the homesickness
18:28 was interesting.
18:29 Because at college you had these freedoms,
18:32 you had this student ID card
18:34 that you could utilize at the bookstore.
18:36 So you are buying these jerseys,
18:38 you are buying the books,
18:39 you are buying all of these types of things,
18:40 and then of course student financial aid
18:43 is paying for some of it,
18:44 but yes, your parents are also paying
18:46 for a substantive part of your education.
18:49 And at that time as a student,
18:50 you really don't understand the full context
18:53 of what you're dealing with it.
18:54 I tell you the story about my son.
18:56 And when he bought his first bike
18:58 and I go back on that, or when I bought my first car,
19:02 there is a certain sense of obligation
19:05 when you have to save for something,
19:07 and you have to pay for it.
19:09 You take care of it a lot better.
19:11 When you are not paying for something
19:13 and you deal with student loan
19:14 there's a certain type of psychology
19:17 that comes to play that, you know,
19:19 I didn't use my own money for it,
19:20 therefore it's not really mine
19:22 and I don't treat it with the same type of care
19:25 that I treat something
19:26 that I spent the sweat and handwork doing.
19:31 Now
19:32 what I would tell you is this.
19:36 The key to understanding
19:38 how to deal with all of these expenses
19:41 is making your children,
19:43 your young people a part of everything you do.
19:46 Education is key because a lot of these concerns
19:51 such as medical emergencies.
19:53 If you tell them the importance of wearing a helmet
19:56 when they are riding their bike,
19:58 and we iterate the importance of their part
20:01 in the full finance of the home,
20:03 tends to provide them an awareness factor
20:06 that this is not really just this game that we play,
20:09 that I don't have any obligations
20:12 because we all do
20:14 when it comes to the family unit.
20:15 Medical emergencies come up and they can wipe people out.
20:19 Medical emergencies have put many people in debt
20:22 for years and years and years.
20:24 And many can't even dig out of it
20:26 because there was inadequate planning,
20:28 and even when you plan for it,
20:30 it takes a substantive chunk of money
20:32 out of your revenue stream for a long time.
20:36 Medical problems even cause concerns.
20:40 If you forget to make a payment on a medical concern
20:43 that you are charged that you got
20:45 when you went to urgent care.
20:49 That missed payment will hurt you tremendously
20:51 from the standpoint of credit because those medical agencies
20:56 take all of your payments and your non-payments
20:59 and report them into your credit history.
21:01 These are major things to be aware of
21:03 and to prepare for as much as we possibly can.
21:07 So we have the major ones
21:08 I was talking about is home expenses.
21:12 A water heater, it will come up believe me
21:15 because we really don't own that water, we don't know
21:17 when that water heater is gonna break down
21:19 as I found out.
21:20 And then I went into buy the water heater
21:22 and found out that someone else had the same type
21:24 that lasted 22 years
21:26 and mine only lasted seven which is an irritant for me,
21:30 and I'm gonna put it aside right now,
21:33 and we'll continue our conversation
21:34 on the things that matter.
21:36 But I'll bring it up again,
21:37 because I think it's really important to realize
21:38 that these emergencies that come up are relevant,
21:42 they're relevant as small or as large as they can be,
21:46 if your are prepared with an emergency savings account,
21:50 these expensive emergencies can be planned for
21:54 and you can take care of them
21:56 without it hurting your financial status
22:00 within your the conference of your budget.
22:02 Poor budgeting will cause concerns
22:05 all the way down the road from loss of income,
22:08 when you don't have a job to those medical emergencies
22:11 as well as to financial advice.
22:14 Don't ask a baker for advice
22:20 when you need advice on building something.
22:24 Don't ask a friend
22:27 who doesn't have any experience at managing money for advice
22:32 when they really don't have
22:34 what it takes to give you the qualified advice
22:37 that a financial planner and someone in that area
22:40 can actually provide on a qualified basis.
22:45 I will just let that go because I think that
22:48 we tend to rely on parents,
22:51 we tend to rely on people we know,
22:53 we tend to rely on ourselves.
22:55 Many of the interviews that you will see will tell you
22:58 that most people,
23:00 when your are looking at a crisis who do you go to.
23:04 They will tell you, I go to myself.
23:07 I try to figure it out.
23:08 I am having a financial crisis.
23:10 Well, when you are having a financial crisis,
23:14 it means you caused it.
23:16 And then you are going to ask yourself,
23:17 how do I get out of it,
23:19 or should I ask an expert how to get out of this crisis.
23:23 It would make more sense
23:25 to ask a baker to bake your bread
23:27 and not have a builder bake your bread,
23:29 and that's pretty much a concise approach
23:32 I would suggest seek the resources necessary
23:35 to give you the qualified advice.
23:37 And then we go to number five, risky investments.
23:42 Risky investments through either fraud
23:46 or investments that the market cannot and doesn't insure.
23:50 If you plan a budget
23:53 and right now you're barely making it,
23:55 and you can save maybe $200 a month,
23:58 save the $200.
23:59 Save the money and build your emergency savings account.
24:04 At that point in time,
24:05 it's probably not the best advice
24:07 to start investing in the markets,
24:09 because you'll realize that the market is a market
24:11 and you can lose a lot if you are not prepared
24:16 for what could happen.
24:18 So the advice I would give is,
24:20 there are a lot of things going on
24:23 in reference to investment areas.
24:25 There are a lot of scam artists that are out there
24:28 that provide their expertise and what needs to happen
24:32 and what you need to do,
24:34 and I will give you a couple of examples.
24:35 For example, a call comes in,
24:39 a letter or an email can come in,
24:41 and a highly placed official of a foreign government
24:44 request your assistance
24:46 in transferring a large amount of money,
24:48 if you can help, you'll earn a huge fee.
24:52 Now,
24:54 if you get something like that,
24:55 I would ask you to ignore the email or to call
25:00 and report it.
25:03 Get information that you can from them,
25:05 find out what they're doing and report it.
25:09 These checks are almost always counterfeit
25:11 that they provide you.
25:12 You put it into their account into your account
25:14 and the check looks legitimate, they can do a lot of things
25:18 to make it look real and tangible,
25:20 but the check will bounce a few days later.
25:22 And then of course your bank will then ask you
25:24 how you intend to cover the money
25:25 you transferred to the scammers
25:29 and it can take up to 21 days for that check to clear
25:32 and create a major cause of stress in your life,
25:37 when a lot of money is at stake.
25:39 These are things
25:41 you don't want to get involved in.
25:42 How about number two? And I'll pick one.
25:45 We get this all the time, fraud,
25:48 and what you can do to prevent it.
25:50 And I would suggest that if you are interested
25:52 in getting some of these samples
25:53 at end of the show,
25:55 will provide you an email address
25:58 and a website if you would like to checkout
26:01 some of the same specific information
26:03 and we can support you with.
26:05 The last one I'll share with you is this.
26:08 The con job is an unemployment advertisement
26:11 offers a work at home opportunity,
26:14 a multilevel marketing plan
26:17 or another way of becoming your own boss.
26:22 It will increase your income.
26:23 Where all interest gets it in working for ourselves.
26:27 But there are things that are out there
26:28 that you should be aware of when you're looking at
26:30 this work for yourself type of thing.
26:32 There are lot of scams that are out there.
26:34 In fact, the facts are this.
26:36 Sending fees for job guarantees is very risky.
26:43 If someone ask you to pay a fee
26:44 to get something that typically just free is very risky.
26:48 In many cases,
26:50 scammers advertise all kinds of job opportunities
26:53 from envelop stuffing to a craft assembly
26:58 to a variety of all of these, a variety of different jobs.
27:02 And in most instances the ad makes promises
27:04 that they cannot keep.
27:06 You lose more money instead of making more money,
27:09 and there are tips that we should all be aware of
27:11 when you're looking at risky investments.
27:15 The last one is to plan for retirement,
27:18 to save money,
27:19 to get the budget in place
27:22 so that you can have an adequate amount of money
27:25 you can put away into an account
27:28 of 401k or 403B an investment account
27:31 that can prepare you for a retirement
27:33 that you can enjoy.
27:35 Those are the six things
27:38 that cause financial crisis in your life.
27:41 When you prepare for these things by starting
27:45 and planning a budget
27:47 and watching the emails that come in
27:51 and avoiding a lot of these concerns,
27:54 you are better prepared
27:55 of taking that extra money to the bank and save.
27:59 God bless you.


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Revised 2016-06-16