Take it to the Bank

Budget

Three Angels Broadcasting Network

Program transcript

Participants: Cordell Thomas

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Series Code: TITTB

Program Code: TITTB000003


00:01 On Take It To The Bank,
00:02 you will find ways to get out of debt,
00:09 solve your credit card problems,
00:14 how to make and stick with a budget,
00:19 simple ways to save,
00:24 buying or selling a home
00:26 and many more financial matters,
00:29 on Take It To The Bank.
00:31 Hi.
00:33 My name is Cordell Thomas
00:34 and welcome to this program called Take it to the bank.
00:37 We have an exciting program for you today
00:39 because this is the core of understanding
00:42 what financial literacy is all about.
00:45 We are going to talk about budgeting,
00:48 setting up a budget, the art of setting up a budget.
00:51 And many people have different approaches
00:53 to setting up their budgets.
00:54 But basically, a budget is your revenue, your income,
00:58 your paycheck, and your expenses,
01:01 where your money goes on a monthly basis,
01:03 to take care of those things that you have to pay for.
01:07 Many people get caught up in the budgeting process.
01:11 And those that really enjoy it
01:12 begin to make budgets very complex.
01:15 My budget has six different,
01:18 eleven different segments of expenses.
01:20 I have broken it down to areas such as home,
01:22 daily living, health costs, groceries,
01:24 I have broken financial areas
01:26 and then, of course miscellaneous expenses.
01:28 You're gonna see a graphic of a budget that I have set up
01:32 and I'll give you a context of how you can approach it.
01:34 It doesn't have to be that complex.
01:36 I'm getting into it because I can begin to see trends
01:40 in how I spend things, and what I do.
01:42 I'm gonna tell you a few stories
01:44 of things that came up in my life
01:47 that caused specific concern.
01:50 It's good to have a partner in this thing called budgeting.
01:53 It's good to have someone that holds you accountable
01:56 in sticking with the budget.
01:57 You stick with a budget
01:58 which is a comprehensive financial
02:00 look at what you are doing on a monthly and annual basis.
02:04 And give you a context of
02:06 how to continue to cut spending,
02:09 increase savings and make the best use
02:13 of your paycheck and or your revenues.
02:17 So I'm going to start with this, this little story.
02:20 It was interesting from my standpoint.
02:22 I had to go on a short trip and I took,
02:27 I had a nice car at the time
02:29 and some friends had need of transportation.
02:34 So I went on the trip but I said,
02:35 "Hey, here's my keys to the car.
02:36 Take care of the car and use it appropriately
02:39 but, you know, I am entrusting in your care."
02:42 It's not the wisest move I ever made
02:44 because there's a couple of issues involved here.
02:47 I'm paying for a car.
02:48 I have a vested interest in that car.
02:51 There's a value that that car has to me
02:55 because I'm taking care of that specific expense.
02:58 For those friends of mine, it was quite interesting
03:01 because there is no vested interest in the car,
03:04 they aren't paying for the car,
03:05 there wasn't really any need
03:07 for them to really take care of.
03:08 And you could tell because when I got back from my trip,
03:10 there were scratches on the car.
03:12 The wheel had a major gash across
03:14 because they ran over a curb.
03:16 There's a couple of things that happened to my car
03:18 that upset me.
03:20 And we had a conversation with those friends
03:22 and we got most of that those problems taken care of
03:25 but what is my point in telling that story?
03:28 When you pay for something,
03:31 and you have a vested interest in something,
03:33 you take care of it better.
03:37 There's a concern with credit in our communities.
03:39 We're in debt.
03:41 And we're using other people's money
03:42 to pay for certain items.
03:44 We shouldn't be.
03:45 If you don't have the money to spend for something,
03:47 if you don't have a vested interest in saving
03:50 and then paying for something,
03:52 then it doesn't mean as much to you as an item.
03:57 And as I talk about those things,
04:00 we have to consider
04:02 specific issues as it applies to our budgets.
04:05 So as we talk about budget,
04:07 I'm gonna give you a little humor here.
04:09 We have a lot to cover today.
04:11 So I need to budget my time wisely.
04:13 Why?
04:14 If I don't budget my time wisely,
04:16 I'm going to run out of time.
04:18 And thus, you won't see all of the commercials
04:20 and then the different interviews that we had
04:23 and that supports a lot of the things
04:25 we're going to discuss today.
04:27 So if I don't budget, I run out of time.
04:31 If you don't budget for your finances,
04:35 as well as all of us, you run out of money.
04:39 The context is, understanding your financial situation
04:43 is key and a budget is a start of understanding
04:48 what it is your finances can do for you.
04:51 It's a good way of tracking.
04:52 I want to start though, with a quote from a newspaper.
04:55 And it tells us where we are as individuals
04:58 in the United States.
05:00 It tells us we're all in the same boat.
05:02 There's no one any different and no one any better.
05:05 But the quote is this.
05:07 "The financial crisis of the last few years
05:11 and the accompanying housing market meltdown exposes
05:14 how many Americans are ill equipped to master
05:17 the financial ABCs."
05:20 Understanding how finance work, understanding how money works,
05:24 understanding cash flow can be dealt with
05:28 by understanding a budget and the art of budgeting.
05:33 So as we start this, I want to begin to ask you
05:37 some questions.
05:39 Why do we set goals?
05:41 When I was a young person,
05:42 I wanted always to go into business,
05:43 I want to develop my own business.
05:45 I wanted to do something.
05:46 So back when I was a child,
05:48 I set the goal of possibly going to school,
05:50 going to college, getting a master's
05:53 and going and working for some corporate entity,
05:55 which started but it all of a sudden changed.
05:57 God had a different plan but I set that goal,
06:01 meaning, if I wanted to get where I wanted to be,
06:04 I had to plan for a future of going to a specific school.
06:09 So it's essential that if you have a goal
06:11 of, number one, paying off your debt.
06:15 Set a goal, set a time frame which is the next issue
06:18 that I'd like to talk about is your goal ranges.
06:21 So the first thing I want you to do
06:22 is, take out a piece of paper.
06:24 I'll give you second. Second's up.
06:26 Take the piece of paper
06:27 and write down some of your goals.
06:31 What that would be.
06:32 List them. Just list them out.
06:34 I want to be out of debt. I want to buy a car.
06:37 I want to get a new into a new home.
06:39 I want to pay for educational expenses.
06:41 I want to plan for retirement, what are those specific goals.
06:46 Okay.
06:47 Once you've dealt with those goals,
06:50 I'm going to ask you to do something different.
06:54 The second step I'd like you to take
06:57 is to prioritize those goals,
07:01 what is most important, what is least important.
07:06 And then when you prioritize those goals,
07:08 take a look at the ones that are most important.
07:10 And take a look
07:12 at whether or not they are short term goals.
07:16 Short term is typically one for weeks, a month,
07:20 maybe three months, one to three months.
07:23 Mid term goals, I would suggest a mid term goal
07:25 is between three months and a year what that would be.
07:29 If it's paying off your debt
07:31 you want to target into getting clear
07:32 of your credit card debt in one year,
07:34 that's possible objective that you can reach.
07:38 Make it reasonable.
07:40 And long term goals
07:41 could be planning for retirement,
07:44 planning for, planning for kids going to school.
07:49 A variety of those type of things.
07:51 Prioritize and then pick out whether or not
07:55 they are short term, mid term and long term goals.
07:59 And I gave you examples of each.
08:02 Once you've done that, begin to think about
08:06 how you can get to accomplishing those goals,
08:11 how you can get to accomplishing those goals.
08:16 It's essential that we educate our young people.
08:19 If you have kids,
08:21 ask them what their goals are.
08:23 I've asked my son what his goal is and he says.
08:25 "I want to buy a new bike, Dad."
08:27 He has a bike that we had for him
08:28 and he's learned how to ride that bike
08:30 and now as a seven year old he says,
08:31 "There's this other bike that's out there
08:33 that I really would like to get.
08:34 Okay.
08:36 How do you plan to get
08:37 to the goal of acquiring the bike?
08:39 "Well, I don't know.
08:41 I can do jobs, I can fold clothes,
08:43 I can help mom clean up the house,
08:45 I can do these different items."
08:47 How much is the bike?
08:49 "Well, the bike is about $75, Dad.
08:52 And I-- I know it's really expensive
08:55 but I think I can get there.
08:56 And so every day I can see him putting his quarters
08:59 and his dollar bills into a little bank
09:01 that he has at home.
09:03 And he has this plan of attaining that goal
09:05 over the next six months.
09:07 I think he'll get there a lot earlier.
09:09 But the context is key.
09:11 We teach our young people how to attain their goals.
09:14 And there are many different software methods.
09:16 There are different things you can do online.
09:19 There are places you can go.
09:20 There are different methods you can use to teach your kids
09:23 but it's a matter of talking to them about it.
09:27 I asked one of our area experts on literacy and she asked.
09:33 I asked her the question about,
09:35 is money management emphasized enough in our schools?
09:39 Regina, what are your thoughts?
09:44 In my opinion, schools are not emphasizing money management.
09:49 What they're actually doing is,
09:52 they are showing them how to balance a checkbook.
09:55 The time frame that they're giving the children
09:56 to learn is not enough.
09:58 But the psychology of money,
10:00 they're not getting that at all.
10:01 So they're not getting
10:03 the understanding of how money actually works.
10:05 Investing, tithing, saving, they're not getting that all.
10:09 So it makes it difficult for the children to know
10:11 what to do at a later time.
10:14 Regina helps us teach a financial literacy course
10:17 in the Riverside area
10:18 and she's a fantastic resource as she's also an educator.
10:22 And it's interesting as I talk to her
10:23 about some of the ongoing dilemma
10:24 in our educational systems.
10:26 It's interesting that we teach our kids how to read,
10:30 we teach them about mathematics,
10:31 we teach them about economics.
10:33 And they hear all these stories about the debt ceiling
10:36 and all these kind of things going on around our...
10:38 in our world and around the globe.
10:40 And yet, we don't teach them about finance, about budgeting,
10:47 about planning for your acquisitions
10:49 and the benefits that come from planning
10:51 for an acquisition without using someone else's money.
10:54 And so as we move forward with this context,
10:57 this conversation on budgeting,
10:58 I'd like to talk to you about a couple of things.
11:03 When you begin the process of budgeting,
11:06 the first thing you want to put in a budget
11:09 is where your money comes from.
11:12 If you're single mom,
11:14 take a look at things like alimony,
11:17 take a look at paychecks, take a look at parents,
11:21 take a look at many different aspects.
11:23 And if you have a specific skill
11:25 or talent that God has given you a wealth in,
11:29 such as teaching music, such as mechanics,
11:33 there in could be additional income.
11:36 My wife is a financial, excuse me, a fitness trainer.
11:41 And so there is some additional income
11:43 that can come in when she goes and does some fitness classes
11:47 with some other individuals.
11:49 Those are little things you can put in
11:51 and that can help in defraying other type of expenses.
11:54 So the first thing I want you look at in a budget
11:57 is where the money comes from.
12:01 The second thing I want you to start thinking about now
12:04 is about the feeling of what independence is like.
12:09 I don't have anything on my back.
12:11 I don't have these debts that I have to deal with
12:14 and envision yourself down the road
12:17 having a debt free lifestyle.
12:21 The next thing I would like to talk to you about is,
12:23 where the money goes.
12:25 This part of the budget is the most important part
12:27 because it gives us an opportunity to track
12:30 our spending.
12:33 Where does the money go? Why did I buy this item?
12:36 Was it a necessity? Was it a need versus a want?
12:41 If I needed to purchase a car
12:43 that I think through the process
12:45 and add that in as a long term project
12:50 and goal that I wanted to have.
12:52 So as a part of my full financial picture,
12:55 I now have these expenses that I can use to track
13:01 where I'm at and what I would like to do
13:04 in order that I can accomplish my objectives.
13:07 So if I have a short term objectives of,
13:09 I'd like to begin saving an additional $250 per month,
13:13 I now know what I need to do to get to that $250 mark.
13:18 But unless I budget for it, and take a look at my expenses,
13:21 and know where my expenses are,
13:23 I will never be able to cut in certain areas
13:26 to get to that objectives,
13:28 that specific objective in this case.
13:31 The other thing with budgeting
13:34 and finding out where your expenses are,
13:36 is you can begin to see trends.
13:39 Hey, I'm spending $150 more on my phone expense
13:45 than I did two and a half months ago.
13:47 What happened?
13:48 Hey, my travel expense went up about $600.
13:52 What happened, did I account for it,
13:54 was it a part of my budget,
13:56 was it something that was an emergency that came up?
13:59 Hey, I didn't realize that I had so many things
14:02 that were going to be a problem this year
14:05 because I had book expense for school.
14:08 And I also had a travel expense
14:09 and I had a moving expense that came up.
14:11 You can begin to see cycles in your expenditures
14:14 on a yearly basis
14:15 and it can help you plan for those things
14:18 that you never knew would arise.
14:21 What did you need? what did you want?
14:25 Did I plan for it? Is it there in the budget?
14:29 Am I being a good steward,
14:33 a good faithful trusted individual
14:36 that can begin the process of managing
14:40 and doing something with the talent
14:43 that Christ has given me?
14:45 And in this case, it's managing the money,
14:48 decreasing the expenses, and utilizing the profits
14:51 and or your paycheck
14:53 that comes in on a monthly basis
14:55 to do what needs to be done.
15:00 What did you decide to spend money for?
15:04 Where did you decide to spend the money?
15:07 Categorize how your money is spent.
15:11 I spent this amount on clothing.
15:13 I bought a couple of CDs last month.
15:16 I had an unexpected expense because I had to buy ten Bibles
15:21 for a Bible study that we're planning to have
15:23 at a friend's house.
15:25 We were planning to do some things with the kids
15:27 where they would get together,
15:28 have a get together and we had to buy
15:31 $75 worth of pizzas
15:33 to satisfy the cravings of the young people
15:35 at the party.
15:37 All of these things
15:38 can become categorized now as a food expense,
15:41 as may be a clothing expense.
15:44 And we can better have a grasp of those trends in the expenses
15:49 that we have in an ongoing basis.
15:52 Review the concept
15:53 that I have provided with you, for you.
15:55 Begin the process over the next couple of weeks
15:58 of writing down where the money goes.
16:01 Take a look at what your paycheck says.
16:03 Is it net income or is it gross income?
16:07 Taking out the taxes makes it a net income
16:09 and ensures that you know exactly how much money
16:13 is going into your bank account,
16:14 and how much money you can draw from
16:17 to pay those expenses.
16:20 A budget again, is understanding the money,
16:24 understanding where it's coming from,
16:26 understanding where it's going,
16:28 understanding the trends
16:30 and understanding where you can look
16:32 at cutting some expenses
16:34 and putting it more into savings
16:36 into emergency funds and into paying off that debt.
16:41 Debt is real.
16:44 We did a few interviews out there on the street
16:47 and asked people about
16:49 how do you track your monthly expenses.
16:52 And here's what they said.
16:58 That's a very good question.
16:59 I don't know if I necessarily plan for financial emergencies.
17:04 Sometimes if I know
17:06 that I have something come up like a trip
17:08 or something, I go ahead put some moneys away.
17:10 But I got to-- I must be honest,
17:12 that's probably a bad area for me.
17:14 I don't necessarily have the greatest in planning
17:18 for financial emergency.
17:19 So I don't really have all that together.
17:22 I have a savings
17:24 and I take out a certain percent
17:28 every month for the savings for emergencies.
17:35 Depends what the emergency is.
17:37 To be honest,
17:39 my situation right now, I really don't plan.
17:41 That's the problem.
17:46 Interesting.
17:47 Interesting responses how people save what they do,
17:49 how they plan on their budgeting.
17:52 Some don't plan. Some do.
17:54 And the context right now is hammering across the issue
17:57 of budget, budget, budget.
17:59 I'm budgeting time right now
18:00 because I'm going to run out of it.
18:02 There's so many things I want to share with you today
18:03 and the context right now
18:05 is we are constantly going to try to talk today
18:09 about budget, budget, budget.
18:11 Okay, with that said, are you planning
18:15 for what you spend the money on?
18:18 Are you planning to figure out how you can save
18:20 additional money.
18:22 The context is understanding
18:25 that if I can decrease the amount of money
18:27 I'm paying out each month,
18:29 I have now this value of a paycheck
18:31 that comes in each month.
18:32 And that margin the difference between my revenue,
18:36 my paycheck, my profit and my expenses
18:40 gives me the amount of money I can allocate to savings,
18:44 I can allocate to investments more longer term type of thing,
18:48 and then of course, what I can allocate
18:50 to free cash flow that I can use to pay off debt
18:54 and in the case of the rich and wealthy,
18:58 how they deal with money,
19:00 how I can use cash flow in understanding
19:04 where I can actually get and reach my goals.
19:07 I asked Mr. Rodney Watson a key question.
19:11 And I think it'll be valuable for you to hear his response.
19:14 The question is, "Rodney, what is key to understanding
19:19 how cash flow works?
19:21 Can you explain?
19:24 I was watching one of nature programs
19:26 that I love to watch.
19:27 And I notice how the young lion,
19:30 lioness brought a little gazelle
19:33 to her cubs.
19:34 And the little cubs was playing with the gazelle.
19:36 But the mother brought this live gazelle to her cubs
19:39 so the cubs could learn how to hunt
19:41 when they get older,
19:43 so one of the principles
19:44 of teaching your children financial literacy
19:46 is to introduce games to them early on
19:49 just like the cheetah and the lion
19:51 and all the other animals do
19:52 so they could learn how to be financially literate
19:55 when they become older.
19:56 There are many games that can accomplish that.
19:58 Monopoly is a good introductory game
20:01 to get you there.
20:03 But there are also
20:04 many video games that they will love.
20:05 SimCity Sea World.
20:08 We have a Shamu type games.
20:10 You have games where you can build schools,
20:12 built malls, built shopping centers.
20:14 My kids love to play these games.
20:16 And with these games
20:18 the kids learn how to hire people,
20:20 how to fire people.
20:21 They learn how much
20:23 the tree costs to put over here,
20:24 the concrete cost to put over there.
20:26 They learn how much that building cost.
20:28 And my daughter, she made a million dollars.
20:30 She put the ATM machine over there,
20:32 bought a arcade machines and make sure there were
20:34 plenty of restrooms and all that.
20:35 So they get to learn
20:37 what it takes to run a business.
20:39 Schools are not in a position to teach your child
20:41 how to run a business.
20:42 They teach your child how to be an employee.
20:44 It's up to you to teach your child
20:46 how to become an employer.
20:49 And employers, of course make more money
20:51 than the employee, right.
20:53 So that's what you want to teach your child.
20:55 The key to doing this is, just remember this.
20:58 Someone once told me
21:00 watch what poor people do and don't do it.
21:03 That's why they're poor. And I always say this also.
21:07 Watch what rich people do and do that.
21:10 That's why they are rich.
21:11 So the key to teach your child
21:13 financial literacy is to introduce it early on
21:16 and introduce it in such a fun way
21:18 that they're learning financial literacy
21:21 and also gaining experience in money matters as well.
21:28 You know, I love swivel chairs
21:30 and its twisting back and forth is great.
21:33 But that was when I was a child.
21:34 I would spin around these chairs,
21:36 and spend time doing those type of things,
21:37 and lose sense of what time really is
21:40 and wouldn't budget my time the best way possible.
21:43 I had fun doing the simple things in life
21:45 and then as I grew up,
21:46 I never really know about the budgeting process,
21:49 and using money,
21:50 and understanding the context of being
21:53 a producer versus a consumer.
21:58 We are driven by the media to buy things.
22:01 We are driven to purchase.
22:03 We hear about Black Friday during the holiday timeframe
22:07 so that all of these
22:10 merchandisers can make up their profits
22:12 for the course of the year.
22:13 We see so many of these things going on
22:15 and we get this mentality that we are the employee,
22:19 we are the consumer
22:21 and we don't get the concept in place
22:23 and don't teach our young people, as Rodney said,
22:26 that kids can learn how to be the employer
22:30 and understand how to use cash flow to get to that goal.
22:35 It's about setting goals.
22:38 It's about teaching our young people
22:41 about what it is all about.
22:43 I have a graphic. I'd like you to look at.
22:46 And this is an example of my personal budget.
22:49 Personal budget actually gives you a context
22:51 of what a budget looks like.
22:52 In this case, what I'd like you to glean from it,
22:54 you can't read it.
22:55 But look at the layout.
22:57 It's month by month for the course of the year.
22:59 This is my annual budget
23:00 and how I track my actual expenses
23:03 as it relates to what I had actually budgeted.
23:06 The context here is to take a look
23:07 at the segments in a budget.
23:10 The top portion is basically my income,
23:14 my revenue, paycheck
23:15 and different forms or places that I make money.
23:18 The bottom portion is more so with where money goes out.
23:22 And examples of those expenses on my sheet it include,
23:26 areas that include the home expense,
23:28 daily living expense, transportation
23:31 and entertainment.
23:32 If you look at daily living, you can see different areas.
23:35 Groceries, $350, childcare, we don't spend on childcare.
23:39 Dry-cleaning, dining out,
23:41 those type of things that go into a daily living
23:45 portion of my budget.
23:47 And you do the same and you can be as detailed
23:51 as you would like to be on your budget.
23:53 You don't have to be as detailed as me.
23:56 You can provide just a synopsis
23:58 where it can be your income and expenses,
24:00 it can be as easy as just your income,
24:02 your fixed and your variable expenses.
24:05 And you can actually download free budget forms from online,
24:08 if you like to do that
24:09 and if you're a little bit more savvy in computer use,
24:12 you can actually develop one through Excel.
24:16 Okay.
24:17 So as we look at different elements of a budget,
24:23 I want you to consider four things
24:26 in reference to what we talked about today.
24:28 Simple things. One, become a good consumer.
24:32 Learn how to get the most of your money.
24:34 For example,
24:35 many of us may have health insurance
24:37 and when we need to go get,
24:39 maybe, some type of antibiotic we have to pay a co-pay,
24:41 a $15 co-pay, for example,
24:43 and then we have to go in
24:45 and then purchase the actual drug
24:47 at a discounted price.
24:48 All right.
24:50 Did you know that their pharmacists
24:52 have a support by law in different states
24:55 that they can offer generic forms of that drug?
24:59 The context is to understand
25:00 that you may not have to use your co-pay
25:03 and spend $22 for a specific drug that you might need
25:06 when there are there are manufacturers
25:09 and or retail establishments
25:10 that offer those same type of generic drugs
25:14 for a simple $4 price.
25:17 There are different ways that you can become
25:20 a very good consumer
25:22 and that's the first thing is just become a good consumer,
25:24 look at the best way
25:26 you can get the most of your money.
25:27 Second, exercise will power and self-control.
25:30 The essence of what I'm talking about here is,
25:32 have a partner that can hold you accountable.
25:34 And when you have that budget set up,
25:36 abide by it.
25:38 Stick with it.
25:39 Don't deviate from it
25:41 because your goal is to pay off debt, to save,
25:44 become a producer
25:45 instead of just a basic consumer.
25:48 And then of course, three,
25:49 develop a good record keeping situation.
25:53 Don't go through and have unnecessary expenses.
25:58 The context that you really want
26:00 in this case is to keep the budget working.
26:05 Record where those expenses are and keep that budget updated.
26:09 Four, evaluate your budget on a regular basis.
26:15 I can't say anything more about that.
26:17 Look at it on an ongoing basis. Look at it daily.
26:20 Every time you spend money, make sure it's updated,
26:23 make sure it is as accurate as possible.
26:27 There are many things that we can talk about
26:30 in reference to the budget.
26:31 And the context of what it's all about.
26:35 But my primary concern for you is this,
26:40 financial goals that you have set for yourself,
26:45 whether or not they'd be long term, mid term
26:49 or short term.
26:50 And they must include these three elements.
26:54 Financial goals should be realistic.
26:58 Don't think you're going to be able to save
27:00 a million dollars over the next year.
27:02 It's not realistic. The bottom line is start.
27:06 Start this journey with us.
27:07 Let's do it together
27:09 and begin the process of getting to the place
27:11 that you can save.
27:13 And that you can possibly invest.
27:14 And that you can possibly become a more
27:17 proactive individual
27:18 using the talents that God has given you
27:20 to help in His ministry.
27:23 Remember that as they are realistic goals
27:29 that they should also be specific
27:31 and they should also be in a specific time frame.
27:35 These are the things that you should think about
27:38 when you consider a budget,
27:40 the budget that helps you become a consumer,
27:44 a producer, a saver and someone they can pay off their debts.
27:48 Remember what Luke 12: 13 and 14 said.
27:52 "Man's Life does not consist
27:53 of the abundance of their possessions."
27:56 Key.
27:57 Remember, Take It To The Bank and save.
28:00 God bless.


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Revised 2016-02-18