Participants: Cordell Thomas
Series Code: TITTB
Program Code: TITTB000007
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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, 00:27 and many more financial matters on Take It To The Bank. 00:32 Hi, my name is Cordell Thomas, 00:33 and welcome to Take It To The Bank. 00:36 Today, we're gonna talk about saving versus investing. 00:40 They are very important topics, 00:42 I think, as it applies to how you manage your money. 00:46 We've talked about 00:48 or we're planning to talk about several things, 00:50 but one of the things I'd like to say upfront 00:51 is there's a process, 00:53 acronym - ACCSAS, assess your debt, 00:57 assess where you're at. 00:58 Then of course, create a budget. 01:00 After you've created that budget, 01:02 take a look at cutting your spending. 01:04 After you've cut the spending 01:06 to where you can feel comfortable, start saving. 01:09 After you start saving, 01:11 then you can apply some of the saving 01:13 to aggressively going after your debt. 01:16 The most important aspect that I asked you think about 01:19 is creating a budget. 01:22 The budget is essential for you to know where you're at 01:27 and to know where you're going. 01:28 It's a planning tool, it gives you an idea 01:31 of what your short term goals can be, 01:34 your mid-term goals should be, 01:36 and what your long term goals should be. 01:40 I would ask you to make a list of what your goals are. 01:42 Is it about retiring? 01:44 Is it about 01:45 putting your children through school? 01:47 Is it about paying for college? 01:48 Is it more short term in nature where you need 01:51 three to six months emergency fund? 01:53 Is it all about the context of just being able 01:57 to put a little bit of money away? 01:59 Or are we already saving some money 02:01 and what can we do to create a cash flow process 02:05 where we can invest in assets 02:08 that can help us build a business 02:10 and/or give back to the church 02:13 in helping them reach other for Christ. 02:16 There's so many different things we can do. 02:18 A budget is prime, 02:19 so the first thing I'd would like you to do 02:22 at a time that's convenient for you 02:24 is develop the habit of writing things down 02:30 and writing those things 02:32 that are goals and priorities for you. 02:34 Once you written the goals and priorities, 02:35 we can begin to take an assessment 02:37 of where we're at and what we'll need to do 02:39 to address the debt issue, if that's the case. 02:42 They say that, in America, 02:44 the average household credit card debt is $14,750. 02:49 It's essential that we understand 02:52 what that is and how we can address those concerns. 02:56 Did you know that saving just 35 cents per day, 03:00 in a savings account comes to about $125 per year? 03:05 A university did an interesting study 03:06 and they looked over the past 81 years 03:08 up through 2009. 03:10 They started, I believe, in 1928 and assessed money 03:15 that was put into a stock market 03:17 and money that was put into savings account. 03:20 And you look at the difference between the two. 03:22 Those that, they said a $100 dollars 03:25 that was placed in a savings account 03:27 versus a $100 that was invested in the stock market, 03:31 the $100 in the savings account 03:34 through 2009 came up to about $1,900 03:38 of simple interest accrued on that amount of money. 03:44 And though that was, the amount of $100 03:46 that was invested in the stock market 03:48 as of 2009, 81 years later, was about $142,000. 03:54 You take a look at the difference 03:56 between the two 03:57 and you deal with simple interest 03:58 versus compound interest. 04:00 What is the difference between simple and compound? 04:01 Well, simple interest is basically gaining interest 04:07 on the principle. 04:09 What's the principle? 04:10 The principle is basically 04:12 the initial amount you put in the account. 04:13 For example, if I put $200 into a simple savings account, 04:17 a simple interest at 5.5 percent interest, 04:22 what will that be over five years? 04:24 Well, you take your principle, 04:26 the $200 you place into the account 04:28 and you multiply it times 0.055. 04:32 That comes to what? Eleven dollars. 04:35 So, each year you accrued $11 on that $200 dollars you place 04:41 in the savings account. 04:43 After five years, 04:44 eleven times five is fifty five. 04:48 So simple interest tells you that my $200 after five years 04:53 is worth $255. 04:58 In compound interest, what we're talking about 05:01 is compounding that interest you have. 05:03 So you have the principle 05:05 and the interest that you gain interest on. 05:08 So it's not just the principle 05:10 but it's a principle and interest that you accrue 05:12 and that accumulates that much quicker. 05:14 And now, I give you the eight wonder of the world. 05:19 It came out as the rule of 72. 05:23 What does that mean? 05:24 Okay, so I take, $1,000 05:29 and I put it into the stock market 05:33 or I invest it and I'm getting six percent 05:37 on that compound interest. 05:39 If I take 72 and divide 6 into 72, 05:43 the six being the interest rate, 05:45 I can tell you how quickly that money will double. 05:47 So 6 into 72 is 12. 05:51 So every 12 years my $1,000 05:53 that I put into that investment should double. 05:56 Therefore, you can understand the difference between 05:58 simple interest in a simple savings account 06:02 versus compound interest in an investment, 06:05 and that's where this whole conversation will start 06:09 in comparing the benefits and how should you think about 06:13 a savings account versus an investment. 06:17 Now, there is a Bible verse that talks about this race 06:22 that we're all going through. 06:24 I run a marathon 06:25 and there's this thing called A Wall. 06:31 The wall in marathon is an interesting thing, 06:35 because there comes a point in time when you're running 06:37 and you're running and you're running 06:39 and things begin to irritate you. 06:41 After mile nine, 06:42 I felt every time I jog and took a step 06:45 my shirt bounced on my shoulder. 06:48 And it was bothersome, it started irritating me 06:51 because every step I had, 06:52 the thing hitting the same spot on my body 06:54 and I said, man, this is getting irritating. 06:57 And then of course, I dealt with different things 07:01 because I had to have a orthotic device 07:04 that I wasn't quite used to in my shoe. 07:07 So it kind of put my balance off 07:09 just a little bit and my knee started hurting me. 07:13 And as of mile 15, I ran on my first wall. 07:16 I couldn't run anymore, my knee was killing me 07:18 and I had to sit on the side of the curve. 07:20 And I still remember that part of the trip 07:23 because I believe 07:24 I was running down Constitution Avenue. 07:26 And oh, by the way, it was the Marine Corps Marathon, 07:29 I was harden type of guy at that time. 07:30 But then couldn't go a step further 07:33 because of the pain in my knee, 07:37 and I remember sitting down at that time in my life 07:42 and I said, I didn't come this far not to make it. 07:47 That was the first hurdle I had to overcome 07:51 in my dream of completing this race, this marathon. 07:56 The second hurdle was mile 20 to 22. 08:00 And that time, I was just out, 08:03 I couldn't do it anymore, I had run 20 miles and wow. 08:09 I had to face this wall where I felt 08:11 it was a place I couldn't get over. 08:13 But guess what? 08:14 You can, I can, this marathon of life, 08:19 this brace that we're taking on is about completing it, 08:24 and there gonna be things and challenges in our lives, 08:27 hurtful things, thinks about our budget, 08:29 things about savings, things about cutting spending 08:32 and not going out as much. 08:34 There are things that we're going to have to overcome 08:36 to get to the goals that we set for ourselves 08:40 as you've written down in your priorities 08:42 and your goals. 08:43 So I ask you to think about that 08:46 as you think about the analogy of the race. 08:49 Did I finish the race? 08:51 Of course, I did, I over came that hurdle. 08:54 And it was interesting 08:55 how I overcame that hurdle in my life, 08:57 it was about a gentleman that I had no clue who it was. 09:00 A gentleman with black and white hair, 09:03 long hair down the back, biker dude, it seems. 09:05 And he came up to me and without batting an eye, 09:09 he knelt down and grab my knees and said, 09:11 "Dude, you look like you're in pain." 09:14 "Well, yeah." 09:15 And he rub some stuff into my knee, 09:17 heated up my knee and said, "Come, let's go." 09:20 When you look like you can't get over that hurdle 09:24 and you run into a wall of life I ask you to have a partner, 09:29 have someone that you are responsible to, 09:32 it may be your spouse, it may be your good friend. 09:35 But don't go away from that budget 09:40 that you've set up. 09:44 Secondarily, make certain 09:47 that you follow those rules, 09:51 the priorities and those goals that you set for your life. 09:54 If in fact you want to save $1,000 in the next six months, 10:00 if in fact you want to pay off that credit card debt 10:03 over the next two to three years, 10:05 if you want to get debt free, 10:07 if you want to pay for that college tuition, 10:12 if you want to begin saving for retirement, 10:16 what is it that's important about... 10:18 what we're talking about in savings and investing? 10:21 It means, you need to overcome, 10:23 you need to place yourself at the end of the race 10:28 and realize what life can feel like being debt free. 10:32 Imagine yourself not having the burden 10:34 of credit card debt that you may have 10:37 or the concerns you may have by overspending 10:40 and not knowing where you're at from a budgetary stand point. 10:43 Understanding 10:44 that you are Christ's servant, 10:51 using the Holy Spirit of the gifts 10:53 that He has provided you 10:55 that you're now held responsible 10:57 for how you use the money God has given to you. 11:06 There are many other issues we can talk about, 11:08 but I want to limit it now 11:11 to just the issue of saving versus investing. 11:15 And I have verse for you in reference to the race. 11:18 1 Timothy 4: 7. 11:21 1 Timothy... 11:22 excuses me, 2 Timothy 4:7. 11:25 2 Timothy 4:7, 2 Timothy says" 11:31 I have fought the good fight, 11:34 I have finished the race, I have kept the faith. 11:38 Now there is in store for me the crown of righteousness." 11:42 Understand that God is telling you 11:45 if you complete the race 11:47 there is something in store for you. 11:50 I finished the race, when I got to the end of the race 11:54 I felt no pain. 11:56 Yeah, for the first few minutes, of course, 11:57 after that things started contracting, 11:59 my muscles started hurting, 12:01 it is results of putting your body 12:02 through something that's not really normal. 12:05 But when I got to the finish line 12:07 and imagine getting into heaven, 12:08 there will be no more pain, you finished it. 12:11 And being debt free, the pain and the languish 12:14 and the weight of those debts are no longer with you, 12:18 and there is a certain sense of peace that you'll have. 12:23 Finish the race. 12:24 Let's finish this race together. 12:27 As a tool I'd like you to use 21 days, 21 days. 12:31 If you can assess and look at a budget 12:35 and look at your priorities each day for next 21 days, 12:39 it will form a habit. 12:41 You'll get in the habit of looking at it, 12:43 and addressing it, and assessing it, 12:46 and cutting spending where you can, 12:48 and creating a larger margin 12:50 between your income and your expenses. 12:55 Such that you can put away that 35 cents a day, 12:59 or $35 a day, or $100 a month and understand that 13:03 that money will begin to accumulate. 13:06 There are various saving plans that you should be aware of, 13:09 there are things like a regular saving plan, 13:11 that's simple interest. 13:12 There are things called money market accounts, 13:15 there are things concerns like CDs, 13:18 which are Certificates of Deposits. 13:20 And we'll talk a little bit about that as we go through 13:25 this comparison between savings and investing. 13:29 And I ask you to bear with me as we talk 13:31 because that's the most exciting subject. 13:34 But it is something that's very important, 13:36 and it can become very exciting for you if you begin to think 13:40 in a way that says 13:42 that I too can get to a place that I'm debt free. 13:46 Okay. 13:48 The goal is to address some of the disadvantages 13:50 and some of the advantages 13:51 of different methodology of saving 13:53 and different investment vehicles 13:54 that you can use to make your money work 13:57 a little bit better for you. 13:59 Remember, the parable of the talents, 14:01 the servant that received five talents 14:05 put his money to work and he doubled his investments. 14:09 The man that got four... there was two talents. 14:12 The second servant that got two talents 14:15 invested those two talents and it became four talents 14:18 regardless if it was $20,000, $2,000, 14:20 whatever the case may be, he took the money, 14:23 invested in some product or some asset 14:26 and used the production methodology 14:28 and double that money. 14:29 The third servant took the talent 14:31 based on his own ability and he buried it. 14:35 Wow, you know, it's too much weight on me 14:38 to take this money and do anything with it. 14:41 And it was in that we learn 14:43 that that talent was taken from him 14:45 and given to somebody else. 14:48 Okay, we talked about simple versus compound interest, 14:54 Now let's understand savings, 14:57 and we'll talk about savings for now 15:00 and then talk about investing a little bit later on. 15:03 Why do people save? 15:04 People save for two primary purposes. 15:08 One is for emergencies. 15:12 It's essential that you have some money put away, 15:15 because there are many different things 15:17 that can happen in your life that are unexpected. 15:20 They can be from the standpoint 15:23 of losing a job. 15:24 And one of the recommendations that people have is 15:27 try to ensure that you have three to six months savings 15:30 for... three to six months based on your typical expenses 15:35 so that you can carry yourself for those six months. 15:37 Now we know that if you hit the jobless mark 15:40 and many of those individuals that are out there 15:43 can't find work for upwards of 24 to 28 months, 15:47 the average amount of time someone is out of work. 15:50 Different things can be discussed about 15:52 tapping an unemployment insurance 15:55 and using some other talents you may have, 15:57 and developing a different business 15:59 and those type of things. 16:01 But the context is you need to save for that rainy day. 16:05 Secondarily, things can happen such as medical emergencies, 16:10 illness, and those type of things 16:12 can wipe out people's wealth very quickly. 16:14 So it's essential that you budget 16:16 for sometimes of health insurance 16:18 within that context. 16:21 But the two purposes 16:22 that you have is for the emergencies. 16:25 Emergency fund could entail car repairs, 16:29 it could entail layoffs, it could entail disabilities. 16:34 Three to six months, I'd say 16:35 save as much as you possibly can 16:37 because if you have 10, 12, 14 months worth of savings, 16:41 that is a good thing. 16:42 Now, if we think about some of those saving tools, 16:48 one would be a money market account 16:52 where you basically saying, okay, Mr. Banker, 16:54 I want to put this money into money market account. 16:56 Which basically says, 16:57 I'd like you to take the funds that I have in there 17:00 and invested into government or corporate securities 17:05 and as your performance does well 17:07 on your side of things, give me some of that profit 17:10 and help my small amount grow that much more quicker. 17:16 There's also, 17:17 now what are the drawbacks about of money market account? 17:19 I can't see really too much of drawback 17:21 except that, that bank is investing your money. 17:24 Did you know that the bank 17:26 as you put the money in the savings account 17:27 or whatever the case may be, 17:28 that bank takes your money and invests it. 17:31 The banker may make 24, 26, 28 percent 17:34 on the money they invest 17:36 and they can give you as simple as you know, 17:37 one percent back on your 17:39 savings account simple interest. 17:40 But if you know how to talk to a banker 17:42 and know some of the different avenues 17:45 for saving your money 17:46 and getting the best from your money, 17:49 that context then tells you 17:50 that I too can become a wealthy person 17:55 from a savings standpoint 17:57 and I can understand the concept 17:58 of how can I invest some of the money 18:00 to make even make more money. 18:03 There is also the context of CDs, 18:07 the CD is a Certificate of Deposits. 18:09 What is the Certificate of Deposit? 18:11 Well, I go to the banker and say, 18:12 you know, I want to open up a CD. 18:14 The CD in of itself can be $10,000 18:17 or I can have a Jumbo CD over a $100,000. 18:21 The CD says that the bank 18:24 will give you a promissory note, 18:26 a promissory note is a promise to pay you a certain thing 18:28 over a certain amount of time. 18:30 A CD has a maturity date. 18:31 You can have CDs open for as little as three months 18:34 and for as long as five years. 18:37 Now, in that you have agreed upon percentage that you're 18:41 or interest rate that you're guaranteed from the bank. 18:44 The bank says that in the promissory note 18:47 or this promise to you, is that we will promise you, 18:51 for example five percent interest 18:53 over the 12 months that you have this CD open. 18:58 Over that 12 months time 18:59 we promise you five percent interest 19:01 and your maturity is 12 months from today. 19:04 So it basically says, I put $10,000 into a CD, 19:07 the bank takes it, 19:09 and basically gives you five percent interest 19:12 continuously over that amount of time. 19:15 Simple interest. 19:17 At the end of that 12 months 19:18 you would then have how much money? 19:20 You take the $10,000 times 1.05 or 0.5 percent, 19:25 five percent, gives you $500. 19:28 So at the end of 12 months, I don't have the $10,000 19:31 but I have $10,500, and your CD matures, 19:35 you can withdraw the money. 19:37 Now if you put a CD in for more than $100,000, 19:42 you have the right to negotiate 19:43 with the bank about how much that CD, 19:46 the interest you can get on that CD. 19:49 The drawback of CD is this, if you put in five, 19:52 you can't pull it out for that five years. 19:55 And within that five years, 19:56 what if the interest rate goes up or goes down? 19:59 Well, if it goes, if the interest rate goes up 20:03 you suffer because you're stuck at that five percent interest. 20:07 If the interest rate drops, the bank suffer 20:09 because they're gonna pay you that five percent regardless. 20:14 That's one potential drawback, but their is another drawback 20:17 that you cannot take that money out 20:19 for that five years. 20:20 So you can't access that amount 20:22 and if it's an emergency savings account, 20:23 it really isn't 20:24 because you'll have to wait five years 20:26 or absorb a penalty for withdrawal. 20:29 The benefits of understanding money 20:32 now tells you that there are different venues. 20:34 Investing is another specific areas. 20:36 Why invest? 20:38 Well, we told you about that simple $100 invested 20:40 and compound interest will actually double 20:44 over the course of certain amount of time, 20:46 based on the interest rate. 20:49 What I would tell you about investing is this, 20:53 investment is a risk. 20:55 There's many different investment methodologies. 20:57 And if you plan to invest, invest for the long term. 21:01 The key is this, 21:02 we saw the volatizing in stock market 21:04 over the past several months. 21:07 We see it going up by 400 points 21:09 and down by several hundred points, 21:11 and we don't know what to think. 21:13 But those who are in the market 21:15 should be in it for the long haul. 21:16 Here is my point, you as an individual 21:21 need to understand that if you don't have a budget 21:24 you have no right being in the stock market. 21:26 If you don't know how much of a margin you have 21:28 between your income and your expenses, 21:31 you have no reason investing in something that's risky. 21:34 And the fact that you're thinking long-term 21:37 is a good thing, 21:38 because if you do look at a budget 21:40 and understand that, okay, I've this margin 21:42 and I can save here and I can invest here, 21:45 that is key. 21:46 You have the funds that are necessary 21:48 for that specific investment purpose. 21:52 If you don't have the money, it makes no sense to invest 21:55 because if you lose that money, that money is gone. 21:58 And if you invest the money, 22:00 you shouldn't really want to touch that money 22:04 for the long term, it could be for 401K, 22:07 it could be any different IRA, 22:09 it could be some type of investment tool 22:11 that can take you to retirement. 22:13 If you have toddlers right now, 22:15 you can invest for the college education, 22:17 that's the long term process. 22:19 And as a result of you taking the necessary steps, 22:23 taking those necessary steps of understanding 22:26 where you are from a budgetary stand point, 22:29 where you are in reference to 22:30 how much money you can actually save. 22:32 And then, once you're saving a good amount of money 22:35 and you cut your expenses, 22:37 and you are adhering to a budget, 22:40 then you can start the process of talking 22:42 to a financial advisor and asking them, "Where is it, 22:46 I can take this talent God has given me 22:50 and get a little bit more back?" 22:52 As the servant in the Parable of the Talents did. 22:56 It's essential that we take those necessary steps 22:59 and understand it is a key issue 23:02 to knowing what the values is in the savings 23:07 as well as the investment products. 23:08 So here's what we'll talk about, set goals, 23:11 get a direction of where you want to go. 23:14 Start taking actions now, 23:16 start the process of prioritizing, 23:21 setting those goals, and look at your short term goals, 23:25 which should be between one and four weeks 23:26 or it could be between one month and three months. 23:29 Short term, where do you want to be 23:31 over the next three months? 23:32 I'd ask you to begin to assess your budget 23:37 and see how much you can at least just start to save. 23:41 Then take a look at what your medium-term goals would be. 23:45 And what's a medium-term goal? 23:47 Something between three months and a year, mid-term goal. 23:51 A mid- term could be, I wanna start 23:53 cutting into my credit card debts significantly 23:56 and start paying it off. 23:57 That's a good mid-term goal. 23:59 And long-term goals range from one year or longer. 24:03 We know that credit card debt, $14,000 24:07 with interest is gonna take approximately 24:09 two to three years to pay that off. 24:11 So part of your long-term goals 24:12 is paying off that debt. 24:14 But additionally, it would be investment, 24:17 or investing in retirement, and taking a look at 24:20 where you want to be from a state savings perspective 24:23 that I'd like to have 15 months to 24 months 24:26 with the savings in cases the crisis that hits. 24:29 And then also take a look at 24:31 where I want to be at retirement 24:33 and how comfortable life 24:34 I would like to live from that standpoint. 24:36 And understanding all of that, you still know 24:39 that it's not a matter of your possessions 24:43 that matter to Christ, 24:45 it's a matter of how you use the funds. 24:48 It's interesting. 24:50 Biblically, when you take a look 24:52 at Luke 12, 13, 14, and 15, 24:55 many of us don't know the rest of the story. 25:01 Look there with me. 25:03 It was the parable of the rich fool. 25:05 And you remember Christ said, 25:08 "Be on your guard against all kinds of greed. 25:13 A man's life doesn't consist in the abundance 25:16 of his possessions." 25:19 Verse 16, and he told in this parable, 25:23 the ground of a certain man produce a good crop. 25:27 "He thought to himself, what shall I do? 25:30 I have no place to store my crops. 25:32 Then he said, this is what'll do, 25:35 I will tear down my barns and I'll build bigger ones, 25:40 and there I will store all the stuff that I have, 25:43 the grain and all of my goods. 25:45 And I'll say to myself, myself speaking, 25:49 you have plenty of good laid up for many years, take life easy, 25:54 eat, drink and be merry." 25:58 Next verse is quit interesting, it says, "But God said to him, 26:03 'You fool, this very night 26:07 your life will be demanded from you 26:11 then who will get 26:13 what you have prepared for yourself?' 26:17 This is how it will be with anyone 26:19 who stores up things for himself, 26:21 but it's not rich towards God." 26:24 This ties right into the Parable of the Talents. 26:27 A man's life does not consist of your possessions, 26:31 a man's life consists of how he uses the talents 26:35 that God has given him, the Holy Spirit has given him. 26:38 To get the word out about the Gospel of Christ, 26:43 your immediate need in developing a budget 26:47 is to create a margin between your income and your expenses. 26:51 You'll hear me say that over and over again, 26:54 because when you can increase that margin 26:56 you can take more money and save it, 26:58 you can prepare for that rainy day. 26:59 You can prepare for the problems 27:04 that life may have 27:05 and you can prepare to pay off all off your debt. 27:09 But here's key, of that money that you have saved 27:12 and you have as in an abundance that God has given you, 27:16 you can turn around and say, 3ABN, 27:19 I have $5,000 that you can use 27:23 to help share the word of God in a foreign country. 27:27 I have $5,000 I can give to a local charity 27:32 to help in inter-city needs 27:34 and help people begin to exist on a higher level, 27:37 and to begin to get better, 27:39 and to begin to get economically 27:42 aware of what's going on 27:43 and they can also pass things forward. 27:46 I share these things with you 27:48 because it's essential to understand the value 27:50 of what's saving and investing can mean in our lives. 27:54 So, Take it the Bank and save. 27:58 God bless. |
Revised 2016-06-09