The Total Money Makeover: Classic Edition
Page 23
Income Sources Recap
Money’s fun. if you’ve got some.
You’ve got money coming in from somewhere, right? Then write it down. This form documents every single income source you’ve got. There’s no such thing as “found money.” It all counts, and it all goes on the budget!
Pro Rata Debt List
“But I can’t pay the minimum payments!” it’s okay. We have a plan for that.
Pro rata means “fair share.” Use this form to figure out what percentage of your income each creditor represents, and then send their payment along with a copy of this form and your budget every month—even if they say they won’t accept it.
Index
A
academic credentials, xvii
accountability, 130
adjustable rate mortgage (ARM), 174–175
advertising, and debt, 17
affluenza, 197
age, for starting Makeover, 148–149
aggressive growth funds, 146
Alcorn, Randy, Money, Possession, and
Eternity, 197
Allen, Jeff, 134
Allocated Spending Plan worksheet, 212–216
American Bankruptcy Institute, 40
AmeriDebt, 59, 61
annual percentage rate (APR), 173–174
assets, form for listing, 222
autos. See cars
B
baby life insurance, 157
Baby Steps, 88
order of, 90
1. starter emergency fund of $1000,
97–103
2. Debt Snowball, 106–111
3. emergency fund for 3 to 6 months of
expenses, 124–127
3b. down payment savings, 137–138
4. investing for retirement, 143–144
5. saving for college, 156–158
6. home mortgage payoff, 168, 179–180
7. wealth building, 181–182
7b. Pinnacle Point, 187–189
back-end penalties, on car loans, 33
bad credit, in credit report, 61
balloon mortgage, 174–175
bankruptcy, 3, 61, 64–67
credit cards and, 40
debt-management companies’ advice on, 60
from medical bills, 71
personal stories, L. & S. Hickman, 65–67
risk, 46
of those over 65, 143
Barnum, P.T., 92
barter, black-market system, 52
Beardstown Ladies, 54
behavior, ix–x
change in, xvii–xviii
Debt Snowball and, 106
vs. knowledge, 3
learned from others, 18–19
beta, 171
Bible
Proverbs 6:1 and 5, 112
Proverbs 10:15, 196
Proverbs 11:14, 185
Bible (continued)
Proverbs 13:22, 73
Proverbs 17:18, 25
Proverbs 22:7, 20
Bible (continued)
Jeremiah 29:11, 199
Luke 14:28, 92
Romans 12:2, 201
1 Timothy 6:6, 82
James 1:27, 190
black-market barter system, 52
Blue Chip funds, 146
borrowing. See also credit cards; loans;
mortgage
on home, 170–172
resolving to stop, 114
brand loyalty, 44
Breakdown of Savings worksheet, 221
budget, 202
agreement with spouse on, 95
changes to, 95
envelope system, 68
Monthly Cash Flow Plan, 209–211
personal stories
W. & S. Frick, 77–78
T. & T. Kiger, 91
S. & J. Marsh, 92–93
B. & T. McKinley, 84–85
J. Morgan, 94–95
D. & K. Schmidt, 81–82
time for planning, 58–59
writing monthly, 90–94
Buffett, Warren, xxv
Burkett, Larry, 45, 96
Butterworth, Eric, 191
C
CardTrak, 39
career, change, 14
cars
impact of, 83–85
insurance, 71
leasing, 32–34
mileage deduction for taxes, 34
monthly payments, vs. used cars, 30–32
new, loss of value, 34–35
purchasing, 182–183
rental, 38
selling, 116
cash
for college expenses, 155
discounts for, 29
for home purchase, 176–179
Monthly Cash Flow Plan, 209–211
paying with, 67–68
risk of robbery, 67–68
using all available, 131–132
cash advance, 26–28
cash value life insurance, 54–55
Celebrate Recovery, 13
Certificates of Deposit, 101, 128
challenge, 4
challenge winners, K. & C. Morrow, 201–203
change, x
in behavior, xvii–xviii
in need for approval, 80
pain of, 14–15
Chapter 7 bankruptcy, 61, 65
Chapter 13 bankruptcy, 65
checking accounts, separate in marriage, 119
children, character of, 197
Christmas, 99
gift giving, 80–81
Secret Santa, 192–193
collectors, 63–64
college education
Dave’s rules for, 155–156
purpose of, 152–153
college expenses
prepaying, 57–58, 157
research on, 155
savings for, 156–158
college fund, 144, 152–164
on little time, 161–164
personal stories, C. & K. Seymour, 157–158
College Savings Foundation, 156
college students, marketing credit cards to, 42
Collins, Jim, How the Mighty Fall, xxiv–xxv
commissions, 186
Irregular-Income Planning sheet for, 94, 217–218
companies, tuition payments by, 161
compounding investment, 149
consolidation of debt, 45–46
consumer confidence, 47
Consumer Credit Counseling Services, 60–61
Consumer Equity Sheet, 222
Consumer Federation of America, 55, 142
Consumer Reports, 32, 55
cosigning loan, 24–26
cost-of-living raise, 147
Country Financial Security Index survey, 126
Covey, Stephen, The Seven Habits of Highly
Effective People, 59
creative financing, 138
credit, 36
credit-card collector, 64
credit cards, 36–38, 202
alternatives, 98–99
and creditworthiness, 15
vs. debit card, 38–39
debt, 18
marketing to college students, 42
monthly payoff, 38–41
personal stories, 6, 42–43
S. & A. Bledsoe, 99–100
A. & L. Cluff, 40–41
J. & T. Eller, 116–117
D. & T. Jarrett, 42–43
M. & K. Stolworthy, 6–7
for teenagers, 41–44
credit-repair companies, 61–62
credit reports
bankruptcy on, 65
cleaning up, 61–62
damage from cosigned loans, 25
credit score, 190
creditors, keeping debt current, 96–97
criticism, xii
cultural expectations, 78
D
debit card, 38
vs. credit card, 38–39
debt. See also borrowing; credit cards;
loans; mortgage
common perceptions of, 18
consolidation of, 45–46
from credit cards, 18
divorce and repayment of, 62–63
for investing, xxvi
listing smallest to largest, 107
of “normal” American family, 105
personal stories, 10
J. & T. Atwood, 129–130
S. Hogenhout, 162–163
M. & K. Reep, 10
T. & M. Skinner, 69–70
A. & M. Wessner, 20–21
single mom with, 102–103
staying current on, 109
typical, 1–2
debt-free living, 21
personal stories
S. & D. Howerton, 178–179
K. & K. McGinty, 186–187
M. & K. Stolworthy, 6–7
debt-management companies, 59–61
Debt myths
accepting, 16–17, 48
debt impact on economy, 47–48
vs. truth, 19–44
car payments or used cars, 30–32
car rentals, hotels or online
purchases, 38
cosigning loan, 24–26
credit cards, 36–38
debit card vs. credit card, 38–39
debt consolidation, 45–46
leasing cars, 32–34
loans to friends or relatives, 22–24
new car loss of value, 34–35
“Ninety days same as cash,” 28–30
prosperity vs. risk, 19–22
teenager with credit card, 41–44
Debt Snowball, 104–123
components for success, 111–114
enemy identification, 104–106
getting rolling, 114–119
importance of, 123
personal stories, 77
D. Dangerfield, 113–114
S. & A. Farrar, 107–108
J. & A. Hopkins, 110–111
C. & J. Schubeck, 166–167
selling possessions, 115–116
using all available cash, 131–132
worksheet, 219–220
defaulted loan, 24–25
denial, 9–15, 80, 86
financial crisis from, 12
of risk, 49–50
depreciation, straight-line, 34
dignity, retirement with, 142
discounts, and sales quota, 29
divorce
and debt repayment, 62–63
money problems and, 96
Dogs of the Dow, 54
Dow Jones Industrial Average, 54
down payment, savings for, 137
E
easy wealth, quest for, 50
economic storms in 2008, xxi–xxiii
economy, debt impact on, 47–48
Education IRA, 159
Educational Savings Account (ESA), 158–159
Einstein, Albert, 14
emergencies
credit cards and, 99
examples, 126–127
gender and, 133–134
emergency fund
dipping into, 121
ease of access, 127–128
finishing, 124–127
hiding, 101
vs. home equity loan, 175–176
impact on crises, 135–136
liquidity of, 101–103
personal stories, 77, 125–126
as priority, 136–137
size of, 129–131
starter of $1000, 97–103
emerging market funds, 146
Emotional Intelligence, 153
Employee Benefit Research Institute, 142
envelope system, 68
Equity funds, 146
estate planning, 59, 73
evil, view of money as, 198
F
Fannie Mae Bonds, xxii
FDIC, and money market accounts, 128
fear, as motivator, 133
Federal Fair Credit Reporting Act, 61
Federal Trade Commission (FTC), 28, 61–62
truth-in-lending statement, 32
FICO score, 36, 37
fifteen-year mortgage, vs. thirty-year, 172–174
financial crisis, from denial, 12
Financial Peace, ix, xviii, 145
financial peace, 201
Financial Peace Jr., 45
Financial Peace University, ix, 145
Home Study Kit, 70
financial responsibilities, in family, 117
529 plan, 159–160
fixed portfolio 529 plan, 159
fixed-rate loan, qualifying for, 36–37
flexible 529 plan, 160
focus, power of, 89
focused intensity, 111, 120
food, budget for, 68
Forbes 400, 21
Ford, Henry, 22
Ford Motor Company, 22
foreclosure, xxii–xxiii, 11, 171
foreign funds, 146
forgiveness of debt to friend, 23
forms. See worksheets
Fortune, 55
“Foundations in Personal Finance,” 44
401(k) contributions, 120, 146
403(b)s funds, 146
457s fund, 146
fraud, 62
friends, 153–154
impressing, 31
loans to, 22–24
funerals, prepaying, 57–58
G
Gallup poll, 126
Gallwey, Timothy, 149
gambling, 13, 56
personal stories, T. Newman, 13
garage sale, 115, 202
gender, and emergencies, 133–134
Gerber insurance, 157
giving to others, 80–81
vs. loans to friends, 23
personal stories
R. & T. Brewer, 191
L. & L. Lokietek, 195–196
goals
for college, 154
focus on, 111
settling for good enough, 166
written budget as, 92
God, 141
plan of, 199
gold, as investment, 51–52
growth funds, 145, 146
guaranteed income, and emergency fund, 137
H
happiness, 197
Harley-Davidson motocycle, 183–184
health insurance, 69, 71
health issues
personal stories, C. & K. Rhoads, 72
from stress, 66
Health Savings Account (HSA), 71
hiding emergency fund, 101
high school curriculum, 44
home equity loan, 46, 121–122, 175–176
home purchase, 11. See also mortgage
cash for, 176–179
timing for, 137–138
home value, borrowing more than, 46–47
homeowner insurance, 71
hope, 103, 199
Horn, Tom, 192–193
hotels, 38
How the Mighty Fall (Collins), xxiv–xxv
HSA (Health Savings Account), 71
hubris, xxv
I
ignorance, 75–78, 86
vs. intelligence, xv
impressing friends, 31
impulse-buying, 101
income
increasing, 118
for wealth-building, 104
income funds, 146
Income Sources Recap, worksheet, 226
infomercials, 53
insurance, 69–72. See also life insurance
types, 71
intelligence, vs. ignorance, xv
interest rates
for car lease, 32
for money market accounts, 128
for rent-to-own, 28
international funds, 146
investment, 184–189
compounding, 149
gold as, 51–52
living on income from, 189
personal stories
A. & K. Ivey, 150–151
L. & L. Lokietek, 195–196
returns, xv–xvi
short-term v
s. long-term, 145
Irregular-Income Planning worksheet, 94, 217–218
J
J.C. Penney, 22
job loss, 11
Joneses, keeping up with, 78–83
joy, in working, 141
K
kid branding, 44–48
Kiplinger’s Personal Finance, 55
knowledge
acquiring, 75
vs. behavior, 3
L
Large Cap funds, 146
layoff, 11
preparing for, xxvi–xxvii
leasing cars, 32–34
life insurance, 71
baby, 157
cash value, 54–55
term, 69, 71
universal, 55
whole, 55, 70, 73
life phase 529 plan, 159
line of credit, 176
liquidity of emergency fund, 101–103, 127–128
loan sharking, 27
loans. See also mortgage
cosigning, 24–26
defaulted, 24–25
fixed-rate, qualifying for, 36–37
to friends or relatives, 22–24
home equity, 46, 121–122, 175–176
at more than house value, 46–47
subprime, xxii
long-term care insurance, 71
long-term disability insurance, 71
long-term investing, vs. short-term, 145
looking good, 31
lottery, 56
Lump Sum Payment form, 223
M
Major Components form, 224
manufactured housing (mobile homes), 56–57
marriage
agreement on plan, 132–133
communication in, 117
finances in, 96
separate checking accounts, 119
materialism, 197
Maxwell, John, 18, 59
medical bills, bankruptcy from, 71
mediocrity, 12–13
Mid Cap funds, 146
military, for college funding, 162
The Millionaire Next Door (Stanley), 78–79
mistakes, repeating, 87
mobile homes, 56–57
money. See also wealth
love of, 198
responsibility for managing, 185
Money, 97, 125
money market account, 128
Money myths, 49–73
bankruptcy, 64–67
collectors, 63–64
credit clean-up, 61–62
debt-management companies, 59–61
divorce and debt repayment, 62–63
gold as investment, 51–52
insurance, 69–72
lottery and gambling, 56
prepaying funeral and college expenses, 57–58
quick wealth acquisition programs, 52–54
retirement outlook, 50–51
time for budget planning, 58–59
will, 73
Money, Possession, and Eternity (Alcorn), 197
Monthly Cash Flow Plan worksheet, 209–211
mortgage
adjustable rate (ARM), 174–175
balloon, 174–175
length of, 177
payment vs. retirement fund as priority, 144
refinancing, 121–122
on rental properties, 122
second, 46, 121–122
tax deductions on interest, 169