MISSION STATEMENT:

To empower and give HOPE to everyone

from the financially secure to the
financially distressed.
Information About the Program

This class is presented by Dave Ramsey via video. As you watch, you’ll fill in the
blanks in this workbook.

You will find Dave’s presentation both educational and entertaining. If you have
any questions about the material, please ask your class facilitator or call our
representative at 800.480.5902. You may also email questions to
[email protected].

This course is an abridged version of Dave Ramsey’s popular Financial Peace

University (FPU), which contains Dave’s complete presentation in thirteen
separate hour-long lessons. This abridged version, two hours in length, is
specifically designed for bankruptcy filers and includes special messages from
Dave to encourage and provide hope.

Topics covered in this program include saving money, cash flow planning, debt
and repayment, real estate and mortgages, bargain shopping, the influence of
marketing on buying decisions, insurance, and credit bureaus.

How to Get the Most Out of This Program

1. Fill in the blanks.

2. Work with your spouse.

3. Join a support group with others who are applying these principles.

4. Make copies of blank cash flow forms and use them monthly.
© 2013 Lampo Licensing, LLC. All Rights Reserved.
1749 Mallory Lane • Brentwood, TN 37027.

This publication is designed to provide accurate and authoritative information with regard to the subject matter covered. It is sold with the
understanding that the publisher is not engaged in rendering legal, accounting, or other professional advice. If legal advice or other expert
professional assistance is required, the services of a competent professional person should be sought.

– From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers
and Associations.

Published by THE LAMPO GROUP, INC. For more information, please contact DAVE RAMSEY’s office
at 888.22.PEACE.
About Dave Ramsey
America’s trusted voice on money and business, Dave Ramsey
is a personal money-management expert and extremely popular
national radio personality. His four New York Times best-selling
books –Financial Peace, More Than Enough, The Total Money
Makeover and EntreLeadership – have sold more than 7 million
copies combined. EntreLeadership: 20 Years of Practical Business
Wisdom from the Trenches, his latest best-seller, released in
September 2011 and debuted at number one.

By age twenty-six he had established a four-million-dollar real estate portfolio, only to lose it by
age thirty. Using the wisdom he gained, Ramsey rebuilt his financial life and now teaches others
how to be responsible with their money, so they can acquire enough wealth to take care of
loved ones, retire with dignity, and give generously to others.

In 1992, Ramsey founded The Lampo Group, Inc. to provide financial counseling, through
various means, to anyone who wants to better understand the principles of proper money
management. Twenty years later, the company has grown from a card table in his living room to
more than 350 team members and has been voted one of the “Best Places to Work” in Nashville
numerous times. Ramsey runs a multi-million dollar company with a nationally recognized
brand, but he defines success by the number of lives changed through his message of hope.

Ramsey offers that life-changing message as host of a nationally syndicated radio program, “The
Dave Ramsey Show,” which is heard by 6 million listeners each week on more than 500 radio
stations throughout the United States. The show is also available on iHeartRadio.com. In 2009,
he was honored as the National Association of Broadcaster’s Marconi Award winner and in 2013
he will be inducted into the NAB Broadcasting Hall of Fame.

He is the creator of Financial Peace University (FPU), a program that helps people dump their
debt, get control of their money, and learn new behaviors around money that are founded on
commitment and accountability. More than two million families have attended FPU classes at
their workplace, church, military base, local nonprofit organization or community group.

Ramsey offers his message of hope through a variety of mediums and products. More than
950,000 people have attended a Live Event including more than 40,000 EntreLeadership
participants. His high school and college curriculums are offered in more than 10,000 schools
and educational institutions. The “Dave Says” syndicated column is available to more than 18
million readers monthly. Thousands of children have enjoyed his entertaining and educational
book series. Daveramsey.com offers free informational articles and streaming of “The Dave
Ramsey Show.”

Ramsey earned his B.S. degree in Finance and Real Estate from the University of Tennessee.
Follow Dave on Twitter at @DaveRamsey and on the web at www.DaveRamsey.com.
How Well Are We Handling Money Today?

• 70% of Americans are living paycheck to paycheck and only 55% are worried
about it. —Wall Street Journal

• 64% of Americans don’t have enough cash to cover groceries for their family
for one month. —2011 National Foundation for Credit Counseling

• In 2011, 1.3 million bankruptcy petitions were filed by individuals with

predominantly nonbusiness debt. —2012 Bankruptcy Abuse Prevention and Consumer
Protection Act

• 42% of American workers have never even tried to calculate how much
money they will need to save in order to live comfortably in retirement.
—2011 Employee Benefit Research Institute

• Average retirement savings would last the typical household five months.
—2012 Employee Benefits Research Institute

5
Credit Card Crumbs
• Americans’ consumer debt as of May, 2013 was $2.84 trillion.

• Americans’ revolving debt (98% credit cards) in May of 2013 was 856.5 billion.

• There are over 1.5 billion credit cards in circulation in America. The 176.8
million U.S. credit card holders have, on average, 3.5 cards each.

• In 2012, 13.9% of the American family’s disposable income went to service

credit card debt.

• 56% of American cardholders carry a balance instead of paying off the balance
on their cards at the end of the month.

• The average balance owed by U.S. households that kept an unpaid balance on
their card accounts was $15,799 in 2012.

• The average interest rate on new card offers in May of 2012 was 14.9%.

• Making minimum monthly payments at 14.67% interest, it will take nearly 27

years to pay off your balance if you don’t charge anything else!

• As recently as 2009, credit card issuers were extracting $22.9 billion annually in
penalty fees from U.S. cardholders.

• 93 percent of credit cards allow the issuer to raise any interest rate at any time
by simply unilaterally changing the account agreement.

• Some card issuers consider you in default—enabling them to penalize you via a
higher interest rate—if you miss a payment with any creditor.

• A first-offense credit card late fee can be as much as $39. The average late fee
in 2009 was $28.6; a 9% increase over one year earlier.

6
Super Saving
The answers to the fill-in-the-blanks appear in white on the LEFT HAND
SIDE of the screen as Dave teaches. Fill in the blanks as you go through this
workbook starting with the Super Saving lesson. The answer key is located at
the end of the lesson (page 43).
You can get anywhere
if you simply go one
step at a time.

“If you do the things The Seven Baby Steps

you need to do when
you need to do them, There is a process for getting out of the mess that we created
then someday you
can do the things you without feeling overwhelmed. Getting out of debt will not
want to do when you
want to do them.” happen overnight; it takes time. Here are the Baby Steps that will
– Zig Ziglar get you started:

Step 1: $1,000 in an emergency fund

($500 if your income is under $20,000 per year)

Step 2: Pay off all debt except the house utilizing

the debt snowball

Step 3: Three to six months expenses in savings

Step 4: Invest 15% of your household income into Roth IRAs

and pre-tax retirement plans

Step 5: College funding

Step 6: Pay off your home early

Step 7: Build wealth and give!

7
Super Saving
You should save for three basic reasons:
1.
2.
3.
We all face intense
Emergency Fund financial concerns at
some time or another.
events do occur—expect them! Whether it’s a layoff,
lengthy illness, large
financial loss, etc., we
Purchases need to be prepared
and save up while we
Instead of to purchase, pay cash by using can. It will allow us to
a fund approach. better cope during
tough times and, in
some cases, to
survive.
For example...
Say you borrow to purchase a $ dining room set.
Most furniture stores will sell their financing contracts to
finance companies.

This means you will have borrowed at % with payments of

per month for months. So, you will pay a total of
$ , plus insurance, for that set.

But if you save the same $ per month for only

months, you will be able to pay cash.

When you pay cash, you can almost always negotiate a discount,
so you will be able to buy it even earlier.

8
Super Saving
Wealth Building
Retirement & College Funding, Etc.

Building wealth is a marathon, not a sprint.

Just $ per month, every month, from age 25 to age 65, at

% will build to over $ .

Compound interest is a mathematical .

You will either learn to
manage money, or the
lack of it will always
manage you.
Daily decisions can make a HUGE impact!
Cost Cost If invested at 12%
Expense per day per month from age 16-76

Cigarettes $3 $90 $11,622,000

Gourmet Coffee $5 $150 $19,371,943

Lunch
(5 days/week) $8 $160 $20,663,319

Is it worth the cost in the long run?

9
Super Saving
The Story of Ben and Arthur
Ben starts saving $2,000 a year at age 19, stops saving at age 26,
and never saves another dime. His brother, Arthur, starts later—at
age 27—but saves until age 65, almost his entire life. With a 12%
return, guess who came out ahead at retirement?

BEN vs. ARTHUR

BEN INVESTS TOTAL AGE ARTHUR INVESTS TOTAL
2,000 2,240 19 0 0
2,000 4,749 20 0 0
2,000 7,558 21 0 0
2,000 10,706 22 0 0
2,000 14,230 23 0 0
2,000 18,178 24 0 0
2,000 22,599 25 0 ARTHUR 0
2,000 27,551 26 0 STARTS LATE 0
0 30,857 27 2,000 2,240
0 34,560 28 2,000 4,749
0 BEN 38,708 29 2,000 7,558
0 STOPS 43,352 30 2,000 10,706
0 SAVING! 48,554 31 2,000 14,230
0 54,381 32 2,000 18,178
0 60,907 33 2,000 22,599
0 68,216 34 2,000 27,551
0 76,802 35 2,000 33,097
0 85,570 36 2,000 39,309
0 95,383 37 2,000 46,266
0 107,339 38 2,000 54,058
0 120,220 39 2,000 62,785
0 134,646 40 2,000 72,559
0 150,804 41 2,000 83,506
0 168,900 42 2,000 95,767
0 189,168 43 2,000 109,499
0 211,869 44 2,000 124,879
0 237,293 45 2,000 142,104
0 265,768 46 2,000 161,396
0 297,660 47 2,000 183,004
0 333,379 48 2,000 207,204
0 373,385 49 2,000 234,308
0 418,191 50 2,000 264,665
0 468,374 51 2,000 298,665
0 524,579 52 2,000 336,745
0 587,528 53 2,000 379,394
0 658,032 54 2,000 427,161
0 736,995 55 2,000 480,660
0 825,435 56 2,000 540,579
0 924,487 57 2,000 607,688
0 1,035,425 58 2,000 682,851
0 1,159,676 59 2,000 767,033
0 1,298,837 60 2,000 861,317
0 1,454,698 61 2,000 966,915
0 1,629,261 62 2,000 1,085,185
0 1,824,773 63 2,000 1,217,647
0 2,043,746 64 2,000 1,366,005
0 2,288,996 65 2,000 1,532,166

$2,288,996 vs. $1,532,166

WITH ONLY A $16,000 INVESTMENT! ARTHUR NEVER CAUGHT UP!
10
Super Saving
Rate of return, or rate, is important.

“Make all you can, A simple, one-time investment of $1,000 could make a huge
save all you can,
give all you can.” difference at retirement ... if you know how and where to invest it.
– John Wesley

“Get Rich Quick” never

works. You will lose
your money. Saving $1,000 One-Time Investment, No Withdrawal
faithfully over time Age 25 to Age 65 (40 years)
will always build
wealth—it just takes
a little while.

Where you put your money DOES MATTER!

11
Cash Flow Planning
Budgeting Basics
You must do a written cash flow plan every month.
You must also keep your checking account .
Overdrafts are a sign of and sloppy,
Remember the
lazy money habits. Four Walls:

1. Food
Reasons We SHOULD Do a Cash Flow Plan 2. Shelter
3. Clothing
• The easiest and most powerful method is a - based plan 4. Transportation
using the system.

• Keep up with your receipts and write them down in your

account register. Money flows from
• Use your bank’s online tools regularly to keep a close eye on those who don’t
your spending. manage it and to
those who do.

Calculating Gross vs. Net Income

• Gross income is income without deductions. This is your income
before expenses such as taxes and benefits.
• Net income is income after deductions (i.e. gross income minus
taxes, benefits, and other expenses). This is your “take-home pay.”

12
Cash Flow Planning
Income Sources (Form 3)
SOURCE AMOUNT PERIOD/DESCRIBE

Salary 1 ____________ _____________________

Salary 2 ____________ _____________________
Salary 3 ____________ _____________________
Bonus ____________ _____________________
Self-Employment ____________ _____________________

Interest Income ____________ _____________________

Dividend Income ____________ _____________________
Royalty Income ____________ _____________________
Rents ____________ _____________________

Notes ____________ _____________________

Alimony ____________ _____________________

Child Support ____________ _____________________
AFDC ____________ _____________________

Unemployment ____________ _____________________

Social Security ____________ _____________________
Pension ____________ _____________________
Annuity ____________ _____________________

Disability Income ____________ _____________________

Cash Gifts ____________ _____________________

Trust Fund ____________ _____________________

Other_____________ ____________ _____________________

Other_____________ ____________ _____________________
Other_____________ ____________ _____________________

TOTAL ____________

13
Cash Flow Planning
Lump Sum Payment Planning (Form 4)
Payments you make on a non-monthly basis, such as insurance premiums and taxes, can be
budget busters if you do not plan for them every month. Therefore, you must annualize the cost
and convert these to monthly budget items. That way, you can save the money each month and
will not be caught off-guard when your bi-monthly, quarterly, semi-annual, or annual bills come
due. Simply divide the annual cost by 12 to determine the monthly amount you should save for
each item.

ITEM NEEDED ANNUAL AMOUNT MONTHLY AMOUNT

Real Estate Taxes _______________ / 12 = _______________

Homeowner’s Insurance _______________ / 12 = _______________

Home Repairs _______________ / 12 = _______________

Replace Furniture _______________ / 12 = _______________

Medical Bills _______________ / 12 = _______________

Health Insurance _______________ / 12 = _______________

Life Insurance _______________ / 12 = _______________

Disability Insurance _______________ / 12 = _______________

Car Insurance _______________ / 12 = _______________

Car Repair/Tags _______________ / 12 = _______________

Replace Car _______________ / 12 = _______________

Clothing _______________ / 12 = _______________

Tuition _______________ / 12 = _______________

Bank Note _______________ / 12 = _______________

IRS (Self-Employed) _______________ / 12 = _______________

Vacation _______________ / 12 = _______________

Gifts (including Christmas) _______________ / 12 = _______________

Other ___________ _______________ / 12 = _______________

14
Cash Flow Planning
Monthly Cash Flow Plan (Instructions)
Every single dollar of your income should be allocated to some category on this form. When
you’re done, your total income minus expenses should equal zero. If it doesn’t, then you need
to adjust some categories (such as debt reduction, giving, or saving) so that it does equal
zero. Use some common sense here, too. Do not leave things like clothes, car repairs, or home
improvements off this list. If you don’t plan for these things, then you’re only setting yourself up
for failure later.

Yes, this budget form is long. It’s really long. We do that so that we can list practically every
expense imaginable on this form to prevent you from forgetting something. Don’t expect to put
something on every line item. Just use the ones that are relevant to your specific situation.

Every main category on this form has subcategories. Fill in the monthly expense for each
subcategory, and then write down the grand total for that category. Later, as you actually pay
the bills and work through the month, use the “Actually Spent” column to record what you really
spent in each area. If there is a substantial difference between what you budgeted and what
you spent, then you’ll need to readjust the budget to make up for the difference. If one category
continually comes up over or short for two or three months, then you need to adjust the budgeted
amount accordingly.

Use the “% Take Home Pay” column to record what percentage of your income actually goes
to each category. Then, use the “Recommended Percentages” sheet (Form 6) to see if your
percentages are in line with what we recommend.

Notes:

• An asterisk ( * ) beside an item indicates an area for which you should use the envelope system.

• The emergency fund should get all the savings until you’ve completed your full emergency
fund of three to six months of expenses (Baby Step 3).

• Don’t forget to include your annualized items from the “Lump Sum Payment Planning” sheet
(Form 4), including your Christmas gift planning.

15
Cash Flow Planning
Monthly Cash Flow Plan (Form 5)
Budgeted Sub Actually % of Take
Item Total TOTAL Spent Home Pay

CHARITABLE GIFTS _______ _______ _______

SAVING
Emergency Fund _______ _______
Retirement Fund _______ _______
College Fund _______ _______ _______ _______
HOUSING
First Mortgage _______ _______
Second Mortgage _______ _______
Real Estate Taxes _______ _______
Homeowner’s Ins. _______ _______
Repairs or Mn. Fee _______ _______
Replace Furniture _______ _______
Other _________ _______ _______ _______ _______
UTILITIES
Electricity _______ _______
Water _______ _______
Gas _______ _______
Phone _______ _______
Trash _______ _______
Cable _______ _______ _______ _______
*FOOD
*Groceries _______ _______
*Restaurants _______ _______ _______ _______
TRANSPORTATION
Car Payment _______ _______
Car Payment _______ _______
*Gas and Oil _______ _______
*Repairs and Tires _______ _______
Car Insurance _______ _______
License and Taxes _______ _______
Car Replacement _______ _______ _______ _______

PAGE 1 TOTAL _______ _______

16
Cash Flow Planning
Monthly Cash Flow Plan (Form 5 – continued)
Budgeted Sub Actually % of Take
Item Total TOTAL Spent Home Pay

*CLOTHING
*Children _______ _______
*Adults _______ _______
*Cleaning/Laundry _______ _______ _______ _______
MEDICAL/HEALTH
Disability Insurance _______ _______
Health Insurance _______ _______
Doctor Bills _______ _______
Dentist _______ _______
Optometrist _______ _______
Medications _______ _______ _______ _______
PERSONAL
Life Insurance _______ _______
Child Care _______ _______
*Baby Sitter _______ _______
*Toiletries _______ _______
*Cosmetics _______ _______
*Hair Care _______ _______
Education/Adult _______ _______
School Tuition _______ _______
School Supplies _______ _______
Child Support _______ _______
Alimony _______ _______
Subscriptions _______ _______
Organization Dues _______ _______
Gifts (incl. Christmas) _______ _______
Miscellaneous _______ _______
*Blow Money _______ _______ _______ _______

PAGE 2 TOTAL _______

17
Cash Flow Planning
Monthly Cash Flow Plan (Form 5 – continued)
Budgeted Sub Actually % of Take
Item Total TOTAL Spent Home Pay

RECREATION
*Entertainment _______ _______
Vacation _______ _______ _______ _______
DEBTS (Hopefully -0-)
Visa 1 _______ _______
Visa 2 _______ _______
Master Card 1 _______ _______
Master Card 2 _______ _______
American Express _______ _______
Discover Card _______ _______
Gas Card 1 _______ _______
Gas Card 2 _______ _______
Dept. Store Card 1 _______ _______
Dept. Store Card 2 _______ _______
Finance Co. 1 _______ _______
Finance Co. 2 _______ _______
Credit Line _______ _______
Student Loan 1 _______ _______
Student Loan 2 _______ _______
Other _______ _______ _______
Other _______ _______ _______
Other _______ _______ _______
Other _______ _______ _______
Other _______ _______ _______ _______ _______

PAGE 3 TOTAL _______ _______

PAGE 2 TOTAL _______ _______
PAGE 1 TOTAL _______ _______
GRAND TOTAL _______ _______
TOTAL HOUSEHOLD INCOME _______
ZERO 18
Cash Flow Planning
Recommended Percentages (Form 6)
How much of your income should be spent on housing, giving, food, etc.? Through experience
and research, we recommend the following percentages. However, you should remember
that these are only recommended percentages. If you have an unusually high or low income,
then these numbers could change dramatically. For example, if you have a high income, the
percentage that is spent on food will be much lower than someone who earns half of that.

If you find that you spend much more in one category than we recommend, however, it may
be necessary to adjust your lifestyle in that area in order to enjoy more freedom and flexibility
across the board.

ITEM ACTUAL % RECOMMENDED %

CHARITABLE GIFTS ___________ 10 – 15%

SAVING ___________ 5 – 10%

HOUSING ___________ 25 – 35%

UTILITIES ___________ 5 – 10%

FOOD ___________ 5 – 15%

TRANSPORTATION ___________ 10 – 15%

CLOTHING ___________ 2 – 7%

MEDICAL/HEALTH ___________ 5 – 10%

PERSONAL ___________ 5 – 10%

RECREATION ___________ 5 – 10%

DEBTS ___________ 5 – 10%

19
Cash Flow Planning
Allocated Spending Plan (Instructions)
Now that you’ve already planned out the entire month on the “Monthly Cash Flow Plan” (Form 5),
let’s get just a little bit more precise. On this form, you will allocate—or spend—all of your money
from each individual pay period.

There are four columns on this form, representing the four weeks in a given month. You will use
one column for each week you get paid. If you are married and your spouse earns an income,
then you will both use this same form. For weeks in which you both receive a paycheck, simply
add those two incomes together and use a single column. Be sure to write the pay date at the top
of the column.

Now, go down the list and allocate each expense to a specific payday, using your bills’ due dates
as a guide. For example, if your phone bill is due on the 22nd and you get paid on the 15th and
30th, then you know that you would probably pay that bill from your income on the 15th. Some
things, like utility bills, will be paid monthly, while other items, such as food and gasoline, could
be weekly. The point here is to anticipate both your upcoming expenses and your upcoming
income and plan accordingly.

Beside each line item, you’ll see two blanks separated by a slash ( / ). Put the expense to the left
of the slash and the remaining income from that pay period to the right of the slash. As you work
your way down the column, the income remaining should diminish until you reach a perfect zero
at the bottom of the list. If you have money left over at the end of the column, go back and adjust
an area, such as savings or giving, so that you spend every single dollar.

This level of detail may be uncomfortable to you at first, but the payoff is worth it. By specifically
“naming” every dollar before you actually get it in your hands, you will remove an incredible
amount of stress and curb your overspending.

NOTES:

• If you have an irregular income, such as self-employment or commissions, you should use the
“Irregular Income Planning” sheet (Form 8) instead of this “Allocated Spending Plan.”

• If you know that you have an impulse spending problem, then you may want to allocate more
money to the “Blow” category. That way, you are at least planning for it and setting up some
boundaries for yourself.

• An asterisk ( * ) beside an item indicates an area for which you should use the
envelope system.

20
Cash Flow Planning
Allocated Spending Plan (Form 7)
PAY PERIOD: ____ /____ ____ /____ ____ /____ ____ /____

ITEM:
INCOME _________ _________ _________ _________

CHARITABLE ____ /____ ____ /____ ____ /____ ____ /____

SAVING
Emergency Fund ____ /____ ____ /____ ____ /____ ____ /____
Retirement Fund ____ /____ ____ /____ ____ /____ ____ /____
College Fund ____ /____ ____ /____ ____ /____ ____ /____

HOUSING
First Mortgage ____ /____ ____ /____ ____ /____ ____ /____
Second Mortgage ____ /____ ____ /____ ____ /____ ____ /____
Real Estate Taxes ____ /____ ____ /____ ____ /____ ____ /____
Homeowner’s Ins. ____ /____ ____ /____ ____ /____ ____ /____
Repairs or Mn. Fees ____ /____ ____ /____ ____ /____ ____ /____
Replace Furniture ____ /____ ____ /____ ____ /____ ____ /____
Other _______ ____ /____ ____ /____ ____ /____ ____ /____

UTILITIES
Electricity ____ /____ ____ /____ ____ /____ ____ /____
Water ____ /____ ____ /____ ____ /____ ____ /____
Gas ____ /____ ____ /____ ____ /____ ____ /____
Phone ____ /____ ____ /____ ____ /____ ____ /____
Trash ____ /____ ____ /____ ____ /____ ____ /____
Cable ____ /____ ____ /____ ____ /____ ____ /____

*FOOD
*Groceries ____ /____ ____ /____ ____ /____ ____ /____
*Restaurants ____ /____ ____ /____ ____ /____ ____ /____
21
Cash Flow Planning
Allocated Spending Plan (Form 7 – continued)
TRANSPORTATION
Car Payment ____ /____ ____ /____ ____ /____ ____ /____
Car Payment ____ /____ ____ /____ ____ /____ ____ /____
*Gas and Oil ____ /____ ____ /____ ____ /____ ____ /____
*Repairs and Tires ____ /____ ____ /____ ____ /____ ____ /____
Car Insurance ____ /____ ____ /____ ____ /____ ____ /____
License and Taxes ____ /____ ____ /____ ____ /____ ____ /____
Car Replacement ____ /____ ____ /____ ____ /____ ____ /____

*CLOTHING
*Children ____ /____ ____ /____ ____ /____ ____ /____
*Adults ____ /____ ____ /____ ____ /____ ____ /____
*Cleaning/Laundry ____ /____ ____ /____ ____ /____ ____ /____

MEDICAL/HEALTH
Disability Insurance ____ /____ ____ /____ ____ /____ ____ /____
Health Insurance ____ /____ ____ /____ ____ /____ ____ /____
Doctor ____ /____ ____ /____ ____ /____ ____ /____
Dentist ____ /____ ____ /____ ____ /____ ____ /____
Optometrist ____ /____ ____ /____ ____ /____ ____ /____
Medications ____ /____ ____ /____ ____ /____ ____ /____

PERSONAL
Life Insurance ____ /____ ____ /____ ____ /____ ____ /____
Child Care ____ /____ ____ /____ ____ /____ ____ /____
*Baby Sitter ____ /____ ____ /____ ____ /____ ____ /____
*Toiletries ____ /____ ____ /____ ____ /____ ____ /____
*Cosmetics ____ /____ ____ /____ ____ /____ ____ /____
*Hair Care ____ /____ ____ /____ ____ /____ ____ /____
Education/Adult ____ /____ ____ /____ ____ /____ ____ /____
School Tuition ____ /____ ____ /____ ____ /____ ____ /____
School Supplies ____ /____ ____ /____ ____ /____ ____ /____
Child Support ____ /____ ____ /____ ____ /____ ____ /____
22
Cash Flow Planning
Allocated Spending Plan (Form 7 – continued)
Alimony ____ /____ ____ /____ ____ /____ ____ /____
Subscriptions ____ /____ ____ /____ ____ /____ ____ /____
Organization Dues ____ /____ ____ /____ ____ /____ ____ /____
Gifts (including Christmas) ____ /____ ____ /____ ____ /____ ____ /____
Miscellaneous ____ /____ ____ /____ ____ /____ ____ /____

*BLOW $$ ____ /____ ____ /____ ____ /____ ____ /____

RECREATION
*Entertainment ____ /____ ____ /____ ____ /____ ____ /____
Vacation ____ /____ ____ /____ ____ /____ ____ /____

DEBTS (Hopefully -0-)

Visa 1 ____ /____ ____ /____ ____ /____ ____ /____
Visa 2 ____ /____ ____ /____ ____ /____ ____ /____
MasterCard 1 ____ /____ ____ /____ ____ /____ ____ /____
MasterCard 2 ____ /____ ____ /____ ____ /____ ____ /____
American Express ____ /____ ____ /____ ____ /____ ____ /____
Discover Card ____ /____ ____ /____ ____ /____ ____ /____
Gas Card 1 ____ /____ ____ /____ ____ /____ ____ /____
Gas Card 2 ____ /____ ____ /____ ____ /____ ____ /____
Dept. Store Card 1 ____ /____ ____ /____ ____ /____ ____ /____
Dept. Store Card 2 ____ /____ ____ /____ ____ /____ ____ /____
Finance Co. 1 ____ /____ ____ /____ ____ /____ ____ /____
Finance Co. 2 ____ /____ ____ /____ ____ /____ ____ /____
Credit Line ____ /____ ____ /____ ____ /____ ____ /____
Student Loan 1 ____ /____ ____ /____ ____ /____ ____ /____
Student Loan 2 ____ /____ ____ /____ ____ /____ ____ /____
Other _______ ____ /____ ____ /____ ____ /____ ____ /____
Other _______ ____ /____ ____ /____ ____ /____ ____ /____

23
Cash Flow Planning
Irregular Income Planning (Form 8)
Many people have an “irregular” income, which simply means that their compensation
fluctuates from month to month. This is especially common for the self-employed, as well as
commission-based salespeople. While this makes it more difficult to predict your income, you are
still responsible for doing a monthly budget!

The “Monthly Cash Flow Plan” (Form 5) should remain a crucial part of your plan, as it lays out
exactly how much money you need to bring home each month to survive and prosper. However,
instead of doing the “Allocated Spending Plan” (Form 7), you will use this “Irregular Income
Planning” sheet.

On this form, simply look at the individual items from your “Monthly Cash Flow Plan” sheet and
prioritize them by importance. Ask yourself, “If I only have enough money to pay one thing, what
would that be?” Put that at the top of your list. Then, ask yourself, “If I only have enough money to
pay one more thing, what would that be?” That’s number two. Keep this up all the way down
the list.

With your list in place, you’re ready to get paid. If you get a $1,500 paycheck, you will spend
that $1,500 right down the list until it is gone, recording the cumulative amount spent in the
“Cumulative Amount” column. At that point, you’re finished spending, no matter what remains
unpaid on the list. That’s why the most important things are at the top of the list, right?

Be prepared to stand your ground. Things usually have a way of seeming important when they
are only urgent. For example, a once-in-a-lifetime opportunity to see your favorite band perform
live may seem important, but in reality, it is only urgent, meaning that it is time-sensitive. Urgency
alone should not move an item to the top of this list!

Item Amount Cumulative Amount

____________________________ ________________ ________________

____________________________ ________________ ________________

____________________________ ________________ ________________

____________________________ ________________ ________________

____________________________ ________________ ________________

24
Cash Flow Planning
Breakdown of Savings (Form 9)
After you have fully funded your emergency fund, you can start to save for other items, such as
furniture, car replacement, home maintenance, or a vacation. This sheet will remind you that
every dollar in your savings account is already committed to something. For example, it’s a bad
idea to take money away from car repairs to pay for an impulse Hawaiian vacation, even if you
pay cash for it. What would you do if the car broke down the week you got back home? However,
it can be okay to reassign the dollars to another category, as long as you do it on purpose and it
doesn’t put you in a pinch in another category. Keep up with your breakdown of savings every
month, one quarter at a time.

Item Balance By Month

_________ _________ _________

Emergency Fund (1) $1,000 _________ _________ _________

Emergency Fund (2) 3-6 months _________ _________ _________
Retirement Fund _________ _________ _________
College Fund _________ _________ _________
Real Estate Taxes _________ _________ _________
Homeowner’s Insurance _________ _________ _________
Repairs or Mn. Fee _________ _________ _________
Replace Furniture _________ _________ _________
Car Insurance _________ _________ _________
Car Replacement _________ _________ _________
Disability Insurance _________ _________ _________
Health Insurance _________ _________ _________
Doctor _________ _________ _________
Dentist _________ _________ _________
Optometrist _________ _________ _________
Life Insurance _________ _________ _________
School Tuition _________ _________ _________
School Supplies _________ _________ _________
Gifts (incl. Christmas) _________ _________ _________
Vacation _________ _________ _________
Other ____________________ _________ _________ _________
Other ____________________ _________ _________ _________

25 TOTAL _________ _________ _________

Buyer Beware
Significant Purchases
A “significant purchase” is normally anything over $ .
Our bodies go through physiological when making “Almost any man
knows how to make
a significant purchase. money, but not one in
a million knows how
to spend it.”
What To Do
– Henry David
Because you can always spend more than you , you must Thoreau
develop a power over by:

1. Waiting before making a purchase.

2. Carefully considering your buying . No amount

of equals contentment or fulfillment.

3. Never buying anything you do not .

4. Considering the “ ” of your money.

5. Seeking the of your spouse.

26
That’s Not Good Enough!
The First Key
The first key to opening the door to huge bargains is learning to
everything.
You cannot have
healthy relationships
and build wealth
with lies as your The Second Key
foundation.
• The second key to opening the door to huge bargains is that
you must have .
• Don’t get to a purchase.

“Remember, what you

possess in the world
The Third Key
will be found at the • The third key to opening the door to huge bargains is that you
day of your death to
belong to someone must know to deals.
else, but what you are
will be yours forever.”

– Henry Van Dyke

Places to Find Great Deals
1. 8. Refunding
“A man who owns little
is little owned.” 2. Estate Sales 9.
– Anonymous 3. 10. Pawn Shops

4. Couponing 11.

5. 12. Classified Ads

6. Repo Lot 13.

7. 14. Conventions

27
Clause and Effect
Understanding Insurance
Insurance is an essential financial planning tool.
The purpose of insurance is to risk. Do a break-even
analysis to see if
Without proper insurance, certain losses can you. lowering your deductible
Conventional wisdom says that you should transfer that risk. makes sense. Compare
your annual premium
savings with a lower
deductible to the extra
Basic Types of Coverage Needed
risk you would take on in
1. Homeowner’s or Renter’s Insurance the event of an accident.

2. Auto Insurance
3. Health Insurance
4. Disability Insurance
5. Life Insurance

Types of Insurance
• Homeowner’s and Auto Insurance
If you have a full emergency fund, raise your .
Carry adequate .
Consider dropping your on older cars.
Homeowner’s insurance should be “guaranteed
cost.”
liability policies are a good buy once you
have some assets.

28
Clause and Effect
• Health Insurance
Keys to saving on your health premiums:
Increase your deductible and/or coinsurance amount.
Increase - , but never decrease your
Disability insurance is
a long-term solution. maximum pay.
Your short-term needs
should be covered by See if an HSA, a Health Savings Account, would make sense for
a full emergency fund your situation.
of three to six months
of expenses.
The HSA is a tax-sheltered savings account for medical expenses
that works with a high deductible insurance policy.
• Disability Insurance
Disability insurance is designed to replace lost
due to a short-term or permanent disability.
Medical debt is Try to buy disability insurance that pays if you cannot perform
consistently one of
the leading causes for the job that you were educated or to do.
personal bankruptcy.
You must have health That is called , or “own occ,” disability.
insurance! Many times, this is only available for two years.
Beware of -term policies covering less than
years.
Your coverage should be for % of your current income.
The period is the time between the
disabling event and when the payments actually begin.
A elimination period will
your premium cost.

29
Clause and Effect
• Life Insurance
Life insurance is to replace lost income due to .
Human beings have a
100% mortality rate—
we’re all going to die
Two Types of Life Insurance:
someday. If people
1. insurance is for a specified period, is depend on your
income, it is your
substantially cheaper, and has no savings plan built into it. responsibility to make
2. insurance is normally for life and is more sure they’ll be taken
care of if something
expensive because it funds a savings plan. were to happen to you.
The most common insurance myth is that the need for life
insurance is a situation. “It is unwise to hope
for the best without
preparing for the
Cash Value vs. Term + Roth IRA worst.”

– Anonymous
For $145 a month, you could have $125,000 in cash value
insurance. Or, for that same $145, you could pay $10 for
$400,000 in 20-year term insurance and invest $135 into a
Roth IRA. If you start at age 30... If you try to play
“sophisticated” games
with insurance, you
Age $125,000 Cash Value $135/mo in Roth will get burned.
Guaranteed 12% Return

50 $27,500 $133,000 Keep your insurance

and investments
separate. Don’t try to

70 $65,000 $1,500,000 do any wealth building

in your insurance plan.
It just doesn’t work.

A stay-at-home mom
Before You Cancel Your Cash Value Policy... brings enormous
economic value to a
Make sure that you already have a new term policy in place! If, for home. If something
some reason, you cannot be approved for a new term policy, it is were to happen to her,
dad would need the
better to hang on to a bad cash value policy than to have nothing money to replace part
of what mom does.
at all­—until you become self-insured.
30
Clause and Effect
What To Remember When Purchasing Life Insurance:

1. Buy only low-cost level .

2. Do not forget your .

3. Stay away from fancy .

You need about 10 times your income. Invested at 10-12%,

the annual interest would replace your lost income.

Cash Value Insurance May Also Be Called:

• Permanent
• Whole Life
• Universal
• Variable Universal
• Variable Life

31
Dumping Debt
Debunking the Myth
If you tell a lie or spread a often enough, loud
enough, and long enough, the myth becomes accepted
as .

Myth: By a loan, I am helping out a

friend or relative.

Truth: The bank requires a cosigner because the person isn't

likely to . So, be ready to pay the loan and Quick History of
Plastic:
have your credit damaged because you are on the loan. • The credit card was
born in 1950.

Myth: Cash advance, rent-to-own, title pawning, and tote-the- • The Bank Americard
and American
note car lots are needed for lower Express were
created in 1958.
income people to get ahead.
• The VISA brand was
established in 1976.
Truth: These are horrible, rip-offs that aren’t
• Discover entered
needed and benefit no one but the owners of these the scene in 1986.
companies.

Myth: Car are a way of life, and you'll

always have one.

Truth: Staying away from car payments by driving reliable used

cars is what the typical millionaire does. That is
they became millionaires.

32
Dumping Debt
Myth: your car is what sophisticated
financial people do. You should always lease things that
go down in value. There are tax advantages.
If you do rich people
stuff, you get rich.

If you do poor people Truth: Consumer Reports, Smart Money magazine, and a good
stuff, you get poor.
calculator will tell you that the car lease is the most
It’s really that simple.
way to finance and operate a vehicle.

Truth: If you own a business, you can write off your

car on taxes without paying payments
for the privilege.

Truth: The way to minimize the money lost on things that go

down in value is to buy slightly .

Myth: You can get a good deal on a car.

Truth: A new car loses % of its value in the first four

years. This is the largest purchase most consumers make
that goes down in value.

33
Dumping Debt
30 Year vs. 15 Year Mortgage at 6%
PAYMENT TOTAL PAY BACK
Home Purchased $250,000 30 years $1,349 $485,636
Down Payment $ 25,000 15 years $1,899 $341,762
Mortgage Amount $225,000 Difference $ 550 $143,874

You Save More Than $143,000!

Myth: I’ll take out a 30-year mortgage and pay ,

I promise!

Truth: Life happens! Something else will always seem more

important, so almost no one pays extra every month.
Never take more than a fixed-rate loan.

Myth: It is wise to take out an or a

mortgage if "I know I'll be moving."

Truth: You will be moving when they .

Myth: You need a credit card to a car or to make

online or by phone.

Truth: A card will do all of that, except for a few

major rental companies. Check in advance.

34
Dumping Debt
Myth: “I pay mine off every with no annual fee.
I get brownie points, air miles, and a free hat."

Truth: A recent Dun and Bradstreet study found that when you
use plastic instead of cash, you spend %
more because spending cash hurts. So what if you get 1%
back and a free hat?

Myth: The home equity loan is good for

and is a substitute for an emergency fund.

Truth: You don't go into for emergencies.

Myth: Debt consolidation interest, and you get just

one smaller payment.

Truth: Debt consolidation is a .

Truth: Debt consolidation typically saves

or interest because you will throw your low
interest loans into the deal.

Truth: You can't your way out of debt.

Truth: Smaller payments equal more in debt.

35
Dumping Debt
Myth: Debt is a and should be used to create prosperity.

Truth: The borrower is to the lender.

“If you want to get
yourself better off
Truth: When surveyed, the Forbes 400 were asked, “What is financially, QUIT
BUYING THINGS!”
the most important key to building wealth?” %
– Anonymous
replied that becoming and staying debt free was the
number one key to wealth building.

36
Real Estate and Mortgages
Horrible Mortgage Options
1. Adjustable Rate Mortgages (ARMs) were brought on with the
The FTC says that
reverse mortgage
advent of interest rates in the early 1980s.
options have the most • Of course, loans are a bad idea
fraud in the mortgage
business. because you are only paying the interest—duh!
• You can qualify for more home with ARMs, but the risk of
financial stress later is not worth it.

2. Mortgages
• Bad idea because you are putting a paid-for home at risk and
the fees are horrible.

3. Advantages of a Mortgage
• Do not fall for the myth that you should keep your mortgage
for the tax advantages. The math doesn’t work.

Where’s the Tax Advantage?

Mortgage Amount Interest Rate Annual Interest Paid
$200,000 5% $10,000
Mortgage interest is tax-deductible, so you would not have to pay
taxes on this $10,000. That is why many people tell you to keep the
mortgage. But what does this really save you?

Taxable Amount Tax Bracket Annual Taxes Paid

$10,000 25% $2,500
So, if you keep your mortgage just for the “tax advantages,” all you
are really doing is sending $10,000 to the bank instead of sending
$2,500 to the IRS. Where’s the “advantage” in that?

37
Real Estate and Mortgages
Basic Ways to Finance a Home
1. , usually through FNMA and privately
insured against default. You can avoid PMI with
a 20% down payment or
• Down payments range from 5% to 20% or more. by paying your existing
• These loans are available in all forms and formats. mortgage down to 20%
loan-to-value.
• PMI is private mortgage insurance.

2. , which is insured by HUD—the federal government.

• Down payments are as low as % and are used on
lower-priced homes.
• These loans are currently expensive than
conventional financing and should be avoided.

3. , which is insured by the Veterans Administration.

• Designed to benefit the veteran; the seller pays everything,
allowing a true zero-down purchase.
• With a good down payment, the conventional loan is
a deal.

38
Credit Sharks in Suits
Credit Score
Myth: You need to take out a credit card or car loan to
With a 20% down “build up your .”
payment on a
reasonable house, two
years or more on the job, Truth: The FICO score is an “I love ” score and is not
and two years of paying
your landlord early, you a measure of financially.
will qualify for a
mortgage.

Don’t fall for the lie!

The Credit Score (The “I Love Debt” Score)
Credit scores are based solely on debt, not on income or net
worth. Review the chart below to see exactly how a credit
score is calculated.
FICO stands for Fair
Isaac Corporation, Length of
which developed a Credit History
score-based rating 15% Payment
system that many History
companies use to 35%
measure an individual’s
credit risk. Accounts
Owed
While this measurement 30% Types of
New Credit Used
has become widely Credit 10%
accepted, it is a faulty 10%
standard that is based
on debt, not wealth.

The only way to have a credit score is to go into debt

and stay in debt, making payments your whole life.

A credit score:
• DOES NOT consider home ownership or equity
• DOES NOT consider investments
• DOES NOT consider net worth

You could have a million-dollar income and no debt but still have
a lousy credit score. That sounds like a pretty good plan.
39
Credit Sharks in Suits
Credit Bureaus
Account information is removed from your credit report years
after the last activity on that account, except for a Chapter 7
bankruptcy, which stays on for years.
Beware of credit clean-up scams. The only information that
may be legally removed from a credit report is
information.

The National Association of State Public Interest Research Groups

(U.S. PIRG) did a survey of 200 adults in 30 states who checked
their credit report for accuracy.

• % of those credit reports contained mistakes of some kind

and % of them contained errors serious enough to result
in the denial of credit.
• % of the credit reports contained credit accounts that
had been closed by the consumer but incorrectly remained
listed as open.
• % listed the same mortgage or loan twice.

You should check your credit report , which you can

now do for free.

40
Credit Sharks in Suits
Correcting Credit Report Inaccuracies
An updated version of the 1977 Federal Fair Credit Reporting Act
requires a credit bureau to all inaccuracies within
30 days of notification of such inaccuracies.

To clean your credit report of inaccurate information, you should

write a separate letter for each inaccuracy, staple a copy of your
credit report to each letter, and circle the account number.

Note: You should also request that “inquiries” be removed. All

of these letters should be sent mail with return
receipt requested to prove when they receive the letter. If the credit
bureau does not prove the accuracy of the account within 30 days,
you should request they remove the account from
your file.

You will have to be assertive after the 30-day period.

Lodge any complaints with the Federal Trade Commission and your
state’s Consumer Affairs Division.

41
Answer Key

Listed below are the answers to each section of this workbook.

Super Saving That’s Not Death No

Emergency Good Enough! Term Borrow
Fund Negotiate Cash Time
Purchases Patience Value Tool
Wealth Married Permanent Slave
Building Where Term 75%
Unexpected Find Spouse
Borrowing Individuals Options Real Estate
Sinking Public and Mortgages
$4,000 Auctions Dumping Debt High
24% Garage Myth Interest
$211 Sales Truth Only
24 Flea Co-signing Reverse
$5,064 Markets Repay Tax
$211 Foreclosures Services Conventional
18 Online Greedy FHA
$100 Auctions Payments 3%
12% Consignment How More
$1,176,000 Sales Leasing VA
Explosion Expensive Better
Interest Clause And Effect Paid-For
Transfer Used Credit Sharks In Suits
Cash Flow Planning Bankrupt New Credit
Balanced Deductible 70% Score
Crisis Liability Extra Debt
Living Collision 15-Year Winning
Zero Replacement ARM 7
Envelope Umbrella Balloon 10
Stop Foreclose Inaccurate
Buyer Beware Loss Rent 79%
$300 Income Purchases 25%
Changes Trained Debit 30%
Make Occupational Month 22%
Purchase Short 12-18% Annually
Overnight 5 Consolidation Remove
Motives 65% Debt Certified
Stuff Elimination Saves Entire
Understand Longer Con
Opportunity Lower Little
Cost
Counsel

42
Required Reading Section

ALTERNATIVES TO ADDITIONAL BORROWING IN TIMES

OF UNANTICIPATED EVENTS

• Make a zero-based budget and know how much of your income is being spent in each
category.
• Save $1,000 as a starter emergency fund to cover any expenses that you don’t see coming.
• Some events that we call unexpected really aren’t. Car registration fees, birthdays and kids’
clothing for school can all be anticipated. While making a budget, take some extra time to
see what non-monthly expenses are on the horizon so you can start saving for them.
• Once you are debt-free, build up your emergency fund to cover three to six months of
household expenses. This will make you ready to cover almost any major financial hit that
can occur.
• Don’t be afraid to sell something if you need some quick cash to cover an emergency. If
your air conditioner goes out in the middle of summer, sell that unused piece of exercise
equipment or the jewelry you never wear to pay for the repair and avoid debt.
• If you know that an expense such as car repairs are coming, get a part-time job to save the
money that you’ll need.
• The most important thing to do in avoiding debt is to draw a line in the sand and vow to not
borrow money. By refusing that option, you never dig yourself into a hole and always look
for alternative methods to pay.

43
Required Reading Section

SEEKING ADVICE FROM PUBLIC AND PRIVATE AGENCIES FOR ASSISTANCE

FREE OR LOW-COST LEGAL SERVICES

nn Legal Services Corporation — www.lsc.gov/about/what-is-lsc
Provides legal services at no cost or little cost for consumers in lower to lower-middle
classes.
Legal Services Corporation Phone: 202.295.1500
3333 K Street, NW, 3rd Floor Fax: 202.337.6797
Washington, DC 20007-3522 Email: [email protected]

nn Pine Tree Legal Assistance — www.ptla.org/links/services.htm

Links to organizations that provide free legal assistance.
39 Green Street Phone: 207.622.4731
P.O. Box 2429 Fax: 207.623.7774
Augusta ME 04338-2429

nn American Bar Association — hwww.abanet.org/legalservices/probono/directory.html#

A directory of pro bono legal programs by state
Chicago Headquarters Phone: 800.285.2221/312.988.5000
321 North Clark Street
Chicago, IL 60654

nn State Legal Assistance for the Elderly — www.ilrg.com/practice/assistelderly.html

State agencies that provide legal assistance for older citizens in great economic
or social need

44
Required Reading Section

RENTERS ASSISTANCE/ PUBLIC HOUSING

nn Housing and Urban Development Renter Assistance—www.hud.gov/renting/index.cfm
Links and resources for low-cost rentals
451 7th Street SW, Washington, DC 20410
Phone: 202.708.1112 TTY: 202.708.1455

Emergency Rental Assistance — www.rentassistance.us/

The purpose of the Emergency Rental Assistance Service
(a program of www.crisisassistance.org) is to prevent evictions and homelessness.
nn Crisis Assistance Ministry
500-A Spratt Street
Charlotte, NC 28206
Phone: 704.371.3001, Fax: 704.333.4310

UTILITY ASSISTANCE
Check with your Church as they may have a benevolent fund and counseling/coaching to
help you through this.

nn Low-Income Home Energy Assistance Program (LIHEAP) —

www.acf.hhs.gov/programs/ocs/liheap
Directory of state resources that assist low-income families by providing discounted and
affordable utility services, including electric and water.
Aerospace Building, 5th Floor West
370 L’Enfant Promenade, S.W.
Washington, D.C. 20447
Phone: 202.401.9351, Fax: 202.401.5661

45
Required Reading Section

SOCIAL AID/ SUBSTANCE ABUSE AND ADDICTION RESOURCES

nn The Salvation Army Adult Rehabilitation Centers —
www.satruck.org/rehabilitation-program
Provides spiritual, social and emotional assistance for men and women who have lost the
ability to cope with their problems and provide for themselves.

nn Alcoholics Anonymous — www.alcoholics-anonymous.org

nn Narcotics Anonymous — www.na.org

NA World Services
P.O. Box 9999
Van Nuys, CA 91409
Phone: 818.773.9999

nn Gamblers Anonymous — www.gamblersanonymous.org

P.O. Box 17173
Los Angeles, CA 90017
Phone: 626.960.3500

nn 211 — www.211.org
2-1-1 is an easy-to-remember telephone number that, where available, connects people with
important community services and volunteer opportunities.

46
Required Reading Section

PRESCRIPTION DRUG/ MEDICAL ASSISTANCE/ HEALTH INSURANCE

nn The Partnership for Prescription Assistance — www.pparx.org/Intro.php
The Partnership for Prescription Assistance brings together America’s pharmaceutical
companies, doctors, other health care providers, patient advocacy organizations and
community groups to help qualified patients who lack prescription coverage get the
medicines they need through the public or private program that’s right for them.
Phone: 888.4PPA.NOW (888.477.2669)

nn Free Medicine Foundation — www.freemedicinefoundation.com/index.html

Provides patient assistance programs for those in financial distress with programs that will
help them save or eliminate prescription medicine costs.
Phone: 573.996.3333

nn Senior Care Benefits Network — www.scbn.org/

Provides prescription medication assistance to low-income seniors who lack medical
insurance coverage.
Phone: 888.331.1002

nn Insure Kids Now — www.insurekidsnow.gov/

Provides low-cost health insurance for kids.
Phone: 877.KIDS.NOW

FOOD STAMPS/NUTRITION SERVICES

nn Food and Nutrition Service — www.fns.usda.gov/fns/
Provides information regarding the USDA’s food stamp program.
Food & Nutrition Service
3101 Park Center Drive
Alexandria, VA 22302
Phone: 703.305.2062

nn Social Security Online: Food Stamps — www.ssa.gov/pubs/10100.html

Provides information regarding the Social Security Administration’s food stamp program.

47
Required Reading Section

TAX COUNSELING
nn AARP’s Tax Counseling — www.aarp.org/money/taxaide/taxcounseling/
Answers questions regarding tax-related questions catered to seniors.
601 E Street, NW
Washington DC 20049
Phone: 888.OUR.AARP (888.687.2277)

nn IRS Tax Counseling for the Elderly (TCE) —

www.irs.gov/individuals/article/0,,id=109754,00.html
The TCE program offers FREE tax help to individuals who are aged 60 or older.

FAMILY AND CHILD CARE SERVICES

nn Child Care Aware — childcareaware.org/
As a new parent finding child care for the first time, or a family attempting to find a new
provider, locating high-quality child care might be easier said than done.
1515 North Courthouse Road, 11th Floor
Arlington, VA 22201
(800) 424-2246

nn National Association of Child Care Resource & Referral (NACCRRA) —

www.naccrra.org/about-us
We work with more than 600 state and local Child Care Resource and Referral agencies to
ensure that families in every local community have access to quality, affordable child care.
1515 North Courthouse Rd, 11th Floor
Arlington, VA 22201
Phone: 703.341.4100

48
Required Reading Section

TYPES, SOURCES AND COSTS OF CREDIT AND LOANS

CREDIT means LOANING money, with the borrower promising, and the lender expecting, future
repayment.

The COSTS OF CREDIT are interest, fixed fees and penalty fees.

The AMOUNT OF INTEREST will depend on (1) the current market rate, (2) the type, value, and
likelihood of being able to sell the security, (3) the creditworthiness of the borrower—usually in
the form of a FICO score, and (4) the perceived risk being taken by the lender.

The AMOUNT OF FEES vary widely and are not usually subject to regulation because they do
not count as interest.

SECURED LOANS include mortgages, home equity loans, home equity lines of credit, car loans,
and boat and recreational vehicle loans.

UNSECURED LOANS are almost always more expensive and include personal loans, personal
lines of credit, student loans, credit cards, store cards, payday loans, pawn shops, and title
pawns. They do not use collateral and have far fewer consumer protections available to the
borrower.

DEFAULT is the failure to pay back your loan in the time and manner specified when you
borrowed the money. Defaulting on a secured loan means the lender will get their money back
by foreclosing on your house or selling the collateral.

MORTGAGES are always secured; the collateral usually being real estate.

FIXED OR VARIABLE RATES of interest are available on mortgages. Fixed interest locks the rate
in for a fixed period. Variable interest changes with the prime rate. The frequency of change and
the interest cap depends on the agreement between the borrower and the lender.

49
Required Reading Section

A LINE OF CREDIT sets a maximum allowable balance for the borrower, and each month you
can borrow as much as you wish up to that maximum. Monthly payments vary based on the
contract.

A HELOC is a Home Equity Line of Credit secured by a second mortgage on real estate.
Unsecured lines of credit are sometimes extended to creditworthy borrowers.

CONVENTIONAL loans include personal loans, home equity loans, car loans, etc. Repayment
and amortization are predetermined and consistent. Money cannot be re-borrowed as the
balance owed lessens.

CREDIT CARDS are a specific type of unsecured line of credit. The issuer sets a maximum
balance, and you can borrow up to that maximum. Credit cards are usually unsecured, so the
interest rate is most often high and can be changed for many reasons.

FEES are various charges issued by a debtor and a major source of income to them. The
minimum payment is usually small, which means that full repayment can take years.

EACH TYPE OF DEBT hurts the borrower financially and brings heartache. Debt should be avoided
wherever possible. Always operate on a budget. Play it safe. Avoid getting into debt at all.

50
Required Reading Section

DEBT WARNING SIGNS

If even one of the following statements is true about you, take that as a warning. The more
statements that apply, the more serious your situation.

Be completely honest with yourself as you consider these statements.

• You have no money saved to cover emergencies.
• You don’t believe it’s possible or necessary to be on a budget in your situation.
• You are unaware of how much total debt you have.
• Your thoughts about your financial situation make you feel anxious.
• You can barely make minimum payments on one or more credit cards.
• You’re still charging things to cards on which you pay the minimum.
• You’re using those cards to pay for basics such as food, gas, utilities, etc.
• You’re using cash advances from cards to pay off other cards.
• You’re transferring balances to try to get lower interest or zero interest.
• You lie to friends or family about your finances.

PROTECTION AGAINST CONSUMER FRAUD

nn Additional Laws That Protect Consumers

In addition to the Fair Credit Reporting Act, numerous FEDERAL ACTS AND STATUTES
protect consumers in a variety of situations.
In most cases, the Act’s title defines the general area of the intended protection. To report
or discuss a potential violation of a federal law, you would contact the Federal Trade
Commission OR the Office of the United States Attorney. The FTC has offices in most major
cities. There are separate United States Attorney Offices in every U.S. Judicial District.

• Consumer Credit Protection Act (Truth in Lending Act)

• Consumer Protection in Sales of Insurance (FDIC Part 343)
• Discriminatory Conduct Under the Fair Housing Act

51
Required Reading Section

• Driver’s Privacy Protection Act

• Equal Credit Opportunity Act
• Fair Credit Billing Act
• Fair Debt Collection Practices Act
• Fair Housing Act
• Family Educational Rights and Privacy Act
• Financial Institutions Reform, Recovery and Enforcement Act
• Flood Disaster Protection Act
• Home Mortgage Disclosure Act
• Health Information Portability and Accountability Act
• Real Estate Settlement Procedures Act
• Right to Financial Privacy Act
• Truth in Savings Act
• Unfair or Deceptive Acts or Practices (FRB Regulation AA)

nn Protection Against Consumer Fraud

Every state has a Consumer Protection Agency or a similarly named office designed to offer
the same benefits as well as consumer protection statutes. The point of contact in those cases
would be the Office of the Attorney General for that state. On a local level, the Office of the
District Attorney General would be a contact point.

All fifty states have active Bar Associations that offer access to lawyers when the person
seeking help cannot afford to pay for private counsel. Pro Bono (for the public good) work is
part of the responsibility accepted by all members of the legal profession, and many lawyers
have a real passion for helping those who cannot afford help. Additionally, there are many
state-level legal clinics, phone conference opportunities, and other ways to find out if your
matter is one that should be handled within the legal system.
This concludes your required reading. Please turn back to the “DVD Process Overview” page
at the front of your workbook to finish the steps.

52
Request For File Disclosure Form

REQUEST FOR FILE DISCLOSURE

CREDIT BUREAU OF NASHVILLE
604 FOURTH AVE NORTH - P.O. BOX 190589 - NASHVILLE, TN 37219-0589

Reason for File Disclosure Request ____________________________________________

Referred by ___________________________________ Was credit refused? yes no
I hereby request the Credit Bureau of Nashville to disclose to me the contents of my credit record. I understand that if I
have been rejected for credit within the past sixty (60) days as the result of credit information contained in my credit
record, there will be NO CHARGE for this disclosure, otherwise there will be an $8 charge for an individual disclosure or
$10 for both myself and my spouse.

Name _____________________________________________________________ Phone No. __________

Spouse’s Name _________________________________________________________________________
Present Address ________________________________________________________________________
City ___________________________________________, State ___________________Zip Code _______
Former Address ________________________________________________________________________
City __________________________________________, State ___________________Zip Code ________
Date of Birth ____________________________________ Social Security No. _______________________
Employed By ___________________________________________________________________________
How Long? _________________________ Position ____________________________________________
Former Employment _____________________________________________________________________
Spouse’s Date of Birth ___________________________ Social Security No. ________________________

Spouse’s Employment ____________________________________________________________________

How Long? _________________________ Position ____________________________________________

I hereby authorize the Credit Bureau of Nashville to review my credit record with me, to make any necessary investigation
of my credit transactions and to furnish to its subscribers reports based thereon. In consideration of its undertaking to
make such an investigation I authorize any business or organization to give full information and records about me.

I am the person named above and I understand that federal law provides that a person who obtains information from a
consumer reporting agency under false pretenses shall be fined not more than $5,000 or imprisoned no more than one
year or both.

Signed ___________________________________________________ Date __________________

Telephone Number ________________ Ext _________ where I can be reached during normal working hours.

AUTHORIZATION FOR DISCLOSURE OF SPOUSE’S CREDIT RECORD

I, ____________________, certify that I am presently married to ____________________, and am acting in his/her
behalf in reviewing the credit record information concerning him/her maintained by the Credit Bureau of Nashville.

53
Sample Removal Letter

Date __________________________

(From)
_______________________________
_______________________________
_______________________________

VIA: Certified Mail, Return Receipt Requested

(To)
Mail Preference Service
Direct Marketing Association
P.O. Box 282
Carmel, NY 10512

RE: Unauthorized direct marketing and pre-approved credit card offers

This letter is your formal notice to remove my name from all direct marketing and
pre-screening databases. I do not wish to receive any unsolicited offers, especially
from credit card companies.
Not only do I request that my name be permanently removed, but I also request
that my phone number and address must likewise be permanently removed. My
correct information is as follows:

(Complete Name)
(Full Address)
(Phone Number with Area Code)

Thank you for your immediate attention to this matter.

Sincerely,
(Signatures)

54
Sample Credit Bureau Letter

Date __________________________

(From)
______________________________
______________________________
______________________________

(To)
______________________________
______________________________
______________________________

RE: ___________________________

In reviewing the attached credit bureau report issued by your agency, I have
detected an error. The following account(s) is/are reported inaccurately:

Company Name:_____________________________________
Account Number: ___________________________________

Under the provisions of the 1977 Federal Fair Credit Reporting Act, I hereby
request that your agency prove to me in writing the accuracy of the reporting of
this account. Under the terms of the Act and succeeding court cases, you have 30
days to prove such accuracy or remove the account entirely from my report. I ask
that you do so.

This letter was sent certified mail, return receipt requested. I expect a response
within the 30-day period. Should I not hear promptly from you, I will follow up
with whatever action necessary to cause my report to be corrected.

Please feel free to call me if you have any questions. My home phone number is
_________________, and my office number is _________________.

Sincerely,

____________________________
(Signature)

55
Facts You Should Know

• Payment history on your credit file is supplied by credit grantors with whom
you have credit. This includes both open accounts and accounts that have
already been closed.

• Payment in full does not remove your payment history. The length of time
information remains on file is:
Credit and collection accounts – Seven years, plus 180 days, from the date of
the original delinquency.
Courthouse records – Seven years from the date filed, except bankruptcy
Chapters 7 and 11, which remain for 10 years from date filed.

• A divorce decree does not supersede the original contract with the
creditor and does not release you from legal responsibility on any accounts.
You must contact each creditor individually and seek their legally binding
release of your obligation. Only after that release can your credit history be
updated accordingly.

• There may appear to be duplicate accounts reported in your credit file.

This could be because some credit grantors issue both revolving and
installment accounts. Another reason is that when you move, some credit
grantors transfer your account to a different location and issue another
account number.

• The balance reported is the balance on the date the source reported
the information. Credit grantors supply information on a periodic basis,
so the balance shown may not be the actual, up-to-date balance. If the
balance reported was correct as of the date reported, it is not necessary to
reinvestigate the balance on that account.

56
Credit Bureaus

The FACT Act amendments to the Fair Credit Reporting Act require the nationwide
credit bureaus to provide consumers, upon request, one free personal credit report in
any 12-month period. You may contact the Central Source online at
www.annualcreditreport.com or by calling toll free (877) FACT ACT. Free copies are
also available if you have been denied credit in the past 60 days and the creditor used
their services.

• EXPERIAN
Phone: (888) 397-3742
Website: www.experian.com

• EQUIFAX CREDIT BUREAU

Phone: (800) 685-1111
Website: www.equifax.com

• TRANSUNION CREDIT BUREAU

Phone: (877) 322-8228
Website: www.transunion.com

• FEDERAL TRADE COMMISSION

Phone: (202) 326-2222
Address: 600 Pennsylvania Avenue, N.W.
Washington, D.C. 20580
Website: www.ftc.gov
Publishes a brief, semi-annual list (March and September) on card pricing by the largest
issuers for $5 per copy. Offers a number of free credit-related publications.

57
Credit Bureaus

Be Proactive
Decrease unauthorized direct mail marketing (including pre-approved credit card
offers) and unwanted telemarketing calls!
• PRE-SCREENING OPT OUT
Phone: (888) 567-8688
Website: www.optoutprescreen.com

• NATIONAL DO NOT CALL REGISTRY

Phone: (888) 382-1222
Website: www.donotcall.gov

Direct Marketing Association

For detailed information on your rights and options regarding direct marketing, visit
the Direct Marketing Association’s website. They have great resources to help educate
consumers on how direct marketing works, how to stay off mailing and phone lists, and
more! Visit www.dmachoice.org for details.

58
How To Balance Your Checking Account

• Keep your account register current by subtracting checks, debit card purchases,
and withdrawals and adding deposits as they’re made to keep your account
balanced correctly.

• Balance your checking account within 72 hours of receiving your bank statement or
online once a month to make sure there aren’t any mistakes.

What do I need to balance my account?

1. Your account register

2. Your last bank statement (in print or online)

3. A reconciliation sheet (located on the back of most statements)

Where do I start?
Start by putting check marks in your register for each of the checks, debit card
purchases, and other withdrawals, as well as deposits included in your bank
statement. Make an entry in your register for any bank service charges or interest paid.

Checking Account Register

59
How To Balance Your Checking Account (continued)

• On the reconciliation sheet, list any checks, withdrawals, or other deductions that
are in your register that are not on your bank statement and total the list.

• On the reconciliation sheet, list any deposits that are in your register but are not
included on your bank statement. Total the list.

• Beginning with the ending balance from your bank statement, subtract the total
withdrawals and add the total deposits that were not on your statement.

• Compare with your register balance. If they don’t agree, double check your lists and
re-add your register entries until you find the difference. If the numbers will not agree,
you’re probably missing a transaction in your register. Make sure every transaction
on your statement has been recorded and try again. In some cases, you may need
your bank’s help in getting your register to balance if you haven’t done it in a while.

List the balance from your bank statement

List the withdrawal amounts in your register that aren’t on your statement.

List the deposit amounts in your register that aren’t on your statement.

This should be your register balance

60
Record Keeping

It’s important to stay organized. Set aside time each week to keep your financial
documents in order so that you can locate them quickly and easily when necessary.
Important documents include:

• Bills
˚ Know the due dates of your unpaid bills.
˚ Check them for accuracy before paying.
• Certificates, Contracts, Wills, and Other Important Records
˚ A safe deposit box is recommended.
˚ Keep photocopies at home with other financial information.
• Tax Information
˚ Always keep receipts and support materials for tax deductions.
˚ Keep copies of tax returns for at least seven years.
• Check Registers
˚ See “How to Balance Your Checking Account” on pages 50–51.

A simple filing system is better than no filing system. You can keep all bills and
receipts in a folder or envelope by month. Each month starts a new folder or envelope.
Alternatively, you can create a folder for each bill category, important records, and tax
information. The best system is the one you can stick with long term so that you can
find the documents you need when you need them.

61
Financial Management Forms

Welcome to the wonderful world of cash flow management! This level of detail may seem a bit
intimidating at first, but don’t worry—we’ll walk you through this step by step.

By filling out just a few forms, your new financial plan will start to unfold right in front of
you. You’ll immediately identify problem areas and learn how to shut the valve of wasteful
spending because you’ll know exactly where all of your dollars are going!

The first time you fill out these forms, it will take a little while, and you’ll have to come
face-to-face with the bad habits that have gotten you to this point. After that initial start-
up, however, you’ll get better and better until budgeting becomes second nature.

Do the “Monthly Cash Flow Plan” (Form 5), “Allocated Spending Plan” (Form 7), and the
“Irregular Income Plan” (Form 8) once a month. Dave will teach you which form best fits
your specific situation. This should only take about 30 minutes a month once you get in
the habit.

Are you ready? It’s time to make those dollars dance! Go for it!

62
Income Sources (Form 3)

SOURCE AMOUNT PERIOD/DESCRIBE

Salary 1 ____________ _____________________

Salary 2 ____________ _____________________
Salary 3 ____________ _____________________
Bonus ____________ _____________________
Self-Employment ____________ _____________________

Interest Income ____________ _____________________

Dividend Income ____________ _____________________
Royalty Income ____________ _____________________
Rents ____________ _____________________

Notes ____________ _____________________

Alimony ____________ _____________________

Child Support ____________ _____________________
AFDC ____________ _____________________

Unemployment ____________ _____________________

Social Security ____________ _____________________
Pension ____________ _____________________
Annuity ____________ _____________________

Disability Income ____________ _____________________

Cash Gifts ____________ _____________________

Trust Fund ____________ _____________________

Other_____________ ____________ _____________________

Other_____________ ____________ _____________________
Other_____________ ____________ _____________________

TOTAL ____________

63
Lump Sum Payment Planning (Form 4)

Payments you make on a non-monthly basis, such as insurance premiums and taxes, can be
budget busters if you do not plan for them every month. Therefore, you must annualize the cost
and convert these to monthly budget items. That way, you can save the money each month and
will not be caught off-guard when your bi-monthly, quarterly, semi-annual, or annual bills come
due. Simply divide the annual cost by 12 to determine the monthly amount you should save for
each item.

ITEM NEEDED ANNUAL AMOUNT MONTHLY AMOUNT

Real Estate Taxes _______________ / 12 = _______________

Homeowner’s Insurance _______________ / 12 = _______________

Home Repairs _______________ / 12 = _______________

Replace Furniture _______________ / 12 = _______________

Medical Bills _______________ / 12 = _______________

Health Insurance _______________ / 12 = _______________

Life Insurance _______________ / 12 = _______________

Disability Insurance _______________ / 12 = _______________

Car Insurance _______________ / 12 = _______________

Car Repair/Tags _______________ / 12 = _______________

Replace Car _______________ / 12 = _______________

Clothing _______________ / 12 = _______________

Tuition _______________ / 12 = _______________

Bank Note _______________ / 12 = _______________

IRS (Self-Employed) _______________ / 12 = _______________

Vacation _______________ / 12 = _______________

Gifts (including Christmas) _______________ / 12 = _______________

Other ___________ _______________ / 12 = _______________

64
Monthly Cash Flow Plan (Instructions)

Every single dollar of your income should be allocated to some category on this form. When
you’re done, your total income minus expenses should equal zero. If it doesn’t, then you need
to adjust some categories (such as debt reduction, giving, or saving) so that it does equal
zero. Use some common sense here, too. Do not leave things like clothes, car repairs, or home
improvements off this list. If you don’t plan for these things, then you’re only setting yourself up
for failure later.

Yes, this budget form is long. It’s really long. We do that so that we can list practically every
expense imaginable on this form to prevent you from forgetting something. Don’t expect to put
something on every line item. Just use the ones that are relevant to your specific situation.

Every main category on this form has subcategories. Fill in the monthly expense for each
subcategory, and then write down the grand total for that category. Later, as you actually pay
the bills and work through the month, use the “Actually Spent” column to record what you really
spent in each area. If there is a substantial difference between what you budgeted and what
you spent, then you’ll need to readjust the budget to make up for the difference. If one category
continually comes up over or short for two or three months, then you need to adjust the budgeted
amount accordingly.

Use the “% Take Home Pay” column to record what percentage of your income actually goes
to each category. Then, use the “Recommended Percentages” sheet (Form 6) to see if your
percentages are in line with what we recommend.

Notes:

• An asterisk ( * ) beside an item indicates an area for which you should use the envelope system.

• The emergency fund should get all the savings until you’ve completed your full emergency
fund of three to six months of expenses (Baby Step 3).

• Don’t forget to include your annualized items from the “Lump Sum Payment Planning” sheet
(Form 4), including your Christmas gift planning.

65
Monthly Cash Flow Plan (Form 5)

Budgeted Sub Actually % of Take

Item Total TOTAL Spent Home Pay
CHARITABLE GIFTS _______ _______ _______
SAVING
Emergency Fund _______ _______
Retirement Fund _______ _______
College Fund _______ _______ _______ _______
HOUSING
First Mortgage _______ _______
Second Mortgage _______ _______
Real Estate Taxes _______ _______
Homeowner’s Ins. _______ _______
Repairs or Mn. Fee _______ _______
Replace Furniture _______ _______
Other _________ _______ _______ _______ _______
UTILITIES
Electricity _______ _______
Water _______ _______
Gas _______ _______
Phone _______ _______
Trash _______ _______
Cable _______ _______ _______ _______
*FOOD
*Grocery _______ _______
*Restaurants _______ _______ _______ _______
TRANSPORTATION
Car Payment _______ _______
Car Payment _______ _______
*Gas and Oil _______ _______
*Repairs and Tires _______ _______
Car Insurance _______ _______
License and Taxes _______ _______
Car Replacement _______ _______ _______ _______

PAGE 1 TOTAL _______ _______

66
Monthly Cash Flow Plan (Form 5 – continued)

Budgeted Sub Actually % of Take

Item Total TOTAL Spent Home Pay

*CLOTHING
*Children _______ _______
*Adults _______ _______
*Cleaning/Laundry _______ _______ _______ _______
MEDICAL/HEALTH
Disability Insurance _______ _______
Health Insurance _______ _______
Doctor Bills _______ _______
Dentist _______ _______
Optometrist _______ _______
Medications _______ _______ _______ _______
PERSONAL
Life Insurance _______ _______
Child Care _______ _______
*Baby Sitter _______ _______
*Toiletries _______ _______
*Cosmetics _______ _______
*Hair Care _______ _______
Education/Adult _______ _______
School Tuition _______ _______
School Supplies _______ _______
Child Support _______ _______
Alimony _______ _______
Subscriptions _______ _______
Organization Dues _______ _______
Gifts (incl. Christmas) _______ _______
Miscellaneous _______ _______
*Blow Money _______ _______ _______ _______

PAGE 2 TOTAL _______ _______

67
Monthly Cash Flow Plan (Form 5 – continued)

Budgeted Sub Actually % of Take

Item Total TOTAL Spent Home Pay
RECREATION
*Entertainment _______ _______
Vacation _______ _______ _______ _______
DEBTS (Hopefully -0-)
Visa 1 _______ _______
Visa 2 _______ _______
Master Card 1 _______ _______
Master Card 2 _______ _______
American Express _______ _______
Discover Card _______ _______
Gas Card 1 _______ _______
Gas Card 2 _______ _______
Dept. Store Card 1 _______ _______
Dept. Store Card 2 _______ _______
Finance Co. 1 _______ _______
Finance Co. 2 _______ _______
Credit Line _______ _______
Student Loan 1 _______ _______
Student Loan 2 _______ _______
Other _______ _______ _______
Other _______ _______ _______
Other _______ _______ _______
Other _______ _______ _______
Other _______ _______ _______ _______ _______

PAGE 3 TOTAL _______ _______

PAGE 2 TOTAL _______ _______

PAGE 1 TOTAL _______ _______

GRAND TOTAL _______ _______

TOTAL HOUSEHOLD INCOME _______

ZERO

68
Recommended Percentages (Form 6)

How much of your income should be spent on housing, giving, food, etc.? Through experience
and research, we recommend the following percentages. However, you should remember
that these are only recommended percentages. If you have an unusually high or low income,
then these numbers could change dramatically. For example, if you have a high income, the
percentage that is spent on food will be much lower than someone who earns half of that.

If you find that you spend much more in one category than we recommend, however, it may
be necessary to adjust your lifestyle in that area in order to enjoy more freedom and flexibility
across the board.

ITEM ACTUAL % RECOMMENDED %

CHARITABLE GIFTS ___________ 10 – 15%

SAVING ___________ 5 – 10%

HOUSING ___________ 25 – 35%

UTILITIES ___________ 5 – 10%

FOOD ___________ 5 – 15%

TRANSPORTATION ___________ 10 – 15%

CLOTHING ___________ 2 – 7%

MEDICAL/HEALTH ___________ 5 – 10%

PERSONAL ___________ 5 – 10%

RECREATION ___________ 5 – 10%

DEBTS ___________ 5 – 10%

69
Allocated Spending Plan (Instructions)

Now that you’ve already planned out the entire month on the “Monthly Cash Flow Plan” (Form 5),
let’s get just a little bit more precise. On this form, you will allocate—or spend—all of your money
from each individual pay period.

There are four columns on this form, representing the four weeks in a given month. You will use
one column for each week you get paid. If you are married and your spouse earns an income,
then you will both use this same form. For weeks in which you both receive a paycheck, simply
add those two incomes together and use a single column. Be sure to write the pay date at the top
of the column.

Now, go down the list and allocate each expense to a specific payday, using your bills’ due dates
as a guide. For example, if your phone bill is due on the 22nd and you get paid on the 15th and
30th, then you know that you would probably pay that bill from your income on the 15th. Some
things, like utility bills, will be paid monthly, while other items, such as food and gasoline, could
be weekly. The point here is to anticipate both your upcoming expenses and your upcoming
income and plan accordingly.

Beside each line item, you’ll see two blanks separated by a slash ( / ). Put the expense to the left
of the slash and the remaining income from that pay period to the right of the slash. As you work
your way down the column, the income remaining should diminish until you reach a perfect zero
at the bottom of the list. If you have money left over at the end of the column, go back and adjust
an area, such as savings or giving, so that you spend every single dollar.

This level of detail may be uncomfortable to you at first, but the payoff is worth it. By specifically
“naming” every dollar before you actually get it in your hands, you will remove an incredible
amount of stress and curb your overspending.

NOTES:

• If you have an irregular income, such as self-employment or commissions, you should use the
“Irregular Income Planning” sheet (Form 8) instead of this “Allocated Spending Plan.”

• If you know that you have an impulse spending problem, then you may want to allocate more
money to the “Blow” category. That way, you are at least planning for it and setting up some
boundaries for yourself.

• An asterisk ( * ) beside an item indicates an area for which you should use the
envelope system.

70
Allocated Spending Plan (Form 7)

PAY PERIOD: ____ /____ ____ /____ ____ /____ ____ /____

ITEM:
INCOME _________ _________ _________ _________

CHARITABLE ____ /____ ____ /____ ____ /____ ____ /____

SAVING
Emergency Fund ____ /____ ____ /____ ____ /____ ____ /____
Retirement Fund ____ /____ ____ /____ ____ /____ ____ /____
College Fund ____ /____ ____ /____ ____ /____ ____ /____

HOUSING
First Mortgage ____ /____ ____ /____ ____ /____ ____ /____
Second Mortgage ____ /____ ____ /____ ____ /____ ____ /____
Real Estate Taxes ____ /____ ____ /____ ____ /____ ____ /____
Homeowner’s Ins. ____ /____ ____ /____ ____ /____ ____ /____
Repairs or Mn. Fees ____ /____ ____ /____ ____ /____ ____ /____
Replace Furniture ____ /____ ____ /____ ____ /____ ____ /____
Other _______ ____ /____ ____ /____ ____ /____ ____ /____

UTILITIES
Electricity ____ /____ ____ /____ ____ /____ ____ /____
Water ____ /____ ____ /____ ____ /____ ____ /____
Gas ____ /____ ____ /____ ____ /____ ____ /____
Phone ____ /____ ____ /____ ____ /____ ____ /____
Trash ____ /____ ____ /____ ____ /____ ____ /____
Cable ____ /____ ____ /____ ____ /____ ____ /____

*FOOD
*Grocery ____ /____ ____ /____ ____ /____ ____ /____
*Restaurants ____ /____ ____ /____ ____ /____ ____ /____

71
Allocated Spending Plan (Form 7 – continued)

TRANSPORTATION
Car Payment ____ /____ ____ /____ ____ /____ ____ /____
Car Payment ____ /____ ____ /____ ____ /____ ____ /____
*Gas and Oil ____ /____ ____ /____ ____ /____ ____ /____
*Repairs and Tires ____ /____ ____ /____ ____ /____ ____ /____
Car Insurance ____ /____ ____ /____ ____ /____ ____ /____
License and Taxes ____ /____ ____ /____ ____ /____ ____ /____
Car Replacement ____ /____ ____ /____ ____ /____ ____ /____

*CLOTHING
*Children ____ /____ ____ /____ ____ /____ ____ /____
*Adults ____ /____ ____ /____ ____ /____ ____ /____
*Cleaning/Laundry ____ /____ ____ /____ ____ /____ ____ /____

MEDICAL/HEALTH
Disability Insurance ____ /____ ____ /____ ____ /____ ____ /____
Health Insurance ____ /____ ____ /____ ____ /____ ____ /____
Doctor ____ /____ ____ /____ ____ /____ ____ /____
Dentist ____ /____ ____ /____ ____ /____ ____ /____
Optometrist ____ /____ ____ /____ ____ /____ ____ /____
Medications ____ /____ ____ /____ ____ /____ ____ /____

PERSONAL
Life Insurance ____ /____ ____ /____ ____ /____ ____ /____
Child Care ____ /____ ____ /____ ____ /____ ____ /____
*Baby Sitter ____ /____ ____ /____ ____ /____ ____ /____
*Toiletries ____ /____ ____ /____ ____ /____ ____ /____
*Cosmetics ____ /____ ____ /____ ____ /____ ____ /____
*Hair Care ____ /____ ____ /____ ____ /____ ____ /____
Education/Adult ____ /____ ____ /____ ____ /____ ____ /____
School Tuition ____ /____ ____ /____ ____ /____ ____ /____
School Supplies ____ /____ ____ /____ ____ /____ ____ /____
Child Support ____ /____ ____ /____ ____ /____ ____ /____

72
Allocated Spending Plan (Form 7 – continued)

Alimony ____ /____ ____ /____ ____ /____ ____ /____

Subscriptions ____ /____ ____ /____ ____ /____ ____ /____
Organization Dues ____ /____ ____ /____ ____ /____ ____ /____
Gifts (including Christmas) ____ /____ ____ /____ ____ /____ ____ /____
Miscellaneous ____ /____ ____ /____ ____ /____ ____ /____

*BLOW $$ ____ /____ ____ /____ ____ /____ ____ /____

RECREATION
*Entertainment ____ /____ ____ /____ ____ /____ ____ /____
Vacation ____ /____ ____ /____ ____ /____ ____ /____

DEBTS (Hopefully -0-)

Visa 1 ____ /____ ____ /____ ____ /____ ____ /____
Visa 2 ____ /____ ____ /____ ____ /____ ____ /____
MasterCard 1 ____ /____ ____ /____ ____ /____ ____ /____
MasterCard 2 ____ /____ ____ /____ ____ /____ ____ /____
American Express ____ /____ ____ /____ ____ /____ ____ /____
Discover Card ____ /____ ____ /____ ____ /____ ____ /____
Gas Card 1 ____ /____ ____ /____ ____ /____ ____ /____
Gas Card 2 ____ /____ ____ /____ ____ /____ ____ /____
Dept. Store Card 1 ____ /____ ____ /____ ____ /____ ____ /____
Dept. Store Card 2 ____ /____ ____ /____ ____ /____ ____ /____
Finance Co. 1 ____ /____ ____ /____ ____ /____ ____ /____
Finance Co. 2 ____ /____ ____ /____ ____ /____ ____ /____
Credit Line ____ /____ ____ /____ ____ /____ ____ /____
Student Loan 1 ____ /____ ____ /____ ____ /____ ____ /____
Student Loan 2 ____ /____ ____ /____ ____ /____ ____ /____
Other _______ ____ /____ ____ /____ ____ /____ ____ /____
Other _______ ____ /____ ____ /____ ____ /____ ____ /____

73
Irregular Income Planning (Instructions)

Many people have an “irregular” income, which simply means that their compensation
fluctuates from month to month. This is especially common for the self-employed, as well as
commission-based salespeople. While this makes it more difficult to predict your income, you are
still responsible for doing a monthly budget!

The “Monthly Cash Flow Plan” (Form 5) should remain a crucial part of your plan, as it lays out
exactly how much money you need to bring home each month to survive and prosper. However,
instead of doing the “Allocated Spending Plan” (Form 7), you will use this “Irregular Income
Planning” sheet.

On this form, simply look at the individual items from your “Monthly Cash Flow Plan” sheet and
prioritize them by importance. Ask yourself, “If I only have enough money to pay one thing, what
would that be?” Put that at the top of your list. Then, ask yourself, “If I only have enough money to
pay one more thing, what would that be?” That’s number two. Keep this up all the way down
the list.

With your list in place, you’re ready to get paid. If you get a $1,500 paycheck, you will spend
that $1,500 right down the list until it is gone, recording the cumulative amount spent in the
“Cumulative Amount” column. At that point, you’re finished spending, no matter what remains
unpaid on the list. That’s why the most important things are at the top of the list, right?

Be prepared to stand your ground. Things usually have a way of seeming important when they
are only urgent. For example, a once-in-a-lifetime opportunity to see your favorite band perform
live may seem important, but in reality, it is only urgent, meaning that it is time-sensitive. Urgency
alone should not move an item to the top of this list!

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Irregular Income Planning (Form 8)

Item Amount Cumulative Amount

____________________________ ________________ ________________

____________________________ ________________ ________________

____________________________ ________________ ________________

____________________________ ________________ ________________

____________________________ ________________ ________________

____________________________ ________________ ________________

____________________________ ________________ ________________

____________________________ ________________ ________________

____________________________ ________________ ________________

____________________________ ________________ ________________

____________________________ ________________ ________________

____________________________ ________________ ________________

____________________________ ________________ ________________

____________________________ ________________ ________________

____________________________ ________________ ________________

____________________________ ________________ ________________

____________________________ ________________ ________________

____________________________ ________________ ________________

____________________________ ________________ ________________

____________________________ ________________ ________________

75
Breakdown of Savings (Form 9)

After you have fully funded your emergency fund, you can start to save for other items, such as
furniture, car replacement, home maintenance, or a vacation. This sheet will remind you that
every dollar in your savings account is already committed to something. For example, it’s a bad
idea to take money away from car repairs to pay for an impulse Hawaiian vacation, even if you
pay cash for it. What would you do if the car broke down the week you got back home? However,
it can be okay to reassign the dollars to another category, as long as you do it on purpose and it
doesn’t put you in a pinch in another category. Keep up with your breakdown of savings every
month, one quarter at a time.

Item Balance By Month

_________ _________ _________

Emergency Fund (1) $1,000 _________ _________ _________

Emergency Fund (2) 3-6 months _________ _________ _________
Retirement Fund _________ _________ _________
College Fund _________ _________ _________
Real Estate Taxes _________ _________ _________
Homeowner’s Insurance _________ _________ _________
Repairs or Mn. Fee _________ _________ _________
Replace Furniture _________ _________ _________
Car Insurance _________ _________ _________
Car Replacement _________ _________ _________
Disability Insurance _________ _________ _________
Health Insurance _________ _________ _________
Doctor _________ _________ _________
Dentist _________ _________ _________
Optometrist _________ _________ _________
Life Insurance _________ _________ _________
School Tuition _________ _________ _________
School Supplies _________ _________ _________
Gifts (incl. Christmas) _________ _________ _________
Vacation _________ _________ _________
Other ____________________ _________ _________ _________
Other ____________________ _________ _________ _________

TOTAL _________ _________ _________

76
Test – Version Q7

Single Filers: Complete either test version Q7 or Q8.

Joint Filers: Each filer must take a different test version.
Circle the correct answer and follow the instructions listed at the end of the test.

1. Instead of borrowing to buy an item, Dave 7. What did 75% of millionaires say was the most
suggests: important key to building their wealth?
A. Stealing it A. Becoming and staying debt-free
B. Saving for it B. Evading taxes
C. Not buying it C. Accumulating airline miles on their credit
cards
2. The interest rate (or rate of return) can make a huge
difference on how your investments grow. 8. Cash advance, rent-to-own, and tote-the-note car
A. True lots are rip-off services that benefit no one but the
B. False owners of the company.
A. True
3. What method does Dave suggest for your food B. False
expenses?
A. Envelope system 9. Interest-only loans are:
B. Lump sum payment planning A. A great way to save money
C. Don’t worry about the food expenses B. A bad idea because you’re only paying interest
C. A forced savings plan
4. When making a purchase, you should always
consider: 10. At a minimum, how often should you check your
A. The color of the item credit bureau report?
B. Your buying motives A. Every 1–2 years
C. The prestige associated with owning the item B. Every 3–4 years
C. Never
5. Estate sales, flea markets and consignment sales are
places you will normally find great deals. 11. Which of these is not an alternative to taking out a
A. True new loan for an unanticipated event or expense?
B. False A. Saving a $1,000 as a starter emergency fund
to cover unanticipated expenses
6. I should use life insurance as an investment. B. Realizing some things we call emergencies are
not actually emergencies and start saving for
A. True them a little bit every month
B. False C. Opening a line of credit with a local credit
union

77
Test – Version Q7

12. When we use credit, we incur which of these 19. If an unexpected crisis occurs, there are both
costs? public and private agencies available to help me
A. Interest know my options.
B. Fees A. True
C. All of the above B. False

13. An oil change for your car every 3,000 miles is 20. Dave taught about protecting your Four Walls
considered a: before doing anything else financially. Another way
A. Fixed cost to say that is:
B. Variable cost A. Pay your rent/mortgage, utilities and food first.
C. Periodic cost B. Pay your credit card bills first.
C. Save for retirement no matter what your
14. Lying to friends and family about your finances is a: disposable income is.

A. Debt warning sign

B. Baby Step Dave talked about 21. Which of these would be a long-term financial
C. Way to identify additional borrowing goal?
A. Budget to pay for gas this week.
15. The Fair Credit Reporting Act was written to B. Save $10,000 as a down payment on a home.
protect businesses loaning money to consumers. C. Both are long-term goals.

A. True
B. False 22. Dave taught that using credit wisely consisted of:
A. Paying off your credit cards each month
16. The amount we earn before taxes are taken out is B. Using a second mortgage to have extra cash
called: on hand
C. Avoiding using credit and instead investing in
A. Net income yourself by creating an emergency fund
B. Gross income
C. Disposable income

17. You need to keep written copies of all settlements

with creditors for how long?
A. One year
B. 10 years
C. Always

18. Housing and Urban Development Renter

Assistance is a resource for people:
A. Buying their first home
B. Registering for food stamps
C. Needing assistance with low-cost rental
property

78
Test – Version Q8

Single Filers: Complete either test version Q7 or Q8.

Joint Filers: Each filer must take a different test version.
Circle the correct answer and follow the instructions listed at the end of the test.

1. What is Baby Step 3? 7. Leasing is the most expensive way to finance and
A. Apply for a credit card to rebuild your credit operate a vehicle.
B. Stop giving money to relatives A. True
C. Save 3–6 months of expenses in an emergency B. False
fund
8. Your largest wealth building tool is:
2. It is important to balance your checkbook. A. A lotto ticket
A. True B. A loan
B. False C. Your income

3. You should do a written budget every: 9. Reverse mortgages are a good idea.
A. Month A. True
B. 3 months B. False
C. 6 months
10. Dave says the FICO score is:
4. Before making a major purchase: A. A good measure of financial success
A. Wait overnight B. Based on your income and wealth
B. Check your credit limit C. The “I love debt” score
C. Take out a loan
11. Which of these is an alternative to taking out a new
5. One good place to find great bargains is a pawn loan for an unanticipated event or expense?
shop. A. Researching local internet rates
A. True B. Selling something
B. False C. Checking your FICO score

6. What type of life insurance does Dave 12. When we use credit, we can incur interest, fees
recommend? and penalties.
A. Permanent life insurance A. True
B. Whole life insurance B. False
C. Term life insurance
13. A mortgage is which kind of loan?
A. Secured
B. Unsecured

79
Test – Version Q8

C. Line of credit 20. Car insurance that is paid ever six months is
considered a:
14. Barely making minimum payments on credit cards A. Fixed cost
is a: B. Variable cost
A. Way to increase your FICO score faster C. Emergency cost
B. Strategy millionaires use to grow wealth
C. Debt warning sign 21. Which of these would be a short-term financial
goal?
15. The Fair Credit Reporting Act, Equal Credit A. Budget to pay for groceries this week
Opportunity Act and the Fair Debt Collection B. Save $200 for a new coat
Practices Act are all laws written to protect C. Both are short-term goals
consumers.
A. True 22. Keeping a mortgage will save you an enormous
B. False amount of money.
A. True
16. The amount we earn after taxes are taken out is B. False
called:
A. Net income
B. Gross income
C. Disposable income

17. How long do you need to keep written copies of

your bankruptcy discharge?
A. One year
B. 10 years
C. Always

18. Food and Nutrition Service is a resource for

people:
A. Buying their first home
B. Registering for food stamps
C. Needing assistance with low-cost rental
property

19. If an unexpected crisis occurs, I should reach out

to which of these for assistance:
A. Cash advance company
B. Rent to own company
C. Neither of the above

80