Page 126 - The Prosperous Way _ (APRIL 2024 v3)

THE PROSPEROUS WAY

your car payment $300, think of this $600 as money that would
otherwise have been available for saving if you had no debt. Instead of
buying a car every 5 years, take care of the one you own and go for 5
more years without car payments. Once the debt is repaid, the money
that is freed up will convert to savings and not be used for additional
.
spending So, understanding that debt is really negative savings, and
converting debt to savings is the first step in your plan of building
wealth. As debt decreases (and again this may take place very slowly
over time), you will be able to set aside more and more “freed-up” money
as debt converts to “real” savings and investment.

Finally, it’s worth re-iterating that this is a long-term goal. We may only
be able to start with a small percentage being set aside as savings when
we begin to save. But as income increases, if we save more of our
additional earnings than we spend, keeping the 20% goal in mind,
eventually we will reach that seemingly far off goal.

WRITE THE VISION — AND RUN WITH IT

Remember the Scripture from Habakkuk 2:2. “Write the vision and make
it plain on tablet, that he may run who reads it.” The next thing that we
are going to do is write the vision. This means creating a budget to
capture the vision or goal that you will be working towards. Think of
your budget as your vision that you will run with. Below I have provided
a very simple budget, for illustration purposes, showing how to allocate
disposable income. I have provided a more detailed budget form in
Chapter 14 that you can use.

Let’s start by assuming you are single, and your net monthly income (i.e.
after tax and tithe) is $1,600.

 First, calculate 20% of $1,600 (which is $320). This is your
“Tomorrow” category. It includes insurance and all your present
debt payments, and whatever remains is for savings.
 Subtract $320 for your “Tomorrow” category from your $1,600
net income. This leaves $1,280 for your “Today” expenses.
 Next, take no more than 40% of your $1,600 net income and
allocate this to housing. For example, if you allocate 35%, this
would be $560 for housing.
 The amount remaining is for your other expenses (for example,
45% of net income, which would be $720).

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