Copyright © 2014 Pearson Education, Inc. 1 Sherfield and Moody Cornerstones Topic: Prosper

Copyright © 2014 Pearson Education, Inc. 2 Practicing Fiscal Fitness Managing money is a challenge for many students Will you have to work to finance your education? Do you need to change your financial habits?

Copyright © 2014 Pearson Education, Inc. 3 Young Adults and Debt Nearly 50% have defaulted on a debt 30% worry frequently about debt 58% move in with parents after college 22% altered career plans due to debt Average credit card debt is now over $4, % of income is spent on debt payments Bankruptcy is a major issue for young adults

Copyright © 2014 Pearson Education, Inc. 4 Preparing for the Future Practice delayed gratification Take a personal finance course Learn financial lingo Save your change daily Write down everything you spend Apply for all types of financial aid

Copyright © 2014 Pearson Education, Inc. 5 Types of Financial Aid Loans – must be repaid with interest Grants – do not require repayment and are often need-based Scholarships – do not require repayment and are often merit-based Work study – money earned while working on campus

Copyright © 2014 Pearson Education, Inc. 6 Are you Eligible for Federal Aid? Demonstrate financial need? Have high school diploma or GED? Enrolled in an eligible degree program? Citizen of U.S. with a SS#? Making satisfactory academic progress? Male registered with Selective Service? Any drug convictions?

Copyright © 2014 Pearson Education, Inc. 7 Tips for Applying Complete your FAFSA in its entirety Read instructions carefully and attend to deadlines Be honest and supply any documentation required Keep tax returns and forms organized Work with Financial Aid Officers on campus Apply for all types of aid

Copyright © 2014 Pearson Education, Inc. 8 Student Loans Required for many college students Borrow only the minimum you need This debt will follow you for up to 30 years Bankruptcy does not relieve student loan debt

Copyright © 2014 Pearson Education, Inc. 9 Student Loan Total Interest

Copyright © 2014 Pearson Education, Inc. 10 Protect Your FICO Score Monitor your credit report regularly Keep credit card balances low Ask card companies for lower credit rates Do not open multiple accounts at once Keep accounts in good standing open Use automated payment systems for bills Keep balance transfers to a minimum

Copyright © 2014 Pearson Education, Inc. 11 How Can You Budget in each Area? Household expenditures and utilities? Phone/ costs? Transportation costs? Food?

Copyright © 2014 Pearson Education, Inc. 12 Credit Card Debt One of worst kinds of debt Majority of college students have this debt Credit card issuers love college students! Paying with plastic results in more spending High interest and fees add up quickly Can you pay off what you spend each month?

Copyright © 2014 Pearson Education, Inc. 13 Tips for Managing Credit Cards Watch for changes in fees and interest rates Your credit score can affect your rates Avoid cards with annual fees Know grace periods and payment due dates Protect your card with signature and “see ID” Make more than just minimum payments Try debit cards instead Seek reputable counseling if in trouble

Copyright © 2014 Pearson Education, Inc. 14 Personal Loan Pitfalls Watch out for high-interest: – Payday loans – Car title loans – Rent-to-own contracts Worse than credit cart debt –read carefully!

Copyright © 2014 Pearson Education, Inc. 15 Watch Small Item Money Drain Gum? Bottled water? Eating out daily? Junk food/vending machines? Unused memberships? Expensive salon visits/treatments? Cigarettes?

Copyright © 2014 Pearson Education, Inc. 16 Identity Theft Widespread concern for college students Actual or virtual information may be stolen People you know or strangers may commit it Very expensive and time-consuming to fix

Copyright © 2014 Pearson Education, Inc. 17 Tips to Minimize Your Risk Carry only necessary personal information Buy online from secured sites only Don’t use obvious passwords Memorize PIN numbers and passwords Shred personal documents Monitor your credit report Protect personal information online Use a permanent mailing address

Copyright © 2014 Pearson Education, Inc. 18 What Should You Do If… You need to purchase a car? If you need to save on fuel? If you feel the need to “impulse buy”? If your grocery bill is out of control? If you child wants what other kids have? Your credit cards are lost or stolen?

Copyright © 2014 Pearson Education, Inc. 19 Topic Reflections Avoid credit card trap Record how you spend your money Monitor and protect your credit rating Learn about all types of financial aid Don’t borrow more money than you have to Learn about investment and retirement plans Get reliable counseling for debt management