FINANCIAL MANAGEMENT SEMINAR Stanford Graduate Students DeRonnie Pitts –

Table of Contents Student Loans Saving Basics Credit

Student Loans - Life Cycle

Student Loans - Disbursement DO – Give yourself enough room to focus on academics Keep track of how much you’re borrowing and terms:  Rates - Fixed vs. Variable  Repayment Schedule  Subsidized / Unsubsidized / Private Pay your loans while you’re in school if possible (interest)

Student Loans - Disbursement DON’T – Use student loan money for large frivolous items “I love money. I love everything about it. I bought some pretty good stuff. Got me a $300 pair of socks. Got a fur sink. An electric dog polisher. A gasoline powered turtleneck sweater. And, of course, I bought some dumb stuff, too.” – Steve Martin

Student Loans - Disbursement $10,000 Loan 4% Interest $10,400 Loan 4% Interest $10,816 Loan 4% Interest $11,249 Loan Loans May Accrue Interest While They Don’t Require Payment Year 1 Year 2 Year 3

Student Loans - Repayment When is my first payment due? How much will I owe per month on my current plan? What other repayment options do I qualify for?  Standard  Graduated  Extended  Income-Based How do I switch repayment plans? Are discounts available?  if I sign up for automatic debit or take advantage of other repayment features?

Table of Contents Student Loans Saving Basics Credit

Saving Basics - Budgets “Don’t tell me what you value; show me your budget, and I’ll tell you what you value.” – Joe Biden Step 1 – Understand How Much You Spend Log/Journal expenditures and categorize  Mint.com  Personal Capital  Other tools

Saving Basics - Budgets Step 2 – Determine What Is Essential Categorize Expenditures  Needs  Wants  Nice to have Give Yourself Some Guilty Pleasures (with constraints)

Saving Basics - Budgets Step 3 – Keep Track of Variances Where do I overspend? Bucket/Budget for extraneous items It is all about discipline "Discipline is the bridge between goals and accomplishments." - Jim Rohn

Saving Basics Classic rule of thumb is min of six months of expenses… Adjust for: Economic factors Industry specific factors Personal risk factors Costs covered by employers How much should I have in savings?

Saving Basics – Retirement Accounts Roth IRA* Individual Setup Post-Tax Contribution $5,500/yr Limit** No Matching Can Withdraw Principal w/o Penalty No Distribution Req. Traditional IRA Individual Setup Pre-Tax Contribution* $5,500/yr Limit** No Matching Early Withdrawal Penalties Required Distributions 401k Employer Sponsored Pre-Tax Contribution $18,000/yr Limit Possible Matching Early Withdrawal Penalties Required Distributions * Income limits apply for Roth eligibility & for tax deductibility of traditional IRA contributions ** $5,500 limit is for collective contributions to Roth or Traditional IRA

Table of Contents Student Loans Saving Basics Credit

Credit – Report & Score Report, several pages Consumer data Contains a consumer’s credit history, including credit-card use, timeliness of payments, as well as delinquent debts Credit Report There are three main credit bureaus Equifax, Experian, TransUnion Where to get them: (free once per year) Number, typically Measure of credit risk Based on data in the report Credit Score Lenders typically use FICO scores Where to get them: (~$20/score) Some credit cards offer FICO score access for free How to get them

Credit - Score Credit ScoreInterest Rate EXCELLENT GOOD FAIR BAD LOW HIGH

Credit - Score

Credit – Cards Purchase Make purchases at merchants with a swipe of your credit card Grace Period After your purchase you will have a grace period, typically days, before any interest is applied against the purchase amount Monthly Statement Every month you will receive a statement of your credit card charges for the month, previous balance, financing charges, and minimum payment due Payment Pay the entire amount of your credit card bill or just the minimum payment Revolve If there is a remaining balance from your credit card bill after your payment, that amount “revolves” and will accrue interest until the next statement

Credit – Cards “The man who never has money enough to pay his debts has too much of something else.” – James Lendall Basford “The only man who sticks closer to you in adversity than a friend is a creditor.” – Unknown

Key Takeaways 1. Take time to fully understand your student loans 2. Have a budget and a saving plan 3. Use credit wisely

Tools – just a few… not exhaustive Mint – Tracking spending Personal Capital – Tracking spending / investments Credit Karma – Free FICO scores + reviews of financial products Nerd Wallet – Reviews of financial products + financial tips Sweep (app) – Automated spending buckets I Will Teach You To Be Rich – Savings habits/psychology Suze Orman – Explanation of financial jargon / financial advice Wealthfront Blog – Equity compensation & investing advice

Questions ???