BRESEE BANK OF LOANS AND OTHER EVILS… 1

2 Oh Yes You Can Borrow Points You WORK HARDER for the SAME STUFF

3 Don’t Do It Gotta Get Some Points??? Why borrow? Magic Mountain-leaving now… Xbox? Chips soda hot dog… 3

4 You Work Harder for Your Stuff Borrow to go to Magic Mountain 1,500 points Pay on time -- One year later You Pay Bresee 121 points in interest Still owe974 points loaned 4

5 What Else Could You Have Done? 121 With the 121 points? Work less? Food Fun Save

6 Cost of Borrowed Stuff You BorrowYou Pay 3 Yrs. 5 Yrs. 10 Yrs. $1,000$1,772 $2,594 $6,727 $5,000$8,858 $12,969 $33,637 $10,000$17,716 $25,937 $67,275

7 Gotta Get Cash --- FOR WHAT? Car??? Shelter??? Fun??? Food???

8 Rules for When to Borrow Ssshhhhhh There are no rules You decide – get now pay more later? Save and pay cash – spend less later?

9 Buy Stuff That Goes Up OK one rule…. Buy stuff that goes up House? Stock? Antique car?

10 You Borrow to Get the Goods.. You put up half$250 Borrow half$250 Pay interest $ 50 $500 for SIGNED Collector Edition - Snoop Doggy Dog’s Masterpiece -

11 Two Years Later… You get$1,500 You paid$ 500 Wooo --- not bad You Make 200% $1,000 Snoop’s Goods Go Up.. You Sell

12 Pay Back Time But Wait – You Have to Repay the Loan You Got $1,500 Pay Back Loan $250 Paid Interest $50 You Pocket $1,200

13 You Make More You Make Money on Other People’s Money… You paid $250 (plus $50 interest) You made $1,200 Borrowing gives you an extra $200

14 How Did You Make More? You made money on borrowed money… But only when things go up…

15 Borrow for Car ?????? NEED You NEED a NEW Ford Expedition Dealer charges $40,000 You Borrow $30,000 You Pay Bank $6,000 Interest

16 You WANT You WANT a NEW Car YOU LOSE YOU LOSE$23,000 Dealer will give you $17,000 Whoa - You paid $40,000 Two Years Later

17 You paid interest$6,000 You still owe$21,000 Your Expedition is worth $17,000 Pay the banker $4,000 just to sell the car You LOSE Again You borrowed $30,000

18 When to Borrow???? Depreciate…. Or Appreciate…. OK to borrow to make money…. OK to borrow to make money….

19 OK to borrow to get to great new job? How much interest do you want to pay? TRADEOFFS… And CHOICES… Big car little car.. New car older car… You NEED a Car…

20 JOB Pays… $20,000 Pay interest of $3,000 per year??? $50,000 Pay interest of $3,000 per year??? $1 million Pay interest of $3,000 per year???

21 Credit cards20% Auto loan 10% House mortgage 7% to Ways to Borrow…

22 They Can Take the Stuff Away… CREDIT CARDS 20%NO!! CAR LOAN 10%Yes - but the price goes down HOUSE LOAN 7%Yes - but the price goes up

23 Credit Cards Not wise choices: Clothes Clothes Eating Out Eating Out Movies

24 Credit Cards Wise Choices: Car Rental Buying Online Tracking Expenditures Loss Limited to $50 if Stolen

25 If use a credit card – only do if you can pay off every month. Wise Choices

26 $2,000 with 20% interest 2% minimum payment = 265 Months 22Years = $4,800 Interest 4% every month = 88 months 7 years = $1,120 Interest Pay More Each Month!!!!

27 So You Want to Borrow Points Are You Good for It?

28 BASICS BRESEE BORROWING BASICS 1) Attendance- homework lab or computer lab min. 1 hour per week plus one regular weekly activity 2) Grades- min. 2.0 grade point average 3) Point History- min. 50 points week 4) Behavior- no more than 2 suspensions at the youth center within past 3 months 28

29 Bresee Lending Standards Good credit= 1500 maximum at lower interest Medium credit= 1000 maximum at more interest Bad credit= 500 maximum at YIKES!!!

30 30 days after you borrow points, every time you deposit a check at the bank 25% will automatically go towards your credit account Payback PLUS INTEREST

31 Tracking Your Credit 35% -- your payment history 30% -- your outstanding debt 15% -- length of time you've had credit 10% -- number of inquiries on your report 10% -- types of credit you have

32 Bad Credit ??– No Apartment!! No Job!! score score --- score --- Bankers run after 900 score --- Bankers run after you to lend you money you to lend you money Pay big costs

33 Not Trustworthy? You pay more for $10,000 loan Rate Pay to Bank Good credit 5.5% $13,100 Medium credit 7.5%$14,500 Bad credit 9.5%$16,000

34 Stand in Good Credit Do you want to: Pay $3,100 Pay $4,500 Pay $6,000 Anything else you could think to spend that money on? Of course your banker loves you…

35 SCAMS to Get Your Money Payroll loans Payroll loans Tax refund loans Tax refund loans Loan sharks Loan sharks Leasing v buying Leasing v buying Predatory home equity loans Predatory home equity loans

36 TRADEOFFS and CHOICES 1 2 Spend than you make Borrow borrow less smart cheap

37 Pay Yourself First SAVING MONEY!! Next Class