Setting Limits on Credit Seguin - Debt 2011

“ATM does not mean all the money, Loretta.” Seguin - Debt 2011

 You  Employers  Credit reporting agencies  Get one report from each company FREE every year: Seguin - Debt 2011

 A FICO (Fair Isaac Company) score is an evaluation of a person’s ability to repay debt  It is a number between 300 and 850  A higher number is a better credit score  Indicator of a person’s ability to pay back a loan  A lower score may increase the interest rates a consumer pays or they may not receive credit  The creditor has a greater risk that the individual may not pay back the money they loaned Seguin - Debt 2011

 Low credit scores will cost individuals more money long-term.  This table is based upon a thirty-year fixed mortgage rate on a $300,000 loan. FICO ScoreInterest RateMonthly Payment 30 Year Amount %$1,787$643, %$2,047$736, %$2,500$900,000 Seguin - Debt 2011

Credit cards may influence each component of how an individual’s credit score is calculated. Seguin - Debt 2011

 Identifying information  SS#, address, birthday  Credit history  Account record with creditors  Inquiries  Who has requested a report?  Public record information  Collections, bankruptcies, late child support Seguin - Debt 2011

 Checking and savings account balances  Income  Medical history  Purchases made with cash or check  Race, gender, religion or national origin  Driving record Seguin - Debt 2011

 Pay bills on time  Keep balances low  Apply for new accounts only when necessary  Check credit reports for accuracy Seguin - Debt 2011

 Rule  20%  Never borrow more than 20% of your yearly income (after taxes)  10%  Monthly payments shouldn’t exceed 10% of monthly income  Ex: If you make $50 per month  $50 x 12 months = $600 per year  $600 x 20% = $ max debt  Ex: If you make $50,000 per year  $50,000 x 20% = $10, max debt  Ex: If you make $2,000 per year  $2,000 / 12 = $167 per month  $167 x 10% = $17 – max debt payments  Ex: If you make $50,000 per year  $50,000 / 12 = $4,167 per month  $4167 x 10% = $417 – max debt payments Seguin - Debt 2011

Reminder: Seguin - Debt 2011

Chapter 11: Business bankruptcy Seguin - Debt 2011

Negative InformationMax Time on Credit Report Civil Judgement7 years Tax Lien7 years Chapter 13 Bankruptcy7 years Chapter 7 Bankruptcy10 years Seguin - Debt 2011

Former Celtics star Antoine Walker is broke and in debt. 7 Famous Millionaires who files Bankruptcy7 Famous Millionaires who files Bankruptcy. Seguin - Debt 2011

 There are many ways that the millionaire mind is different from the average persons. It is through this thought process that true greatness is achieved. For starters, quitting or complete failures are simply not options they entertain. Ask any millionaire what they would do should they go bankrupt, most will tell you it does not matter because they will be right back on top in no time at all. In fact, most if not, all millionaires have filed bankruptcy at least once in their adult lives.millionaires Seguin - Debt 2011

 What hope do we have for our future?  Demand better for yourself. Seguin - Debt 2011

 If a business or individual goes through bankruptcy successfully, many of their debts are legally discharged. Creditors no longer have any legal right to collect on those debts. However, the moral obligation to pay those debts remains. This might seem inconsequential -- if the law says the debt is forgiven, why would anyone pay it? There are certainly situations in individual bankruptcies where the moral obligation is important. If your parents loaned you money, you would probably feel a responsibility to pay them back, even if your parents "discharged" the debt. It can be even more important for business owners. If a business goes through Chapter 11, it would probably want to make some good faith payments toward debts if they ever wanted to use the same suppliers once the reorganization is complete. Seguin - Debt 2011

 MTV True Life: I'm in Debt MTV True Life: I'm in Debt  MTV True Life: I'm a Compulsive Shopper MTV True Life: I'm a Compulsive Shopper  MTV True Life: I Have Broke Parents MTV True Life: I Have Broke Parents Seguin - Debt 2011