1. © 2011 Pearson Education, Inc. All rights reserved. Chapter Eleven: Prosper Cornerstone: Creating Success through Positive Change 6 th edition Robert M. Sherfield & Patricia G. Moody This multimedia product and its contents are protected under copyright law. The following are prohibited by law: any public performance or display including transmission of any image over a network; preparation of any derivative work, including the extraction, in whole or in part, of any images; any rental, lease, or lending of the program.

2. © 2011 Pearson Education, Inc. All rights reserved. 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?

3. © 2011 Pearson Education, Inc. All rights reserved. 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 $4,000 24 - 40% of income is spent on debt payments Bankruptcy is a major issue for young adults

4. © 2011 Pearson Education, Inc. All rights reserved. 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

5. © 2011 Pearson Education, Inc. All rights reserved. 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

6. © 2011 Pearson Education, Inc. All rights reserved. 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?

7. © 2011 Pearson Education, Inc. All rights reserved. Some 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

8. © 2011 Pearson Education, Inc. All rights reserved. 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

9. © 2011 Pearson Education, Inc. All rights reserved. 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

10. © 2011 Pearson Education, Inc. All rights reserved. How Can you Budget in each Area? Household expenditures? Utilities? Phone/email costs? Transportation costs? Food?

11. © 2011 Pearson Education, Inc. All rights reserved. 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?

12. © 2011 Pearson Education, Inc. All rights reserved. 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

13. © 2011 Pearson Education, Inc. All rights reserved. Personal Loan Pitfalls Watch out for high-interest: Payday loans Car title loans Rent-to-own contracts Worse than credit card debt –read carefully!

14. © 2011 Pearson Education, Inc. All rights reserved. Watch Small Item Money Drain Gum? Bottled water? Eating out daily? Junk food/vending machines? Unused memberships? Expensive salon visits/treatments? Cigarettes?

15. © 2011 Pearson Education, Inc. All rights reserved. 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

16. © 2011 Pearson Education, Inc. All rights reserved. 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

17. © 2011 Pearson Education, Inc. All rights reserved. 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 your child wants what other kids have? Your credit cards are lost and stolen?

18. © 2011 Pearson Education, Inc. All rights reserved. Chapter 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