1. Working With Credit PBL Presentation, 10/20/2004 By Rick Christoph

2. Second level What is Credit? Credit is a loan –You borrow $$! – Actually, you are buying money! Credit is not: – Prestige – Cool – Special

3. Second level Why do we have so much credit? We want it now! We want EVERYTHING now – No $$? No sweat – charge it. – Lets get that new car, TV, Clothes! What we are doing is to mortgage our future for today

4. Second level How much does it cost? Average household has $9,000 in debt! – Many have 0 – what do the others have?? Look at all the debt consolidation firms – Why are they around? – To make money from the suckers! – Take a look at this credit application Dont be a sucker!

5. Second level How long does it take to payoff? Take that $9,000– what would the minimum payment be? – Usually, 2.08% per month is the minimum – Assume a 21.9% interest rate.028 * 9,000 = 252 OK, how long to payoff WITH NO OTHER PURCHASES? – http://cgi.money.cnn.com/tools/debtplanner/debtpl anner.jsp http://cgi.money.cnn.com/tools/debtplanner/debtpl anner.jsp

6. Second level In Trouble? Get another card! The dumbest possible idea – How much does that cost you? – http://www.credit-card-applications-center.com/1/bad- credit-credit-cards.php http://www.credit-card-applications-center.com/1/bad- credit-credit-cards.php – How about a payday advance? – http://www.loan-till-payday.com/faqs.asp http://www.loan-till-payday.com/faqs.asp HOW MUCH IS THE FINANCE CHARGE? The Annual Percentage Rate (APR) on a typical 14 day loan is 782.14%, which is $30.00 per every $100.00 borrowed. You can also refinance your loan.

7. Second level How to use credit Know good vs. bad debt GOOD – items last longer than debt: – used for investment – Critical items you must have BAD – debt lasts longer than item – Buying a pizza (stuff that is gone before the bills arrive)

8. Second level INVEST in YOU Pay off the debt! http://money.cnn.com/pf/101/lessons/9/ Build a cushion – Cash to cover short term problems Invest in yourself http://cgi.money.cnn.com/tools/savingscalc/savingscalc. html http://cgi.money.cnn.com/tools/savingscalc/savingscalc. html

9. Second level WOW! It will take 25 years to pay off the 9,000 and you get to pay an extra 14,000 in interest. YOU PAY – $23,000 If you invest the $252 a month for 25 years – YOU GET $225,724.36 – Lets you know why firms like the credit card business!

10. Second level More WOW About Tax Deferred Investments -- Your 252 a month GETS YOU $282,522.73 Invest in 401K, 401a, 403b – How do these work? – Immediate tax savings and growth!

11. Second level How about cars? Cars are fun – and expensive – Average payment time > 64 months! What does upside down mean How do we get upside down – Trade too fast – No down payment – Fast depreciation Should you let it be repossessed? – http://money.cnn.com/2004/09/23/pf/debt/chatzky_intronew/index.htm http://money.cnn.com/2004/09/23/pf/debt/chatzky_intronew/index.htm

12. Second level What is a credit score Score developed by Fair Isaac & Co. Called a FICO score Used to determine how much you pay for credit cards, car loans, mortgages How is your score? – http://www.bankrate.com/brm/fico/calc.asp http://www.bankrate.com/brm/fico/calc.asp

13. Second level What is a mother to do? Live BELOW your means Use debt for investments that appreciate Be an owner – not a borrower Learn from others mistakes START early

14. Second level Great Websites http://www.bankrate.com/dls/rate/calc_home.asp http://www.stretcher.com/index.cfm http://www.schwab.com/ http://flagship.vanguard.com/VGApp/hnw/PersonalHome http://money.cnn.com/