1. CHALLENGING MINDS, CHANGING LIVES www.jsums.edu
FINANCIAL LITERACY
Debt Management
CHALLENGING MINDS, CHANGING LIVES

2. Why is Financial Literacy Important?
Americans owe more debt on their student loans than they do on their credit cards.
Americans spend more than they earn, the time to save is now.
Students who default on their student loans, damage their credit scores which negatively affects employment opportunities and lower loan rates.
To sustain financial well being of individuals and their families.
Enable individuals to make informed financial decisions and plan for unexpected financial hardships.
Learn how to build a budget that works for you, to ensure your goals and dreams are attainable.
Take control of your debt before it takes control of you!!!

3. Step 1: Create a Budget-Expenses
Financial Literacy 101
Step 1: Create a Budget-Expenses
What do you want vs. what do you really need? Start with your mandatory expenses on a monthly basis. Add them up.
Example:
My Monthly expenses are/will be:
Debt To University$_________
Rent $_________
Utilities $_________
Food $_________
Transportation $_________
(include: bus pass, fuel, insurance, payment)
6. Other Bills $_________
(include: credit cards, loans, cell phone, internet, etc…)
7. Other expenses $_________
(include: eating out, clothes, movie tickets, etc…)

4. Step 1: Create a Budget-Income
Financial Literacy 101
Step 1: Create a Budget-Income
Next you want to determine your monthly income.
Example:
My Monthly Income will be:
Wages/Salary $_________
Business Income $_________
CalWorks/TANF $_________
Food Stamps $_________
HUD (Housing Assistance) $_________
Social Security $_________
Disability $_________
Financial Aid $_________
Other $_________
TOTAL MONTHLY INCOME $__________

5. Step 2: Assess, Adjust and Make a Plan
Financial Literacy 101
Step 2: Assess, Adjust and Make a Plan
Next you want to subtract your total monthly expenses from your total income.
Example:
Total Monthly Income $________
Total Monthly Expenses $________
TOTAL SAVINGS $________
*If your expenses exceeds your income, prioritize your expenses and look for ways to cut back on spending*
The rule of thumb is that your expenses should not exceed your income and there should be at least 3 months living expenses in your savings.
Assess your income and expenses, make a plan and stick to it!!

6. Step 3: Start a Weekly Log of Flexible Expenses
Financial Literacy 101
Step 3: Start a Weekly Log of Flexible Expenses
Example:
My Weekly expenses are/will be:
Fuel $_________
Groceries $_________
Dining Out/Take-Out $_________
Clothing/Shopping $_________
Entertainment $_________
Other $_________
Total $_________
These are items that should be monitored and assessed to determine if over-spending is occurring.

7. Financial Literacy 101
Step 4: Create a Calendar of Fixed Expense Due Dates and Income Received
Monthly Fixed Expenses and Income
The 1st of Every Month –Rent ($350)
The 1st of Every Month Wages Pay Day
$600
The 1st of Every Month +Cal-Fresh $200
The 15th of Every Month Car Payment ($250)
The 15th of Every Month +Pay Day $600
The 19th of Every Month Credit Card Payment ($100)
The 29th of Every Month Student Loan Payment ($150)
This will ensure payments are made on their due date to protect your housing, food supply, transportation and line of credit.

8. Tips for Staying in the Clear:
Financial Literacy 101
Tips for Staying in the Clear:
Don’t over-borrow!
Balance your check book every time you write a check or use your debit card.
Avoid credit cards unless you plan on using them only in emergencies-they can pose as an invitation to over-spend.
Pay off smaller credit card debts first, then apply bigger payments to larger debts.
Never have more than 2 credit cards open at a time, make sure the amount owed is less than 30% of your credit line, and never miss a payment!!

9. SMART Spending Saves $$$
Financial Literacy 101
SMART Spending Saves $$$
Tips for SMART spending:
Buy discounted items
Shop with coupons
Enjoy low-cost entertainment
Buy used
Carpool
Avoid spending out of impulse

10. Financial Literacy 101 Why is Building GOOD Credit Important?
Graduate with no debt
Better job opportunities
More apartment/house choices
Open eligibility for lower interest rates on home, car, and other loans (cheaper in the long run!) and little to no money down at time of signing
Access to banking services and fast loan decisions

11. Financial Literacy 101 Quick Facts:
During the first half of 2013, more than $46 BILLION in new credit was issued to store branded cards.
PROS:
Upfront discount on purchase
Flexibility with major credit card companies (earn more rewards)
Help boost your credit
CONS:
High Interest Rate!
Limited Use
Credit Damage
Temptation to Spend!!
Better deals elsewhere…do you research and compare rates.

12. Financial Literacy 101 Credit Score Breakdowns : 600-649 (11%)
(Source: Percentage of U.S. Population scoring in each range using FICO model)
Superb (11%)
Excellent (29%)
(20%)
(16%)
(11%)
(7%)
(5%)
up to 499 (1%)

13. Financial Literacy 101 FICO Credit Score Influences in order:
Payment history
Amount owed
Length of credit history
New credit and type of credit used
Vantage Credit Score Influences in order:
1. Payment history (never miss a payment!)
2. Age and type of credit (diversify credit-auto, mortgage, cards)
3. Percent of credit limit used (stay under 30% of credit line)
4. Total balances/debt (reduce debt owed)
5. Recent credit behavior and inquiries (limit accounts opened)
6. Available credit (only open the amount of credit needed)

14. Financial Literacy 101 Tips for Building Good Credit:
Never miss a payment!!
Stay under 30% of your maximum credit line
The rule of thumb is to not have more than 2 credit cards open at a time
Responsible student loan management
Know your credit score and monitor it at least once a year

15. Financial Literacy 101 Check Your Credit Report for Free:
One free report from:
Equifax
TransUnion
Experian
You can request all three at once every year, or one from each every four months which is advised. More consistent monitoring of your credit will enable you to become aware of any identity theft activity and any errors that need disputing (79% of credit reports have errors!).

16. Financial Literacy 101
Final Thoughts:
Taking control of your finances instills empowerment and prepares you for a fiscally sound future.