1. Making Your Money Work Where Are You Now?

2. Objectives Determine Credit Obligations Compare Income to Expenses Determine Net Worth

3. How Much Do I Owe? Credit Obligations Monthly repayments for all non-mortgage consumer debts, including home-equity credit-line loans. Also known as Consumer Debt. *Credit Obligations should not exceed 15%-20% of take-home pay.

4. How Much Do I Owe? Example #1: Take-Home Pay = $1,200/Month 15% = $180/Month ($1,200 x.15) 20% = $240/Month ($1,200 x.20) Example #2: Take-Home Pay = $2,000/Month 15% = $300/Month ($2,000 x.15) 20% = $400/Month ($2,000 x.20)

5. How Much Do I Owe? Consumer Debt-Service Ratio A formula to determine how much of your take-home pay goes toward repaying your debt each month. Formula: Consumer Debt (Monthly) Take-Home Pay (Monthly)

6. How Much Do I Owe? Example #1: Car Loan = $125 Credit Card = $ 50 Loan = $ 50 Consumer Debt = $225/Month Take-Home Pay = $1,200/Month Formula: $225/$1,200 = 18.75%

7. How Much Do I Owe? Example #2: Car Loan = $250 Credit Card = $150 Loan = $100 Consumer Debt= $550/Month Take-Home Pay= $2,000/Month Formula: $550/$2,000 = 27.5%* *Should be less than 20%.

8. Income and Expenses Cash Flow Money going into your pocket and out again. Regular Income Income that is received at regular times. Irregular Income Income that is not received at regular times.

9. Income and Expenses Fixed Expenses Expenses that basically stay the same each month. Flexible Expenses Expenses that change from month to month.

10. Regular Income Example Income Monthly Example #1 Family of 4 Example #2 Single Parent, 2 Children Your Take Home Pay$2,500$2,800 Partner’s Take Home Pay$2,500 Child Support/ Alimony$200 Unemployment Insurance TANF Pension Retirement Social Security Interest Dividends Other Total Income$5,000$3,000

11. Fixed Expenses Example Fixed Expenses Example #1 Family of 4 Example #2 Single Parent, 2 Children Rent/Mortgage$600$500 Life Insurance$20 Medical/Health Insurance$250$150 Vehicle Insurance$60 Disability Insurance$20 Household Insurance$20 Car Payments$300$150 Other Loan Payments$100 Savings$80 Emergency Savings$500$300 Other$50$20 Total Fixed Expenses$2,000$1,420

12. Flexible Expenses Example Flexible Expenses Example #1 Family of 4 Example #2 Single Parent, 2 Children Utilities$300$200 Credit Card Payments$200$100 Auto Upkeep$70 Food Costs$500$300 Clothing$80$40 Household Supplies$50 Medical/Dental$60$50 Recreation/Entertainment$60$40 Church Donation/Charity$50$25 Child Care$400 Education$100 Personal Allowances$50 Other$50 Total Flexible Expenses$1,970$1,475

13. Income and Expenses Example #1 Family of 4 Example #2 Single Parent, 2 Children Total Fixed Expenses$2,000$1,420 Total Flexible Expenses$1,970$1,475 TOTAL EXPENSES (Fixed + Flexible) $3,970$2,895 TOTAL INCOME$5,000$3,000 INCOME minus EXPENSES $1,030$105

14. Determining Net Worth Assets Any financial or material possessions that have monetary value. Liabilities Financial obligations or debts. Net Worth Total Assets – Total Liabilities

15. Net Worth Statement A net worth statement is the best indicator of your financial position at a particular point in time.

16. Summary Determined Credit Obligations. Compared Income to Expenses. Determined Net Worth.