1. $ tartNow A 10 hour Financial Literacy Programme for young people on the Youth Payment and Young Parent Payment Scheme Delivered by New Zealand Federation of Family Budgeting Services

2. Objectives Understand what credit is and what it costs? Understand the difference between good and bad debt Cautions around credit contracts

3. Objectives Understand the use of credit and debit cards How the Credit Contracts and Consumer Finance Act and the Consumers Guarantees Act can help you

4. Interest You borrow $100 at 10% interest per month. Paying it back at $10 per month.

5. Interest You borrow $100 at 10% interest per month. Paying it back at $10 per month. At the end of 10 months You have paid $100 But still owe $77.78

6. Interest You borrow $100 at 10% interest per month. Paying it back at $10 per month. At the end of 10 months You have paid $100 But only paid off $22.22 At this rate it will take you 26 months (2 years and 2 months) to pay off this debt and you will have paid a total of $260

7. Credit Cost

10. DEBT – When Debt is Good, Not So Good or Bad

11. Good:Things that increase in value after you have bought them. Borrow to buy an asset, save to pay for expenses. Borrow to buy an asset, save to pay for expenses.

12. DEBT – When Debt is Good, Not So Good or Bad Good:Things that increase in value after you have bought them. Not So Good: Things that decrease in value after you have bought them. Pay off debt as quickly as possible Pay off debt as quickly as possible Borrow to buy an asset, save to pay for expenses. Borrow to buy an asset, save to pay for expenses.

13. DEBT – When Debt is Good, Not So Good or Bad Good:Things that increase in value after you have bought them. Not So Good: Things that decrease in value after you have bought them. Bad: Things that have no value after you have bought them. Pay off debt as quickly as possible Pay off debt as quickly as possible Borrow to buy an asset, save to pay for expenses. Borrow to buy an asset, save to pay for expenses.

14. Credit Cards – Minimum payment 3% $2000 purchase Minimum payment $60 per month Interest at 20% Time to pay off between 4 years 2 months Total amount paid between $2,944 From the credit card calculator at www.sorted.org.nz

15. Credit Cards – Minimum payment 2% $2000 purchase Minimum payment $40 per month Interest at 20% Time to pay off between 9 years 1 month Total amount paid between $4,336 From the credit card calculator at www.sorted.org.nz

16. Credit Contacts and Consumer Finance Act Read and understand what you are signing. – Take it someone you trust if you don’t understand what you are signing Be aware that if you do sign then you have to pay. Be aware of the Fair Trading Act and what it means. – Refer to your workbook for a brief outline Be aware of the Consumers Credit Contracts Act and what that means

17. Wrap Up What is credit and what does it cost The difference between good and bad debt Credit cards and the alternatives How the law can protect you

18. Wrap Up Session 1: Choices and goals Session 2: Spending plans, costs of living Session 3: Banking and saving Session 4: Credit and debt & how the law can help you