1. Senior Transition Series: “Future Finance Help Center” Presented by: Rick Proctor March 5 th 2012, 7 PM Key Auditorium

2. Budgeting

3. Planning and Monitoring your income and expenses. Set up in an Excel Spreadsheet:

4. Establishing and Maintaining Your Credit

5. Advantages of having good credit: Able to borrow when you want/need Get the best interest rates on loans Get the best offers – car loans, credit cards **Potential employers may check your credit report Once established, you can keep it for life – just pay your bills on time.

6. How do you establish your initial credit? Open a checking and savings account in your name Get a credit card in your name – Use, pay off every month Pay all your bills on time: cell phone, utilities

7. Maintaining Good Credit Pay ALL bills on time Don’t max out your credit cards Monitor your credit history Get free credit report from www.annualcreditreport.comwww.annualcreditreport.com Get your FICO credit score (350-850, higher the better.) Most important factor – credit payment history (35%) Credit Utilization (% of total credit being used) (30%) **Open an account at a Credit Union (non-profit)

8. Choosing a credit card Rate (Annual Percentage Rate, APR) Annual Fee, if any Additional benefits – mileage points for airline tickets, 5% credit towards GM car (read fine print) Use creditcards.com to find cards w/ low rates, for students, for your credit situation.creditcards.com

9. Buying and Financing a Car

10. To find a good price: www.TrueCar.com, www.chug.comwww.TrueCar.com www.chug.com To compare cars: www.Edmunds.com, www.kbb.comwww.Edmunds.com www.kbb.com To find out the value of your trade-in: www.kbb.com www.kbb.com

11. Buying and Financing a Car : Before going to the dealer Determine monthly payment you can afford (Budget) Determine total amount willing to pay. Check on Financing Terms: Check w/ Credit Union, your bank before going to dealer (APRs, amount, terms). Dealer may not give you best rate Dealers make money on financing, options, extended warranties, your trade-in.

12. Leasing vs. Buying: Advantages Lower Down Payment, lower monthly payments Don’t have to find buyer at end of lease Drive a more expensive, newer car for same money

13. Leasing vs. Buying : Disadvantages No equity (ownership value) in car (you have after 2-3 years when buying) You are responsible for maintenance, excess mileage Must come up w/ a down payment every 3 years for new lease.

14. Leasing Terminology Capitalized Cost = Price of Car ***Negotiate price before even discussing leasing Consumer pays average of 92% of list price when buying, but 96% when leasing Money Factor = interest rate Residual Value = expected value at end of lease Higher the residual value, lower your lease payment Don’t Forget cost of car insurance!

15. Student Loans

16. Student Loans (Perkins, Stafford, etc.) Repayment begins 9 months after graduation Standard repayment term is 10 years Ex: $10,000 @ 6.8% - Monthly payment = $115 $40,000 @ 6.8% - Monthly payment $460 Income –based Repayment- IBR Payment is 15% of “Adjusted Gross Income $40,000 @ 6.8% - Monthly payment $297 Loan Payments: www.finaid.org/calculators/ibr.phtmlwww.finaid.org/calculators/ibr.phtml

17. Student Loans (continued) To apply for IBR: contact your loan servicer. If unable to make payments: Apply for Economic Hardship Deferment (3 year max) or Forbearance (5 year max) **Interest compounds (“accrues”) during time. **Interest is tax-deductible, up to $2500/year

18. Leasing an Apartment

19. National Websites: www.moversguide.com www.Apartments.com www.move.com

20. Leasing an Apartment: Moving In Landlord will check your credit report Read the lease before you sign it! Put in writing what will be fixed, painted before you move in. Your Security Deposit should earn interest – Ask!

21. Leasing an Apartment: Moving Out Take pictures of cleaned, empty apartment to document condition Go on walkthrough with manager to verify condition.

22. Insurance Needs

23. Insurance Insurance – to cover potentially expensive risks that you can’t afford to pay yourself You pay a certain, small amount (premium) instead of an uncertain, potentially large amount (the loss due to the risk) Insurance You Need: Renter’s Insurance

24. Renter’s Insurance covers: Personal Property Additional Living Expenses Personal Liability ***Landlord’s insurance doesn’t cover your property unless you can prove it was the landlord’s fault. Inexpensive: $150-250 per year

25. Auto Insurance Medical Coverage Bodily Injury Liability – Covers people in the other car Medical Payments – Covers people in your car, including you. Uninsured Motorist Coverage

26. Property Damage Property Damage – damage to other car, property (street sign, etc.) Coverage is expressed as “100/300/50” “100” Limit paid to any one person per accident “300” Limit paid to all persons per accident “50” Limit paid to all others’ property damage Good, Standard Coverage is 100/300/100

27. Coverage for your Car and Property “Collision” – Covers damage to your car due to an accident, regardless of fault “Comprehensive”– Covers damage due to other events – fire, vandalism, theft…

28. Buying Auto Insurance

29. Get quotes from several reputable companies Rates vary widely Consider: Do you want the convenience of a local agent, vs. online companies? Higher Deductibles – reduce premiums Older Car – may want to eliminate collision/comprehensive

30. Auto Insurance Rates depend on: Type of Vehicle Driving Record/accidents Place of Residence Annual Mileage Credit Report Age, sex, marital status

31. Health Insurance

32. ***Key: Make sure that you maintain coverage as you transition from college to the work world Parents’ policy will cover you until age 23 or no longer in college If need temporary health insurance, buy policy w/ high deductible, covers major medical/hospital expenses “Catastrophic health coverage”

33. Insurance You Don’t Need! Life Insurance – unless someone else depends on your income. Insurance when you take out a loan Credit Life Insurance, Credit Health Insurance Extended Warranties

34. Retirement Planning

35. www.smartmoney.com/retirement Responsibility of planning for your retirement falls on you! Social Security replaces less than 40% of average income Average SS benefit is $960/mo; $2400/mo max.

36. Employer-sponsored Plans Defined Benefit – “Pension” Employer pays you a fixed monthly retirement benefit based on average salary, time at job… Defined Contribution Firm will contribute a defined amount to plan. You are expected to contribute to the plan. Retirement benefit depends on how your investments in plan performed. Risk lies with you!

37. 401-K You contribute, employer may contribute Employers will match all/part of your contribution $ is invested in various investments: Stock, bond mutual funds Key Feature- contributions are tax-deferred $ grows tax-free, only taxed when withdrawn at retirement.

38. Choosing Investments: Must be willing to take risks Stocks for the long term; corporate bonds Be wary of investing in your company’s stock 403-B – Same type of plan for non-profits SEP – Simplified Employee Plan (1-10 employees) Keogh Plan- Self Employed

39. Individual Plans

40. IRA – Individual Retirement Account Contributions not taxed $ grows tax deferred Taxed when withdraw at retirement Set up through investment firms Vanguard – 60 mutual funds

41. Roth IRA Contributions are taxed Withdrawals are tax-free Benefit to younger workers, taxed at lower rate

42. Keys to successful Retirement Planning: Start saving, investing early Ex: If start saving at 35, need $1M by age 70. If earn 8%/year, need to save $5800/year. If began at 25, need to save $2500/year Take suitable level of risk Should be rewarded w/ higher returns over long term Can’t be too conservative Won’t accumulate enough to retire comfortably

43. Questions? Comments? Concerns?

44. * Information presented will be available on the senior class website, to be posted after the presentation * Sponsored by the Class of 2012 Council “Senior Transition Series” www.siena.edu/seniorclass www.siena.edu/seniorclass