3.  Credit  Equity

4.  Credit: the ability to borrow money in return for a promise of future repayment. Future repayment usually includes interest.

5.  Suppose you use credit to buy a jacket for $100. If the interest rate is 15% per year, you must repay $115 at the end of the year.  $100 X 0.15 = $15  $100 + $15 = $115  You are really giving up $115 worth of future spending for the ability to spend $100 now.

6.  Congratulations, you have just been approved for your first credit card.  Go to the link below:  http://www.channelone.com/life/swf_cr edit/ http://www.channelone.com/life/swf_cr edit/  Let’s compare each card to see what they offer, then we will go shopping!

7.  Credit can help you buy things you want sooner than you could get them by saving.  Never borrow more money than you can easily repay.  Borrowing for your Goals: 1. For your Education - with a 4 year degree, people on average will earn $30,000 more per year throughout their working career. Borrowing for education makes good financial sense. 2. For your Health - if you become ill you may have to borrow to pay your living expenses until you can earn your salary again. 3. For your Home

8.  Basic rule of thumb is that your total debt payments should be no more than 20%- 25% of your take home pay. (excluding housing costs) › For example if your net pay is $2,000 per month your total debt payments should be no more than $500. › $2,000 X 0.25 = $500

9.  Owning a home is a often a lifespan goal.  The average cost of a home is $245,000 and up to $450,000 in some areas.  Few people can pay for a home without borrowing.  By borrowing for a home, you get the benefit of living in it while you are making the loan payments.

10. 1. An investment - home values can increase over time which give you the opportunity to sell your home for more than you paid for it. 2. Equity - the difference between the amount you owe on a home and the home’s value. If you own a home worth $250,000 and your mortgage is $200,000, how much equity to you have in your home? $ 250,000 (value) -$200,000 (mortgage) = $50,000 (equity) 3. Tax benefits : property taxes & mortgage interest are deductible on income tax forms.