1. YOUR FINANCIAL FUTURE DEPENDS ON YOU! Personal Finance

2. Budgets Do you have a budget? Why should you have a budget if you don’t? After considering what you spend money on, where can you cut so that you can save that money? How can a budget help you achieve your financial goals?? Short term and long term?

3. What is the top two ways to become a millionaire ? Education Pay yourself first!!  10% of your paycheck – GROSS not NET

4. Ways to save at a bank Regular savings $10 to start Linked to checking for protection Very liquid = low interest rates Money market $2,500 to start Only three transactions a month Linked to checking Less liquid = higher interest rate Certificate of Deposit Any amount and any amount of time Less liquid = more interest (more than the other two) Can not withdraw without penalty until the CD matures

5. Credit cards….good or EVIL??? Good way to build credit Credit cards do go on your credit report When shopping for a credit card, look for  APR – Annual percentage rate  Introductory rates  Late fees  Any perks of the card

6. Good things about credit cards It builds credit – proof of financial maturity It allows you to buy now It is better for booking or securing a flight, room, or deposit It is good to have for an emergency You do not pay interest unless you can not pay off your card (balance) at the end of the month. If used wisely, you can be debt free, but get the benefits of the card perks, like sky miles.

7. Bad things about credit cards Compound interest  Debt Hurts your credit if you do not pay the minimum on time. It can sometimes influence you to buy items that you may not need.

8. How do you know if you are in credit card trouble? You are worrying about how to pay your bills Are can only pay the minimum payment You are late making payments You use credit for food or gas, when you always paid cash for those items before THE KEY – keep track of what you spend and make smart choices.

9. Pay more than the minimum Look at the example as to why you should pay more than the minimum payment every month Balance $1,000 interest rate per yr = 10% Paying on the minimum paying 10% of the balance Payment $ 20$100 Amount applied $11.67$91.67 to principal Interest pd$8.33$8.33 Total time to pay5.4 years11 months Total cost to borrow $300$48 *Pay at the least the minimum b/c it will get reported on your credit report if you are late.

10. Compound vs. Simple Interest Compound interest Pays on the principle and the accrued interest from the previous month. it is the contributor to debt by credit cards it is great for saving money credit cards are the only ones that really use this interest rate Simple interest a rate that is applied to only the principle principle x rate x time (PRT) $10, 000 x 5% x 10 years = $5,000 interest $10,000 + $5,000 = $15, 000 Loans for cars and homes use this interest rate

11. Compound example Example of compound interest with an interest rate of 5% on a savings account of $1,000 Principal4 calculatinginterestbalance  1,0001,000501,050  1,05052.501,102.50  1,102.5055.131,157.63  1,157.6357.881,215,57

12. Credit Report Created by credit bureaus A credit report is a report card of your credit It tells potential creditors how responsible you are with credit and the likelihood that you will pay back a loan. It determines your interest rates on loans Determine the score using: character (history), collateral (assets), and capacity (job/earning potential).

13. Credit Scores 750-850 – Excellent 720-750 – Good-Excellent 690-720 – Good 620-690 – Fair 300-619 – Poor

14. Factors that make up your score These are essentially five categories of information that comprises your credit score.  Payment History – 35%  Amounts Owed - 30%  Age of Accounts - 15%  Inquiries - 10%  Types of Credit In Use - 10% * Cosigning does get reported on your credit report and makes you just as liable as the person you signed for! Maybe more liable!

15. What’s not in a score Age Race Salary or occupation Interest rates on previous accounts Child support or rental obligations Where you live Martial status

16. How long can the bad stuff last? Most “bad” items on a credit report can stay on it for 7 years.  Ex. Of something bad might be: late payments, bankruptcy, foreclosures, or collections. Unpaid taxes are usually seven years, but those can stay on your report INDEFINITELY

17. Examples of benefits of good credit FICO scoreratepayment  720-8505.6%$861  700-7195.72%$873  675-6996.26%$924  620-6747.41%$1,039  560-6198.53%$1,157  500-5599.29%$1,238  This is a $150,000 mortgage on a 30 year fixed loan. What do you want to pay monthly for THIRTY years?

18. Cost/Benefits of credit Costs – finance charges, late fees, costs may be higher for the item, danger of identity theft Benefits – get the item now, get to take advantage of sales, easy to pay and keep track of spending, safer than cash

19. PAYDAY LOANS STORE CARDS TITLE PAWN LOANS Loans to stay away from..

20. Types of Insurance Health – doctor, specialist, emergency room visits Life – death Car – protects you if you hit someone or if someone hits you (liability vs. full coverage) Gap insurance – covers negative equity in the car if the car is totaled Disability – coverage if you become disabled or unable to work – about 60% of your income Homeowners – protects your home against fire, burglary, natural disaster Renters – protects your property if you rent

21. Fed and Fiscal Policy on your budget! If the Government (Fiscal Policy) raises taxes, this could effect your paycheck and your budget. This will lower the amount of money that you have to pay bills, live on, and save. This could also affect your tax returns in April causing you to possibly have to pay the government instead of gaining a return.  Gross Income – money earned BEFORE taxes are taken  Net Income – money that is on your paycheck – taxes have already been taken out. If the Fed increases or lowers rates, this will affect your accounts and loans that you are considering – maybe a new house (a mortgage). It will not affect loans that you already have.

22. Fed and FP on your budget - Continued If the Fed increases or lowers rates, this will affect your accounts and loans that you are considering – maybe a new house (a mortgage). It will not affect loans that you already have.

23. Types of taxes that come out of your income State income tax – money paid to the state based on your income to fund state programs. Federal Income tax – money paid to the Federal government based on your income to fund Federal programs Sales Tax – tax paid on the purchase of good/services at places like Walmart. Property tax – tax paid on your property – ex. House Tag Tax – tax paid on your car – due on your birthday