budget • savings • templete (august 2010) ppt
TRANSCRIPT
ALLIANCE CREDIT COUNSELINGALLIANCE CREDIT COUNSELING
Ed Gilliam
Community Outreach
888-995-7856, ext. 385 • 704-943-0385
How to Establish Credit
and Live Within a Budget
Things That Could Happen If You Don’t?
Why is Establishing Good Credit Important?
Utilities
Car Loans
Apartments
Certain Jobs
Credit Cards
Student Loans
Personal Loans
How to Establish CreditObtain Employment
Establish a Checking & Savings Account
Make Regular Deposits
Balance Your Check Book Daily
Reconcile Your Bank Statement Monthly
Apply for a Single Credit Card and / or Signature Loan from The Bank
Repay Loan over 6 to 9 Months
Things Not To Do
Apply for:
Gas Cards
Store Cards
“High” Interest Credit Cards
Obtain Too Many Lines of Credit
How to Manage Credit
Pay Your Bills on Time
Keep Your Creditors Informed
Have Some Credit, but Not Too Much
No More Than ONE Credit Card
Get Free Credit Report at:
https://annualcreditreport.com
How to Manage Credit
Don’t “Max” Out Credit Cards
Maximum 80% or Below
Limit Your use of the Cards
Total Monthly Payments < 20% of Income
Pay Down or Pay Off
Ex. Net Monthly Income/5 = DTI Ratio
600 Net Monthly Income/5 = $120 on Debt Payments, Other Than Housing
Financially Stressed Consumers With Outstanding Debt Were Asked:
“Do you feel your health has been affected by your financial problems? If yes, please explain.
The average American spends $1.22 for every $1.00 they make!
That means if you make $30,000 a year, you’re spending $36,600!?
Nearly 70% of Americans with credit card debt only pay the minimum monthly amount
If they charge a $12.00 pizza, it could take over $100 after months of payments
33% of Americans did not understand that prospective employers may pull their credit report
Most do not truly understand how a credit report/score can affect their lives
The average American adult receives a failing grade for their knowledge of basic economic concepts!
They don’t understand how to properly budget, save, or invest
Bottom Line? You can’t afford to be average!!You can’t afford to be average!!Source: Financial Literacy and Education Commission – Jan 07; National Council on Economic Education
America’s Financial Culture*America’s Financial Culture*
CEO
Real Stories
Farmer
Chemical Engineer
Professional Football Player
Professional Baseball Scout
$
A Sum of Money Allocated for a Particular Purpose (Spending Plan)
What is a Budget?
Telling Your Money What to Do Instead of Wondering What Happened to It
Not a Straight Jacket
To Meet Your Present Obligations
Why Set Up A Budget?
Not Having to Call Mom or Dad
Not Over Extend Yourself
Prepare For The Future
Reduce Stress
Save Money
Time
Obstacles In Budget Setting
Money
Planning
Confusion
Commitment
Procrastination
Better Spending & Saving Habits
Benefits of a Budget
Enough Money to Cover All the Daily Expenses
Lets You Feel You Are in Control of Your Financial Situation
Allows You to Enjoy Your Time in College without stressing over money
Housing (Rent or Dorms)
Food (Eat in More Than Eat Out!)
Utilities (Power, Water-NOT Both Cell & Land Phone!)
Clothing (Not Designer Brands!)
Transportation (Insurance Also)
Social Life
Budget Needs
Answer the Following Questions:
Guidelines For Setting Up A Budget
Save More
Spend Less
Make It Happen
Allocate Each Dollar for Something Appropriate toYour Needs
Budgets Change As Time Goes by
Alliance Credit Counseling
SAMPLE DEBT MANAGEMENT PROGRAMSAMPLE DEBT MANAGEMENT PROGRAM
Name of Creditors Open Bal. Old Pay New Pay Current % Interest
Program % Interest
Bank One, Delaware $3,537.29 $85.00 $82.00 20.75 6.00Fleet Credit Card Services $7,136.91 $145.00 $158.00 16.10 9.90Direct Merchants Credit Card $6,795.72 $145.00 $150.00 20.75 5.90Bank of America $3,085.06 $85.00 $68.00 24.99 9.90
Total of 4 Accounts: $20,554.98 $460.00 $458.00
Due Date: Jan. 10, 2005 Self Program
Suggested Monthly Donation: $45.00 # Payments: 478 53Suggested Enrollment Donation: $50.00 Years to Pay: 39.8 4.4
Total Interest: $38,962.00 $3,912.00
Interest Savings: $35,050.00
Alliance Credit CounselingSAMPLE DEBT MANAGEMENT PROGRAMSAMPLE DEBT MANAGEMENT PROGRAM
Name of Creditors Open Bal. Old Pay New Pay Current % Interest
Program % Interest
Citibank Bankcard $31,863.06 $663.00 $733.00 14.90 9.90Greenwood Trust Company $15,072.82 $321.00 $302.00 19.24 17.00MBNA America $28,666.63 $501.00 $645.00 18.99 15.00MBNA America $54,150.04 $306.00 $1,219.00 6.75 15.00MBNA America $20,011.23 $369.00 $451.00 21.99 15.00MBNA America $6,860.76 $150.00 $155.00 22.99 15.00RMA/America Express $20,377.41 $408.00 $428.00 13.50 0.00
Total of 7 Accounts: $177,001.95 $2,718.00 $3,933.00
Due Date: Jan. 24, 2005 Self Program
Suggested Monthly Donation: $45.00 # Payments: 489 62Suggested Enrollment Donation: $75.00 Years to Pay: 40.7 5.1
Total Interest: $162,894.00 $68,385.00
Interest Savings: $94,509.00
Time Value of MoneySave $1.67/day, $50/mo, $600/year
Age
Invest
Value
20 $600
$630
21 $600
$1,292
22 $600
$1,986
23 $600
$2,715
24 $600
$3,481
25 $600
$4,285
26 $600
$5,129
27 $600
$6,016
28 $600
$6,947
29 $600
$7,924
65 $6,000
$45,895
Based on earning a 5% return
Age
Invest
Value
20 $600
$660
21 $600
$1,386
22 $600
$2,185
23 $600
$3,063
24 $600
$4,029
25 $600
$5,092
26 $600
$6,262
27 $600
$7,548
28 $600
$8,962
29 $600
$10,519
65 $6,000
$325,161
Based on earning a 10% return
Time Value of Money
Age Invest
Value
18 $3,0
00.00
$3,300
19 $3,0
00.00
$6,930
20 $3,0
00.00
$10,923
21 $3,0
00.00
$15,315
22 $3,0
00.00
$20,147
65 $1,213,646
Based on earning a 10% return
Age
Invest
Value
18 $3,000.0
0
$3,150
19 $3,000.0
0
$6,458
20 $3,000.0
0
$9,930
21 $3,000.0
0
$13,577
22 $3,000.0
0
$17,406
65 $141,851
Based on earning a 5% return
23
Time Value of Money
Age Invest
Value
18 $2,000
$2,200
19 $2,000
$4,620
20 $2,000
$7,882
21 $2,000
$10,210
22 $2,000
$13,431
65 $10,000
$809,098
Based on earning a 10% return
Age Invest
Value
18 $2,000
$2,100
19 $2,000
$4,305
20 $2,000
$6,620
21 $2,000
$9,051
22 $2,000
$11,604
65 $10,000
$94,567
Based on earning a 5% return
24
Age Invest
Value
18 $1,200
$1,320
19 $1,200
$2,772
20 $1,200
$4,369
21 $1,200
$6,126
22 $1,200
$8,059
65 $6,000
$441,326
Based on earning a 10% return
Age Invest
Value
18 $1,200
$1,260
19 $1,200
$2,583
20 $1,200
$3,972
21 $1,200
$5,431
22 $1,200
$6,962
65 $6,000
$54,038
Based on earning a 5% return
Time Value of Money
Doubling Your Money Every Day
Day Amount
1 $0.01
2 $0.02
3 $0.04
4 $0.08
5 $0.16
6 $0.32
7 $0.64
8 $1.28
9 $2.56
10 $5.12
11 $10.24
12 $20.48
13 $40.96
14 $81.92
15 $163.84
Day Amount
16 $327.68
17 $655.36
18 $1,310.72
19 $2,621.44
20 $5,242.88
21 $10,485.76
22 $20,971.52
23 $41,943.04
24 $83,866.08
25 $167,772.16
26 $335,544.32
27 $671,088.64
28 $1,342,177.28
29 $2,684,354.56
30 $5,368,709.12
The Effect of Compound Interest
Start at age: 20 30 40 50 60
At age 30 you will have $31,874.00
At age 40 you will have $114,549.00 $31,874.00
At age 50 you will have $328,988.00 $114,549.00 $31,874.00
At age 60 you will have $885,185.00 $328,988.00 $114,549.00 $31,874.00
At age 70 you will have $2,327,817.00 $885,185.00 $328,988.00 $114,549.00 $31,874.00
This assumes a 10% rate of return on your investment
Save Per Year: $2,000.00
Save Per Month: $166.67
Save Per Day: $5.48
SAVE $2,000.00 PER YEAR STARTING AT AGE __________
The Effect of Compound Interest
% Rate of Return: 8 Save Per Year: $1,200.00
Annual Contribution: $1,200.00 Save Per Month: $100.00
Save Per Day: $3.29
Start at age: 20 30 40 50 60
At age 30 you will have: $17,383.87 $0.00 $0.00 $0.00 $0.00
At age 40 you will have: $54,914.36 $17,383.87 $0.00 $0.00 $0.00
At age 50 you will have: $135,939.85 $54,914.36 $17,383.87 $0.00 $0.00
At age 60 you will have: $310,867.82 $135,939.85 $54,914.36 $17,383.87 $0.00
At age 70 you will have: $688,524.19 $310,867.82 $135,939.85 $54,914.36 $17,383.87
Years Amount Invested
10 $12,000.00
20 $24,000.00
30 $36,000.00
40 $48,000.00
50 $60,000.00
COMPOUND INTEREST SAVINGS
Getting The Best Interest RatePurchase Price $10,000.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00
Downpayment $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00
Amount Financed $8,000.00 $8,000.00 $8,000.00 $8,000.00 $8,000.00
Interest Rate 6.00% 10% 14% 18% 22%
Loan Term (months) 36 36 36 36 36
Monthly Payment $243.00 $258.14 $273.42 $289.22 $305.52
Total Finance Charges $761.68 $1,293.04 $1,843.12 $2,411.92 $2,998.72
Excellent Finance Calculators
http://www.nolo.comhttp://www.dinkytown.nethttp://www.bankrate.com
Get Your Free Credit Report: http://annualcreditreport.com
The Effects of Compound Interest
And
Money Trivia Questions
Money Trivia Questions
3. What percent of American working families now earn wages so low that they have difficulty surviving financially?
1. On average, how much are Americans savings?-1.67% in 2004
-0.5% in 2005
-1.0% in 2006-20092. What is the total average credit card debt, eliminating house mortgage and auto load payment, per household in America? $12,000.00
25%
4. What % of Americans spends more money than they make? 40%
5. What % of consumers pay their utility bills late each month?40%
6. What is the best web site to get your credit report and score?
www.annualcreditreport.com
Money Trivia Questions
9. What % of eligible workers does not contribute ANYTHING into a 401(k) plan?
7. What are the three organization that provide a free credit report annually?
Equlfax, Experian,TransUnion8. What % of employees has financial problems severe enough to affect productivity in the workplace, and spend 20 hours per month of work time on personal financial problems?
20%
33%
10. What % of consumers lives from paycheck to paycheck with little or no savings?
98 Months11. How long will it take you to pay off a $1,000.00 balance, with 18% interest, if you make the minimum payments of $15.00 a month?
12. How long can delinquent bills or bankruptcy stay on your credit report? 7 Years
70%
Money Trivia Questions
15. If a bank repossesses your car and sells it, you may still owe them money. True or False
13. State some examples of good debt ?Student Loans, House
14. Angry creditors can harass you and tell your boss if you owe them money. True or False False
True
16. Bankruptcy wipe out debts such as student loans and child support? True or False
17. Credit Bureaus determine if you have good credit ratings. True or False False
False
Alliance Credit Counseling
Non-Profit Charitable Organization
Established in 2000
Assisted more than 170,000
Member of the Better Business Bureau
Charlotte, North Carolina
Monday-Thursday 9am-9pm
Friday 9am-8pm
Alliance Credit Counseling
Saturday 9am-5pm
704-341-1010
1-888-995-7856
Alliance Credit Counseling
Interactive Calculators
Free Educational Information
WWW.KNOWDEBT.ORG
Links to Other Helpful Websites
Budget Information
Our Mission:Our Mission:
Provide help and hope through charitable relief to the poor and distressed by personalized education, counseling, and support programs that reduce and avoid the burdens of financial crisis, debt stress, bankruptcy, and their consequences.
Provide empowerment to the public through charitable education programs of financial literacy, money management, credit management, and debt reduction to help meet life's challenges and opportunities.
Provide help and hope through charitable relief to the poor and distressed by personalized education, counseling, and support programs that reduce and avoid the burdens of financial crisis, debt stress, bankruptcy, and their consequences.
Provide empowerment to the public through charitable education programs of financial literacy, money management, credit management, and debt reduction to help meet life's challenges and opportunities.