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Personal Finance Education Overcoming Financial Hurdles

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Personal Finance Education. Overcoming ... Why Do We Need Personal Finance Education? ... Quiz Your Knowledge Of Personal Finance. (Multiple choice!) 31 ... – PowerPoint PPT presentation

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Title: Personal Finance Education Overcoming Financial Hurdles


1
Personal Finance Education Overcoming Financial
Hurdles
  • Sponsored by
  • ACA International
  • The Association of Credit
  • Collection Professionals
  • Material Provided by The American
  • Bankers Association, CBM Credit
  • Education Foundation, Efunds, Experian,
  • Federal Trade Commission, Minnesota
  • Bankers Association, U.S. Dept of Labor,
  • and the Illinois Student Assistance
  • Commission

2
Why Do We Need Personal Finance Education?
  • Nellie Mae reports that the percentage of
    students with credit cards rose from 67 in 1998
    to 78 in 2001.
  • The average college student carries a credit card
    debt of 2,748 (Nellie Mae)
  • According to the National Foundation for Credit
    Counseling, the number of Americans entering debt
    management programs has risen sharply over the
    last ten years.

3
Five Things Every High School Senior Should Know
Before Leaving Home
  • How to Balance a Checkbook
  • How to Read a Credit Report
  • The Difference Between a Credit Card and a Debit
    Card
  • Ways to Save Money
  • How to Create a Monthly Budget
  • B

4
Are You Spending Money Wisely?
  • When you go grocery shopping do you?
  • Create a list and stick to the items on that
    list?
  • Go down the aisles and grab what you like?
  • When eating out do you?
  • Split an appetizer, order the most reasonable
    entrée, drink water and skip dessert?
  • Order something from each menu item drinks,
    appetizer, entrée, etc?
  • When going out on the weekend do you?
  • Pick up the tab for your friends?
  • Split everything right down the middle?

5
Knowing the Basics 101
6
Checking Account Tips
  • Only write checks you know your account can
    cover.
  • Whenever you deposit money or withdraw money,
    write it down in the check register immediately.
  • Balance your checkbook on a monthly basis.
  • Triple check your work!
  • Report lost or stolen checks immediately!

7
ATM Card Safety Tips
  • Always keep your ATM card in a safe place.
  • Keep your PIN (password) a secret.
  • Beware of your surroundings.
  • Always take your receipt
  • Count it later.
  • Take a trusted person with you.

8
Debit Cards Frequently Asked Questions
  • What is a Debit Card? Debit cards look like
    credit cards or ATM cards, but operate like cash
    or a personal check.
  • What is the Difference Between a Debit Card a
    Credit Card? Debit means subtracting money from
    your savings or checking account to pay for
    products now, while credit cards are essentially
    borrowing money from a lender to pay for products
    later.

9
In 2001, debit cards accounted for 26 percent of
in-store transactions, compared with 21 for
credit cards. This marks the first time credit
cards have fallen behind debit cards - American
Bankers Association.
  • Tips on being a responsible debit card user
  • If you card is lost, stolen or suspected of being
    fraudulently used, report the loss immediately to
    your bank.
  • Hold on to all your debit card receipts.
  • Keep track of all debit card purchases.
  • Be aware of additional charges.

10
Yes, You Can Save Money!
  • Determine needs vs. wants
  • Brown bag your lunch
  • Use coupons
  • Rent textbooks from the library or purchase used
    textbooks
  • Participate in free community or school
    activities
  • Rent movies, instead of going to the theater.
  • Ask about student discounts
  • Take the bus or walk

11
Budgeting 101
  • An organized way of managing your income and
    expenses on a monthly basis.
  • A key tool in financial management.

12
Budgeting Guidelines
  • Keep it Flexible
  • Keep it Simple
  • Be Honest Realistic
  • Keep Accurate Records
  • Budget for the Unexpected
  • Pay Yourself First

13
Creating a Budget
  • Determine Your Monthly Income
  • Determine Your Expenses (living, auto, school,
    insurance, entertainment, etc.)
  • Add Up Total Monthly Expenses
  • Subtract Monthly Expenses from Income
  • Theres Your Balance

14
Credit is a Privilege Not a Right
  • Credit is easy to get, but people often misuse
    it.
  • Credit is not extra money or a monthly bonus.
  • Essentially, credit is borrowing money to make
    purchases with the promise that you will pay it
    back.

15
When Choosing Credit Cards
  • Get all terms and conditions in writing.
  • Understand pre-approved and low introductory
    offers
  • Check the cards policies on privacy
  • Shop around for the best deal

16
Read The Fine Print
  • All cards have a late fee.
  • Some late fees are as high as 35
  • The average late fee is 29
  • Finance charges apply for late payments
    exceeding monthly balances.
  • Most cards have a minimum finance charge of 50
    cents
  • Some cards have an annual fee, others do not.
  • The annual fee is charged to your card once a
    year whether you use the card or not.

17
The Truth About Credit Cards
  • The Annual Percentage Rate (APR) is a yearly
    measure of the cost of credit.
  • Some cards have an APR as high as 24
  • The majority of cards have an APR between 18 and
    21
  • The average interest rate is 19
  • First time users usually have a higher interest
    rate.

18
The Truth About Credit Cards
  • You might think that when you make a 1,000
    purchase and make the minimum payment (50), your
    next bill will have 950 left, but
  • If your APR is 18 you are charged a portion of
    that per month
  • 18/12 1.5
  • Take 1.5 of 950 14.25
  • You now owe 964.25 instead of 950
  • In other words, your original purchase of 1,000
    with interest charges turned into 1,014.25 in
    the first month.
  • Therefore, if you devoted 50 to the debt every
    month, it would take you 24 months to pay it off.

19
Credit Card Tips
  • Keep a record of your credit cards customer
    service number and Web site address in case your
    card is lost or stolen .
  • Create a monthly credit budget and stick to it.
  • Open and review your bill every month.
  • Save receipts from all credit card purchases.
  • Dont pay your bills late.
  • Dont apply for more cards than you can handle.
  • Pay off your credit card balance every month.

20
Credit Reports
  • Everyone starts life with a good credit rating.
  • When you are late with a payment, your credit
    rating is negatively affected.
  • A poor credit rating will affect you for several
    years.
  • You may have trouble in the future getting
  • Car loans
  • Home loans
  • Other credit cards
  • Insurance
  • Employment

21
Credit Reports
  • A credit report is a factual record regarding an
    individuals credit history. It is primarily used
    by credit grantors to determine whether or not to
    grant a person credit.
  • Individual credit reports consist of
  • Negative Credit Ratings
  • Positive Credit Ratings
  • Personal Information
  • Previous Credit History Requests
  • Personal Statements Made to Report

22
Frequently Asked Questions
  • How can I get a copy of my credit report?
  • For a small fee (around 9) you can request a
    copy of your credit report at anytime.
  • Under the Fair Credit Reporting Act credit
    reports are free under certain circumstances.
  • Credit reporting agencies can be found in your
    local yellow pages, or by contacting the three
    largest credit bureaus
  • Equifax, Inc www.equifax.com or (800) 685-1111
  • Experian www.experian.com or (888) 397-3742
  • Trans Union Corporation www.transunion.com or
    (800) 888-4213

23
Frequently Asked Questions
  • When Should I Request a Copy of My Report?
  • Before major purchases such as a home or new car
  • Before applying for employment
  • If you feel you are a victim of credit fraud
  • What Should I Do If I Find an Error?
  • Carefully re-examine your report from all three
    credit bureaus. If you have trouble understanding
    the reports contact them for assistance.
  • If you find an error call or write the credit
    bureau(s) to dispute any incorrect information.
  • If you continue to disagree, add a personal
    statement to your report.

24
Tips to Reduce Credit FraudIt is estimated that
2-3 billion of the more than 1 trillion U.S.
consumer credit card debt is due to credit card
fraud losses Experian
  • Never give your card number to unfamiliar
    companies or on-line sites without a security
    feature.
  • Dont leave receipts, statements or other account
    information lying out for everyone to see.
  • Be careful when disposing of mail order catalogs
    that include a customer number.
  • Shred all pre-approved credit card offers.
  • Sign your card as soon as you receive it.
  • Limit the number of credit cards you carry
  • Report a lost or stolen card or billing error
    immediately

25
How to Recover From a Stolen Wallet
  • Cancel all credit and bank cards.
  • Call the three largest credit reporting agencies.
  • File a police report
  • Make a list of items in your wallet.

26
Five Financial Danger Signs
  • Do you pay only the monthly minimum.
  • Do you miss payments.
  • Do you write checks your account cant cover.
  • Do you put everything on credit
  • Do you find it hard to save.

27
What Can I Do If I Cant Pay My Bills?
  • Realize you have a problem.
  • Stop using your credit cards.
  • Add up all your debt to determine your current
    financial situation.
  • Contact your creditors.

28
Dont Be Afraid to Scream for Help
  • Credit Counseling Services
  • This non-profit service provides financial
    counseling to consumers for free or a small
    charge.
  • They are neither charitable or lending
    institutions.
  • Beware of companies that offer to wipe clean your
    credit history.
  • To locate the service nearest you call (800)
    388-2227.

29
What To Do If Your Contacted By a Collector?
  • Dont panic
  • Dont get angry
  • Work with the collector
  • Listen
  • Be Honest

30
Quiz Your Knowledge Of Personal Finance.
  • (Multiple choice!)

31
Who Said, The income tax has made more liars out
of the American people than golf has?
  • A. Steve Forbes
  • B. Benjamin Franklin
  • C. Arnold Palmer
  • D. Will Rogers

32
The most bitter squabbles about money have
occurred over -
  • A. Failure to record ATM withdrawls
  • B. Deciding to do it yourself vs. hiring a
    professional
  • C. Filling out Tax Returns
  • D. All of the above

33
If you have a 2,000 balance at 18 on a credit
card and your minimum payment is 2 of the
balance, how long will it take to pay off this
debt making the minimum payments?
  • A. 3 years
  • B. 5 years
  • C. 10 years
  • D. 31 years

34
Same scenario - how much interest will you pay on
this credit card?
  • A. 360
  • B. 400
  • C. 2,931
  • D. 4,931

35
If you have a 50,000 home mortgage at 8 for 30
years and you paid an additional 100 per/ month,
how much interest could you save?
  • A. 10,000
  • B. 20,500
  • C. 44,131
  • D. 50,000

36
Where To Go For Additional Information?
  • ACA International
  • (952) 926-6547
  • www.collector.com
  • National Foundation for Credit Counseling
  • (800) 388-2227
  • www.nfcc.org
  • CBM Credit Education Foundation, Inc.
  • (608) 663-5000
  • www.cbmfoundation.org
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