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Personal Finance Education Overcoming Financial Hurdles


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

Personal Finance Education Overcoming Financial
  • 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

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.

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
  • Ways to Save Money
  • How to Create a Monthly Budget
  • B

Are You Spending Money Wisely?
  • When you go grocery shopping do you?
  • Create a list and stick to the items on that
  • 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?

Knowing the Basics 101
Checking Account Tips
  • Only write checks you know your account can
  • 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!

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.

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

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.

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

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

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

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

Credit is a Privilege Not a Right
  • Credit is easy to get, but people often misuse
  • 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

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

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
  • 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.

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
  • The average interest rate is 19
  • First time users usually have a higher interest

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.

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.

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
  • You may have trouble in the future getting
  • Car loans
  • Home loans
  • Other credit cards
  • Insurance
  • Employment

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

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 or (800) 685-1111
  • Experian or (888) 397-3742
  • Trans Union Corporation or
    (800) 888-4213

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.

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
  • 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

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.

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.

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.

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

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

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

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

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

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

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

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

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