1 / 14

Working With Credit

Working With Credit. PBL Presentation, 10/20/2004 By Rick Christoph. What is Credit?. Credit is a loan –You borrow $$! Actually, you are buying money! Credit is not: Prestige Cool Special. Why do we have so much credit?. We want it now! We want EVERYTHING now

ankti
Download Presentation

Working With Credit

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Working With Credit PBL Presentation, 10/20/2004 By Rick Christoph

  2. What is Credit? • Credit is a loan –You borrow $$! • Actually, you are buying money! • Credit is not: • Prestige • Cool • Special

  3. Why do we have so much credit? • We want it now! • We want EVERYTHING now • No $$? No sweat – charge it. • Let’s get that new car, TV, Clothes! • What we are doing is to mortgage our future for today

  4. How much does it cost? • Average household has $9,000 in debt! • Many have 0 – what do the others have?? • Look at all the debt consolidation firms • Why are they around? • To make money from the suckers! • Take a look at this credit application • Don’t be a sucker!

  5. How long does it take to payoff? • Take that $9,000– what would the minimum payment be? • Usually, 2.08% per month is the minimum • Assume a 21.9% interest rate • .028 * 9,000 = 252 OK, how long to payoff WITH NO OTHER PURCHASES? • http://cgi.money.cnn.com/tools/debtplanner/debtplanner.jsp

  6. In Trouble? Get another card! • The dumbest possible idea • How much does that cost you? • http://www.credit-card-applications-center.com/1/bad-credit-credit-cards.php • How about a payday advance? • http://www.loan-till-payday.com/faqs.asp • HOW MUCH IS THE FINANCE CHARGE?The Annual Percentage Rate (APR) on a typical 14 day loan is 782.14%, which is $30.00 per every $100.00 borrowed. You can also refinance your loan.

  7. How to use credit • Know good vs. bad debt • GOOD – items last longer than debt: • used for investment • Critical items you must have • BAD – debt lasts longer than item • Buying a pizza (stuff that is gone before the bills arrive)

  8. INVEST in YOU • Pay off the debt! • http://money.cnn.com/pf/101/lessons/9/ • Build a cushion • Cash to cover short term problems • Invest in yourself • http://cgi.money.cnn.com/tools/savingscalc/savingscalc.html

  9. WOW! • It will take 25 years to pay off the 9,000 and you get to pay an extra 14,000 in interest. • YOU PAY – $23,000 • If you invest the $252 a month for 25 years – • YOU GET $225,724.36 • Let’s you know why firms like the credit card business!

  10. More WOW • About Tax Deferred Investments -- Your 252 a month • GETS YOU $282,522.73 • Invest in 401K, 401a, 403b • How do these work? • Immediate tax savings and growth!

  11. How about cars? • Cars are fun – and expensive • Average payment time > 64 months! • What does “upside down mean” • How do we get upside down • Trade too fast • No down payment • Fast depreciation • Should you let it be repossessed? • http://money.cnn.com/2004/09/23/pf/debt/chatzky_intronew/index.htm

  12. What is a “credit score” • Score developed by Fair Isaac & Co. • Called a FICO score • Used to determine how much you pay for credit cards, car loans, mortgages • How is your score? • http://www.bankrate.com/brm/fico/calc.asp

  13. What is a mother to do? • Live BELOW your means • Use debt for investments that appreciate • Be an owner – not a borrower • Learn from other’s mistakes • START early

  14. GreatWebsites • http://www.bankrate.com/dls/rate/calc_home.asp • http://www.stretcher.com/index.cfm • http://www.schwab.com/ • http://flagship.vanguard.com/VGApp/hnw/PersonalHome • http://money.cnn.com/

More Related