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DEbt

DEbt. Setting Limits on Credit. Just 50% of Americans believe in the American dream, - you’ll get ahead by working hard. 43% say that the dream was once true, but no longer is . Source: The Week. Ha. “ATM does not mean all the money, Loretta.”. Who cares about your debt?.

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DEbt

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  1. DEbt Setting Limits on Credit Just 50% of Americans believe in the American dream, - you’ll get ahead by working hard. 43% say that the dream was once true, but no longer is. Source: The Week Seguin - Debt 2011

  2. Ha. “ATM does not mean all the money, Loretta.” Seguin - Debt 2011

  3. Who cares about your debt? • You • Employers • Credit reporting agencies • Get one report from each company FREE every year: www.AnnualCreditReport.com Seguin - Debt 2011

  4. Credit score • A FICO (Fair Isaac Company) score is an evaluation of a person’s ability to repay debt • It is a number between 300 and 850 • A higher number is a better credit score • Indicator of a person’s ability to pay back a loan • A lower score may increase the interest rates a consumer pays or they may not receive credit • The creditor has a greater risk that the individual may not pay back the money they loaned Seguin - Debt 2011

  5. Why does is matter? • Low credit scores will cost individuals more money long-term. • This table is based upon a thirty-year fixed mortgage rate on a $300,000 loan. Seguin - Debt 2011

  6. Credit score calculation Credit cards may influence each component of how an individual’s credit score is calculated. Seguin - Debt 2011

  7. What else do they track? • Identifying information • SS#, address, birthday • Credit history • Account record with creditors • Inquiries • Who has requested a report? • Public record information • Collections, bankruptcies, late child support Seguin - Debt 2011

  8. What is NOT included? • Checking and savings account balances • Income • Medical history • Purchases made with cash or check • Race, gender, religion or national origin • Driving record Seguin - Debt 2011

  9. Ways to improve credit score • Pay bills on time • Keep balances low • Apply for new accounts only when necessary • Check credit reports for accuracy Seguin - Debt 2011

  10. Credit card tips Seguin - Debt 2011

  11. Before you sign the dotted line Seguin - Debt 2011

  12. How much can you afford? ***Home loans not included*** • 20-10 Rule • 20% • Never borrow more than 20% of your yearly income (after taxes) • 10% • Monthly payments shouldn’t exceed 10% of monthly income • Ex: If you make $50 per month • $50 x 12 months = $600 per year • $600 x 20% = $120 -- max debt • Ex: If you make $50,000 per year • $50,000 x 20% = $10,000 -- max debt • Ex: If you make $50,000 per year • $50,000 / 12 = $4,167 per month • $4167 x 10% = $417 – max debt payments • Ex: If you make $2,000 per year • $2,000 / 12 = $167 per month • $167 x 10% = $17 – max debt payments Seguin - Debt 2011

  13. Getting out of debt Seguin - Debt 2011

  14. A plan to get out of debt 4 1 5 2 3 Reminder: Seguin - Debt 2011

  15. Bankruptcy Chapter 11: Business bankruptcy Seguin - Debt 2011

  16. Negative Info Seguin - Debt 2011

  17. Bankruptcy in our world Former Celtics star Antoine Walker is broke and in debt. 7 Famous Millionaires who files Bankruptcy. Seguin - Debt 2011

  18. Millionaires file BK? • There are many ways that the millionaire mind is different from the average persons. It is through this thought process that true greatness is achieved. For starters, quitting or complete failures are simply not options they entertain.Ask any millionaire what they would do should they go bankrupt, most will tell you it does not matter because they will be right back on top in no time at all. In fact, most if not, all millionaires have filed bankruptcy at least once in their adult lives. Seguin - Debt 2011

  19. Is BK a good choice? • What hope do we have for our future? • Demand better for yourself. Seguin - Debt 2011

  20. Moral obligation • If a business or individual goes through bankruptcy successfully, many of their debts are legally discharged. Creditors no longer have any legal right to collect on those debts. However, the moral obligation to pay those debts remains. This might seem inconsequential -- if the law says the debt is forgiven, why would anyone pay it?There are certainly situations in individual bankruptcies where the moral obligation is important. If your parents loaned you money, you would probably feel a responsibility to pay them back, even if your parents "discharged" the debt. It can be even more important for business owners. If a business goes through Chapter 11, it would probably want to make some good faith payments toward debts if they ever wanted to use the same suppliers once the reorganization is complete. Seguin - Debt 2011

  21. MTV True Life: I'm in Debt • MTV True Life: I'm a Compulsive Shopper • MTV True Life: I Have Broke Parents Seguin - Debt 2011

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