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Lifetime Money Skills

Lifetime Money Skills. Jean Austin & Crystal Terhune Family and Consumer Science Educators. University of Maryland Cooperative Extension. Emergency Fund. Goals. Budget. Life. Health. Credit Record. Financial Plan. Insurance. Property. Financial Statements. Financial Records.

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Lifetime Money Skills

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  1. LifetimeMoney Skills

  2. Jean Austin & Crystal Terhune Family and Consumer Science Educators University of Maryland Cooperative Extension

  3. Emergency Fund Goals Budget Life Health Credit Record Financial Plan Insurance Property Financial Statements Financial Records Disability Liability Financial Foundation

  4. Basic Financial Advice for Job Loss Involve your family in developing a money management plan Make an assumption about how long you will be out of work : 6 months, 12 months, etc. Consider your financial options as early in the process as possible

  5. status success freedom independence trust envy desire jealousy security comfort power control self-esteem What does money mean to you?

  6. $ Lifetime Money Skill #1 Identify Needs and Wants

  7. Needs and Wants • Stylish summer clothes • Cell phone • Weekend in Ocean City • Hamburgers and beans • Cable TV • Manicure • Phone service • Medication

  8. $ Lifetime Money Skill #2 MANAGING DEBT

  9. Collateral – property that a creditor can take, if you don’t pay a particular debt Secured Debt – collateral *Mortgage, car, equipment Unsecured Debt – no collateral *Credit and charge cards, legal or medical bills, gas cards, department stores Understand the Debt You Have

  10. What to Pay First • Family necessities • Housing – mortgage or rent • Essential utility service • Car loan or lease payment • Child support • Cosigned loans, if you have collateral at risk

  11. Who Gets Paid Next? • Taxes –federal, state and local • Unsecured debt is the last priority • Negotiate a payment plan based on all unsecured debt

  12. $ Lifetime Money Skill #3 Make a Budget

  13. The “B-Word!” • Income • All sources • Expenses • Fixed–--Flexible--- Periodic • Track Expenses • Look for leaks! WRITE IT DOWN!

  14. How does money “slip through your fingers”? Try to identify the leaks!

  15. Make Your Spending Plan Useful A spending plan or budget is… $ Your spending guide $ Personal and unique $ Realistic $ Flexible

  16. Use 70% of take-home pay for living expenses. Use 20% to repay debt. Save 10% for you and your future. Important Reminder Example: Total monthly take home pay = $1000 Living expenses (Rent + bills + food + clothes, etc.) = $700 700/1000 = .7 = 70%

  17. $ Lifetime Money Skill #4 Explore All Resources

  18. Possible Resources • Career Centers: • Area salary/wage rates • Resume writing • Job skills/training • Interviews/ job connections Public Libraries: • Local resource bank • Local & out-of-town phonebooks • Computers for internet access/ Letter and resume writing

  19. . . . More Resources • Consumer Credit Counseling Services (CCCS): • Assistance with negotiations with creditors • Information and education Cooperative Extension: • Educational programs • Self-help information • Fact sheets • Resources & referrals

  20. And MORE Resources • Medical: • MCHIP (Health • Dept. or DSS) • Doctors/Clinics (Sliding fee scales CCHS) • Hospitals’ “Hill Burton” funds (Uncompensated Care) • Health Depts (Free or low-cost exams, services, birth control) • Medbank (Call DSS or Health Dept) Food and Nutrition: • Food Stamps (DSS) • WIC (Health Dept) • School Meals (School) • Family Support Centers/Head Start (Local) • Local food pantries (Ask DSS for a list)

  21. Even More Resources! • Unemployment (1-877-293-4125) • MD Energy Assistance Program (MEAP) and EUSP (For heat)– call DSS • Section 8 Housing (Call MRDC 479-3566) • Subsidized Housing (List from DSS or MRDC) • DSS Emergency Assistance (One-time only help for meds, bills, rent, etc. with proof of need)

  22. $ Lifetime Money Skill #5 ORGANIZE FINANCIAL RECORDS

  23. How long to keep records

  24. $ Lifetime Money Skill #6 Use Credit Wisely

  25. Collect data: Personal information Employment history Credit Use and Repayment history Provide information to: Creditors Employers Insurers Landlords What do Credit Bureaus do?

  26. Credit Bureaus • 3 Major Credit Bureaus: • Equifax • Experian • Transunion

  27. START HERE!

  28. Correcting a Credit Report • Contact company that reported the error • Ask company to correct error, in writing, with each credit bureau • Photocopy pertinent documents • Write credit bureau, explain error and enclose documentation • Send certified mail with return receipt

  29. What Is A Credit Score?

  30. Credit Score Ranges • 780-850 – Low Risk • 740-780 – Medium Low Risk • 690-740 – Medium Risk • 620-690 – Medium High Risk • 620 and Below – High Risk or Sub-Prime

  31. Signs of Credit Trouble • Exceeding 20 percent rule • Second salary used to pay debts • Used for everyday expenses • Credit not thought of as debt • Use cash advances to pay bills

  32. Minimum Payment Trap Credit card: Pay Minimum per Month: Balance of $3000 4% of balance (starts at $120/mo.) 19.0% interest 134 months $1,872.49 in interest Total Paid: $4,872.49 Pay More each month: 4% of balance + $15/mo. 53 months $1,358.74 in interest Total Paid: $4,358.74 Power Payment: $120/month (fixed payment) 33 months $849.27 in interest Total Paid: $3,849.27

  33. $ Lifetime Money Skill #7 SAVINGS Should Still Be A HABIT

  34. Every Little Bit Counts

  35. Saving vs. Investing

  36. SavingPreserve principal while getting a small return. InvestingIncrease principal in hopes of getting a greater rate of return.

  37. Pay Yourself First at 5% interest Save this each week In 10 years, you will have $ 7.00 $ 4,720 $ 14.00 $ 9,440 $ 21.00 $ 14,160 $28.00 $ 18,880 $35.00 $ 23,600

  38. Your Net Worth Assets - Liabilities = Net Worth

  39. Before You Invest • Prepare financial statements • Set financial goals • Establish a spending plan • Organize financial records • Establish a positive credit history • Maintain adequate insurance coverage

  40. Simple Ways To Invest • High Interest Savings Accounts • I-Bonds • Certificates of Deposit (CD’s) • Individual Retirement Accounts • Traditional IRA’s • Roth IRA’s • Mutual Funds

  41. Bankrate.com

  42. $ Smart Money Tip #8 Beware of SCAMS and FALSE CLAIMS!

  43. Let US help YOU clean up your credit! Earn $1,000/wk working at home! Do MEDICAL BILLING in your PAJAMAS!!!! Save your home from foreclosure! STUFF ENVELOPES and earn LOAD$ OF DOUGH! We’ll find you a job– GUARANTEED! Call the Consumer Protection Division to ask about complaints– but remember scams “move quickly”! 410-713-3620

  44. Emergency Fund Goals Budget Life Health Credit Record Financial Plan Insurance Property Financial Statements Financial Records Disability Liability Financial Foundation

  45. Presentation compiled and edited by:Jean Austin &Crystal TerhuneFamily and Consumer Science EducatorsUniversity of Maryland Cooperative Extension Help us to help others!! Please complete your EVALUATION! Lifetime Money Skills

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