The Importance of Money Management and Understanding Credit

1. The Importance ofMoney Management and Understanding Credit It’s Your Money. It’s Your Credit…It’s Your Future!

2. Money Management 1. Establish a realistic spending plan. 2. Set goals and create a spending plan. 3. Trim expenses and find ways to save.

3. Why A Spending Plan? • Accomplish goals • Identify wasteful spending • Encourage savings • Prepare for surprise expenses

4. Establishing a Spending Plan • Determine your monthly net income. • Calculate your monthly expenses. • Subtract your monthly expenses from your income.

5. Monthly Income Worksheet

6. Monthly Expenses Worksheet

7. Monthly Spending Plan

8. Setting Your Goals • Discuss goals with family. • Discuss individual goals of each family member. • Set priorities. • Identify short-term and long-term goals.

9. Tips on Trimming Expenses • Clip coupons. • Compare prices. • Use a list to grocery shop. • Cut back on eating out. • Shop second-hand or consignment shops. • Find free family and leisure time activities.

10. Developing a Spending Plan • Plan ahead. • Pay yourself first. • Plan according to what your income is now. • Make your record keeping as simple as possible. • Include some spending money for each family member. • Make sure the family agrees on the spending plan.

11. Make Money Management Easy • Decide who pays the bills. • Know when bills are due. • Ask your utility companies if they offer a budget plan. • Open a checking account to pay your bills. • Open a savings account for unexpected expenses. • Stick to the plan. • Change the spending plan if it is not working.

12. Control Day-to-Day Spending • Carry a written reminder of your goals. • Carry as little cash as possible. • Avoid ATM machines. • Leave credit cards at home. • Use direct deposit. • Put items on layaway, if possible. • Buy only what you need. • Try to pay with cash.

13. Saving Tips • Pay yourself first. • Put your change at the end of the day in a container or jar. • Deposit monetary gifts, raises and tax returns in your savings account.

14. Remember, people don’t plan to fail, but they oftenfail to plan.

15. What is Credit? The present use of future income.

16. Why is good creditimportant?

17. It Allows You Opportunities to: • Purchase items you want or need. • Get the lowest interest rates. • Get a job (in some cases). • Rent an apartment. • Open a checking account. • Establish utility services in your name. • Obtain insurance at a lower rate. • Purchase a home.

18. The three C’s of Credit-worthiness: • Capital • Capacity • Character

19. What’s That? • Credit Reporting Agency or Credit Bureau • It is a company that collects information and sells it in the form of written reports to creditors.

20. Who are Creditors? • Banks • Finance Companies • Stores • Insurance Companies • Landlords • Credit Card Companies

21. Major Credit Reporting Agencies 1. Experian 2. Trans Union 3. Equifax

22. Contact Information Experian P.O. Box 2002 Allen, TX 75013 www.experian.com Equifax P.O. Box 740241 Atlanta, GA 30374 www.equifax.com Trans Union Consumer Disclosure Center P.O. Box 1000 Chester, PA 19022 www.transunion.com

23. Types of Credit Reports • Consumer Credit Report • In-File Credit Report • Residential Mortgage Credit Report

24. Reading Your Credit Report • Verify that your name, current and previous address, social security number, date of birth and employers are correct. • Review credit information for accuracy. • Review public record information (this information comes from local, state and federal courts). • Review inquiries (names of creditors that have obtained a copy of your credit report).

25. Reviewing Your Credit Report • Request a credit report. • Correct errors on a credit report. • Dispute information on a credit report.

26. Credit Letters • More sample letters are available, depending on your needs.

27. What is a Credit Score? • It is a number lenders use to determine if you are a good credit risk. • Credit Scores range from 300 – 850

28. What a Credit Score Considers • Payment history - 35% • Amounts owed - 30% • Length of credit history - 15% • New credit - 10% • Types of credit in use - 10%

29. Tips for Raising Your Score • Pay your bills on time. • If you miss a payment, get current and stay current. • Correct any inaccurate information. • Keep balances low on credit cards and other revolving credit. • Minimize outstanding debt.

30. Tips for Raising Your Score • Don’t close unused credit cards accounts. • Use credit cards responsibly. • Don’t open a lot of new accounts too rapidly. • Re-establish credit if you have had problems. • If you are having trouble making ends meet, contact your creditors or a legitimate financial counselor.

31. What If You Do Not Have A Credit History?

32. You may be able toborrow by establishing a nontraditional credit history

33. Based On: • Rent payments. • Gas, electric and other utility payments. • Childcare or child support payments. • Any other recurring expense.

34. Know Your Rights! • Equal Credit Opportunity Act • Truth in Lending Act • Fair Credit Billing Act • Fair Credit Reporting Act • Fair Debt Collection Practices Act

35. Money Management and Understanding CreditYOU CAN DO IT! It’s Your Money. It’s Your Credit…It’s Your Future!