Money Matters

1. Money Matters Living on a Budget Getting out of Debt

2. The Budget • A budget is people telling their money where to go instead of wondering where it went. • Budgeting is about choices – choosing how to make money and choosing how to spend it. • The #1 key to success in managing your money is a WRITTEN PLAN.

3. What does a Budget do for me? • Lets you control your money instead of your money controlling you. • Reduces your anxiety of not knowing whether you have enough money to pay your bills when they are due. • Helps you prepare for your future.

4. How do I make this work? • Get Organized! • Have a specific place for your bills. • A budget box is wonderful, but even a basket will work. • Open all your bills

5. Track your daily spending habits. • Write down every purchase. Keep a check register or notebook with you at all times and write in it every time you make a purchase. • If you use a debit card, you can look at last month’s bank statement.

6. 3. Know Your Budget Busters! • Budget Busters are small items that add up throughout the month and can bust your budget. • Common Budget Busters: • Pop • Cigarettes • Coffee • Candy Bar • Lunches • Lotto Tickets • Chewing Tobacco

7. Gaining Control Over Your Money • If you want to be in control of your money, you must understand where your money goes. • Communication is KEY! • Determine what spending you can cut back on. • Understand what Fixed and Flexible Expenses are.

8. Fixed vs. Flexible • Fixed Expenses • Amounts that do not change from month to month • You do not have any control over how much you pay. • Examples: • Rent or Mortgage • Car Payment • Insurance • Loan Payments • Flexible Expenses • Amounts that often change from month to month. • Things you do can affect the cost. • Examples: • Turning the heat down in the winter saves on heating cost. • Driving less uses less gas. • Turning the lights off saves on electricity.

9. Find Ways to Increase Income and Decrease Expenditures • Odd jobs • Assistance that you may be eligible for: • Food Stamps • Medicaid (difficult for adults to be eligible) • Advanced Earned Income Tax Credit • If you have been eligible for the EITC in the past, you qualify to have a portion of it credited to you in your paychecks throughout the year.

10. Monthly Payment Schedule • Helps you plan in advance when you will pay your bills. • Lets you record in advance when you will receive income to pay those bills.

11. Monthly Payment Schedule

12. Monthly Payment Calendar: April

13. How to Make the Schedules Work for You • Use different color ink for Income and Expenses • When you have paid a bill, cross it out or put a checkmark next to it. • Do a new schedule each month.

14. Envelope System • Make an envelope for each expense category • Online envelope systems also available • When you receive income, divide it into the amounts to cover the expenses listed on the envelope • Pay bills right away so you’re not tempted to spend the money on something else.

15. Budget Box System • A small box with dividers for each day of the month • When you receive a bill, check the due date and place it behind the divider that represents the bill’s due date. • As you receive income, pay all bills that are due.

16. What happens if I can’t make all my payments? Pay Essentials First! • Food • Mortgage/Rent • Utilities * After you have paid for these things, then you can pay your other creditors.

17. Talk with your creditors. • They are usually very willing to work with you. • All Credit Card companies have hardship departments. • You can’t just ignore the problem. It only makes it worse. Seek Help • There are a lot of community resources out there to help you through this difficult time. • Seek Credit Counseling

18. AVOID Credit Cards • Credit cards don’t help, they just make the problem worse. All they do is get you deeper into debt. • The more you charge, the higher your minimum payments go until pretty soon you’re drowning. • Cut them up and quit using them. If you keep using them, you’ll never get your head above water.

19. Never buy with: No Payments, No Interest until… http://www.youtube.com/watch?v=sLZJ5Fza8bg

20. NEVER, NEVER use these types of loans: • Payday • Cash Advance • Rent-to-Own • They are NOT there to help you!! • They charge over 100% interest • Example: You write a $225 check dated one week from now which will be payday – you’ll get $200 for only $25 – only the $25 represents 650% interest annually! And what makes you think you’ll be able to repay this loan on payday?? By then, you’ll need that money for something else and then, when you can’t pay, the interest and fees will really kick in!

21. Get Caught Up • If you’re getting a big tax refund soon or just got it. • Pay all your bills up current • Save $1000 if possible so that you have money to fall back on. • Save $500 if you can’t save $1000 • Save more, if possible, for those short months when you never have enough money.

22. SAVE: Emergency Fund • If you have some money saved, you have something to fall back on if you have a hard time instead of charging things on credit cards. • If you find it nearly impossible to save try: • Getting rid of Cable/Satellite • Lower your phone plan • Sell your cars – get rid of those big payments • Sell your stuff • Have a garage sale • Sell on E-Bay • Sell on Craig’s List

23. Biggest Money Eaters • Overdraft Fees • Late Fees • Interest

24. Mr. and Mrs. Clark sit down to pay their bills and expenses at the end of the month. They have been holding off paying their bills because they know they do not have enough money to cover everything. But finally, Mrs. Clark insists that they have to start paying some of them, or their situation will get even worse. The Clarks have five credit cards. Three of them have an interest rate of 24 percent. The other two cards have an interest rate of 13 percent. Two of the high interest rate cards and one of the lower interest rate cards are 15 days past the due date. Looking over the credit card bills, Mr. Clark is amazed to see that his wife spent $200 last month on shoes. Mrs. Clark is amazed to see that Mr. Clark bought yet another power tool and spent $385 for it. “No wonder we don’t have any money!” each says to the other. Mr. Clark also confesses that he stops off at the coffee shop on his way to work every morning and spends $5 on a cup of coffee, then eats lunch at a restaurant near his office. Mrs. Clark admits that she gets a pedicure and manicure twice a month. The Clarks want to make sure that they have enough money for rent, utilities, the car payment, and food. But if they pay these bills first, they will have only enough money to make the minimum payment on three of their five credit cards. What has caused these financial problems for the Clarks? What can they do to resolve their problems?

25. The Clarks • What has caused these financial problems for the Clarks? • Overuse of Credit Cards • Personal expenses are too high • What can they do to resolve their problems? • Immediately call the credit card companies for the cards that are past due to see if they can work out an arrangement to bring the accounts up to date. • Set aside money for rent, utilities, the car payment and food. • Call a halt to “splurge” buying on credit. • Cut back on personal spending. • Get credit counseling to help them create and implement a budget they can follow.