$ tartNow

1. $tartNow A 10 hour Financial Literacy Programme for young people on the Youth Payment and Young Parent Payment Scheme Delivered by New Zealand Federation of Family Budgeting Services

2. Objectives • Understand what credit is and what it costs? • Understand the difference between good and bad debt • Cautions around credit contracts

3. Objectives • Understand the use of credit and debit cards • How the Credit Contracts and Consumer Finance Act and the Consumers Guarantees Act can help you

4. Interest • You borrow $100 at 10% interest per month. • Paying it back at $10 per month.

5. Interest • You borrow $100 at 10% interest per month. • Paying it back at $10 per month. At the end of 10 months You have paid $100 But still owe $77.78

6. Interest • You borrow $100 at 10% interest per month. • Paying it back at $10 per month. At the end of 10 months You have paid $100 But only paid off $22.22 At this rate it will take you 26 months (2 years and 2 months) to pay off this debt and you will have paid a total of $260

7. Credit Cost

8. Credit Cost

9. Credit Cost

10. DEBT – When Debt is Good, Not So Good or Bad

11. DEBT – When Debt is Good, Not So Good or Bad Good: Things that increase in value after you have bought them. Borrow to buy an asset, save to pay for expenses.

12. DEBT – When Debt is Good, Not So Good or Bad Good: Things that increase in value after you have bought them. Not So Good: Things that decrease in value after you have bought them. Borrow to buy an asset, save to pay for expenses. Pay off debt as quickly as possible

13. DEBT – When Debt is Good, Not So Good or Bad Good: Things that increase in value after you have bought them. Not So Good: Things that decrease in value after you have bought them. Bad: Things that have no value after you have bought them. Borrow to buy an asset, save to pay for expenses. Pay off debt as quickly as possible

14. Credit Cards – Minimum payment 3% • $2000 purchase • Minimum payment $60 per month • Interest at 20% • Time to pay off between 4 years 2 months • Total amount paid between $2,944 • From the credit card calculator at www.sorted.org.nz

15. Credit Cards – Minimum payment 2% • $2000 purchase • Minimum payment $40 per month • Interest at 20% • Time to pay off between 9 years 1 month • Total amount paid between $4,336 • From the credit card calculator at www.sorted.org.nz

16. Credit Contacts and Consumer Finance Act • Read and understand what you are signing. • Take it someone you trust if you don’t understand what you are signing • Be aware that if you do sign then you have to pay. • Be aware of the Fair Trading Act and what it means. • Refer to your workbook for a brief outline • Be aware of the Consumers Credit Contracts Act and what that means

17. Wrap Up • What is credit and what does it cost • The difference between good and bad debt • Credit cards and the alternatives • How the law can protect you

18. Wrap Up Session 1: Choices and goals Session 2: Spending plans, costs of living Session 3: Banking and saving Session 4: Credit and debt & how the law can help you