Daily Information 5/7

Objectives:

1.Discuss living arrangements with housemates. 2.Describe contractual rights and responsibilities for landlords and tenants.

Warm Up:

Log onto your computer and check your grade in infinite campus.

Agenda:

1.Warm Up2.Roommates (Y/N)3.Vocab.4.“Moving Out” P.P.5.Lease agreement6.Research project (Due Friday – 5/10)

The Mint

• http://themint.org/kids/what-is-your-credit-card-iq.html

• What is your credit card I.Q.?

• Take the spending challenge

• I paid how much?

Roommates

• Answer the questions in the handout provided.

• Be prepared to share your answers with a partner.

Daily Information 5/7/13

Objectives:

1.Discuss long-term debt options for the purchase of high-priced items.2.Explain the purpose of a debt repayment plan.

Warm Up:

Grab a textbook and log onto your computer.

Open the “Group Budget” document in the webdesign folder.

Agenda:

1.Warm up2.Long-term debt P.P.

Daily Information 5/7/13

Objectives:

1.Discuss long-term debt options for the purchase of high-priced items.2.Explain the purpose of a debt repayment plan.

Warm Up:

Grab a textbook.

What living habits and areas of compatibility should be discussed before moving in with a roommate?

Agenda:

1.Warm up2.“Moving Out” P.P.3.Lease agreement 4.Long-term debt P.P.5.Research project – due Friday (5/10)

Roommates! Good or Bad?

• Why is it important to pick your roommates carefully?– Wrong decisions could lead to much

frustration and wasted money– Discussing these issues ahead of time

allows you to have an idea of what it will be like when you do move in therefore reducing conflict later

After High School: Moving Out

• What responsibilities and obligations will you have when you move out on your own?

• Financials: rent, security deposit, moving costs, cost of living

• Daily Living: cooking, cleaning, laundry, transportation

• Will you have a roommate?• Shared responsibilities and obligations

Group Budget

Group budgeting allows allocation of expenses so that each person pays his or her share.

When might it be appropriate for roommates to pay unequal amounts of money towards an expense, such as 70% of the rent instead of 50%?

TenantsRights

• To possess and enjoy the property• To come and go and have guests• To use common areas, such as pools

Responsibilities• To use the property only as intended• To care for the property and report repairs• To obey the rules

LandlordsRights

• To receive rent in a timely manner• To inspect the property with notice

Responsibilities• To provide a safe, sanitary, and habitable

living site• To provide a convenient way to pay rent• To keep security deposits in a separate

account and refund unused portions

Contracts

• To be legally binding, a contract requires considerations (something of value exchanged for something else of value).

• Why would an oral contract be difficult to enforce?– No documentation or proof

• What is a lease agreement? Open your textbook to page 253

Reading a Lease Agreement

• A lease is a property rental agreement that lasts a year or longer.

• A month-to-month agreement means you can leave with a 30-day notice.

• A lease gives you the security of knowing property is committed for a fixed time period.

• Read a lease agreement carefully before signing to avoid traps.

Using figure 8-1.2 on page 253, answer the questions in the handout

Buying a Car

A car loan is usually an installment loan with monthly payments.

• Make a down payment (cash deposit) toward purchase price.

• Can trade-in existing car as down payment.

• Consider a preapproved loan, dealer financing, or a lease (less money, limited mile usage).

Loans

• Longer terms mean lower payments, but more interest paid and a greater chance for an upside-down loan (owe more than it is worth)

• Refinancing: paying off an old loan with a new loan (lower interest rates)

Auto Depreciation

• Loss of value from original price

• Cars lose value after driven off lot– Becomes a used car

Buying a House

• Build Equity • Appreciation (going up in value)• Tax advantages• Security• Independence• Privacy

Advantages:

Buying a House

• A down payment of 10 to 20 percent of the purchase price is often required.

• Property is used as collateral for the loan.• A conventional loan lasts up to 30 years.• Closing costs are expenses paid to get a loan,

such as appraisal fees and credit report fees.

A mortgage is a long-term debt agreement used to purchase real estate.

FHA Loans

• First time homebuyers– Smaller down payment– 3.5% down– Average 640 credit score required

What Is a Debt Repayment Plan?

A debt repayment plan is a strategy for paying off debt to reduce interest paid.

Fixed-rate mortgage vs. Adjustable-rate mortgage

Paying Down Debt

Student Loans:

• Payments can be deferred– Start 6 months after no longer registered for

class– Can choose to make payments early but not

required

• Multiple loans can be consolidated– Lower monthly payment

Paying Your Mortgage

• Choice of 15 year or 30 year– Affects monthly payment and interest rate

• Balloon Payment– Final payment is higher– Could have a lower interest rate– Lower monthly payments

Rent-to-Own

• Portion of rent is applied to purchase

• Price is locked in

• Used for homes and other items (furniture, electronics)

• Also known as right of first refusal

• Can be costly

Daily Information 5/8

Objectives:

1.List ways to reduce your credit costs and lower your dependence on credit.2.Explain how to avoid deceptive credit practices.

Warm Up:

What are some of the ways people can overextend their credit?

List three examples.

Agenda:

1.Warm Up2.Vocab.3.Credit management P.P.4.Credit and debt management activity5.Bottom Line

Managing Credit Usage

• Establish credit so it will be available in the future.

• Pay bills on time to build a solid credit history.

• Pay entire balance monthly to avoid interest charges.

• Establish a cash fund (savings account) and have unused credit.

Saving Your Money

As your pay increases, why should you plan to save most or all of that increased income?

Economy and Loans

In a good economy– People are optimistic about future income and

buy more, interest rates tend to rise– This is a good time to save money and earn

interest (bank/investments)

In a bad economy– People are pessimistic about future income and

buy less, interest rates tend to drop – This is a good time to buy because you can get

better values!

Evaluate Credit Offers

Compare disclosure terms

o Grace periodo Annual feeso Minimum finance chargeo Interest rates (fixed vs. variable) o Transaction fees (transfer balances)o Cash advance fees (high interest fees)o Late fees (can increase interest rate)o Over-the-limit fees (can increase interest rate)

Debt Load

• The amount of outstanding debt at a particular time

• Debt represents future earnings already spent– How much future income have you already

committed to debt? Keep Track!

Avoid Unnecessary Credit Costs

• Limit the number of credit cards

• Comparison shop for credit cards

• Consider special deals and financing

• Get cash rebates and rewards

• Pay bills on time or early

Avoid Unethical Loan Practices

• Loan shark: illegal unsecured loans at high interest rates

• Advance-fee loan: a large upfront fee, then loan denied and fee non-refundable

• Equity stripping: issuing a loan to a homeowner who cannot afford it, then taking possession of the home

Group Budget Activity

• Open group budget activity in the webdesign folder, complete, save as lastnamefirstname in the group budget activity folder.

Slide 32

Chapter 8 Review Questions

• Part 1 (page: 256)– Key Terms Review: 2-9– Check Your Understanding:

12,13,14,16,18,20– Think Critically: 26,27

Chapter 8 Review Questions

• Part 2 (page: 265)– Key Terms Review: 1-9– Check Your Understanding:

10,11,12,13,14,15,16– Think Critically: 21,22,23,26,27,28

Chapter 8 Review Questions

• Part 3 (page: 273)– Key Terms Review: 2-8– Check Your Understanding:

9,10,11,15,16,18– Think Critically: 22,23,24,28,29