Upload
waylon-gant
View
217
Download
2
Tags:
Embed Size (px)
Citation preview
Financial Basics 101
Welcome to
Budgets and Credit
Introduction
Budgeting
Credit Report
Credit Score
Agenda
1
2
3
4
IntroductionBanks vs Credit Unions
Banks Credit Unions
Customers –Banks are owned by investors. Members – Credit unions are member owned. Each person who deposits money becomes a member.
Profits – Investors get share of profits. Not-For-Profit – Profits are given back to members in the form of lower loan rates, higher dividends and free or low cost services.
FDIC – Federal Deposit Insurance Corporation NCUA – National Credit Union Association.
Budget
Learning to Manage Your Money also known as
Setting up a Budget
BudgetBenefits of Managing (Budgeting) Your Money
• Free up time → do things you enjoy
• Less Stress → better health
• Achieve goals → satisfaction
•Greater Control → peace of mind
Budget
Ask Yourself: Do you….• Spend more than you make?
• Live beyond your means?
• Pay yourself first?
• Charge items instead of saving for them?
• Think about an emergency fund, but fail to have one?
• Spend uncontrollably?
Budget
Establishing anEmergency Fund
Emergency Fund
$1,000
3 – 6 months living expenses
Retirement
401KIRA
Savings Account Savings AccountMoney Market
CD IRA
Remember to PAY YOURSELF FIRST!
BudgetSet SMART Financial Goals
Specific
Measurable
Adjustable
Realistic
Time-Oriented
BudgetSet Three Types of Goals
Short Term Goal within next six months
Mid Term GoalWithin next one to five years
Long Term GoalMore than five years away
BUDGET
SAVE
INVEST
BudgetFinancial Goal Chart
Targe
t Date
Total Neede
d
Pay Periods
Until Target Date
Savings Needed Per Pay Period
Savings Per Week
Savings Per Day
Short Goal
Intermediate Goal – pay off $1,200 debt
One year
$1,200 12 $100 $25 $3.57
Long Range Goal
BudgetFive Steps to a
Successful Spending Plan
1. Identify all income sources2. Determine monthly expenses
fixed and variable expenses
3. Balance income and expenses
4. Review and Revise
5. Manage
Budget
BudgetingBasics
http://hffo.cuna.org/budget_blueprint.html
BudgetSTEP 1: List All Income Sources
Paycheck BonusDividends GiftsInterest Child Support/AlimonyPension Tax RefundSocial Security OtherRental Income
BudgetSTEP 2: Determine Monthly Expenses
• Fixed - mortgage, car payment
• Flexible - food, clothes, utilities, gifts
• Periodic - insurance, taxes
BudgetExpenses
Necessary – shelter, food, utilities, insurance, taxes.
Discretionary – vacations, entertainment, lattes.
Personal – don’t have to account for every penny.
Miscellaneous – unplanned expenses.
BudgetWhere Does Your Money Go??Track your daily expenses
Fast FoodSodaCoffeeVideo Rental Tobacco products
BudgetSTEP 3: Balance Income and Expenses
How does your CA$H flow?
If Income > Expenses – save more!If Expenses > Income – make changes
BudgetSTEP 4: Review and Revise
• Continue to track expenses• Find places to save (eliminating leaks)• Does your plan fit with your goal?
BudgetSTEP 5: Manage Your System
• Track expenses regularly• Pay bills regularly• Balance checkbook monthly• Review goals annually or after major life change.•Does plan still fit with your goals?
Credit Report
Credit Report
www.experian.com/credit_report_basics/pdf/samplecreditreport.pdf
Credit Report
How long does information stay on your credit report?
• Positive information can remain forever.• Negative information can remain up to seven years – from time you take care of it.• Bankruptcies can remain seven to 10 years.
Credit ReportIf your credit report has errors….
• Write a letter to credit bureau explaining why you think information is inaccurate.
• Credit bureau has 30 days to investigate, notify you of results and delete inaccurate or unverifiable information.
• If you disagree with investigation results, write a dispute statement to appear in your file.
Credit Score
•How your credit score can affect your life•Employment•Landlord•Insurance underwriting•Extending future credit
Credit Score
FICO Credit ScoreRange from 300-850, higher is betterMost lenders base approval on themHigher scores mean lower interest ratesScores are based on your rating in five general categoriesThe median FICO® score in the U.S. is 723
How Credit is Calculated
Payment History
•Timely payments=positive points•Late/delinquent=negative points
Length of Credit
Type of Credit• Unsecure vs secure debt• High risk vs low risk
Amount Owed• % of credit used• # of accounts• Aggregate credit limits
New Credit• # of new accounts• # of inquiries
Vehicle Loan Example
Credit Score $25,000 5 year note*
Monthly Payment
700 – 850 4.50% $466
660 – 699 6.25% $486
600 – 659 9.25% $522
599 – below 17.50% $628
*for illustration purposes only
$162.00/month difference = $9,720 over a five year loan.
Credit ScoreWays to Improve your credit score
• Pay down debt• Pay on time• Cancel cards you don’t need - with caution
Financial Traps
•Check Cashing Services•Pay Day Lenders•Car Title Loan Companies•Rent-to-Own Retailers•Zero Interest Deals•Rapid Refund Loans
Do You Ever Feel Like This?
Debt Collectors
http://ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm
http://www.credability.org/en/homepage.aspx
Debt Collection FAQs: A Guide for Consumers
CredAbility
Brought to you by:
Budget Worksheet emoryacu.com → About Emory ACU → Resources → Home & Family Finance Magazine → Search for Budget.
Free Copy of Your Credit Report - freecreditreport.com
Credit Bureaus - experian.com • transunion.com • equifax.com
Debt Collection FAQs - http://ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm
CredAbility –
Don’t forget - the credit union is here to assist youwith all your financial needs. 404.329.6415 • emoryacu.com
Resources
http://www.credability.org/en/homepage.aspx