Marsha A. Goetting Ph.D., CFP, CFCS Professor & Extension
Family Economics Specialist Department of Agricultural Economics
& Economics 2
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Packet Provides tools & techniques that can help you become
a more effective financial manager during 2011 & beyond 3
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Provided by 4 MSU Extension Montana Credit Unions for Community
Development First Interstate BancSystem Foundation
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How would you describe your money management skills? 5
1.Fantastic 2.Sorta good 3.So-So 4.Awful 5.Hopeless Countdown
8
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Do you have a system for tracking your expenses? 6 Countdown 8
1. Yes 2. No
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How would you describe your tracking system? 7 Countdown 8
1.Checks 2.Envelope 3.Calendar method 4.Mental 5.Computer Software
6.Web-based program 7.Dont have a system
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How do we? Make adjustments in spending if we dont know where
the money is going???? 8
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Benefits of knowing Reduce need for credit Spend hard earned $
more effectively Find money for other goals 9
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MSU Check Register Tracking System Tool # 1 10
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Register System Use to track expenses Checks Cash Debit Cards
Credit Cards 11
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Front Cover 12
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Back Cover 13
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Category Descriptions 14
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Blank Page for Your Expense Categories 15
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Planned spending amounts (p. 2) Categories Food = $300 Housing
= $590 Transportation = $360 Clothes Personal care = $120 Medical =
$100 Recreation = $80 16
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Balance at a glance Far right column Checking account balance
$300 17
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Example 1: 18
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Example 2: Recording Expenses 19
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Example 2: Record Expenses Check 511 to K-mart $9.06 listed
twice Under personal care Checking account balance 20
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Example 2: Expenses Personal Care Category: $20.94 Checking
Account Balance $290.94 21
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Example 3: Circle=Cash Box=Credit 22
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Example 3: Cash/Debit Card Items are circled $3.75 food $24.00
clothes $15.00 medical 23
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Credit Card Charges Items are boxed Credit Card expense 5/5
Auto Repair $130 Listed under Trans. & Credit Card Columns
TotalCredit Card Column 24
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Example 4: Adding Expenses 25
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Rounding Round up or down in budget category section $9.06 =
$9.00 $9.67 = $10.00 26
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Register Tracking System 27 Check Cash Credit Debit
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Blank Register 28
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Evaluation Families found an average of $50 that used to
disappear. 29
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Cost $1.00 No charge in packet thanks to sponsorship of: MSU
Extension Montana Credit Unions for Community Development First
Interstate BancSystem Foundation 30
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What year did Americans have the highest year of saving? 31
Countdown 8 1. 1975 2. 1983 3. 1991 4. 2000
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32 Personal Savings Rate 32
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33 Year (Highest Rate of Savings) May 1975 14.6
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34 1982 9.0
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At this point in your life what is your primary motivation for
saving? 35 Countdown 8 1.Fear (of what happens if I dont) 2.Desire
to minimize financial stress 3.Retirement 4.For emergencies
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Trackn Your Savings Goals Tool # 2 36
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Handy tool Shows how to track progress towards achieving
specific savings goals All in one place 37
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Front Cover
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Back Cover
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What are you saving for? Savings Goals 40
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Decide on Amount Needed Figure 2 41
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My Savings Goals Figure 2 42
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Goal Categories & Amounts Figure 3 43
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Recording a Savings Deposit Figure 4 44
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Recording a Deposit - - Split Among Goals Figure 5
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Recording a Savings Withdrawal Figure 6
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Sample Savings Register: 47
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Credit Cards 48
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But Roger, everyone spends more than he earns. Thats what
America is for. 49
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What is the average credit card balance owed by American
households? 50 Countdown 8 1.$23,100 2.$14,687 3.$8,250
4.$5,500
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51 Credit Card Balance $14,687
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What is the average annual credit card interest rate? 52
Countdown 8 1.21.5% 2.18.9% 3.14.9% 4. 6.0% 5. 2.8%
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53 Average credit card interest rate 14.9%
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What percentage of credit card holders carry more than a
$10,000 balance on their credit cards? 54 Countdown 8 1. 75% 2. 50%
3. 37% 4. 15%
59 Paying Just 3% on Your Credit Card Debt Check the REAL cost
Orange Side: Side 1
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60 Blue Side: Side 2 Pay MORE than 3% and Save a LOT
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61 Matt & Julie $10,000 Credit Card Debt
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62 Pay back: $19,421 Interest Charges: $9,421 Years to pay off:
20 Orange Side: Side 1
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63 $10,000 debt $300 first payment 20 years in debt $9,421
interest paid Blue Side: Side 2
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64 $10,000 debt Payment$300$400$600 Years in Debt 20138
Interest$9,421$5,738$3,226 Savings0$3,368$6,195 Blue Side: Side
2
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65 Credit Card Tracker Tool # 4
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66 Ask yourself questions: Do I really need the item now?
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67 Ask questions What will I have to give up to pay this
debt?
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68 Personal limits for using credit: ?????
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69 Record of Card Expense Date Description of charge Amount
charged
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Credit Card Tracker inside 70
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Schedule of Non- monthly Living Expenses Tool #5 71
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Purpose Provide clear picture of how your non-monthly payments
are distributed throughout a 12-month period 72
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Example--page 3 Car insurance is due? Property taxes are due?
Total payments in Nov? Yearly cost for newspaper? 73
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Non-monthly Expenses Total yearly cost of non- monthly
expenses? $5,153 Monthly set aside amount? $429.42 74
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Back of MontGuide Blank form for you to use 75
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76 Non Monthly Expenses Fill out on computer Download Excel or
PDF spreadsheet at: www.montana.edu/extensionecon/
financialmgtpublications.html See form under Schedule of Non-
monthly Family Living Expenses
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Schedule of Non-Monthly Worksheet 77
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Completed Worksheet 78
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Eastern Montana Couple Line 1 is our family fixed expenses,
Line 2 is our family income, The difference is the fix were in.
79
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I tried living within my income once & got claustrophobia.
MSU non traditional student 80
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Question often asked How much should be spent for family living
expenses? 81
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Marshas Response Well, It depends.. 82
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1. Available Income 2. Number of Family Members 3. Stage in
Family Life Cycle 4. Rural vs. Urban 5. Family/Individual Values
Factors 83
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Do you/your family have a written spending plan? 84 Countdown 8
1. Yes 2. No
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Developing a Spending Plan Tool #6 85
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Guidelines from Bureau of Labor Statistics 86
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Consumer Expenditure Survey 2008 Percentages by category
87
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Annual Income Across top Less than $5,000 $70,000 & over
88
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Average Expenditure Categories, after taxes Food at home Food
away from home Housing Apparel & services Transportation
89
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Average Expenditure Categories, after taxes (cond.) Health Care
Entertainment Education/Reading Contributions Personal Care Other
90
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Question: What is the average amount before taxes does family
with income of between $40,000 & $49,999 spend on
transportation? 91
What is a Homestead? House, condo, townhouse, manufactured or
mobile home Land on which it sits (if owned) Any improvements,
fences, etc. 101
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Married Couples Both spouses should sign the declaration Must
be notarized 102
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Record Clerk and Recorders office: In the county where the home
is located 103
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No Protection Against liens 104
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Doesnt protect Equity in home if owners cost of care Were paid
by Medicaid 105
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Standard Form MSU Extension: www.montana.edu/exte
nsionecon/financialmgtp ublications.html 106
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Montana Medical Care Savings Accounts Tool #8 107
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108 Health Expenses Have you had any medical expenses this year
that arent covered by insurance?
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Do you have medical expenses not covered by insurance? 109
Countdown 8 1. Yes 2. No
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Do you have a Montana Medical Care Savings Account? 110
Countdown 8 1. Yes 2. No
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What is an MSA? An account that can be used for paying eligible
medical expenses not covered by a Montanans health insurance
policy, Flexible FSA, Federal Health Care Savings Account (HSA)
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MSA Contribution Amounts: Maximum $3,000 for each taxpayer
$6,000 married couple 112
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MSA Saves on Montana Income Taxes Contributions: Not subject to
Montana income tax Taxes saved depend on tax bracket 113
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Taxable Income Adjusted income $ 29,000 MSA deposit - $3,000
Taxable Income $26,000 114
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Tax Brackets & Rates Montana- 2011 115 At LeastBut less
ThanThen your tax is: $0$2,7001% $2,700$4,7002% $4,700$7,2003%
$7,200$9,7004% $9,700$12,5005% $12,500$16,0006% $16,000 or more6.9%
www.mt.gov/revenue
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Tax Savings with MSA Deposit: $3,000 Taxable income more than
$15,600 6.9% tax bracket MSA Deposit $3,000 Tax Bracket x.069 $207
Tax Savings 116
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Regular savings account Deposit: $3,000 Taxable income more
than $15,600 6.9% tax bracket Savings Deposit$ 3,000 Interest Rate
x.0001.30 earnings 117
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Reduced Income for Taxes Total deposited in MSA Not amount
withdrawn 118
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Example: Barbara January 31 $3,000 deposited in MSA Only $2,000
eligible medical expenses during year 119
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Barbaras Montana Income Reduced by $3,000 Not $2,000 Adjusted
income $ 32,000 MSA deposit - $3,000 Taxable Income $ 29,000
120
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Reporting Schedule II: Montana Subtractions from Federal
Adjusted Gross Income Line 18: Exempt Medical Care Savings Accounts
Deposits and Earnings 121
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What percentage of Montanans have established an MSA? 122
Countdown 8 1. 78% 2. 25% 3. 13% 4. 1.4%
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Percent of Montanans with MSAs 1.4% 123
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Managing Money in Tough Times Tool #9 Check those you would
like to receive 124
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Family Financial Management Publications Tool #10 Other
materials that may be of interest 125
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Get a Grip on Your Money during 2012 and beyond 126