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Get a Grip on Your Money during 2012 and beyond 1

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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%

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55 Owe more than $10,000 37%

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56 Tool #3 Credit Card Smarts Slide Calculator

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57 Credit card annual interest rate assumed by Credit Smarts Calculator 18.0%

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58 Credit card monthly interest rate assumed by Credit Smarts Calculator 1.5%

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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

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Amount spend on Transportation 92 Countdown 8 1. $6,393 2. $3,125 3. $2,010 4. $ 957

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$40,000 - $49,999 Transportation $6,393 93

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94 Question: What does family with income between $50,000 & $69,999 income spend annually on food at home?

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Amount spend on Food at Home? 95 Countdown 8 1. $5,212 2. $3,755 3. $2,120 4. $1,315

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$50,000 - $69,999 Food $3,755 96 $313 monthly

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Tool #7 Using a Homestead Declaration to Protect Your Home From Creditors 97

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Question What is the $$ amount of equity in your home that a Montana Homestead Declaration (if recorded) protects against most creditor claims? 98

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Amount home equity Montana Homestead Declaration protects? 99 Countdown 8 1. $250,000 2. $100,000 3. $ 60,000 4. $ 40,000 5.$ 10,000

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Montana Homestead Declaration $250,000 100

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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) 111

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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