More Month Than Money Worksheet - CTA Go!...Automatic Millionaire Homeowner Smart Women Finish Rich Automatic Millionaire Start Late, Finish Rich Jean Chatzky The Difference: How Anyone

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“More Month Than Money

and Extra Credit”

Sean L. Mabey

[email protected]

Why are you here?

� Introductions:

� Name

� What you do

� Expectation of the session

� Answer the following:

� What is your philosophy of money?

� List three or four financial goals that you have.

Why People Don’t Plan

� Procrastination

� Intimidation

� Where to begin?

Cash Management: Overview

• Understanding cash management

• Age old questions: “Where oh

where does our money go?”

• Making a budget

• Living within that budget

• It doesn’t always take more

money, sometimes it takes better

choices.

Benefits of developing a budget

• What are they?� It allows you to choose how you will spend

your money

� It gives you control over where your money goes.

� It provides against financial emergencies.

� It helps prevent impulse buying.

� It helps financial goals become a reality.

� Others?

Budgeting Rules

• Set realistic financial goals.

• Distinguish between wants and needs.

• Establish an emergency fund of 9-12 months of after tax income.

• Shop wisely.

• Establish credit.

• Don’t let your money sleep on the job (NO LAZY MONEY).

• Track income and expenditures.

• PAY YOURSELF FIRST!

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Steps in Developing Your Budget

• Step 1: Track your expenses

�EVERY SINGLE PENNY

�Give it a category

�Homework: Expense Sheet

♦1 month


• Step 2: Determine your

income

� Include only your net

income

� Do not include over-time or

bonuses

� Homework:

♦Document income


• Step 3: Determine your fixed expenses

� Includes rent or mortgage, utilities, car

loans, student loans, insurances, etc…

� PAY YOURSELF FIRST!


• Step 4: Determine your flexible expenses

• Easier to control, reduce, or cut

� Includes clothing, entertainment, eating out, food, etc…


• Step 5: Determine your variable expenses

� Can be a problem if not properly budgeted

� Includes things like insurances, taxes, annual fees, etc…

� Divide the number of months by the projected costs and set aside each month


• Step 6: Create Your Monthly

Budget

• After 3 months of tracking

expenses and completing your

cash flow, create a budget.

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Steps in Developing your budget

• Step 7: Re-evaluate your budget periodically

�Budget should reflect you and changes in your life. Marriage, divorce, birth, kids moving out, kids moving in (and bringing others with them ☺)

• Net Worth Statement

Years of

Continuous

Membership

Death Benefit AD&D Benefit Occupation /

Association

Leader AD&D

Benefit

Unlawful

homicide while

at work

1 year $200 $1,000 $50,000 $150,000

2 years $400 $2,000 $50,000 $150,000

3 years $600 $3,000 $50,000 $150,000

4 years $800 $4,000 $50,000 $150,000

5 or more

years

$1,000 $5,000 $50,000 $150,000

CTA Death and Dismemberment Plan

Example: A CTA member with eight years of continuous membership experiences a fatal automobile accident. The spouse informs CTA of the accidental death, and files the claims. The spouse would be entitled to a combined death and accidental death benefit of $9,600 from CTA.

Travel the Road of Life with CTA and NEA Member Benefits

Resources: Books

� David Bach

♦ Fight for Your Money

♦ Automatic Millionaire Homeowner

♦ Smart Women Finish Rich

♦ Automatic Millionaire

♦ Start Late, Finish Rich

� Jean Chatzky

♦ The Difference: How Anyone Can Prosper in Even the Toughest

Times

♦ The Ten Commandments of Financial Happiness

� Ric Edelman

♦ The Lies About Money

� Dave Ramsey

♦ The Total Money Makeover: A Proven Plan for Financial Fitness

Resources: Books

� Suze Orman

♦ Suze Orman’s 2009 Action Plan

♦ Women and Money

♦ The Road to Wealth

♦ 9 Steps to Financial Freedom

♦ You’ve Earned It/Don’t Lose It

♦ The Courage to Be Rich

♦ The Laws of Money, The Lessons of Life

♦ Young, Fabulous & Broke

� Liz Pulliam Weston

♦ Your Credit Score: How to Fix, Improve and Protect the 3-Digit

Number that Shapes Your Financial Future

NEA Magazine Service

• www.neamb.com/get2

18

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Extra CreditAll you need to know about your

Credit Report and Credit Score

Credit

• Why is it important to establish credit?

� Allows you to enjoy major purchases.

� Offers advantages of convenience and safety.

� Enables you to take advantage of sales and investments.

Credit Score

• FICO (Fair Isaac Corporation)

� Predictive Model Builder and Analytical Provider

� Risk Level

� How credit scoring help you

♦ Obtain loan decisions quicker

♦ Credit decisions are faster

♦ Older credit blemishes count less

♦ More credit is available

♦ Rates can be lower overall

Home and auto insurance

Mortgage

Home equity

Credit Reporting Agencies

• Equifax

� PO Box 740241

� Atlanta, Georgia 30374-0241

� www.equifax.com

• Experian

� PO Box 2104

� Allen, Texas 75013

� www.experian.com

• TransUnion

� PO Box 1000

� Chester, Pennsylvania 19022

� www.transunion.com

What’s in your credit report?

• Identifying information

• Trade Lines

�Real estate

� Installment

�Revolving

�Other

• Inquiries

• Public Record and Collection Items

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How scoring works

• FICO Scores range from 300 to 850� 300-499: 2%� 500-549: 5%� 550-599 8%� 600-649: 12%� 650-699: 15%� 700-749: 18%� 750-799: 27%� 800-850: 13%

• You have more than one FICO score

• Your scores will be different among the three credit reporting agencies

• Source: Your Credit Score: Second Edition

� Liz Pulliam Weston, page 16

What a FICO Score Considers

35%

30%

15%

10%

10%

Score

Payment History

Amounts Owed

Length of Credit History

New Credit

Types of Credit in Use

Payment History

• Approximately 35%

• Considers:

� Payment information on types of accounts

� Public records and collection items

♦ Bankruptcies

♦ Foreclosure

♦ Suits

♦ Wage attachments

♦ Liens

♦ Judgments

� Details on late or missed payments and / or delinquencies

� Number of accounts with no late payments

Amounts Owed


• Considers:

� Amounts owed on all accounts

� How many accounts have balances

� How much of the total credit line is being used

� How much of installment loan accounts are still owed compared to the original loan amounts

Length of Credit History


• Considers:

� In general, how long your credit accounts have been established

� How long specific credit accounts have been established

� How long it has been since you used certain accounts

Types of Credit in Use


• Considers:

� What kind of credit accounts you have

� How many of each you have

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New Credit


• Considers:

� How many new accounts you have

� How long it has been since you opened a new account

� How many recent requests for credit you have made

� Length of time since credit report inquiries

� Whether you have a good recent credit

� History, following past payment problems

What FICO Score Ignores

• Title

• Employer

• Hire date

• Where you live

• Interest rates on credit

cards or other accounts

• Any information not

found in your credit

report

� Race

� Religion

� National origin

� Gender

� Marital status

� Age

� Salary

� Occupation

� Employment history

How the FICO Score Counts Inquiries

• Types of inquiries

� Hard Inquiry

� Soft Inquiry

• Inquiries do not affect scores that much

� Many inquiries not counted at all

� The score looks for “rate shopping”

• Interpreting your score

How do mistakes get on my credit report?

• You applied for credit under a different name

• Someone made a clerical error in reading or entering your

name or address

• Inaccurate Social Security Number was given or misread

• Loan or credit card payments were applied to the wrong

account

Disputing Items on Your Credit Report

• If you find an error on your credit report:

� Contact the Credit Reporting Agency

� Send in written documentation of the inaccuracy to the reporting agency

♦ The credit reporting agency and/or reporting source will review the information and conduct their investigation if needed

♦ The credit reporting agency will then make all appropriate changes to your credit file based on the investigation and notify you of the update.

Identifying Financial Stress

• Do you routinely spend more than you earn?

• Are you forced to make day-to-day purchases on credit?

• Are you able to only make the minimum payments on monthly credit card bills?

• Are you having difficulty stretching your paycheck to meet monthly bills?

• Are bill collectors calling?

• Would you have difficulty paying next month’s bills if you lost your job?

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Reducing Expenses

• Cut spending: eliminate unnecessary spending such as eating out, going to movies each week, expensive entertainment.

• Clip coupons, shop sales, and avoid impulse buying.

• Consolidate debt: check into mortgage refinancing, home equity loans, and personal loans.

• Pay cash for purchases when possible.

Reducing Expenses

• Get a handle on credit cards (give them a credit card haircut)

� Did you knowIBy paying $100 towards a $3,000 balance (and not charging anything more to the account), it will take 41 months to pay off the balance (assuming 18% interest) and you would incur $1,042 in interest charges?

Building a good credit reputation

• Use credit before you need it.

• Keep within the obligations of your agreement.

• Live up to the terms of the contract.

How to rebuild damaged credit

• Open new accounts and pay them off.

• Start small� Credit cards from department stores, NEA Member Benefits,

or your local credit union can be helpful.

• Consider asking for help� If you can’t qualify on your own, ask a friend or family

member to co-sign for a small loan or credit card.� Remember, if you don’t make the payment it not only

damages YOUR credit but ALSO the person who co-signed on the loan or credit card.

How to rebuild damaged credit

• Consider a secured credit card� Make sure the grantor reports payment histories to one of the three

major credit reporting agencies:♦ Trans Union♦ Equifax♦ Experian

• Use your new accounts in moderation

• Keep your balances low� Avoid carrying a balance that is more than 30% of your credit limit

(creditors may view this as excessive debt).

• If you are not able to make a payment, call the creditor and make arrangements� If you get nowhere, politely hang up, wait ten minutes, call again and

speak with a different service representative.� Document who you speak with and when

Establish Credit In

Your OWN Name!

�SecuringYourFinancialFuture�Goals

FinancialGoalor

Objective

Time

Frame:

Immediate,

Short,Mid,

LongTerm

Amount

Needed

toSave

Dead-

line

Invest-

ment

Vehicle

ActionPlan

1.

2.

3.

4.

5.

Step 6: Record monthly expenses:EVERY SINGLE PENNY!!!

Categories:1. Housing 2. Transportation 3. Insurance 4. Groceries5. Eating out 6. Pets 7. Personal Care 8. Entertainment9. Loans 10. Savings 11. Charity 12. Other

Date CategoryPlace Amount Date CategoryPlace Amount

Complete this form and then transfer the information toyour CASH FLOW STATEMENT

Step 1. Determine your MONTHLY income: (examples: your income, significant (or in-significant) other income)

Income Source: TOTAL AMOUNT

Income Source 1:

Income Source 2:

Income Source 3:

Amount Frequency: (Monthly,Weekly, Semi-Weekly)

TOTALS: XXXXXXXXXXXXXXX XXXXXXXXXXXXXXX $

Step 2: Determine your fixed expenses: (examples: mortgage, rent, car payment utilities)

Amount

Fixed Expense 1:

Fixed Expense 2:

Fixed Expense 3:

Fixed Expense 4:

Fixed Expense 5:

Fixed Expense 6:

Fixed Expense 7:

MONTLY TOTALS: $

Step 3: Determine your flexible expenses: (examples: clothes, fast food, entertainment)

Flexible Expenses (change from one month to the next): Amount

Flexible Expense 1:

Flexible Expense 2:

Flexible Expense 3:

Flexible Expense 4:

Flexible Expense 5:

Flexible Expense 6:

Flexible Expense 7:

MONTLY TOTALS: $

Step 4: Determine your variable expenses: (examples: auto and home insurance, holi-day shopping, utilities)

Variable Expenses (get a bill once a quarter, every six months,once a year)

Amount per

Variable Expense 1:

Variable Expense 2:

Variable Expense 3:

Variable Expense 4:

Variable Expense 5:

Variable Expense 6:

Variable Expense 7:

MONTLY TOTALS: $

Length of

(ex. 3 months, 6months, 12months)

Amount to setaside each month(divide amount bythe length of

List of Expenses FixedExpense

Mortgage or rent

Phone (landline)

Phone (cell)

Electricity

Gas

Cable

Water

Garbage

FlexibleExpense

VariableExpense

Maintenance or repairs

Supplies

Car payment

Auto Licensing

Gas

Auto Maintenance

Auto Insurance

Home Insurance

Health Insurance

Groceries

Dining Out

List of Expenses FixedExpense

Pet Food

Pet Medical

Pet Grooming

Pet Other

Medical Care

Hair, nails, beauty care

Clothing

Dry Cleaning

FlexibleExpense

VariableExpense

Health Club

Professional Dues

Video DVD rental

Movies

Concerts

Sporting events

Personal Loan

Charity

Other

Other

HOUSING Projected Cost Actual Cost Difference ENTERTAINMENT Projected Cost Actual Cost Difference

Mortgage or rent Video/DVD

Phone CDs

Electricity Movies

Gas Concerts

Water and sewer Sporting events

Cable Live theater

Waste removal Other

Maintenance or repairs Other

Supplies Other

Other Subtotals

Subtotals

LOANS Projected Cost Actual Cost Difference

TRANSPORTATION Projected Cost Actual Cost Difference Personal

Vehicle payment Student

Bus/taxi fare Credit card

Insurance Credit card

Licensing Credit card

Fuel Other

Maintenance Subtotals

Other

Subtotals TAXES Projected Cost Actual Cost Difference

Federal

INSURANCE Projected Cost Actual Cost Difference State

Home Local

Health Other

Life Subtotals

Other

Subtotals SAVINGS OR INVESTMENTS Projected Cost Actual Cost Difference

Retirement account

FOOD Projected Cost Actual Cost Difference Investment account

Groceries Other

Dining out Subtotals

Other

Subtotals GIFTS AND DONATIONS Projected Cost Actual Cost Difference

Charity 1

PETS Projected Cost Actual Cost Difference Charity 2

Food Charity 3

Medical Subtotals

Grooming

Toys LEGAL Projected Cost Actual Cost Difference

Other Attorney

Subtotals Alimony

Payments on lien or judgment

PERSONAL CARE Projected Cost Actual Cost Difference Other

Medical Subtotals

Hair/nails

Clothing

Dry cleaning

Health club

Organization dues or fees

Other

SubtotalsTOTAL DIFFERENCE

TOTAL ACTUAL COST

Personal Monthly Budget

Income 1

Extra income

Total monthly income

ACTUAL MONTHLY INCOME

PROJECTED MONTHLY INCOME

Income 1

Extra income

ACTUAL BALANCE

(Actual income minus expenses)

Total monthly income

TOTAL PROJECTED COST

PROJECTED BALANCE

(Projected income minus expenses)

DIFFERENCE

(Actual minus projected)

Personal Balance Sheet � Net Worth Statement

LIABILITIES

Short Term _________Credit Card _________Bills Payable _________Short Term Loans _________Property Taxes _________Other _________

Subtotal _________

Long TermHome Mortgage _________Other Mortgage _________Automobile Loans _________Education Loans _________Life Insurance Loans _________Other _________

Subtotal _________

TOTAL LIABILITIES _________

ASSETS

Cash Equivalent _________Checking Accounts _________Savings& Credit Union Accounts _________Money Market Accounts _________Other _________

Subtotal _________

InvestmentsStocks _________Bonds _________Government Securities _________Mutual Funds _________Real Estate _________Investment Collectibles _________Certificates of Deposit _________Other _________

Subtotal _________

Personal PropertyHome _________Automobiles _________Household Furnishings _________Art/Antiques/Collectibles _________Clothing/Furs _________Jewelry _________Metalware _________Other _________

Subtotal _________

TOTAL ASSET S _________

Total Assets ____________

Minus Liabilities ____________

Equals Net Worth _____________

Personal Information

Personal Papers

Insurance Policies

One of the difficulties facing your heirs after your death will be locating all the relevant documents to help dispose of your estate in the manner your directed. This Personal Document Locator will help you record the location of your valuable papers, assets and other important items. It will prove

invaluable to others in locating these items after your passing.

Should you keep all your important documents in a safe deposit box? No. Safe deposit boxes are excellent for most important financial and legal documents, but there are some documents you shouldn t keep there.

Keep your will and life insurance policies somewhere else. Generally, your safe deposit box will be locked upon your death just when these important documents will be needed most.

Name Date

Residence address

Office address

Safe deposit boxNumber Bank

Address

Birth certificate

Baptismal certificate

Medical records

Burial records

Letter of last instruction

Other

Life

Disability

Health/Medical

Long-term health care

Homeowner s/rental

Other

Person

al D

ocum

ent L

ocator

Legal Documents

Financial Documents

Titles and Deeds

Marriage certificate

Divorce papers

Social Security card

Power of Attorney

Will and trust agreements

Veteran s papers

Living will and health care proxy

Other

Mortgage papers

Bank/brokerage houseAccount papers

Stock/bond certificates

Income tax returns

Gift tax returns

Employee benefit data

Other

Automobile

House

Other real estate

Cemetery plot

Other

Person

al D

ocum

ent L

ocator

Important People

AccountantName

Address

Phone

AttorneyName

Address

Phone

BankerName

Address

Phone

EmployerName

Address

Phone

Financial management professional Name

Address

Phone

Insurance agentName

Address

Phone

Stock BrokerName

Address

Phone

Primary PhysicianName

Address

Phone

OtherName

Address

Phone

OtherName

Address

Phone

Person

al D

ocum

ent L

ocator

Institutions

Bank (savings)Name

Address

Phone

Bank (checking)Name

Address

Phone

Credit unionName

Address

Phone

Money market fundName

Address

Phone

Savings and loanName

Address

Phone

OtherName

Address

Phone

OtherName

Address

Phone

OtherName

Address

Phone

OtherName

Address

Phone

OtherName

Address

Phone

Person

al D

ocum

ent L

ocator

Finish Rich File Folder System

I would like to share with you a simple yet powerful way to organize your financial affairs athome. This information comes from the book, Smart Women Finish Rich, by David Bach.

First, you will need a box of 50 manila file folders and a dozen hanging folders for your filecabinet. I want you to label your hanging folders as follows:

1. Tax Returns: Inside put eight manila folders, one for each of the past seven years, andone for the current year. Mark the year on each folder and put all your important taxdocuments for that year in each folder. As a rule, you should keep old tax records for atleast 7 years.

2. Retirement Accounts: This is where you keep all of your retirement account statements.You should create a file for each retirement account you have. This most important thingto keep ion these folders is the quarterly statements. At the end of each year you canthrow away the quarterly�s and keep just the annual statement.

3. Social Security: You should keep the most recent Social Security Benefits Statement ineach folder. If you haven�t gotten one recently you can go online at www.ssa.gov andrequest one.

4. Investment Accounts: In this folder put files for each investment account that you havethat is not a retirement account.

5. Checking and Savings Accounts: If you have separate checking and savings accounts,create separate folders for each of them. Keep your monthly statements in here.

6. Household Accounts: If you own your home, you should have the following folders:Home title (this should contain your title information), Home Improvements (this shouldcontain all receipts for work you do on your home�home improvement costs can beadded to the cost basis of your home when you sell it), Home Mortgage (for all mortgagestatements). If you are a renter, this folder should contain your lease, all of your securitydeposit information, and receipts for rental payments.

7. Credit Card Debt: You should create a file folder for each credit card account you have(hopefully, this will not be one of your larger files).

8. Other liabilities: This file should contain separate folders for such things as collegeloans, car loans, personal loans, etc. They should contain the loan notes and yourpayment receipts.

9. Insurance: You should create a folder for each insurance policy you have, includinghealth, life, car, homeowners or renters, disability, long term care, etc. In these foldersput the appropriate policy and all related payment records.

10. Family Will or Trust: This should contain the most current copy of your will or livingtrust documents. You should also have a business card of the attorney who set them up.

11. Children�s Accounts: It should contain all statements and other records of collegesavings accounts and other investments that you have made for your kids.

12. Finish Rich Inventory Planner: This folder will contain the Finish Rich worksheet thatwill help you determine your net worth. This folder will also contain a file in which youkeep a running semiannual total of your net worth- a vital record that will help you keeptrack of your financial progress.