Make a smart start toward financial success
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Make A Smart Start Toward Financial Success. College Education: A Smart Investment. High School Graduate$ 30,400 Associate’s Degree$ 38,200 Bachelor’s Degree$ 52,200 Master’s Degree$ 62,300 Doctorate Degree$ 89,400 Professional Degree$109,600.

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Make A Smart Start Toward Financial Success

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Make a smart start toward financial success

Make A Smart Start Toward Financial Success


College education a smart investment

College Education: A Smart Investment

High School Graduate$ 30,400

Associate’s Degree$ 38,200

Bachelor’s Degree$ 52,200

Master’s Degree$ 62,300

Doctorate Degree$ 89,400

Professional Degree$109,600


Start smart by avoiding pitfalls

Start Smart By Avoiding Pitfalls

  • Little or No Savings

  • No Short and Long Range Plan

  • Too Much Credit Card Debt


The credit card debt picture

The Credit Card Debt Picture

  • Among college students:

    • 84% have credit cards

    • 62% of final year students have four cards or more

    • 21% owe between $3,000 and $7,000

    • Final year students carry an average credit card balance is $4,100.00


It s hard to get out from under

Scenario #1

You charge $2,500

You pay $50 per month

Yearly interest rate is 19.9%

How long will it take to pay the balance?

Scenario #2

You charge $2,500

You pay $100 per month

Yearly interest rate is 19.9%

How long will it take to pay the balance?

It’s Hard to Get ‘Out from Under’

9 years, 1 month

2 years, 9 months


Six steps for a smart start after college

Six Steps for a Smart Start after College

  • Establish Financial Goals

  • Separate Needs from Wants

  • Create a Monthly Spending Plan

  • Start Saving and Bank Wisely

  • Stay on Top of Your Student Loan Obligations

  • Use Credit Wisely


1 establish financial goals

Short Term

Buy a car

Buy new furniture

Be debt free

Vacations

Long Term

Buy a home

Pay off student loans

Start a business

Start a family

College tuition for children

Retirement

1. Establish Financial Goals


2 separate needs from wants

2. Separate Needs from Wants

Wants: Variable

  • Entertainment

  • Cable

  • Internet Service

  • Magazines

  • Eating Out

  • Hobbies

  • Cell Phones

Needs: Fixed

  • Rent or Mortgage

  • Utilities

  • Food

  • Clothing

  • Transportation

  • Taxes

  • Health Care

  • Childcare

  • Repairs


Needs vs wants

Needs vs. Wants


3 create a monthly spending plan

3. Create a Monthly Spending Plan

  • Start at the beginning of each month

  • Pay yourself first (open a savings account)

  • Keep track of everything you spend: coffee, newspaper, magazines, etc.

  • Record all of your income

  • Pay your bills on time


Budget worksheet sections

Budget Worksheet Sections

  • Section 1

    • Yours (and your spouse’s, if you have one)

    • Financial Aid

  • Section 2

    • Books, tuition, and interest on unsubsidized loans

  • Section 3

    • Cable TV, lattes, eating out, newest cell phone


4 start saving and banking wisely

4. Start Saving and Banking Wisely

  • Start a savings account

  • Sign up for your employer’s retirement plan

  • Borrow only what you need

  • Sign up for automatic savings: what you don’t see does make a difference

Today’s habits will pay off tomorrow!


Banking and savings

Banking and Savings

  • Due to the effect of compounding, routine saving adds up quickly …

The Effect of Compounding

$50/month = about $7,057 in 10 years

$250/month = about $35,284 in 10 years

$500/month = about $70,568 in 10 years

Based on 3% interest


Choose the right bank

Choose the Right Bank

  • When choosing a bank, seek one that offers:

    • Convenient Location and Hours

    • Types of Accounts You Need

    • Competitive Interest Rates

    • Low Service Charges

    • Convenient ATMs

    • Secure Online Services

    • Incentives


Use your checking account wisely

Use Your Checking Account Wisely

  • Record all purchases

  • Balance your account monthly

  • Avoid overdraft fees

  • Take advantage of online banking

  • Debit cards are not credit cards


5 stay on top of student loan obligations

5. Stay on Top of Student Loan Obligations

  • Subsidized Loans

    • Federal government pays the interest until the student enters repayment

    • When the borrower has been granted a deferment, the government pays the interest during the deferment period

  • Unsubsidized Loans

    • Student is responsible for paying the interest that accrues on the loan from the date of disbursement until the loan is paid in full, regardless of enrollment status


Pay down student loans

Pay Extra and Save

An extra $50 a month

Pay off loan 2.8 years faster

Save $1,766 in interest

An extra $250 a month

Pay off loan 6.7 years faster

Save $3,920 in interest

An extra $500 a month

Pay off loan 8 years faster

Save $4,633 in interest

Pay Down Student Loans

Student Loan

$15,000 borrowed

10 year term

6.8% interest rate

Monthly payment: $173

Total interest paid: $5,714


6 use credit wisely

Advantages

Build credit

Rent a car

Available for emergencies

Frequent flyer miles

Online purchases

Immediate cash availability

Disadvantages

Negatively affect credit

Debt accumulation

Years to repay debt

High interest rates

Repayment could be 3 to 5 times original purchase price

Immediate cash availability

6. Use Credit Wisely


Consequences of defaulting on your student loans

Consequences of Defaulting on Your Student Loans

  • Entire loan balance due at time of default

  • Notification to the credit bureaus

  • Approximately 15-18% collection cost added

  • Possibility of wage garnishment of 25%

  • Tax refunds can be withheld for payment

  • Ineligible for additional financial aid

  • Transcripts can be withheld


Choose the right credit card

Choose the Right Credit Card

  • Strive to pay off your credit card balance every month

    • Don’t charge more than you can afford

  • Examine the Interest Rate

    • Introductory Rates

    • Adjustable Rate Credit Cards

    • Fixed Rate Credit Cards


Choose the right credit card1

Choose the Right Credit Card

  • Examine the Fees

    • Late fees

    • Over the limit fees

    • Annual fees

    • Balance transfer fees


Choose the right credit card2

Choose the Right Credit Card

  • Reward Programs

    • Do your homework


Manage your credit cards

Manage Your Credit Cards

  • Choose a credit card with no annual fee

  • Use credit cards conservatively

  • Charge only what you can pay off at the end of the month

  • Make monthly payments on time

  • Always pay more than the minimum requested

  • Be wary of cards that offer free merchandise


Manage your credit cards1

Manage Your Credit Cards

  • Do not purchase on impulse

  • Do not charge more than you can afford

  • Know when your credit card payment is due

  • Do not live a lifestyle you cannot afford

  • Do not use credit cards for cash advances, unless it is an emergency


Protect your credit

Protect Your Credit

  • Limit access to your personal data

  • Always take credit card receipts with you

  • Never permit your credit card number to be written onto your checks

  • Order your free credit report once a year

  • Remove your name from the marketing lists of the three credit reporting bureaus

  • Never allow anyone to use your credit card


Feeling overwhelmed

Feeling Overwhelmed?

  • Ask for help

  • Call at the first sign of trouble

    • Denial of credit

    • Credit cards that are maxed out

    • Borrowing money to pay bills

    • Paying only the minimum

  • Contact your student loan provider

  • Contact a Consumer Credit Counselor

  • Work out a plan to repay


Protect your credit1

Protect Your Credit

National Credit Bureaus

Equifax www.equifax.com (800) 997-2493

Trans Union www.transunion.com (800) 888-4213

Experian www.experian.com (888) 397-3742


Protect your credit2

Protect Your Credit

www.annualcreditreport.com(877) 322-8228

www.optoutprescreen.com(888) 5OPTOUT


Make a smart start toward financial success

Follow these guidelines and you will have a successful future!

You’ll be able to take that vacation, pay off bills, and buy your new car or home!


Questions

Questions


Thank you

Thank You!


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