PERSONAL FINANCE PRIMER. Covering Your Bases!. DEBT: Using Debt Wisely. CREDIT CARDS 1. Advantages: Interest Free Loan Know your billing date Grace period: 25-30 days Simplified Record Keeping Convenience Simplifies return of goods and resolution of purchase disputes Emergencies.
Covering Your Bases!
Debt Safety Ratio = Total Monthly Consumer Credit Payments @
Monthly Take-Home Pay
@ excludes monthly mortgage payment
Danger Signs of Using Too Much Credit:
1. WHOLE LIFE
2. TERM LIFE
***IMPORTANT: Before you buy an insurance coverage check the financial stability rating of the insurance company. Look for an A.M. Best rating of A++
3 Months to 6 months take home Pay
To cover unanticipated Financial Shocks
Employer downsizing – lost our job
* WARNING: BE CAREFUL OF INFLATION
Therefore $115.50 - $5.25 = 22 pizzas
Notice: We have a 15.5% return on our financial assets, however, the number of pizzas we can consume only increased from 20 to 22 pizzas.
The idea behind Mutual Funds Is Simple:
VALUE BLEND GROWTH
SHORT MEDIUM LONG
High – Treasury &
Medium – Corporate
Low – Below Investment Grade
STRATEGY #1 STRATEGY#2 STRATEGY #3