Beverlee AndrewsValencia Skillshop

Slide 1:Beverlee Andrews Valencia Skillshop

Slide 5:Each school day, if you buy 2 sodas a day at $1.25, you’re spending $50 each month. Instead, if you invested $50 per month for 50 years, you would have close to $1 million. (invested at 10% interest) Make it a habit to SAVE 10% of every dollar you make. You don’t have to spend all of the money you make.

Slide 6:Don’t underestimate the power of compounding interest. Compounding gets more powerful the longer it’s left to work. The magic of compounding interest depends on three factors How much money you invest How much time it spends growing Its rate of growth

Just do it!  Pay yourself first!  Mar 19, 2004 -- Are you saving a dime on every dollar? New statistics from the Commerce Department show that the typical American family is saving just a little more than a penny on each dollar earned. This worries Clark very much because it simply will not help you. Of course, there are some people who are saving huge amounts of money. But there are many more who are not saving anything or are involved in “negative net saving.” That means that people spend more money than they make. So, overall, we are pitiful at saving money in the United States. Good and bad habits are formed one step at a time, and that’s how you change them, as well. Saving a dime on every dollar is a good goal to have. As the years pass, you’ll be able to bump that number up. Last year, Clark saved 15 percent of his before tax pay and two-thirds of his after tax pay. When you retire, you will have to live on half of what you make. You must keep that in mind. Gather all important financially-related documents and receipts to a central location.  File them so you will be able to easily find the items you need in the future.  Consider a computer based financial program so you can keep track of every dime you spend – financial control is a special form of power!  Spending every dime and more?  Start by cutting back on a few items per week and putting away that money.  Pay yourself first.  Just say no to spending more than you have.  Ask for direct deposit at work if they offer it – you’re saving money, and you don’t even see it.  A savings plan at work that pays you a “matching contribution” is the fastest way to save.  Pay yourself first!  Do not use credit cards.  Force yourself to pay cash so that you can track the dimes.  You will never have a late payment (now as much as $75) and you will never pay interest to others at the very high rates credit cards charge.  Financial freedom will be worth everything you put into it.  Don’t want to work forever – choosetosave®! Top Saving Mistakes   Not modifying your spending habits and committing to save money.  Not taking advantage of your company’s match in a 401 (k) plan, or getting involved in a defined contribution plan.  Not appropriately/correctly allocating your assets to meet a specific goal or time horizon (diversification is important).  Not setting a specific dollar target or financial goal.  Not knowing how much you have, where you are spending your money, and how much you need to save for the future (failure to plan for retirement).  Cashing out your retirement plan – should roll over to an IRA or your new company’s retirement plan.  Just do it!  Pay yourself first! Mar 19, 2004 -- Are you saving a dime on every dollar? New statistics from the Commerce Department show that the typical American family is saving just a little more than a penny on each dollar earned. This worries Clark very much because it simply will not help you. Of course, there are some people who are saving huge amounts of money. But there are many more who are not saving anything or are involved in “negative net saving.” That means that people spend more money than they make. So, overall, we are pitiful at saving money in the United States. Good and bad habits are formed one step at a time, and that’s how you change them, as well. Saving a dime on every dollar is a good goal to have. As the years pass, you’ll be able to bump that number up. Last year, Clark saved 15 percent of his before tax pay and two-thirds of his after tax pay. When you retire, you will have to live on half of what you make. You must keep that in mind. Gather all important financially-related documents and receipts to a central location.  File them so you will be able to easily find the items you need in the future.  Consider a computer based financial program so you can keep track of every dime you spend – financial control is a special form of power! Spending every dime and more?  Start by cutting back on a few items per week and putting away that money.  Pay yourself first.  Just say no to spending more than you have. Ask for direct deposit at work if they offer it – you’re saving money, and you don’t even see it.  A savings plan at work that pays you a “matching contribution” is the fastest way to save.  Pay yourself first! Do not use credit cards.  Force yourself to pay cash so that you can track the dimes.  You will never have a late payment (now as much as $75) and you will never pay interest to others at the very high rates credit cards charge. Financial freedom will be worth everything you put into it.  Don’t want to work forever – choosetosave®!

Slide 9:Who has more at age 65?

Scenario assumes a 9% interest rate Fred invested $18,000 Joe invested $70,000 $579,504 $470,247 JOE

Slide 11:Checking accounts The bank holds money for you and you draw from it. Rule # 1: Don’t overdraw the account Very expensive Can cause trickle effect as the bank overdraft charges are taken from your account. Never rely the ATM receipt balance Balance your checkbook often Too many overdrafts will count against you and will prevent you from opening a checking account at another bank – data is stored in ChexSystems

Oct 05, 2007 -- Bank overdraft fees plaguing young adults Sometimes it seems like young people have a huge bull's eye on their backs for the banks. People who are between the ages of 18 and 24 are being killed with bank overdraft fees. The latest stats say they're paying more than one billion dollars in overdraft fees every year. Clark recently heard from someone who has a teen that overdrew a debit account by $15 and that generated $80 in fees. As a parent, it's getting more and more difficult to teach the young about money. But it must be done. When Clark was in school, you paid for things with cash. Today there's no equivalent in a credit-crazy world. While cash is finite, plastic is infinite. A parent's most important lesson to a son or daughter should involve a pen and a check register -- showing them how to take debit transactions seriously. Banks are only too happy to approve transactions that will result in overdrawn accounts and high fees. There's a bill in Congress that's trying to make it so that a bank must contact you for approval before they overdraw your account. The banks, predictably, are incensed about this because they may lose profit. Clark loves it when people have more info to make smart (or dumb) choices. What happened to ethics and morality in the banking world? Why do bankers get up in the morning and try to figure out how to rip off fellow Americans? If a bank approves an overdrawn transaction that generates fees, how is that moral or ethical?? It's not. The bill will probably be killed because the bankers are so strong giving dirty money to politicians. So teach your children well and you'll save them from losing money in the school of hard knocks. Oct 05, 2007 -- Bank overdraft fees plaguing young adults Sometimes it seems like young people have a huge bull's eye on their backs for the banks. People who are between the ages of 18 and 24 are being killed with bank overdraft fees. The latest stats say they're paying more than one billion dollars in overdraft fees every year. Clark recently heard from someone who has a teen that overdrew a debit account by $15 and that generated $80 in fees. As a parent, it's getting more and more difficult to teach the young about money. But it must be done. When Clark was in school, you paid for things with cash. Today there's no equivalent in a credit-crazy world. While cash is finite, plastic is infinite. A parent's most important lesson to a son or daughter should involve a pen and a check register -- showing them how to take debit transactions seriously. Banks are only too happy to approve transactions that will result in overdrawn accounts and high fees.

Slide 12:Keep your receipts. Immediately record deposits, checks, debit charges and ATM withdrawals in your checkbook (or computer program such as Quicken or Microsoft Money) Pay attention to the fees. They add up. If you use an out of network ATM machine to get $20 and pay $2.50 to get it, you just paid 5% fee to get that money. Plan ahead.

Slide 13:Bank Method Bank or Credit Union has a bill payer program that you tell them when to pay the bill. Most banks offer this for free and saves time Excellent way to keep track of your bills and what has been received by the companies. You can choose to initiate each payment or set up a recurring payment at the same time each month.

Slide 14:You authorize the company (phone, electric, etc.) to take the funds from your checking account. You can initiate the transaction or You can authorize a certain time of the month to pay the bill If you want to stop the withdrawal, you must contact the company who you authorized to take it out – not the bank!

Slide 15:Short term loans in case of emergencies usually between $500 and $1,000 Loan made against a credit card or a paycheck Interest rates are VERY high Credit may be extended if the loan can’t be paid, but it makes the amount owed SKY HIGH Avoid, if possible!

Slide 17:Credit Card – borrowing money from a bank or financial institution. The bank pays the debt to the store and in turn, you pay the money back to the institution. You agree to pay back the money in a certain period of time. If you don’t pay all of the money owed each month, you will pay interest on the balance owed. Visa, MasterCard, Discover, etc.

Slide 18:On average, Americans carry eight credit cards per person and have a balance of $8,400 in debt. 20% of the cards are maxed out. The average household pays their lender $1,000 a year in finance charges. Roughly 1 in 7 Americans are carrying credit card balances exceeding $25,000. Nobody gets rich paying Visa or MasterCard. Having a credit card doesn’t mean you can afford to spend more---it just makes it easy to spend more than you can afford.

Slide 19:Credit Card Minimum Payment Calculator This calculator requires the use of Javascript enabled and capable browsers. This calculator determines the amount of time, interest and payments required to pay off the credit card balance, assuming nothing more is added and that you pay only the minimum required payment you entered into the minimum payment field (or left at the default). It uses the APR (annual percentage rate of interest) and your entry of the minimum required payment. Enter the credit card balance using only numbers and a decimal. Enter the APR in whole numbers. For instance, 18% would be 18; if the APR was only 1/2% (Oh Joy!), the entry would be .005. Enter your credit card's minimum payment percentage or leave the default of 3%, what most credit card companies use. Enter the minimum payment YOU wish to make or leave the default. Click on calculate and read the bad news! The formatted APR is the factor used in calculations, based on your entry. The Calculated From Minimum Payment Percentage field is the amount of the minimum payment based on the percentage of balance field; in order to make headway against your balance, you should pay NO LESS than that, although your credit card company may suggest lower. After that is calculated, you can enter that figure in the minimum payment field, click on Calculate again and see the difference in the calculations! You may also wish to see our Credit Card Payment Calculator, which will determine the payment to pay off a balance in a fixed amount of time. Credit Card Minimum Payment Calculator This calculator requires the use of Javascript enabled and capable browsers. This calculator determines the amount of time, interest and payments required to pay off the credit card balance, assuming nothing more is added and that you pay only the minimum required payment you entered into the minimum payment field (or left at the default). It uses the APR (annual percentage rate of interest) and your entry of the minimum required payment. Enter the credit card balance using only numbers and a decimal. Enter the APR in whole numbers. For instance, 18% would be 18; if the APR was only 1/2% (Oh Joy!), the entry would be .005. Enter your credit card's minimum payment percentage or leave the default of 3%, what most credit card companies use. Enter the minimum payment YOU wish to make or leave the default. Click on calculate and read the bad news! The formatted APR is the factor used in calculations, based on your entry. The Calculated From Minimum Payment Percentage field is the amount of the minimum payment based on the percentage of balance field; in order to make headway against your balance, you should pay NO LESS than that, although your credit card company may suggest lower. After that is calculated, you can enter that figure in the minimum payment field, click on Calculate again and see the difference in the calculations! You may also wish to see our Credit Card Payment Calculator, which will determine the payment to pay off a balance in a fixed amount of time.

Slide 20:Credit is becoming more important than ever before Jobs, apartments, insurance rates Late payments, maxing out your cards, applying for too much credit at once hurts your credit. Start right! Get a free credit report, 1 free each year by each of the three credit bureaus

Slide 21:Correct any errors. Establish a checking and savings account – signs of stability Pay your bills on time, all the time It can take 7 years to have the full effects of missed payments taken off your credit report Don’t max out your cards – use less than 30% of your credit limit Pay your balance in full, if possible.

Slide 22:Ask the credit card companies to lower your interest rate. Just ask, stand firm. They would rather lower it than lose you. (transferring to another card or going into bankruptcy.) If you can’t qualify for a credit card, you can get a secured credit card. You deposit money into the card and spend it. It helps build your credit and it gives you access to using plastic instead of cash.

Slide 23:Issued by your bank, debit cards take funds directly from your money that you have in your bank account – it’s acting like a check, just faster. Can be used like a credit card – you can swipe them and then you sign off on the receipt. No PIN required.

Slide 24:Since it has a ‘credit card’ like feature (ex. Visa logo), if you lose it, and someone uses it, the money is coming directly out of your checking account which will affect your balance and could put you in the negative. The bank will work with you, but in some cases, the damage has been done and there is a lot of cleaning up to do if you bounced a check due to insufficient funds.

Slide 25:You must notify the bank immediately or your liability goes up. Or if the store accidently runs the transaction more than once, you have to get them to remove the transaction. Credit cards are safer because if someone steals it, you are not liable for the charges if you notify them – call and report it immediately and fill in the form sent to remove the charges. – more consumer protection.

Slide 27:Nearly 40% of all millionaires choose to buy used cars rather than new ones. You will be more likely to pay for the true value of the car. Used cars keep their value longer. A new car goes down in value The minute you drive off the lot, it’s worth 20% less. A $20,000 car is now worth $16,000

Why does Clark prefer that you buy used cars instead of new? Well, according to Kelly Blue Book, the value of a new car drops like a rock as soon as you leave the lot. Let’s say you buy a new American car and trade it in five years from now. How much of the original purchase price is it worth? Between 22 and 25 percent. In five years, it loses between 75 and 80 percent of its value. What about Japanese cars? Two vehicles that hold their vehicle better than any other car are the Toyota Camry and Honda Accord. They hold about 60 percent. So, there is a benefit to buying a new Japanese car versus a new American car in terms of resale value. But there is still a large drop. If you buy a used car that is a few years old and have it checked out, the car will keep its value much longer. There may also be some of the warranty left on the car, which is great. Even better news is that car prices are no going down and car companies are adopting a “no-haggle” buying procedure. So, the process is easier and cheaper. GM is one of the companies that tried the no haggle deal, and it did not work so well for them. So the company is implementing special incentives on top of the deals. It’s basically a great time to buy a used car. Just remember to always have your used car inspected by a certified mechanic and research the title history on carfax.com. That goes for “manufacturer certified” cars as well. Why does Clark prefer that you buy used cars instead of new? Well, according to Kelly Blue Book, the value of a new car drops like a rock as soon as you leave the lot. Let’s say you buy a new American car and trade it in five years from now. How much of the original purchase price is it worth? Between 22 and 25 percent. In five years, it loses between 75 and 80 percent of its value. What about Japanese cars? Two vehicles that hold their vehicle better than any other car are the Toyota Camry and Honda Accord. They hold about 60 percent. So, there is a benefit to buying a new Japanese car versus a new American car in terms of resale value. But there is still a large drop. If you buy a used car that is a few years old and have it checked out, the car will keep its value much longer. There may also be some of the warranty left on the car, which is great. Even better news is that car prices are no going down and car companies are adopting a “no-haggle” buying procedure. So, the process is easier and cheaper. GM is one of the companies that tried the no haggle deal, and it did not work so well for them. So the company is implementing special incentives on top of the deals. It’s basically a great time to buy a used car. Just remember to always have your used car inspected by a certified mechanic and research the title history on carfax.com. That goes for “manufacturer certified” cars as well.

Slide 28:Know beforehand how much car you can afford. Shop for a car in your price range Go to these sites to research carsdirect.com edmunds.com kelleybluebook.com

Know what you should be paying for a car!

Slide 32:Shop online: Cars.com

Slide 33:Get out a magnifying glass and read the fine print. Some ads simply list “WAC” or “OAC” (with or on approved credit) Get the dealer’s best price in writing. Don’t buy that day. Tell them you are going to shop around to other dealerships. When serious, get a CARFAX to see the history on the car.

Slide 34:Tell the dealer you want the best price without financing. The best time to buy is at the end of the month when the dealership is trying to meet their sales goals. Never tell the salesperson what you want your monthly payment to be. They will build the deal with that in mind when you might be able to get by with a lower payment. Don’t pay the sticker price. Begin negotiating at the “invoice” price. Try to end up as close as possible to this price. Make sure the dealer follows through with the advertised deal. Advertised deals aren’t always the best deals on the lot. Walk around.

Slide 35:Get approved for financing from a credit union or bank before shopping. Get the shortest term possible. If financing through the dealer, take the ad with you to the dealership. The ad must state the amount or percentage of down payment, terms of payment, and the annual percentage rate

Slide 36:Insurance costs will be different, depending on the car year and model What happens if you don’t make your payments? Repossess the car (the bank comes and takes the car back) Credit report major hit Buy Here, Pay Here dealers Very high (sub-prime) car loan rates The dealership fails to report your on-time payments and your credit score does not improve Not all BHPH dealerships are ethical and they might sell you a lemon on purpose

Slide 37:Have a certified mechanic look the car over before purchasing For more information: http://www.carbuyingtips.com/used.htm http://www.smartcarguide.com/ http://carinfo.com/ http://www.insidercarsecrets.com/

Certified used cars have become overwhelmingly popular these days. With everything that the dealer’s say about their “certified used cars,” you would believe that they are a safe bet. Don’t count on it. In a recent story, one lady bought a GM certified pre-owned car that turned out to be two cars welded together! And GM has said absolutely nothing about it. The average extra price paid for a “certified used car” as opposed to one that isn’t certified is $2,000. When you are paying “certified” price but aren’t really getting a “certified” product, it is just wrong. So avoid some of the pains you can have and pay an ASE certified mechanic to take a look before you buy. It might cost a little up front, but save you a lot in the long run. Clark always prefers that people buy used cars because they cost much less than new cars and still have a lot of life left. But the risk with used cars is that the car may have been in a wreck and you don’t know about it. That’s why Clark wants you to always do two things: have the car inspected and run a Carfax report. It’s especially important that you do both because Clark has just learned that in Oregon and Illinois it’s illegal to disclose information about accidents in which cars have been. Somehow, car dealers convinced the legislatures in these two states that a car is worth less if people know about those accidents. What about the people who buy the cars? Don’t they deserve to know that the car could be faulty and potentially endanger their lives. It’s essential that you have any used car checked out by a certified independent mechanic. Pay the money to have this done. And if a dealer refuses to allow you to do this, don’t buy from that dealer. Certified used cars have become overwhelmingly popular these days. With everything that the dealer’s say about their “certified used cars,” you would believe that they are a safe bet. Don’t count on it. In a recent story, one lady bought a GM certified pre-owned car that turned out to be two cars welded together! And GM has said absolutely nothing about it. The average extra price paid for a “certified used car” as opposed to one that isn’t certified is $2,000. When you are paying “certified” price but aren’t really getting a “certified” product, it is just wrong. So avoid some of the pains you can have and pay an ASE certified mechanic to take a look before you buy. It might cost a little up front, but save you a lot in the long run. Clark always prefers that people buy used cars because they cost much less than new cars and still have a lot of life left. But the risk with used cars is that the car may have been in a wreck and you don’t know about it. That’s why Clark wants you to always do two things: have the car inspected and run a Carfax report. It’s especially important that you do both because Clark has just learned that in Oregon and Illinois it’s illegal to disclose information about accidents in which cars have been. Somehow, car dealers convinced the legislatures in these two states that a car is worth less if people know about those accidents. What about the people who buy the cars? Don’t they deserve to know that the car could be faulty and potentially endanger their lives. It’s essential that you have any used car checked out by a certified independent mechanic. Pay the money to have this done. And if a dealer refuses to allow you to do this, don’t buy from that dealer.

Slide 39:If you must pay money in advance to get money, it might be a scam – legitimate companies deduct it from the disbursement check. Never spend more than a postage stamp. If it sounds too good to be true, it probably is. Less than 1% of users of fee-based scholarship matching services actually win an award (finaid.org) Nobody can guarantee that you’ll win a scholarship.

Slide 40:Legitimate scholarship foundations do not charge application fees You must do the work…don’t believe “we apply on your behalf.” Claims of “influence” over the scholarship sponsors. (matching services) Excessive hype “free money” “everyone is eligible” Unusual request for personal information

Slide 41:Claims of government approval – govt. does not endorse or recommend private businesses If a seminar is held at your college, don’t assume that it’s a university approved event Don’t assume that’s a not-for-profit organization Typing and spelling errors in materials Notification by telephone

Slide 42:Be cautious if fees are involved Get an independent opinion Call Directory Assistance Never give out personal info to strangers Get it in writing before responding Don’t respond to unsolicited offers Ask the organization how it got your name Ignore offers that involve time pressure Contact the FTC Consumer Alert

Slide 44:Signing a lease Obligates you for the term of the lease If more than one person is on the lease, all are responsible, even if one moves out. Get renter’s insurance Roommates Are you compatible? Setting ground rules Collecting bill money Maintenance

Slide 45:Imagine that you’re interviewing a potential roommate to share your two bedroom apartment. List three questions you would ask about the person’s lifestyle and habits.

Slide 48:Choose the right store - go to stores that offer the best prices on certain items Eat first! Stock up when things are on sale (buy one get one) Buy store brands Clip coupons Avoid marketing ploys – end of aisle dump bins, island displays, middle shelf items.

Slide 49:Set limits on impulse buying Read labels – does it have what the item represents Prepare your week with things you have and what’s on sale Grocery store ads (Orlando Sentinel on Wed. Stores offer loss leaders (below market price to get you in the store) Watch the scanner – stop the checkout if an item is incorrect. Some stores offer it free if it rings up incorrectly.

Slide 50:Don’t buy convenience items. (cheese already cut up, carrots with dip, little boxes of raisins) Cut or bag your own Some bakeries have a day old section. It’s still fresh, but significantly discounted. Just because it say’s sale, doesn’t mean it’s a bargain. Packaging cost money. Example: Cereal in the bag instead of a fancy box

Slide 51:Ask for a raincheck if a sale item is gone. Return products that you didn’t use. Send off for rebates Shop with friends and share Warehouse clubs have lower prices most of the time, but not if you use coupons often Be a savvy consumer. Don’t be afraid to question a price.

Slide 52:“extra 10% off” if you apply today. – not good for your credit score no interest for 12 months – same as cash The interest is really adding up (accruing) so that if you don’t pay the balance before the 12 months is up, you have to pay back all of the (deferred) interest from the start of the loan. If you use these, pay the balance due a month BEFORE the due date. Consumers have reported being told that the check wasn’t received on time… 1 day late and 12 months of interest is due.