FinancialAwareness Ann Elinski Senior Advisor Office of Financial Aid
Decisions About Money • No one told me…. • Be honest with yourself about your finances • Keep good habits, change bad ones • Life happens, be prepared • Bad decisions happen, you can recover
Know Yourself First • Before you can manage your money, you need to know how you spend it • What do you like to spend your money on? • How do you pay for your expenses?
Jane’s Story • Jane only received one year of help with tuition from her parents, and has been working to pay her expenses. But she does use credit cards to pay for extra things she wants.
How Do You Spend Your Money? • Housing • Economical- you live with 5 roommates to save on housing costs • Moderate- you live in the dorms with a meal plan • Elaborate- you have a nice apartment that you can barely afford
Jane’s Story • Jane lives with her parents off campus and does not pay rent • Yearly cost $0.00
How Do You Spend Your Money? • Groceries/Food • Economical- you use coupons and shop every sale • Moderate- you use your meal plan, and eat out 2 times a week • Elaborate- you have a meal plan and don’t use it. You eat out at fast food a lot.
Jane’s Story • Jane eats out breakfast, lunch and dinner on the days she has class • $22 a day at least 3 days a week = $3432 a year
How Do You Spend Your Money? • Entertainment • Economical- you take advantage of free activities on campus or you only go out 1-2 times a month • Moderate- you go out at least once a week to eat, the movies or to the club • Elaborate- you go out two to three times a week to the movies or the club
Jane’s Story • Jane goes out to the Bar 3 times a week. • $60 a week = $3120 a year
How Do You Spend Your Money? • Transportation • Economical- you drive an older car that is totally paid off, but in need of a few repairs • Moderate- you drive a newer car that you bought used, and you still make monthly payments to your car note • Elaborate- you drive a brand new car, and you have 4-5 years left to pay on the car note.
Jane’s Story • Jane drives a brand new car • $300 a month = $3600 a year • Car Insurance = $1200 a year
What’s The Big Deal? • If you eat out at Wendy’s twice a week and spend $7.00, you will spend $728.00 a year on fast food • $4.00 a day on Starbucks = $1460.00 a year
Jane’s Yearly Expenses • Rent - $0.00 • Food- $3432 • Entertainment $3120 • Car- $3600 • Insurance- $1200 • Total yearly $11,352
Jane’s Yearly Expenses • Total yearly expenses $11,352 • Jane earns $7,000 a year • Jane is charging $4352 ayear on her Credit Cards! • After 5 years of college Jane will owe $21,760 on her Credit Cards she doesn’t change her spending habits!
What Are Your Goals? • To be financially aware, you need to write down what you spend • Define your future goals • Career Goals • Educational Goals • Financial Goals • Take actions to reach your goals
Jane’s Goals • Jane wants to move out of her parents house • What can she do to get her expense under control to reach her goal?
Evaluate Jane’s Expenses Wants Needs
How Can Jane get Control of Her Expenses? • Go to the bar only once a week • Eat breakfast at home and bring lunch on days she has class • Shop around for cheaper car insurance • Use student loans instead of Private loans or Credit Cards to pay living expenses
What about Student Loans? • Jane is about to graduate with her Bachelor’s Degree in Accounting • She made some changes to her spending habits and she used Stafford Loans instead of her credit cards to pay for school
What about Student Loans? • For every $10,000 in student loans you borrow, you will repay about $115 a month when you graduate • Jane’s Loan Debt $30,000 in Stafford loans = $345 a month
Jane gets a job • Jane got a job as an Accountant that pays $45,000 a year • Taxes take about 25% of her income which leaves her $33,750 to live on • $2813 a month to pay her expenses
Jane gets a job Income per month $2813 Less Student loan bill -$345 Less Credit Card bill -$400 Less Car Note & Insurance -$400 Less Phone/Cell Bill -$100 Less Apartment Rent -$900 Less Groceries/Gas -$300 Remaining Salary $368 Is Jane doing okay?
Are You Already In Debt Trouble? • You don’t know the amount of your monthly expenses • You only pay the minimum or less on your bills • You are near the limits on all of your credit cards • You don’t know how much you owe and you don’t want to find out
Are You Already In Debt Trouble? • You use a credit card to buy food and gas • You use credit cards because you don’t have enough money to live • You have more than eight open credit cards
Are You Already In Debt Trouble? • There is no specific amount that means you are in debt trouble • You may be able to make your own plan • Or you may need help
Debt Education/Credit Counselors • Many organizations are non-profit • Not all services are free • States Department of Justice provides a list of approved Debt Education Agencies on their website • www.usdoj.gov/ust/eo/bapcpa/ccde/de_approved.htm
Debt Education/Credit Counselors • Will a Debt Management plan affect your credit score? • It wont hurt your score but it may make it hard to qualify for new credit
Credit Reports • Each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report, at your request, once every 12 months
How do you establish good credit? • Pay your credit balances on time every month • If you can’t pay your balance in full make the minimum payment • Don’t charge your card to the limit
How do you lose good credit? • Pay your bill late • Exceed your credit limit • Write a bad check • Default on a loan • File for Bankruptcy
Websites • www.nelliemae.com • www.truecareers.com • www.salary.com • www.collegeboard.com • www.optoutprescreen.com • www.ftc.gov
Credit Reports • To receive a free copy of your credit report: • annualcreditreport.com • 1-877-322-8228 • complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281 • You can print the form from ftc.gov/credit