PersonalFinancial ManagementSeminar Office of Frank M. Pees Standing Chapter 13 Trustee Debtor Education
Personal Financial Management • Meets post-filing financial education requirement. • Must show ID and sign-in and sign-out to receive certificate. • Certificate will be emailed to your attorney. • Attorney must file certificate with court. • Seminars 2, 3, and 4 are voluntary.
Agenda for Seminars • Seminar 1 – Financial Management - Monthly • Seminar 2 – Basics of Budgeting • February, August • Seminar 3 – Buyer Beware • April, October • Seminar 4 – Credit Re-establishment • June, December
Materials • Green Folder • Right side • Forms to complete • Personal Financial Choices workbook • Left side • Handouts for Lessons 3 – 5 in workbook • Extra packet of forms/exercises for spouses in joint cases
Class Goals Setting goals and Creating a Plan Money Management/Budgeting (Break) : Enjoy Refreshments! Buyer Beware Restoring Your Credit Wise Use of Credit
Journey To Financial Success What does financial success mean to you? • Enough money to take care of your needs. • Enough money to pay for reasonable wants. • Enough money to save for your goals.
Values • What is really important to you? • Activity 1 ---- Page 1-2 List 5 things you want to do in your lifetime.
Philosophy of MoneyWhat Does Money Mean to You? • Financial Security • Bills • College Education for Children • Boat • Home • Home Improvements • Gas/fuel • Good Job
Money Messages • What positive or negative messages about money did you hear from the important people in your life as you were growing up? • What did they say about money----making it, spending it, saving it, etc? • What did you “hear between the lines” about money? • Their attitudes about money have influenced your attitudes and spending habits.
Emotions and Money • Anger • Guilt • Envy • Depression • Joy • Loneliness and Boredom
Communicating about Money • Timing is everything: • choose a good time & talk about finances on a regular basis • There are 168 hours in a week: • We spend about 56 hours sleeping, • 21 hours eating, • 40 hours working, • 28 hours online or watching TV, • 10 hours driving, • Which leaves 13 hours: • Use 1 or 2 hours to discuss personal finances
Communicating about Money • Be clear about what you want to say before you try to explain it • Avoid jumping to conclusions or playing the blame game • Focus on one topic at a time • Let each person talk & Listen carefully: ”If you’re too busy talking, you’re not busy listening”
Exercises to Help Start Discussions about Money MONEY AND GOALS QUESTIONNAIRE • Lesson 1, Page 1-6 • Answer the first 4 questions. PERSONALITY TYPES • Page 1-7
A Financial Plan will assist You in: • learning how finances work in your life. • enabling you to make good decisions about how you use your money. • making you aware of where your money is going. • keeping good records of spending. • improving communicating about money.
A Financial Plan will assist You in: • showing where to cut spending. • providing a way to save for specific items. • spending money without feeling guilty. • living within your income.
Four Steps in Planning ProcessPage 1-10 • Assess Needs • Set Goals • Make A Plan • Take Action
Step 2 - Set S.M.A.R.T. Goals • Specific – clearly identifies need or want. • Measurable – can easily measure progress. • Attainable – choose a realistic and probable goal. • Relevant – important to you & consistent with other life plans. • Time-related – set a definite target date.
Step 3: Make a Plan • Goal: Purchase a new lawn mower next May. • What actions must you take? • 1. Decide how much to spend. • Research which model to buy. • Compare prices at stores or online. • Determine how much to save each paycheck.
Step 4: Take Action Take the first step. It is often the most difficult. Identify the end point for each step & reward yourself for achieving it. Review your progress along the way. Work through or around roadblocks and obstacles.
Realistic Goal with Action Steps Activity #8– Page 1-14 in workbook • Write a goal – written goals are more likely to be achieved • Write a date by which you will accomplish it • List the steps you need to take to achieve your goal
Actions needed to achieve goals • 1 Focus – reminders or pictures • 2 Visualize achieving goal • 3 Set Priorities • 4 Manage Time Wisely • 5 Evaluate Progress • 6 Adjust Goals - if necessary • 7 Celebrate Success!
Keep On Keeping On. Persistence Usually Wins!
Lesson 2 $Managing your Money $ Aka Budgeting
Components of a Budget Earning money Tracking money Categorizing expenses Subtracting expenses from income Analyzing and trimming expenses Saving money
Know Your Monthly Income • Gross income – what you actually earn • Net income – what’s left over after deductions for taxes, insurance, Chapter 13 payment, child support, etc. (what you actually get to spend)
Net Monthly Income Page 2-2
Types of Expenses Types of Expenses Examples Fixed Mortgage, Rent, Chapter 13 Payments, Support Variable Clothing, Food, Gas for auto, Utilities Periodic or Insurance (house, car) Unexpected Property/Income Taxes
GETTING STARTED Activity #2 in Lesson 2, page 2-3 How much do you think you spend?
Trackyourspending Write down everything you spend every day for one month Do you know where your money actually goes?
Where does your money go? Write down every time money is spent, even on the smallest things.
WeeklyTracking Track weekly expenses Do this for 4 weeks Page 2-6
MonthlyTotals Page 2-7 Total weekly expenses to get monthly totals
Create a personal spending plan page 2-10 The first step is to see where you are so you can begin to make plans to get where you want to be.
Analyze and Trim Expenses Pack lunch for work or school Cancel extra cable services Use the public library for DVDs & magazines Food banks Dollar stores, secondhand clothing shops Use coupons and look for specials Plan meals weekly or monthly & build menus from what’s on special
Saving Your Money As soon as you receive your payment termination letter at the end of your case, start saving 5% - 10% of each & every paycheck from each & every wage-earner. Start a savings habit that continues for the rest of your working life. Pay yourself first. Use direct deposit if possible.
But, remember, as the country music singer says: Children spell LOVE: T-I-M-E It’s the time we spend with family & friends that matters most.
“It’s good to have money and the things that money can buy, but it’s good too, to make sure you haven’t lost the things that money can’t buy.” George Horace Lorimer Editor, Saturday Evening Post 1899-1937
Lesson 3 – Buyer Beware In the last 15 years a tremendous amount of research has gone into how to get people to buy. Targeted groups The Trustees’ Education Network included this chapter to help people protect their hard-earned money.
Marketing Tactics Ever go to the store for a loaf of bread and spend $30.00? According to the experts Between 20% and 70% of all purchases are impulse or unplanned purchases Marketing experts have researched ways to increase unplanned purchases through: Color Atmosphere---texture, sound and smell Advertising techniques
Color--- Influences Purchases Red ---Raises the blood pressure. Creates the feeling of excitement. It may cause us to be less rational. --Used in signs, brand labels and sale signs. Blue ---Send the message of trust and loyalty. --Used by many insurance companies, banks, medications or any product they want you to trust. Green ---Associated with money, wealth and nature. --Used by banks, investment firms, and companies associated with the outdoors. Black and Silver ---Used to sell luxury items. --Cars, computers and cell phones What do these background colors say?
http://blog.kissmetrics.com/color-psychology/ Researchers have determined which colors appeal to what kind of person.
Atmosphere Transition Zone---Just as you enter the store This zone is designed to separate us from the hustle and bustle of our lives. Makes us feel good and prepare us for the store’s promotions. If we are happy we will buy more. Grocery stores use flowers and fresh bread. There are appealing smells there too. Clothing stores use displays of enticing garments. Usually on the right side. Research has gone into the type of music the store plays. Uncarpeted isles in department stores are meant to lead you past certain merchandise. Some department stores are using smell to increase the likelihood you will buy. Food courts in malls and coffee and snacks in book stores are meant to get you to stay longer. The longer you stay, the more you will buy.
What are some of the advertising tricks that irritate you?
Advertising Techniques • Page 3 -2 and 3-4 have more examples • Peer Approval----Implies if you do not use this product you will not be popular. • High Pressure---One day only. Quantities are limited. • Watch for Weasel Words---Words that practically nullify the claim they are supposed to be making. • "Leaves dishes virtually spotless." Do you want your dishes almost clean? • “________ fights bad breath." It fights it, but doesn’t stop it. • Bait and Switch---Store advertises something at a low price to get you in and then they try to get you to buy higher priced item. • Buy one and get one free ---The word free rings with people. However, would you buy the first one if the second wasn’t free? • Suggestive Selling ---More than we used to experience.
Tricks to Avoid Impulse Buying Smart shopping begins at home. Make a list. Stick to your list. See Sample Shopping List This saves on those $30.00 loaves of bread. “Sleep on” major purchases. (Google complaints about products before you buy or check consumer reports.) Know your store. Go to the items you need and don’t browse. Don’t use a cart or use the smallest one you can find. If you use a cart, review your cart for items you might want to put back before you get in line. (Think about whether or not you really need the item.) Check the advertisements before you go. Try to build your week’s menu based on what is on sale.
Watch out for loss leaders— These items are sold at or below cost. The stores try to get you in the store hoping you will buy something else. hidden costs--- Shipping and handling or batteries not included. deceptive packaging--- Packages with more than one item grouped together. Sometimes they cost more than single ones. Same sized container, but one is 10 ounces and the other is 12. (We don’t buy 1 pound bags of chips or ½ gallons of ice cream any more.) Comparison shop. (Many stores will price similar items--one in pounds and one in ounces. They make it hard to compare—Take your calculator.)
RememberImpulse spending---Leaves you further away from your goals. Ask yourself first: Is there something else I need to spend this money on? Have I already spent too much money on things like this? How disappointed will I be if I don’t buy this today?