Presentation Transcript

1. Get a Grip on Your Money during 2012 and beyond

   1

2. Marsha A. GoettingPh.D., CFP®, CFCS

   Professor & Extension Family Economics Specialist Department of Agricultural Economics & Economics 2
3. Packet Provides tools & techniques that can help you become a more effective financial manager during 2011 & beyond 3
4. Provided by MSU Extension Montana Credit Unions for Community Development First Interstate BancSystem Foundation 4
5. How would you describe your money management skills? Fantastic Sorta good So-So Awful Hopeless 8 Countdown
6. Do you have a system for tracking your expenses? Yes No 8 Countdown
7. How would you describe your tracking system? Checks Envelope Calendar method Mental Computer Software Web-based program Don’t have a system… 8 Countdown
8. How do we? Make adjustments in spending if we don’t know where the money is going???? 8
9. Benefits of knowing Reduce need for credit Spend hard earned $ more effectively Find money for other goals 9
10. MSU Check Register Tracking SystemTool # 1
11. Register System Use to track expenses Checks Cash Debit Cards Credit Cards
12. Front Cover
13. Back Cover
14. Category Descriptions
15. Blank Page for Your Expense Categories
16. Planned spending amounts (p. 2) Categories Food = $300 Housing = $590 Transportation = $360 Clothes Personal care = $120 Medical = $100 Recreation = $80
17. Balance at a glance Far right column Checking account balance $300
18. Example 1:
19. Example 2: Recording Expenses
20. Example 2: Record Expenses Check 511 to K-mart $9.06 listed twice Under personal care Checking account balance
21. Example 2: Expenses Personal Care Category: $20.94 Checking Account Balance $290.94
22. Example 3: Circle=Cash Box=Credit
23. Example 3: Cash/Debit Card Items are circled $3.75 food $24.00 clothes $15.00 medical
24. Credit Card Charges Items are boxed Credit Card expense 5/5 Auto Repair $130 Listed under Trans. & Credit Card Columns Total—Credit Card Column
25. Example 4: Adding Expenses
26. Rounding Round up or down in budget category section $9.06 = $9.00 $9.67 = $10.00
27. Register Tracking System Check Cash Credit Debit
28. Blank Register
29. Evaluation Families found an average of $50 that used to “disappear.”
30. Cost $1.00 No charge in packet thanks to sponsorship of: MSU Extension Montana Credit Unions for Community Development First Interstate BancSystem Foundation
31. What year did Americans have the highest year of saving? 1975 1983 1991 2000 8 Countdown
32. Personal Savings Rate 32 32
33. Year (Highest Rate of Savings) May 1975 14.6 33 33
34. 1982 9.0 34 34
35. At this point in your life what is your primary motivation for saving? Fear (of what happens if I don’t) Desire to minimize financial stress Retirement For emergencies 8 Countdown
36. Track’n Your Savings GoalsTool # 2
37. Handy tool Shows how totrack progress towards achieving specific savings goals All in one place
38. Front Cover
39. Back Cover
40. What are you saving for? Savings Goals
41. Decide on Amount Needed Figure2
42. My Savings Goals Figure2
43. Goal Categories & Amounts Figure 3
44. Recording a Savings Deposit Figure4
45. Recording a Deposit -- Split Among Goals Figure5
46. Recording a Savings Withdrawal Figure6
47. Sample Savings Register: 47
48. Credit Cards 48
49. “But Roger, everyone spends more than he earns. That’s what America is for.” 49
50. What is the average credit card balance owed by American households? $23,100 $14,687 $8,250 $5,500 8 Countdown
51. Credit Card Balance… $14,687 51
52. What is the average annual credit card interest rate? 21.5% 18.9% 14.9% 6.0% 2.8% 8 Countdown
53. Average credit card interest rate 14.9%
54. What percentage of credit card holders carry more than a $10,000 balance on their credit cards? 75% 50% 37% 15% 8 Countdown
55. Owe more than $10,000 37%
56. Credit Card Smarts Slide Calculator Tool #3 56
57. Credit card annual interest rate assumed by Credit Smarts Calculator 18.0%
58. Credit card monthly interest rate assumed by Credit Smarts Calculator 1.5%
59. Paying Just 3% on Your Credit Card Debt Check the REAL cost Orange Side: Side 1
60. Blue Side: Side 2 Pay MORE than 3% and Save a LOT
61. Matt & Julie $10,000 Credit Card Debt
62. Pay back: $19,421 Interest Charges: $9,421 Years to pay off: 20 Orange Side: Side 1
63. $10,000 debt $300 first payment 20 years in debt $9,421 interest paid Blue Side: Side 2
64. Blue Side: Side 2 $10,000 debt
65. Credit Card Tracker Tool # 4 65
66. Ask yourself questions: Do I really need the item now?
67. Ask questions What will I have to give up to pay this debt?
68. Personal limits for using credit: ????? ????? ?????
69. Record of Card Expense Date Description of charge Amount charged
70. Credit Card Trackerinside
71. Schedule of Non-monthly Living Expenses Tool #5
72. Purpose Provide clear picture of how your non-monthly payments are distributed throughout a 12-month period
73. Example--page 3 Car insurance is due? Property taxes are due? Total payments in Nov? Yearly cost for newspaper?
74. Non-monthly Expenses Total yearly cost of non-monthly expenses? $5,153 Monthly set aside amount? $429.42
75. Back of MontGuide Blank form for you to use
76. Non Monthly ExpensesFill out on computer Download Excel or PDF spreadsheet at:www.montana.edu/extensionecon/ financialmgtpublications.htmlSee form under Schedule of Non-monthly Family Living Expenses 76
77. Schedule of Non-Monthly Worksheet 77
78. Completed Worksheet 78
79. Eastern Montana Couple “Line 1 is our family fixed expenses, Line 2 is our family income, The difference is the fix we’re in.”
80. “I tried living within my income once & got claustrophobia.” MSU non traditional student
81. Question often asked How much “should” be spent for family living expenses?
82. Marsha’s Response Well, It depends..
83. Available Income Number of Family Members Stage in Family Life Cycle Rural vs. Urban Family/Individual Values Factors
84. Do you/your family have a written spending plan? Yes No 8 Countdown

85. Developing a Spending PlanTool #6

86. Guidelines from Bureau of Labor Statistics

87. Consumer Expenditure Survey – 2008Percentages by category
88. Annual Income Across top Less than $5,000 $70,000 & over
89. Average Expenditure Categories, after taxes Food at home Food away from home Housing Apparel & services Transportation
90. Average Expenditure Categories, after taxes (con’d.) Health Care Entertainment Education/Reading Contributions Personal Care Other
91. Question: What is the average amount before taxes does family with income of between $40,000 & $49,999 spend on transportation?
92. Amount spend on Transportation $6,393 $3,125 $2,010 $ 957 8 Countdown
93. $40,000 - $49,999 Transportation $6,393
94. Question: What does family with income between $50,000 & $69,999 income spend annually on food at home?
95. Amount spend on Food at Home? $5,212 $3,755 $2,120 $1,315 8 Countdown
96. $50,000 - $69,999 Food $3,755 $313 monthly
97. Tool #7

    Using a Homestead Declaration to Protect Your Home From Creditors

98. Question What is the $$ amount of equity in your home that a Montana Homestead Declaration (if recorded) protects against most creditor claims?
99. Amount home equity Montana Homestead Declaration protects? $250,000 $100,000 $ 60,000 $ 40,000 $ 10,000 8 Countdown

100. Montana Homestead Declaration

     $250,000
101. What is a Homestead? House, condo, townhouse, manufactured or mobile home Land on which it sits (if owned) Any improvements, fences, etc.
102. Married Couples Both spouses should sign the declaration Must be notarized
103. Record Clerk and Recorder’s office: In the county where the home is located
104. No Protection Against liens
105. Doesn’t protect Equity in home if owner’s cost of care Were paid by Medicaid
106. Standard Form MSU Extension: www.montana.edu/extensionecon/financialmgtpublications.html

107. Montana Medical Care Savings Accounts

     Tool #8
108. Health Expenses Have you had any medical expenses this year that aren’t covered by insurance? 108 108
109. Do you have medical expenses not covered by insurance? Yes No 8 Countdown
110. Do you have a Montana Medical Care Savings Account? Yes No 8 Countdown

111. What is an MSA?

     An account that can be used for paying eligible medical expenses not covered by a Montanan’s health insurance policy, Flexible FSA, Federal Health Care Savings Account (HSA)
112. MSA Contribution Amounts: Maximum $3,000 for each taxpayer $6,000 married couple
113. MSA Saves on Montana Income Taxes Contributions: Not subject to Montana income tax Taxes saved depend on tax bracket
114. Taxable Income Adjusted income $ 29,000 MSA deposit - $3,000 Taxable Income $26,000
115. Tax Brackets & Rates Montana- 2011 www.mt.gov/revenue
116. Tax Savings with MSADeposit: $3,000 Taxable income more than $15,600 6.9% tax bracket MSA Deposit $3,000 Tax Bracket x .069 $207 Tax Savings
117. Regular savings accountDeposit: $3,000 Taxable income more than $15,600 6.9% tax bracket Savings Deposit $ 3,000 Interest Rate x .0001 .30 earnings
118. Reduced Income for Taxes Total deposited in MSA Not amount withdrawn
119. Example: Barbara January 31 $3,000 deposited in MSA Only $2,000 eligible medical expenses during year
120. Barbara’s Montana Income Reduced by $3,000 Not $2,000 Adjusted income $ 32,000 MSA deposit - $3,000 Taxable Income $ 29,000
121. Reporting Schedule II: Montana Subtractions from Federal Adjusted Gross Income Line 18: Exempt Medical Care Savings Accounts Deposits and Earnings
122. What percentage of Montanans have established an MSA? 78% 25% 13% 1.4% 8 Countdown

123. Percent of Montanans with MSAs

     1.4%

124. Managing Money in Tough Times

     Tool #9 Check those you would like to receive

125. Family Financial Management Publications

     Tool #10 Other materials that may be of interest

126. Get a Grip on Your Money during 2012 and beyond