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Freshman Experience: Managing Your Finances Georgia Gwinnett College October 15 & 17, 2007.

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Presentation on theme: "Freshman Experience: Managing Your Finances Georgia Gwinnett College October 15 & 17, 2007."— Presentation transcript:

1 Freshman Experience: Managing Your Finances Georgia Gwinnett College October 15 & 17, 2007

2 2 Georgia Gwinnett College I.Money Management II.Banking III.Credit: Managing Debt IV.Identity Theft Table of Contents

3 3 Georgia Gwinnett College Money Management

4 4 Georgia Gwinnett College  Not knowing what you have to spend  Ignoring bills coming up next week or next month  Results:  Living paycheck-to-paycheck  Coming up short when the big bills come in  Know where you spend your money  Reach your long and short term goals  Keep your focus  Show where you need additional help and if you have a borrowing need  Include your spouse and/or family in money management issues The #1 Money Trap Budgets Help You To: Money Management Are you managing your money or is it managing you? Importance of Budgeting

5 5 Georgia Gwinnett College Money Management Step 1 Estimate Your Income Step 2 Estimate Your Fixed Expenses Step 3 Determine Amount Available for Variable Expenses Step 4 Estimate Your Variable Expenses Step 5 Determine Your Surplus or Deficit Budget Guidelines and Suggestions Keep it simple Tailor your budget to specific goals Be consistent Restrict debt payments to no more than 20% of your income Try to save 10% of your income Establish an emergency fund equal to 6 months of expenses Step-by Step Budgeting

6 6 Georgia Gwinnett College Money Management Budget Example

7 7 Georgia Gwinnett College  Review your budget every month  Are you over or under on your budget items?  Are your variable expenses in line?  What are your “budget busters”?  Are any expenses out of control?  Will you make your planned surplus by year end?  The “latest and greatest” syndrome  Using credit instead of cash  Eating out every night  Borrowing from the future  Keeping up with the Joneses Set Your Budget Every Year 10 Leading Causes of Overspending – Beware of These Habits! Money Management Now that you have created your budget, stick with it! Follow Through With Your Budgeting Plan  Being unaware of how much you have to spend  Money “burning a hole in your pocket”  Buying impulsively  Rationalizing spending = “need it because”  Not knowing on what or where you are spending your money

8 8 Georgia Gwinnett College Money Management Saving Tips!  Saving Tip #1  Focus on number of dollars per day to save  Saving Tip #2  Pay yourself first  Saving Tip #3  Save money from coupons and sales  Saving Tip #4  Look at lower-cost alternatives  Saving Tip #5  Shop around for the best price  Saving Tip #6  Organize your bills and financial records  Saving Tip #7  Pay installments to your savings account  Saving Tip #8  Live with roommates  Saving Tip #9  Avoid impulse buys  Saving Tip #10  Use public transportation or carpool  Saving Tip #11  Collect loose change  Saving Tip #12  Break a habit  Saving Tip #13  Dine in more than out  Saving Tip #13  Borrow books and movies, instead of buying  Saving Tip #15  Have a “Buy Nothing” week Stay on Track With These Money Management Tips

9 9 Georgia Gwinnett College Banking

10 10 Georgia Gwinnett College Think of Banking as a Journey Keeping your money in a bank will provide you with: Safety Convenience Security Financial Future Checking Account Payments made via check, online banking and debit card Low or no interest High transaction volume Money Market Account Checks Limited withdrawals Higher interest earnings Savings Account Withdrawal Slip Low transaction volume Minimal interest earnings Asset Management Account High transaction volume High interest earnings Stocks Banking

11 11 Georgia Gwinnett College  Spending Money I Don’t Have  Reconciling My Account  Using Online Banking  Reading a Check  Endorsing a Check  Getting Help What Do I Need to Know About My Checking Account? Only 10% of high school students graduate with any kind of instruction in personal finance Banking Routing Transit Number Account NumberCheck Number

12 12 Georgia Gwinnett College Reconciling Your Account Banking

13 13 Georgia Gwinnett College An Account Statement Banking

14 14 Georgia Gwinnett College In today’s virtual world, you can manage your finances almost anywhere, anytime Different Ways You Can Bank Banking  Check your account  Transfer money between accounts within your bank  Obtain account history  Stop payment on check  Obtain branch hours and locations  Set up balance alerts  Pay bills online PhoneOnline ATMBranch  All of the above!  Access cash  Check account balances  Make deposits  Check your account  Transfer money  Obtain account history  Stop payment on check  Obtain branch hours and locations  Report a lost, stolen or damaged card

15 15 Georgia Gwinnett College Credit Cards  Purchase amounts are automatically deducted from your checking account  May approve into overdraft  May also be used as an ATM card to access cash  Usually VISA or MasterCard branded  Buy now, pay later  Interest charges on unpaid balances  May incur late fees if the minimum payment is not paid on time  If establishing credit:  Pay on time, in full each month Debit Card vs. Credit Card Do you know the difference? Debit Cards Banking

16 16 Georgia Gwinnett College Credit: Managing Debt

17 17 Georgia Gwinnett College  College students mostly use credit cards on lifestyle purchases  76% of all undergraduate college students have at least one credit card and carry an average balance of $2,169  10% of college card holders owe $7,000 or more, and most do not pay off the balances each month  For every $1,000 you charge and do not pay off, you will be charged $180 to $210 a year  Best Practice: charge no more than you can pay off each month  Your credit score will be the single most important factor in determining your approval for a mortgage, car loan, credit card and insurance  You have a file with a credit bureau if you have ever applied for a credit card, loan, or a job  Lenders use your credit score and the following factors to decide whether to lend you money  your income  your other debts  job stability Importance of Credit 1 in 3 college students has 4 or more credit cards! Credit: Managing Debt Students and Debt

18 18 Georgia Gwinnett College Your Credit Record What Is a Credit Score? Checking Your Credit Reports How Do Creditors Use Your Credit Report?  To determine how likely it is that you will repay a loan and make payments on time based on information contained in your credit report, including the following:  bill paying history (late payments, collections, outstanding debt)  income (and amount of debt you have)  types of credit accounts  arrests  Numeric score (3 digits) that summarizes your credit history  Provided to lenders by credit reporting companies  Also known as your “FICO” score, or Fair Isaac (company that created the credit score)  Scores range from 300’s to 800’s, and you should aim for a 720 or higher  You can order free credit reports online annually from Equifax, Experian and Transunion by accessing  It is important to know your credit score and check it annually  Unexpected change in your credit score may be a sign of identity theft Like it or not, potential employers and lending institutions view your credit as an extension of your character – are you a responsible person? Credit: Managing Debt

19 19 Georgia Gwinnett College Tips for Good Credit  Pay your bills on time and in full  Credit card companies are now checking your report every month  Under new “universal default” clauses, if you’re late on 1 card payment, another credit company can hike your interest rate on their card by up to 30%!  Establish credit history – keep only 3 cards; short credit history can negatively affect credit score  Reduce your total amount of credit card debt, and watch your debt in relation to your credit limit  Close unneeded accounts; excessive credit card accounts may have a negative effect on your credit score  Apply for new credit cautiously; too many credit inquiries can negatively affect your score  Reduce the urge to sign up for new cards: Stop 90% of mail solicitations by calling the national OPT OUT number (888-5-OPT-OUT)  Get copies of all three credit reports every year  Equifax  Experion  Transunion  Pay online if possible, that way you have proof that you paid on time Credit: Managing Debt

20 20 Georgia Gwinnett College Identity Theft

21 21 Georgia Gwinnett College What is identity theft? What is fraud? Identity Theft  Identity Theft is when someone uses your personal information to assume your identity and open accounts with the intent of committing theft, fraud or crime  Fraud occurs when someone steals information to transact on an account that is already open and the owner of the account is unaware of these transactions  “Every 79 seconds, a thief steals someone’s identity, opens accounts and goes on a buying spree” - CBSnews.com  Identity theft is one of the fastest growing crimes in the United States  According to the Federal Trade Commission (FTC), 10 million people became victims of identity theft in 2006  FTC predicts 1 in 3 people will be identity theft victims sometime in their lives  A typical victim spends $500-$1,500 and hours to repair the damage of theft to existing accounts  Nearly 75% of victims who discover the theft in the first month spend no money and less than 10 hours to resolve the issues Identity Theft Facts Definition

22 22 Georgia Gwinnett College What do I do if a become a victim? Identity Theft  File a police report  Contact your bank to cancel debit cards and close bank accounts  Call your credit card company to report fraudulent charges and close credit card accounts  Report fraudulent use of your identification information to the Social Security Administration’s Fraud Assistance Hotline  Change all electronic deposits and payments, credit cards and checking accounts  Contact all credit reporting agencies  Recover over 18 month time period  Explain, explain, explain What Identity Theft Means to Me

23 23 Georgia Gwinnett College How could your identity be stolen? Identity Theft Stolen purse or wallet Stolen mail Obtaining credit report by posing as a legitimate person Phishing s Dumpster Diving Pretending to be a reputable company and ask for personal info Obtaining personal info from the internet Shoulder Surfing Account numbers stolen as cards are processed Ways Your Identity Can Be Stolen

24 24 Georgia Gwinnett College How could someone use my identity? Identity Theft  Make counterfeit identification, checks and bank cards and use them to drain your bank accounts  Purchase larger items, including cars, boats and homes, by obtaining loans in your name  Establish phone or wireless service in your name  Call your bank or creditors pretending to be you and request an address change and another credit or debit card on your account  The imposter then makes charges using the card sent to the incorrect address  Intercept a check written to you, forge your endorsement and cash it  File for bankruptcy under your name to avoid paying debts they have incurred under your name, or to avoid eviction  Commit crimes in your name Uses of a Stolen Identity

25 25 Georgia Gwinnett College  Unexplained charges to or withdrawals from your financial accounts  Receipt of credit cards for which you did not apply  Credit denial for no apparent reason  Unexplained negative credit score  Calls or letters from debt collectors or businesses about merchandise or services you did not purchase How do I know if I have been a victim of identity theft? Watch Out for Signs of Identity Theft Identity Theft

26 26 Georgia Gwinnett College  Buy a cross cut shedder and use it!  Shed unsolicited credit card and loan applications, account statements and receipts  Destroy all cancelled checks, old statements, excess checks and deposit slips for closed accounts and credit card receipts  Avoid printing your driver’s license number or your social security number on your checks – only supply information to reputable companies  Review your credit report at least once a year from various credit bureaus – it may be months before you become aware of unauthorized activity, and it can take years to clear up!  Know with whom you are sharing your personal, confidential information  Are they reputable?  Do they truly need the information?  Protect – do not write down or share – account information, pin numbers or passwords with others  Run anti-virus software on your computer and avoid storing personal information on your laptop  Access secure browsers and exit online applications as soon as you finish using them – If doing business over the internet, only use https://  Use debit card in place of checks  Keep pin number separate from debit card Prevent Becoming a Victim How can I prevent being a victim? Strategies to Prevent Becoming a Victim Identity Theft

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