Chapter 8 Preserving Your Credit

Slide 2 What Are Shared Responsibilities? 8-1 Identifying Financial Issues Shared responsibility is when two or more people agree to bear a portion of an obligation. A roommate is a person with whom you share living space and responsibilities.

Slide 3 Group Budget 8-1 Identifying Financial Issues Group budgeting allows allocation of expenses so that each person pays his or her share.

Slide 4 Tenant Rights and Responsibilities 8-1 Identifying Financial Issues Rights To possess and enjoy the property To come and go and have guests To use common areas, such as pools Responsibilities To use the property only as intended To care for the property and report repairs To obey the rules

Slide 5 Landlord Rights and Responsibilities 8-1 Identifying Financial Issues Rights To receive rent in a timely manner To inspect the property Responsibilities To provide a safe, sanitary, and habitable living site To provide a convenient way to pay rent To keep security deposits in a separate account and refund unused portions

Slide 6 Focus On... Reading a Lease Agreement A lease is a property rental agreement that lasts a year or longer. A month-to-month agreement means you can leave with a 30-day notice. A lease gives you the security of knowing property is committed for a fixed time period. Read a lease agreement carefully before signing to avoid traps. 8-1 Identifying Financial Issues

Slide 7 Buying a Car A car loan is usually an installment loan with monthly payments. 8-2 Long-Term Debt Repayment Make a down payment (cash deposit) toward purchase price. Can trade-in existing car as down payment. Consider a preapproved loan, dealer financing, or a lease.

Slide 8 Buying a House 8-2 Long-Term Debt Repayment A down payment of 10 to 20 percent of the purchase price is often required. Property is used as collateral for the loan. A conventional loan lasts up to 30 years. An FHA loan is a government loan. Closing costs are expenses paid to get a loan, such as appraisal fees and credit report fees. A mortgage is a long-term debt agreement used to purchase real estate.

Slide 9 What Is a Debt Repayment Plan? 8-2 Long-Term Debt Repayment A debt repayment plan is a strategy for paying off debt to reduce interest paid.

Slide 10 Debt Repayment Plans 8-2 Long-Term Debt Repayment Student loans are deferred-payment loans; payment is postponed until your education is completed. A shorter mortgage (15 yr. vs. 30 yr.) means less interest but higher monthly payments. A rent-to-own agreement applies the monthly rent toward the purchase price of the property.

Slide 11 Building Communications Skills 8-2 Long-Term Debt Repayment Formal Speaking Begin with a clear statement of your goals. Use an outline to develop the content. Consider the audience. Use slides to help illustrate points and add interest. Practice the speech within the time limit. Make eye contact and speak with confidence.

Slide 12 How Can You Manage Credit Use? Pay bills on time to build a solid credit history. Pay entire amount to avoid paying interest. Establish a cash fund and have unused credit. 8-3 Credit Management Establish credit so it will be available in the future.

Slide 13 Study Credit Offers 8-3 Credit Management Compare disclosure terms. o Interest rates o Grace period o Annual fee o Minimum finance charge o Transaction fees o Cash advance fees o Late fees o Over-the-limit fees

Slide 14 Avoid Unnecessary Credit Costs 8-3 Credit Management Keep the number of credit cards and accounts to a minimum. Comparison shop for credit cards. Consider special deals and financing. Use credit to get sale prices. Time your credit purchases. Get cash rebates and rewards. Pay bills on time or early.

Slide 15 Avoid Unethical Loan Practices A loan shark offers illegal unsecured loans at high interest rates. An advance-fee loan includes a large upfront fee. 8-3 Credit Management Equity stripping involves giving a loan to a homeowner who cannot afford it, then taking possession of the home.

Slide 16 Success Skills 8-3 Credit Management Stress Management Identify the causes of negative stress. Take steps to avoid or change these situations. Seek counseling for serious stressful events. Find activities to help you relax. Spend time with family and friends. Get rest, eat healthfully, and stay active.