Debt/Bankruptcy

VIDEO CLIP https://www.youtube.com/watch?v=HuGIgf-ICHM

Debt is when we owe more money than we have What is debt? Debt is when we owe more money than we have One way to get into debt is by making impulsive decisions with money – whether for a want or a need

What will the consequences of my purchase be? Ask these questions… Whenever making a purchase decision ask these questions: Can I afford it? How will I pay for it? What will the consequences of my purchase be? Example – buying a new card – luxury vs. used and not as nice

Ex. – financing college tuition, mortgage for a home Good vs. bad debt GOOD BAD When credit is used to purchase something that is needed but may be difficult to pay for in cash. Can help build credit Ex. – financing college tuition, mortgage for a home Credit is used to purchase something that is more of a want May lower your credit. Ex. – a car or a house way out of your price range

bankruptcy Bankruptcy is a last resort when a person is so deeply in debt that there is no other way to resolve the problem Two basic forms: Chapter 7 Chapter 13

Chapter 13 Chapter 7 Allows you to erase MOST of your debt bankruptcy Chapter 7 Chapter 13 Allows you to erase MOST of your debt Must be unemployed or have a very low income Must take part in financial counseling Allows you to repay many of your debts over a period of time Usually no more than 5 years A court typically oversees a repayment plan

Circumstances Leading to Bankruptcy Family Break-Up Uninsured Medical Costs Loss of Job

Effects of bankruptcy Personal Societal

Increased consumer costs Inflation Effects of bankruptcy Personal Societal Family relationships Remains on credit for 7-10 years (Ability to receive loans is affected) Social stigmas Loss of a home Increased consumer costs Inflation

Order your debt from smallest to largest. The Debt snowball Order your debt from smallest to largest. Cut your unnecessary budget expenses and put aside as much money toward debt payoff as you can possibly spare. Pay the minimum on all debt payments/loans, except your smallest Use all extra monthly debt repayment money toward your smallest loan. *Once you’ve paid off one loan, you take all the money you were putting toward paying it off and add it to the next loan

The Debt snowball https://www.youtube.com/watch?v=J3p_FNugS_0

One way to save - couponing http://www.youtube.com/watch?v=W5LosUoULpo