1 PowerPay Your Way out of Debt

2 22 Marsha A. Goetting Ph.D., CFP ®, CFCS Professor & Extension Family Economics Specialist Department of Agricultural Economics & Economics

3 33 Marsha Goetting’s Version of…………..

4 44 Using Response Clicker Is already ON Don’t press these buttons –Menu –Enter –Go to –Clear

5 Test Your Clicker Press 3/C o 1/A o 2/B o 3/C o 4/D Not Accepting Answers

6 Screen shows your answer o 1/A o 2/B o 3/C o 4/D Your Answer 1/A

Which of your debts has the highest balance? 7 1. Credit Card 2. Car Loan 3. Student Loan 4. Store Credit 5. Other Countdown 8

8 Must respond before end of time 1.Yes 2.No Countdown 6

What is your most important financial goal right now? 9 Countdown 8 1.Pay off loans, overdue bills or other debts 2.Save money for retirement 3.Save money for emergencies 4.Save for children’s education

10 What if I entered wrong answer? Last response counts o 1/A o 2/B o 3/C o 4/D Your Answer 4D

Which of your debts has the highest interest rate? Credit Card 2. Car Loan 3. Student Loan 4. Store Credit 5. Other Countdown 8

12 Yes No Questions Do not use these keys: “Yes” or “No”

13 Yes or No Questions Use 1, if yes 2, if no

Do your sometimes feel overwhelmed at the amount that you owe creditors? Yes 2. No Countdown 8

What % of consumers have debt other than a mortgage? % 2. 88% 3. 82% 4. 71% 5. 68% 6. 40% Countdown 8

16 Using Clicker You are anonymous No one knows your answers So click away when asked questions!!!!!!

Credit Financial Concept Paying only the minimum amount on credit cards costs a lot 17

What’s the average credit card balance owed by American households? $23, $15, $8, $5,500 Countdown 8

19 Credit Card Balance… $15,956

What is the average APR on credit card with a balance? 20 Countdown % % % % %

21 Average credit card interest rate 12.8%

What percent of credit card holders say they hardly ever pay the balance in full? % 2. 58% 3. 35% 4. 15% Countdown 8

23 Hardly ever pay in full 58%

How many credit cards does average American household hold? 24 Countdown

25 Credit Cards the average household “holds” 3.5

26 PowerPay

27 PowerPay Debt Types Credit Cards Appliance Loans Remodeling Loans Car Loans

28 Debt Payments First debt: $150 Second debt: $50 Third debt: $75 Total Monthly Payment: $275

29 How PowerPay Works? As soon as one debt is paid off, that monthly payment is applied to the next debt.

30 First Debt When debt 1 ($150) is paid off, add that payment to next debt.

31 First Debt Paid Off First debt paid off: 0 Second debt ($50):  $150 + $50 = $200 Third debt: $75 Monthly Payment $275

32 Second Debt When debt 2 ($50 + $150) is paid off, add that payment to next debt.

33 Second Debt Paid Off 1st & 2nd debt paid off: 0 Third debt ($75): $275 ($150 + $50 + $75) Monthly Payment $275

34 PowerPay Continue combined payments until all debts are paid off.

35 Benefit$ of PowerPay Reduces time to pay on debts $ ave$ interest

36 PowerPay Debt “Rules” No new debt be incurred Total dollar amount towards debt reduction remains the same

37 PowerPay Web site (Utah State University-Extension)

38 Welcome

39 User Login If new member, click [New? Sign up now]

40 Screen that Appears Enter New User Information, Click Submit

41 Power Pay Options

42 Folder Tabs PowerPay Spending Plan PowerSave Calculators Education Center About PowerPay

43

44 PowerPay Options 1. Payment Calendar 2. Consolidate 3. Emergency Fund 4. Loan Qualifier 5. Snapshot Projection

45

46 Create Creditor(s) List Creditor Name Balance Payment % Rate

47 Creditor Information: Creditor Name BalancePayment% Rate Chase Auto Mastercard Security Bank Lowes Save Creditor Information Press after each entry

48 Example: Payoff Time Creditor NamePayoff Time Chase Auto2 years 7 months January 2012 Mastercard9 years 11 months May 2019 Security Bank4 years 1 month July 2013 Lowes1 year 2 months August 2010

49 Creditor Information

50 Highest Interest First

51 Repayment Method Drop Down Menu Without Power Payments Highest Interest First Lowest Balance First Shortest Term First Calculated as Entered

52 Which loan “should” be paid off first? 1.Lowest Balance 2.Shortest Term 3.Highest interest rate

53 Advantages of Paying Shortest/Term Lowest Balance First 1. Reduce from 10 – 7 2. You feel “better” 3. Get rid of “Uncle George” 4. Other ideas?

54 Advantages of Paying Highest Interest First 1. Pay less interest 2. Pay off quicker 3. Other ideas?

55 Select Highest Interest First, Then Click Calculate

56 Without Power Payments (Highest Interest First) Creditor Name# of paymentsTotal PaidInt. Paid Chase Auto31$ $ Mastercard119$ $ Security Bank49$ $ Lowes14$ $67.51 Payoff Time 9 years 11 months May 2010 Total Paid $35, Total Interest $12,578.17

57 With Power Payments (Highest Interest First) Creditor Name# of paymentsTotal PaidInt. Paid Chase Auto31$ $ Mastercard47$ $ Security Bank47$ $ Lowes14$ $67.51 Payoff Time 3 years 11 months May 2013 Total Paid $29, Total Interest $6,263.25

58 Bottom Line benefits (Highest Interest First) Time to Pay off Reduced by: – 6 years Amount Saved in Interest: – $6,314.92

59 Payment Calendar Example Scroll Down

60 Detailed Calendar Provides a month by month look at your debt elimination plan.

61 Click Payment Calendar

62 Scroll down to see Detailed Calendar Last pmt $82.49

63 $ Lowes $ To Master Card

64 Total Creditor Payback

65 Want to know Remaining Balance Interest Principal

66 Show Balance, Interest, Amount towards Principal Click on tiny box

67 For each creditor

68 Payment Calendar Questions?

69 Extra Payment Option

70 Extra Payment Any additional money paid toward debts above the minimum amounts

71 Click Extra Payments Tab

72 Extra Payment Amount Start month Start year Frequency

73 Extra Payment Frequency One-time only Annually Semi-annually Quarterly Monthly

74 Example: Extra Payment AmountStart Month Start Year Frequency $50August2010Monthly $500Feb.2011Annually Save Payment Information Press after each entry

75 Drop Down Menus

76 Click Payment Calendar

77 Select Highest Interest First

78 Without Power Payments Highest Interest First Creditor Name# of paymentsTotal PaidInt. Paid Chase Auto31$ $ Mastercard119$ $ Security Bank49$ $ Lowes14$ $67.51 Payoff Time 9 years 11 months May 2010 Total Paid $35, Total Interest $12,578.17

79 With Power Payments Highest Interest First Creditor Name# of paymentsTotal PaidInt. Paid Chase Auto31$ $ Mastercard42$ $ Security Bank42$ $ Lowes14$ $67.51 Payoff Time 3 years 6 months December 2012 Total Paid $ Total Interest $

80 PowerPay Benefits $50 per month $500 annually Time Reduction – 6 years 5 months Amount Saved –$6,955.12

81

82 Detailed Calendar with Extra Payment $500 extra $50 extra

83 Consolidation Option

84 Select Consolidate

85 Creditors to Consolidate Check creditors to consolidate Enter fees and penalties amount Calculate Amount to Be Consolidated

86

87 PowerPay Web site (Utah State University-Extension)

My opinion of PowerPay is: 88 1.Worth Trying 2. Too complicated 3.Won’t use as I don’t have debt 4.Other Countdown 8

89 Your Opinion Please

What is your reaction to using the response clickers?: 90 1.Worth Trying 2. Too complicated 3.Won’t use as I don’t have debt 4.Other Countdown 8

91 What is your reaction to using the response clickers? 1.Very Impressed 2.Sort of Useful 3.So-So 4.Not too impressed 5.Didn’t like using them Countdown 7

92 Rank the knowledge you gained from the PowerPay program 1.Didn’t learn anything new 2.Gained a little 3.Neutral 4.Gained some 5.Gained a lot Countdown 7

93 Rank the level of motivation that the PowerPay program provided for you to take actions towards increasing your minimum credit payment. 1.No motivation 2.A little motivation 3.Neutral 4.Some motivation 5.Lots of motivation Countdown 7

94 Best wishes as you explore Power Pay Marsha