1 Lifetime Money Skills

2 University of Maryland Cooperative Extension Jean Austin & Crystal Terhune Family and Consumer Science Educators

3

4 Emergency Fund GoalsBudget Financial Plan Financial Statements Financial Records Credit Record LifeHealth Insurance Disability Property Financial Foundation Liability

5 Basic Financial Advice for Job Loss Involve your family in developing a money management plan Make an assumption about how long you will be out of work : 6 months, 12 months, etc. Consider your financial options as early in the process as possible

6 What does money mean to you? status success freedom independence trust envy desire jealousy security comfort power control self- esteem

7 $ Lifetime Money Skill #1 Identify Needs and Wants

8 Needs and Wants Stylish summer clothes Cell phone Weekend in Ocean City Hamburgers and beans Cable TV Manicure Phone service Medication

9 $ Lifetime Money Skill #2 MANAGING DEBT

10 Understand the Debt You Have Collateral – property that a creditor can take, if you don’t pay a particular debt Secured Debt – collateral *Mortgage, car, equipment Unsecured Debt – no collateral *Credit and charge cards, legal or medical bills, gas cards, department stores

11 What to Pay First Family necessities Housing – mortgage or rent Essential utility service Car loan or lease payment Child support Cosigned loans, if you have collateral at risk

12 Who Gets Paid Next? Taxes –federal, state and local Unsecured debt is the last priority Negotiate a payment plan based on all unsecured debt

13 $ Lifetime Money Skill #3 Make a Budget

14 The “B-Word!” Income All sources Expenses Fixed–--Flexible--- Periodic Track Expenses Look for leaks! WRITE IT DOWN!

15 How does money “slip through your fingers”? Try to identify the leaks!

16 Make Your Spending Plan Useful A spending plan or budget is… $ Your spending guide $ Personal and unique $ Realistic $ Flexible

17 Use 70% of take-home pay for living expenses. Use 20% to repay debt. Save 10% for you and your future. Important Reminder Example: Total monthly take home pay = $1000 Living expenses (Rent + bills + food + clothes, etc.) = $ /1000 =.7 = 70%

18 $ Lifetime Money Skill #4 Explore All Resources

19 Possible Resources Public Libraries: Local resource bank Local & out-of-town phonebooks Computers for internet access/ Letter and resume writing Career Centers: Area salary/wage rates Resume writing Job skills/training Interviews/ job connections

20... More Resources Cooperative Extension: Educational programs Self-help information Fact sheets Resources & referrals Consumer Credit Counseling Services (CCCS): Assistance with negotiations with creditors Information and education

21 And MORE Resources Food and Nutrition: Food Stamps (DSS) WIC (Health Dept) School Meals (School) Family Support Centers/Head Start (Local) Local food pantries (Ask DSS for a list) Medical: MCHIP (Health Dept. or DSS) Doctors/Clinics (Sliding fee scales CCHS) Hospitals’ “Hill Burton” funds (Uncompensated Care) Health Depts (Free or low- cost exams, services, birth control) Medbank (Call DSS or Health Dept)

22 Even More Resources! Unemployment ( ) MD Energy Assistance Program (MEAP) and EUSP (For heat)– call DSS Section 8 Housing (Call MRDC ) Subsidized Housing (List from DSS or MRDC) DSS Emergency Assistance (One-time only help for meds, bills, rent, etc. with proof of need)

23 $ Lifetime Money Skill # 5 ORGANIZE FINANCIAL RECORDS

24 How long to keep records

25 $ Lifetime Money Skill #6 Use Credit Wisely

26 What do Credit Bureaus do? Collect data:  Personal information  Employment history  Credit Use and Repayment history Provide information to:  Creditors  Employers  Insurers  Landlords

27 3 Major Credit Bureaus:  Equifax  Experian  Transunion Credit Bureaus

28 START HERE!

29 Correcting a Credit Report Contact company that reported the error Ask company to correct error, in writing, with each credit bureau Photocopy pertinent documents Write credit bureau, explain error and enclose documentation Send certified mail with return receipt

30 What Is A Credit Score?

31  – Low Risk  – Medium Low Risk  – Medium Risk  – Medium High Risk  620 and Below – High Risk or Sub-Prime Credit Score Ranges

32 Signs of Credit Trouble Exceeding 20 percent rule Second salary used to pay debts Used for everyday expenses Credit not thought of as debt Use cash advances to pay bills

33 Minimum Payment Trap Credit card:Pay Minimum per Month: Balance of $3000 4% of balance (starts at $120/mo.) 19.0% interest 134 months $1, in interest Total Paid: $4, Pay More each month: 4% of balance + $15/mo. 53 months $1, in interest Total Paid: $4, Power Payment: $120/month (fixed payment) 33 months $ in interest Total Paid: $3,849.27

34 $ Lifetime Money Skill #7 SAVINGS Should Still Be A HABIT

35 Every Little Bit Counts

36 Saving vs. Investing

37 Saving Preserve principal while getting a small return. Investing Increase principal in hopes of getting a greater rate of return.

38 Pay Yourself First at 5% interest Save this each week In 10 years, you will have $ 7.00 $ 4,720 $ $ 9,440 $ $ 14,160 $28.00 $ 18,880 $35.00 $ 23,600

39 Your Net Worth Assets - Liabilities = Net Worth

40 Before You Invest  Prepare financial statements  Set financial goals  Establish a spending plan  Organize financial records  Establish a positive credit history  Maintain adequate insurance coverage

41 Simple Ways To Invest High Interest Savings Accounts I-Bonds Certificates of Deposit (CD’s) Individual Retirement Accounts –Traditional IRA’s –Roth IRA’s Mutual Funds

42 Bankrate.com

43 $ Smart Money Tip #8 Beware of SCAMS and FALSE CLAIMS!

44 Earn $1,000/wk working at home! Let US help YOU clean up your credit! Save your home from foreclosure! We’ll find you a job– GUARANTEED! Do MEDICAL BILLING in your PAJAMAS!!!! STUFF ENVELOPES and earn LOAD$ OF DOUGH! Call the Consumer Protection Division to ask about complaints– but remember scams “move quickly”!

45 Emergency Fund GoalsBudget Financial Plan Financial Statements Financial Records Credit Record LifeHealth Insurance Disability Property Financial Foundation Liability

46 Presentation compiled and edited by: Jean Austin & Crystal Terhune Family and Consumer Science Educators University of Maryland Cooperative Extension Lifetime Money Skills Help us to help others!! Please complete your EVALUATION!