Financial Awareness Ann Elinski Senior Advisor Office of Financial Aid

Decisions About Money No one told me…. Be honest with yourself about your finances Keep good habits, change bad ones Life happens, be prepared Bad decisions happen, you can recover

Know Yourself First Before you can manage your money, you need to know how you spend it What do you like to spend your money on? How do you pay for your expenses?

Jane’s Story Jane only received one year of help with tuition from her parents, and has been working to pay her expenses. But she does use credit cards to pay for extra things she wants.

How Do You Spend Your Money? Housing  Economical- you live with 5 roommates to save on housing costs  Moderate- you live in the dorms with a meal plan  Elaborate- you have a nice apartment that you can barely afford

Jane’s Story Jane lives with her parents off campus and does not pay rent Yearly cost $0.00

How Do You Spend Your Money? Groceries/Food  Economical- you use coupons and shop every sale  Moderate- you use your meal plan, and eat out 2 times a week  Elaborate- you have a meal plan and don’t use it. You eat out at fast food a lot.

Jane’s Story Jane eats out breakfast, lunch and dinner on the days she has class $22 a day at least 3 days a week = $3432 a year

How Do You Spend Your Money? Entertainment  Economical- you take advantage of free activities on campus or you only go out 1-2 times a month  Moderate- you go out at least once a week to eat, the movies or to the club  Elaborate- you go out two to three times a week to the movies or the club

Jane’s Story Jane goes out to the Bar 3 times a week. $60 a week = $3120 a year

How Do You Spend Your Money? Transportation  Economical- you drive an older car that is totally paid off, but in need of a few repairs  Moderate- you drive a newer car that you bought used, and you still make monthly payments to your car note  Elaborate- you drive a brand new car, and you have 4-5 years left to pay on the car note.

Jane’s Story Jane drives a brand new car $300 a month = $3600 a year Car Insurance = $1200 a year

What’s The Big Deal? If you eat out at Wendy’s twice a week and spend $7.00, you will spend $ a year on fast food $4.00 a day on Starbucks = $ a year

Jane’s Yearly Expenses Rent - $0.00 Food-$3432 Entertainment$3120 Car-$3600 Insurance-$1200 Total yearly $11,352

Jane’s Yearly Expenses Total yearly expenses $11,352 Jane earns $7,000 a year Jane is charging $4352 a year on her Credit Cards! After 5 years of college Jane will owe $21,760 on her Credit Cards she doesn’t change her spending habits!

What Are Your Goals? To be financially aware, you need to write down what you spend Define your future goals  Career Goals  Educational Goals  Financial Goals Take actions to reach your goals

Jane’s Goals Jane wants to move out of her parents house What can she do to get her expense under control to reach her goal?

Evaluate Jane’s Expenses WantsNeeds

How Can Jane get Control of Her Expenses? Go to the bar only once a week Eat breakfast at home and bring lunch on days she has class Shop around for cheaper car insurance Use student loans instead of Private loans or Credit Cards to pay living expenses

What about Student Loans? Jane is about to graduate with her Bachelor’s Degree in Accounting She made some changes to her spending habits and she used Stafford Loans instead of her credit cards to pay for school

What about Student Loans? For every $10,000 in student loans you borrow, you will repay about $115 a month when you graduate Jane’s Loan Debt $30,000 in Stafford loans = $345 a month

Jane gets a job Jane got a job as an Accountant that pays $45,000 a year Taxes take about 25% of her income which leaves her $33,750 to live on $2813 a month to pay her expenses

Jane gets a job Income per month $2813 Less Student loan bill-$345 Less Credit Card bill-$400 Less Car Note & Insurance -$400 Less Phone/Cell Bill-$100 Less Apartment Rent-$900 Less Groceries/Gas-$300 Remaining Salary$368 Is Jane doing okay?

Are You Already In Debt Trouble? You don’t know the amount of your monthly expenses You only pay the minimum or less on your bills You are near the limits on all of your credit cards You don’t know how much you owe and you don’t want to find out

Are You Already In Debt Trouble? You use a credit card to buy food and gas You use credit cards because you don’t have enough money to live You have more than eight open credit cards

Are You Already In Debt Trouble? There is no specific amount that means you are in debt trouble You may be able to make your own plan Or you may need help

Debt Education/Credit Counselors Many organizations are non- profit Not all services are free States Department of Justice provides a list of approved Debt Education Agencies on their website ccde/de_approved.htm

Debt Education/Credit Counselors Will a Debt Management plan affect your credit score?  It wont hurt your score but it may make it hard to qualify for new credit

Credit Reports Each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report, at your request, once every 12 months

How do you establish good credit? Pay your credit balances on time every month If you can’t pay your balance in full make the minimum payment Don’t charge your card to the limit

How do you lose good credit? Pay your bill late Exceed your credit limit Write a bad check Default on a loan File for Bankruptcy

Websites

Credit Reports To receive a free copy of your credit report:  annualcreditreport.com   complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box , Atlanta, GA  You can print the form from ftc.gov/credit