Today is Wednesday September 28 th ! So we’ll be doing some group work… Everyone come in close… And get a partner to work with

Today we’re going to focus on a word that you’ve probably heard a lot before…

Budget A list of all planned expenses and incomes. Everyone has to do this. It’s a pretty necessary part of life. It’s not pleasant. Some important things to know about a budget: Come along and take a look at my… I mean “our” budget.

Budget A list of all planned expenses and incomes.

The goal is to have a “Balanced Budget” This means that you only spend as much money as you earn. That way, you’re never in debt Debt Debt : An amount of money that is owed by one person to another. UGH! This is soooo irritating! You try it!

The goal is to have a “Balanced Budget” INCOME: Average Yearly Income in Baltimore $38,000EXPENDITURES: Monthly CostYearly Cost Average Monthly Rental Price: $700$8400 Average Monthly Utility Cost: (Water / Electricity / Heat) $100$ …… Baltimore City Data This is assuming that I don’t get any of it… Now, with your partner, make a list of other expenses that you’ll have… Things like clothes, schools, cars, food. Figure out how much it would cost per month and then how much it’ll cost per year…. (Keep your total below $38,000!)

Bring it together… What expenses do we have? EXPENDITURES Monthly CostYearly Cost Average Monthly Rental Price: $700$8400 Average Monthly Utility Cost: (Water / Electricity / Heat) $100$1200

Now, here’s the problem… Even after you think that you’ve mapped everything out well, life just likes to throw people curveballs. We’re raising our rates…again. We’re getting married, so bring a nice gift! Eh, I’m sick. I’m not going into work today. Well, accidents happen. I’m going to cost you a fortune! -$125 from Income +$100 to Expenses +$ A Ton to Expenses -Your Last Nerve +$35 to Expenses +$1500 to Expenses

Debriefing the Activity The big lesson The big lesson: You can never plan for everything that life with throw at you, so always be sure to save something in case of a “rainy day”. What are some ways that you could limit your expenses? What do you think will be the hardest thing to cut back on?

CNN has some advice for us: 1. Budgets are a necessary evil. 2. Creating a budget generally requires three steps. Identify how you're spending money now. Evaluate your current spending and set goals that take into account your long- term financial objectives. Track your spending to make sure it stays within those guidelines. 3. Don't drive yourself nuts. Once you determine which categories of spending can and should be cut (or expanded), concentrate on those categories and worry less about other aspects of your spending. 4. Watch out for cash leakage. If withdrawals from the ATM machine evaporate from your pocket without apparent explanation, it's time to keep better records. In general, if you find yourself returning to the ATM more than once a week or so, you need to examine where that cash is going. 5. Spending beyond your limits is dangerous. 6. Tithe yourself. Aim to spend no more than 90% of your income. That way, you'll have the other 10% left to save for your big-picture items. 7. Don't count on windfalls.

Welcome Back! Grab a seat and we’ll get started in a moment. ADVISORY: Thursday, SEPTEMBER 29 th

One day, would you like to… Buy a house? Buy a car? Open a credit card?

If you answered “yes” to any of these questions, you should know about credit scores and how they can impact your future.

Credit Score: A credit score is designed to give lenders a fast, accurate prediction of the risk involved in giving you a loan. Lenders believe the score is very helpful in streamlining the underwriting process. Scores range from the 300s to about 900, with the vast majority of folks falling in the 600s and 700s. The higher the score, the better.

What determines a Credit Score: Past delinquency: People who have failed to make payments in the past tend to do the same in the future. The way credit has been used: Someone who is maxed out or close to the limit on a credit card is considered a greater risk. The age of the credit file: Fair Isaac's model assumes people who have had credit for a long time are less risky. The number of times a person asks for credit: The system frowns upon those who have initiated several requests for credit cards, loans or other debt instruments over a short period. A customer's mix of credit: Someone with only a secured credit card is riskier than someone who has a combination of installment and revolving loans.

18 is the Magic Number In one day - their 18th birthdays - young people go from being fully shielded from credit cards to fully exposed. Before they turn 18, they can't enter into a contract to get a credit card. They may use cards, but someone else is responsible for the debt. Once they turn 18, however, they can get their own credit cards and charge up a storm and be on the hook for the debt.

Here is a short video about the effects of bad credit card debt…

Ten Ways to Avoid Credit Card Debt 1. Have an emergency fund. 2. Charge only what you can afford 3. Avoid balance transfers 4. Don’t miss credit card payments 5. Pay your balance in full each month. 6. Know the signs of credit card debt 7. Avoid cash advances 8. Don’t lend your credit card. 9. Understand your credit card terms 10. Limit your number of credit cards.

Key takeaways… What is a credit score? What is a credit score used for? Why should individuals opening a credit card be especially careful?