1. W!SE Most Missed Parts
Part 1

2. Exemptions (allowances) on a W-4
The more exemptions (allowances) you take on a W-4 (form you fill out when you start a job)…
You get more money on your paycheck
But you owe more money when taxes come due on April 15th

3. “Liquidity” How easy it is to buy something using that form of payment
What is the most “liquid” type of payment?
Cash
Credit Card
Check
Stocks

4. Discretionary Income
Money leftover after you pay your bills

5. Budget Surplus v. Deficit
Surplus—you spend less than you make
Deficit—you spend more than you make
Debt—you have lots of deficits

6. Money Order
You give money to a company and they write a “money order” that you can send to someone for payment
High rates of counterfeiting

7. What is U.S. dollar based on?
Nothing really
Based on the trust of the U.S. government
It is not based on gold anymore!

8. Opportunity cost
What you give up when you make a choice

9. Inflation
All prices rising

10. Who is hurt by inflation?
Inflation hurts people who have saved money and people who get a set amount of money (people with pensions, etc.)

11. Who is helped by inflation?
Inflation helps people who have borrowed money. It can help those who own resources that increase in value (e.g., homes, land).

12. Treasury Department
Prints money

13. Pay yourself first
When you get a paycheck, the first thing you do is put money in savings (even before you pay bills!)
That way, you actually save

14. Certificate of Deposit (CD)
You buy a CD from a bank
Certain amount of money (not a small amount)
Certain amount of time
Gets much better interest rate so you make more money!
If you take it out early, you are penalized

15. Payday lenders Give you loans quickly, but…
Charge you very, very high interest

16. Credit Union Like a bank, but not-for-profit
Often have better interest rates, but not as many locations as regular banks

17. Overdraft If you write a check for more than you have
Penalized by bank
If you have overdraft protection from the bank (you must opt-in), you aren’t penalized if you accidently overdraw

18. Compound v. Simple Interest
Simple interest is regular interest on the amount you borrow (called principal)
Compound interest is interest on the principal plus interest on the interest
Compound interest gives bigger numbers over time

19. Time Value of Money
It is better to have money now if you can invest it and make interest on it

20. Rule of 72
72 / interest rate = number of years it will take to double your money at that interest rate
3% interest rate?
72/3 = 24 years to double

21. Cash advance from credit card
You can get money from your credit card company
Just like payday lenders—they have huge interest

22. Truth in Lending Act
You must be told the cost of the loan (APR)

23. Loan length
The longer the loan, the more expensive because of interest

24. Minimum Payments on bill
If you just minimum payments, your loan will take longer to pay off
Means your loan will be more expensive

25. Risky loan The riskier the loan, the more interest you will be charged
There is a better chance you won’t be able to pay back the loan