1. Debt/Bankruptcy

2. VIDEO CLIP

3. Debt is when we owe more money than we have
What is debt?
Debt is when we owe more money than we have
One way to get into debt is by making impulsive decisions with money – whether for a want or a need

4. What will the consequences of my purchase be?
Ask these questions…
Whenever making a purchase decision ask these questions:
Can I afford it?
How will I pay for it?
What will the consequences of my purchase be?
Example – buying a new card – luxury vs. used and not as nice

5. Ex. – financing college tuition, mortgage for a home
Good vs. bad debt
GOOD
BAD
When credit is used to purchase something that is needed but may be difficult to pay for in cash.
Can help build credit
Ex. – financing college tuition, mortgage for a home
Credit is used to purchase something that is more of a want
May lower your credit.
Ex. – a car or a house way out of your price range

6. bankruptcy
Bankruptcy is a last resort when a person is so deeply in debt that there is no other way to resolve the problem
Two basic forms:
Chapter 7
Chapter 13

7. Chapter 13 Chapter 7 Allows you to erase MOST of your debt
bankruptcy
Chapter 7
Chapter 13
Allows you to erase MOST of your debt
Must be unemployed or have a very low income
Must take part in financial counseling
Allows you to repay many of your debts over a period of time
Usually no more than 5 years
A court typically oversees a repayment plan

8. Circumstances Leading to Bankruptcy
Family Break-Up
Uninsured Medical Costs
Loss of Job

9. Effects of bankruptcy
Personal
Societal

10. Increased consumer costs Inflation
Effects of bankruptcy
Personal
Societal
Family relationships
Remains on credit for years (Ability to receive loans is affected)
Social stigmas
Loss of a home
Increased consumer costs
Inflation

11. Order your debt from smallest to largest.
The Debt snowball
Order your debt from smallest to largest.
Cut your unnecessary budget expenses and put aside as much money toward debt payoff as you can possibly spare.
Pay the minimum on all debt payments/loans, except your smallest
Use all extra monthly debt repayment money toward your smallest loan.
*Once you’ve paid off one loan, you take all the money you were putting toward paying it off and add it to the next loan

12. The Debt snowball

13. One way to save - couponing