1. Debt and Risk Management FONTBONNE UNIVERSITY FINANCIAL LITERACY AND DEFAULT PREVENTION FACILITATED BY JAMES “VINNY” VINCENT ASSOCIATE DIRECTOR, FINANCIAL LITERACY LIAISON

2. Money Habitudes Seminar Activity  To fully understand the real issues that make people argue, act irrationally or keep them from reaching their financial and life goals one must first assess their attitude toward money. It is a person’s attitude towards money which drives their actions and their course for decision making. Money Habitudes is an easy way to identify the issues that impact how we save, spend, earn, invest, go into debt and give away our money.  Complete Activity 1.1 to assess your Money Habitudes (combination of money habit and attitudes).

3. Debt: What Exactly Is It?  Simply put, debt is when you owe something to someone. You could owe money, time, or goods and services.  Good Debt: appreciates in value, asset life longer than loan, and positive financial leverage  Examples of Good Debt: house, college education  historically rise in value over time  will usually last far longer than the debt repayment period  financial benefits received are higher than the cost of the debt  Bad Debt: depreciates in value, asset life shorter than loan or negative financial leverage  Examples of Bad Debt: car, living room furniture  immediately depreciate in value once bought  generally lasts shorter than life of loan (furniture); could last longer than life of loan if well maintained (car)  no financial gain (furniture); could argue a car is necessary for work, but are there alternate methods of transport?

4. Types of Debt Credit Cards Consumer Payday Loans Auto LoansHome LoansCollege Loans Shop around www.cardweb.com You’re the Boss! Call to negotiate better terms Credit and loans are tools – not excuses to bypass budget, ignore your goals, or skirt your own financial self-control

5. Managing Debt List all your debt Establish an emergency fund Arrange your debtsPay off the first debt Use the money from the first debt and add that to the amount you pay on the next debt, etc.

6. Three Approaches to Eliminating Debt Pay off the highest interest rate first Saves on cost of overall interest Pay off the smallest debt first Leads to faster gratification but may not offer much financial gain Create monthly cash low quickly Focus on which debt will free up the most money in the shortest amount of time

7. Risks We Face  Disability  Illness  Death  Retirement  Financial  Property  Liability  Identity Theft Unintentional in nature (accidents) Pure Risk Chance of loss or gain (the lottery) Speculative Risk

8. Managing Risks Avoidance AssumptionReductionShifting Adjusting lifestyle choices, removing self from situations Assuming the risk, taking chance it works in your favor Can’t avoid, but can take steps to lower the intensity of risks Transferring the financial burden to another agency or individual

9. Identity Theft Step 1 Contact TransUnion Fraud Assistance Department Step 2 Contact Credit Card Companies Step 3 File a Police Report Step 4 Contact the FTC and Fill Out Their ID Theft Affidavit

10. Questions?  Contact James “Vinny” Vincent  jvincent@fontbonne.edu jvincent@fontbonne.edu  314.719.4353  Office Hours: Monday thru Friday (8:30am-4:30pm)  Lunch taken daily from 12:30pm – 1:30pm