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Your Financial Check-up
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Lynn F. LittleExtension Educator
University of Maryland Extension
Washington County
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$$$ Smart Money Tip
CHART YOUR COURSE
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Set S.M.A.R.T. Financial Goals!
• Specific
• Measurable
• Action/Agreeable
• Realistic
• Time-Related
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Change these dreams to specific goals:
Pay off my credit card balance and not make any new charges. I will play Bingo every other week and I will use the $40 to pay extra on my credit card balance so my balance will be zero by June 2010.
Drive a car that is paid for
By packing (not buying) lunch 2 days per week, I will pay an extra $50/month on my car payment so my car will be paid off by December 2009
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$$$ Smart Money Tip
ORGANIZE FINANCIAL RECORDS
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How long to keep records
Permanently As long as needed Until disposed of Personal records Warranties (until
expired)
Appliance books
Education, employment records
I nstallment contracts (5 years af ter paid)
Vehicle titles, bill of sale
List of important
papers and their location
I nsurance policies (until expired)
List of safe deposit box contents
Tax records with supporting data (3-10 years)
Tax f orms with W-2 attached
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Identity Theft - Are you a target?
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$$$ Smart Money Tip
KNOW HOW YOU ARE DOING
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Your Net Worth
Assets -
Liabilities= Net Worth
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$$$ Smart Money Tip
BE A MONEY DETECTIVE
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Create a Spending Diary
Create a Spending Diary
Does money slip through your fingers? Try to identify the
leaks.
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Separate needs from wants
Build A Budget/Spending Plan
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Use 70% of take-home pay for living expenses
Important
Reminder
Use 20% to repay debt.
Save 10% for you and your future.
•Track spending•Review and Revise
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$$$ Smart Money Tip
Watch Your Credit!
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3 Major Credit Bureaus:
EquifaxExperianTransunion
Credit Bureaus
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What do Credit Bureaus do?
Collect data:
Personal information
Employment history
Credit Use and Repayment history
Provide information to:
CreditorsEmployersInsurersLandlords
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What Makes Up Your Score?
10%
10%
15%
30%
35%
• 10% New Credit
• 10% Types of Credit used
• 15% Length of Credit History
• 30 % Debt
• 35% Payment History
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720-850 – Moderate to Low Risk
620 - 719 – Fair to Good Risk
350 - 619– You may have
difficulty
Credit Score Ranges
29www.myfico.com
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$$$ Smart Money Tip
PAY OFF DEBT
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Minimum Payment TrapCredit card: Pay Minimum (4%) per Month:
Balance of $3,000 $120/Month19% interest 134 months to
pay $1,872.43 = interestTotal Paid: $4,872.43
Pay 5% of balance per month: $150/Month
103 months to pay
$1,339.96 = interestTotal Paid: $4,339.96
Difference: $532.47
Source: www.bankrate.com
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www.bankrate.com
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Signs of Credit TroubleExceeding 20 percent ruleSecond salary used to pay debtsDishonest about credit useCredit not thought of as debtUse credit impulsivelyUse cash advances to pay billsBills paid latePaying only the minimum due each monthDefaulting on paymentsAnticipated income increase committed to creditDon’t know total amount of debt
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www.nfcc.org
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$$$ Smart Money Tip
DEVELOP A SAVINGS
HABIT
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Every Little
Bit
Counts
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Pay Yourself First
Build an Emergency Fund
–3-6 months net income
An emergency fund will…
• Help you feel in-control financially
• Pad your bank account to help you avoid overdraft fees
• Make it possible to deal with the emergency quickly and get back to normal
• Help you avoid extra interest charges for unexpected repairs or emergency purchases
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$$$ Smart Money Tip
Manage Risks
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Ask about available discounts
Comparison shop – follow the rule of “3”
Don’t try to save money by reducing or dropping necessary coverage
Don’t select insurance company based on price alone
Don’t surrender a whole-life policy for its cash value
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Consider disability income insurance
Consider long term care
Update beneficiary designations
Keep up with changes in Medicare as you approach retirement
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$$$ Smart Money Tip
INVEST WISELY
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SavingPreserve principal while getting a small return.
InvestingIncrease principal in hopes of getting a greater rate of
return.
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Do Your OwnBall ParkE$timate For Retirement
www.asec.org/ballpark/
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$$$ Smart Money Tip
CREATE A PLAN FOR
YOUR ESTATE
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Your Estate PlanA will or trustA guardianship/trust for minor children or disabled loved onesA power of attorney (general, financial, health care)Health Care Advanced DirectivesPersonal Property Inventory with named recipients
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$$$ Smart Money Tip
Make a TO DO list to help Manage Your Personal
Finances!
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Lynn LittleExtension Educator
University of Maryland Extension Washington County Office
Your Financial Check-Up
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