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1
LifetimeMoney
Skills
2
University of
Maryland Cooperative Extension
Jean Austin &Crystal Terhune
Family and Consumer Science Educators
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4
Emergency Fund
Goals Budget
Financial Plan
Financial Statement
s
Financial Records
Credit Record
Life Health
Insurance
Disability
Property
Financial Foundation
Liability
5
Basic Financial Advice for Job Loss
Involve your family in developing a money management plan
Make an assumption about how long you will be out of work :
6 months, 12 months, etc.
Consider your financial options as early in the process as possible
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What does money mean to you?
• status• success• freedom• independence• trust• envy• desire
• jealousy• security• comfort• power• control• self-
esteem
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$ Lifetime Money Skill #1
Identify Needs
and Wants
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Needs and Wants• Stylish summer clothes• Cell phone• Weekend in Ocean City• Hamburgers and beans• Cable TV• Manicure• Phone service• Medication
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$ Lifetime Money Skill #2
MANAGING
DEBT
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Understand the Debt You Have
Collateral – property that a creditor can take, if you don’t pay a particular debt
Secured Debt – collateral*Mortgage, car, equipment
Unsecured Debt – no collateral*Credit and charge cards,
legal or medical bills, gas cards, department stores
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What to Pay FirstFamily necessities
Housing – mortgage or rent
Essential utility service
Car loan or lease payment
Child support
Cosigned loans, if you have collateral at risk
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Who Gets Paid Next?
Taxes –federal, state and local
Unsecured debt is the last priority
Negotiate a payment plan based on all unsecured debt
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$ Lifetime Money Skill #3
Make a Budget
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The “B-Word!”The “B-Word!”
•Income
•All sources
•Expenses
•Fixed–--Flexible--- Periodic
•Track Expenses
•Look for leaks!
WRITE IT DOWN!
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How does money “slip through your fingers”?
Try to identify the leaks!
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Make Your Spending Plan Useful
A spending plan or budget is…
$ Your spending guide
$ Personal and unique
$ Realistic
$ Flexible
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Use 70% of take-home pay for living expenses.
Use 20% to repay debt.
Save 10% for you and your future.
Important
Reminder
Example: Total monthly take home pay = $1000
Living expenses (Rent + bills + food + clothes, etc.) = $700
700/1000 = .7 = 70%
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$ Lifetime Money Skill #4
Explore
All
Resources
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Possible ResourcesPublic Libraries:• Local resource bank• Local & out-of-town
phonebooks• Computers for
internet access/ Letter and resume writing
Career Centers:
•Area salary/wage rates
•Resume writing
•Job skills/training
•Interviews/ job connections
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. . . More Resources
Cooperative Extension:
• Educational programs
• Self-help information• Fact sheets• Resources & referrals
Consumer Credit Counseling Services (CCCS):
•Assistance with negotiations with creditors
•Information and education
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And MORE ResourcesFood and Nutrition:• Food Stamps (DSS)• WIC (Health Dept)• School Meals
(School)• Family Support
Centers/Head Start (Local)
• Local food pantries (Ask DSS for a list)
Medical:
•MCHIP (Health
Dept. or DSS)
•Doctors/Clinics (Sliding fee scales CCHS)
•Hospitals’ “Hill Burton” funds (Uncompensated Care)
•Health Depts (Free or low-cost exams, services, birth control)
•Medbank (Call DSS or Health Dept)
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Even More Resources!
• Unemployment (1-877-293-4125)
• MD Energy Assistance Program (MEAP) and EUSP (For heat)– call DSS• Section 8 Housing (Call MRDC 479-3566)
• Subsidized Housing (List from DSS or MRDC)
• DSS Emergency Assistance (One-time only help for meds, bills, rent, etc. with proof of need)
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$ Lifetime Money Skill #5
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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$ Lifetime Money Skill #6
Use Credit Wisely
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What do Credit Bureaus do?
Collect data:
Personal information
Employment history
Credit Use and Repayment history
Provide information to:
CreditorsEmployers InsurersLandlords
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3 Major Credit Bureaus:
EquifaxExperianTransunion
Credit Bureaus
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START HERE!
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Correcting a Credit Report
Contact company that reported the errorAsk company to correct error, in writing, with each credit bureauPhotocopy pertinent documentsWrite credit bureau, explain error and enclose documentationSend certified mail with return receipt
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What Is A Credit Score?
10%
10%
15%
30%
35%
Requests for newcredit
Types of credit inuse
Length of credithistory
Current total debt
Payment History
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780-850 – Low Risk740-780 – Medium Low Risk690-740 – Medium Risk620-690 – Medium High Risk620 and Below – High Risk or Sub-Prime
Credit Score Ranges
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Signs of Credit Trouble
Exceeding 20 percent ruleSecond salary used to pay debtsUsed for everyday expensesCredit not thought of as debtUse cash advances to pay bills
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Minimum Payment TrapCredit card: Pay Minimum per Month: Balance of $3000 4% of balance (starts at $120/mo.) 19.0% interest 134 months
$1,872.49 in interest Total Paid: $4,872.49
Pay More each month: 4% of balance + $15/mo.
53 months $1,358.74 in interest Total Paid: $4,358.74
Power Payment: $120/month (fixed payment) 33 months $849.27 in interest Total Paid: $3,849.27
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$ Lifetime Money Skill #7
SAVINGS Should Still
Be A HABIT
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Every Little
Bit
Counts
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Saving vs. Investing
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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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Pay Yourself Firstat 5% interest
Save this each week In 10 years, you will have
$ 7.00 $ 4,720
$ 14.00 $ 9,440
$ 21.00 $ 14,160 $28.00 $ 18,880$35.00 $ 23,600
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Your Net Worth
Assets -
Liabilities= Net Worth
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Before You Invest
Prepare financial statements Set financial goals Establish a spending plan Organize financial records Establish a positive credit history Maintain adequate insurance
coverage
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Simple Ways To Invest
•High Interest Savings Accounts• I-Bonds•Certificates of Deposit (CD’s)• Individual Retirement Accounts
–Traditional IRA’s–Roth IRA’s
•Mutual Funds
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Bankrate.com
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$ Smart Money Tip #8
Beware of SCAMS and
FALSE CLAIMS!
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Earn $1,000/wk
working at home!
Let US help YOUclean up your credit!
Save your home from foreclosure!
We’ll find you a
job–GUARANTEED!
Do MEDICAL BILLING in your PAJAMAS!!!!
STUFF
ENVELOPES
and earn
LOAD$ OF
DOUGH!
Call the Consumer Protection Division to ask about complaints– but remember scams “move quickly”! 410-713-3620
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Emergency Fund
Goals Budget
Financial Plan
Financial Statement
s
Financial Records
Credit Record
Life Health
Insurance
Disability
Property
Financial Foundation
Liability
46
Presentation compiled and edited by:
Jean Austin &Crystal Terhune
Family and Consumer
Science Educators University of
Maryland Cooperative
Extension
Lifetime Money SkillsHelp us to help others!! Please complete your EVALUATION!