KEYS FOR FINANCIAL SUCCESS

A COURSE FOR PERSONAL FINANCIAL MANAGEMENT

RICHARD K. MAUK, President

© CONSUMER FINANCIAL EDUCATION FOUNDATION OF AMERICA, 2007

Member of AICCCA

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INSTRUCTORS

RICHARD K. MAUK, PRESIDENT OF CFEFA

JAN SPRUILL, CERTIFIED FINANCIAL HEALTH CARE COUNSELLOR

ERA SELLERS, CERTIFICED FINANCIAL HEALTH CARE

COUNSELLOR

GAYLE LINVILLE, SUPERVISING CERTIFIED FINANCIAL HEALTH CARE COUNSELLOR

SCOTT A. WHYRICK, VICE-PRESIDENT OF CFEFA AND CERTIFIED FINANCIAL HEALTH CARE COUNSELLOR

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TABLE OF CONTENTS

INTRODUCTION 4 SESSION 1 – Understanding Debt-Being in Debt….5 SESSION 2 – Creating an Effective Home Budget…8 SESSION 3 – Understanding How Credit Works….19 SESSION 4 – Credit Reports……………………………..21 SESSION 5 -- Credit Scoring………………………………23 SESSION 6 - Planning for the Future………………….25 CONCLUSION…………………………………………………..29 CODE CERTIFICATE………………………………………….31 EVALUATION……………………………………………………32

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INTRODUCTION

This workbook has been developed to accompany the classroom

or DVD presentation of the course entitled Keys to Financial

Success. The workbook is intended to be a supplement to

content provided by the instructor, in person or on video.

The following elements contained in the workbook will improve

your understanding of the material and concepts presented by

the instructor.

• Preview Objectives for each chapter.

• Guide for note taking in the form of “Keys for Success.” As

you follow along with the instructor’s presentation, fill in the

blank spaces to emphasize key concepts.

• Supplemental Information

• Worksheets

Please take advantage of the information contained in the

workbook. We welcome your evaluation of this and other

materials at the conclusion of the course.

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SESSION 1

UNDERSTANDING DEBT- BEING IN DEBT

Instructors:

Richard K. Mauk and Jan Spruill

OBJECTIVES

At the conclusion of this session, the student will be able to:

• Identify types of consumer debt

• Identify factors that contribute to consumer debt in the

United States.

• Describe psychological patterns identified in the practice of

overspending.

• List examples of predatory practices used by some lenders

to exploit borrowers.

• Discuss the financial, lifestyle, and emotional changes that

may occur as a result of being in debt.

• Understand debt collection and how to deal with it.

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SESSION 1

UNDERSTANDING DEBT- BEING IN DEBT

KEYS TO FINANCIAL SUCCESS

1. Four of the sources of consumer debt in the United States

are

2. A person who (over)spends in order to cope with feelings of

emptiness or depression has exhibited a pattern of

spending.

3. spenders try to overcome feelings

of inferiority by spending excessively on appearance items (hair,

clothing, jewelry, etc.).

4. Punishment of another person through destructive spending

is an example of spending.

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5. lenders use a variety of unethical

practices to exploit borrowers, expanding the national consumer

debt problem.

LIST THE CODE GIVEN IN THE VIDEO For The First Session

1.__________________

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SESSION 2

CREATING AN EFFECTIVE HOME BUDGET

Instructors:

Richard K. Mauk and Era Sellers

OBJECTIVES

At the conclusion of this session, the student will be able to:

• Identify methods used to establish a “picture” of monthly

income and expenses.

• Describe process to identify patterns in spending.

• List strategies to modify spending in an effort to reduce

monthly expenses.

• Establish an achievable goal that can be met in a month

through budgeting. Three months? One year?

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SESSION 2

CREATING AN EFFECTIVE HOME BUDGET

KEYS TO FINANCIAL SUCCESS

1. A is a financial statement of

estimated income and expenses for an individual or family of a

specific period of time.

2. An will help

cut expenses by identifying less costly ways of buying essentials.

3. % of current monthly spending can be

reduced with no noticeable change in lifestyle.

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HOME BUDGETING

What is a budget? A budget is a savings and spending plan. It is a step-by-step plan for meeting expenses in a given period of time. Why Budget? Knowing what your income and expenses are every month will help you take control of your financial situation. How will budgeting help you take control of your financial situation?

o A budget will reduce anxiety. o A budget will give you a sense of control over your money.

To complete a budget, you must first know what you spend your money on daily. The best way to track your spending is to keep a “Daily Spending Diary”. Write down everything that you spend your money on for one month. See example of a “Daily Spending Diary” on next page.

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My Daily Spending Diary

Items Purchased Daily Total

Sunday

Monday

Tuesday

Wednesday

Thursday

Friday

Saturday

Total Amount Spent This Week $______________________

Once you know what you spend your money on monthly, it is time to prepare a budget. Let’s review the items listed on this budget.

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Housing

o Mortgage/rent should not exceed 32.7% of your gross monthly income. Gross income is the amount shown on your check stub prior to taxes and other deductions. See national budget guidelines provided.

For example, you monthly gross income is $3,000. You would multiply $3,000 X .327 = $981.00.

o 2nd Mortgage o Association Fees o Land or lot Payment o Property Tax (if not escrowed) If not included with mortgage

divide total amount mount by 12 to get the yearly average.) o Electric – I suggest that you get on the budget plan if it is available

in your area. o Gas – o Water/Sewer o Telephone/Cell/Pager o Cable o Home Maintenance/Security System o Computer/Online o Garbage Service (due every three months) o Fire Dues o Homeowners Ins. (if not escrowed) o Pest Control

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Food

o Groceries o School Lunches o Food at Work o Eating Out/Entertainment o Other

Automobile o Car payment # 1 o Car payment #2 o Gasoline o Car Repairs/Maintenance o Car Tag (s) yearly amount o Bus/Taxi/Parking o Auto Insurance (monthly amount)

Personal

o Personal Items/Toiletries o Barber/Beauty Shop o Allowance for Children o Child care o Child support – (if not payroll deducted) o Alimony o Tobacco/Alcohol o Clothing o Dry Cleanings/Laundry

Medical

o Doctors Visits (yearly Avg.) – To get the yearly average, total cost of visit for the year and divide by 12 months.

o Medication (monthly) o Dentist (yearly average)

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Insurance

o Life Insurance (if not payroll deducted) o Health (if not payroll deducted)

Education

o Tuition/School Fees o School Books/Supplies o Professional Dues

Gifts & Donations

o Birthday (yearly average) o Christmas o Other Gifts – (Anniversaries, mothers/fathers day, etc..) o Church Donations/Charities

Entertainment

o Movies/video rental/play station o Books/magazines/CDs

Other

o Savings/Emergency Funds o Postage/P.O. Box Rentals/Safety Deposit Box o Pet Supplies/Vet bills – (yearly average/12 months) o Fee on checking account o Other/credit card debts/payday loans.

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Summary

Monthly Gross Income _____________________ Monthly Net Income _______________________ Total Expenses ___________________________ (subtract from Net income)

Questions

1. Do you have a negative cash-flow? If the answer is yes, then consider the following options to help balance the budget.

o Take a lunch from home. o Cut off cable or down grade cable. o Car pool o Get a part-time job if possible.

2. Do you have a positive cash-flow? If the answer is yes,

then consider the following options. o Place the extra income in your savings/emergency

funds. o Place more money in retirement plan.

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BUDGET WORK SHEET (MONTHLY EXPENSES)

Housing MEDICAL Mortgage/Rent ___________________________ Doctor Visits (yearly Average) ________________ 2nd Mortgage _____________________________ Medication (monthly) _______________________ Association fees __________________________ Dentist (yearly average) ______________________ Land or lot payment _______________________ Property Tax (if not escrowed) _______________ INSURANCE Electric _________________________________ Life (if not payroll deducted) __________________ Gas ____________________________________ Health (if not payroll deducted) ________________ Water/Sewer _____________________________ Telephone/Cell/Pager ______________________ EDUCATION Cable ___________________________________ Tuition/School Fees _________________________ Home Maintenance/Security System __________ School Books/Supplies ______________________ Computer/Online __________________________ Profession Dues ____________________________ Garbage service ___________________________ Fire Dues ________________________________ GIFTS & DONATIONS Homeowners Insurance (if not escrowed) _______ Birthday (yearly average) ____________________ Pest Control/Termite Bond __________________ Christmas _________________________________ Other gifts ________________________________ (Anniversaries, mother/father day, etc..) Church Donation/Charities ___________________ FOOD Groceries ________________________________ ENTERTAINMENT School lunches ____________________________ Movies/Video Rentals/Play Station _____________ Food at Work _____________________________ Books/Magazines/CDs _______________________ Eating Out/Entertainment ____________________ Other ____________________________________ OTHER Savings/Emergency Funds ____________________ AUTOMOBILE Postage/PO Box Rental/Safety Deposit Box ______ Car Payment #1 ____________________________ Pet Supplies/Vet Bills _______________________ Car Payment #2 ____________________________ (yearly average/12 months) Gasoline __________________________________ Fee on Checking Account ____________________ Car Repairs/Maintenance _____________________ Other/Credit Cards Debts/Payday Loans _________ Car Tag(s) yearly amount _____________________ Bus/Taxi/Parking ___________________________ Auto Insurance (monthly amount) ______________ PERSONAL Personal Items/Toiletries ______________________ Barber/Beauty Shop __________________________ Allowance for Children _______________________ Child Care __________________________________ Child Support _______________________________ (if not payroll deducted) Alimony ___________________________________ Tobacco/Alcohol ____________________________ Clothing ___________________________________ Dry Cleaning/Laundry ________________________

SUMMARY Gross Income __________________ Net Monthly Income _____________ Total Expenses _________________

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BUDGETING TOOL

Monthly Payment Schedule

In conclusion, a budget is a road map to give you a snap shot of where you are financially. Always review your budget prior to taking on additional debt. Establish an emergency savings fund as a number one priority because you never know when you will need it. As a rule of thumb, save at least three to six months of your monthly net income.

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Tools For Budgeting

Monthly Payment Schedule

Use different colored ink for income and expenses (example: black for income and red for expenses). List ALL bills, even the little ones. Where applicable keep track of remaining balance due.

Income Bills/Expenses Due Date Amt. Due Amt. Paid Remaining Bal.

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LIST THE CODE GIVEN IN THE VIDEO FOR SECTION 2

2._______________

SESSION 3

UNDERSTANDING HOW CREDIT WORKS

Instructors:

Richard K. Mauk and Gayle Linville

OBJECTIVES

At the conclusion of this session, the student will be able to:

• Identify the four basic types of credit available to consumers

in the United States.

• Describe common methods used to calculate credit card

finance charges.

• Excluding finance charges, list some of the various fees and

expenses that may be associated with consumer credit

cards.

• Discuss strategies for the prevention of credit card debt.

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SESSION 3

UNDERSTANDING HOW CREDIT WORKS

KEYS TO FINANCIAL SUCCESS

1. There are four types of credit extended to consumers:

2. Credit cards may cause debt problems quickly because they

allow impulse purchasing and may carry

.

3. The is the

percentage of interest that is charged in exchange for the ability

to use a credit card.

4. Two features that might make a credit card undesirable are:

LIST THE CODE GIVEN IN THE VIDEO FOR SECTION 3

3._________________

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SESSION 4

CREDIT REPORTS

Instructor:

Richard K. Mauk

OBJECTIVES

At the conclusion of this session, the student will be able to:

• Identify acceptable uses for consumer credit reports.

• List the contents of a consumer credit report.

• Know what responsibilities a credit bureau has

• Names, addresses and web sites of the credit bureaus

• Know how to correct errors

• How to prevent identity theft

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SESSION 4

CREDIT REPORTS

KEYS TO FINANCIAL SUCCESS

1. A is designed to assist a

consumer in developing a reputable credit history.

2. The oversees

how consumer credit information is handled.

3. More than % of consumer reports may contain

some type of error.

CREDIT REPORTING AGENCIES

EXPERIAN NATIONAL CONSUMER ASSISTANCE CENTER

* www.experian.com

TRANSUNION CORPORATION

*www.transunion.com

EQQUIFAX CREDIT INFORMATION SERVICE

*www.equifax.com

FREE CREDIT REPORT

www.annualcreditreport.com

LIST THE CODES GIVEN IN THE VIDEO

4._____________________

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SESSION 5

CREDIT SCORING

Instructor:

Richard K. Mauk

OBJECTIVES

At the conclusion of this session, the student will be able to:

• Identify the five most common reasons that credit is not

extended by a lender.

• Describe the factors that establish creditworthiness.

• List consumer rights regarding credit.

• Tips on raising a credit score

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SESSION 5

CREDIT SCORING

and ESTABLISHING NEW CREDIT

KEYS TO FINANCIAL SUCCESS

1. The primary reason that new credit is denied is

2. Being creditworthy depends on factors such as:

3. Credit scores are based on the following five categories:

_______________;_______________;__________________;

_______________;and _______________.

LIST THE CODE GIVEN IN THE VIDEO

5.________________

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SESSION 6

PLANNING FOR THE FUTURE

Instructor:

Scott A. Whyrick

OBJECTIVES

At the conclusion of this session, the student will be able to:

* Understand the four steps to planning

* Describe the necessity to plan for debt, insurance,

investments, and your decedent's estate

* Understand what the most important financial goals are

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SESSION 6

PLANNING FOR THE FUTURE

There are four (4) steps in planning for your future:

1. State Goals in specific terms

2. Create a plan of how to achieve each goal

3. Evaluate your progress towards that goal

4. Decide whether to keep working toward the goal or focus on

a new one

Three financial goals to consider:

1. Education: With the cost of a college education rising

yearly, it is impossible for most people to attend college

without some type of financial assistance. Student loans

should be considered an investment for higher earning

potential. Keep in mind however that most federally insured

student loans cannot be discharged in bankruptcy.

2. Buying a home: Homeownership is a hallmark of financial

success. It requires saving for a down payment and

qualifying for a mortgage that you can afford. The interest

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paid on the mortgage is deductible on your income taxes.

Homeownership offers a sense of stability and security that

renting cannot.

3. Saving for retirement: Today's living expenses often exceed

what we receive in social security income. More than ever,

people need to understand that retirement income must be

supplemented by savings and investments. Options include

401(k)s, Individual Retirement Accounts (IRAs), and mutual

funds.

Additional goals to consider:

1. Debt Planning: Debt is a part of life. Mortgages, car loans

and lines of credit make it possible for us to attain life's

necessities when we don't have tremendous amounts of

cash at our disposal. It is important to keep our debt in

check and not let it get out of hand. Shopping and

qualifying for the best low interest loans and credit cards

with consumer-friendly terms is key in debt planning. Using

these for essential purchases rather than for non essential

items is also important.

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2. Insurance planning also plays an important role in the life-

cycle. When people are young, their ability to work and

earn income is a valuable asset. When people are injured,

grow old or die, they need insurance to cover these

expenses. Disability, life, casualty and health insurance are

ways to guard against these losses.

3. Investment Planning: Saving a percentage of one's income

every year is only part of the retirement equation. The

money saved should be invested to produce a desired

dividend.

4. Estate Planning: Even when you die, financial obligations

can devastate your family. Preparing a will and a burial plan

should also be considered.

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CONCLUSION

FINANCIAL HEALTH CHECKLIST

Answer Yes or No to the following:

• I prioritize payment for the important things

• I am able to consistently save at least 5% of my income

• Currently I have adequate health, life, home and auto

insurance

• I balance my checkbook every month or balance my debit

purchases once a week

• I am generous with my money

• I consult with my spouse/partner before making purchases

• I am currently satisfied with my level of income

• For the most part, I enjoy my job

• Before I go shopping, I plan

• I understand the terms and conditions of all my lending

agreements

• I establish short and long term financial goals

• I regularly monitor and adjust my financial goals to measure

my level of success and to meet changing needs

• I have a spending plan and retirement plan

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Monetary Assessment

Think about your current finances:

• What level of income do you need to live the kind of life

you imagine for yourself?

• Do you currently have that level of income?

• If not, what could you do to accomplish that goal?

• In your opinion, what is the number one cause of credit

card debt?

• Describe your family's money history. Were resources

abundant or were times tough? Was money spent wisely

or frivolously?

• Has this history affected you in any way?

• What do you spend most of your money on?

• Do you have money left over at the end of the month?

• Are you generous or miserly?

Please complete the code certificate on the following page,

complete with the codes and your bankruptcy case number

and submit to our website. We also have an evaluation page

following the code certificate that we would like for you to

complete and submit.