Transcript SMART MONEY MOVES (Child Care Provider Lesson) Ruth Miller

Lifetime
Money
Skills
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Jean Austin &
Crystal Terhune
Family and Consumer
Science Educators
University of
Maryland
Cooperative
Extension
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Emergency Fund
Goals
Budget
Financial Plan
Financial
Statements
Financial
Records
Life
Credit
Record
Health
Insurance
Property
Disability
Liability
Financial Foundation
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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
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jealousy
security
comfort
power
control
selfesteem
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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 10
What to Pay First
Family 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!”
•Income
•All sources
•Expenses
•Fixed–--Flexible--- Periodic
•Track Expenses
•Look for leaks!
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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.
Important
Reminder
Use 20% to repay debt.
Save 10% for you and
your future.
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 Resources
Public 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 Resources
Food 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 lowcost 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
 Personal records
As long as needed
 Warranties
(until expired)
Until disposed of
 Appliance books
 Education,
employment records
 Installment contracts
(5 years after paid)
 Vehicle titles, bill
of sale
 List of important
papers and their
location
 Insurance policies
(until expired)
 List of safe deposit
box contents
 Tax records with
supporting data
(3-10 years)
 Tax forms 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:
Provide information to:
 Personal information
 Employment history
 Credit Use and
Repayment history
 Creditors
 Employers
 Insurers
 Landlords
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Credit Bureaus
3 Major Credit Bureaus:
Equifax
Experian
Transunion
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Correcting a Credit Report
Contact company that reported
the error
Ask company to correct error, in
writing, with each credit bureau
Photocopy pertinent documents
Write credit bureau, explain
error and enclose documentation
Send certified mail with return
receipt
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What Is A Credit Score?
Requests for new
credit
10%
10%
35%
15%
Types of credit in
use
Length of credit
history
Current total debt
Payment History
30%
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Credit Score Ranges
780-850 – Low Risk
740-780 – Medium Low Risk
690-740 – Medium Risk
620-690 – Medium High Risk
620 and Below – High Risk or
Sub-Prime
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Signs of Credit Trouble
Exceeding 20 percent rule
Second salary used to pay
debts
Used for everyday expenses
Credit not thought of as
debt
Use cash advances to pay
bills
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Minimum Payment Trap
Credit card:
Balance of $3000
19.0% interest
Pay Minimum per Month:
4% of balance (starts at $120/mo.)
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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Saving
Preserve principal while
getting a small return.
Investing
Increase principal in hopes
of getting a greater rate of
return.
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Pay Yourself First
at 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
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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
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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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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
Statements
Financial
Records
Life
Credit
Record
Health
Insurance
Property
Disability
Liability
Financial Foundation
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Lifetime Money Skills
Presentation compiled and
edited by:
Jean Austin &
Crystal Terhune
Family and Consumer
Science Educators
University of Maryland
Cooperative Extension
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