FinancialSense

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FinancialSense

• A Financial Literacy Course
• An Initiative Based on the AICPA 360 Degrees
  Program

Presented By
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Topics To Cover

• Cash and Budgeting
• Student Loans
• Credit Cards
• Credit Ratings
• Identity Theft
• Questions?

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What about spring break?

• Budgeting can help you find out if you will have
  enough cash to make purchases in the future
  without borrowing money
• Budgets Contain 2 main parts Cash Inflows and
  Cash outflows

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Why does it Matter?

• According To the Associated Press
• Nellie Mae found that 21 percent of
  undergraduates who have credit cards have balance
  levels between 3,000 and 7,000, a 61 percent
  increase from the 2000 study population.
• A 1000 Spring Break trip charged to a credit
  card at a 16 interest rate, making only 15
  payments every month, will take 13 years to pay
  off. In the process, you will spend 2500

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An Example of Proper Planning

• John receives 100 a month from his parents, 300
  a month from a part-time job and has about 215 a
  month in expenses. Will he be able to take a
  1000 trip on spring break assuming it is August
  and Spring Break is in March? John has 300 in
  Cash before he receives any money in August.
  Additionally, John must Purchase 400 of
  Textbooks in August and must Pay his Car
  Insurance of 500 in December.

Conclusion John must either raise his income or
cut his expenses in order to pay for the spring
break trip without borrowing money.
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An example of Using Debt Wisely

• Using the Same Illustration Assume John Borrows
  120 from his credit card to take the Trip.
• Using the budget, we can see that John usually
  ends up 185 for every month he doesnt have
  special expenses.
• John could choose to put the 120 on his credit
  card if he was sure he could pay it off by the
  end of April. Therefore, he will have no interest
  to pay the credit card company.

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Credit Ratings?

• Virtually Everyone in your Future will use your
  credit rating to assess your financial
  responsibility, they include
• Your insurance company
• Potential Employers
• Banks
• Credit card companies
• Car dealerships

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Credit Ratings

• Fair Isaac reports that the American public's
  credit scores break out along these lines
• Credit Score Percentage
• 499 and below 1 percent
• 500-549 5 percent
• 550-599 7 percent
• 600-649 11 percent
• 650-699 16 percent
• 700-749 20 percent
• 749-799 29 percent
• 800 and above 11 percent

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Credit How it Affects You
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Free Credit Reports!

• The Federal Government has passed legislation
  requiring Credit Monitoring companies to issue
  you one free credit report yearly. This can be
  obtained at
• http//www.annualcreditreport.com
• Warning Freecreditreport.com is not the correct
  site!

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Identity Theft The information war.

• According to a Federal Trade Commission Survey,
  Identity-Theft is the fastest growing crime in
  America. 9.9 Million victims were reported last
  year.

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Avoiding IDTheft.

• Never give out your Social Security number or
  other personal information, especially over the
  phone or internet, unless you know who you are
  communicating with.
• If a utility provider or office calls you and
  asks for information, dial them back instead,
  before giving out information.
• Do not respond to emails that claim you have a
  vast fortune if you send your account number.
• Do not respond to emails that take you to a site
  and ask for account numbers or information, type
  in the site instead, or call the site. These
  scams are known as Phishing.
• Shred all documents with personal information,
  including credit card receipts and bank
  statements.

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Financing your Education

• While credit card debt can be high interest and
  cause financial problems, many student loans are
  provided for your benefit. The benefits of
  Federal Direct Student Loans are
• Lower interest rates, capped at 8.25 or 9
• Ability to deduct Interest paid on your Tax
  Return
• Ability to defer payments until you graduate

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Types of Federal Loans

• Subsidized Where the Government pays the
  interest on the loan until after you Graduate.
• Unsubsidized Interest on the loan is your
  responsibility.

Private loans by third party groups, often banks,
are increasing in popularity, but the interest
rates can be much higher than Federal Aid.
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Applying for Federal Aid

• Complete the FAFSA at http//www.fafsa.ed.gov
• Complete the online loan counseling offered on
  the Marshall SFA website http//www.marshall.edu/
  sfa/
• Be aware that if you take any loans you will be
  required to take exit-counseling before you
  graduate, when you drop to half-time status or
  drop out of school.

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FinancialSense

• Brought to you by Beta Alpha Psi, Kappa Phi
  Chapter
• http//www.marshall.edu/bap/

The Committee for Financial Literacy Matthew
Rucker, BAP - VP of Finance, Chair Melissa
Langford, BAP - President, Vice-Chair Nathan
Hamilton, BAP - VP of Activities Valarie Moore,
BAP VP of Membership Shawn Milligan, BAP
http//www.360financialliteracy.org/