Karen Aspinwall FCS Extension Educator Cecil County

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Karen AspinwallFCS Extension Educator Cecil
County
Your FinancialCheck Up
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Emergency Fund
Financial Plan
Credit Record
Insurance

• Health
• Life
• Property
• Disability
• Liability

• Goals
• Spending Plan
• Financial Statements
• Financial Records

• Using it wisely
• Monitoring
• ID Theft Protection

Financial Foundation
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Smart Money Tip 1Make a Plan

• Specific
• Measurable
• Agreeable
• Realistic
• Time-bound

Turn financial dreams into S.M.A.R.T. Financial
Goals!
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Turn them into S.M.A.R.T. Financial Goals!

• Specific
• Measurable
• Agreeable
• Realistic
• Time-bound

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Changing dreams to SMART goals
I wish I could drive a car thats paid for. By
packing (not buying) lunch 2 days/wk, I will pay
an extra 50/month on my car payment so my car
will be paid off by June 2011.
I wish I wasnt drowning in debt! I will only
play BINGO once a month and Ill put the extra
40 toward debt payments so that my credit cards
are paid off by March 2011.
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Smart Money Tip 2 Get Organized!
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In the case of identity theft, an ounce of
prevention is worth a pound of cure . . .
.Clearing your good name from identity theft
may take two to three years!
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Smart Money Tip 3Know How You Are Doing
Calculate your Net Worth
Assets
- Liabilities
Net Worth
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Online tools www.mdsaves.org
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Data from Employees Benefits Research Institute
(EBRI) indicates that only 2 out of 5 people have
done net or future worth calculations, but 44 of
those who do make a positive change in savings
behavior.
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Smart Money Tip 44a. Be a Money Detective

• Track your expenses. . .

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Discover how money slips through your fingers
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4b. Develop a Spending Plan

• A spending plan is a roadmap for your money
• Income All sources
• Expenses Fixed, Flexible, Periodic
• Plans for spending/saving

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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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A Guideline To Remember

• Use 70 of take-home pay for living
  expenses.
• Use 20 to repay debt.
• Save 10 for you and your future.

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Emergency Fund
Financial Plan
Credit Record
Insurance

• Health
• Life
• Property
• Disability
• Liability

• Goals
• Spending Plan
• Financial Statements
• Financial Records

• Using it wisely
• Monitoring
• ID Theft Protection

Financial Foundation
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Smart Money Tip 6Become Credit Smart

• Understand credit
• Use it wisely

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Smart Money Tip 6Become Credit Smart
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What do Credit Bureaus do?

• Collect data
• Personal information
• Employment history
• Credit use and repayment history

• Provide information to
• Creditors
• Employers
• Insurers
• Landlords

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Start Here
www.AnnualCreditReport.com
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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?
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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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www.myfico.com
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Signs of Credit Trouble
Smart Money Tip 7Pay Off Debt

• Exceeding the 20 Rule
• Second salary is used to pay debts
• Dishonest about credit use
• Credit not thought of as debt
• Using credit impulsively
• Using cash advances to pay bills

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(More) Signs of Credit Trouble

• Bills paid late
• Paying only the minimumdue each month
• Defaulting on payments
• Anticipated income increase is committed to debt
  repayment
• Dont know total amount of debt

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The Minimum Payment Trap Credit card Balance of
3000. Card has 19.0 interest. Minimum per
Month 4 of balance (starts at 120/mo.)
If you pay the Minimum each month4 of balance If you pay the Minimum plus 15 each month 4 of balance plus 15 If you Power Payeach month fixed payment of 120/mo
No. of months to pay off debt 134 (11.2 years!) 53 (4.4 years) 33 (2.75 years)
Amount of Interest paid 1,872.49 1,358.74 849.27
Total amount paid 4,872.49 4,358.74 3,849.27
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www.bankrate.com
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Regain Control

• Communicate with your creditors
• Stop credit use
• Create a realistic spending plan

• Develop a debt repayment plan
• Know when (and where) to ask for help!

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Smart Money Tip 8Develop aSavings Habit
EveryLittle BitCounts!
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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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Painless Ways to Save

• Continue to make loan/debt payments into savings
  after debt has been paid
• Try a temporary crash savings diet by purchasing
  only bare necessities
• Adjust your tax withholdings and save the
  difference
• Save windfall money from lottery, inheritance and
  gifts
• Save money from pay raise, bonus or working
  overtime

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Smart Money Tip 9Buy Adequate Insuranace

• Buy insurance - dont let someone SELL it to you
• Buy appropriate insurance
• Buy adequate coverage
• Consider disability income insurance
• Consider long term care

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Smart Money Tip 9Cover Your Bottom Line
9a.Insurance

• Health--Life--Property--Liability
• Disability--Long term care
• Buy insurance - dont let someone SELL it to you.
  Follow the Rule of Three
• Buy adequate coverage

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• Insurance Guidelines
• Review periodically and update as needed through
  life cycle, including beneficiary designation
• Keep essential coverage in force until a new
  policy starts
• Keep up with changes in Medicare as you approach
  retirement

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Smart Money Tip 9Cover Your Bottom
Line 9b.Create an Estate Plan

• Powers of Attorney (general, financial,
  healthcare)
• Healthcare Advance Directives
• Will and/or trust(s)
• Guardianships for minor children or other
  dependents
• Personal property inventory with named recipients

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Smart Money Tip 9Cover Your Bottom Line 9c.
Establish an Emergency Fund

3-6 months 8 months (current average length of
time of unemployment)
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SavingPreserve principal while getting a small
return.
Smart Money Tip 10Invest Wisely
InvestingIncrease principal in hopes of getting
a greater rate of return.
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Prerequisites to Investments

• 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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Futures Contracts Collectibles
Pyramid of Investment Risk
Aggressive Growth, Junk Bonds, Stocks and Mutual
Funds
Increased Risk
Real Estate
High Quality Corporate Stocks, Bonds and Mutual
Funds
Life Insurance Investments Government
Securities
Insured Savings, Savings Bonds, Money Market
Funds, Certificates of Deposits

Emergency Fund
Financial Plan
Credit Record
Insurance
Health, Life, Property,Disability, Liability
Goals, Spending Plan, Financial Statements and
Records
Using it wisely, Monitoring, ID Theft Protection
Financial Foundation
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The Time Value of Money and Compounding Interest
Start saving today!
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The Time Value of Money and Compounding Interest

• If you save 5 a week until age 65, starting at
• age 20, youll save 114,282
• age 30, youll save 49,701
• age 40, youll save 20,606

Start saving today!
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Smart Money Tip 11Take advantage of Tax
Deferment
TAX DEFERRAL MAGIC

• 403b
• 457

• IRA
• 401k

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Smart Money Tip 12Plan for Retirement
Do your own Ball Park Estimatefor Retirement
planning
http//www.choosetosave.org/ballpark/
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Karen AspinwallFCS Extension Educator Cecil
County
Your Financial Check Up
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