Will Work for Food Candy

1
Will Work for Food Candy

• Make sure your wrappers get in the garbage!!!
• Honor System
• 1. p.1 If you brought back the packet
• 2. p.2 If you wrote a plan Discuss with
  family
• 3. p.4 If you did the 1st week of 13-week
  Budget.
• 4. p.12 If you completed the five stocks.

2
p.12 , Req. 6ePretend you have 1,000 to
save/invest, and help prepare yourself for the
future.Explain to your merit badge counselor
the advantages or disadvantages of saving or
investing for each of the following

• (e). Savings account at a bank or credit union
• Advantages
• They pay us _________
• Very ____ risk of loss (if insured by _____ or
  _____)

interest
low
FDIC NCUA
Disadvantages The interest they pay ____
isnt
3
p. 12, Requirement 6 (d) Certificate of Deposit
(CD) at a Bank or Credit Union

• Advantages
• They pay us ______ (usually ______ rate than
  savings)
• Very _____ risk of loss(insured by _____ or
  ______)

interest
higher
low
FDIC NCUA

• Disadvantages
• Timing risk I may need my money _____ the CD
  matures.

before

• U.S. Savings Bonds
• Similar, but ____ convenient.

less
4
p. 12, Req. (6a) Common Stocks.

• Advantages

• If I invest in a company that is very profitable
  and if the stock market does well, I could ____
  ____ of money,

earn lots

• The value of the stock could ___ ___ and I could
  get _________.

go up
dividends

• Disadvantages

• Compared to bank or cu savings, the risk of loss
  is ______.

higher

• If the company I invested in loses money, I
  probably ___ _____

lose money

• If the stock market in general goes down, I
  probably ____ _____

lose money

• Timing risk If I buy when the price is high and
  sell when it is low, I ____ ______.

lose money
5
p. 12 Req. (6b) Mutual Funds (invest in stocks
of _________ companies)
different

• Advantages

• Compared to stock in a particular company, the
  risk of loss is supposed to be _____

lower
(but some have lost in scandals)

• The return on the investment is often ______ than
  at a bank.

higher

• If the stocks in the fund do well, I am likely to
  earn ____ _____

more money

• Disadvantages

• Compared to bank or cu savings, the risk of loss
  is ______.

higher

• If the stocks in the fund do poorly, I am likely
  to ____ ______

lose money

• If the fund mgr blows it or takes off, I ____

lose

• If the stock market in general goes down,
• I probably ____ ________

lose money
6
ExampleMutual Fund vs. 5-yr CDs
7
p. 12 Req. (6c) Life Insurance

• Advantages

• Life insurance pays money to my ___________ when
  I die.

beneficiaries

• Some policies invest part of the premium so
  people dont have to ___ to get some money (but
  they cost ______.)

die
more

• Disadvantages

• Both the insurance and inv portions cost
  ______.

money

• The investment portion is not _______ by the US
  Government

insured

• If I dont die while I have the life insurance,
  I wasted _________,
• but what if?

money
8
p. 13 Req. 7 Explain to your merit badge
counselor the following
Explain what a loan is
money
things
A loan is ________ or ________ owned by someone
who allows another person to _____ ___
use it
9
p. 13 Req. 7(a) Explain what interest is
interest
Interest is the amount of money paid to a lender
in ________ of what was borrowed.
excess
principal
The amount earned as _____ passes.
time
10

• p. 13 Req. 7(a) Explain how the Annual
  Percentage Rate (APR) measures the true cost of a
  loan.

1. The APR is the ________ ____ established by
the U.S. Government
standard rate
MPH
(just as _____ is for highway speed)
2. So we can _______ the cost of borrowing. (MPH
or MPM? APR or MPR?)
compare
3. It includes ______ and _____
interest fees
4. It is expressed as a _______ rate.
yearly
11

• p. 13 Req. 7(a) Explain how the Annual
  Percentage Rate (APR) measures the true cost of a
  loan.

If you borrow 100, and pay back 110 What is
the interest cost? ____
10
10
What is the percentage rate? ____
What is the Annual Percentage Rate (APR)?
That depends on when you are to pay the 110.
What is the APR if you borrow 100 and are
scheduled to pay back 110 one year later?
_____ APR
10
120
What is the APR if you pay back 110 one month
later? _____ APR
If you paid 110, re-borrowed 100, 12 times, 12
x 10 120 cost for 1y, thus 120 APR
520
What is the APR if you pay back 110 one week
later? _____ APR
520
What is the cost if you pay 10 interest each
week? _____ p/yr
12
p. 13, Req. 7(b) Explain the different ways to
borrow money

• I might be able to borrow from a relative for
  ____.

free
I can borrow from myself for very ___ ____.
low cost
I can borrow from bank or cu at a ______ ___.
higher cost
I can borrow by charging things using a _____
____.
credit card
I can borrow by ________ a purchase (usually
higher rate)
financing
If I am really stupid or really desperate
I can borrow from ultra-high-cost lenders at
outrageous interest ____.
rates
13
BEST BORROWING TIPS
unnecessary

1. Avoid _____________ borrowing!

increase
2. Only borrow for things that _________ in value.
early
3. Pay off loans ______ (when no penalty).
dont buy
4. If you dont have the money, _____ ____
_________.
anything
5. When you do borrow, always pay less than
_______ APR.
13
14
Example TOO EASY LOAN COMPANY Promissory Note
with Security Interest Security 1996 Olds Ciera
Annual Percentage Rate The cost of your credit
as a yearly rate. 300
Finance Charge The dollar amount the credit
will cost you. 4,442.80
Amount Financed The amount of credit provided to
you or on your behalf. 2000.00
Total of Payments The amount you will have paid
after you have made all payments as
scheduled. 6,442.80
25 per month Payment Schedule 12 Payments
of 536.90. Beginning 2/4/99 and on the 4th of
each month thereafter until final payment is made
on January 4, 2000. Default Charge If the
payment is late 10 days, you will be charged 5
of the payment amount.
15
ExampleTV Purchase

• 400.00
• cash

16
ExampleTV 400.00Using a Credit Card

• 26.00 per mo.
• 18 A.P.R.
• 18 mo. pmts
• 59.00 interest
• Total Cost 459

17
ExampleTV 400.00Finance Company

• 36 A.P.R.
• 18 mo. Pmts.
• 29.00 per mo.
• 123.00 int.
• Total Cost 523

18
ExampleTV 400.00Rent-to-Own

• 70.00 mo. pmt
• 18 months
• Total Cost 1260

• (196 APR)

(int.)

• 860.00

19
ExampleTV 400.00Too Easy Loan (Bad Credit OK)

• 300 A.P.R.
• Car Title Pawn
• If 18 months
• 102.00 payments
• 1,433 interest
• Total Cost 1833

20
ExampleTV 400.00Payday Loan

• 10

x 52 520
21
ExampleTV 400.00Payday Loan

• 10 per week
• 520 APR

174 payments 2,725 interest 18 months (12 weeks
max) Total Cost 3125
22
p.13 Req. 7(c) Explain the differences between

• A Credit Card
• A Debit Card
• A Charge Card

23
Credit Cards Our Friends?
Or Our Foes?
24
p.13 Req. 7(c) A CREDIT CARD
is used to make purchases using the ____
____ _________ money.
credit card companys

• It may be paid off ____ _____ (without interest
  -most cards),

each month

• or it may be paid ____ ____ (plus interest
  charges)

over time

• Advantages
• One way to start building a good ______ ______
  for free (if you pay it off each monthon time!)

credit rating
convenient!

• Very ___________

25
p.13 Req. 7(c) A CREDIT CARD

• Pitfalls

• Too easy to spend money, especially if its money
  I _____ _____

dont have

• Costs

interest

• If I dont payoff each month, I pay ________
• Always at a rate _______ than I want to pay.

higher
26
p. 13, Req. 7(c)

• A CHARGE CARD is a type of credit card, where a
  person is using the companys money, but no
  periodic interest rate is charged, and the person
  is usually required to pay off the balance ____
  ______

each month.

• Pitfalls Too easy to spend money, especially
  money you _____ _____

dont have.

• Costs ______ fees.

annual
27
p.14 req. 7 (c) contd

• A DEBIT CARD

• Is one way to withdraw money from a persons
  ______________ account.

checking

• Advantages
• Using _____ ______ money, so if you dont have
  it, you dont spend it.

your own
28
p.14 req. 7 (c) contd Debit Card

• Pitfalls
• If somebody else uses your debit card, or a
  mistake is made, your money may be gone when you
  _____ _.

need it

• Some places (like gas stations motels) place a
  _____ on your acct.

hold
29
p.14, req. 7 (c) contd Debit Cards

• Costs
• If you dont have enough money in your checking
  account to cover the withdrawal, your
  transaction(s) may _______ (get returned
  unpaid).

bounce
fees

• Causing returned item ____

30
p.14 req. 7(c)Costs of debit cards (checking
accounts)

• If you dont have a backup plan, like an
  overdraft ____ __ _____ (an empty loan),

line of credit

• youll probably get ________ _____ fees.

returned item
fees

• Some checking accounts have monthly ____

31
ExampleSo, the differences between

• Charge Card Debit Card Credit Card

Money from your checking account.
Borrowed money. No interest charge (Reg. Z
226.2(15)) Must pay off each month.
Borrowed money. May pay off each month (no
int)
or pay over time (high interest).
32

• Charge Card Debit Card Credit Card

Using your own money
Your money gone
33
p. 14 Req. 7(c) Explain why it is unwise to make
only the minimum payment on your credit card.
A person who only pays the minimum stays in debt
a ____ ____ time.
very long
And pays ___ and ____ of interest.
lots lots
34
At typical terms, it would take about _____ years
to pay off a 5,000 balance (if no other charges
were made).
34
ExampleSimplified Credit Card Statement

• Last Months Balance 128.42
• Payments received (128.42)
• Interest 0
• Auto Repair Center 289.94
• Joes Gas Goodies 14.32
• Babes Apparel Store 96.24
• Ending balance 400.50
• Required (min) Payment Due 20.00

35
Credit Card Summary
If used well, a great tool, if used poorly,
financial ruin!
36
Credit Reports or Credit Records
p. 14, Req. 7(d). Explain Credit Reports

• A credit report is a report of a persons credit
  ______

history
And it usually includes a credit _____ or credit
_____
rating score
Credit reports show what ______ and _____ _____ a
person has had.
loans
credit cards
And if he made his payments ___ _____
on time
If he was late, it shows how late he was and how
_____ _____ he was late.
many times
37
ExampleCredit Report (simplified)

• Bill S. Preston 529-00-0000 Score 380
• Creditor Limit Bal
  Comments
• Department Store 1000 1050 5gt30, 3gt60
• Credit Card 5000 4999 6gt30,3gt60,1gt90
• Dumpy Bikes 500 430 Collection agency
• Fast Car Lot 6000 0 Repossession
• Credit Card 2000 0 as agreed
• Home Mortgage 70000 65000 current
• Overdraft Line of Cr 2000 0 as agreed

38
p. 14 Req. 7(d) Explain how your personal
responsibility can affect your credit record

• If I pay my bills on time, I will have a good
• credit ______.

history

• And if I dont borrow too much, Ill have a good
  credit ______ or _______

rating score

• If I am irresponsible, and pay my bills late
• Ill have a ____ credit history ______ or ______

bad
rating score
late fees
I will also be required to pay ____ ____, and
next time I borrow Ill pay interest at a ______
____.
higher rate
bad
If I have too much debt, Ill have a ___ credit
rating, or a ____ credit score
low
39
Is it possible

• To have a good credit history while having
• A bad credit score? ______

YES!

• If I have too much debt (even if Ive paid on
  time) a problem waiting to happen.

40
p. 14 Req. 7(e). Describe ways to reduce or
eliminate debt
Pay ____ ________ (more than requiredif no
prepayment penalty).
extra principal
41
Example of Paying Extra Principal

• Bal Rate Term Pmt Total Int Pd
• (If simple
  interest)
• 10,000 12 60 mo 222 13,346 3,346
  

Savings 179

• 10,000 12 57 mo 232 13,167 3,167

• 10,000 12 47 mo 272 12,582

2,582 764

• 10,000 12 38 mo 322 12,069 2,069
  1,277

42
p. 14 Req. 7(e). Describe ways to reduce or
eliminate debt
Pay ____ ________ (more than required).
extra principal
Pay off highest rate debt _____
first
Then, when it is paid off, add what you were
paying on that debt to the amount you were paying
on your next _______ ____ debt.
highest rate
43
Example of paying highest rate debts first.
After 1 year New New New Bal. Pmt.
Term 77,554 651 21.9 8,072 250 3.1
4,126 150 2.6 6,253 120 8.5 0
0 0 794 90 .8
Existing Balance Payment
Rate Remaining Obligations (p i)
Term (yrs.) 1st Mort 78,721
651 8.5 22.9 yrs. Auto Loan 10,239
250 9.0 4.1 yrs. Trailer 5,451
150 9.8 3.6 yrs. Credit Card
6,539 120 18.0 9.5 yrs. Doctor
400 40 21.0 .9
yrs. Dentist 1,200 50 19.0 2.5
yrs. Totals 102,550 1331
44
Reduce or eliminate debt quicker, by paying
highest rate debts first.
After .8 year (1.8 yrs total) New New
New Bal. Pmt. Term 76,547 651 21.1 6,194
250 2.3 2,970 150 1.8 5,984 210 3.1
0 0 0 0 0 0
Existing Balance Payment
Rate Remaining Obligations (p i)
Term (yrs.) 1st Mort 78,721
651 8.5 22.9 yrs. Auto Loan 10,239
250 9.0 4.1 yrs. Trailer 5,451
150 9.8 3.6 yrs. Credit Card
6,539 120 18.0 9.5 yrs. Doctor
400 40 21.0 .9
yrs. Dentist 1,200 50 19.0 2.5
yrs. Totals 102,550 1331
45
Reduce or eliminate debt quicker, by paying
highest rate debts first.
After 1.8 more (3.7 yrs tot) New New New
Bal. Pmt. Term 73,863 651 19.2 1,153 250
.4 0 0 0 2,745 360 .7
0 0 0 0 0 0
Existing Balance Payment Rate
Remaining Obligations (p i)
Term 1st Mort 78,721 651
8.5 22.9 yrs. Auto Loan 10,239 250
9.0 4.1 yrs. Trailer 5,451 150
9.8 3.6 yrs. Credit Card 6,539 120
18.0 9.5 yrs. Doctor 400
40 21.0 .9 yrs. Dentist 1,200
50 19.0 2.5 yrs. Totals 102,550
1331
46
Reduce or eliminate debt quicker, by paying
highest rate debts first.
After .7 more (4.4 years tot) New New New
Bal. Pmt. Term 72,760 1,261 6.2 0
0 0 0 0 0 0
0 0 0 0 0 0 0
0 Out of debt in 10.6 yrs.
Existing Balance Payment Rate
Remaining Obligations (p i)
Term 1st Mort 78,721 651
8.5 22.9 yrs. Auto Loan 10,239 250
9.0 4.1 yrs. Trailer 5,451 150
9.8 3.6 yrs. Credit Card 6,539 120
18.0 9.5 yrs. Doctor 400
40 21.0 .9 yrs. Dentist 1,200
50 19.0 2.5 yrs. Totals 102,550
1331
47
p. 14 Req. 7(e). Describe ways to reduce or
eliminate debt
Pay ____ ________ (more than required).
extra principal
Pay off highest rate debt _____
first
Then, when it is paid off, add what you were
paying on that debt to the amount you were paying
on your next _______ ____ debt.
highest rate

• Pay _____ often than required (if allowed).

more
Bi-weekly payments can be an easy way to make
extra principal payments
48
Examplep.14 Req 7d. Describe ways to eliminate
Debt.
Most loans require Monthly payments
49
ExampleSome Loans allowBi-Weekly
Payments(every other week)
By paying ½ paymentevery other week
50
ExampleSomeBi-Weekly Payments(every other
week)
By paying ½ paymentevery other week
13 full payments A very convenient way to pay
off earlyif you get paid every other week.
51

• p. 15, Req 8(a) Write a "to do" list of tasks
  or activities, such as homework assignments,
  chores, and personal projects, that must be done
  in the coming week. List these in order of
  importance to you.
• TO DO LIST. Things that must be done in the
  coming week (in order of importanceuse as many
  rows as you want)
• 1 ________________ 13 ________________
• 2 ________________ 14 ________________
• 3 ________________ 15 ________________
• 4 ________________ 16 ________________
• 5 ________________ 17 ________________
• 6 ________________ 18 ________________
• 7 ________________ 19 ________________
• 8 ________________ 20 ________________
• 9 ________________ 21 ________________

Eat
Sleep
School
Church
Scouts
BB
Date
Shower
52
p.15, Req. 8(b) (c). Make a 7-day calendar or
schedule Day 1 Day of the week
__________ Date________
Scheduled Activity Actual Scheduled Activity Actual
Times   Times Times   Times
      12 PM    
6 AM          
      1 PM    
7 AM          
      2 PM    
8 AM          
      3 PM    
9 AM          
      4 PM    
10 AM          
      5 PM    
11 AM          
      6 PM    
           
      7 PM    
           
      8 PM    
           
      9 PM    
           
      10 PM    
53
p.19, Req. 8(d) Review your to do list, your
1-week schedule, and diary/journal entries and
discuss what you learned your merit badge
counselor, and what you might do differently the
next time.
54
p. 19, Req. 9. Prepare a written project or
plancould include a camping trip

• Define the project ___________________
• What is your goal? ___________________
• b. Develop a timeline

Start Finish
c. Describe your project ________________
55
p.19 Req. 9(d) (e) Develop a list of
resources If necessary develop a budget.
(e) budget (d) Develop a list
Identify how these resources Already Est.
cost if you of Resources needed will help you
achieve the goal have it don't already
have it ______________ ____________________
______ ______________ ______________
____________________ ______ ______________ ____
__________ ____________________ ______
______________ ______________
____________________ ______ ______________ ____
__________ ____________________ ______
______________ ______________
____________________ ______ ______________ ____
__________ ____________________ ______
______________ ______________
____________________ ______ ______________ ____
__________ ____________________ ______
______________

• Discuss your completed project plan with your mb
  counselor.

56
p. 20, Req. 10. Do the followingChoose a career
you might want to enter Research the
limitations
57
p. 20, Req. 10. Do the followingChoose a career
you might want to enter Research the
limitations, qualifications.Career_____________
__________________
Bank Examiner
(b) Research the limitations of your anticipated
career Limitations Where you learned about
it Qualifications _______________ _______________
________ ______________ _______________ _________
______________ ______________ _______________ ___
____________________ ______________ _____________
__ _______________________ ______________
Pay average
MB Class Instructor
College Degree
Sometimes boring

Banking Experience
Sometimes conflicts

Communicate
58
Personal Management Merit Badge

• More things to finish.
• When youve completed ALL the requirements,
  contact your scoutmaster and/or merit badge
  counselor. Take the handout with you.
• Discuss the things and be excellent to each other!

Lots of effort
, but totally worth it!