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LifetimeMoney

Skills

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University of

Maryland Cooperative Extension

Jean Austin &Crystal Terhune

Family and Consumer Science Educators

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Emergency Fund

Goals Budget

Financial Plan

Financial Statement

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Financial Records

Credit Record

Life Health

Insurance

Disability

Property

Financial Foundation

Liability

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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

• jealousy• security• comfort• power• control• self-

esteem

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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

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What to Pay FirstFamily 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!”The “B-Word!”

•Income

•All sources

•Expenses

•Fixed–--Flexible--- Periodic

•Track Expenses

•Look for leaks!

WRITE IT DOWN!

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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.

Use 20% to repay debt.

Save 10% for you and your future.

Important

Reminder

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 ResourcesPublic 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 ResourcesFood 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 low-cost 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 As long as needed Until disposed of Personal records Warranties

(until expired)

Appliance books

Education, employment records

I nstallment contracts (5 years af ter paid)

Vehicle titles, bill of sale

List of important

papers and their location

I nsurance policies (until expired)

List of safe deposit box contents

Tax records with supporting data

(3-10 years)

Tax f orms 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:

Personal information

Employment history

Credit Use and Repayment history

Provide information to:

CreditorsEmployers InsurersLandlords

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3 Major Credit Bureaus:

EquifaxExperianTransunion

Credit Bureaus

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START HERE!

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Correcting a Credit Report

Contact company that reported the errorAsk company to correct error, in writing, with each credit bureauPhotocopy pertinent documentsWrite credit bureau, explain error and enclose documentationSend certified mail with return receipt

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What Is A Credit Score?

10%

10%

15%

30%

35%

Requests for newcredit

Types of credit inuse

Length of credithistory

Current total debt

Payment History

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780-850 – Low Risk740-780 – Medium Low Risk690-740 – Medium Risk620-690 – Medium High Risk620 and Below – High Risk or Sub-Prime

Credit Score Ranges

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Signs of Credit Trouble

Exceeding 20 percent ruleSecond salary used to pay debtsUsed for everyday expensesCredit not thought of as debtUse cash advances to pay bills

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Minimum Payment TrapCredit card: Pay Minimum per Month: Balance of $3000 4% of balance (starts at $120/mo.) 19.0% interest 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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SavingPreserve principal while getting a small return.

InvestingIncrease principal in hopes of getting a greater rate of

return.

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Pay Yourself Firstat 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

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

•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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Earn $1,000/wk

working at home!

Let US help YOUclean up your credit!

Save your home from foreclosure!

We’ll find you a

job–GUARANTEED!

Do MEDICAL BILLING in your PAJAMAS!!!!

STUFF

ENVELOPES

and earn

LOAD$ OF

DOUGH!

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 Statement

s

Financial Records

Credit Record

Life Health

Insurance

Disability

Property

Financial Foundation

Liability

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Presentation compiled and edited by:

Jean Austin &Crystal Terhune

Family and Consumer

Science Educators University of

Maryland Cooperative

Extension

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