Social and recreational expenses –movies, sporting events
Transportation – plane, taxi, parking, car maintenance
College Credit Cards & College Students
Your credit record begins when you establish credit in your name, and a history of repayment is recorded by credit reporting agencies.
Your credit rating follows you wherever you go.
A bad credit rating can affect your ability to get a job or buy a car or a house.
“ Bad Debt” vs. “Good Debt” What’s the difference?
Name some bad debts
Book Definition: “Basically, if you consume it, if it loses value over time, or if you have to feed it, it’s bad debt.”
e.g. Credit Cards (living beyond one’s means)
Name some good debts
“ Returns for a long time”
Affordable home, education, transportation/car
(6+ year investments)
The average American has 2.7 bank credit cards, 3.8 retail credit cards and 1.1 debit cards, for a total of 7.6 cards per cardholder
The average amount of credit card debt in households with more than one card is now more than $8,000, according to CardWeb.com
Tips for College Students
Set a credit limit and stick to it. Always aim to pay off credit card balances each month.
If you only pay the minimum balance on credit cards each month, you will pay interest on the use of the money, and it will lengthen the time to pay off the total debt.
Your credit limit may increase when you pay your bills on time.
Comparison shop for credit cards. On credit applications, compare the annual percentage rate (APR) including finance charges, methods used to compute charges, the grace period, annual fees, penalties for late payments and other charges.
To avoid overspending, make buying decisions based on a careful look at your financial condition, rather than on the credit limit on your card.
Ways to make money…
Trade time (job skills)
Own your own business
“ Saving/Investing” vs. “Spending”
“ A penny saved is a penny earned.”
-- Emergency fund for a “rainy day” and short term goals
-- Future goals and dreams
-- Examples: CDs; 401K; Mutual Funds; Stocks
- Need a “spending plan” to figure out how much you can save/invest…
YOUR FUTURE INCOME
MONTHLY GROSS PAY $3,564.00
ANNUAL GROSS PAY $42,768.00
Taxes, Medicare, Social Security (Must Pays…come out before you even get your money)
Taxable income: $3,564.00
Uncle Sam’s Portion:
Federal Tax: ($535) 15.00% (depends, but likely)
MEDICARE/SS ($273) 7.65%
CO State Tax: ($160) 4.5%
Net pay after taxes (“Take-Home”) : $2,596
Payday (twice a month) : $1,298
Annual Net Take-Home Pay: $31,152
So can you get rich?
Maybe we should Develop a Financial Plan for the future to find out… Part II of your Personal Budget/ Financial Plan assignment. Due next class – Sept 14
Design a budget for a college student who receives $3,500 from a parent, earns $50 a week from student employment, has a $500 tuition scholarship and will use $1,000 of personal savings. Room and board expenses are $____, tuition expenses are $____ (Use UCCS figures). The student does not own a car and is covered by a parent's health insurance plan.