The dangers of payday loans


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  • The recent business failures and job losses are a clear indication of a declining economy. With the current economic climate we all feel the effects personally. Consumers change buying habits to conserve. Businesses pass on increased costs of goods and services, which increases the costs of goods and services to you. With tightening credit markets even consumers with excellent credit scores are finding it difficult to obtain mortgages or even credit cards. Many consumers have seen credit lines decreased while interest rates increased. It’s extremely important to begin to strengthen your financial position in the event your worst fears are realized, in order to prevent your own personal financial crisis. I hope that each of you will find the information helpful. Keep in mind as we go through this presentation that everyone’s personal situation, finances, income and expenses are different. Anyone in need of personal assistance please feel free to contact our credit counseling & enrollment department for help in preparing your personal budget. This is a free service we provide, and all information is kept strictly confidential. As a non-profit credit counseling organization, American Debt Counseling also has debt management programs available that can help people experiencing difficulty with credit card debt.
  • Planning a budget and monitoring it is essential to not only achieve your goals but also to avoid a personal financial crisis.
  • No matter how much or how little we make, we all have to manage our money carefully and live within our means in order to avoid our own personal financial crisis. If your financial situation has changed due to the economic downturn, you will more than likely have to change your lifestyle. (discuss some conversations with clients)…Many individuals may not be aware that their spending exceeds their income. Many individuals who are paid on Fridays have no money by Monday and no idea where their $ went.
  • One of the most important things to remember when we create our individual spending plans is to keep it REALISTIC. If we put together an unrealistic budget we only set ourselves up to fail.
  • FIXED: SAME EVERY MONTH (rent/mortgage, car payment, cable & internet) VARIABLE: DIFFERENT EVERY MONTH (electric bill, gas, water, phone, groceries) PERIODIC EXPENSES: NOT MONTHLY, QUARTERLY, YEARLY (insurances, home & vehicle maintenance, insurance deductibles) DISCRETIONARY: THE I WANTS (not the I needs)
  • START SMALL…saving becomes a habit…goal is to get up to 10% of gross 3-6 months living expenses
  • Living within our means. When you pay off a debt put that amount into savings each month.
  • Explain DMP
  • Money Gobblers
  • HOUSING includes rent/mortgage, utility bills, property taxes, insurance, HOA UTILITIES: (apply for an extension or payment arrangements) CAR PAYMENTS (if the car is essential means of transportation? Will the lender tack the payment to the end of the loan)? CHILD SUPPORT (failure to pay can result in imprisonment) JUDGMENT (to avoid garnishment) STUDENT LOANS (do you qualify for forbearance or deferrment)?
  • Do not use credit cards to live beyond your means
  • Keep your balance below 50% of your available credit! Use a credit or debit card that pays you back!!!
  • The dangers of payday loans

    1. 1. BUDGETING To Avoid Personal Financial Crisis
    2. 2. KEEP MORE MONEY IN YOUR POCKET <ul><li>Plan a budget (spending plan) </li></ul><ul><ul><ul><ul><ul><li>Monitor your budget </li></ul></ul></ul></ul></ul>
    3. 3. <ul><li>Do you ask yourself where all the money goes at the end of every month? </li></ul><ul><li>Do you lose track of which bills you’ve paid and which are due? </li></ul><ul><li>Do you have a special project you’d like to save for? </li></ul><ul><li>Do you need a new car? </li></ul>
    4. 4. <ul><li>Remember, it’s not about how much money you earn… </li></ul><ul><li>I It’s about how well you manage </li></ul><ul><li>your money! </li></ul>
    5. 5. <ul><li>! </li></ul><ul><ul><li>A helpful tool that tracks all of your financial </li></ul></ul><ul><ul><ul><li>information at a glance. </li></ul></ul></ul><ul><ul><li>A great way to organize your finances and pinpoint ways to save money. </li></ul></ul>
    6. 6. YOUR SPENDING PLAN Creating and maintaining a livable, breathable spending plan is based on following 6 easy steps .
    7. 7. In addition to salary, think of all other expected sources of household income including tax refunds, bonuses, tips, etc. IDENTIFY YOUR INCOME
    8. 8. Be honest with yourself about all household expenses, including eating out, salon services, hobbies and habits. Include all of your regular monthly bills and payments to creditors. IDENTIFY YOUR EXPENSES
    9. 10. PAY YOURSELF FIRST Always put a few dollars aside in a savings account each month. Credit Counselors say the amount is not as important as establishing the savings habit! Money adds up!
    10. 11. MAKE ADJUSTMENTS Making expenses fit your income is not always easy. Consider consulting with a Certified Credit Counselor to structure a personalized spending plan that that focuses on your long-term goals.
    11. 12. DUMP THE DEBT Building a strong financial future means getting rid of your debt. Pay down highest interest rate credit card bills first. Hardship? A Debt Management Plan may be the solution.
    12. 13. TRACK YOUR RESULTS Check your spending plan monthly to monitor how much closer you are to reaching your financial goals! Balance your checkbook regularly!
    13. 14. <ul><li>SPENDING PLAN STRATEGIES: </li></ul><ul><li>D etermine wants vs. needs </li></ul><ul><li>E stablish short term and long term goals </li></ul><ul><li>S tay strong! </li></ul>
    14. 15. SPENDING PLAN
    15. 16. <ul><li>Household </li></ul><ul><ul><li>Do your own repairs and painting </li></ul></ul><ul><ul><li>Shop for the best insurance rates (homeowners, automobile, health) </li></ul></ul><ul><ul><li>Grow a vegetable or herb garden </li></ul></ul><ul><ul><li>Turn the thermostat up when not at home </li></ul></ul><ul><ul><li>Consider budget billing </li></ul></ul><ul><ul><li>Re-evaluate cable TV service </li></ul></ul><ul><ul><li>and internet costs </li></ul></ul>
    16. 17. <ul><ul><li>Pack lunches for school and work </li></ul></ul><ul><ul><li>Eat out less </li></ul></ul><ul><ul><li>Consider store brands </li></ul></ul><ul><ul><li>Use coupons </li></ul></ul><ul><ul><li>Shop buy one get ones </li></ul></ul><ul><ul><li>Do warehouse shopping </li></ul></ul><ul><ul><li>Limit shopping to once a week </li></ul></ul><ul><ul><li>Plan menus and shop with a list </li></ul></ul><ul><ul><li>Brew your own coffee </li></ul></ul>
    17. 18. <ul><ul><li>Car pool to school & work </li></ul></ul><ul><ul><li>Try public transportation </li></ul></ul><ul><ul><li>Ride a bike! </li></ul></ul><ul><ul><li>Keep your autos maintained for better gas mileage </li></ul></ul><ul><ul><li>Be a bargain gasoline hunter </li></ul></ul>
    18. 19. <ul><ul><li>Discover outdoor activities for the family </li></ul></ul><ul><ul><li>Rent DVDs for $1.00 </li></ul></ul><ul><ul><li>Use restaurant coupons and join dining clubs </li></ul></ul><ul><ul><li>Take advantage of early bird offers at restaurants and movie theatres </li></ul></ul>
    19. 20. <ul><li>ATM Fees Computerware Home Parties Cosmetics Online Services </li></ul><ul><li>Beauty Shop Over limit fees Dating </li></ul><ul><li>Ice Cream Parking Fees CD’s DVD’s Gifts Bottled Water Bounced Checks Clubs Cigarettes Greeting Cards Tanning Haircuts Cable TV Late Payment Fees Dinners Out </li></ul><ul><li>Bar Night Books Fast Food Attacks Dry Cleaning </li></ul><ul><li>Car Washes Lottery Tickets Magazines Movie Rentals Sports Lunches Out Gambling Prescriptions Household Items </li></ul><ul><li>Pet Costs Licenses Speeding Tickets </li></ul><ul><li>Cash Advance Fees Munchies Vending Machines Souveniers </li></ul><ul><li>  </li></ul>
    20. 21. <ul><li>Necessities </li></ul><ul><ul><li>Food </li></ul></ul><ul><ul><li>Housing Related Bills </li></ul></ul><ul><ul><li>Medical </li></ul></ul><ul><li>Car Payments </li></ul><ul><li>Income Tax </li></ul><ul><li>Child Support </li></ul><ul><li>Court Judgments </li></ul><ul><li>Student Loans </li></ul><ul><li>Uncollateralized Debt </li></ul>
    21. 22. <ul><li>Can this expense be adjusted somehow? </li></ul><ul><li>Can this expense be eliminated altogether? </li></ul><ul><li>Could this bill be negotiated for better terms until times get better? </li></ul>
    22. 23. CREDIT CARD DON’TS Don’t carry more than two cards with you Don’t use them for cash advances Don’t use them to pay for basics: rent, groceries, utilities. (unless you pay the bill in full each month) Don’t charge more than you can pay that month Don’t let others borrow your credit car d
    23. 24. CREDIT CARD DO’S <ul><li>Use a debit card vs. a credit card </li></ul><ul><li>Use a card with no annual fee and low interest rates </li></ul><ul><li>Know all of your cards’ hidden fees </li></ul><ul><li>Always pay more than the minimum each month </li></ul><ul><li>Pay on time, all the time </li></ul>
    24. 25. THE REAL COST OF CREDIT…. What happens when you a $50 dinner? charge A $50 dinner over 20 years on a 22.8% APR credit card would end up costing $4,579.04. Paying only the minimum payment due could mean you never pay off your credit cards for your entire life. Finance Period 10.8 percent 16.8 percent 22.8 percent 1 Year $55.68 $59.08 $62.67 10 Years $146.53 $265.17 $478.49 20 Years $429.39 $1,406.31 $4,579.04
    25. 27. GOOD VS. BAD DEBT Good debt returns something of long term value - higher education or a home. Bad debt is “feel good” debt for purchases that you can’t afford and don’t really need. Any bad debt over 15% of your annual income after taxes should set off an alarm.
    26. 28. DEBT WARNING SIGNS <ul><li>Being able to make only minimum </li></ul><ul><li>payments on credit card bills </li></ul><ul><li>Making late payments or skipping payments </li></ul><ul><li>Having credit cards at or near your credit limit </li></ul><ul><li>Arguing with family or friends over your spending habits or hiding purchases </li></ul><ul><li>Being unsure of how much you really owe </li></ul><ul><li>Using cash advances or payday loans to pay your bills </li></ul><ul><li>Having your credit card purchases declined </li></ul><ul><li>Having increasingly more of your income paying for debts </li></ul><ul><li>each month </li></ul>
    27. 29. 8 Tips for Staying Financially Healthy <ul><li>Develop and stick to a spending plan that includes saving some money each month </li></ul><ul><li>Make a habit of paying off the majority of your credit card balances each month </li></ul><ul><li>Live within your means </li></ul><ul><li>Transfer any credit card debt to a lower interest rate credit card </li></ul>
    28. 30. Staying Financially Healthy (cont’d) <ul><li>Plan ahead for large purchases </li></ul><ul><li>Teach children the “3 Ss”: </li></ul><ul><li>Saving, Spending, Sharing </li></ul><ul><li>NEVER turn unsecured debt into secured debt! </li></ul><ul><li>Consult with a Certified Credit Counselor for </li></ul><ul><li>advice and confidential assistance </li></ul>
    29. 31. If you need help creating a Spending Plan contact : 14051 NW 14 th Street Sunrise, FL 33323 (888) DEBT USA
    30. 32. Thank you! Good luck!