Money Management


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Lecture for First Year Florida class

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Money Management

  1. 1. Credit/Debt Ratings, Scores, Tips
  2. 2. How to Build a Good Credit History <ul><li>Building a good credit history is essential to anyone who expects to make major purchases or start a business. </li></ul><ul><li>Building good credit is actually easy to do - if you pay attention to your expenses. </li></ul>
  3. 3. Instructions <ul><li>STEP 1: Know which accounts are shown on your credit report. </li></ul><ul><li>STEP 2: Request a copy of your credit report at least once a year. </li></ul><ul><li>STEP 3: Check that the information shown on your report is accurate. </li></ul><ul><li>STEP 4: Pay all of your bills on time. You don't need to pay the entire balance each month, but make at least the minimum payment promptly. </li></ul><ul><li>STEP 5: Avoid going over the credit limit on your credit card account. Some credit card companies allow you to do this as a courtesy, but it can reflect poorly on your ability to handle your account. </li></ul><ul><li>STEP 6: Cancel credit cards you aren't using or don't anticipate using. </li></ul>
  4. 4. Tips & Warnings <ul><li>If your application for credit is denied, you're entitled to a free credit report. The denial letter you receive should list the credit bureau used. Contact that company for the copy of your credit report. </li></ul><ul><li>If you don't understand the report, contact the credit bureau or your local consumer credit counselor. </li></ul><ul><li>Setting up an automatic payment plan with your credit card company can help ensure that you never miss your minimum credit card payment. </li></ul><ul><li>If you never use credit of any kind, it doesn't mean that you'll have a great credit history. Most lenders prefer to see a history of credit and debt payment. </li></ul><ul><li>Avoid &quot;shopping for credit.&quot; Each time you apply for a loan or credit card, an inquiry from that lender will be reflected on your credit report. Too many inquiries can signal to a potential lender that you're a risky customer. </li></ul>
  5. 5. <ul><li>U.S. NATIONAL DEBT CLOCK The Outstanding Public Debt as of 03 Nov 2006 at 01:14:22 PM GMT is: </li></ul><ul><li>The estimated population of the United States is 300,135,992 so each citizen's share of this debt is $28,572.58 . </li></ul><ul><li>The National Debt has continued to increase an average of $1.96 billion per day since September 29, 2006! </li></ul>Debt
  6. 6. Instructions: Getting out of Debt <ul><li>STEP 1: Cut up your credit cards except for one or two to use for emergencies. Throw away the pieces. </li></ul><ul><li>STEP 2: Cancel all of your credit lines and request a lower interest rate on the debt you have left. </li></ul><ul><li>STEP 3: Transfer as much debt as possible to the credit card that has the lowest interest rate, or get a debt-consolidation loan from a bank at a lower rate. </li></ul><ul><li>STEP 4: Use cash for all your purchases, and only buy what you can afford. </li></ul><ul><li>STEP 5: Commit to start paying off your debts one at a time and do it. Pay off the credit card and loans with the highest interest rate first. </li></ul><ul><li>STEP 6: Double your payments on the next debt by taking the payment you made on the first debt and adding it to the current debt. </li></ul><ul><li>STEP 7: Triple your payments on the next debt by combining payment amounts. Continue until all your credit cards and other debts are paid off. </li></ul>
  7. 7. Tips: Getting out of Debt <ul><li>Invest in personal finance software to accurately track your spending and identify problematic habits </li></ul><ul><li>If you have investments that are paying 6 to 10 percent but a credit card debt with an interest rate of 17 to 21 percent, cash out your investments and pay off your debt. </li></ul><ul><li>Ask your creditors how much repayment is needed before they are able to send a favorable report to credit agencies. Sometimes they will accept less than your total debt. </li></ul><ul><li>Use consumer credit agencies to arrange repayment of debt. Many are free. </li></ul>
  8. 8. Money Management Tips <ul><li>Keep track of it – track all your spending for two weeks, see where your money really goes </li></ul><ul><li>Budget —list all sources of income and all expenses (based on your tracking) </li></ul><ul><li>Include fun money in your budget —don’t deprive yourself, don’t fool yourself into thinking you will </li></ul><ul><li>Pace Yourself —it’s easy to spend all your loan/aid/scholarship money early in the semester, then be broke </li></ul><ul><li>Careful with those credit cards —if you can’t afford to pay for it now, you probably can’t afford it </li></ul><ul><li>Revisit and adjust your budget —after an impulse buy or unexpected expense, tighten up for a while </li></ul><ul><li>Plan ahead —Spring Break is more fun when you’ve saved up enough to enjoy it guilt-free </li></ul>
  9. 9. Sources <ul><li>Information derived from ehow money management tips </li></ul>