Discuss what’s not on credit report too—income etc;
Discuss new credit scoring models emerging
Money matter$ financial education
Money Matter$ WorkshopHome Conference 2012 Sue Rogan MD CASH Campaign S
MD CASH CampaignS Maryland CASH (Creating Assets, Savings and Hope) Campaign: a network of organizations from across Maryland that seeks to improve the financial stability of working families.S Advocates on behalf of low-and moderate-income taxpayers throughout the stateS Assists partners in capacity building and training—VITA sitesS Provides financial education programs
MD CASH CampaignS In partnership with Consumer Credit Counseling Service of Maryland and Delaware, Inc., MD CASH Campaign created: Maryland Money Helpline (877-254-1097)free financial service where callers may speak with a certified, nonprofit financial counselor about debt, credit, budgeting, job loss and more.
Financial Beliefs/Attitudes Objectives: • Clients explore their beliefs/values/attitudes about money Resources: • Utah State University CEs "Financial Attitudes and Goals" Tools: • Money Habitudes • Money Personality Quiz
Financial BeliefsS “Money”—What comes to mind?S Money MemoriesS How do you use your $?S Influencing Factors —family; social, religious; media
Financial Goals, Tools & ResourcesObjective: Brainstorm with client on various "term" financial goals:• Short Term Financial Goals: Up to a year• Mid Term Financial Goals: 3-7 years• Long Term Goals Goals: 7+ yearsResources: www.nefe.org; www.mymoney.govTools: Write some examples of financial goals on note cards andhave client sort them into long term and short termPB & J ExerciseCreate a "vision board“
Financial Goal Statement“We want to buy a car in 5 years (May 2XXX). We will save $16.66 per month (a total of $1,000) to down payment.” S
Spending PlansObjective: Clients track their spending, create a real timeSpending Plan, and learn to check it frequently to stay ontrackResources: MD Extension Fact Sheets:http://extension.umd.edu/family/ManagingMoney/index.cfmMD CASH Campaign toolkit: www.mdcash.orgTools: Sample Spending Plans; Excel spreadsheet, Softwaresuch as Quicken, online sites such as www.mint.com, BeanGame
Spending PlanS Spending logS Put fixed expenses firstS Identify needs vs. wantsS Put savings/goals inS Prioritize spending plan
Estimate IncomeS wages, salaries S public assistanceS cash gifts, inheritances S rental incomeS child support, alimony S commissions, tips, bonusesS tax refundsS farm incomeS interest dividendsS Social Security 10
Fixed Flexible Fixed Expenses PeriodicS Due on specific dates, in specific amountsS Less controlS Examples: taxes, rent, car payment, utility budget plans 12
Fixed Flexible Periodic Flexible ExpensesS Living expenses that vary from month to monthS More control over amounts spentS Examples: telephone, food, clothing, entertainment, transportation, gifts 13
Fixed Flexible Periodic Periodic ExpensesS Occur occasionally during the yearS Catch you off-guardS Examples: automobile insurance premiums, car or appliance repairs or replacement, tag renewals 14
Ways of Increasing IncomeUpgrade present job Child supportAdditional family member to Social securitywork Veterans benefitsPart-time jobs Food stampsOvertime Unemployment insuranceGovernment assistance 16
Ways of Decreasing ExpensesS Energy Audit, implement energy efficient ideas, ck energy bill before moving inS Thrift Store shoppingS Use coupons if it makes CentsS Avoid feesS Don’t go into storesS Others?
CreditS Objectives: Clients-- learn how to get their free credit report, how to dispute errors and ways to improve their credit score.S Resources: www.annualcreditreport.com ; www.mymoney.gov; www.ftc.govS Tools: FTC Brochure, local credit cafes, pie chart of credit score—tipsheet on www.mdcash.org
What is Credit? • Money or services given with expectation of repayment, usually with interest. o Interest = Money paid for a borrower’s use of money, calculated as a percentage of the money borrowed and paid over a specified time.Copyright 2011 Maryland CASH Campaign S
Why Credit is Important • Credit • Housing • Insurance • Employment Copyright 2011 Maryland CASH Campaign S
What is a Credit Report?• Credit Report: a report that is compiled by credit reporting bureaus on an individual’s history of debt, credit and borrowing behavior• Major Credit Reporting Bureaus: o Equifax o Experian o TransUnion• Retrieve a free consumer credit report at AnnualCreditReport.com or call 1-877-322-8228 S
What’s on Your Credit Report?S Personal InformationS Account InformationS InquiriesS CollectionsS Public Record InformationS Creditor’s Contact Information
How Long Do Items Stay on Credit Report? 7 years? 10 years? Indefinitely?
What is a Credit Score?• Credit Score: a number based on the analysis of an individual’s credit reports that represents the creditworthiness of that person.• Fair Isaac Corporation (FICO) is renowned for their credit scoring model.• Credit scores are available for purchase. Alternatively, you can use credit score estimators. S
Basics of Credit Scoring S Copyright 2011 Maryland CASH Campaign
Myths About Credit• Close old accounts.• Never close any accounts.• You must carry a balance to build credit.• Individuals with higher incomes have higher credit scores.• If I get married, my spouse and I will have a joint credit score.• All credit scores are the same. S
4 C’s of CreditS CharacterS CapacityS CollateralS Capital
How to Build/Rebuild Credit• Open a bank or Credit Union checking and savings account• Secured credit card• Installment Credit Account• Department store Charge Card• Co-Signer/Authorized User S
Managing DebtS Objective: Client learns to verify debt, prioritize debt payments and create a plan to get out of debt.S Resources: National Consumer Law Center, www.nclc.org Nolo, www.nolo.com , credit counseling agencies, FTC, www.ftc.govS Tools: Debt Worksheet, sample creditor letters
Managing DebtS Rip off the band aid—assessment of debtS Create BudgetS Emergency FundS Call CreditorsS Payment Plan—everything in writing!S How to choose what to pay first?
SummaryHelp Clients:S Understand their money values/habitsS Create a Spending Plan and Check it—weeklyS Learn that Emergency Savings is criticalS Develop specific steps to attain financial goalsS Understand their credit history and ways to improve scoreS Become empowered to avoid/get out of debt
Questions? Contact info: Sue Rogansue@mdcash.org 410-782-1428