Rbs Scholar Development Financial Literacy (April 08)


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  • Rbs Scholar Development Financial Literacy (April 08)

    1. 1. Money $ mart PRESENTER William Chichester, III, Campus Diversity Recruiter Corporate & Investment Banking Wachovia Corporation
    2. 2. Overview <ul><li>Budgeting </li></ul><ul><li>Savings </li></ul><ul><li>Credit </li></ul>
    3. 3. Wake-Up Call - The Costs of Clubbing
    4. 4. Wake-Up Call - The Costs of Clubbing
    5. 5. Budgeting
    6. 6. Calculate Your Bi-Weekly Check <ul><li>What’s the average gross base salary for a Charlotte-based college graduate? </li></ul><ul><ul><li>$43,000/year </li></ul></ul><ul><li>How much are you really bringing home per year? </li></ul><ul><ul><li>Calculate Your Take-Home Pay: </li></ul></ul><ul><ul><ul><li>http://www.paycheckcity.com/copaycycle/netpaycalculator.asp </li></ul></ul></ul>
    7. 7. Note: The $1205.14 does not account for pre-tax contributions into your company’s 401K Plan and your after tax contributions to your benefit plan (Medical, Dental, Vision, etc.). Factoring these items in, you’re probably only bringing home $1000 bi-weekly check $1,205.14 Net Pay per Check ~$24, 0000 Net Annual Salary $103.00 North Carolina $23.98 Medicare $102.54 Social Security $219.19 Federal Withholding $1,653.85 Bi-weekly Gross Pay Your Pay Check Results
    8. 9. 10 Tips for Reducing Expenses <ul><li>Enroll in Automatic Billpay & Payroll Deductions </li></ul><ul><li>Live with a Friend or Family </li></ul><ul><li>Decrease Your Daily Environmental Impact </li></ul><ul><li>Self-groom </li></ul><ul><li>Purchase cheaper cell phone plan </li></ul><ul><li>Quit Your Vices </li></ul><ul><li>Shop at Family Dollar </li></ul><ul><li>E-Bay </li></ul><ul><li>Hotwire.com </li></ul><ul><li>Utilize Employer Discounts </li></ul>
    9. 11. Savings & Investing <ul><li>Open a High Interest Bearing Savings account </li></ul><ul><li>Participate in Employer Retirement Plan </li></ul><ul><li>Visit Wachovia’s Investment Basics website: </li></ul><ul><ul><li>http://www.wachovia.com/personal/page/0,,505_510,00.html </li></ul></ul><ul><li>Visit Vanguard’s Investment Basics website: </li></ul><ul><ul><li>https://personal.vanguard.com/us/planningeducation/education </li></ul></ul>
    10. 12. Credit
    11. 13. What’s Your FICO Score? <ul><li>Predicts a person’s likelihood of paying one’s debts </li></ul><ul><li>FICO scores range between 300 and 850 </li></ul><ul><li>FICO Score Ratings: </li></ul><ul><ul><ul><li>Excellent: Over 750 </li></ul></ul></ul><ul><ul><ul><li>Very Good: 720 or More </li></ul></ul></ul><ul><ul><ul><li>Acceptable: 660 to 720 </li></ul></ul></ul><ul><ul><ul><li>Uncertain: 620 to 660 </li></ul></ul></ul><ul><ul><ul><li>Risky: Less than 620 </li></ul></ul></ul>
    12. 14. How is Your FICO Score Calculated? <ul><li>35% on your payment history </li></ul><ul><li>30% on the amount you currently owe lenders </li></ul><ul><li>15% on the length of your credit history </li></ul><ul><li>10% on the number of new credit accounts you've opened or applied for (fewer is better) </li></ul><ul><li>10% on the mix of credit accounts you have (mortgages, credit cards, installment loans, etc.) </li></ul>
    13. 15. How Do I Build Credit? <ul><li>Visit freecreditreport.com & know your score from Equifax, Experian, TransUnion </li></ul><ul><li>Don’t have a credit history? Here are good starting points to establish one: </li></ul><ul><li>Typically high interest rates. </li></ul><ul><li>Typically high annual fees. </li></ul><ul><li>Your savings account may serve as the guarantee for the debt. </li></ul><ul><li>Your line of credit will be a % of your savings balance. </li></ul>Secured Credit cards <ul><li>The credit will be in your name and the co-borrower’s name. </li></ul><ul><li>If you default, it appears on their file, too. </li></ul>Relatives and friends with good credit history may co-sign your credit obligation Obtain a co-borrower <ul><li>Low credit limit </li></ul><ul><li>Typically high interest rates. </li></ul><ul><li>Offered relatively easy. </li></ul><ul><li>Good way to start building credit </li></ul>Department store credit cards Cons Pros Options
    14. 16. Avoid Credit Traps <ul><ul><li>Pay your bills on time. </li></ul></ul><ul><ul><li>Negotiate with creditor/lender </li></ul></ul><ul><ul><li>Don’t solicit or accept un-needed credit cards </li></ul></ul><ul><ul><li>Annually monitor your credit report via annualfreecreditreport.com </li></ul></ul><ul><ul><li>Correct and dispute credit report errors </li></ul></ul><ul><ul><li>Subscribe to a credit file monitoring service </li></ul></ul><ul><ul><li>Maintain your owed balances to manageable levels. </li></ul></ul><ul><ul><li>Longer credit history </li></ul></ul><ul><ul><li>Credit Mix of Revolving (i.e. dept store) & Installment (loan) </li></ul></ul><ul><ul><li>Consult with a reputable credit counselor (NFCC.org) </li></ul></ul>
    15. 17. Q & A
    16. 19. Budgeting <ul><li>Step-by-step plan for meeting expenses in a given period of time </li></ul><ul><li>Benefits </li></ul><ul><ul><li>Know What’s Going On </li></ul></ul><ul><ul><li>Self-Learning </li></ul></ul><ul><ul><li>Organization </li></ul></ul><ul><ul><li>Take advantage of opportunities </li></ul></ul><ul><ul><li>Goal-setting </li></ul></ul><ul><ul><li>Extra money </li></ul></ul>
    17. 20. Expense Tracking Tools <ul><li>Quicken - Download Bank Statements </li></ul><ul><li>Daily Spending Diary </li></ul>Saturday Thursday Friday Wednesday Sunday Tuesday Monday What did I spend my money on today? Day
    18. 21. Recordkeeping & Identity Theft <ul><li>Keep information in a safe place </li></ul><ul><li>Keep your files organized </li></ul><ul><li>Keep records for at least 3 years </li></ul><ul><li>Shred all files/junk mail before disposing </li></ul><ul><li>Don’t view personal information on public computers </li></ul><ul><li>Delete history and browser cookies </li></ul><ul><li>Beware of phishing e-mails </li></ul><ul><li>Never share personal information to unknown callers </li></ul>
    19. 22. Why is FICO Important to You? <ul><li>GOOD CREDIT SCORE </li></ul><ul><li>Faster loan approvals </li></ul><ul><li>Pay lower interest rates </li></ul><ul><li>Easier pre-employment process </li></ul><ul><li>Easier to get credit cards </li></ul><ul><li>Easier to purchase a home </li></ul><ul><li>Less Documentation </li></ul><ul><li>Less Hassle </li></ul><ul><li>Allows you to shop around </li></ul><ul><li>Credit card reward programs </li></ul><ul><li>BAD CREDIT SCORE </li></ul><ul><li>Denied credit/loans </li></ul><ul><li>Pay higher interest rates </li></ul><ul><li>Hard to get a job </li></ul><ul><li>Hard to rent </li></ul><ul><li>Hard to get a home </li></ul><ul><li>More documentation needed </li></ul><ul><li>More hassle </li></ul><ul><li>Limited </li></ul>
    20. 23. How Long Do Items Stay on My Credit Report? <ul><li>Purge Rules: </li></ul><ul><ul><li>Inquiries: 2 years </li></ul></ul><ul><ul><li>Accounts with no derogatory history: 10 years </li></ul></ul><ul><ul><li>Accounts with a derogatory status: 7 years (ex: charged off) </li></ul></ul><ul><ul><li>Late or missed payments: 7 years </li></ul></ul><ul><ul><li>Collections: 7 years </li></ul></ul><ul><ul><li>Tax Liens: paid: 7 years; unpaid: 15 years to never </li></ul></ul><ul><ul><li>Judgments: paid/unpaid: 7 years </li></ul></ul><ul><ul><li>Bankruptcy: Chapters 7 & 11: 10 years </li></ul></ul><ul><ul><li>Bankruptcy: Chapters 12 & 13: 7 years </li></ul></ul>