The derivation of the annuity formula in the book is very approachable for most students and might be discussed if time permits. Several savings scenarios can be worked through to get acquainted with this formula. The more realistic, the better.
The derivation of this formula can be done by simply setting the compound interest formula equal to the annuity formula and is fairly approachable for many students. Again, working through realistic scenarios that students can relate to will help them appreciate the importance of this payment formula.
Money Management Skills: The Education That our Schools Missed. By Gabriel Mendoza
Disclosure• All of this information was retrieved for education purposes only any relationship to your life it is just coincidence.• All of the material presented was retrieved from the internet.• I do not claim to be a financial advisor or author of the material.
The “F” word that will change your world. What is FICO? • FICO(R) mid-1980s after analyzing raw data provided by Experian, Equifax and TransUnion. • FICO score -- its short for Fair Isaac Corp. • Experian/Fair Isaac Risk Model (Experian), BEACON (Equifax) and FICO Risk Score, Classic (TransUnion) •
How is my Score Calculated?• Your score is calculated by a series of questions based on both your credit report & debt-to-income ratio. Each answer accumulates a certain number of points that are then added together for your final score. A typical scoring considers: • How long youve lived at your current address • Your job or profession • Your financial obligations (debt-to-income ratio) • Any late payments • The amount of credit you have outstanding • The amount of credit you are using • The amount of time youve had credit established
Most Weighted Factors• Current balances on accounts• too few bank revolving accounts • too many bank revolving accounts • number of accounts with balances• number of accounts opened in the last 12 months• length of time accounts have been established• amount of past due accounts, number of delinquent accounts• too few accounts rated "current," recent derogatory public record of collection• past due balances, number of credit inquiries made
What is Considered a Good score?• A FICO score of 700 and higher means Excellent or Very Good credit.• 680 to 699 means Good.• 620 to 679 is OK.• Less than 620, they will not even lend you the pencil to fill the application.
Better Your Credit• pay bills on time.• Try to keep the amount borrowed under 35-50% of the credit limit.• Call every six months for a lower APR• Wants Vs. Needs• Use a payment calculator• Don’t fall for tricks (i.e. six months free interest)• Don’t close accounts
• Never max a credit card or your car insurance will go up.• Avoid Department store credit cards(i.e. Victoria Secret, JC penny, SEARS, Lowes, Homedepot, compusa, bestbuy)• Automatic Withdraw• NEVER Cosign for ANYBODY• Buy your home first than your car• TRY to read your credit card statements• Children
Compound Formula A = P (1 + i ) nA = P(1 + ) r m mt• P = money, r = rate or %, m = # of times they charge interest, t = time in years, and A = total to pay.
A = Pe rt Periodic Compounding A = Pe rt P = money, r = interest or %, t = time in yrs, e = 2.718, and A = total to pay.
Savings Plan Formula (Regular Payments) r ( mt ) 1 + − 1 m A = PMT × r m A = accumulated savings plan balancePMT = regular payment (deposit) amountr = annual percentage rate (as a decimal) m = number of payment periods per year t = number of years
Loan Payment Formula (Installment Loans) r P× PMT = m r ( − mt ) 1 − 1 + m PMT = regular payment amount P = starting loan principal (amount borrowed) r = annual percentage rate m = number of payment periods per year t = loan term in years
What I Need to Know to Buy a Home • Where do I want to live. http://www.realtor.com • Who is my neighbor? http://18.104.22.168/SOMAP/somapSearch.cfm http://www.familywatchdog.us
How Much is My Future Home www.zillow.com http://www.elpasocad.org
Cry baby CryHow much can I affordhttp://finance.yahoo.com/calculator/real-estate/hAmortization calculatorshttp://finance.yahoo.com/calculator/real-estate/hBi-weekly calculatorhttp://mortgage-x.com/calculators/biweekly.htm
PMI• Principal Mortgage Insurance• 20% down• 45-60 dollars a month• 1% of the value of the home
Help for Teachers• The Teacher Next Door program was established by the Department of Housing and Urban Development (HUD) to offer single-family houses, townhouses and condominiums for sale to a teacher at a 50 percent discount. The goal through the Good Neighbor Next Door program is to encourage teachers to buy homes in low and moderate-income neighborhoods.http://www.fhainfo.com/teachernextdoor.htm
Teacher Next Door ProgramHUD phone number 1-800-225-5342DHUDDenver Homeownership CenterProgram Support Division -23rd Floor1670 BroadwayDenver, CO 80202-4801
Other Calculators• Credit cardhttp://www.csgnetwork.com/creditcardcalc.html• Retirementhttp://finance.yahoo.com/calculator/retirement/ret-02• Collegehttp://finance.yahoo.com/calculator/college-education/c