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Your Money: Buy Anything You Want, Guilt-Free

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Your Money: Buy Anything You Want, Guilt-Free

  1. 1. Your Money Buy Anything You Want, Guilt-Free Brendan Quinn Patrick Johnson Tuesday, November 16, 2010
  2. 2. What We’ll Talk About Why is this important? Credit cards and credit Accounts you need Building a system Investing Tuesday, November 16, 2010
  3. 3. How We Know This Stuff I Will Teach You To Be Rich by Ramit Sethi Most of what we’re going to talk about comes from this Personal finance blogs Tuesday, November 16, 2010
  4. 4. Three Rules of Personal Finance 1. Spend less than you earn 2. Make the money you have work for you 3. Prepare for the unexpected Tuesday, November 16, 2010
  5. 5. Why Is This Important? Compound interest yields HUGE results long-term if you start even a year or two earlier Takes only a few hours to get your money working for you instead of against you Money is stressful, and it shouldn’t be Tuesday, November 16, 2010
  6. 6. Credit Cards Tuesday, November 16, 2010
  7. 7. Why You Want One Build credit rating - save money Convenience Easy to track your spending Rewards Tuesday, November 16, 2010
  8. 8. What To Look For No annual fee Rewards Cash Back Airline Miles Points Low APR Tuesday, November 16, 2010
  9. 9. 6 Rules of Credit Cards 1. Pay off your bill IN FULL each month 2. Get all fees waived 3. Negotiate a lower APR 4. Keep your cards for a long time, and use them 5. Ask for more credit (be careful with this, though) 6. Use your rewards Source: I Will Teach You To Be Rich Tuesday, November 16, 2010
  10. 10. PAY OFF YOUR BILL IN FULL EVERY MONTH Tuesday, November 16, 2010
  11. 11. Credit Score 35% payment history (late payments are bad) 30% amounts owed (credit utilization rate) 15% length of history (how long you’ve had credit) 10% new credit (older accounts are better) 10% types of credit (student loans, mortgages, credit cards) Source: I Will Teach You To Be Rich Tuesday, November 16, 2010
  12. 12. On a $200,000 30-year mortgage... If your FICO score is... Your APR will be... You’ll pay a total of... 760 - 850 4.384% $359,867 700 - 759 4.606% $369,364 680 - 699 4.783% $377,021 660 - 679 4.997% $386,381 640 - 659 5.427% $405,515 620 - 639 5.973% $430,427 Source: I Will Teach You To Be Rich Tuesday, November 16, 2010
  13. 13. Accounts Tuesday, November 16, 2010
  14. 14. Accounts You Need Right Now Checking Savings Roth IRA Tuesday, November 16, 2010
  15. 15. Checking Accounts No monthly fees, ever Find one that gives interest, if you can Use any ATM in the country without paying fees Schwab Investor Checking Tuesday, November 16, 2010
  16. 16. Savings Accounts High interest rates Lets you create sub-accounts for goal-setting Long-term money Online-only banks generally have better offerings ING Direct, Ally Bank Tuesday, November 16, 2010
  17. 17. Saving For The Future Tuesday, November 16, 2010
  18. 18. START NOW! Even if it’s just $20/month Tuesday, November 16, 2010
  19. 19. Saving for Goals Everyone has huge expenses during their lifetime (down payments on a house, car, wedding costs, travel) Think ahead and they become more manageable Set aside money ahead of time Tuesday, November 16, 2010
  20. 20. The average wedding costs $28,000... Your Age Months Until Wedding Monthly Amount Needed to Save 20 84 $333 21 72 $389 22 60 $467 23 48 $583 24 36 $778 25 24 $1,167 26 12 $2,333 27 1 $28,000 Source: I Will Teach You To Be Rich Tuesday, November 16, 2010
  21. 21. Saving for Retirement Compound interest yields HUGE returns over time Start immediately, even if it’s not very much - it will be in 40 years 401(k), Roth IRA Tuesday, November 16, 2010
  22. 22. Compound Interest Britney deposits $5,000 into a Roth IRA and then leaves it alone Britney deposits $5,000 into a Roth IRA and then leaves it alone Age at deposit Value at retirement 20 $160,000 39 $40,000 Source: www.GetRichSlowly.org Tuesday, November 16, 2010
  23. 23. To have $1,932,528 at retirement... Starting Age Annual Contribution Monthly Contribution 19 $4,618 $384.83 20 $5,000 $416.67 21 $5,414 $451.17 22 $5,863 $488.58 25 $7,459 $621.58 30 $11,214 $934.50 35 $17,059 $1,421.58 40 $26,434 $2,202.83 Source: www.GetRichSlowly.org Tuesday, November 16, 2010
  24. 24. Start Now Monthly Investment If you start sophomore year... If you start senior year... Difference $20 $1,832,252 $1,816,160 $16,092 $30 $1,843,609 $1,819,691 $23,918 $10/month difference: $11,357 $3,531 *assumes you make the maximum contribution after graduation Tuesday, November 16, 2010
  25. 25. How To Stop Worrying Tuesday, November 16, 2010
  26. 26. Building a System That Works If you can automate your finances, you don’t have to worry about them Automated saving is easier mentally and emotionally Keep track of things with Mint.com & email alerts Tuesday, November 16, 2010
  27. 27. Salary 401(K) Checking Roth IRASavings Wedding...............................2% House...................................1% New iPhone...........................1% Emergency Fund....................1% Credit Card Regular bills that can be paid electronically Guilt-free spending money Other Bills Stuff that can’t be paid using a credit card 5% 5%5% 100% 95% Source: I Will Teach You To Be Rich Tuesday, November 16, 2010
  28. 28. Parting Words 85% Rule These are just tips, you should research on your own Check out the book Money is a means, not an end Tuesday, November 16, 2010
  29. 29. Thanks for coming! Tuesday, November 16, 2010

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