Dreading Deathly Debt

10/2/2014

Savings Review 3 Reasons

EmergenciesPurchasesWealth

Emergency Fund $500 - $1000 3-6 Months of Expenses

Budgets Review

TitheSavingsDebtVariable/Discretionary/Fun Expenses

The Credit ScoreUNDERSTANDING CREDIT

The Credit Report Contains…

Personal identity Existing Credit Public Record Inquiries

3 Reports from 3 Bureaus Equifax Experian TransUnion

The Credit Score 300 - 900

< 630 > 700

Creating a Good Score Pay every bill, every month Don’t accumulate balances Remember 24 months!

Credit CardsUNDERSTANDING CREDIT

Credit Cards Purpose & Pro’s

Responsible use has a big positive impact on the score Delays payment Offers perks and rewards

Cautions & Con’s Credit limits are often higher than affordability Fees Incredibly high interest rates

Applying Under 21? - Student Card or bust! APR = Interest Rate

12.99% - 22.99% Fees

Annual & Maintenance Fees – Never!!Late Fees (a.k.a. Penalty Rates)Balance Transfer Fees, Over Limit (a.k.a. Credit Limit

Increase) Fees, Foreign Transaction Fee

Applying Perks/Rewards

Theft ProtectionCash Back vs. Rewards PointsNo Expirations or Limits – Ever!Beware the Travel Rewards!

High fee and high interest cardsPick your due date

DebtUNDERSTANDING CREDIT

Credit Card Debt Compound Interest

Remember the Savings example?...$100 deposit, 0.1% interest compounded monthly

Compound Interest Now with the interest rate of a Credit Card…

$100 bill, 18.99% compounded monthly

Getting Out of Credit Card DebtDestroy the Card(s) – Seriously.

Evaluate all your debt

Try to negotiate a lower rateBUDGET

If > $10,000, need a Professional

Getting Out of Credit Card DebtThe Payoff Plan

Start with the highest INTEREST RATEEven if it isn’t the highest balance

At the same time…Pay at least the minimum on all other debts

Repeat

Student LoansUNDERSTANDING CREDIT

FAFSA Unsubsidized & Subsidized

Repayment deferred during enrollment and 6 mo. Post Difference is in interest payment

Unsubsidized means you pay the interestSubsidized – Government pays interest during deferment

Perkins – for exceptional need PLUS – for graduate students and parents Private Loans

Repayment of Student Loans If > 1 – Consolidate! Standard Repayment

Fixed amount over a period of time Graduated

Low amount that gets bigger over a period of time Extended

Very low payment over 30 years or more Lots of Interest paid over time

Car Loans Collateral Loans

Pay the loan, or lose the car

Usually 3-6 years fixed monthly payment

Used Car Dilemma