Financial Counseling, Debt Evaluation & Affordability Assessment 5-Step Financial Worksheet & Student Budgeting Essentials & Basic Budget Goals

Breakdown Handouts Presented by: APTA Member Benefit - Education Finance Program Administered by: EAS Group, LLC/MEDebt

Solutions

• Small Group Financial Counseling & Debt Management Session: Friday, October 30, 2009 – 10:00 am – Noon in Orchid D. There will be three 25-minute sessions of 25 members.

• Five (5) One-on-One Debt Evaluation and Affordability Assessment Financial Counseling Sessions*: Friday, October 30, 2009 – 2:00 pm – 5:00 pm in Orchid D. Registration and a completed 5-Step Financial Worksheet is required for participation.

• Six (6) One-on-One Debt Evaluation and Affordability Assessment Financial Counseling Sessions*: Saturday, October 31, 2009 – 10:00 am – 2:00 pm in Orchid D. Registration and a completed 5-Step Financial Worksheet is required for participation.

• Financial Management Presentation: “Protecting the Value of Your Prime Financial Assets: Your Degree and

Career Earnings!” Saturday, October 31, 2009 3:00 pm – 4:00 pm - TBA

*One-on-One Financial Counseling Cannot Be Conducted Without a Completed 5-Step Financial Worksheet.

The content of this publication are proprietary and are for informational use only and are subject to change without notice. The APTA member benefit Education Finance Program, APTA, EAS Group, LLC/MEDebt Solutions nor the authors/editors assume no responsibility or any liabilities for any errors, omission, or

inaccuracies. Copyright APTA - Endorsed Education Finance Program and EAS Group, LLC/MEDebt Solutions

Email – info@MEDebtSolutions.com August 2009

A Completed 5-Step Financial Worksheet is REQUIRED for One-on-One Debt Evaluation and Assessment Counseling

Step 1. Priority Goals Next 5 – 10 Years

Year Goals 1. _______________________________ 2. _______________________________ 3. _______________________________ 4. _______________________________ 5. _______________________________ 6. _______________________________ 7. _______________________________ 8. _______________________________ 9. _______________________________10. _______________________________

Step 2. Federal & Private/Alternative Student Loans: FEDERAL LOANS:

Lender Name Loan Type/Name Loan Amt. $ Interest Rate % ( i.e. Stafford, PLUS)

1 ______ __________________ ____________ ________________2 ______ __________________ ____________ ________________3 ______ __________________ ____________ ________________4 ______ __________________ ____________ ________________5 ______ __________________ ____________ ________________

PRIVATE/ALTERNATIVE STUDENT LOANS:

Lender Name Loan Amt. $ Interest Rate % Interest Type Repayment # of Years (Fixed/Variable)

• _______ ____________ ____________ ____________ ________________• _______ ____________ ____________ ____________ ________________• _______ ____________ ____________ ____________ ________________• _______ ____________ ____________ ____________ ________________• _______ ____________ ____________ ____________ ________________

Step 3. All Other Outstanding Loans & Revolving Credit:

MONTHLY LOAN PAMENT DETAILS:

Name of Loan/Account Interest Rate % Minimum Required Balance (Purpose: car, credit card, etc.) Monthly Payment

1 _________________ ______________ _______________________ _______2 _________________ ______________ _______________________ _______3 _________________ ______________ _______________________ _______4 _________________ ______________ _______________________ _______5 _________________ ______________ _______________________ _______

*One-on-One Financial Counseling Cannot Be Conducted Without a Completed Financial Worksheet.

A Completed 5-Step Financial Worksheet is REQUIRED for One-on-One Debt Evaluation and Assessment Counseling

Select Graduate or Student*

Step 4. GRADUATE – Annual Income Resources & Expenses

Available Annual Funds/Income:

Gross Salary – Before Deductions $_____________

Cash/Savings $_____________

Investments $_____________

All Other Sources $_____________

Total Gross Annual Income - $_____________

Annual Deductions & Expenses:

Deductions (Federal, State, Local Taxes,

Social Security, Medicare, Health Insurance,

Others – If actual deductions are unknown,

Estimate 25% or 30% of Gross Income) $_____________

Retirement Contributions $_____________

Total Deductions & Expenses$_____________

Employer Matching Retirement

Contributions $_____________

*Graduate = Has graduated and received degree or will do so in less than 12 months.

Step 4. STUDENT – Annual Income Resources & Expenses

Available Funds/Income – Annual (12 months):

Financial Aid $______________

Contributions to Education Expenses

From Personal Cash/Savings/Investments $______________

Scholarship(s) $______________

All Other Sources $______________

Deductions & Expenses – Annual (12 months):

Tuition, Fees & Related Education Cost

Due School + Books $______________

Taxes/Social Security/Medicare $______________

Retirement Contributions $______________

Total Deductions & Expenses Due

School $______________

Available Funds/Income Less Total

Deductions & Expenses Due School $______________

Monthly Funds Available for Saving

and Spending $______________

*Student = Will continue in school with more than 12 months before receiving graduation and receipt of degree.

A Completed 5-Step Financial Worksheet is REQUIRED for One-on-One Debt Evaluation and Assessment Counseling

Step 4. Monthly “Must Committed Have” Expenses

Rent/Mortgage $_____________

Insurance Premiums $_____________

Car Payments & Related Expenses* $_____________

Utilities $_____________

Basic Food Needs/Groceries (Dine-In) $_____________

Student Loan Payments That Are Not

Deferred/Postponed $_____________

Child Care $_____________

Child Support and/or Alimony Payments $_____________

Ongoing Contractual Obligations (i.e.

credit cards, medical bills) $_____________

Other $_____________

Total $_____________

*Car Payments and Related Expense is a “Must Have” expense only if public/alternative transportation is not a viable, lower cost, reasonable and safe option. Otherwise it is a “Selected Want”. Automobile ownership for the purpose of status, convenience or perceived

freedom is not considered a “Must Have Committed Expense”.

Step 4. Monthly “Selected Wants” Expenses

Cable TV/Internet $_____________

Nonessential Food Purchases $_____________

Car Payments & Related Expenses* $_____________

Utilities $_____________

Dining Out $_____________

Child Care/Babysitting $_____________

Personal Care $_____________

Cell Phone $_____________

Entertainment/Recreation $_____________

Presents/Gifts $_____________

Travel/Vacation $_____________

Subscriptions/Memberships $_____________

Other $_____________

Total $_____________

*Car Payments and Related Expense is a “Must Have” expense only if public/alternative transportation is not a viable, lower cost, reasonable and safe option. Otherwise it is a “Selected Want”. Automobile ownership for the purpose of status, convenience or perceived freedom is not

considered a “Must Have Committed Expense”.

A Completed 5-Step Financial Worksheet is REQUIRED for One-on-One Debt Evaluation and Assessment Counseling

Step 4. Monthly Saving/Investing

Non-Deductible & Deductible Retirement Contributions (IRA, ROTH IRA, SEP, etc.) $_____________Savings (Insured Saving Account, CDs, Money Market Account, etc.) $_____________Investments (Stocks, Bonds, Mutual Funds & Other Securities)

$_____________College Savings Accounts $_____________Payments in Excess of Monthly Minimums to Lower High Interest Debt $_____________Irregular Expenses (Auto, Medical, Home Repairs, Maintenance $_____________Spare of the Moment/Just Because

$_____________Other $_____________

Total $_____________

Step 5. Credit Status & History

• If known, what is your credit score?• Have you been 30, 60 or 90 days late on any loan payment?

Yes_ No_ If yes when?• Have you ever defaulted on a loan, been a party to foreclosure

or bankruptcy? Yes_ No_ If yes when?• Have you reviewed a copy of your free annual credit report for

accuracy within the last four months? Yes_ No_

CONGRATUALTIONS,

THAT’S IT, YOU’RE DONE!!!!

You now have an organized comprehensive record of your finances which puts you ahead of most people and provides the basis for you to make informed decisions about your finances and goals.

Be sure to secure this information and bring it with you for your small group or one-on-one session.

Getting Your Federal Loan Information:

As a result of recent changes at the Department of Education, only borrowers and financial aid offices can access federal student loan histories. In order to gain full benefit of the counseling sessions you’ll need to have your student loan information along with your expenses and income. In order to access your federal student loan history you must use the Personal Identification Number (PIN) issued to you by the Department of Education.

If you filed your FASFA recently, you can use the same PIN for the National Student Loan Data System (NSLDS) that you used for the FASFA and visit NSLDS at http://www.NSLDS.ed.gov and follow the instructions.

Some financial aid offices may assist you assembling your student loan portfolio if you ask. If you do not have your PIN, if you do not remember your PIN, or it’s been more than a year since you filed your FASFA obtaining it is a relatively simple process. Go to http://www.PIN.ed.gov, click on Apply for a PIN and follow the instructions. You should be able to instantly view your PIN online or have it sent by postal mail within 7 - 10 days. Once you have your PIN, you’ll be able to log onto the NSLDS web site and obtain your student loan information. Remember to NEVER share your PIN.

Once on your personal NSLDS homepage, print the page with the list of you loans and current status. For each of your loans, click on the blue number next to the loan and print the summary page about the loan. Assemble the pages and use the 5-Step Financial Worksheet to record your information. Bring the completed 5-Step Financial Worksheet to your counseling session. One-on-One Financial Counseling Cannot Be Conducted Without a Completed 5-Step Financial Worksheet. Also remember to always securely file this information and update the file as you add student loans.

Getting Your Private/Alternative Loan Information:

If you do not have complete records of your private/alternative student loans you have several options:

1. You can contact the financial aid office of your current and all former colleges and universities attended where you received private student loans and request a copy of your private student loan records. The school will not have information for private student loans that were disbursed directly to you without school certification.

2. Virtually all private loan lenders send a statement identifying the original loan balance, current loan balance, interest, current interest rate, account number, lender, loan status (in deferment, forbearance or repayment), servicer and lender/servicer contact information.

3. The promissory note contains all of the vital information regarding all loans including the type of loan rate (variable or fixed) and payment information. The promissory note identifies the frequency and index (Prime Rate, LIBOR) being used to make adjustments in variable rate loans. If you do not have a copy of your original promissory note you should immediately request a duplicate copy for your records.

4. You can also request a copy of your free annual credit report from one of the major credit reporting agencies. Your credit report should detail your consumer loan history. Go to www.annualcreditreport.com to request your free credit report which will be immediately viewable online upon authentication of identity. Free credit reports can also be requested by phone or mail and are reported to be processed within 15 days of receiving a request.

You can request a free credit file disclosure (credit report) once every 12 months from each of the nationwide consumer credit reporting companies: Equifax, Experian and TransUnion. We recommend that you request only one report from one company at a time every four months. This single request over the

course of a year strategy will also help you to monitor for identity thief. In most cases, private student loans will turn up on your credit report.

Getting Information on Other Loans, Obligated Payments and Interest & Dividends:

When assembling your financial information for review you want to make sure that you include all credit and loan payment obligations such as credit cards, car loans, consumer loans, mortgages and personal debts such as medical or dental bills. On the income side you want to account for all income including salary, financial aid, gifts and interest and dividend payments.

In most cases, for consumer debt such as credit cards and car loans, you can determine the status of your debt from your monthly statements. For all debts and loans you want to be sure that you identify and record:

• Interest rate• The interest rate - variable or fixed.• The index which the interest rate is based (Prime Rate, LIBOR, Other)• Payment amount• Original balance• Current balance• The type/name of each loan (credit card, car loan, etc.)• The name of the lender (Citibank, Macy’s, etc.).• The status of the loan (current, overdue/late).

Information regarding consumer debt, other loans, interest and dividend income can also be obtained by calling the company’s customer service number. It is fundamental to informed financial planning and money management to have your financial information assembled and organized. When planning to make any major financial decision or to meet with a financial advisor or significant other(s) it is best to have this information available because every individual represents a unique financial profile with unique potential strategies and options which can only be effectively addressed with complete and accurate information.

Review and gather your information and have it available when you meet with an APTA – member benefit Education Finance Program MEDebt Solutions’ advisor during a small group or one-on-one session during APTA “NSC 2009”.

Budgeting Essentials for StudentsFor Budgeting Essentials for Graduates Email – info@MEDebtSolutions.com

The first step in budgeting essentials for students is writing out your priority top ten goals for the next 10 -30 years. This list in priority order should be reviewed and updated annually or whenever a goal has been achieved. Your goal list provides you with your destination.

Your next step is preparing a budget; a plan which provides you with the navigation and transportation tools for achieving your goals. Your budget (money in/money out) plan will be most effective when formulated and implemented before or during your physical therapy school years before graduation. A spending plan requires a commitment to borrowing only for your direct education expenses and basic minimum virtually no frills “student” living cost. On a regular basis, at least twice a year, preferably quarterly and even better monthly, review your budget. Compare your actual income and expenses with those you had projected and make necessary adjustments. Preferably you want to have something left over and at least break even at the end of the budgeted school year.

As you take on new borrowing, estimate and compare future monthly payments for student loans and all debt to projected “net” (after taxes & deductions) employment/practice income so that you are informed and understand “affordability” of your future “living/lifestyle” and the implications and adjustments necessitated by your borrowing. Estimate the impact of all debt on your goals and timeline, projected future income, expenses and paying yourself - saving/investing. Obtaining your degree should result in a positive impact whereas consumer debt while in school and during your early career years virtually always has a negative impact which may greatly delay achievement of your goal and reaching financial stability.

Budgeting as a student dependent on student loan sources is significantly different than budgeting as a practicing physical therapist earning a salary. Students who are dependent upon loans should first identify all sources of funds available to pay for their education. Next you should deduct tuition, fees and related direct education cost due the institution including books. The remaining balance is what you actually have left to pay for all remaining expenses.

Each school publishes a “school budget” which provides a general guideline for student’s cost of education including living expenses . Every student must decide how much of their money they wish to spend on each living expense item such as housing, transportation and personal expenses. Understand, it is guaranteed that bad things will happen if your expenses exceed your available dollars.

As a student your first savvy financial move should be to creatively reduce your “living expenses” by 10 percent which will be applied to and/or the reduction and elimination of any high interest debt. Students can use the following Basic Budget Goals Breakdown template and recommendations to create a budget:

Basic Budget Goals Breakdown for StudentsFor Budgeting Essentials & Budget Goals Breakdown for Graduates Email – info@MEDebtSolutions.com

Income/Money In:• Financial Aid• Personal Cash/Savings/Investments• Scholarships• All Other Sources

Expenses/Money Out:• Tuition, fees and related direct education cost• due the school• With the remaining funds after paying tuition, fees and related direct education cost due the• school allocate:

50% - 70% of Monthly Available Funds for Must Have Committed Expenses:

• Rent/Mortgage• Insurance premiums• Utilities• Basic food needs• Taxes (property & other)• Student loan payments that cannot be deferred• Child care• Child-support or alimony payments• Ongoing contractual obligations

10% - 30% of Monthly Available Funds for Selected Wants:

• Cable TV• Nonessential food purchases• Dining out• Babysitters• Hair care• Recreational fees and gear• Entertainment• Birthday presents/gifts• Vacations/Travel• Magazine subscriptions

$500 - 10% of Monthly Available Funds for Savings/Investment Goals:

• Emergency fund in federally insured• Money-market account (one month of• expenses)• Retirement contributions (IRAs, Roth IRAs, 401 (k), 403 (b), etc.)• College savings accounts• Payments in excess of monthly minimums to lower

high interest debt• Irregular expenses (auto, medical, home repair/maintenance)• Spare of the moment/just because

The content of this publication are proprietary and are for informational use only and are subject to change without notice. The APTA member benefit Education Finance Program, APTA, EAS Group, LLC/MEDebt Solutions nor the authors/editors assume no

responsibility or any liabilities for any errors, omission, or inaccuracies. Copyright APTA - Endorsed Education Finance Program and EAS Group, LLC/MEDebt Solutions

August 2009