Financial Freedom

Super SavingsGinger L. Hack, FACS Educator,

USU Extensionginger.hack@usu.edu

Utah State University is an affirmative action /equal opportunity institution.

Stock market Crash

• October 29th, 1929• Black Tuesday• An enormous drop in stock

prices on the stock exchange.• Contributed to the Great

Depression of the 1930’s, which lasted almost 10 years.

Crowds gather outside the New York Stock Exchange on Black Tuesday.

Three Main Reasons to Save

•Emergency Funds•Purchases•Wealth Building or Retirement

Pay Yourself First

•Use direct deposit and automatic transfersinto savings account

•Envelope/Purchases•Retirement Accounts

$1000 emergency Fund#1 Savings priority

.• One-half of all Americans have

no savings• Start now• Pay the minimum on credit cards

until you have reached this goal• After you have reached this goal,

keep adding to your savings until you reach…..

3 To 6 Months of Expenses

What would happen if you suddenly became:

• Unemployed• Seriously ill• Widowed• Divorced

Most households should save approximately $10,000 in a money market account.

Sinking Funds

Save a small amount each month for a certain amount of time before making your purchase. This is more specific than a savings account since you know how much you contribute and when you will use it.

• Christmas• Car• Household repairs• Big ticket items

Leading Causes of Overspending

• The “latest and greatest” syndrome

• Using credit instead of cash• Eating out• Impulse buying• Emotional/Stress spending• Keeping up an image or lifestyle

• Not knowing how much you have to spend--not keeping track

• Spending money on things you don’t use

• Keeping up with the Jones’

Ways To Save Money• Quit using credit cards• Use the envelope system• Stop eating out• Quadruple casserole recipes and freeze the

extra ones• Wash your own car• Cook from scratch• Get a crock-pot• Grow a garden and preserve the harvest• Cancel gym memberships• Brown bag your lunch• Use the 24-hour rule before making

purchases

• Invite friends over instead of going out• Repair clothing instead of tossing it out• Make gifts instead of buying them• Swap babysitting with neighbors• Fix things yourself• Use a simple razor• Make your own cleaning supplies• Use the library• Cancel the cable channels you don’t watch• Buy in bulk

Ways to Save Money (cont.)• Don’t incur overdraft or late fees• Keep tires inflated• Review cell phone, cable, satellite, and

internet service costs—shop around and ditch services you don’t use

• Live in a smaller house• Shop for cheapest interest rates• Buy used when you can – especially

cars• Check out free events in town• Make your own personal care items• Air seal your home

• Do your own manicures• Give up daily trips to Starbucks –make

your own coffee• Use coupons and shop sales• Write a list before shopping and stick

to it• Negotiate rates with credit card

companies or do a balance transfer• Clean out closets-have a garage sale

or sell to consignment store• Pack food for road trips• Design your debt snowball plan

Step Down Principle

Movie theatre, new release, night show $9.50Movie theatre, new release, matinee $6.50

Movie theatre, less recent release, night show $3.00Movie theatre, less recent release, matinee $2.00

Rental $1.00 - $3.00Local Library $0

What Are Your Goals?

• Vacations• Taxes• Christmas• Retirement• College• New Car• Home

Where To Deposit Your Savings

• Certificates of Deposit• Money Market Savings

Accounts• Savings Bonds

Investment?

• Certificates of Deposit• Money Markets• Bonds• Stocks• Mutual Funds• Annuities

Certificate of Deposit

A certificate issued by a bank to a person depositing money for a specified length of time. A CD bares a maturity date, a specified fixed interest rate, and can be issued in any denomination.

Money Markets

A money market account is a financial account that pays interest based on current interest rates.

Bonds

A bond is an investment in which an investor loans money to an entity (typically corporate or governmental) which borrows the funds for a defined period of time at a variable or fixed interest rate.

Stocks

A stock is a type of security that signifies ownership in a corporation and represents a claim on part of the corporation’s assets and earnings.

Mutual Funds

A mutual fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks.

Annuities

A contract sold by an insurance company designed to provide payments to the holder at specified intervals defines annuities. Usually done after retirement. All annuities are tax deferred.

Retirement Funds

• Fully fund all retirement plans• “Max out” your employers

contributions• How much can you contribute to

your retirement without tax penalties?

• 401K• IRA• Roth

Pay off Your House

30 year Mortgage vs.

15 year

How do you know if you are better off?

Assets –Liabilities = Equity

Questions?

“Do not save what is left after spending, but spend what is left after saving.”

-Warren Buffett

Utah State University is an affirmative action /equal opportunity institution.