2 Welcome 4 th of 16 Sessions No cost to participate. Financial
Support: FINRA Foundation & United Way Worldwide Solid Finances
Webpage: www.msuextension.org/solidfinances
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Text Your Questions Do you have a Question? Do you want to
comment? Type in the Q & A pod: 3
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Send Your Questions Click this after typing question in Q &
A Pod 4
Slide 5
Schedule Investments November 30 Investment Risks December 7
Personal Risk Tolerance & Asset Allocation December 14 Mutual
Funds December 21 Mortgages (Refinancing & Reverse) 5
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Solid Finances Sponsors MSU Extension MSU Human Resources This
program is made possible by a grant from the FINRA Investor
Education Foundation through a partnership with United Way
Worldwide. 6
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Saving Money by Paying Down Debt Joel Schumacher 7
Slide 8
Question A: Have you attended a previous Solid Finances
Webinar? 1.Yes 2.No 8
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What is your goal? Be debt free earlier Save on interest Reduce
your monthly payments Improve your credit so you can make a large
purchase (house, car, etc.) Less creditors to deal with 9
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Question B: What is your top goal? 1.Be Debt Free 2.Save on
Interest 3.Reduce Monthly Payments 4.Improve your Credit
Application 5.Other Goal 10
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Understand your current debt List each debt and terms Balance
Interest rate Payment amount Is the interest tax deductible?
Repayment method Automatic Payment, Check, etc. Non-Money issues
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Example Lisa is expecting a tax refund of $1,500 Wants to know
to do with the $1,500 Income: $25,000 Income Tax Rates: 15% Federal
6.9% Montana 12
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Example: Lisa 13
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Question C: Lisa will get the best financial return by applying
the $1,500 to which loan? 1.Student Loan 2.Car Loan 3.Credit Card
4.Mom & Dad Loan 14
Slide 15
Interest Saved If the $1,500 is applied to: Mom & Dad
Loan:$3.75 next month Student Loan: $6.25 next month Car Loan:
$6.25 next month Credit Card: $16.25 next month To get the Best
Financial Return: Pay down the highest interest rate loan 15
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Which Goals are Achieved by Paying down different loans? What
will Lisa do with her extra $60 each month? 16
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What if Lisa paid off her student loan? What will she do with
the extra $95 each month? 17
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Question D: What is a better financial option? 1. Student Loan
(5%) 2. Car Loan (5%) 3. Student Loan & Car Loan are the same
18
Slide 19
Tax Deducible Interest Car and Student loans: Both 5% Interest
Interest paid on the student loan is tax deductible Car Loan
Student Loan Interest Payment$100 $100 Fed. Tax Savings$ 0 $15 MT
Tax Savings$ 0 $ 7 After Tax Cost$100 $ 78 19
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Tax Example Another way to look at this: 5% Interest Rate 22%
Tax Rate (15% Federal & 6.9% State) 1 - 22% = 78% 5% x 78% =
3.9% Effective rate is 3.9% 20
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Mortgage Interest Interest on a mortgage can be tax deductible
Only deductible if you itemize your deductions on your tax return
If you itemize use the method on the previous slide If you dont
itemize assume your interest isnt deductible Not sure if you
itemize: Check last years tax return 21
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Question E: Is your mortgage interest deductible? 1. Yes 2. No
3. Not Sure 4. I dont have a mortgage 22
Slide 23
Other Factors Family/Personal Reasons Relations with Mom &
Dad will improve when that loan is paid off Ease of Access Some
loans are paid automatically Other loans you write a check (or
electronic payment) 23
Slide 24
Creating Your Debt Repayment Plan Step 1: Create a list of your
debts Amount, payments, interest rates, tax deducible, late fees
Step 2: List your goal (s) Lower monthly payments, lower interest,
improve credit application Step 3: Create Your Plan PowerPay.org
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Do you have extra money? Will you make extra payments each
month? If so how much? Will you make a one time extra payment? Tax
Refund, Inheritance, other source Are you about to pay off a loan?
Those dollars could go toward another debt. 25
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Debt Repayment Tool: PowerPay What is it? Repayment Plan Equal
payments for the entire repayment plan Tool to help track loan
repayments Calculate Interest Savings Determine pay off date Create
Amortization Schedules Compare payment strategies 26
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How to use Power Pay www.powerpay.org www.powerpay.org Run by
Utah State University Extension Free Service No email sales
pitches, etc. 27
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User Login 28
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Creditor Information 30
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31 Select Highest Interest First, Then Click Calculate 31
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32 Scroll down to see Detailed Calendar $82.49
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Drop Down Menus 33
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34 Select Consolidate 34
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Question F: Is the PowerPay system useful? 1. Yes 2. No 3.
Maybe 35
Slide 36
Question G: Is the PowerPay website useful? 1. Yes 2. No 3.
Maybe 36