Beverlee Andrews

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Life On Your Own

• Beverlee Andrews
• Valencia Skillshop

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Presentation Outline
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SAVING MONEY
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SAVING MONEY
Who wants to be a millionaire?
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Pay Yourself First!

• Each school day, if you buy 2 sodas a day at
  1.25, youre spending 50 each month.
• Instead, if you invested 50 per month for 50
  years, you would have close to 1 million.
  (invested at 10 interest)
• Make it a habit to SAVE 10 of every dollar you
  make.
• You dont have to spend all of the money you
  make.

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Savings

• Dont underestimate the power of compounding
  interest.
• Compounding gets more powerful the longer its
  left to work.
• The magic of compounding interest depends on
  three factors
• How much money you invest
• How much time it spends growing
• Its rate of growth

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Lets start simple Take 100 and invest it at an
interest rate of 10
The initial 100 is growing, and the amount by
which its growing is also growing. Thats
compounding in action.
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Lets jump to year 35
Think about it. With only 100 invested, in year
35, your wealth grew by 281.02, in that single
year alone!
Think about what you would have if you added more
money to the investment each week or month!
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Who has more at age 65?
579,504
470,247
Fred invested 18,000
Joe invested 70,000
JOE
Scenario assumes a 9 interest rate
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BANKING
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Banking

• Checking accounts
• The bank holds money for you and you draw from
  it. Rule 1 Dont overdraw the account
• Very expensive
• Can cause trickle effect as the bank overdraft
  charges are taken from your account.
• Never rely the ATM receipt balance
• Balance your checkbook often
• Too many overdrafts will count against you and
  will prevent you from opening a checking account
  at another bank data is stored in ChexSystems

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How to keep track

• Keep your receipts.
• Immediately record deposits, checks, debit
  charges and ATM withdrawals in your checkbook (or
  computer program such as Quicken or Microsoft
  Money)
• Pay attention to the fees. They add up. If you
  use an out of network ATM machine to get 20 and
  pay 2.50 to get it, you just paid 5 fee to get
  that money. Plan ahead.

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Online Bill Paying Two Main Methods

• Bank Method
• Bank or Credit Union has a bill payer program
  that you tell them when to pay the bill.
• Most banks offer this for free and saves time
• Excellent way to keep track of your bills and
  what has been received by the companies.
• You can choose to initiate each payment or set up
  a recurring payment at the same time each month.

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Company Debit Method

• You authorize the company (phone, electric, etc.)
  to take the funds from your checking account.
• You can initiate the transaction or
• You can authorize a certain time of the month to
  pay the bill
• If you want to stop the withdrawal, you must
  contact the company who you authorized to take
  it out not the bank!

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Cash Advances

• Short term loans in case of emergencies usually
  between 500 and 1,000
• Loan made against a credit card or a paycheck
• Interest rates are VERY high
• Credit may be extended if the loan cant be paid,
  but it makes the amount owed SKY HIGH
• Avoid, if possible!

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CREDIT CARDS
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Credit Cards

• Credit Card borrowing money from a bank or
  financial institution. The bank pays the debt to
  the store and in turn, you pay the money back to
  the institution. You agree to pay back the money
  in a certain period of time. If you dont pay all
  of the money owed each month, you will pay
  interest on the balance owed.
• Visa, MasterCard, Discover, etc.

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Were Charged Up and Maxed Out

• On average, Americans carry eight credit cards
  per person and have a balance of 8,400 in debt.
  20 of the cards are maxed out.
• The average household pays their lender 1,000 a
  year in finance charges.
• Roughly 1 in 7 Americans are carrying credit card
  balances exceeding 25,000.
• Nobody gets rich paying Visa or MasterCard.
• Having a credit card doesnt mean you can afford
  to spend more---it just makes it easy to spend
  more than you can afford.

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Building Your Credit

• Credit is becoming more important than ever
  before
• Jobs, apartments, insurance rates
• Late payments, maxing out your cards, applying
  for too much credit at once hurts your credit.
• Start right! Get a free credit report, 1 free
  each year by each of the three credit bureaus

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Building your Credit

• Correct any errors.
• Establish a checking and savings account signs
  of stability
• Pay your bills on time, all the time
• It can take 7 years to have the full effects of
  missed payments taken off your credit report
• Dont max out your cards use less than 30 of
  your credit limit
• Pay your balance in full, if possible.

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Building your Credit

• Ask the credit card companies to lower your
  interest rate. Just ask, stand firm. They would
  rather lower it than lose you.
• (transferring to another card or going into
  bankruptcy.)
• If you cant qualify for a credit card, you can
  get a secured credit card. You deposit money into
  the card and spend it. It helps build your credit
  and it gives you access to using plastic instead
  of cash.

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Debit (Check) Cards

• Issued by your bank, debit cards take funds
  directly from your money that you have in your
  bank account its acting like a check, just
  faster.
• Can be used like a credit card you can swipe
  them and then you sign off on the receipt. No
  PIN required.

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Problems with Debit Cards

• Since it has a credit card like feature (ex.
  Visa logo), if you lose it, and someone uses it,
  the money is coming directly out of your checking
  account which will affect your balance and could
  put you in the negative. The bank will work with
  you, but in some cases, the damage has been done
  and there is a lot of cleaning up to do if you
  bounced a check due to insufficient funds.

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• You must notify the bank immediately or your
  liability goes up.
• Or if the store accidently runs the transaction
  more than once, you have to get them to remove
  the transaction.
• Credit cards are safer because if someone steals
  it, you are not liable for the charges if you
  notify them call and report it immediately and
  fill in the form sent to remove the charges.
  more consumer protection.

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Buying a car
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Did you know?

• Nearly 40 of all millionaires choose to buy used
  cars rather than new ones.
• You will be more likely to pay for the true value
  of the car.
• Used cars keep their value longer.
• A new car goes down in value
• The minute you drive off the lot, its worth 20
  less. A 20,000 car is now worth 16,000

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How to buy a car (new or used)

• Know beforehand how much car you can afford.
• Shop for a car in your price range
• Go to these sites to research
• carsdirect.com
• edmunds.com
• kelleybluebook.com

Know what you should be paying for a car!
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• Shop online Cars.com

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• Get out a magnifying glass and read the fine
  print. Some ads simply list WAC or OAC (with
  or on approved credit)
• Get the dealers best price in writing.
• Dont buy that day. Tell them you are going to
  shop around to other dealerships.
• When serious, get a CARFAX to see the history on
  the car.

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• Tell the dealer you want the best price without
  financing.
• The best time to buy is at the end of the month
  when the dealership is trying to meet their sales
  goals.
• Never tell the salesperson what you want your
  monthly payment to be. They will build the deal
  with that in mind when you might be able to get
  by with a lower payment.
• Dont pay the sticker price. Begin negotiating
  at the invoice price. Try to end up as close as
  possible to this price.
• Make sure the dealer follows through with the
  advertised deal.
• Advertised deals arent always the best deals on
  the lot. Walk around.

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Financing a Car

• Get approved for financing from a credit union or
  bank before shopping. Get the shortest term
  possible.
• If financing through the dealer, take the ad with
  you to the dealership. The ad must state the
  amount or percentage of down payment, terms of
  payment, and the annual percentage rate

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• Insurance costs will be different, depending on
  the car year and model
• What happens if you dont make your payments?
• Repossess the car (the bank comes and takes the
  car back)
• Credit report major hit
• Buy Here, Pay Here dealers
• Very high (sub-prime) car loan rates
• The dealership fails to report your on-time
  payments and your credit score does not improve
• Not all BHPH dealerships are ethical and they
  might sell you a lemon on purpose

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• Have a certified mechanic look the car over
  before purchasing
• For more information
• http//www.carbuyingtips.com/used.htm
• http//www.smartcarguide.com/
• http//carinfo.com/
• http//www.insidercarsecrets.com/

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Financial aid scams
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Financial Aid Scams

• If you must pay money in advance to get money, it
  might be a scam legitimate companies deduct it
  from the disbursement check. Never spend more
  than a postage stamp.
• If it sounds too good to be true, it probably is.
  Less than 1 of users of fee-based scholarship
  matching services actually win an award
  (finaid.org)
• Nobody can guarantee that youll win a
  scholarship.

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Financial Aid Scams

• Legitimate scholarship foundations do not charge
  application fees
• You must do the workdont believe we apply on
  your behalf.
• Claims of influence over the scholarship
  sponsors. (matching services)
• Excessive hype free money everyone is
  eligible
• Unusual request for personal information

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Financial Aid Scams Alert

• Claims of government approval govt. does not
  endorse or recommend private businesses
• If a seminar is held at your college, dont
  assume that its a university approved event
• Dont assume thats a not-for-profit organization
• Typing and spelling errors in materials
• Notification by telephone

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Tips

• Be cautious if fees are involved
• Get an independent opinion
• Call Directory Assistance
• Never give out personal info to strangers
• Get it in writing before responding
• Dont respond to unsolicited offers
• Ask the organization how it got your name
• Ignore offers that involve time pressure
• Contact the FTC Consumer Alert

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renting
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Renting

• Signing a lease
• Obligates you for the term of the lease
• If more than one person is on the lease, all are
  responsible, even if one moves out.
• Get renters insurance
• Roommates
• Are you compatible?
• Setting ground rules
• Collecting bill money
• Maintenance

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• Imagine that youre interviewing a potential
  roommate to share your two bedroom apartment.
  List three questions you would ask about the
  persons lifestyle and habits.

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shopping
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Distinguish between wants and needs
Dont Laugh, its Paid For
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Shopping Tips

• Choose the right store - go to stores that offer
  the best prices on certain items
• Eat first!
• Stock up when things are on sale
• (buy one get one)
• Buy store brands
• Clip coupons
• Avoid marketing ploys end of aisle dump bins,
  island displays, middle shelf items.

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Shopping Tips

• Set limits on impulse buying
• Read labels does it have what the item
  represents
• Prepare your week with things you have and whats
  on sale
• Grocery store ads (Orlando Sentinel on Wed.
  Stores offer loss leaders (below market price to
  get you in the store)
• Watch the scanner stop the checkout if an item
  is incorrect. Some stores offer it free if it
  rings up incorrectly.

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Shopping Tips

• Dont buy convenience items. (cheese already cut
  up, carrots with dip, little boxes of raisins)
  Cut or bag your own
• Some bakeries have a day old section. Its still
  fresh, but significantly discounted.
• Just because it says sale, doesnt mean its a
  bargain.
• Packaging cost money. Example Cereal in the bag
  instead of a fancy box

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Shopping Tips

• Ask for a raincheck if a sale item is gone.
• Return products that you didnt use.
• Send off for rebates
• Shop with friends and share
• Warehouse clubs have lower prices most of the
  time, but not if you use coupons often
• Be a savvy consumer. Dont be afraid to question
  a price.

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Dont fall for these store offers

• extra 10 off if you apply today. not good
  for your credit score
• no interest for 12 months same as cash
• The interest is really adding up (accruing) so
  that if you dont pay the balance before the 12
  months is up, you have to pay back all of the
  (deferred) interest from the start of the loan.
• If you use these, pay the balance due a month
  BEFORE the due date. Consumers have reported
  being told that the check wasnt received on
  time 1 day late and 12 months of interest is
  due.

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QUESTIONS?
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bandrews_at_valenciacc.edu