Money Matters

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Money Matters

• NxLeveL Guide to
• Money Management

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Getting Started
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Discussion Topics

• Household Budgeting
• Setting Financial Goals
• Personal Financial Statement
• Understanding Credit
• Debt is it for you?
• Linking Personal Business Finances
• Borrowing for your Business
• The Lender Relationship
• Take the First Step

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Household Budgeting
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Sample of Household Budget Categories

• Income
• Salary
• Partners Salary
• Public Assistance
• Child Support/Alimony
• Other

• Expenses
• Living/Housing
• Regular Payments
• Food
• Personal
• Transportation
• Charity, Donations
• Savings
• Other

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Setting Financial Goals
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The Planning Cycle
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What are Your Goals?

• Immediate
• Within 1year
• Short Term
• 2-5 years
• Long Term
• 5 years

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U.S. Personal Savings Rate (1960-2008)
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Personal Financial Statement

• Assets Liabilities Net Worth

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Understanding Credit
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Credit Report Basics

• Four Types of Information
• Identification
• Name, address(es), Social Security number, birth
  date, employers, etc.
• Credit History
• Account information, credit/loan limits, payment
  history, balances due
• Public Records
• Bankruptcies, tax liens, criminal records, other
• Inquiries
• Requests for your credit history

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Elements of Credit Score
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Rebuilding Protecting Your Credit

• Reduce existing debt Stop spending!
• Stick to a budget
• Pay bills on time
• Make more than the minimum monthly payment
• Dont carry too many credit cards
• Get copy of Credit Report annually
• Fix discrepancies in writing
• Carefully guard your Social Security Number and
  other personal information
• Beware of Identity Theft schemes

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Debt Is it for You?
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Types of Debt

• Short term
• Less than one year
• Personal Consumables (restaurants, clothing,
  vacations, etc)
• Business Working capital, supplies, seasonal
  inventory, lines of credit, etc.
• Intermediate term
• 2-10 years
• Personal Auto or student loans
• Business Furniture fixtures, leasehold
  improvements, equipment
• Long term
• 10 years
• Personal Home mortgage, property
• Business Real estate, large equipment, initial
  business purchase

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Caution Not all debt is created equal

• Pay Check Loans
• Easy to arrange
• Extremely high interest rates, restrictive terms
• Committing future pay as a guarantee to repay the
  debt
• Rent to Own
• Easy down payment is usually not required
• Rent an item for a short period before returning
• If all payments are made, you own it if not, it
  will be repossessed for as little as one missed
  payment
• Extremely high interest rates may pay more than
  double or triple the original purchase price by
  the end
• Layaway
• Making a resurgence as our economy struggles
• Retailer holds an item for you no credit history
  is required
• Store keeps the money as you make payments fee
  is charged
• Retailer may go out of business and/or you may
  incur extra expenses if you later change your mind

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Caution Not all debt is created equal

• Car Title Loans
• Similar to rent to own easy to access
• Lender holds the title of vehicle until all
  payments are received
• High interest rates vehicle repossessed if
  payments are missed
• Pawn Shops
• Quick money using your valuables as collateral
• No questions are asked
• Extremely high interest rates shop can sell your
  property if you do not pay
• Loan is for only a small portion of the true
  value of your items
• Quick Tax Refund
• Loan against your expected tax refund
• Quick access to money high interest rates
  refund may be delayed
• An alternative is electronic filing or using a
  VITA (Volunteers Income Tax Assistance) Center to
  assist you

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Spending Choices
Housing 20-35 own 15-20 rent
Living 25-40
Transportation 10-15
Debt Obligations 10-20
Savings Investments 5-10
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Linking Personal Business

• Why do we care?

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Keeping the Books
Personal Business
Household Budget Business Budget
Balancing your Checking Account Cash Flow Statement Profit Loss Statement
Personal Financial Statement Balance Sheet
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Borrowing for Your Business
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Sources of Capital

• Personal Savings, Boot-strapping
• Friends Family
• Angel Investors
• Home Equity Loans
• Credit Cards
• Franchising
• Banks Credit Unions
• Loan Guarantees
• Suppliers/Vendors
• Alternative Lenders, Microlenders
• Other Sources ..

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Business Financing

• Debt Financing
• Money borrowed for a business
• A promise to pay back at a later time, with
  interest
• Payment varies on terms (amount, length of loan,
  interest rate)
• Receive money upfront in one lump sum
• Repaid via a standard repayment schedule amount
  typically does not vary
• Common sources Banks, Credit Unions, Alternative
  Lenders

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Business Financing

• Equity Financing
• Money invested by the owner(s)
• Sell partial ownership of business in exchange
  for financial investment
• Receive money upfront in one lump sum
• Terms vary greatly based upon owner investor
  negotiations share risks and profits (or losses)
• No monthly payments, but high rate of return
  expected in future

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Cs of Credit

• Character
• Credit
• Concept
• Collateral
• Conditions

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What to Look for in a Lender

• Listens
• Answers all questions
• Interested in working with you
• Familiar with your type of business
• Works with your size of request
• Explains terms options clearly
• Does not talk down to you
• Returns all phone calls emails
• Provides references, if asked
• Trustworthy, honest, flexible, timely
• Interested in a long-term relationship

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Preparing for the Loan Process

• Investigate multiple lenders
• Find lenders that regularly lend to small
  business
• Learn their preferences and requirements
• Get your personal records in order
• Check your credit history, know your credit score
• Update your Personal Financial Statement
• Get your business records in order
• Write/update your business plan
• Prepare financial projections for your business
• Know what records will be requested
• Understand your commitments
• What is your financial investment
• What will you pledge as collateral
• Understand personal guarantee requirements
• Set expectations
• Be prepared for personal questions
• Have patience

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Next Steps
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Next Steps

• Know Your Baseline
• Household Budget
• Personal Financial Statement
• Credit Report, Credit Score
• Set Financial Goals
• Address Credit Challenges
• Rebuild Protect your Credit
• Spending Plan
• Prepare for Your Business
• Write/update a Business Plan
• Take Action Today!
• Have fun enjoy the ride!

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If you dont write it down,it doesnt happen!

• My Action Items
• 1.
• 2.
• 3.

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