Chapter 5- DEBT!!

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Chapter 5- DEBT!!
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Benefits and Risks of Borrowing

• Allows you to make investments
• Education
• Home
• Business
• Buy today, pay tomorrow

• -Interest
• -Financial and legal consequences for missed
  payments

3
Credit Report/Score

• 3 major bureaus/ scores
• TransUnion
• Equifax
• Experian
• used for lending decisions and risk analysis

• Credit Score- a numerical expression to represent
  the creditworthiness of a person

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Credit Report Myths

• Checking my own credit score will hurt my score.
• Carrying a balance on my credit card will help my
  score.
• I have to pay for my credit report
• AnnualCreditReport.com- does not include your
  score
• Canceling a credit card will improve my score.
• A divorce decree automatically severs joint
  accounts

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Ways to Borrow- Costs and Terms

• Banks/Credit Union- traditional
• Mortgages, Car Loans, Student Loans
• Interest rates vary by loans and length
• Purchasers of structured settlements/annuities-
• JG Wentworth, 877CashNow, PeachTree
• Use Net Present Value (NPV) of future payments

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Ways to Borrow- Costs and Terms

• PayDay Loans/Cash Advance- high interest-short
  term, borrowed against your paycheck
• Money Mutual, Western Sky
• Government- student loans, grants, Veterans home
  loans,
• Restrictive application process
• Yourself- borrow from 401k, pension

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Credit Cards

• Types?
• Compare and Contrast