Financial Awareness Ann Elinski Senior Advisor Office of Financial Aid.

Financial Awareness

Ann ElinskiSenior Advisor

Office of Financial Aid

Decisions About Money

No one told me….Be honest with yourself about

your financesKeep good habits, change bad

onesLife happens, be preparedBad decisions happen, you can

recover

Know Yourself First

Before you can manage your money, you need to know how you spend it

What do you like to spend your money on?

How do you pay for your expenses?

Jane’s Story

Jane only received one year of help with tuition from her parents, and has been working to pay her expenses. But she does use credit cards to pay for extra things she wants.

How Do You Spend Your Money?

HousingEconomical- you live with 5

roommates to save on housing costs

Moderate- you live in the dorms with a meal plan

Elaborate- you have a nice apartment that you can barely afford

Jane’s Story

Jane lives with her parents off campus and does not pay rent

Yearly cost $0.00

How Do You Spend Your Money?

Groceries/FoodEconomical- you use coupons and shop every sale

Moderate- you use your meal plan, and eat out 2 times a week

Elaborate- you have a meal plan and don’t use it. You eat out at fast food a lot.

Jane’s Story

Jane eats out breakfast, lunch and dinner on the days she has class

$22 a day at least 3 days a week = $3432 a year

How Do You Spend Your Money?

EntertainmentEconomical- you take advantage of

free activities on campus or you only go out 1-2 times a month

Moderate- you go out at least once a week to eat, the movies or to the club

Elaborate- you go out two to three times a week to the movies or the club

Jane’s Story

Jane goes out to the Bar 3 times a week.

$60 a week = $3120 a year

How Do You Spend Your Money?

TransportationEconomical- you drive an older car

that is totally paid off, but in need of a few repairs

Moderate- you drive a newer car that you bought used, and you still make monthly payments to your car note

Elaborate- you drive a brand new car, and you have 4-5 years left to pay on the car note.

Jane’s Story

Jane drives a brand new car

$300 a month = $3600 a year

Car Insurance = $1200 a year

What’s The Big Deal?

If you eat out at Wendy’s twice a week and spend $7.00, you will spend $728.00 a year on fast food

$4.00 a day on Starbucks = $1460.00 a year

Jane’s Yearly Expenses

Rent - $0.00Food- $3432Entertainment $3120Car- $3600Insurance- $1200Total yearly $11,352

Jane’s Yearly Expenses

Total yearly expenses $11,352 Jane earns $7,000 a yearJane is charging $4352 a year

on her Credit Cards! After 5 years of college Jane will

owe $21,760 on her Credit Cards she doesn’t change her spending habits!

What Are Your Goals?

To be financially aware, you need to write down what you spend

Define your future goalsCareer GoalsEducational GoalsFinancial Goals

Take actions to reach your goals

Jane’s Goals

Jane wants to move out of her parents house

What can she do to get her expense under control to reach her goal?

Evaluate Jane’s Expenses

Wants Needs

How Can Jane get Control of Her Expenses?Go to the bar only once a

weekEat breakfast at home and

bring lunch on days she has class

Shop around for cheaper car insurance

Use student loans instead of Private loans or Credit Cards to pay living expenses

What about Student Loans?

Jane is about to graduate with her Bachelor’s Degree in Accounting

She made some changes to her spending habits and she used Stafford Loans instead of her credit cards to pay for school

What about Student Loans?

For every $10,000 in student loans you borrow, you will repay about $115 a month when you graduate

Jane’s Loan Debt $30,000 in Stafford loans = $345 a month

Jane gets a job

Jane got a job as an Accountant that pays $45,000 a year

Taxes take about 25% of her income which leaves her $33,750 to live on

$2813 a month to pay her expenses

Jane gets a jobIncome per month $2813Less Student loan bill -$345Less Credit Card bill -$400Less Car Note & Insurance

-$400Less Phone/Cell Bill -$100Less Apartment Rent -$900Less Groceries/Gas -$300Remaining Salary $368

Is Jane doing okay?

Are You Already In Debt Trouble?

You don’t know the amount of your monthly expenses

You only pay the minimum or less on your bills

You are near the limits on all of your credit cards

You don’t know how much you owe and you don’t want to find out

Are You Already In Debt Trouble?

You use a credit card to buy food and gas

You use credit cards because you don’t have enough money to live

You have more than eight open credit cards

Are You Already In Debt Trouble?

There is no specific amount that means you are in debt trouble

You may be able to make your own plan

Or you may need help

Debt Education/Credit Counselors

Many organizations are non-profitNot all services are freeStates Department of Justice

provides a list of approved Debt Education Agencies on their website

www.usdoj.gov/ust/eo/bapcpa/ccde/de_approved.htm

Debt Education/Credit Counselors

Will a Debt Management plan affect your credit score?It wont hurt your score but it may make it hard to qualify for new credit

Credit Reports

Each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report, at your request, once every 12 months

How do you establish good credit?

Pay your credit balances on time every month

If you can’t pay your balance in full make the minimum payment

Don’t charge your card to the limit

How do you lose good credit?

Pay your bill lateExceed your credit limitWrite a bad checkDefault on a loanFile for Bankruptcy

Websites

www.nelliemae.comwww.truecareers.comwww.salary.comwww.collegeboard.comwww.optoutprescreen.comwww.ftc.gov

Credit Reports

To receive a free copy of your credit report: annualcreditreport.com 1-877-322-8228 complete the Annual Credit Report

Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281

You can print the form from ftc.gov/credit