give yourself credit 6.10
TRANSCRIPT
Give Yourself Give Yourself Credit!Credit!
Setting Financial Goals
Getting what you want…
“Getting what you want doesn’t always come easily.
Chances are you’ll have to work hard to get what you want!”
What are goals?
Something for which you work and which you achieve by planning and following the plan.
Short, Middle, or Long Term goals?
Replacing a TV set Purchasing a vehicle Paying for your child’s college education Planning for your retirement Buying a home Buying a refrigerator Short, Middle or Long term goals?
How to achieve your goals:
Write down goals and place reminders where you’ll see them everyday
Keep your goals in the forefront of your mind
Get people in your life to support you and feed off their inspiration
Develop your goals hand-in-hand with your spending plan, and figure ways you can apply more of your money towards achieving them.
Which family will succeed?The Jones Family…WILL be out of debt by January of next year based on monthly payments of $600…WILL buy a home by March with $10,000 saved for a down payment.…WILL have $14,000 saved for tuition by the time their child is 18 years old.
The Smith Family…HOPE to get out of debt…WANT to purchase a home…WISH to eventually send their child to college
Organizing Financial Records
Does this look familiar?
Organizing Financial Records
Consequences of not organizing financial records: Time wasted in looking for important documents. Confusion about how much money you have and
how much you owe. Difficulty in planning and meeting goals. Not having documents when you absolutely need
them. Inability to answer questions regarding
discrepancies with your finances. Extra fees for late payments and account overdrafts.
How to Get Organized
Use a file folder system, carton, box or expanding file
File regularly to avoid a “file pile” Commit to staying organized Tell someone where to find your documents – in
case of emergency
Which documents? Utilities Bill Birth Certificate Passport & Immigration docs Credit & Debt Card Receipts Bank Account Statements Copy of your tax returns Insurance and Investment
Docs Social Security Card Credit Card Bill Police/court documents Will Others????????
When Credit Card Statement arrives…
OPEN IT……………. Make sure the charges listed are yours, or authorized by you. Make sure any payments you made were credited to your
account properly. Contact your credit card issuer immediately if you have any
questions about charges or payments.
Bank statements………………
Make sure that all your Debits and Deposits are accurate.
Deposits - money paid into your account.
Debits – money taken out of your account and include:- Checks you write- Transactions you make using your debit card- Automatic deductions - car loan payments or insurance payments- Monthly service fees, overdraft fees, ATM charges, NSF fees- Additional charges for exceeding monthly transaction limits- Charges for new checks
Organize your Checkbook-
Always date your checks and debit transactions
Write the purpose for the check or debit in the memo area of the check or check register
Record every check you write in your check register
Keep ATM and debit receipts, and enter them promptly in your check register
Balance your checking account statement and checkbook every month
Reconcile your Checking Account – MONTHLY
When your Bank Account Statement arrives – open it!!!! Check every entry – debits & credits against your records Search for errors and investigate why – even if it’s $1 If your balances are still different, ask your institution for
help.
What is Debt-to-Income Ratio ?
Have you been declined for a loan?
And you pay your billson time………
Then maybe your debt-to-income ratio is too high?
So, what is “Debt-to-Income Ratio” ?
Your earnings
Vs.
Your level of debt
Why is it important to monitor my debt-to-income ratio?
By staying aware of your debt-to-income ratio, you can:
Make sound decisions about buying on credit and taking out loans;
See the clear benefits of making more than minimum credit card payments; and
Avoid major credit problems.
Calculating your debt-to-income ratio:Step 1 – Calculate your monthly take home pay
Multiply your paycheck amount by either 26 or 52 - depending on how often you are paid.
Now divide your annual take-home pay by 12. This is your monthly take-home pay.
If your take-home pay is inconsistent, estimate your monthly take-home pay by dividing last year’s annual take-home pay by 12.
Remember to include: Alimony and child support, bonuses, commissions, tips and any other income.
EXAMPLE: TOTAL MONTHLY TAKE HOME PAY $2000
Step 2 – Calculate your monthly debt
Calculate how much you pay every month for your debts
Remember to include:
Car payment(s) Loan payment(s) (furniture, appliances, etc.) Financial institution loan(s) Student loan payment(s) Other loans/credit accounts Credit card payments Payment for past medical care
EXAMPLE: TOTAL OF MONTHLY DEBT = $400
Step 3 – Calculate the Ratio
Divide your total monthly debt payments by your total monthly take-home pay, or income.
EXAMPLE: Monthly take-home pay = $2,000 Monthly debt = $400 400 divided by 2,000 = .20
DEBT-TO-INCOME RATIO = .20 OR 20%
Is your debt-to-income ratio ok?
16-19% or lower and you’re probably okay!
20% or higher and you may:
Jeopardize your ability to make major purchases, such as a car or a home.
Keep yourself from getting the lowest interest rates and best credit terms.
Have difficulty getting additional credit in case of emergencies.
Communicating about money
Family situations can make it difficult for one person to control the spending:
Dual incomes Blended families Childcare costs Eldercare costs Multiple credit, checking, and
savings accounts Debts
Why we need to communicate about money
Set ground rules for your money discussions Leave the judgments about who is right or
wrong out of the discussion Identify your common problems Agree on common solutions - such as
sticking to a budget or allocating savings
Establish common goals Decide on which things are important to the
entire household
Credit Reports – Facts & Myths
What is a Credit Report? A report which details, in depth information
about your credit history.
Creditors, insurance providers, employers, leasing agents and any other person you authorize has access to it.
Reveals your Credit Score.
Your Credit Report Reveals-
Your level of debt Your bill-paying habits Length of credit Inquiries made about
your credit
How can I get a free copy of my credit report?
Go to www.annualcreditreport.com
You are entitled to 1 free copyof your credit report each year
Plus….
You can also get a FREE copy if………….
You’ve been denied credit, insurance, or employment.
You have 60 days to order a report You’re on welfare Your credit report is inaccurate because of
fraud.
Do you know what your credit score is?
If you answered no then you could be a victim of identity theft.
You could have accounts on there that are paid, yet still reflecting a balance.
You may not receive the best terms when applying for credit cards or loans.
Scores range from 300 – 900
The higher the score the better! “Average” score - 680
What’s the VantageScore?What’s the VantageScore?
• Created in March 2006Created in March 2006• Used by all three reporting Used by all three reporting
agencies (Equifax, Experian, agencies (Equifax, Experian, TransUnion)TransUnion)
• Scores range from 501 to 990Scores range from 501 to 990• Number score goes with a letter Number score goes with a letter
gradegrade– Example: 501-600 = F, 901-990 Example: 501-600 = F, 901-990
= A= A
What’s in my Credit Score?
What’s not included in my Credit Score ?
Race, color, religion, national origin, sex and marital status Your age Your salary, occupation, title, employer, date employed or
employment history Where you live Any interest rate being charged Any items reported as child/family support obligations Certain types of inquires
Information taken from www.myfico.com
How can I get a good Credit Score?
Pay all your bills on time Keep your debt-to-income ratio level low Dispute all negative information Correct inaccurate information with all 3 major reporting
bureaus Make sure old accounts are closed at YOUR request Request that all missing positive credit information be
included in your report Notify in writing your creditors of any change of address Fill out all credit applications the same Review your credit report at least once a year!
Innocent mistakes are made
Credit Reports can contain incorrect and inaccurate information from innocent mistakes being made:
A person applied for credit under different names.
Someone made an error when transferring information from a hand written application.
Payments were applied to the wrong account.
My report contains inaccurate and incorrect information…..
You must notify all 3 credit bureaus in writing:
Detailing what is inaccurate/incorrect and why You will need to provide evidence/proof to verify your claim
The Credit bureau has 30 days to investigate and respond to you.
Information that can not be substantiated, must be removed.
If the disputed information is confirmed as accurate, you can include an explanation to be included in your credit report.
It is youryour responsibility to have the information corrected!
Am I responsible for a co-signed debt?
YES!
If a co-signed debt goes to collection: A collection agency may try to collect the debt from you. Institutions can sue you and get a judgment against you
for the debt plus interest and legal fees.
Lenders may consider co-signed amounts when calculating your debt-to-income ratio before extending you more credit.
How do I repair my credit?
You are fully able to dispute inaccurate and incorrect information yourself!
You can use a “Credit Repair Company”: Beware of scams and large upfront fees Some companies illegally and deceptively
promise to “clean up” credit reports, erase bad credit, or provide a new credit history
Debt Options
Try and arrange a repayment plan directly with your creditors.
Contact a reputable non-profit Credit Counseling Organization to pay off your unsecured debt within 48-60 months with greatly reduced interest.
Contact a reputable Debt Settlement company to settle your debt.
Where to get more information:
1 888-DEBT-USA
www.americandebtcounseling.org
Thank you!
American Debt Counseling, Inc.American Debt Counseling, Inc.1 888 DEBT USA1 888 DEBT USA
www.americandebtcounseling.orgwww.americandebtcounseling.org