the dangers of payday loans

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BUDGETING BUDGETING To Avoid Personal Financial Crisis To Avoid Personal Financial Crisis

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Page 1: The dangers of payday loans

BUDGETING BUDGETING To Avoid Personal Financial Crisis To Avoid Personal Financial Crisis

Page 2: The dangers of payday loans

KEEP MORE MONEY KEEP MORE MONEY IN YOUR POCKETIN YOUR POCKET

Plan a budget (spending Plan a budget (spending plan) plan)

Monitor your budgetMonitor your budget

Page 3: The dangers of payday loans

Do you ask yourself where all the money goes at the end of every month?

Do you lose track of which bills you’ve paid and which are due?

Do you have a special project you’d like to save for?

Do you need a new car?

Page 4: The dangers of payday loans

Remember, it’s not about how much money you earn…

I It’s about how well you manage your money!

Page 5: The dangers of payday loans

! A helpful tool that tracks all of your

financial information at a glance.

A great way to organize your finances and pinpoint ways to save money.

Page 6: The dangers of payday loans

YOUR SPENDING YOUR SPENDING PLANPLAN

Creating and Creating and maintaining a maintaining a livable, livable, breathable breathable spending plan is spending plan is based on based on following following 6 easy steps6 easy steps..

Page 7: The dangers of payday loans

In addition to salary, In addition to salary, think of all other think of all other expected sources of expected sources of household income household income including tax including tax refunds, bonuses, refunds, bonuses, tips, etc.tips, etc.

IDENTIFY YOUR IDENTIFY YOUR INCOME INCOME

Page 8: The dangers of payday loans

Be honest with yourself about all household expenses, including eating out, salon services, hobbies and habits. Include all of your regular monthly bills and payments to creditors.

IDENTIFY YOUR EXPENSES

Page 9: The dangers of payday loans
Page 10: The dangers of payday loans

PAY YOURSELF FIRST Always put a few dollars aside in a Always put a few dollars aside in a

savings account each month. savings account each month. Credit Counselors say the amount Credit Counselors say the amount is not as important as establishing is not as important as establishing the savings habit! the savings habit! Money adds up! Money adds up!

Page 11: The dangers of payday loans

MAKE ADJUSTMENTS

Making expenses fit Making expenses fit your income is not your income is not always easy. always easy. Consider consulting Consider consulting with a Certified with a Certified Credit Counselor to Credit Counselor to structure a structure a personalized personalized spending plan that spending plan that that focuses on your that focuses on your long-term goals.long-term goals.

Page 12: The dangers of payday loans

DUMP THE DEBT Building a strong financial future Building a strong financial future

meansmeans getting rid of your debt.getting rid of your debt. Pay down highest Pay down highest

interestinterest rate credit card rate credit card

billsbillsfirst.first.

Hardship? Hardship? A Debt Management Plan may beA Debt Management Plan may bethe solution.the solution.

Page 13: The dangers of payday loans

TRACK YOUR RESULTS

Check your spending Check your spending plan monthly to plan monthly to monitor how much monitor how much closer you are to closer you are to reaching your reaching your financial goals! financial goals!

Balance your Balance your checkbook regularly!checkbook regularly!

Page 14: The dangers of payday loans

SPENDING PLAN SPENDING PLAN STRATEGIES:STRATEGIES:

DDetermine wants vs. needsetermine wants vs. needs

EEstablish short term and long term goalsstablish short term and long term goals

SStay strong!tay strong!

Page 15: The dangers of payday loans

Savings10%

Housing35%

Other expenses

20%

Other debt15%

Transportation20%

SPENDING PLANSPENDING PLAN

Page 16: The dangers of payday loans

Household Do your own repairs and painting Shop for the best insurance rates

(homeowners, automobile, health) Grow a vegetable or herb garden Turn the thermostat up when not at

home Consider budget billing Re-evaluate cable TV service and internet costs

Page 17: The dangers of payday loans

• Pack lunches for school and work• Eat out less• Consider store brands• Use coupons• Shop buy one get ones• Do warehouse shopping• Limit shopping to once a week• Plan menus and shop with a list• Brew your own coffee

Page 18: The dangers of payday loans

Car pool to school & work Try public transportation Ride a bike! Keep your autos maintained for

better gas mileage Be a bargain gasoline hunter

Page 19: The dangers of payday loans

• Discover outdoor activities for the family

• Rent DVDs for $1.00• Use restaurant coupons and join

dining clubs• Take advantage of early bird offers

at restaurants and movie theatres

Page 20: The dangers of payday loans

ATM Fees Computerware Home Parties Cosmetics Online Services

Beauty Shop Over limit fees Dating

Ice CreamParking Fees CD’s DVD’s Gifts Bottled Water Bounced Checks Clubs

Cigarettes Greeting Cards TanningHaircuts Cable TV Late Payment Fees Dinners Out

Bar Night Books Fast Food Attacks Dry Cleaning

Car Washes Lottery Tickets MagazinesMovie Rentals Sports Lunches Out

Gambling Prescriptions Household Items

Pet Costs Licenses Speeding Tickets

Cash Advance Fees Munchies Vending Machines Souveniers

 

Page 21: The dangers of payday loans

Necessities› Food › Housing Related Bills› Medical

Car Payments Income Tax Child Support Court Judgments Student Loans Uncollateralized Debt

Page 22: The dangers of payday loans

Can this expense be adjusted somehow?

Can this expense be eliminated altogether?

Could this bill be negotiated for better terms until times get better?

Page 23: The dangers of payday loans

CREDIT CARD DON’TSCREDIT CARD DON’TS

Don’tDon’t carry more than two cards with you carry more than two cards with you

Don’tDon’t use them for cash advances use them for cash advancesDon’t Don’t use them to pay for basics: rent, use them to pay for basics: rent, groceries, utilities. (unless you pay the bill in groceries, utilities. (unless you pay the bill in full each month)full each month)Don’tDon’t charge more than you can pay that charge more than you can pay that monthmonthDon’t Don’t let others borrow your credit carlet others borrow your credit cardd

Page 24: The dangers of payday loans

CREDIT CARD DO’SCREDIT CARD DO’SUse a debit card vs. a credit cardUse a debit card vs. a credit card

Use a card with no annual fee and low Use a card with no annual fee and low interest interest ratesrates

Know all of your cards’ hidden feesKnow all of your cards’ hidden fees

Always pay more than the minimum each Always pay more than the minimum each monthmonth

Pay on time, all the timePay on time, all the time

Page 25: The dangers of payday loans

Finance Finance Period Period 10.8 percent10.8 percent 16.8 percent16.8 percent 22.8 percent 22.8 percent

1 Year 1 Year $55.68 $55.68 $59.08$59.08 $62.67$62.67

10 Years10 Years $146.53$146.53 $265.17$265.17 $478.49$478.49

20 Years20 Years $429.39$429.39 $1,406.31$1,406.31 $4,579.04$4,579.04

THE REAL COST OF CREDIT….THE REAL COST OF CREDIT….

What happens What happens when you a $50 when you a $50 dinner? dinner? charge charge

A $50 dinner over 20 years on a 22.8% APR credit card would end up costing $4,579.04. Paying only the minimum payment due could mean you never pay off your credit cards for your entire life.

Page 26: The dangers of payday loans
Page 27: The dangers of payday loans

GOOD VS. BAD GOOD VS. BAD DEBTDEBTGood debt returns something of long Good debt returns something of long term value - higher education or a term value - higher education or a home.home.

Bad debt is “feel good” debt for Bad debt is “feel good” debt for purchases that you can’t afford and purchases that you can’t afford and don’t really need. don’t really need. Any bad debt over Any bad debt over 15% of your annual income after taxes 15% of your annual income after taxes should set off an alarm.should set off an alarm.

Page 28: The dangers of payday loans

DEBT WARNING DEBT WARNING SIGNSSIGNSBeing able to make only minimum Being able to make only minimum

payments on credit card billspayments on credit card bills

Making late payments or skipping paymentsMaking late payments or skipping payments

Having credit cards at or near your credit limitHaving credit cards at or near your credit limit

Arguing with family or friends over your spending Arguing with family or friends over your spending habits or hiding purchases habits or hiding purchases

Being unsure of how much you really oweBeing unsure of how much you really owe

Using cash advances or payday loans to pay your billsUsing cash advances or payday loans to pay your bills

Having your credit card purchases declinedHaving your credit card purchases declined

Having increasingly more of your income paying for Having increasingly more of your income paying for debts debts each montheach month

Page 29: The dangers of payday loans

8 Tips for Staying 8 Tips for Staying

Financially HealthyFinancially Healthy

1. Develop and stick to a spending plan that includes saving some money each month

2. Make a habit of paying off the majority of your credit card balances each month

3. Live within your means

4. Transfer any credit card debt to a lower interest rate credit card

Page 30: The dangers of payday loans

Staying Financially Healthy Staying Financially Healthy (cont’d)(cont’d)

5. Plan ahead for large purchases

6. Teach children the “3 Ss”:

Saving, Spending, Sharing

7. NEVER turn unsecured debt into secured debt!

8. Consult with a Certified Credit Counselor for

advice and confidential assistance

Page 31: The dangers of payday loans

If you need help creating If you need help creating a Spending Plan contacta Spending Plan contact:

14051 NW 14th StreetSunrise, FL 33323

www.americandebtcounseling.owww.americandebtcounseling.orgrg

(888) DEBT USA

Page 32: The dangers of payday loans

Thank you!

Good luck!