karen aspinwall fcs extension educator cecil county your financial check up

Karen AspinwallFCS Extension Educator

Cecil County

Your FinancialCheck Up

Emergency FundFinancial Plan Credit Record

•Health

•Life

•Property

•Disability

•Liability

Insurance

Financial Foundation

•Goals

•Spending Plan

•Financial Statements

•Financial Records

•Using it wisely

•Monitoring

•ID Theft Protection

Smart Money Tip #1Make a Plan

• SSpecific

• MMeasurable

• AAgreeable

• RRealistic

• TTime-bound

Turn financial dreams into S.M.A.R.T. Financial Goals!

“I wish I wasn’t drowning in debt!” I will only play BINGO once a month and I’ll put the extra $40 toward debt payments so that my credit cards are paid off by March 2011.

“I wish I could drive a car that’s paid for.”By packing (not buying) lunch 2 days/wk,I will pay an extra $50/month on my carpayment so my car will be paid off by June 2011.

Changing dreams to SMART goals

Smart Money Tip #2:Get Organized!

In the case of identity theft, an ounce of

prevention is worth a pound of cure . . . .

Clearing your good name from identity theft may take two to three years!

Assets - Liabilities = Net Worth

Smart Money Tip #3:Know How You Are Doing

Calculate your Net Worth

Online tools: www.mdsaves.org

Data from Employees Benefits Research Institute (EBRI) indicates that only 2 out of 5 people have done net or future worth calculations, but 44% of those who do make a positive change in savings behavior.

Track your expenses. . .

Smart Money Tip #4:4a. Be a Money Detective

Discover how money slips through your

fingers

A spending plan is a roadmap for your money

•Income : All sources

•Expenses: Fixed, Flexible, Periodic

•Plans for spending/saving

4b. Develop a Spending Plan

Use 70% of take-home pay for living expenses.

Use 20% to repay debt.

Save 10% for you and your future.

A Guideline To Remember:

Smart Money Tip #6:Become Credit Smart

•Understand credit•Use it wisely

Smart Money Tip #6:Become Credit Smart

Collect data:Personal informationEmployment historyCredit use and

repayment history

Provide information to:CreditorsEmployers Insurers Landlords

What do Credit Bureaus do?

Start Here

www.AnnualCreditReport.com

• Contact company that reported the error

• Ask company to correct error,in writing, with each credit bureau

• Photocopy pertinent documents

• Write credit bureau, explain error and enclose documentation

• Send certified mail with return receipt

Correcting a Credit Report

10%

10%

15%

30%

35%

Requests for newcredit

Types of credit inuse

Length of credithistory

Current total debt

Payment History

What is a Credit Score?

Credit Score Ranges

780-850 : Low Risk740-780 : Medium Low Risk690-740 : Medium Risk620-690 : Medium High Risk620 and Below : High Risk or Sub-Prime

www.myfico.com

Signs of Credit Trouble• Exceeding the “20% Rule”• Second salary is used to pay debts• Dishonest about credit use• Credit not thought of as debt• Using credit impulsively• Using cash advances to pay bills

Smart Money Tip #7:Pay Off Debt

• Bills paid late• Paying only the minimum

due each month• Defaulting on payments• Anticipated income increase is

committed to debt repayment• Don’t know total amount of debt

(More) Signs of Credit Trouble

The Minimum Payment TrapCredit card: Balance of $3000. Card has 19.0% interest.

Minimum per Month: 4% of balance (starts at $120/mo.)

If you pay the Minimum each

month:4% of balance

If you pay the Minimum plus $15

each month:4% of balance

plus $15

If you “Power Pay”each month:

fixed payment of $120/mo

No. of months to pay off debt 134

(11.2 years!)53

(4.4 years)33

(2.75 years)

Amount of Interest paid $1,872.49 $1,358.74 $849.27

Total amount paid $4,872.49 $4,358.74 $3,849.27

•Communicate with your creditors

•Stop credit use

•Create a realistic spending plan

•Develop a debt repayment plan•Know when (and where) to ask for help!

Regain Control

EveryLittle BitCounts!

Smart Money Tip #8:Develop a

Savings Habit

Pay Yourself First!at 5% interest. . .

Save this each week: In 10 years, you will have:

$ 7.00 $ 4,720 $ 14.00 $ 9,440

$ 21.00 $ 14,160 $ 28.00 $ 18,880

$ 35.00 $ 23,600

$ Continue to make loan/debt payments into savings after debt has been paid

$ Try a temporary crash savings diet by purchasing only bare necessities

$ Adjust your tax withholdings and save the difference

$ Save windfall money from lottery, inheritance and gifts

$ Save money from pay raise, bonus or working overtime

Painless Ways to Save

• Health--Life--Property--Liability Disability--Long term care • Buy insurance - don’t let someone

SELL it to you. Follow the “Rule of Three”

• Buy adequate coverage

Smart Money Tip #9Cover Your Bottom Line: 9a.Insurance

Insurance Guidelines

1. Review periodically and update as needed through life cycle, including beneficiary designation

2. Keep essential coverage in force until a new policy starts

3. Keep up with changes in Medicare as you approach retirement

• Powers of Attorney (general, financial, healthcare)

• Healthcare Advance Directives• Will and/or trust(s)• Guardianships for minor children

or other dependents• Personal property inventory with

named recipients

Smart Money Tip #9:Cover Your Bottom Line:9b.Create an Estate Plan

3-6 months8 months(current average length of time of unemployment)

Smart Money Tip #9:Cover Your Bottom Line:9c. Establish an Emergency Fund

Saving:Preserve principal while getting a small return.

Smart Money Tip #10Invest Wisely

Investing:Increase principal in hopes of

getting a greater rate of return.

Prepare financial statements Set financial goals Establish a spending plan Organize financial records Establish a positive credit

history Maintain adequate insurance

coverage

Prerequisites to Investments

Insured Savings, Savings Bonds, Money Market Funds, Certificates of Deposits

Life Insurance Investments Government Securities

High Quality Corporate Stocks, Bonds and Mutual Funds

Real Estate

Aggressive Growth, Junk Bonds, Stocks and Mutual Funds

Futures Contracts

Collectibles

Pyramid of Investment Risk

Increase

d Risk

Financial Plan Credit RecordHealth, Life, Property,

Disability, Liability

Insurance

Financial Foundation

Goals, Spending Plan, Financial Statements and Records

Using it wisely, Monitoring, ID Theft Protection

Emergency Fund

The Time Value of Moneyand CompoundingInterest

Start saving today!

TAX DEFERRAL MAGIC

•403b•457

•IRA•401k

Smart Money Tip #11Take advantage of Tax Deferment

http://www.choosetosave.org/ballparkhttp://www.choosetosave.org/ballpark//

Smart Money Tip #12Plan for Retirement

Do your own “Ball Park Estimate”for Retirement planning

Your input is very valuable to us!

Please take a moment to complete the evaluation

form.

Your Financial Check UpKaren Aspinwall

FCS Extension Educator Cecil County