debt to dollars © the money professors (tm) 2013 career and technical education summer conference...
TRANSCRIPT
Debt to Dollars
© The Money Professors (TM) www.TheMoneyProfessors.com
2013 Career and Technical Education Summer Conference
Len Rhodes M.B.A. C.P.F.M.
Mark C. Weitzel M.B.A. C.P.F.M.
July 25, 2013
Debt to Dollars
My First Credit Card $1500 Balance, $25 Minimum Payment 18.99% Interest Rate
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Debt to Dollars
My First Credit Card $1500 Balance, $25 Minimum Payment 18.99% Interest Rate 16 Years to Pay Off
© The Money Professors (TM) www.TheMoneyProfessors.com
Debt to Dollars
My First Credit Card $1500 Balance, $25 Minimum Payment 18.99% Interest Rate 16 Years to Pay Off It Gets Worse $25 X 12 X 16 = $4800
© The Money Professors (TM) www.TheMoneyProfessors.com
Debt to Dollars
My First Credit Card $1500 Balance, $25 Minimum Payment 18.99% Interest Rate 16 Years to Pay Off It Gets Worse(er) $25 X 12 X 16 = $4800 $25 PMT at 9.6% APR for 16 Years =
$11,300
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Debt to Dollars
My First Car Loan
$291 PMT
5 Years 12.25% APR
= $13,000
- 25 PMT
MasterCard PMT
$266 PMT
5 Years 13.65% APR
= 11,522
COST $ 1,478
© The Money Professors (TM) www.TheMoneyProfessors.com
Debt to Dollars
My First Car Loan
$291 PMT
5 Years 12.25% APR
= $13,000
- 25 PMT
MasterCard PMT
$266 PMT
5 Years 13.65% APR
= 11,522
COST $ 1,478
© The Money Professors (TM) www.TheMoneyProfessors.com
© The Money Professors (TM) www.TheMoneyProfessors.com
Debt to Dollars
My First Car Loan
$291 PMT
5 Years 12.25% APR
= $13,000
- 25 PMT
MasterCard PMT
$266 PMT
5 Years 13.65% APR
= 11,522
COST $ 1,478
© The Money Professors (TM) www.TheMoneyProfessors.com
Debt to Dollars
My First Car Loan
$291 PMT
5 Years 12.25% APR
= $13,000
- 25 PMT
MasterCard PMT
$266 PMT
5 Years 13.65% APR
= 11,522
COST $ 1,478
© The Money Professors (TM) www.TheMoneyProfessors.com
Debt to Dollars
My First Mortgage
$1,200 PMT
30 Years
6.25% APR =$194,895
- 266 PMT
Car PMT
- 75 PMT MasterCard PMT
$ 859 PMT
30 Years
6.75% APR =132,440
COST $62,455
© The Money Professors (TM) www.TheMoneyProfessors.com
Debt to Dollars
My First Mortgage
$1,200 PMT
30 Years
6.25% APR =$194,895
- 266 PMT
Car PMT
- 75 PMT MasterCard PMT
$ 859 PMT
30 Years
6.75% APR =132,440
COST $62,455
© The Money Professors (TM) www.TheMoneyProfessors.com
Debt to Dollars
My First Mortgage
$1,200 PMT
30 Years
6.25% APR =$194,895
- 266 PMT
Car PMT
- 75 PMT MasterCard PMT
$ 859 PMT
30 Years
6.75% APR =132,440
COST $62,455
© The Money Professors (TM) www.TheMoneyProfessors.com
Debt to Dollars
My First Mortgage
$1,200 PMT
30 Years
6.25% APR =$194,895
- 266 PMT
Car PMT
- 75 PMT MasterCard PMT
$ 859 PMT
30 Years
6.75% APR =132,440
COST $62,455
© The Money Professors (TM) www.TheMoneyProfessors.com
Debt to Dollars
My First Mortgage
$1,200 PMT
30 Years
6.25% APR =$194,895
- 266 PMT
Car PMT
- 75 PMT MasterCard PMT
$ 859 PMT
30 Years
6.75% APR =132,440
COST $62,455
© The Money Professors (TM) www.TheMoneyProfessors.com
Debt Takes Away Our Choices
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Why Do We Borrow?
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Why Do We Borrow?
We don’t control our spending
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Why Do We Borrow?
Consolidating is NOT paying off.
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Why Do We Borrow?
Consolidating is NOT paying off.
DEBT
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Approval Affordability
Why Do We Borrow?
Why Do We Borrow?Reasons for Indebtedness
Keeping up with the Joneses
The use of money to punish.
Need for instant gratification.
The expectation of instant comfort among young couples who overuse the installment plan.
Why Do We Borrow?Reasons for Indebtedness
Lack of communication among family members.
The amount of finance charges is too high.
We are mentally trained to spend.
Overindulgence of children.
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Defeating Debt
You are never in too deep to lose hope! You can pay off $10,000 of debt in less
than 2 years with just a part time job!
© The Money Professors (TM) www.TheMoneyProfessors.com
Defeating Debt
You are never in too deep to lose hope! You can pay off $10,000 of debt in less
than 2 years with just a part time job! Common strategies:
Pick up a part time job (taxes) Sell stuff on eBay or Craig's list Become a smarter consumer Above all else… stop borrowing!
© The Money Professors (TM) www.TheMoneyProfessors.com
Defeating Debt
Defeating Debt
Assess your current debts (list or work
in Excel)
Who do you owe?
How much do you owe?
What is the interest rate?
What is your monthly payment?
© The Money Professors (TM) www.TheMoneyProfessors.com
Defeating Debt
Contact your credit card company(ies)
Ask for rate reduction
Ask to speak to a manager or customer
retention specialist
Move money to a lower rate card
Beware of transfer fees
© The Money Professors (TM) www.TheMoneyProfessors.com
– Start with the smallest debt (easiest
way)
– Start with the highest interest rate
(financial)
Defeating Debt
There are 3 ways to eliminate debt
Just pay them off naturally (most expensive)XX
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Defeating Debt
Pay off your first debt faster
Now you can add the previous payment
to the next debt
Don’t get discouraged…look for the
tipping point
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Defeating Debt
What happens when we add extra
money onto the minimum
payment.
• The Tipping Point
The key is to focus on one debt at
a time like a laser.© The Money Professors (TM) www.TheMoneyProfessors.com
Defeating Debt
The 50% Solution
Aggressively pay off debt while
giving yourself a break
After each debt is paid off, enjoy
50% of the extra and use the other
50% towards your Debtor-ADE
© The Money Professors (TM) www.TheMoneyProfessors.com
Defeating Debt
Control Spending
Envelope System (cash-based)
Create one envelope per category to track
Put monthly amount in at the beginning of the
month (if possible) or with each paycheck
Only pull money out of the envelope for that
category – when its gone, you’re done! Simple!
© The Money Professors (TM) www.TheMoneyProfessors.com
Debt to Dollars
Go home today and list your debts
Start tracking your total balances each
month on paper
Use at least one of the Debtor-ADE strategies
Raise cash to retire debt
Add to the minimum
Highest interest rate
Lowest Balance
50% solution© The Money Professors (TM) www.TheMoneyProfessors.com
Debt to Dollars
© The Money Professors (TM) www.TheMoneyProfessors.com
2013 Career and Technical Education Summer Conference
Len Rhodes M.B.A. C.P.F.M.
Mark C. Weitzel M.B.A. C.P.F.M.
July 25, 2013