freshman experience: managing your finances georgia gwinnett college october 15 & 17, 2007

Freshman Experience: Managing Your FinancesGeorgia Gwinnett CollegeOctober 15 & 17, 2007

2Georgia Gwinnett College

I. Money Management

II. Banking

III. Credit: Managing Debt

IV. Identity Theft

Table of Contents


Money Management


Not knowing what you have to spend Ignoring bills coming up next week or next month

Results: Living paycheck-to-paycheck Coming up short when the big bills come in

Know where you spend your money

Reach your long and short term goals

Keep your focus

Show where you need additional help and if you have a borrowing need

Include your spouse and/or family in money management issues

The #1 Money Trap

Budgets Help You To:

Money Management

Are you managing your money or is it managing you?

Importance of Budgeting


Money Management

Step 1

Estimate Your Income

Step 2

Estimate Your Fixed

Expenses

Step 3

Determine Amount

Available for Variable Expenses

Step 4

Estimate Your Variable Expenses

Step 5

Determine Your Surplus or Deficit

Budget Guidelines and Suggestions

Keep it simple

Tailor your budget to specific goals

Be consistent

Restrict debt payments to no more than 20% of your income

Try to save 10% of your income

Establish an emergency fund equal to 6 months of expenses

Step-by Step Budgeting


Money Management

Budget Example January February March

Budget Actual Budget Actual Budget ActualIncome1. Money from Mom & Dad/ Family2. Financial Aid3. Part/ Full-Time Job Salary4. Total IncomeFixed Expenses5. Savings6. Mortgage/ Rent7. Auto Loan(s)8. Other Loan(s)9. Gas10. Credit11. Utilities12. Insurance13. Books & School Supplies14. Medical15. Parking16. Total Fixed Expenses17. Available for Variable ExpensesVariable Expenses18. Food19. Concerts20. Road Trips21. Spring Break22. Clothing23. Beverage Fund24. Personal Care25. Gym Membership26. Taxes27. Miscellaneous28. Total Variable ExpensesMonthly Result29. Monthly Surplus/ (Deficit)


Review your budget every month Are you over or under on your budget items? Are your variable expenses in line? What are your “budget busters”? Are any expenses out of control? Will you make your planned surplus by year end?

1. The “latest and greatest” syndrome

2. Using credit instead of cash

3. Eating out every night

4. Borrowing from the future

5. Keeping up with the Joneses

Set Your Budget Every Year

10 Leading Causes of Overspending – Beware of These Habits!

Money Management

Now that you have created

your budget, stick with it!

Follow Through With Your Budgeting Plan

6. Being unaware of how much you have to spend

7. Money “burning a hole in your pocket”

8. Buying impulsively

9. Rationalizing spending = “need it because”

10. Not knowing on what or where you are spending your money


Money Management

Saving Tips!

Saving Tip #1 Focus on number of dollars per day to

save

Saving Tip #2 Pay yourself first

Saving Tip #3 Save money from coupons and sales

Saving Tip #4 Look at lower-cost alternatives

Saving Tip #5 Shop around for the best price

Saving Tip #6 Organize your bills and financial records

Saving Tip #7 Pay installments to your savings account

Saving Tip #8 Live with roommates

Saving Tip #9 Avoid impulse buys

Saving Tip #10 Use public transportation or carpool

Saving Tip #11 Collect loose change

Saving Tip #12 Break a habit

Saving Tip #13 Dine in more than out

Saving Tip #13 Borrow books and movies, instead of

buying

Saving Tip #15 Have a “Buy Nothing” week

Stay on Track With These Money Management Tips


Banking


Think of Banking as a Journey

Keeping your money in a bank will provide you

with:

Safety

Convenience

Security

Financial Future

Checking AccountPayments made via check, online banking and debit card

Low or no interestHigh transaction volume

Money Market AccountChecks

Limited withdrawalsHigher interest earnings

Savings AccountWithdrawal Slip

Low transaction volumeMinimal interest earnings

Asset Management AccountHigh transaction volumeHigh interest earnings

Stocks

Banking


Spending Money I Don’t Have

Reconciling My Account

Using Online Banking

Reading a Check

Endorsing a Check

Getting Help

What Do I Need to Know About My Checking Account?

Only 10% of high school students graduate with any kind of

instruction in personal finance

Banking

Routing Transit Number

Account Number

Check Number


Reconciling Your Account

Banking


An Account Statement

Banking


In today’s virtual world, you can manage your

finances almost anywhere, anytime

Different Ways You Can Bank

Banking

Check your account Transfer money between accounts

within your bank Obtain account history Stop payment on check Obtain branch hours and locations Set up balance alerts Pay bills online

Phone Online

ATM Branch

All of the above! Access cash Check account balances Make deposits

Check your account Transfer money Obtain account history Stop payment on check Obtain branch hours and locations Report a lost, stolen or damaged

card


Credit Cards

Purchase amounts are automatically deducted from your checking account

May approve into overdraft

May also be used as an ATM card to access cash

Usually VISA or MasterCard branded

Buy now, pay later

Interest charges on unpaid balances

May incur late fees if the minimum payment is not paid on time

If establishing credit: Pay on time, in full each

month

Debit Card vs. Credit Card

Do you know the difference?

Debit Cards

Banking


Credit: Managing Debt


College students mostly use credit cards on lifestyle purchases

76% of all undergraduate college students have at least one credit card and carry an average balance of $2,169

10% of college card holders owe $7,000 or more, and most do not pay off the balances each month

For every $1,000 you charge and do not pay off, you will be charged $180 to $210 a year

Best Practice: charge no more than you can pay off each month

Your credit score will be the single most important factor in determining your approval for a mortgage, car loan, credit card and insurance

You have a file with a credit bureau if you have ever applied for a credit card, loan, or a job

Lenders use your credit score and the following factors to decide whether to lend you money your income your other debts job stability

Importance of Credit

1 in 3 college students has 4 or more credit

cards!


Students and Debt


Your Credit Record

What Is a Credit Score?

Checking Your Credit Reports

How Do Creditors Use Your Credit

Report?

To determine how likely it is that you will repay a loan and make payments on time based on information contained in your credit report, including the following: bill paying history (late payments, collections, outstanding debt) income (and amount of debt you have) types of credit accounts arrests

Numeric score (3 digits) that summarizes your credit history Provided to lenders by credit reporting companies Also known as your “FICO” score, or Fair Isaac (company

that created the credit score) Scores range from 300’s to 800’s, and you should aim for a

720 or higher

You can order free credit reports online annually from Equifax, Experian and Transunion by accessing www.annualcreditreport.com

It is important to know your credit score and check it annually Unexpected change in your credit score may be a sign of

identity theft

Like it or not, potential

employers and lending

institutions view your credit as an

extension of your character –

are you a responsible

person?



Tips for Good Credit

Pay your bills on time and in full Credit card companies are now checking your report every month Under new “universal default” clauses, if you’re late on 1 card payment, another credit company can hike

your interest rate on their card by up to 30%!

Establish credit history – keep only 3 cards; short credit history can negatively affect credit score

Reduce your total amount of credit card debt, and watch your debt in relation to your credit limit

Close unneeded accounts; excessive credit card accounts may have a negative effect on your credit score

Apply for new credit cautiously; too many credit inquiries can negatively affect your score

Reduce the urge to sign up for new cards: Stop 90% of mail solicitations by calling the national OPT OUT number (888-5-OPT-OUT)

Get copies of all three credit reports every year Equifax Experion Transunion

Pay online if possible, that way you have proof that you paid on time



Identity Theft


What is identity theft?

What is fraud?

Identity Theft

Identity Theft is when someone uses your personal information to assume your identity and open accounts with the intent of committing theft, fraud or crime

Fraud occurs when someone steals information to transact on an account that is already open and the owner of the account is unaware of these transactions

“Every 79 seconds, a thief steals someone’s identity, opens accounts and goes on a buying spree” - CBSnews.com

Identity theft is one of the fastest growing crimes in the United States

According to the Federal Trade Commission (FTC), 10 million people became victims of identity theft in 2006

FTC predicts 1 in 3 people will be identity theft victims sometime in their lives

A typical victim spends $500-$1,500 and 30-170 hours to repair the damage of theft to existing accounts

Nearly 75% of victims who discover the theft in the first month spend no money and less than 10 hours to resolve the issues

Identity Theft Facts

Definition


What do I do if a become a victim?

Identity Theft

File a police report

Contact your bank to cancel debit cards and close bank accounts

Call your credit card company to report fraudulent charges and close credit card accounts

Report fraudulent use of your identification information to the Social Security Administration’s Fraud Assistance Hotline

Change all electronic deposits and payments, credit cards and checking accounts

Contact all credit reporting agencies

Recover over 18 month time period

Explain, explain, explain

What Identity Theft Means to Me


How could your identity be

stolen?

Identity Theft

Stolen purse or wallet

Stolen mail

Obtaining credit report by posing as a legitimate

person

Phishing emails

Dumpster Diving

Pretending to be a

reputable company and

ask for personal info

Obtaining personal info

from the internet

Shoulder Surfing

Account numbers stolen as cards are processed

Ways Your Identity Can Be Stolen


How could someone use my

identity?

Identity Theft

Make counterfeit identification, checks and bank cards and use them to drain your bank accounts

Purchase larger items, including cars, boats and homes, by obtaining loans in your name

Establish phone or wireless service in your name

Call your bank or creditors pretending to be you and request an address change and another credit or debit card on your account The imposter then makes charges using the card sent to the incorrect

address

Intercept a check written to you, forge your endorsement and cash it

File for bankruptcy under your name to avoid paying debts they have incurred under your name, or to avoid eviction

Commit crimes in your name

Uses of a Stolen Identity


Unexplained charges to or withdrawals from your financial accounts

Receipt of credit cards for which you did not apply

Credit denial for no apparent reason

Unexplained negative credit score

Calls or letters from debt collectors or businesses about merchandise or services you did not purchaseHow do I know if

I have been a victim of identity

theft?

Watch Out for Signs of Identity Theft

Identity Theft


Buy a cross cut shedder and use it! Shed unsolicited credit card and loan applications, account statements and

receipts

Destroy all cancelled checks, old statements, excess checks and deposit slips for closed accounts and credit card receipts

Avoid printing your driver’s license number or your social security number on your checks – only supply information to reputable companies

Review your credit report at least once a year from various credit bureaus – it may be months before you become aware of unauthorized activity, and it can take years to clear up!

Know with whom you are sharing your personal, confidential information Are they reputable? Do they truly need the information?

Protect – do not write down or share – account information, pin numbers or passwords with others

Run anti-virus software on your computer and avoid storing personal information on your laptop

Access secure browsers and exit online applications as soon as you finish using them – If doing business over the internet, only use https://

Use debit card in place of checks

Keep pin number separate from debit card

Prevent Becoming a Victim

How can I prevent being a

victim?

Strategies to Prevent Becoming a Victim

Identity Theft

freshman experience: managing your finances georgia gwinnett college october 15 & 17, 2007

Documents

money slide

money management tips

money management issues

loose change saving

best price saving tip

step budgeting slide

money trap budgets

variable expenses step