Financial literacy is important no matter how old you are and no matter your goals Understanding money allows you to make more informed choices and to be better able to pursue your dreams Congratulations ID: 668084
Download Presentation The PPT/PDF document "Sponsored by Welcome COUNTRY Financial..." is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
Slide1
Sponsored by
Welcome
COUNTRY Financial® proudly provides financial literacy education to your classroom.
Financial literacy is important, no matter how old you are and no matter your goals. Understanding money allows you to make more informed choices and to be better able to pursue your dreams. Congratulations on taking this first step in becoming more financially savvy.Slide2
CreditA Financial Beginnings Financial Education ProgramSlide3
What do they have in common?Slide4
What are we doing today?We will:Understand what credit is, how it works and why you need it.
Understand the different ways of establishing credit.Learn your responsibilities as a borrower.Understand how to monitor credit using a credit report and credit scoreUnderstand loans and credit cards and how to borrow responsibly Slide5
Why would someone lend money?
What is credit?Slide6
Leveraging creditSlide7
Why do you need credit? Where does credit come into play?BorrowingBuying a house
Getting phone serviceRenting an apartmentFinancing a carGetting a credit cardStudent loansOtherGetting a job
Getting insuranceSlide8
How did you get it?
Do any of you have a credit card?Slide9
Can I have 3 volunteers?Slide10
Your responsibilities as a borrower:Slide11
What if I can’t pay?Keep in contact with creditorsCredit counselingNegative marks will show on credit for 7-10 yearsBankruptcy last resortSlide12
What debts never go away?Slide13
Have you or someone you have known been a victim of fraud?Slide14
Credit reporting agencies
Annualcreditreport.comSlide15
Review Sample Credit ReportPage 53-54 of the Resource GuideWhat’s on there?
Identity AccountsPublic recordsInquiresDispute instructionsSlide16
What is a credit score?
Myfico.comSlide17
What makes up your score?Slide18
What if you have a good score of 780 and make some mistakes?
MistakePoint DowngradeNew Score
Maxed out credit card25-45735-755
30 day late payment90-110670-690Debt settlement105-125655-675Foreclosure140-160620-640Bankruptcy220-240540-560Slide19
What is the impact of your score on the interest rate?
FICO ScoreInterest Rate
Monthly PaymentTotal Interest Paid720-850
6%$608$1,901690-7197.6%$623$2,430660-6899.6%$642$3,096620-65913.4%$678$4,391590-61918.1%$724
$6,077
500-589
18.7%
$730
$6,290
$20,000 Auto Loan- 3 Year TermSlide20
Types of LoansSlide21
How does interest work?Costs money to borrow Annual Percentage Rate – APR
How often it’s compounded? Monthly? 12%/ 12 months =1% Daily? 12%/ 365 days= .03%Calculating interest Balance * Interest % for the periodMore interest paid at the beginning of a loan than the endSlide22
$20,000 Car Loan at 10%Slide23
Payday LoansShort-term high interestPost date check or provide debt card numberLaws vary by stateA vicious cycle to get intoSlide24
Credit Profile: SashaSasha has a monthly payment on $1200 on her mortgage. She owes $200,000 on the mortgage and the APR is 6%. Page
28 of the Resource GuideSlide25
Credit Profile: Sasha AnswersMonthly interest rate: 6%/12=.5%
How much interest in first payment: $1,000How much of her first payment goes to pay off the loan: $200How would you calculate the 2nd month: (200,000-200)*.005= $999 in interest 2nd
monthSlide26
How interest works: Sasha Case
TimeTotal PaidTotal
InterestLoan Balance5 Years
$71,946$58,055$186,10921 Years $302,173$202,051$99,87730 Years$431,676$231,676$0Slide27
Credit Card CycleSlide28
Credit Profile: SteveSteve’s credit card has an annual interest rate of 18%. The minimum payment is 4% of the current balance. Right now, Steve’s balance has grown to $2,500.
Let’s see how the minim payment helps Steve pay off is balance. Page 30 of the Resource GuideSlide29
How can Steve help himself?Balance $2,500Annual Interest Rate 18%Minimum Payment 4% of balance
Payment
Interest PaidReal Cost# of Payments
Total Years to Pay offMinimum$1,289$3,789877.1$150$499$2,899201.6$200$289$2,789141.2Slide30
Lending terms:Slide31
Credit Profile: AvaCredit card balances: $3,000Income: $50,000Inheritance $30,000Wants to purchase a $125,000 condoSlide32
Do you think Ava will get her mortgage?
In what ways could Ava have handled her credit more responsibly?Slide33Slide34
Got it?Do you:Understand what credit is, how it works and why you need it?Understand the different ways of establishing credit?
Know your responsibilities as a borrower?Understand how to monitor credit using a credit report and credit score?Understand loans and credit cards and how to borrow responsibly? Slide35
Sponsored by
Want to learn more?
Visit
countryfinancial.com/FinEdCongratulations,you are well on your way to being
more
financially
savvy.