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					College Financial Education
    Your (Financial) Life
               Leslie Lum
              Molly Blume
              Audrey Hue

                        Why are you here?
    What motivates you . . . to save money? . . . To spend money?

• What financial troubles have you seen with family
  or friends?
• What financial problems would you like to avoid?
• What do you need to know to achieve personal
  financial success? How to make money, save
  money, and protect your money ?
    Check out these 1 credit classes:
    –   GBUS 102 Personal Money Management,
    –   GBUS 103 Personal Savings,
    –   GBUS 104 Personal Credit,
    –   GBUS 108 Personal Investments
•   Learn how to set up your personal financial goals for:
    – emergencies, college funding, unexpected living expenses,
    – car, wedding, house, new baby, and retirement income.
                         Your Priorities
                         Activity -- Make 2 lists:
 Financial Dreams                      Financial Nightmares

You are not alone. Many people have similar concerns.

Today-3 topics:
•Setting Personal Financial Goals
•Learn about Spending Plan
•Credit Do’s and Don’ts
•Money saving tips
                Your (Financial) Life
                               Your Financial Life
                                                                           Growing your
                                                                             career and
                                   High                                       managing
Income                            School                                   life’s ups and
                                   and                                          downs
                                  College         Starting a                                                                      If you’ve been good
                                                                                                                                 about saving, you will
                                You’re starting     family               You move towards                                        enter retirement debt-
$60,000      Childhood          to earn money                            your peak earning                                       free and comfortable
                                  (not much)                             years and use this                                     for the rest of your life.
                                and getting the                           time to grow your                                         If you haven’t, the
             You begin by          education                                    wealth.                                               only option is to
           being a financial    (expensive) to    Your earnings start    You upgrade your         Your income could                continue working if
              drain to your       earn more.      to take off and you    house and save for       fall well before you           you can. Healthcare
$40,000       middle-class       This is when     settle down to start         your kids’       reach retirement age.                  becomes a big
               parents at        you start with    a family. With that         education             You continue to                     expense.
           $10,000 a year         credit cards      comes your first        ($100,000) and            accumulate for
              or $184,000         and student         house (down        your retirement ($1     retirement and plan
            until you leave          loans.        payment of about       million). You may    how your nest egg will
            the roost—and                               $30,000),           be unemployed      last for the rest of your
$20,000       that doesn’t                        mortgage, and the       (by choice or not)       life. Health issues
            include college                       kids who now drain     at times. You may       start to crop up and
                 tuition.                            you $10,000 a        divorce. You may        you look to protect
                                                  year. You need an        have to care for          your health and
                                                  emergency fund of        your parents. All   assets. You may work
                                                    six months. You         these could set      longer because you
                                                  protect your assets          you back.         need to or because
                                                    with insurance.                                    you want to.

                           10              20            30 4            40              50               60               70               80
                                                                   Age (years)
Set Exciting Goals
     • What do you want to achieve this
     • Over the next year, what ONE
       occurrence would have to happen for
       you to feel you’ve made significant
       financial progress?
     • Write this occurrence as a goal.
     • Describe why it is important to you.
     • Describe how you will feel when you
       have accomplished this goal.

                    How can you save and
           what is the effect of saving every year?

   • What if you cut out candy and pop, or fast food
     meals, or one sit-down restaurant meal a week,
     or 5 fancy coffees a week?
   • Your savings would be $25 a week.
   • What will you have in 40 years?

   Start Saving NOW. . . Saving $25 a week for 40
    years at 5 or 8 % can build quite a nest egg !

  Interest            Savings           Number of
     rate             per week            Years             Future Value
          5%                $25                 40            $152,602.02
          5%                 50                 40            $305,204.03
          5%                 75                 40            $457,806.05
          8%                $25                 40            $349,100.78
          8%                 50                 40            $698,201.57
          8%                 75                 40          $1,047,302.35
• Using automatic savings deductions through work,
bank or credit unions builds a larger nest egg for future
• Take the GBUS 108 Investing class to see how to
earn higher investment returns.
2/4/2010                                                                7
                   Saving Plan

• Helps you achieve all your financial goals
• It can help you get control of your life
• It can relieve stress and stop conflict in a family
• Start as a student even if you don’t have much
• It should be a lifetime habit

It’s a marathon not a sprint –
       plan your saving.

             How Can you Start Saving?
Develop a Spending Plan. . . .
1.  List all your income.
2.  Accumulate all your expenses (receipts, credit card bills,
    checking account register, etc.)
3. Categorize it as fixed, variable and discretionary.
4. Create a debt reduction plan. It’s never too early to start
    paying off your student loan.
5. Consolidate all these into an annual spending plan.
6. Compare your spending to the recommended student
7. Adjust your spending plan so you can meet your spending
8. Live by your spending plan for 3 months and then check
    how you’re doing.
9. Check your spending plan at the end of the year. Did you
    meet your budget?
10. Do it again for next year. Keep at it. It’s a marathon not a

Financial aid
FIXED EXPENSES                                 Activity: Create a Spending
Rent or College Room and Board
Health insurance
                                            For an online college student budget, check out:
Books, equipment, supplies, tutoring
Cell phone, long distance calls
Transportation (including trips home)
Health care (prescriptions, doctor,
Snacks, drinks, restaurant meals
Personal care (haircuts, skin care, etc.)
    Compare to UW Student Budget

                             Live away      Live at home     Non-
                             from home                       traditional

    Tuition and fees                 6385             6385          6385
    Room and board                   8337             2804         11742
    Books and supplies               1008             1008          1008
    Personal expenses                2265             2265          2265
    Transportation                    396              396          1443
    TOTAL                          18931             12858         22843
Compare to Community College
Puget Sound Area                Live at home        Non-traditional
Community College
Tuition                                  4728                 4728
Fees                                           75                75
Books                                    1000                 1000
Room and Board                           2804                11742
Personal Expenses                        2265                 2265
Transportation                             396                1443
TOTAL                                    11268               21253

    BCC estimates based on UW data

What students owe by college

Spending/Savings Tips for College Students

• Leave the car at home. Walk or use public transit.
• Buy used books.
• Comparison shop for your computer and keep it safe so
  it doesn’t get stolen.
• Comparison shop your cell phone plan. Use long
  distance calling cards.
• Go to free entertainment or get student discounts.
• Rent DVDs instead of going to movies.

Bucking the debt generation – good
           credit habits

     Student Credit Card Facts
• Credit card debt is 16% of debt when students
  leave college
• Students have an average of 4 credit cards
• 33% of students have over $2000 in outstanding
• Most students underestimate the amount of
  credit card debt they have
• Most students don’t pay their credit card bills in
  full at the end of the month

            Work-spend Rat Race
                                               Percent of        Average
 Work                                           Students         Balance Anxiety*
 Do not work during school year but work
 during vacations                                    19%    $   942.00        3.3
 Work 1-10 hours per week                            12%    $   782.00          3
 Work 10-20 hours per week                           34%    $    926.00       3.4
 Work more than 20 hours per week                    31%    $   1,661.00      2.4
 Do not work at all                                   5%    $    714.00       2.8

Lower score means higher anxiety!

Don’t work to spend, it can hurt your grades and your
chances of finishing college on time or at all.
Source: Nellie Mae 2005 Study of undergraduate students
and credit cards                        18
   Students who work a lot of hours feel:

• They can’t select courses they need
  because conflicts with work hours
• They study less
• Work hurts their grades
• They are more stressed
• They are more likely to drop out or fail out

Learn More. . .

Are you ready to play the Credit Game?

                    Credit Card Do’s
1.   Credit cards encourage you to spend. So if you have problems with
     spending too much, use cash.
2.   Credit cards are a very expensive way to borrow money. Pay all credit
     cards on time and in full. If at all possible, do not maintain outstanding
     balances. Do not use features such as cash advance.
3.   Do not spend up to your credit limit.
4.   Opt out of credit card offers by calling Opt out 888-567-8688 or going to the
5.   Before you sign on to a credit card, use the credit card evaluation form to
     evaluate all fees and charges.
6.   Keep only two credit cards on you to minimize loss.
7.   Keep a record of your account numbers, their expiration dates, and the
     phone number and address of each company in a secure place. Some
     fraud experts recommend that you photocopy the cards you carry with you.

                     Credit Card Do’s
8.    Protect your card and your account number. Sign your credit card when it
      arrives. Don’t lend your card to anyone. Don’t give out your account number
      unless you know you are calling a company that is reputable. Destroy
      incorrect receipts and copies.
9.    Save receipts to compare with billing statements. Open bills promptly and
      reconcile accounts monthly, just as you would your checking account.
10.   Report any questionable charges promptly and in writing to the card issuer.
      Do not pay for purchases where product was not delivered or defective.
11.   Correct any billing errors by contacting your credit card company as soon as
12.   If you use your credit card to shop online, experts advise installing and
      periodically updating virus and spyware protection and a "personal firewall" to
      stop thieves from secretly installing malicious software on your personal
      computer remotely that can be used to spy on your computer use and obtain
      account information.
13.   If you lose your credit or charge cards or if you realize they've been lost or
      stolen, immediately call the issuers. Many companies have toll-free numbers
      and 24-hour service to deal with such emergencies. By law, once you report
      the loss or theft, you have no further responsibility for unauthorized charges.
Managing student loans

          Students Loans
• 55% of borrowers felt burdened by the
• 54% would have borrowed less if they had
  to do it again

                 Student Loan Do’s
1. Save as much as you can using tax-advantaged educational savings plans
   before you go to college.
2. Make sure that you have a good chance of earning the income you need to
   pay off the debt.
3. Only borrow as much as you need.
4. Fill out the Free Application for Federal Student Aid (FAFSA) for federal
   loans first. They are the cheapest and have the most options.
5. Comparison shop for private loans and evaluate APRs. Check out the
   maximum monthly payment if you are considering a variable rate.
6. Ask for loan features that will help you if you miss a payment or if you have
   a good on-time record.
7. Create a plan for repaying your loan when you take out the loan.

             Maintaining Good Credit
1. Check your credit report annually by
   requesting a free credit report from                                          Computing your credit score
                                                                   Types of or contacting                       credit used
   the three credit reporting services. Ask to
   correct any errors in writing to the credit       New credit
                                                       10%                                         Payment
   rating service.                                                                                  history
2. Opt out of pre-approved credit offers by
   calling 888-5-OPT-OUT (888-567-8688).
3. Pay all your bills on time and don’t spend to   Length of
   your credit limit. Check to make sure that        15%
   your creditors post your payments in a timely
4. Establish an emergency fund of 3 to 6                                        Amounts
   months.                                                                       30%

5. If you’ve been denied credit, check to see if
   the lender has violated any laws. File a                         Source:
   complaint if you feel this is the case.
6. Maintain accurate records and reconcile your
     Coping with Credit Problems
1. Stay calm and work your way slowly and surely through the problem.
   Don’t delay. Take action now and make it a priority.
2. If you feel that an error caused your credit problem, tell the credit rating service. Be
   diligent about monitoring your credit report.
3. Seek financial counseling right away. Use free counseling services that are listed in Be aware of credit counseling services (even though they claim
   to be nonprofit) that charge you fees.
4. Make a list of all the debts you owe with the creditor names and addresses. Call your
   lenders and creditors. Let them know you're having financial difficulties.
5. Prepare a realistic spending plan to pay down your debt.
6. If you have savings, consider using it to pay as many bills as you can. Consider
   selling some assets. Consider getting a second job to pay off your debt.
7. It might take longer than you thought for your financial crisis to go away. Be
   persistent with your creditors and payment plan.
8. As you start to pull yourself out of the financial crisis, remember to set aside money
   for savings.

Protect your money.

         Protect your Money--Do’s
•   Protect all your financial information. Don’t give out your social security number
    unless absolutely necessary. Most places will give you another identity number if you
    ask for it.
•   Keep track of your credit card spending and check your statements very carefully. If
    you find a charge for something you did not buy, contact your credit card company
•   Watch your debit card charges and balance your checkbook every month. In general
    keep good records.
•   Burn your mail, or use a shredder to cut up the receipts and other papers you throw
    into the garbage. Don’t leave outgoing mail in unlocked mailboxes.
•   Avoid filling out forms for contests and clubs. The ―contest‖ may simply be a way for
    someone to collect your private information.
•   Protect your computer with anti-virus software and firewalls especially if you use it for
    online banking or purchasing.
•   Don’t store financial information on web services.
•   Check your credit report every year.

Learn More. . .