1 Your Financial Check-up. 2 Julie Judy Extension Educator University of Maryland Cooperative...

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Your Financial Check-up

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Julie JudyExtension Educator

University of Maryland Cooperative Extension Montgomery County

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$$$ Smart Money Tip #1

CHART YOUR COURSE

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Start with financial dreams

What are your financial dreams?

Do you dream about being wealthy?

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Wealth-building strategies

Change these dreams to specific goals:

Save $40 a month through bank or to pay off debt I will play Bingo every other week and I will use the extra $40 to save or to pay off my debt by October 2007.

Drive a car that is paid for

By packing (not buying) lunch 2 days per week, I will pay an extra $50/month on my car payment so my car will be paid off by Dec. 2007.

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Set S.M.A.R.T. Financial Goals!

•SSpecific

•MMeasurable

•AAgreeable

•RRealistic

•TTime

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ORGANIZE FINANCIAL RECORDS

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How long to keep records

Permanently As long as needed Until disposed of Personal records Warranties (until

expired)

Appliance books

Education, employment records

I nstallment contracts (5 years af ter paid)

Vehicle titles, bill of sale

List of important

papers and their location

I nsurance policies (until expired)

List of safe deposit box contents

Tax records with supporting data (3-10 years)

Tax f orms with W-2 attached

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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.

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KNOW HOW YOU ARE DOING

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Your Net Worth

Assets -

Liabilities= Net Worth

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www.mdsaves.org

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BE A MONEY DETECTIVE

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Set Spending Levels

Set Spending Levels

Keep a record for 2 to 3 months

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Make Your Spending Plan Useful

A spending plan or budget is…

$ Your spending guide

$ Personal and unique

$ Realistic

$ Flexible

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How does money slip through your fingers? Try

to identify the leaks.

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Use 70% of take-home pay for living expenses

Use 20% to repay debt.

Save 10% for you and your future.

Important

Reminder

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BE CREDIT SMART

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What do Credit Bureaus do?

Collect data:

Personal information

Employment history

Credit Use and Repayment history

Provide information to:

CreditorsEmployers InsurersLandlords

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3 Major Credit Bureaus:

EquifaxExperianTransunion

Credit Bureaus

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Start Here

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Correcting a Credit Report

Contact company that reported the errorAsk company to correct error, in writing, with each credit bureauPhotocopy pertinent documentsWrite credit bureau, explain error and enclose documentationSend certified mail with return receipt

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What Is A Credit Score?

10%

10%

15%

30%

35%

Requests for newcredit

Types of credit inuse

Length of credithistory

Current total debt

Payment History

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

Credit Score Ranges

26www.myfico.com

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PAY OFF DEBT

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Signs of Credit Trouble

Exceeding 20 percent ruleSecond salary used to pay debtsDishonest about credit useCredit not thought of as debtUse credit impulsivelyUse cash advances to pay bills

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Signs of Credit Trouble

Bills paid latePaying only the minimum due each monthDefaulting on paymentsAnticipated income increase committed to creditDon’t know total amount of debt

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Minimum Payment TrapCredit card: Pay Minimum per Month: Balance of $3000 4% of balance (starts at $120/mo.) 19.0% interest 134 months

$1,872.49 in interest Total Paid: $4,872.49

Pay More each month: 4% of balance + $15/mo.

53 months $1,358.74 in interest Total Paid: $4,358.74

Power Payment: $120/month (fixed payment) 33 months $849.27 in interest Total Paid: $3,849.27

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www.bankrate.com

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Check the Yellow

Pages for Credit and Debt Counseling Services in your area.

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DEVELOP A SAVINGS

HABIT

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Every Little

Bit

Counts

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Pay Yourself Firstat 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

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Painless Ways To Save

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

$ Try a crash savings diet by purchasing only bare necessities

$ Kick a habit and save the money

$ 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

$ Start a part-time job and save the money

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Join Maryland SAVES to build wealth not debt

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BUY ADEQUATE INSURANCE

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Buy insurance - don’t let someone SELL you insurance

Buy appropriate insurance

Buy adequate coverage

Consider disability income insurance

Consider long term care

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Follow “Rule of 3”

Update beneficiary designations

Keep essential coverage in force until a new policy starts

Keep up with changes in Medicare as you approach retirement

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Emergency Fund

Goals Budget

Financial Plan

Financial Statement

s

Financial Records

Credit Record

Life Health

Insurance

Disability

Property

Financial Foundation

Liability

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INVEST WISELY

43Financial Foundation

Goals

Emergency Fund

Budget

Financial Records

Credit Record

Life

Disability

Health

Property Liability

Financial Plan Insurance

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 Collectibl

es

Pyramid of Investment Risk

Incr

ease

d Ris

k

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DID YOU KNOW…$5 a week until age 65

-Start at 20 = $114,282- Start at 30 = $49,701- Start at 40 = $20,606

Today may be a good time to start!

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TAKE ADVANTAGE

OF TAX DEFERMENT

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TAX DEFERRAL MAGIC

$2,000 Annual Investment @ 5%

5 $11,603.83 $11,133.26 $ 470.57 10 26,413.57 24,420.08 1,993.4915 45,314.98 40,277.04 5,037.9420 69,438.49 59,201.28 10,237.2125 100,226.90 81,786.14 18,440.7630 139,521.55 108,739.69 30,781.8635 189,672.58 140,906.98 48,765.6040 253,679.42 179,296.56 74,382.86

Years Tax Deferred TaxedInvested Investment Investment Savings

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PLAN FOR RETIREMENT

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Do Your OwnDo Your OwnBall ParkBall ParkEE$$timate For timate For RetirementRetirement

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

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CREATE A PLAN FOR

YOUR ESTATE

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Your Estate PlanA will or trustA guardianship/trust for minor children or disabled loved onesA power of attorney (general, financial, health care)Health Care Advanced DirectivesPersonal Property Inventory with named recipients

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Make a TO DO list to help Manage Your Personal

Finances!

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Julie JudyExtension Educator

University of Maryland Cooperative Extension –

Montgomery County Office

Your Financial Check-Up

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