Budgeting & Credit Armand Parvazi, MBA Marketing & Business Development Director

What is a Budget?

!  Itʼ’s a personalized record of the money

you receive and the money you spend

during a specific period of time.

5 Reasons to Budget ! A budget helps you take control of your finances

!  Budgeting helps you achieve goals.

! A good budget keeps you honest with yourself!

!  Budgeting helps improve saving & spending habits.

!  Budgeting helps you avoid debt & improve credit.

North Carolina

North Carolina

Know the Difference

! Budget for short-term goals.

! Save for medium-term goals.

! Invest for long-term goals.

Needs vs. Wants !  Two categories of NEEDS:

!  Absolutely Necessities - things important for basic survival

!  Food !  Clothing !  Shelter

!  Near Necessities – fairly important for survival !  Reliable transportation !  Insurance coverage (property & casualty, medical, life) !  Telephone !  Personal care expenses !  Child care expenses !  Utilities (electric, gas, water)

Spending Plan Pie Chart

Good vs. Bad Credit ! GOOD Debt

!  helps finance long-term benefits, like home ownership and education

! BAD Debt !  provides short-term gratification, like a vacation or

new outfit that’s forgotten long before you’ve paid for it

Types of Credit !  Secured 

!  Car Loans & Mortgages

!  Unsecured  !  Medical & Utilities Bills

!  Revolving  !  Credit Cards & Home Equity Lines of Credit

!  Installment  !  Mortgages, Car Loans, & Student Loans

The 5 C’s of Credit

! Character – reputation

! Capacity – ability to repay

! Capital – contribution by the borrower

! Collateral – property helps secure the loan

! Conditions – interest rate & amount of principal

Schumer Box

Why Good Credit Matters ! Shelter ! Transportation ! Employment ! Insurance ! Utility Services ! Entrepreneurship ! Lenders ! Cell Phone Providers

Your Credit Report !  Your “REAL LIFE” Permanent Record

How Scores Work

How to Maintain Good Credit !  Pay your bills on time.

!  Keep balances low on credit cards & other "revolving credit.”

! Apply for & open new credit accounts only as needed.

!  Pay off debt rather than moving it around.

! www.annualcreditreport.com

Armand Parvazi, MBA Marketing & Business Development Director

marketing@unofcu.org

For Further Info