Welcome to the

The Prosperous Teen™Ordinary Money Habits create Extraordinary Results!

Please note: This is general advice. You should consult with your own financial advisor before making any major financial decisions, including investments or changes to your portfolio.Kids Cash Coach ™/Teens Cash Coach ™ and Patti Handy are not stockbrokers nor investment advisors and that no investment advice is given or implied. All information provided, including references to stocks, investment strategies or formulas, is for educational and illustrative purposes only. You should seek appropriate legal, financial, tax and other professional services as needed.You agree to hold Kids Cash Coach ™/Teens Cash Coach ™ and Patti Handy harmless from any and all loss, damages, liabilities, demands, claims, actions, or suits, incurred as a result of use of any information presented in this DVD curriculum or that may be asserted against me by third parties by reason of your use of any information presented in products.Taping, reproduction, distribution, or resale of material owned or delivered by Kids Cash Coach ™/Teens Cash Coach ™ or Patti Handy, without prior written authorization, is prohibited. Patti Handy is not a registered investment advisor and the information provided in this DVD/workbook curriculum should be considered educational in nature, but it is not a substitute for legal or professional financial advice. If you believe you need the help of a Certified Financial Planner or other investment counselor, please seek a qualified professional. Patti Handy is not responsible for any losses, damages or claims that may result from your financial decisions or the information provided herein.

The Prosperous Teen™Release of liability and legal disclaimer

With Patti Handy

Money Coach

Section 1

Debit

&

Credit Cards

Let’s talk about Debit Cards!

Definition- Do’s – Don’ts

•Little plastic card that looks just like a credit card, but it’s not!

•Debit card is more like a check than anything. When used, money is taken out of account almost immediately.

•Tied to your checking or savings account.

Used at the ATMmachine to withdraw or deposit money.

ATM stands for Automated Teller Machine.

My personal definition is ‘Always Takes Money’.

�Looks like a credit card, but acts very differently!

�18 years is the minimum age for credit cards, but you can get a debit card much earlier, check with your local bank or credit union.

�Most financial institutions have minimum age of 16 years, without the need for parent as custodian if you can prove you have a job, driver’s license and school ID.

�You can get a debit card at a much younger age, with parent as custodian on your account.

When you use your debit card, be sure to put purchase in spending tracker or checkbook register!

�Keep a running balance at all times so you don’t overdraft.

�Some lenders won’t let transaction take place without sufficient funds.

�Some will allow the transaction and then charge you overdraft fees.

�If you have that kind of money to burn, give it to your parents!

When you withdraw money from ATM, be sure to note that transaction too!

To use a debit card, you will need to enter a PIN number on the keypad.

PIN stands for Personal Identification Number

Keep this number safe, but not in your wallet or purse. Don’t share PIN with anyone, except your parents!

Overview of DO’s:

�Track every purchase!

�Keep a running balance, so you don’t overdraw account.

�Realize money comes out of account almost immediately.

�Keep PIN number in a safe place at home.

Overview of DON’TS:

�Don’t overdraft! Fees are nasty!

�Don’t spend frivolously.

�Don’t share your PIN with anyone but parents.

Section 2

Let’s talk credit cards!

When you think credit card, think bad debt.

If used incorrectly, it will wreak havoc on your life.

If used correctly, using credit cards can help build a solid credit history and improve credit scores (more on this later)

oUsing a credit card is different from debit card in that your purchase is not deducted from your checking or savings account.

oYou will receive a monthly bill for all of your purchases that you need to pay, preferably in full.

oIf you have more than one credit card, be aware that different cards will have different billing cycles.

WATCH DUE DATES!

When I say using credit cards incorrectly, what do I mean?

Purchasing items without the intent of paying bill in FULL!

Paying bill late and incurring late fees.

Paying interest/finance charges as a result of carrying balance.

Once you are in the cycle of carrying balance, it is very difficult to get out from under that debt.

The interest charges keep adding up and it becomes increasingly more difficult to pay the card off in full.

This is a major struggle many people are facing today!

~~When you purchase an item with your credit card, you should be in the habit of knowing you have, or will have, the cash to pay it off. I know I sound like a broken record, but this point is imperative to understand!!

It can take years to pay off one item you have purchased.

The true cost of those $50 pair of jeans becomes far more than $50.

�Beware that things add up very quickly.

�This is why a spending tracker is very important.

�There won’t be any surprises when the bill arrives.

�Keep all receipts organized, so you know what to expect.

~When you get your bill, you will be given the option to pay ‘minimum payment’.

~Don’t make the mistake, thinking that minimum payment is full payment.

~Credit card companies love charging you finance fees and late fees. ~If you happen to

go over your credit limit (the most you are ‘approved’ to spend) they can increase your interest rate.

~If the interest rate is raised, you may not be able to bring it down again.

Pros to Credit Cards:

Good alternative to carrying cash, especially when traveling.

Will help build credit history if used correctly.

Can be a Godsend in an emergency situation.

Cons to Credit Cards:

Will create years of stress and debt if credit is abused.

Easy to overuse due to accessibility.

Section 3

Let’s talk about the true cost of an item if you don’t pay the card in full...

You really, really want a new cell phone that costs $500.

The bill comes and you can’t pay it in full, so you pay the minimum.

Assuming your interest rate is 20% and you pay $25 minimum, what is the true cost of the item over time?

Are you ready for this?

It would take you over 2 years (25 months to be exact) to pay off that $500 cell phone.

You would have paid $113 in interest (wasted money).

The true cost of that $500 cell phone was $613.

This doesn’t take into consideration what you could have done with that money if you saved or invested it.

This also doesn’t take into account any additional finance fees or late fees if they applied.

A few more examples:

How about a $2,000 credit card balance at 20%?

Assuming you pay only $50 minimum payment per month, take a wild guess what the interest cost would be...

You’ll never guess this one...

A whopping $1,323 in interest alone, that’s on top of the $2,000!!

It would take you 67 months to pay that off, that’s almost 5 ½ years.

That’s just plain crazy!!!

What’s the lesson here?

~Pay your credit cards in FULL every single month!!

~If you buy something, be sure you have the money to pay for it.

~If you don’t have the money, you just can’t buy it!!

Refer back to the spending tools I gave you.

Remember the need vs. wants question you should ask yourself.

Think hard about ‘why’ you are buying this item.

Let’s see some more examples:

What if you bought that cell, and then some clothes or shoes, totaling $1,000.Using an interest rate of

18% and a minimum payment of $50 per month, what would your true cost be?

It would take you 24 months to pay this off (assuming you didn’t make additional purchases) and the interest cost would have been $198!!

Let’s look at some larger balances, because things do add up!If we have a credit card

balance of $5,000, with an interest rate of 18% and pay a monthly payment of $100...

This one hurts...

You will be paying an interest of $4,311! That’s just interest!!

It would take you 94 months to pay off- that’s almost 8 years!

These numbers will hopefully be shocking enough to you that you think twice, even three times before using a credit card.

Recognize that your purchases will be following you, and costing you dearly if you don’t pay the bill in full.

Letting the balance carry forward to the next month will begin a very large snowball effect.

Let’s turn this around for a minute...

Using your credit card regularly and paying in full every month, will help build credit history!

This is key for credit scoring, which I will cover in detail later.

Don’t be afraid to use credit cards, if you know you have the cash!!

On the next disc, we’re going to cover interest rates on cards.

Setting credit limits and...

The impact of using credit cards on your credit score!

Action Step:

If you have credit cards, take a close look at your statement to determine you interest rate and terms.

If you don’t have a credit card yet, starting doing some homework by going online and examining your choices in cards.

Make sure to check annual fees, interest rates and late fees.