National Program Planning and Development Committee
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THE ILLNESS: The Recession of the 21st Century
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REMEDY #1: Conduct a Personal Assessment of Your Finances
∆ Financial Check Up
∆ Identify Needs vs. Wants
REMEDY #2: Address Your Spending , Savings, and Debt
Management
∆ Managing Your Spending
∆ Savings
∆ Managing Debt
REMEDY #3: American Recovery and Reinvestment Act of 2009
∆ What’s in the ACT to help you and your family
REMEDY #4: Foreclosure Prevention
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REMEDY #5: Entrepreneurship
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Loan Modification
Homeowner Affordability and Stability Plan
Self Sufficiency and Empowerment
Create Legacy Wealth
How To Get Started
THE CURE: Preparing for a Brighter A Future
∆ Adopting The 10 Wealth For Life Principles
∆ The Advantages for You of Recession
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2001:
Failure of a number of tech and start up companies; 911 attacks
Federal Reserve steps in to help prevent recession by lowering interest rates
2002-2005:
Lowering interest rates ignites the Housing Market
Home prices went up
Mortgage companies and banks created “exotic” mortgages to qualify
consumers
Continued sales to unqualified consumers into subprime ADJUSTABLE
loans
Lenders assumed homes would continue to appreciate; thought the worst
borrowers would be able to repay their loans in the future.
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2006-2008:
3-Year, 5-Year Interest Only/Option Adjustable Rate Mortgages are starting
to adjust; consumers cannot pay their new mortgage payment →
FORECLOSURE
Banks gaining MORE housing inventory (loans defaulted), LESS cash to
lend out to future lenders
Domestic automakers profits plunge; Unemployment begins to rise; more
foreclosures
September-October 2008
Banks declare bankruptcy, Unemployment continues to rise
Stocks and your 401K declined dramatically
Housing prices dropped to an all-time low.
Government steps in to help
November 2008-Present
ARRA 2009: Economic Stimulus Plan
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Develop an Annual Financial Check Up
Δ Categorize Your Expenses
Δ Necessary - (housing payments, food, transportation, insurance, utilities, and
loan interest)
Δ Discretionary - (Cable, dining out, sporting events, movies, magazine
subscriptions and club memberships)
Δ Negotiate -You Get Not Because You Ask Not!
Δ Eliminate unnecessary/wasteful spending, CANCELΔ Expensive Hobbies
Δ Membership you never use
Δ Add-ons offered by car Dealership Δ Car washes
Δ Eating Out
Δ Subscriptions you never read
Δ Relaxing At the Mall
Δ Expensive Haircuts/Hairdos
Δ Extended Warranty on electronics ΔSpecial offers from Credit Card
Companies
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 Manage Your Money: Live by the 10-10-30-50 Rule
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10% - Tithes and Offering
10% - Personal Savings
30% - Cash (to purchase needs)
50% - Total Monthly Debt
Δ Identify Needs vs. Wants
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Need a pocketbook Want a Gucci pocketbook
Need a car Want a BMW 740
Need clothing Want St. Johns
Need a “Staycation” Want a Vacation
Need Coffee Want Starbucks
Need a Movie Video Want to go to the Movies
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Managing Your Spending
Δ Write down everything you spend for a month;
cut out things you don’t need.
Δ Start saving the excess money or use it to
reduce debt.
Δ Use paper currency when paying by cash.
Save all coins that you receive to start your
savings.
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Savings and Investment Strategies
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Diversify to manage business, market, and interest rate risk
Rebalance your portfolio if it is appropriate
Consider the current and future tax ramifications of
your actions
Dollar-cost average to keep your investment strategy
on track
Avoid Market Timing, but prepare for opportunities
Manage your emotions by following a disciplined plan based
on solid fundamentals, not emotion
Point of maximum financial risk
Euphoria
Anxiety
Thrill
Excitement
Optimism
“Wow, I am
making money.
I feel good
about this
investment.”
Denial
“This is just a temporary setback.”
Fear
Optimism
Desperation
Panic
Relief
Capitulation
“I think I need to sell.”
Hope
Despondency
Understanding
emotional
investing
Source: Radarwire.com. A product of Simon Economic Systems, Ltd.
“Things may be turning around.”
Depression
Point of maximum financial opportunity
ASK YOURSELF…..
Δ Are financial matters creating stress in the
household?
Δ How much do you bring home after taxes?
Δ How much do you have remaining at the end
of the month after paying fixed expenses?
Δ How much do you spend on variable items,
such as, that $2 cup of coffee every morning
or $10.00 for lunch three times a week?
Δ Are You Living Check To Monday?*
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Managing Your Debt
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Pay off your highest-rate debts first.
Proceed with caution the institutions you establish a credit
relationship with
Don’t be afraid to contact your creditors to make “deals” on your
interest rates
Total monthly debt should not exceed 50% of gross monthly income
Create an emergency fund of at 6 months of your salary
Establish a tracking system of your spending patterns
Δ Write down every cent you spend for 1 month
Δ Add up all expenses on a list and compare the sum to your
monthly income
Establish “envelopes” to pay bills and pay yourself
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How the Stimulus Plan IS helping you!
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FIRST-TIME HOME BUYER CREDIT First-time home buyers are eligible
for a refundable tax credit equal to 10 percent of the purchase price of their
home, up to $8,000, if they made the purchase after Jan. 1, 2009, but
before Dec. 1, 2009.
CAR BUYER TAX DEDUCTION: For the rest of 2009, you’ll be able to
deduct the state and local sales and excise taxes you pay on the purchase
of a new (not used) car, light truck, recreational vehicle or motorcycle.
UNEMPLOYMENT: Normally, you pay federal income taxes on federal
unemployment benefits. In 2009, however, you won’t have to pay taxes on
the first $2,400 in benefits you receive.
HEALTH INSURANCE : If you get released from a job, your company is
required, thanks to a law known as Cobra, to allow you to pay to keep your
health insurance, generally for up to 18 months. COBRA is expensive! The
federal government will subsidize 65% of the premium for up to nine
months.
ENERGY CREDITS: If you install new windows, doors, energy efficient
heating and cooling systems, all qualify for credit on 2009-2010 taxes.
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Loan Modification: When a lender agrees to modify the terms of a mortgage
without refinancing the loan.
Forbearance: Is when your lender offers a temporary reduction or suspension of
your mortgage payments while you get back on your feet. Forbearance is often
combined with a reinstatement or a repayment plan to pay off the missed or
reduced mortgage payments.
Reinstatement: Your lender may agree to let you pay the total amount you are
behind, in a lump sum payment and by a specific date. This is often combined
with forbearance when you can show that funds from a bonus, tax refund, or
other source will become available at a specific time in the future. Be aware that
there may be late fees and other costs associated with a reinstatement plan.
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Repayment Plan: This is an agreement that gives you a fixed amount of time
to repay the amount you are behind by combining a portion of what is past
due with your regular monthly payment. At the end of the repayment period
you have gradually paid back the amount of your mortgage that was
delinquent.
Loan Modification: This is a written agreement between you and your
nortgage company that permanently changes one or more of the original
terms of your note to make the payments more affordable.
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Homeowner Affordability and Stability Plan
Homeowner Affordability and Stability Plan: is part of the President’s broad, comprehensive
strategy to get the economy back on track. The plan will help up to 7 to 9 million families
restructure or refinance their mortgages to avoid foreclosure.
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Low –cost refinancing for responsible homeowners suffering from falling
home prices.
Helping hard-pressed homeowners stay in their homes
Protecting neighborhoods
Loan modifications should bring monthly payments to sustainable levels
Reaching borrowers early
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Self-Sufficiency and Empowerment
“….Begin to work towards financial literacy with a goal of financial security;
but, as we age we should work toward the goal of building Legacy
Wealth”. Dr. Dorothy Irene Height
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What would you do if you could not fail?
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What Business would you start if you could not fail?
Would You Buy an Exiting Business?
Would You Invest is a Franchise?
Would You Start Your Own Business?
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What Prescription would you take to make Your Dream A Reality?
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Creating Legacy Wealth
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Conduct a Self Assessment
Get Started
Develop a Business Plan
Identify Regulatory Requirements
Explore Financing Options
Learn How to Read Financial Statements
Formalize Operating Procedures
Develop a Marketing Plan
Research Outsourcing Services
Plan to Succeed – Turn Your Dream into a Reality
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Getting Started
Available Resources for Start-Up Companies
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Small Business Administration
Service of Retired Executives
Minority Business Development
International Franchise Association
Women Business Owners
Internal Revenue Service
Recession can create opportunity.
 Without sacrificing your daily living plans, consider
taking smart investment risks (starting a business,
purchasing property, buying more stock).
 It could pay major dividends when the financial
market improves.
2. Don’t let your emotions affect your financial future.
Avoid reacting too quickly to the market changes. It
could affect your overall financial portfolio.
3. In these time, GET HELP!! Review or set up your
financial plan with a trusted financial professional
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QUESTIONS AND DISCUSSION
National Program Planning and Development Committee
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Δ Budget Calendar by Mishell -Tracks Cash flow
http://www.download.com/Budget-Calendar/30002057_4-10360090.html
Δ Home Budget Calculator at Bankrate.com
https://www.bankrate.com/brm/calculators/personalfina
nce/home_budget_calculator.asp
Δ Manage your money for free https://www.mint.com
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Δ SF Red Portfolio – Interactive Website designed for
Women to provide education on Financial Services
http://sfredportfolio.com, click on Red Portfolio
Toolbox for interactive worksheets and calculator
such as:
 What is my NET WORTH?
 Daily Expense Journal
 Credit Card Spending
 What is it worth to reduce spending
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Δ The Stimulus Plan: ARRA
For more details about the HIGHER EDUCATION TAX
CREDITS, EMPLOYEE TAX CREDITS, and other
benefits, go to:
http://www.recovery.gov
Δ Also, consult a strong tax accountant as well!
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1.
I will live within my means.
2.
I will maximize my income potential through education and training.
3.
I will effectively manage my budget, credit, debt, and tax obligations.
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I will save at least 10% of my income.
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I will use homeownership as a foundation for building wealth.
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I will devise an investment plan for my retirement needs and childrens’
education.
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I will ensure that my entire family adheres to sensible money
management principles.
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I will support the creation and growth of minority-owned businesses.
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I will guarantee my wealth is passed on to future generations through
proper insurance and estate planning.
10.
I will strengthen my community through philanthropy
Source: Black Enterprise
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