Get a Grip on
Your Money
during 2012
and
beyond
1
Marsha A. Goetting
Ph.D., CFP®, CFCS
•Professor & Extension Family
Economics Specialist
•Department of Agricultural
Economics & Economics
2
Packet
•Provides tools &
techniques that can
help you become a
more effective
financial manager
during 2011 & beyond
3
Provided by
•MSU Extension
•Montana Credit Unions
for Community
Development
•First Interstate
BancSystem
Foundation
4
How would you describe your
money management skills?
1. Fantastic
2. Sorta good
3. So-So
4. Awful
5. Hopeless
20%
20%
20%
20%
20%
85
Fantastic
Sorta good
So-So
Awful
Hopeless
Countdown
Do you have a system for
tracking your expenses?
1. Yes
2. No
50%
50%
86
Yes
No
Countdown
How would you describe your
tracking system?
14%
14%
14%
14%
14%
Checks
Envelope
Calendar method
Mental
Computer Software
Web-based
program
7. Don’t have a
system…
14%
14%
1.
2.
3.
4.
5.
6.
87
C hecks
Envelo p e
C alend ar
met ho ...
M ent al
C o mp ut er
So f t w...
W eb - b ased D o n’t have a
p r o g ... Countdown
s...
How do we?
•Make adjustments in
spending if we don’t
know where the
money is going????
8
Benefits of knowing
•Reduce need for credit
•Spend hard earned $
more effectively
•Find money for other
goals
9
MSU Check
Register
Tracking System
Tool # 1
10
Register System
• Use to track expenses
 Checks
 Cash
 Debit Cards
 Credit Cards
11
Front Cover
12
Back Cover
13
Category Descriptions
14
Blank Page for Your
Expense Categories
15
Planned spending
amounts (p. 2)
• Categories
 Food = $300
 Housing = $590
 Transportation = $360
 Clothes Personal care = $120
 Medical = $100
 Recreation = $80
16
Balance at a glance
•Far right
column
Checking account
balance
$300
17
Example 1:
18
Example 2: Recording
Expenses
19
Example 2: Record
Expenses
Check 511 to
K-mart
• $9.06 listed twice
•
 Under personal care
 Checking account balance
20
Example 2:
Expenses
• Personal Care
Category:
 $20.94
• Checking Account
Balance
 $290.94
21
Example 3: Circle=Cash
Box=Credit
22
Example 3:
Cash/Debit Card
• Items are circled
 $3.75 food
 $24.00 clothes
 $15.00 medical
23
Credit Card Charges
• Items are boxed
•
•
•
Credit Card expense 5/5
Auto Repair $130
Listed under Trans.
& Credit Card Columns
Total—Credit Card Column
24
Example 4: Adding
Expenses
25
Rounding
• Round up or down in
budget category
section
 $9.06 = $9.00
 $9.67 = $10.00
26
Register Tracking
System
• Check
• Cash
• Credit
• Debit
27
Blank Register
28
Evaluation
•Families found an
average of $50
that used to
“disappear.”
29
Cost $1.00
• No charge in packet thanks to
sponsorship of:
 MSU Extension
 Montana Credit Unions
for Community
Development
 First Interstate
BancSystem Foundation
30
What year did Americans
have the highest year of
saving?
25%
1.
2.
3.
4.
25%
25%
1975
1983
1991
2000
25%
8
31
1975
1983
1991
2000
Countdown
Personal Savings Rate
32
32
Year (Highest Rate
of Savings)
•May 1975
• 14.6
33
1982
• 9.0
34
At this point in your life
what is your primary
motivation for saving?
1. Fear (of what
happens if I
don’t)
2. Desire to
minimize
financial stress
3. Retirement
4. For emergencies
25%
25%
25%
25%
8
35
Fear (of what ...
Desire to mini...
Retirement
Countdown
For emergencie...
Track’n Your
Savings Goals
Tool # 2
36
Handy tool
• Shows how to
track progress
towards achieving
specific savings goals
 All in one place
37
Front Cover
Back Cover
What are you saving
for?
Savings Goals
40
Decide on Amount
Needed
Figure 2
41
My Savings Goals
Figure 2
42
Goal Categories &
Amounts
Figure 3
43
Recording a Savings
Deposit
Figure 4
44
Recording a Deposit - Split Among
Goals
Figure
5
Recording a Savings
Withdrawal
Figure 6
Sample Savings
Register:
47
Credit Cards
48
“But Roger, everyone
spends more than he
earns. That’s what
America is for.”
49
What is the average credit
card balance owed by
American households?
1.$23,100
2.$14,687
3.$8,250
4.$5,500
25%
25%
25%
25%
8
50
$23,100
$14,687
$8,250
$5,500
Countdown
Credit Card
Balance…
$14,687
51
What is the average annual
credit card interest rate?
1.21.5%
2.18.9%
3.14.9%
4. 6.0%
5. 2.8%
20%
20%
20%
20%
20%
8
52
21.5%
18.9%
14.9%
6.0%
2.8%
Countdown
Average credit
card interest rate
14.9%
53
What percentage of credit card
holders carry more than a $10,000
balance on their credit cards?
1.
2.
3.
4.
75%
50%
37%
15%
25%
25%
25%
25%
8
54
75%
50%
37%
15%
Countdown
Owe more
than $10,000
37%
55
Credit Card
Smarts Slide
Calculator
Tool #3
56
Credit card annual
interest rate
assumed by Credit
Smarts Calculator
18.0%
57
Credit card monthly
interest rate
assumed by Credit
Smarts Calculator
1.5%
58
Orange Side: Side 1
• Paying Just 3%
on Your Credit
Card Debt
Check the REAL cost
59
Blue Side: Side 2
 Pay MORE
than 3% and
Save a LOT
60
Matt & Julie
• $10,000 Credit
Card Debt
61
Orange Side: Side 1
• Pay back: $19,421
• Interest Charges:
$9,421
• Years to pay off: 20
62
Blue Side: Side 2
• $10,000 debt
$300 first payment
20 years in debt
$9,421 interest paid
63
Blue Side: Side 2
$10,000 debt
Payment
$300
$400
$600
20
13
8
Years in
Debt
Interest
$9,421
$5,738 $3,226
Savings
0
$3,368 $6,195
64
Credit Card
Tracker
Tool # 4
65
Ask yourself
questions:
• Do I really
need the item
now?
66
Ask
questions
• What will I have
to give up to
pay this debt?
67
Personal limits
for using credit:
?????
?????
?????
68
Record of Card
Expense
 Date
 Description
of charge
 Amount charged
69
Credit Card
Tracker
inside
70
Schedule of Nonmonthly Living
Expenses
Tool #5
71
Purpose
 Provide clear picture of
how your non-monthly
payments are
distributed throughout
a 12-month period
72
Example--page 3
• Car insurance is due?
• Property taxes are due?
• Total payments in Nov?
• Yearly cost for
newspaper?
73
Non-monthly
Expenses
 Total yearly cost of nonmonthly expenses?
•$5,153
 Monthly set aside
amount?
•$429.42
74
Back of MontGuide
 Blank form for you
to use
75
Non Monthly Expenses
Fill out on computer
 Download Excel
or PDF spreadsheet
at:
www.montana.edu/extensionecon/
financialmgtpublications.html
See form under Schedule of Nonmonthly Family Living Expenses
76
Schedule of Non-Monthly
Worksheet
77
Completed Worksheet
78
Eastern Montana
Couple
“Line 1 is our family
fixed expenses,
Line 2 is our family
income,
The difference is the fix
we’re in.”
79
MSU non traditional
student
“I tried living
within my
income once & got
claustrophobia.”
80
Question often asked

How much
“should” be spent
for family living
expenses?
81
Marsha’s Response
Well,
It depends..
82
Factors
1. Available Income
2. Number of Family
Members
3. Stage in Family Life Cycle
4. Rural vs. Urban
5. Family/Individual Values
83
Do you/your family have a
written spending plan?
1. Yes
2. No
50%
50%
8
84
Yes
No
Countdown
Developing a
Spending Plan
Tool #6
85
Guidelines
from Bureau
of Labor
Statistics
86
Consumer
Expenditure
Survey – 2008
Percentages
by category
87
Annual Income
 Across top
• Less than $5,000
• $70,000 & over
88
Average Expenditure
Categories, after taxes





Food at home
Food away from home
Housing
Apparel & services
Transportation
89
Average Expenditure
Categories, after taxes
(con’d.)
 Health Care
 Entertainment
 Education/Reading
 Contributions
 Personal Care
 Other
90
Question:
 What is the average
amount before taxes
does family with income
of between $40,000 &
$49,999 spend on
transportation?
91
Amount spend on
Transportation
1.
2.
3.
4.
$6,393
$3,125
$2,010
$ 957
25%
25%
25%
25%
8
92
$6,393
$3,125
$2,010
$957
Countdown
$40,000 - $49,999
Transportation
$6,393
93
Question:
• What does family with
income between
$50,000 & $69,999
income spend
annually on food at
home?
94
Amount spend on Food at
Home?
1.
2.
3.
4.
$5,212
$3,755
$2,120
$1,315
25%
25%
25%
25%
8
95
$5,212
$3,755
$2,120
$1,315
Countdown
$50,000 - $69,999
Food
$3,755
$313 monthly
96
Using a
Homestead
Declaration to
Protect Your
Home From
Creditors
Tool #7
97
Question
 What is the $$ amount
of equity in your home
that a Montana
Homestead Declaration
(if recorded) protects
against most creditor
claims?
98
Amount home equity Montana
Homestead Declaration
protects?
20%
20%
20%
20%
20%
1. $250,000
2. $100,000
3. $ 60,000
4. $ 40,000
5.$ 10,000
8
99
$250,000
$100,000
$60,000
$40,000
$10,000
Countdown
Montana
Homestead
Declaration
$250,000
100
What is a
Homestead?
House, condo, townhouse,
manufactured or mobile
home
 Land on which it sits
(if owned)
 Any improvements,
fences, etc.

101
Married Couples
• Both spouses
should sign
the declaration
• Must be
notarized
102
Record
• Clerk and
Recorder’s office:
 In the county
where the home is
located
103
No Protection
Against
liens
104
Doesn’t protect
• Equity in home
if owner’s cost
of care
Were paid by
Medicaid
105
Standard Form
MSU Extension:
•www.montana.edu/exte
nsionecon/financialmgtp
ublications.html
106
Montana Medical
Care Savings
Accounts
Tool #8
107
Health Expenses
 Have you had any
medical expenses
this year that aren’t
covered by
insurance?
108
Do you have medical
expenses not covered by
insurance?
1. Yes
2. No
50%
50%
8
109
Yes
No
Countdown
Do you have a Montana
Medical Care Savings
Account?
1. Yes
2. No
50%
50%
8
110
Yes
No
Countdown
What is an MSA?
• An account that can be
used for paying eligible
medical expenses not
covered by a Montanan’s
health insurance policy,
Flexible FSA, Federal Health
Care Savings Account (HSA)
111
MSA Contribution
Amounts: Maximum
• $3,000 for each
taxpayer
• $6,000 married
couple
112
MSA Saves on Montana
Income Taxes
• Contributions:
 Not subject to Montana
income tax
 Taxes saved depend on
tax bracket
113
Taxable Income
Adjusted income
MSA deposit
Taxable Income
$ 29,000
- $3,000
$26,000
114
Tax Brackets & Rates
Montana- 2011
At Least
$0
$2,700
But less Than Then your tax is:
$2,700
$4,700
1%
2%
$4,700
$7,200
$7,200
$9,700
$9,700
$12,500
$12,500
$16,000
$16,000 or more
3%
4%
5%
6%
6.9%
115
www.mt.gov/revenue
Tax Savings with MSA
Deposit: $3,000

Taxable income more
than $15,600
 6.9% tax bracket
MSA Deposit
Tax Bracket
$3,000
x .069
$207 Tax
Savings
116
Regular savings account
Deposit: $3,000

Taxable income more
than $15,600
 6.9% tax bracket
Savings Deposit
Interest Rate
$ 3,000
x .0001
.30 earnings
117
Reduced Income
for Taxes
Total deposited
in MSA
 Not amount
withdrawn
118
Example:
Barbara
• January 31
 $3,000 deposited in MSA
• Only $2,000 eligible
medical expenses during
year
119
Barbara’s Montana
Income
Reduced by $3,000
•Not $2,000
Adjusted income
MSA deposit
Taxable Income
$ 32,000
- $3,000
$ 29,000
120
Reporting
 Schedule II: Montana
Subtractions from Federal
Adjusted Gross Income
Line 18: Exempt Medical
Care Savings Accounts
Deposits and Earnings
121
What percentage of
Montanans have
established an MSA?
1.
2.
3.
4.
78%
25%
13%
1.4%
25%
25%
25%
25%
8
122
78%
25%
13%
Countdown
'1.4%
Percent of
Montanans with
MSAs
•1.4%
123
Managing
Money in
Tough Times
Tool #9
Check those you would
like to receive
124
Family Financial
Management
Publications
Tool #10
Other materials that may
be of interest
125
Get a Grip on
Your Money
during 2012
and
beyond
126