educ - week 11 PROSPER

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Sherfield and Moody Cornerstones
Topic: Prosper
Copyright © 2014 Pearson Education, Inc.
1
Practicing Fiscal Fitness
• Managing money is a challenge for many
students
• Will you have to work to finance your
education?
• Do you need to change your financial habits?
Copyright © 2014 Pearson Education, Inc.
2
Young Adults and Debt
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Nearly 50% have defaulted on a debt
30% worry frequently about debt
58% move in with parents after college
22% altered career plans due to debt
Average credit card debt is now over $4,000
24 - 40% of income is spent on debt payments
Bankruptcy is a major issue for young adults
Copyright © 2014 Pearson Education, Inc.
3
Preparing for the Future
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Practice delayed gratification
Take a personal finance course
Learn financial lingo
Save your change daily
Write down everything you spend
Apply for all types of financial aid
Copyright © 2014 Pearson Education, Inc.
4
Types of Financial Aid
• Loans – must be repaid with interest
• Grants – do not require repayment and are often
need-based
• Scholarships – do not require repayment and are
often merit-based
• Work study – money earned while working on
campus
Copyright © 2014 Pearson Education, Inc.
5
Are you Eligible for Federal Aid?
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Demonstrate financial need?
Have high school diploma or GED?
Enrolled in an eligible degree program?
Citizen of U.S. with a SS#?
Making satisfactory academic progress?
Male registered with Selective Service?
Any drug convictions?
Copyright © 2014 Pearson Education, Inc.
6
Tips for Applying
• Complete your FAFSA in its entirety
• Read instructions carefully and attend to
deadlines
• Be honest and supply any documentation
required
• Keep tax returns and forms organized
• Work with Financial Aid Officers on campus
• Apply for all types of aid
Copyright © 2014 Pearson Education, Inc.
7
Student Loans
• Required for many college students
• Borrow only the minimum you need
• This debt will follow you for up to 30 years
• Bankruptcy does not relieve student loan debt
Copyright © 2014 Pearson Education, Inc.
8
Student Loan Total Interest
Copyright © 2014 Pearson Education, Inc.
9
Protect Your FICO Score
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Monitor your credit report regularly
Keep credit card balances low
Ask card companies for lower credit rates
Do not open multiple accounts at once
Keep accounts in good standing open
Use automated payment systems for bills
Keep balance transfers to a minimum
Copyright © 2014 Pearson Education, Inc.
10
How Can You Budget in each Area?
• Household expenditures and utilities?
• Phone/email costs?
• Transportation costs?
• Food?
Copyright © 2014 Pearson Education, Inc.
11
Credit Card Debt
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One of worst kinds of debt
Majority of college students have this debt
Credit card issuers love college students!
Paying with plastic results in more spending
High interest and fees add up quickly
Can you pay off what you spend each month?
Copyright © 2014 Pearson Education, Inc.
12
Tips for Managing Credit Cards
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Watch for changes in fees and interest rates
Your credit score can affect your rates
Avoid cards with annual fees
Know grace periods and payment due dates
Protect your card with signature and “see ID”
Make more than just minimum payments
Try debit cards instead
Seek reputable counseling if in trouble
Copyright © 2014 Pearson Education, Inc.
13
Personal Loan Pitfalls
• Watch out for high-interest:
– Payday loans
– Car title loans
– Rent-to-own contracts
• Worse than credit cart debt –read carefully!
Copyright © 2014 Pearson Education, Inc.
14
Watch Small Item Money Drain
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Gum?
Bottled water?
Eating out daily?
Junk food/vending machines?
Unused memberships?
Expensive salon visits/treatments?
Cigarettes?
Copyright © 2014 Pearson Education, Inc.
15
Identity Theft
• Widespread concern for college students
• Actual or virtual information may be stolen
• People you know or strangers may commit it
• Very expensive and time-consuming to fix
Copyright © 2014 Pearson Education, Inc.
16
Tips to Minimize Your Risk
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Carry only necessary personal information
Buy online from secured sites only
Don’t use obvious passwords
Memorize PIN numbers and passwords
Shred personal documents
Monitor your credit report
Protect personal information online
Use a permanent mailing address
Copyright © 2014 Pearson Education, Inc.
17
What Should You Do If…
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You need to purchase a car?
If you need to save on fuel?
If you feel the need to “impulse buy”?
If your grocery bill is out of control?
If your child wants what other kids have?
Your credit cards are lost or stolen?
Copyright © 2014 Pearson Education, Inc.
18
Topic Reflections
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Avoid credit card trap
Record how you spend your money
Monitor and protect your credit rating
Learn about all types of financial aid
Don’t borrow more money than you have to
Learn about investment and retirement plans
Get reliable counseling for debt management
Copyright © 2014 Pearson Education, Inc.
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