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TAKE CONTROL OF YOUR MONEY AND YOUR LIFE

TAKE CONTROL OF YOUR MONEY AND YOUR LIFE. WELCOME Lori Ciccomascolo INTERIM DEAN, COLLEGE OF HUMAN SCIENCE AND SERVICES. TOPICS AND PRESENTERS. The Value of Financial Planning Joan Gray Anderson, Professor Emerita , HDF Wise Borrowing Gail Hopkins ’97, Supervisor,

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TAKE CONTROL OF YOUR MONEY AND YOUR LIFE

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  1. TAKE CONTROL OF YOUR MONEY AND YOUR LIFE

  2. WELCOMELori CiccomascoloINTERIMDEAN, COLLEGE OF HUMANSCIENCE AND SERVICES

  3. TOPICS AND PRESENTERS The Value of Financial Planning Joan Gray Anderson, Professor Emerita, HDF Wise Borrowing Gail Hopkins ’97, Supervisor, Money Management International Smart Spending And Saving Jing Jian Xiao, Professor, HDF

  4. Audience Response Clickers Question Participation: • Turning Point Channel for CBLS 100: Channel 41 To change channels: - Press GO on your clicker. - When you see the flashing red and green light, press the number of the channel. (For Channel 41: press ’4,1'.) - Press GO again, and you should see a green light.

  5. The Value of Financial Planning Joan Gray Anderson Professor Emerita of Family Finance Department of Human Development and Family Studies College of Human Science and Services University of Rhode Island

  6. The Value of Financial Planning Financial Planning: It’s not as hard as it sounds.

  7. The Value of Financial Planning So, here’s the bad news about money: You will never have enough!!

  8. The Value of Financial Planning Here’s the good news: You can still be very happy if you learn to use what you have wisely.

  9. The Value of Financial Planning • Financial Planning: • Ensures you can pay all your bills • on time. • Lets you afford big ticket items like • a house, college, retirement. • Gives you freedom from worrying • about money.

  10. The Value of Financial Planning FINANCIAL PLANNING IS ABOUT MAKING GOOD DECISIONS… MOST OF THE TIME, IT’S OK TO MAKE MISTAKES NOW AND THEN, BUT NOT TOO OFTEN.

  11. The Value of Financial Planning Financial Planning: Every dollar you make is about choice This or That? Fun or Food? Today or Tomorrow?

  12. The Value of Financial Planning Ask Yourself… HOW CAN I SPEND THIS DOLLAR IN A WAY THAT WILL MAKE ME HAPPIER OVER THE COURSE OF MY ENTIRE LIFE THAN ANY OTHER CHOICE I COULD MAKE???

  13. The Value of Financial Planning FOR EXAMPLE…WOULD I RATHER… • DRIVE A BRAND NEW CAR TODAY, OR RETIRE EARLIER? • PAY MY PROPERTY TAX OR GO ON VACATION? • GO TO A PRIVATE COLLEGE OR A PUBLIC ONE? • BUY A LATTE OR SAVE FOR RETIREMENT?

  14. The Value of Financial Planning WHAT IS WEALTH?HOW IS IT CREATED? • WEALTH IS WHAT WE CALL • NET WORTH • IT COMES FROM: • - MORE SAVING • - LESS BORROWING

  15. The Value of Financial Planning WEALTH IS SEEN ON A BALANCE SHEET • ASSETS LIABILITIES • HOUSE CREDIT CARD • RETIREMENT PLAN STUDENTLOAN • SAVINGS MORTGAGE • INVESTMENTS UNPAID BILLS • TOTAL ASSETS MINUS TOTAL DEBT = • NET WORTH!!

  16. Which group has the lowest net worth? • The elderly • Baby boomers • New parents • Recent college grads

  17. The Value of Financial Planning Bottom line on the bottom line Over time, we like to see net worth increasing so that one day you have enough wealth to retire.

  18. The Value of Financial Planning NEW ASSETS COME FROM INCOME INCOME STATEMENT INCOME - TAXES, DEDUCTIONS = AMOUNT AVAILABLE FOR SPENDING AND SAVING - SAVINGS GOALS = AMOUNT LEFT FOR SPENDING ON: 1. NEEDS 2. WANTS

  19. The Value of Financial Planning When it comes to money, worrying is good! • Always ask yourself, what can go wrong? • Lose job • Get sick • Spouse dies • House is destroyed • Divorce • Develop a backup plan, or 2 or 3…

  20. The Value of Financial Planning No brainers • Save as much as possible • Avoid casual debt • Spend sensibly

  21. The Value of Financial Planning SAVE • EMERGENCY CASH RESERVE • -3-6 MONTHS OF NEEDS • LARGE TICKET ITEMS • COLLEGE • RETIREMENT

  22. The Value of Financial Planning Remember MC Hammer??? He achieved superstar status in early 1990 with album “Please, Hammer, Don’t Hurt Them”.

  23. The Value of Financial Planning MC Hammer • 1990: Forbes magazine lists MC on its richest Americans list with a net worth of $33 million. • Supports an entourage of 60 people • Monthly payroll over $500,000

  24. The Value of Financial Planning 1992 MC buys a house • 12 acres, • $20 million, • 40,000 square-foot • Two swimming pools, • Tennis courts, • A baseball field, • A weight and sauna room, • A recording studio, • A 33-seat media room, • A bowling alley • 13-car garage

  25. The Value of Financial Planning MC Hammer • 1996 declares bankruptcy: • -$9.6 million in assets • -$13.7 million in debt • Net worth: - $4.1 million

  26. The Value of Financial Planning • Sells his house for $5 million • Net loss of $15 million

  27. The Value of Financial Planning OSEOLA McCARTY My hero

  28. The Value of Financial Planning Oseola • Born in 1908 in Mississippi, never married or had children, left school in the 6th grade • Washed and ironed clothes for 3 generations of rich people. • She was poor, poor, poor

  29. The Value of Financial Planning Oseola • “When I started making $10 a bundle -- I don't remember when ... sometime after the war -- I commenced to save money," she recalled. "I put it in savings. I never would take any of it out. I just put it in. It just accumulated."

  30. The Value of Financial Planning • By 1995, • she had saved $250,000

  31. The Value of Financial Planning Oseola • Donated $150,000 to The University of Southern Mississippi for scholarships. She wished the recipients would be black, female and in need of financial assistance. • "I want to help somebody's child go to college. I just want it to go to someone who will appreciate it and learn.”

  32. The Value of Financial Planning • WHAT ARE YOUR SPENDING PRIORITIES?

  33. The Value of Financial Planning Wasteful spending: • Americans waste 10-20% of their money. • Keep a record of everything you spend. • Put it in Excel with categories and see where it all goes.

  34. The Value of Financial Planning JUNK, JUNK, JUNK • We live in a world full of junk: • Junk food, • Junk tv, • Junk internet, • Junk reading, • Junk movies, • Junk college, • All this junk wastes our time and our money

  35. The Value of Financial Planning • A little junk is good • A lot of junk rots • -the teeth, • -the mind, • -the soul

  36. The Value of Financial Planning We all have too much stuff • Garage sales/yard sales • eBay and Craig’s list • Storage bins • Second hand stores – consignment shops

  37. The Value of Financial Planning Money gobblers • Beverages to go • Eating out • Magazines, newspapers • CDs, electronics, downloads, videos, apps • Clothes • Cell phones • Gifts

  38. The Value of Financial Planning • What are your money • gobblers?

  39. The Value of Financial Planning Spend/save purposefully • What’s the best way I can use • this dollar? • Make a spending plan: putting • saving and debt reduction first. • Pay yourself first

  40. The Value of Financial Planning Remember… • Money can’t buy happiness, but • lack of money can buy a lot • of misery ! !

  41. WISE BORROWING Gail Hopkins ’97 Supervisor of Support Service Money Management International 501 Centreville Rd, 2nd floor, Warwick, RI 02886 www.moneymanagement.org

  42. WISE BORROWING Presentation Outline • Student Loans • Cost of credit • Credit Reports and Credit Scores • Tips on wise use of credit

  43. Student Loan Basics • Private Loans vs. Federal Loans • Private Loans may have adjustable rates • Federal Loans have fixed rates • These are real loans • Must be repaid no matter what

  44. Student Loan Basic, continued… • Repayments start 6 months after school ends • 10 year repayment plan • Contact servicer if you cannot make scheduled payments • Deferment and forbearance • Forgiveness, cancellation, discharge

  45. Understanding Loan Default • Failure to make scheduled payments = default • Delinquencies of at least 90 days reported to 3 major credit bureaus • Negative impact on your credit • Higher interest rates on car loan, mortgage • Trouble getting insurance, cell phone, rental, utilities • Consequences are severe • Avoid default

  46. Cost of Credit and Credit scores • Want vs. need purchase • Pay more than the minimum • Always pay on time • Develop a budget if you don’t have one • Make adjustments as needed

  47. You purchase new Plasma TV at $2,500.00.If you make only the minimum monthly payment of $50 at 18% APR, how long would it take to pay off this TV? • 5 years • 15 years • 28 years

  48. What does my Credit report say about me? • Whether I pay my bills on time • Whether I have credit cards • Whether I go to class every day • A and B

  49. Credit Reports • 4 parts of the credit report • Your personal information • Public information (legal, judgments, collection accounts) • Existing Credit • Credit report Inquiries • Hard inquiry • Soft inquiry

  50. Credit Bureaus • Experian www.experian.com • Equifax www.equifax.com • Transunion www.transunion.com Free credit reports: www.annualcreditreport.com

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