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Is the study of personal and family resources considered important in achieving financial success; it involves how people spend, save, and protect, and invest their financial resources.
Involves concepts: spending, saving and protecting, and investing
Learn financial Responsibility! Become accountable for your future financial well-being, strive to make good decisions about personal finance, and learn how to manage your resources.
Also, to AVOID financial mistakes and TAKE advantage of financial opportunities
also known as liquid assets or cash equivalents include cash and low risk near cash items that can be quickly converted into cash with little or no loss in value in such as checking and savings accounts. Used for payment of bills
i.e. cash, tax refunds due, money owed to you by others
Contributes to a particiular quality of life. Mainenance of ones own lifestyle. Generally depreciates over time (want to look at the current value)
i.e. house, condo, mobile home, appliances, furniture, auto, jewelry, tools
Provides additional income, may increase over time, and generally appreciate
i.e. stocks, bonds, mutual funds, gold, partnerships, life insurance and annuitis, real property, and retirement accounts
Less than one year to pay off what is owed
i.e. personal loans, credit card and charge balances, professional services, unpaid taxes, and rent, utility bills, and insurance premiums
More than one year to pay off what is owed.
i.e. auto loans, real estate mortgages, home equity, consumer installment loans and leases, education loans, or margin loans
Surplus=net gain or net income
are usually paid in the same amount during each time period; they are typically inflexible and often contractual. expenses that recur and at fixed intervals. SCHEDULED PAYMENTS
i.e. rental payment and auto loans or insurance payments
Are expenditures over which an individual has considerable control. expenses over which you have substantial control
i.e. meals, utilities, and transportation
Income after taxes are taken out...also known as disposable income
-money that is available for your to spend/ pay your bills
1. make it simple
2. make it personal
3. keep it flexible
4. be positive
-housing, insurance, transportation, food, central organization
-cable,latte,dinner at bravos, spring break, dog grooming
-traditional savings, additional payments above scheudled credit card payments
Live within our means
Identify changes that need to be made
Identify spending leaks`
1. identify the leak
2. how much does it cost per month, per year?
3. is there way you can reduce the leak?
4. what could you do with the money if had it available for another use?
to determine the number of months that you could contribute t omeet your expenses using only your monetary assets if all income ceases. HIGH RATIO IS DESIREABLE
monetary assets/monthly expenses
Do I have enough to meet my debt obligations?
provides service-to-income ratio provides a view of your total debt burden by comparing the dollars spent on gross annnual debt repayments. 0.36 is DESIREABLE
annual debt payments/gross income
monthly nonmortgage debt repayment/ disposable income
-ideal number is .14
fail to plan for occassional, non monthly expenditures
underestimate how much they spend each month
use credit cards to balance their budget
scarcity (basic economic problem; unlimited wants but few resources)
choose most benefits with the least cost
-next best alternative that you d NOT choose
-trade-off: every decision involves trade offs
actions, awards or rewards that influence choice
can be negative or positive
when incentives change=people change in predictable ways
written and unwritten rules that people use to allocate scarce resources
rules make decisions on what how and why things are produced and for whom
changing rules influences peoples behavior, choices, and incentives
costs and benefits of decisions lie in the future
uninteded consequences sometimes occur
Steady rise in the general level of prices
Occurs when supply of money rises faster than the supply of goods and services available for purchase.
Exchange rates determine the relative prices of imports and domestic goods and services. One varieable in determining the price of imported oil
moves in the direction of the economy
i.e. retail sales, GDP, number of employees
moves in the oppisite direction of the economy
i.e. unemployment rate and gold/silver prices
Business and labor market conditions improved and more consumer optimism. Consumers ending year in upbeat mood.
DECEMBER 2011: job market=pos, short term outlook improved in december, and consumers outlook for the job makret was favorable.
Jobs, Housing sales, consumer spending, business spending, and inflation.
Savings: safe, easily accessible, low return, usually for short term goals
Investing: involves risk, volatile in short terms, potential for appreciation, used for mid long goals.
How long it will take for your money to double...
-72 divided by number of years=interested rate you will need to double your money
-72 divided by interest rate=number of years it will take to double money
credit union: not for profit, national credit union admin, usually pay higher interest rates, lower fees
Banks: for profit, owned by stockbrokers, federal deposit insurance corporation
is an interest earning savings instrument purchased for a fixed period of time.
-money for a fixed term 6mo-4/5yrs, principal does not fluctuate, APY (annual percentage yield), good balance of risk and reward.
APR: yearly interest rate, that includes all fees and costs you pay to a lender when you borrow money. By law lenders are required to tell you the APR.
APY: The yearly interest rate recieved from an investment, check how often interest rate is paid, if two interest rates are the same, choose theo one with the more compounding zeroes.
Matched up savings account for limited income individuals (under 200% of poverty, must have earned income) Save for: homeownership, eductaion/job train, small business.
How it works?: meet guidelines and take financial class. $1000 matched up for Michigan IDA partnership ...3:1 on household and 2:1 on education
1. paying high fees unessecarily
2. keeping too much money in a checking where it earns little interest
3. falling to reconcile their accounts on a regular basis
5. failing to shop around for the best account that meets your needs
You back with your own money
Good for peopel with bad credit history
35% pay bills on time
15% credit history
30% amounts ownded
10% taking on more debt
10% types of debt
Establish checking and savings accounts
have phone and utilities in name
esatblish and maintain credit and loans
-pay on time, credit history, credit mixture, and credit utilization
pay off student loans
Commit to pay the same amount each month until you are out of debt
no new debt is assumed during this period
organize debt by interest rate
-Issuers must discolose the conseuqences of paying the minimum balance
-MORE TIME TO PAY (5pm deadline and extra day if closed) 21 days after delivered
- No increase on rates unless over 60 days
-Get old rate back after 6 months
-Must give 45 day notice before increase
-payments go to highest rate first
-no increase first year
No over the limit fees unless you give pre approval
-opt in-over the limit
-opt out-trans reject
late fees limitied to 25
no one under the age of 21 an get a card without a cosigner
-Comparison by offers
-Disclosure of APR
-Disclosure of finance charge in dollars
-Protection of fraud (report fraud within 2 days then protected, 50 dollars guarantee if not)
Gives consumers the right to correct errors in ATM or bank statements relating to electronic funds transfers...challenge errors within 60 day window
-limits liablity for losses in the even of a stolen or lost ATM card...$50 if lost ATM card in 2 business days
-prohibits unfar or deceptive debt collection practices
-cant use abusive, deceptive, and unfair practices in and effort to collect pst due debt
-Offices are not restrained by FDCA rules
Fair credit reporting act
-allows you to challenge errors on your credit bureau data
-helps to insure: confidentiality, accuracy, relevent/ recent information, the consumers right to konw.
Liquidation of assets
Cannot file for another 8 years
On credit report for 10 years
Reconciliation (payment plan)
Cannot file for another 2 years
Protected from lawsuit
Petition (list all assets and liabilities, creitors contacted, assigned a trustee)
Automatic Say=no more contacts from creditors or collectoins
meeting of creditrs
expempt assets: home/food. benefits, persoanl propert, cash value of life insurance
can be discharged: landlord, utilities, credit cards, dept stores, medical bills
cant be dischraged: student loans, taxes, child support
before: no class, self file with court, ch 7 couldnt file until 6 years, 13 was unlimited, no means test
after: class, attorney, cant file for 8, cant file for 2, means test
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