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Bridget Skelly

on 12 November 2013

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Transcript of Budgeting

B u d g e t i n g !
B u d g e t i n g !
What is gross pay?
Gross pay is the pay before taxes are taken out.
What percentage of your paycheck is taken out for taxes?
What is net pay?
The pay after taxes are taken out or take home pay.
Let's do a practice problem! :)
If my gross annual salary is $40,000 and I get paid monthly, what is my net pay for each paycheck?
What things should you look for when opening a checking account?
You should look for:
Monthly fee/Service charges
Minimum Balance Required to Waive Monthly Fee
Overdraft Fees
Stop Payment Fees
ATM Card Available?
ATM Fees
Direct Deposit Available?
Cost of Printing Checks
Other Fees/Charges
The best way to learn is by doing. LET'S DO THIS :)
What is the difference between debit and credit?
Debit cards take money from your bank account that you ALREADY have
Credit cards take money from a lender that you have to then pay back. If you do not pay the FULL AMOUNT by the due date, you will be charged interest.
Again, ballers, let's do this :)
What does it mean to endorse a check?
To endorse a check means to sign it in order to deposit or cash the check.
Who should endorse the check?
The person that THE CHECK IS WRITTEN TO should endorse the check
How do credit card companies determine your interest rate?
Your credit score...
What is a checkbook register?
A checkbook register is similar to what we used for the pretest. It is a way to keep track of your income and spending.
Practice your signature, ballers! :)
Checkbook registers are not AS important today because our banks keep track of our expenses with web banking...
... but can you think of a time that you might want to use a checkbook register?
When you're writing checks, ballers! Online banking services do not know when you have written a check. Sometimes, people can take FOREVER to cash a check you have written them. If you don't record that you've written that check somewhere and forget, you might not have the money in your account... and the check will BOUNCE and you will be charged :(
There are three types of expenses.
The three types of expenses
Periodic or
Fixed Expenses
Fixed Expenses are expenses that cost the same amount every time.
What are some examples of fixed expenses?
Variable Expenses
Variable expenses fluctuate in amount
Do you think you have more control over fixed expenses or variable expenses?
You have more control over variable expenses because you can change the amount you spend. You can still predict an approximate range that you will spend on a variable expense :)
Periodic or Occasional Expenses
What are the numbers on the check?
This is the bank's routing number
This is the person's checking account number
This is the check number
Periodic expenses are expenses that you don't pay every month, and can be either fixed or variable.
Can you think of a periodic expense that would also be fixed?
Things to consider
Other things to note
Read the lease carefully!
Where to look for an apartment
newspaper/ magazine
online rental services
craigslist, etc.
word of mouth
ads in mail/ outside
number of bedrooms
lease legalities
security deposit
rent due date
are pets allowed?
a check
If you write a check for more money that you have in your bank account, your bank might return the unpaid check to the person or business it was written to. If the check is bounced, you'll most likely have to pay a NSF (not sufficient funds) fee to both the financial institution and the business to which it was written.
Can you think of examples of variable expenses?
You are responsible for all information in the lease, even if you haven't read it!
Also, it's a good idea to keep a copy of your lease for your records... but like a REALLY good idea
Ms. Skelly's extra piece of advice: Check if there's a grace period for the rent due date :)
Buying vs Leasing
What's the differnce between buying a car and leasing a car?
Buying a car means that you are purchasing the car
Leasing a car means you are purchasing the "use" of a car
Things to consider
Short term vs long term cost
Down payment
Up-front costs
Monthly payments
Let's look at a side by side comparison...
Higher monthly payments
Lower monthly payments
Pay a down payment
Pay first payment a month after purchase of car
Pay first payment day of purchase as security deposit for next month.
After all payments made, car is yours.
After all payments made, car is dealer's. You either have to lease another car or buy a car. You can usually purchase the car you leased for its depreciated value.
Extra charges if you go over in mileage
Buying costs more in the short run. Leasing costs more in the long run
Err.. so Ms. Skelly, should I lease or buy?
Well, baller, I'm glad you asked!
lease if...
buy if...
You should...
you enjoy driving a new car every 2-3 years
like having a car that has the latest safety features and is always under warranty
don't like trading and selling used cars
don't care about building ownership equity
drive an average number of miles
are willing to pay more over the long run for these benefits
don't mind paying higher monthly payments
prefer to build up some trade-in or resale value (equity)
prefer paying off your loan and being payment-free for a while
don't mind the cost of repairs insurance doesn't cover after the warranty expires
don't like the risk of possible lease-end charges
like to customize your car
OK mis amores, now that you have an idea about whether you want to buy or lease... what car should you choose?!
What things should you consider when choosing which car to purchase?
Things to consider!
What can you afford?
New or used?
Your source...
do your research!
Size and space needed
Engine and performance
Fuel economy and environmental concerns
BALLLAAAASSSS, if you decide to go to college, chances are you will have to take out loans to finance your continued education...
... and then you will have to pay them back!
You will have a 6 month "grace period" after you either graduate or are no longer enrolled as a full time student to start paying back your loans.
*Please note: even if you do not graduate, you still have to pay back your student loans...
Aren't the loan companies sooo nice for lending you the money?
Don't be fooled, ballers. These companies are making money off of you. And that's ok! BUT they WILL get their money. Don't make my brother's mistake, lovely ballers. Pay the loan companies the money you owe them... :)
How much can you anticipate to pay, you ask?
Welp, for federal loans, with a standard plan, you will pay a minimum of $50 a month and you will have a maximum of 10 years to pay it off.
If you owe more than $30,000, you can opt for the extended plan, through which you would have up to 25 years to pay it off. However, then, you'll pay much more in interest over the long run
Lettt'sss see how much your monthly payment would be for a standard plan!

*Please note: the aforementioned plans and calculator reflect FEDERAL loans. Private loans will have different options and rates that you can find on their website. The loans that are provided through FAFSA are federal. Any loans you apply for and take out on your own are typically private loans and will typically have a higher interest rate.
If you do not pay back your loans, it will negatively affect your credit score, which will greatly impact your ability to buy or lease a car, take out credit cards, rent or own a home, etc. PINKY SWEAR YOU'LL PAY YOUR LOANS BACK :)
ok, FINALLY, let's do this! :)
So, let's say we spend $600 on a credit card at an 18% interest rate and only make the minimum payment. How much will that end up costing us?
Let's look at a few other items to figure out the REAL cost if we use a credit card!

MORAL OF THE STORY: Use debit whenever possible! :)
With all of these expenses it's hard to think that you also need to be SAVING money right?!
What kinds of things should we be saving for??
We need to save for...
EMERGENCIES! (3 months pay)
Family expenses (children's schooling, etc)
Major purchases (car, home, etc)
Let's look at the importance of saving for retirement at a young age!!
How is your credit score determined??
How important is your credit score??
If you have poor credit history/credit score, it will affect your ability to take out credit in the future (house, car, student loans, apartment, etc). Also, the credit you can take out will be at a MUCH higher interest rate!
Full transcript