Personal_Money_Management_FINAL_02162011[1]

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2 Personal Financial Management Personal financial management gives us the ability to meet financial challenges during our lifetime. How we handle these challenges can determine the quality of our lives and the lives of our families.
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3 Some Financial Issues to Expect During Your Lifetime Risk Management Life insurance Property and casualty insurance Disability insurance Health insurance Long-term care insurance Cash Management Positive cash flow vs. negative cash flow Preparing/using a budget Using credit responsibly Keeping a record of transactions Limiting your tax burden
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4 Financial Issues Estate Planning Transfer of assets Wills and trusts Financial Independence Taking the steps Living the good life Preparation for the latter years of your life Accomplishment of Goals Creation of wealth Establishing an emergency fund Buying a home Educational fund for children Investment portfolio Retirement Income
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5 Credit Management
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6 Credit is Important Credit gives you the ability to acquire goods and services today, but pay later. When you borrow you are making a promise to repay .
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7 The Three C’s Capacity Your ability to pay your debts. Character Where credit is concerned, a person’s reputation for paying bills when due. This is also referred to as your willingness and ability to pay—or credit worthiness. Collateral An asset pledged to the creditor until the credit obligation is paid. Example: If you own your home (or another car), it may be used as collateral to secure a car loan.
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8 Types of Credit Cards Bank Cards: Issued by banks, savings and loan associations, and credit unions. Charge Cards: ―Travel and Entertainment‖ cards. Charges generally have to be paid at the end of the month.
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9 Types of Credit Cards Retail Credit Cards: Issued by businesses such as department stores, gasoline companies and airlines. Credit is limited to goods or services offered by the card issuer. Secured Credit Cards: A credit card secured by a deposit in account held by the card issuer. Affinity Cards: Affinity cards issued jointly by a lending institution and some other organization such as charity or college alumni associations.
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10 Debt-to-Limit Ratio Outstanding Credit Card Balance / Credit Card Loan Limit $300 / $1,000 = 30% $450 / $1,000 = 45%
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11 Credit Formula Credit card charges + Car loan + Student loans + Consumer loans + Mortgage loans Future Income Spent or Committed =
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12 Liquidation of Student Loans For illustration purposes only. Actual monthly payments may vary, by lender.
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13 Bad Credit History Results In: High interest rates on loans – if you can even obtain them! Limited number of lenders. Recorded in your credit report. Late payments or account charge-offs stay on your credit report for 7 years; bankruptcies 10 years. Financial stress – life is hard enough without the added pressure of being overextended financially.
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14 How to Repair Credit: Begin by requesting your credit report.
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This note was uploaded on 08/30/2011 for the course MGE 302 taught by Professor Isse during the Fall '08 term at SUNY Buffalo.

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