COA 4131 1st Edition Lecture 8 Outline of Last Lecture I Managing Credit and Loans II Credit and Credit Cards III Pros and Cons of Credit IV Establishing credit V Opening an Account VI Credit Bureau VII Manage Credit VIII College Students and Credit IX Types and Sources of Credit X Costs of Credit XI Additional Fees XII Annual Percentage Rate XIII Average Daily Balance XIV Best Deals XV Consumer Credit Legislation XVI Loans XVII Debt Warning Signs XVIII Credit Problems and Solutions Outline of Current Lecture I Review for first exam Current Lecture Most Americans have 1 8 credit cards o Suggests 1 2 credit cards Before you file for bankruptcy o Get some credit counseling o Try to pay off your bills o Stays on financial report 5 7 years CPI o Measure 400 goods and services each month and report it to Washington o Monthly and yearly CPI Level of living is o where you re at now Standard of living o How you aspire to live Ben Berneke o Chairman of the Fed 14th Purpose of the fed is to be the central bank of the United States Time value of money o Money increases through investment over time Not only what you have now but what you are going for DON T NEED TO KNOW FORMULAS just concept College graduate should expect to make twice as much as somebody with a high school degree Age of average Ashley customer 47 o 45 54 is the highest income group Main determinant of how you are doing o Income Salary Good benefits can add 30 on top of your income Most expensive and sought after insurance o Health insurance Insolvent o Unable to pay bills Solvent o Able to pay bills Business Cycle o Expansion recession depression recovery 1933 was the worst year for the economy Sign of depression 10 or more of unemployment Should keep tax records for 3 years o Keep receipts etc for up to 3 years 1 of people get audited by the IRS Federal Government needs tax money o Social security Medicare social programs Illegal taxes o Evasion Legal taxes o avoidance When you get a job o Fill out w2 form o Get return its w4 form o Most common form 1040 o Most college students use 1040 ez Estate taxes Inheritance tax Florida doesn t have a state income tax o Higher property tax Property tax once a year Homestead exemption taxes o Can reduce property taxes Set up accounts for kids o Custodial Accounts trust funds Fixed and variable expenses o Fixed same every month Car payment insurance house payment o Variable is different Food pet care going out to eat entertainment etc Budget is usually one month Savings bonds o Super safe 1 out of 4 Americans have savings bonds Most inexpensive one is EE and they start at 25 Savings bond that start with the letter I track inflation start at 50 Microeconomics o Applied social science interested in the individual 70 of US economy is consumer spending Jimmy Carter o High inflation high interest rate Ronald Reagan o Supply side economics Philosophy that If you put money into businesses it will trickle down to employees and everyone else Bill Clinton o New Economy The New economy is the switching to the internet era George W Bush o Personal Responsibility Emphasized people and corporate responsibility Barak Obama o Gave money to GM Chevrolet Analyze action FDIC o Insure bank accounts up to 250 000 If you are in the red its bad in the black good shape financially Deflation o It goes under 0 Disposable income o Take home pay Housing most expensive thing Cash Reserve o Want to have save up 3 6 months of salary saved up More people are opening tax services and doing it with tax programs Main problem with using credit o Over extending People spend to much cause they don t see it as real money Debit card o Takes money right out of account Furlow o Days off without pay 80 of FSU budget goes to o Labor CD o Certificate of deposit Very safe look for best rate of return Biggest debts o Mortgage Utah has most bankruptcy Tennessee is second Elderly o Affected by fix income FICO score o 720 or above is really good Banks are decentralized Financial Planner o CFP certified professional planner o Or been in business a long time are good o Go to bigger firm Own something that increases in value o Sustainable long lasting Financial attitude o Interested in what people are selling what it costs etc Liquidity o How fast you can turn something into cash Risk aversion o Fear of risk Safe deposit boxes o Why want one what goes into them
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