COA 4131 1st Edition Lecture 8 Outline of Last Lecture I. Managing Credit and LoansII. Credit and Credit CardsIII. Pros and Cons of CreditIV. Establishing credit V. Opening an AccountVI. Credit BureauVII. Manage Credit VIII. College Students and Credit IX. Types and Sources of Credit X. Costs of Credit XI. Additional FeesXII. 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 examCurrent Lecture- Most Americans have 1-8 credit cardso Suggests 1-2 credit cards- Before you file for bankruptcyo Get some credit counselingo Try to pay off your billso Stays on financial report 5-7 years- CPIo Measure 400 goods and services each month and report it to Washingtono Monthly and yearly CPI- Level of living is o where you’re at now- Standard of livingo How you aspire to live- Ben Bernekeo Chairman of the Fed (14th)- Purpose of the fed is to be the central bank of the United States- Time value of moneyo 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: 47o 45-54 is the highest income group- Main determinant of how you are doingo Income/ Salary- Good benefits can add 30% on top of your income- Most expensive and sought after insuranceo Health insurance- Insolvento Unable to pay bills- Solvento Able to pay bills- Business Cycleo 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 yearso Keep receipts, etc. for up to 3 years- 1% of people get audited by the IRS- Federal Government needs tax moneyo Social security, Medicare, social programs- Illegal taxes o Evasion- Legal taxeso avoidance - When you get a jobo Fill out w2 formo Get return its w4 formo Most common form 1040o Most college students use 1040-ez- Estate taxes- Inheritance tax- Florida doesn’t have a state income taxo Higher property tax- Property tax once a year- Homestead exemption taxeso Can reduce property taxes- Set up accounts for kidso Custodial Accounts, trust funds- Fixed and variable expenseso Fixed same every month Car payment, insurance, house paymento Variable is different Food, pet care, going out to eat, entertainment etc- Budget is usually one month- Savings bondso Super safe 1 out of 4 Americans have savings bonds- Most inexpensive one is EE and they start at $25- Savings bond that start with the letter I track inflation start at 50$- Microeconomicso Applied social science, interested in the individual 70% of US economy is consumer spending- Jimmy Cartero 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 Clintono New Economy The New economy is the switching to the internet era- George W. Busho Personal Responsibility Emphasized people and corporate responsibility- Barak Obamao Gave money to GM, Chevrolet- Analyze, action,- FDICo Insure bank accounts up to $250,000- If you are in the red its bad, in the black good shape financially- Deflationo It goes under 0- Disposable incomeo Take-home pay Housing most expensive thing- Cash Reserveo 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 credito Over extending People spend to much cause they don’t see it as real money.- Debit cardo Takes money right out of account- Furlowo Days off without pay- 80% of FSU budget goes to o Labor- CDo Certificate of deposit Very safe, look for best rate of return- Biggest debts o Mortgage Utah has most bankruptcy Tennessee is second- Elderlyo Affected by fix income- FICO scoreo 720 or above is really good- Banks are decentralized- Financial Plannero CFP(certified professional plannero Or been in business a long time are goodo Go to bigger firm- Own something that increases in valueo Sustainable, long lasting- Financial attitudeo Interested in what people are selling, what it costs, etc..- Liquidityo How fast you can turn something into cash- Risk aversiono Fear of risk- Safe deposit boxeso Why want one, what goes into
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