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STUDENT GUIDE
PE TER BIELAGUS
Warning Disclaimer
The purpose of this course is to educate and entertain. The author and publisher do not guarantee
that anyone following the techniques, suggestions, tips, ideas or strategies will become
successful. The author and publisher shall have neither liability nor responsibility to anyone with
respect to any loss or damage caused, or alleged to be caused, directly or indirectly by the
information contained in this book. It is recommended that readers seek competent legal and
financial advice before taking any actions mentioned in this course.
Unit 1
Personal Finance
Basics
Lesson 1: Introduction
Lesson Objectives: By
the
end
of
this
lesson,
you
should
be
able
to:
Know
the
definition
of
personal
finance.
Understand
the
simple
confusion
people
make
about
personal
finance.
Lesson Summary:
Personal
means
relating
to
you.
Finance
means
to
pay
for.
When
you
put
the
two
words
together,
personal
finance
is
about
paying
for
your
personal
life.
Sadly
many
people
get
this
backwards.
They
personalize
their
finances.
They
get
upset
when
the
stock
market
goes
down;
they
scramble
to
buy
a
house
simply
because
everyone
else
seems
to
be
buying.
When
we
personalize
our
finances,
we
often
get
ourselves
into
financial
trouble.
Its
important
to
learn
about
personal
finance
now
because
you
will
not
physically
be
able
to
work
for
the
rest
of
your
life.
Whats
more,
you
probably
dont
want
to
work
the
rest
of
your
life,
even
if
you
could.
As
you
get
older,
youll
want
to
work
less
or
even
not
at
all.
For
this
to
happen,
youll
need
your
investments
to
cover
100%
of
your
expenses.
The
point
where
your
investments
pay
for
everything,
is
called
retirement.
We
call
this
retirement.
Most
experts
agree
that
you
need
at
least
70%
of
your
current
income
when
you
retire.
The
way
you
will
get
this
income
is
through
your
investments,
which
are
devices
that
pay
you
an
income.
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
Personal
finance
pays
for
______________________?
What
are
the
two
ways
you
can
(legally)
make
money?
Answer:
1. ________________________
2. ________________________
Answer:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
_____________________________________________________
Action Assignment:
Call
at
least
one
person
you
know
who
is
close
to
retiring
or
is
already
retired.
(Perhaps
this
person
is
a
grandparent.)
Ask
them
what
they
did
right
and
what
they
did
wrong.
Ask
them
what
they
would
do
if
they
were
in
your
shoes.
Suggested Activity:
Determine
your
current
knowledge
level
of
personal
finance
by
taking
the
pre-
assessment
quiz
located
below
in
this
Student
Guide.
Pre-Assessment Quiz
(Answer yes or no to each question. For every
yes answer give yourself one point.)
Yes/No
_______
_______
_______
_______
_______
_______
_______
_______
Total ______
Lesson 2: Goals
Lesson Objectives: By the end of this lesson, you should be able to:
Lesson Summary:
Personal
finance
is
about
financing
your
personal
life,
so
lets
first
determine
what
that
personal
life
is.
You
do
this
by
writing
your
goals.
Goals
ARE
the
financial
planning
process!
Your
goals
tell
you
whats
important
in
your
personal
life.
You
then
arrange
your
finances
to
meet
these
goals.
Once
you
have
written
goals,
the
daily
ups
and
downs
of
the
economy
become
less
of
a
concern.
You
only
care
about
how
it
relates
to
your
goals.
Goals
help
you
achieve
one
of
the
most
important
mindsets
in
the
world
of
personal
finance.
They
help
you
focus.
A
person
with
written
goals
doesnt
waste
a
lot
of
money
on
impulse
purchases
or
stuff
they
do
not
need.
Goals
help
you
recognize
opportunity
cost;
an
economic
term
that
forces
us
to
look
at
the
price
of
our
decisions.
A
dollar
spent
here
cannot
also
be
spent
there.
If
you
spend
a
dollar
on
a
cup
of
coffee
you
cannot
spend
that
same
dollar
on
a
bottle
of
water.
Goals
help
you
determine
the
best
use
of
your
money.
Remember,
you
can
spend
your
money
on
only
one
of
two
things:
needs
and
wants.
A
need
is
something
you,
well,
need.
You
cannot
live
without
it.
A
want
is
something
you
can
live
without.
Often,
wants
are
more
fun
than
needs,
so
we
spend
money
on
those
first.
People
fool
themselves
into
thinking
a
want
is
really
a
need.
(I
need
an
IPAD
for
school.)
Dont
be
one
of
those
people!
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
What
are
the
three
characteristics
that
all
written
goals
must
have
and
why?
Answer:
1. ____________________________________________
2.
____________________________________________
3. ____________________________________________
The
true
key
to
personal
finance
is
not
more
money,
but
more
____________.
Action Assignment:
Create
five
goals
using
the
Goal
Sheet
at
the
end
of
this
section.
(Use
one
goal
per
sheet.)
Suggested Activity:
Think
about
some
people
who
could
support
you
as
you
go
through
this
exercise.
This
should
be
done
after
the
Action
Assignment.
Remember,
taking
control
of
your
financial
life
takes
time
and
effort.
Once
you
have
your
goals,
share
them
with
these
people.
Ask
them
to
hold
you
accountable.
Ask
them
for
suggestions
on
how
to
achieve
your
goals?
Next,
grab
a
calendar.
Mark
a
date
three
months
away
to
revisit
your
goals.
Are
you
on
track?
If
not,
what
do
you
need
to
get
back
on
track?
Additional Information:
www.goalforit.com
-
This
website
has
some
great
FREE
programs
to
help
you
set
and
achieve
goals!
Fun Facts:
How
does
billionaire
investor
Warren
Buffet
define
the
risk?
He
says,
Risk
is
not
having
a
plan.
(www.quoteswise.com)
Heres
a
quote
from
James
Cash
Penny
(the
founder
of
JCPenny):
Give
me
a
stock
clerk
with
a
goal
and
I
will
give
you
a
man
who
will
make
history.
Give
me
a
man
without
a
goal
and
I
will
give
you
a
stock
clerk.
(www.quoteland.com)
Notes:
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
__________________________________________________________________
Goal Sheet
Remember
goals
should
be:
Specific
Measurable
On a Timeline
My
goal
is:
________________________________________________________________________
________________________________________________________________________
I
would
like
to
achieve
this
goal
by:
________________________________________________________________________
________________________________________________________________________
The
cost
(if
any)
of
this
goal
is
likely
to
be:
________________________________________________________________________
________________________________________________________________________
People
that
may
be
able
to
help
me
achieve
this
goal
are:
________________________________________________________________________
________________________________________________________________________
My
plan
for
achieving
this
goal
is
to:
________________________________________________________________________
________________________________________________________________________
Some
things
I
am
willing
to
give
up
to
achieve
this
goal
are:
________________________________________________________________________
________________________________________________________________________
2015
National
Center
for
Student
Life.
All
rights
reserved.
10
11
The
true
key
to
personal
finance
is
not
more
money,
but
more
____________.
Answer:
Focus.
All
the
money
in
the
world
wont
solve
your
problems
if
you
forget
that
EVERYTHING
has
an
opportunity
cost.
12
Lesson Objectives: By
the
end
of
this
lesson,
you
should
be
able
to:
Define
simple
interest
and
compound
interest.
Understand
how
compound
interest
works
and
why
it
is
so
important
to
start
financial
planning
now.
Define
the
Rule
of
72.
Lesson Summary:
Interest
is
the
rental
fee
on
money.
When
we
rent
something
-
a
kayak,
a
DVD
-
we
pay
a
rental
fee.
When
we
rent
money,
the
rental
fee
is
called
interest,
and
it
is
charged
as
a
percentage
of
the
money
borrowed.
The
original
amount
of
money
borrowed
is
called
the
principal.
We
can
borrow
money
and
pay
interest
to
someone
else,
but
we
can
also
invest
or
lend
our
money
to
other
people
and
have
them
pay
interest
to
us.
As
we
learned
in
Lesson
1,
the
amount
of
money
you
get
back
for
investing
or
lending
money
to
others
is
called
a
return.
There
are
two
types
of
interest,
simple
interest
and
compound
interest.
Simple
interest
is
interest
paid
on
your
initial
investment.
Thats
it.
If
you
have
a
$1,000
investment
paying
a
5%
simple
interest
rate,
then
every
year
you
would
get
$50
in
interest
on
your
$1000
of
principal.
($1,000
X
5%
=
$50)
Year
after
year,
you
would
only
get
$50.
Compound
interest
is
interest
paid
on
your
initial
investment
AND
on
the
interest
already
accumulated.
If
the
above
investment
paid
compounded
interest;
you
would
still
receive
$50
after
year
one
($1,000
X
5%
=$50).
But
in
year
two,
it
gets
interesting.
You
would
receive
a
payment
of
$52.50.
You
earned
5%
on
your
initial
investment
of
$1,000
PLUS
the
$50
you
have
already
earned.
($1050
X
5%)
In
year
three,
you
would
earn
$55.
($1102.50
X
5%)
The
Rule
of
72
can
be
used
to
calculate
how
long
it
will
take
your
investment
to
double
in
value.
Simply
divide
the
compounded
interest
rate
into
the
number
72.
The
answer
is
how
many
years
it
will
take
for
your
investment
to
double
in
value.
If
your
investment
is
earning
a
5%
compounded
interest
rate,
divide
5
into
72:
72/5
=
14.4
years
for
your
money
to
double
in
value.
13
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
Why
should
you
start
investing
in
compounded
investments
today?
Answer:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
How
long
will
it
take
to
double
the
value
of
an
investment
that
pays
a
compounded,
8%
annual
return?
Answer:
____________________________________________________________
_____________________________________________________
Action Assignment:
(Answers
are
located
at
the
end
of
this
lesson
under
Action
Assignment
Answers.)
Visit
www.peterbielagus.com
and
find
the
financial
calculator
for
compound
interest.
Answer
the
following
questions:
$1,000
invested
every
year
at
8%
for
45
years
equals
$________.
Think
of
one
item
you
can
cut
out
of
your
daily
life
and
instead
invest
that
money.
14
Suggested Activity:
Visit
www.peterbielagus.com
and
find
the
financial
calculator
for
compound
interest.
Answer
the
following
questions:
1. First
guess
how
much
money
you
would
have
if
you
invested
just
$1
a
day
for
the
next
45
years
at
8%.
Then
use
the
financial
calculator
to
find
the
answer.
Guess:
$_____________
Answer:
$_____________
2. Now
guess
how
much
you
would
have
if
you
invested
$1
for
the
next
35
years
at
8%.
Then
use
the
financial
calculator
to
find
the
answer.
Guess:
$_____________
Answer:
$______________
Additional Information:
Below
is
a
story
about
a
student
named
Old
Gil.
(Although
I
am
not
sure
why
we
call
him
Old
Gil,
since
he
was
only
23
years
old
at
the
beginning
of
the
story.)
The
story
uses
some
financial
terms,
like
inflation,
which
we
will
talk
about
later
in
this
course.
Basically
Old
Gil
is
a
guy
who
didnt
have
much
financial
luck
in
life.
However,
because
he
started
investing
young,
he
still
did
all
right,
despite
nearly
everything
going
wrong.
Enjoy!
15
Old
Gil
was
a
23-year-old
student
who
had
only
two
pieces
of
luck
in
his
financial
life.
The
first
was
the
job
he
got
right
out
of
college.
He
made
$40,000
a
year.
The
second
was
that
he
took
this
incredible
course,
which
inspired
him,
at
age
23,
to
take
control
of
his
financial
life.
Other
than
that,
just
about
everything
went
wrong
for
Old
Gil.
Throughout
his
career,
the
only
raise
Old
Gil
got
was
one
that
kept
pace
with
inflation
(the
rising
cost
of
goods
and
services).
While
it
was
a
steady
increase
year
after
year,
he
never
got
a
big
bonus,
never
saw
a
double-digit
increase
in
his
annual
salary.
Old
Gils
company
had
a
retirement
plan
that
matched
10%
of
what
Old
Gil
put
in.
Old
Gil
remembered
from
this
course
that
he
should
save
10%
of
his
income
so
he
contributed
$4,000
a
year
into
the
retirement
account.
His
company
matched
10%
of
that
10%,
so
the
account
swelled
to
$4,400.
For
45
years,
Old
Gils
return,
after
factoring
in
inflation,
was
zero.
Thats
right,
he
pulled
out
only
what
he
and
his
company
put
in.
While
his
money
kept
pace
with
inflation,
it
did
not
grow
at
all.
Not
one
cent.
When
he
turned
30,
Old
Gil
bought
a
house
for
$200,000.
Two
years
after
he
bought
it,
the
value
fell
to
$170,000.
For
35
years,
Old
Gil
lived
in
that
house.
Like
his
retirement
plan,
the
house
never
rose
in
value
beyond
inflation.
After
35
years,
it
was
worth
$450,000,
or
$200,000
in
todays
dollars.
At
age
35,
Old
Gil
bought
a
rental
property
for
$200,000.
Again,
the
moment
he
bought
it,
it
dropped
in
value
by
$15,000.
For
30
years,
Gil
rented
out
the
property
but
averaged
a
loss
of
$100
a
month.
Thats
right,
Old
Gil
thought
the
property
would
be
helping
his
cash
flow,
but
the
opposite
was
true:
He
lost
$100
a
month,
every
month
for
30
years.
If
this
werent
enough,
two
years
before
Old
Gil
was
going
to
retire,
Congress
cut
his
Social
Security
benefits
in
half!
Poor
old
Gil,
right?
Well,
maybe
not.
Lets
take
a
look
at
old
Gils
situation.
Currently
he
is
65
years
old.
His
retirement
account
is
worth
$450,000.
While
he
had
a
zero
percent
return,
he
did
keep
pace
with
inflation,
so
his
$450,000
can
buy,
what
$200,000
can
buy
today.
He
also
owns
his
home
free
and
clear
for
$450,000,
or
$200,000
in
todays
dollars.
The
fair
market
rental
of
his
primary
residence
is
about
$3,000
a
month,
or
$1,500
a
month
in
todays
dollars.
2015
National
Center
for
Student
Life.
All
rights
reserved.
16
Old
Gil
also
scored
himself
a
rental
property.
Even
though
the
property
lost
$36,000
over
30
years,
($100
a
month
or
$1200
a
year
for
30
years)
he
now
owns
it
free
and
clear
as
well.
Like
his
home,
the
rental
property
never
went
up
in
value.
It
merely
kept
pace
with
inflation.
It
is
now
worth
about
$450,000.
Based
on
current
rents,
Gil
could
rent
the
property
for
$3,000
monthly.
Assuming
Old
Gil
is
going
to
live
another
20
years,
here
would
be
his
situation:
His
retirement
account
is
worth
$450,000.
Even
if
he
continues
to
get
zero
growth
after
inflation,
he
would
be
able
to
spend
$22,500
a
year.
He
lives
in
his
house
and
pays
no
rent,
so
one
of
his
biggest
expenses
is
gone.
He
rents
his
other
property
out
and
gets,
after
paying
insurance,
taxes
and
management
fees,
another
$2,000
a
month.
Social
Security,
while
cut
severely,
still
yields
him
$1,000
a
month.
In
total,
Old
Gils
income
is
$58,500.
He
earns
about
70%
of
what
he
made
while
working
full
time
(adjusting
for
inflation).
But
remember,
as
a
full
time
employee,
he
had
to
pay
for
his
house.
Now
he
owns
it
free
and
clear;
so
he
does
not
have
the
large
expense
of
a
home
loan
payment.
If,
after
10
years
of
retirement,
Old
Gil
needs
more
money,
he
can
sell
his
house
or
his
rental
property.
Perhaps
he
can
work
part
time
at
a
fun
job.
The
point
is,
despite
all
that
happened
to
him,
he
still
did
okay.
If
you
are
steady
and
consistent,
even
when
it
doesnt
work
well,
it
still
works.
Fun Facts:
In
the
early
1600s,
the
American
Indians
sold
an
island,
now
called
Manhattan,
for
various
beads
and
trinkets
worth
about
$16.
Since
Manhattan
real
estate
is
now
some
of
the
most
expensive
in
the
world,
it
would
seem
that
the
American
Indians
made
a
terrible
deal.
However,
had
the
American
Indians
sold
their
beads
and
trinkets,
and
instead
invested
their
$16,
at
an
8%
compounded
annual
return,
not
only
would
they
have
enough
money
to
buy
back
all
of
Manhattan,
they
would
still
have
several
hundred
million
dollars
left
over.
That
is
the
power
of
compound
interest
over
time
(www.pfadvice.com).
Notes:
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
2015
National
Center
for
Student
Life.
All
rights
reserved.
17
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
__________________________________________________________________
18
Starting
Cash
$1.00
$1.01
$1.02
$1.03
$1.04
$1.05
$1.06
$1.07
$1.08
$1.09
$1.10
$1.12
$1.13
$1.14
$1.15
$1.16
$1.17
$1.18
$1.20
$1.21
$1.22
$1.23
$1.24
$1.26
1%
$1.01
$1.02
$1.03
$1.04
$1.05
$1.06
$1.07
$1.08
$1.09
$1.10
$1.12
$1.13
$1.14
$1.15
$1.16
$1.17
$1.18
$1.20
$1.21
$1.22
$1.23
$1.24
$1.26
$1.27
Starting
Cash
$1.00
$1.05
$1.10
$1.16
$1.22
$1.28
$1.34
$1.41
$1.48
$1.55
$1.63
$1.71
$1.80
$1.89
$1.98
$2.08
$2.18
$2.29
$2.41
$2.53
$2.65
$2.79
$2.93
$3.07
5%
$1.05
$1.10
$1.16
$1.22
$1.28
$1.34
$1.41
$1.48
$1.55
$1.63
$1.71
$1.80
$1.89
$1.98
$2.08
$2.18
$2.29
$2.41
$2.53
$2.65
$2.79
$2.93
$3.07
$3.23
Starting
Cash
$1.00
$1.08
$1.17
$1.26
$1.36
$1.47
$1.59
$1.71
$1.85
$2.00
$2.16
$2.33
$2.52
$2.72
$2.94
$3.17
$3.43
$3.70
$4.00
$4.32
$4.66
$5.03
$5.44
$5.87
8%
$1.08
$1.17
$1.26
$1.36
$1.47
$1.59
$1.71
$1.85
$2.00
$2.16
$2.33
$2.52
$2.72
$2.94
$3.17
$3.43
$3.70
$4.00
$4.32
$4.66
$5.03
$5.44
$5.87
$6.34
19
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
$1.27
$1.28
$1.30
$1.31
$1.32
$1.33
$1.35
$1.36
$1.37
$1.39
$1.40
$1.42
$1.43
$1.45
$1.46
$1.47
$1.49
$1.50
$3.04
$3.07
$3.10
$1.28
$1.30
$1.31
$1.32
$1.33
$1.35
$1.36
$1.37
$1.39
$1.40
$1.42
$1.43
$1.45
$1.46
$1.47
$1.49
$1.50
$3.04
$3.07
$3.10
$3.13
$3.23
$3.39
$3.56
$3.73
$3.92
$4.12
$4.32
$4.54
$4.76
$5.00
$5.25
$5.52
$5.79
$6.08
$6.39
$6.70
$7.04
$14.43
$15.15
$15.91
$16.71
$3.39
$3.56
$3.73
$3.92
$4.12
$4.32
$4.54
$4.76
$5.00
$5.25
$5.52
$5.79
$6.08
$6.39
$6.70
$7.04
$14.43
$15.15
$15.91
$16.71
$17.54
$6.34
$6.85
$7.40
$7.99
$8.63
$9.32
$10.06
$10.87
$11.74
$12.68
$13.69
$14.79
$15.97
$17.25
$18.63
$20.12
$21.72
$23.46
$25.34
$27.37
$29.56
$6.85
$7.40
$7.99
$8.63
$9.32
$10.06
$10.87
$11.74
$12.68
$13.69
$14.79
$15.97
$17.25
$18.63
$20.12
$21.72
$23.46
$25.34
$27.37
$29.56
$31.92
2015
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Center
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Student
Life.
All
rights
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20
Review Question Answers:
Why
should
you
start
investing
in
compounded
investments
today?
Answer:
Investing
is
all
about
getting
your
money
to
double
in
value
over
time.
The
more
opportunities
you
have
for
your
money
to
double,
the
more
of
it
you
will
have.
Imagine
someone
wanted
to
stop
working
when
they
were
65
years
old.
Next
imagine
they
started
investing
at
a
10%
return
when
they
were
20
years
old.
The
Rule
of
72
tells
us
that
their
money
will
double
in
value
about
every
seven
years.
In
this
case,
the
persons
money
will
double
about
six
times
over
those
45
years
of
investing.
If,
however,
that
same
person
waits
until
they
are
35
years
old,
their
money
doubles
in
value
only
four
times.
They
would
end
up
with
significantly
less
money.
How
long
will
it
take
to
double
the
value
of
an
investment
that
pays
an
annual,
compounded,
8%
return?
21
22
23
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
Cheryl
works
at
a
firm
in
a
big
city
and
makes
$65,000
a
year.
Her
rent
is
$30,000
a
year.
Kim
works
at
a
firm
in
a
small
town
and
makes
$45,000
a
year.
Her
rent,
however,
is
only
$500
a
month.
If
all
their
other
expenses
are
equal,
who
earns
more?
Answer:
____________________________________________________________
____________________________________________________________
____________________________________________________________
_____________________________________________________
What
are
the
two
reasons
people
mess
up
the
four
parts
of
a
financial
plan?
Answer:
1. ______________________________________________________
______________________________________________________
2. ______________________________________________________
______________________________________________________
24
Action Assignment:
Calculate
your
net
worth
using
the
Net
Worth
worksheet
in
this
lesson.
You
may
need
to
ask
your
parents
for
financial
documents.
(I.e.
savings
bonds
from
a
birthday
or
Bar
Mitzvah).
Its
ok
if
your
net
worth
zero
or
negative.
After
completing
this
course
youll
know
how
to
improve
this
number.
Then
on
the
Depreciable
Asset
List
below,
write
down
the
depreciable
assets
you
own,
like
clothes,
guitars,
and
CDs.
Then
estimate
their
value.
Suggested Activity:
(Answers
are
located
at
the
end
of
this
lesson
under
Suggested
Activity
Answers.)
Next
to
each
item
below,
determine
if
it
is
an
asset
or
a
liability.
STOCKS:
__________________
GOLD COINS:
__________________
HOME:
__________________
HOME LOAN:
__________________
__________________
COLLEGE EDUCATION:
__________________
STUDENT LOANS:
__________________
If
someone
borrows
money
to
buy
a
house,
they
own
the
house,
but
they
owe
money
on
it
as
well.
Is
the
house
an
asset
or
a
liability?
Why?
Answer:
________________________________________________________________________
________________________________________________________________________
_________________________________________________________________
Imagine
someone
buys
a
home
for
$300,000.
Five
years
later,
its
worth
$375,000.
But
ten
years
later,
the
owners
sell
the
home
for
$290,000.
Was
that
home
an
asset
or
a
liability?
2015
National
Center
for
Student
Life.
All
rights
reserved.
25
Why
is
it
important
to
know
the
difference
between
an
asset,
a
liability,
and
a
depreciable
asset?
Answer:
________________________________________________________________________
________________________________________________________________________
_________________________________________________________________
Additional Information:
The
best
piece
of
additional
information
you
can
gather
from
this
lesson
is
to
know
what
your
net
worth
is.
The
worksheet
in
this
lesson
will
help
you
calculate
that
number.
Fun Facts:
Daniel
Radcliffe,
otherwise
known
as
Harry
Potter,
isnt
even
30
yet
and
his
net
worth
is
over
$80
million
(Source:
www.celebritynetworth.com).
You
can
use
this
website
to
find
out
the
net
worth
of
your
favorite
celebrities.
How
much
is
your
favorite
worth?
Notes:
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
__________________________________________________________________
26
Assets:
Current
value
of
retirement
brokerage
accounts:
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
__________________
Value of business:
__________________
Other assets:
__________________
__________________
Home Loan(s):
__________________
Student loans:
__________________
__________________
Car loan:
__________________
__________________
Business loan:
__________________
__________________
Other liabilities:
__________________
__________________
______________
Total Assets:
Liabilities:
Total Liabilities:
2015
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27
Item:
Car:
___________________
Musical Instruments:
___________________
Clothes:
___________________
TV:
___________________
Video Games:
___________________
Computer:
___________________
Jewelry:
___________________
Tools:
___________________
Toys:
___________________
Firearms:
___________________
___________________
_________________
___________________
_________________
___________________
_________________
___________________
_________________
___________________
TOTAL
___________________
Value:
2015
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Center
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Student
Life.
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28
Review Question Answers:
Cheryl
works
at
a
firm
in
the
big
city
and
makes
$65,000
a
year.
Her
rent
is
$30,000
a
year.
Kim
works
at
a
firm
in
a
small
town
and
makes
$45,000
a
year.
Her
rent,
however,
is
only
$500
a
month.
If
all
their
other
expenses
are
equal,
who
earns
more?
Answer:
Kim.
Kims
rent
is
only
$6,000
per
year.
After
paying
rent
she
earns
$39,000
a
year.
Cheryl
earns
$35,000
after
her
rent
payments.
Remember,
income
is
only
part
of
the
financial
planning
process!
Expenses
matter
too!
What
is
a
depreciable
asset?
Answer:
A
depreciable
asset
is
an
asset
that
loses
value,
but
can,
at
any
time,
be
sold
for
something.
Your
$10,000
student
loan
is
taking
money
out
of
your
pocket,
but
it
cannot
be
sold
to
someone.
Your
$10,000
car
is
also
slowly
getting
less
and
less
valuable,
but
it
could
be
sold
for
something.
Some
financial
planners
let
you
count
the
fire
sale
price
of
your
depreciable
assets
when
you
calculate
your
net
worth.
What
are
the
two
reasons
people
mess
up
the
four
parts
of
a
financial
plan?
2015
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Center
for
Student
Life.
All
rights
reserved.
29
Answer:
1. They
confuse
the
definition
of
asset
and
liability.
Remember
ANYTHING
can
become
an
asset
or
liability.
Your
education
is
an
asset,
but
if
you
never
finish,
its
a
liability.
If
you
start
your
own
business,
its
a
liability
until
it
starts
making
you
money.
Then
its
an
asset.
2. Assets
are
boring.
Liabilities
are
fun.
Because
of
this
people
often
buy
liabilities
first
and
buy
assets
only
if
there
is
money
leftover.
Suggested Activity Answers:
Next
to
each
item
below,
determine
if
it
is
an
asset
and
liability.
STOCKS:
Asset
GOLD COINS:
Asset
HOME:
Asset
HOME LOAN:
Liability
Liability
COLLEGE EDUCATION:
Asset
STUDENT LOANS:
Liability
30
31
Why
is
it
important
to
know
the
difference
between
an
asset,
a
liability,
and
a
depreciable
asset?
Answer:
The
more
assets
you
have,
and
the
fewer
liabilities
and
depreciable
assets,
the
wealthier
you
will
be.
As
basic
as
the
concept
may
seem,
very
few
people
actually
follow
it.
They
buy
liabilities
and
depreciable
assets
first,
and
then
they
buy
assets
with
any
money
left
over,
which
usually
isnt
much.
Wealthy
people
do
the
opposite;
they
buy
assets
first,
and
buy
liabilities
with
their
leftover
money.
Often
people
confuse
the
definitions.
They
think
a
house
or
a
college
education
is
always
an
asset.
Its
not.
Its
possible,
if
managed
poorly,
that
both
of
those
items
will
take
money
out
of
your
pocket.
32
Lesson Objectives: By
the
end
of
this
lesson,
you
should
be
able
to:
Name
the
three
things
you
can
learn
from
Kyle
MacDonalds
story.
Answer
this
question:
Who
the
heck
is
Kyle
MacDonald?
Lesson Summary:
If
you
completed
the
net
worth
worksheet
in
the
previous
lesson,
you
probably
noticed
it
only
dealt
with
physical,
financially-related
objects.
You
possess
other
things
that
are
worth
money
or
could
be
converted
into
money
with
a
little
effort.
You
also
have
skills,
connections
and
experiences
that
could
also
be
converted
into
money.
Anything
that
could
easily
be
converted
into
money
we
call
resources.
Perhaps
you
dont
have
as
much
money
as
you
would
like,
but
you
do
have
more
than
you
think,
because
your
resources
can
be
converted
into
money.
You
may,
for
instance,
be
very
good
at
editing
term
papers,
baking
cupcakes,
or
simply
meeting
people.
Those
skills
can
be
converted
into
money.
Perhaps
you
have
physical
stuff
that
you
normally
would
not
count
in
a
net
worth
worksheet,
like
old
clothes.
Those
too
can
be
sold
for
money.
If
you
think
you
have
nothing,
think
again.
Remember,
what
is
worthless
to
you
is
of
great
value
to
others.
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
What
are
some
of
the
lessons
of
the
One
Red
Paper
Clip
story?
Answer:
____________________________________________________________
____________________________________________________________
____________________________________________________________
33
____________________________________________________________
____________________________________________________________
_____________________________________________________
What
is
a
resource?
Answer:
____________________________________________________________
____________________________________________________________
_____________________________________________________
_____________________________
_____________________________
_____________________________
_____________________________
_____________________________
Action Assignment:
Complete
the
Resources
Form
at
the
end
of
this
Lesson.
Suggested Activity:
Think
about
how
you
can
use
your
resources
to
pay
down
debt,
reduce
liabilities,
or
achieve
your
goals.
What
might
your
One
Red
Paperclip
be?
Finally,
whom
could
you
trade
resources
with?
If
you
completed
the
Action
Assignment
for
this
Lesson,
then
you
have
a
list
of
your
resources.
Now
think
for
a
moment
about
your
friends
resources.
Is
there
anyone
who
has
something
you
need
and
you
have
something
you
know
they
need?
2015
National
Center
for
Student
Life.
All
rights
reserved.
34
Additional Information:
www.oneredpaperclip.com
-
This
is
the
website
of
Kyle
MacDonald.
Fun Facts:
Want
to
read
some
other
One
Red
Paperclip
Stories?
Gary
Dahl
was
the
man
who
invented
the
Pet
Rock
and
made
a
fortune
from
selling
rocks.
Paul
Hartunian
made
a
fortune
by
selling
the
worthless
scrap
wood
from
the
Brooklyn
Bridge
(thereby
literally
selling
the
Brooklyn
Bridge)
(www.hartunian.com).
Alex
Tew
designed
the
million
dollar
website
by
selling
ads
of
1
pixel
per
ad
at
a
cost
of
$1.
(www.milliondollarhomepage.com)
Notes:
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
______________________________________________________________________
35
Resources Form
36
37
38
Unit 2
39
Lesson 1: Introduction to
Budgeting
Lesson Objectives: By
the
end
of
this
lesson,
you
should
be
able
to:
Identify
the
three
reasons
why
most
budgets
do
not
work.
Lesson Summary:
Budgets
are
documents
that
track
your
income
and
your
expenses.
Budgets
ensure
you
dont
spend
more
than
you
earn.
Sadly,
most
people
cannot
make
them
work.
Typically,
budgets
fail
because
of
three
reasons:
We
write
our
budgets
in
La
La
Land.
We
write
down
how
much
we
want
to
spend,
not
how
much
we
actually
spend.
We
dont
plan
for
emergencies.
We
assume,
for
instance,
that
our
cars
NEVER
will
break
down.
We
forget
the
little
stuff.
For
most
people,
a
budget
is
a
list
of
expenses
they
already
know.
We
forget
to
count
all
the
little
things,
the
bag
of
chips,
the
morning
coffee,
etc.
We
fall
victim
to
Chain
Reaction
Shopping.
Chain
Reaction
Shopping
occurs
when
one
purchase
grows
into
more
purchases.
Buy
the
purse,
you
soon
buy
the
shoes.
Buy
the
car,
you
have
to
gas
it
up.
Get
cable,
and
suddenly
you
must
have
the
premium
channels.
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
The
video
stated
that
Chain
Reaction
Shopping
works
both
ways.
What
does
this
mean?
Answer:
____________________________________________________________
____________________________________________________________
____________________________________________________________
2015
National
Center
for
Student
Life.
All
rights
reserved.
40
____________________________________________________________
_____________________________________________________
Action Assignment:
Write
down
(without
looking)
what
you
estimate
to
be
the
monthly
cost
of
your
electric
bill,
your
cell
phone
bill
and
your
grocery
bill
(Do
this
even
if
someone
else
pays
these
bills.
Then
look
at
your
actual
bank
and
credit
card
statements
(or
ask
the
person
who
pays
these
bills
for
the
amounts).
How
close
did
you
get?
Write
the
difference.
Cell
Phone:
Estimated:
______________
Actual:
____________
Difference:
______________
Electric
Bill:
Estimated:
______________
Actual:
____________
Difference:
______________
Grocery
Bill:
Estimated:
______________
Actual:
____________
Difference:
______________
Suggested Activity:
41
Write
down
some
examples
of
Chain
Reaction
Shopping.
If
you
get
stuck,
think
about
your
car,
cell
phone
bill,
or
wardrobe.
What
are
the
purchases
behind
the
purchase?
Then
trace
the
cost
of
the
initial
purchase,
plus
all
the
additional
purchases.
One
example
discussed
in
the
video
was
an
apartment.
If
your
budget
is
$1,000
a
month
for
an
apartment,
what
else
should
you
budget
for
before
you
rent
that
apartment?
Additional Information:
www.mint.com
-
This
is
a
FREE
website
that
helps
track
your
monthly
expenses.
It
can
even
pull
information
from
the
existing
bills
you
pay.
Your
Bank
-
The
bank
you
use
may
have
free
budgeting
software
and
free
bill
paying
services.
Ask
them.
If
you
dont
use
a
bank,
visit
with
three
banks
in
your
neighborhood
and
see
what
they
offer.
(More
about
banks
in
Unit
2
Lesson
3.)
Fun Facts:
According
to
Sports
Illustrated,
60%
of
the
players
in
the
NBA
are
bankrupt
within
five
years
of
retiring
from
the
NBA.
That
number
in
the
NFL
is
80%.
(Okay
fine,
this
fact
is
not
fun.
Its
truly
sad.
But
it
confirms
the
point
that
more
income
alone
wont
solve
everything.
You
need
a
budget
that
works!)
Notes:
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
__________________________________________________________________
42
43
Lesson Objectives: By
the
end
of
this
Lesson,
you
should
be
able
to:
Explain
why
an
emergency
fund
is
so
important.
Explain
the
income
myth
and
why
it
prevents
people
from
starting
an
emergency
fund.
Lesson Summary:
Budgets
never
can
account
for
everything.
Emergencies
happen.
Thats
why
everyone
needs
to
save
six
to
eight
months
worth
of
living
expenses
in
an
emergency
fund.
Your
emergency
fund
will
prevent
you
from
dipping
into
your
other
investments,
selling
your
property
early,
or
making
some
other
hasty
and
unwise
financial
decision
to
pay
for
the
unexpected.
Your
emergency
fund
needs
to
be
liquid.
Liquid
simply
means
available.
If
you
own
a
home,
that
home
is
not
very
liquid.
It
would
probably
take
you
several
months
to
sell
the
home
and
get
the
cash.
But
the
cash
in
your
bank
account
is
liquid
because
you
can
get
it
at
any
time.
The
drawback
to
liquid
investments
is
that
they
do
not
pay
much
in
interest.
For
an
emergency
account,
however,
thats
okay.
The
most
important
thing
is
that
you
just
get
started
building
the
account.
A
good
place
for
your
emergency
fund
is
at
your
local
bank.
Many
people
believe
that
a
budget
wont
solve
their
problems,
but
more
income
will.
This
untrue
belief
is
referred
to
as
the
Income
Myth.
Many
celebrities
and
lottery
winners
have
still
filed
for
bankruptcy
despite
having
large
incomes.
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
How
the
HECK
are
you
supposed
to
save
6-8
months
of
living
expenses?
44
Answer:_____________________________________________________
____________________________________________________________
Answer:
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
_____________________________________________________
Action Assignment:
Research
celebrities
who
may
have
fallen
victim
to
the
Income
Myth.
What
did
that
celebrity
spend
all
their
money
on?
What
could
they
have
done
differently?
Suggested Activity:
Regardless
of
your
income,
you
can
fall
victim
to
the
Income
Myth.
Think
about
some
of
the
items
you
have
already
bought
because
you
thought
you
had
plenty
of
money,
only
to
find
out
later
you
couldnt
afford
them.
By
writing
these
items
down,
you
can
prevent
this
from
happening
again.
Additional Information:
www.bankrate.com
-
Publishes
the
best
interest
rates
all
banks
are
offering.
This
site
can
help
you
find
a
good
spot
for
your
emergency
fund.
www.cuna.org
-
The
website
of
the
Credit
Union
National
Association,
which
can
help
you
find
credit
unions
in
your
area.
A
credit
union
is
a
non-profit
bank.
www.ncua.org
-
The
website
of
the
National
Credit
Union
Association,
which
also
can
help
you
find
credit
unions
in
your
area.
Fun Facts:
2015
National
Center
for
Student
Life.
All
rights
reserved.
45
Notes:
________________________________________________________________________
________________________________________________________________________
__________________________________________________________________
46
47
Lesson Objectives: By
the
end
of
this
lesson,
you
should
be
able
to:
Explain
how
a
bank
works.
Determine
how
to
prevent
yourself
from
dipping
into
your
emergency
fund.
Lesson Summary:
48
A
debit
card
does
the
same
thing,
only
electronically.
When
you
swipe
and
enter
your
PIN,
you
are
authorizing
the
transfer
of
money
from
your
account
to
another.
While
debit
cards
are
great
for
checking
accounts,
do
not
get
one
for
your
savings
account.
Savings
accounts
are
for
savings.
In
other
words,
the
money
should
be
difficult
to
get.
That
also
means
do
not
link
your
checking
accounts
and
savings
accounts
online.
Ideally,
have
your
accounts
at
separate
banks
so
the
money
is
hard
to
access!
Once
you
get
your
emergency
account
set
up
and
are
contributing
to
it,
you
might
want
to
consider
some
of
the
other
accounts
that
banks
offer.
Here
are
two
other
popular
forms
of
bank
accounts:
Money
Market
Account.
The
money
market
is
a
market
where
corporations,
governments
and
individuals
can
borrow
large
amounts
of
money
for
a
very
short
term.
Sometimes
companies
need
to
borrow
money
for
only
one
night,
and
when
they
do
that,
they
go
to
the
money
market.
But
whose
money
do
they
borrow?
Yours!
If
you
open
a
money
market
account
at
your
bank,
you
agree
to
let
your
bank
loan
that
money
to
the
money
market.
Its
a
bit
riskier
than
a
bank
account,
but
it
pays
more
interest.
Certificate
of
Deposit
Account
(CD):
A
CD
is
like
a
savings
account
with
a
lock
on
it.
If
you
agree
not
to
touch
the
money
for
a
certain
amount
of
time
(anywhere
from
one
month
to
several
years)
the
bank
agrees
to
pay
you
an
interest
rate
that
is
higher
than
what
a
regular
savings
account
would
earn.
While
a
CD
can
be
a
great
way
to
save
money,
it
is
not
the
best
place
for
your
emergency
fund,
because
there
are
penalties
for
taking
the
money
out
early.
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
If
you
already
have
a
bank
checking
account,
why
not
just
use
that
for
your
emergency
fund?
Answer:
____________________________________________________________
____________________________________________________________
49
____________________________________________________________
_____________________________________________________
Answer:
____________________________________________________________
____________________________________________________________
____________________________________________________________
_____________________________________________________
Action Assignment:
Find
out
the
fees
on
your
bank
accounts.
What
services
are
they
charging
for?
(If
you
dont
have
a
bank
account,
get
information
from
three
local
banks
or
credit
unions
about
opening
an
account.)
Get
the
interest
rate,
the
price
of
checks,
monthly
fees,
and
account
minimums
of
a
few
banks.
Look
online,
go
in
person,
or
use
information
from
a
bank
account
you
already
have.
Is
there
a
better
deal
at
another
bank?
Suggested Activity
Call
your
bank
and
ask
to
meet
with
the
branch
manager.
Even
better,
if
its
a
small
bank,
ask
to
meet
with
the
president.
Introduce
yourself
and
get
their
business
card.
Spend
five
minutes
explaining
some
of
your
goals
and
ask
how
the
bank
can
help.
While
much
banking
is
done
online
or
through
a
machine,
it
STILL
pays
to
have
a
personal
connection
at
your
bank.)
Additional Information:
www.bankrate.com
-
Publishes
the
best
interest
rates
all
banks
are
offering.
www.cuna.org
-
The
website
of
the
Credit
Union
National
Association,
which
can
help
you
find
credit
unions
in
your
area.
2015
National
Center
for
Student
Life.
All
rights
reserved.
50
www.ncua.org
-
The
website
of
the
National
Credit
Union
Association,
which
can
also
help
you
find
credit
unions
in
your
area.
Fun Facts:
The
first
bank
that
notorious
bank
robber
Jesse
James
robbed
was
the
Clay
County
Savings
Association
in
the
town
of
Liberty,
Missouri.
It
was
the
first
armed
robbery
of
a
U.S.
bank
after
the
Civil
War.
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
51
Parts of a Check
1. Checks
include
the
check
writers
name
and
address
so
people
know
who
wrote
the
check.
2. Checks
are
numbered
so
that
you
can
keep
track
of
them.
3. Checks
are
dated
on
the
date
the
check
writer
fills
them
out.
4. The
name
of
the
party
(the
payee)
to
whom
you
are
making
a
payment
is
written
here.
5. The
amount
you
are
writing
a
check
for
is
written
here
in
numerals.
6. To
limit
errors,
banks
also
ask
you
to
write
out,
in
words,
the
amount
of
the
check.
7. The
bank
where
the
checking
account
is
held
is
always
placed
on
the
check.
This
tells
the
person
cashing
the
check
where
the
money
will
come
from.
8. Checks
have
a
memo
line
to
reference
what
the
check
is
for.
For
example:
rent,
dry
cleaning
etc.
9. Remember
you
must
sign
the
check,
confirming
you
agree
to
have
the
amount
on
the
check
withdrawn
from
your
checking
account.
10. The
first
set
of
numbers
at
the
bottom
of
the
check
is
called
the
routing
number.
Every
bank
has
a
unique
routing
number
to
help
them
sort
the
checks
they
receive.
11. The
second
set
of
numbers
at
the
bottom
of
the
check
is
your
account
number.
This
informs
the
bank
which
account
to
withdraw
the
money
from.
12. The
back
of
the
check
must
be
endorsed
or
signed
by
the
payee,
the
person
the
check
is
made
out
to.
By
signing,
the
payee
legally
agrees
to
accept
the
money.
52
53
Lesson Outcomes: By
the
end
of
this
lesson,
you
should
be
able
to:
Identify
where
your
money
is
going.
Identify
what
is
most
important
to
you.
Identify
what
is
least
important
to
you.
Lesson Summary:
If
budgets
havent
worked
for
you
then
its
time
to
try
something
else.
To
overcome
the
typical
budget
problems
of
La
La
Land,
forgetting
the
small
stuff,
and
Chain
Reaction
Shopping,
try
writing
three
lists.
List
#1:
A
list
of
what
you
want.
This
is
everything
in
your
life
that
is
important
to
you.
From
having
kids
to
being
debt
free,
to
traveling
the
world,
put
all
your
goals
on
this
list.
You
should
even
include
tiny,
everyday
purchases
and
the
brands
you
prefer.
List
#2:
A
list
of
what
you
dont
want.
Knowing
what
you
dont
want
will
save
you
just
as
much
money
as
knowing
what
you
do.
Advertisers
spend
billions
to
get
you
to
buy
their
stuff.
You
can
fight
back
with
a
written
list
of
what
is
not
important.
List
#3:
A
list
of
where
your
money
is
going.
Take
a
week
of
your
life
and
write
down
everything
you
spend
money
on.
From
a
bag
of
chips
to
money
in
a
parking
meter
to
buying
a
new
sweater,
write
down
everything.
Now
that
you
have
these
three
lists,
the
key
is
to
see
how
they
work
together.
In
other
words,
Lists
1
and
3
should
match
up.
You
should
be
spending
money
on
the
stuff
you
want.
Lists
2
and
3
should
not
match
up;
you
should
not
be
spending
money
on
the
stuff
you
dont
want.
If
you
are
trying
to
save
money
(and
who
isnt)
List
2
gives
you
a
whole,
welllist
of
items
to
cut
back
on.
If
you
take
these
three
lists
seriously,
then
doing
a
budget
is
easy.
Review Questions:
2015
National
Center
for
Student
Life.
All
rights
reserved.
54
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
What
is
the
goal
of
the
three
lists?
Answer:_____________________________________________________
____________________________________________________________
____________________________________________________________
If
you
buy
a
$1
coffee
every
day,
that
adds
up.
But
it
adds
up
to
only
$365
a
year.
Why
is
remembering
the
little
items
in
your
spending
important?
Answer:_____________________________________________________
____________________________________________________________
____________________________________________________________
Action Assignment:
Write
down
the
three
lists
discussed
in
this
Lesson.
Remember,
to
complete
List
#3
you
will
need
to
track
your
expenses
for
at
least
a
week.
Suggested Activity:
A
few
months
after
creating
your
three
lists,
visit
them
again.
What
changed?
Are
you
improving?
Or
are
things
getting
worse?
What
changes
do
you
need
to
make?
Additional Information:
www.mint.com
-
Mint
is
a
great
website
to
help
your
track
your
spending.
Fun Facts:
The
average
U.S.
household
spends
an
estimated
$850
annually
on
soft
drinks,
for
a
total
of
$65
billion
on
soft
drinks
alone.
A
total
of
$101
billion
was
spent
on
beer
in
2010.
(Source:
www.drinkwaterfirst.com)
55
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
56
57
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
List
ALL
of
your
expenses.
List
all
of
your
sources
of
income.
Plug
them
into
a
zero-based
budget.
Lesson Summary:
A
great
budget
is
the
zero-based
budget.
It
has
just
seven
steps:
1. Gather
up
all
the
expenses
you
ALREADY
know
(bills,
rent,
taxes
etc.).
Start
plugging
them
into
the
Zero-Based
Budget
Worksheet
in
this
Lesson.
Be
sure
to
convert
any
yearly
expenses
to
monthly
expenses.
2. Next
fill
in
the
costs
for
everything
you
wrote
down
for
List
#3
from
Unit
2
Lesson
4.
3. Now
fill
in
all
your
total
income.
Write
down
everything!
If
you
grandmother
gives
you
a
$20
bill
for
your
birthday;
that
is
part
of
your
income!
4. Add
up
the
total
expenses,
first
by
sub-category,
then
the
grand
total.
5. Add
up
your
total
income.
6. Subtract
total
expenses
from
total
income.
If
the
answer
is
zero
or
higher,
congrats!
Use
the
leftover
for
savings
or
to
pay
down
debt.
7. If
its
negative,
keep
working
on
those
expenses
until
it
works.
Future
lessons
in
this
program
will
help
you
get
a
budget
that
works.
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
If
you
compile
a
zero-based
budget
and
the
last
amount
is
negative,
what
are
some
things
you
can
do?
Answer:_____________________________________________________
____________________________________________________________
58
____________________________________________________________
If
you
compile
a
zero-based
budget
and
you
have
a
LOT
of
money
left
over,
what
does
that
typically
mean?
Answer:_____________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Action Assignment:
Compile
a
zero-based
budget
using
the
worksheet
in
this
Lesson.
Suggested Activity:
At
the
end
of
the
first
month,
create
another
zero-based
budget
factoring
in
the
changes
you
(hopefully)
made.
Are
you
on
track?
Remember,
it
takes
the
average
person
three
months
to
get
a
budget
that
works.
Additional Information:
www.mint.com
-
This
is
a
great
(FREE)
website
to
help
students
track
their
spending.
(Remember,
your
budget
might
not
work
right
away,
so
keep
working
it!)
Fun Facts:
The
origin
of
our
word
budget
is
from
the
Latin
word
bulga,
meaning
a
little
pouch
or
knapsack.
In
other
words,
a
wallet
or
purse.
Whatever
money
was
in
there,
that
was
your
budget!
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
2015
National
Center
for
Student
Life.
All
rights
reserved.
59
Zero-based Budget
(Note:
All
expenses
should
be
MONTHLY.
You
may
have
to
divide
by
12
to
figure
out
the
monthly
number
for
some
expenses.
Be
sure
to
write
0
in
a
blank
line
if
it
does
not
apply
to
you.
The
reason
we
listed
so
many
budget
categories
is
because
people
often
forget
what
they
spend
their
money
on,
so
the
categories
help
to
spark
your
imagination.
Its
completely
okay
to
have
a
lot
of
zeroes
in
your
budget.)
Income:
Pay
Checks
____________________
Bonus
___________________
Dividends
___________________
Interest
___________________
Rental Income
___________________
Capital Gains
___________________
Gifts
___________________
Social Security
___________________
Tips
___________________
Pension
___________________
Other
___________________
Total
Income:
_______________
Expenses:
Food
Grocery
Bill
___________________
Bar Bill
___________________
Takeout Bill
___________________
Morning Coffee
___________________
Restaurant Bill
___________________
Mid-day Snacks
___________________
Other
___________________
60
Total Food:
_______________
Insurance
Homeowners
Insurance
___________________
Renters Insurance
___________________
Car Insurance
___________________
Health Insurance
___________________
Dental Insurance
___________________
Life Insurance
___________________
Disability Insurance
___________________
Other
___________________
Total Insurance:
_______________
Shelter
Rent
Payment
___________________
Cable
___________________
Internet
___________________
Water Bill
___________________
___________________
Hot water
___________________
Telephone
___________________
Electricity
___________________
Cleaning
___________________
Other
___________________
61
Family
Childcare
___________________
___________________
Allowance Payments
___________________
School Expenses
___________________
Other
___________________
Total Family:
_______________
Clothing
Clothes
___________________
Cleaning/Maintenance
___________________
Other
___________________
Total Clothing:
_______________
Entertainment
Movies
Out
___________________
Rental Videos
___________________
Sporting Events
___________________
Amusement Parks
___________________
Ski Resorts
___________________
Golf
___________________
___________________
Club Memberships
___________________
Bowling
___________________
Arcade
___________________
Pool Hall
___________________
Music-CDs
___________________
DVDs, Videos
___________________
Pet Expenses
___________________
62
Transportation
Gasoline
___________________
Cleaning
___________________
Maintenance
___________________
Car Repairs
___________________
Bus/Subway/Train
___________________
Tolls
___________________
Taxi
___________________
Parking
___________________
Other
___________________
___________________
Car Loans
___________________
___________________
Mortgage Payment
___________________
Other
___________________
Total Loans:
_______________
Personal
Expenses
Eye
Care
___________________
Skin Care
___________________
Dental Care
___________________
Hair Care
___________________
___________________
Barber/Beauty
___________________
Other
___________________
Total Personal:
_______________
2015
National
Center
for
Student
Life.
All
rights
reserved.
63
_________________
_________________
_________________
_________________
Donations
_________________
Other
_________________
_____________
(Divide By Twelve)
_____________
Total
Monthly
Income:
___________________
___________________
Net Result:
___________________
Note:
If
your
net
result
is
positive,
congratulations!
Use
this
money
for
savings
or
to
pay
down
debt.
If
it
is
negative,
go
back
through
your
expenses
and
see
what
you
can
cut
back.
Remember
it
takes
the
average
person
three
months
to
make
this
work,
so
stick
with
it!
64
65
Unit 3
Credit
66
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
Define
the
term
credit.
Explain
how
a
credit
report
and
a
credit
score
are
created.
Identify
the
three
major
credit
reporting
agencies.
Lesson Summary:
The
word
credit
has
multiple
meanings,
but
for
the
purposes
of
this
lesson,
credit
is
a
measure
of
someones
financial
faith
in
you.
When
someone
says
they
have
good
credit
that
means
that
there
is
a
written
track
record
that
they
have
paid
their
debts
and
bills
on
time.
People
with
good
credit
will
have
an
easier
time
getting
a
loan,
and
they
may
enjoy
cheaper
insurance
premiums.
They
wont
have
to
pay
a
deposit
to
get
a
cell
phone,
or
to
hookup
cable
TV.
Good
credit
can
help
you
rent
an
apartment
and
even
help
you
get
a
job.
Credit
is
typically
measured
using
two
tools:
a
credit
report
and
a
credit
score.
The
credit
report
is
a
written
history
of
how
well
you
have
paid
your
bills,
how
well
you
have
handled
the
money
lent
to
you,
and
how
aggressively
you
have
tried
to
borrow
money.
The
credit
score
is
simply
the
numeric
summary
of
a
credit
report.
Equifax,
Transunion
and
Experian
are
the
three
major
credit
reporting
agencies
that
together,
handle
about
80%
of
all
the
credit
reports
in
the
United
States.
Sometimes
they
are
referred
to
as
The
Big
Three.
The
Big
Three
compile
your
credit
report
by
gathering
information
from
the
companies
you
are
already
doing
business
with,
such
as
cell
phone
companies
and
car
loan
companies.
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
Can
someone
pull
your
credit
report
without
your
permission?
67
Answer_____________________________________________________
____________________________________________________________
__________________________________________________________
Answer:_____________________________________________________
____________________________________________________________
__________________________________________________________
Action Assignment:
Nothing!
Take
the
night
off,
because
there
is
a
lot
of
work
with
credit
in
the
upcoming
lessons.
Suggested Activity:
Make
a
list
of
rumors
that
you
have
heard
about
credit
reports
and
credit
scores.
As
you
go
through
the
lessons
on
credit,
see
which
rumors
were
true
and
which
were
false.
Additional Information:
www.equifax.com
-
This
is
the
website
of
Equifax.
www.experian.com
-
This
is
the
website
of
Experian.
www.transunion.com
-
This
is
the
website
of
Transunion.
Fun Facts:
Credit
reports
have
actually
be
around
since
the
late
1800s.
They
started
as
simple,
handwritten
reports
that
store
owners
kept
about
their
customers
who
bought
items
on
credit.
Slowly
these
reports
got
more
and
more
standardized,
so
they
could
be
shared
between
different
stores.
The
department
store
Sears,
was
one
of
the
first
major
companies
to
make
use
of
standardized
credit
reports.
68
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
69
70
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
List
two
websites
to
check
your
credit
report.
Name
the
ONE
question
you
should
ask
yourself
when
looking
at
your
credit
report.
Explain
why
look
at
your
credit
report
at
least
once
per
year
is
important.
Lesson Summary:
A
credit
report
is
nothing
more
than
a
written
history
of
how
well
you
have
paid
your
bills,
how
well
you
have
handled
the
money
lent
to
you,
and
how
aggressively
you
have
tried
to
borrow
money.
A
credit
score
is
simply
the
numeric
summary
of
your
credit
report.
There
are
more
than
100
different
credit
scores
today,
but
still
the
most
popular
is
the
FICO
score.
FICO
scores
range
between
300,
which
is
terrible,
and
850,
which
is
perfect.
Currently,
most
lenders
would
consider
a
FICO
score
of
720
or
better
to
be
an
A
credit
score.
People
with
scores
below
this
can
still
get
credit,
but
A
credit
means
you
get
the
best
deal
available
for
the
product
or
service
at
hand.
So
as
an
example,
an
A
credit
borrower
might
get
a
car
loan
at
5%,
a
B
credit
borrower
(somewhere
between
719-650)
might
get
that
same
loan
at
6%.
C
credit
(649-550)
is
probably
looking
at
7-10%
for
that
car
loan,
D
credit
(549-
450)
will
get
pummeled
with
a
car
loan
around
18%,
and
someone
with
F
credit
(below
450)
should
probably
just
take
the
bus.
Two
websites
to
check
your
credit
report
are
www.annualcreditreport.com
and
www.creditkarma.com.
Both
websites
are
free,
although
creditkarma.com
is
a
for
profit
website,
so
they
are
hoping
you
will
buy
something.
Annualcreditreport.com
is
sponsored
by
government
legislation
so
there
are
no
advertisements
on
the
site.
When
you
check
your
credit
report,
be
sure
to
ask
yourself
one
question:
Do
I
agree
with
this?
If
there
is
something
on
the
report
that
is
inaccurate,
you
can
2015
National
Center
for
Student
Life.
All
rights
reserved.
71
follow
the
steps
right
on
the
websites
to
get
that
credit
report
and
score
fixed.
Remember,
about
70%
of
Americans
have
a
mistake
on
their
credit
report
that
is
not
their
fault.
72
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
Why
is
it
extra
important
for
people
with
more
common
last
names
(Smith,
Jones
etc.)
to
check
their
credit
reports?
Answer:________________________________________________________
_______________________________________________________________
_____________________________________________________________
When
you
check
your
credit
report,
why
is
it
important
to
have
your
financial
information
nearby?
Answer:________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
Action Assignment:
Check
your
credit
at
either
www.annualcreditreport.com
or
www.creditkarma.com.
If
you
can,
print
out
the
report
and
keep
it
for
a
year.
When
a
year
lapses,
recycle
the
old
report
and
start
again.
Suggested Activity:
Look
at
your
list
of
credit
myths
you
created
for
the
suggested
activity
in
Lesson
1:
Introduction
To
Credit.
Did
any
of
your
misconceptions
get
cleared
up?
Additional Information:
www.myfico.com
-
This
is
the
official
website
of
the
Fair
Isaac
Company,
the
company
that
created
the
FICO
Score.
They
do
charge
you
to
get
your
score,
but
it
will
be
the
official
FICO
score.
73
Fun Facts:
In
the
1950s,
two
guys,
Bill
Fair
and
Earl
Isaac,
designed
a
mathematical
formula
that
could
read
credit
reports.
They
went
on
to
form
the
Fair
Isaac
Company
or
FICO.
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
74
Your
Name
SSN#
000-00-0000
(Yes,
you
do
need
to
put
your
social
security
number
or
they
wont
be
able
to
access
your
account.)
Note:
If
the
credit
bureau
fails
to
respond
within
30
days,
send
this
letter
again
with
another
letter
that
states
they
failed
to
respond.
Keep
doing
that
until
they
take
care
of
the
mistake.
If,
after
3
rounds
of
letters
nothing
happens,
send
a
final
letter
containing
all
the
original
letters.
Only
in
this
final
letter
state
that
you
will
soon
contact
the
Federal
Trade
Commission.
If
this
doesnt
do
it,
then
send
a
letter
to
the
Federal
Trade
Commission,
the
government
agency
that
enforces
the
Fair
Credit
Reporting
Act).
Their
address
is:
Federal
Trade
Commission
CRC-240
Washington,
D.C.
20580
1-877-FTC-HELP
2015
National
Center
for
Student
Life.
All
rights
reserved.
75
76
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
Explain
how
credit
cards
work.
Define
the
term
grace
period.
Lesson Summary:
One
of
the
most
dangerous,
yet
most
common,
ways
to
build
credit
is
with
a
credit
card.
A
credit
card
is
a
piece
of
plastic
that
allows
you
to
borrow
money.
When
you
swipe
a
credit
card
to
buy
something,
you
do
not
pay
the
store
with
your
money.
The
bank
that
issued
the
credit
card
pays
with
their
money
and
now
you
owe
the
issuing
bank.
Most
credit
cards
offer
a
grace
period.
This
is
a
window
of
time
where
you
can
pay
back
the
bank
without
paying
interest.
But
go
one
day
over
the
end
of
the
grace
period
(about
30-45
days),
and
you
will
owe
them
interest.
Another
way
to
look
at
grace
periods
is
to
realize
that
during
the
grace
period,
credit
cards
are
a
good
deal
for
you.
After
the
grace
period,
its
a
good
deal
for
the
credit
card
company.
Thats
why
credit
card
companies
love
it
when
you
pay
only
the
minimum
amount
every
month,
because
they
get
to
charge
you
a
lot
of
interest.
The
high
interest
rates
that
kick
in
after
the
grace
period
are
the
reason
most
people
should
not
get
a
credit
card.
The
majority
of
folks
cannot
pay
the
full
amount
before
the
grace
period
is
up.
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
Is
there
such
thing
as
a
fixed
interest
rate
on
a
credit
card?
Answer:_____________________________________________________
____________________________________________________________
___________________________________________________________
2015
National
Center
for
Student
Life.
All
rights
reserved.
77
If
you
pay
just
the
minimum
on
a
credit
card,
you
will
owe
the
credit
card
company
interest.
But
why
is
this
a
problem?
Whats
a
little
bit
of
interest?
Answer:_____________________________________________________
____________________________________________________________
___________________________________________________________
Action Assignment:
Go
online
and
research
additional
credit
card
fees,
aside
from
the
interest
charged.
Some
of
them
are:
Cash
advance
fee:
A
VERY
expensive
way
to
get
cash
from
your
credit
card.
Late
fee:
If
you
pay
your
bill
late,
this
fee
can
be
as
high
as
$29.
Overdraft
fee:
If
you
charge
more
than
you
are
allowed.
Annual
fee:
This
is
a
fee
charged
just
for
having
the
card.
However,
not
all
credit
cards
charge
this
fee.
Suggested Activity:
If
you
have
a
credit
card
or
debit
card,
photocopy
both
the
front
and
back.
Keep
this
photocopy
in
a
safe
place,
separate
from
your
card.
You
might
need
it
if
you
ever
lose
your
cards.
Additional Information:
www.myfico.com
-
This
is
the
website
run
by
the
people
who
offer
the
most
popular
credit
score
in
the
world,
the
FICO
score.
www.annualcreditreport.com
-
This
is
a
site
where
you
can
get
a
free
copy
of
your
credit
report
once
per
year.
www.bankrate.com
-
This
site
has
lots
of
great
financial
calculators,
including
ones
that
determine
minimum
payments
on
credit
cards.
Fun Facts:
Only
2
percent
of
higher
education
students
have
no
credit
history
at
all.
(Source:
www.college.com)
2015
National
Center
for
Student
Life.
All
rights
reserved.
78
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
79
80
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
List
4
ways
to
get
your
credit
score
up.
Lesson Summary:
There
are
4
ways
to
get
your
score
up:
1. Fix
mistakes
that
are
not
your
fault.
Remember,
70%
of
Americans
have
a
mistake
on
their
credit
report
that
is
not
their
fault.
If
you
DO
have
a
mistake
that
IS
your
fault,
you
could
ask
for
a
Good
Will
Adjustment.
This
is
a
forgiveness
of
a
late
payment.
They
are
tough
to
get,
but
you
can
ask
the
creditor
for
one
(You
may
have
to
ask
for
a
supervisor
to
get
this
approved.).
2. Pay
down
debt.
Debt,
especially
consumer
debt
such
as
credit
card
debt,
payday
loan
debt,
and
title
loan
debt,
hurts
your
credit
score.
Try
to
pay
as
much
as
you
can,
as
fast
as
you
can.
3. Pay
on
time.
Payment
history
accounts
for
35%
of
your
score.
Remember,
even
small
bills,
like
parking
tickets
and
overdue
library
books
can
show
up
on
your
credit
report.
4. Stop
applying.
When
a
store
offers
you
a
store
card
in
exchange
for
a
discount,
decline
the
offer.
When
someone
checks
your
credit
it
can
drop
your
score
5-15
points,
even
if
you
are
denied.
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
What
is
meant
by
the
term
inquiry?
Answer:_____________________________________________________
___________________________________________________________
81
Answer:_____________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Imagine
you
go
car
shopping
at
five
different
places,
and
they
all
tell
you
they
MUST
check
your
credit
to
determine
how
much
they
can
loan
you.
What
should
you
do?
Answer:_____________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Action Assignment:
Write
out
a
short
plan
to
improve
your
credit.
What
can
you
do
to
make
sure
you
pay
on
time?
Can
you
set
up
automatic
payments
from
your
bank
account?
Set
up
email
alerts?
Prepay
an
entire
month
in
advance?
Remember,
many
students
have
NO
CREDIT
at
all.
That
is
okay.
YOU
SHOULD
NOT
GO
INTO
DEBT
FOR
THE
SOLE
PURPOSE
OF
BUILDING
CREDIT.
THERE
ARE
WAYS
TO
BUILD
CREDIT
WITHOUT
EVER
BORROWING
MONEY,
WHICH
WE
WILL
DISCUSS
IN
ANOTHER
LESSON.
Suggested Activity:
(Answers
are
located
at
the
end
of
this
lesson
under
Suggested
Activity
Answers.)
Decide
if
the
following
actions
will
raise
or
lower
the
credit
score
and
why:
Jim
owes
$1,000
on
his
credit
card
but
the
minimum
payment
is
only
$15.
So
he
pays
$15
on
time,
but
he
still
has
a
large
amount
in
debt.
Did
his
score
go
up
or
down?
2015
National
Center
for
Student
Life.
All
rights
reserved.
82
Answer:_____________________________________________________
____________________________________________________________
________________________________________________________
Bill
gets
a
card
at
a
department
store
just
to
get
10%
off
his
purchase.
He
gets
approved,
but
when
the
card
comes
in
the
mail,
he
never
activates
it.
He
calls
the
company
and
tells
them
he
doesnt
want
it.
Did
his
score
go
up
or
down?
Answer:__________________________________________________
_________________________________________________________
______________________________________________________
Sarah
applies
for
a
card
at
a
bank
but
gets
denied.
Did
her
score
go
up
or
down?
Answer:__________________________________________________
_______________________________________________________
Additional Information:
www.myfico.com
-
This
is
the
official
website
of
the
Fair
Isaac
Company,
the
company
that
created
the
FICO
Score.
They
do
charge
you
to
get
your
score,
but
it
will
be
the
official
FICO
score.
www.annualcreditreport.com
-
This
is
the
ideal
website
to
check
your
credit
report
because
it
is
totally
free.
www.creditkarma.com
-
This
is
a
free
website
where
you
can
get
your
credit
report
and
credit
score.
While
the
score
is
free,
it
is
not
the
official
FICO
score.
It
is
a
different
score
called
the
Vantage
Score.
But
it
is
close
enough
to
the
FICO
to
get
a
reasonable
measurement
of
where
you
stand.
www.equifax.com
-
This
is
the
website
of
Equifax.
www.experian.com
-
This
is
the
website
of
Experian.
2015
National
Center
for
Student
Life.
All
rights
reserved.
83
www.transunion.com
-
This
is
the
website
of
Transunion.
Fun Facts:
According
to
the
student
loan
company
Sallie
Mae,
students
are
carrying
record-
high
credit
card
balances.
In
2009,
the
average
balance
grew
to
$3,173,
the
highest
amount
since
the
study
has
been
conducted.
Twenty-one
percent
of
students
had
balances
of
between
$3,000
and
$7,000,
also
up
from
the
last
study,
which
was
done
in
2004.
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
84
85
86
3. Sarah
applies
for
a
card
at
a
bank
but
gets
denied.
Did
her
score
go
up
or
down?
Answer:
Down!
Even
though
she
never
got
approved,
her
score
dropped
the
moment
she
applied
for
the
card.
87
Lesson 5:
Improving Your Credit
Part 2
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
List
five
more
ways
to
build
your
credit
score.
Lesson Summary:
1. Cancel
with
care.
Canceling
a
credit
card
can
hurt
your
credit
score.
So
be
sure
to
first
pay
off
all
the
debt
on
that
card
and
then
stop
using
it
for
a
while.
After
a
few
months
of
inactivity,
then
you
can
cancel
it.
2. Become
an
authorized
user.
This
is
a
way
to
inherit
someone
elses
good
credit.
If
someone
with
good
credit
adds
you
as
an
authorized
user
to
his
or
her
credit
card,
then
you
will
inherit
his
or
her
good
payment
history
for
that
card.
But
be
careful,
as
you
can
also
inherit
their
bad
credit,
too!
How
do
you
know
if
you
are
an
authorized
user?
Check
your
credit
report
at
annualcreditreport.com.
3. Get
a
micro
loan.
The
best
way
to
prove
you
can
pay
on
time
is
to
pay
on
time!
You
can
prove
this
with
a
micro
loan,
which
is
a
tiny
loan
set
up
for
the
sole
purpose
of
building
credit.
You
put
a
small
amount
of
money
on
deposit
with
the
bank.
The
bank
then
issues
you
a
small
loan.
The
bank
pays
off
the
loan
with
the
money
you
already
deposited.
4. Ask
for
a
pay
for
deletion
contract.
There
is
one
included
in
this
course.
A
Pay
For
Deletion
Contract
is
an
agreement
where
you
agree
to
pay
off
a
debt
in
exchange
for
the
creditor
deleting
it
from
your
credit
report.
Its
often
used
to
settle
misunderstandings
or
late
payments
that
are
not
your
fault
(i.e.
the
insurance
company
took
three
months
to
pay
out).
5. Build
your
own
credit
report.
This
is
a
way
to
build
credit
without
borrowing
any
money.
Start
collecting
copies
of
all
the
bills
you
paid
on
time.
Attach
the
canceled
checks
to
these
bills.
Try
to
get
reference
letters
from
companies
you
do
business
with.
Keep
all
this
information
in
a
file.
Some
small
banks
and
credit
unions
will
accept
these
homemade
credit
reports
when
giving
you
a
loan.
It
cannot
hurt
to
try.
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
88
Action Assignment:
Start
building
your
own
credit
file.
Do
TWO
of
the
following:
Collect
your
on-time
statements
in
a
folder
(gym
memberships,
cell
phone
etc.).
Write
and
mail
a
letter
to
the
companies
you
do
business
with
requesting
a
letter
of
good
standing.
Have
them
confirm
you
have
always
paid
your
bills
on
time.
You
can
use
the
sample
letter
in
this
Lesson
as
a
guide.
Visit
or
call
banks
until
you
find
one
that
will
offer
a
micro
loan.
You
dont
need
to
sign
up,
just
find
a
bank
that
offers
one
and
what
the
terms
are
(Tip:
Start
with
small
banks
and
credit
unions.).
Write
a
letter
to
your
landlord
requesting
that
he
begin
reporting
to
the
credit
bureaus.
Call
your
credit
card
company
(if
you
have
one)
and
ask
how
good
will
adjustments
work.
You
may
have
to
speak
to
a
supervisor
to
get
the
answers
you
need.
Suggested Activity:
Take
a
break!
89
Additional Information:
www.ftc.gov
-
This
is
the
website
of
the
Federal
Trade
Commission.
It
is
a
great
source
of
information
regarding
credit,
identity
theft,
consumer
protection
and
more.
www.annualcreditreport.com
-
Get
your
free
credit
report
here.
www.creditkarma.com
-
Get
your
free
credit
score
here.
www.myfico.com
-
Get
your
FICO
score
and
score
monitoring
(charges
may
apply).
Fun Facts:
About
20
million
people
live
with
no
credit
at
all.
(Source:
Bankrate.com)
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
90
Date
91
92
93
Unit 4
Student Loans
94
Lesson 1:
Student Loans: What Are They?
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
Explain
what
a
student
loan
is
and
what
it
can
be
used
for.
Explain
why
the
term
educational
expenses
is
really
not
important.
Explain
the
difference
between
subsidized
and
unsubsidized
loans.
Identify
the
most
important
number
that
you
need
to
know
about
your
student
loans.
Lesson Summary:
What,
exactly,
is
a
student
loan?
Lets
break
this
down.
Student
means
someone
enrolled
in
some
form
of
school.
A
loan
is
rented
money.
So
a
student
loan
is
rented
money
to
pay
for
school.
It
sounds
simple,
but
millions
of
students,
from
career
schools
to
four
year
private
colleges,
mess
this
up.
Many
students
who
borrow
money
dont
realize
they
are
actually
borrowing
it!
Many
people
confuse
their
loans
with
some
sort
of
scholarship
or
grant.
While
you
may
have
some
scholarships
or
grants
that
do
not
need
to
be
paid
back,
all
student
loans
do
(And
they
must
be
paid
back
with
interest.).
If
you
forget
everything
else
about
student
loans,
just
remember
this:
They
must
be
paid
back
with
interest.
The
second
confusion
that
arises
with
student
loans
is
that
many
students
stretch
the
definition
of
educational
expenses
to
infinity.
Ive
met
students
who
say
things
like,
Well
I
have
to
watch
some
DVDs
as
homework,
and
Ill
need
a
TV
to
watch
those
on,
so
a
52-inch
plasma
TV
is
an
educational
expense.
You
laugh,
but
it
happens
all
the
time.
During
my
speeches,
students
ask
me,
Is
a
car
an
educational
expense?
Can
I
use
my
loans
to
take
an
educational
vacation?
The
short
answer
to
both
of
those
is
no.
But,
the
BIGGER
answer
is
that
it
doesnt
matter.
What
matters
is
this:
Can
you
afford
to
pay
back
what
you
borrow?
Take
this
example
to
illustrate
the
point.
If
Student
A
spends
$5,000
of
their
loans
on
a
trip
to
Vegas
and
Student
B
spends
all
their
money
on
tuition,
Student
A
is
the
one
who
broke
the
law.
However,
if
Student
A
pays
on
time
and
Student
B
pays
late,
Student
B
is
the
one
who
is
going
to
have
problems.
2015
National
Center
for
Student
Life.
All
rights
reserved.
95
How
much
would
the
student
owe
if
the
above
loan
was
a
subsidized
loan?
Answer:____________________________________
Action Assignment:
Research
your
student
loan
paper
work.
Find
these
numbers
for
each
student
loan
you
have:
(Try
www.nslds.ed.gov
for
help.)
Total
amount
borrowed:
________________
Interest rate:
________________
96
________________
________________
Suggested Activity:
Putting
the
legal
definitions
aside
(and
they
are
very
hard
to
find),
what
do
you
think
is
a
fair
use
of
student
aid
money?
Gas?
A
bus
pass?
An
iPad?
Why
do
you
feel
your
suggested
item
should
count
as
an
educational
expense?
Additional Information:
www.nslds.ed.gov
-
The
National
Student
Loan
Data
System
(NSLDS)
is
the
U.S.
Department
of
Education's
central
database
for
student
aid.
By
plugging
in
your
information,
you
can
access
data
on
your
loans
and
federal
grants,
including
the
name
of
the
company
that
services
your
loan,
your
loan
status,
and
loan
disbursements.
You
will
need
a
PIN
to
get
this
information
-
go
to
the
FAQs
page
to
learn
how
to
get
one.
www.studentaid.ed.gov
-
The
Department
of
Education's
Federal
Student
Aid
office
provides
information
about
student
loans,
loan
repayment
plans
repayment
calculators,
loan
forgiveness
for
public
service,
postponing
repayment
of
your
loans,
and
more.
www.finaid.org
-
This
is
a
very
comprehensive
website
on
financial
aid.
It
has
everything
from
Frequently
Asked
Questions,
to
calculators,
to
the
ability
to
ask
questions
and
get
personalized
answers!
Fun Facts:
Total
student
loan
debt
in
the
United
States
is
now
increasing
at
a
rate
of
approximately
$2,853.88
per
second!
It
pays
to
pay
attention!
(Source:
www.finaid.org)
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
97
98
Lesson 2:
Student Loans: How Do They
Work?
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
Explain
the
financial
aid
process.
Explain
what
the
term
amortize
means.
Explain
why
the
EFC
is
the
Oh
_______
number.
Lesson Summary:
We
know
that
student
loans
fall
into
two
types:
subsidized
and
unsubsidized.
With
subsidized
loans,
the
government
is
paying
the
interest
on
the
loans
while
you
are
in
school.
With
unsubsidized
loans,
the
interest
gets
added
to
the
principal
while
you
are
in
school.
Unsubsidized
loans
can
be
broken
down
even
further
into
private
and
public
loans.
A
private
loan
has
no
involvement
from
the
government
while
a
public
loan
does.
While
a
private
company
usually
services
a
public
loan
(which
means
they
collect
the
monthly
payments
from
you),
the
big
difference
between
public
and
private
loans
is
in
the
collection
of
an
unpaid
debt.
Public
loans
enjoy
the
protection
of
the
government,
which
means
if
you
fail
to
pay,
the
government
will
be
the
one
chasing
you.
Remember,
the
government
has
additional
collection
powers,
and
it
will,
use
those
powers
if
you
fail
to
pay
your
student
loans.
Chances
are
at
least
some
of
your
loans
are
public.
The
government
is
not
going
to
forget
about
you
if
you
do
not
pay!
The
financial
aid
process
starts
with
a
form
called
the
Free
Application
for
Federal
Student
Aid
or
FAFSA.
This
document
allows
you
to
explain
your
financial
situation.
The
FAFSA
is
sent
to
the
government
and
they
generate
a
report
called
the
Student
Aid
Report
or
SAR.
The
most
important
number
in
the
SAR
is
the
Expected
Family
Contribution
or
EFC.
I
like
to
call
the
EFC
the
oh
______
number,
because
it
states
how
much
the
government
expects
YOU
to
pay
for
your
education.
The
higher
the
EFC
is,
the
more
youll
have
to
pay.
The
Student
Aid
Report
is
sent
to
the
schools
you
listed
when
you
filled
out
the
FAFSA.
Hopefully
those
schools
will
then
issue
an
award
2015
National
Center
for
Student
Life.
All
rights
reserved.
99
letter,
which
lists
all
the
loans,
grants
and
scholarships
they
can
offer
you.
If,
for
any
reason,
the
award
is
not
enough,
you
can
choose
to:
Not
go
to
that
school
Pay
with
more
money
out
of
your
own
pocket
Try
to
get
additional
scholarships
Seek
additional
private
loans
Even
though
you
are
probably
enrolled
in
school
as
you
read
this,
many
students
go
on
to
get
additional
education.
Some
people
have
to
navigate
the
process
for
their
children.
So,
its
important
to
know
how
the
process
works.
Here
are
some
other
concepts
to
understand
about
financial
aid:
Is
the
money
a
loan
or
some
sort
of
grant/scholarship?
In
other
words,
do
you
have
to
pay
it
back?
How
much
will
I
owe
when
I
GRADUATE
school?
(Not
when
you
begin
school.)
Remember,
unsubsidized
loans
grow
while
youre
in
school.
Is
this
a
public
loan?
If
the
government
is
involved,
they
have
additional
collection
powers.
Loans
are
amortized.
With
every
payment,
some
of
the
money
goes
to
principal
and
some
goes
to
interest.
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
Doug
has
$20,000
in
student
loans
at
6%
interest.
He
pays
$100
a
month.
So
far,
he
has
paid
$1,200.
All
of
a
sudden
Doug
wins
the
lottery
and
he
wants
to
pay
off
all
his
loans.
He
calls
the
lender
and
asks
how
much
he
owes.
They
tell
him
he
still
owes
$19,880.
But
Ive
given
you
$1,200!
He
yells.
What
happened?
Answer:_____________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
2015
National
Center
for
Student
Life.
All
rights
reserved.
100
Action Assignment:
Go
to
www.peterbielagus.com
and
play
around
on
the
loan
payoff
calculators.
Put
in
your
loan
amounts
and
interest
rates.
(If
you
dont
have
any
loans
right
now,
estimate
what
you
think
youll
borrow
for
school.)
What
is
the
expected
monthly
payment?
What
happens
if
you
pay
an
additional
$10
or
$20?
Or
more?
Suggested Activity:
Visit
the
financial
aid
office
and
ask
one
question
about
student
loans.
It
can
be
about
your
loans
or
just
a
general
question.
Even
students
without
loans
should
do
this.
This
makes
you
comfortable
with
visiting
the
financial
aid
office
and
talking
about
student
loans.
Remember,
even
if
you
dont
have
student
loans
right
now,
you
may
get
them
later
to
complete
your
degree
or
to
get
an
advanced
degree.
Additional Information:
www.nslds.ed.gov
-
The
National
Student
Loan
Data
System
(NSLDS)
is
the
U.S.
Department
of
Education's
central
database
for
student
aid.
When
you
put
in
your
information,
you
can
access
information
on
your
loans
and
federal
grants,
including
the
name
of
the
company
that
services
your
loan,
your
loan
status,
and
loan
disbursements.
You
will
need
a
PIN
to
get
this
information
-
go
to
the
FAQs
page
to
learn
how
to
get
one.
www.studentaid.ed.gov
-
The
Department
of
Education's
Federal
Student
Aid
office
provides
information
about
student
loans,
loan
repayment
plans
(and
accompanying
repayment
calculators),
loan
forgiveness
for
public
service,
postponing
repayment
of
your
loans,
and
more.
101
Fun Facts:
Find
a
fun
fact
about
your
own
school:
ask
the
financial
aid
office
if
they
will
tell
you
how
many
undergraduate
seniors
will
graduate
with
more
than
$100,000
in
student
loan
debt.
(They
know
this
number,
even
if
they
wont
tell
you.)
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
102
Month
1
2
3
4
5
6
7
8
9
10
11
12
Beginning
Payment Interest
Balance
10,000.00
100.00
50.00
9,950.00
100.00
49.75
9,899.75
100.00
49.50
9,849.25
100.00
49.25
9,798.49
100.00
48.99
9,747.49
100.00
48.74
9,696.22
100.00
48.48
9,644.71
100.00
48.22
9,592.93
100.00
47.96
9,540.89
100.00
47.70
9,488.60
100.00
47.44
9,436.04
100.00
47.18
Ending
Balance
9,950.00
9,899.75
9,849.25
9,798.49
9,747.49
9,696.22
9,644.71
9,592.93
9,540.89
9,488.60
9,436.04
9,383.22
103
104
Lesson 3:
Student Loans:
What Am I Responsible For?
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
Name
3
things
a
person
with
student
loans
is
responsible
for.
Explain
the
median
income
trap.
Lesson Summary:
During
the
last
lesson,
I
talked
about
how
your
student
loans
are
borrowed
money
that
you
MUST
pay
back
with
interest.
It
is
not
a
scholarship
or
a
grant,
which
are
awards
that
you
do
not
have
to
pay
back.
I
discussed
that
misunderstanding
this
simple
concept
has
become
a
national
disaster.
If
you
have
student
loans,
you
are
responsible
for
3
things:
1. Finishing
what
you
started
as
quickly
and
affordably
as
possible.
2. Understanding
how
much
you
have
borrowed
and
what
the
monthly
payments
are.
3. Setting
yourself
up
to
be
sure
you
can
make
those
monthly
payments.
Median
income
is
the
average
salary
in
your
career
field.
It
is
the
number
that
you
often
read
about
in
career
guides
and
job
postings.
If
you
are
in
school
and
about
to
enter
a
new
field,
you
are
not
going
to
enter
that
field
with
the
average
income.
Most
people
start
out
their
careers
with
BELOW
average
income.
Failure
to
recognize
this
fact
is
called
the
median
income
trap.
If
you
are
a
hair
stylist,
dont
ask
the
question
What
does
the
average
hair
stylist
make
in
this
industry?
because
you
probably
wont
make
that
right
out
of
cosmetology
school.
Find
out
what
a
brand
new
stylist
makes
right
out
of
school.
105
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
If
you
ask
yourself,
Can
I
afford
to
borrow
this?
and
the
answer
is
no,
does
that
mean
you
cannot
go
to
school?
Or
that
you
should
drop
out?
Answer:_____________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Action Assignment:
Take
the
night
off!
Suggested Activity:
Take
the
night
off!
Additional Information:
www.finaid.org
-
This
is
a
very
comprehensive
website
on
financial
aid.
It
has
everything
from
Frequently
Asked
Questions,
to
calculators,
to
the
ability
to
ask
questions
and
get
personalized
answers!
Fun Facts:
Currently,
the
rate
of
student
loan
default
is
just
under
9%
(Source:
NY
Times).
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
106
107
Lesson 4:
Student Loans: What If I Cant
Pay?
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
List
the
additional
collection
powers
that
the
government
has.
Name
the
website
where
you
can
find
out
who
your
loan
servicer
is.
Summarize
this
lesson
in
one
sentence.
Lesson Summary:
Student
loan
lenders
often
have
enhanced
collection
powers.
Normally,
a
creditor
only
has
two
options
to
collect
money
from
you:
They
can
hurt
your
credit
score
and
they
can
take
you
to
court
to
get
a
judgment.
A
judgment
is
a
legal
ruling
that
allows
a
creditor
the
enhanced
powers
to
collect
their
money.
Some
judgments
allow
creditors
to
garnish
wages,
take
money
out
of
a
bank
account,
or
even
tow
your
car.
With
public
student
loans,
lenders
can
take
money
WITHOUT
going
to
court.
They
can,
for
example,
take
your
tax
refund.
They
can
also
garnish
your
wages.
Whats
more,
with
student
loans,
it
is
very
difficult
to
get
rid
of
them
in
a
personal
bankruptcy.
Because
of
these
enhanced
powers,
it
is
very
important
that
you
know
the
number
one
question
when
it
comes
to
student
loans:
Can
you
afford
to
borrow
this
money?
In
other
words,
can
you
afford
to
pay
it
back?
Look
at
the
budget
you
did
during
Unit
2
Lesson
5.
How
much
will
the
payments
be
on
this
loan?
How
will
you
pay
for
them?
If
you
are
in
trouble,
the
first
step
is
to
admit
you
are
having
trouble
paying.
Then
ask
your
financial
aid
administrator
or
your
loan
servicer
what
options
are
available
to
you.
How
do
you
find
your
loan
servicer?
Go
to
the
National
Student
Loan
Data
System
website
at
www.nslds.ed.gov.
The
good
news
is
that
student
loans
also
have
built-in
payment
restructuring
plans
for
people
who
are
having
trouble.
Most
other
loans
DONT
have
this
2015
National
Center
for
Student
Life.
All
rights
reserved.
108
feature.
Here
are
some
of
the
options
for
folks
who
are
having
trouble
making
their
payments.
Loan
term
extension.
If
you
have
a
10-year
student
loan,
you
might
be
able
to
extend
it
to
a
20-year
loan
(sometimes
even
longer).
Even
though
you
will
pay
more
in
interest
(because
you
are
borrowing
the
money
for
a
longer
period
of
time)
your
monthly
payments
will
be
smaller.
Loan
forgiveness.
Okay,
this
one
is
not
easy,
but
sometimes,
if
you
agree
to
volunteer,
either
in
AmeriCorps,
the
military,
or
even
to
teach
in
a
teacher
shortage
area,
you
can
get
your
loans
forgiven.
This
option
is
not
for
everyone,
but
it
is
a
possibility.
Loan
modification.
Your
loan
may
qualify
for
modification.
This
is
where
you
pay
interest
only
for
a
few
years
and
then
it
becomes
an
amortized
loan.
Loan
deferment.
Even
after
you
graduate,
the
loan
can
be
deferred.
This
automatically
happens
if
you
enroll
in
school
again
(to
get
another
degree
or
certification)
but
it
can
also
be
done
if
you
can
prove
a
financial
hardship.
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
What
is
a
garnishment?
Answer:_____________________________________________________
____________________________________________________________
____________________________________________________________
If
you
are
going
to
change
your
existing
loan
in
any
way
because
you
cant
make
payments,
what
should
you
do?
Answer:_____________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
109
Why
is
being
open
and
honest
the
best
policy
when
it
comes
to
renegotiating
payment
terms
on
your
student
loans?
If
you
are
trying
to
negotiate
with
your
lender,
it
might
make
sense
to
hold
at
least
some
information
back,
right?
Answer:_____________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Answer:
____________________________________________________
Action Assignment:
Write
down
5
unexpected
things
that
could
prevent
someone
from
paying
their
loans.
Perhaps
a
car
accident
or
a
spouse
gets
laid
off.
What
can
they
do
to
plan
now
to
prepare
for
those
emergencies?
Suggested Activity:
Look
at
your
list
from
the
Action
Assignment.
What
could
prevent
you
from
paying
your
student
loans?
What
can
you
do
now
to
prevent
those
things?
Additional Information:
www.studentaid.ed.gov
-
The
Department
of
Educations
website
has
everything
from
calculators
to
information
on
modifications.
www.ombudsman.ed.gov
-
The
Student
Loan
Ombudsman
Office
helps
borrowers
who
are
in
trouble.
www.nslds.gov
-
The
National
Student
Loan
Data
System
allows
students
to
find
out
who
their
loan
servicer
is.
www.finaid.org
-
This
is
a
very
comprehensive
website
on
financial
aid.
It
has
everything
from
Frequently
Asked
Questions,
to
calculators,
to
the
ability
to
ask
questions
and
get
personalized
answers!
2015
National
Center
for
Student
Life.
All
rights
reserved.
110
Your
states
secretary
of
states
office
can
tell
you
what
the
laws
are
for
wage
garnishment
in
your
state.
While
lenders
are
able
to
do
it
with
student
loans;
how
much
they
can
take
is
often
limited
by
state
law.
Fun Facts:
NBA
star
Allen
Iverson
had
his
earnings
garnished
by
Aydin
and
Company
Jewelers
for
an
unpaid
jewelry
bill.
The
court
ruled
that
the
jewelry
company
could
take
$859,896.46
from
Iverson
for
the
unpaid
jewelry
bill,
court
costs,
interest,
and
attorney
fees
(Source:
TMZ.com
report).
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
_______________________________________________________________________
111
112
113
Lesson 5:
Student Loans:
Tips for Paying on Time
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
Explain
what
a
Return
of
Title
IV
Funds
is.
Explain
the
importance
of
making
your
loan
payoff
automatic.
Lesson Summary:
At
base,
student
loans
are
simple.
If
you
dont
borrow
over
your
head
and
you
just
pay
your
bills
on
time
every
month,
then
all
will
be
well.
If
you
did
borrow
too
much,
try
to
give
it
back
right
away.
You
can
do
this
officially
with
a
Return
of
Title
IV
Funds.
This
is
a
process
that
occurs
when
you
have
leftover
money
from
your
student
loans.
Most
people
keep
that
money
(and
often
spend
it
on
silly
stuff
like
clothes
and
guitars).
However,
you
can
send
the
money
right
back,
which
is
the
simplest
way
to
avoid
borrowing
too
much.
Ask
your
financial
aid
administrator
for
help.
Still,
many
students
want
to
keep
the
leftover
money
just
in
case.
This
is
understandable,
but
you
can
still
start
sending
money
back
another
way,
by
making
payments
immediately.
You
are
allowed
to
pay
off
your
student
loans
before
they
are
due,
in
any
amount
you
choose,
on
any
schedule
you
like.
Just
make
sure
you
write
apply
towards
principal
on
the
check.
Sadly,
many
students
borrow
more
than
they
need,
and
dont
send
any
money
back.
Not
surprisingly,
these
students
get
into
trouble.
As
we
learned
in
the
last
lesson,
there
are
repayment
programs
already
set
up
if
you
find
yourself
in
this
situation.
Students
who
fall
behind
should
ask
what
programs
are
available
to
help
their
situation.
Here
are
more
quick
tips
to
make
sure
you
pay
loans
on
time:
Set
up
alerts.
You
can
do
this
with
a
smart
phone
or
with
email,
or
both.
Send
yourself
a
reminder
seven
days
before
your
bills
are
due.
Set
up
automatic
withdrawal.
Your
bank
can
arrange
to
take
an
amount
of
money
out
of
your
account
at
the
same
time
every
month
to
pay
your
loans.
(Just
make
sure
there
is
enough
to
cover
it!)
Some
lenders
even
give
a
discount
for
this!
(See
the
Fun
Facts
Section
of
this
lesson.)
Have
a
buddy
remind
you.
And
you
remind
them!
2015
National
Center
for
Student
Life.
All
rights
reserved.
114
Take
a
job
that
will
pay
your
student
loans.
To
attract
talented
people,
many
companies
will
do
this.
Be
on
the
lookout
when
you
are
job
hunting.
Pick
the
date
that
works
for
you.
Many
lenders
will
let
you
choose
the
date
you
can
make
your
payment.
Arrange
it
so
it
makes
sense
for
you.
Create
a
completely
separate
bank
account.
In
this
account,
keep
one
extra
month
of
payments.
Whenever
you
get
your
paycheck,
put
a
months
payment
into
this
account
and
then
set
up
an
automatic
withdrawal
to
pay
your
loan.
Dont
have
a
debit
card
or
a
checkbook
with
this
account.
Use
automatic
bill
pay.
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
Why
is
it
so
important
to
make
student
loan
payoff
automatic?
Answer:_____________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Action Assignment:
Call
your
bank
and
ask
about
how
to
set
up
an
automatic
payment.
Call
your
student
loan
servicer
and
ask
if
you
can
choose
the
date
that
you
make
your
payment.
Also
ask
the
student
loan
servicer
to
suggest
ways
to
ensure
payments
are
made
on
time.
Can
you
pay
a
month
in
advance?
Set
up
alerts
with
the
servicer?
What
does
the
servicer
suggest?
Suggested Activity:
Think
of
some
other
tips
and
tricks
on
how
you
can
pay
your
bills
on
time.
Ask
other
people
what
they
do.
Get
as
much
feedback
as
you
can.
Here
are
two
examples:
115
I
know
a
student
who
sleeps
on
the
floor
for
the
night
if
he
pays
a
bill
late.
It
may
seem
silly,
but
he
creates
a
physical
change
whenever
he
fails
to
pay
on
time.
Another
student
I
know
of
treats
herself
to
a
day
at
the
spa
if
she
pays
on
time
for
a
year.
Additional Information:
www.mint.com
-
This
is
a
great,
free
website
that
helps
you
track
your
bill
paying.
www.studentaid.ed.gov
-
The
Department
of
Educations
website
has
everything
from
calculators
to
information
on
modifications.
www.ombudsman.ed.gov
-
The
Student
Loan
Ombudsman
Office
helps
borrowers
who
are
in
trouble.
www.nslds.ed.gov
-
The
National
Student
Loan
Data
System
allows
students
to
find
out
who
their
loan
servicer
is.
Fun Facts:
Many
lenders
offer
discounts
for
borrowers
who
set
up
auto-debit
(This
is
where
the
servicer
takes
a
pre-agreed
amount
out
of
your
bank
account
once
per
month.).
Federal
loans
offer
a
0.25%
interest
rate
reduction,
while
private
student
loans
often
offer
a
0.25%
or
0.50%
interest
rate
reduction
for
the
remainder
of
the
repayment
period.
Some
lenders
will
require
electronic
billing
to
get
the
discount.
Ask
your
lender
what
they
offer!
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
_______________________________________________________________________
116
117
Unit 5
Investing
118
Lesson 1:
Introduction to Investing
Part 1
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
Identify
the
two
most
common
types
of
investments.
Explain
why
diversification
is
important.
Lesson Summary:
At
the
beginning
of
this
course,
I
mentioned
that
you
can
either
trade
your
time
for
money,
a.k.a.
working,
or
trade
your
money
for
money,
a.k.a.
investing.
Investing
is
the
act
of
risking
your
resources
in
hopes
that
those
resources
will
grow
in
value.
The
more
risk
you
accept,
the
more
reward
you
should
get
for
that
risk.
Investing
is
different
from
saving.
Saving
is
the
act
of
putting
your
resources
somewhere
safe
to
be
used
later.
Basically,
all
investments
fall
into
one
of
two
categories:
growth
investments
and
income
investments.
Growth
investments
tend
to
be
riskier
but
offer
a
higher
reward.
These
investments
fluctuate
more
with
the
ups
and
downs
of
the
economy,
so
they
are
safest
when
bought
with
a
long-term
view.
Income
investments
tend
to
be
less
risky
and
therefore
pay
a
smaller
reward.
They
have
a
more
predictable
return.
Combining
these
two
types
of
investments
builds
the
basic
investment
strategy
that
everyone
should
follow.
When
you
are
young,
go
heavy
on
the
growth
investments
and
light
on
the
income
investments.
As
you
get
older,
more
money
should
go
to
income
and
less
to
growth.
It
is
important
to
remember
that
even
our
income
investments
can
let
us
down,
so
we
still
need
to
save.
While
most
investments
fall
into
those
two
basic
groups,
smart
investors
own
many
different
investments
within
those
groups.
They
do
this
by
diversifying
their
investments.
Diversification
is
the
act
of
spreading
your
money
around
to
reduce
risk.
No
one
knows
for
sure
which
investments
will
perform
well
tomorrow.
You
can
create
a
safety
net
by
buying
a
little
bit
of
everything.
119
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
Action Assignment:
(Answers
are
located
at
the
end
of
this
lesson
under
Action
Assignment
Answers.)
Research
the
following
investments.
Spend
10
minutes
researching
each
one.
Are
they
growth
investments
or
income
investments?
Or
are
they
both?
Are
they
risky
or
safe?
Is
there
a
limit
on
the
reward?
Gold.
Stocks.
Bank
account.
Your
own
business.
Suggested Activity:
Fill
out
the
answers
below
based
on
your
research.
120
1. Gold
coins
Answer:
Growth,
income
or
both?
__________________
Risky
or
safe?
__________________
__________________
__________________
__________________
121
Additional Information:
www.investopedia.com
-
This
site
has
all
sorts
of
resources
for
investors.
Its
a
great
resource
for
the
Action
Assignment!
Fun Facts:
Lack
of
diversification
has
hurt
investors
for
years.
In
1637,
the
country
of
Holland
was
in
a
tulip
craze.
Investors
were
clamoring
to
buy
tulip
bulbs.
Some
single
tulip
bulbs
sold
for
more
than
ten
times
the
annual
income
of
a
skilled
craftsman.
A
year
later,
the
tulip
market
completely
crashed,
and
many
people
lost
everything
they
had.
Had
some
of
these
investors
diversified,
they
would
have
been
okay
when
the
bottom
fell
out.
(Source:
www.investopedia.com).
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
122
123
2. Stocks:
Answer:
Well
talk
more
about
them
in
an
upcoming
lesson,
but
stocks
can
be
both
growth
and/or
income
investments.
Stocks
can
grow
in
value
and
they
can
also
pay
income
in
the
form
of
a
dividend.
They
tend
to
be
on
the
riskier
side,
but
because
of
this,
there
is
no
limit
on
the
reward.
3. Bank
account:
Answer:
Even
though
we
use
bank
accounts
for
savings,
they
still
pay
us
a
bit
of
income
in
the
form
of
interest.
That
makes
a
bank
account
an
income
investment.
The
government
insures
your
money;
so
bank
accounts
are
very
safe.
However,
there
is
a
limit
on
the
reward.
You
will
only
earn
the
stated
interest
rate,
which
is
not
very
high.
4.
124
Lesson 2:
Introduction to Investing
Part 2
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
Explain
the
concept
of
rebalancing.
Explain
dollar
cost
averaging.
Lesson Summary:
Smart
investors
practice
two
strategies
to
limit
their
risk
and
increase
their
reward.
First,
they
rebalance,
which
means
they
adjust
their
investments.
Typically,
investors
use
three
criteria
to
determine
the
best
time
to
rebalance:
the
investments
performance,
their
financial
goals,
and
their
age.
The
second
strategy
is
called
dollar
cost
averaging.
Dollar
cost
averaging
is
the
practice
of
investing
the
same
amount
of
money
every
month
into
the
stock
market.
You
may,
for
instance,
decide
to
invest
$200
per
month
into
the
stock
market.
If
the
stock
market
soars
to
new
heights,
you
invest
the
$200.
If
it
crashes,
you
still
invest
the
$200.
By
investing
the
same
amount
every
month,
you
ensure
that
you
buy
fewer
shares
when
prices
are
high,
and
more
shares
when
prices
are
low.
Dollar
cost
averaging
takes
the
emotion
out
of
investing.
By
relying
on
numbers,
and
not
emotion,
youre
more
likely
to
come
out
ahead
over
the
long
term.
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
The
lesson
mentioned
that
most
people
ALREADY
have
experience
investing.
If
you
have
never
invested
before,
how
is
this
true?
Answer:_____________________________________________________
____________________________________________________________
2015
National
Center
for
Student
Life.
All
rights
reserved.
125
____________________________________________________________
____________________________________________________________
____________________________________________________________
Action Assignment:
How
important
is
dollar
cost
averaging?
Look
up
the
52-week
high
and
low
price
of
the
following
stocks
-
Google,
Microsoft,
McDonalds
and
Coca
Cola.
Write
down
the
high
and
low
price
and
then
compare.
Is
there
a
huge
difference?
(You
can
find
this
information
online
or
in
any
financial
newspaper.)
Suggested Activity:
Fill
in
the
missing
blanks
on
dollar
cost
averaging.
Assume
you
invest
$200
a
month
in
a
certain
stock.
In
Month
1,
at
$10/share,
you
would
buy
_____shares.
In
Month
2,
at
$50/share,
you
would
buy
____shares.
In
Month
3,
at
$100/share,
you
would
buy
____
shares.
Even
though
the
stock
goes
up,
you
are
not
trying
to
guess
the
highs
and
lows.
Notice
how
when
the
price
goes
up,
you
buy
less
stock.
While
everyone
wishes
they
could
have
buy
all
the
shares
in
Month
One,
and
then
sell
them
all
in
Month
Three,
to
do
this
consistently
is
very
difficult.
Additional Information:
www.yahoo.com
(their
finance
page)
-
Get
up-to-date
information
on
finances
around
the
world
as
well
as
helpful
articles
and
tools
for
your
everyday
life.
www.investopedia.com
-
This
educational
website
has
a
lot
of
great
information
to
help
you
better
understand
personal
finance
and
the
stock
market.
www.magicformulainvesting.com
-
If
you
are
really
interested
in
investing,
this
website
is
a
great
start.
It
was
created
by
Joel
Greenblatt,
who
wrote
The
New
York
Times
Bestseller
The
Little
Book
That
Beats
The
Market.
Fun Facts:
Your
financial
life
is
a
bit
like
being
healthy
and
fit.
Its
all
about
doing
the
same
things
over
and
over
again.
126
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
127
128
129
Lesson 3:
How the Stock Market Works
Part 1
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
Explain
what
the
stock
market
is
and
how
a
company
becomes
public.
Lesson Summary:
The
stock
market
is
a
market
like
any
other.
It
is
a
place
where
stuff
gets
bought
and
sold.
In
the
stock
market,
people
buy
and
sell
stocks.
A
stock
is
a
unit
of
a
company.
Those
units
are
often
referred
to
as
shares.
Stockholders
(or
shareholders)
are
owners
in
a
company.
Every
company
has
at
least
one
stockholder.
If
you
own
your
own
landscaping
business,
consisting
of
just
you,
a
mower,
two
rakes
and
a
shovel,
you
are
the
sole
stockholder.
Granted,
you
are
not
like
Coca-Cola,
which
has
millions
of
stockholders
all
over
the
world.
However,
there
is
really
only
one
difference
between
your
company
and
Coca
Cola,
aside
from
size.
The
difference
is
that
your
company
is
private,
while
Coca
Cola,
which
began
(as
all
companies
do)
as
a
private
company,
is
now
public.
Companies
make
the
leap
from
private
to
public
for
only
one
reason:
They
need
money.
Businesses
need
money
to
expand,
and
there
are
only
two
ways
to
get
that
money:
borrow
it,
or
sell
part
of
the
company
for
cash.
When
a
company
borrows
money,
lenders
expect
to
be
paid
back
their
money,
with
a
predetermined
interest
rate,
within
a
predetermined
period
of
time.
Thats
a
lot
of
restrictions
for
a
new
company.
Instead,
the
new
company
can
sell
shares
to
investors.
In
this
option,
there
are
no
such
restrictions.
If
the
company
does
well
and
makes
money,
the
shareholders
get
paid.
If
it
doesnt,
they
dont.
When
companies
are
seeking
investors,
they
can
do
it
one
of
two
ways.
They
can
do
it
privately
asking
family,
friends,
and
fools
or
they
can
do
it
publicly,
by
2015
National
Center
for
Student
Life.
All
rights
reserved.
130
asking
everyone.
If
a
business
needs
to
raise
a
lot
of
money,
like
several
hundred
million
dollars,
family
and
friends
usually
dont
cut
it.
Instead,
they
go
the
public
route,
by
enlisting
the
help
of
an
investment
bank.
Investment
banks
help
companies
raise
money,
often
by
conducting
an
Initial
Public
Offering
or
I.P.O.
This
event
is
the
first
time
that
shares
in
the
private
company
are
available
to
the
public.
People
who
buy
shares
are
now
owners.
Yes,
yes,
yes.
But,
then
what?
Where
do
these
people
sell
their
shares
if
they
want
to
dump
them?
That
is
where
the
stock
market
comes
in.
The
stock
market
provides
a
place
where
people
can
trade
their
stocks.
After
an
IPO,
a
company
becomes
listed
on
a
stock
exchange,
such
as
the
New
York
Stock
Exchange,
the
American
Stock
Exchange,
or
an
overseas
stock
exchange.
Here,
all
the
stocks,
on
that
particular
exchange,
are
traded
every
business
day.
Prices
of
stocks
are
determined
by
only
one
variable,
the
number
of
buyers
and
sellers.
More
people
buying
will
drive
a
stock
price
up.
A
lot
of
sellers
will
cause
a
stocks
price
to
plummet.
People
buy
out
of
greed
and
sell
out
of
fear,
and
its
important
to
recognize
this
may
or
may
not
have
anything
to
do
with
the
actual
performance
of
the
company.
Investors
can
make
money
by
buying
a
stock
at
one
price
and
selling
it
at
a
higher
price.
They
can
also
make
money
through
dividends.
Dividends
are
company
profits
that
are
distributed
to
shareholders.
Typically
bigger,
older
established
companies
pay
dividends.
The
smaller
companies
reinvest
their
profits
right
back
into
the
business.
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
If
buyers
and
sellers
influence
prices
in
the
stock
market,
what
influences
them?
Answer:_____________________________________________________
____________________________________________________________
____________________________________________________________
Must a company go public? Can it stay private forever? Why or why not?
131
Answer:_____________________________________________________
____________________________________________________________
____________________________________________________________
Action Assignment:
Pick
a
stock
and
research
it.
Write
1-2
paragraphs
on
why
you
think
it
is
a
good
investment.
Whats
todays
price?
What
is
the
52-week
high
and
low
price?
Use
websites
like
yahoo
finance
to
glance
over
the
research
reports
about
that
company.
A
great
place
to
start
is
with
companies
whose
products
you
already
use.
Suggested Activity:
Three
months
after
doing
the
Action
Assignment
for
this
lesson,
go
back
and
look
at
your
stock.
How
did
it
perform?
Why
do
you
think
it
went
up
or
down?
Additional Information:
www.yahoo.com
-
Here
you
will
find
a
great
(and
free)
financial
site
to
get
quotes
and
research
about
stocks.
www.magicformulainvesting.com
-
If
you
are
really
interested
in
investing,
this
website
is
a
great
start.
It
was
created
by
Joel
Greenblatt,
who
wrote
The
New
York
Times
bestseller
The
Little
Book
That
Beats
The
Market.
Fun Facts:
The
worlds
first
publicly
issued
stock
was
issued
by
the
Dutch
East
India
Company
in
1602
(Source:
www.investopedia.com).
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
132
133
134
Lesson 4:
How the Stock Market Works
Part 2
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
Explain
what
stock
market
indexes
are.
Explain
what
a
mutual
fund
is.
Lesson Summary:
Currently
there
are
thousands
of
stocks
available
in
the
United
States
alone.
Its
too
cumbersome
to
look
at
every
single
stock
individually
to
see
where
the
economy
is
at
and
to
guess
where
its
headed.
Indexes
were
created
to
address
this
problem.
The
stock
market
indexes
are
lists
of
publically
traded
companies
designed
to
represent
a
sector
of
the
economy
or
even
the
economy
as
a
whole.
There
are
indexes
for
small
companies,
health
care
companies,
big
companies,
foreign
companies,
and
so
on.
The
most
famous
index
is
the
Dow
Jones
Industrial
Average.
Youve
probably
seen
it
quoted
daily
in
the
global
media.
Apparently,
when
this
index
goes
up,
the
stock
market
as
a
whole
is
doing
well.
When
it
goes
down,
the
market
as
a
whole
goes
down.
Buying
individual
companies
can
be
costly,
risky
and
time
consuming.
That
is
why
most
people
purchase
mutual
funds.
Mutual
funds
are
money
pools
where
several
thousand
investors
surrender
the
management
of
their
money
to
a
manager
who
invests
that
money
on
behalf
of
the
fund.
Naturally,
the
manager
charges
a
fee
to
do
this.
A
very
popular
mutual
fund
is
the
index
mutual
fund,
because
it
has
no
manager
and
therefore
very
low
fees.
In
an
index
mutual
fund,
a
computer
picks
the
stocks.
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
135
Answer:_____________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Action Assignment:
Research
a
mutual
fund
(These
can
be
searched
just
like
stocks
on
websites
like
yahoo
finance.
Type
in
phrases
like
Top
Performing
Mutual
Funds.).
What
are
the
fees?
What
does
the
fund
invest
in?
Suggested Activity:
Build
a
fake
mutual
fund.
What
stocks
would
you
put
in
it
and
why?
(Assume
no
one
stock
can
be
more
than
5%
of
the
funds
position).
Based
on
the
stocks
you
picked,
what
type
of
fund
do
you
have?
Is
it
a
technology
fund?
A
consumer
products
fund?
A
healthcare
fund?
A
food
manufacturing
fund?
This
is
a
great
way
to
get
into
the
mindset
of
a
professional
investor.
Additional Information:
www.etrade.com
www.scottrade.com
www.fidelity.com
www.edwardjones.com
www.vanguard.com
www.troweprice.com
(Note:
All
these
companies
above
can
help
you
with
a
Roth
IRA
and
mutual
funds.
We
receive
no
compensation
or
referral
fee
for
mentioning
them
here.)
Fun Facts:
The
first
mutual
fund
is
often
credited
to
a
Dutch
merchant
named
Adriaan
van
Ketwich.
He
created
an
investment
trust
created
in
1774
Ketwich
most
likely
thought
that
offering
diversification
would
increase
the
appeal
of
the
fund
to
smaller
investors
with
minimal
amounts
of
money.
The
name
of
Ketwichs
fund,
Eendragt
Maakt
Magt,
translates
to
unity
creates
strength.
2015
National
Center
for
Student
Life.
All
rights
reserved.
136
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
137
138
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
Explain
the
3-step
investment
process.
Lesson Summary:
To
get
started
on
your
investment
plan,
follow
a
3-step
process:
Step
one:
Determine
your
risk
level.
Simply
subtract
your
age
from
the
number
100.
The
answer
is
how
much
of
your
portfolio
should
be
in
growth
investments.
The
rest
should
be
in
income
investments.
Every
year,
do
this
same
subtraction
and
rebalance.
Step
two:
Dollar
cost
average.
Pick
an
amount
you
will
invest
every
month
and
set
up
an
automatic
plan
to
have
that
money
transferred
from
your
paycheck
or
your
checking
account
to
you
stock
brokerage
account.
Step
3:
Set
up
an
account
and
buy
something.
Your
local
bank
or
financial
company
can
help
you
set
up
an
investment
account.
If
you
are
employed,
ask
human
resources
for
information
on
your
companys
retirement
plan.
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
What
if
you
set
up
an
investment
account
and
you
want
to
change
something?
Are
you
locked
in?
Answer:________________________________________________________
_______________________________________________________________
_______________________________________________________________
Action Assignment:
Write
up
your
investment
plan
by
answering
three
questions:
1. What
is
your
risk
level?
139
Then
along
comes
2008.
The
market
drops
considerably
and
her
new
portfolio
is
$75,000
in
income
investments
and
a
sad
$32,000
in
growth
products.
Her
portfolio
again
is
out
of
line.
Only
this
time,
its
in
the
other
direction.
What
does
she
do?
140
Answer:_____________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Additional Information:
www.yahoo.com
-
Here
you
will
find
a
great
(and
free)
financial
site
to
get
quotes
and
research
about
stocks.
www.irs.gov
-
This
is
the
official
website
of
the
IRS
which
provides
information
on
Roth
IRAs
and
other
retirement
accounts.
www.magicformulainvesting.com
-
If
you
are
really
interested
in
investing,
this
website
is
a
great
start.
It
was
created
by
Joel
Greenblatt,
who
wrote
The
New
York
Times
bestseller
The
Little
Book
That
Beats
The
Market.
Fun Facts:
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
141
142
143
144
145
Only
this
time,
its
in
the
other
direction.
What
does
she
do?
Answer:
Bravely,
she
moves
$21,500
out
of
the
income
side
and
puts
it
into
the
growth
side,
giving
her
portfolio
a
balance
of
50/50.
When
the
market
does
go
back
up,
shell
be
glad
she
had
the
courage
to
sink
money
in
when
times
were
tough.
146
Bonus Unit
Financial Life
Events
147
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
Explain
the
ideal
age
of
the
car
you
should
buy.
Explain
why
the
monthly
car
payment
means
NOTHING.
Explain
the
downside
of
leasing.
List
seven
tips
for
buying
a
car.
Lesson Summary:
Where
buying
cars
is
concerned,
the
advice
is
simple
to
understand,
but
difficult
to
follow.
In
three
sentences,
here
it
is:
Buy
the
cheapest
car
you
feel
safe
in.
Pay
cash.
Shop
around.
The
sad
truth
about
car
shopping
is
that
most
people
swindle
themselves
when
than
actually
get
swindled
by
a
slick
salesperson.
As
a
society,
we
now
believe
cars
are
a
reflection
of
ourselves,
so
we
want
to
buy
something
cool.
Dont
fall
for
it.
Safety
and
price
in
that
order
should
be
your
focus.
Here
are
some
additional
car
buying
tips:
Dont
buy
a
new
car.
Ideally,
buy
a
car
that
is
2-5
years
old.
Studies
have
shown
this
is
the
sweet
spot.
A
new
car
loses
25%
of
its
value
instantly,
while
cars
older
than
5
years
are
often
plagued
with
repairs,
despite
their
low
price.
Shop
the
car
AND
the
financing.
You
dont
have
to
get
a
loan
from
the
dealer.
You
can
get
it
from
your
bank
or
even
a
bank
you
have
never
used
before.
Check
the
book
value.
Visit
www.kbb.com
and
www.edmunds.com.
These
are
sites
that
have
prices
of
used
cars.
Find
a
senior
citizen.
Retired
seniors
usually
dont
drive
a
lot
(since
they
have
no
commute).
They
may
have
an
older
car
with
very
low
mileage.
Monthly
payment
means
NOTHING.
What
matters
is
the
value
of
the
car
you
are
getting.
Any
car
salesperson
can
stretch
out
the
monthly
payments
until
the
number
works
for
you.
Think
in
terms
of
the
dealers
price,
compared
to
the
price
of
the
book
value.
Dont
lease.
The
way
to
get
value
out
of
a
car
is
to
buy
a
car
that
is
2-5
years
old
and
drive
it
until
it
dies.
Even
when
it
dies,
you
can
always
sell
it
for
something.
With
leasing,
you
never
own
the
car.
If
leasing
looks
cheaper,
its
often
because
the
salesperson
is
fooling
around
with
monthly
payments.
2015
National
Center
for
Student
Life.
All
rights
reserved.
148
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
Is
a
car
an
appreciable
or
depreciable
asset?
Answer:_____________________________________________________
Action Assignment:
Pick
the
kind
of
car
you
want
to
buy.
Then
research
the
different
ways
to
get
it.
Compare
leasing
versus
buying
outright
versus
getting
a
loan.
Next
write
a
summary
of
your
research
and
your
decision
about
what
to
buy.
Visit
the
websites
mentioned
in
this
chapter.
Look
at
the
classified
ads,
maybe
call
up
a
salesperson
on
the
phone.
Compare
buying
new
versus
buying
used.
Get
familiar
with
the
actual
process.
Youll
have
to
do
it
sometime.
2015
National
Center
for
Student
Life.
All
rights
reserved.
149
Suggested Activity:
Go
car
shopping,
even
if
you
are
not
in
the
market.
Be
honest
that
you
are
just
looking,
but
feel
free
to
ask
questions
about
price,
terms
and
service
(Note:
DO
NOT
let
the
salesperson
check
your
credit
report,
as
this
can
hurt
your
score
unnecessarily.).
The
purpose
is
to
get
comfortable
with
the
car
buying
process.
Additional Information:
www.edmunds.com
-
This
site
lists
the
book
value
of
used
cars.
www.kbb.com
-
This
site
also
lists
the
book
value
of
used
cars.
www.carfax.com
-
This
site
is
an
insurance
database,
which
has
accident
information
on
cars.
All
cars
have
a
unique
Vehicle
Identification
Number
or
VIN.
When
a
car
is
in
an
accident,
the
insurance
company
makes
a
note
of
the
vehicle,
the
VIN,
and
the
details
of
the
damage.
Carfax
can
tell
you
the
accident
history
of
a
used
car.
www.lendingtree.com
-
This
website
reveals
what
banks
are
currently
offering
for
car
loan
rates.
Take
this
information
to
the
car
dealership.
Fun Facts:
Sam
Walton,
when
he
was
the
richest
man
in
America,
drove
a
pickup
truck.
He
was
the
guy
who
founded
Walmart.
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
150
____
____
Did
you
go
online
to
www.creditkarma.com
and
print
out
your
credit
report
and
score
(Show
this
to
the
salesperson
so
they
dont
check
your
credit
at
every
dealership.)?
____
Determine
what
you
can
afford
based
on
the
prices
and
rates
youve
seen.
Grabyour
zero-based
budget,
and
take
a
good
look.
Can
you
afford
the
car
you
want?
If
not,
you
may
have
to
make
some
lifestyle
adjustments
or
look
at
cheaper
vehicles.
____
____
______
151
152
Bonus Lesson 2:
Renting an Apartment
Part 1
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
List
four
ways
to
save
money
on
an
apartment
rental.
Lesson Summary:
Every
dollar
you
spend
on
rent,
you
will
never
get
back.
So
while
I
want
you
to
be
happy
with
where
you
live,
I
also
want
you
to
get
a
good
deal.
Heres
how:
! Negotiate.
Remember
to
get
a
better
deal;
sometimes
all
you
need
to
do
is
ask.
Take
on
roommates.
The
more
roommates
you
have,
the
lower
the
cost
per
room.
You
also
save
on
bills.
Cable
for
one
TV
is
the
same
price,
whether
one
person
or
ten
people
are
watching
it.
Remember
Chain
Reaction
Shopping.
Speaking
of
bills,
you
cant
just
look
at
the
cost
of
rent.
How
much
it
is
to
heat
the
place?
Do
you
have
to
pay
for
parking
or
laundry?
Will
you
need
new
furniture?
Live
at
home
as
long
as
you
can.
I
know,
I
know.
But
it
is
a
powerful
way
to
save.
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
Is
rent
an
asset
or
liability?
Answer:_____________________________________________________
Action Assignment:
Find
out
the
average
starting
salary
in
your
career
field.
You
might
be
able
to
find
this
online
or
you
can
ask
the
career
center
at
your
school.
When
you
have
that
number,
try
to
find
an
apartment
in
the
area
that
supports
that
salary,
including
estimated
electricity
and
other
expenses.
Write
up
a
one-
to
two-paragraph
plan
on
how
you
will
pay
for
it.
You
might
have
to
live
at
home
for
three
months
first.
You
might
have
to
take
on
roommates
or
skip
cable.
153
Suggested Activity:
Find
someone
you
know
who
just
rented
an
apartment
in
the
city
youd
like
to
live
in.
Ask
them
about
their
experience.
What
worked
and
what
didnt
during
the
apartment
hunting
process?
What
could
they
have
been
done
differently?
If
you
live
at
home,
think
about
that
experience
as
well.
What
do
you
like
and
not
like
about
living
at
home?
Do
you
share
a
room
with
a
brother
or
sister?
How
do
you
deal
with
conflicts?
Answering
these
questions
can
prevent
future
fiascos
when
you
get
a
place
of
your
own.
Additional Information:
Your
states
real
estate
commission
should
have
a
standard
lease
for
your
state.
If
not,
you
can
ask
your
local
board
of
Realtors
or
local
real
estate
agent
for
help.
www.craigslist.org
-
This
is
a
great
place
to
find
not
just
apartments
but
roommates
and
furniture
as
well.
www.realtor.org
-
This
is
the
official
website
of
the
National
Association
of
Realtors,
the
professional
association
of
real
estate
agents.
They
also
have
local
chapters
in
every
state.
Fun Facts:
In
1759,
Arthur
Guinness,
founder
and
creator
of
Guinness
Beer,
needed
to
rent
some
space
to
make
his
beer.
So
he
signed
a
nine
thousand
year
lease
to
rent
space
at
the
St.
James
Gate
Brewery.
Today,
the
lease
is
no
longer
valid,
as
Guinness
bought
the
property
outright
many
years
ago.
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
154
________________
Realtor Fee
________________
________________
________________
Washer/Dryer Fee
________________
________________
155
______________________
156
157
Bonus Lesson 3:
Renting an Apartment
Part 2
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
List
six
ways
to
save
money
on
an
apartment
rental.
Explain
what
a
co-signer
is.
Lesson Summary:
Congrats!
Youve
found
a
place!
Now
what?
Read
your
lease.
A
lease
is
a
legal
agreement
to
rent
space.
Most
leases
are
standard
but
some
landlords
will
ask
the
tenant
to
do
extra
stuff.
For
example,
they
might
ask
you
to
shovel
the
driveway,
or
care
for
the
yard.
When
you
read
the
lease,
youll
know
these
items
in
advance.
Ask
your
roommates
about
their
habits.
And
do
this
BEFORE
they
become
your
roommates.
What
are
your
pet
peeves?
What
are
theirs?
Does
anyone
have
weird
habits?
Who
will
be
visiting?
Who
has
a
significant
other?
Everyones
name
must
be
on
the
lease
and
ALL
the
bills.
If
you
have
roommates,
youll
need
to
put
everyones
name
on
the
lease
and
all
the
bills
so
no
one
person
is
stuck
with
everything.
Take
pictures.
Before
you
move
in,
photograph
the
place
and
save
the
photos
until
you
move
out.
This
can
serve
as
proof
if
something
is
damaged.
Do
a
walk
through.
A
walk-through
is
done
the
day
you
move
in,
and
it
is
done
with
the
landlord.
If
something
is
different
than
when
you
first
looked
at
the
place,
ask
about
it.
Also
be
sure
to
get
any
agreements
in
writing.
If
the
landlord
says,
Oh
yeah
Ill
be
sure
to
replace
that
before
you
move
in.
Get
it
in
writing,
on
the
lease.
Get
renters
insurance.
Renters
insurance
costs
around
$25
a
month.
It
covers
your
stuff
if
your
stuff
gets
lost
or
stolen
and
protects
you
if
you
get
sued.
Please
dont
skip
it.
158
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
What
will
you
need
to
provide
to
the
landlord
before
you
move
in?
Answer:____________________________________________________
___________________________________________________________
___________________________________________________________
Whats
a
cosigner?
Answer:_____________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Action Assignment:
Go
look
at
an
apartment
that
you
are
interested
in
living
in,
even
if
that
day
is
far
in
the
future.
(If
there
is
no
time
for
an
in-person
visit,
you
can
look
online.).
Be
sure
you
take
the
Apartment
Rental
Checklist.
Suggested Activity:
Fill
out
the
Apartment
Rental
Checklist
for
the
apartment
you
just
looked
at.
Even
if
you
already
have
an
apartment,
this
exercise
gets
you
comfortable
with
the
process
of
how
to
find
an
apartment.
(Often
people
get
swept
up
by
a
nice
view
or
granite
countertops,
and
they
miss
other
stuff
that
will
become
a
problem
later.)
Additional Information:
Your
states
real
estate
commission
should
have
a
standard
lease
for
your
state.
If
not,
you
can
ask
your
local
board
of
Realtors
or
local
real
estate
agent
for
help.
2015
National
Center
for
Student
Life.
All
rights
reserved.
159
Fun Facts:
So
which
cities
have
the
best
rental
deals?
According
to
Today
Money,
your
dollars
will
go
furthest
in
these
cities:
1.
Wichita,
KS
2.
Oklahoma
City,
OK
3.
Tulsa,
OK
4.
Knoxville,
TN
5.
Dayton,
OH
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
160
161
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
Explain
why
you
should
NOT
focus
on
the
total
amount
of
debt
you
have.
Explain
why
having
a
plan
to
pay
off
your
debt
is
so
important.
Lesson Summary:
Debt
can
be
a
major
stress
inducer.
While
eliminating
your
debt
overnight
is
difficult,
you
can
reduce
the
stress
quickly
with
a
little
planning
and
a
slight
change
in
perspective.
The
first
step
in
dealing
with
debt
is
to
plan
ahead.
If
your
credit
is
terrible,
it
will
be
tough
to
get
a
cell
phone,
an
apartment,
or
to
borrow
money
perhaps
to
even
get
a
job.
Be
prepared
to
address
these
issues
in
advance.
There
are
landlords
who
dont
do
credit
checks,
and
you
can
get
a
prepaid
cell
phone.
So
think
to
the
future.
The
second,
even
simpler
step,
is
to
just
change
your
perspective
on
debt.
If
you
have
$10,000
in
credit
card
debt
that
amount
can
be
intimidating.
By
changing
your
prospective,
you
can
conquer
this
intimidation.
Imagine
the
payments
on
that
$10,000
debt
are
$300
a
month.
Let's
also
assume
that
all
you
can
afford
to
pay
is
$250
a
month.
So
every
month
you
are
$50
short.
Looking
at
the
situation
this
way,
it
quickly
becomes
frustrating.
A
slight
shift
in
perspective
however,
changes
everything.
Really,
you
only
have
a
$50
a
month
problem.
If
you
can
increase
your
income,
or
cut
your
expenses,
or
make
a
large
enough
payment
toward
the
debt
to
get
rid
of
that
$50
gap,
you
just
made
huge
progress
with
a
very
small
step.
Look
for
a
part-time
job
for
a
month.
Have
a
yard
sale.
Sell
some
clothes.
Do
whatever
you
need
to
do
to
bridge
that
gap.
162
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
How
does
changing
your
perspective
help
with
your
debt
problems?
Answer:_____________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
This
lesson
mentioned
that
people
with
bad
credit
should
plan
ahead.
What
are
some
things
they
can
do?
Answer:_____________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
Action Assignment:
Go
to
www.peterbielagus.com
and
find
the
credit
card
payoff
calculator.
Type
in
$10,000
of
debt,
a
15%
interest
rate
and
a
payment
of
$250
a
month.
How
long
does
it
take
to
pay
it
off?
Now
type
in
a
payment
of
$300
a
month,
just
$50
more.
How
much
quicker
is
the
payoff?
How
about
just
5
extra
dollars?
What
does
that
do?
Play
around
with
different
debt
amounts,
interest
rates
and
payments.
Find
out
how
much
of
a
big
difference
a
tiny
change
can
make.
Suggested Activity:
Create
a
pretend
student
who
has
$10,000
in
credit
card
debt
and
$10,000
in
student
loan
debt.
Imagine
they
get
a
job
right
out
of
school
making
$27,000
a
year.
How
could
this
person
could
arrange
their
financial
life
to
make
sure
their
loans
are
paid
on
time?
2015
National
Center
for
Student
Life.
All
rights
reserved.
163
Assume
their
student
loan
payments
are
$100
a
month
and
the
credit
card
payments
are
also
$100
a
month.
Now
think
about
the
other
expenses
this
student
might
have,
like
food,
gas
etc.
What
could
they
do
to
be
sure
they
meet
their
debt
obligations?
Could
they:
Live
at
home
for
one
year
and
put
all
their
rent
payments
toward
the
debt?
Get
an
extra
roommate
for
one
year
and
put
that
savings
toward
debt?
Walk
to
work?
Carpool
to
work?
Get
creative
and
come
up
with
some
ideas.
Remember,
even
though
this
is
a
pretend
student,
this
pretend
student
may
very
well
be
YOU
one
day!
Additional Information:
www.nfcc.org
-
The
National
Foundation
for
Credit
Counseling
can
help
if
you
have
huge
debt
problems.
They
can
help
with
everything
from
debt
consolidation,
to
home
foreclosure
issues,
to
bankruptcy.
www.bankrate.com
-
This
website
has
a
whole
bunch
of
calculators,
including
ones
for
credit
cards.
Fun Facts:
According
to
Delray
Credit
Counselings
website,
the
city
of
Montreal
needed
30
years
to
pay
off
its
Olympic
debt
of
$2
billion,
held
in
1976!
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
164
Debt Payoff
A 5-Step Plan
Step
1:
List
all
of
your
debts,
with
the
name
of
the
creditor,
the
type
of
debt
(student
loan,
credit
card,
home
loan,
car
loan),
monthly
payment,
total
amount
owed,
interest
rate,
minimum
payment,
and
whether
it
is
a
fixed
or
variable
interest
rate.
(REMEMBER:
Credit
cards
have
no
fixed
rates!)
Step
2:
Re-prioritize
by
putting
the
smallest
debt
first.
Step
3:
Pay
the
MINIMUM
on
all
debts,
except
the
smallest
one.
Put
as
much
as
you
can
toward
that
one.
Step
4:
Once
the
smallest
debt
is
wiped
out,
apply
that
payment
toward
the
NEXT
smallest
debt.
Step
5:
Keep
repeating
this
process.
Paying
the
minimums
on
all,
except
the
smallest
debt,
which
gets
as
much
money
as
you
can
afford.
As
a
debt
gets
wiped
out,
put
those
payments
toward
the
next
smallest
debt.
The
amount
of
your
total
payments
wont
change,
but
you
are
creating
a
snowball
effect,
for
as
your
debts
shrink,
you
keep
paying
the
same
amount.
165
Creditor
Amount
You
Owe
Interest
Rate
Monthly Payment
Fixed?
Type
of
Minimum
Debt
Payment
10
166
167
168
Bonus Lesson 5:
Dealing with Debt Collectors
Part 1
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
List
the
4
options
people
have
when
it
comes
to
dealing
with
debt
collectors.
List
the
5
items
they
can
negotiate
with
a
debt
collector.
Explain
the
3
things
debt
collectors
can
do
if
you
do
not
pay
your
debts.
Lesson Summary:
If
you
owe
money
to
someone,
that
person
or
company
is
called
a
creditor.
Creditors
will
sometimes
hire
third-party
debt
collectors
or
collection
agents.
All
creditors
fall
into
two
groups,
public
creditors
or
private
creditors.
Public
creditors
are
government
agencies,
like
the
IRS,
or
the
Department
of
Education.
Private
creditors
are
everyone
else,
like
credit
card
companies
and
car
loan
companies.
When
you
owe
money
to
a
creditor
and
you
cannot
make
your
payments,
you
have
four
basic
options:
Run
and
hide
-
By
far
the
most
popular
option
but
also
the
most
useless.
Remember,
creditors
dont
give
up
easily,
even
if
it
appears
that
they
have.
Just
because
theyve
stopped
calling,
doesnt
mean
theyve
given
up.
Negotiate
on
your
own
-
Usually
the
best
option,
because
you
dont
have
to
pay
someone
to
do
what
you
can
do
for
free.
In
addition,
negotiating
with
creditors
is
easier
than
most
people
believe.
Hire
someone
to
negotiate
for
you
-
This
is
another
popular
option
but
with
one
drawback.
Normally,
the
money
you
pay
to
the
third-party
negotiation
company
would
be
better
spent
just
paying
the
debt.
Declare
personal
bankruptcy.
Bankruptcy
is
the
legal
process
where
you
ask
the
court
to
assist
you
in
settling
your
debts.
This
is
not
as
easy
as
it
used
to
be,
as
the
laws
changed
in
2005.
Also,
bankruptcy
varies
between
states.
It
is
easier
in
some
states
than
in
others.
Remember,
a
personal
2015
National
Center
for
Student
Life.
All
rights
reserved.
169
170
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
Why
is
negotiating
often
the
best
option
for
a
creditor?
Answer:
_____________________________________________________
_____________________________________________________
_____________________________________________________
Answer:
______________________________________________________
______________________________________________________
______________________________________________________
______________________________________________________
Action Assignment:
Make
a
large
list
of
all
the
ways
you
could
reduce
your
debts
(Do
this
even
if
you
do
not
have
any
debts
right
now.).
While
many
students
may
have
no
debt
at
all,
this
will
really
help
the
students
who
are
in
debt.
And
remember,
one
day
you
might
be
in
debt,
so
youll
be
thankful
you
did
this
list.
To
help
you
get
started,
here
are
some
ideas:
1. Switch
to
a
credit
card
with
a
lower
interest
rate
-
Often
you
can
get
a
better
rate
simply
by
asking
for
it.
You
can
also
use
one
credit
card
to
pay
off
the
other
(AS
LONG
AS
YOU
CUT
UP
THE
OTHER!!!).
2. Knock
off
a
tiny
debt
ASAP
-
If
you
have
a
small
debt
of,
say
$250,
get
rid
of
that,
regardless
of
the
interest
rate.
This
will
motivate
you.
3. Sell
your
stuff
-
The
average
yard
sale
yields
$600,
tax
free!
If
you
dont
have
a
yard,
try
eBay.
4. Get
a
temp
job
for
a
very
short
period
of
time
-
You
probably
dont
have
the
time
or
energy
to
work
another
job.
But
working
a
temporarily
job
for
2015
National
Center
for
Student
Life.
All
rights
reserved.
171
Suggested Activity:
Make
a
list
of
cheap
stuff
you
like
to
do.
Often
we
spend
money
because
we
hang
out
with
people
who
spend
money
(We
pay
for
cable
because
our
roommates
want
cable.
We
go
out
to
eat
because
our
friends
go
out
to
eat.).
Or
we
feel
the
need
to
spend
money
to
make
something
special
or
memorable.
(We
spend
money
on
an
expensive
Valentines
Day
dinner.
We
spend
a
lot
of
money
on
spring
break
or
New
Years
Eve.).
Having
a
written
list
of
fun
activities
that
are
also
affordable
will
prevent
you
from
opening
your
wallet
the
next
time
you
want
to
have
an
enjoyable
night.
Additional Information:
www.nfcc.org
-
This
is
the
website
of
the
National
Foundation
for
Credit
Counseling.
This
is
a
great
place
to
start,
as
they
can
discuss
everything,
from
credit
counselors,
to
doing
it
yourself,
to
bankruptcy
(They
will
not,
of
course,
discuss
the
run
and
hide
technique.).
Fun Facts:
Total
U.S.
consumer
debt:
$11.74
trillion,
as
of
2014
(Source:
Nerd
Wallet.com)
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
172
173
Its
possible
an
employer
will
ask
about
bankruptcy
and
look
scornfully
upon
it.
This
will
vary
from
company
to
company,
but
in
general,
more
and
more
employers
are
pulling
credit
reports.
7. Whats
this
Chapter
7
and
Chapter
13
stuff?
The
Chapter
refers
to
the
location
in
the
Bankruptcy
laws.
Chapter
7
is
a
clean
slate.
Declaring
Chapter
7
actually
wipes
out
debt.
Its
best
for
people
with
massive
debts
who
have
no
chance
of
paying
it
off.
But
as
of
October
2005,
Chapter
7
is
not
so
easy.
Chapter
13
is
a
court-ordered
payment
plan.
Your
payments
get
extended,
creditors
cant
harass
you
-
but
you
MUST
pay.
Chapter
13
doesnt
wipe
out
debts.
Why
do
it
then?
It
can
be
used
for
debts
that
not
even
a
Chapter
7
bankruptcy
can
wipe
out,
like
taxes.
174
When
meeting
with
a
credit
counseling
service,
the
following
questions
may
help.
1. How
is
your
service
compensated?
There
are
a
few
firms
out
there
who
will
charge
an
hourly
rate
to
negotiate
a
debt
payment
plan.
The
majority
of
them
will
get
a
kickback
of
the
money
they
bring
in
for
creditors.
Needless
to
say,
this
kickback
can
create
a
bias.
Kickback
firms
have
helped
thousands
of
people
dig
their
way
out
of
debt
without
declaring
bankruptcy;
just
realize
the
bias
can
be
there.
Naturally,
firms
that
charge
by
the
hour
are
going
to
bash
those
who
work
on
kickback
commission,
and
those
who
are
on
kickback
commission
are
going
to
make
you
think
twice
about
paying
hourly.
There
is
no
easy
way
around
this.
Try
meeting
with
both
types
of
firms.
Do
what
youre
comfortable
with
and
what
you
can
afford.
And
always
remember,
the
money
you
would
send
to
these
firms
may
better
used
by
sending
it
directly
to
the
creditor,
to
get
you
out
of
debt
faster.
2. Can
you
get
rid
of
negative
marks
on
my
credit
report?
The
answer
is
NO!
There
are
only
two
ways
to
get
negative
marks
off
your
credit
report.
One,
let
enough
time
pass
by
so
they
disappear.
Two,
prove
that
the
bad
mark
is
indeed
a
legitimate
mistake
made
by
the
creditor.
No
one
can
erase
your
wrongdoings.
Dont
buy
services
from
anyone
who
claims
they
can.
3. How
exactly
will
you
help
me
get
out
of
debt?
There
are
a
few
ways
a
credit
counseling
service
can
help
you
get
out
of
debt.
If
the
credit
counseling
service
is
a
law
firm
that
youre
paying
hourly,
they
may
approach
each
creditor
one
at
a
time
and
negotiate
down
the
debt.
Because
its
a
law
firm,
which
no
doubt
offers
bankruptcy
services
as
well,
creditors
might
be
willing
to
listen
for
fear
you
will
declare
bankruptcy.
Some
credit
counseling
services
can
reduce
your
payment
by
acting
as
a
middleman.
These
services
meet
with
hundreds
of
clients
who
owe
thousands
of
dollars.
Rather
than
Visa
meeting
with
every
single
client
to
hear
their
particular
sob
story,
the
counseling
service
does
that.
Then
the
counseling
service
negotiates
with
Visa
(or
whomever),
leveraging
the
bulk
amount
of
payments
they
can
help
bring
in.
Sometimes
states
have
their
own
repayment
plans
which
may
allow
you
to
force
your
creditor
to
take
principal
only
payments.
Your
lawyer
or
your
counseling
service
can
tell
you
more
about
what
your
state
offers.
4. Will
you
help
me
with
all
my
debts?
175
5.
6.
7.
8.
The
answer
you
want
here
is
YES!
Some
services
just
help
with
credit
cards.
Dont
use
such
a
service.
Why
work
with
a
service
to
pay
off
credit
card
debt,
only
to
leave
your
mortgage
payments,
taxes
and
student
loans,
untouched?
This
is
silly.
If
youre
going
to
get
back
on
track,
get
ALL
your
debts
back
on
track.
I
guess
because
youre
a
not-for-profit
corporation
you
have
my
best
interests
at
heart,
right?
Beware
of
the
phrase
not-for-profit.
I
have
a
few
friends
who
run
not-for-profit
companies
and
they
make
more
money
than
I
do!
Im
not
saying
not-for-profits
are
scams
in
disguise,
but
dont
think
a
flashy
corporate
law
firm
is
pure
evil
and
a
not-for-profit
has
a
halo
over
its
head.
You
need
to
dig
deeper.
What
about
bankruptcy?
Its
important
to
at
least
ask
this
question
and
see
what
they
say.
If
they
balk
at
it
instantly,
that
may
indicate
some
bias.
While
bankruptcy
is
a
last
resort
option,
it
is
an
option.
Dont
dismiss
it
instantly,
especially
if
you
have
so
much
debt
you
see
no
way
out.
Will
this
hurt
my
credit
rating?
Using
a
debt
counselor
wont
hurt
your
score.
It
used
to,
but
the
laws
have
been
changed.
Am
I
actually
saving
money
working
with
your
service?
This
seems
like
a
dumb
question
but
be
sure
the
credit
counselor
can
actually
save
you
money.
If
not,
you
may
be
better
off
making
the
payments
directly
to
your
creditors
to
get
out
of
debt
faster.
You
can,
if
you
feel
comfortable,
ask
your
creditors.
Tell
them,
Look,
all
I
can
pay
is
X
a
month.
If
you
dont
agree
to
that,
I
need
to
go
see
a
credit
counselor
and
maybe
even
declare
bankruptcy.
Do
you
want
me
to
pay
you
or
go
look
into
these
other
options?
Often
such
phrases
get
the
response
you
are
looking
for.
176
Bonus Unit
177
Bonus Unit
Bonus Lesson 6:
Dealing with Debt Collectors
Part 2
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
Explain
what
validating
an
account
means.
Explain
the
4-step
process
to
working
with
debt
collectors.
Lesson Summary:
This
second
lesson
on
dealing
with
debt
collectors
focused
on
how
to
create
a
plan
to
work
with
them.
Basically,
all
debt
repayment
plans
have
four
steps:
1. Ask
that
your
account
be
validated.
Validating
an
account
means
the
debt
collector
must
prove
that
they
have
the
right
to
collect
the
money
from
you.
There
is
a
time
limit
about
how
long
you
can
request
this,
but
ask
it
anyway,
even
if
that
time
has
passed.
Sometimes
they
oblige.
2. Ask
the
debt
collector
not
to
call
you.
You
want
them
to
only
contact
you
in
writing.
3. Come
up
with
a
plan.
How
much
can
you
pay
and
when?
The
plan
should
be
realistic
for
YOU.
4. Present
the
plan.
Most
likely
a
debt
collector
will
not
agree
to
your
first
offer,
but
you
can
keep
working
with
them.
REMEMBER
they
just
want
their
money.
Every
minute
they
spend
negotiating
costs
them
money.
So
they
do
want
to
work
with
you.
Dont
get
nervous!
Debt
collectors
only
have
three
tools
they
can
use
against
you.
They
can:
Hurt
your
credit
report
-
Often
this
isnt
such
a
big
deal,
because
once
the
nasty
phone
calls
come,
your
credit
has
already
been
ruined.
Take
back
the
item
the
debt
was
tied
to
-
If,
for
example,
you
bought
a
car
with
a
car
loan,
they
can
take
the
car
back.
Typically,
they
do
this
as
soon
as
you
become
a
few
months
late
on
your
payments,
so
if
you
are
way
behind,
it
has
probably
already
happened.
Take
you
to
court
-
In
court,
a
debt
collector
is
trying
to
get
a
judgment
against
you.
A
judgment
allows
the
debt
collector
to
take
money
out
of
your
bank
account,
or
take
a
portion
of
your
paycheck
(Dont
worry,
you
2015
National
Center
for
Student
Life.
All
rights
reserved.
178
Bonus Unit
will
be
formally
notified
about
the
court
date.).
But
remember,
court
is
expensive,
it
takes
a
long
time,
and
they
may
not
win.
So
collectors
do
want
to
work
with
you.
Public
debt
collectors
can
often
take
money
out
of
your
bank
account,
take
your
tax
refund,
or
garnish
part
of
your
paycheck
without
a
court
order.
You
will
be
notified
before
this
happens,
but
be
aware
they
can
do
it,
in
most
cases,
without
taking
you
to
court.
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
Why
is
presenting
a
written
plan
to
the
debt
collector
so
important?
Answer:________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
Why
is
it
important
to
NOT
talk
on
the
phone
to
collection
agents
but
instead
communicate
in
writing?
Answer:________________________________________________________
_______________________________________________________________
_______________________________________________________________
Action Assignment:
Go
online
and
type
into
your
favorite
search
engine:
wage
garnishment
laws
in
the
state
of
_________________.
Put
in
your
home
state.
What
are
the
rules
in
your
state?
Suggested Activity:
2015
National
Center
for
Student
Life.
All
rights
reserved.
179
Bonus Unit
Roll
play!
If
you
are
having
problems
with
your
debts,
find
a
friend
and
use
one
of
the
scripts
at
the
end
of
this
lesson.
One
person
is
the
debt
collector
and
one
is
the
debtor.
Run
through
some
of
the
scripts.
This
is
a
great
exercise
because
it
gets
you
comfortable
with
talking
to
a
debt
collector.
Additional Information:
Fun Facts:
According
to
Readers
Digest,
debt
collectors
usually
have
the
pre-approved
power
to
cut
between
15-35%
of
your
debt
immediately.
So
it
pays
to
negotiate!
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
180
Bonus Unit
Get
your
tools.
We
recommend
you
tape
this
checklist
to
the
wall
near
the
phone.
Also
keep
a
recording
device,
a
pen
and
a
piece
of
paper
as
well
as
a
calendar.
Say
this
first
-
Could
you
hold
on
just
a
moment?
Then
go
grab
a
pen
and
piece
of
paper.
DO
NOT
talk
on
the
phone
unless
you
are
taking
notes.
Write
the
date
of
the
call
at
the
top
of
the
piece
of
paper.
Then
ask
them
for:
o Their
first
and
last
name
(If
they
wont
give
their
full
name
ask
for
their
initials.
Get
as
much
information
as
you
can
get.)
o Ask
for
their
employee
number
(if
they
have
one)
o Ask
for
the
name
of
the
company
they
are
calling
from
o Ask
for
their
phone
number
and
extension
Dont
panic
-
Remember,
collection
agents
just
want
their
money.
This
is
a
business
transaction.
Be
polite
(even
if
they
are
not)
-
Should
the
situation
ever
wind
up
in
court,
you
want
a
record
that
you
were
always
courteous
and
polite.
Remember,
there
are
ONLY
two
things
a
collection
agent
can
do
to
you:
o Ruin
your
credit.
(If
they
are
calling,
your
credit
is
probably
already
ruined).
o Take
you
to
court.
To
garnish
your
wages
or
your
tax
refund,
they
need
a
court
order.
You
will
be
notified
they
are
taking
you
to
court.
o EXCEPTION:
The
IRS
and
student
loan
companies
with
federally-insured
student
loans,
have
much
more
power.
Also,
companies
that
have
secured
debt
(like
car
loans)
can
usually
take
your
car
(or
whatever
security)
back
without
a
court
order.
If
you
have
problems
with
the
IRS,
we
recommend
you
FIRST
talk
to
a
tax
professional.
If
you
have
problems
with
a
student
loan
company,
call
your
student
loan
servicer.
o Beyond
this.
Collection
agents
are
making
threats
that
are
most
likely
illegal.
WRITE
THESE
DOWN,
as
any
illegal
threats
may
help
your
case
later.
Do
not
tolerate
verbal
abuse
-
It
is
illegal,
end
of
story.
If
they
keep
screaming,
tell
them
you
are
going
to
record
the
call
or
you
are
going
to
hang
up.
They
have
broken
the
law
if
they
say
any
of
the
following:
o Threaten
to
call
your
neighbors,
friends
or
employer
o Call
you
names
like
deadbeat,
cheater,
etc.
o Make
illegal
threats,
like
threatening
to
get
you
fired
o Threaten
to
come
to
your
house
181
Bonus Unit
182
Bonus Unit
183
Bonus
Unit
Also
during
this
validation
period,
if
any
action
is
taken
which
could
be
considered
detrimental
to
any
of
my
credit
reports,
I
will
consult
with
my
legal
counsel
for
suit.
This
includes,
but
is
not
limited
to:
Listing
of
any
information
with
a
credit
reporting
agency
that
could
be
inaccurate
or
invalidated.
Verifying
an
account
as
accurate
when
there
is
no
proof
that
it
is.
If
your
company
fails
to
respond
to
this
letter
requesting
validation
of
the
above
referenced
account
within
30
days
from
the
date
of
your
receipt,
all
references
to
this
account
must
be
deleted
and
completely
removed
from
my
credit
file.
You
must,
at
that
time,
also
send
a
copy
of
the
deletion
request
to
me
at
the
address
above.
Be
advised
at
this
time
I
also
request,
in
writing,
that
no
telephone
contact
be
made
by
your
offices
to
my
home
or
to
my
work.
If
your
company
attempts
telephone
communication
with
me,
including
but
not
limited
to
computer-generated
calls
and
calls
or
correspondence
sent
to
or
with
any
third
parties,
I
will
consider
such
action
to
be
harassment
and
I
will
have
no
choice
but
to
press
legal
charges.
All
future
correspondence
with
me
must
be
done
in
writing
and
sent
to
the
address
stated
in
this
letter
by
first
class
U.S.
Mail.
Please
be
sure
that
your
records
are
in
order.
Invalidated
or
inaccurate
information
will
force
me
to
take
legal
action.
This
is
an
attempt
to
correct
your
records;
any
information
obtained
will
be
used
for
that
purpose.
Best
Regards,
Your
Signature
HERE
Your
Name
HERE
184
Bonus Unit
185
Bonus Unit
THEM:
Look,
we
handle
all
the
collection
accounts
for
Sneaky
Cellular.
You
know
you
had
an
account
with
them,
and
this
is
the
third
time
I
have
had
to
call.
My
client
wants
to
be
paid!
YOU:
Carl,
I
understand
that
and
I
certainly
want
to
work
with
you.
I
am
going
through
a
tough
time
now,
but
it
is
my
goal
to
settle
all
of
my
outstanding
debts.
However,
the
number
you
suggested
sounds
high,
and
I
need
the
paperwork
verifying
the
amount.
When
I
receive
it,
I
will
look
it
over,
and
if
I
agree
with
everything
it
says,
I
will
call
you
back
one
week
from
receiving
the
paperwork
to
discuss.
If
I
disagree,
I
will
still
call
you
back
one
week
from
receiving
the
paperwork.
Is
this
the
best
number
to
reach
you?
THEM:
Yes.
However,
I
would
like
to
receive
part
of
the
payment
today.
YOU:
Carl,
unfortunately
I
am
unable
to
do
that
without
the
file.
If
you
send
it
right
away
I
will
look
at
it
immediately.
THEM:
Okay,
is
the
address
still
_________________.
YOU:
Yes.
THEM:
Okay
I
will
send
it
out
today,
and
I
will
look
forward
to
your
call
on
_______________.
YOU:
Thank
you
Carl.
Goodbye.
186
Bonus Unit
187
Bonus Unit
YOU:
That
is
why
I
am
sending
this
one
certified
mail,
return
receipt
requested.
Remember,
I
told
you
I
would
call
you
today
at
precisely
11
a.m.,
and
I
did.
THEM:
That
is
true
and
I
appreciate
that.
Most
people
avoid
me
and
I
have
to
track
them
down.
YOU:
You
will
not
have
that
problem
from
me.
You
will
get
a
letter
from
me,
with
a
check
for
$25
on
the
15th
of
every
month.
If
the
money
is
going
to
be
late
for
any
reason,
you
will
hear
from
me
in
advance.
THEM:
I
appreciate
that.
Stick
to
that
schedule
and
well
do
fine.
YOU:
One
more
thing
Carl.
My
credit
is
very
important
to
me
and
I
do
not
want
any
further
damage
to
happen
to
my
credit
report.
I
am
asking
that
you
report
every
payment
I
make
as
paid
as
agreed.
When
I
am
done,
I
want
this
account
on
my
credit
report
to
read
PAID
IN
FULL.
THEM:
Youre
asking
a
lot,
Mr.
Debtor.
YOU:
Remember
Carl,
it
is
easier
for
me
to
pay
my
bills
with
a
good
credit
score.
THEM:
Okay.
I
can
handle
that.
YOU:
Thank
you,
Carl.
Can
you
just
send
me
a
quick
email
confirming
that?
THEM:
Sorry
I
cannot
email
out,
but
I
just
told
you
I
would.
YOU:
I
know
Carl,
but
I
prefer
a
paper
trail.
THEM:
Okay,
I
cannot
send
an
email,
but
I
can
send
a
written
letter.
YOU:
Thank
you.
Goodbye.
188
Bonus Unit
Read
the
summons
-
The
summons
is
the
official
notification
from
the
court
that
you
are
being
sued.
In
order
for
there
to
be
any
action
against
you,
a
summons
must
be
properly
served
on
you
according
to
the
laws
of
your
state
(often
a
sheriffs
deputy
has
to
do
it
in
person).
The
summons
will
tell
you
precisely
what
you
need
to
do
and
how
much
time
you
have
to
do
it.
BE
AWARE,
you
may
not
have
much
time.
DO
NOT
SKIP
OUT
-
This
is
very
bad.
If
you
cannot
make
it,
notify
the
court
in
writing
and
get
a
confirmation
in
writing
that
the
court
agrees
to
move
the
date.
Bring
a
lawyer
-
Okay,
ha
ha.
If
you
can
get
a
family
friend
to
represent
you
for
free,
do
that.
But
if
you
cannot
do
that,
most
people
will
not
be
able
to
spend
$5,000
to
bring
a
lawyer
to
court.
If
you
have
that
kind
of
money,
JUST
PAY
THE
DEBT!
;-)
Have
a
plan
-
If
you
do
not
show
up
with
a
plan,
the
courts
will
force
you
on
a
plan.
They
may
force
you
on
a
plan
anyway,
or
they
may
arrange
to
have
your
wages,
bank
account,
or
tax
refund
garnished,
but
this
is
not
easy
to
do.
Having
a
plan
proves
you
want
to
pay
your
debts.
Their
lawyer
probably
will
try
to
negotiate
with
you
before
the
court
date
goes
through.
Dont
just
agree
to
what
he
says.
You
are
in
court,
but
remember,
its
YOUR
day
in
court
as
well.
You
can
argue
why
you
cannot
pay
what
they
have
asked.
Dont
sign
any
agreements
without
reading
and
understanding
them.
Even
if
you
dont
have
your
own
lawyer,
you
can
ask
the
judge
questions.
189
Bonus Unit
190
Bonus Unit
191
Bonus Unit
192
Bonus Unit
193
Bonus Unit
194
Bonus Unit
Bonus Lesson 7:
Retirement Accounts
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
Explain
the
importance
of
investing
through
retirement
accounts.
Explain
the
two
main
types
of
retirement
accounts.
Explain
the
difference
between
a
Roth
retirement
account
and
a
non-Roth
retirement
account.
Lesson Summary:
One
of
the
simplest
things
investors
can
do
to
make
more
money
is
pay
very
close
attention
to
taxes
and
fees.
Both
of
these
costs
dig
directly
into
your
profits.
In
one
of
the
lessons
on
investing,
we
discussed
how
index
mutual
funds
have
lower
fees,
since
they
dont
have
a
manager.
Because
of
this
simple
fact,
index
funds
often
outperform
the
majority
of
funds
that
use
a
manager.
For
most
investors,
the
largest
fee
of
all
are
taxes.
One
of
the
easiest
ways
to
minimize
taxes
is
to
invest
inside
a
retirement
account.
Retirement
accounts
are
tax
shelters
that
the
government
set
up
to
encourage
people
to
save
for
their
own
retirement.
These
accounts
protect
your
investments
from
taxes
until
you
turn
age
59
.
Since
taxes
are
essentially
a
fee,
and
a
large
fee
at
that,
its
worth
considering
these
accounts.
There
are
two
types
of
retirement
accounts:
Accounts
sponsored
by
your
employer
-
Employer
sponsored
accounts
are
the
401k,
the
Roth
401k,
the
403b
(for
non-profit
companies),
the
TSP
(for
government
employees),
and
the
SEP
or
SIMPLE
(for
small
business
employees).
Individually
sponsored
accounts
-
These
include
the
IRA
(Individual
Retirement
Arrangement)
or
the
Roth
IRA.
One
way
that
retirement
accounts
differ
then
is
by
who
manages
them.
Is
it
you,
or
the
company
you
work
for?
The
other
distinction
has
to
do
with
the
word
Roth.
If
an
account
(individual
or
employer)
has
the
word
Roth
in
its
title,
which
simply
means
you
get
the
tax
195
Bonus Unit
break
later.
If
it
doesnt
have
the
word
Roth
in
the
title,
you
get
the
tax
break
now.
To
set
up
an
employer
plan,
ask
your
boss,
or
the
head
of
human
resources,
what
plans
are
available.
If
you
work
for
a
for-profit
company,
most
likely
the
plan
will
be
a
401k
or
the
Roth
401k.
If
you
work
for
a
non-profit
company,
most
likely
your
plan
will
be
called
a
403b.
If
nothing
is
available,
then
consider
setting
up
an
IRA.
You
can
set
one
of
these
up
at
your
local
bank
or
any
financial
company.
You
can
ask
the
company
all
about
IRAs
vs.
Roth
IRAs,
but
for
most
young
people,
the
Roth
IRA
is
the
way
to
go.
There
is
one
final
consideration
to
keep
in
mind
about
retirement
accounts.
You
must
have
earned
income
to
have
one
of
these
plans.
If
you
are
a
full-time
student,
living
off
your
parents
or
student
loans,
youll
have
to
wait
until
you
have
a
job.
Be
patient,
youll
get
there
(Remember
one
of
my
big
themes:
You
need
to
know
this
stuff
before
you
need
to
know
this
stuff.).
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
For
most
young
people,
why
is
a
Roth-type
account
the
better
choice?
Answer:_____________________________________________________
____________________________________________________________
____________________________________________________________
2015
National
Center
for
Student
Life.
All
rights
reserved.
196
Bonus Unit
Answer:_____________________________________________________
____________________________________________________________
Action Assignment:
Research
getting
a
retirement
plan.
If
you
already
have
one,
get
the
information
on
where
the
money
is
invested.
If
you
dont
have
one,
but
do
have
a
job,
ask
your
employer
or
call
a
brokerage
company
and
interview
them.
Use
the
sheet
in
the
Resources
Section.
Suggested Activity:
Often
students
are
hesitant
about
investing
for
retirement.
It
seems
too
far
away
and
there
are
far
more
urgent
things
to
address.
Write
down
some
of
your
concerns.
Now
find
someone
-
perhaps
a
parent,
relative
or
even
fellow
student
-
who
is
already
investing
in
a
retirement
account.
Did
they
have
any
of
your
same
concerns
when
they
started?
What
did
they
do
to
overcome
them?
What
advice
do
they
have
for
you?
Additional Information:
Below
are
some
companies
that
can
help
you
open
a
retirement
account.
Your
local
bank
can
help
as
well.
www.etrade.com
www.scottrade.com
www.fidelity.com
www.edwardjones.com
www.vanguard.com
www.troweprice.com
Note:
All
these
companies
can
help
you
with
a
Roth
IRA.
We
receive
no
compensation
or
referral
fee
for
mentioning
them
here.)
197
Bonus Unit
www.irs.gov
-
The
IRS
website
is
surprisingly
easy
to
use.
You
can
search
for
the
terms
401k
or
"Roth
IRA"
and
read
about
them.
Fun Facts:
The
ROTH
IRA
was
named
after
its
creator,
Senator
William
Roth.
Notes:__________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
198
Bonus Unit
199
200
the
earnings
in
the
account
until
you
turn
59
years
old,
however,
unlike
the
traditional
401k
or
403b,
with
the
Roth,
you
can
take
out
your
contributions
at
any
time.
Your
human
resources
department
can
explain
more
about
these
plans.
Sometimes
employers
will
match
your
contributions
to
these
plans
with
money
of
their
own.
Typically,
you
can
put
more
money
into
these
plans
than
into
an
IRA.
SEP-IRA
or
SIMPLE:
These
are
retirement
plans
for
self-employed
people.
They
work
like
a
Traditional
IRA,
but
you
may
need
the
help
of
a
professional
to
set
them
up.
201
202
203
Lesson Objectives:
By
the
end
of
this
lesson,
you
should
be
able
to:
Explain
how
to
create
more
abundance
in
the
world.
Explain
why
you
should
lighten
up.
Lesson Summary:
During
a
session
we
did
a
while
back
on
resources,
we
stated
that
the
world
can
be
an
abundant
place
because
we
dont
all
want
the
same
things.
What
is
borderline
worthless
to
you,
is
of
great
value
to
others.
Often
people
dont
give
back
because
of
one
of
three
reasons:
1. There
is
something
more
exciting
to
do
or
more
interesting
to
spend
money
on.
2. They
dont
have
time
for
a
long
term
commitment.
3. They
worry
they
only
have
enough
money
for
a
small
donation,
which
will
seem
insulting.
This
lesson
debunked
all
these
excuses.
We
talked
about
a
charity
I
volunteer
for
where
I
get
to
repel
down
the
side
of
a
building!
Pretty
exciting!
And
for
those
who
claim
they
have
no
time,
there
are
charities
that
will
take
your
help
for
a
day
or
even
a
few
hours.
Finally,
when
it
comes
to
money,
dont
be
embarrassed
by
the
amounts
you
send,
everything
helps.
If
a
charity
had
to
pick
between
a
person
who
sends
$1
and
a
person
who
sends
nothing,
they
will
take
the
$1
every
time.
The
lesson
also
talked
about
lightening
up
your
financial
life.
The
stuff
you
own
costs
you
time
and
money
to
own
it.
It
costs
you
time
and
money
to
insure
it,
to
organize
it,
and
to
clean
it.
So
lighten
up.
Sell,
donate
or
recycle
as
much
of
your
stuff
as
you
can.
Remember,
what
is
worthless
to
you
is
of
great
value
to
others.
You
can
give
back
without
having
it
hurt.
Start
by
finding
a
charity
that
you
would
love
to
volunteer
for.
Next,
donate
all
the
stuff
in
your
life
that
you
no
longer
want
but
someone
else
would
love.
And
finally
make
small
tiny
financial
contributions.
(The
amount
doesnt
matter,
its
the
action.)
Review Questions:
(Answers
are
located
at
the
end
of
this
lesson
under
Review
Question
Answers.)
2015
National
Center
for
Student
Life.
All
rights
reserved.
204
If
you
only
volunteer
for
charities
that
you
think
are
fun,
arent
you
being
a
bit
selfish?
Answer:_____________________________________________________
____________________________________________________________
Action Assignment:
Go
through
your
home
and
start
getting
rid
of
your
stuff.
Sell
it,
donate
it
or
recycle
it.
If
you
do
donate
it,
make
a
list
of
what
you
donate
and
put
it
in
your
financial
file.
Suggested Activity:
Using
the
websites
in
the
Additional
Information
Section
of
this
Lesson,
research
some
charities
you
would
be
interested
in
volunteering
for.
Start
by
asking
yourself,
what
do
you
enjoy
doing?
Then
see
if
you
can
find
a
charity
that
lines
up
with
this
activity.
Additional Information:
All
the
websites
below
have
links
to
volunteering
opportunities.
You
can
search
by
location
and
type
of
service
you
want
to
do.
www.volunteermatch.org
www.idealist.org
www.serve.gov
Fun Facts:
According
to
the
United
Way,
the
hourly
value
of
a
volunteer
is
$20.25.
That
means
for
every
hour
you
volunteer,
you
save
that
nonprofit
$20.25!
So
get
out
there!
2015
National
Center
for
Student
Life.
All
rights
reserved.
205
Notes:__________________________________________________________________
________________________________________________________________________
206