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Money Matters
Spring 2013
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• True or False – – Using a credit card is a lot easier than paying cash– Credit cards are a great way to buy something– Credit cards are free to use– Credit cards allow you to buy something you
otherwise couldn’t afford
Credit
• If you owe $5,000 on your credit card and pay the minimum balance every month, how long will it take you to pay it off completely?
Credit
Credit Card Calculator
$100 Estimated initial minimum payment
29 yearsAmount of time to pay off your balance, if you make no more charges and make only the minimum payment on time each month
$9,779 Interest charges you will pay in that amount of time
Debt
• More than three-quarters of American families are in some kind of debt
• 40% owe more than $50,000
Debt
Debt
Debt
Debt
• General 2010 Statistics– 1.5 Million people filed for bankruptcy– 2.8 Million foreclosures (1 in 45)
• Young Adults– Unemployment for under 25 ~ 54%– Percent of college grads living at home ~ 85%
(consulting firm Twentysomething Inc.)
Current Financial Picture
College Debt
• Average debt for 22-29 year olds
$16,120
• 48% of young adults worry about making ends meet
College DebtGraduates with college debt struggle financially
AllianceBernstein survey of 1,508 college graduates ages 21 to 35
College DebtAmong graduates with college debt, many were forced
to delay
AllianceBernstein survey of 1,508 college graduates ages 21 to 35
College DebtGraduates in households still paying off education debt
said it has contributed to
AllianceBernstein survey of 1,508 college graduates ages 21 to 35
College Debt
Graduates without college debt are more likely to have started saving for their children’s college costs
AllianceBernstein survey of 1,508 college graduates ages 21 to 35
College Debt
AllianceBernstein survey of 1,508 college graduates ages 21 to 35
How difficult has it been to pay off your education-related debt?*
College Debt
AllianceBernstein survey of 1,508 college graduates ages 21 to 35
When do you expect to pay off your education loans?
College Debt
AllianceBernstein survey of 1,508 college graduates ages 21 to 35
Respondents indicating satisfaction with:
College DebtThe following chart shows how much a hypothetical portfolio could grow if monthly loan payments were
invested in a hypothetical portfolio instead.
Total Loan AmountTotal Principle &
InterestMonthly Payment for
10 YearsTotal if this loan payment were invested monthly for 10 years
$10,000 $13,322 $111 $18,194$20,000 $26,645 $222 $36,388$30,000 $39,967 $333 $54,582$40,000 $53,290 $444 $72,776
** Assumes 6% average annual return w ith earnings tax-deferred and compounded monthly
Student Loan *
* Assumes a 10-year subsidized loan at 6% interest which does not accrue until repayment begins w ith equal payment amounts
compounded monthly.
Investment **
AllianceBernstein survey of 1,508 college graduates ages 21 to 35
Estimated Future Cost of Four Years of CollegeChild’s Age Now Public College Private College
Newborn $125,791 $301,0821 $119,801 $286,7452 $114,096 $273,0903 $108,663 $260,0864 $103,489 $247,7015 $98,561 $235,9056 $93,867 $224,6727 $89,398 $213,9738 $85,141 $203,7849 $81,086 $194,08010 $77,225 $184,83811 $73,548 $176,03612 $70,045 $167,65413 $66,710 $159,67014 $63,533 $152,06715 $60,508 $144,82516 $57,626 $137,92917 $54,882 $131,36118 $52,269 $125,106
* Source for all data represented here: Trends in College Pricing 2005 , The College
Board
Money Matters
• American teens spend $170 Billion/year– Money comes from:
• 55% parents• 43% gifts• 28% odd jobs• 25% part time job• 21% allowance• 6% full time job• 2% their own business
• Need to learn how to make it and spend it wisely!
Assignment
• 66 Ways to Save Money– On butcher paper provided, creatively display 11 tips to
saving money– Must include text as well as at least one picture (may be
hand drawn) for each• Table 1: 1 – 11• Table 2: 12 – 22• Table 3: 23 – 33• Table 4: 34 – 44• Table 5: 45 – 55• Table 6: 56 – 66
– Be prepared to present to class
