Money Matters

Spring 2015

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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

$125 Estimated initial minimum payment

273 monthsAmount of time to pay off your balance, if you make no more charges and make only the minimum payment on time each month

$6,923.14 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 2013 Statistics– 1.1 Million people filed for bankruptcy– 1.4 Million foreclosures

• Young Adults– Unemployment for under 25 ~ 23%– Percent of college grads living at home ~ 45%

Current Financial Picture

College Debt

• Average debt for college grads

$35,200

• 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 $258.7 Billion/year

• Need to learn how to make it and spend it wisely!

Total number of teens in the U.S. 26,873,000

Average teen spending per year $9,626.76

Average annual income of a 12-14 year old $2,767

Average annual income of a 15-17 year old $4,923

% of teens who say they are currently saving 38%

% of teens saving for clothes 57%

% of teens saving for college 51%

% of teens saving for car 36%

Source: Marketingvox, Rand Youth Poll, Seventeen, Packaged FactsResearch Date: 7.8.2014

Assignment

• 66 Ways to Save Money– On butcher paper provided, creatively display your tips

to saving money– Must include text as well as at least one picture (may be

hand drawn) for each• Table 1: 1 – 12• Table 2: 13 – 24• Table 3: 25 – 32• Table 4: 33 – 42• Table 5: 43 – 52• Table 6: 53 – 66

– Be prepared to present to class