Have one credit card? Have more than one credit card? Have $100 debt on your credit card right now? Have between $100- $500 debt on your card? Lastly, have between $500 - $1000 debt on your card?
I won’t even ask who has more than $1000 debt on their credit cards, because I don’t feel like raising my hand right now. For those of you who have $1000 on you credit cards: How long do you think it will take you to pay off that $1000 if you only make the minimum payment each month? (Slide 2)
That’s right. It can take as many as 5 years to repay. Repeatedly making minimum payments increases the time it takes to pay off and nearly doubles the amount you’ll actually pay because of interest. (Slide 3/4) I want to ask everyone a few questions – • • • • •
Do you pay bills late or skip payments? Do you bounce checks or overdraw your account? How about take extra jobs to pay your credit card bills? Or use one credit card to pay off another? What about call the parents to help pay for credit card bills?
If you answered yes to ANY of these questions – it’s time to change how you manage your money. It just takes a little effort – but it will pay off in the end! (Slide 7) A few key things to understand: •
Understand what a credit card is – essentially it’s money that’s been LOANED to you. We all know that credit cards can be great – but they have to be used the right way.
(Slide 8) Here are a few tips on how to master your credit cards / money … Let’s talk about summer vacations trips now. How many of you took a summer vacation? You, in the blue shirt – what’s your name (Bob). Okay Bob, where did you go? Miami How about you, in the blue top? New York How did you both pay for your trip this year? Your flight and hotel, etc? Hopefully one of them will say credit card. Actually that’s VERY common for college students to put their spring break trips on their credit card. Let’s say Bob’s Cancun trip is originally $500 roundtrip airfare, hotel, and complimentary drinks. He really can’t afford $500 but the trip is on-sale because Bob is going with
twenty other young single men. Now its $400. He really can’t afford $400 but it’s such a steal…he can’t help it. So, Bob charged the trip on his favorite credit card. But it’s actually not really a great deal for Bob. If he only pays the minimum payment each month it will cost a total of $614 and will take how many years to repay—5. Bob will be 25, married, and still be paying for his sophomore year spring break trip. (Slide 9) So now that we know what NOT to do — there are a few things key things that we should do… Budgeting and cash flow --- I know, but it’s not as terrible as it sounds. I know some of you think that budgeting is impossible because it’s too much math. Trust me, if I can budget—anyone can. It’s important to budget because you will follow your cash flow and balance you budget. (Slide 11) It’s simple: 1. Write down your MONTHLY income (After TAXES– include scholarship, $$ from parents, etc) 2. SUBTRACT ALL expenses - Include EVERYTHING - Analyze your habits - Take notes for a week on all purchases - Don’t forget to pay...