1. Credit

2. Why should you have a plan for your money?
1. So your basic needs are covered
2. So you can get what you want (when you can afford it)
3. So you don’t overspend
4. So you don’t have to get all stressed out or feel guilty
about what you spend

4. Financial Planning Step 1: Think it
S.M.A.R.T. goals are goals that are:
S – Specific
M – Measurable
A – Attainable
R – Realistic
T – Time Based

5. Financial Planning Step 2: Track it
Keep track of your income for a month:
Paychecks…………………………. $600
Allowance………………………….$80
Gas money from friends…….$40
Total…………………………….…..$720
Keep track of how much you spend in a
month:
Lunch….……………………………. $160
Gas…………………………………… $80
Cell Phone Bill………………..….$95
Netflix……………………………….$9
Car Payment…..…….…………..$200
Total………………………………..$544

6. Financial Planning Step 3: Plan It
Get it on paper
1. Write down your income – be specific
2. Write down your PYF goal
3. Write down your expenses – be specific
4. Do the math.

7. Income
PYF Goal
Expenses
Balance

8. Balance
Balance your budget by subtracting your expenses from your income.

9. Financial Planning Step 4: Do it
1. Commit
Only spend what you have planned to spend
2. Stay on track
Using your tracking system…
Track your spending and compare it to your plan.
Track your income and compare it to your plan.
Often.
3. Adjust as needed
Income increases. Or decreases.
Goals change and you want to make a purchase that will
require credit.

10. Let’s talk about credit.

11. What is Credit?
1. The ability to get things before you pay for
them because someone trusts that you
will pay for the items in the future.
2. Money someone is willing to loan to you.

12. What is Debt?
1. The state of owing money
2. The amount of money you owe

13. What is a Loan?
Money that is borrowed and is expected to be paid back…
with interest
An installment loan is a loan repaid
with a fixed number of equal payments.

14. What is Interest?
Money you pay back on top of the money you
borrowed.
Why are you charged interest?
Because you are delaying the repayment of
money that was lent to you.

15. What is Principal?
The actual dollar amount that someone has
loaned to you.

16. What is APR?
Annual Percentage Rate.
Expressed as a percent of the amount borrowed.
Translated into a dollar amount.
This is what it will cost you to borrow money.
This is the price of your loan.

17. What is Collateral?
An asset promised as security
for repayment of a loan.
If you do not make your payments, the lender has
the right to take your “collateral” as payment.

18. What is Secured Debt?
Debt that is guaranteed by collateral.

19. What is Unsecured Debt?
Debt that you guarantee only with your word.

20. What is Equity?
The difference between the value of
your collateral and the amount you still owe on the loan.
Value – Principal Owed = Equity
Your car is worth $14,000
You owe $8,000
Your Equity = $6,000

21. Why put down a
Down Payment?
1. Lowers your monthly payments
2. Shows the lender you have vested interest
3. Increases your equity in the vehicle

22. What is a Credit Report?
A record of your credit activities.
It lists credit-card accounts or loans you may have,
past and present.
It shows the balances and
how regularly you make your payments.
It also shows if any action has been taken against you
because of bills you didn’t pay.

23. What is a Credit Score?
A number that measures how likely
you are to repay debt on time.
It's calculated and based on
your history of repaying debt.

24. Where do Credit Reports
and Credit Scores come from?

25. Who can see my Credit Report?
(1) Creditors
(2) Employers and Potential Employers
(3) Insurance Agencies
(4) Government Agencies
(5) Judges
(6) Landlords
(7) Yourself (if you’re at least 18)
Go to AnnualCreditReport.com
(8) Anyone you specify in writing

26. Credit Activity Break
The Loan Process

27. How Much Does Bad Credit Behavior Cost?
Borrower Terry R. Fernando G. Violeta B.
Principal $20,000 $20,000 $20,000
Credit Score
Interest Rate
Payment
Term
Interest Paid
Total Paid
Difference

28. How Much Does Bad Credit Behavior Cost?
Borrower Terry R. Fernando G. Violeta B.
Principal $20,000 $20,000 $20,000
Credit Score 832
Interest Rate
Payment
Term
Interest Paid
Total Paid
Difference

29. How Much Does Bad Credit Behavior Cost?
Borrower Terry R. Fernando G. Violeta B.
Principal $20,000 $20,000 $20,000
Credit Score 832 691
Interest Rate
Payment
Term
Interest Paid
Total Paid
Difference

30. How Much Does Bad Credit Behavior Cost?
Borrower Terry R. Fernando G. Violeta B.
Principal $20,000 $20,000 $20,000
Credit Score 832 691 577
Interest Rate
Payment
Term
Interest Paid
Total Paid
Difference

31. How Much Does Bad Credit Behavior Cost?
Borrower Terry R. Fernando G. Violeta B.
Principal $20,000 $20,000 $20,000
Credit Score 832 691 577
Interest Rate 2.43%
Payment
Term
Interest Paid
Total Paid
Difference

32. How Much Does Bad Credit Behavior Cost?
Borrower Terry R. Fernando G. Violeta B.
Principal $20,000 $20,000 $20,000
Credit Score 832 691 577
Interest Rate 2.43% 5.19%
Payment
Term
Interest Paid
Total Paid
Difference

33. How Much Does Bad Credit Behavior Cost?
Borrower Terry R. Fernando G. Violeta B.
Principal $20,000 $20,000 $20,000
Credit Score 832 691 577
Interest Rate 2.43% 5.19% 16.73%
Payment
Term
Interest Paid
Total Paid
Difference

34. How Much Does Bad Credit Behavior Cost?
Borrower Terry R. Fernando G. Violeta B.
Principal $20,000 $20,000 $20,000
Credit Score 832 691 577
Interest Rate 2.43% 5.19% 16.73%
Payment $355
Term
Interest Paid
Total Paid
Difference

35. How Much Does Bad Credit Behavior Cost?
Borrower Terry R. Fernando G. Violeta B.
Principal $20,000 $20,000 $20,000
Credit Score 832 691 577
Interest Rate 2.43% 5.19% 16.73%
Payment $355 $380
Term
Interest Paid
Total Paid
Difference

36. How Much Does Bad Credit Behavior Cost?
Borrower Terry R. Fernando G. Violeta B.
Principal $20,000 $20,000 $20,000
Credit Score 832 691 577
Interest Rate 2.43% 5.19% 16.73%
Payment $355 $380 $495
Term
Interest Paid
Total Paid
Difference

37. How Much Does Bad Credit Behavior Cost?
Borrower Terry R. Fernando G. Violeta B.
Principal $20,000 $20,000 $20,000
Credit Score 832 691 577
Interest Rate 2.43% 5.19% 16.73%
Payment $355 $380 $495
Term 60 months 60 months 60 months
Interest Paid
Total Paid
Difference

38. How Much Does Bad Credit Behavior Cost?
Borrower Terry R. Fernando G. Violeta B.
Principal $20,000 $20,000 $20,000
Credit Score 832 691 577
Interest Rate 2.43% 5.19% 16.73%
Payment $355 $380 $495
Term 60 months 60 months 60 months
Interest Paid $1,300
Total Paid
Difference

39. How Much Does Bad Credit Behavior Cost?
Borrower Terry R. Fernando G. Violeta B.
Principal $20,000 $20,000 $20,000
Credit Score 832 691 577
Interest Rate 2.43% 5.19% 16.73%
Payment $355 $380 $495
Term 60 months 60 months 60 months
Interest Paid $1,300 $2,800
Total Paid
Difference

40. How Much Does Bad Credit Behavior Cost?
Borrower Terry R. Fernando G. Violeta B.
Principal $20,000 $20,000 $20,000
Credit Score 832 691 577
Interest Rate 2.43% 5.19% 16.73%
Payment $355 $380 $495
Term 60 months 60 months 60 months
Interest Paid $1,300 $2,800 $9,700
Total Paid
Difference

41. How Much Does Bad Credit Behavior Cost?
Borrower Terry R. Fernando G. Violeta B.
Principal $20,000 $20,000 $20,000
Credit Score 832 691 577
Interest Rate 2.43% 5.19% 16.73%
Payment $355 $380 $495
Term 60 months 60 months 60 months
Interest Paid $1,300 $2,800 $9,700
Total Paid $21,300
Difference

42. How Much Does Bad Credit Behavior Cost?
Borrower Terry R. Fernando G. Violeta B.
Principal $20,000 $20,000 $20,000
Credit Score 832 691 577
Interest Rate 2.43% 5.19% 16.73%
Payment $355 $380 $495
Term 60 months 60 months 60 months
Interest Paid $1,300 $2,800 $9,700
Total Paid $21,300 $22,800
Difference

43. How Much Does Bad Credit Behavior Cost?
Borrower Terry R. Fernando G. Violeta B.
Principal $20,000 $20,000 $20,000
Credit Score 832 691 577
Interest Rate 2.43% 5.19% 16.73%
Payment $355 $380 $495
Term 60 months 60 months 60 months
Interest Paid $1,300 $2,800 $9,700
Total Paid $21,300 $22,800
Difference
+$1,500

44. How Much Does Bad Credit Behavior Cost?
Borrower Terry R. Fernando G. Violeta B.
Principal $20,000 $20,000 $20,000
Credit Score 832 691 577
Interest Rate 2.43% 5.19% 16.73%
Payment $355 $380 $495
Term 60 months 60 months 60 months
Interest Paid $1,300 $2,800 $9,700
Total Paid $21,300 $22,800 $29,700
Difference +$1,500

45. How Much Does Bad Credit Behavior Cost?
Borrower Terry R. Fernando G. Violeta B.
Principal $20,000 $20,000 $20,000
Credit Score 832 691 577
Interest Rate 2.43% 5.19% 16.73%
Payment $355 $380 $495
Term 60 months 60 months 60 months
Interest Paid $1,300 $2,800 $9,700
Total Paid $21,300 $22,800 $29,700
Difference +$1,500
+$8,400

46. What is a Default?
Failure to pay back the debt according
to the terms to which you agreed.

47. What is Repossession?
When the lender takes the collateral
that was used to secure the loan.
This happens when you default.

48. Let’s talk about
property loans.

49. What is a Mortgage?
When you borrow money
to buy property or a house.

50. What is Foreclosure?
When the lender takes possession of a mortgaged
property as a result of you not paying your mortgage.

51. Let’s talk about
credit cards.

52. What is a Credit Card?
A card issued by a company giving you the option to
borrow funds, usually at the point of sale.
Credit cards charge interest and are best
used for short-term financing.
Interest rates for credit cards are usually higher
than interest rates for other loans.

53. A debit card is NOT a
credit card and will not
help you increase your
credit score –
But can decrease it.

54. What is a Credit Limit?
The maximum amount someone will lend to you.

55. What is an Annual Fee?
An amount that some credit card companies
charge each year for the use of a credit card.

56. What is a Finance Charge?
Just like the interest on a loan, a finance charge is
the actual dollar cost of carrying a
balance on your credit card.

57. What is a Universal Default?
A clause included in many credit card company
agreements that allows them to increase your interest
rate if you make just one late payment.
They can do this without notice.

58. What is Bankruptcy?
A legal process to restructure your debt when you can
no longer make all of your required payments.

59. It severely damages
your credit score.
It ruins your credit
history for 7-10 years.

60. By following the 4 steps to Financial Planning,
you will be in the best position to avoid bankruptcy.
But all of us can get off track – especially if hit by Divorce, Death,
Disability, and Dismissal from Job.

61. So, if you start to struggle, go see a Financial Counselor.
(We have 4 available at TxPFCU.)
If you don’t do that, contact all your creditors and
try to work something out with them.
DON’T just stop paying and
DON’T stop talking to your creditors!
After all, YOU borrowed the money.
The lender gave it to you in good faith.
Don’t break your promise. Work something out!

62. If you have any questions about financial planning, credit,
investments, or anything else, please ask!
Shelley Carlson/ Director of Marketing – SCarlson@TexasPartnersFCU.org
Ken Chambers/ Lending Manager – KChambers@TexasPartnersFCU.org
Sidney Henderson/ Marketing Assistant – SHenderson@TexasPartnersFCU.org
Stephanie Garrett/ Accountant – SGarrett@TexasPartnersFCU.org
Brittany Bringman/ Bookkeeper - BBringman@TexasPartnersFCU.org
You can also get a hold of us on our Facebook page –
www.Facebook.com/TexasPartners
Thanks again, everyone… We’ll see you at the next workshop!
Your friends @ Texas Partners FCU