wise money & budgeting review part 2

Emergency Fund:

Budget to include savings with the first goal of having an EMERGENCY ACCOUNT with 6-19 months of income

have an emergency fund b4 investing.

Zero base Budget:

when income and expenses equal zero

Rules of thumb (Car):

monthly expense should be no more than 20% of your income

Rules of thumb (House):

monthly expense should be no more than 25% of your income

Rules of thumb (Student Loans):

no more than 1 yr expected after graduation

Down Payment (Car):

15% down

Down Payment (House):

20% down

If you do not put down 20% down, you will have to pay private mortgage interest each month until you have paid off 20% of your home

Renting (What you are responsible for):

security deposit, renters insurance, & utilities

Benefits of Renting: easier to move & short-term

Cons of Renting: cost customize

Owning (What you are responsible for):

Down payment, mortgage, & homeowner’s insurance.

benefit: house builds equity
Cons: cost of repairs

The higher the down payment, the lower

the monthly mortgage payment

Fixed expenses:

stay the same each month, such as rent & car payments

Variable expenses:

change from month to month, such as food, utility bills, new clothes.

Budget deficit:

when you spend more money than you have coming in....this creates debt

Budget surplus:

when you spend less than you make.
- This is called "living within your means" 

Opportunity cost:

next best alternative - it is what is given up when a choice is made

Keeping Records: (having a system):

to manage money effectively. 

"Keeping up with the Jones'" mentality: Avoid the "Keeping up with the Jones'" mentality. 

Trying to act rich / when you try to buy something to impress someone but you don't have the money

Money Order or Check or Cashier Check:

Ask for a Money Order or Check or Cashier Check when selling expensive items

Money in the US is Flat Currency - it is not backed by

gold. It is backed by confidence in the US government.

Department of Treasury -

collects taxes, prints money, issue Treasury bonds (collected by or paid to the Internal Revenue Service)

Federal Reserve System is the central bank system of the United States. The fed uses

monetary policies to regulate the money supply.

SMART goals:

Specific, measurable, attainable, Relevant, timeframe

Short-term goals:

1 yr less

Mid-term goals:

Around 5 years

long-term goals: 

15 years

Factors that influence college choice:

[1] career goals [2] Cost [3] location

FAFSA -

Free application for student aid

Inflation (Most hurt): -

Most hurt by inflation lenders (banks) and people living on Fixed income are hurt by inflation

Inflation (Least hurt): -

Least hurt by inflation are those earning large amounts of money

he purpose and importance of a Will -

make sure your assets/final expenses taken care of

beneficiaries

(people who get your assets)

Federal Deposit Insurance Corporation (FDIC) -

insures deposits and can take over failed banks

Securities Exchange Commission (SEC) -

is a board with five members. They regulate the offer of and sale of securities among the public (stock shares from corporations).

Truth & Lending Act

The lender must state the finance charge in terms of annual % rate

If your credit card is stolen, you are only liable for $50 of the charges made by someone else.

Fair Credit Billing Act

i. Creditors must send the borrower a bill at least 14 days before payment is due
i. Gives the borrowers time to dispute any wrong information

Fair Credit Reporting Act

a. Your credit report must be accurately reported

i. If any information is wrong, you can dispute it

b. If you are denied a loan or line of credit you are entitled to a copy of the report to know why.

i. Must receive the report within 60 days