Personal Finance

P.Y.F. --> Explain

Pay Yourself First --> Take money from paycheck and save and/or invest some first, then spend or live off the rest

Equity --> What is it?

Assets - liability

Three C's of Credit

Character --> Previous loan history
Capacity --> Earning power/income
Capital --> Assets and liabilities (net worth)

I = P x R x T --> Calculate

Interest = Principle x Rate x Time

Maturity Dates --> Calculate

*See in-class worksheet

Credit Card Calculations:
1) Monthly interest rate
2) Amount of payment that is interest
3) Reduce debt

*See in-class worksheet

Paying mortgage early:
1) Other options
2) Savings amount problem --> Calculate

*See in-class worksheet

Car insurance numbers --> i.e. 100/300 --> Calculate

*See in-class worksheet

Uninsured/Underinsured

1) No insurance/not enough
2) Hit and run
3) Bodily injury ONLY!!

Liability Coverage

If you hurt or cause damage (you're at fault)
1) People
2) Other vehicle
3) Pedestrian
4) Property

100/300/100
$100,000 per person per accident
$300,000 per accident maximum
$100,000 property

Collision Coverage

Covers your car only!!

• Deductible →What you pay before insurance kicks in
• Premium →how much you pay per month/quarter/year for insurance
  0 →higher premium
  50
  100
  250
  500
  1,000 →lower premium

Comprehensive Coverage

Perils
Ex. Vandalism, stolen, hit deer

Medical Payments Coverage

You and family

Umbrella Policy

• Have to have full coverage and 250/500/100
  1) Additional Liability
  2) Car and home
  3) Sold in increments of 1 million dollars
• Protect your assets

Advantages and Disadvantages of Term Life Insurance

Advantages:

• Cheaper Premium
• The greatest amount of protection when young
• Best for temporary needs
• Varying types
• Less premium, invest rest
  Disadvantages:
• Expires

*Term Life Insurance - lasts for a certain amount of time (doesn't have cash value)

Advantages and Disadvantages of a Cash Value Life Insurance Policy

Advantages:

• Continues whole life
• Protection and savings built in
• Borrow $ from policy
• Premiums stay the same
• Choice of investments
  Disadvantages:
• More expensive
• Difficult to analyze return on savings

*Cash Value - it has a savings component (builds cash value)

Co-insurance --> Define and be able to calculate insurer payment

When you share the cost with the insurance company (ex. 80/20)

Co-payment

A flat fee you pay every time you go to the doctor

Out-of-pocket Maximum

The most money you will pay in a year for medical bills

Network

When the provider contracts with the insurance company for specific rates

Deductible

What you pay before insurance kicks in

Reaching financial independence

1) Time
2) Amount of money
3) Discipline in spending

Three things in place before an investment program is appropriate

1) Income > expenses
2) Emergency fund
3) Protect your assets (adequate insurance)

Tax-deferred investment

Ex. Trad. IRA --> 401K (Pay tax when you take the money out)

Rule of 72

72/years to double investment = interest rate required

Given financial data on a stock chart, answer questions about the table

• See in-class worksheet