IF I WERE TO GIVE YOU $1,000 to buy a new cell phone, what steps would you take to ensure that you receive the best value?

I WOULD TAKE A RESEARCH BASED APPROACH TO BUYING

1. Before you shop

• Identify your needs

• Gather Information

• Be Aware of the Marketplace

2. Weighing the Alternatives

• Identify what is important to you

• Compare prices

• Comparison Shopping

3. Making the purchase

• Negotiate the price

• Decide on Cash or Credit

• Know the Real Price

4. After the purchase

• Maintenance and ownership costs

• Product support

• Rethink and Re Evaluate your Decision

What is a stock?

5/8/23

A share in the ownership of a company, including a claim on the company’s earnings and assets.

You can buy stocks in publicly traded companies.

When a company goes from privately owned to publicly owned it is called an IPO- Initial Public Offering.

STOCK MARKETS: NYSE: New York Stock Exchange, NASDAQ, DOW JONES, S + P 500

STRATEGIES: - Research big events

- Look at trends and patterns

- Buy low, Sell high

- Diversification: Helps you limit your risk; you invest in multiple markets

- Short sale: When you expect the stock price to go down; you’ll buy it for $90 after selling it for $100

What is credit

5/15/23

An arrangement to receive cash, goods, or services now and pay for them later.

Consumer credit: The use of credit for personal needs

Creditor: An entity that lends money

Paying an item through credit involves responsibility and risk.

When you buy something on credit, you also agree to pay the fee that a creditor adds to the purchase price (interest)

No credit is just as bad as bad credit

ADVANTAGES:

• You can enjoy goods and services now, but enjoy them at a later time

• Allows you to combine several purchases and make just one monthly payment

• You can travel without carrying cash, which is safer.

• If you use credit wisely you can be seen as a responsible person

DISADVANTAGES:

• Temptations

Closed end credit: Credit as a one time loan that you will pay back over a specified period of time in payments of equal amounts.

EXAMPLES:

• Mortgage

• Car loan

• Furniture

Open end credit: Credit as a loan with a certain limit on the amount of money you can borrow for a variety of goods and services

Line of Credit: The maximum amount of money a creditor will allow a credit used to borrow

EXAMPLES:

• Department store Credit Cards

• Bank Credit Cards

LOANS

Loans - borrowed money with an agreement to repay it with interest in a certain amount of time

Inexpensive Loans - Loans between family members and friends with low interest

Medium Priced Loans - loans with moderate interest that you can obtain through commercial banks, savings and loans associations and credit unions,

Expensive Loans - easiest loans to obtain and charge high interest rates (12%-25%)

Home Equity Loans - A loan on your home equity (difference between the current market value of your home and the amount you still owe)

CREDIT CARDS

• The average cardholder has more that nine credit cards

• Cardholders who pay off their balances in full each month are known as convenience users

• Cardholders who do not pay off their balances every month are known as borrowers

• Grace Period: time period during which no finance charges will be added to your account

• Finance charge: The total dollar amount you pay to use credit

• Minimum monthly payment: Smallest payment to remain in good standing

• Debt Payments -to- Income Ratio (DPR) can be used to calculate if you can afford a loan

• Monthly Debt Payments - 500

Monthly Net Income - $4,000

500/4000 = 0.125 = 12.5%

YOU DON”T WANT THE PERCENTAGE TO BE MORE THAN 20%

What are the 5 C’s of credit

5/17/23

1. Character

• Credits want to know what kind of person they will give money too, so they will ask for references

2. Capacity

• They are going to look at your income and debts you have and how it will affect your ability to pay additional debts

• They may ask, what is your job and how much is your salary? Sources of income?

3. Capital

• They are going to look at your assets and liabilities because they want to make sure you have enough capital to pay back the loan.

• If you lost some income you could sell your assets?

4. Collateral

• When creditors look and see what kind of properties and and savings you have that can be used as collateral to secure the loan

• If you can’t pay the loan they’ll keep what you pledged in collateral

5. Credit History

• Lenders will look at how you used credit responsibly in the past

• They obtain a credit report, on all the history of the debt you had in the past

• Credit rating: A measure of a person's ability and willingness to make credit payments on time. 730 is a good spot