Get Out of Debt Fast with PowerPay Erica Abbott Jessica Tolbert Robby Olsen Warning Signs of Excess Debt      Relying on credit cards for daily purchases Using home equity line of credit to extend purchasing power Paying minimum on credit card bills Using cash advances to keep afloat Losing sleep over debts 2 How to Dig Out  Assess your finances    Add up debts Use PowerPay to develop a plan to repay Stop borrowing   Use cash or debit card for daily expenses Use 1 credit card & pay in full each month   Keep 1 card in reserve… in case of theft or fraud Call creditors before they call you 3 What type of debt do you have? Secured debts    Have some type of collateral Items could be repossessed or foreclosed Example: car, house Unsecured debts    No collateral bill collectors calling Example: credit card 4 How much do you owe? Make a complete list:  Creditor name  Total balance  Monthly payment  Interest rate  Payments in arrears 5 Check your Credit Report at annualcreditreport.com • How to contact Creditors • How much debt you owe • Be sure to check all three • See http://www.usu.edu/fpw/ for more information on credit reports 6 Why am I in debt? Am I living beyond my means?  Job loss, or pay reduction  Unexpected medical expenses  Insufficient insurance  No emergency fund  7 Examine Your Expenditures & Develop a Spending Plan Is the plan realistic?  Can I meet all my monthly obligations?  How can I reduce spending to put more money towards my debts?  How can I increase my income?  Will I stick to it?  8 Credit Card Rates Introductory Rate = 0% Typical Rate = 18% or higher $7,000 balance, yearly interest payments ~$1,000 9 Reduce Credit Card Rates     Call your credit card company Let them know your current interest rate and your habit of paying on time (if true) Tell them other credit card companies are offering lower rates Ask if they will lower your current rate 10 PowerPay Debt Analysis get out of debt faster Pay less total interest 11 Power Pay Debt Analysis Create a List of debts & creditors  Prioritize debts  Pay at least minimum each month  When a debt is paid, put same $ towards highest priority debt  Add extra dollars to highest priority debt  12 The Results… A person with a total debt of $30,381 will pay $38,966 over 9 years without PowerPay BUT with PowerPay only pay $34,819 & be debt free in only 3 years 13 Power Pay Saves You… 6 Years $4,146 14 Get Back on the Right Track Create a spending plan.  Stick to it!  15 Get Back on the Right Track  Use community resources  USU Family Life Center  County Extension office  Financial Planning for Women 16 Get Back on the Right Track    Establish better credit habits Pay bills on time Don’t create more debt 17 Get Back on the Right Track  If your monthly obligations are not affordable, reduce spending. 18 Choices That Could Get You in Trouble        Bouncing checks Postdated checks Payday lenders Rent to own Pawn shops For-profit debt counseling Get rich quick schemes 19 Remember… It’s not the amount you make, it’s what you do with it that matters. 20 Questions?  Experiences to share?  What works for you? 21 Evening Program     Please tell your friends that this program will be repeated this evening 7-8:30 pm (more time for Q&A) USU Family Life Center, 493 N 700 E Free, easy parking 22 FPW    Website: www.usu.edu/fpw Blog: http://fpwusu.blogspot.com/ FB: facebook.com/FinancialPlanningforWomen 23 Upcoming FPW     August 8: Q& A with insurance agents Sept. 12: Managing your $ IN retirement Oct. 10: The Psychology of Money Nov. 7 (FIRST Wed.) TBA 24 Family Life Center Housing & Financial Counseling Center 493 N. 700 E. Logan At the bottom of Old Main Hill 435-797-7224 25 Financial Management • Budget Planning • Debt Management • Credit Use • Life Stage Responsibilities • Bankruptcy Intervention 26 Power Pay  www.powerpay.org    Stop borrowing or charging until debts are paid off Make power payments. As one debt is paid off, move that payment to another debt rather than spending it on something else. Saves money in interest and pays debts faster. 27 Housing Counseling • Home Purchase • Responsibilities of Home Ownership • Mortgage Default • Reverse Mortgage 28