LIFE IN PLASTIC ...IT S FANTASTIC? Credit cards, why they re important, and how to use them responsibly. MIND ON MY MONEY MONEY ON MY MIND AND

Transcription

1 LIFE IN PLASTIC...IT S FANTASTIC? Credit cards, why they re important, and how to use them responsibly. MIND ON MY MONEY AND MONEY ON MY MIND

2 C R E D IT CA R D S : LI FE IN PLAST IC...IT S FANTAST IC? WHAT YOU LL NEED: this packet a few of your friends worksheets (included) and pens for your friends calculators for your friends (phone calculators work just fine) a camera (phone cameras work just fine) OVERVIEW: Intro + Game (If I Had a Million Dollars) + Making It Invisible Rain 5 min Worksheet Activity: Matchbox Twenty 5-10 min Worksheet: Whatcha Gonna Do When They Come for You? min What We Learned: Your Credit Card Balance is Killing You Softly 5 min Discussion 5 min Conclusion + Photo + Scholarship 2 min hey! read this first! If you're leading this session, read this first (to yourself!). Thanks for leading Life in Plastic...It s Fantastic? This guide details everything you need to know to run this thing. You should read all the bold headers and everything in quotes aloud to your friends. Everything in italics is just instructions for your reference. You can read this guide word for work and be good to go. Or, feel free to customize it a bit. The bolded terms throughout will give you a good roadmap for leading the session...and you re all set! Go ahead and distribute the worksheets. INTRODUCTION: You may or may not be familiar with the 1997 one-hit wonder Barbie Girl, by the Danish-Norwegian dance-pop group Aqua. One of the lyrics in that song is, Life in plastic, it s fantastic. Does anyone know what that was referring to? Barbie dolls. Because Barbies are plastic. It could also refer to credit cards, which are also plastic. Except, with credit cards, it s more like, Life in plastic...it s fantastic? That s the name of this workshop, because credit cards can indeed be fantastic. Or they could be your worst enemy. This workshop is all about credit cards, why they re important, and how to use them responsibly. This workshop is also about outdated music references. At the end, everyone will have the chance to win a $1,000 scholarship So, come on, Barbie, let s go party...! Distribute pens, paper, and worksheets to the group.

3 C RE D IT CA R D S : LIFE I N PLAST IC...IT S FANTAST IC? GAME: IF I HAD A MILLION DOLLARS 5 min If I Had a Million Dollars is the name of a 1993 song by the Canadian pop-rock band Barenaked Ladies. It is also the name of a game we re about to play. Let s go around the table and have everyone fill in the blank to, If I had a million dollars... Go around the table, allow everyone to answer. I MAKE IT INVISIBLE RAIN! : WHY YOU WANT CREDIT Great. So for most of that ridiculous stuff you d buy, you re going to need credit. A house? A car? A college education? You re going to need credit. Make It Rain is a 2008 song by Fat Joe about throwing all your cash in the air. Decent song, dumb idea. Make it invisible rain is something I just made up that refers to making purchases with a credit card. For any big life purchase, you ll probably need to take out a loan. In order to take out a loan, you ll need credit. Then, you can make it invisible rain all day. But, first things first: can anyone define what credit is? Have a few people guess. Credit is the ability to obtain goods and services before you pay for them, based on a promise to pay later. In other words, you borrow money from a credit card company, which allows you to buy things without spending money, so long as you pay them back later. How it works is, you pay for things on your credit card not with real money at that moment but instead with credit. At the end of each month, you either write a check or pay online, so the credit you ve used is taken out of your bank account. WORKSHEET ACTIVITY: MATCHBOX TWENTY 5-10 min Time for a worksheet activity. Matchbox Twenty was a 90s rock band, led by Rob Thomas who won some Grammys for a song called Smooth with Carlos Santana. Matchbox Twenty is also the name of an activity we re going to do on our worksheets. We re going to be matching boxes of terms about credit. There are 20 terms. I m kidding. There are only seven. But Matchbox 7 is not a band. Everyone look at your worksheet and take a few minutes to match each term to the letter of its correct definition. If you don t know, just guess. Give everyone a few minutes. Does anyone think they matched them all correctly? Allow a few people to guess, then read the answers aloud.

4 C R E D IT CA R D S : LI FE IN PLAST IC...IT S FANTAST IC? annual fee (e): a yearly charge some credit card companies charge a holder simply for owning a card. Not all credit cards charge an annual fee. minimum payment (d): the lowest amount of money you are required to pay on your credit card each month. You re not required to pay off your entire statement, only the minimum payment. This can be positive because it allows you some leeway on a payment if you re short on cash that month. But, it can also turn into big problems down the road. More on this later. credit score (c): a credit score is a three-digit number that predicts how likely you are to pay back the credit you borrow. In other words, your credit score allows your credit card company to measure the risk it takes by lending you credit. If you have a good credit score, the bank thinks you re more likely to pay back the money you borrow, so it s more likely to lend you more credit. A credit score is generally measured from 300 to 850, and 720 is considered a good score. credit limit (h): the maximum amount of credit you are allowed to spend. If your credit limit is $2000, that s the all credit you re allowed to spend. You can increase your credit limit by making timely payments. This is good because it means you re allowed to spend more money, but it doesn t mean you actually have more. balance (f): the amount of money you need to pay to reimburse the charges you put on your card. It s what you owe. interest rate (b): also known as annual percentage rate or APR. It s the percentage of your balance you pay as interest. It could be something like 18%. A finance charge is the monthly interest you pay. It s the APR divided by 12 months. In this case, 18% divided by 12 months means you pay an additional 1.5% to your ending monthly balance. The interest rate only applies after you accumulate a balance, and if you pay your statement in full, you don t pay interest. member rewards (a): perks card holders receive when they sign up for a credit card. Most companies give members incentives to spend, which can include: frequent flier miles, which work towards free or discounted flights; 1-5% cash back on things like gas or groceries; or points that you accumulate that you can trade for credit or gift cards.

5 C RE D IT CA R D S : LI FE IN PLAST IC...IT S FANTAST IC? CREDIT CARD BALANCE WORKSHEET: WHATCHA GONNA DO WHEN THEY COME FOR YOU? min In 1987, the reggae group Inner Circle released the song Bad Boys, which you may or may not know from the TV show COPS. Let s see why this is loosely related to credit. As we discussed, building credit is really important, and using a credit card has some great advantages. On the other hand, not paying your bills in a timely way or not paying your monthly statement in full (in other words, leaving a balance) can have some harsh consequences. They only require you to make a minimum payment each month, so your credit card company can seem like a good cop. But, as you leave a monthly balance it begins to add up--and you have to pay interest on it. In this sense, your credit card company is a bad cop. You can leave a balance on your statement, but whatcha gonna do when they come for you? Let s do an activity together to see how using a credit card irresponsibly can end in debt or bankruptcy. Flip to the worksheet, and let s read the story together. Use the chart to fill in the blanks as we go. THE STORY JJ just received his first credit card. Annual interest rate: 18%; Finance charge: 1.5%; Minimum payment: 5% January: JJ charges two shirts, a pair of pants, and a pair of shoes for $235. When his first credit-card bill arrived in February, Justin owed. Since his account provides for a 30-day grace period, JJ did not owe any finance charges immediately. JJ knows he should pay his entire bill each month, but he was short on cash, so he only made the minimum payment of. His unpaid balance was. February: JJ took his GF to a concert then bought the band s albums on itunes for a total of $157. When his bill for March arrived, Justin owed for the new charges, his previous balance, and the finance charge on the previous balance. He was now even shorter of cash at the time, so he made only the minimum payment of. March: After he made his March payment, JJ resolved to stop charging things until he could pay his entire balance. But the next day, his car broke down and the repairs came to $760. He needed his car to get to school and work, so he charged the repairs. His total credit-card balance in April was. Taken aback by his growing balance, JJ swore not charge another dime until he paid the balance off entirely. He decided to pay $55 a month for as long as it would take to pay it off. If had paid his statement in full each month, JJ would have spent $1152 now, due to the interest he had to pay on his balance, he spent $ Also, if JJ decided to pay $55 a month, it would take him 23 months--almost two years--to pay off his balance.

6 CR E D IT CA R D S : LI FE IN PLAST IC...IT S FANTAST IC? THIS SHEET IS FOR REFERENCE ONLY. CREDIT CARD BALANCE WORKSHEET: WHATCHA GONNA DO WHEN THEY COME FOR YOU? JANU ARY Purchases: - Minus min payment: Unpaid balance: $ F EBRU ARY Purchases: + Previous balance: = Total before interest: + Finance charge at 1.5% (total x 1.015): = Total owed: - Min payment: Unpaid balance: $ M ARC H Purchases: + Previous balance: = Total before interest: + Finance charge at 1.5% (total x 1.015): = Total owed: - Min payment: Unpaid balance: $ Total purchases: $ Total spent: $ Bonus: if he didn t charge anything more and paid $55 a month, how long would it take JJ to pay off his bill? 21 months and 2 weeks KILLING ME SOFTLY : CREDIT CARD BALANCE Killing Me Softly With His Song is a 1973 song that was covered most famously in 1996 by the Fugees. No one can say for sure, but it s probably about credit card debt. As you ve seen, leaving a balance on your credit card is bad for three main reasons

7 C RE D IT CA R D S : LI FE IN PLAST IC...IT S FANTAST IC? First, if you don t pay off your entire statement, you start to have high monthly payments. As you ve seen in JJ s case, those really add up. Then, you can t afford to buy things now and can t save for the future because you re always paying past balances. Second, leaving a balance could result in late payments and a could have a detrimental effect on your credit score. If your credit score drops low enough, it will be more difficult or even impossible for you to get a loan on a house or a car in the future. Third, if you re unable to pay off your credit, you could go bankrupt. If you ve seen Wheel of Fortune, going bankrupt is not fun. Nobody wants to see Pat Sajack and Vanna White frown. Start building credit by paying for something you know you can pay off each month. DISCUSSION 5 min Ask the group if they have questions. Have an organic discussion and feel free to use the below questions to help.? What most excites you about having a credit card? What most worries you?? After this workshop, what are some things you can do to make sure you use your credit card responsibly?? What did you learn in the workshop that surprised you most? What do you still not fully understand?? Who lets the dogs out? Who? Who? Who? Who?

8 C R E D I T CA R D S : L I F E I N P L A ST I C... I T S FA N TA ST I C? CONCLUSION + PHOTO + SCHOLARSHIP for your friends 2 min Have everyone pose for a photo with their workshop materials. You ll need this for your report back to be eligible for the scholarship. Consider this the beginning of your modeling career. If you have further questions, try the resources listed on your worksheet. Now that you ve learned about money, time for the chance to win some for yourself. Text CREDIT to You ll give some feedback on the workshop and be entered to win a $2,500 scholarship. If you are leading the session, visit You ll upload your photo, give some feedback, and be entered to win a $10,000 scholarship. Score. RESOURCES For more information on how to handle credit cards, check out Master Your Plastic: Master-Your-Plastic/_/R "

9 WORKSHEETS FOR YOUR FRIENDS

10 C RE D IT CA R D S : LIFE I N PLAST IC...IT S FANTAST IC? M AT C H B O X T W E N T Y annual fee minimum payment credit score credit limit A. perks cardholders receive when they sign up for a credit card, like points, frequent flyer miles, and cash back B. also known as annual percentage rate or APR. It s the percentage of your balance you pay as interest C. three-digit number that predicts how likely you are to pay back the credit you borrow. In other words, your credit score allows your credit card company to measure the risk it takes by lending you credit D. the lowest amount of money you are required to pay on your credit card each month balance E. a yearly charge some credit card companies charge a holder simply for owning a card. F. the amount of money you need to pay to interest rate reimburse the charges you put on your card. It s what you owe G. the maximum amount of credit you are allowed member rewards to borrow

11 C RE D IT CA R D S : LIFE I N PLAST IC...IT S FANTAST IC? WHATCHA GONNA DO WHEN THEY COME FOR YOU? THE STORY JJ just received his first credit card. Annual interest rate: 18%; Finance charge: 1.5%; Minimum payment: 5% January: JJ charges two shirts, a pair of pants, and a pair of shoes for $235. When his first credit-card bill arrived in February, Justin owed. Since his account provides for a 30-day grace period, JJ did not owe any finance charges immediately. JJ knows he should pay his entire bill each month, but he was short on cash, so he only made the minimum payment of. His unpaid balance was. February: JJ took his GF to a concert then bought the band s albums on itunes for a total of $157. When his bill for March arrived, Justin owed for the new charges, his previous balance, and the finance charge on the previous balance. He was now even shorter of cash at the time, so he made only the minimum payment of. March: After he made his March payment, JJ resolved to stop charging things until he could pay his entire balance. But the next day, his car broke down and the repairs came to $760. He needed his car to get to school and work, so he charged the repairs. His total credit-card balance in April was. Taken aback by his growing balance, JJ swore not charge another dime until he paid the balance off entirely. He decided to pay $55 a month for as long as it would take to pay it off. CREDIT CARD BALANCE WORKSHEET JANUARY Purchases: - Minus min payment: Unpaid balance: $ FEBRUARY Purchases: + Previous balance: = Total before interest: + Finance charge at 1.5% (total x 1.015): = Total owed: - Min payment: Unpaid balance: $ M ARCH Purchases: + Previous balance: = Total before interest: + Finance charge at 1.5% (total x 1.015): = Total owed: - Min payment: Unpaid balance: $ Total purchases: $ Total spent: $ Bonus: if he didn t charge anything more and paid $55 a month, how long would it take JJ to pay off his bill? 23 months

12 MIND ON MY MONEY AND MONEY ON MY MIND