Module 3: Debt Lesson Part 1

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2 Module 3: Debt Lesson Part 1

3 Module 3: Debt Lesson Part 1 The Debt Stuff No One is Talking About

4 The Lesson Blueprint What is Debt? Type of Debt Credit Scores

5 What is Debt? Debt is ANYTHING you owe to Someone Else Credit Cards Student Loans Car Payments Medical Bills IRS Payday Loans Family Member Collections

6 Secured Debt? Utilizes a Form of Collateral Your Car Your Boat Your RV Your House Your Dog? Think REPO Man

7 Unsecured Debt? Does NOT have Collateral Stuff you bought on your Credit Card Student Loans Income Taxes Telephone/Utility Bills Personal Loans Most Debt falls under Unsecured Debt

8 Fixed Rate Debt? Same Interest Rate for Life of Loan Your Mortgage (15 year FIXED) Car Loans Federally Backed Student Loans Some Privately Held Student Loans

9 Variable Rate Debt? The Interest Can Change or is Scheduled to Change Adjusts as Market Rates Change Credit Cards Variable Rate Mortgages (ARMs) Some Privately Held Student Loans Usually Starts off with an Introductory Offer to tease you!

10 Fixed vs Variable Terms When the Loan is Scheduled to be Paid Off Fixed The Loan Pay Off Date is Already Determined Mortgage Car Loan Auto Lease Student Loan Variable The Payment Term is left Open (No End Date) Forever Debt Credit Cards

11 Credit Card Debt Unsecured Debt END of you Budget These can be negotiated

12 Credit Card Debt You Need a Credit Card to. Rent a Car Purchase Online Travel This is Just Plain Wrong

13 Credit Card Debt Debit Cards Just Aren t Safe

14 Credit Card Points The Credit Card Company is Smarter than You Nothing is Ever Free Who s Building is Bigger? If you Carry Credit Card Debt, Cut Up the Cards If you Don t Carry Credit Card Debt, Cut Up the Cards

15 Medical Debt Unsecured Debt END of you Budget These can be negotiated

16 Student Loans You HAVE to Pay These Don t Go Away After Bankruptcy Exceptions to the Rule Brunner Test Difficult Disability

17 Predatory Lenders Cash Advance Payday Lenders Title Loans Rent to Own

18 Predatory Lenders Predominantly Found in Lower Income Areas of Town Average Payday Lender Charges 400% Interest - Centers for Responsible Lending Illegal in Some States Interest Rate Caps In Some States Bottom Line: Stay Far Away

19 Zero Percent Interest There is no such thing Why Would a Bank want to Lend you Money for Free? They Don t Want to and They Never Do

20 Car Debt New Cars Leased Cars

21 New Cars New Cars lose 60% - 70% in the first 4 years! Most of it in the Very First Year Average Car Payment is $503 over 68 Months USA TODAY 2016 Average New Car Sold in 2016 = $33,560 Four Years Later. $12,000

22 New Cars Average Profit for Car Sold: $111 new cars are essentially a loss leader for dealers, who make most of their money by fixing your car, selling you a warranty when you buy a new car, financing car loans, and used car sales -Huffington Post

23 Leased Cars The Most Expensive Way to Operate a Vehicle You are Covering the Depreciation of the Vehicle Example: You Lease a Brand New $30,000 Car You turn it in after 36 Months & Car is Worth Only $14,000

24 Leased Cars You Covered the Depreciation for the Dealer at $444/month You Provided the Profit with Down Payment and the $0.10/mile that you went over

25 Leased Cars But I get to write off my Lease You are creating an unnecessary business expense just for the write off

26 Leased Cars If you paid $444/month ($5,328/yr) for the Lease, you could write off that amount off to save $1,332 You paid the Dealership $5,333 to avoid sending $1,332 to the Government And Your Car Dropped in Value Like a Rock

27 Credit Score

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29 awesomemoneycourse.com/creditsesame

30 But First Good to know Credit Score? YES!!! Better to have ZERO Debt than High Credit Score? YES!!! Checking you Credit Report? (Module 4)

31 Rookie Mistakes You Continue to Believe the Lies about Debt Your Broke Friend Tells You What You Want to Hear You Make Yourself the Exception

32 Wrapping Up Debt is Everywhere Arm Yourself with Knowledge We are Changing Our Behavior You Can Live Without Debt and Survive

33 In the Next Module The Steps to Paying Off Debt I Don t Have the Money to Pay Them Getting out of your Car Payment Collection Bullies

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