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| Speaker | Time | Text |
|---|---|---|
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unidentified
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Thank you. | |
| I remember the first time I got a catalog in the mail. | ||
| I was so excited I didn't know what to do. | ||
| It was for one of those CD clubs, you know, the kind where you get 10 CDs all for the price of one and never have to buy anything again. | ||
| You can't imagine the joy I felt looking through all those colorful stamps, picking up the CDs I wanted, sticking them on the reply cards. | ||
| It was unbelievably hard to wait for my CDs to arrive. | ||
| But they did. | ||
| As the years went on, I built up quite a collection of CDs and other things I ordered through the mail. | ||
| Mom and Dad were really nice and would order for me using their credit cards. | ||
| Or sometimes I'd just give them the cash and they'd write a check. | ||
| Then one day, just for the fun of it, I sent in my own credit card application. | ||
| And guess what? | ||
| About a month later, My credit card arrived. | ||
| I couldn't wait to go to the mall and try it out. | ||
| The mall was like a giant candy store. | ||
| All I had to do was give them my card and I could have anything I wanted. | ||
| Until one day when I reached my limit. | ||
| I'm sorry miss, but your card has been rejected. | ||
| It was like a slap in the face. | ||
| I'm sorry miss, your card has been rejected. | ||
| What right did he have to say that to me? | ||
| How insulting! | ||
| But then the trouble was just beginning. | ||
| The bills started coming in and coming in and coming in. | ||
| It seemed like they would never stop. | ||
| Before I knew it, I was in way over my head and had to get some help. | ||
| Like many teenagers who are lured into trouble by the temptation of easy credit, Tina was naive about the responsibilities of personal finance. | ||
| Nothing can be more important to a person starting out in life than getting a proper understanding of how personal finances work. | ||
| Teenagers are notorious for giving in to their desires without thinking ahead to the consequences. | ||
| Before they know it, Teenagers can be in over their heads, owe more money than they can pay, and have to turn to parents, relatives, or outside credit counseling agencies for help. | ||
| But that doesn't have to happen to you. | ||
| You have a choice. | ||
| You can avoid financial trouble by applying the things we are going to tell you in this program to your own situation. | ||
|
unidentified
|
We always got everything we wanted, but at the end of the month, the bills would come in. | |
| Mom and Dad would always argue. | ||
| Let's start by getting a good working definition of the key issue, money. | ||
| Money, simply told, is something generally accepted as a medium of exchange, a measure of value, a means of payment. | ||
| In ancient history, human beings traded among themselves using animal skins, bushels of corn, or strings of fish. | ||
| Goods were exchanged directly for goods. | ||
| But as civilization diversified, it became increasingly difficult to establish value between buyer and seller. | ||
| Were five goats equal to ten bushels of wheat? | ||
| What if the guy with the goats didn't want wheat, but wanted fish instead? | ||
| Or bricks? | ||
| Or lumber? | ||
| Or something the guy with the wheat didn't even have? | ||
| That was a real problem. | ||
| Then some enterprising individual came up with the idea of a medium of exchange that could be accepted by farmers and hunters alike. | ||
| Early money took the form of jewels or crude coins made of gold or silver. | ||
| As society evolved and became more sophisticated, governments took on their responsibility of establishing standard units of value and issuing currency backed by gold or silver in the nation's treasury. | ||
| In the modern world, we deal in coins and paper money or cash, but we also use financial vehicles offered by banks such as checks and credit cards to pay for goods and services. | ||
| This is where things begin to get a little sticky and where you need to start paying attention. | ||
| Financial institutions have had a long time to sharpen their skills at making money from unwary consumers. | ||
|
unidentified
|
Ever since I was a little girl, Mom would always take us to the mall. | |
| She would always buy our stuff with credit cards. | ||
| There are a lot of features that need to be considered when it comes to credit cards, and you'll find them all in the very small print, the disclosure statement that oftentimes kids don't read, adults don't read it. | ||
| And so what ends up happening is you could buy a pizza for $10 on Friday night because you're starving. | ||
| It's a necessity. | ||
| And if you paid minimum payments, over time that pizza could end up costing you $100 or more. | ||
| What fool would pay $100 for a pizza? | ||
| It might be you if you don't know what you're doing with regard to your credit card. | ||
| Such things as late fees, over-limit fees, 22% interest and so forth can add up to a horrifying amount of money over time. | ||
| Not only do people tend to spend more money when they pay with credit, they often buy things they wouldn't buy if they had to pay cash. | ||
| Even things they don't really need. | ||
| Let us consider the disadvantages to using credit cards. | ||
| First of all, you commit future income or earnings to pay for something you will be using now. | ||
| This decreases your spending power for what you can buy later. | ||
| Secondly, buying on credit adds additional cost to items you purchase because you must pay finance charges that can run 22% or higher. | ||
| Third, unless you are a seasoned credit card user with decades of experience, chances are you will be lured by the false perception of getting something for nothing. | ||
| Fourth, if you misuse your credit card, spend beyond your limit, or don't pay on time, you will damage your credit record. | ||
| A poor credit rating can haunt you for years and prevent you from getting college loans, car loans, house loans, even other credit cards. | ||
| And fifth, credit cards can be lost, stolen, or misused by others. | ||
| This can lead to a host of problems with a credit card holder that can go on for years and could result in a lawsuit. | ||
|
unidentified
|
If they never seem to have any money and they end up using credit, or if they get behind on their bills and people are pestering them to pay, those are always red flags that they really need to cut back and live within their means a little bit more. | |
| And if they are using credit, then they need to either cut up that card or put it in a glass of water and put it in the freezer until they can feel comfortable with it again. | ||
| However, there are many benefits of having good credit that result from using credit responsibly. | ||
| The first step is understanding what credit means. | ||
| Credit comes from the Latin word credo, meaning to believe or to trust. | ||
| Credit is a merchant's faith in your ability Later, to pay for goods or services he gives you today. | ||
| When someone, whether it's a big company or your mom, gives you credit, they are entrusting you with an obligation to repay. | ||
| If you are responsible and do what you say you are going to do, you will be given more credit. | ||
| If not, you'll lose the credit you have. | ||
| It's that simple. | ||
| It all comes down to you. | ||
| In order to use credit wisely, it's important for you to understand all kinds of credit accounts that are generally available to consumers. | ||
| Installment credit is primarily used to purchase large expensive items such as automobiles, major appliances, and furniture. | ||
| Installment credit breaks the total sales price, taxes, and interest down into a number of equal payments, usually on a monthly basis. | ||
|
unidentified
|
I always wanted a Jeep. | |
| I had no credit so my parents had to co-sign for me. | ||
| Say you buy a used Jeep Cherokee for $10,000 and finance it over 36 months. | ||
| $10,000 divided by 36 equals a monthly payment of $277.77. | ||
| To that $10,000 you must add taxes and interest. | ||
|
unidentified
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I thought by working after school I could afford $277 a month, but taxes and interest added over $50 to the payment. | |
| If taxes are 8%, you add another $800 to the bill. | ||
| If interest is 12%, you add another $1,200, making your total sales price $12,000, and your monthly payment $333.33. | ||
| But that's not all. | ||
|
unidentified
|
Then the insurance bill came. | |
| It was another $150 a month because I had some tickets. | ||
| Most dealers will want you to carry insurance with a comprehensive coverage that can add $100, $200 or more to your monthly expenses. | ||
| To operate a car, you must buy gas, oil, tires, and pay for periodic upkeep and maintenance. | ||
|
unidentified
|
The Jeep needed the tires at $100 each and then the transmission broke down. | |
| So what seemed like a good deal at $277 a month has now become $500, $600 or higher. | ||
| A primary danger of signing up for a big ticket item on an installment plan is in overlooking these additional costs that can make the actual cost more than double your initial estimate. | ||
|
unidentified
|
It ended up costing $700 a month. | |
| All I was earning at my job and plus overtime. | ||
| I had to sell it just to pay off the loan. | ||
| The second type of retail credit is the revolving charge account. | ||
| Most apartment stores issue charge cards that allow you to charge purchases up until you reach a predetermined credit limit. | ||
| A revolving charge account stays open as long as you pay at least the minimum amount due by the due date printed on your monthly statement. | ||
| A lesser known account is a 30 day account usually offered by local merchants who give you 30 days same as cash opportunity. | ||
| Buying items you have cash for and paying the full amount within 30 days is an excellent way to start building a good credit record. | ||
| Using retail credit wisely requires knowledge, discipline, and common sense as indicated by the following guidelines. | ||
| Remember that a credit line is a debt, money you owe, and must repay. | ||
| Weigh each purchase in your mind the same as if you were paying cash. | ||
| Pay each statement on time to avoid late charges and build a good credit history. | ||
| Do not establish more credit accounts than you can easily handle. | ||
| Note how much of your monthly payment is going to pay your debt. | ||
| If, for example, the minimum amount due is $20 and finance charges are $5, realize that you are only paying $15 towards what you owe. | ||
|
unidentified
|
The credit industry loves minimum payment customers because that's how they're making their bread and butter. | |
| In fact, a minimum paying customer will be solicited for more credit in the future. | ||
| When they lower the monthly payment, they lower it to maybe the interest, or even a little lower, and you're paying all interest and nothing for the principal. | ||
| Most credit cards are issued as revolving credit and allow you to make purchases up to a predetermined spending limit. | ||
| This limit is set by the credit card company according to such factors as your past credit history, your income, your occupation, and so forth. | ||
| When starting out, your credit limit will be low, perhaps a few hundred dollars, but as you prove yourself by paying on time, Your account will be reviewed and your limit increased if you maintain a good record. | ||
| Credit card companies are in business to make money and they do it by charging interest. | ||
| As innocent as credit card applications may appear and as excited as you may be to get a MasterCard in the mail, you need to look closely and compare the several key variables that can over time make a difference of hundreds or thousands of dollars. | ||
| The first thing to look for is the APR or annual percentage rate of interest you will have to pay on your unpaid balance. | ||
| This rate can vary from 3 or 4 percent to as high as 22 percent or more. | ||
| You want to get the lowest rate possible. | ||
| You also need to be aware of the late payment fee and over-limit fee. | ||
| Late payment fees are charged when your monthly payment does not reach the company before the payment due date. | ||
| These fees can be $10, $15, even $25 or more, and no excuses are acceptable. | ||
| Your checks must reach the company and be posted before the payment due date. | ||
| Some companies will get you to sign up with a low late payment fee, then increase the fee later on as shown here by a simple mention on your statement. | ||
| This is a legal notice, so be sure to read your statements carefully. | ||
| If your minimum payment due is 15 and you missed the July 4th due date, this company will charge you a $29 late fee. | ||
| Another trick is to make a due date on a holiday, like this company, when no mail will be delivered. | ||
| These are the kinds of things that can add up and make a $10 pizza cost you $100 or more in the long run. | ||
| Overlimit fees are charged when you exceed your pre-set spending limit. | ||
| It would seem logical that if you tried to make a charge and the amount of the charge that would cause you to run over the limit, the charge would be denied. | ||
| Not so. | ||
| Credit card companies love to approve charges that cause you to exceed your limit by a few dollars so they can impose a $25 overlimit fee. | ||
| This is pure profit. | ||
| Always know where you are in relation to your limit and stay well below it. | ||
| If you are unsure, call the company on their toll-free line and find out your current balance before you go shopping. | ||
| Also, be sure to save all your charge receipts and verify them against entries on your monthly statements. | ||
| Credit card companies handle literally billions of entries a year and mistakes do occur. | ||
| Check your company's policy, usually written on the back of your statement, and notify them as soon as you discover any error. | ||
| Secured credit cards are gaining popularity. | ||
| And can be a good way to start building credit. | ||
| Instead of giving you a line of credit outright, secured credit cards are issued against a cash deposit in your account in their bank. | ||
| You deposit 400, you have a credit limit of 400. | ||
| It's that simple. | ||
| Debit cards are like secured credit cards, but actually deduct the amount of your expenses, plus a small transaction fee from the amount you have on deposit. | ||
| Prepaid phone cards work the same way. | ||
| The ATM or automatic teller machine card works like a debit card to allow you to withdraw cash from your checking or savings account. | ||
| This card usually requires no credit history, just a bank account with funds on deposit. | ||
| There are certain dangers of using an ATM card you need to be aware of. | ||
| First, you may forget or lose your PIN number and the machine won't work. | ||
| Second, you need to make certain that you are not observed entering your PIN number by a stranger. | ||
| As fraud can occur when strangers get a hold of this key information. | ||
| Thirdly, take your transaction receipt with you as leaving it by the machine is another way to leave yourself vulnerable to theft. | ||
| And fourth, be sure to keep a record of your withdrawals. | ||
| The greatest temptation and greatest risk to your good credit is to forget about the cash the machine gives you. | ||
| It will be a rude awakening when checks start to bounce and merchants begin to call. | ||
| This brings us to the subject of checking accounts, a source of convenience or dread depending upon how you handle your personal business. | ||
|
unidentified
|
Checks? | |
| I don't know. | ||
| Write them, give it to the grocery store, just like money. | ||
| Checks are very handy for paying bills, ordering merchandise, and transferring money. | ||
| But this convenience does come at a cost. | ||
| Banks make money from your checking account in several ways. | ||
| Charging you for printing checks and deposit slips. | ||
| Charging you for handling checks and mailing statements. | ||
| Charging you service fees for overdrafts. | ||
| A word of warning about overdrafts. | ||
| Bounce checks are checks marked insufficient funds. | ||
| If you ever bounce a check, you know that there is no end to the trouble this can cause you. | ||
| And fees keep on rising. | ||
| Not only will a bounce check cost you $25 at the bank, but the merchant will charge you $25 too. | ||
| That $10 pizza paid for with a bad check can end up costing you $60 or more if that check also cost other checks to bounce. | ||
| One of the most important things you can do in life is to maintain a good credit rating. | ||
| As the world becomes more populated and less personal, computerized data is increasingly important to establish who and what we are. | ||
| A person's credit rating is one of the first things checked by employers, Landlords, car salesmen and other people who make decisions about your future. | ||
| In the United States, there are three primary credit reporting agencies, Equifax, TransUnion and TRW. Every time you apply for or use a credit card or charge card, these agencies collect information about you and your payment history. | ||
| Here are seven ways to build and maintain a good credit rating. | ||
| Write your name the same way on all credit applications. | ||
| Make all your credit card and charge card payments on time. | ||
| Always pay at least the minimum amount required. | ||
| Check your monthly statements for accuracy and correct any mistakes. | ||
| When you move, notify your creditors promptly about your new address. | ||
| If you run into trouble, alert your creditors quickly and make payment arrangements. | ||
| Review your credit report periodically to verify information. | ||
| If you ever apply for a credit card and are turned down, you are entitled to a free copy of your credit report under the Fair Credit Reporting Act. | ||
| Your letter will state the reason for denial and give you an address to write to. | ||
| If at any time you get in over your head and can't pay, seek out qualified help in agencies such as consumer credit counseling. | ||
| What you tell them is completely confidential and they will take your side and stop creditors from hounding you while you get reorganized. | ||
|
unidentified
|
There may be parents out there who are in a position financially to help get them out of debt instead of going someplace else. | |
| But I think that the individual would learn a little bit more if they go through the process themselves, if in fact they're the ones who got themselves into that situation. | ||
| The primary way to avoid all of the problems we've mentioned so far is to live by this golden rule. | ||
| Never spend more money than you have. | ||
|
unidentified
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If they apply the magic formula, we call it the 80-10-10 formula, they learn to live on 80% of anything they make. | |
| So they can spend 80 cents out of every dollar, then they can give 10 cents away and save 10 cents. | ||
| They will learn to live on less than they bring in on a consistent basis. | ||
| If they can do this, they can become millionaires. |
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