Youth Life Youth Future Youth Money! name. Student Workbook. Improving My Money Situation - Debt

Transcription

1 Youth Life Youth Future Youth Money! name Student Workbook Improving My Money Situation - Debt

2 CONTENTS Calculating My Debt Repayments... 3 Calculating Other Debt Repayments... 4 Some Ways To Fix My Weekly Finances... 5 Playing the right 'CARDS'... 5 Giving Debt a 'SCARE'... 6 COOL WAYS TO CLEAR DEBT AND SAVE - THE 2 BANK ACCOUNT METHOD... 7 The 2 Bank Account System - Step The 2 Bank Account System - Step The 2 Bank Account System - Setting Up My Accounts Session Notes END OF WORKBOOK Page 1 Improving My Money Situation - Debt CBNZ 2014

3 Learning how to manage your money is an awesome skill to have. It can really help you to prevent money problems. Youth Life Youth Future, Youth Money is a fun, interactive programme where you ll discover some really useful tools to keep control of your money tools that you can pass on to friends and family as well! Knowing how to manage your money may also help you to fulfil your goals for the future. CBNZ (Christian Budgeting New Zealand Inc) developed this special programme with funding from the Ministry of Social Development. Launched in October 2012 it was reviewed and reprinted in May Your programme is presented by Christian Assist Trust. CBNZ supports and equips budget advisors across the country with members from Auckland to Invercargill. Established in 2004 and later incorporated, it is a Not For Profit organisation. For more information about CBNZ please sarah@cbnz.org.nz or phone CBNZ Inc, c/o PO Box 33285, Incorporated Society No Charities Commission Registration No. CC22291 Page 2 Improving My Money Situation - Debt CBNZ 2014

4 Calculating My Debt Repayments Work out the following repayment periods I want to buy It costs $. I can afford $ per week It will take this many weeks to pay off Cell phone $ $8 per week 45 weeks Cell phone $ $15 per week weeks I want to buy It costs $. I can afford $ per week It will take this many weeks to pay off "ipod nano" $ $8 per week 22 weeks "ipod nano" $ $15 per week weeks I want to buy It costs $. I can afford $ per week It will take this many weeks to pay off Page 3 Improving My Money Situation - Debt CBNZ 2014

5 Calculating Other Debt Repayments I want to buy It costs $. I can afford $ per week It will take this many weeks to pay off Page 4 Improving My Money Situation - Debt CBNZ 2014

6 Some Ways To Fix My Weekly Finances Playing the right 'CARDS' Cut out spending - remove it totally. Alter spending frequency - e.g. weekly to fortnightly. Reduce spending - where possible and appropriate. Defer spending (put off spending) - e.g. no takeaways for 3 months. Supplement Income - earn more money! An Example: Using Defer Spending and Alter spending frequency You currently spend $20pw on takeaways Buy takeaways each week $20 each Week = $1040 per year Now only buy takeaways each fortnight $20 Per Fortnight = $520 per year Now don't buy takeaways for 3 months And then only have them each fortnight = $400 per year The effects of this last combination are: Immediate reduction in expenses of $20pw for the next 3 months $640 increase in cash saved over a one year period A goal date of getting your takeaways back - in 3 months time Page 5 Improving My Money Situation - Debt CBNZ 2014

7 Giving Debt a 'SCARE' Snowball debt repayment. Consolidate loan - very, very BIG caution here. Accelerate (Increase) regular debt repayment. Raise income. Eliminate debt - sell items, gift, interest free loan, insolvency. Some Explanations Snowball debt repayment When you have paid off one debt, you add this money onto the payments of the next debt "snowballing" the repayment or making the repayments larger. This pays off the next debt faster. You can do this on the next debt and so on. Consolidation loan Accelerated payment Raise income This is when a number of debts are paid off by taking out another larger loan. There are a number of reasons to avoid this option including the additional costs of interest and fees you will be charged. You also won't achieve the satisfaction of making the last payments on the smaller loans when you would normally have achieved them. This is where you increase the repayment on a loan to pay it off faster. This may be done by getting new or additional work. An extra $80 per week is $4160 per year! Eliminate debt There are a number of ways to do this: o Sell items and pay off debt o Gift - Use a cash gift to reduce debt o Interest free loan (no fees/interest) o Insolvency (SIO, NAP, Bankruptcy) o Get advice! Page 6 Improving My Money Situation - Debt CBNZ 2014

8 Cool Ways To Clear Debt And Save - The 2 Bank Account Method Account 1 (income account) All your money comes into this account Automatic Payments This Account Does 3 Things 1. Pays your Automatic payments e.g. rent, phone, power 2. Transfer one payment for the total of your set spending amounts to your second account to pay for specific items 3. Builds up some cool savings Examples: rent, power, phone Account 2 (spending account) Total Of Set Spending Amounts Examples: groceries personal spending tip tip if you have a balanced budget, you can spend all the money in this account each week and get more the next week!!! Don't have eftpos or online access to this account to reduce the possibility of withdrawing money too easily!!! If you have to go into the bank to withdraw money, you will be less likely to waste your hard earned savings Page 7 Improving My Money Situation - Debt CBNZ 2014

9 The 2 Bank Account System - Step 1 A Simple Budget Broken Down Into Groups Income $ Weekly Expenses rent $ (automatic payment) power $25.00 (automatic payment) food $50.00 (set spending) personal spending $20.00 (set spending) total $ Savings $40.00 Page 8 Improving My Money Situation - Debt CBNZ 2014

10 The 2 Bank Account System - Step 2 Account 1 (income account) All your money comes into this account $235.00pw Automatic Payments rent $ power $25.00 total paid $ Set up 2 automatic payments: one to pay rent one to pay power Set up 1 automatic payment for the TOTAL of your set spending $70.00pw Account 2 (spending account) Amounts you get to spend every week!!! Food $50.00 Spending $20.00 total $70.00 Builds up some cool savings $40.00pw Page 9 Improving My Money Situation - Debt CBNZ 2014

11 The 2 Bank Account System - Setting Up My Accounts This page is left as a reminder to review my budget and set up my 2 bank account system. Page 10 Improving My Money Situation - Debt CBNZ 2014

12 Session Notes End of workbook Page 11 Improving My Money Situation - Debt CBNZ 2014