Resources

http://www.finweb.com/retirement/key-differences-between-a-401k-and-ira.html

http://www.fool.com/teens/teens01.html

chacha.com
about.com

mortgageunderwriters.com
homebuyers.colorado.org

What we learned from Economics

Most important topic of economics this semester

because...

• you need it for good credit history
• there are many costs if you don't know how to use it
• it's convenient
• makes life easier
• need to know what the different rates are (Late fee, interest rate, APR)
• tempts to overspend if you don't know how to use it

Credit Card Fraud for Dummies

11 Charged in Massive Credit Card Fraud

 

Investment

Stocks: 

• shares in ownership of a company
• riskful

Mutual Funds:

• investment program funded by shareholders
• trades diversified holdings
• professionally managed

Bonds:

• debt security
• similar to an I.O.U.

Risk of Investment

Whats the difference between saving accounts and investment?

• saving accounts are riskfree, investments are not
• you always gain a percentage of money on your saving account
• you can make a lot of money on your investment or lose all of it

Does time play a role in investments?

• bigger chance of making money in long-term investments
• conditions affect time of investment rates

3 Things about Investing:

1. no guarantees + no perfect way to invest
2. understand how your investment works
3. make a plan to determine your needs + goals

Bonds bounce back

Buying a home - Loan

Step One Pre Qualificaton Letter

App: Beginning loan precess complete a mortgage app

Processing:

• occurs between 5-20 days
• credit reports are reviewed by processor
• debt + payment history is reviewed

Underwriting:

• occurs between 21-30 days
• tells if Credit, Debt + Payment histories are acceptable for a loan 

Mortgage:

• loan is submitted to private mortgage insurer
• if there is not enough history it gets send back within 48 hours

Pre-closing:

• occurs between 25-30 days
• title insurance is ordered
• closing time gets schedualed if approval contingencies are met

Closing:

• occurs between 25-45 days
• receive money from loan 
• finish last bit of loan prcess
• buy the HOUSE

Down Payments:

•  important because of credit card crisis
• if you have bad credit history need to show good down payments
• Benefits of Down Payments

1. eliminates private mortgage insurance
2. smaller mortgage = less interest
3. instant equity

Time Frame:

• takes 3 to 4 weeks
• depending on type of loan

3 Things about buying a home

1. You are responsible for developing your budget
2. plan for the unthinkable
3. live within your means

What can go wrong when buying a house

Retirement

IRA:

• private investment fund
• your own money
• anyone can get one

 401(K):

• offered of your place of work
• involves your constributions
• must work for a certain period at the company to get it
• contributions of employee

 What is Social Security?

• supplemental retirement system
• funded out of payroll taxes

Obama fights Privatization of Social Security


How does retirement relate to personal savings? 

• more money after retirement
• more benefits
• more possibilites
• not tied up in debt

Investment calculator


See what Investment could do

Year	Start with	Add 10%
0	$100	$10
1	$110	$11
2	$121	$12.10
3	$133.10	$13.31
4	$146.41	$14.64
5	$161.05	$16.11
6	$177.16	$17.72
7	$194.88	$19.49
8	$214.37

Saving Social Security

Credit Cards

Defintion: Loan from a company that you agree to pay back later with interest.

Interest rates: The amount that is charged as an annual percentage rate. It's like a rental or leasing charge, that you pay back to the company or bank.

APR: The actual yearly cost funds over time of a loan like a credit card.

Late Fees: A fee if you don't pay the money back on time.

Over charge: When you borrow to much money from your loan.


How to apply for a credit card:

• research about credit card plans, and different interest rates and APR's
• fill out paper application for credit card
• apply on phone
• apply online
• compare features
• apply for multiple credit card plans
• fill in details and double-check information
• make a choice and pick one credit card

Why should I get a credit card?

• Earlier consumption
• convenience
• use for emergencies
• establishment of a good credit history
• use of goods while paying for them

Why should I not get a credit card?

• costs more if unpaid balance is not paid monthly
• ties up for future
• tempts to overspend
• decrease future buying power

Tips for credit card users

• set a budget
• pay on time
• don't go over your limit

 

Saving accounts

Defintion: An account at a bank or company where you earn interest by putting in money on your account over time.

Saving Account Tips

 

Why is saving important?

• security
• safety
• planning ahead
• emergencies
• college
• enjoying life

Is it okay to spend money now? 
Yes, if you...

• spend it wisely
• need it
• you can stay out of debt
• save some of it
• know how to limit your 

No, if you...

• can't avoid splurging
• have to borrow
• don't need it
• can't limit yourself

 Saving account efficiency

Compound and simple interest


Simple interest:

• grows slowly
• principle amount

Compound interest:

• speeds up the progress
• principle + any earned interest amount 

Youth with saving accounts

Fixed and Flexibe expenses

Fixed:

• spendings
• monthly
• can change
• bills like loans, or gas payment

Flexible:

• spendings
• entertainment
• clothes