Guest Speaker Today: DeVry

Our guest speaker today is Mike Dobkin from DeVry University.  He will be doing an "Interactive Careers" demonstration.

You will be receiving credit for being respectful and attentive during the presentation.  If you are disruptive, ask meaningless or off-topic questions, or otherwise fail to participate, you will receive a zero for the day.

If you have suggestions or ideas for guest speakers, please let me know.

Careers, Finance, and Character: It's a Wonderful Life

"It's a Wonderful Life" is a movie that was released almost 60 years ago -- in 1946.  It's about an angel who helps a compassionate but despairingly frustrated businessman by showing what life would have been like if he never existed.

At this time of year I show this movie for several reasons:

1. It's a good study of someone who has dreams of what they want to do but situations in life move them in another direction.
2. It's a good example of how finance in a savings and loan situation works.
3. It demonstrates a "run" on a bank.
4. It does a good job of showing how our great grandparents (and great-great grandparents) weren't really so different from us.  Whether we [or they] are willing to admit it or not.
5. It shows how a good, intelligent, hard-working person can still suffer from depression.
6. It reminds us that we don't always know the difference we are making in others' lives.

There aren't a lot of requirements for this movie other than paying attention, so I will have computers off during this time.

I have a worksheet for you to complete for the first and second halves of the movie which I will give you in class, but if you are not here and you would like another copy you can download it. (Here)

I'll be showing it in class, but here's an online version that you can watch:

Finish Banking Packet

Today I would like you to do the following:

• Finish all checks, deposit slips, and check registers entries
• Reconcile / balance all debits and credits.
• Check off every deposit
• Check off every check
• Check off every ATM or Debit transaction
• Make notes of any missing checks
• Make notes of any other discrepancies
• Check your final balance with someone else in the classroom -- or two people if one of your balances doesn't match
• When turning in your packet, make sure you include:
• Completed Bank Application
• All Checks
• All Deposit Slips
• All Check Registers
• Both Monthly Statements (with checked off items)
• Complaint Letter (for damaged DVD) -- if you still have it.
• Turn in your packet with your name clearly written on the front.

Continue Banking Simulation

Today we're going to finish month two of our virtual checking accounts.  Follow the correct procedure for each of the following transactions, including writing checks (if applicable), writing items in the Transaction Register, etc.

• 3/22 - You have a garage sale to save up additional money to cover your upcoming summer college class.  You manage to collect the following amounts which you will put on your Deposit Slip:
  + 37 quarters
  + 18 dimes
  + 12 nickels
  + 55 pennies
  + 6  $20 bills
  + 4  $10 bills
  + 7  $5 bills
  + 41  $1 bills
  + Check #1824 for $20.00
  + Check #154 for $16.50
  + Check #913 for $100.00
  + Check #8213 for $125.50
• 3/23 - You receive an Income Tax check for last years taxes.  The check (#52280226) is for $473.29.  Fill out a Deposit Slip for this check and indicate that you would like $100 cash back which you will use to go out with some friends.  Make sure to put this in your Check Register.
• 3/24 - You stop by Games R' Us to buy a new video game.  Write a check for $80.29.
• 3/25 - You decide you need a new hat.  Use your debit card to buy your hat from Wig Out for $22.95.
• 3/25 - You need a new shirt to match your cool new hat.  Write a check for $24.17 at Cold Topic.
• 3/25 - You buy a belt, socks, and underwear at American Dog.  Write a check for $33.91. 
• 3/26 - You and your friends go to dinner and the movies.  You use your cash to pay $11.12 at McTaco King.  You also use your cash to pay $8 to get in to the movies and $8 for popcorn at Stadium 6 Theater.
• 3/27 - You want to go clubbing this weekend so you need to fill up your car with gas.  Spend $42.11 on gas at Tweakin' Beacon on your debit card.
• 3/28 - You drive to Sacramento and pay the $10 cover charge at Yo'Mamaz with cash.  You use your debit card to buy soda's amounting to $24.  They also charged $2 to use your debit card.
• 3/29 - Your friend is arrested for being in a bar fight.  Write a check for $250 to bail them out.  Make the check payable to The Sacramento Police.
• 3/30 - You're really tired the next morning and decide you need some coffee.  Stop by MoonBucks and use your debit card for $11.54.

When you have finished, compare your last amount with your neighbor and try to figure out who's wrong.  :)

Problem With a Product

You sit down to watch the movie you purchased on February 27th and realize the it's broken.  You try to call the store but they say they can't do anything over the phone.   They suggest you speak to Mike Jackson, the manager.  Rather than try to call back on a day that he is at work, you decide to write a more official complaint letter.  Looking up the address, you see that the video store is located at 518 South School Street, Kelseyville, CA 95451.

Below is a template for a complaint letter that you can use as a reference.  Remember that everything in the page lines up on the left, and you always begin with YOUR name and address.

Save a completed copy of your later to your Thawspace as "Complaint Letter".

Begin Second Month's Transactions

Today we're going to begin working on month two of our virtual checking accounts.  Follow the correct procedure for each of the following transactions, including writing checks (if applicable), writing items in the Transaction Register, etc.

• 3/03 - Looks like it's time to hit the grocery store again.  You go to Super Mega Mart to stock up on some necessities because buying in bulk will help you save money.  Write a check for $227.32 to Purity Market.
• 3/05 - You receive your Netmoviez bill in the mail.  Send a check for $10.14 to cover it.
• 3/10 - You receive your cell phone bill in the mail.  Write a check for $47.52 to American Cellular.
• 3/14 - Your electric bill has arrived.  Write a check for $88.14 to Kelseyville Electric Company.
• 3/15 - You receive your paycheck today.  Complete a deposit slip and log it in your Register.
• 3/16 - You have some engine trouble with your car.  After the mechanic looks at it, you discover it's going to be $316.77 to replace your water pump and radiator hose.  Write a check to Kelseyville Car Repair.
• 3/17 - You sill want to put away some money for emergencies, but you can only afford $50 this month.  You stop in at the bank and have the teller move $50 from Checking to Savings.  Remember to remove the money from Checking in your Register.
• 3/18 - You need to drop by the grocery store to pick up a few things.  Write a check to Purity Market for $23.22.
• 3/19 - It's time to pay your car insurance again.  Go online to the Chameleon Insurance web site and submit your electronic payment for $118.33.
• 3/19 - You realize you're gas tank is just about on empty.  Use your Debit Card to buy $54.32 in gasoline at Filler Up Gas & Go.
• 3/21 - You stop at Restored Treasures, a second-hand shop that sells furniture, and buy a couch for $100.  With tax, the total price comes to $109.75.  Write a check.

Reconcile Bank Statement / Balance Checkbook (Month 1)

Today we will be balancing (or "reconciling") our first month's transactions.  Approximately once a month you will receive a "bank statement" which shows all debits (checks, ATM withdrawals, automatic deductions, debit charges, transfers, etc.) and credits (deposits or transfers to checking).  Your bank statement also shows check numbers, dates the transactions were made, daily balances, bank fees, etc.

There is a copy of your bank statement in the back of your packet.  You should have a statement for last month (the one we need today) and one for this month (which we will use in a few days).

Begin going through your check register and comparing the items against the bank statement.  If the items match (check number, amount, etc.) put a check mart next to the item on your bank statement and a check mark in the "check mark column" next to the item of your check register.

Repeat these steps going through deposits/credits.

Next, figure out what has not been taken out of [or put into] your bank account.  Circle them so you can make sure they clear by next months statement.  Do your accounts balance?

Begin Checking

Today we're going to begin working on our virtual checking accounts.  Get your envelopes out and get ready to begin your first months transactions.

Follow the correct procedure for each of the following transactions, including writing checks (if applicable), writing items in the Transaction Register, etc.

• 2/01 - You take a trip to Curl Up & Dye -- a little beauty parlor and barber shop in downtown Kelseyville.  The cost to do your hair (including tax and tip) was $32.  Write a check.
• 2/01 - You receive your first paycheck from Griffith Enterprises which you deposit into your checking account.  Complete a deposit slip and enter the amount in your Register.
• 2/02 - You decide that you need a new pair of shoes for all of the standing and walking you will be doing.  You drop by G-Mart and find a nice pair of shoes.  Rather than write a check you decide to use your Debit Card for the $52.79 total.
• 2/03 - You go to lunch with a few of your colleagues at McTaco King.  Use your Debit Card to pay the $6.42 total.
• 2/04 - Rent is due on the 1st of the month, but it's not late until the 5th.  Write a check for $600 to cover February rent, payable to Shady Acres Apartments.
• 2/06 - The cupboards are looking a little bare and you have a friend coming over for dinner.  You go to the grocery store to stock up on some necessities.  Write a check for $184.69 to Purity Market.
• 2/07 - You receive your Netmoviez bill in the mail.  Write a check for $10.14 to cover it.
• 2/11 - You receive your cell phone bill in the mail.  Although money is running a little low, write a check for $34.71 to American Cellular.
• 2/15 - Thankfully you receive your paycheck today.  Complete a deposit slip and log it in your Register.
• 2/17 - Your electric bill came in.  Write a check for $74.61 to Kelseyville Electric Company.
• 2/19 - You're in need of some more groceries.  You drop by Purity Market and spend $32.17.  Write a check.
• 2/22 - You decide to put away some money for emergencies.  You stop in at the bank and open a Savings account by depositing $250.  Remember to remove the money from Checking in your Register.
• 2/23 - You decide to do some decorating in your apartment.  You stop by G-Mart and buy some wall hangings, dishes, and a house plant.  Write a check for $59.90.
• 2/24 - It's time to pay your car insurance.  Go online to the Chameleon Insurance web site and submit your electronic payment for $118.32.
• 2/25 - You stop on the way to work to get gas.  Use your Debit Card to buy $41.17 in gasoline.
• 2/26 - You and some friends decide to go to Rock & Bowl at Mega Bowling Alley.  Rather than drive back to your regular bank, you stop at an ATM at another bank and withdraw $40 from your checking account.  The bank charges you $2 for this service.
• 2/27 - You have a movie reserved at The FlixBuster.  Write a check for $21.55.
• 2/27 - When you arrive at FlixBuster you discover that they don't take checks.  VOID the check you wrote to FlixBuster and use your Debit Card instead.
• 2/28 - The Wilderness Girls dropped by selling cookies.  You buy three boxes of Minty Goodness at $4.00 per box.  Write a check to cover the cost.
• 2/29 - It's time to pay your monthly Internet bill.  Write a check to InterWebz for $39.49.  While you are there dropping off your payment, the company offers you a discount if you have Automatic Withdrawal from your checking account.  VOID the next check to leave with them and next month you will receive $5 off your bill.
• 2/29 - You stop at the SuperQuickyMart to pick up a gallon of milk.  Use your debit card for the amount of $3.41.
• 3/1 - You receive another paycheck.  Deposit it into your checking account.  Make sure you fill out a Deposit Slip to go with it, then log it in your Check Register.
• 3/2 - Your good friend has asked to move in with you.  You decide that it would really help with the cost of the rent, so you get permission from the landlord.  Your friend gives you a check for $300 for their half of the rent and you write a check for $300 for your half of the rent.  Both checks are made payable to Shady Acres Apartments and cover rent for April.

Begin Banking Simulation

You recently graduated from Kelseyville High School and got hired at Griffith Enterprises in Kelseyville, California as an office assistant producing educational videos and multimedia.  Griffith Enterprises is located at 5480 Main Street, Kelseyville, CA  95451 and the phone number is (707) 279-1234.

Your beginning salary is $2000 per month and you will be paid on the 1st and the 15th of each month.  You will receive your pay in the form of a voucher check which is typically divided with perforations in two parts -- one part being the actual check (the Net Amount of your pay) and the other part being the voucher (or record) of how your pay was calculated.  You typically Deposit the check portion into your bank account and file the voucher away for your records.

In discussing your salary with your new employer, you have learned that the following items will be deducted from your paycheck:

• Federal Income Tax:  Approximately 15% of your income goes to Federal Income Tax.  This can be less or more depending on your situation.  For example, if you are single and make less than $8,500 in a year you may only have to pay 10%... but if you make over $34,500 you may be paying 25-35%.  (And depending on your deductions and credits, you may get some [or all] of that money back in an income tax refund at the beginning of the next year.)
• State Income Tax:  Current Estimates are that California Income Tax is equal to about 9.9%.
• Social Security:  Currently we are paying approximately 4.2% of our pay toward Social Security; a program provided by the Federal Government that includes old age and survivors' insurance, old age assistance, and unemployment protection.  This is sometimes listed as FICA (Federal Insurance Contribution Act) on a voucher [or pay stub].
• Medicare:  Currently charged at 1.45%, Medicare is used to cover medical costs for older people.
• Medical/Dental:  Because you are a new employee, you are not yet eligible to receive medical or dental insurance.  Once you are eligible you will be asked to select from plan options.

Because there is a full-service bank next door, you decide to leave your old bank and set up an account with this closer bank.  Complete a New Account Application for Bank of KHS (download one here) using the following information:

• ACCT #: (leave blank for now)
• Required Signatures: 1
• Account Type: Free Checking
• SSN: (use 123-45-6789)
• Title: Your own full name
• Business or Occupation: Multimedia Production Assistant
• ATM or Debit Card?   Yes
• Internet Banking?   Yes
• Previous Bank:  Clear Lake Savings & Loan: 101 Lakeview Drive, Clearlake, California 95422
• Previous Acct. #: 8675309
• Amount of Deposit: $226.68  (Description: Transfer)
• Type of Personalized Checks:  Regular Free
• No., Style, Color, and Cover:  (leave blank)
• Starting Number:  101

Because we are starting over with a new bank, we will also begin a new Check Register.  Fill out the front of your check register with your information.  We are bringing $226.68 from our previous bank into our new bank, so open the check register and enter that amount in the "Beginning Balance" spot.

One method of keeping track of items in your checkbook is to use one line per transaction.  For our simulation, we will be using two lines per transaction -- the actual transaction on the first line and the balance and additional information on the second (usually shaded) line.

Stokes Tourney / Finish Missing Work

Today and tomorrow are going to be a bit hectic because of the Stokes Tourney.  I'd like to use these two days to complete any missing assignments.  Beginning Monday, December 9th I will only accept projects from after that date.

Remember that we have two more weeks and then Winter Break.

Guest Speaker: The Art Institutes

Today we have a guest speaker from The Art Institutes in California.  They have campuses all over, including areas like Sacramento and San Francisco.

As always, I expect respect, attention, and valid, appropriate questions for our guest speakers.

Credit Card Research Project

Today we are going to be comparing three different credit offers.  I will provide you with two and your homework is to find a 3rd.

• I will pass out a Credit Card Comparison worksheet [you can download one Here if you need one at a later date].
• Fill in the blanks for your 3 different credit offers.
• Turn in your results page.

Credit Card Offers:

• Offer #1
• Offer #2
• Locate an offer on your own

Next I want you to look at this offer I got in the mail in 2010.  It is not edited to make it look worse -- this is how it came.  It's in a folder pamphlet form (which I will show everybody tomorrow) but I scanned both sides so you could see the details.  You can click the picture to read the small print:

When you are finished with this project, work on getting any missing work turned in.

ADDITIONAL HOMEWORK:  Interview one adult who has [or has had] credit cards using the provided worksheet.

Beginning Checking: Checks and Registers

Today we're going to begin a unit on using a checking account.  First we'll do a math worksheet going over percentages, decimals, and writing amounts out in longhand. (I will be handing out a copy in class, but you can get a copy here)

Next we will explore the general layout of a personal check:

Finally we will do a quick simulation of writing checks and using a check register.  I will be passing out a worksheet with three checks and a register (you can view a copy here: Checks with Register).  Use the following scenario to complete your worksheet:

• You begin your checking account today (12/02/13) with $135.72 from your piggy bank.
• You receive a Check for $550.00 from your work and Deposit it to your checking account on 12/03/13.
• Write a Check for your rent on 12/04/13 for $525 to Kelseyville Green Apartments.
• You go to dinner at Lyndall's on Saturday Night (12/05/13) for $18.27 and use your Debit Card.
• You send a Check to Edward Teach in the amount of $31.19 on 12/06/13 for a movie you bought on eBay.
• You receive a Check for $550.00 on 12/07/13 from your work and you Deposit it to your checking account that afternoon.
• You write a Check for your car payment to Airport Auto Brokers on 12/08/13 in the amount of $224.72.
• You use Online Banking to pay $124.25 for your PG&E bill on 12/09/13.

Compare your ending balance with a neighbors to verify your accuracy.

Here are a couple video clips to explore:

Debt: Debunking the Myths (Parts 1-7)

Answer the following questions you watch the videos by Dave Ramsey on the myths about Debt:
Note: Don't print until we complete the "Myths" section.

Myth 1

• Myth: If I ____________ money to a friend or relative, I will be helping them.
• Truth: The relationship will be strained or ________ .

Myth 2

• Myth: By ______________ a loan, I am helping out a friend or relative.
• Truth: The bank requires a cosigner because the person isn't likely to ___________.  Be ready to pay the loan and have your credit damaged.

Myth 3

• Myth: ___________ ____________, rent-to-own, title pawning, and tote-the-note lots are needed _______________ for lower income people to help them get ahead.
• Truth: These are horrible, greedy rip-offs that aren't needed and benefit no one but the owners of these companies.

Myth 4

• Myth: The ___________ and other forms of gambling will make me ____________.
• Truth: The lottery is a _______ on the poor and on the people who can't do math.

Note:  Texas Tech University did a study on the Texas Lottery and found that people without a high school diploma spent an average of _________ a month playing the lottery.  College graduates spent _________ a month on average.  When studies are done on the lottery, it's always the lower-income ZIP codes that generate the highest revenue on sales.

Myth 5:

• Myth: ____________ payments are a way of life and you'll always have one.
• Truth: Staying away from car payments by driving reliable used cars is what the typical ____________ does.  That is how they became millionaires.

Myth 6:

• Myth: ____________ your car is what sophisticated financial people do.  You should always lease things that go down in value.  There are tax advantages.
• Truth: Consumer Reports, Smart Money magazine and a good calculator will tell you that the car _______ is the most ________ way to finance and operate a vehicle.

Myth 7:

• Myth: You can get a good deal on a _____________ car.
• Truth: A new car loses _________ of its value in the first four years.  This is the largest purchase most consumers make that goes down in value.

On average, a $28,000 car will be worth $8,400 in four years.

Myth 8:

• Myth: I'll take out a 30-year mortgage and pay ______________.
• Truth: Life happens and something else will always seem more important.  Never take out more than a _________ year fixed-rate mortgage.

Myth 9:

• Myth: It's wise to take out an ________ or a ___________ mortgage if "I know I'll be moving."
• Truth: You will be moving when they _______________.

The adjustable-rate mortgage is here to keep the _____________ from losing money.  It transfers the ____________ of higher interest rates to you.

Myth 10: 

• Myth: You need a __________  __________ to rent a car or make ____________ online or by phone.
• Truth: A __________ card does all of that.

Myth 11:

• Myth: I pay my __________ _______ off every month with no annual payment or fee.  I get brownie points, air miles and a free hat.
• Truth: When you use cash instead of plastic, you spend ___________ less because spending cash hurts.

According to carddata.com, U.S. consumers racked up an estimated $51 billion worth of fast food on their personal credit and debit cards in 2006, compared to $33.2 billion one year ago.

Myth 12:

• Myth: I'll make sure my ___________ gets a credit card so he or she can learn to be responsible with money.
• Truth: Teens are a huge ___________ of credit card companies today.

As soon as you get to college, you will receive offers from credit card companies.  About 80% of college graduates have credit card debt before they even get a job.

Myth 13:

• Myth: The home equity loan is good for __________ and is a substitute for the emergency fund.
• Truth: You don't go into ____________ for emergencies.

Myth 14:

• Myth: Debt _____________ saves interest and you get a smaller ________________.
• Truth: Debt consolidation is a _______________.

Debt consolidation saves little or no _______________ because you will throw your low interest loans into the deal.
You cannot ____________ your way out of debt!  _____________ payments equal more _________ in debt.

Myth 15:

• Myth: Debt is a _________________.  It should be used to create prosperity.
• Truth: The _______________ is slave to the lender.

When surveyed, the Forbes 400 were asked, "What is the most important key to building wealth?"  _____________ replied that becoming and staying ________ free was the number one key to wealth building.

The Dangers of Debt

This time of year is notorious for the growth of personal debt -- mostly due to purchasing Christmas presents with credit cards.  Today we will be starting Dave Ramsey's video series on the Dangers of Debt.

Before we begin, answer the following questions:

1. In what ways is it easier, safer, or more convenient to use a credit card instead of cash?
2. What kinds of "rewards" do credit card companies offer customers for using their cards?
3. Why is it important to "Build your credit?"
4. Why are teenagers the number one target of credit card companies?

During [or after] the video, answer the following questions:

1. About how many credit card applications does the average college student receive their first year of college?
2. What does "living paycheck to paycheck" mean?  (70% of Americans are doing it)
3. What is a "paradigm shift"?
4. How has the perception of debt changed since the early 1900's?  (Beginning with the 1910 Sears Catalog example)  How do our great grandparents, grandparents, and parents see debt differently?
5. How did credit cards begin in the 1950's?
6. Approximately how many credit card offers went out last year?  (According to this movie from a few years ago)

And something to think about:

pred·a·tor  

/ˈpredətər/

Noun

1. An animal that naturally preys on others.
2. A rapacious, exploitative person or group.

Maxed Out: Finishing Up

Today we will be finishing up the Maxed Out video and questions.  Next we will briefly discuss the ramifications of credit cards before beginning the next part of the assignment today.

Continue "Maxed Out" Clips & Discussion

Yesterday we watched another piece of the 2006 documentary "Maxed Out" by director James Scurlock.  Scurlock originally set out to make a movie about the crazy spending habits of Americans, but after he started researching the issue and interviewing borrowers, he change his focus to the lending industry and the effects of deregulation.

The Washington Post called this documentary "a matter of life and debt" and sent on to say, "This swift-moving documentary is something all American high school graduates should watch... especially before they head to college and are asked to sign up for credit cards."

The segments we watched this week discussed how the lending industry "sells debt" to companies who go after those who owe them money.  It also covers the tragedy that can happen when people get so deep into debt that they can't see a way out.

In Microsoft Word, answer the following questions (Don't print when finished because we will continue with this tomorrow):

1. What tactics do debt collectors use get people to pay?
2. Why do debt collectors push people so hard?
3. Why do some people resort to pawn shops?
4. Who funds the largest check cashing chain in the U.S.?
5. Do you think lenders are partially responsible for America's debt crisis?  How so?
6. Why does your credit card company want you to be late on your payments?
7. Why do credit card companies want customers who have filed bankruptcy?
8. Why do credit card companies want 18 year old college students?
9. Why don't Senators and Congressmen punish credit card companies for "predatory lending"?
10. Discuss your right to privacy from individuals, corporations, and the Government.

About the Movie:  Answer these on the same page as the previous 10 questions

1. What is your opinion of the movie?  
2. Is it worth showing to students next year?
3. In what ways did the movie change the way in which you look at money?

Maxed Out

Today we will begin watching part of an award-winning documentary called, "Maxed Out". We will be pausing the movie every few minutes to discuss various aspects of the movie as they relate to this class, our experiences, and our future. Please feel free to comment, ask questions, or ask for clarification.

You can rent this movie at local movie stores or, if you have Netflix Streaming at home, you can view it at: http://movies.netflix.com/WiMovie/Maxed_Out/70058892?trkid=496624

An interesting juxtaposition from the opening scene in Maxed Out is this video about the economic collapse of Las Vegas and the drying up of the housing market there.

Guest Speaker: Rihannah Mitchell (WestAmerica Bank)

Today we have a guest speaker (Rihannah Mitchell) from WestAmerica Bank.  I expect everybody to pay attention, ask relevant questions, and be respectful.

The WestAmerica web site is at: https://www.westamerica.com/

Budget: Creating an Excel Spreadsheet

If you're having trouble understanding the coordinates in Excel, try to think of them like a Battleship game:

 In this example, the boat that has been hit is at cell E7.  The boat in the bottom-right corner is at cell J10.

Rows are horizontal... like the rows of a theater.  And they are numbered -- row 3, row 4, etc.

Columns are vertical... like columns in a building.  They are lettered -- column A, B, C, etc.

Next we will open and explore this spreadsheet:  Spreadsheets

• When you open it, go to FILE > MAKE A COPY and save it to your folder to work on.

Looking at Budgets

Today we are having a class discussion about budgets and building a "Hard Times" budget using the absolute minimum amounts for rent, car insurance, food, utilities, etc. We will also calculate monthly income based on a minimum wage and will discuss how tight our budgets might be.

Homework:  Another "Ask Someone Who Knows" assignment where students are to ask someone who owns a house *and* someone who rents an apartment/house for a general budget.  [Forms Will Be Here]

We will be using this data on Tuesday in a spreadsheet, so make sure you get it done.

After Our Discussion

We went with the absolute minimum that we thought we could survive on and these are the numbers we went with:

Monthly Expense	Amount	Explanation
Housing / Rent	$ 400	Studio apt.
Food	$ 100	Eating only Ramen / Mac&Cheese
Car Payment / Insurance	$ 60	No car payment / budget insurance
Gas, Oil & Auto Maintenance	$ 100	Economical car / minimal driving
Utilities (PG&E, Water, Garbage)	$ 150	Basic utilities
Phone / Cell / Internet	$ 35	Cheapest service possible
Cable / Satellite	$ 0	None.
Health Care / Medicine	$ 0	None -- need to regular medication.
Clothing	$ 6	Shirt, pant & budget shoes per year.
Entertainment	$ 10	One event or maybe Netflix.
Pets	$ 0	No pets.
Sundries (TP, Soap, Shampoo, etc.)	$ 50	Budget products (dollar store TP)
Furnishings & Kitchenware	$ 20	The basics (pillows, dishes, pots)
School Expenses	$ 0	No school (or scholarships/grants)
Credit Card Payments	$ 0	No credit cards... EVER.  :)
Child Care	$ 0	Hopefully not yet.
Savings	$ 0	Hard times -- no budget for savings.
Laundry / Dry Cleaning	$ 20	One load per week.
Energy Drinks, Soda & Candy	$ 0	None.

That comes to a total of  $951.00 per month.

So how much can you make working full time (no days off and no vacation days)?

Well, with minimum wage being $8.50 per hour, if you worked full time (40 hours per week) every week for 12 months (no vacations or sick days)... you would make around $1473 per month ($8.50*40*52/12).  But wait... there are taxes and other things (Social Security, Disability, etc.) that come out of your check.  You will likely bring home more like $1105.  That gives you a surplus of $150 each month!  That means if you actually ever want to eat something besides Ramen noodles... or buy a pair of shoes... or pick up a candy bar... you can probably do it.

Remember, though... that things like a flat tire, a car repair, a broken tooth, an injury, breaking your phone, etc. can eat up months of your "extra" money.  The smart move is to put "extra" money into savings for those kinds of emergencies.

The other thing to remember is that you may [some day] want to go out with friends... or see a movie... buy a birthday present... or buy a video game.  That money has to come out of somewhere.

Budgets: The Cost of Living on Your Own

Last week I asked you to interview someone who lived in a house and someone who lived in an apartment to get an idea of how much it will cost living on your own.  Clearly there will be differences based how nice the apartment/house is, whether you are renting or buying, how large it is, and where it's located... but you should have a general idea at this point.  The biggest variations will probably include how people spend their "extra income" -- although quite often answers about these questions are not completely honest.

Collaboration: Today I would like you to sit for a few minutes with another person [who actually did the interview] and compare figures.  Make sure you note the other person's information on your paper.  Discuss the information with them; including why the amounts are different, difficulties you had in getting the information, etc.  After you finish comparing notes, sit with another classmate and compare notes with them.

Discussion: Next we will have a brief discussion to compare overall notes.

Hands-On: Next we will work on our "Hard Times" budget and set some actual numbers down that you learned from your interviews.

Video: Finally we will finish up Dave Ramsey's Savings (Part III).

Savings: Part II & III

Do you think people who make more actually save more?  Think again.  Harris Interactive conducted a survey for CareerBuilder.com [November/December 2006] of 6,169 full time adult workers.  The survey, according to a Reuters news release, found that 19% of workers who make over $100,000 live paycheck to paycheck.

Today we are continuing with our lesson on Savings.  You should continue your Microsoft Word document from yesterday.

  1.  You should save money for three basic reasons:

• ___________________
• ___________________
• ___________________

EMERGENCY FUND

  2.  _________________ are going to happen.  Count on it.

  3.  Baby Step 1, a beginner emergency fund, is __________________ in the bank (or $500 if your household income is below $20,000 per year).

  4.  Baby Step 3 is a fully funded emergency fund of __________ of expenses.

  5.  A great place to keep your emergency fund is in a __________ ___________ account from a mutual fund company.

  6.  Your emergency is NOT an _____________, it's ______________.

  7.  Do not ______________ this fund for purchases.

  8.  The emergency fund is your ______________ savings priority.  Do it quickly!

  9.  The second thing you save money for is ______________.

PURCHASES

  10.  Instead of __________ to purchase, pay cash by using a __________ __________ approach.

  11.  What is the average monthly car payment in the U.S.?

After the video is over, take a few minutes to answer the following questions:

  12. What is a "sinking fund"?

  13. Why isn't "90 days same as cash" really "the same as cash".

Knowledge of the importance of an Emergency Fund has been around for centuries.  Consider the quote:

"In the house of the wise are stores of choice food and oil, but a foolish man devours all he has." -- Proverbs 21:20

WEALTH BUILDING

  14.  The third thing you save money for is __________ __________.

  15.  _____________ is a key ingredient when it comes to wealth building.

  16.  Building wealth is a __________________, not a sprint.

  17.  Pre-___________________ (PACs) withdrawals are a good way to build in discipline.

  18.  __________ ___________ creates a mathematical explosion.  You must start _________.

After the video is over, take a few minutes to answer the following questions:

  19.  Discuss the idea of "Wants vs. Needs" in a short paragraph.

  20.  Discuss why someone who put less money into savings ended up with almost a million dollars more than someone who put in more money for more years.

Why worry about what "might" happen?  Consider the quote:

"If you do the things you need to do when you need to do them, then someday you can do the things you want to do when you want to do them." -- Zig Ziglar

Save your assignment, print it out, and turn it in to the box.  

Type Results of Interviews

Last week [or was it the week before?] your homework was to interview four people about spending money and living on their own. Everybody should have been able to find and interview at least 3 of the 4 people on the list by now.

Your assignment today is to write a standard 5-paragraph essay using the material you gathered in your interviews.  You should have an introductory paragraph, three body paragraphs, and a conclusion paragraph.  Discuss what you learned: living on your own, differences among age groups, and spending habits.

Remember that I am interested in what YOU think and feel about what you learned as much as I am the data itself.  Something that sets you apart from everybody else in this class is that only you know what you think and feel.

PLEASE put some real thought into this essay.  I appreciate intelligent thoughts, interesting data, and funny anecdotes.

Tomorrow we will be talking about budgets, so make sure your Interview about personal budgets is done.

Banking: Recollections of Pine Gulch

Today we will be reading a fictional story about how a "bank" started in California during the Gold Rush (1849).  While it's fictional, it does a good job of explaining how banks work, why our printed money is so complex, how loans work, etc.

The story is located here: http://pinegulch.blogspot.com

After reading the story, answer the following questions:

1. Why was there a demand for Slim's services in Pine Gulch?  
2. How did Slim use this demand to create a monetary system for the town?
3. Why was it important for Slim to go to San Francisco to get the ink and paper to write the receipts?  
4. Why did the people of Pine Gulch accept these receipts as currency?
5. How did Slim increase the money supply in Pine Gulch?  How did he decrease it?  Who benefited from this practice?
6. Why did Slim have to leave town after Big Bart shot him?
7. How did Slim become one of the richest men in Pine Gulch?
8. Did this story change your understanding of how money or banking works?  Explain.

When finished, print and turn in your responses.

The History of Money

As we have been discussing banking and reading the Recollections of Pine Gulch story, we have touched on the topic of "What did we really use before we had money?"  The first response is usually, "gold" but there have been many other "standards" for monetary systems.

Barter	The first people didn't buy goods from other people with money. They used barter. Barter is the exchange of personal possessions of value for other goods that you want. This kind of exchange started at the beginning of humankind and is still used today. From 9,000-6,000 B.C., livestock was often used as a unit of exchange. Later, as agriculture developed, people used crops for barter. For example, I could ask another farmer to trade a pound of apples for a pound of bananas.
Shells	At about 1200 B.C. in China, cowry shells became the first medium of exchange, or money. The cowry has served as money throughout history even to the middle of this century.
First Metal Money	China, in 1,000 B.C., produced mock cowry shells at the end of the Stone Age. They can be thought of as the original development of metal currency. In addition, tools made of metal, like knives and spades, were also used in China as money.  From these models, we developed today's round coins that we use daily. The Chinese coins were usually made out of base metals which had holes in them so that you could put the coins together to make a chain.
Silver	At about 500 B.C., pieces of silver were the earliest coins.   Eventually in time they took the appearance of today and were imprinted with numerous gods and emperors to mark their value. These coins were first shown in Lydia, or Turkey, during this time, but the methods were used over and over again, and further improved upon by the Greek, Persian, Macedonian, and Roman empires. Not like Chinese coins, which relied on base metals, these new coins were composed from scarce metals such as bronze, gold, and silver, which had a lot of intrinsic value.
Leather Currency	In 118 B.C., banknotes in the form of leather money were used in China. One-foot square pieces of white deerskin edged in vivid colors were exchanged for goods. This is believed to be the beginning of a kind of paper money.
Noses	During the ninth century A.D., the Danes in Ireland had an expression "To pay through the nose." It comes from the practice of cutting the noses of those who were careless in paying the Danish poll tax.
Paper Currency	From the ninth century to the fifteenth century A.D., in China, the first actual paper currency was used as money. Through this period the amount of currency skyrocketed causing severe inflation. Unfortunately, in 1455 the use of the currency vanished from China. European civilization still would not have paper currency for many years.
Potlach	In 1500, North American Indians engaged in potlach, a term that describes the exchange of gifts at banquets, dances, and various rituals. Since the trading of gifts was so important in figuring the leaders’ community status, potlach went out of control as the gifts became more extravagant in an effort to surpass others' gifts.
Wampum	In 1535, though likely well before this earliest recorded date, strings of beads made from clam shells, calledwampum, are used by North American Indians as money. Wampum means white, the color of the clam shells and the beads.
Gold Standard	In 1816, England made gold a benchmark of value. This meant that the value of currency was pegged to a certain number of ounces of gold. This would help to prevent inflation of currency. The U.S. went on the gold standard in 1900.
Depression	Because of the depression of the 1930's, the U.S. began a world wide movement to end tying currency to gold. Today, few nations tie the value of their currency to the price of gold. Other government and financial institutions now try to control inflation.
Today	At present, nations continue to change their currencies. For example, the U.S. has already changed its $100 and $20 banknotes. More changes are in the works.
Tomorrow	Tomorrow is already here. Electronic money (or digital cash) is already being exchanged over the Internet.

*Based on NOVA Online's the Secrets of Making Money, "The History of Money."  See also Glyn Davies' History of Money from Ancient Times to the Present Day.

There is a video on YouTube which does a fair job of describing how banking was started, although it is very Euro-centric.  You can find it here: http://www.youtube.com/watch?v=D0IJCGuNtqk

Another cute cartoon of how money came about can be found here -- although it rushes through some of the important changes: http://www.youtube.com/watch?v=TLVoV6gK8mE

Personal Finance Lessons That Should Be Taught in High School

by Guest Contributer to Money Q&A

The following is a guest post from Briana Myricks who writes at her blog, How’s Married Life?

High school teachers emphasize preparing for the real world, but in reality, how many of the things you learned in high school do you use today? Has The Scarlet Letter been mentioned at any time outside of a classroom? Do you utilize your US history lessons when it’s not an election year? Besides knowing what H20 means, what elements do you remember from chemistry class?

Part of a valuable high school education should include things you will definitely experience in the real world. One subject that should be taught is personal finance, as that’s something that can be used even before a student graduates. Since personal finance is such a broad subject, what topics specifically should be taught in high school?

How to balance a checkbook: Even though checkbooks and ledgers are going a little out of style with the use of debit cards and online banking applications, students should know how to balance a checkbook. This essential step is all about knowing how much money you have, especially after making a deposit or a purchase. Once a student gets the hang of balancing a checkbook, they have a better grasp of what money management is.

How to save for an emergency fund: High school students love to live in the moment, so very few of them actually think about something happening in the future. Learning about saving for an emergency fund is very important, as it will give them a head start for saving. They should know what constitutes as an emergency, which is something even some adults have a hard time grasping.

How to set up a budget: Budgeting is going to be important, no matter how old someone is. Learning to set up a budget includes knowing your expenses and your income, and ensuring the two will leave you in the positive, or at least breaking even. Without a budget, you have a disconnect as to what you may be spending and paying for. Setting a budget, even when you’re in high school, helps you keep track of how much disposable income you have after your expenses are paid for.

Investing basics: When you hear from the experts, many of them emphasize that it’s never too early to start investing. When students learn the basics about what’s included in investing and how to do it, it may spark their interest to look into it further, or give them a general idea of it if they ever become interested in it later on in life.

Insurance basics: High school students may have heard about car insurance or phone insurance, but again, there’s a disconnect to it since they usually don’t pay for it. It’s important that they learn what insurance is, how it works, and what it can be used for. There’s no doubt they’ll need to know about things like deductibles, and it could be sooner than later that they need the knowledge.

How to manage credit: Once students graduate from high school and go off to college, that’s a time where they become vulnerable to credit card companies, and when many students find themselves discovering debt. Teaching them ahead of time, before they rack up debt, is extremely important. Students need to know what credit is, how to look for interest rates, and learn the importance of paying back the money they borrowed in a timely manner.

These lessons are sometimes learned the hard way in adulthood, but if personal finance is included in high school curriculum, students can avoid the hard lessons.

Why is Personal Finance an Important Class?

As you have probably heard me say many times, I truly believe that "Life Skills and Personal Finance" is the single most important class you will ever take in high school.  It demonstrates principles of spending, saving, and money management as well as career research and planning and preparing you for living on your own.

Some of the major components of this course include:

• Professional Portfolios: Our first portfolio check was last week.
• Personal Finance: We will be working through budgeting, spreadsheets, etc. and will begin a series of videos by Dave Ramsey, a nationally syndicated financial planning expert. We will also be working through a banking simulation unit using checks, ATM cards, etc.
• Life Skills: These will include renting an apartment, buying a car, looking for roommates, dealing with babies, handling stress, exploring college choices, etc.

Today will be watching a few short video clips by Dave Ramsey.

Before we begin, let's quickly discuss the following:

1. About what percentage of marriages end in divorce? 
2. What is the number one cause for divorce in America?
3. What is the number one cause for male suicide in America?

[Watch: GETTING STARTED > ORIENTATION]

Before the next video let's discuss the following:

1. "Griffs financial experience." or... "Why you should listen to me."
2. "I wish someone had told me..." or... "What would you tell yourself if you could go back in time?"

[Watch: GETTING STARTED > DAVE'S PERSONAL TESTIMONY]

Before watching the next video, let's discuss the following:

1. Have you ever played a game with someone who didn't tell you the rules?
2. Ever have someone change the rules while you were playing because you didn't know any better?
3. Would you like to play a game where those you were playing the game with knew the rules better than you did?
4. How likely is it that you could win a game you didn't know how to play?

This video clip from the movie "Stripes" demonstrates this point:

While watching the next video [Chapter 1: Savings - Part 1] answer the following questions in Microsoft Word -- but don't print yet.  We will continue next week.  (Let me know if we need to pause for a moment or if you have a question.)

1. The best way to become a millionaire is _____________.
2. Baby Step 1 is __________ in an emergency fund.  
3. If you make under $20,000 a year, put ____ in an emergency fund.
4. ___________ must become a priority.  Always pay ________ first.
5. What country saves the most money?
6. The United States has a _________ savings rate.  Which means we are __________ more than we ____________.
7. Saving money is about __________ and ____________.
8. Money is __________________.

Next Week:  Remember the bring in the "Ask Someone Who's Been There" (4 people) page and the "Ask Someone Who Knows: Budget Questions" by Tuesday.

Today we're going to begin discussing personal finances.  Namely, ho

Career Zone Reality Check

Today we will continue thinking about the next step after high school.  Where will you live?  What type of lifestyle will you have?  What is your long term outlook?

1. Go to the California Career Zone Reality Check web site
2. Choose the living situation that works best for you and click "Next"
3. Select as many services as you will use and click "Next"
4. Choose your eating style and click "Next"
5. Choose your mode of transportation and click "Next"
6. Select your clothing allowance and click "Next"
7. Select your health care and click "Next"
8. Choose your entertainment style and click "Next"
9. Choose your "personal upkeep" style and click "Next"
10. Select as many miscellaneous items as you like and click "Next"
11. Choose the amount you would like to put into savings and click "Next"
12. Now you can click the "Find occupations that match this annual salary" button
13. Select the amount of education you plan to have
14. Select an "occupation cluster" that mosts interest you and click "Find Occupations"
15. See if any occupations meet your selections (you may have to click "Back" and change choices)

• Open a Microsoft Word document and add your name and period
• Copy your city, necessary salary, and career results and paste them to the Word document
• Write a paragraph discussing your careers and whether any of them match the careers from your previous two personality / interest surveys.

REMINDER: Tomorrow we will type up the results of the "Ask Someone Who's Been There" survey.

Signatures...

As we have discussed, signatures can play an important role in your professional life.  A sloppy signature, a "printed" signature, or a "crazy" signature can affect your job search, college application, or loan applications -- and if you don't have a consistent signature, your bank may not even allow you to write a check.

There are many sites out there wish suggestions for "better signatures" but really, a smooth, cursive, consistent signature works best.

A very famous signature appears no the U.S. Constitution.  It became so famous, in fact, that people will still tell you [over 200 years later] to "Put your 'John Hancock' right here on this line."

Another famous signature (Walt Disney) was the inspiration for the "Disney" font used throughout the Disney corporation.

 

President Obama has a distinctive signature because the first letters of his first and last name encircle part of each word -- and they are very prominent.

 Sometimes you can make your signature more personal by addition little flourishes, but be careful because some older, "stuffier" people will see it as unprofessional or immature.

 And while you can have a very flamboyant  signature with loops and curls, remember that you have to sign your name the same each time.  So don't over-complicate it.

 

Finally, don't over-simplify your signature either.  Occasionally you will have to sign in for something... or sign equipment out... and if they can't read your signature you may be in trouble.  This particular signature belongs to Eoin Colfer:

So for today, I want you to practice your signature.  Here is a sample "Cursive Letters" chart, but remember that you don't have to use these particular styles:

Use this "Professional Signature Practice Page" to work on a professional signature:

Click to Download Full Size

Teens Should Learn Personal Finance from Parents, Teachers

U.S. News & World Reports: http://www.usnews.com/education/blogs/high-school-notes/2012/01/23/teens-should-learn-personal-finance-from-parents-teachers

By Laura McMullen

January 23, 2012 RSS Feed Print

Most high school students don't spend their time fretting over mortgages, stock prices, or their 401(k) plans, but they are at an age when smaller financial responsibilities start creeping into their lives. Many teenagers earn allowances and begin working part-time jobs, so they need to make decisions about what to do with their money.

High school students "also begin to have a lot more of a social life," says Margaret Magnarelli, senior editor of Money magazine and author of the textbook Per$onal Finance. "They might have a car and access to shopping and restaurants. And if they don't have a car, they want a car."
Teenagers often have many desires, but they must figure out how to allot their money for the things they want, says Magnarelli, who believes the first step to their financial understanding should be taught by parents.

"When you're shopping, and your child says, 'I want X item,' you can put that item into context," says Magnarelli. "Ask, 'what would it take for you to save up to buy that? How many hours of your part-time job would it take to achieve that?"
[This high school-college hybrid grooms students for jobs.]

Parents can also help their kids understand financial responsibilities by being transparent with their own money decisions, says Magnarelli. For instance, she says parents can say, "We are not able to go to Spain for vacation this year, because if we did you couldn't go to basketball camp. So we're going to the New Jersey shore instead."

Other ways parents can teach financial responsibility include helping their kids set up a bank account and playing online stock market games, says Magnarelli.

Teachers can also play a huge part in preparing students to make financial decisions, says Magnarelli, even if the school doesn't offer a personal finance course.
[Learn how some states push to teach personal finance in school.]

"It's a practical skill that fits nicely into a lot of [curricula]," she says. "These kinds of lessons can be incorporated into other topics easily and smoothly."

Magnarelli explains that a math teacher could show compound interest, or an economics teacher can talk about finance on a micro level. One of the teachers who reviewed the Per$onal Finance book brought newspaper clippings into class and discussed personal finance that way, she says. He would show an article about a car accident, for example, and ask how an incident like that would affect the students' money decisions.

Financial lessons taught by both parents and teachers will go a long way in helping high school students in the future, says Magnarelli.

At this age, she says, "There are a lot of responsibilities that are building into what's going to be a bigger responsibility as they graduate from high school—whether they're going into college or whether they're going off into the working world."

After high school, Magnarelli says, students will have to think about how much money they make, how much of that income goes toward taxes, and how the rest of the paycheck will cover rent, food, entertainment, and other expenditures.

"They're probably not conscious of that yet—of the financial commitments that are coming up—but that's why it's important to be teaching them these skills about managing the money that they have now."