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.  :)

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.

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.

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.