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.

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.

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.  

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.