A Word of Thanks to the Organizations that Fund Our Work U.S. - PDF document

The Role of Financial Well-Being on the Road to Recovery Judith A. Cook, PhD Professor & Director University of Illinois at Chicago, Department of Psychiatry National Research & Training Center on Psychiatric Disability A Word of Thanks to the Organizations that Fund Our Work • U.S. Department of Education, National Institute on Disability & Rehabilitation Research • Substance Abuse & Mental Health Services Administration, Center for Mental Health Services ��������������������������������� �������������������������� ������������������

�������������������������������������������������� Two Tools for Building a Secure Economic Future � Financial Literacy � Asset Accumulation Financial Literacy Financial Literacy ����������������������������������������������� ��������������������������������� ���������������������������������������������

Low Low- -Income People in Income People in Recovery May Feel Financial Recovery May Feel Financial Planning is Futile Planning is Futile I just sat down the other day and “ I just sat down the other day and “ wrote out checks with which to pay wrote out checks with which to pay my bills and find out I’ ’ve already ve already my bills and find out I spent my money before I even have spent my money before I even have it. There was no fat to trim, nothing it. There was no fat to trim, nothing to budget.” ” to budget. Woman in Chicago Woman in Chicago A Fatalistic View Can Get in the A Fatalistic View Can Get in the Way of Planning Way of Planning “ “I think when I have money, I think when I have money, ‘ ‘You You know what? I may not be here know what? I may not be here tomorrow. Look at my friend who tomorrow. Look at my friend who passed away suddenly.’ ’ Then I Then I passed away suddenly. don don’ ’t care about the end of the t care about the end of the month. month.” ” Man from Georgia Man from Georgia UIC NRTC Free Financial Education UIC NRTC Free Financial Education Curriculum Curriculum values, needs vs ? values, needs vs – Lesson 1: What – Lesson 1: What’ ’s Important to You s Important to You? wants; identifying financial goals, budgeting wants; identifying financial goals, budgeting Lesson 2: Income vs. Expenses difference between difference between – Lesson 2: Income vs. Expenses – fixed vs. flexible expenses; developing a savings plan fixed vs. flexible expenses; developing a savings plan Lesson 3: Managing Your Debt controlling debt, how controlling debt, how – Lesson 3: Managing Your Debt – to increase your income, 101 ways to save $ to increase your income, 101 ways to save $ Lesson 4: Understanding Credit understanding your understanding your – Lesson 4: Understanding Credit – credit report; managing credit/debt problems credit report; managing credit/debt problems Lesson 5: Using Financial Institutions checking & checking & – Lesson 5: Using Financial Institutions – savings accounts, direct deposit, debit cards, savings accounts, direct deposit, debit cards, using ATMs, online banking, bank loans using ATMs, online banking, bank loans Lesson 6: Building Consumer Skills smart smart – Lesson 6: Building Consumer Skills – shopping, spending traps, spotting fraud, shopping, spending traps, spotting fraud, consumer rights consumer rights

UIC Curriculum Adapted From… • All My Money: A Financial Management Curriculum for Persons Working with Limited-Resource Audiences http://www.ace.uiuc.edu/cfe/mymoney/ • Your Money & Your Life: A Financial Education Curriculum for Limited- Resource Audiences https://pubsplus.uiuc.edu/ACE-4-CD.html University of Illinois Extension Lesson 1: What’s Important to You? • Your values • Distinguishing between needs vs. wants • Identifying your savings goals – short or long term? – getting out of debt? – saving up for a purchase (big or small)? – 6 steps of decision-making • Tracking expenses – Different ways to track your expenses – Knowing when your bills are due � Fun Quizz: What Type of Buyer Are You?

� Learn How to Track Your spending Ways to Track Spending • Spending Diary – write it down in a small notebook or say it into a voice recorder • Collect Your Receipts – get a receipt for each purchase & total them weekly • Use Expense Tracking Worksheets – assign purchases to categories at the end of each day via free paper & pencil or excel worksheets http://www.frugalvillage.com/printables-othermenu/31-printable-daily-expense- tracking/117-printable-expense-tacking.html • Use Online Budget Tracking – you can obtain a free system called “Budget Tracker” on the Internet http://budgettracker.com/login.php Monthly Budget Worksheet Sample

Lesson 2: What’s Important to You? • Fixed vs. flexible expenses • Envelope budgeting • Developing a savings plan Build a Savings Plan by Understanding Fixed vs. Flexible Expenses Flexible Fixed • Food • Housing • Household • Utilities • Health • Credit payments • Transportation • Loan repayment • Recreation/Entertain • Insurance payments ment • Personal • Contributions Envelope Budgeting • Good for people with limited income who operate on a cash basis • Good for folks who don’t like math ☺ • Important to make good “guesstimates” of how much to put in each envelope • Start with just a few envelopes and add more over time • Keep envelopes in a safe place – preferably a locked box or drawer

Envelope Budgeting Example Using Online Finance Calculators to Develop Savings Plans • How much do you spend each month? http://frugalliving.about.com/library/Budget_Calculator/bl_budg etcalculator.htm • What will your savings be worth over time? http://partners.leadfusion.com/tools/uiue/savings02/tool.fcs • What will it take to make a large purchase (used car, condo)? http://partners.leadfusion.com/tools/uiue/savings03/tool.fcs ������������������� ��������������������� ������������������� �������������� � ������!������

Lesson 3 – Managing your Debt and Expenses • Controlling debt • Saving money • Increasing income • Calculate income-expenses Know Thy Bills • Make a list of all bills (rent/ mortgage, utilities, phone, doctor, credit card, other charge cards) • List the amount due, when due, interest rate, amount owed (helps you see all your debt at once) • Make a payment calendar for the month & year (helps you see when each bill is due & how it fits with other expenses) Prioritize Your Bills • Most important is housing • Next most critical is utilities (electric, gas) • Transportation & insurance come 3 rd • Bills that cost money if they are not paid come next (late penalty, disconnect/reconnect charges, repossession options) • Bills likely to be “vigorously” collected come next • Once you’ve paid the above – pay the rest

Learn to Spot Spending Traps • Rent-to-own stores • Payday lenders • Pawn shops • Online shopping • Mail-order clubs • Auto-purchase • Buying parties Lesson 4: Understanding Credit • What is credit? • Your credit report • Understanding your credit score • Managing credit problems Pitfalls of Using Credit Cards • Credit card companies make money by encouraging you to take on more & more debt • Initially low credit card interest rates are called “teaser rates” because they always increase • Spending on credit gives the illusion of “free money,” misleading people by leaving them unaware of how much they are spending

How Long Will It Take to Pay Off Your Credit Card? Credit Card Repayment Calculator http://www.federalreserve.gov/creditcardcalc ulator/ Free Credit Reports • Once a year, U.S. citizens have the right to a free credit report ( or within 60 days of being denied credit) • AnnualCreditReport.com is the ONLY authorized source for the free annual credit report that's yours by law. The Fair Credit Reporting Act guarantees you access to your credit report for free from each of the three nationwide credit reporting companies: Experian, Equifax, and TransUnion. Understanding Your Credit History/Score Your Credit Report Your Credit Score Credit bureaus collect Score is calculated by information on your use applying a of any form of credit mathematical formula to including rent, liens, information in your bills, mortgages, credit credit history cards, bankruptcy Lenders use score to Negative info stays on determine whether to report for 7 years loan you money & how Any business or creditor much interest to charge who subscribes can access this information