2013 Career
and Technical
Education
Summer
Conference
July 25, 2013
Debt to Dollars
Len Rhodes M.B.A. C.P.F.M.
Mark C. Weitzel M.B.A. C.P.F.M.
© The Money Professors (TM)
www.TheMoneyProfessors.com
Debt to Dollars

My First Credit Card
 $1500
Balance, $25 Minimum Payment
 18.99% Interest Rate
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Debt to Dollars

My First Credit Card
 $1500
Balance, $25 Minimum Payment
 18.99% Interest Rate
 16 Years to Pay Off
© The Money Professors (TM)
www.TheMoneyProfessors.com
Debt to Dollars

My First Credit Card
 $1500
Balance, $25 Minimum Payment
 18.99% Interest Rate
 16 Years to Pay Off
 It Gets Worse
 $25 X 12 X 16 = $4800
© The Money Professors (TM)
www.TheMoneyProfessors.com
Debt to Dollars

My First Credit Card
 $1500
Balance, $25 Minimum Payment
 18.99% Interest Rate
 16 Years to Pay Off
 It Gets Worse(er)
 $25 X 12 X 16 = $4800
 $25 PMT at 9.6% APR for 16 Years = $11,300
© The Money Professors (TM)
www.TheMoneyProfessors.com
Debt to Dollars

My First Car Loan
$291 PMT 5 Years 12.25% APR = $13,000
- 25 PMT MasterCard PMT
$266 PMT 5 Years 13.65% APR = 11,522
COST
$ 1,478
© The Money Professors (TM)
www.TheMoneyProfessors.com
Debt to Dollars

My First Car Loan
$291 PMT 5 Years 12.25% APR = $13,000
- 25 PMT MasterCard PMT
$266 PMT 5 Years 13.65% APR = 11,522
COST
$ 1,478
© The Money Professors (TM)
www.TheMoneyProfessors.com
Debt to Dollars

My First Car Loan
$291 PMT 5 Years 12.25% APR = $13,000
- 25 PMT MasterCard PMT
$266 PMT 5 Years 13.65% APR = 11,522
COST
$ 1,478
© The Money Professors (TM)
www.TheMoneyProfessors.com
Debt to Dollars

My First Car Loan
$291 PMT 5 Years 12.25% APR = $13,000
- 25 PMT MasterCard PMT
$266 PMT 5 Years 13.65% APR = 11,522
COST
$ 1,478
© The Money Professors (TM)
www.TheMoneyProfessors.com
Debt to Dollars

My First Mortgage
$1,200 PMT 30 Years
- 266 PMT Car PMT
6.25% APR
= $194,895
- 75 PMT MasterCard PMT
$ 859 PMT 30 Years 6.75% APR
COST
= 132,440
$62,455
© The Money Professors (TM)
www.TheMoneyProfessors.com
Debt to Dollars

My First Mortgage
$1,200 PMT 30 Years
- 266 PMT Car PMT
6.25% APR
= $194,895
- 75 PMT MasterCard PMT
$ 859 PMT 30 Years 6.75% APR
COST
= 132,440
$62,455
© The Money Professors (TM)
www.TheMoneyProfessors.com
Debt to Dollars

My First Mortgage
$1,200 PMT 30 Years
- 266 PMT Car PMT
6.25% APR
= $194,895
- 75 PMT MasterCard PMT
$ 859 PMT 30 Years 6.75% APR
COST
= 132,440
$62,455
© The Money Professors (TM)
www.TheMoneyProfessors.com
Debt to Dollars

My First Mortgage
$1,200 PMT 30 Years
- 266 PMT Car PMT
6.25% APR
= $194,895
- 75 PMT MasterCard PMT
$ 859 PMT 30 Years 6.75% APR
COST
= 132,440
$62,455
© The Money Professors (TM)
www.TheMoneyProfessors.com
Debt to Dollars

My First Mortgage
$1,200 PMT 30 Years
- 266 PMT Car PMT
6.25% APR
= $194,895
- 75 PMT MasterCard PMT
$ 859 PMT 30 Years 6.75% APR
COST
= 132,440
$62,455
© The Money Professors (TM)
www.TheMoneyProfessors.com
Debt Takes Away Our Choices
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Why Do We Borrow?
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Why Do We Borrow?
We don’t control our spending
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Why Do We Borrow?
Consolidating is NOT paying off.
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Why Do We Borrow?
Consolidating is NOT paying off.
DEBT
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Why Do We Borrow?
Approval
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Affordability
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Why Do We Borrow?
Reasons for Indebtedness
 Keeping up with the Joneses
 The use of money to punish.
 Need for instant gratification.
 The expectation of instant
comfort among young couples
who overuse the installment plan.
Why Do We Borrow?
Reasons for Indebtedness
 Lack of communication
among family members.
 The amount of finance
charges is too high.
 We are mentally trained to spend.
 Overindulgence of children.
Defeating Debt


You are never in too deep to lose hope!
You can pay off $10,000 of debt in less than 2
years with just a part time job!
© The Money Professors (TM)
www.TheMoneyProfessors.com
Defeating Debt



You are never in too deep to lose hope!
You can pay off $10,000 of debt in less than 2
years with just a part time job!
Common strategies:
 Pick
up a part time job (taxes)
 Sell stuff on eBay or Craig's list
 Become a smarter consumer
 Above all else… stop borrowing!
© The Money Professors (TM)
www.TheMoneyProfessors.com
Defeating Debt
© The Money Professors (TM)
www.TheMoneyProfessors.com
Defeating Debt

Assess your current debts (list or work in Excel)
 Who
do you owe?
 How
much do you owe?
 What
is the interest rate?
 What
is your monthly payment?
© The Money Professors (TM)
www.TheMoneyProfessors.com
Defeating Debt

Contact your credit card company(ies)
 Ask
for rate reduction
 Ask
to speak to a manager or customer retention
specialist

Move money to a lower rate card
 Beware
of transfer fees
© The Money Professors (TM)
www.TheMoneyProfessors.com
Defeating Debt

There are 3 ways to eliminate debt
 Just
pay them off naturally (most expensive)
– Start with the highest interest rate (financial)
– Start with the smallest debt (easiest way)
© The Money Professors (TM)
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Defeating Debt

Pay off your first debt faster

Now you can add the previous payment to the
next debt

Don’t get discouraged…look for the tipping point
© The Money Professors (TM)
www.TheMoneyProfessors.com
Defeating Debt

What happens when we add extra money
onto the minimum payment.
•

The Tipping Point
The key is to focus on one debt at a time like
a laser.
© The Money Professors (TM)
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Defeating Debt

The 50% Solution

Aggressively pay off debt while
giving yourself a break

After each debt is paid off, enjoy
50% of the extra and use the other
50% towards your Debtor-ADE
© The Money Professors (TM)
www.TheMoneyProfessors.com
Defeating Debt
Control Spending

Envelope System (cash-based)

Create one envelope per category to track

Put monthly amount in at the beginning of the month (if
possible) or with each paycheck

Only pull money out of the envelope for that category –
when its gone, you’re done! Simple!
© The Money Professors (TM)
www.TheMoneyProfessors.com
Debt to Dollars

Go home today and list your debts

Start tracking your total balances each month on paper

Use at least one of the Debtor-ADE strategies

Raise cash to retire debt

Add to the minimum


Highest interest rate

Lowest Balance
50% solution
© The Money Professors (TM)
www.TheMoneyProfessors.com
2013 Career
and Technical
Education
Summer
Conference
July 25, 2013
Debt to Dollars
Len Rhodes M.B.A. C.P.F.M.
Mark C. Weitzel M.B.A. C.P.F.M.
© The Money Professors (TM)
www.TheMoneyProfessors.com