This document provides tips for managing personal finances and resisting marketing tactics that encourage overspending. It explains how things like credit cards, impulse purchases, and flashy sales can negatively impact budgets. Strategies are presented for tracking income and expenses, paying with cash instead of cards, negotiating lower interest rates, and maintaining a good credit score over time.

1. Money is Sexy
2012 Edition

2. Rules
Keep stories to a minimum
Save big questions for the end
Interrupt politely

3. black background,
white stripes?
or
white background,
black stripes?

4. Which
Pizza
would
you
buy?

5. Question
 What is the difference between gross
income and net income?

6. Gross Income vs. Net
Income
Gross Income is what the employer agrees to
pay the employee. It doesn’t take in account
taxes, benefits and other deductions.
Net Income is what the employee receives
after deductions and taxes.

7. 65–80%

8. ‘$500
 To purchase something that costs $500
the actual cost is $500 + 10% (sales tax)


9. ‘$550
 How many hours must we work to afford
$550?
We earn $45,000 per year. Each week
we make $865.38 ($45,000/52
weeks). If we work 40 hours each week
we earn $21.63/hour.
25 hours to spend/earn $550

10. ’25 Hours
 We actually need to use our actual income
We earn $36,000 per year. Each week
make $692.31 ($36,000/52 weeks). If
we work 40 hours each week we make
$17.31/hour.
32 hours to spend/earn $550

11. ’32 Hours
 But, What about the other costs?
How much does it cost to work?
Gas, bus token
Parking
Child Care
Lunch
Work Clothes
Time (opportunity)

12. 10.75%
Pico Rivera & South Gate

13. 10.25%
Inglewood & El Monte

15. Did You Know
$100 in 1960 was equivalent to $670.09
in 2005?
 The value of dollar things haveWhat wouldthe
most risen. And
value of our has fallen. you
$100 to buy in the 1960s would cost you
more than $600 today.

16. Price and Income Gap
• Income = blue line, Price = red line

17. How Budgets Fail
You don’t think you need one
You think a budget limits your spending
You use inaccurate information
You don’t protect yourself from yourself
You don’t make short-term and long-term
financial goals
Too much Facebook

18. $1,240.25

19. Monthly Payments
=

Affordability
Just because you can make the monthly
payments doesn’t mean you really can
afford it.
Can you really afford the car payment once you
consider gas, insurance, repairs, maintenance,
and all other related costs?

20. Think In Terms of Interest
An ATM will charge you on average $2.50 to
withdraw money from their machine.
Let’s assume we withdraw $20.
$20 + $2.50 = $22.50
$2.50 per $20 = 12.5% APR or
150% APY (12.5% x 12 months)

21. Study of Americans’ spending
habits says each hour of
weekly television viewing
correlated to an increase in
spending of $200 annually.

22. The Truth About Spending
Statistically speaking, Arnold says, people spend
12 to 18% more when they pay with a card --
credit or debit -- than when they use cash.
"Bear in mind that even if you are proactive
and monitor their account online, they're still
statistically going to blow through that
allowance quicker,"

23. Watch What You Say
 Sometimes we say things to convince
ourselves how to spend our money.
“It’s only $20 dollars.”
“It’ll only cost me $10 a month.”
“It comes out to just $100 every year.”

24. Look But Don’t Touch!
Studies show the longer a person touches an
object, the greater the value is for that item.
Meaning the longer you touch something, the
more likely you are to buy and pay even more for
it than its sticker price —irrespective of if you even
have a need for it.

25. Real Life Examples
 Car dealerships
 Costco, Sam’s Club (free samples)
 Furniture store
 Yard/Garage Sales & Flea Markets
 Pretty much any clothing store
 Any more?

26. Don’t go shopping while
drunk

28. Take the Free Sample and Run!
Obviously, free samples are supposed to
encourage you to buy that product. But, the
chances of you buying the product increase if you
have a conversation with the vendor. Yes, that
relationship, despite how small and harmless,
from friendly chit-chatter often leaves you with a
sense of obligation to buy.

29. The Fear of Missing Out
Retailers like Costco are infamous for selling an
item for a short period and then taking it away to
never be seen again. Couple that with the
assumed discount you’re getting because you’re
shopping at a warehouse club store and the
temptation might be too strong to escape.

30. Read Between the Signs
Be careful of loud signage that screams “low
price” or “hot deal”. It can give you the false
impression of a bargain that’s not even there.
Another tactic, “bargain” bins of a mix of stuff with
big signs and a single digit price.

31. Sneaky Economics 101
 Remember the supply and demand curve?
When supply is up, price is down. That’s how
we tend to think so that’s why retailers like to
display a lot of one thing in big piles or stacks.
Our line of reasoning is that there is so much of
it, it must be at a bargain. Wrong. The reverse
tends to happen when we see few of one item.

32. We’re Already Here, We Might as
Well Shop
Warehouse Clubs don’t have many locations and
many times people will make a trip out of visiting
them. If you view the trip as longer then a normal
trip to the grocery store you might be inclined to
spend more. Plus, you’re likely to spend some
time there browsing around. Who goes to
Disneyland for two rides? Plus, the stores are so
huge you want to explore every nook and cranny.

33. Don’t Be a Glutton
Warehouse Clubs
allow you to buy
products in bulk.
But sometimes
when we have so
much of something
we tend to be
wasteful of it.

34. Dirty Little Store
Stores often jack up prices to maximize profits
An anonymous Target employee admitted if
something is selling really well at, say,
$9.99 the store will raise the price to
$13.99 (and then mark it on sale)

35. What’s Going on Here?

37. “Shop Today and Save 50% Next
Week”
 Why you fall for it : The promise
of bigger savings in the future
appeals to people who think they
can game the system.

38. “Limit Five Per Person”
 Why you fall for it : Limits trigger a feeling that the deal
is so great that, if not for that limit-four-per-customer rule,
shoppers would be filling their carts to the brim, leaving
none for you. According to a 2007 study in the Journal of
Retailing changing the structure of a sale from “Buy two”
to “Buy eight” resulted in a 55% increase in sales —
regardless of the price of each option.
Why do you think they’ll put limits on big purchase items
like laptops? Who buys more than one laptop at a time?

39. “Our big sale ends
tomorrow/today/in an hour”
 Why you fall for it : Fear, pure and simple.
This tactic appeals to a basic instinct to grab
what’s available or be left without. Think of
the crowds stocking up on bottled water and
canned goods before a major storm comes
through. In those frenzied hours, it’s a
matter of survival.

40. “Get 23% Off”
 Why you fall for it : Real estate brokers have
long known that uneven pricing (say, $524,755
versus $525,000) catches buyers’ attention,
because those odd numbers suggest a bargain
that has already been marked down -- whether
that’s actually the case or not. Amazon.com
recently advertised discounts of “up to 61%”
on its bulk groceries, for example.

41. “Get a Free Gift with a $50
Purchase”
 Why you fall for it : A 2009 study from researchers at
New York University and California State University found
that promotions were more effective if they highlighted
the product to be purchased, rather than the gift.
 It’s the retail equivalent of finding money on the ground.
And shoppers equate added value with a discount — even
if they’re spending extra money to get a freebie they
wouldn’t have otherwise purchased and might not even
use.

42. Sure that’s an Investment?
Be careful. You’ll hear the word “investment”
being thrown around when it has nothing
really to do with the true definition of the
word.
The word “invest” is often used when people
spend more than they know they should and
want to convince others as well as
themselves that they made the right decision
from a financial standpoint.

43. Spending vs. Saving
Please don’t confuse spending
with saving.
The only true way to save is to not spend

44. “These boots are regular price $150 but
they’re on sale for $100. I’m saving 50
bucks!”

45. What do they know?
They know it’s something (new) without
difficult for a person to weigh
the true value of
comparing it to something else.

46. What does smooth jazz or Sade
have in common with grocery
stores?

47. What is the best deal?
☺Buy 2 , Get 1 Free
☻Buy one for $4.00

48. Pay Attention
No clocks
When you walk in a store, are you
always right?
Most recent/expensive at eye level
Product positioning
They pick the colors on purpose

49. Are Credit Cards Making You Fat?
According to a new study published in the
Journal of Consumer Research, paying with a
credit card instead of cash leads to more
impulse food purchases, and most impulse
food purchases are not of the healthy variety.

50. Two factors contribute to this intriguing effect. First,
there is a correlation between unhealthiness and
impulsiveness of food items: Unhealthy food
items also tend to elicit impulsive responses.
Second, cash payments are psychologically more
painful than card payments, and this pain of
payment can curb the impulsive responses to buy
unhealthy food items...

51. A Credit Score Measures
New Credit 10%
Types of 10%
Credit
Length of Credit History 15%
Your
Outstanding Debt
30% }
Credit
Score
Payment History
35%

52. How Long Does Information Remain?
 Negative information 7 years
 Bankruptcies 10 years
 Judgments 7 years
 Student loans 7 years
 Inquiries 2 years
* Closed bank/credit union 5
years
accounts (on ChexSystems Network)

53. Credit – Hard/Soft Inquiries
Hard inquiries Soft inquiries
•Mortgage applications •Consumers pulling
•Auto loan applications their own credit files
•Credit card •Lenders sending you a
applications pre-approved credit
offer in the mail
•Personal loan
applications •Lenders with whom
you have an existing
•Collection agency
relationship viewing
skip-tracing
your credit periodically

54. Unexpected Items on Your Credit
Report
 Late fines for library fees
 Unpaid parking tickets
 Unpaid child support payments
 Unpaid utility bills

55. Consider this…
Experts estimate that you lose 1 point for every
percent of your credit limit that you use. So if you
have a total credit limit of $10,000 and have an
outstanding balance of $4,000 (40%), your score
would be 40 points
lower than if you
had a $0 balance.
Ideally, credit experts say, your never want your
balance to exceed 30 percent of your credit
limit.

56. Debunking – Credit Cards &
Reports
Wait, so closing credit cards won’t bring
down my score?
 Even after cancelling and disappearing
from report will hold on to that payment
history regardless. 7 years for negative
information. 10 years for positive
information.

57. Debunking – Credit Cards &
Reports
Credit Utilization Ratio…really is important
Looks at total used credit and total
available credit.
To avoid getting dinged close credit cards
only when there is zero balance on all
active credit cards. BTW, those with
the best scores on average have 10%
credit utilization ratios.

58. How to Close Credit Card w/o
Getting Dinged
1. Pay off card in full
2. Call customer service to ensure balance is
really zero
3. Cancel the balance over the phone
4. Ask for written confirmation
5. Wait, and check credit report to see if
account is really closed

59. Lower Credit Limit
If you frequent your credit card ask to
lower the limit so you’ll have less to spend.
But be careful of the credit utilization ratio! If
you lower your credit limit but don’t reduce
your spending you can risk maxing out your
card. They say you shouldn’t spend over
30% of your credit limit.

60. Debit Card vs. Credit Card
Automatic withdrawals (ACH electronic funds
transfer) are not protected from overdraft fees
Under the Truth in Lending Act, consumers'
maximum liability for unauthorized use of their
credit card is only $50, and when a card is used
online, it's zero.
Over-pumping at gas stations can result in
overdraft charges.

62. My Name is _____ and I
Buy Stuff Online
Out of PayPal, Credit Cards and Debit Cards
which is the safest?
“Internet Specials”
Quick and Easy
Shipping & Handling

63. Hassan’s Suggestion
 Set up a separate online checking account
Transfer only what you need when you need it
If using PayPal only link to reserved checking
account and not your main bank account
The 3-5 business days it takes for the money to
transfer into your account gives you more time.
Is this a Need or a Want?

64. Wallet Instant Match Maker

65. Be Careful
Are you a victim of “lifestyle” inflation?
The temptation to increase your
expenses and purchases when you begin
to earn more money (because of a new
job, promotion, etc.)

66. To get something you’ve never had
before, you should try something you’ve
never done before.

67. Times New Roman Isn’t Good Enough
Anymore
 Re-think the way you are marketing yourself
Revisit the resume
SlideShare.net
LinkedIn.com
Wordpress.com/Blogspot.com
Facebook.com
Twitter.com

68. Taking Back the Power
☻Money Isn't the Key to Happiness, But
How You Spend It Is - (Researchers) have
found that our types of purchases, their size and
frequency, and even the timing of the spending all
affect long-term happiness. One major finding is
that spending money for an experience — concert
tickets, French lessons, sushi-rolling classes, a
hotel room in Monaco — produces longer-lasting
satisfaction than spending money on plain old
stuff.

69. The biggest threat to
obtaining your goals is
Yourself.

70. By Hassan Nicholas
Community Financial Resource Center
CFRCLA.org
(323) 846-1434
All Rights Reserved Copyright © 2011