Unit 6 Project

Credit and Debt Management Team 8 (Stock Scrubz)

Introduction

Throughout life there are various stages of development a person goes through, an important cycle of development is financial development. You start off as a high school student progress to college student then to young adult then middle adult then finally to older adult. Each stage has different responsibilities and tasks that you must fulfill. As you progress through the financial life cycle you must know how to handle your money carefully. This flyer is meant to help you learn the various things you can do to keep on track through the financial life cycle.
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Stage 1: High School Students

To manage your credit and debt responsibly, you must:
Know what to do when you get a job, bank account , and credit/debit card.
-Job: Make sure you know the different types of payment and deposit methods. For payment methods there are day-to-day checks, salaries, and wages. The deposit methods are direct deposit, and check cashing.
-Bank Account: Most banks are insured up to $250,000 by the government. It is a great way to keep your money safe and make a little in the long run.
-Credit/Debit Card: Credit cards have a certain limit you can spend and must be paid back in a certain amount of time. If you don't pay it back or are late on your payments you will be penalized with severe interest. Debit, on the other hand, is money that comes straight from your savings or checking account.
Never apply for a loan your know you can't pay off.
-There are many different financial aid options to help get the money you need for college; like the FAFSA, Private Loans, and Student Loans.
-FAFASA: They are federal student loans issued by the government. They are willing to work with you to come up with a financial plan.
-Private Loans: These loans are issued by a private bank and general have higher interest rates than others.
-Student Loans: These are usually issued by public school and have lower interest rates than private schools.
Learn how to build a credit score.
-One way to start building your credit score is to take out a small loan and pay off with no late payments.

Stage 2: College Students/Young Adults

As a young adult, you may still be in college getting your education, you may also be working and renting and apartment.
  • Bank Accounts: You should be regularly depositing money into your bank account, and should be paying your bills on time. You may have a credit card, so only use it in emergencies. This prevents you from getting any unnecessary debt on something you don't need. If you have any debt, make sure you make regular payments, and avoid any late payments.
  • You may take out a loan for a car, which may be difficult because you may have a bad credit score. You may have to pay higher rates if you have a low credit score, but you must make sure to make payments on time. You may have education loans, which must also be paid back on time. You have a grace period in which you pay nothing back. During this time you should make sure that you have enough money to pay back your debt.
  • There are a variety of ways to invest your money to increase wealth, while managing debt. You can always keep your savings account with money, so that it may build wealth. You may also invest in stocks, which may build your wealth quickly, but are very risky. There are also bonds, which are less risky but also take a longer time.
  • To protect your credit score, make sure that you pay all your bills on time, and use little credit and pay off anything and everything you owe.
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Stage 3: 22-50 Year Old Adults

As an adult, you have many living expenses, and are able to use credit.
  • Before using credit, you must understand that by using credit, you give up the ability to spend in the future in order to spend now. This is because you have to pay back the amount of money you borrow plus interest. You are in debt to the creditor until you pay back everything you owe. In order to pay back your debt at a quicker rate, it is recommended that you pay more than the minimum balance required. Credit must be paid back in full before you are able to do anything else.
  • Loans are a quick way to get a lot of money in a rather quickly. You take out a loan and have to pay it back. There are variety of loans and a variety of ways to pay them back. For example, there is the installment loan, where you pay back the loan in equal amounts every months until the loan is paid off. Important advice for a loan would be to make sure that you are on time in making your payments. Late payments can harm your credit score, and can result in having to pay high fees and your monthly payment may go up as well.
  • Credit has many positive and negative aspects. One positive aspect is that you get a lot of money quickly, so you are able to spend now instead of later. Second, using credit and paying on time may help increase your credit score, and shows creditors that you are responsible in paying back debt. A negative aspect of credit is that you have to pay it back with interest. In order to use credit, you have to pay back what you owe, plus interest on the amount of time you used it. Second, credit prevents you from spending later because you are spending now. You must pay back all of your debt before you are able to spend money in the future.
  • Using credit and taking out loans create and influence your credit score. Your credit score demonstrates your reliability in regards to paying back your debt. The higher the credit score, the better off you'll be. There are several ways you can protect your credit score. One way is to make sure that you take out as much credit as you need, not too much. Using too much credit results in having to pay back a large amount of money, which can harm your credit score. The most important way to protect your credit score is to pay all of your monthly bills on time.

Stage 4: 50-70 Year Old Adults

Older Adults/Seniors are retired and have to save money for retirement, and still pay off remaining debt.
  • Seniors may want to invest in less risky investments such as Bonds and Mutual Funds because this prevents them from losing their money and end up without any money. People who are middle age may invest in stocks, but they are risking all or most of their money in doing so. Older adults may invest in a 401K if they have a career or have an individual retirement plan, which is known as an IRA.
  • Older adults can pay off remaining debt with money that they have saved up or they continue to pay until they retire and the debt is paid off. Seniors may want to be careful to credit scams, while managing with their credit.
  • Older adults must make sure not to give their private information on the phone, which may be a scam. The scam may result in the loss of all of their money. Older adults must make sure to pay any bills they have on time to make sure they have a good credit score.
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Conclusion

Now that you have read this paper, you know some of the required steps to be able to build and protect wealth. You must make sure that you pay any bills that you owe on time, and avoid late fees. Paying bills late may result in the harming of your credit score. Avoid scams and make sure to keep your private information private. This protects you from identity theft and the loss of your money. No matter what your age is make sure that you are responsible with your money!