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RealMoney101www.hesaa.org1 RealMoney101www.hesaa.org2DearStudentPursuingacollegedegreegivesyouanopportunitytobroadenyourhorizonsanddevelopnewskills.Itsalsothestartoyournancialindependence.TheHigherEducationStudentAssistanceAuthorityHESAAiscommittedtoexcellenceineducationandhelpingyoudevelopthelieskillsyouneedoryournancialwell-being.RealMoney101wascreatedespe-ciallyorNewJerseystudentsincooperationwithlicensedcreditcounselingagenciesandthenancialaidcommunity.ByocusingonwhatyouneedtoknowaboutcreditbankinginvestingandstudentloansRealMoney101willhelpyoutomakewisedecisionsaboutyourscalafairs.RealMoney101wasconceivednotonlytoassistyouinmanagingyourstudentloandebtbutalsotogiveyoutheskillsyouneedtomanageyournancesthroughoutyourlie.ForurtherinormationaboutmoneyandcreditmanagementHESAAhasateamoproessionalswhocanhelpansweryourquestionsbycalling609588-3987.Educationisthekeytolearninggrowingandachievingyourdreams.WithHESAAsRealMoney101programyouwillalsolearntomanageyournancialresponsibilitiesandplanoryournancialgoals.BestWishesGabrielleCharetteEsq.ExecutiveDirectorCHRISCHRISTIEGovernorKIMGUADAGNOLt.GovernorStateofNewJerseyHIGHEREDUCATIONSTUDENTASSISTANCEAUTHORITY4QUAKERBRIDGEPLAZAPOBOX545TRENTONNJ08625-0545609-584-4480www.hesaa.orgGABRIELLECHARETTEESQ.ExecutiveDirector RealMoney101www.hesaa.org1MoneyManagementDebtManagementQuiz2WhyBudget3HowtoBudgetYourMoneyinSchoolandBeyond3CurrentFederalTaxRates4CurrentNewJerseyTaxRates5Expenses6BudgetWorksheet7ExpectedStartingSalaries7SampleBudgets8BankingServicesCheckingAccounts9CreditUnions9HowtoCashaCheck10MaintainingandReconcilingaCheckbookRegister11OnlineBanking11KeyConsiderationsorSelectinganOnlineBankorCredit11UnionFinancialInvestmentsTypesoSavingsAccounts12TypesoInvestments13MoreonInvestingandSaving14MutualFund16Ruleo7216ProtectAgainstInfationandTaxes17RelyontheExperienceoProessionals18IdentityTheftWhatisIdentityThet20HowIdentityThetStrikes20ComputerSecurityTips21MonitorYourCreditReportClosely23ATMSkimmers23DebtManagementCredit24CreditCardActo200926FactorsThatDoNotAectYourCreditScore26TestYourCreditIQNow27StudentLoansBasicsoBorrowingorCollege32UnderstandingLoanTypes33FederalStaordLoansRepaymentOptions34ConsequencesoDeaultingonYourStudentLoan36LoanConsolidation38EligibleLoansorConsolidation38WhatToDoIYouHaveProblemsRepaying38YourStudentLoanResourcesWebResourcesandReerences39TableofContents RealMoney101www.hesaa.org2MoneyManagementGoodfnancialhabitsdontstartateryouleaveschool.Theybeginnow.Duringschoolyoucandevelopthenec-essaryskillsthatwillassistyouwithmoneymanagementthroughoutyourlie.Beorewegetstartedanswerthesetwelvequestionstolearniyoucontrolyourmoneyoryourmoneycontrolsyou.Behonestwithyouranswersandcheckbelowtoseehowyouscore.DebtManagementQuiz1.AcoupleodaysatertakingmoneyoutoanATMIhavenoideawheremymoneywent.YesNo2.Ionlymaketheminimumpaymentsonmycreditcardseachmonth.YesNo3.Iotenbuythingsonimpulsefguringyouonlyliveonce.YesNo4.IneverthinkaboutreducingspendingeveniImhavingproblemspayingmybills.YesNo5.PuttingmoneyintoasavingsaccountissomethingIcanworryaboutlater.YesNo6.IdonthaveacheckingaccountoriIdoIneverbothertoreconcilemycheckbookwhenIgetmystatements.YesNo7.Imtooyoungtothinkaboutinvesting.Therestimeorthat.YesNo8.Ihaveneverseenorrequestedmycreditreport.YesNo9.NoonelooksthroughmytrashormypersonalorfnancialinormationsoInevershredanydocuments.YesNo10.Idonthaveaplantoreachmyfnancialgoals.YesNo11.IdontkeepafleorrecordopaystubsbankstatementsreceiptsATMtransactionsetc.YesNo12.WhenfllingoutastudentloanapplicationitsalwaysbesttoaskorthemaximumamountavailableeveniIdontreallyneedit.YesNoIyouansweredYESto0-2questionsyoureontherightpathtocontrollingyourmoney.IyouansweredYESto3-5questionsyouneedtoseriouslyre-evaluateyourspendingandsavinghabits.IyouansweredYESto6-11questionsSTOPandTAKEADEEPBREATH.Youmayneedhelpromacreditcounselororfnancialplannertoavoidfnancialdisaster.IyouansweredYEStoall12questionsyourneedorhelpisurgent. RealMoney101www.hesaa.org3WhyBudgetAbudgetisthemostundamentalandefectivenancialmanagementtoolavailable.Whetheryouearnthousandsodollarsayearorhundredsothousandsitsextremelyimportanttoknowhowmuchmoneyyouhavetospendandwhereitisgoing.Abudgetistherstandmostimportantsteptowardmaximiz-ingthepoweroyourmoney.NeedsWantsandGoalsYourmoneyshouldcoverNeedsWantsShort-termgoalsMid-termgoalsLong-termgoalsNeedsessentialorsurvivalarethingsyoucannotlivewith-out.Theyalsoincludepaymentsthatyoumustmake.Wantsarethingsthatyoucanlivewithoutbutyougetthembecauseyouwantthem.Goalsarethingsyouwantintheuture.Yourmoneyshouldcoverallyourneedsbeoreyourwants.Thecharttotherightlistssamplesoneedswantsandgoals.HowToBudgetYourMoneyInSchoolAndBeyondDevelopingabudgetwillhelpyoumanageyournancesandassistyouinreachingyournancialgoals.Togetstartedgureoutwhereyourmoneygoes.Therststepistokeeptrackoallyourspendingoronemonthideallythreemonthsormore.Yourexpensesshouldincludemoneyyouspendmoneyyousavemoneyyouinvestandmoneyyougiveaway.Writedownallexpensesincludingpurchasesasminorasacupocofee.Attheendothemonthyouwillbeabletoaccuratelyassesswhereyourmoneyisbeingspent.Thenextstepistogureoutyourincome.Tocorrespondwithsteponecalculateyourmonthlyincome.Dontorgettouseyournetincomemoneyletateralldeductionshavebeentak-enoutbecausethisisthemoneyyouwillactuallyhaveavail-abletoyou.NeedsaplacetoliveutilitiesbasicoodbasicclothestransportationhealthcareWantsShort-TermGoalsbuyacarnewTVMid-TermGoalsFindacareerLong-TermGoalsbuyahousesendkidstocollegestartaccountorretirementincomeluxuryoodluxuryclothesbooksentertainmentcomputerhobbiescableTVmagazinesMoneyManagement RealMoney101www.hesaa.org4Anotheraspectobeingagrownupunortunatelyispayingtaxes.Pleaseseetheollowingtwotablestohelpfgureoutwhatyoumayowetheederalandstategovernmentannually.CurrentFederalTaxRatesTaxrateSingleflersMarriedflingjointlyMarriedflingseparatelyHeadohousehold100to90750to181500to90750to12950159076to3690018151to738009076to3690012951to494002536901to8935073801to14885036901to7442549401to1275502889351to186350148851to22685074426to113425127551to20660033186351to405100226851to405100113426to202550206601to40510035405101to406750405101to457600202551to228800405101to43220039.6406751457601228801432201MoneyManagementThetaxratedescribestheburdenatwhichthepersonistaxed.TheUnitedStatesincometaxsystemimposesataxbaseonincomeorindividualscorporationsestatesandtrusts.Taxableincomeisgrossincomelessexemptionsdeductionsandpersonalexemptions.Filingstatusisusedtodetermineyourflingrequirementsstandarddeductioneligibilityorcertaintaxcreditsandyourcurrenttax. RealMoney101www.hesaa.org5CurrentNewJerseyTaxRatesTaxBracketSingleMarginalTaxRate01.40200001.75350003.50400005.53750006.375000008.97TaxBracketCoupleMarginalTaxRate01.40200001.75700003.50800005.531500006.375000008.97NewJerseyhastwelvemarginaltaxbracketsrangingrom1.40to8.97.UnliketheederalincometaxbracketstheNewJerseytaxratebracketsarethesameorsingleflersandcouples.ForcomparisonhoweveryourNewJerseytaxbracketisthetaxbracketinwhichyourlastearneddollarinanygiventaxperiodalls.MoneyManagement RealMoney101www.hesaa.org6Wagesamongcollegestudentscanvary.Thehoursyouworkmaydiferromweektoweekyourincomemayincludetipsoryoumaybepaidoncommission.Ithisisthecasethebestwaytoevaluateyourincomeistogureoutyouraverageandusethisnumbertocalculateyourbudget.AscollegestudentsyoumayhaveothersourcesoincomesuchasFinancialaidreundChildsupportpaymentsPublicassistanceUnemploymentGitsorbonusesHoweverthesesourcesoincomemaynotbeissuedonamonthlybasis.Forexampleiyouareanancialaidrecipientyourreundnormallyoccursatthebeginningoeachsemester.Duetotheactthatundsromthesesourcesmaynotbeavail-ableonamonthlybasisresistthetemptationtospendyourreundallatonce.Incorporatetheseundsintoyourmonthlybudget.Thesumoallthesesourcesplusyourwagesmakeupyourmonthlyincome.Expensescanbedividedintothreecategories.FixedExpensesthatdonotchangerommonthtomonth.VariableExpensesthatchangerommonthtomonth.PeriodicExpensesthatdonotoccureverymonth.Dependingonhowyourhouseholdpaysutilitiesie..paymentplanstheycouldeitherbefxedvariableorperiodic.Nowthatyouhaveallthecomponentsoabudgetyoumustdetermineiyourincomeexceedsyourexpensesorvice-versa.Iyourincomeexceedsyourexpensesyoucanusepartoyourexcessonwantsorgoalssuchasreducingyourdebtpurchas-ingaspecialitemorbuildingyoursavings.WhatdoyoudoiyourexpensesexceedyourincomeYouhavetwochoices1.Reduceyourspending.2.Increaseyourincome.Sinceincreasingyourincomewhileinschoolmaynotbeea-siblethebestalternativeistoreduceyourexpenses.YoumayalsowanttoseekproessionaldebtmanagementhelpromoneoNewJerseysLicensedConsumerCreditCounselingAgenciesormoreinormationvisitwww.state.nj.usdobi.RentCarpaymentsMortgagesLoanpaymentsGitsVacationsClothingMoneyManagementGroceriesUtilitiesGas RealMoney101www.hesaa.org7BudgetWorksheetMyIncomeWages______________________PublicAssistance______________________ChildSupportAlimony______________________InterestDividends______________________SocialSecurity______________________Other______________________TotalIncome______________________FixedExpensesRentMortgage______________________Insurance______________________CarPayment______________________CarInsurance______________________LoanPaymentsstudentloans______________________DayCare______________________TotalFixed______________________VariableExpensesSavings______________________Gas______________________Electricity______________________Water______________________Telephone______________________Food______________________Clothing______________________Transportation______________________Tuition______________________Miscellaneous______________________TotalVariable______________________TotalIncome______________________TotalFixedExpenses______________________TotalVariableExpenses______________________ExpectedStartingSalariesTohelpyoudevelopabudgetwehaveprovidedatableoex-pectedstartingsalaries.Listedbelowaretypicalstartingsala-riesorrecentgraduates.PleasechecktheAverageEntry-LevelStartingSalariestogetanestimateoyourfrstyearssalary.Itisimportantthatyouusenetincomewhenfguringoutyourbudget.Iyoucannotfndyouroccupationbelowyoucanvisitwww.salary.com.AverageEntry-LevelStartingSalariesOccupationGrossSalaryAccountant43857.00ComputerProgrammer54160.00EngineerCivilMechanicalChemical59176.0062242.0066069.00Nurse65450.00OccupationalTherapist73064.00Pharmacist113355.00PoliceOfcer49874.00RetailSales23479.00SocialWorkerBSW46671.00TeacherHighSchool54203.00MoneyManagement RealMoney101www.hesaa.org8SampleBudgetsSocialWorkerSocialWorkerBSW46671NetMonthlyIncome2700RentMortgage-950Foodincludinglunch-300Utilities-150CarLoanTransportation-260StudentLoan10-yearterm-300Miscellaneous-300Total2260MonthlySurplus440OccupationalTherapistOccupationalTherapist73064NetMonthlyIncome3800RentMortgage-1425Foodincludinglunch-325Utilities-300CarLoanTransportation-500StudentLoan10-yearterm-980Miscellaneous-300Total3830MonthlyDefcit-30ThingstothinkaboutWhatshouldbedonewiththesurplusortopreventasurplusinthefrstbudgetexampleWhatcanbedonetopreventthedefcitinthesecondexamplebudgetSarahsMonthlyBudgetPlan25000salaryNetMonthlyIncome1625Rent-850Food-200Utilities-75CarLoanTransportation-260StudentLoan10-yearterm-307Miscellaneous-150Total1842MonthlyDefcit-217WhatcanSarahdotoeliminatehermonthlydefcit________________________________________________________________________________________________________________________________________________________________________________________________MoneyManagement RealMoney101www.hesaa.org9BankingServicesBanksarebothaconvenientandsaeplacetotempo-rarilystoreyourmoneyuntilyoueitherspendorin-vestit.TheyarentonlyconvenientbecauseyoucandepositorwithdrawundsromyouraccountatthecornerATMatanyhourothedayornightbutwiththeadvancementotechnologyyoucannoweasilytrackyouraccountonline.Banksprovideasaeplacetostoreyourmoneybecauseinmanycasestheederalgovernmentwillinsurebankdepositsupto250000.TheFederalDepositInsuranceCorporationFDICisthegovernmentagencyresponsibleorinsuringbanksandhelpingtomaintainasecureandefcientbankingsystem.CheckingAccountsCheckingaccountstraditionallyareusedtopaybillsbywritingacheckorusingadebitcard.Usuallyyouplacemoneyinyourcheckingaccountthatyoudonotexpecttokeeporverylong.TherearemanydierenttypesocheckingaccountssuchasBasicCheckingStudentCheckingInterestBearingJointCheck-ingandExpressChecking.Whenyouwanttoopenacheckingaccountitisrecommendedyoudosomeresearchandseewhatlocalbankoersthemostvaluabledealthatsuitsyourneeds.CreditUnionsAnyonecanbelongtoacreditunionjustnotthesameone.Itsaboutt.Unlikebankscreditunionsareorganizedbyacom-monbondwhetheritswhereyouworkworshiporlive.Creditunionsareownedbytheirmembersnotbystockholders.AccordingtotheCreditUnionNationalAssociation7351creditunionsexistedintheUnitedStatesin2011.BenetsojoiningacreditunioncanincludeFreeeducationalworkshopsonsavingreducingdebtinvestingetc.CreditunionstendtohaveastrongerrelationshipwiththeircustomersLowornominimumbalancecheckingandtypicallyFREEcheckingOtenlowereesandhigheryieldsPossibledownsidesoacreditunionMayormaynothavelesstechnologythanbanksFewerbranchesorin-persontransactionsbutusuallyhavesharedbranchingNotallarealikesoonestillneedstoreadtheneprintonallcreditunionproductsSharedbranchingisanationalnetworkofcreditunionsfromalloverthecoun-trythatsharefacilitiestogivemembersthousandsofconvenientlocationstoperformtransactionsjustasiftheywereattheirhomecreditunion. RealMoney101www.hesaa.org10ComparisonChartCreditCardDebitCardWherethemoneycomesromBeingborrowedromabankorsomeotherfnancialinstitutionFundstakendirectlyromonesownbankaccountCanbeusedasCreditonlyCreditandDebitLineocreditYesNoPINNumberNoYesbutnotalwaysrequiredtopunchinInterestYesNoAfectscredithistoryYesNoRiskinvolvedLowHighasadebitcardisattachedtoonesbankaccountLimitWhatevercreditlimitisappliedbycreditissuerEqualtoonesaccountlimitMonthlybillsYesNoHowToCashACheckBeorecashingacheckmadeouttoyousignyournameontheback.Yoursignaturemustappearwithin1-12inchesothetop.YoucanalsowriteForDepositOnlyandyouraccountnumberaboveyoursignature.Thisensuresthatthemoneygoesintoyourbankaccount.JohnDoeJohnDoeForDepositOnlyAcct012-345-678JohnDoePaytotheOrderofJaneDoeBlankEndorsementAnyonecancashcheckRestrictiveEndorsementMoresecurethanblankendorsementSpecialorFullEndorsementTransferchecktoanotherpartyBankingServices RealMoney101www.hesaa.org11MaintainingAndReconcilingACheckbookRegisterwhetheronlineormanuallyItsimportanttokeeptrackoyourcheckingaccount.Recordalloyourcheckswithdrawalschargesanddeposits.Howev-erthatisonlypartotheresponsibilityohavingacheckingaccount.Whenyoureceiveyourbankstatementyoushouldbalanceyourcheckbook.Thisensuresyourrecordscorrespondwiththebanksrecordoyouraccount.OnlineBankingFity-onepercentoU.S.adultsor61ointernetusersbankonline.Thirty-twopercentoU.S.adultsor35ocellphoneownersbankusingtheirmobilephones.KeyConsiderationsForSelectingAnOnlineBankOrCreditUnion1.ProductsandServicescanyoupurchasethingslikeCDsMoneyMarketsandothersavingvehiclesthroughtheon-lineservice2.CustomerServicehoweasyisittogetquestionsanswered3.SaetySecuritydoyoutrusttheonlinesecurity4.Perksandrewardsdoesthebankofertheseandaretheyredeemableorusableonline5.CanIpaybillsviewtransactionslterviewcheckimagespendingpurchasescheckbalancestranserbetweenaccountsBankingServices RealMoney101www.hesaa.org12FinancialInvestmentsFinancialInvestmentsInvestingmeansputtingyourmoneywhereyouthinkitwillearnaprot.Beoreyoubegininvestinghoweveryoushouldhaveasoundbudgetandsavingsplan.Wesuggestthatyouconsultseveralresourcesbeoreinvestingsuchasnancialmagazinesnewspapersortelevisionandradioshowsonmoneymanagement.Alsotalktootherswhohavemadesimi-larinvestments.Obtaininginormationromstateandregula-toryagenciesstockbrokersinsuranceagentsandnancialplannersisalsoagreatideaTypesOfSavingsAccountsRegularSavingsAccountsDepositAccountsCDsCertifcatesoDepositMoneyMarketAccountsDescriptionMoneycanbedepositedatanytime.DepositscanbemadeatabankbranchoratanATMmachine.Youwillgetamonthlystatementromthebankindicatingtransactions.Sometimesonlineonlybankswilloferbetterinterestrates.Youmayhavetodepositamini-mumamountdependingonthenancialinstitution.Youagreetoleavethemoneyoracertainperiodromamonthto5years.Youmayhavetodepositalargeamounttoopentheaccountormaintainahigherbalanceinordernottobecharged.Thebankpaysyouinterestbasedonthemoneymarket.ProsEithernoneorlowminimumbalancerequirement.Yourmoneyearnsinterest.Youcanwithdrawyourmoneyatanytime.Thebankmayraiseyourinterestiratesgoup.Thebankmaygiveyoureecheckingiyouhaveasavingsaccount.Yougethigherinterestthanwithregularsavings.Yourinterestratestaysthesameeveniratesgodown.YoucanuseCDstoplanoruturemoneyneeds.Yougethigherinterestthanwithregularsavings.Yourinterestratecangoup.Youcanwriteaewcheckseachmonthandsometimesunlimited.ConsCDsandMoneyMarketaccountspaymoreinterestthantraditionalsavings.Youmayneedtokeepamini-mumbalance.Thebankcanloweryourinterestiratesgodown.Yourmoneyistieduporaspecicperiod.Youpaylargepenaltiesiyouwithdrawitearly.Yourinterestratestaysthesameeveniratesgoup.Youmayhavetokeepalargeminimumbalance.Iyoudontthebankchargeshighees.Yourinterestratecangodown. RealMoney101www.hesaa.org13TypesOfInvestmentsAnnuitiesCanbepurchaseddirectlyromelectronicpayrolldeduction.TaxDeerredAnnuityisacontractbetweenyouandaninsurancecompanyoraguaranteedinterest-bearingpolicywithguaranteedincomeoptions.Annuitypaysyouregularlyintheuture.Mostotenpaysofduringretirement.Otennontaxableuntilpaymentsbegin.Lowriskgenerallyhigheesassociatedwiththeseadjustments.MutualFundsFundsareagroupostocksbondsandotherinvestmentsmanagedbyinvestmentexperts.Eachinvestorbuyssharesintheund.Fundsregularlypayprotstoinvestors.Investorscansellsharestomakeaprotbutmaylosemoneyivaluehasdecreased.Levelsoriskandreturnvary.BondsInvestorloansmoneytogovernmentorcorporationthatissuesthebond.Bondstake5to20yearstomature.Lowtomoderaterisk.StocksInvestorbuyssharesromabrokerorromanelectronicbroker.Stocksriseinvaluewhencorporationdoeswell.Stocksmayalsodecreaseinvalue.Successrequiresknowledgeothestockmarket.Riskvaries.RealEstateInvestormaymakemoneybybuyingpropertyandrentingitout.Investormaymakemoneybybuyingpropertyandsellingitoraprot.Moderatetohighrisk.529SavingsPlanA529Planisaneducationsavingsplanoperatedbyastateoreducationalinstitutiondesignedtohelpamiliesprepareoruturecollegecosts.ItisnamedaterSection529otheInternalRevenueCodewhichcreatedthesetypesosavingsplanin1996.Nearlyeverystatenowhasatleastone529planavailable.Itsuptoeachstatetodecidewhetheritwillofera529planpossiblymorethanoneandwhatitwilllooklike.Inotherwords529planscandiferromstatetostate.Besuretoresearchtheeaturesandbenetsothe529planandcomparethevariousstate529planspriortoinvesting.FormoreinormationonNewJerseyspremiere529SavingsPlanpleaselogontowww.njbest.comFinancialPlannersSomemaychargeaee.Theypresentmoreoptions.Someworkoncommission.Theymaytryhardertosellyouparticularinvestments.FinancialInvestments RealMoney101www.hesaa.org14MoreonInvestingSavingCollegestudentsandrecentgraduatesaceparticularchal-lengesinsavingandplanningorretirement.Savingearlyandcapitalizingonyearsocompoundinginterestiskeytoretiringcomortably.Themostimportantthingtorememberisthatyouwillretiresomeday.Youngerstudentsshouldbemoreocusedonbuildingupacashreservethanputtingmoneyinaretire-mentaccount.Thiswillprovidethemwithanemergencyundwhichcanbeusedorincidentalexpensesorasasavingsac-countoraneventualdownpaymentonahome.SocialSecurityisanothercomponentoretirementthatstudentsshouldbecomeamiliarwithearlyon.SocialSecuritypaymentsarebasedontheaverageothe35yearswhenyouhavethemostreportedearnings.CurrentstudentscanexpecttoclaimullSocialSecuritybenetsatage67althoughpartialbenetsbecomeavailableatage62.SocialSecurityhoweverwillnotensureacomort-ableretirementbyitsel.Companyprovided401kplanso-tenhavethebenetoacompanymatchwhichcanincreaseretire-mentundsdramaticallyovertime.Forthosewhodonthaveaccesstoa401kanindividualretirementaccountIRAallowssaverstotakeadvantageocompoundinterest.SavershavetheoptionoatraditionalIRAinwhichcontributionsarenttaxeduntilyouwithdrawthemduringretirementoraRothIRAinwhichundsaretaxedbeorebeingaddedtoyoursavingsbutthewithdrawalsarenottaxed.TheRothIRAisaparticularlyadvan-tageousoptionoryoungsaverswhoarelikelyinalowertaxbracketthantheywillbeuponretirementseepage4and5ormoreinormationontaxbrackets.Determiningyourinvestmentapproach-orinotherwordsdis-coveringwhattypeoinvestoryouare-canhelpyouchoosetherightinvestmentmix.Therearemultipleactorstoconsiderincludingyourtimehorizonrisktoleranceandnancialsitua-tion.InvestmentsovertimeThechartontheollowingpagede-pictsourdierentinvestmenttypes.Thereturnsonstockscanfuctuategreatlyovertime.Yethistoricallystockshaveoutper-ormedbondsandshort-terminvest-mentsandhavegreatlyosetthee-ectsoinfation.Thelongeryouhavetoinvestthebetterequippedyouaretorideoutshort-termfuctuationsinthestockmarketandthemoreag-gressiveyourinvestmentstrategycanbe.Butiyourenearingretirementyoumayneedmoreothesecuritythatbondsandshort-terminvestmentscanbring.YourrisktoleranceBeoredecidingonyourrisktoleranceleveltherearetwotypesorisktothinkabouttheriskthataninvestmentwillnotgeneratethereturnyoudhopedorinvestmentriskandtheriskthatinfationwilleatawayatthevalueoyoursavingsinfa-tionrisk.Stockstendtoinvolvegreaterinvestmentriskandlessinfationrisk.Bondsandshort-terminvestmentsoerlessinvestmentriskbutgreaterinfationrisk.Ultimatelyyourcomortlevelwitheachtypeoriskwillhelpdeterminewhichinvestmentmixisrightoryou.FinancialInvestments RealMoney101www.hesaa.org15Notwopeoplearealikewhichiswhyyouneedtoidentiyyouruniquefnancialsituation.Understandingbothyourshortandlong-termfnancialneedswillhelpyouchoosethebestapproachtohelpyoumeetyourgoals.WheredoyouftalongthespectrumoinvestmentapproachesShortertimehorizonLowerrisktoleranceFinanciallyunstableLongertimehorizonHigherrisktoleranceFinanciallystableTosumitupthehigheryourrisktoleranceandthelongeryourtimeramethemoreweightyoumaywanttogivetostocks.Ontheotherhandtheloweryourrisktoleranceandtheshorteryourtimeramethemoreyoumaywanttorelyonbondsandshortterminvestments.ConservativeMixBalancedMixGrowthMixAggressiveGrowthMix20domesticstocks50bonds30short-terminvestments45domesticstocks5foreignstocks40bonds10short-terminvestments60domesticstocks10foreignstocks25bonds5short-terminvestments70domesticstocks15foreignstocks15bondsMaybeappropriateifyouprefersteadierperformanceovertimewithsomeopportunityforgrowth.Maybeappropriateifyouwantsomeopportunityforgrowthandcantoleratesomeupanddownmove-mentinyourportfoliosvalue.Maybeappropriateifyouhaveapreferenceforgrowthandcantoleratesignicantupanddownmovementinyourportfoliosvalue.Maybeappropriateifyouhaveastrongpreferenceforgrowthandcantoleratewideandsometimessuddenupanddownmovementinyourportfoliosvalue.ThischartshowshowfourhypotheticalinvestmentmixesalignwithdierentapproachestoinvestingfromconservativetoaggressiveCONSERVATIVEAGGRESSIVEFinancialInvestments RealMoney101www.hesaa.org16MutualFundHereswhatmutualundinvestingcanmeantoyou.Todaymorethan50oallU.S.householdsinvestinmutualunds.Whenyouinvestinthemyouwillenjoyalltheseadvantages1.Diversicationcanhelpreduceyourrisk.Mutualundsareagreatwaytoavoidputtingallyoureggsinonebasket.Asamutualundinvestoryouownsharesinaportoliomadeupoasmanyasseveralhundreddiferentsecuritiesarmorethanyoucouldeverhopetoinvestinasanindividual.2.Proessionalswhomanageyourdollars.Whenyouinvestinamutualundyoureactuallyhiringull-timeinvestmentproessionals.Onyourbehaltheseproessionalspursuethebestpossibleperormanceoramutualunddevotingtheircareerstobuyingandsellingsecuritiesorundinves-torslikeyou.3.Easyaccesstoyourmoney.Onanybusinessdayyoucanredeemyoursharesorcashwhichmaybemoreorlessthantheoriginalpriceyoupaidpershare.4.Morewaystoadapttoyourchangingneeds.Youcaneasilyexchangesharesooneundorsharesoanothertoadapttochangesinyourpersonalnancialgoalsormarketconditions.5.Theoptiontoreinvestyourearningsautomatically.Aneasywaytobuildthenumberoyoursharesistoreinvestyourearningsautomatically.Ruleof72TheRuleo72isamathematicalguidethatcanhelpyoucalculatewhenmoneywilldoubleatagiveninterestrate.ItscalledtheRuleo72becauseat10moneywilldoubleevery7.2years.TousethisRulesimplydividetheinterestrateinto72.ItisimportanttonotethatthisRuleo72isintendedasaneducationalandplanningtoolandassuchshouldnotbeconstruedasinvestmentadvice.ExampleSoiyoudeposit3000intoanaccountwitha2interestrate722is36.Soin36yearsyouwillhave6000.Diversifcationdoesnotassureaproftorprotectagainstloss.Thisabilitytoexchangemaybemodifedordiscontinuedatanytime.JoinsahugepoolofmoneyinvestedbyothershareholdersIsmanagedbyprofessionalsTheypurchaseadiversiedportfolioofsecuritiesforthefundFundearningsandgainsaredistributedtoshareholdersorreinvestedHowaMutualFundWorksRuleof72Determineshowmanyyearsitwilltaketodoubleyourmoney72InterestrateyearstodoubleinvestmentFinancialInvestments RealMoney101www.hesaa.org17ProtectAgainstInfationandTaxesEverysuccessulnancialplanincludesastrategytoreducetheimpactoinfationandtaxes.Iyourinvestmentsearnlessa-tertaxesthantherateoinfationyourpurchasingpowerwilldecreaseovertime.Historyhasshownthatequityinvestmentssuchasstocksarethebesthedgeagainstinfationbecauseotheirpotentialorhigherreturns.Ocourseequityinvestmentsarealsosubjecttogreaterriskthanothertypesoinvestments.AnIRAisagreatwaytosaveoncurrenttaxesandtoshelterinvestmentgrowthandincomeromannualtaxationuntilyourmoneyiswithdrawn.DenitionsInfationTherateatwhichthegenerallevelopricesorgoodsandservicesisrisingandsubsequentlypurchasingpowerisall-ing.Centralbanksattempttostopsevereinfationalongwithseveredefationinanattempttokeeptheexcessivegrowthopricestoaminimum.DefationAgeneraldeclineinpricesotencausedbyareductioninthesupplyomoneyorcredit.Defationcanbecausedalsobyadecreaseingovernmentpersonalorinvestmentspending.Theoppositeoinfationdefationhasthesideeectoincreasedunemploymentsincethereisalowerlevelodemandintheeconomywhichcanleadtoaneconomicdepression.Centralbanksattempttostopseveredefationalongwithseverein-fationinanattempttokeeptheexcessivedropinpricestoaminimum.InvestmentStrategiesStayFocusedEstablishyourtimehorizonorinvestingandsticktoit.Avoidgettingcaughtupintheday-to-dayshitsinmarketperor-manceandyourundsshareprices.Forlonger-terminvest-mentsusetimeasavaluableallyandlearntolookpastshort-termfuctuations.DiversiyAmutualundoersinvestorstheopportunitytopooltheirmoneytoownsharesinaportolioodozensorevenhundredsosecurities.Buttheresmoretodiversicationthansimplyinvestinginonemutualund.Thebesttypeodiversicationoccurswhenyouspreadyourinvestmentsacrossamixoas-setclassesornancialmarketssuchasequitiesbondsandmoneymarketsecurities.Thisstrategycalledassetallocationcanhelpyoucapturethecombinedperormanceoseveralmarketsandsmoothoutdownturnsinanysingleone.Yournancialadvisorcanassistyouinproperlydiversiyingyourportolioandcanhelpexplainthebroadarrayochoices.DistributionsodeductiblecontributionsandearningsromTraditionalSEPandSimpleIRAsaresubjecttoincometaxwhenwithdrawnandmaybesubjecttoa10penaltyithewithdrawalismadebeoretheageo5912.Diversicationdoesnotassureaprotorprotectagainstloss.FinancialInvestments RealMoney101www.hesaa.org18RelyOntheExperienceofProfessionalsInaspecializedworldinvestingcanseemcomplicated.Thatswhyyourundsshouldhaveadedicatedteamoproessionalsworkingbehindthescenesoryou.SourceMTBFundsSelectingaFinancialAdvisorTenQuestionstoAsk1.AreyouregisteredasaninvestmentadvisorIyesthentheadvisorowesyouaduciarydutywhichisaancywayosayingthattheymustputyourneedsrst.Investmentproes-sionalswhoarentduciariesareheldtoaless-erstandardcalledsuitabilitywhichmeansthatanythingtheysellyouhastobeappropri-ateoryouthoughnotnecessarilyinyourbestinterest.ItheadvisorisregisteredaskoracopyotheirForm-ADVandForm-ADVPartII.2.HowwillIpayoryourservicesTheadvisorshouldclearlystateinwritinghowtheywillbepaidortheservicespro-vided.ThethreebasicmethodsopaymentareFeesbasedonanhourlyorfatrateeesbasedonapercentageoyourportolioval-ueotencalledAssetsUnderManagementAUMandcommissionspaidpertransaction.Howotenyouexpecttotradeandwhetheryouwantyourmoneypro-activelyman-agedwillhelpdeterminewhichmodelworksbestoryou.Plannerswhoearnmoneybasedoncommissionrath-erthanafatorasset-basedratecouldhaveanin-centivetosteeryouinaparticulardirection.Whenconsideringhowyouwillactuallybuyorsellyoushouldde-terminewhetheryouneedasalespersonoranadvice-giver.Iyouneedawaytobuyandsellsecuritiesthenyoucanopenanonlineaccountwithadiscountbrokeragermotenthecheapestoptionwhereyouwillnotreceiveanyadvice.3.WhatexperiencedoyouhaveIyouwantamoneymanagerwhowillmakeinvestmentdecisionsoryoubasedonyourinvestorproleandrisktolerancethenyouarelikelytopayviaAUM.Butee-basedadvisorsarentperect.Advisorsearning1percentoyouras-setsmightbedisinclinedtoencourageyoutoliquidateyourinvestmentsevenithatstherightmovebecausetheireewouldshrinkasaresultothatadvice.Findouthowlongtheadvisorhasbeeninpracticeandwhere.AlsoaskitheyhaveanyproessionalcerticationslicensesordesignationssuchasaCertiedFinancialPlannerCFPaCertiedPublicAccountant-PersonalFinancialSpecialistCPA-PFSoraChar-teredFinancialConsultantChFC.Whilethesearesignalsocredibilitytheydontguaranteeasuccessulrelationship.4.WhatotherservicesdoyouoerTheservicesoeredcandependonanumberoac-torsincludingcredentialslicensesandareasoexper-tise.Someoeradviceonarangeotopicsbutdonotsellnancialproducts.Othersmayprovideadviceonlyinspecicareassuchasestateplanningortaxmatters.5.WhatisyourapproachtofnancialplanningandinvestingSomeadvisorspreertodevelopaholisticplanthatbringstogetheralloyournancialgoals.OthersprovideadviceonFinancialInvestments RealMoney101www.hesaa.org19specicareasasneeded.Makesuretheadvisorsviewpointoninvestingisneithertoocautiousnoroverlyaggressiveoryourrisktolerance.Alsoaskwhethertheplannermakesinvestmentdecisionsaloneordependsonothersinthermtodoso.Whatwastheadvisorsperormanceinbothgoodandbadmarketsandaskyourselwhetheritsmoreimportanttoyoutomakemoneyinarisingmarketorpre-ventlossesinadownmarket.AgreatollowupquestionWhatwerethethreeworstinvestmentdecisionsyoumadeoverthepastveyearsandhowdidyoucorrectthem6.CanyouprovidethreereerencesAskortwocurrentclientswhosegoalsandnancesmatchyourownaswellasaproessionalreerencelikeanaccoun-tantorestateattorney.7.DoyouhaveafnancialinterestintheentitythathousesmyaccountThisisyourMado-preventionquestion.Wheninterview-ingadvisorsnotassociatedwithlargebrokerageorinsur-ancecompaniesaskitheyuseanindependentthird-partycustodianorclearingrmthisistheentitythatproducesyourstatementswhichpreventstheadvisorromhavingdirectcustodyoyourassetsandaddsanotherlevelose-curityoryouraccount.IntheMadoexamplehewastheinvestmentadvisorbroker-dealerclearingagentandcustodianorallohisclientaccounts--abigredfag.8.HowotenwillweinteractWhatshouldyouexpectintermsorequencyover-balwrittenandin-personcommunicationAlsoaskwhethertheadvisorwillremainyourprimarycontact.9.IsthereanythinginyourregulatoryrecordthatIshouldknowaboutPartoyourresearchshouldincludeconductingbackgroundchecksontheproessionalyoumayhire.YoucanvisittheSe-curitiesExchangeCommissionandFINRAwebsitesortheStateSecuritieswebsiteNASAAaswellastheCFPCertiedFinancialPlannerBoard.Whilesomeviolationsarenon-start-erssettlementomultiplecustomercomplaintsothersmaybeunderstandablemarketingmaterialsnotpre-approvednon-clientornon-investmentviolations.10.DoIlikethispersonAttheendoyourmeetingaskyourselthemostim-portantgutcheckquestionDoIlikethispersonA-terallyouareabouttoenterintoanintimaterelation-shipthatwillhopeullylastalongtime.Iyouhaveanyreservationsmoveon.Thereareplentyoquali-edadvisorsouttherewhowouldliketohelpyouout.FinancialInvestments RealMoney101www.hesaa.org20IdentityTheftWhatIsIdentityTheftWhensomeonewithoutlawulauthorityknowinglytransersorusesameansoidenticationoanotherpersonwiththeintenttocommitoraidandabetanyunlawulactivitythatvio-latesederallaworthatconstitutesaelonyunderanystateorlocallaw.SomeexamplesIdentitythetoccurswhensomeonestealsanotherpersonsprivateinormationtotakeovertheircreditaccountsopennewonestakeoutaloanrentanapartmentaccessbankaccountsorcommitmanyothercrimesusingthatpersonsidentity.HowIdentityTheftStrikesWhenitstrikestheefectscanbedevastating.Whatsmorebe-causeitrequentlyinvolvesnophysicalthetidentitythetmaynotbenoticedbyitsvictimsuntilsignicantdamagehasbeendoneotenseveralmonthsandthousandsodollarslater.SomeofthewaysyourpersonalinformationcanbestolenincludeGoingthroughyourmailortrashlookingorbankandcreditcardstatementspre-approvedcreditofersandtaxinorma-tion.Stealingpersonalinormationromyourwalletorpursesuchasidenticationcreditorbankcards.Completingchange-o-addressormstoredirectyourmail.Obtainingyourcreditreportbyposingasalandlordorsome-oneelsewhohasalawulrighttotheinormation.AcquiringpersonalinormationyoushareonunsecuredsitesontheInternet.Buyingpersonalinormationaboutyouromaninsidesourceorexampleastoreemployeethatgetsyourinormationromacreditapplicationorbyskimmingyourcreditcardin-ormationwhenyoumakeapurchase.Gettingyourpersonnelrecordsatwork.IdentitythievescanthenuseyourstoleninformationinthefollowingwaysOpeningnewcreditcardaccountsusingyournamedateobirthandSocialSecuritynumber.Whentheyusethecreditcardsanddontpaythebillsthedelinquencyisreportedonyourcreditreport.Establishingphoneorcellularserviceinyourname.Openingabankaccountinyournameandwritingbadchecksontheaccount.Countereitingchecksordebitcardsanddrainingyourbankaccount.Buyingcarsbytakingoutautoloansinyourname.Callingyourcreditcardissuerandpretendingtobeyouchangingtheaddressontheaccount.Billsgetsenttothenewaddresssoyoudontrealizetheresaproblemuntilyoucheckyourcreditreport.Filingorbankruptcyusingyournametoavoidpayingdebtstheyveincurredunderyourname. RealMoney101www.hesaa.org21ComputerSecurityTips1.Limitstorageopersonalinormationonyourcomputerathomeoryourbusiness.2.AteryouleyourtaxesusingyourcomputerandathirdpartysotwarelikeTurboTaxprintacopyoryourrecordsandremovetheleromyourcomputer.3.Passwordmanagementpracticesmustincludestrategiesormaximumpasswordprotectionandcomputersecurity.Suchstrategiessuggestusinguniqueeasy-to-rememberandhard-to-guesspasswords.4.Assignapasswordtoeachuserothesamecomputertolimitaccesstosensitiveareas.5.Donttakethecomputeraroundtopublicareasvacationsorbusinesstripsiyoudonthaveto.Whenandiyoudomakesurethecomputerisinyourpossessionatalltimes.Forexamplewhenyoutakeyourcomputertoacamakesureyouhavesomeoneyoutrustwatchoveryourcomputeriyouhavetogotothebathroom.6.Dontleavethecomputerinyourcar.7.Dontdisposeoyourcomputerwithoutrstmakingsurethatallsensitivecontentsareclearedromthecomputer.8.Dontshareyourpersonalcomputerwithothers.9.IyouhavetouseyourcomputerorstoringpersonalandnancialinormationthenavoidusingthatsamecomputertoconnecttotheInternet.10.Installanti-virussotwareandupdateitregularlyasup-datesbecomeavailable.Computervirusescandestroyacomputeranditsdataandwormscanleadtoinormationthetandemailspoong.11.Useapersonalrewallonyourlaptop.Althoughsomeoperatingsystemscomewithapersonalrewallyoushoulduseagoodthird-partypersonalrewalltosecureyourcomputerandpreventintrudersromhackingbackyoursystem.Thissotwareisusuallyinexpensiveandeasytoinstall.12.Applypatchestotheoperatingsystemsastheybecomeavailable.Thiscouldbedoneautomaticallybycertainoper-atingsystems.13.Usesotwaretoencryptyoursensitivelesandimproveyourcomputersecuritycontrolssoevenithecomputerisstolenthestoredinormationwouldbeuseless.14.Haveaplantopreventlaptopthetorlossprotectyourmobiledeviceanddealwithitsthetorlosswhenitoccurs.15.Developcommunicateenorceandmonitoracomputersecuritypolicyoryourbusinessoryouramily.16.Educateyouremployeesamilymembersriendsagentsaccountantsattorneysandotherswithwhomyoudobusi-nessorallowhandlingoyoursensitiveinormation.Makesureeveryoneisawareotheidentitythetrisksandhowtheycanhelpdeterthisthreat.17.Recognizeanddeletewithoutopeningspamemailswhicharejunkunwantedorunsolicitedemailspotentiallycon-tainingmaliciousprogramsandinormation.18.Createanduseyouronlineaccountscareully.19.PhishingisoneothelatestInternetscamstolurevictimsintogivingawaytheirpersonalinormation.Dontallvic-timtophishingscams.20.WhenaccessingtheInternetespeciallyoronlinebankingandbillpaymentalwaysusetrustedcomputerssuchasyourofceorhomecomputer.IdentityTheft RealMoney101www.hesaa.org2221.Backupyourimportantflesonaregularbasistorecoverthemincasetheyarelostordamaged.22.Bewareothelatestcomputermalwareandyouroptionstoprotectyoursel.23.Fakewebsitesareincreasinglyusedtostealpersonalinormationsuchasaccountinormationandconsumersareencouragedtobeextracautiousaboutakeemailsandwebsitelinks.24.Remotesmartphonesecurityismoreimportantthesedaysaspeoplestoreatonobusinessandpersonalinormationontheircellphoneswhichcanbelostorstolen.IdentityTheft RealMoney101www.hesaa.org23MonitorYourCreditReportCloselyUnlessyoucheckyourcreditreportfrequentlytheresoftennowaytotellifidentitythieveshaveusedyourpersonalinforma-tiontoobtaincreditaccountsorotherservicesinyourname.Tohelpprotectyourselffromimpostorsandidentitythieveshavingexpandedaccesstoyourcreditreporttherearecreditmonitoringservicesthatcanhelpyougetanearlyalerttonewandsuspiciousactivityonyourcreditreport.ThethreemajorcreditreportingagenciesTransUnionEquifaxandExperianallhaveindividualcreditmonitoringservicesthatcanbesub-scribedtoforamonthlyfee.NoCreditCardIsNecessaryCreditcardfraudisjustonetypeofidentitytheft.Whileathiefmayuseyourinformationtoapplyforanewcreditcardsometypesofidentitytheftdontinvolvecreditcardsatall.Someonewithabadcreditratingmayuseyourpersonalinformationtogetacarloanacquirephoneserviceanotherutilityserviceoropenabankaccountinyourname.Suchcasescanbeseriouslydamagingsinceyoumaynotrealizeanythingiswronguntilyounoticeunfamiliarchargesonyourmonthlybillsorstatements.ATMSkimmersATMskimmersareusuallyinvisibletousersastheyblendrightintotheequipmentitself.Whenacustomerinsertshisorhercardtheaccountinformationisreadandstoredonthedeviceorsenttothecriminalscomputer.MoreoverskimmersmayalsoinvolveacamerathatwillrecordtheusersPINentry.Oncealltheinformationisobtaineditisencodedontobankcardsandusedtowithdrawmoneyfromthevictimsaccounts.1.2.3.4.IdentityTheftHowATMSkimmersWorkFigure1.TheATMlooksnormaltotheaverageuserbutithasafalsecardslotattachedtoit.Figure2.Itcontainsanadditionalcardreadertocopyyourcardinforma-tionandduplicateyourcard.Figure3.ThebrochureholdernexttotheATMisalsofalse.Thesideoftheboxcontainsamicrocamerathatisangledtoviewthekeypad.Figure4.ThemicrocameracanviewandrecordasyouenteryourPINnumberthroughawirelessdeviceupto200meters. RealMoney101www.hesaa.org24CreditThetermcreditreerstoacontractualagreementinwhichaborrowerreceivessomethingovaluenowandpromisestore-paythedebttothelenderatalaterdate.Apersonscreditpro-letypicallydeterminesorwhatpurposehowmuchandhowlongandatwhatinterestratestheywillbepermittedtobor-row.Younotonlyneedtomanageyourmoneywiselyyoualsoneedtomanageyourcreditwisely.Havinggoodcreditmakesitmorelikelythatyoucangetnancingwheneveryouwanttomakeamajorpurchasesuchasacarorhome.Maintaininggoodcreditmakesyoumoreattractiveasaborrowerwhichcantranslatetopayinglowerinterestratesthanapersonwithpoorcredit.CreditCardsCreditcardsareattractivebecauseotheirconvenience.Imag-inehowdifcultitwouldbetomakeahotelreservationorrentacarwithoutacreditcard.Howeverinordertoreceiveacreditcardyouneedtohavedecentcredit.Creditcardcompaniesdontnormallygivecreditcardstopeoplewithsuspectcredit.SelectingacreditcardandkeytermsWhenselectingacreditcardyoushouldshoparoundorthebestdealbasedonyourbudgetandrepaymenthabits.Herearesomesuggestionsthatwillassistyouinselectingacreditcard.Alowannualpercentagerate.Thelowertheratethelessin-terestyouhavetopay.Bewareoteaserratesthatincreaseaterayearorlessoriyouarelateinmakingapayment.Theinterestratecalculationmethod.ThisaectshowmuchinterestyoupayevenwhentheAPRisidentical.Thestandardmethodocapitalizationisoncepermonth.Lowornoannualees.Itheissuerchargesanannualeeaskthemtowaiveitdevelopyournegotiatingskills.Reviewallotherchargessuchaslatepaymenteestransac-tioneesoverthelimiteesetc.Thesehiddeneescanin-creaseyourdebtsubstantially.Agraceperiod.Nottobeconusedwithagraceperiodonyourederalstudentloansthisthenumberodaysyouhavetopayyourbalanceinullbeorethecardissuerstartstochargeinterest.Thisnormallydoesnotapplyiyoucarryabalanceortakeacashadvance.Pleasenotenotallcreditcardissuerswillprovideagraceperiod.Creditlimit.Itisagoodideatostartsmallanywhererom500to1500untilyouarewelldisciplinedenoughtohan-dleahigherlimit.Wideacceptance.Amajorcreditcardisconvenientandeasiertomanage.Servicesandeaturessuchascashrebatesrequentyermilesextendedwarrantiesetc.Typesofcredit1.RevolvingCredit-Consumercreditlinesthatcanbeuseduptoacertainlimitorpaiddownatanytime.CreditcardssuchasVisaorMasterCardareexamplesorevolvingcredit.2.InstallmentCredit-Aloanborrowedoraspecicpurposethatisrepaidwithinter-estinequalperiodicpayments.Examplesoinstallmentcreditarehomemortgag-escarloansandstudentloans.3.OpenCredit-Unlimitedpurchasingpow-erthatmustbepaidinullattheendothebillingcycle.AmericanExpressGreencardisanexampleoopencredit.DebtManagement RealMoney101www.hesaa.org25Comparethetermsandconditionsanddecidewhichcardisbestoryou.Iyouintendtopayyourbalanceinulleachmonthamajorcreditcardthathasahigherannualpercent-ageratebuthasagraceperiodandnoannualeeswouldworkbest.Iyouplantocarryamonthlybalancelookoralowan-nualpercentagerate.ImportanceofEstablishingGoodCreditAsmentionedbeorehavinggoodcreditmakesanindividu-almoreattractiveasaborrowerbutcreditcanimpactotherareasoyourlieaswell.Havingpoorcreditcanhinderyourjobsearch.Manyemployersarenowcheckingcreditreportsaspartotheirscreeningprocess.Alsomanylandlordscheckcreditbeorerentingoutapartments.Finallysomeautoinsur-ancecompaniesnowcheckcredit.Iyouhaveapoorcredithis-toryyouwilllikelypaymoreorautoinsurancethansomeonewithgoodcredit.Iyourcreditisbadyoumaynotbeabletogetajobrentanapartmentorobtainautomobileinsurance.CreditReportsAcreditreportisadetailedrecordoyourcreditactivity.Inessenceitisyourreportcardonhowyouhandletherespon-sibilitiesassociatedwithcredit.Allcreditreportscontainbasi-callythesameinormationhowevertheormatwillvaryromagencytoagency.YourSocialSecuritynumberdateobirthandemploymentinormationareusedtoidentiyyou.Theseactorsarenotusedinscoring.Creditreportingagenciescollectandorganizeinormationaboutyouandyourrepaymenthistoryandmakeitavailabletothosewhoareconsideringgrantingyoucredit.TherearethreemajorcreditreportingagenciesExperianEquiaxandTransUnion.Itisrecommendedthatyoucheckyourcreditreportatleastonceperyearromeachothethreecreditbureaustoensuretheinormationonyourreportisaccurate.Thiscanalsohelpyouidentiyandwardofidentitythet.CreditScoresSincethecreditreportisadetailedrecordoyourcreditactiv-ityyourcreditscoresareyourgradesonhowwellyouhavemanagedyourcreditthehigherthescorethebetter.Mostlend-ersrelyoncreditscoresromFairIsaacsCorporationFICO.FICOcompilesascoreromeachothethreemajorcreditreportingbureaus.FICOscoresrangerom300to850withamedianscoreo692intheU.S.Scoresabove700aregenerallyconsideredtobegoodcreditscoresandscoresabove760areconsideredexcellentbymostlenders.Thehigheryourcreditscorethemorelikelyyouwillpayalowerinterestrateoncredit.InterestRateCreditScore3.641760-8503.863700-7594.04680-6994.254660-6794.684640-6595.23620-639ofPopulationCreditScore2300-4995500-5498550-59912600-64915650-69918700-74927750-79913800-850Gotowww.AnnualCreditReport.comorcall1-877-322-8228toobtainareecreditreportromallthreetopcreditreportingagenciesExperianEquifaxTransUnionDebtManagement RealMoney101www.hesaa.org26Asyoucanseeromthelistjustpayingyourbillsontimedoesnotguaranteegoodcredit.Toomanycreditinquiriesmadebycreditorscanhaveanegativeefectonyourcreditscore.CreditCardActo2009FactorsthatdonotafectyourcreditscoreThereareseveralactorsthatarenotconsideredincalculatingyourcreditscore.HerearesomelistedbelowYourracecolorreligionnationaloriginsexmaritalstatus.Whereyoulive.Yoursalaryoccupationtitleemployerdateemployedoremploymenthistory.Somelendersmayconsiderthisinormationandsomeoitisusedasidentiyinginormation.Interestratescurrentlybeingchargedoncreditcardsorotheraccounts.Itemsreportedaschildamilysupportobligationsorrentalagreements.Certaintypesocreditinquiries.Checkingyourowncreditconsumerinquiriesdoesnothaveanimpactonyourcreditscore.Othertypesocreditin-quiriesthatdonotimpactyourcreditscorearepromotionalinquiriesandadministrativeinquiries.Thesearerequestsmadebylenderstopreapproveyouoracreditoferoryourcurrentlendersmakinganinquirytoreviewyouraccount.Anyinormationnotoundinyourcreditreport.Anyinormationthatisnotproventobepredictiveouturecreditperormance.Iyouareparticipatingincreditcounselingoanykind.CreditScoreIngredients35Paymenthistory30Amountsowed15Lengthocredithistory10Newcredit10TypesocreditusedDebtManagementNewCreditCardRulesRetroactiverateincreasesMoreadvancenoticeoratehikesFeerestrictionsRestrictsmarketingissuancetostudentsEndsdouble-cyclebillingFairerpaymentallocationMoretimetopayGitcardprotections RealMoney101www.hesaa.org271.Whichotheollowingmightusecreditscoresa.Mortgagelenderb.Creditcardissuerc.Homeinsurerd.Cellphonecompanye.Electricutility.Landlordg.Allotheabove2.Ona2000060-monthautoloanabouthowmuchmorewouldaborrowerwithalowcreditscoretypicallypaythanaborrowerwithagoodscorea.Under1000b.1000-3000c.3000-5000d.Morethan50003.Whichotheollowingdoesacreditscoretypicallymeasurea.Knowledgeb.Attitudetowardconsumercreditc.Amountoconsumerdebtd.Riskonotrepayingaloane.Financialresourcestopaybackloans4.Whichotheollowingactorsareamongthoseusedtocalculateacreditscorea.Apersonsageb.Missedpaymentsc.Highbalancesoncreditcardsd.Maritalstatuse.Stateoresidence.Personalbankruptcyhintmorethanoneanswer5.WhichgroupoAmericansismostlikelytohaveacreditscorea.Thosewhohaveborrowedmoneyb.Thosewithabankaccountc.Thosewhovepaidoranyfnancialorutilityserviced.AllAmericansatleast21yearsold6.Whocollectstheinormationonwhichcreditscoresaremostrequentlybaseda.FICOandVantageScoreb.ThreemaincreditbureausEquiaxExperianandTransUnionc.Individuallendersd.Federalgovernment7.Whomaymakeacreditscoreavailabletoanindividualconsumera.ThreemaincreditbureausEquiaxExperianTransUnionb.Independentwebsitesc.Manyindividuallendersd.Allotheabove8.DoeseachconsumerhavejustONEgenericcreditscorea.Yesb.No9.Whatisagoodgenericcreditscorea.600b.700c.800d.900e.Itdependsonthescoringsystem10.Aregenericcreditscoresreea.Alwaysb.Sometimesc.NeverTestyourcreditscoreIQnow.DebtManagementYourcreditscorecanafectallpartsoyournanciallie.Testyourcreditscoringknowledgewiththissimplequiz. RealMoney101www.hesaa.org2811.Whenarelenderswhousegenericcreditscoresrequiredtoinormborrowersothecreditscoreusedinthelend-inga.Ateraconsumerappliesoramortgageb.Onallcreditcardautootherconsumerloanswhenaconsumerdoesntreceivethebesttermsandorlowestin-terestrateavailablec.Wheneveraconsumeristurneddownoraloand.Allothesee.Noneothese.Dontknow12.Whichotheollowingactionshelpsaconsumerraisealowscoreormaintainahighonea.Makeallloanpaymentsontimeb.Useacreditcardkeepingthebalanceunder25othecreditlimitc.Avoidopeningseveralcreditcardaccountsatthesametimed.Allotheabove13.WhenwillmultipleinquiriesaboutgettingamortgageorautoloanorloansromlendersloweronesFICOorVantageScorecreditscorea.Eachtimeonemakesaninquiryb.Onlywhenonemakesatleastveinquiriesc.Neverduringa1-2weekwindowd.Never14.Howwouldco-signingastudentloanafectonescreditscorea.Atrsttheco-signerscreditscoreislikelytodeclineslightlybecausetheircreditscoreispulledandaninquiryreportedb.Theco-signerscreditscoreislikelytoimproveithestudentmakesallpaymentsontimec.Theco-signerscreditscoreislikelytodeclineithestudentmakesonelateloanpaymentd.Allothesee.Noneothese15.Howimportantisittochecktheaccuracyoyourcreditreportsatthethreemaincreditbureausa.Veryimportantb.Somewhatimportantc.Notveryimportant16.Howotenarecreditrepaircompanieshelpulincorrectinganycreditreporterrorsandtakingothermea-surestoimproveonescreditscorea.Alwaysb.Usuallyc.Occasionallyd.NeverDebtManagement RealMoney101www.hesaa.org291.TheanswerisgAlloftheabove.Mortgagelendersandcreditcardissuersmayusecreditscorestohelpdeterminewhetheryoucanqualiyorcreditandwhatinterestrateyoullpay.Insomestateshomeinsurersmayusecreditscorestohelpgaugeyourrisklevelasapotentialcustomerandtoaccuratelypricethatriskinyourpremium.Cellphonecompaniesmayusecreditscorestohelpdeterminewhichplanyoumaybeeligibleorandwhetheranysecurityde-positisrequired.Electricutilitiesmayusecreditscoresastheyevaluatewhetherornottorequireasecuritydepositandtheamountosuchdeposit.Landlordsmayusecreditinormationandscorestohelpdeterminetheamountothedepositthatmayberequiredoraparticularproperty.2.TheanswerisdMorethan5000.Onatypicalautoloanromabankaborrowerwithalowscorewouldlikelybechargedahigherinterestrateandlikelypayatleast5000more.3.TheanswerisdRiskofnotrepayingaloan.Thereareotheractorsthatmayinfuencethisriskbutitistheriskitselthatacreditscoretriestomeasure.4.TheanswersarebMissedpaymentscHighbalancesoncreditcardsandfPersonalbankruptcy.Thegreat-ertheseverityornumberomissedpaymentstheloweronesscore.Generallythehigheronesbalanceisinrela-tiontoacardscreditlimittheloweronesscore.Andapersonalbankruptcysignicantlyharmsonescreditscoreandcanremainononescreditrecordoruptotenyears.5.TheanswerisaThosewhohaveborrowedmoney.Creditscoresarelargelybasedonaborrowersrecordoloanpay-ments.6.TheanswerisbThreemaincreditbureaus.Theycollectinormationonthecredituseomorethan200millionAmeri-cansandmakeitavailableincreditreports.FICOandVan-tageScorehavedevelopedthemostwidelyusedscoringsystemsorusingcreditreportstocomputecreditscores.7.TheanswerisdAlloftheabove.Whatsmostimportanttounderstandisthattherearetwogeneraltypesocreditscoresgenericscoresandlender-specicscores.Genericscoresareavailabletoallconsumersthroughthecreditbu-reausthroughFICOandthroughsomeindependentweb-sites.Theygiveconsumersanideaotheirgeneralcreditriskandthuswhethertheyshouldbeabletoobtaincreditandatwhatinterestrate.Lender-specicscoreswhichmayormaynotbeavailabletoaconsumerborrowerarecom-putedbyindividuallenderswhoalsousetheminmakingdecisionswhethertoextendcreditandatwhatinterestrate.Likemanyindividuallenderssomeinsurersalsocom-puteandusetheirowncreditscoresorriskassessment.8.TheanswerisbNo.Genericscoresvarydependingonthespeciccreditreportandscoringmodelusedaswellasthepointintimewhenthescoreiscomputed.Itislikelyorex-amplethationeobtainedgenericcreditscoresromseveraldierentsourcesthescoreswouldalldieratleastsomewhat.9.TheansweriseItdependsonthescoringsystem.Higherscoresarebetterundervirtuallyallscoringsys-tems.ScoresusingtheFICOandVantageScore3.0scaleswhichrangerom300to850areusuallyconsideredgooditheyareover700.ScoresromearlierVantage-Scoremodelswhichrangerom501to990areusuallyconsideredgooditheyreover800.Butthemostimpor-tantpointisthatwhenonegetsascoreoneshouldlooktoseewhereitallsonthescaleothatscoringsystem.10.TheanswerisbSometimes.ThethreecreditbureausFICOandvariouswebsitessellindividualscoresusuallyorlessthan20each.Someotheirwebsitesalsooerreescoresotenaspartotrialperiodsoree-basedmonth-lymonitoringservices.OtherwebsitesincludingCredit.comCreditKarma.comCreditSesame.comandQuizzle.comoerconsumersreecreditscoresaspartoserviceswithoutees.Somecreditcardissuersandcreditunionsmakereecreditscoresavailabletoselectcustomersandsomewebsitesallowconsumerstoroughlyestimatetheirscorebyansweringquestionsabouttheircredituse.DebtManagement RealMoney101www.hesaa.org3011.TheanswerisdAllofthese.Federallawrequiresmort-gagelenderstoinormapplicantsothegenericcreditscoreorscoresthelendersuseinevaluatingtheirloanapplications.Aso2011italsorequiresmortgageandconsumerlenderswhousegenericscoringmodelstosettermsortheirservicetodiscloseacreditscoreorscoresusedtoreachthatdecisionwhenaconsumerisnoto-eredthelowestinterestrateorbesttermsavailable.12.TheanswerisdAlloftheabove.Althoughittakesmuchlongertoraisealowscorethanlowerahighone.Themakeupoeachindividualscreditlewillimpacttheamountochangeseeninacreditscore.Forexamplesomeonewithagoodscoremayloseupto30pointswhenpaymentsaremissedonmultipleaccountslikecreditcardsandautoloansorpossiblymorethan100pointswhenamortgagepaymentismissed.Howevertheymaygainonlysomeothesepointsbackbymakingallmortgagecarandcreditcardpaymentsontimeorsixmonths.13.TheansweriscNeverduringa1-2weekwindow.Inqui-riesduringthisperiodaretreatedasoneinquirybyFICOandVantageScorecreditscoringmodelsandusuallybyotherscoringmodels.Aninquiryaterthiswindowhasclosedmaybeconsideredasecondinquirywhichcouldhaveanegativeimpactonaconsumerscreditscore.Butkeepinmindthatmultipleinquiriesrarelyloweracon-sumerscreditscoreasmuchasamissedloanpayment.14.TheanswerisdAllofthese.Astudentloanaccountisjustlikeanyotherco-signedaccount.Boththeapplicantsandtheco-signerscreditscoresmaybeimpactedbe-causetheircreditactivitieswillbereportedtothethreenationalcreditbureaus.Beoretheloanisissuedbothapplicantandco-signeraresubjecttocreditinquirieswhichcanlowercreditscoresslightlyandwhichtypi-callyafectscoresorjustaewmonthsintheabsenceolatepaymentsorothernegativeevents.Oncethestu-dentloancomesdueloanpaymentsarereportedtothecreditbureausandlatepaymentscansignicantlylowerthecreditscoresobothloanrecipientandco-signer.15.TheanswerisaVeryimportant.Lendersmayhaveprovidedinaccurateinormationorailedtoaddaccu-rateinormationaboutyourpaymenthistorytoyourcreditreports.Sincemanyconsumershavesimilarnamesevenaccurateinormationmayhavebeenaddedtothewrongle.EachothethreemaincreditbureausEqui-axExperianandTransUnionwillprovideareecopyoyourcreditreportonceayearuponyourrequest-perederallaw.Aneasywaytogeteachreportistovisitwww.annualcreditreport.comorcall1-877-322-8228.16.TheansweriscordOccasionallyornever.Expertsdis-agreewhetherthecorrectanswerisoccasionallyornever.Butallexpertsagreethatcreditrepaircompaniesotenoverpromisechargehighpricesandperormservicessuchascorrectingcreditreportinaccuraciesthatcon-sumerscoulddothemselvesbyjustcontactingthelenderandthecreditbureaus.Federallawsprohibitcreditrepaircompaniesromchargingeesuprontandconsumerad-vocatesagreethatyoushouldthinktwicebeorepayingthesecompaniesmorethanseveralhundreddollarsintotal.DebtManagement RealMoney101www.hesaa.org31HowtoreadyourcreditreportPartomaintaininggoodcreditistocheckyourcreditreportatleastonceperyearromeachothethreemajorcreditreport-ingagencies.Torequestacopyoyourcreditreportromthecreditreportingagenciesgotowww.annualcreditreport.com.Onceyoureceiveyourcopyothecreditreportyouneedtoknowhowtoreadtheinormation.Makesureyoupullthecred-itreportromallthreecreditbureaus.Allthreereportswillhavediferentinormationbecausecreditorswillsupplyinormationtowhicheveragencytheywant-ianyatall.Thispageillustratesasamplecreditreport.ThePersonalIdenticationInormationisalltheinormationthatuniquelyidentiesyouromsomeoneelsewithasimilarname.ThelistingsunderPublicRecordincludebankruptciesoreclo-suressuitswageattachmentsliensandjudgments.CollectionAgencyAccountInormationisinormationonoverduedebtwithcollectionagencies.CreditAccountInormationprovidesalistoallcompaniesthathaveanopencreditaccountinyourname.Theaccountnumberwillbelistedwhichmaybescrambledorsecuritypurposesdateopeneddateolastactivitycreditlimitbalancepastdueaswellasotherrelevantcategoriessuchasthekindocreditin-stallmentrevolvingetc..Iitisjustyournameontheaccountthetotalamountotheloanamountowedstatusoaccountopenpaidclosedwillalsobelisted.Othercommentsmayincludeinternalcollectiondeaultorchargedof.Alsolistedisyourpreviouspaymenthistoryindicatinglatepaymentsandaccountstatus.ThelastsectionisCompaniesThatRequestedYourCreditFile.DebtManagement RealMoney101www.hesaa.org32Ateryouvetakenadvantageoallotheravailableormsofnancialaidlikegrantsorscholarshipsyoumayneedtoconsiderborrowingtocovertheremainingcollegecosts.Bor-rowingmoneytopayorcollegeisaseriousmatterandrepay-mentothatobligationisamajorresponsibility.Thenextsec-tionwillassistyouinmanagingyourstudentloansduringandateryouleaveschool.BasicsofBorrowingForCollegeEducationalloanscanbeavaluableresourceormeetingex-pensesatacollegeuniversityorpostsecondaryinstitution.Youmustrememberthattheseareloansthatmustberepaidwithinterest.Theamountborrowedmustbecareullymanaged.Borrowingnowwillhaveanimpactonyourutureliestyleandabilitytosupportotherfnancialobligations.Thefrstandmostimportantstepistoeducateyourselaboutthebasicloanpro-grams.Beoreyousignthepromissorynoteyoushouldhaveaclearunderstandingovariousloanprograms.StudentLoans RealMoney101www.hesaa.org33UnderstandingLoanTypesProgramFederalPerkinsLoanFederalSubsidizedStafordLoanAmountsForDependentandIndependentUndergraduateStudentsFederalUnsubsidizedStafordLoanAmountsForIndependentUndergraduateStudentsandDependentUndergraduateStudentsWhoseParentsWereUnableToObtainAPLUSLoanFederalPLUSLoanGraduatePLUSNJCLASSAmountUndergraduateupto5500peryear.Totalaggregateoupto27500.Graduateupto8000peryear.Totalaggregateoupto60000.UndergraduateSubsidizedYear13500Year35500Year24500Year45500Theaggregateloanlimitorundergraduatesis23000.UndergraduateUnsubsidizedYear16000Year37000Year26000Year47000Theaggregateloanlimitorundergraduatestudentsis57500.Nottoexceedtheestimatedcostoattendanceminusthestudentsnancialaidortheacademicperiod.Nottoexceedtheestimatedcostoattendanceminusthestudentsnancialaidortheacademicperiod.InterestRate2014-20155TheinterestrateontheStafordloansorundergraduatestudentsis4.66witha1.073originationee.PLUS7.21GraduatePLUS7.21witha4.288originationee.Fixedandvariableratede-pendentuponrepaymentoptionchosen.Gotowww.hesaa.orgorcurrentratesRepaymentTermsUpto10yearstopaydependingonamountowed.Repaymenttermsvaryrom10to25yearsbasedonselectedrepaymentplanoption.Upto10years.VariesMinimumRepayment480peryear40minimumpermonth600peryear50minimumpermonth600peryear50minimumpermonth600peryear50minimumpermonthInterestSubsidyStudentpaysnointer-estwhileinschoolorduringgraceperiod.SubsidizedStudentpaysnointerestwhileinschool.UnsubsidizedIntereststartsimmediately.Intereststartsonceloanisdisbursed.REPAYMENTBEGINSFollowing9monthgraceperiodaterleavingschool.Following6monthgraceperiodaterleavingschool.60daysaterundsaredisbursedordeeruntilstudentgraduates.Dependentonloanrepaymentoptionselected.StudentLoansThePerkinsloanisalowinterestloanundedbytheederalgovernmentandadministeredbythecollege.FortheStafordloanstheU.S.DepartmentoEducationisthelenderandthestudentorborrowerisassignedaservicer.ThePerkinsandSubsidizedStafordloansareneedbased.PerkinsStafordPLUSandNJCLASSloanborrowersmustbeU.S.citizensorpermanentresidents.InadditionNJCLASSborrowersmustbeeither1.NJresidentsattendinganeligiblein-stateorout-o-stateschoolor2.Out-o-statestudentsattendingaschoolinNewJersey.AllborrowersmustcompletetheFreeApplicationorFederalStudentAidFAFSAandbeenrolledinacollegeoruniversityatleasthal-time.Pleasenotethatdependentundergraduatestudentsareeligibleoranaddi-tional2000inanunsubsidizedStafordloanperacademicyear. RealMoney101www.hesaa.org34FederalStafordLoansRepaymentOptionsStandardRepaymentWiththestandardplanyoullpayaxedamounteachmonthuntilyourloansarepaidinull.Yourmonthlypaymentswillbeatleast50andyoullhaveupto10yearstorepayyourloans.Thestandardplanisgoodoryouiyoucanhandlehighermonthlypaymentsbecauseyoullrepayyourloansquicker.Yourmonthlypaymentunderthestandardplanmaybehigherthanitwouldbeundertheotherplansbecauseyourloanswillberepaidintheshortesttimeandyoullthereorepaytheleastininterest.ExtendedRepaymentTobeeligibleortheextendedplanyoumusthavemorethan30000inDirectLoandebtandnooutstandingloanbalancepriorto10-7-98.Undertheextendedplanyouhave25yearsorrepaymentandtwopaymentoptionsxedorgraduated.Fixedpaymentsarethesameamounteachmonthjustlikethestandardplan.Thisisagoodplaniyouwillneedtomakesmallermonthlypayments.Sincetherepaymentperiodwillbe25yearsyourmonthlypaymentswillbelessthanwiththestandardplan.Howeveryouwillpaymoreininterestbecauseyouretakinglongertorepaytheloans.Rememberthatthelongeryourloansareinrepaymentthemoreinterestyouwillpay.GraduatedRepaymentWiththisplanyourpaymentsstartoutlowandincreaseeverytwoyears.Thelengthoyourrepaymentperiodwillbeupto10years.Iyouexpectyourincometoincreasesteadilyovertimethisplanmayberightoryou.Yourmonthlypaymentwillneverbelessthantheamountointerestthataccruesbetweenpay-ments.Althoughyourmonthlypaymentwillgraduallyincreasenosinglepaymentunderthisplanwillbemorethanthreetimesgreaterthananyotherpayment.IncomeContingentRepaymentnotavailableforparentPLUSLoansThisplangivesyouthefexibilitytomeetyourDirectLoanob-ligationswithoutcausingunduenancialhardship.EachyearyourmonthlypaymentswillbecalculatedonthebasisoyouradjustedgrossincomeAGIplusyourspousesincomeiyouremarriedamilysizeandthetotalamountoyourDirectLoans.UndertheICRplanyouwillpayeachmonththelessero20oyourdiscretionaryincomeWhatyouwouldpayonarepaymentplanwithaxedpay-mentoverthecourseotwelveyearsadjustedaccordingtoincomeThemaximumrepaymentperiodis25years.Iyouhaventullyrepaidyourloansater25yearstimespentindeermentoror-bearancedoesnotcountunderthisplantheunpaidportionwillbedischarged.Youmayhoweverhavetopaytaxesontheamountthatisdischarged.Income-BasedRepaymentUnderthisplantherequiredmonthlypaymentwillbebasedonyourincomeduringanyperiodwhenyouhaveapartial-nancialhardship.Yourmonthlypaymentmaybeadjustedan-nually.Themaximumrepaymentperiodunderthisplanmayexceed10years.Iyoumeetcertainrequirementsoveraspeci-edperiodotimeyoumayqualiyorcancellationoanyout-standingbalanceoyourloans.IncomeSensitiveRepaymentTheollowingloansareeligibleorthisrepaymentplanDirectStaordLoansFFELPPLUSLoansFFELPConsolidationLoansUnderthisplanyourmonthlypaymentsIncreaseordecreasebasedonyourannualincomeAremadeoramaximumo10yearsPayAsYouEarnRepaymentThisplanusuallyhasthelowestmonthlypaymentotherepaymentplansthatarebasedonyourincome.Yourpay-StudentLoans RealMoney101www.hesaa.org35mentamountmayincreaseordecreaseeachyearbasedonyourincomeandamilysize.Toqualiyorpayasyouearnyoumusthaveapartialnancialhardship.Youhaveapartialnancialhardshipithemonthlyamountyouwouldbere-quiredtopayonyoureligibleederalstudentloansundera10-yearstandardrepaymentplanishigherthanthemonthlyamountunderpayasyouearn.Onceyouvequaliedorpayasyouearnyoumaycontinuetomakepaymentsundertheplaneveniyounolongerhaveapartialnancialhardship.ForthispurposeyoureligiblestudentloansincludeDirectLoansaswellascertaintypesoFederalFamilyEducationLoanFFELProgramloans.AlthoughyourFFELloanscannotbere-paidunderpayasyouearntheollowingtypesarecountedindeterminingwhetheryouhaveapartialnancialhardshipSubsidizedandUnsubsidizedFederalStafordLoansFederalPLUSLoansmadetograduateorproessionalstu-dentsFederalConsolidationLoansthatdidnotrepayanyPLUSloansorparentsYoualsomustbeanewborrowerasoOct.12007andmusthavereceivedadisbursementoaDirectLoanonoraterOct.12011.Youareanewborroweriyouhadnooutstandingbal-anceonaDirectLoanorFFELloanasoOct.12007orhadnooutstandingbalanceonaDirectLoanorFFELloanwhenyoureceivedanewloanonoraterOct.12007.MonthlydiscretionaryincomeequalsyourAGIminusthepovertyleveloryourstateoresidenceandamilysizedi-videdby12.ForthecurrentpovertylevelseethePovertyGuidelinesChartwhichisissuedannuallybytheU.S.Depart-mentoHealthandHumanServices.PovertyGuidelinesChartFamilysize48ContiguousstatesandD.C.AlaskaHawaii11167014580134202157301966018090319790247402276042385029820274305279103490032100631970399803677073603045060414408400905014046110Foreachaddi-tionalpersonadd406050804670LastupdatedJuly12013StudentLoans RealMoney101www.hesaa.org36IfyouhaveastudentloangettoknowYourrightsasaborrowerBeoreyoubegintorepayyourstudentloantheholderser-vicerotheloanisrequiredtogiveyouarepaymentscheduleandinormationaboutinterestrateseesoutstandingbal-anceandrepaymentoptions.Youhavetherighttorequestadeermentoradenedpe-riodaterthegraceperiodexpires.Youmustapplyandbeapprovedorthisdeerment.Youhavetherighttorequestaorbearance.Againyoumustapplyandbeapprovedorthisorbearance.Youmayrepayyourloaninwholeorinpartatanytimewith-outpenalty.YourresponsibilitiesYoumustcompleteanexitinterviewsessionbeoreyouleaveschoolordropbelowhal-timeenrollment.Youmustrepayyourloanseveniyoudonotcompletetheacademicprogramormaybedissatisedwiththeeducationyoureceivedorareunabletondemploymentatergradu-ation.YoumustnotiytheholderserviceroyourloanimmediatelyoanychangestoyournameaddresstelephonenumberorSocialSecurityNumber.Youmustalsoprovidenoticationiyouwithdrawromschooldropbelowhal-timeenrollmenttransertoanotherschoolailtoenrollorre-enrollinschooloraperiodwhichtheloanwasintendedgraduateorchangeyourexpectedgraduationdate.Youmustmakeyourloanpaymentsontimeateryouleaveschoolunlessadeermentororbearancewasgranted.TipsForManagingYourStudentLoanWhileYouAreInSchoolKeepcopiesoallyourstudentloanpaperworkinoneloca-tion.Readandactonanylettersreceivedromyourlenderorschool.Iyouarenotsurewhattodocontactthenancialaidofceatyourschool.ALWAYSBORROWCONSERVATIVELY.Neverborrowmorethanyouneed.ConsequencesofDefaultingOnYourStudentLoanTheentireunpaidbalanceoyourloanandanyinterestisim-mediatelydueandpayable.Yourcreditratingwillbeseverelyaectedandmaymakeitdifcultorimpossibletoobtainloansmortgageandcreditlines.Yourwagesmaybegarnished.Youwillincurcollectioncostswhichincreasewhatyouowe.Yourabilitytoobtainemploymentmaybelimited.Yourproessionalandoroccupationallicensesmaybedeniedorsuspended.Legalactionmaybetakenagainstyou.Youwillbeineligibleoradditionalstateandorederalstu-dentaid.Yourlotterywinningsmayberetainedtoosetthemoneyyouowe.Yourederalandstatetaxreundsmaybewithheldthroughataxoset.ThismeansthattheIRScantakeyourederalandstatetaxreundstocollectanyoyourdeaultedstudentloandebt.StudentLoans RealMoney101www.hesaa.org37AmIeligibleforaloandefermentTheollowingtableprovidessituationsthatmaymakeyoueligibleoradeermentoyourederalstudentloan.SituationsWhenYouMayApplyforDefermentDefermentAvailableandforhowlongifapplicableDirectLoansFFELloansPerkinsLoansDuringaperiodoatleasthal-timeenrollmentincollegeorcareerschoolYesYesYesDuringaperiodostudyinanapprovedgraduateellowshipprogramorinanapprovedrehabilitationtrainingprogramorthedisabledYesYesYesDuringaperiodounemploymentorinabilitytofndull-timeemploymentYesorupto3yearsYesorupto3yearsYesorupto3yearsDuringaperiodoeconomichardshipincludesPeaceCorpsServiceYesorupto3yearsYesorupto3yearsYesorupto3yearsDuringaperiodoservicequaliyingorPerkinsLoandischargecancellationNoNoYesDuringaperiodoactivedutymilitaryserviceduringawarmilitaryoperationornationalemergencyYesYesYesDuringthe13monthsollowingtheconclusionoqualiyingactivedutymilitaryserviceoruntilyoureturntoenrollmentonatleastahal-timebasiswhicheverisearlieriyouareamemberotheNationalGuardorotherreservecomponentotheU.S.armedorcesandyouwerecalledororderedtoactivedutywhileenrolledatleasthal-timeataneligibleschoolorwithinsixmonthsohavingbeenenrolledatleasthal-timeYesYesYesStudentLoans RealMoney101www.hesaa.org38LoanConsolidationIyouhaveseveraldiferentstudentloanpaymentsandyouwishtomakejustonepaymentyoumayapplyorederalloanconsolidation.Aederalconsolidationloanallowsstudentstocombineallotheederalloanstheyreceivedintoasingleloanpayment.Whenyourederalconsolidationloanisissuedyournewlenderpaysoftheoutstandingbalanceoalltheloansyouselectedtoconsolidate.Consolidationmayhelpreducemonth-lyexpenseshoweveritcouldresultinyoupayingmoreoverthelieotheloan.EligibleLoansforConsolidationDirectUnsubsidizedLoansincludingDirectunsubsidizedloansconvertedromTEACHGrantsNationalDirectStudentLoansNDSLNationalDeenseStudentLoansNDSLSubsidizedFederalConsolidationLoansAuxiliaryLoanstoAssistStudentsALASHealthProessionsStudentLoansHPSLHealthEducationAssistanceLoansHEALFederalPLUSLoansorparentsorgraduateproessionalstudentsParentLoansorUndergraduateStudentsPLUSDirectPLUSLoansorparentsorgraduateproessionalstudentsDirectPLUSConsolidationLoansNursingStudentLoansNSLLoansorDisadvantagedStudentsLDSWhatToDoIfYouHaveProblemsRepayingYourStudentLoanIyouarehavingproblemsmakingyourstudentloanpaymentyoushouldcallyourloanservicerholderimmediately.Youmaybeeligibleoradeermentoraorbearance.StudentLoans RealMoney101www.hesaa.org39WebResourcesandReferencesTheollowingWebSitescanprovideadditionalassistanceMoneyManagementwww.money.cnn.comwww.kiplinger.comwww.myco.comwww.practicalmoneyskills.comwww.money.msn.comwww.njce.orgwww.money-zine.comwww.saltmoney.orgBankingServicesandFinancialInvestmentswww.mymoney.govwww.bankrate.comwww.checkree.comwww.usnews.comwww.treasurydirect.govwww.state.nj.usdobiConsumerCreditwww.annualcreditreport.comwww.optoutprescreen.comwww.identitythet.govwww.creditscorequiz.orgwww.vantagescore.comCareerPlanningwww.vault.comwww.salary.comwww.careermag.comwww.careerbuilder.comDebtManagementwww.360nancialliteracy.orgwww.ncc.orgwww.tc.govwww.irs.govwww.tax-brackets.orgStudentLoansandFinancialAidwww.hesaa.orgwww.mappingyouruture.orgwww.ed.govwww.studentaid.ed.govwww.direct.ed.govMisc.www.pewinternet.orgwww.cbsnews.comwww.identity-thet-awareness.comwww.difen.comResources RealMoney101www.hesaa.org40HESAA-HigherEducationStudentAssistanceAuthorityPhone609-584-4480MondaythroughThursday8a.m.8p.m.Friday8a.m.5p.m.BilingualexpertsareavailabletoansweryourquestionsHigherEducationStudentAssistanceAuthority4QuakerbridgePlazaPOBox071TrentonNJ08625-0071www.hesaa.orgPrinted2315