Dave Ramsey has taught and encouraged millions to get out of debt and to achieve an improved financial situation through his “seven baby steps,” which are: (1) establish a $1,000 emergency fund; (2) pay off debt; (3) save three to six months of expenses; (4) invest 15 percent of income in pre-tax retirement funds; (5) plan for the funding of the college education of children; (6) pay off mortgage as soon as possible; (7) build wealth and give.
An alternative perspective to this approach might be:
- Create a larger initial emergency fund.
- Instead of paying off the smallest debts first, pay off the ones with the highest interest.
- A minimum of six months for expenses is needed, with twelve months more realistic.
- Take advantage of any 401k matching offered by employers.
- College may not be the right educational choice for everyone. Also, those who go to college should be responsible for a portion of education costs.
- Home ownership may not be appropriate for everyone. When buying a home, paying off a mortgage may be a higher priority than saving for college to reduce the amount of interest paid.
- Making money, saving money, and donating to charity should be the main focus.
For additional information on personal financial planning actions, click here.
- Have students survey others regarding their use of these personal financial planning suggestions.
- Have students obtain additional financial planning suggestions using online research.
- What do you believe are the most important actions that should be taken regarding wise personal financial planning?
- How would you communicate these financial planning actions to others?
Many companies that solicit new credit card accounts and insurance policies use prescreening to identify potential customers for the products they offer. Prescreened offers–sometimes called “preapproved” offers–are based on information in your credit report that indicates you meet criteria set by the company. Usually, you receive prescreened solicitations via mail, but you may also get them in a phone call or in an email.
For additional information, go to
You may want to use the information in this article to discuss
- Why some people prefer not to receive prescreened offers in the mail, especially if they are not in the market for a new credit card or insurance policy?
- What might be some advantages of receiving prescreened offers?
- Ask how many students have received prescreened offers and what did they do with them.
- Can prescreening hurt your credit report or credit score?
- How can you reduce the number of unsolicited credit and insurance offers you receive?
“A new survey from BMO Harris Bank shows consumers are confused on how credit card balances affect credit scores. . .”
While using a credit card is one of the easiest ways to build credit, there are plenty of misconceptions about how best to do that. According to this survey
- 39 percent of Millennials—people between ages 18 to 34—believe carrying a balance increases their credit scores. In fact, carrying a balance does not improve credit scores and can actually hurt scores.
- 23 percent of those surveyed indicated that a person’s educational level affects his or her credit score. In fact, a credit score is based only on the information in your credit report, and educational level is not included in your credit report.
- 27 percent of those surveyed thought checking their credit scores would lower their credit score. In fact, the opposite is true: If you regularly check your credit scores, it’s likely you’ll make financial decisions that will improve your credit score.
For more information go to http://finance.yahoo.com/news/credit-card-mistake-thats-costing-103040745.html
You may want to use the information in this blog post and the original article to
- Discuss why a credit score is important.
- Stress the importance of “managing” credit card debt.
- What affect will your credit score have on the finance charges you pay for credit purchases?
- How can your credit score affect your ability to purchase a home or an automobile?
- Assume you have a low credit score and have been turned down for a home mortgage. What steps can you take to increase your credit score?
Medical credit cards are offered by financial institutions to pay for services not covered by health insurance, such as, dental and cosmetic procedures, or for veterinary care. Medical credit cards received increased attention after the New York attorney General and the Bureau of Consumer Financial Protection brought enforcement actions against Care Credit LLC, an affiliate of GE Capital Retail Bank. It is alleged that Care Credit failed to provide disclosures and gave inaccurate information to 4.4 million cardholders.
Medical credit cards from large banks offer a revolving line of credit with an established credit limit with some form of promotional financing (special terms and conditions, which are valid for a specified period of time). The most commonly used financing option is deferred interest, with no interest charged for promotional period, but interest charged retroactively if the balance is not paid in full before the end of the promotional period, usually 6 to 24 months. Among large banks the Government Accountability Office reviewed in May 2014, the most commonly used cards had an annual percentage rate of 26.99 percent or more. These banks also offered revolving line of credit with fixed monthly payments, with an APR of zero to 17.99 percent.
For more information , go to
- Ask students what are other alternatives in financing medical expenses that are not covered by health insurance.
- Have students survey friends or relatives to determine the use of medical cards.
- Why would someone get medical credit cards when mainstream credit cards, such as Visa, and MasterCard, offer relatively lower-rate credit cards?
- What might be advantages or disadvantages of using medical credit cards?
When your credit card issuer suspects fraudulent activity on your credit card, it triggers a red flag to deny the charge. Generally, it is a great protection. But if you are making the purchase and not a thief, it can be frustrating. Some purchase patterns that could cause your purchase to be denied include:
- A purchase for a small dollar amount, followed by a large purchase. Credit card thieves sometimes make a small dollar “test purchase” followed by big ticket items, so this raises a red flag.
- Multiple purchases back-to-back in a short span of time.
- Making purchases in a new city, in a different part of town, or in stores where you do not normally shop.
Though inconvenient, these protections are to keep you from being a victim of fraud. Take these steps to prevent or deal with a credit card purchase being denied by mistake:
- Inform your credit card company if you will be using your card out of town (especially internationally).
- Update your billing address if you move, so that the company recognizes the new pattern of purchases as a new normal.
- Make sure the company has your cell phone number so that it can contact you faster to verify or authorize a purchase.
- Contact your credit company immediately if your purchase is denied.
For more information go to http://www.usa.gov/topics/consumer/consumer-action-handbook.pdf
- Ask students if their credit card was ever denied in error.
- If the transaction was denied, how did they resolve the problem.
- What are a few reasons that your credit card purchase might be denied?
- What can you do to avoid such an embarrassment at the check-out counter?
Did you know that retailers are permitted to charge or surcharge up to 3 percent on your credit card purchases? However, if a retailer imposes a surcharge, it must be clearly disclosed in the store and on your receipt.
These checkout fees may also give you a discount if you pay with cash. Retailers in CA, CO, CT, FL, KS, MA, ME, NY, OK, and TX are not permitted to charge credit card surcharges.
Retailers are also allowed to set a $10 minimum purchase amount for credit card purchases. However, they can’t charge fees or set minimum purchase amounts on debit card purchases.
For more information on credit card surcharges, go to http://www.knowyourcard.org.
- Ask students if they have personally experienced credit card surcharges on their purchases.
- Have students make a short presentation with a summary of what actions might be taken to avoid credit card surcharges.
1. Should retailers charge extra 3 percent surcharge when they display a sign “Your VISA and MasterCard are accepted here”?
2. What can you do to avoid credit card surcharges?
You just opened your credit card statement. “What’s this charge?” may be your first thought when you see a small charge on your credit card statement that you can’t figure out. This is known as a “grey charge” and there are several types of grey charges you should be familiar with:
- Unintended subscriptions. You thought you made a onetime purchase, but it was really a subscription.
- Zombie fees. Membership fees that you had cancelled, but charges still appear on your statement.
- Free trial to a paid subscription. When a free trial is over, the seller converts it to a paid subscription.
- Negative option. You bought one product, but did not realize that you were buying others at the same time.
What can you do to protect yourself from grey charges?
- Before you buy, read the terms of service. Disclosures about fees may be hidden, so read the entire document.
- Mark your calendar as a reminder to cancel free trials by a set date.
- Read your credit card statements carefully. Pay attention to the names of companies and charges for small amounts.
- Contact the seller to have the grey charges removed.
- Dispute the charges with your credit card company.
For additional information on grey charges go to: http://www.consumer.ftc.gov
- Have students check their credit card statements to discover any grey charges.
- Have students make a short presentation with a summary of actions that might be taken to avoid grey charges.
1. What are several reasons to check your credit card statements?
2. What can you do if grey charges appear on your credit card statement?
This article explains why identity thieves want eight different numbers and also provides some helpful tips for avoiding identity theft. The eight numbers include:
1. Phone numbers
2. Specific dates (birth, college attendance, employment, etc.) and Zip Codes
3. PIN Codes
4. Social Security Numbers
5. Bank Account Numbers
6. IP Address
7. Driver’s License and Passport Numbers
8. Health Insurance Account Numbers
For more information go to
You may want to use the information in this blog post and the original article to
- Stress that identity theft is on the rise. According to the article, data breaches are now the third certainty in life and sooner or later, you will become a victim.
- Ask students who have had their identity stolen what steps were necessary to solve the problems associated with identity theft.
1. What have you done to protect the eight numbers that thieves want and need to steal your identity?
2. Today many companies offer services designed to help protect your identity. These companies charge from $100 to $200 a year or more. Would you consider using one of these services?