4th Quarter Week 1 April 13th -17th Senior Communications – Mrs. Haselwood

. Hello- Ways to contact me: Grades There are many items that I need to • Email . Grades will be issued each week, I share with everyone as we begin 4th [email protected] will post the grades in the online Quarter. gradebook. The work will take you • School phone 360-496-5137 ext. approximately 45 minutes to Weekly assignments can be found in 207 This rings straight to my cell – complete. Be sure to complete the the following locations. Leave me a message if I don’t Google Form assessment. answer • School Website . **If you are unable to complete the • Requesting me to contact you with google form online please call your • Google Classroom the google form on my website. We responses in to me at the number • Teacher website - can also schedule a meeting with above. https://sites.google.com/morton.k1 many students 2.wa.us/mrs-haselwood/home I look forward to hearing from all of • Please ask me questions I am here you as we finish the school year strong! • Or via request of the school office to help you during this challenging for a packet. time. - Mrs. Haselwood

NGPF Case Study Financial Pitfalls

Case Study Summary Alignment to Financial Pitfalls Unit Learning Objectives:

Description: In this case study, Students will be able to: ​ students will communicate the risks, ● Identify different types of , such as payday , auto fees, and outcome of payday loans and title loans, rent-to-own centers, and pawnshops (8.4) . Students will give ● Explain how using these types of loans can cause a vicious cycle of suggestions for debt management and (8.4) calculate the total cost of a payday ● Understand why many people use types of predatory lending despite the . potential financial consequences (8.4) ● Explain what it means to file for Chapter 7 and Chapter 13 bankruptcy Internet Usage: Required and the impact bankruptcy can have on your finances (8.7) ​ ● Identify the various costs associated with bankruptcy (8.7) Spreadsheet Skills: Minimal ● List what steps you can take to avoid filing for bankruptcy, including ​ seeing a counselor (8.7)

Payday Loan, Bankruptcy...What Should I Do?

Meet Lily. Lily is 25 years old. She graduated college with an Associate’s degree in General Business and works full-time as an office assistant. Lily really enjoys the company she works for, so she took a lower-paying position in the hopes of getting promoted in the near future. She makes a monthly net income of $2,805.92. Lily lives in a small, one-bedroom apartment approximately 20 minutes from her work. Lily overused credit cards while she was attending college and has the following :

Debt Current Balance Credit Limit Rate Minimum Monthly Payment

Credit Card #1 $6,000.00 $6,000.00 18.9% $180.00

Credit Card #2 $3,855.66 $4,000.00 23.1% $115.00

Credit Card #3 $8,168.40 $8,000.00 18.9% $245.00

Auto Loan $15,000.00 n/a 2.9% $285.00

Student Loan $11,647.90 n/a 3.76% $150.00

www.ngpf.org Last updated: 9/20/18 1 Exhibit 1 Answer This: 1. What is the total amount of Lily’s debt payments each month (assuming she is only making minimum payments)?

2. What percentage of Lily’s net income is she spending on debt repayment?

3. How do you think Lily’s current debts impact her credit score? Explain. ​ ​

Lily’s savings habits are far from perfect. She does not pay herself first and very rarely puts money into her savings account. Currently, she has $79.54 in her account. She lives paycheck to paycheck. Because her is lower than she expected, she tries to manage her money each month by keeping a budget.

Here is a snapshot of Lily’s monthly budget: Exhibit 2

www.ngpf.org Last updated: 9/20/18 2 Answer This: 4. In what areas of Lily’s budget do you think she is overspending? Explain.

5. Is there any category that is left out of Lily’s budget that should be included?

Lily’s car has recently broken down and needs a repair. The cost to fix the car totals $500.00. Lily does not have the money available in her savings account and, since her budget is so tight each month, does not know where she can get the funds for this repair. Her credit cards are already maxed out, she does not have enough money in savings, and her only other option would be to not pay her rent that month, but she is already one month behind.

Lily must get her car fixed in order to get to work each day.

Lily is considering a or a Payday Loan to cover the costs until her next paycheck. She does a quick Internet search and comes across this infographic on Payday Loans and this article on Title Loans. Although the numbers seem ​ ​ ​ ​ scary, she knows it will be a quick fix until her next paycheck. She will try to pick up additional hours at work to cover the cost.

Answer This: 6. What is the difference between a Title Loan and a Payday Loan?

7. Could Lily get a Title Loan even though she is still paying off her vehicle loan? Why or why not?

8. After reviewing the above infographic and using your own knowledge about Predatory Lending, explain in simple terms how a Payday Loan works.

9. Why do you think a Payday Loan or a Title Loan look like attractive options to Lily? What do these companies offer that traditional institutions do not?

10. At this point, what advice would you give to Lily?

Lily decides to visit a local Payday Lender, and they were happy to give her a two-week loan. The Payday Lender is requesting the following information from Lily: a paycheck stub, her next paycheck date, and a current statement. She was told that the total fee to borrow the $500.00 would only be $75.00, so she would owe $575.00 on her next ​ ​ payday (this lender charges $15.00 for every $100.00 borrowed). All she would have to do is sign some paperwork and bring a post-dated check for her paycheck date to cover the cost of the loan and fee. www.ngpf.org Last updated: 9/20/18 3

Answer This: 11. What would be the financial impact of Lily taking out this Payday Loan? How do borrowers get trapped in an inescapable cycle of borrowing money when using this type of loan?

12. Using THIS spreadsheet1,2,3, calculate the total cost of Lily taking this Payday Loan. As you know, short-term loans ​ ​ are rarely short-term. Many borrowers renew or refinance their loan because they do not have the funds to pay it off on the due date. For this example, assume Lily renews her loan amount five times. ​ ​

Lily is desperate, trapped, and broke. She ended up taking the Payday Loan, and as expected, has renewed the loan five times because, with all of her other monthly bills, does not have the money available to pay it off. She still owes the full amount of her Payday Loan, and her credit card, , and rent are due. She does not have enough money to make ends meet and pay all of these bills. She is now considering filing for bankruptcy. She feels this is the only way to get out of this cycle of endless, unmanageable debt. Lily reads this article about whether she should file for bankruptcy ​ ​ and this graphic about the different types of bankruptcy. ​ ​

Answer This: 13. What are the key differences between Chapter 7 and Chapter 13 bankruptcy?

14. How will filing bankruptcy impact Lily’s ability to use and obtain credit in the future?

15. Lily is unsure what to do. In the space below, draft an email to Lily about the consequences of filing for bankruptcy and your financial advice. Although she is overwhelmed with debt, she must understand the long-term consequences of filing for bankruptcy and the importance of paying off her Payday Loan. In your email, include: ● Your financial advice to Lily. ○ Are there changes she could make to her lifestyle or budget? ○ Is bankruptcy the best decision? ○ How else can she pay off the Payday Loan and other debts? ○ Could she use a debt strategy such as the Debt Snowball or High Rate? ○ What long-term consequences should she consider before making a decision? ○ What advice would you give her? What should she do?

1 How To: Entering & Editing Data ​ 2 How To: Equations with Relative Cell References ​ 3 How To: Using the SUM Function ​ www.ngpf.org Last updated: 9/20/18 4

To: Lily

Subject:

www.ngpf.org Last updated: 9/20/18 5

Cash Advance/Borrowed for 2- Total Amout Due After Amount Week Loan (%) APR Interest and Fees ($) 2 Weeks Loan #1 $500.00 15.00% Loan #2 Loan #3 Loan #4 Loan #5 $15 / $100 *This rate will be the same Interest rate x 26 Lily will roll over her total throughout the duration of *There are 26, 2-week Borrowed amount x 2-week Borrowed amount + interest Calculation Tips loan amount five times. the loan. periods in a year. interest rate & fees

Original Loan Amount: Total Amount Repaid: Total Amount of Interest Paid: