Lesson 4 of Fundamentals: Economic Business Cycle, Consumer Protection Flashcards
(106 cards)
1
Q
Interest rates
(Impact on investment returns and purchasing powers)
A
Investment Returns are INVERSELY related to changes in interest rates
- Examples: When an interest rate increases, stock prices and bond prices decrease in value.
- Companies will not want to borrow money as it becomes more expensive. This will decrease their profitability as this will cut into their profit. Investors will take note.
Purchasing Power is INVERSELY related to interest rates.
Represent the cost of “buying” or borrowing money.
2
Q
Taxes
(Impact of redistribution of wealth)
A
Redistribution of wealth is DIRECTLY related to changes in tax rates.
- As tax rates increase, there is a redistribution of wealth from the higher tax brackets to the lower tax brackets.
3
Q
Inflation
(Impact on the cost of goods, services, and money)
A
The cost of goods, services, and money is DIRECTLY related to inflation.
- When inflation increases all three also increase.
The cost of money is measured by interest rates.
4
Q
Unemployment
(Impact on wage rates)
A
Wage rates are INVERSELY related to the unemployment rate.
- As the unemployment rate decreases, wage rates (wages paid to employees) increase because firms are competing for workers.
- When the unemployment rate increases, the wage rate decreases.
5
Q
Monetary & Fiscal Policy
(Impact on economic
expansion/contraction)
A
Economic expansion and contraction are DIRECTLY related to fiscal and monetary policy.
- Loosening Policy = Economic Expansion
- Tightening Policy = Economic Slowdown
6
Q
Demand
A
- Reflects the quantity of a good or service that consumers are willing to pay.
- Heavily dependent upon price.
- As Price increases, consumers demand less.
- As price decreases consumers demand more.
7
Q
Quantity Demanded
A
- How much consumers are willing to demand at certain price levels.
- Anytime there is a change in price
- It’s a movement along the demand curve or a change in QD
8
Q
Discretionary Income
A
The extra income you have after paying for basic necessities, like taxes, everyday expenses, and household bills.
9
Q
Increase / Decrease in Demand Curve
A
Anything that causes discretionary income to go up will shift the demand curve up and to the right.
Anything that causes discretionary income to go down will shift the demand curve down and to the left.
Reasons for a shift in demand:
- Income,
- Taxes,
- Savings rate,
- Disposable Income
10
Q
Examples of Increase in Demand Curve
A
- Consumer income increases
- Government lowers tax rates
- Consumers lower their savings rates
- Cosumers have more disposable income
This will all lead to consumer spending going up.
11
Q
Examples of Decrease in Demand Curve
A
- Consumers’ income decreases
- Government increases tax rates
- Consumers increase their savings rate
This will all lead to consumer spending going down.
12
Q
Supply
A
- Reflects the quantity of a good or service that businesses are willing to supply at a given price.
- The higher the price, the MORE suppliers are willing to supply.
- The lower the price the LESS suppliers are willing to supply.
EXPLANATION: The higher the prices the more profit suppliers can get.
13
Q
Change in Quantity Supplied
A
- Anytime there is a change in price, there is a movement along the supply curve due to a price change which is called a change in QS.
- As Price decreases, consumers are willing to pay less for it, so firms are inclined to supply less (Profit Reasons, Dimishing Incentive to Produce)
- As Prices increase, firms are inclined to supply more. (Better profit-maximizing, increase profit-maximizing).
14
Q
A supply curve will shift to the left or right because of a change in?
A
- Technology
- Competition
- Anything other than price
15
Q
Increase in Supply Curve
A
Anything that causes PRODUCTION to improve will shift the supply curve down and to the right.
Examples:
- As MORE FIRMS enter the marketplace
- If TECHNOLOGY IMPROVES efficiency
- Goods used in the manufacturing process DECREASE in price
16
Q
Decrease in Supply Curve
A
Anything that causes an increase in production costs or supply to decrease, the supply curve will shift up and to the left.
Examples:
- As LESS firms enter the marketplace, (supply decreases because less firms are making goods and services)
- If goods used in the manufacturing process INCREASE in price
17
Q
Equilibrium
A
Is the price at which the QD = QS
18
Q
Substitutes
A
Are products that serve a similar purpose
A price change in one product changes the QD for another product.
EXAMPLES:
- If the price of movie tickets suddenly increases, demand for movie rentals may suddenly increase. Movie rentals would be considered this for movie tickets.
- If the price for chicken suddenly increases, the demand for pork may suddenly increase.
19
Q
Complements
A
Are products that are consumed jointly.
A price change in one product changes the QD for another product.
EXAMPLE:
- If razors are put on sale, demand for razor blades may increase. Razors and Razor blades are considered this.
- If peanut butter is put on sale, demand for jelly may increase.
20
Q
Price Elasticity
A
Measures the change in QD, relative to changes in price.
21
Q
Elastic Demand
A
QD responds significantly to changes in price.
EXAMPLES:
- Airline Tickets
- Movie Tickets
- Alcohol
- Luxury Goods
Exam Tip:
- An elastic demand curve is horizontal, sloping down and to the right.
22
Q
Inelastic Demand
A
QD changes very little to changes in price.
- Life’s necessities respond very little to changes in price.
Examples:
- Milk
- Gasoline
Exam Tip:
- Inelastic demand curve is almost vertical, sloping town and to the right.
- Remember the “I” in Inelastic to help remember the same of the elastic demand curve.
23
Q
Inflation
A
Peak: Highest
Recession: Decreasing
Trough: Lowest
Expansion: Increasing
24
Q
Interest
A
Peak: Highest
Recession: Decreasing
Trough: Lowest
Expansion: Increasing
25
Unemployment
Peak: Lowest
Recession: Increasing
Trough: Highest
Expansion: Decreasing
26
GDP
Peak: Highest
Recession: Decreasing
Trough: Lowest
Expansion: Increasing
27
GDP 4 Main Areas:
| Make a falshcard of this.
- Consumer Spending
- Government Spending
- Business Investing
- Net Imports and Exports
28
Expansion
Should be in **short-term duration bonds and equities.**
- Characterized by increasing GDP, inflation, and interest rates.
- Unemployment is decreasing.
29
Peak
Since interest rates are increasing to cut off inflation, **bonds, preferred stock, and other high-duration or fixed-income assets should be sold.**
- Equities and hard assets, such as gold and real estate tend to perform well in this environment.
- GDP at its highest
- Inflation and interest rates are peaking, and the unemployment rate is at its lowest level.
- Interest rates are a lagging indicator, and will continue to climb for a short time after the peak.
30
Recession/Contraction
- GDP Slowing
- Inflation and interest rates are beginning to decline.
- Unemployment rates begin to increase during the contraction phase.
- **Equities and hard assets should be sold and reinvested into short-term cash and bonds** until the market settles out.
- Supply of goods and services would be decreasing.
31
Trough
- GDP, Inflation, and Interest Rates being at their lowest levels
- Unemployment is highest
- High-duration bonds will perform well as bond yields drop and interest rates continue to fall.
- Stock purchases late in the cycle should be considered if the valuation seems appropriate.
32
Business Life Cycle
Average GDP Growth: Approx 3%
Average Cycle Time: 60 months
**Consumer durables and capital goods** are cyclical in nature and fluctuate directly with the business cycle.
33
Gross Domestic Product (GDP)
Measures the amount of goods and services produced in the US, regardless of ownership.
**EXAMPLE:**
- Mexican beer made in Texas is included; however, a Big Mac in France is not.
34
Gross National Product (GNP)
GNP measures the amount of goods and services produced by a country's citizens, regardless of where the goods and services are produced.
**EXAMPLE:**
- Ford Production in Mexico is included in GNP.
35
Recession
**Consists of 6 consecutive months (or two-quarters** of declining GDP.
36
Depression
A recession becomes a depression if the recession last for **18 months or 6 consecutive quarters**.
37
Inflation
In an increase in price
A loss of purchasing power is the risk that inflation impacts
**EXAMPLES:**
- The couple age 62, receives a pension per year of $50,000. Annual expenses are $45,000 per year. With inflation just 3% per year, living expenses will increase to $64,000 per year in 12 years. At age 74, the pension will still be $50,000 per year, but living expenses will exceed income by $14,000 per year.
38
Formula to Measure Inflation
= (Price level(year x) - Price Level( year x-1))
/ Price level (year x -1)
**EXAMPLES:**
Coffee beans cost $2.20 per pound this year and $2.00 per pound last year. The inflation rate is
(2.20 - 2.00) / 2.00 = 0.10 or 10%
39
Moderate Inflation
**Is when prices are slowly increasing.**
- Historic inflation has been 3% over the past 60 years,
- so moderate inflation would be 1-2% per year.
40
Galloping Inflation
Is when money loses value very quickly.
41
Deflation
- Is the opposite of inflation, so when prices are falling.
- During periods of inflation, individuals prefer to hold cash because cash becomes more valuable, as it can buy more goods and services, and prices decrease.
42
Disinflation
**A decline or a slowdown in the rate of inflation.**
**EXAMPLE:**
- If annual inflation has been running at 4% each year for the past three years, then slows to 3.0 - 3.5%, that would be a slowdown in the rate of inflation.
43
Consumer Price Index (CPI)
- Measures the price change in a basket of goods and services at the retail level.
- Is applicable to consumer purchases and is historically 2-3%.
44
Producer Price Index (PPI)
Measures price changes in the wholesale and manufacturing sectors.
45
Leading Indicators
Anticipate changes in the economy.
**Examples:**
- Initial unemployment claims
- Stock Prices
- Money Supply (MS)
- New Manufacturing Orders
- New Private Housing Units
- Consumer Sentiment
46
Coincident Indicators
Indicates changes along with changes in the business cycle.
**Examples:**
- Employees on payroll.
- Personal Income
- Industrial Production
- Manufacturing sales
47
Lagging Indicators
summarize or confirm **past performances**
**Examples:**
- Avg. duration of unemployment
- Change in the CPI
- Change in labor cost per unit
- Consumer credit to income
- Value of outstanding loans
- Avg. prime rate charged by banks.
48
Monetary Policy
It is the means where the **Federal Reserve** controls the
- **money supply**and **influences interest rates.**
49
Federal Reserve 3 main Goals?
1. Maintain long-term economic growth
2. Maintain price levels supported by the economy.
3. Maintain full employment.
## Footnote
Exam Tip: On exam they could ask all of these are goals of monetary policy except.
50
Federal Reserve has the ability to?
**Ease Monetary Policy:**
- By increasing MS and decreasing interest rates.
**Tighten Monetary Policy:**
- By decreasing MS and increasing interest rates.
Has 4 tools where it can influence the money supply and interest rates.
## Footnote
This reduction in available funds creates a situation where individuals and businesses compete for the remaining money. As demand for money increases relative to its reduced supply, interest rates rise as lenders can charge higher rates to meet the heightened demand for loans.
When the money supply increases, interest rates tend to decrease because the abundance of money in the financial system reduces the demand for borrowing, leading to a lower cost of borrowing as lenders compete to lend out the surplus funds.
51
Reserve Requirement (1st Tool)
Is a **percentage of deposits in a bank that must maintain in cash.**
- As the reserve requirement increases, there is less available cash to lend; therefore the MS decreases and the interest rates increase.
- As the reserve requirement decreases, there is more available cash to lend; therefore the MS increases and interest rates decrease.
52
Discount Rate (2nd Tool)
Is the **overnight interest rate at which member banks can borrow from the Federal Reserve to meet their reserve requirement.**
- As the **discount rate increases, the short-term interest rate increases.**
- Explanation: More expensive for commercial banks to borrow from central banks. Banks will pass this down to customers in the form of higher interest rates.
- As the **discount rate decreases, short-term interest rates decrease.**
## Footnote
Example. If discount rate increases lets say 20% they will make sure they can fill in the shortfall. So MS will come out of the MS, which will decrease the MS and interest rates go up.
Example: If discount rates decrease to 1% then they will lend all the MS out because the Discount rate is low. MS goes up and Interest rates go down.
53
Fed Funds Rate
The **overnight borrowing rate between member banks.**
- The Federal Reserve decides this.
## Footnote
Exam Tip: Discount rate is differerent than the Fed Funds rate. Banks would prefer to borrow from other Banks.
54
**Practice Question**
The Federal Funds rate will tend to move upward under which of the following conditions?
a) The Federal reserve is buying government securities.
b) The Federal Reserve lowers the discount rate.
c) A few banks have reserve deficiencies, and the rest have ample excess reserves.
d) A few banks have excess reserves, and the rest have significant reserve deficiencies.
Answer: D
Think supply and demand, more Demand then Supply. I am one of the few banks that can lead but all of you need to borrow it will drive the rate up.
55
Prime Interest rates
(Prime Lending Rate)
**The Federal Reserve does not control this.**
- It is the interest rates banks charge on loans to their credit worthy customers.
56
Open Market Operations (3rd Tool)
## Footnote
Most Likely to be tested
**As the Federal Reserve buys or sells government securities, the MS is influenced and places pressure on interest rates.**
**As the Federal Reserve buys treasuries, (easing)**
- the money supply increases and interest rates decrease.
- Explanation: The Federal Reserve buys treasuries from banks with their own funds, so the funds go into the banks and increase the money supply.
**As the Federal Reserve sells treasuries, (tighten)**
- the money supply decreases and interest rates increase.
57
Excess Reserve (4th Tool)
**Excess reserves**
- are monies that a bank holds at the federal reserve (or central bank) in excess of the requirement reserve amount.
- In 2008, under the Economic Stabilization Act, the federal reserve began paying interest on excess reserves.
**An increase in the excess reserve rate will**
- cause more banks to keep excess reserves, thus limiting the money available for loans. So MS decreases and Interest rates increase.
**A decrease in the excess reserve rate will**
- cause fewer banks to keep excess reserves, thus increasing the money available for loans. So MS increase and Interest rates decrease.
58
A DECREASE in the reserve requirement
Policy: Expansionary
MS: Increase
Interest Rates: Decrease
59
A INCREASE in the discount rate
Policy: Contractionary
MS: Decrease
Interest Rates: Increase
60
Sales of Treasuries in Open Markets
Policy: Contractionary
MS: Decrease
Interest Rates: Increase
61
A DECREASE in the Excess Reserve rate
Policy: Expansionary
MS: Increase
Interest Rates: Decrease
62
A DECREASE in the Discount Rate
Policy: Expansionary
MS: Increase
Interest Rates: Decrease
63
An INCREASE in the reserve requirement
Policy: Contractionary
MS: Decrease
Interest Rates: Increase
64
Buying Treasuries in the Open Market
Policy: Expansionary
MS: Increase
Interest Rates: Decrease
65
A INCREASE in the excess reserve rate
Policy: Contractionary
MS: Decrease
Interest Rates: Increase
66
Fiscal Policy
By the policy and means by which Congress controls **spending and taxation,** which influences the money supply and interest rates.
67
Congress has 3 main goals related to fiscal policy
1. Maintain economic growth
2. Maintain price stability
3. Maintain full employment
68
Congress's 3 tools to influence fiscal policy?
Taxation
Spending
Debt Management
69
Taxation (1st Tool)
**Increasing taxes will**
- reduce the money available and thereby increase interest rates.
**Decreasing tax rates will**
- increase the money available for spending, thereby decreasing interest rates.
70
Spending (2nd Tool)
**Through government spending congress can increase the MS**
- thereby decreasing interest rates.
- Explanation: When the government increases spending, it pays for goods, services, and salaries. The recipients of these payments, which can include contractors, employees, and recipients of government programs, deposit these funds into their bank accounts.
**Alternatively, congress can cut spending**
- thereby increasing interest rates.
- Explanation: Less money in circulation.
71
Debt Management (3rd Tool)
**Deficit Spending**
- is when Congress spends more than tax revenues that are collected.
- Because of deficit spending, Congress must borrow to continue spending.
**As Congress borrows more**,
- the amount of dollars available to be lent decreases, and it places increasing pressure on interest rates.
- MS would decrease and Interest rates Increase.
72
Foreign Investor's Impact on MS and Interest Rates
- Foreign investors **selling** dollar-dominated assets will **decrease the money supply** and **increase interest rates.**
- Foreign investors **buying** dollar-dominated assets will **increase the money supply** and **decrease interest rates.**
73
Yield Curves
A diagram that plots the current interest rates against the term to maturity for similar securities, such as Treasuries.
74
Normal Yield Curve
**Is concave**
- Sloping upward and to the right
- Expansionary policy from monetary and fiscal results in this
75
Inverted Yield Curve
**Is convex**
- Sloping downward to the right.
- Contractionary policy from both monetary and fiscal results in this.
76
Legal Environment
- A planner should have a high level of understanding of the legal environment so that clients can attain financial goals, while avoiding legal risks and protecting their rights.
- The legal environment includes consumer protection laws, worker protection laws and investor protection laws.
77
Consumer Protection Laws
- Helps protect weak consumers from powerful corporations.
- Help protect honest businesses from less-than-honest businesses.
- The Federal Trade Commission protects both consumers and businesses.
78
Federal Trade Commission
Helps protect both consumers and businesses.
79
Fair Credit Reporting Act
If a consumer is refused credit or employment based upon information contained in a credit report, the consumer must be provided with the information in the report.
- The three main credit bureaus are **Equifax, Experian, and Transunion.**
- Consumers have the right to one free credit report once a year from each of the three bureaus.
80
Fair Debt Collection Act
- Collection telephone calls are limited to 8:00am to 9:00pm.
- Collectors must contact your attorney if you have an attorney.
- Collection calls are not permitted at work "if your employer forbids such calls"
- Creditors cannot harass or threaten a lawsuit if not intended.
81
Fair Credit Billing Act
- Gives a creditor 30 days to acknowledge recept of a **billing dispute** and explain or correct the error within 90 days.
- A consumer's liability for a **lost or stolen credit card is limited** to $50 (if notice is given to the credit card company) or the actual amount charged on the card, whichever is less.
- $50 per credit card
82
Truth in Lending Act
- **Lenders must disclose the total cost of financing**, including the cost of any credit life insurance.
- Interest must be stated of the Annual Percentage Rate (APR).
- Is administered by the Federal Reserve.
83
Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act)
- Card companies must give cardholders 45 days' notice of any interest rate increases.
- Card companies cannot charge interest on debt that is paid on time during the grace period.
- A credit card **cannot be issued to someone under the age of 21** unless they have a co-signer who is 21 or older.
- **Late fees are generally limited** to $25 ($35 if a payment was missed in the last 6 months)
84
FDIC Insurance
Federal Deposit Insurance Corporation
**Each depositor has a total of**
- $250,000 of insurance **per type of account ownership.**
**4 types of ownership:**
- Individual accounts
- Joint accounts
- Trust accounts (per owner, per beneficiary
- Certain Self-directed retirement accounts (Traditional and Roth IRA, SEP and Simple IRAs)
**SEP: Simplified Employee Pension Plan**
- Accounts at different banks are insured separately; therefore, a depositor could deposit $250,000 in accounts at two different banks and still be insured for a total of $500,000.
- The amount of insurance for an IRA (and other retirement plans, e.g. SEPs) is up to $250,000 as long as the IRA is invested in bank deposits such as CDs.
- FIDC insurance does not cover mutual funds, stocks, bonds, or annuities.
85
FDIC Continued
- Each person is deemed to **own 50% of a Joint Account**
- Any deposit payable in the US will **BE** covered
- Any deposit only payable outside of the US is **NOT** covered
- Money held in a money market mutual fund is **NOT** covered
- Stocks, bonds, and mutual funds are **NOT** covered.
86
Chapter 7 Bankruptcy Law
- Provides relief through **liquidation.**
- Debt get written of, you don't have to pay them.
- Bankruptcy may remain on the **credit report file for up to 10 years.**
- Means testing began in October 2005 to determine if a debtor would be permitted to file for Chapter 7 bankruptcy protection.
- If the debtor's **average monthly income** for their region is in **excess of the threshold** they CANNOT file.
87
Examples of debt that are NOT discharged through Chapter 7 Bankruptcy
- Student and government loans (Unless "Undue hardship" - Jurisdiction Issue)
- 3 years of back taxes
- Alimony and child support
- Monies owed due to malicious acts, drunk driving, criminal fines, and penalties or embezzlement.
- Debts related to fraud
- *IRAs Inherited* by a non-spousal beneficiary will have no bankruptcy protection (unless a trust is named)
88
Examples of Debt that ARE exempt through Property/Discharged/Assets Chapter 7 Bankruptcy
**THESE ARE PROTECTED ASSETS**
**PROPERTY:**
- Homestead
- Life insurance
- Qualified Plans
- Pensions
- Annuities
**DISCHARGED:**
- Debts associated with negligence
**ASSETS:**
- Contributory Traditional and Roth IRAs are exempt assets, up to $1 million as indexed every three years. Filings between April 1, 2022, and March 31, 2025, will have $1,512,350 in protection.
- Qualified plans along with converted IRAs have an unlimited exemption. Converted IRAs (aka rollover) must be clearly marked rollover and have no other contributions commingled.
- Rollover IRAs have unlimited protection.
- IRA and Roth are exempt up to about $1.3 million (as indexed)
- Almony & Child Support
89
Chapter 11 Bankucpy
Provides relief through **reorganization** for businesses or the self-employed.
90
Chapter 13 Bankruptcy
Provides relief through **adjusting debts**.
## Footnote
They would conduct the means test, which is do you have the means to pay back the debt, if so they would put you in Chapter 13 bankrupcy.
91
Workers Compensation
Is an **absolute form of liability**
- Regardless of fault if injured at work the **employee will collect benefits.**
- Benefits **NOT** subject to income taxation.
**Example**:
- Holly owns an ice cream store that has tile floor that becomes slippery when wet. While mopping the floor, two employees decide to have a food fight and begin throwing chocolate chips at each other. One of the employees falls, cut her head, and needs stitches. The employee is entitled to collect workers compensation benefits, under absolute liability, even though the employees were acting inappropriately by having a food fight at work.
92
Unemployment Compensation
Provides **moderate income replacement**, for a specified period of time, if an **employee loses his job.**
- The insurance premiums are **funded by a tax** on employers.
- Maximum number of weeks to receive unemployment is 39 with regular benefits lasting up to 26 weeks.
- The additional 13 weeks is for periods of high unemployment.
- Benefits ARE included in Gross Income.
93
Social Security
- Provides **old age, survivor, and disability** benefits (OASDI).
- A form of "public" insurance funded by payroll taxes on ages earned and self-employment income.
94
ERISA
Protects **retirement plans** of employees.
(Employment Retirement Income Security Act of 1974)
95
Securities Act of 1933
**Regulates new issues of securities in the primary market.**
- The primary market is the securities market where new issues are sold the public for the **first time.**
- New issues constitute a **IPO**.
96
Securities Act of 1934
**Regulates secondary markets**
- Constitute the buying and selling of securities that **were previously sold in the primary market.**
- **Established the SEC,** whose primary function is to regulate the securities market.
97
Securities Investor Protection Act of 1970
**Created Securities Investor Protection Corporation (SIPC)**
- Provides coverage if a broker-dealer becomes insolvent (unable to pay debts) or
- if there is unauthorized trading in an investor's account.
98
FICO (Fair Isaac Corporation)
**Commonly used by lenders to**
- access a potential borrower's credit risk.
- Scores range from 350 - 850, and the higher the better.
- The goal for FICO is 760 or higher.
99
5 factors that affect credit scores:
- Payment history (largest factory)
- Amount of debt
- Length of credit history
- New credit
- Type of Credit
100
Buy vs Lease/Rent
The decision to buy or lease property (home or vehicle) requires consideration of all cash outflows and inflows over the planning period.
101
Outflow factors from leasing a home:
- Security Deposit
- Rent Payments
- Personal Property Insurance
- Utilities
102
Outflows from owning a home:
- Down payments
- Closing Costs
- Principal and Interest payments
- Property Taxes
- All Insurance costs
- Maintenance expenses
103
Inflows from leasing a home:
- The return of the security deposit
- Earnings on savings IF the lease payments is low
104
Inflows from owning a home:
**Tax savings due to deductibility of:**
- Interest
- Points
- Property Taxes
105
Issues to consider in deciding whether to buy or lease assets:
1. Will the asset likely appreciate in value? If yes, buying is preferable.
2. Are there tax advantages to either ownership or leasing? All else being equal, choose the tax advantage.
3. Will the item be obsolete shortly? If yes leasing is probably favorable.
4. Will the purchaser be adding improvements at their expense? If yes, ownership is more favorable.
106
Efficient Debt Repayment plans
**Debt can be a tool to reach goals,**
- such as home ownership,
- purchasing a vehicle, or
- going to college.
**Debt can also be misused**
- which increases financing costs and then limits the cash flow available for goals.
**Efficient Debt Repayment Plans**
- Watch for burdensome debt and address ways the client can unburden themselves such as refinancing or moving to a longer repayment schedule to make the payments more manageable.
- Help order debt repayment; higher interest rate debt should be paid down first.
- Allocate debt savings toward financial goals.
- Proforma cash flow statements are a useful tool for illustrating the long-term impact of debt management.
- Help clients set up a workable budget, which may mean making some lifestyle adjustments, ie: eating out less, updating their wardrobe less, etc.
