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Loan Preparation

Debt-to-Income Ratio

Someday, you’re probably going to need a loan to purchase a car or a home. Even if that day feels far away right now, you can still learn how lenders—like credit unions and banks—determine how much they’re willing to lend you, and then take steps to put yourself in the strongest borrowing position for that “someday.”

When applying for a loan, your credit score is a large factor in determining what size loan and interest rate you’re approved for. Your score is based on multiple elements, like length of credit history, on-time payment history, and amount owed. Once your credit “worthiness” has been established (meaning you have a high enough credit score to meet the lender’s standards), the lender then looks at what size loan and loan payments you can reasonably afford. Affordability is largely determined by your debt-to-income ratio, or your DTI.

Your DTI is based on a simple formula: monthly gross debt divided by monthly gross income. For example, if your monthly gross income is $3,000, and you pay $1,500 in monthly bills, your debt-to-income ratio is .50, or 50 percent ($1,500/$3,000).

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Fuel Efficiency

Myth vs Realty

Myth: It's more fuel-efficient to keep the windows down rather than using the air conditioning.
Reality: This myth is only partially true. At lower speeds, having the windows down can be more fuel-efficient. However, at higher speeds, the increased wind resistance from the open windows can actually reduce fuel efficiency more than using the air conditioning.

Myth: Using premium gasoline improves fuel efficiency in all vehicles.
Reality: Premium gasoline is designed for high-performance or luxury vehicles that require higher octane ratings. For regular cars that don't specifically require premium fuel, there is usually no significant benefit in terms of fuel efficiency or engine performance.

Myth: Filling up your gas tank in the morning when it's cooler will give you more fuel.
Reality: The temperature outside does not affect the actual amount of fuel you pump into your tank. Fuel is measured by volume, not weight or density, so filling up in the morning or evening won't result in more gas.


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Career Planning

Financial Role

Planning your career is a time-consuming process that begins in high school and extends into college or trade school. It is vital to consider how your career plan aligns with your long-term financial goals and overall vision for your life. Here are five key factors to consider in your career plan that can have a significant impact on your financial plan.

Income Potential: Look beyond the starting salary and consider the potential for salary growth throughout your career. Research opportunities for promotions and advancements, as well as any potential salary plateaus. Additionally, evaluate whether your skills can be transferred to different career paths if desired. Understanding the expected trajectory of your income can help you make informed decisions about your financial future.

Benefits and Perks: Take advantage of employer-sponsored benefits to improve your financial situation. Look for retirement plans like 401(k)s or 403(b)s that allow you to save pre-tax money for retirement. Consider if your employer offers health insurance, disability insurance, or workers' compensation. Explore other tax-advantaged benefits, such as Health Savings Accounts (HSAs) or Flexible Saving Accounts (FSAs). Additionally, inquire about investment opportunities like stock options that may have tax implications.

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