Lesson 12: Financial Pitfalls

5.7 Financial

Pitfalls

LEARNING OBJECTIVES

Students will be able to:
● Take precautions to avoid having their identity stolen
● Appreciate the dangers of payday lending and

identify payday lending laws in their state

● Develop strategies for eliminating debt should they

find themselves accumulating a lot of it

Open Ended

Does this statistic from 2018 surprise you? Why or why not?

RESOURCE 2: PROTECTING YOURSELF

AGAINST IDENTITY THEFT

Americans are concerned about identity theft, and they probably
should be. In 2016, (the latest stats available) the Bureau of Justice
Statistics reports that 10% of Americans over age 15 had been a
victim of ID theft in the previous year. You’ve just learned about
the benefits of responsible credit card use, but a potential downfall
of opening accounts is that ID theft can arise. On the next slide,
watch the video Protecting Yourself Against Identity Theft by
SchoolsFirst FSU to learn more.

Open Ended

This video speeds through over 10 common mistakes people make that leave them open to identity theft. List at least 5 of them here:

RESOURCE 3: PAYDAY LOANS EXPLAINED

Another financial pitfall to avoid - payday loans!
On the next slide, watch the video Payday Loans
Explained by Pew, to get a better understanding
of what payday loans actually are.

RESOURCE 3: PAYDAY LOANS - WHO USES THEM

AND WHY?

Now that you know what Payday loans are. They can
lead to a cycle of debt. On the next slide, watch the
video Payday Loans: Who Uses Them and Why? by
Pew, to learn how.

Now that you have watched

the videos,

answer 2 questions!

Open Ended

How do payday loans differ from other types of loans?

Open Ended

Why do so many people use payday loans despite the potential consequences?

RESOURCE 4: HOW LONG DO ALTERNATIVE

LOAN BORROWERS CARRY BALANCES?

On the next slide, complete the NGPF
activity.

Open Ended

What type of loan is a borrower most likely to have a balance on after 6 months to a year?

Open Ended

For those who take out a payday loan, approximately what percent of borrowers still have a balance 6-12 months later?

Open Ended

Based on information in this chart, how do auto title loans differ from payday or pawn loans over a longer time period? Why do you think this might be the case?

RESOURCE 6: 11 WAYS TO GET OUT OF

DEBT FASTER

Sometimes, accumulating debt is a necessity for
improving your opportunities -- an auto loan on a
reliable car can allow you to commute to your dream
job! Skim the 11 strategies and record the three you
think would lead to the most success.

​https://www.credit.com/debt/get-out-of-debt/

Open Ended

Skim the 8 strategies and record the three you think would lead to the most success.

RESOURCE 7: EXIT TICKET

Take the three question Exit Ticket to
assess what you have learned about
various financial pitfalls!

Multiple Choice

Each of the following represents a good habit if you’re trying to prevent ID theft EXCEPT…

• Using one very secure password for all of your major financial accounts

• Shredding all paper mail that contains your personal information or financial account data

• Password protecting your cell phone

• Doing online shopping on sites that begin with https://

Multiple Choice

Rather than the borrower paying a small rate of interest in each billing cycle like with a credit card, the borrower uses a payday loan...

• Avoids interest by only taking out small loan amounts.

• Pays a fee when they first receive the loan and must repay it to extend.

• Pays one lump sum of all their interest after the first year of the loan.

• Is eligible to have their loan reduced if they make their first 6 payments on time.

Multiple Choice

Fill in both blanks with the correct terms: A _________ percentage of young people have debt than older generations, while their debt amounts tend to be ________.

• Smaller, lower

• Smaller, higher

• Larger, lower

• Larger, higher