to develop a better understanding of the wise use of credit let's spend a few minutes with a certain individual we'll call mr money hello i'm m money people can't seem to get along without me cash or credit everybody knows there are many forms of credit available to consumers everywhere in our country these young men and women are high school students repairing themselves for a successful and happy life john nelson will be graduating this year judy naylor is a junior john and judy are friends of mine they drop in to see me from time john what does credit mean to you gosh i don't know by now and pay later i guess bad but there's a lot more to it than that credit has been defined as man's confidence and man webster's dictionary says credit is trust given or received almost everybody in the united states uses credit in one form or another millions of people use credit to buy the things that add up to a better living so there's sure a lot of things that i'd like to buy for better living how about giving me a little credit and nobody gives you a credit check on something that afternoon i don't understand the money how can you well we'll select other channels on the learning machine by remote control and say to earn credit first you have to develop your character you have to be trustworthy second you have to have capacity to pay your bills and  that's right judy your father has an excellent credit rating here's his record at the credit bureau that goes way back before though yesterday your father and in there's always kept a good credit rating now that you know something about credit let's bring back those signs that seem so confusing what do you mean seem confusing i still don't get it all these signs are only advertising consumer credit and there are two kinds the first is not an installment credit or single payment credit the other kind is installment credit which is repaid two or more payments not installment credit is usually extended for thirty sixty or ninety days and repaid in a single lump sum not installment credit is also available in stores where people buy many things on a thirty day charge account credit cards for travel gasoline stations hotels restaurants also provide non installment credit electricity water gas and telephone service are furnished by utility companies on monthly credit dentists and doctors extend credit by billing monthly non installment credit is used by people who borrow cash and repay the loans and one lump sum in addition to using non installment credit consumers use installment credit it is usually extended for a period of a few months to two or three years there are two kinds of installment credit installment sales credit and installment cash credit installment sales credit is generally used to purchase such things as furniture automobiles appliances and similar products since an automobile is one of the major purchases consumers make with installment sales credit let's see what's involved here is the consumer and here is the car dealer the first thing to understand is that a legal contract spells out the agreement between the consumer and the dealer including the number and amount of installment payments the wise buyer makes certain he's getting good value for his money and always reads the fine print to make sure he understands all the terms of the contract before he signs it installment sales credit is used extensively by consumers and so is installment cash credit millions of people use installment cash credit when they bought ok from consumer finance companies or small loan companies commercial banks and other financial institutions consumers use installment cash loans to pay off accumulated bills to keep their credit rating good they use installment cash loans to pay for vacations to pay for special education for their children and people use installment cash loans to meet unexpected emergency so you can see the use of installment credit is mighty important to the consumers of this country mr money my father been making payments on our home for years now is this installment credit to yes john that's called mortgage credit and sometimes the payments may run for as long as twenty five years boy i never realized people use credit in so many different ways of course some people prefer to wait to buy the things they want until they've saved enough money to pay cash for them however there are many people who are able to pay cash prefer to buy things on credit so as not to disturb their savings and investments one of the cost factors is maintaining up to date credit information then there are bookkeeping costs keeping up the records and collecting payments in addition there is the cost of borrowed and equity capital the price you pay for credit service depends upon such things as the type of merchandise you buy the amount of your down payment how long you take to complete your payments or if you borrow cash how long you take to pay it back the type of security you give and your credit  rating there's another thing you both should know in order to use credit wisely and that is how to figure out the maximum amount of credit or other obligations you can safely afford sounds like another good job for the learning machine right let's s enjoy mr and mrs homemaker arrive at the amount you can safely afford to spend when mr and mrs homemaker figure the maximum amount of credit or other obligations they can safely afford each month they first deduct from gross income their income taxes social security and any other deductions they make to arrive at their take home pay or disposable income under disposable income expenditures they deduct essential living costs their discretionary income is left out of discretionary income they provide for savings insurance recreation and contributions to their church after deducting any payments they are making on any installment purchases or cash loans let's assume they have thirty dollars of their monthly discretionary income left so thirty dollars a month that's the maximum total obligation we can safely afford to take on for new credit payments of any kind that's right  girls have to learn all this about credit to the jodi women do most of the shopping when they get married and very often spend most of the family sure if a guy has to work hard to earn money for the wife ought to learn to help get the most out of it that's right the husband and wife should plan together how the family earning should be spent before they borrow cash or buy anything on installments they should carefully think it whether the benefits of credit service are worth the extra charge well you can be sure mr money that well before i buy anything i need on the installment plan or borrow cash for some good reason i'll figure out all the costs to make sure the deals worth while  to benefit from the magic credit services available throughout the country every consumer should understand our wise use of credit