Cover image for Personal finance for dummies
Personal finance for dummies
Tyson, Eric (Eric Kevin)
Personal Author:
Third edition.
Publication Information:
Foster City, CA : IDG Books Worldwide, [2000]

Physical Description:
xxx, 470 pages : illustrations ; 24 cm.
General Note:
Includes index.
Subject Term:
Format :


Call Number
Material Type
Home Location
Item Holds
HG179 .T97 2000 Adult Non-Fiction Non-Fiction Area
HG179 .T97 2000 Adult Non-Fiction Open Shelf

On Order



Many Americans don't understand personal finance. If you're among them, it's probably not your fault. Personal Finance 101 is not offered in our schools - not in high school, not even in the best colleges and graduate schools. It should be. There are common financial problems and mistakes and different people keep making those same mistakes over and over again. Personal Finance For Dummies, 3rd Edition, like a good friend, can stop you from falling into those traps.

This book is for anyone who wants a crash course in personal finance. It's basic enough for a novice to get his or her arms around thorny financial issues, but advanced readers will be challenged to think about their finances in a new way and identify areas for improvement. In a nutshell, this easy-to-understand guide is for anyone who wants to

Get out of high-interest consumer dept Plan for major goals Start an investment program Minimize high piles of bills, receipts, and junk mail

You'll explore what it takes to start an investment program as you diagnose your current financial health, set new goals, and reduce your spending. Personal Finance For Dummies, 3rd Edition, also covers:

Figuring out where your dollars are going Solving debt and credit problems Reducing your tax burden Picking up wise investments Paying the right price for insurance Figuring out where to go for more financial information

Best-selling personal finance writer Eric Tyson is a master at keeping it simple. And his third edition of Personal Finance For Dummies, can help you consider your higher life goals and non-financial priorities (your family, your friends, and your causes) and how you can best accomplish those with the financial resources you have.

Author Notes

Eric Tyson, MBA, is a financial counselor, a syndicated columnist, and the author of bestselling For Dummies® books on investing, real estate, and taxes.



Chapter One Figuring Your Financial Fitness In This Chapter * Common financial problems * Bad debt, good debt, and too much debt * Assets, liabilities, and your (financial) net worth * How much you really saved last year * Investment and insurance checkups * Fitting money into your overall life " I 've made just about every financial mistake there is to make," lamented a student in my personal finance course. The student, who had an anxious yet depressed look, seemed to be asking me for forgiveness. This is when it first dawned on me that as grown-up children -- referred to as adults -- we're not really allowed to make mistakes. If you mangle your car in an accident because you weren't paying attention or get fired from a job because of poor attendance and performance, you feel awful. With financial matters, however, the fact that you've made a mistake may not be as obvious as twisted metal or a pink slip and no more paycheck. Some mistakes take months, years, even decades to manifest themselves. Even then, some people don't realize the foolishness of their ways. REMEMBER Few people like to be made to feel stupid or told that they're doing something wrong. And what you do with your money is a quite personal and confidential matter. I've endeavored not to be paternalistic in this book but to provide guidance and advice that is in your best interest. You don't have to take it all -- pick what works best for you and understand the pros and cons of your options. But from this day forward, please don't make the easily avoidable mistakes nor overlook the sound strategies that I discuss throughout this book. If you're young, congratulations for being so forward-thinking as to realize the immense value of investing now in your personal financial education. You'll reap the rewards for many decades to come. But even if you're not so young, you surely have many years to make the most of what money you currently have and will earn (and may even inherit!) in the future. Throughout our journey together, I hope to challenge and even change the way you think about money, about making important personal financial decisions -- sometimes even about the meaning of life. No, I'm not a philosopher, but I do know that money, for better but more often for worse, is connected to many other parts of our lives. Common Financial Problems How financially healthy are you? You may already know the bad news. Or perhaps things aren't quite as bad as they seem. When was the last time you sat down surrounded by all of your personal and financial documents and took stock of your overall financial situation, including reviewing your spending, savings, future goals, and insurance? If you're like most people, you've either never done this exercise or did so a long time ago. Financial problems, like many medical problems, are best detected early (clean living doesn't hurt, either). Here are some common personal financial problems I've seen in my work as a financial counselor: * Not planning. Human beings were born to procrastinate. That's why there are deadlines -- and deadline extensions. With your finances, unfortunately, you have no deadlines, and you may think you have unlimited extensions! You can allow your credit card debt to accumulate or leave your savings sitting in lousy investments for years. You can pay higher taxes, leave gaps in your retirement and insurance coverage, and overpay for financial products. Of course, planning your finances isn't as much fun as planning a vacation, but doing the former will help you take more of the latter. * Overspending. The average American saves less than 5 percent of his after-tax income (in contrast to those in other industrialized countries, where the savings rate is two to three times that in America). Simple arithmetic helps you determine that savings is the difference between what you earn and what you spend (assuming you're not spending more than you're earning!). To increase your savings, you either have to work more (yuck!), know a wealthy family who wants to leave its fortune to you, or spend less. For most of us, the thrifty approach is the key to building savings and wealth. * Buying with consumer credit. Even with the benefit of today's lower interest rates, carrying a balance month-to-month on your credit card or buying a car on credit means that even more of your future earnings are earmarked for debt repayment. Buying on credit encourages you to spend more than you can really afford. * Delaying saving for retirement. Most people say they want to retire by their mid-60s or sooner. But in order to accomplish this financially, most people need to save a reasonable chunk (around 10 percent) of their incomes starting sooner rather than later. The longer you wait to start saving for retirement, the harder it will be to reach your goal. And you'll pay much more in taxes to boot if you don't take advantage of the tax benefits of investing through particular retirement accounts. * Falling prey to financial sales pitches. Great deals that can't wait for a little reflection or a second opinion are often disasters waiting to happen. A sucker may be born every minute, but a slick salesperson is born every second! Steer clear of those who pressure you to make decisions, promise high investment returns, and lack the proper training and experience to help you. * Not doing your homework. To get the best deal, you need to shop around, read reviews, and get advice from disinterested, objective third parties. You need to check references and track records so you don't hire incompetent, self-serving, or fraudulent financial advisors. But with all the different financial products available, making informed financial decisions has become an overwhelming task. I've done a lot of the homework for you with the recommendations in this book. I also explain what additional research you need to do and how to go about doing it. * Making decisions based on emotion. You are most vulnerable to making the wrong moves financially after a major life change (a job loss or divorce, for example) or when you feel under pressure. Maybe your investments have plunged in value. Or perhaps a recent divorce has you fearing that you won't be able to afford to retire when you had planned, so you pour thousands of dollars into some newfangled financial product. Take your time and keep your emotions out of the picture. In Chapter 21, I discuss how to approach major life changes with an eye to determining what changes you may need to make to your financial picture. * Not separating the wheat from the chaff. In any field in which you're not an expert, you run the danger of following the advice of someone who you think is an expert but really isn't. This book teaches you to separate the financial fluff from the financial facts. If you look in the mirror, you'll see the person who is best able to manage your personal finances. Educate and trust yourself! * Exposing yourself to catastrophic risk. You're vulnerable if you or your family don't have insurance to pay for financially devastating losses. People without a savings reserve and support network can end up homeless. Many people lack sufficient insurance coverage to replace their income. Don't wait for a tragedy to strike to learn whether you have the right insurance coverages. * Focusing too much on money. Too much emphasis on making and saving money can warp your perspective on what's important in life. Money is not the first or even second priority in happy people's lives. Your health, relationships with family and friends, career satisfaction, and fulfilling interests should be more important. Most problems can be fixed over time and with changes in your behavior. That's what the rest of the book is all about. The rest of this chapter puts you through a financial physical to help you detect problems with your current financial health. But don't get depressed and dwell on your "problems." View them for what they are -- opportunities to improve your financial situation. In fact, the more areas for improvement that you can identify, the greater the potential you have to build real wealth and accomplish your financial and personal goals. Bad Debt versus Good Debt Why do you borrow money? Usually, it's because you don't have enough money to buy something you want or need -- like a college education. If you want to buy a four-year college education, you could easily spend $50,000 to $100,000, perhaps even more. Not too many people have that kind of spare cash. So borrowing money to finance part of that cost enables you to buy the education. How about a new car? A trip to your friendly local car dealer shows you that a new set of wheels will set you back around $15,000 or more. Although more people have the money to pay for that than, say, the college education, what if you don't? Should you finance the car the way you'd finance the education? BEWARE The auto dealers and bankers eager to make you an auto loan say you deserve to and can afford to drive a nice, new car, so borrow away. I say, NO! NO! NO! Why do I disagree with the auto dealers and lenders? For starters, I'm not trying to sell you a car or loan from which I derive a profit! More importantly, there's a big difference between borrowing for something that represents a long-term investment and borrowing for consumption. If you spend, say, $1,500 on a vacation, the money is gone. Poof! You may have fond memories and even some Kodak moments, but you'll have no financial value to show for it. "But," you say, "vacations replenish my soul and make me more productive when I return. In fact, the vacation more than pays for itself!" Great. I'm not saying don't take a vacation. By all means, take one, two, three, or as many as you can afford yearly. But that's the point -- what you can afford . In order to take the vacation, if you had to borrow money in the form of an outstanding balance on your credit card for many months, then you could not afford the vacation you took. I refer to debt incurred for consumption as bad debt . Don't get me wrong -- you're not a bad person for having the debt, but the debt is harmful to your long-term financial health. You'll be able to take many more vacations during your lifetime if you save the cash in advance to afford them. If you get into the habit of borrowing and paying all that interest for vacations, cars, clothing, and other consumer items, you'll spend more of your future income paying back the debt and interest. So you'll have less money available for vacations and all your other goals. One of the reasons you'll have less money using bad debt is because of the relatively high interest rates banks and other lenders charge for such debt. Money borrowed through credit cards, auto loans, and other types of consumer loans not only carries a relatively high interest rate but is also not tax-deductible. TIP I'm not saying never borrow money and that all debt is bad. Good debt, such as that used to buy real estate and small businesses, is generally available at lower interest rates than bad debt and is usually tax-deductible. If properly and smartly managed, these investments should also increase in value. Borrowing to pay for educational expenses can also make sense. Education is generally a good long-term investment. It should increase your earning potential. How Much Bad Debt Is Too Much? A useful way to size up your debt load is to calculate how much debt you have relative to your annual income. Ignore, for now, good debt -- the loans you may owe on real estate, a business, an education, and so on. I'm focusing on bad debt, the higher-interest stuff used to buy items that depreciate in value. For example, suppose that you earn $30,000 per year. Between your credit cards and an auto loan, you have $15,000 of debt. In this case, your bad debt represents 50 percent of your annual income.     bad debt / annual income = debt danger ratio The financially healthy amount of bad debt is zero. (Not everyone agrees with me. One major U.S. credit card company says in its "educational" materials, which it gives to schools to supposedly teach students about sound financial management, that it's just fine to carry consumer debt amounting to 10 to 20 percent of your annual income.) WARNING When your debt danger ratio starts to push beyond 25 percent, that can spell real trouble. High-interest consumer debt on credit cards and auto loans is like cancer when it gets to those levels. As with cancer, the growth of the debt can snowball and get out of control unless something significant intervenes. If you have this much debt, see Chapter 5 to find out how to get out of debt. How much good debt is acceptable? The answer varies. The key question is, are you able to save sufficiently to accomplish your goals? Later in this chapter, I help you figure how much you are actually saving, and in Chapter 3, I help you determine what you should be saving to accomplish your goals. Take a look at Chapter 14 to find out how much mortgage debt is appropriate to take on when buying a home. REMEMBER Avoid borrowing money for consumption (bad debt) -- for spending on things like cars, clothing, vacations, and so on that decrease in value and eventually become financially worthless. Borrow money only for investments (good debt) -- for purchasing things that retain and hopefully increase in value over the long term, such as an education, real estate, or your own business. TIP Playing the credit card float Given what I have to say about the vagaries of consumer debt, you might think that I am against using credit cards. Actually, I have credit cards and I use them -- but I pay my balance in full each month. Besides the convenience credit cards offer me in not having to carry around extra cash and checks, I get another benefit. I have free use of the bank's money extended to me through my credit card charges. (Some cards offer other benefits such as frequent flyer miles. Also, purchases made on credit cards may be contested if the seller of the product or service doesn't stand behind what it sells.) When you charge on a credit card that does not have an outstanding balance carried over from the prior month, you typically have several weeks, known as the grace period , from the date of the charge to when you must pay your bill. Financial types call this playing the float . Had you paid for this purchase by cash or check, you would have had to shell out the money sooner. If you have difficulty saving money and plastic tends to burn holes through your budget, forget the float game. You'd be better off not using your credit cards. The same applies for those who pay their bills in full but who spend more because it's so easy to do so with a piece of plastic. Your Financial Net Worth Your financial net worth is an important barometer of your financial health. It indicates your capacity to accomplish major financial goals such as buying a home, retiring, and withstanding unexpected expenses or loss of income. Before you crunch any numbers here and before you experience the thrill of bigness or the agony of nothingness or negativity, let's get one thing perfectly clear. Sit down. Take a deep breath. And repeat after me: REMEMBER "My financial net worth has absolutely, positively, no relationship to my worth as a human being." This is not a test. You don't have to compare your number with your neighbor's. It's not the scorecard of life. So do we have an understanding? Good! I hate to see people get depressed about unimportant things that they have the power and ability to change. Your net worth is your financial assets minus your financial liabilities.     Financial Assets - Financial Liabilities = Net Worth Financial assets A financial asset is worth real money or is something that you plan to convert to hard dollars that you can use to buy things now or in the future. Financial assets generally include money in bank accounts, stocks, bonds, and mutual fund accounts (see Part III, which deals With investments). Also included is money that you have in retirement accounts, including those with your employer. You should also include the value of any businesses or real estate that you own. TIP I generally recommend that you exclude your personal residence. Include your home only if you expect to someday sell it or otherwise live off the money you now have tied up in it (perhaps by taking out a reverse mortgage, which I discuss in Chapter 14). If you plan on someday tapping into the equity (the difference between the market value and any debt owed on the property) in your home, add that portion of the equity that you expect to use to your list of assets. Assets also include your future expected Social Security benefits and pension payments if your employer has such a plan. These are usually quoted in dollars per month rather than in a lump sum value. I show you in a moment how to account for these monthly benefits when tallying your financial assets. Personal property such as your car, clothing, stereo, wine glasses, and straight teeth do not count as financial assets. I know adding these things to your assets makes your assets look larger (and some financial software packages and publications encourage you to list these items as assets), but you can't live off them unless you hock them at a pawn shop or otherwise sell them to meet your financial goals. Financial liabilities You must subtract your financial liabilities from your assets to arrive at your financial net worth. Liabilities include loans and debts outstanding, like credit card and auto loan debts. Include money you've borrowed from family and friends (unless you're not gonna pay it back -- I won't tell). Include mortgage debt on your home as a liability only if you include the value of your home in your asset list. Be sure to include debt owed on other real estate, no matter what. (Continues...) Copyright © 2000 Eric Tyson. All rights reserved.

Table of Contents

Introductionp. 1
Why This Book?p. 1
Uses for This Bookp. 2
The Big Picturep. 3
Icons Used in This Bookp. 5
Part I Where Do You Go from Here?p. 7
Chapter 1 Figuring Your Financial Fitnessp. 9
Common Financial Problemsp. 10
Bad Debt versus Good Debtp. 12
How Much Bad Debt Is Too Much?p. 13
Your Financial Net Worthp. 15
Financial assetsp. 15
Financial liabilitiesp. 16
Your net worth calculationp. 16
Interpreting your net worth resultsp. 18
Savings Analysisp. 18
How Is Your Investing Knowledge?p. 20
How Insurance Savvy Are You?p. 22
Chapter 2 Overcoming Obstacles to Personal Financial Successp. 25
Personal Financial Illiteracyp. 25
Teaching personal finance in schoolsp. 27
Talking money at homep. 27
Illiteracy and conflicts in financial publishing and advisingp. 28
Real and Imaginary Hurdlesp. 34
Discovering the real hurdles holding you backp. 34
Practicing good habitsp. 35
Chapter 3 Establishing and Accomplishing Goalsp. 37
Creating Your Own Definition of "Wealth"p. 37
What money can't buyp. 38
The balancing actp. 39
Prioritizing Your Savings Goalsp. 40
Know what's most important to youp. 41
The advantages of retirement accountsp. 41
Dealing with competing goalsp. 43
Building Emergency Reservesp. 43
Saving to Buy a Home or Businessp. 44
Saving for Kids' Educational Expensesp. 45
Saving for Big Purchasesp. 46
Preparing for Retirementp. 46
What you need for retirementp. 47
Retirement building blocksp. 48
Social Securityp. 49
Personal savings/investmentsp. 52
Pensionsp. 52
Retirement planning worksheetp. 53
How to make up for lost timep. 55
Overcoming objections to retirement accountsp. 58
Part II Saving More, Spending Lessp. 63
Chapter 4 Where Did Your Money Go?p. 65
Why You Overspendp. 65
Access to creditp. 66
Using credit cardsp. 66
Making minimum monthly paymentsp. 67
Taking out car loansp. 67
Bending to peer pressurep. 68
Spending to feel goodp. 68
Becoming addicted to spendingp. 68
Trying to keep currentp. 69
Ignoring your financial goals when buyingp. 69
Wanting the "best" for your childrenp. 69
Analyzing Your Spendingp. 70
Tracking your spending on paperp. 71
Tracking your spending on the computerp. 74
The Secret to Growing Rich on Your Incomep. 76
Chapter 5 Solving Debt and Credit Problemsp. 77
Using Savings to Reduce Your Debtp. 77
How you gainp. 78
Money you may be overlookingp. 78
Decreasing Debt When You Lack Savingsp. 79
Transfer to lower-interest-rate credit cardsp. 80
Cut 'em up, cut 'em all upp. 81
Debit cards: The best of both worldsp. 82
Filing Bankruptcyp. 83
Bankruptcy benefitsp. 84
Bankruptcy drawbacksp. 85
Pick a number: 7 or 13p. 86
Bankruptcy advicep. 87
Ending the Spend-and-Debt Cyclep. 89
Identifying and treating an addictionp. 89
Resisting the credit temptationp. 90
Dealing with Credit Mistakesp. 91
Obtain a copy of your credit reportp. 91
Get others to correct their mistakesp. 92
Tell your side of the storyp. 93
Chapter 6 Reducing Your Spendingp. 95
Four Keys to Successful Spendingp. 96
Live within your meansp. 96
Find the best valuesp. 97
Eliminate fatp. 101
Avoid buying on creditp. 102
Strategies for Reducing Your Spendingp. 103
Foodp. 104
Shelterp. 107
Transportationp. 109
Clothing and accessoriesp. 112
Debt repaymentp. 113
Indulgencesp. 114
Personal businessp. 117
Medical carep. 117
Insurancep. 118
Taxesp. 119
Costly addictionsp. 120
Chapter 7 Taming Taxesp. 123
Understanding the Taxes You Payp. 123
The importance of your marginal tax ratep. 124
Taxable income definedp. 126
Trimming Employment Income Taxesp. 127
Retirement plan contributionsp. 127
Income shiftingp. 128
Reducing Investment Income Taxesp. 128
Fill up those retirement accountsp. 129
Invest in tax-free money market funds and bondsp. 129
Select other tax-friendly investmentsp. 130
Make your profits long-termp. 130
Strategies to Increase Your Deductionsp. 131
Selecting standard versus itemized deductionsp. 131
Purchasing real estatep. 133
Trading consumer debt for mortgage debtp. 133
Charitable contributions and expensesp. 134
Auto registration fees and state insurancep. 134
Deducting miscellaneous expensesp. 135
Self-employment expensesp. 136
Tax Resourcesp. 138
IRS assistancep. 139
Preparation and advice guidesp. 139
Softwarep. 139
Hiring helpp. 139
Dealing with an Auditp. 141
Audit preparationp. 142
The day of reckoningp. 143
Part III Investing Crash Coursep. 145
Chapter 8 Important Investment Conceptsp. 147
First, Establish Your Goalsp. 147
The Major Investment Flavorsp. 148
Lending investmentsp. 148
Ownership investmentsp. 150
Shun gambling instruments and behaviorsp. 151
Investment Returnsp. 152
Investment Risksp. 153
Stock and bond risksp. 154
Focus on the risks that you can controlp. 155
Low-risk, high-return investmentsp. 157
Diversificationp. 157
Asset allocation: Spreading it aroundp. 159
Allocating money for the long-termp. 160
Stick with your allocations: Don't tradep. 161
Investment Firms Are Not Created Equalp. 162
Where to focusp. 162
Places to consider avoidingp. 164
Experts Who Predict the Futurep. 169
Investment newslettersp. 170
Investment gurusp. 172
Final Thoughtsp. 173
Chapter 9 Investment Vehiclesp. 175
Lending Vehicles for Slow-Trip Moneyp. 175
Transaction/checking accountsp. 176
Savings and money market accountsp. 176
Bondsp. 177
Ownership Vehicles to Build Wealthp. 179
Stocksp. 179
Real estatep. 185
Investing in small businessp. 190
Investment Odds and Endsp. 193
Precious metalsp. 193
Annuitiesp. 193
Collectiblesp. 194
Life insurance with a cash valuep. 194
Chapter 10 Mutual Funds: Investments for All of Usp. 195
Mutual Fund Benefitsp. 195
Fund Typesp. 198
Money market fundsp. 198
Bond fundsp. 199
Hybrid fundsp. 199
Stock fundsp. 200
U.S., international, and global fundsp. 201
Index fundsp. 202
Specialty (sector) fundsp. 203
Selecting the Best Mutual Fundsp. 204
Costp. 205
Historic performancep. 208
Fund manager and fund family reputationp. 208
Tax-friendlinessp. 209
Your needs and goalsp. 210
Fund Rankings and Performancep. 211
Beware the worst sourcesp. 211
Consider fund directoriesp. 212
Understanding your fund's performancep. 213
Following and selling your fundsp. 215
Chapter 11 Investing in Retirement Accountsp. 217
Types of Retirement Accountsp. 218
Employer-sponsored plansp. 218
Self-employment plansp. 221
Individual retirement accounts (IRAs)p. 224
Annuities: An odd investmentp. 226
Inappropriate Retirement Account Investmentsp. 226
Tax-free bondsp. 227
Annuitiesp. 227
Limited partnershipsp. 228
Allocating Your Money in Retirement Plansp. 228
Prioritizing retirement contributionsp. 229
Setting up a retirement accountp. 229
Allocating money when your employer selects the investment optionsp. 230
Allocating money in plans that you designp. 233
Transferring Retirement Accountsp. 236
Transferring accounts you controlp. 236
Moving money from an employer's planp. 239
Chapter 12 Investing Outside Retirement Accountsp. 241
Getting Startedp. 242
Pay off high-interest debtp. 242
Contribute to retirement accountsp. 243
Taxes on Your Investmentsp. 243
Savings/Emergency Reserve Investmentsp. 244
Bank and credit union accountsp. 244
Money market mutual fundsp. 245
Investing Money for the Longer Termp. 249
Bond fundsp. 250
Certificates of deposit (CDs)p. 254
Stock fundsp. 255
Annuitiesp. 255
Real estatep. 256
Small-business investmentsp. 256
Chapter 13 Investing for Educational Expensesp. 257
The Big Mistake Nonwealthy Parents Make when Saving for College Costsp. 257
How the Financial Aid System Worksp. 258
Treatment of retirement accountsp. 259
Treatment of money in the kids' namesp. 261
Treatment of home equity and other assetsp. 263
How Will I Pay for Educational Expenses?p. 263
Some tips: Loans, grants, and scholarshipsp. 264
The borrowing-versus-saving debatep. 265
What's college going to cost?p. 266
Setting realistic savings goalsp. 266
Investments for Educational Fundsp. 267
Good investments: No-load mutual fundsp. 268
Bad investmentsp. 268
Overlooked investmentsp. 269
Chapter 14 Real Estatep. 271
To Buy or Continue Renting?p. 271
What's your timeline?p. 272
Can you afford to buy?p. 273
How much will lenders allow you to borrow?p. 274
What's the cost of owning versus renting?p. 275
Consider the long-term cost of rentingp. 278
Financing Your Homep. 279
Understanding the two types of mortgagesp. 280
Choosing between fixed- and adjustable-rate mortgagesp. 281
Fixed-rate mortgagesp. 282
Adjustable-rate mortgages (ARMs)p. 285
How to buy with less money downp. 288
15-year versus 30-year mortgagesp. 289
Finding the best lenderp. 292
Increasing your approval chancesp. 293
Finding the Right Property and Locationp. 295
Condo, townhouse, co-op, or detached home?p. 295
Cast a broad netp. 296
Find out actual sale pricesp. 296
Research the neighborhood and areap. 297
Working with Real Estate Agentsp. 297
Real estate agents' top conflicts of interestp. 298
Qualities to look for in real estate agentsp. 301
Putting Your Deal Togetherp. 302
Negotiating 101p. 302
Inspect, inspect, inspectp. 303
Title insurance and escrow feesp. 304
After You Buyp. 305
Refinancing your mortgagep. 305
Mortgage life insurancep. 307
Is getting a reverse mortgage a good idea?p. 308
Selling your housep. 309
Part IV Protecting What You've Gotp. 313
Chapter 15 Insurance Basicsp. 315
Insurance: A Big, Inefficient Businessp. 315
Eric's Three Laws of Buying Insurancep. 316
Law I Insure for the big, not the small stuffp. 317
Law II Buy broad coveragep. 322
Law III Shop around and buy directp. 323
Dealing with Insurance Problemsp. 327
Help! I've been denied coverage!p. 327
Help! My insurer is hassling me about paying a claimp. 328
Chapter 16 Insurance on Youp. 333
Life Insurancep. 333
How much do you need?p. 335
Term versus cash value life insurancep. 337
Buying term insurancep. 340
How to get rid of cash value life insurancep. 342
If you're considering cash value life insurancep. 342
Disability Insurancep. 343
How much disability insurance do you need?p. 344
Other features you need in disability insurancep. 345
Where to buy disability insurancep. 346
Health Insurancep. 347
Choosing the best health planp. 347
Buying health insurancep. 350
If you're denied insurancep. 351
Retiree medical care insurancep. 352
The Most Overlooked Form of Insurancep. 355
Chapter 17 Insuring Your Assetsp. 357
Homeowner's/Renter's Insurancep. 357
Dwelling coverage: The cost to rebuildp. 358
Personal property coveragep. 358
Liability insurancep. 359
Flood and earthquake insurancep. 359
Deductiblesp. 361
Special discountsp. 361
Where to buy homeowner's or renter's insurancep. 361
Auto Insurancep. 362
Bodily injury/property damage liabilityp. 362
Uninsured or underinsured motorist liabilityp. 363
Deductiblesp. 363
Special discountsp. 364
Little-stuff coverage to skipp. 364
Where to buy auto insurancep. 365
Umbrella Insurancep. 365
Estate Planningp. 366
Wills, living wills, and medical powers of attorneyp. 367
Probate and living trustsp. 368
Estate planning to minimize estate taxesp. 368
Part V Where to Go for More Helpp. 371
Chapter 18 Financial Plannersp. 373
Alice in Financial-Planner Landp. 373
Alice's adventuresp. 374
Lessons learned from Alice's journeyp. 375
Your Financial Management Optionsp. 378
Doing nothingp. 378
Doing it yourselfp. 378
Hiring financial helpp. 379
Should You Hire a Financial Planner?p. 381
How a good financial planner can helpp. 382
Why financial planners aren't for everyonep. 383
The Frustrations of Finding Good Financial Plannersp. 384
Regulatory problemsp. 385
Letting the Big Bad Wolf guard the Three Little Pigsp. 385
Financial planners' top conflicts of interestp. 386
How to Find a Good Financial Plannerp. 389
Personal referralsp. 390
Associationsp. 390
Interviewing a Potential Financial Advisorp. 392
What percentage of your income comes from fees paid by your clients versus commissions from the products that you sell?p. 393
What percentage of fees paid by your clients is for ongoing money management versus hourly financial planning?p. 394
What is your hourly fee?p. 394
Do you also perform tax or legal services?p. 394
What work and educational experience qualifies you to be a financial planner?p. 395
Have you ever sold limited partnerships? Options? Futures? Commodities?p. 395
Do you carry liability insurance?p. 396
Can you provide references of clients with needs similar to mine?p. 396
Will you provide specific strategies and product recommendations that I can implement on my own if I choose?p. 397
How is implementation handled?p. 397
Chapter 19 PC Money Managementp. 399
Software and Internet Sitesp. 399
The benefits of using financial softwarep. 400
Tread carefully on the webp. 401
Computer Money Tasksp. 403
Pay your bills and track your moneyp. 403
Plan for retirementp. 406
Prepare your taxesp. 406
Research investmentsp. 407
Trade onlinep. 408
Read and search periodicalsp. 408
Buy life insurancep. 409
Prepare legal documentsp. 410
Chapter 20 On Air and in Printp. 411
The Mass Mediap. 411
Alarmistsp. 411
Poor valuesp. 412
Worship of prognosticating punditsp. 413
Radio and Televisionp. 413
The Internetp. 414
Newspapers and Magazinesp. 415
Booksp. 416
Part VI The Part of Tensp. 417
Chapter 21 Eric's Tips for Ten Life Changesp. 419
Starting Out: Your First Jobp. 420
Changing Jobs or Careersp. 421
Getting Marriedp. 422
Starting a Small Businessp. 424
Buying a Homep. 425
Having Childrenp. 426
Caring for Aging Parentsp. 429
Divorcingp. 430
Receiving a Windfallp. 432
Retiringp. 433
Chapter 22 Ten Things More Important than Moneyp. 437
Familyp. 437
Friendsp. 438
Your healthp. 438
Kidsp. 438
Your neighborsp. 439
Appreciating what you do havep. 439
Your reputationp. 439
Educationp. 440
Having funp. 440
Solving social problemsp. 440
Glossaryp. 441
Indexp. 453
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