Chapter 7

Personal Finance Simulations for Budgeting and Investing

Posted on December 17, 2022 by Melissa Hart

Question:  What is a Personal Finance simulation? 

Answer:  A Personal Finance simulation allows students to fine-tune their decisions when they encounter real-life scenarios while taking a Personal Finance course. 

The authors of Personal Finance, 14e and Focus on Personal Finance, 7e have partnered with StockTrak.com to provide students with an interactive learning experience before they leave the classroom.   

The simulation that accompanies the Kapoor Personal Finance texts includes two components–a personal budgeting simulation and an investing simulation.

The Budgeting Simulation

  • Students assume the role of a full-time employee or part-time employee living on their own.
  • Over a virtual 12-month period, students review their estimated income and expenses, create monthly budgets and savings goals, and try to build an emergency fund. Each month takes about 20 minutes to complete.
  • Each month students manage their checking, savings, and credit card accounts as they deal with life’s expected and unexpected events that affect their budget.  
  • Within the simulation, additional personal finance tutorials are available to make sure students are learning about budgeting, banking, credit, employment, taxes, insurance, and more.
  • A class ranking based on net worth, credit score, and quality of life keep the students fully engaged and professors informed of each student’s progress.

The Investing Simulation

  • Students receive a virtual $25,000 in a brokerage account.
  • They can research U.S. stocks, ETFs, bonds and mutual funds and create their own investment portfolio.
  • All investment trades are based on real-time market prices.
  • Within the simulation, interactive tutorials help students get started and provide additional information during the simulation.
  • Students can monitor their performance versus their classmates.  At the same time, professors can track each student’s progress.

And BEST of ALL, with the new partnership between Stock-Trak and McGraw Hill, classes using the Kapoor Personal Finance textbook get a 50% savings when students register for the simulation – only $9.99 per student instead of retail price of $19.99.

Teaching Suggestions

  • Visit StockTrak.com/kapoor to learn more about the Personal Finance Budgeting and Investing Simulation.  You can learn even more by watching a short video or accessing the Kapoor demo materials located toward the bottom of the above site. 
  • It’s easy to get started.  All you need to do is access the above site, register your classes for Spring 2023, and indicate the dates you want your student to have access to the Personal Finance Simulation.  The site will generate a unique link for you to give to your students.
Categories: Budget, Chapter 1, Chapter 2, Chapter 3, Chapter 4, Chapter 5, Chapter 6, Chapter 7, Chapter 8, Chapter 9, Chapters, Chapter_10, Chapter_11, Chapter_12, Chapter_13, Chapter_14, Financial Planning Topics, Teaching Tools | Tags: , | Leave a comment

Should you Pay Off Your Mortgage Early?

Posted on August 22, 2020 by Melissa Hart

Traditional wisdom encourages you to pay off your mortgage faster by taking a 15-year mortgage instead of 30 years, or by paying an additional principal amount each month. However, these actions have risks. If you encounter financial difficulties and don’t have an emergency (reserve) fund, you could face foreclosure. Be sure your emergency fund has enough to cover several months of mortgage payments to avoid losing your home.

Some financial advisors suggest that if your reserve fund earns a rate greater than your mortgage rate (also taking into account tax benefits), you may decide to invest rather than pay down your mortgage. This approach could give more flexibility when encountering an economic downturn, which might include refinancing your mortgage at a lower interest rate.

Also, beware of organizations promising to help you make additional mortgage payments. You can do this on your own, without the fee they will likely charge.

For additional information on paying off your mortgage early, click here.

Teaching Suggestions

  • Have students talk to others about the benefits and drawbacks of paying off a mortgage early.
  • Have students develop a visual to compare paying off a mortgage early with saving and investing additional funds instead.

Discussion Questions 

  1. What are the benefits and drawbacks of paying off a mortgage early?
  2. Describe actions to take when trying to decide if to pay off a mortgage early.
Categories: Chapter 1, Chapter 7, Financial Planning, Home Buying | Tags: , | Leave a comment

Anchoring Your Personal Finance Decisions

Posted on December 14, 2019 by Melissa Hart

To spend less and save more, consider an “anchoring” system.  One example of an anchor is the price of an item to determine if that is an appropriate amount of money to spend for the item.

Anchors prevent shoppers from being overwhelmed by the many choices, prices, and features.  You can create your own anchors by:

  • setting the maximum price you are willing to spend for an item.
  • considering the value of an item in relation to the number of hours you have to work to pay for it.
  • comparing the cost in relation to another item. If you buy coffee costing $2.50 a cup and want a sweater costing $50, view the sweater as costing 20 cups of coffee. Your “coffee” anchor will help you determine how valuable the sweater is to you.

When buying a home, you may be encouraged to look at properties outside your price range.  Anchoring yourself at a price limit will avoid overspending, make you feel more in control, and encourage wiser financial decisions.

For additional information on financial anchoring, click here.

Teaching Suggestions

  • Have students talk to several people to obtain information about how they determine the price they are willing to pay for an item.
  • Have students create a video presentation that demonstrates various anchoring methods.

Discussion Questions 

  1. How might anchoring help improve personal financial literacy and money management activities?
  2. Describe anchors people might used to determine the price they would be willing to pay for an item.
Categories: Chapter 1, Chapter 2, Chapter 6, Chapter 7, Financial Planning, Wise Shopping | Tags: , | Leave a comment

Apartment Loans

Posted on November 16, 2019 by Melissa Hart

Many recent college graduates choose to rent expensive, upscale apartments rather than putting money into savings. Their “fear of missing out” (FOMO) on being “close to the action” or luxury-living amenities comes at a cost, with high demand for these units resulting in spiraling monthly rents.  To cover these higher costs, “apartment loans” are now available in several urban areas.

Similar to the high-risk mortgages that triggered the financial crisis in 2008, apartment loans may be viewed as predatory lending.  Renters may borrow up to $15,000 with no interest for the first six months, but then encounter an annual interest rate of 15-17 percent.  Some justify these loans in that the costs are lower than payday lending.

If you have to take out a loan to pay the rent for an apartment…you CAN’T afford to live there.  Your ability to build wealth and long-term financial security will depend on living within your income.

For additional information on apartment loans, click here.

Teaching Suggestions

  • Have students conduct a survey of renters to determine actions they took to determine the location and cost of obtaining an apartment.
  • Have students create a visual presentation with the dangers of apartment loans.

Discussion Questions 

  1. What actions might be considered to avoid apartment loans?
  2. Describe financial and personal concerns associated with apartment loans.
Categories: Chapter 5, Chapter 7, Credit Scores, Financing a Home | Tags: , | Leave a comment

Personal Finance Hacks

Posted on April 13, 2019 by Melissa Hart

Hacks – skills and shortcuts – are used in many life settings.  For personal finance, here are some tips that can help stop money leakages:

  • Only use credit cards with financial advantages, such as cashback; always pay off credit card balances on time.
  • Making weekly payments, instead of monthly, helps to save interest and reduces the amount owed faster.
  • Pay off loans/debts with the highest interest rates first.
  • You might consider paying off a debt with another loan if the new loan has a much lower interest rate.
  • When shopping online, leave the item in the cart for several days or weeks; the price may be lower or you may decide you don’t really need the item.
  • Consider bulk purchases with friends to qualify for free shipping.
  • Take advantage of seasonal sales.
  • Unsubscribe from email offers.
  • Avoid household clutter to save time and money.
  • Cook your own meals; online videos and recipes offer fast, easy meals.
  • Talk to others for investment advice.

For additional information on personal finance hacks, click here.

Teaching Suggestions

  • Have students tell their personal experience with tech, travel, or personal finance hacks.
  • Have students create a video to dramatize various personal finance hacks.

Discussion Questions 

  1. How would you decide if a personal hack will be of value to you?
  2. Describe actions that might be used to communicate personal finance hacks to others.
Categories: Chapter 1, Chapter 3, Chapter 6, Chapter 7, Chapter 8, Financial Planning, Wise Shopping | Tags: , | Leave a comment

Why Buy When You Can Rent?

Posted on December 8, 2018 by Melissa Hart

While car ownership has been a cultural milestone in our society, this tradition is diminishing with a trend toward renting or borrowing rather than owning. This situation is partially related to fewer teenagers opting to obtain a driver’s license. Also, fewer young people are buying homes, giving preference to the flexibility of renting.

The owning of “stuff” is shifting toward “decluttering” and choosing instead to rent items as needed. A strong belief that overconsumption is putting our planet at risk is driving the rise of the sharing economy. In addition, there is a growing trust to value exchanging items with “real people” rather than buying from major companies.

In addition to Zipcar, which rents vehicles by the hour, other rental business models include:

  • Ann Taylor’s Infinite Style service that allows a person, for a $95 monthly fee, to rent up to three garments at a time.
  • SnapGoods rents cameras, power tools and home appliances, such as blenders.
  • Frankfurt airport has a service that allows travelers to store winter coats when flying to warmer climates. Other businesses are considering a service to rent cold weather clothing to travelers arriving from tropical areas.
  • Since about one-third of new vehicles are leased, Cadillac created the “Book By Cadillac” program allowing a person to exchange up to 18 vehicles a year.

The many empty stores in malls create opportunities for “swap meets” and “rental fairs” for various products, using these spaces to also build connections in the local community.

For additional information on renting instead of buying, click here.

Teaching Suggestions

  • Have students locate examples of sharing economy businesses and rental companies in your community and online.
  • Have students talk to others to obtain ideas for new types of rental businesses.

Discussion Questions 

  1. What do you believe are the benefits and drawbacks of renting instead of owning?
  2. Describe actions that might be taken to determine needs and ideas for rental businesses in a community.
Categories: Chapter 6, Chapter 7, Debt, Economy, Home Buying, Purchasing Strategies, Wise Shopping | Tags: , , , , | Leave a comment

Tiny House Living-Is it for you?

Posted on August 12, 2017 by Melissa Hart

Tiny houses (usually 400 square feet or less) have become popular with many people, as they offer these benefits:

  • quick access to a comfortable home with probably no mortgage payments.
  • you can learn from your home-building mistakes if you decide to build a larger home.
  • lower home ownership costs with the possibility of living off-grid.
  • an environmentally-friendly design with little or no toxins.
  • a simpler, less cluttered life with creative ideas to effectively use space.
  • potential for better communication with family members as a result of close quarters.

However, common drawbacks of buying and living in a tiny house include:

  • limited privacy, no place for solitude.
  • limited living space; little room for entertaining guests and family.
  • limited kitchen and storage space.
  • more trips to the store-no buying in bulk, and usually driving further to stores.
  • tiny houses may be on wheels or on a foundation, restrictions may exist as to where you may park or build.

For additional information on tiny houses:

Link #1

Link #2

Teaching Suggestions

  • Have students search for online videos about tiny house living to obtain additional information on benefits and drawbacks.
  • Have students design a tiny house that would fit their life situation.

Discussion Questions 

  1. What personal factors should be considered when building a tiny house?
  2. Describe life situations of people who might be appropriate for tiny house living.
Categories: Chapter 7, Home Buying | Tags: , | Leave a comment

How to Get the Best Mortgage Rate

Posted on February 4, 2017 by Melissa Hart

“Finding the right mortgage (and how to get the best mortgage rate can be a confusing process–especially for first time home-buyers.”

Buying a home is a huge financial commitment.  In this article, Deborah Kearns discusses the following six questions that can help you decide which is the right mortgage for you.

  1. Should I get a fixed- or adjustable-rate mortgage?
  2. Should I pay for points?
  3. How much should I expect to pay in closing costs?
  4. Do I qualify for any special programs?
  5. How much can and should I put down?
  6. Any other insights on how to get the best mortgage rate?

Each question provides detailed information to help you answer the question and find the right home mortgage financing needed to purchase the home of your dreams.

For more information, click here. 

Teaching Suggestions

You may want to use the information in this blog post and the original article to

  • Help students understand the importance of purchasing a home they can afford after all other home ownership costs–taxes, utilities, repairs, etc. are considered.
  • Stress the necessity of “shopping” for a home mortgage and comparing both term of the mortgage and the effect of interest rates on total financing costs.

Discussion Questions

  1. What factors affect the cost of financing a home that you would like to purchase?
  2. How important is good credit when purchasing a home? Does it really make a difference if you have a good credit score or a bad credit score?  Explain your answer.
  3. What steps can you take to make sure that you are getting the lowest interest rate when you finance your home?
Categories: Chapter 7, Financing a Home, Home Buying | Tags: , , | Leave a comment

Home Ownership Can Be A Financial Disaster

Posted on October 1, 2016 by Melissa Hart

While home ownership is often promoted as part of the “American Dream” and a sound financial decision, another point of view might be considered.  Home ownership may not be for everyone when considering these drawbacks:

  • A home is not an investment. Over the past 120 years, the real return of the value of homes has been less than 0.5 percent a year,
  • Home ownership can be a money drain. Mortgage payments and other costs, such as property taxes, maintenance, repair, insurance, and utilities can add up to a significant portion of a household budget.
  • The mortgage tax deduction may not be worth it. If you do not itemize on your taxes, you will not get the benefit of this deduction.
  • Consider the “rent-price ratio.” This analysis is determined by dividing the average home sale price by the average annual rent.  A ratio of 1 to 15 is considered a range when it is better to buy than rent. Between 16 to 20, you are getting in to risky buy territory. Over 21, it may be better to rent than buy.  Be sure to also consider how much space you need. Homes are usually larger than apartments.
  • People often buy a larger house than needed, resulting in higher mortgage, insurance, energy, and maintenance costs as well as higher property taxes.

For additional information on the financial drawbacks of home ownership, click here.

Teaching Suggestions

  • Have students ask homeowners for suggestions they would offer to people planning to buy.
  • Have students create a financial analysis comparing renting and buying for comparable housing.

Discussion Questions

  1. What factors might you overlooked when deciding to buy a home?
  2. How you decide whether to rent or buy your housing?
Categories: Chapter 7, Financing a Home | Tags: , , | Leave a comment

Comparing Renting vs. Buying Your Home

Posted on June 11, 2016 by Melissa Hart

While more people are renting in recent years due to various economic and household situations, home ownership is still a financial goal for many.  A financial comparison between renting and buying often overlooks various factors.  An online calculator may be used to consider buying items such as the opportunity cost of investing your down payment (along with the taxes on capital gains), condo or home association fees, maintenance costs, and, of course, the tax benefits of property taxes and mortgage interest.  On the rental side, the calculator considers initial costs (such as a security deposit and any broker’s fee) along with the opportunity costs of the initial costs and recurring costs, such as renter’s insurance.

For additional information on calculating the renting vs. buying your home, click here.

Teaching Suggestions

  • Have students ask people to describe factors that affected whether they own or rent their housing.
  • Have students conduct a personal financial analysis for renting and buying a place to live.

Discussion Questions 

  1. What are benefits and drawbacks of renting and buying a place to live?
  2. Describe financial factors that might be overlooked when comparing renting and buying a place to live.
Categories: Chapter 7, Financing a Home, Home Buying, Wise Shopping | Tags: , | Leave a comment

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