Chapters

Successful Financial Goals

Posted on February 20, 2016 by Melissa Hart

Financial goals are communicated in many formats, and are good to have. However, too often, a goal is lacking the “why.”  While various financial planning actions are beneficial, quite often, little thought is given to the motivation behind a certain goal. Without this “why,” minimal internal motivation is likely to be present to see a goal to completion. The “why” of a financial goal will help you persevere when encountering challenges that could derail your achievement of a goal.

Not being able to answer the “why” may indicate that the goal is not worth your efforts. The “why” will also assure that a goal provides a higher level of satisfaction when it is achieved.  The process may require a series of “why” questions as you respond to the initial “why.”

Instead of being an afterthought, the “why” of your financial goals should be a driving force in creating and achieving these personal economic objectives. Be able to decide if a goal is a result of advertising, societal influences, or reflective thought about your personal financial situation. This action should result in meaningful goals rather than just efforts to accumulate more money or more stuff.

For additional information on financial goals, click here.

Teaching Suggestions

  • Have students talk to people to create examples of financial goals.
  • Have students ask a series of “why” questions to help other people to better focus their personal financial goals.

Discussion Questions 

  1. What are common motivations that influence personal financial goals?
  2. How might a person better understand the motivation behind personal financial goals?
Categories: Chapter 1, Chapter 2, Financial Planning | Tags: , | Leave a comment

Robo Investment Advice

Posted on February 13, 2016 by Melissa Hart

With many investors already making their own trades online, investment companies believe that robo advisors have these additional benefits:

  • lower costs for obtaining advice and conducting transactions.
  • an ability to adjust the portfolio for tax purposes by selling shares that have declined to offset gains.
  • an easier investment approach for younger clients with less-complicated financial lives.

Some will be concerned about automated portfolio management.  Human advisors will still be available to address issues about mortgages, insurance, estate planning, retirement income, and other topics that robo-advisers are not yet equipped to answer.

For additional information on robo advice, click on the following articles:

Article #1
Article #2
Article #3

Teaching Suggestions

  • Have students ask people to describe the process they use to select investments.
  • Have students create a framework to analyze when using robo advice might be appropriate for an investor.

Discussion Questions 

  1. What are benefits and drawbacks of robo advice?
  2. What factors might be considered when using robo advice for investment decisions?
Categories: Bonds, Chapter_11, Chapter_12, Chapter_13, Financial Services, Investments, Mutual Funds, Stocks | Tags: , , , , | Leave a comment

The Gig Economy

Posted on February 6, 2016 by Melissa Hart

Online selling, personal taxi services such as Uber, and renting a spare room to tourists, are examples of an increasing number of people generating or supplementing their incomes by trading goods and services online.  This trend is often replacing traditional employment.

Measurement of the “gig economy” (working outside a formal work environment with temporary, short-term employment by independent workers) is difficult.  Many situations are not reported in current labor statistics. In recent years, the fastest growth for self-employed workers has been in hairdressing, cleaning, and management consulting. While these services may be in the gig economy, this trend may also indicate growing formal self-employment in these fields.

Gig economy activities may start as temporary work due to a lay-off or a need to supplement household income. However, as time goes by, these self-employment positions can become a person’s ongoing employment status.

For additional information on the gig economy, click here.

Teaching Suggestions

  • Have students describe examples of the “gig economy.”
  • Have students explain the “gig economy” to others (including different generations) and get their reactions.

Discussion Questions

  1. What factors influenced the development of the gig economy?
  2. How might the gig economy affect a person’s financial planning activities?
Categories: Career, Chapter 1, Financial Planning, _Appendix B | Tags: , | Leave a comment

Beware of IRS Imposters

Posted on January 30, 2016 by Melissa Hart

You get a call from a scammer pretending to be with the IRS, threatening you’ll be arrested if you don’t pay taxes you owe right now.  You’re told to wire the money or put it on a prepaid debit card.  The scammer might threaten to deport you or say you’ll lose your driver’s license.  Some scammers even know your Social Security number, and they fake caller ID so you think it really is the IRS calling.  But it’s all a lie.  If you send the money, it’s gone.

The Federal Trade Commission advises that if you get illegal sales calls, robocalls, or fake IRS calls, it’s best to ignore them.  Don’t interact in any way.  Don’t press buttons to be taken off the call list or talk to a live person or call back.  When you have a tax problem, the IRS will first contact you by mail.  The IRS won’t ask you to wire money, pay with a prepaid debit card, or share your credit card information over the phone.  If you get fake calls, file a complaint with the Treasury Inspector General for Tax Administration at tigta.gov. You also can file a complaint with the FTC at ftc.gov/complaint.  If you’re concerned there’s a real tax problem, call the IRS directly at 800-829-1040.

For more information, click here.

Teaching Suggestions

  1. Ask students to make a list of steps that taxpayers can take to protect themselves from tax scammers.
  2. Why do scammers prey on the most vulnerable people, such as the elderly, newly arrived immigrants and those whose first language is not English?

Discussion Questions

  1. What can the IRS and other governmental agencies do to catch and punish criminals impersonating IRS agents?
  2. How can taxpayers protect themselves from scam artists?
  3. What should you do if you believe you owe federal income taxes?
Categories: Chapter 3, Frauds and Scams, Taxes | Tags: , , , | Leave a comment

Reporting Changes to Social Security is Your Responsibility

Posted on January 23, 2016 by Melissa Hart

If you receive benefits from Social Security, you have a legal obligation to report changes, which could affect your eligibility for disability, retirement, and Supplemental Security Income (SSI) benefits.  You must report any changes that may affect your benefits immediately, no later than 10 days after the end of the month in which the change occurred.  Changes you need to report range from a change of address to traveling outside the United States for 30 consecutive days.

Life changes affect your benefits.  You may be due additional payments, or you may be overpaid and have to pay Social Security back because you didn’t report the overpayment promptly. The SSI program may apply a penalty that will reduce your benefits if you fail to report a change, or if you reported the change later than 10 days after the end of the month in which the change occurred.  If you fail to report changes promptly, or if you intentionally make a false statement, Social Security may stop your SSI, disability, and retirement benefits.  Social Security may also impose a sanction against your payments.  The first sanction is a loss of all payments for six months.  Subsequent sanctions are for 12 and 24 months.

Report your change online at www.socialsecurity.gov, or by calling toll free at 1-800-772-1213.  If you are deaf or hearing impaired call TTY 1-800-325-0778.  Mail the information to your Social Security office or deliver in person.  If you receive benefits and need to change your address or direct deposit, create a Social Security account at www.socialsecurity.gov/myaccount.

For more information click here.

Teaching Suggestions

  • Ask students to visit http://www.socialsecurity.gov and to create their own online Social Security account. There is no fee to create a “my Social Security” account, but students must have a valid e-mail address.
  • Ask students to sign into their “my Social Security” account and obtain their benefit verification letter.

Discussion Questions

  1. Why is it important to report life changes to Social Security if you receive any benefits from Social Security?
  2. What are the consequences if you fail to report changes promptly?

What are several ways you can report the life changes to Social Security Administration?

Categories: Chapter_14, Financial Planning, Retirement Planning | Tags: , | Leave a comment

Investor Alert: Securities-Backed Lines of Credit (SBLOC)

Posted on January 16, 2016 by Melissa Hart

SBLOCs are loans that are often marketed to investors as an easy and inexpensive way to access extra cash by borrowing against the assets in your investment portfolio without having to liquidate these securities.  They do, however, carry a number of risks, among them potential unintended tax consequences and the possibility that you may, in fact have to sell your holdings, which could have a significant impact on your long-term investment goals.

Set up as a revolving line of credit, an SBLOC allows you to borrow money using securities held in your investment accounts as collateral.  You can continue to trade and buy and sell securities in your pledged accounts.  An SBLOC requires you to make monthly interest-only payments, and the loan remains outstanding until you repay it.  You can repay some (or all) of the outstanding principal at any time, then borrow again later.  Some investors like the flexibility of an SBLOC as compared to a term loan, which has a stated maturity date and a fixed repayment schedule.  In some ways, SBLOC are reminiscent of home equity lines of credit, except of course that, among other things, they involve the use of your securities rather than your home as collateral.

The Financial Industry Regulatory Authority (FINRA) and the SEC’s Office of Investor Education and Advocacy (OIEA) have issued an investor alert to provide information about the basics of SBLOC, how they may be marketed to you, and what risks you should consider before posting your investment portfolio as collateral.  SBLOCs may seem like an attractive way to access extra capital when markets are producing positive returns, but market volatility can magnify you potential losses, placing your financial future at greater risks.

For more information, click here.

Teaching Suggestions

  • Ask students to prepare a list of possible advantages and disadvantages of securities-based loans.
  • How might market volatility magnify potential losses placing your financial future at a greater risk?

Discussion Questions

  1. How are securities-backed lines of credit different from home-equity lines of credit?
  2. Why some investors prefer SBLOC to a traditional short term loan?
Categories: Chapter 5, Debt, Investments, Savings | Tags: , | Leave a comment

Chip Card Scams

Posted on January 9, 2016 by Melissa Hart

Scammers are taking advantage of millions of consumers who haven’t yet received a chip card.  For example, scammers are e-mailing people, posing as their card issuer.  The scammers claim that in order to issue a new chip card, they need to update your account by confirming some personal information or clicking on a link to continue the process.  Information received can be used to commit identify theft.  If they click on the link, they may unknowingly install malware on your device.

How can you tell if the e-mail is from a scammer?

  • There is no reason your card issuer needs to contact you by e-mail or by phone to confirm personal information before sending you a new chip card number.
  • Still not sure if the e-mail is a scam? Contact your card issuers at phone numbers on your cards.
  • Don’t trust links in e-mails. Only provide personal information through a company’s website if you typed in the web address yourself and you see that the site is secure, like a URL that begins https (the “s” stands for secure).

For more information, click here.

Teaching Suggestions

  • Ask students to visit other identify theft websites, such as, consumer.gov/idtheft, to learn what to do if your identity is stolen.
  • Ask students to compile a list of what actions can they take to ensure that their credit/debit cards and other financial information are secure.

Discussion Questions

  1. How do you discover that someone has stolen your identity?
  2. What steps can you take to thwart identity thieves?
Categories: Chapter 5, Frauds and Scams, Identity Theft, Uncategorized | Tags: , , , | Leave a comment

Personal Finance Quizzes

Posted on January 2, 2016 by Melissa Hart

Need a lecture launcher to start your Personal Finance course?

Here a few links for resources:

Kiplingers Personal Finance Quizzes

LearnVest Quizzes

Financial Football Game

Teaching Suggestions

You may want to use the links in this blog post:

  • as a lecture launcher for the first day of your Personal Finance course.
  • to preview important personal finance topics that will be covered in the course.
  • stress why everyday decisions can make a “big” difference in the quality of a person’s life over a long period of time.

Discussion Questions

  1. How many of the questions did you get right?
  2. Do you understand why your incorrect answers are wrong and why there is a better answer?
  3. How can the questions in this quiz help you improve your ability to manage your personal finances and improve the quality of your life now and in the future?
Categories: Chapter 1, Financial Planning, Teaching Tools | Tags: , | Leave a comment

New Credit and Debit Chip Cards

Posted on December 19, 2015 by Melissa Hart

Banks and card issuers have been sending out new credit and debit chip cards, usually as existing cards expire or need replacement.  If you haven’t gotten your new cards, don’t worry.  The rollout will continue at least through 2016.  If you want to know when yours new chip cards will arrive, contact your card issuers at the phone numbers on your cards.

Your new cards look like your old cards with one exception.  New cards have a small square metallic chip on the front.  The chip holds your payment data—some of which is currently held on the magnetic stripe on your old cards—and provides a unique code for each purchase.  The metallic chip is designed to reduce fraud, including counterfeiting.

Here’s how it works: To buy something in a store, instead of swiping your card, you’ll put it into a reader for few seconds.  Then you might have to sign or enter a PIN.  With each transaction, the chip generates a unique code needed for approval.  The code is good only for that transaction.  Because the security is always changing, it’s more difficult for someone to steal and use.

There will be no change in how you use your card online or by phone.  That means chip cards won’t prevent crooks from using stolen card numbers to buy online or by phone.  So it’s a good idea to still guard your card information closely, and check statements for suspicious activity.  If there is a problem, your consumer protections remain the same.

For more information, click here.

Teaching Suggestions

  • Ask students if they have received a new chip credit or debit card. Show how the new card differs from the old card.
  • Do you believe that new cards will help reduce fraud? Why or why not?

Discussion Questions

  1. How might scammers try to take advantage of the millions of consumers who have not yet received a chip card?
  2. How can you protect yourself from the scammers?
Categories: Chapter 5, Credit Cards, Frauds and Scams, Identity Theft | Tags: , | Leave a comment

Attention College Students: Student Loans, Debit and Prepaid Cards

Posted on December 5, 2015 by Melissa Hart

College students often make financial decisions that can have consequences for years.  Getting a student loan or credit cards can influence long-term financial success.  Here are the ways to strengthen your decision-making skills:

  1. Do your research before applying for a student loan. If you have to borrow to pay for some or all of a college education, review the different types of student loans.  Choose one that’s low-cost and has a flexible repayment terms, which will generally be a federal student loan.
  2. Understand the pros, cons and costs of debit and prepaid cards. Debit cards enable you to withdraw money from your checking accounts for purchases or cash.  Prepaid cards are used to access money that has been loaded (added) onto the card, which is not connected to a bank account.
  3. Use credit cards responsibly: While credit cards are a convenient way to establish a credit history, they can make it easier to spend money. Purchases that cannot be paid in full by the due date will incur interest

For more information, click here.

Teaching Suggestions

  • Ask students if they have an outstanding student loan. Was the process of financing an education daunting and time consuming?
  • Ask students to visit the College Affordability and Transparency Center website (collegecost.ed.gov) for choosing the financial aid package that best suits their needs.

Discussion Questions

  1. Why is it important that you find the most affordable education that fits your budget, future career, and long-term financial goals?
  2. What might be the benefits of understanding the pros, cons, and costs of debit and prepaid cards?
  3. Are school-affiliated cards the best deal for all students? Why or why not?
Categories: Chapter 5, Credit Cards, Debt, _Appendix A | Tags: , | Leave a comment

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