Chapters

Choosing a Credit Card? Ensure that Your Credit Report is Accurate

Posted on May 4, 2014 by Melissa Hart

Correcting inaccuracies in your credit report may help you improve your credit history and credit score, which credit card issuers consider when deciding whether to offer you a card and how they will determine your interest rate and credit limit. You also can find out if an identity thief has opened credit cards or other accounts in your name.

By federal law, you are entitled to one free copy of your credit report every twelve months from each of the three major nationwide consumer reporting agencies (also called “credit bureaus”)—Equifax, Experian and TransUnion. Each company issues its own report, and because some lender do not provide information to all three of them, it’s useful to request your report from each one in order to get a comprehensive view of you credit history.

For additional information, go to

http://www.AnnualCreditReport.com; http://www.equifax.com; http://www.experian.com; http://www.transunion.com

Discussion Questions

1. Why is it important to check your credit reports every year?

2. Why should you request a credit report from each one of the three credit bureaus?

 

Teaching Suggestions

You may want to use the information in this blog and the above websites to discuss

* What should students do if they find inaccuracies in their credit reports?

* Have students draft a letter to the credit bureau to correct the errors in their credit report.

Categories: Chapter 5, Credit Mistakes, Credit Scores | Tags: , | Leave a comment

Payday Loans

Posted on April 30, 2014 by Melissa Hart

Loans with annual interest rates exceeding 400 percent continue to occur in our society.  Payday loans are often used to bridge a cash-flow shortage between paychecks. Also known as “cash advances” or “check loans,” they are usually expensive, small-dollar loans, of generally $500 or less. They offer quick and easy access to funds for consumers who may not qualify for other credit.

A recent Consumer Financial Protection Bureau (CFPB) study revealed that four out of five payday loans are rolled over or renewed within 14 days. The majority of payday-loan borrowers renew their loans so many times that they end up paying more in fees than the amount of money they originally borrowed.  This study also reported that:

  • only 15 percent of borrowers repay all of their payday debts when due without borrowing again within 14 days.
  • 20 percent default on a loan at some point, and
  • 64 percent renew at least one loan one or more times.

These actions often create exorbitant fees and charges, and keep the consumer in perpetual debt.

For additional information and a complete copy of the payday loan report go to http://files.consumerfinance.gov/f/201403_cfpb_report_payday-lending.pdf

Discussion Questions

  1. Why does the market for payday loans exist?
  2. What actions might be taken to avoid using payday loans?
  3. Recommend actions for people who are caught in the trap of payday loans.

 

Teaching Suggestions

  • Have students visit a payday loan office or an online payday loan provider to gain additional insight into this high-cost financial service.
  • Have students make a short presentation with a summary of actions that might be taken to avoid payday loans.
Categories: Chapter 4, Financial Services | Tags: , , , | Leave a comment

The Slacker’s Guide to Saving for Retirement

Posted on April 23, 2014 by Melissa Hart

Whether retirement is coming soon or feels far away, it’s something you need to think about.

This article encourages students to make retirement planning a part of their budget and one of their financial goals.   It also points out the benefits of starting early—even if students can contribute only a small amount because of other obligations that include paying off student loans and other debt obligations, paying rent, buying groceries, and establishing an emergency fund.

A very good suggestion included in this article is to start by saving just $25 from each paycheck, and then increase the amount until someone feels they have reached a limit they are comfortable with.

Other suggestions include participating in a 401(k) account at work and using bonuses and salary increases to boost the amount contributed to your retirement account.

For more information, go to

http://finance.yahoo.com/news/slackers-guide-saving-retirement-113005671.html

Teaching Suggestions

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

  • Encourage students to develop a long-term financial plan that includes retirement goals.
  • Discuss time value of money examples that show how small dollar amounts invested on a regular basis can help achieve long-term financial goals.
  • Launch a discussion about the different types of retirement accounts.

Discussion Questions

1.  Many people never begin saving or investing because there is never anything left over at the end of the month.  How can you find the money needed to begin saving and investing?

2.  Why should you begin to save for retirement now instead of waiting until later in life?

Categories: Chapter 1, Chapter 3, Chapter 4, Chapter_11, Chapter_14, Financial Planning, Investments, Retirement Planning, Savings, Taxes | Tags: , , , , , , , | Leave a comment

Stock Investing at Lower Risk: A Guide for Beginners

Posted on April 20, 2014 by Melissa Hart

Here’s a simple breakdown of key points for investing in stocks

For the beginner, stock investing can seem like an uncharted mine field because of terms, regulations, and fear. This article provides five important pieces of information that can help students understand stocks and become better investors. Here goes:

  1. Owning stock is owning a company. As an owner, you have rights and responsibilities.
  2. Stocks grow two ways because they can increase in value and they pay dividends.
  3. Stocks rise and fall in value. Keep in mind what goes up can come down.
  4. You will pay taxes unless your stocks are held inside some type of tax deferred retirement account.
  5. Stocks can be volatile. Volatility is different than the typical rise and fall in price described above because volatility occurs when an investment has major price swings in a short period of time.

For more information go to

http://www.forbes.com/sites/mitchelltuchman/2013/08/09/stock-investing-at-lower-risk-a-guide-for-beginners/

Teaching Suggestions

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

  • Provide basic information to students who are studying stock for the first time.
  • Help students understand the process of stock investing.
  • Compare stocks with savings accounts, certificates of deposit, bonds, mutual funds, and other investment alternatives.

Discussion Questions

  1. How can you profit from a stock investment?
  2. What are the risks associated with stock investments?
  3. How can you avoid paying taxes on stock and other investment alternatives?
Categories: Chapter_12, Chapter_14, Investments, Retirement Planning | Tags: , , | Leave a comment

Do You Need the Retirement Estimator?

Posted on April 16, 2014 by Melissa Hart

Are you saving enough for your retirement?  The Retirement Estimator gives you an estimate based on your Social Security earnings.  However, be aware that it is only an estimate since your earnings may increase or decrease in the future.  Moreover, your benefit amount may be affected by military service, railroad employment or pensions earned through work on which you did not pay Social Security tax.  Remember, your estimated benefits are based on current law and the law may change because by 2033, the payroll taxes collected will be enough to pay only 77 cents for each dollar of scheduled benefits.

For additional information about who can use Retirement Estimator and how you can estimate your retirement benefits go to http://www.socialsecuirity.gov/estimator/.

Discussion Questions

  1. How do you decide which calculator to choose?
  2. What are some other possible sources of income for retirees?
  3. How can the Internet assist you in your retirement?

Teaching Suggestions

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

  • What are the two primary reasons for increasing the normal retirement age?
  • What are some factors that may, or may not, affect your retirement benefits?
Categories: Chapter 1, Chapter 3, Chapter_14, Retirement Planning, Taxes | Tags: , , , | Leave a comment

Should You Worry About Estate Tax?

Posted on April 12, 2014 by Melissa Hart

The estate tax is a tax on your right to transfer property at your death.  Most relatively simple estates do not require the filing of an estate tax return.  However, if your estate is $5,340,000 in 2014, your estate’s representative must file the return.

Who should you hire to represent you, prepare and fill your return?  The answer depends on how large and complex is your estate, how many beneficiaries you have and are they cooperative?

Discuss this matter with several estate tax professionals.  Ask about their experience and referrals.  Most estates hire the services of both attorneys and CPAs.

For additional information on estate planning and estate tax matters go to http://www.irs.gov/Businesses/Small-Businesses-Businesses-&-Self-Employed/Frequently-Asked-Questions.

Discussion Questions

  1. What is included in your estate?  What is excluded?
  2. What deductions are available to reduce the estate tax?
  3. What might be advantages of hiring the services of estate attorneys and CPAs?

Teaching Suggestions

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

  • How can charitable gifts and bequests reduce estate and inheritance taxes.
  • Different types of taxes imposed on a deceased’s estate.
  • Arguments in support and against the estate tax.
Categories: Chapter 3, Chapter_14, Estate Planning, Taxes | Tags: , , | Leave a comment

What is the Health Insurance Marketplace?

Posted on April 9, 2014 by Melissa Hart

Health Insurance and the Patient Protection and Affordability Care Act of 2010 created state-based health insurance marketplace (also called insurance exchange) through which individuals can purchase health insurance coverage.

Open enrollment in the Health Insurance Marketplace ends on March 31, 2014.  The next open enrollment period for 2015 coverage starts from November 15, 2014 and ends on February 15, 2015.  There are several ways to sign up for Marketplace plans, but applying online is the quickest method to  get coverage.  You can buy a marketplace plan directly from an insurance company, with the help of a broker or an agent, or using an online service.  If you can’t afford a health plan or can’t wait until coverage begins, you can get low-cost care at a Community Health Center near you.

For additional information about the Health Insurance Marketplaces go to https://www.healthcare.gov/what-is-the-health-insurance-marketplace.

Discussion Questions

  1. What are several methods of getting health insurance coverage through the Health Insurance Marketplaces?
  2. Can a Marketplace refuse the coverage or charge you more because you have an illness or a medical condition?
  3. How do you choose a health insurance plan that is  right for you?

Teaching Suggestions

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

  • The 5 categories of Marketplace plans: Bronze, Silver, Gold, Platinum, and Catastrophic.
  • How you may be able to get lower costs on deductibles, copayments, and coinsurance?
  • How to apply and enroll in health coverage in the Marketplace?
Categories: Chapter 9, Health Insurance | Tags: , | Leave a comment

Average Tax Refund More than $3,000 So Far

Posted on April 6, 2014 by Melissa Hart

A month into the 2014 tax filing season, the IRS said the average tax refund is up 3 percent to $3,034.

This article also reports that more taxpayers are completing their own returns as opposed to using the services provided by tax professionals and filing their returns earlier this year when compared to 2013.   Already, the IRS has received nearly 40 percent of expected total returns during the first month of the filing season.

Finally, recent surveys indicate most Americans plan to use their tax refund to pay down debt, for shopping, or for entertainment.

For additional information, go to    http://www.usatoday.com/story/money/personalfinance/2014/03/06/irs-tax-refunds-returns/6125597/

Discussion Questions

1.  Assume you just received a $3,000 tax refund.  How would you use the money?

2.  If you received a $3,000 refund this year, what effect would it have on your tax planning for next year?

Teaching Suggestions

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

  • If students should use a tax refund to pay down debt, start an investment program, or spend the refund.
  • Time Value of Money examples to show how a refund that is saved or invested can increase in value.
Categories: Chapter 3, Chapter 6, Chapter_11, Investments, Purchasing Strategies, Taxes | Tags: , , | Leave a comment

Mortgage Rates Fall Again

Posted on April 6, 2014 by Melissa Hart

Cheap mortgage rates are a bonanza for home buyers.

Currently, home mortgage rates are trending lower which is good news for home buyers.  According to a recent Freddie Mac survey, the 30-year fixed rate is 4.28 percent.  The 15-year fixed rate is 3.32 percent.

So how important is a lower home mortgage rate for a home buyer? 

  • At a rate of 6 percent, the monthly mortgage payment for a $200,000 thirty-year mortgage is $1,000 a month ($200,000 x 6% ÷ 12 = $1,000). 
  • If the rate drops to 4.28 percent, the monthly payment drops to $713 a month ($200,000 x 4.28% ÷ 12 = $713). 
  • That’s a difference of $287 each and every month.
  • Assuming the home buyer makes monthly payments for the entire 30-year period, that’s a savings of $103,320 ($287 x 12 x 30 = $103,320).

For additional information about mortgage rates and the factors that cause rates to increase or decrease go to http://money.cnn.com/2014/03/06/real_estate/mortgage-rates/index.html.

Discussion Questions

1.  What are the common mistakes people make when they finance a home?

2.  Why would you consider a 15-year mortgage instead of a 30-year mortgage?

3.  Why would you consider a 30-year mortgage instead of a 15-year mortgage?

Teaching Suggestions

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

  • Why a home buyer should compare mortgage rates when financing a home purchase.
  • The advantages and disadvantages of a 30-year and a 15-year home mortgage.
Categories: Chapter 7, Financing a Home | Tags: | Leave a comment

Can the Government Get Us to Save More for Retirement?

Posted on April 2, 2014 by Melissa Hart

Millions of Americans aren’t saving enough for retirement. Now the President is getting involved and has proposed a new way to help workers save more!

According to a survey by the Employee Benefit Research Institute, 46 percent of American workers had less than $10,000 saved for retirement. The survey also revealed that half of all workers and the majority of part-time workers didn’t receive any retirement benefits from their employer.

To encourage workers to save more, President Obama proposed the “MyRA” plan that allows workers to invest $5,500 a year in government savings bonds that earn 2% to 3% until their balance reaches $15,000. At that point, the money in the account can be rolled over to a private sector Roth IRA, where the money can continue to grow tax-free.

While MyRA accounts are seen as a first step to encourage workers to begin saving, critics argue that the tax-free withdrawals encourage workers to withdraw money before reaching retirement.

For additional statistics on how much Americans save or more information about MyRA accounts, go to http://money.cnn.com/2014/02/11/retirement/retirement-savings/index.html?section=money_pf.

Discussion Questions
1. Many people never begin saving or investing because there is never anything left over at the end of the month. How can you find the money needed to begin saving and investing?
3. Why should you begin to invest money now instead of waiting until later in life?
3. What are the advantages of a MyRA savings plan? of a Roth IRA plan?

Teaching Suggestions
You may want to use the information in this blog post and the original article to discuss
• Why students should develop a long-term financial plan that includes both savings and investments.
• Time Value of Money examples to show how small dollar amounts invested on a regular basic can help achieve long-term financial goals.
• Different types of retirement accounts.

Categories: Chapter 1, Chapter 3, Chapter 4, Chapter_14, Financial Planning, Investments, Retirement Planning, Savings, Taxes | Tags: , , | Leave a comment

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