Revising Dave Ramsey’s Baby Steps

Posted on August 19, 2015 by Melissa Hart

Dave Ramsey has taught and encouraged millions to get out of debt and to achieve an improved financial situation through his “seven baby steps,” which are: (1) establish a $1,000 emergency fund; (2) pay off debt; (3) save three to six months of expenses; (4) invest 15 percent of income in pre-tax retirement funds; (5) plan for the funding of the college education of children; (6) pay off mortgage as soon as possible; (7) build wealth and give.

An alternative perspective to this approach might be:

  1. Create a larger initial emergency fund.
  2. Instead of paying off the smallest debts first, pay off the ones with the highest interest.
  3. A minimum of six months for expenses is needed, with twelve months more realistic.
  4. Take advantage of any 401k matching offered by employers.
  5. College may not be the right educational choice for everyone. Also, those who go to college should be responsible for a portion of education costs.
  6. Home ownership may not be appropriate for everyone. When buying a home, paying off a mortgage may be a higher priority than saving for college to reduce the amount of interest paid.
  7. Making money, saving money, and donating to charity should be the main focus.

For additional information on personal financial planning actions, click here.

Teaching Suggestions

  • Have students survey others regarding their use of these personal financial planning suggestions.
  • Have students obtain additional financial planning suggestions using online research.

Discussion Questions 

  1. What do you believe are the most important actions that should be taken regarding wise personal financial planning?
  2. How would you communicate these financial planning actions to others?
Categories: Chapter 1, Chapter 2, Credit Cards, Debt, Financial Planning, Wise Shopping | Tags: , , | Leave a comment

Auto Insurance Resources

Posted on August 15, 2015 by Melissa Hart

Having adequate auto insurance and determining what coverages are needed are fundamental for avoiding financial difficulties. Consumer Action (www.consumer-action.org) offers a variety of materials related to shopping for auto insurance, managing auto insurance costs, and obtaining assistance when encountering trouble when filing a claim.

These resources includes downloadable publications on the basics of auto insurance in English, Spanish, Korean, and Vietnamese. Also available are PowerPoint slides and lessons plans.

For additional information on auto insurance resources, click here.

Teaching Suggestions

  • Have students develop actions that can reduce the cost of auto insurance.
  • Have students create a video that demonstrates financial problems associated with not having adequate auto insurance.

Discussion Questions 

  1. What are information sources that might be used to become better informed on auto insurance?
  2. How might a person reduce the cost of auto insurance?
Categories: Car Insurance, Chapter 8, insurance, Wise Shopping | Tags: | Leave a comment

Avoiding Banking App Errors

Posted on August 12, 2015 by Melissa Hart

While smartphone apps have made banking easier than ever, threats to financial security continue to grow.  However, some simple actions can be taken to avoid banking app mistakes.

1.    Don’t conduct banking transactions on public Wi-Fi networks since they are vulnerable to hackers. Use a virtual private network (VPN), which provides added security and encryption.
2.    Log out after your session to prevent a thief from getting access to your bank account.
3.    Select a not-so-obvious username. Create password recovery questions with responses that are difficult to obtain from public records.
4.    Update your app when a new version is available to take advantage new security features.
5.    Create a strong password with special characters, and it should be at least 12 characters long. Change your password every 90 days.

For additional information on banking app errors, click here.

Teaching Suggestions

  • Have students talk with others about their experiences using banking apps.
  • Have students locate online information about the latest security features fof banking apps.

Discussion Questions 

  1. What are benefits of costs of banking apps?
  2. How might banking apps be improved for increased financial security?
Categories: Chapter 4, Financial Services, Frauds and Scams, Identity Theft | Tags: , , | Leave a comment

Your Path To Success

Posted on August 8, 2015 by Melissa Hart

What separates successful people from others?   While favorable timing, personal connections, wealth or other advantages can lead to success, a person must also possess various success-oriented attitudes, behaviors, and skills. Some of the actions that can lead to academic, career, and personal success include:

  • Display poise and confidence in your ability.
  • Assess existing skills and knowledge.
  • Set personal and career goals that align with your abilities.
  • Develop a habit on ongoing learning.
  • Take risks that allow you the opportunity to achieve at a higher level.
  • Persevere in your work efforts
  • Be prepared to face and go beyond obstacles.
  • Rejection and criticism can lead to future success.
  • Develop effective interpersonal skills. Your ability to interact, gain support of others, and develop trust is critical.

 For additional information about a success path, click here.

Teaching Suggestions

  • Have students ask people to describe their definition of “success.”
  • Have students obtain suggested actions for personal and career success using online research.

Discussion Questions 

  1. What are common mistakes people make in their personal financial planning and career planning activities?
  2. What actions do you plan to take to improve your personal and career success?
Categories: Career, Career Training, Career_Appendix, Chapter 1, Financial Planning, Skills Development, _Appendix B | Tags: , , | Leave a comment

A Boost To Your Credit Score?

Posted on August 5, 2015 by Melissa Hart

Your credit score, which is mainly based on your history of repaying loans, can determine your ability to borrow money and how much you will pay for it.  Here is good news for some consumers: Your score may improve as a result of changes in how credit reports and scores are compiled.

FICO, a company that provides software used to produce many consumer credit scores, announced that unpaid medical debt will not have as big an impact on the new version of its most popular credit score.  And the Consumer Financial Protection Bureau (CFPB) announced that it will require the major consumer reporting agencies to provide regular accuracy reports to the Bureau on how disputes from consumers are being handled.  The CFPB said medical debt in particular is a source of numerous complaints because billing process can be complicated and confusing to consumers.  The CFPB noted that the accuracy reports will help it hold credit reporting companies accountable for ensuring that erroneous information does not damage your credit score.

These changes may help raise some consumers’ credit scores and reduce their borrowing costs.  In general, though, to build or maintain a good credit score, consumers need to manage their money carefully, and that includes using caution when taking on additional debt.

For more information, click here.

Teaching Suggestions

  • Ask students if they have requested copies of their credit reports and if the information was correct?
  • Have you applied for new credit recently, and it so, what was the outcome?

Discussion Questions

  1. What is the best strategy to maintain or improve your credit score?
  2. What are the legal steps to take to improve your credit report?
  3. If you apply for too many new credit cards, how it might affect your credit score?
Categories: Chapter 5, Credit Scores | Tags: , | Leave a comment

The Retirement Number Secret No One Wants to Tell You

Posted on August 1, 2015 by Melissa Hart

There’s a substantial gulf between the amount of money Americans have actually saved for retirement and what they might need to last throughout their golden years.”

This article reports the results of a survey conducted by the Employee Benefits Research Institute which discovered that nearly three in five people surveyed had saved $25,000 or less for their retirement.  Even worse—more than a quarter of those surveyed had saved less than $1,000.

To help plan for retirement, many financial experts suggest that you need between 70 and 85 percent of whatever yearly income you had during your career in order to sustain the lifestyle you enjoyed prior to retiring.  While these calculations provide a recommended dollar amount to provide retirement income, the same calculations often create two problems.  First, there is often a big gap between what people have saved and what they need for retirement.  Second, the amount of money you need in retirement is based on what’s important to you and the standard of living you want in retirement.  And the you may be the most important part of retirement planning.

For more information, click here.

Teaching Suggestions

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

  • Explain why you should plan for retirement early in your career rather than waiting until you are about to retire.
  • Reinforce the concepts of the time value of money and a long-term saving and investing program.

Discussion Questions

  1. Many financial experts suggest you begin retirement planning as soon as you begin your career. What are the benefits of planning for retirement planning sooner rather than later?
  2. How is the time value of money related to a long-term investment program and retirement planning?
Categories: Chapter_11, Chapter_14, Investments, Retirement Planning, Time Value of Money | Tags: , | Leave a comment

Free Financial Coaches Give the Working Poor a Second Chance.

Posted on July 29, 2015 by Melissa Hart

“. . . Financial coaching initiatives that target the working poor have sprung up in communities across the country.”

For low-income wage earners, the idea of paying hundreds of dollars for professional financial help can seem about as far-fetched as buying a winning lotto ticket.  And yet, help is available in a number of the nation’s larger cities including Chicago and New York.  In most cases, the financial coaches volunteer their time and have a background in personal finance or have received financial and investment training.  The participants receive specific suggestions geared to their individual situation that are designed to improve their credit score and help them build a sound financial future.  According to Richard Cordray, the director of the Consumer Financial Protection Bureau, “Having a trusted, well-informed financial coach can increase your odds of financial success.”

For more information, click here.
Note:  There is a short video that accompanies this article.

Teaching Suggestions

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

  • Point out that often low wage earners don’t have the money to pay a financial coach to help them manage their finances.
  • Describe different situations where the advice from a financial coach could make a difference in someone’s financial future. For example, a coach’s suggestions on how to improve someone’s credit score could lead to obtaining a credit card for emergencies or a short-term loan to bridge the gap between unemployment and employment.

Discussion Questions

  1. Assume you are unemployed and have exhausted your emergency fund.  You are behind on monthly payments including your rent and utilities.  What steps can you take to improve your financial situation?
  2. In the above situation, what suggestions do you think a financial coach could provide that would help you work through this difficult situation?
Categories: Chapter 1, Chapter_11, Financial Planning, Financial Services | Tags: , , | Leave a comment

The Supreme Court, Health Care, and You

Posted on July 25, 2015 by Melissa Hart

On June 26, 2015, the Supreme Court made an important decision about the Health Insurance Marketplace keeping           quality, affordable coverage for millions of Americans.  The Supreme Court’s decision confirmed that if you qualify, you can receive financial assistance, including premium tax benefit to make coverage more affordable no matter where you live.

On average, consumers enrolled in the Marketplace are receiving $3,260 per year in tax credit, or $272 each month.

About 8 in 10 consumers could find coverage for $100 or less with tax credit through the Marketplace.

If you don’t have health insurance, see if you can get health coverage for 2015.  You may qualify for a Special Enrollment Period due to life change, such as marriage, having a baby, or losing other coverage.  Open enrollment for 2016 starts on November 1, 2015.

For more information, click here.

Teaching Suggestions

  • Ask students if anyone in their family is affected by the Supreme Court ruling, and if so, how?
  • Ask students to prepare a summary of the major provisions of the Affordable Care Act.

Discussion Questions

  1. Why is it important to inform the Marketplace about any changes to your household, income, and insurance status?
  2. If you have health insurance through your employer or purchased it on the individual market, does the Supreme Court ruling impact you?
Categories: Chapter 9, Health Insurance, insurance, Wise Shopping | Tags: , , | Leave a comment

How to Open a Mutual Fund Account at a Brokerage Firm

Posted on July 22, 2015 by Melissa Hart

“It’s easy to figure out the right type of account—just start with what you’re saving for.”

Too often, investors want to invest, but they don’t know where to start.  While most investment companies and brokerage firms make it as easy as possible to open an account and begin investing, for many would-be investors opening an account is confusing and often traumatic.

The link below describes a practical approach that helps would-be investors to begin investing at Vanguard—one of the largest and most successful companies in the investment world.  Note:  The link below provides information for Vanguard, but other investment companies and brokerage firms provide similar information on their websites.  At the Vanguard site, there is basic information about mutual funds.  Then specific information about fees and no-load funds is included in the section “Discover Vanguard’s Advantages.”  Next, there is a section on choosing the right fund.  Then, information about different types of investment accounts is provided.  Finally, there is a 3-step process that can be used to open an account.

For more information, click here.

Teaching Suggestions

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

  • Remind students of the advantages of beginning to invest sooner rather than later.
  • Visit the Vanguard (or other investment or brokerage firm websites) for more information.
  • Encourage students to open a mutual fund investment account when they have saved the money needed to begin an investment program.

Discussion Questions

  1. Why do you think people are reluctant to begin investing?
  2. Even though investment companies and brokerage firms make the process as easy as possible, people are often “afraid” to open an account and begin investing. How can you overcome this fear?
Categories: Chapter_13, Investments, Mutual Funds | Tags: , | Leave a comment

Bitcoins or a Credit Card?

Posted on July 18, 2015 by Melissa Hart

Do you shop online?  Have you seen websites that allow you to pay with bitcoins?

Beware of the Bitcoin (virtual currency) risks!!

  • Values go up and down based on demand.
  • Payments made with virtual currencies aren’t reversible.
  • You do not have the same legal protections as more traditional payment methods.

For more information, click here.

Teaching Suggestions

  • Ask students if they have purchased products or services with bitcoins and what has been their experience.
  • Ask students if they check out the seller’s reputation before a purchase with bitcoins.

Discussion Questions

  1. Should the payment with bitcoins go directly to the seller or a payment processor?
  2. Does a payment through a payment processor offer any protections?
  3. If you receive damaged merchandise, will you get a refund in virtual currency, U.S. dollars, or store credit?
  4. If you have a problem with bitcoin-related product or service, where should you file a complaint?
Categories: Chapter 4, Chapter 5, Wise Shopping | Tags: , , | Leave a comment

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