Personal Finance For Dummies

Title Page
Copyright Page
Table of Contents
Introduction
About This Book
Foolish Assumptions
Icons Used in This Book
Beyond the Book
Where to Go from Here
Part 1 Getting Started with Personal Finance
Chapter 1 Embracing Financial Literacy
Understanding Everything Financial Literacy Includes
Starting with the basics: Budgeting and transaction accounts
Making your money work for you: Investing
Protecting your income and assets: Insurance
Talking Money at Home
Identifying Unreliable Sources of Information
Understanding the dangers of free financial content online
Recognizing the dangers of following financial gurus (and celebrities)
Knowing who’s talking
Beware celebrity endorsers
Seeing the red flag in outrageous performance claims
Publishers pandering to advertisers
Jumping over Real and Imaginary Hurdles to Financial Success
Discovering what (or who) is holding you back
Developing good financial habits
Chapter 2 Establishing a Financial Foundation
Understanding Your Cash Flow
Uncovering where your money goes
Sizing up your income
Investing in your career
Securing a side hustle
Utilizing Transaction and Investment Accounts
Transaction/checking accounts
Savings accounts and money-market funds
Investment accounts
Budgeting to Boost Your Savings
Understanding and Improving Your Credit Score
Deciphering how lenders use credit reports and scores
Obtaining your credit reports
Getting your credit score
Chapter 3 Measuring Your Financial Health
Avoiding Common Money Mistakes
Determining Your Financial Net Worth
Adding up your financial assets
Subtracting your financial liabilities
Crunching your numbers
Interpreting your net worth results
Examining Your Credit Score and Reports
Understanding what your credit data includes and means
Reviewing your credit reports and score
Improving your credit reports and score
Getting credit-report errors corrected
Knowing the Difference between Bad Debt and Good Debt
Consuming your way to bad debt
Recognizing bad debt overload
Assessing good debt: Can you get too much?
Playing the credit-card float and reward games
Analyzing Your Savings
Evaluating Your Investment Knowledge
Assessing Your Insurance Savvy
Chapter 4 Establishing and Achieving Goals
Creating Your Own Definition of Wealth
Acknowledging what money can’t buy
Managing the balancing act
Prioritizing Your Savings Goals
Knowing what’s most important to you
Valuing retirement accounts
Dealing with competing goals
Building Emergency Reserves
Saving to Buy a Home or Business
Funding Kids’ Educational Expenses
Saving for Big Purchases
Preparing for Retirement/Financial Independence
Figuring out what you need for retirement/ financial independence
Understanding retirement building blocks
Counting on Social Security
Planning your personal savings/investment strategy
Making the most of pensions
Crunching numbers for your retirement
Making up for lost time
Part 2 Spending Less, Saving More
Chapter 5 Managing Where Your Money Goes
Examining Overspending
Having access to credit
Misusing credit cards
Taking out car loans
Bending to outside influences and agendas
Spending to feel good
Assessing Your Spending
Tracking spending the “low-tech” way
Tracking your spending on “free” websites and apps
Chapter 6 Dealing with Debt
Using Savings to Reduce Your Consumer Debt
Understanding how you gain
Finding the funds to pay down consumer debts
Decreasing Debt When You Lack Savings
Reducing your credit card’s interest rate
Understanding all credit-card terms and conditions
Cutting up your credit cards
Discovering debit cards: The best of both worlds?
Turning to Credit Counseling Agencies
Beware biased advice at credit counseling agencies
Ask questions and avoid debt management programs
Filing Bankruptcy
Understanding bankruptcy benefits
Coming to terms with bankruptcy drawbacks
Deciphering the bankruptcy laws
Choosing between Chapter 7 and 13
Seeking bankruptcy advice
Stopping the Spending/Consumer Debt Cycle
Resisting the credit temptation
Identifying and treating a compulsion
Chapter 7 Reducing Your Spending
Unlocking the Keys to Successful Spending
Living within your means
Looking for the best values
Don’t waste money on brand names
Tread carefully online
Getting your money back
Eliminating the fat from your spending
Turning your back on consumer credit
Reducing Your Spending
Managing food costs
Eating out frugally
Eating healthy at home without spending a fortune
Joining a wholesale superstore
Saving on shelter
Reducing rental costs
Reducing homeowner expenses
Cutting transportation costs
Research before you buy a car
Don’t lease, don’t borrow: Buy your car with cash
Replace high-cost cars
Keep cars to a minimum
Buy commuter passes
Use regular unleaded gas
Service your car regularly
Lowering your energy costs
Controlling clothing costs
Repaying your debt
Indulging responsibly in fun and recreation
Looking at low-cost entertainment
Vacationing for less
Using thrift with gifts
Lowering your phone bills
Technology: Spending wisely
Curtailing personal-care costs
Paring down professional expenses
Managing medical expenses
Eliminating costly addictions
Keeping an eye on insurance premiums
Trimming your taxes
Chapter 8 Managing and Reducing Your Taxes
Understanding the Taxes You Pay
Focusing on your total taxes
Recognizing the importance of your marginal tax rate
Defining taxable income
Being mindful of the second tax system: Alternative minimum tax
Analyzing recent tax law changes
Trimming Employment Income Taxes
Contributing to retirement investment plans
Shifting some income
Increasing Your Deductions
Choosing standard or itemized deductions
Organizing your deductions
Shifting or bunching deductions
Purchasing real estate
Trading consumer debt for mortgage debt
Contributing to charities
Remembering auto registration fees and state insurance
Deducting self-employment expenses
Reducing Investment Income Taxes
Investing in tax-free money-market funds and bonds
Selecting other tax-friendly investments
Making your profits long term
Does funding retirement accounts still make sense?
Enlisting Education Tax Breaks
Getting Help from Tax Resources
Obtaining IRS assistance
Consulting preparation and advice guides
Using software and websites
Hiring professional help
Preparers
Enrolled agents (EAs)
Certified public accountants (CPAs)
Tax attorneys
Dealing with an Audit
Getting your act together
Surviving the day of reckoning
Part 3 Building Wealth through Investing
Chapter 9 Considering Important Investment Concepts
Establishing Your Goals
Understanding the Primary Investments
Looking at lending investments
Exploring ownership investments
Shunning Gambling and Get Rich Quick Vehicles
Forsaking futures, options, and other derivatives
Ditching day trading
Sidestepping “get rich quick” schemes
Understanding Investment Returns
Sizing Investment Risks
Comparing the risks of stocks and bonds
Focusing on the risks you can control
Discovering low-risk, high-return investments
Diversifying Your Investments
Spreading the wealth: Asset allocation
Allocating money for the long term
Sticking with your allocations: Don’t trade
Investing lump sums via dollar-cost averaging
Acknowledging Differences among Investment Firms
Focusing on the best firms
No-load (commission-free) mutual-fund companies
Discount brokers
Places to consider avoiding
Commissions and their impact on human behavior
Investment salespeople’s conflicts of interest
Valuing brokerage research
Seeing Through Experts Who Predict the Future
Investment newsletters
Investment gurus
Leaving You with Some Final Advice
Chapter 10 Understanding Your Investment Choices
Slow and Steady Investment: Bonds
Building Wealth with Ownership Vehicles
Selecting stocks
Discovering the relative advantages of mutual funds and exchange-traded funds (ETFs)
Understanding exchange-traded funds, hedge funds, and managed accounts
Investing in individual stocks
Investing internationally in stocks
Generating wealth with real estate
Real estate: Not your ordinary investment
The best real-estate investment options
The worst real-estate investments
Investing in small business
Launching your own enterprise
Buying an existing business
Investing in someone else’s small business
Off the Beaten Path: Investment Odds and Ends
Precious metals
Bitcoin, Ethereum, and other cryptocurrencies
Annuities
Collectibles (including NFTs)
Chapter 11 Investing in Funds
Understanding the Benefits of Mutual Funds and Exchange-Traded Funds
Exploring Various Fund Types
Money-market funds
Bond funds
Stock funds
Mixing bonds and stocks: Balanced funds
U.S., international, and global funds
Index funds
Specialty (sector) funds
Selecting the Best Funds
Reading prospectuses and annual reports
Keeping costs low
Eliminating loads
Minimizing operating expenses
Evaluating historic performance
Assessing fund manager and fund family reputations
Rating tax friendliness
Determining your needs and goals
Deciphering Your Fund’s Performance
Dividends
Capital gains
Share price changes
Evaluating and Selling Your Funds
Chapter 12 Investing in Retirement Accounts
Looking at Types of Retirement Accounts
Employer-sponsored plans
401(k) plans
403(b) plans
457 plans
Self-employed plans
Individual Retirement Accounts (IRAs)
Annuities: An odd investment
Allocating Your Money in Retirement Plans
Prioritizing retirement contributions
Setting up a retirement account
Allocating money when your employer selects the investment options
Money market/savings accounts
Bond mutual funds
Guaranteed-investment contracts (GICs)
Balanced/target date mutual funds
Stock mutual funds
Stock in the company you work for
Some asset allocation examples
Allocating money in plans you design
Vanguard
Fidelity
Discount brokers
Transferring Retirement Accounts
Transferring accounts you control
Moving money from an employer’s plan
Chapter 13 Investing in Taxable Accounts
Getting Started
Paying off high-interest debt
Taking advantage of tax breaks
Understanding Taxes on Your Investments
Fortifying Your Emergency Reserves
Bank and credit union accounts
Money-market mutual funds
Watch out for “sales”
Recommended money-market mutual funds
Investing for the Longer Term (Several Years or Decades)
Defining your time horizons
Bonds and bond funds
U.S. Treasury bond funds
Buying Treasuries from the Federal Reserve Bank
State- and federal-tax-free bond funds
Federal-tax-free-only bond funds
Certificates of deposit (CDs)
Stocks and stock funds
Annuities
Real estate
Small-business investments
Chapter 14 Investing for Educational Expenses
Exploring Higher-Education Options
Figuring Out How the Financial Aid System Works
Treatment of retirement accounts
Treatment of money in the kids’ names
Traditional custodial accounts
State-sponsored college savings plans: 529
Treatment of home equity and other assets
Strategizing to Pay for Educational Expenses
Estimating college costs
Setting realistic savings goals
Tips for getting loans, grants, and scholarships
Investing Educational Funds
Good investments: No-load mutual funds and exchange-traded funds
Bad investments
Overlooked investments
Chapter 15 Investing in Real Estate: Your Home and Beyond
Deciding Whether to Buy or Rent
Assessing your timeline
Determining what you can afford
Calculating how much you can borrow
Comparing owning versus renting costs
Mortgage
Property taxes
Tax savings in homeownership
Considering the long-term costs of renting
Recognizing advantages to renting
Financing Your Home
Understanding the two major types of mortgages
Choosing between fixed- and adjustable-rate mortgages
How willing and able are you to take on financial risk?
How long do you plan to keep the mortgage?
Shopping for fixed-rate mortgages
Trading off interest rates and points
Understanding other lender fees
Shunning balloon loans
Inspecting adjustable-rate mortgages (ARMs)
Understanding the start rate
Determining the future interest rate
Looking at the adjustment period or frequency
Understanding rate caps
Being aware of other ARM fees
Avoiding the down-payment blues
Comparing 15-year and 30-year mortgages
Finding the best lender
Shopping for a lender on your own
Hiring a mortgage broker
Increasing your approval chances
Finding the Right Property
Condo, town house, co-op, or detached home?
Casting a broad net
Finding out actual sale prices
Researching the area
Working with Real-Estate Agents
Recognizing conflicts of interest
Looking for the right qualities in real-estate agents
Putting Your Deal Together
Negotiating 101
Inspecting before you buy
Remembering title insurance and escrow fees
After You Buy
Refinancing your mortgage
Spending money to save money
Using money for another purpose
Changing loans
Mortgage life insurance
Considering a reverse mortgage
Selling your house
Selling through an agent
Selling without a real-estate agent
Should you keep your home until prices go up?
Should you keep your home as investment property after you move?
Part 4 Insurance: Protecting What You Have
Chapter 16 Insurance: Getting What You Need at the Best Price
Discovering My Three Laws of Buying Insurance
Law I: Insure for the big stuff; don’t sweat the small stuff
Take the highest deductible you can afford
Avoid small-potato policies
Law II: Buy broad coverage
Recognizing fears
Preparing for natural disasters — insurance and otherwise
Law III: Shop around and buy direct
Looking at employer and other group plans
Buying insurance without paying sales commissions
Dealing with Insurance Problems
Knowing what to do if you’re denied coverage
Getting your due on claims
Documenting your assets and case
Preparing your case
Approaching your claim as a negotiation
Practicing persistency
Enlisting support
Chapter 17 Insurance on You: Life, Disability, and Health
Providing for Your Loved Ones: Life Insurance
Determining how much life insurance to buy
Comparing term life insurance to cash value life insurance
“Cash value policies are all paid up after X years. You don’t want to be paying life insurance premiums for the rest of your life, do you?”
“You won’t be able to afford term insurance when you’re older.”
“You can borrow against the cash value at a low interest rate.”
“Your cash value grows tax-deferred.”
“Cash value policies are forced savings.”
“Life insurance is not part of your taxable estate.”
Making your decision
Buying term insurance
Selecting how often your premium adjusts
Ensuring guaranteed renewability
Deciding where to buy term insurance
Considering the purchase of cash value life insurance
Getting rid of cash value life insurance
Preparing for the Unpredictable: Disability Insurance
Deciding whether you need coverage
Determining how much disability insurance you need
Identifying other features you need in disability insurance
Deciding where to buy disability insurance
Getting the Care You Need: Health Insurance
Mandating health insurance: The Affordable Care Act (Obamacare)
Choosing the best health plan
Major medical coverage
Choice of healthcare providers
Lifetime maximum benefits
Deductibles and co-payments
Guaranteed renewability
Buying health insurance
Clarifying why prices rose because of the Affordable Care Act
Understanding subsidies
Coping with higher health insurance prices
Looking at retiree medical care insurance
Closing Medicare’s gaps
Long-term care insurance
Making sense of Medicare’s prescription drug program
Chapter 18 Covering Your Assets
Insuring Your Home
Dwelling coverage: The cost to rebuild
Personal property coverage: For your things
Liability insurance: Coverage for when others are harmed
Flood and earthquake insurance: Protection from Mother Nature
Deductibles: Your cost with a claim
Special discounts
Buying homeowner’s or renter’s insurance
Auto Insurance 101
Bodily injury/property damage liability
Uninsured or underinsured motorist liability
Deductibles
Special discounts: Auto edition
Little-stuff coverage to skip
Buying auto insurance
Protecting against Mega-Liability: Umbrella Insurance
Planning Your Estate
Wills, living wills, and medical powers of attorney
Avoiding probate through living trusts
Reducing estate taxes
Part 5 Where to Go for More Help
Chapter 19 Working with Financial Planners
Surveying Your Financial Management Options
Doing nothing
Doing it yourself
Hiring financial help
Commission-based “planners”
Percentage-of-assets-under-management advisors
Hourly-based advisors
Deciding Whether to Hire a Financial Planner
How a good financial advisor can help
Why advisors aren’t for everyone
Recognizing conflicts of interest
Selling and pushing products that pay commissions
Taking a narrow view
Not recommending saving through your employer’s retirement plan
Ignoring debts
Not recommending real-estate and small-business investments
Selling ongoing money-management services
Selling legal services
Scaring you unnecessarily
Creating dependency
Finding a Good Financial Planner
Soliciting personal referrals
Seeking advisors through associations
Interviewing Financial Advisors: Asking the Right Questions
What percentage of your income comes from clients’ fees versus commissions?
What portion of client fees is for money management versus hourly planning?
What is your hourly fee?
Do you also perform tax or legal services?
What work and educational experience qualifies you to be a financial planner?
Do you carry liability (errors and omissions) insurance?
Can you provide references from clients with needs similar to mine?
Will you provide specific strategies and product recommendations that I can implement on my own if I choose?
How is implementation handled?
Learning from Others’ Mistakes
Chapter 20 Using Technology to Manage Your Money
Surveying Software, Apps, and Websites
Adding up financial software benefits
Understanding how apps can benefit and harm your bottom line
Surfing hazards online
Considering the source so you can recognize bias
Watching out for “sponsored” content
Steering clear of biased financial-planning advice
Shunning short-term thinking
Accomplishing Money Tasks on Your Computer, Tablet, or Smartphone
Paying your bills, finding ways to save, and tracking your money
Planning for retirement
Preparing your taxes
Researching investments
Accessing economic and financial data
Trading online
Reading and searching periodicals
Investing through automated investment managers: Robo advisors
Buying life insurance
Preparing legal documents
Chapter 21 Consuming Financial Content
Observing the Mass Media
Alarming or informing?
Teaching questionable values
Worshipping prognosticating pundits
Navigating social media
Rating Radio, Podcasts, and Television Financial Programs
Finding the Best Websites
Navigating Newspapers and Magazines
Betting on Books
Understanding the book publishing business
Books at the head of their class
Part 6 The Part of Tens
Chapter 22 Survival Guide for Ten Life Changes
Starting Out: Your First Job
Changing Jobs or Careers
Getting Married
Buying a Home
Having Children
Starting a Small Business
Caring for Aging Parents
Divorcing
Receiving a Windfall
Retiring
Chapter 23 Ten Tactics to Thwart Identity Theft and Fraud
Save Phone Discussions for Friends Only
Never Respond to Emails Soliciting Information
Review Your Monthly Financial Statements
Secure All Receipts
Close Unnecessary Credit Accounts
Regularly Review Your Credit Reports
Freeze Your Credit Reports or Place an Alert
Keep Personal Info Off Your Checks
Protect Your Computer and Files
Protect Your Mail
Glossary
Index
EULA