Table of Contents

Top 10 Personal Finance Tips 10

Introduction 11

01 Setting Goals: Your Financial Road Map 13

Why Financial Goals Are Important 14

Calculating Net Worth: Your Financial Snapshot 14

Decide What You Want to Achieve 17

Break It Down 18

Evaluating Your Progress 19

Educating Yourself about Money Matters 20

02 Guilt-Free Budgeting 23

It's All about Attitude 24

Customizing Your Budget 25

Set Spending Goals by Category 29

Monitor Your Progress Monthly 30

Plug Any Spending Leaks 30

Personal-Finance Software 32

Stay Motivated 33

03 The Secrets to Saving Money 35

The Magic of Compounding 36

The Rule of 72 37

The Danger of Inflation 38

The Time Value of Money 39

Building an Emergency Fund 40

The Fun of Frugality 40

Luxury Items and Loss of Value 44

04 Banking Basics 45

Choosing a Bank or Credit Union 46

Online Banking 47

Banking Costs 50

Overdraft Protection 51

Automated Teller Machines 52

Debit Cards 54

Balance Your Checkbook 56

Best Places to Stash Your Cash 56

05 Credit Cards 101 59

The Good, the Bad, and the Ugly 60

What's Out There 60

Choosing What's Best for You 62

If You Have Damaged Credit 63

Using Credit Cards Wisely 65

Pay It Off! 67

Protecting Yourself Against Losses 68

The Credit CARD Act of 2009 70

06 Digging Out of Credit Card Debt 71

Your Credit Report and How It Works 72

Paying Down Debt on Your Own 75

Finance Companies and Bill-Paying Services 77

Transferring Credit Card Balances 77

Borrowing from Your 401 (k) 78

Credit-Counseling Service 79

Negotiating with Credit Card Companies 80

Avoiding Credit-Repair Scams 81

07 Other Credit Issues 83

Installment, Secured, and Unsecured Loans 84

Creditors and Debt Collectors 85

Filing for Bankruptcy 87

Chapter 13 Bankruptcy: Reorganization 87

Chapter 7 Bankruptcy: Liquidation 89

Bankruptcy as a Debt Management Tool 91

Avoiding Financial Scams and Schemes 92

The Consumer Financial Protection Bureau 94

08 Living with Student Loans 96

Stafford Loans 97

Federal Perkins Loans 100

PLUS Loans 101

Keep Track of the Interest Rates 102

Defaulting on Your Student Loan 103

Rehabilitating Your Defaulted Loan 104

Resolving Student Loan Disputes 105

Consolidating Your Student Loans 105

A Tax Break 107

Income-Based Repayment Plans 107

Creative Financing for Your Children 108

09 Show Me the Money: Work and Career 111

Choosing a Job with Potential 112

Your Worth to an Employer 113

Negotiating Your Salary and Benefits Package 113

Evaluating Your Employee Benefits 114

Employee-Ownership Plans 116

Asking for a Raise 118

Losing Your Job Without Losing Your Shirt 120

So You Want to Be Your Own Boss? 122

The True Cost of Happiness 124

10 Moving On: Finding New Living Space 125

Your Housing Options 126

Finding an Apartment 126

Signing the Lease 128

Deposits and Other Charges 129

Renting with Roommates 131

Renters' Insurance 131

Cost of Living Differences 133

Automotive Costs Related to Moving 133

Tax Issues Related to Moving 134

11 Buying a Home 136

Getting Ready for Home Ownership 137

How Mortgages Work 138

Types of Mortgages 139

Choosing the Best Mortgage for You 143

The Home-Buying Process 144

Making and Negotiating the Purchase 147

Closing the Deal 148

Home Ownership Tax Savings 149

Be Prepared for Other Expenses 150

Owning a Condo 151

Owning a Co-Op 152

12 Living with a Mortgage 153

Planning Home Improvements 154

Building a Home 156

Home-Equity Loans and Lines of Credit 157

Escrow Accounts 158

Refinancing Your Mortgage 159

Tax Deductibility of Mortgage Interest 162

Prepaying Your Mortgage 163

Facing Foreclosure 164

The Short Sale Alternative 165

13 Getting Deals on Wheels 167

New or Used? 168

Paying for a New Car 169

What about Leasing? 170

Negotiating the Price 173

The True Cost of Ownership 174

Extended Warranties 175

Buying Credit Life Insurance 176

14 Marriage and Family 178

Tying the Financial Knot 179

Do You Need a Prenuptial Agreement? 181

Planning an Affordable Wedding 182

What about the Marriage Tax Penalty? 183

Beneficiaries, Name Changes, and Wills 184

Planning for a Baby 184

Can You Afford to Stay Home? 186

Raising Financially Savvy Kids 187

The Financial Impact of Divorce 188

15 Unwed but Not Unwise 192

Moving In Together 193

Nonmarital Agreements 193

Common-Law Marriages 196

Mingling Your Assets 197

Buying a House Together 197

Sharing Expenses 199

Taxes for Unmarried Couples 199

Other Issues 201

16 Minimizing Income Taxes 202

Federal Income Taxes-the Basics 203

Standard and Itemized Deductions 206

Preparing Your Tax Return 206

Hiring a Tax Accountant or Service 208

Making Tax-Wise Financial Decisions 210

Keeping Good Tax Records 211

Surviving an Audit 212

When You Can't Pay Your Taxes 214

Credits and Deductions 216

17 Investing: Profits and Risks 219

The Big Picture 220

Investing in Stocks 224

Investing in Bonds 227

Mutual Funds 230

Alternative Investments 234

Using a Financial Planner 234

Sample Investment Allocations 235

Investing in a Low Interest Rate Environment 237

18 Retirement: Planning for Tomorrow 239

The Younger, the Better 240

Defined-Benefit Plans 240

Defined-Contribution Plans 240

401(k) Plans 241

403(b) and 457 plans 244

Individual Retirement Accounts 245

Roth 401(k) and Roth 403(b) 248

Small Business Plans 249

Choosing the Right Investments 250

A Word on Social Security 253

19 Insurance and Estate Planning 255

Life Insurance 256

Health Insurance and COBRA 259

Disability Insurance 265

Homeowner's and Auto Insurance 267

Other Types of Insurance 269

What Is Estate Planning? 270

Where There's a Will, There's a Way 271

Durable Power of Attorney for Finances 274

Probate and Trusts 276

Estate Taxes 278

20 Living in a Postrecession World 279

Be a More Savvy Consumer 280

Institute a Savings Program 280

Investing in a Postrecession World 281

Keep Your Investment Decisions Simple 282

Appendix A Glossary of Financial Terms 284

Appendix B Internet Resources 289

Index 296