Category Chapter 8

Mar 7 2015

THINGS NOT TO BUY

To avoid wasting money, financial experts suggest cutting back on items that might not best serve your needs, such as:

  • cable television, since there are less expensive alternatives such as online streaming, which save a person over $800 a year.
  • name-brand razor blades costs can be reduced by using a membership program or by shopping at a discount retailer.
  • bottled water costs can reduced by using a home purification system.
  • USB drive costs can be reduced with the use of cloud storage.

For additional information on wise buying, click here:

Teaching Suggestions

  • Have students talk to others and create a list of items on which money is often wasted.
  • Have students suggest lower-cost alternatives for various items that are purchased regularly.

Discussion Questions 

  1. What actions can be taken to find low-cost alternatives for items that are purchased frequently?
  2. Explain short-term and long-term financial benefits of saving money on items that are purchased frequently.
Mar 4 2015

Tax Scams

Phone calls from criminals impersonating an Internal Revenue Service agent are the most common and serious tax scams reported by the IRS. Taxpayers should be aware the IRS never calls demanding payment or to ask for a credit card; the agency will first make contact by mail.

Phishing involves a taxpayer receiving an unsolicited email trying to obtain financial or personal information.  These phony emails often look very official with an IRS logo.  Tax-related identity theft occurs when a stolen a Social Security number is used to file a tax return for a refund.  Fraudulent tax preparation services prey on innocent taxpayers with promises of large refunds.  Be sure to investigate the credentials of the tax preparer and make sure the preparer will be available after April 15.  Avoid tax preparers who base their fees on a percentage of the refund or promise a large refund.

Other common tax scams include inflated refund claims, fake charities, filing false documents to hide income, abusive tax shelters, falsifying income to claim tax credits, and excessive claims for fuel tax credits.

For additional information on tax scams, click here:

Teaching Suggestions

  • Have students talk with others to obtain information about actions taken to file their taxes.
  • Have students prepare a list of warning signs of tax scams.

Discussion Questions 

  1. What attitudes and behaviors can result in a person being a victim of a tax scam?
  2. What actions can taxpayers take to avoid being a victim of a tax scam?
Feb 7 2015

Wedding Costs and Marriage Success

The average cost of a wedding is nearly $30,000 and the average engagement ring cost is about $5,500.  However, a high-cost wedding does not ensure a long-term marriage.  A study by two economists at Emory University concluded that “marriage duration is inversely associated with spending on the engagement ring and wedding ceremony“.

Other findings of the research included:

  • spending between $2,000 and $4,000 on an engagement ring was associated with a 1.3 times greater chance of divorce compared to spending between $500 and $2,000.
  • spending between $2,000 and $4,000 on the engagement ring was associated with two to three times the probability of reporting being stressed about wedding-related debt relative to spending between $500 and $2,000.
  • spending less than $1,000 on the wedding is associated with an 82 to 93 percent decrease in the chance of reporting being stressed about wedding-related debt relative to spending between $5,000 and $10,000. 

While money is important in marriage and life, being materialistic can result in relational difficulties.

For additional information on the wedding costs and marriage success, click here:

For the research paper, click here:

Teaching Suggestions

  • Have students research actions that may be taken to reduce wedding costs.
  • Have students interview people about their experiences related to planning a wedding. 

Discussion Questions 

  1. What financial difficulties might result from overspending for a wedding?
  2. How might a couple reduce weddings costs?
  3. Describe actions that might be taken to as alternatives for an expensive wedding.
Jan 17 2015

Auto Dealer Financing

You want a car and need financing, but your credit isn’t so great.  Most dealerships have a Finance and Insurance (F&I) Department that will tell you about their financing options.  To get the process started, the F&I Department will ask you to complete a credit application, which includes your monthly income and information on current credit accounts, including debt you owe.

At least that is how it’s supposed to work.  But there have been reports that some dealers inflate your income information for the financing without your knowledge.  That can cause you serious financial harm.  You could be saddled with car financing that you can’t afford to repay.  That means your car could be repossessed and your credit score could take a hit.

The Federal Trade Commission has a few tips to help you avoid unscrupulous finance deals:

  • Consider your options for financing. You might be able to arrange financing directly with a credit union or finance company before you pick a car.
  • Research the dealer before visiting the sales lot. Check the dealer’s reputation online by searching for the company’s name with words like “scam,” “rip-off,”or “complaint.”
  • If a dealer encourages you to overstate your income, take it as a sign that the dealer is not reputable, and leave the dealership.
  • Ask to see the credit application, completely filled out, before you sign it. Make sure your income and other personal information is correctly listed.

For more information, click here.

Discussion Questions

  1. Why is it important to consider other sources of financing before visiting an auto dealer?
  2. What might be the consequences if an auto dealer inflates your income?

Teaching Suggestions

  1. Have students visit an auto dealership to gain additional insight into this high-cost financing service.
  2. Have students make a short presentation with a summary of their findings.
Dec 17 2014

Plunging Crude Prices Hammer Energy Companies

“A decision by OPEC this week to maintain current levels of oil production is hammering major energy companies in the U.S. and abroad.”

This article explores the winners and losers of lower energy prices.  For consumers, lower energy and gas prices means increased discretionary funds for purchasing consumer goods including food, clothes, electronics, and presents for friends and relatives during the holiday season.  Also, both large and small retailers benefit because consumers have more money to spend.  And airlines, package delivery services, cruise lines, and other companies are spending less on fuel.

The disadvantages of lower energy and gasoline prices are already causing the stock prices of big oil companies including Chevron, ConocoPhillips, Exxon Mobil, Marathon Oil, and British Petroleum to decline.

For more information go to http://finance.yahoo.com/news/plunging-crude-prices-hammer-energy-companies-123639239–finance.html

Teaching Suggestions

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

  • Discuss the impact of the cost of energy and gasoline on a consumer’s budget.
  • Describe alternatives uses for the savings that result from lower energy and gasoline prices.

Discussion Questions

  1. What is the current price for a gallon of gasoline? How does this compare with the cost 6 months ago?  What impact does this have on your spending patterns and your personal budget?
  2. While you are saving money at the pump, the big question may be how you plan to use the savings. Are there alternatives to spending the money on clothes, entertainment, or holiday gifts?
  3. Now that the value of energy company stocks has declined, would you invest in a company like Exxon Mobil or Chevron? Explain your answer.
Nov 26 2014

Trick yourself into saving

Saving money can be automatic with some simple actions that would reduce your monthly spending.  Some actions, which can include lowering your monthly cash outflows by as much as $400, include:

 

  • Using a programmable thermostat which can be used to automatically raise and lower the temperature in your home, resulting in energy savings.
  • Increasing insurance deductibles for your home and auto insurance which will likely result in an annual savings of several hundred dollars.
  • Practicing less aggressive driving; using a constant speed can save money on fuel costs.
  • Seeking out ways to reduce your communication bills, such as using basic cable along with streaming video on your computer. Also, using a free texting app on your phone.
  • Using a refillable water bottle can save hundreds of dollars by not buying bottled water.

 

To ensure that you actually save this money, each month, have funds automatically moved into a savings account or investment program.

For additional information on saving, go to:

http://www.bankrate.com/finance/video/saving-money/trick-yourself-into-saving.aspx#ixzz3IKDG71pN

Teaching Suggestions

  • Have students conduct online research to determine various actions to reduce spending and increase savings.
  • Have students interview several people to determine various actions that might be considered for reducing spending.

Discussion Questions 

  1. What actions have you taken to reduce spending and increase savings?
  2. Explain short-term and long-term benefits of reduced spending.

 

 

Oct 1 2014

Creating a Low-Cost Food Plan

Spending on food can represent as much as one-third of a household budget.  Despite careful shopping many consumers are able to reduce this expenditure since they want to buy organic, eat a lot of produce, and buy high quality ingredients for cooking at home.

For better shopping (and healthier eating), especially with the possibility of higher food costs in the future (due to rising oil prices, drought, and massive food shortages), consider these suggestions:

  • reduce the variety of foods eaten; focus on 20 items or less
  • limit portions
  • buy seasonal produce
  • find substitutes for foods with the largest price increases
  • simplify your meal planning
  • reduce use of expensive herbs, spices, and other seasonings
  • avoid caffeine, alcohol, over-processed foods, fad-diet foods, and pricey meats

For additional information on creating a low-cost food plan go to:

The 17-Item Grocery Challenge: Creating A Low-Cost Food Plan

Teaching Suggestions

  • Have students interview some friends and family members about their food buying activities.
  • Have students create a video presentation with wise food buying strategies.

Discussion Questions 

  1. What are short-term and long-term benefits (financial and others) of wise food buying and eating healthier?
  2. What are some wise food buying techniques that may be commonly overlooked?
Jul 19 2014

Consumer Action Handbook

How can a person contact an auto manufacturer with a concern about a motor vehicle? Where would a person file a complaint about deceptive investments? What state consumer protection agencies are available to help consumers in Missouri?

These, and many other, questions are answered in the Consumer Action Handbook, published by the U.S. General Services Administration. Updated each year, this free reference book offers consumer buying tips on everything from consumer credit and environmental-friendly products to travel and utilities along with extensive lists of contact information for major companies, trade associations, and federal, state, and local consumer agencies.

The Consumer Action Handbook may be accessed at::

online version – http://www.usa.gov/topics/consumer/consumer-action-handbook-online.shtml

download version – http://www.usa.gov/topics/consumer/consumer-action-handbook.pdf

order form for print copy – http://www.usa.gov/consumer-action-handbook/order-form.shtml

video – https://www.youtube.com/watch?v=eHhm5arq1RY

Teaching Suggestions

  • Have students obtain a copy of the Consumer Action Handbook (print or PDF version) and have them select information about which they were not previously aware.
  • Have students talk to others to determine their main sources of consumer information when making a purchase or when having a consumer complaint.

Discussion Questions 

  1. Why do an extensive number of consumer problems occur in our society?
  2. Explain the actions a person might take when encountering a consumer complaint.
  3. In addition to the Consumer Action Handbook, what information sources might consumers use when planning a purchase or encountering a consumer problem?
Jul 16 2014

Text Message Spam

Spam text messages are not only annoying but also illegal. Many con artists use text messages to obtain your personal information by offering a free gift card or vacation. As a result, you become very vulnerable to identity theft.

To avoid becoming a victim of text message spam, register your number on the Do Not Call List.  Also, never click on links in spam messages, which often carry malware or send you to fake websites.

Never reply to these text messages or give out your personal information.  Report the text spam to your cell phone carrier by forwarding the message to 7726 (SPAM).

You can report unwanted commercial text messages and other complaints related to consumer fraud to the Federal Trade Commission at https://www.ftccomplaintassistant.gov/#crnt&panel1-1

For additional information on text message spam, go to:

http://blog.usa.gov/post/89152807112/protect-yourself-from-text-message-spam

http://www.consumer.ftc.gov/articles/0350-text-message-spam

Teaching Suggestions

  • Have students conduct research to obtain information on various types of scam and frauds.
  • Have students create an in-class presentation or a video communicating actions to take to avoid becoming a victim of consumer fraud.

Discussion Questions 

  1. Why do some people easily become victims of text message spam and other consumer frauds?
  2. Describe various types of frauds and scams.
  3. What actions can be taken to avoid becoming a victim of consumer fraud?

 

Jul 9 2014

The Sharing Economy

Saving money or earning extra income can be as easy as using an app to rent a car or lend someone your backyard tools. With about 5,000 sharing companies, organizations and programs in operation, consumers could save hundreds and even thousands of dollars a year.

The main focus of the sharing economy is car and bicycle rentals, home sharing, and shared nanny services.  But consumers can also borrow drills, saws, ladders, lawn mowers through a community tool shed.

To avoid obvious dangers, be sure to use a sharing service that screens potential customers with background checks and identity verification. Technology can increase trust with online profiles and reviews from users.

There is also money to be made in the sharing economy by providing rides to others or renting out an extra bedroom. Before getting involved in the sharing economy, be sure to have proper insurance coverage and an understanding of tax implications. Participants in the sharing economy also note the social benefits of connecting with others from around the world.

For additional information on the sharing economy, go to:

http://www.kiplinger.com/article/business/T049-C000-S002-cash-in-on-the-sharing-economy.html

http://www.kiplinger.com/article/spending/T050-C000-S002-sites-to-help-you-save-make-money-by-sharing.html

Teaching Suggestions

  • Have students research various apps that facilitate transactions in the sharing economy.
  • Have students create interview questions that they might ask someone who is a buyer or seller in the shared economy.

Discussion Questions 

  1. What benefits are present for individuals and society as a result of the sharing economy?
  2. Explain how technology helps to increase the participation and acceptance of sharing economy activities.
  3. What concerns should be addressed when participating in the shared economy?