Category Chapters

Oct 25 2014

Stop Debt Collector’s Empty Threats

Calls from debt collectors can add to the stress of having financial problems.  When these calls involve harassment, threats and intimidation, the situation can get worse–especially if you don’t know your rights

In 2014, the Federal Trade Commission filed a complaint against National Check Registry for violating the Fair Debt Collection Practices Act by using outrageous and intimidating methods to get people to pay debts immediately, often debts that were in dispute.  The company will tell the victims that they had committed check fraud or another crime and threatening them with lawsuits, garnishments, arrest or imprisonment if they don’t pay within 12 or 24 hours.

According to the FTC complaint, National Check Registry has no authority to make arrests or seek other criminal punishments for failure to pay these debts.

For additional information go to

http://www.consumer.ftc.gov/blog/stop-debt-collectors-empty-threats

Teaching Suggestions

  • Ask students what actions are commonly recommended if a person has difficulty making credit payments.
  • Ask students to outline the actions they should take when they receive phony debt collection calls.

Discussion Questions

  1. Are debt collectors allowed to discuss your debt with anyone other than you, your spouse or your attorney?
  2. What can you do if you think that a debt collector has violated your rights?
Oct 22 2014

The SEC Mutual Fund Cost Calculator: A Tool for Comparing Mutual Funds

“Fees and expenses are an important consideration in selecting a mutual fund because these charges lower your returns.”

One of the common complaints from fund investors is that they don’t understand the different types of mutual fund fees.  And they are often surprised how fees can substantially lower their returns on fund investments.

This article provides basic information on fund fees and how they lower returns.  It also provides a link to the FINRA (Financial Industry Regulatory Authority) Mutual Fund Expense Analyzer.  By entering a fund’s ticker symbol, you can compare fees and performance for different funds.  And if you don’t know the fund’s ticker symbol, you can also search by using the fund name or key words.

For more information go to http://www.sec.gov/investor/tools/mfcc/mfcc-int.htm

Teaching Suggestions

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

  • Stress how fees and charges lower an investor’s return on a fund investment.
  • Illustrate how to use FINRA’s Mutual Fund Expense Analyzer.

Discussion Questions

  1. Why should load charges, management fees, and other charges be considered when evaluating a mutual fund?
  2. Use FINRA’s Mutual Fund Expense Analyzer to evaluate the Fidelity Small Cap Growth Fund (Symbol – FCPGX) and the Vanguard 500 Index Fund (Symbol – VFINX). Which fund had the highest fees and sales charges?  Which fund had the highest return over the 10-year period?  Note:  You will need to access the Mutual Fund Expense Analyzer through the SEC link at  http://www.sec.gov/investor/tools/mfcc/mfcc-int.htm.
Oct 18 2014

The Perils of Penny Stocks

“The best way to avoid penny stock scams is to do independent research.” 

This article underscores the importance of researching penny stocks before investing.  Too often, the lure of “big” profits encourages people to invest without researching penny stocks.  Simply put, they don’t do their homework.

According to this article, a good place to obtain research information about penny stocks is the Security and Exchange Commission website (www.sec.gov).  By examining a company’s 10-K annual report, 10-Q quarterly report, and Form 8-K filings, in which companies report material events.

The article also warns investors about email promotions about penny stocks that are more hype than reality.  For example, Paul Allen, a 65-year old retiree from Boston,  received a flood of emails about a company called Vapor Hub International suggesting that shares of the e-cigarette company were about to take off.  He invested and quickly lost 80 percent of his investment.  And there are many more examples where investors–especially investors with limited funds and little experience buying and selling stock–often lose all or a large portion of their investment.

For more information go to http://www.kiplinger.com/article/investing/T052-C008-S002-the-perils-of-penny-stocks.html

Teaching Suggestions

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

  • Remind students that there is no substitute for research when picking any stock–especially penny stocks issued by small companies without a proven track record.
  • Tell students to remember the old adage “if it sounds too good to be true, it probably isn’t true.”

Discussion Questions

  1. Most investors know the risks involved when they invest in penny stocks. Still, they invest their money.  Why do you think they choose penny stocks?
  2. Assume that you are considering an investment in Vapor Hub International. What information could be used to evaluate this penny stock?  Where would you get this information?
Oct 15 2014

Here’s How to Become a 401k Millionaire

“If your job offers you a 401k or similar retirement plan, you’ve got one of the very best investment tools at your disposal.”

To become a 401k millionaire, all you need is a paycheck, reasonable options in your retirement plan, and time.  This article also explains that once you start putting money into the plan, the tax-deductible investments grow and are tax-deferred until you begin to withdraw money from your 401k account.  As an added bonus, your employer may match all or part of the money you contribute to your 401k account.

A very useful table that shows how many years it will take for you to become a millionaire based on how much you (and your employer) invest each month with different rates of return is also included in this article.  And there are also suggestions for increasing the amount that you save or invest in a 401k account or other savings or investment accounts.

For more information go to http://www.fool.com/retirement/401k/2014/09/27/heres-how-to-become-a-401k-millionaire.aspx

Teaching Suggestions

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

  • Stress the importance of beginning an investment program sooner rather than later.
  • Discuss ways to save the money needed to start an investment program.

Discussion Questions

  1. Why is it important to begin saving and investing sooner rather than later?
  2. Assume you (and your employer) invest $250 a month in your 401k account. How long will it take for you to become a millionaire if your investments earn annual returns of 10 percent?  (Note:  Using the table in the article, the answer is 35.5 years.)
Oct 8 2014

Mistakes of Homebuyers

An increasing number of homebuyers are coming into the market. However, along with that trend, is an increasing number of financial regrets due to mistakes such as:

  •  considering that renting may still be a viable financial choice in some situations; for example, if you may be moving due to a job or other circumstances.
  • with rising housing prices and higher mortgage rates, some buyers may not be competitive when bidding on a property.
  • other debts (such as a high car loan) may limit the monthly payment a person can afford.
  • putting too much faith in online property prices, which can give a false sense of true home values.
  • skipping the home inspection can result in not being aware of subtle home defects.
  • unrealistic expectations of the future appreciation of the home.

For additional information on mistakes made by homebuyers go to:

http://www.cnbc.com/id/101837611

Teaching Suggestions

  • Have students research suggestions for avoiding home buying mistakes.
  • Ask students create an in-class presentation with suggestions for avoiding home buying mistakes.

 Discussion Questions 

  1. What actions might be taken to avoid these home buying mistakes?
  2. Describe other difficult situations that a person might encounter in process of buying a home.
Oct 4 2014

Thinking Like A Rich Person

While thinking about getting rich will not get you there, certain attitudes (along with accompanying behaviors) can move you in that direction. In his book How Rich People Think, Steve Siebold makes these suggestions:

  1.  Leverage, the use of other people’s money to make money, is the foundation. Look for investment opportunities that will grow your wealth faster than saving part of your wages as an employee. Look for methods to solve problems to make money.  New products and services are created each day, and some will result in large fortunes.
  2.  Avoid the lottery since only a very, very small number of people will retire using that financial planning path.
  3. Worrying about money is a waste of time. Concentrate on problem solving to make money. Even as an employee, your creativity and innovations can result in a higher salary.
  4. Emphasize investing instead of spending. This action will result in higher wealth.
  5. Use credit to your advantage, not for things you don’t need and can’t afford.

 For additional information on thinking like a rich person go to:

http://www.foxbusiness.com/personal-finance/2014/09/12/5-ways-to-think-like-rich-person/

Teaching Suggestions

  • Have students talk to others to obtain additional suggestions for improving a person’s long-term financial security.
  • Ask students to propose a product or service that solves a problem in our society and could result in future income.

 Discussion Questions 

  1. What are common barriers that people face when taking the actions suggested above?
  2. Describe additional actions that might be taken to create long-term wealth.
  3. What are some examples of problems to be solved in our society that could be the basis for future products or services?
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?
Sep 27 2014

Prescreened Credit and Insurance Offers

Many companies that solicit new credit card accounts and insurance policies use prescreening to identify potential customers for the products they offer.  Prescreened offers–sometimes called “preapproved” offers–are based on information in your credit report that indicates you meet criteria set by the company.  Usually, you receive prescreened solicitations via mail, but you may also get them in a phone call or in an email.

For additional information, go to

http://www.consumer.ftc.gov/articles/0148-prescreened-credit-and-insurance-offers

Teaching Suggestions

You may want to use the information in this article to discuss

  • Why some people prefer not to receive prescreened offers in the mail, especially if they are not in the market for a new credit card or insurance policy?
  • What might be some advantages of receiving prescreened offers?
  • Ask how many students have received prescreened offers and what did they do with them.

Discussion Questions

  1. Can prescreening hurt your credit report or credit score?
  2. How can you reduce the number of unsolicited credit and insurance offers you receive?
Sep 24 2014

Data Breaches and Credit Freezes

News reports of large-scale data breaches–like the September 2014 announcement from Home Depot–have prompted many people to consider a credit freeze.  Also known as a security freeze, this tool lets you limit access to your credit report, which makes it more difficult for identity thieves to open new accounts in your name.

Remember, credit freeze doesn’t prevent a thief from making charges to your existing accounts.  Even if you elect a credit freeze, you still must monitor your existing credit card and bank accounts for charges you don’t recognize.  Also, remember that you can check your credit reports for free, every few months by visiting AnnualCreditReport.com or calling 1-877-322-8228.

For additional information, go to

http://www.consumer.ftc.gov/blog/data-breaches-credit-freezes-and-identity-theft-oh-my?utm_source=govdelivery

Teaching suggestions

You may want to use information in this article to discuss

  • The difference between a credit freeze and a fraud alert.
  • If anyone can see your credit report, is it frozen?

Discussion Questions

  1. Does a credit freeze affect your credit score?
  2. Does a credit freeze stop prescreened credit offers?
  3. How can you place a freeze on your credit report and how do you lift a freeze?
Sep 20 2014

You Tube Videos: Healthcare and Taxes

In September 2014, the Internal Revenue Service announced the availability of new You Tube Videos to help taxpayers get important information about the Affordable Care Act and tax return filing.  These videos on IRS You Tube channel discuss the premium tax credit and the individual shared responsibility provision.  These provisions of the Affordable Care Act will affect tax returns beginning with the 2014 filing year.

In the premium tax credit video, the IRS Commissioner explains how it can help make purchasing health care through the Health Insurance Marketplace more affordable for people with moderate incomes.

For additional information on the tax provisions of the Affordable Care Act go to
http://www.irs.gov/uac/Newsroom/New-YouTube-Videos-Provide-Tips-on-Health-Care-Tax-Returns

Teaching Suggestions

You may want to use the original article to discuss

  • What are the criteria used to be exempt from the Individual Shared Responsibility provision?
  • How and where can you obtain an exemption?
  • Who is subject to the individual shared responsibility provision?
  • What you need to do if you want to be sure you have minimum essential coverage or an exemption for 2014?

Discussion Questions

  1. What will you have to do if you don’t have or don’t maintain your health insurance coverage?
  2. If you don’t have health insurance coverage or qualify for an exemption, how and when must you make an Individual Shared Responsibility payment?