Introduction 1
About This Book 2
Foolish Assumptions 3
Icons Used in This Book 3
Beyond the Book 4
Where to Go from Here 4
Part 1: Getting Started with Personal Finance 5
Chapter 1: Improving Your Financial Literacy 7
Talking Money at Home 8
Identifying Unreliable Sources of Information 10
Understanding the dangers of free financial content online 10
Recognizing fake financial gurus 11
Publishers pandering to advertisers 17
Jumping over Real and Imaginary Hurdles to Financial Success 18
Discovering what (or who) is holding you back 18
Developing good financial habits 19
Chapter 2: Measuring Your Financial Health 21
Avoiding Common Money Mistakes 22
Determining Your Financial Net Worth 24
Adding up your financial assets 24
Subtracting your financial liabilities 25
Crunching your numbers 26
Interpreting your net worth results 26
Examining Your Credit Score and Reports 27
Understanding what your credit data includes and means 27
Obtaining your credit reports and score 28
Improving your credit reports and score 29
Getting credit report errors corrected 30
Knowing the Difference between Bad Debt and Good Debt 32
Consuming your way to bad debt 33
Recognizing bad debt overload 33
Assessing good debt: Can you get too much? 35
Playing the credit-card float 35
Analyzing Your Savings 36
Evaluating Your Investment Knowledge 38
Assessing Your Insurance Savvy 39
Chapter 3: Managing Where Your Money Goes 41
Examining Overspending 42
Having access to credit 42
Misusing credit cards 43
Taking out car loans 43
Bending to outside influences and agendas 44
Spending to feel good 45
Analyzing Your Spending 45
Tracking spending the low-tech way 46
Tracking your spending on free websites and apps 51
Chapter 4: Establishing and Achieving Goals 53
Creating Your Own Definition of Wealth 53
Acknowledging what money can't buy 54
Managing the balancing act 54
Prioritizing Your Savings Goals 56
Knowing what's most important to you 57
Valuing retirement accounts 57
Dealing with competing goals 58
Building Emergency Reserves 59
Saving to Buy a Home or Business 60
Funding Kids' Educational Expenses 61
Saving for Big Purchases 61
Preparing for Retirement/Financial Independence 62
Figuring out what you need for retirement/financial independence 64
Understanding retirement building blocks 65
Crunching numbers for your retirement 69
Making up for lost time 71
Part 2: Spending Less, Saving More 73
Chapter 5: Dealing with Debt 75
Using Savings to Reduce Your Consumer Debt 76
Understanding how you gain 76
Finding the funds to pay down consumer debts 77
Decreasing Debt When You Lack Savings 78
Reducing your credit card's interest rate 78
Understanding all credit-card terms and conditions 79
Cutting up your credit cards 79
Discovering debit cards: The best of both worlds 80
Turning to Credit Counseling Agencies 82
Beware biased advice at credit counseling agencies 82
Ask questions and avoid debt management programs 83
Filing Bankruptcy 84
Understanding bankruptcy benefits 85
Coming to terms with bankruptcy drawbacks 86
Deciphering the bankruptcy laws 87
Choosing between Chapter 7 and 13 88
Seeking bankruptcy advice 89
Stopping the Spending/Consumer Debt Cycle 89
Resisting the credit temptation 89
Identifying and treating a compulsion 90
Chapter 6: Reducing Your Spending 93
Unlocking the Keys to Successful Spending 94
Living within your means 94
Looking for the best values 95
Eliminating the fat from your spending 99
Turning your back on consumer credit 100
Budgeting to Boost Your Savings 101
Reducing Your Spending 102
Managing food costs 103
Saving on shelter 106
Cutting transportation costs 109
Lowering your energy costs 112
Controlling clothing costs 113
Repaying your debt 114
Indulging responsibly in fun and recreation 115
Lowering your phone bills 116
Technology: Spending wisely 118
Curtailing personal care costs 118
Paring down professional expenses 119
Managing medical expenses 120
Eliminating costly addictions 121
Keeping an eye on insurance premiums 122
Trimming your taxes 122
Chapter 7: Trimming Your Taxes 125
Understanding the Taxes You Pay 125
Focusing on your total taxes 126
Recognizing the importance of your marginal tax rate 126
Defining taxable income 128
Being mindful of the second tax system: Alternative minimum tax 128
Analyzing the 2017 Tax Cuts and Jobs Act 129
Trimming Employment Income Taxes 131
Contributing to retirement plans 131
Shifting some income 132
Increasing Your Deductions 133
Choosing standard or itemized deductions 133
Purchasing real estate 134
Trading consumer debt for mortgage debt 135
Contributing to charities 136
Remembering auto registration fees and state insurance 136
Deducting self-employment expenses 137
Reducing Investment Income Taxes 138
Investing in tax-free money-market funds and bonds 139
Selecting other tax-friendly investments 139
Making your profits long term 140
Does funding retirement accounts still make sense? 140
Enlisting Education Tax Breaks 141
Getting Help from Tax Resources 142
Obtaining IRS assistance 142
Consulting preparation and advice guides 143
Using software and websites 143
Hiring professional help 143
Dealing with an Audit 145
Getting your act together 146
Surviving the day of reckoning 146
Part 3: Building Wealth Through Investing 149
Chapter 8: Considering Important Investment Concepts 151
Establishing Your Goals 151
Understanding the Primary Investments 152
Looking at lending investments 152
Exploring ownership investments 153
Shunning Gambling Instruments and Behaviors 154
Forsaking futures, options, and other derivatives 155
Ditching day trading 155
Understanding Investment Returns 156
Sizing Investment Risks 157
Comparing the risks of stocks and bonds 157
Focusing on the risks you can control 158
Discovering low-risk, high-return investments 159
Diversifying Your Investments 160
Spreading the wealth: Asset allocation 162
Allocating money for the long term 163
Sticking with your allocations: Don't trade 164
Investing lump sums via dollar-cost averaging 165
Acknowledging Differences among Investment Firms 166
Focusing on the best firms 167
Places to consider avoiding 169
Seeing through Experts Who Predict the Future 173
Investment newsletters 174
Investment gurus 174
Leaving You with Some Final Advice 176
Chapter 9: Understanding Your Investment Choices 179
Slow and Steady Investments 179
Transaction/checking accounts 180
Savings accounts and money-market funds 180
Bonds 181
Building Wealth with Ownership Vehicles 183
Socking your money away in stocks 183
Investing internationally in stocks 188
Generating wealth with real estate 189
Investing in small business (and your career) 195
Off the Beaten Path: Investment Odds and Ends 198
Precious metals 199
Bitcoin and other cryptocurrencies 199
Annuities 201
Collectibles 201
Chapter 10: Investing in Funds 203
Understanding the Benefits of Mutual Funds and Exchange-Traded Funds 203
Exploring Various Fund Types 205
Money-market funds 205
Bond funds 206
Stock funds 207
Balancing bonds and stocks: Hybrid funds 208
U.S., international, and global funds 208
Index funds 209
Specialty (sector) funds 210
Selecting the Best Funds 211
Reading prospectuses and annual reports 212
Keeping costs low 212
Evaluating historic performance 214
Assessing fund manager and fund family reputations 215
Rating tax friendliness 215
Determining your needs and goals 216
Deciphering Your Fund's Performance 216
Dividends 217
Capital gains 218
Share price changes 218
Evaluating and Selling Your Funds 219
Chapter 11: Investing in Retirement Accounts 221
Looking at Types of Retirement Accounts 221
Employer-sponsored plans 222
Self-employed plans 225
Individual Retirement Accounts (IRAs) 227
Annuities: An odd investment 228
Allocating Your Money in Retirement Plans 230
Prioritizing retirement contributions 230
Setting up a retirement account 230
Allocating money when your employer selects the investment options 231
Allocating money in plans you design 235
Transferring Retirement Accounts 238
Transferring accounts you control 238
Moving money from an employer's plan 241
Chapter 12: Investing in Taxable Accounts 243
Getting Started 244
Paying off high-interest debt 244
Taking advantage of tax breaks 245
Understanding Taxes on Your Investments 245
Fortifying Your Emergency Reserves 246
Bank and credit union accounts 246
Money-market mutual funds 246
Investing for the Longer Term (Several Years or Decades) 249
Defining your time horizons 250
Bonds and bond funds 250
Certificates of deposit (CDs) 253
Stocks and stock funds 254
Annuities 254
Real estate 255
Small-business investments 255
Chapter 13: Investing for Educational Expenses 257
Figuring Out How the Financial Aid System Works 258
Treatment of retirement accounts 259
Treatment of money in the kids' names 259
Treatment of home equity and other assets 262
Strategizing to Pay for Educational Expenses 262
Estimating college costs 262
Setting realistic savings goals 264
Tips for getting loans, grants, and scholarships 264
Investing Educational Funds 266
Good investments: No-load mutual funds and exchange-traded funds 266
Bad investments 267
Overlooked investments 267
Chapter 14: Investing in Real Estate: Your Home and Beyond 269
Deciding Whether to Buy or Rent 270
Assessing your timeline 270
Determining what you can afford 270
Calculating how much you can borrow 272
Comparing owning versus renting costs 272
Considering the long-term costs of renting 276
Recognizing advantages to renting 277
Financing Your Home 277
Understanding the two major types of mortgages 277
Choosing between fixed- and adjustable-rate mortgages 278
Shopping for fixed-rate mortgages 281
Inspecting adjustable-rate mortgages (ARMs) 284
Avoiding the down-payment blues 288
Comparing 15-year and 30-year mortgages 289
Finding the best lender 291
Increasing your approval chances 293
Finding the Right Property 294
Condo, town house, co-op, or detached home? 294
Casting a broad net 295
Finding out actual sale prices 295
Researching the area 296
Working with Real-Estate Agents 296
Recognizing conflicts of interest 297
Looking for the right qualities in real-estate agents 298
Putting Your Deal Together 300
Negotiating 101 300
Inspecting before you buy 301
Remembering title insurance and escrow fees 302
After You Buy 303
Refinancing your mortgage 303
Mortgage life insurance 305
Going with a reverse mortgage: Yes or no? 305
Selling your house 306
Part 4: Insurance: Protecting What You Have 309
Chapter 15: Insurance: Getting What You Need at the Best Price 311
Discovering My Three Laws of Buying Insurance 312
Law I: Insure for the big stuff; don't sweat the small stuff 312
Law II: Buy broad coverage 317
Law III: Shop around and buy direct 319
Dealing with Insurance Problems 322
Knowing what to do if you're denied coverage 322
Getting your due on claims 323
Chapter 16: Insurance on You: Life, Disability, and Health 329
Providing for Your Loved Ones: Life Insurance 330
Determining how much life insurance to buy 330
Comparing term life insurance to cash value life insurance 332
Making your decision 335
Buying term insurance 336
Considering the purchase of cash value life insurance 338
Getting rid of cash value life insurance 338
Preparing for the Unpredictable: Disability Insurance 339
Deciding whether you need coverage 339
Determining how much disability insurance you need 340
Identifying other features you need in disability insurance 341
Deciding where to buy disability insurance 342
Getting the Care You Need: Health Insurance 343
Mandating health insurance: The Affordable Care Act (Obamacare) 343
Choosing the best health plan 344
Buying health insurance 347
Looking at retiree medical care insurance 352
Chapter 17: Covering Your Assets 357
Insuring Your Home 357
Dwelling coverage: The cost to rebuild 358
Personal property coverage: For your things 359
Liability insurance: Coverage for when others are harmed 359
Flood and earthquake insurance: Protection from Mother Nature 360
Deductibles: Your cost with a claim 361
Special discounts 361
Buying homeowner's or renter's insurance 362
Auto Insurance 101 363
Bodily injury/property damage liability 363
Uninsured or underinsured motorist liability 364
Deductibles 364
Special discounts: Auto edition 365
Little-stuff coverage to skip 365
Buying auto insurance 365
Protecting against Mega-Liability: Umbrella Insurance 366
Planning Your Estate 367
Wills, living wills, and medical powers of attorney 367
Avoiding probate through living trusts 368
Reducing estate taxes 369
Part 5: Where to Go for More Help 371
Chapter 18: Working with Financial Planners 373
Surveying Your Financial Management Options 373
Doing nothing 374
Doing it yourself 374
Hiring financial help 374
Deciding Whether to Hire a Financial Planner 377
How a good financial advisor can help 378
Why advisors aren't for everyone 379
Recognizing conflicts of interest 379
Finding a Good Financial Planner 383
Soliciting personal referrals 383
Seeking advisors through associations 384
Interviewing Financial Advisors: Asking the Right Questions 384
What percentage of your income comes from clients' fees versus commissions? 385
What portion of client fees is for money management versus hourly planning? 386
What is your hourly fee? 386
Do you also perform tax or legal services? 386
What work and educational experience qualifies you to be a financial planner? 387
Have you ever sold limited partnerships? Options? Futures? Commodities? Invested with Madoff? 387
Do you carry liability (errors and omissions) insurance? 388
Can you provide references from clients with needs similar to mine? 388
Will you provide specific strategies and product recommendations that I can implement on my own if I choose? 389
How is implementation handled? 389
Learning from Others' Mistakes 389
Chapter 19: Using Technology to Manage Your Money 391
Surveying Software, Apps, and Websites 392
Adding up financial software benefits 392
Understanding how apps can benefit and harm your bottom line 393
Surfing hazards online 394
Accomplishing Money Tasks on Your Computer, Tablet, or Smartphone 397
Paying your bills and tracking your money 397
Planning for retirement 399
Preparing your taxes 400
Researching investments 400
Accessing economic and financial data 401
Trading online 401
Reading and searching periodicals 402
Investing through automated investment managers: Robo advisors 402
Buying life insurance 402
Preparing legal documents 403
Chapter 20: On Air and in Print 405
Observing the Mass Media 405
Alarming or informing? 406
Teaching questionable values 406
Worshipping prognosticating pundits 407
Rating Radio and Television Financial Programs 407
Finding the Best Websites 408
Navigating Newspapers and Magazines 409
Betting on Books 409
Understanding the book publishing business 410
Books at the head of their class 411
Part 6: The Part of Tens 413
Chapter 21: Survival Guide for Ten Life Changes 415
Starting Out: Your First Job 416
Changing Jobs or Careers 417
Getting Married 418
Buying a Home 420
Having Children 420
Starting a Small Business 422
Caring for Aging Parents 423
Divorcing 424
Receiving a Windfall 426
Retiring 427
Chapter 22: Ten Tactics to Thwart Identity Theft and Fraud 431
Save Phone Discussions for Friends Only 432
Never Respond to E-mails Soliciting Information 432
Review Your Monthly Financial Statements 433
Secure All Receipts 433
Close Unnecessary Credit Accounts 433
Regularly Review Your Credit Reports 434
Freeze Your Credit Reports 434
Keep Personal Info Off Your Checks 434
Protect Your Computer and Files 435
Protect Your Mail 435
Glossary 437
Index 451