BUA234 Personal Financial Planning Home Page

 

 

Syllabus, Spring, 2006

 

Chuck and Betsy Cooper

 

Financial Plan: Spring 2006 Project:  Bill and Patti Warner

 

Financial Planning Project Assignment Example: 2005 NOT an assignment for you)

 

Help with Excel

 

SOHO (Small Office Home Office) America - finance

 

How long will you live?

    We will be able to live to 1,000

    How long shall humans live? . . .

 

Employment--

    Manpower research

  

 

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TOPICS

FINANCIAL PLANNING OVERVIEW (PowerPoint)

1: Overview of Personal Finance/Financial Plan                                                               

2: Budgeting:  Planning with Personal Financial Statements                                        

3: Time Value

4: Taxes:  Using Tax Concepts for Planning

5: Liquidity, Banking, and Interest Rates 

6: Managing Your Credit

7: Loans

8: Home Purchase and Financing

9:  Life Insurance   

10:  Other insurance topics:  Auto, Homeowner's, and Health:  .                                                       

11:  Investing                                    

12:  Retirement Planning

13.  Estate Planning

14.  Love and Money                                                   

15. Charity/Giving

16.  Education

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1:  Overview of a Personal Finance/Financial Plan

 

    Secrets of the the Millionaire Mind (PowerPoint)   

 

    Careers in Finance- Facts and Trends

 

    Careers in Finance- Skills Needed

 

    Reasons People Fail Financially

        The cost of procrastination (Raymond James)

        Pick your excuse, every has one

 

    Does Money Buy Happiness?

    Do People with money tend to be happier?  12-3-05 WSJ

 

    College Students, problems with money-- Sept 2005 Money Magazine

 

    How bad financial behavior can really cost you- Sept 2005 Money Magazine

 

    Proven Principles for Financial Success

 

    Components of a Financial Plan

        1.  Big Picture (Personal Profile, Financial Mission Statement, Goals) 

        2.  Budgeting and Tax Planning

        3.  Managing your liquidity

        4.  Financing your large purchases (e.g., your home)

        5.  Investing your money

        6.  Protecting your wealth (insurance, retirement, and estate planning)

 

Personal and Financial Profile

        Vanguard's Personal Profile Questionnaire click 1) print the questionnaire and 2) print and mail

        Money Type - August 2005 Money Magazine

 

        Financial Mission Statement

 

        Goal Setting

        Goals Spreadsheet (Excel)

 

 

2:  Budgeting:  Planning with Personal Financial Statements

 

    Budget (Excel Template)

 

    Personal Balance Sheet (Excel Template)

 

    Money:  Budgeting 101

 

    iVillage:  Budgeting Quizzes

 

    Compare Your Budget

    Bankrate's Budgeting 101

    MS Financial Savvy.com

    Consumer Expenditures in 2003:  Department of Labor   

  

    Additional Budgeting Websites

    Visa: Budgeting Advice

    About:  Budgeting Advice  

    Building Wealth:  Federal Reserve Bank of Dallas

    Wife.og:  Budgeting Advice

    Tomorrow's Money:  Budgeting Advice   

 

    Other Helpful Budgeting Information   

    Consumer Price Index - Average Price Data

    Why young families are always broke (MSN)

    Raymond James:  Budget Worksheet

    Fidelity:  Budget Worksheet

 

3:  Applying Time Value (of Money) Concepts

 

     Amortization Schedule (Excel)

 

    Amortization Schedule Calculator (Bankrate.com)

 

    Amortization Schedule (java)

 

    Time Value Practice Problems

        Time Value Practice Problems Solutions

 

    One Time (lump sum) Investment (Excel)

 

    Monthly Savings (Excel)

 

    Saving Early (Excel)

 

    Time Value Calculators:  WoodForest National Bank

 

 

4:  Taxes: Using Tax Concepts for Planning

 

Note:  We need to understand taxes to develop an accurate forecast of cash flows.  The purpose is not to turn you into a tax accountant, however, the more you understand taxes, the more accurate your cash flow estimation will be.

 

    1.  Social Security-- How much do you pay?

        Go to Social Security Administration, click Taxes and Social Security and find out the social security tax rates.

 

    2.  Estimating Taxes (the primary purpose of this chapter)

        Forms we will use to estimate Federal Income Taxes

            

        1040 ES 2006

 

        1040 2005

      

        Schedule A 2005

 

        Form W-4 2006

 

        Capital Gains Taxes

   

        Definition of Capital Gain

        Capital Gains - BankRate.com

        Capital Gains Taxes - Yahoo

        Capital Gain Calculator

 

       Useful Tax Websites

 

        IRS website

 

        H&R Block - Tax Information

 

        H&R Block Tax Rates

 

        State

            Go to State Income Tax Information to help estimate North Carolina Taxes

          

Ted and Jane Turner Practice Exercise

    Ted and Jane Solutions (Excel)

 

5:  Liquidity, Banking, and Interest Rates

 

What factors determine the dollar amount of liquid funds you should set aside?  What are some alternatives for emergency funds? 

BankRate.com: Deposits

 

   

Online Banks

EverBank Online (savings instruments in foreign-currency denominations; FDIC insured; however, there is currency risk)

AmericanBank Online

NetBank

Bank of Internet USA

 

    Short Term Investment Choices 

    1.  Checking Account (most cases: preferably with overdraft protection): doesn't pay interest

    2.  Now Account:  pays interest

    3.  Money Market Deposit Account (MMDA): limited check writing ability

    4.  Savings account:  no check writing

    5.  Certificate of Deposit   

            Bank-CD Rate Scanner

    6.  Bureau of the Public Debt:  US Department of Treasury

            Treasury securities: sold at a discount (T-Bills:  maturity one year or less)

            The Basics of Treasury Securities

            TreasuryDirect Purchase treasury securities without a broker

    7.  Money Market Fund (Investopedia Definition)

            IMoneyNet.com-- provides money-market fund yields

           Example Money Market Fund:   Vanguard Money Market Fund

   

Considerations for opening an account

    1.  Relationships and banking

    2.  Location

    3.  Psychology (if your money isn't in your town, are you nervous)

    4.  Government secured vs. Close to Risk Free

    5.  Fees, interest rates, and maturity dates

    6.  Minimum amount

 

Federal Reserve Bank of Chicago:  The ABCs of Figuring Interest (Advanced)

   

 Managing Your Credit

 

SmartMoney:  Debt Management

Yahoo:  Credit Center

LendingTree:  Credit Information

Federal Reserve- Philadelphia- establishing, using, and protecting credit

 

The Credit Score

Credit Score:  What do the numbers mean? (Lendingtree)

Bankrate.com-- estimating your credit score

 

Interested in checking your credit? 

Free Credit Report-- Federal Trade Commission's link

 

AnnualCreditReport -- Starting in Sept. 2005 for NC, you can obtain a free credit report once a year.  You can make a request of each of the three primary credit agencies:  Equifax, TransUnion, and Experian.  Ask for one report from a different agency every four months.

 

Choose the Right Credit Card

    To Find a Credit Card

    CreditCardMenu

    Bankrate.com

    CardRatings.com

    CardWeb.com

   

 

Credit Report Companies

1.  Experian

2.  Transunion

3.  Equifax

4.  FairIsaac:  Most popular credit score was created by Fair Isaac Corporation-- the FICO credit score

 

Rule #1—Pay off your credit card debt each month; use your credit card for convenience only.  If you cannot follow rule #1, consider cutting up your  credit cards or leaving your credit cards at home and use them only for emergencies and/or travel.

Having trouble with your credit/budget?  For a variety of information, go to

Consumer Credit Counseling Service of San Franscisco 

Nolo Legal Information:  Debt and Bankruptcy

 

Your Rights as a Credit Holder and other Credit Information

Federal Trade Commission's website on credit

Federal Citizen Information Center:  Fair Credit Reporting

 

Opting out of receiving preapproved credit offer-- To get off the credit bureaus' marketing lists-- 1-888-567-8688

 

Identity Theft

Identity Theft Resource Center

Privacy Rights Clearinghouse

 

 

 

 

 Loans

 

    Purchasing a Car

    Cars.com

    NADA Guide

    Edmunds

    New Car Test Drive.com

    PriceQuotes

    IntelliChoice

    Kelley Blue Book

    Yahoo- Auto Loan Center

    autobytel.com

    CarsDirect

    AutoTrader

    eBay Motors

    Carfax

 

    Auto Financing and Purchasing (Excel)

 

    Vehicles:  Lease vs. Buy

 

    O% vs. Cash Up Front

 

    Going under water with a car (Excel)

 

    A Nurse buys a car.

 

 

 

 Home Purchase and Financing 

 

    Home Buying Questions (Word)

 

    The Mortgage Professor   

    SmartMoney:  Real Estate

    Fannie Mae Foundation:  Home Buying Guide  

    Mortgage101.com

    GetSmart

    Bankrate.com

    E-loan

 

    Quicken Loans

    Home:  When selling, your capital gain is tax free up to $250,000 ($500,000 for joint filers) on the sale of a primary residence as long as you have owned and lived in the house at least two years.

 

    housezone.com

   

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  Motley Fool:  Closing Costs

 

 

Valuation of a Home

 

    Realtor.com

    Zillow

    Homegain.com - recent sales for free

    Valuing a home using square footage of a home-- quick and dirty (Excel)

 

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 Decisions

 

1.  Rent vs. Buy

 

2.  How much can you afford? 

 

    How Much House Can You Afford (bankrate.com)

    It is not what you are approved for but rather what your budget can handle.

    About.com:  The debt ratios 

    CNN/Money:  How Much House Can You Afford

 

Financing a Home

 

3.  15 or 30 Year Mortgage

 

4.  Tradeoff:  Points or a Higher Interest Rate

 

5.  Fixed vs. Adjustable Rate Mortgage

 

___________________________________________

 

PMI: Private Mortgage Insurance (MSN)

 

Refinancing-- Two Websites

    Refinancing (bankrate.com for rates, etc.)-- go to bankrate.com; current situation-- 30 year mortgage; original mortgage $100,000; 7.5% rate; 48 payments made-- should you refinance?

    Refinancing Calculator (from bankrate.com)

 

 

 

 Life Insurance

 

Insurance Questions (Word)

 

Life and Health Insurance Foundation for Education

Life and Health Insurance Foundation for Education- How much do you need?

 

4insurance.com: Life

Yahoo Life Insurance

Common Life Insurance Questions (the Beehive)

Insurance Information Institute

 

Play the longevity game-- Northwestern Mutual Life

 

Obtaining Life Insurance (other insurance quotes are also available) Quotes: 

   AccuQuote.com

    Term4Sale.com

    insweb.com

    Quicken or insuremarket.com

    quotesmith.com

    selectquote.com

 

Types of Life Insurance

 

How Much Life Insurance do you need?

 

Settlement Options on a  Life Insurance Policy

 

Example:  Recommendation of Life Insurance Amount from an Agent

 

Example:  Which policy should you choose?

 

 

 Other Insurance Topics:  Auto, Homeowner's and Health

 

insbuyer.com

 

Insurance Finder

 

Insurance Information Institute:  Credit history and insurance

 

GEICO:  Insurance Terminology

 

North Carolina Department of Insurance

    includes consumer complaints

 

How Risky is Your Car (MSN)

 

Auto Insurance Questions

 

4insurance.com: Auto

 

Moneycentral's Auto Insurance Webpage

 

Moneycentral's Auto Insurance Question and Answer Webpage

 

Moneycentral- 10 cheapest cars to insure

 

Yahoo's Auto Insurance website

 

 

Rating Insurance Companies--  Without paying a fee, you may not obtain rating information of companies; however, the websites may inform you on what the ratings mean.

    A.M. Best

    Standard & Poor's

    Moody's Investors Service

 

4insurance.com: Homeowner's

Yahoo's Homeowner's Insurance website

 

4insurance.com:  Health

 

Insurance Information Institute

 

4insurance.com:  Disability

 

MoneyCentral:  Insurance Most People Can Do Without

 

 Investing

 

High Point University has a course, BUA334, Investment Analysis that covers this information in detail.  Therefore, the depth of this section will be minimal.  At a minimum, enough information will be covered so you can complete your plan.

 

Mutual Funds and ETFs

 

    Mutual Funds and ETF Worksheet (word)

 

    Morningstar - Mutual Funds

 

    Motley Fool Mutual Fund Center

 

    Vanguard Mutual Funds

        Mutual Funds, an overview

        narrowing your choices

ETF research

www.xtf.com -- click on research tools and resources

www.morningstar.com -- quarterly updates of most overvalued and undervalued ETFs

www.sectorspdr.com -- Find individual ETFs and click on research

www.nasd.com -- check out ETF expenses

www.indexuniverse.com -- to srot EFTs by the indexes they track

 

 

Asset Allocation

       

    SmartMoney Asset Allocator

 

    Asset-Analysis.com click into "Estimate your optimal asset allocation based on your risk profile".

 

   

 

Real Estate

 

    Schedule E

 

    Publication 527

 

    Rental Real Estate Example (Excel)

 

Investing and Income Taxes

 

        Investments and Income Taxes Worksheet (Word)

 

        Marginal Tax Rate:  The tax rate on the next $1 of earnings. 

            Critical to understand for investment decisions

 

        Yahoo site on Capital Gains-- covers LT and ST Gains

 

        Municipal Bonds - Yahoo

 

        Dividends and Taxes Motley Fool

 

 

 12:  Retirement Planning

 

Retirement Planning Worksheet (word)

 

About:  Retirement Planning

SmartMoney: Retirement

The Motley Fool: Retirement

ElderWeb

 

Social Security

Social Security Benefits-- See top 10 requested Services for Social Security Online

 

IRS's website

 

    IRAs-  Pub 590 common questions (IRS website)

    Roth IRA vs. Traditional IRA- Which is better?  Excel

    FinanCenter - IRAs will help guide you with many of your IRA decisions

 

Calculating your Retirement Needs

 

Estimating Your Net Worth for Retirement/Estimating Your Future Retirement Needs (Excel)

 

        Mortality Table

 

        Social Security Retirement Website Benefits

 

A Better Way to Size up Your Nest Egg - January 22, 2001 BusinessWeek

        Why we need to be aware of averages-- the relevancy of Monte Carlo Excel

 

Annuities

    Annuity Buyer's Guide, Money, November, 2002

 

 

Unconventional Wisdom:  Can you contribute too much to a 401k or other retirement account?  Excel

 

Retire on Your Terms

 

 13:  Estate Planning

 

Estate Planning Worksheet (Word)

 

Advance Health Care Directive Registry, State of North Carolina

 

EstatePlanningLinks.com

 

Nolo.com:  Will and Estate Planning

 

Basic Information about Estate Planning

 

US Living Living Will Registry

 

Wake Forest University Baptist Medical Center, NC Guide

 

Five Wishes is a document that helps you express how you want to be treated if you are seriously ill and unable to speak for yourself.

 

Advance Directives (2 types):  1) Living Wills and 2) Medical Power of Attorney

 

Planning Your Estate:  NC State University

 

Introduction to your NC Advance Directive

 

NC Health Care Power of Attorney

 

Partnership for Caring:  Frequently Asked Questions

 

 14.  Love and Money

 

Finances for Newlyweds Money Magazine

 

Marrying Your Money Money Magazine

 

5 Money Questions to Ask Before Marriage i-Village

 

Stop Fighting About Money i-Village

 

Stop Fighting About Money-- highlighted article

 

Raising A Child

    What is the cost of raising a child? (Bankrate.com)

    What is the cost of raising a child (The Commerce Bank of Washington)

    What is the cost of raising a child? (daddy2be)

    Cost of Raising a Child Calculator (BabyCenter)

   

 

  15. Charity/Giving

 

Charity Navigator

 

The Better Business Bureau Wise Giving Alliance

 

16. Education

 

Savingforcollege.com

FinAid:  Saving for College

SmartMoney:  College Planning

 

How much will parents have to contribute to college (SmartMoney)

FAFSA-- Parental Assets

 

Just for Fun

 

Moneyopolois