Bonus D – Managing Personal Finances
D-1
Managing Personal
Finances
bonus
chapter
=
what’s new in this edition D.3
brief chapter outline and learning goals D.3
lecture outline and lecture notes D.5
PowerPoint slide notes D.38
lecture links D.51
lecture link D-1: MILLIONAIRE WOMEN NEXT DOOR D.52
lecture link D-2: THE RENT-VERSUS-BUY DECISION D.53
lecture link D-3: KNOW YOUR CREDIT SCORE D.53
lecture link D-4: AMERICA’S GROWING CREDIT CARD AVERSION D.54
lecture link D-5: DISCREDIT REPORT D.55
lecture link D-6: SOCIAL SECURITY AND YOUR RETIREMENT D.57
lecture link D-7: THE TROUBLE WITH SUING YOUR BROKER D.59
critical thinking exercises D.60
critical thinking exercise D-1: PREPARING A PERSONAL BALANCE SHEET D.60
D
Bonus D – Managing Personal Finances
D-2
critical thinking exercise D-2: DEVELOPING A SPENDING PLAN D.62
critical thinking exercise D-3: FINDING THE BEST CAR LOAN D.64
critical thinking exercise D-4: CHOOSING THE RIGHT MORTGAGE LOAN D.66
what’s new in
this edition
Bonus D – Managing Personal Finances
D-3
brief chapter outline
and learning goals
bonus c h a p t e r D
Bonus D – Managing Personal Finances
D-4
IV. PLANNING YOUR RETIREMENT
Bonus D – Managing Personal Finances
Getting to Know NATHAN MYHRVOLD and OTHER
MILLIONAIRES.
Myhrvold earned his money as chief technology officer at Microsoft. Extremely brilliant
and with expensive tastes, you might expect him to be the model millionaire. However, the ma-
jority of millionaires are entrepreneurs who own one or more small businesses. Self-employed
people are about five times more likely to be millionaires as people who earn a paycheck work-
ing for others.
learning goal 1
NING
One way to save money is to use your credit card wisely. There are organizations that
can help you compare credit cards to get the most out of them. What is the name of one
of those organizations?
Bonus D – Managing Personal Finances
PPT D-1
Chapter Title
PPT D-2
Learning Goals
(See complete PowerPoint slide notes on page D.38.)
PPT D-3
Nathan Myhrvold
(See complete PowerPoint slide notes on page D.38.)
PPT D-4
Name That Company
(See complete PowerPoint slide notes on page D.39.)
PPT D-5
Financial Planning Begins with
Making Money
(See complete PowerPoint slide notes on page D.39.)
Bonus D – Managing Personal Finances
D-7
self.
i. A balance sheet starts with the formula:
Bonus D – Managing Personal Finances
PPT D-6
Six Steps to Control Your Finances
(See complete PowerPoint slide notes on page D.39.)
critical thinking
exercise D-1
PREPARING A PERSONAL
BALANCE SHEET
This exercise asks students to calculate the assets, liabili-
ties, and owners’ equity for a couple. (See complete exercise
on page D.60 of this manual.)
Bonus D – Managing Personal Finances
time.
4. STEP 3: Prepare a BUDGET.
in a separate account.
b. The best way to save money is to PAY
YOURSELF FIRST—take money out of your
Bonus D – Managing Personal Finances
critical thinking
exercise D-2
DEVELOPING A SPENDING
PLAN
This exercise asks students to develop a monthly budget
and judge the impact of an increase in monthly rent. (See
complete exercise on page D.62 of this manual.)
PPT D-7
Managing Your Household Budget
(See complete PowerPoint slide notes on page D.40.)
PPT D-8
Possible Cost-Saving Choices
TEXT FIGURE D.1
Possible Cost-Saving Choices
(Text page D-4)
(See complete PowerPoint slide notes on page D.40.)
PPT D-9
How Money Grows
TEXT FIGURE D.2
How Money Grows
(Text page D-5)
(See complete PowerPoint slide notes on page D.40.)
D-11
7. STEP 6: Borrow money only to BUY ASSETS
that have the potential to increase in value.
II. BUILDING YOUR FINANCIAL BASE
A. Accumulating capital takes discipline and careful
planning.
1. Savings can help you become an ENTREPRE-
NEUR, one of the fastest ways to wealth.
Bonus D – Managing Personal Finances
PPT D-10
Easy-ish Budget Cuts
(See complete PowerPoint slide notes on page D.41.)
PPT D-11
Billionaire’s Tab
(See complete PowerPoint slide notes on page D.41.)
lecture link D-1
MILLIONAIRE WOMEN NEXT
DOOR
Thomas J. Stanley and William D. Danko, the authors of
the 1996 book The Millionaire Next Door, undertook a three-
year study of wealthy women with some interesting findings.
(See the complete lecture link on page D.51 in this manual.)
PPT D-12
Building Your Financial Base
(See complete PowerPoint slide notes on page D.41.)
PPT D-13
Five Rules of Frugality
(See complete PowerPoint slide notes on page D.42.)
1. The real estate bust that began in 2008 is a rel-
atively rare occurrence.
2. HOME OWNERSHIP
a. The one investment that you can live in is a
home.
MOST IMPORTANT INVESTMENT you’ll make.
Bonus D – Managing Personal Finances
D-14
PPT D-14
Financial Benefits of Buying a
Home
(See complete PowerPoint slide notes on page D.42.)
PPT D-15
How Much House Can You Afford?
TEXT FIGURE D.3
How Much House Can You Afford?
(Text page D-7)
(See complete PowerPoint slide notes on page D.42.)
lecture link D-2
THE RENT-VERSUS–BUY
DECISION
Although buying is generally better than renting, there are
situations in which it is better to rent. (See the complete lec-
ture link on page D.52 in this manual.)
critical thinking
exercise D-4
CHOOSING THE RIGHT
MORTGAGE LOAN
How much would the monthly payment be to purchase an
$85,000 house? It depends on the interest rate, type of loan,
and down payment. (See complete exercise on page D.66 of
this manual.)
Bonus D – Managing Personal Finances
D-15
D. WHERE TO PUT YOUR SAVINGS
1. One of the WORST PLACES to keep your
vest.
a. The greater the RISK, the greater the RE-
TURN.
Bonus D – Managing Personal Finances
PPT D-16
Saving and Managing Credit
(See complete PowerPoint slide notes on page D.43.)
Bonus D – Managing Personal Finances
b. Credit cards help KEEP TRACK OF
Bonus D – Managing Personal Finances
lecture link D-3
KNOW YOUR CREDIT SCORE
Your credit score determines the interest rate you are
charged for credit. This lecture link gives some practical tips
for improving our score. (See the complete lecture link on
page D.53 in this manual.)
PPT D-17
Credit Cards and Debt
(See complete PowerPoint slide notes on page D.43.)
PPT D-18
Credit Card Act of 2009
(See complete PowerPoint slide notes on page D.43.)
lecture link D-4
AMERICA’S GROWING CREDIT
CARD AVERSION
As new credit card regulations come into effect, more and
more Americans are still turning away from plastic, (See the
complete lecture link on page D.54 of this manual.)
PPT D-19
America’s Credit Card Debt
(See complete PowerPoint slide notes on page D.44.)
PPT D-20
Clean Credit
(See complete PowerPoint slide notes on page D.44.)
Bonus D – Managing Personal Finances
6. DEBIT CARDS are like credit cards, but they
won’t let you spend more than a certain
amount.
ING INSURANCE
A. BUYING LIFE INSURANCE
1. The death of one spouse can mean a sudden
drop in income for the survivor.
2. To PROVIDE PROTECTION from the loss of a
spouse or business partner, you should buy life
insurance.
3. TERM INSURANCE is pure insurance protec-
Bonus D – Managing Personal Finances
PPT D-21
What’s Your Score?
(See complete PowerPoint slide notes on page D.44.)
critical thinking
exercise D-3
FINDING THE BEST CAR LOAN
This exercise asks students to use online financial sites to find
the latest interest rates for car loans and calculate the monthly
payment. (See complete exercise on page D.64 of this manual.)
lecture link D-5
DISCREDIT REPORT
Maybe you’ve never seen your credit report, but dozens of
strangers have. (See complete lecture link on page D.55 of this
manual.)
progress
assessment
(Text page D-9)
PPT D-22
Progress Assessment
(See complete PowerPoint slide notes on page D.45.)
PPT D-23
Insuring Your Life
(See complete PowerPoint slide notes on page D.45.)
TEXT FIGURE D.4
Why Buy Term Insurance?
(Text page D-10)
This text figure shows the reasons for purchasing term insur-
ance.