Get a Financial Life: Personal Finance In Your Twenties and Thirties

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Overview

The bestselling book that the New York Times hailed as “a highly readable and substantial guide to the grown-up realms of money and business,” Get a Financial Life is a must-read for anyone in their twenties and thirties (or beyond) who wants to understand the basics of personal finance.

If you’ve been meaning to get your finances in shape but have no idea where to start, this is your playbook. Get a Financial Life busts open the system, teaching tricks for becoming master of ...

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Overview

The bestselling book that the New York Times hailed as “a highly readable and substantial guide to the grown-up realms of money and business,” Get a Financial Life is a must-read for anyone in their twenties and thirties (or beyond) who wants to understand the basics of personal finance.

If you’ve been meaning to get your finances in shape but have no idea where to start, this is your playbook. Get a Financial Life busts open the system, teaching tricks for becoming master of your own money universe. No matter what’s happening in the economy, all the guidance you need is right here. You’ll learn how to:

• Pay off your credit cards and student loans and live debt free
• Start saving, even if you’re living paycheck to paycheck
• Take advantage of the latest tax rules and save a bundle
• Find smart investments while still supporting socially responsible companies
• Come up with a down payment and buy a home, even in a tough economy
• Afford grad school
• Protect yourself from identity theft

And you’ll discover why a 401(k) is your best friend—in boom times and even if the market is tanking.

From tracking your spending to finding deals on insurance to navigating the new world of homebuying, this easy-to-understand, comprehensive guide provides an up-to-date road map of the world of personal finance. Whether you earn $30,000 or $300,000, are single or married, are drowning in debt or just looking for ways to keep your savings secure in uncertain times, you’ll find the answers you need in Get a Financial Life.

“A daring book….A life’s worth of smart financial advice” (Newsweek).

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Editorial Reviews

From the Publisher
"Kobliner's done it again! Get a Financial Life gives clear and straightforward advice on how to manage your money-even in a financial meltdown. A must-read for 20-and 30-somethings who want to be fiscally smart and financially secure." — Soledad O'Brien, CNN

"Beth Kobliner's book provides a much-needed and sensible guide." — Paul A. Volcker, Former Chairman, Federal Reserve Board

"One of the best guides to help young people get a handle on money matters." — Burton G. Malkiel, Chemical Bank Chairman's Professor of Economics, Princeton University; author, A Random Walk Down Wall Street

"Stop worrying and start reading Beth Kobliner's Get a Financial Life, the best book to help you understand your money in the toughest financial market since the Great Depression." — Jim Cramer, CNBC's Mad Money

"A highly readable and substantial guide to the grown-up worlds of money and business." — The New York Times

"Get A Financial Life gives you the essential information you need to get your finances in order as you're starting your career. The rest is up to you. Educate yourself, get motivated, and get your finances in shape now by reading this book." — Sharon Epperson, CNBC Personal Finance Correspondent and author of The Big Payoff

"Smart, thorough-a tremendously useful guide to all the essentials of sound personal finance." — Eric Gelman, Fortune

"A daring book....A life's worth of smart financial advice." — Newsweek

"With numerous insights, this fine book demonstrates that, through discipline and enterprise, anyone can win their financial independence." — Tom Gardner, co-founder of The Motley Fool

"Beth Kobliner is telling you it's time to smell the latte. In Get a Financial Life, Kobliner serves a rich, smooth brew of common sense on everything from paying off your student loan to saving for (gasp) your own kid's future. The advice is thoughtful, precise, and up-to-date. But the simple, step-by-step explanations make getting a financial life easier than steaming the perfect froth on a cappuccino." — Saul Hansell, The New York Times

Library Journal
Kobliner presents straightforward advice for money management, written in language aimed at twenty- and thirtysomethings. She covers topics such as credit card debt, retirement plans, insurance, home buying, and budgeting. Her goal for boomerang kids is obviously to gain financial freedom and be able to move out of their parents' basement, but this is also an important book for young adults who want to avoid moving back home in the first place. (LJ 6/15/96)
BUST Magazine
If you use money and are numbstruck by the world of finance, run—don't walk—to get this book....Kobliner id friendly, yet direct, and gets the information out by using an economy of words unmired by cutesy anecdotes...I would heartily recommend it to anyone who is as foreign to all matters of finance as I am. Was.
Library Journal
Those in their twenties and thirties have special financial concerns, including paying off college loans, obtaining credit cards, buying a car, and financing a first house or apartment. Kobliner, a contributing writer for Money magazine, provides some assistance here. She "focuses exclusively on what you need to know now when you're just starting to pay attention to money matters whether you earn $15,000 or $150,000, whether you're single or married, whether you're financially inclined or financially challenged." Those consulting this book will find useful information and advice, from buying insurance to filing an income tax return. Helpful features include a bibliography of information resources and lists of agencies to contact. This source provides a helpful road map for young people striving for financial security.
-- Lucy T. Heckman, St. John's University Library, Jamaica, NY
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Product Details

  • ISBN-13: 9780743264365
  • Publisher: Touchstone
  • Publication date: 3/17/2009
  • Edition description: Revised
  • Edition number: 3
  • Pages: 352
  • Sales rank: 88,021
  • Product dimensions: 5.50 (w) x 8.30 (h) x 2.80 (d)

Meet the Author

Beth Kobliner is a personal finance commentator, journalist, and the author of the New York Times bestseller Get a Financial Life. She’s currently writing a new book for parents, Make Your Kids a Money Genius (Even If You’re Not). Beth was recently appointed by President Obama to the President’s Advisory Council on Financial Capability for Young Americans, a new bipartisan committee dedicated to increasing the financial know-how of kids of all ages and economic backgrounds. As a member of the last Council, she spearheaded the creation of the national initiative Money as You Grow.

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Read an Excerpt

Introduction

A lot has happened since 1996, when I wrote the first edition of Get a Financial Life.

The Internet has revolutionized the way many people interact with the world. The economy has experienced the greatest period of prosperity it has ever known. In the last three years of the 1990s alone, stock values doubled, and just about any stock with a "dot com" after its name has seemed like a winning lottery ticket.

Despite these changes, the premise of the original edition of Get a Financial Life still holds: Many people in my generation — those now in their twenties and thirties — do not expect to live as well as their parents. In inflation-adjusted dollars, people 25 to 34 years old today still earn lower incomes on average than our counterparts in the 1970s. And we are carrying more personal debt (like credit cards and student loans) than any other generation has at our age.

The good news is that there has never been a better time to get your financial life in order. If you're drowning in credit card debt, there are dozens of low-rate cards aggressively competing for your business. If you're hoping to buy a home in the next few years, there are more low down-payment loans to choose from than ever before. If you're eager to start investing — even with very little money — new tax-favored savings plans are available to help you make the most of whatever you can afford to set aside. And the Internet has made it exponentially easier to find everything from low-interest-rate auto loans to high-interest-rate savings options.

This book will show you how to make the most of your money, whether you earn $20,000 or $200,000, whether you're single or attached, whether you're financially adept or financially confused. You will learn how to save even if you're barely making ends meet. You'll get straightforward advice on how to select the right stock mutual funds. You'll pick up tax strategies that could save you hundreds of dollars a year. You'll discover how to reduce outrageous bank fees and carefully evaluate your online banking options. You'll find strategies for handling your student loans. You will get unbiased advice on what kinds of life, health, and auto insurance you need, and what kinds you should avoid.

This book will provide answers to specific questions, including: Should I contribute to my company's 401(k) plan? How do I determine whether I should buy or rent a home? Where's the best place to save? When does it make sense to start investing? How can I find out what's in my credit report? Should I buy or lease a car? What tax credits can I claim? How can the Internet help me shop for a home loan? Should I get a Roth IRA? Do I need a stockbroker?

If the thought of reading an entire book on personal finance seems daunting, relax. Chapter 1 offers a summary of some of the most important steps you'll need to take, and "Financial Cramming" review sections at the end of each chapter highlight key concepts so you can be sure that you've nailed them.

By the way, all of the information in this second edition of Get a Financial Life has been meticulously re-researched and updated, but not everything needed to be rewritten; I have decided not to change anything just for change's sake. The bottom line of Get a Financial Lifehasn't changed a bit. Once you get started, you'll see that achieving your financial goals can be a lot easier than you think — that is, if you take advantage of the biggest benefit you still have on your side: time.

Copyright © 1996, 2000 by Beth Kobliner

Chapter One: Crib Notes

A "Cheat Sheet" for Time-Pressed Readers

If the idea of reading a whole book on personal finance leaves you cold, this is the chapter for you. The advice below cuts to the chase and sets you on the road to a solid financial life. So if you don't have the patience to read the entire book right now, adopting one or two of these strategies will still put you ahead of the game.

Of course, as someone's mother once said, cheaters only cheat themselves. And while this chapter is a good launching point, ignoring the remaining eight chapters is a little like relying on the Cliffs Notes version of Moby Dick: You'll get the basic plot line but never understand it in any real depth. Still, the following crib notes should give you a rundown on the basics. I've tried to list them in rough order of importance, but your priorities may depend on your own situation.

1. Insure yourself against financial ruin.

It's not surprising that people don't like to talk about insurance. It's expensive, confusing, and mostly about sickness and death. But if you're interested in getting adequate medical care in case of a serious accident or illness, and would prefer not to bankrupt yourself and your family in the process, there really is no higher financial priority than health insurance.

If you work for a company that offers employees health insurance, you're lucky; participating in your employer's group plan will almost always cost you much less than buying a policy on your own, and the coverage you get is likely to be more comprehensive than any individual policy you could afford. However, in an effort to reduce their costs, many companies have shifted to what is known as managed care, which means you may be limited in your choice of doctors and treatments. If you're given more than one type of health insurance plan to choose from through your employer, make sure you consider not only price but also the type of coverage you will receive. If, for example, you're thinking about joining a type of plan called a health maintenance organization (HMO), inquire about exactly what is covered, ask about the procedure for seeing specialists, and find out what happens if you want to visit a doctor outside the HMO. Although HMOs are generally less expensive than other plans, if you come down with a serious illness and want to see a specialist outside your HMO network, you may have to foot the entire bill yourself. Before you sign up for any health insurance plan, talk to coworkers about their experiences with the various options.

If the company you work for does not offer health insurance, you'll have to pay for it yourself. If you recently graduated from college, see if you can extend coverage from your parents' plan for a few years. If you're job hunting, at the very least get temporary coverage. If you're employed but your company doesn't offer you insurance, see if there are any organizations you can join (a trade association, for example) that will allow you to purchase health insurance at a group rate. This can be much less expensive than purchasing individual coverage. Since plans vary dramatically from state to state, your best bet is to call the major insurers and HMOs in your area and see what they have to offer. Also try Quotesmith (800-556-9393; www.quotesmith.com), Insweb (www.insweb.com), and your local Blue Cross/Blue Shield company (www.bluecares.com) for quotes. And if you're having trouble getting insurance because of a preexisting medical condition, your state insurance department should be able to provide you with the names of companies that will cover you. (See page 220 for the phone number of your state's office.)

Another type of protection you may want to consider is life insurance, but only if you have children or someone else is financially dependent on you. If you don't have dependents, you don't need life insurance. If you do, the type you should buy is called term insurance, which is relatively inexpensive. Get quotes from agents at USAA (800-531-8000; www.usaa.com) and Ameritas (800-552-3553; www.ameritas.com). You should also consult Web sites that will let you compare quotes from different firms side by side, like Term4sale (www.term4sale.com) and Quotesmith (800-556-9393; www.quotesmith.com). One warning: If you deal with a life insurance agent, be prepared to hear a big pitch for a type of policy known as cash value life insurance. Ignore it. It's more profitable for the agent, but it's probably not a good deal for you.

Depending on your financial situation, you may also want to consider protecting your earning power with disability insurance. A disability policy will pay you an income (typically 60% to 70% of your current salary) if you're injured or very sick and are unable to work for an extended period of time. Depending on the state in which you're employed, you may already be covered by a mandatory disability insurance program and/or by insurance provided voluntarily by your employer as part of your standard employee benefits package. Even if you are, it's a good idea to find out how much coverage you have, whether it's possible to buy more, and what it would cost you. If disability insurance is not available to you through your employer's plan, look into purchasing some on your own. Companies that specialize in disability insurance are Unum (800-843-3426; www.unum.com) and Northwestern Mutual Life Insurance (800-672-4341; www.northwesternmutual.com).

For additional tips on purchasing all types of insurance, see Chapter 8.

2. Pay off your debt the smart way.

More often than not, the smartest financial move you can make is to take any savings you have (above and beyond money you need for essentials like rent, food, and health insurance) and pay off your high-rate loans. The reason is simple: You can "earn" more by paying off a loan than you can by saving and investing. Paying off a credit card that has a 17% interest rate is equivalent to earning 17% on an investment, guaranteed — an extremely attractive rate of return. (Actually it's even better than that; it's the equivalent of earning 17% after taxes.) If you want a full explanation of this concept, turn to page 51. Otherwise, take my word for it.

If you can't pay off your high-rate debt immediately, take steps to reduce the interest rate you pay. As a short-term strategy, you can switch to a new credit card and take advantage of the super-low introductory rates (known as "teaser rates") that many credit card companies offer to new customers. But these rates only last for a few months and then spike up to much higher rates. In the long run, it probably makes more sense to apply for a card with a long-lasting low rate, but you'll need an excellent credit rating to qualify. For lists of low-rate credit card issuers, visit the Web sites of Bankrate.com (www.bankrate.com), Consumer Action (www.consumer-action.org), and CardWeb (www.cardweb.com). (If you don't have access to the Internet, call 800-344-7714 or send a request and check or money order for $5 to CardTrak, P.O. Box 1700, Frederick, MD 21702.)

If you have several different types of debt — say, a credit card balance on a card with a 17% interest rate, a car loan with a 10% rate, and a student loan at 8% — pay off the loan with the highest interest rate first. One strategy to consider is stretching out your student loan payments over 15 or 20 years instead of 10 years through a process known as loan consolidation. (To see if you're eligible, call the company that handles your loan.) This will reduce your monthly student loan payment and leave you with extra cash. Use this money to pay off your credit card balance faster. Once you've gotten rid of your credit card debt, start paying off your auto loan faster. After you wipe out that loan too, increase your student loan payments to at least their initial levels.

The only time it doesn't make sense to kill your debt is when the interest rate you're being charged is lower than the rate you can receive on an investment. If, for example, you have a special student loan with a 3% rate, you'd be better off maintaining your usual payment schedule on the loan and putting your cash into an investment that pays an after-tax rate greater than 3%.

For detailed information on credit cards, auto loans, student loans, home equity loans, and credit reports, see Chapter 3.

3. Start contributing to a tax-favored retirement savings plan.

Next to flossing, saving money in a retirement plan is the smartest habit to acquire when you're young. If you're lucky enough to work for a company that offers a retirement savings plan like a 401(k), you should take advantage of it.

There are several reasons to participate in a 401(k). For starters, many employers will match a portion of the amount you put into such a plan. That means the company will contribute a set amount — say, 50 cents — for every dollar you contribute, up to a specified dollar amount. That's an immediate 50% return on your money! (In fact, if your company offers such a fabulous matching deal, you should probably contribute to the plan even before paying off your credit card debt.) In addition, the federal government allows you to delay paying taxes on the money you contribute to a 401(k) until you withdraw that money. That translates into an immediate tax break of hundreds of dollars each year. If, for example, you contribute $1,000 to a 401(k), you will reduce your taxable income by $1,000. If you're in the 28% tax bracket, that's a savings of $280. (You are in this tax bracket in 2000 if you are single and your taxable income is between $26,250 and $63,550, or if you are married and you and your spouse's combined taxable income is between $43,850 and $105,950.)

Be forewarned that you're likely to come across people who'll tell you you're too young to lock up your money in a retirement savings plan. Ignore them. While it's true that you won't be able to withdraw your money until you reach age 591/2 without paying a 10% penalty, many plans allow employees to borrow against their retirement savings at favorable rates. What's more, your money will grow tax-free in a retirement plan for years. The benefits of tax-free growth could easily outweigh the penalty you'd have to pay for making an early withdrawal. And if you switch jobs, you may be able to move your 401(k) money into your new employer's plan.

The easiest way to start contributing is to contact your employee benefits office and ask to have a set percentage of each paycheck automatically transferred into your company plan. Try to contribute the maximum allowed by law. If you can't afford to stash away this much, at least contribute the maximum amount for which you're eligible to receive matching funds.

If you aren't lucky enough to work for an employer that offers a 401(k) or a similar company retirement plan (and possibly even if you are), you should start investing in an individual retirement account (IRA). The most you can contribute to an IRA is $2,000 annually; if at all possible, contribute this amount every year. There are two main kinds of IRA: traditional deductible IRAs and Roth IRAs. Deductible IRAs, like 401(k)s, give you an immediate tax break and let you delay paying taxes on your money until you withdraw it. Roth IRAs work the other way around: You don't get an upfront tax break, but the money you invest grows tax-free forever; you won't have to pay federal income tax when you withdraw that money at retirement.

IRAs don't have all the advantages of 401(k)s, so putting money in an IRA is somewhat less pressing than enrolling in your company-sponsored plan. For starters, with an IRA you don't have the benefit of an employee matching program. Also, you can't borrow money from an IRA before you reach age 591/2 the way you can with most 401(k)s; if you need to get at your money, you'll probably have to pay the 10% penalty. (There are exceptions to this rule if you're withdrawing the money from an IRA for certain educational or homebuying expenses.) Even if you have to pay the penalty for making an early withdrawal from your IRA, you'll often still come out ahead.

If your employer does offer a 401(k) with matching, you should contribute to that plan before thinking about an IRA. Once you've hit the maximum your employer will match, you should contribute to an IRA as well.

For answers to commonly asked questions about tax-favored retirement savings plans, including which kind of IRA to choose, see Chapter 6.

4. Reduce your monthly banking fees.

Chances are you don't give your bank too much thought. But by becoming aware of bank

dn0 charges, you may be able to save hundreds of dollars a year.

Two of the most burdensome bank fees are checking charges and automated teller machine (ATM) fees. To reduce these charges, and possibly eliminate them entirely, shop around for a bank that waives them for customers who maintain a specified minimum balance. Some banks require you to maintain the minimum in a checking account only; others waive monthly checking charges as long as the combined balances in your checking and savings accounts (and other bank savings options) meet the minimum requirement. Either way, look for a bank with a low minimum. While some banks require you to keep as much as $10,000 in the bank to get free checking and ATM use, others require you to keep just $100. Even if you have enough money to meet the higher minimum balance requirements, it still makes sense to find a bank with low balance requirements. That way you won't have to tie up large sums of cash in a bank account that pays a pitifully low interest rate.

Before you switch banks, ask whether yours will waive its minimum balance requirement if you sign up for direct deposit (which means that your entire paycheck would be automatically deposited into your checking or savings account each pay period); some banks will. You should also find out if you're eligible to join any credit unions, which are special not-for-profit banks that tend to have lower minimum balance requirements and lower fees all around. (For help in finding a credit union, contact the Credit Union National Association at 800-358-5710 or www.cuna.org.) Or look into opening a checking account at one of the growing number of banks that operate only over the Internet, many of which require no minimum balance for checking.

For more tips on banking smart, see Chapter 4.

5. Build an emergency cushion with an automatic savings plan.

If you find it impossible to save any money, you're not alone. But once you've gotten rid of your high-rate debt and taken care of Crib Notes 1, 2, 3, and 4, it's time to start saving. A relatively painless way to do it is to enroll in an automatic savings plan. These plans allow you to have money automatically withdrawn from each paycheck and funneled into a bank account or mutual fund. (See Crib Note 6 for a brief discussion of mutual funds.)

Once you've met the minimum balance requirement for free checking at your bank, you're ready to invest in a special type of mutual fund called a money market fund. Money market funds are considered nearly as safe as bank savings accounts and tend to pay higher interest rates. To find a money market fund, check out Web sites like Bankrate.com and Money.com, which offer lists of the highest interest rates currently being offered. Another strategy is to open a money market fund at the same low-cost mutual fund company where you plan to purchase all of your mutual funds in the future. (For my suggestions on specific low-cost mutual fund companies that offer money market funds, see Crib Note 6.) Find out if the fund company and your employer will allow you to have the amount you want to invest automatically deducted from your paycheck and deposited into the fund. If not, the next best option is to have the mutual fund company automatically siphon the cash out of your checking account once or twice a month and deposit it into the fund.

No matter what type of automatic savings plan you choose, your goal should be to save at least three months' worth of living expenses in a money market fund before you even think about the more aggressive investments discussed in Crib Note 6. To figure out what three months' worth of living expenses amount to, use the worksheet in Chapter 2. For virtually everything you need to know about money market funds, see Chapter 5.

6. Begin investing in stock and bond mutual funds.

Once you have your three-month savings cushion in place in a money market fund, it's time to get a bit more aggressive with your investments. The advantage of stocks and bonds over money market funds is that they've historically tended to earn higher rates of return for investors over long periods of time, and many experts predict that they will continue to do so in the future. You may need these higher returns to stay ahead of inflation. (For a discussion of inflation and why you'll need to worry about it, see Chapter 5.)

The downside of stocks and bonds is that they're riskier than money market funds. You can lose money by investing in them. Only you can decide how much risk you're willing to take for the chance to earn higher returns over time, but one reasonable approach might be to put about half your holdings into stocks, one-third into bonds, and the rest in money market funds.

If you do decide to put some of your money in stocks and bonds, I recommend that you do so by investing in stock mutual funds and bond mutual funds. A mutual fund is a type of investment that pools together the money of thousands of people. It's headed by a fund manager, who invests the entire sum in a variety of stocks, bonds, and/or money market instruments. (To find out exactly what these are, you'll need to read Chapter 5.) I recommend that you consider only no-load mutual funds with low expenses. A load is a fee that some mutual fund companies charge each time you put money in or take money out of a fund. Avoid investing in load funds; they don't perform any better on average than no-load funds, so there's no point in paying the extra fees. Expenses are the annual fees charged by the fund and can take a serious bite out of your investment returns if you're not careful.

Although stock funds are considered somewhat riskier than bond funds, they have also performed somewhat better over the years. If you decide to invest in a stock fund, I recommend you consider a type known as a stock index fund. Two companies that offer index funds are Vanguard (800-662-7447; www.vanguard.com) and T. Rowe Price (800-638-5660, www.troweprice.com). Vanguard has the lowest fees and the largest selection of index funds, but you'll generally need at least $3,000 to open an account there. T. Rowe Price allows investors to get started by putting in just $50 a month.

Bonds are typically less risky than stocks but riskier than money market funds. Holding bonds as well as stocks will help to diversify your investments, thus reducing your overall risk. Companies that offer no-load bond funds with low expenses include Vanguard (800-662-7447; www.vanguard.com), Galaxy Funds (877-289-4252; www.galaxyfunds.com), and USAA (800-531-8181; www.usaa .com). While there are several different types of bond funds, a reasonable approach would be to choose an intermediate-term bond fund that invests in government securities or highly rated corporations.

To learn more about bond funds, stock funds, and investing in general — you guessed it — you'll have to read Chapter 5.

7. Think about buying a house or apartment.

At a certain point in life, you may start to feel that you should buy a home. Deciding that it makes sense to purchase a place of your own involves more than simply comparing your monthly rent with the monthly mortgage payments you'd make as an owner.

A range of financial factors, including the tax break you'll get from buying, the fees you'll pay when you buy, and how long you plan to live in the new home, should enter into your decision. For a discussion of some of these factors and information on where you can get software to help analyze your own situation, turn to Chapter 7.

Just a few years ago, the biggest obstacle to buying a home was coming up with the down payment. Today there are several options available, especially if you have good credit. Start by calling your state housing office to see if it offers any low down payment mortgage options for which you're eligible. The advantage of these state programs is that they typically charge a lower interest rate than you can get on a bank mortgage. (For the phone number of your state housing office, see page 192.)

Your next step is to get information on Fannie Mae and Freddie Mac, two companies that were established by the government to help banks and mortgage companies expand their mortgage offerings to all types of borrowers. Fannie and Freddie offer several low down payment loan programs (as low as 3%). When you shop around, ask lenders if they participate in Fannie's "Flexible 97" and "Community Home Buyer's Program," or in Freddie's "Affordable Gold" and "Alt 97." They'll know what you mean. For several free booklets from Fannie Mae on purchasing a home, call 800-688-HOME (www.fanniemae.com).

If you don't qualify for one of these programs, a third alternative is the Federal Housing Administration (FHA) loan program. FHA loans require only a 3% down payment, and they're usually easier to qualify for, but the deal you get may not be quite as good. Contact a lender or your local Housing and Urban Development office (www.hud.gov) for more information on FHA loans.

If you don't qualify for any of these programs, don't give up. There are many lenders out there that offer creative options. For more housing-related tips for buyers and renters, see Chapter 7.

8. Get smart about taxes.

Nobody likes paying taxes. One way to reduce the portion of your paycheck that goes to Uncle Sam is to take as many tax deductions as you are eligible for. Deductions are specific expenses that the government allows you to subtract from your income before calculating the amount of tax you're required to pay. Taking advantage of these tax deductions is a lot easier than it may sound.

The government allows you to take advantage of deductions in either of two distinct ways. The easiest approach is to take the standard deduction, which is simply a fixed dollar amount ($4,400 for singles, or $7,350 for couples, in 2000) that you subtract from your income. Although all taxpayers are permitted to take the standard deduction, depending on your circumstances, you may wind up paying less if you itemize your deductions instead. Itemizing means listing separately the specific items that are deductible under the current tax laws and then subtracting their total cost from your income.

If you choose to itemize your deductions, you'll have to fill out a tax form called a 1040 (also known as the long form) rather than the simpler 1040A (the short form) or the 1040EZ (the really short form). You'll then have to list your deductions on an attachment to Form 1040 called Schedule A. Among the types of expenses you may be allowed to deduct are state and local taxes you've paid, donations you've made to a charity, and certain moving, job-hunting, business travel, and education expenses.

The only way to find out if you can save money on your taxes by itemizing instead of taking the standard deduction is to fill out a copy of Schedule A and see if the amount you're allowed to deduct is greater than the standard deduction. Even if you find that you won't save money by itemizing this year, this exercise will help get you better acquainted with some common types of deductions and may help you plan things in a way that could reduce your tax bite next year.

There are some deductions you can take whether you itemize or not, like contributions to a deductible IRA or interest payments on your student loans. If you have children or educational expenses, you may also qualify for valuable tax credits, which subtract money directly from the amount you owe the IRS.

To get tax forms and a general instruction book from the IRS, call 800-TAX-FORM (or go to its Web site at www.irs.gov) and ask for Tax Publication 17, Your Federal Income Tax. Also consider using your computer to help you prepare your taxes. The Web site TurboTax (www.turbotax.com) provides you with the forms and instructions you'll need, performs all the necessary calculations, and prints out completed forms you can send to the IRS. It will also let you send your return straight to the IRS electronically. For about $35 you can purchase tax software that performs the same tasks; two programs worth considering are TurboTax (or MacInTax for Macs) and TaxCut.

For specific ways to cut your tax bill, see Chapter 9.

Copyright © 1996, 2000 by Beth Kobliner

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Table of Contents

Introduction

Chapter 1: Crib Notes
A Cheat Sheet for Time-Pressed Readers Who Need Help Now

Chapter 2: Get a Grip on Your Financial Life
Figuring Out Where You Are and Where You Want to Go

Putting a Price Tag on Your Goals Learning How to Reach Your Goals Figuring Out Where Your Money Goes Financial Rules of Thumb Getting Your Financial Life in Order Keeping Track of Money Coming In and Going Out

Chapter 3: Dealing with Debt
Finding the Cheapest Loans and Getting Yourself Out of Hock

Four Pointers for Anyone with Debt Credit Cards Student Loans Car Loans Home Equity Loans Credit Reports and Credit Scores If You're in Serious Debt When to Consider Bankruptcy

Chapter 4: Basic Banking
How to Keep Your Costs Low and Your Money Safe

A Bank by Any Other Name What to Look for in a Bank Managing Your Checking Account Using the ATM Wisely When to Go Internet-Only What to Do with Your Savings Joint versus Separate Accounts A Warning About Bank-Sold Investments

Chapter 5: All You Really Need to Know About Investing
Getting a Foothold in this Rocky Landscape

Mutual Fund Fundamentals Money Market Funds A Word About Inflation Stock Funds Bond Funds The Right Mix of Investments Mutual Fund Expenses Deciding Where to Buy Your Mutual Funds Socially Responsible Investing

Chapter 6: The Brave New World of 4O1(k)s
Don't Let the Market Meltdown Be Your Excuse for Missing the Best Savings Deal Around

What Are Retirement Savings Plans, Anyway?
How Your Retirement Savings Account Works Contributing to Your 401(k)
Contributing to an IRA How to Tap the Money in Your 401(k) or IRA if You Really Need It Now A Word About Inflation and Taxation Answers to Some Common Questions If You're Self-Employed

Chapter 7: Oh, Give Me a Home
The New Rules for Getting a House or Apartment of Your Own

A 60-Second Explanation of the Mortgage Mess What Every Renter Needs to Know Should You Rent or Buy?
What Lenders Look For The Real Costs of Owning a Home Loans to Discuss with Your Lender If You Don't Qualify for a Mortgage Shopping for a Mortgage Making the Process Go Smoothly If You Can't Pay Your Mortgage

Chapter 8: Insurance: What You Need and What You Don't
Finding the Right Policies and Skipping Coverage You Can Do Without

Getting the Best Deal Checking Out Credentials Making the Most of Your Employer's Plans Health Insurance Car Insurance Disability Insurance Home Insurance Life Insurance Insurance You Probably Don't Need

Chapter 9: How to Make Your Life Less Taxing
Put More Money in Your Pocket and Less in Uncle Sam's

Why Is Your Paycheck So Small?
The Taxes You Pay Figuring Out Your Tax Rate Filing Your Tax Return Maximizing Your Tax Breaks Making the Most of Your Tax Credits Ten Tax Moves That Could Save You Money Deductions for the Self-Employed Getting Your Tax Life in Order Do You Need a Tax Preparer?

Chapter 1O: Making the Most of Military Benefits
Know What You Deserve if You Serve

Further Reading

Special Acknowledgments

Acknowledgments

Index

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First Chapter

Chapter One: Crib Notes

A "Cheat Sheet" for Time-Pressed Readers

If the idea of reading a whole book on personal finance leaves you cold, this is the chapter for you. The advice below cuts to the chase and sets you on the road to a solid financial life. So if you don't have the patience to read the entire book right now, adopting one or two of these strategies will still put you ahead of the game.

Of course, as someone's mother once said, cheaters only cheat themselves. And while this chapter is a good launching point, ignoring the remaining eight chapters is a little like relying on the Cliffs Notes version of Moby Dick: You'll get the basic plot line but never understand it in any real depth. Still, the following crib notes should give you a rundown on the basics. I've tried to list them in rough order of importance, but your priorities may depend on your own situation.

1. Insure yourself against financial ruin.

It's not surprising that people don't like to talk about insurance. It's expensive, confusing, and mostly about sickness and death. But if you're interested in getting adequate medical care in case of a serious accident or illness, and would prefer not to bankrupt yourself and your family in the process, there really is no higher financial priority than health insurance.

If you work for a company that offers employees health insurance, you're lucky; participating in your employer's group plan will almost always cost you much less than buying a policy on your own, and the coverage you get is likely to be more comprehensive than any individual policy you could afford. However, in an effort to reduce their costs, many companies have shifted to what is known as managed care, which means you may be limited in your choice of doctors and treatments. If you're given more than one type of health insurance plan to choose from through your employer, make sure you consider not only price but also the type of coverage you will receive. If, for example, you're thinking about joining a type of plan called a health maintenance organization (HMO), inquire about exactly what is covered, ask about the procedure for seeing specialists, and find out what happens if you want to visit a doctor outside the HMO. Although HMOs are generally less expensive than other plans, if you come down with a serious illness and want to see a specialist outside your HMO network, you may have to foot the entire bill yourself. Before you sign up for any health insurance plan, talk to coworkers about their experiences with the various options.

If the company you work for does not offer health insurance, you'll have to pay for it yourself. If you recently graduated from college, see if you can extend coverage from your parents' plan for a few years. If you're job hunting, at the very least get temporary coverage. If you're employed but your company doesn't offer you insurance, see if there are any organizations you can join (a trade association, for example) that will allow you to purchase health insurance at a group rate. This can be much less expensive than purchasing individual coverage. Since plans vary dramatically from state to state, your best bet is to call the major insurers and HMOs in your area and see what they have to offer. Also try Quotesmith (800-556-9393; www.quotesmith.com), Insweb (www.insweb.com), and your local Blue Cross/Blue Shield company (www.bluecares.com) for quotes. And if you're having trouble getting insurance because of a preexisting medical condition, your state insurance department should be able to provide you with the names of companies that will cover you. (See page 220 for the phone number of your state's office.)

Another type of protection you may want to consider is life insurance, but only if you have children or someone else is financially dependent on you. If you don't have dependents, you don't need life insurance. If you do, the type you should buy is called term insurance, which is relatively inexpensive. Get quotes from agents at USAA (800-531-8000; www.usaa.com) and Ameritas (800-552-3553; www.ameritas.com). You should also consult Web sites that will let you compare quotes from different firms side by side, like Term4sale (www.term4sale.com) and Quotesmith (800-556-9393; www.quotesmith.com). One warning: If you deal with a life insurance agent, be prepared to hear a big pitch for a type of policy known as cash value life insurance. Ignore it. It's more profitable for the agent, but it's probably not a good deal for you.

Depending on your financial situation, you may also want to consider protecting your earning power with disability insurance. A disability policy will pay you an income (typically 60% to 70% of your current salary) if you're injured or very sick and are unable to work for an extended period of time. Depending on the state in which you're employed, you may already be covered by a mandatory disability insurance program and/or by insurance provided voluntarily by your employer as part of your standard employee benefits package. Even if you are, it's a good idea to find out how much coverage you have, whether it's possible to buy more, and what it would cost you. If disability insurance is not available to you through your employer's plan, look into purchasing some on your own. Companies that specialize in disability insurance are Unum (800-843-3426; www.unum.com) and Northwestern Mutual Life Insurance (800-672-4341; www.northwesternmutual.com).

For additional tips on purchasing all types of insurance, see Chapter 8.

2. Pay off your debt the smart way.

More often than not, the smartest financial move you can make is to take any savings you have (above and beyond money you need for essentials like rent, food, and health insurance) and pay off your high-rate loans. The reason is simple: You can "earn" more by paying off a loan than you can by saving and investing. Paying off a credit card that has a 17% interest rate is equivalent to earning 17% on an investment, guaranteed — an extremely attractive rate of return. (Actually it's even better than that; it's the equivalent of earning 17% after taxes.) If you want a full explanation of this concept, turn to page 51. Otherwise, take my word for it.

If you can't pay off your high-rate debt immediately, take steps to reduce the interest rate you pay. As a short-term strategy, you can switch to a new credit card and take advantage of the super-low introductory rates (known as "teaser rates") that many credit card companies offer to new customers. But these rates only last for a few months and then spike up to much higher rates. In the long run, it probably makes more sense to apply for a card with a long-lasting low rate, but you'll need an excellent credit rating to qualify. For lists of low-rate credit card issuers, visit the Web sites of Bankrate.com (www.bankrate.com), Consumer Action (www.consumer-action.org), and CardWeb (www.cardweb.com). (If you don't have access to the Internet, call 800-344-7714 or send a request and check or money order for $5 to CardTrak, P.O. Box 1700, Frederick, MD 21702.)

If you have several different types of debt — say, a credit card balance on a card with a 17% interest rate, a car loan with a 10% rate, and a student loan at 8% — pay off the loan with the highest interest rate first. One strategy to consider is stretching out your student loan payments over 15 or 20 years instead of 10 years through a process known as loan consolidation. (To see if you're eligible, call the company that handles your loan.) This will reduce your monthly student loan payment and leave you with extra cash. Use this money to pay off your credit card balance faster. Once you've gotten rid of your credit card debt, start paying off your auto loan faster. After you wipe out that loan too, increase your student loan payments to at least their initial levels.

The only time it doesn't make sense to kill your debt is when the interest rate you're being charged is lower than the rate you can receive on an investment. If, for example, you have a special student loan with a 3% rate, you'd be better off maintaining your usual payment schedule on the loan and putting your cash into an investment that pays an after-tax rate greater than 3%.

For detailed information on credit cards, auto loans, student loans, home equity loans, and credit reports, see Chapter 3.

3. Start contributing to a tax-favored retirement savings plan.

Next to flossing, saving money in a retirement plan is the smartest habit to acquire when you're young. If you're lucky enough to work for a company that offers a retirement savings plan like a 401(k), you should take advantage of it.

There are several reasons to participate in a 401(k). For starters, many employers will match a portion of the amount you put into such a plan. That means the company will contribute a set amount — say, 50 cents — for every dollar you contribute, up to a specified dollar amount. That's an immediate 50% return on your money! (In fact, if your company offers such a fabulous matching deal, you should probably contribute to the plan even before paying off your credit card debt.) In addition, the federal government allows you to delay paying taxes on the money you contribute to a 401(k) until you withdraw that money. That translates into an immediate tax break of hundreds of dollars each year. If, for example, you contribute $1,000 to a 401(k), you will reduce your taxable income by $1,000. If you're in the 28% tax bracket, that's a savings of $280. (You are in this tax bracket in 2000 if you are single and your taxable income is between $26,250 and $63,550, or if you are married and you and your spouse's combined taxable income is between $43,850 and $105,950.)

Be forewarned that you're likely to come across people who'll tell you you're too young to lock up your money in a retirement savings plan. Ignore them. While it's true that you won't be able to withdraw your money until you reach age 591/2 without paying a 10% penalty, many plans allow employees to borrow against their retirement savings at favorable rates. What's more, your money will grow tax-free in a retirement plan for years. The benefits of tax-free growth could easily outweigh the penalty you'd have to pay for making an early withdrawal. And if you switch jobs, you may be able to move your 401(k) money into your new employer's plan.

The easiest way to start contributing is to contact your employee benefits office and ask to have a set percentage of each paycheck automatically transferred into your company plan. Try to contribute the maximum allowed by law. If you can't afford to stash away this much, at least contribute the maximum amount for which you're eligible to receive matching funds.

If you aren't lucky enough to work for an employer that offers a 401(k) or a similar company retirement plan (and possibly even if you are), you should start investing in an individual retirement account (IRA). The most you can contribute to an IRA is $2,000 annually; if at all possible, contribute this amount every year. There are two main kinds of IRA: traditional deductible IRAs and Roth IRAs. Deductible IRAs, like 401(k)s, give you an immediate tax break and let you delay paying taxes on your money until you withdraw it. Roth IRAs work the other way around: You don't get an upfront tax break, but the money you invest grows tax-free forever; you won't have to pay federal income tax when you withdraw that money at retirement.

IRAs don't have all the advantages of 401(k)s, so putting money in an IRA is somewhat less pressing than enrolling in your company-sponsored plan. For starters, with an IRA you don't have the benefit of an employee matching program. Also, you can't borrow money from an IRA before you reach age 591/2 the way you can with most 401(k)s; if you need to get at your money, you'll probably have to pay the 10% penalty. (There are exceptions to this rule if you're withdrawing the money from an IRA for certain educational or homebuying expenses.) Even if you have to pay the penalty for making an early withdrawal from your IRA, you'll often still come out ahead.

If your employer does offer a 401(k) with matching, you should contribute to that plan before thinking about an IRA. Once you've hit the maximum your employer will match, you should contribute to an IRA as well.

For answers to commonly asked questions about tax-favored retirement savings plans, including which kind of IRA to choose, see Chapter 6.

4. Reduce your monthly banking fees.

Chances are you don't give your bank too much thought. But by becoming aware of bank charges, you may be able to save hundreds of dollars a year.

Two of the most burdensome bank fees are checking charges and automated teller machine (ATM) fees. To reduce these charges, and possibly eliminate them entirely, shop around for a bank that waives them for customers who maintain a specified minimum balance. Some banks require you to maintain the minimum in a checking account only; others waive monthly checking charges as long as the combined balances in your checking and savings accounts (and other bank savings options) meet the minimum requirement. Either way, look for a bank with a low minimum. While some banks require you to keep as much as $10,000 in the bank to get free checking and ATM use, others require you to keep just $100. Even if you have enough money to meet the higher minimum balance requirements, it still makes sense to find a bank with low balance requirements. That way you won't have to tie up large sums of cash in a bank account that pays a pitifully low interest rate.

Before you switch banks, ask whether yours will waive its minimum balance requirement if you sign up for direct deposit (which means that your entire paycheck would be automatically deposited into your checking or savings account each pay period); some banks will. You should also find out if you're eligible to join any credit unions, which are special not-for-profit banks that tend to have lower minimum balance requirements and lower fees all around. (For help in finding a credit union, contact the Credit Union National Association at 800-358-5710 or www.cuna.org.) Or look into opening a checking account at one of the growing number of banks that operate only over the Internet, many of which require no minimum balance for checking.

For more tips on banking smart, see Chapter 4.

5. Build an emergency cushion with an automatic savings plan.

If you find it impossible to save any money, you're not alone. But once you've gotten rid of your high-rate debt and taken care of Crib Notes 1, 2, 3, and 4, it's time to start saving. A relatively painless way to do it is to enroll in an automatic savings plan. These plans allow you to have money automatically withdrawn from each paycheck and funneled into a bank account or mutual fund. (See Crib Note 6 for a brief discussion of mutual funds.)

Once you've met the minimum balance requirement for free checking at your bank, you're ready to invest in a special type of mutual fund called a money market fund. Money market funds are considered nearly as safe as bank savings accounts and tend to pay higher interest rates. To find a money market fund, check out Web sites like Bankrate.com and Money.com, which offer lists of the highest interest rates currently being offered. Another strategy is to open a money market fund at the same low-cost mutual fund company where you plan to purchase all of your mutual funds in the future. (For my suggestions on specific low-cost mutual fund companies that offer money market funds, see Crib Note 6.) Find out if the fund company and your employer will allow you to have the amount you want to invest automatically deducted from your paycheck and deposited into the fund. If not, the next best option is to have the mutual fund company automatically siphon the cash out of your checking account once or twice a month and deposit it into the fund.

No matter what type of automatic savings plan you choose, your goal should be to save at least three months' worth of living expenses in a money market fund before you even think about the more aggressive investments discussed in Crib Note 6. To figure out what three months' worth of living expenses amount to, use the worksheet in Chapter 2. For virtually everything you need to know about money market funds, see Chapter 5.

6. Begin investing in stock and bond mutual funds.

Once you have your three-month savings cushion in place in a money market fund, it's time to get a bit more aggressive with your investments. The advantage of stocks and bonds over money market funds is that they've historically tended to earn higher rates of return for investors over long periods of time, and many experts predict that they will continue to do so in the future. You may need these higher returns to stay ahead of inflation. (For a discussion of inflation and why you'll need to worry about it, see Chapter 5.)

The downside of stocks and bonds is that they're riskier than money market funds. You can lose money by investing in them. Only you can decide how much risk you're willing to take for the chance to earn higher returns over time, but one reasonable approach might be to put about half your holdings into stocks, one-third into bonds, and the rest in money market funds.

If you do decide to put some of your money in stocks and bonds, I recommend that you do so by investing in stock mutual funds and bond mutual funds. A mutual fund is a type of investment that pools together the money of thousands of people. It's headed by a fund manager, who invests the entire sum in a variety of stocks, bonds, and/or money market instruments. (To find out exactly what these are, you'll need to read Chapter 5.) I recommend that you consider only no-load mutual funds with low expenses. A load is a fee that some mutual fund companies charge each time you put money in or take money out of a fund. Avoid investing in load funds; they don't perform any better on average than no-load funds, so there's no point in paying the extra fees. Expenses are the annual fees charged by the fund and can take a serious bite out of your investment returns if you're not careful.

Although stock funds are considered somewhat riskier than bond funds, they have also performed somewhat better over the years. If you decide to invest in a stock fund, I recommend you consider a type known as a stock index fund. Two companies that offer index funds are Vanguard (800-662-7447; www.vanguard.com) and T. Rowe Price (800-638-5660, www.troweprice.com). Vanguard has the lowest fees and the largest selection of index funds, but you'll generally need at least $3,000 to open an account there. T. Rowe Price allows investors to get started by putting in just $50 a month.

Bonds are typically less risky than stocks but riskier than money market funds. Holding bonds as well as stocks will help to diversify your investments, thus reducing your overall risk. Companies that offer no-load bond funds with low expenses include Vanguard (800-662-7447; www.vanguard.com), Galaxy Funds (877-289-4252; www.galaxyfunds.com), and USAA (800-531-8181; www.usaa .com). While there are several different types of bond funds, a reasonable approach would be to choose an intermediate-term bond fund that invests in government securities or highly rated corporations.

To learn more about bond funds, stock funds, and investing in general — you guessed it — you'll have to read Chapter 5.

7. Think about buying a house or apartment.

At a certain point in life, you may start to feel that you should buy a home. Deciding that it makes sense to purchase a place of your own involves more than simply comparing your monthly rent with the monthly mortgage payments you'd make as an owner.

A range of financial factors, including the tax break you'll get from buying, the fees you'll pay when you buy, and how long you plan to live in the new home, should enter into your decision. For a discussion of some of these factors and information on where you can get software to help analyze your own situation, turn to Chapter 7.

Just a few years ago, the biggest obstacle to buying a home was coming up with the down payment. Today there are several options available, especially if you have good credit. Start by calling your state housing office to see if it offers any low down payment mortgage options for which you're eligible. The advantage of these state programs is that they typically charge a lower interest rate than you can get on a bank mortgage. (For the phone number of your state housing office, see page 192.)

Your next step is to get information on Fannie Mae and Freddie Mac, two companies that were established by the government to help banks and mortgage companies expand their mortgage offerings to all types of borrowers. Fannie and Freddie offer several low down payment loan programs (as low as 3%). When you shop around, ask lenders if they participate in Fannie's "Flexible 97" and "Community Home Buyer's Program," or in Freddie's "Affordable Gold" and "Alt 97." They'll know what you mean. For several free booklets from Fannie Mae on purchasing a home, call 800-688-HOME (www.fanniemae.com).

If you don't qualify for one of these programs, a third alternative is the Federal Housing Administration (FHA) loan program. FHA loans require only a 3% down payment, and they're usually easier to qualify for, but the deal you get may not be quite as good. Contact a lender or your local Housing and Urban Development office (www.hud.gov) for more information on FHA loans.

If you don't qualify for any of these programs, don't give up. There are many lenders out there that offer creative options. For more housing-related tips for buyers and renters, see Chapter 7.

8. Get smart about taxes.

Nobody likes paying taxes. One way to reduce the portion of your paycheck that goes to Uncle Sam is to take as many tax deductions as you are eligible for. Deductions are specific expenses that the government allows you to subtract from your income before calculating the amount of tax you're required to pay. Taking advantage of these tax deductions is a lot easier than it may sound.

The government allows you to take advantage of deductions in either of two distinct ways. The easiest approach is to take the standard deduction, which is simply a fixed dollar amount ($4,400 for singles, or $7,350 for couples, in 2000) that you subtract from your income. Although all taxpayers are permitted to take the standard deduction, depending on your circumstances, you may wind up paying less if you itemize your deductions instead. Itemizing means listing separately the specific items that are deductible under the current tax laws and then subtracting their total cost from your income.

If you choose to itemize your deductions, you'll have to fill out a tax form called a 1040 (also known as the long form) rather than the simpler 1040A (the short form) or the 1040EZ (the really short form). You'll then have to list your deductions on an attachment to Form 1040 called Schedule A. Among the types of expenses you may be allowed to deduct are state and local taxes you've paid, donations you've made to a charity, and certain moving, job-hunting, business travel, and education expenses.

The only way to find out if you can save money on your taxes by itemizing instead of taking the standard deduction is to fill out a copy of Schedule A and see if the amount you're allowed to deduct is greater than the standard deduction. Even if you find that you won't save money by itemizing this year, this exercise will help get you better acquainted with some common types of deductions and may help you plan things in a way that could reduce your tax bite next year.

There are some deductions you can take whether you itemize or not, like contributions to a deductible IRA or interest payments on your student loans. If you have children or educational expenses, you may also qualify for valuable tax credits, which subtract money directly from the amount you owe the IRS.

To get tax forms and a general instruction book from the IRS, call 800-TAX-FORM (or go to its Web site at www.irs.gov) and ask for Tax Publication 17, Your Federal Income Tax. Also consider using your computer to help you prepare your taxes. The Web site TurboTax (www.turbotax.com) provides you with the forms and instructions you'll need, performs all the necessary calculations, and prints out completed forms you can send to the IRS. It will also let you send your return straight to the IRS electronically. For about $35 you can purchase tax software that performs the same tasks; two programs worth considering are TurboTax (or MacInTax for Macs) and TaxCut.

For specific ways to cut your tax bill, see Chapter 9.

Copyright © 1996, 2000 by Beth Kobliner

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  • Anonymous

    Posted April 28, 2000

    A Mother's Gift to Her Son

    When our son graduated from Law School, I got him this book. He had never had a credit card, had his first car loan and had school loans he had to pay. I honestly didn't think he would read the book, but decided it was worth $10 to try! Once he started it, he never put it down. Within a few weeks, whenever we discussed anything related to finances, he was quoting the book to me! It is the BEST $10 I ever spent!

    3 out of 3 people found this review helpful.

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  • Anonymous

    Posted January 10, 2010

    Great Book

    This is a top rated book that both of my son's enjoyed receiving over the holidays. They were grateful for having such useful information written in a clear and concise manner.

    1 out of 1 people found this review helpful.

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  • Anonymous

    Posted August 29, 2006

    A workbook for early-career savers

    Books like Beth Kobliner¿s have to earn their place on your bookshelf. After all, these days plenty of personal finance advice is available for free on the Internet. That said, this book is a wise investment for early-career professionals who would like advice about getting out of debt. Although its guidance is solid-if-predictable, it is well-researched and straightforwardly written. Kobliner provides an authoritative 'further reading' list for those who want to delve deeper into how to get their finances on an even keel. This book does not promise to make you rich overnight, and it doesn¿t exactly qualify as a page-turner, but it lends a helping hand. We recommend it to young people whose financial life is just a bit too exciting.

    1 out of 1 people found this review helpful.

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  • Anonymous

    Posted December 30, 2004

    Changed my Life

    This is by far the book that had the greatest impact on my life. I recommend this book to everyone. As an engineer coming out of college I never had any classes in finance and when I graduated I had some big debt. This book helped me change all that. I got the book when I was 23 and was in $35,000 in debt. Now I'm 30 and own a house, rent out my condo, and have 0 debt besides my mortgages. Get this book.

    1 out of 1 people found this review helpful.

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  • Anonymous

    Posted July 1, 2014

    Empty buisiness lot

    Three stories. It costs 500,000,000.

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  • Anonymous

    Posted May 6, 2004

    Loved this Book

    I bought the original in 1996 and I think I'm going to buy the updated version for my boyfriend. I found it so helpful and it definitely got me on the right track. Spells the vital stuff out without 'talking down'. Excellent first financial book.

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  • Anonymous

    Posted November 21, 2002

    Advice for young adults

    This book covers many of the basic requirements needed by those in the early stages of their financial lives. The advice is excellent and the author points out the importance of beginning a savings and investing program while still young. In addition, she covers many topics offering good guidance for her readers everyday lives, including how to decide between renting or buying, how to find a bank and choose the right type of account to open, etc. My only complaint with her advice is the suggestion readers "consider mutual funds your entire investment universe, at least for now." That is bad advice. Now is the time for learning how to invest in individual stocks and how to use options to make those investments safer. Learning how to make careful stock selections is worth the time and effort, and IMHO, using mutual funds is not the best path to financial success.

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  • Anonymous

    Posted September 16, 2002

    We're in the money

    I purchased this book for my 21 daughter. She is buying her first home and getting married next spring. Thanks to what she has learned from this book she is now also contributing to her 401K and has come to realize that new cars are a bad investment.

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  • Anonymous

    Posted July 5, 2001

    Help hints, data, thought and memorizing

    I found that Kobliner's book had allot of help and hints and in some cases she had to much insight into the financial world. However, I am in my early twenties reading this book and I've realized that the more you know about the financial world, the better. Read at your pace...

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  • Anonymous

    Posted November 24, 2000

    Got a copy for each of my daughters

    I read several books of this type looking for some generalized financial information for my two daughters. I settled on this one and recently asked if it had been helpful. Here's the response I got: 'Very readable. Very easy to understand. Doesn't expect you to understand *anything* about finances prior to reading the book. And also has an understanding attitude, like 'ya, ya, I know you don't *really* feel like thinking about this stuff so let's make it as quick and painless as possible...'. The first chapter is sort of like cliff notes too, just a quickie overview of some of the most important stuff. I read some of the other stuff on car buying and loans, and...oh, I forget what else...credit card stuff I think... I recently lent it to Rebecca and she found parts of it useful. She mentioned especially stuff like 'if you have credit card debt at 16% interest then pay that off before trying to put money in a saving account that's only giving 4% interest'. Stuff that you *know* but when someone spells it out for you, you think about actually doing it. Oh, and stuff like there's a table in there somewhere that tells you how long you should keep stuff like bank statements, and tax files, and other paperwork that I, at least, seem to hang on to indefinitely until I either run out of space or move.'

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  • Anonymous

    Posted August 23, 2000

    Salvage your Financial Life...Buy This Book!

    I bought this book 4 years ago, when I turned 30. With school loans, credit cards and past due taxes, I was over $25,000 in debt. I was a financial mess! I read the book cover to cover and followed Ms. Kobliner's easy to understand steps. I purchased my first home last year and I own a new car. More importantly...4 years later, I am totally DEBT FREE. I am about to order the 2000 edition to help me start investing on-line.

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    Posted April 8, 2010

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