The Complete Idiot's Guide to Boosting Your Financial IQ

by Clark, CFP, Ken

• ISBN13: 9781592579419
• ISBN10: 1592579418
• Format: Paperback
• Copyright: 2009-12-01
• Publisher: DK Publishing, Inc.

Summary

You're no idiot, of course. But you have no clue what just hit your home value, your bank account, and your 40I(k)-and it turns out there's more you didn't know about your finances.

Author Biography

Ken Clark, CFP, author of The Complete Idiot's Guide(r) to Getting Out of Debt, has been providing financial advice for over a decade. He graduated from Pepperdine University with a degree in business management, with an emphasis in accounting. He earned his Certificate of Financial Planning from the College of Financial Planning in Colorado. After college, he worked for PaineWebber (now UBS) managing investments for individuals, families, and businesses. He is also the college savings guide at About.com.

Table of Contents

The Basics of financial IQ	p. 1
What is a financial IQ?	p. 3
Understanding Financial IQ	p. 4
The People Who Prefer You Stay Uneducated	p. 4
The Less You Know, the Better far Them	p. 5
How They Keep You in the Dark	p. 5
Life's Best Investment: Increasing Your Financial IQ	p. 6
Test Your Financial IQ	p. 7
Financial IQ Quiz	p. 7
Score Your Financial IQ Quiz	p. 9
Banking On Your Ignorance	p. 13
How Banks Profit Off of You	p. 14
Fees, Fees, and More Fees	p. 15
Lending Activities	p. 15
Co-Branded Products	p. 16
Tricks of the Trade	p. 16
Overdraft/NSF Fees	p. 17
Required Mininum Balances	p. 18
Posting Dates and Times	p. 19
Overdraft Protection	p. 20
The Fine (Almost Invisible) Print	p. 21
We Act Safe, But	p. 22
Our Tellers Are Salespeople	p. 22
Our Rates Are Lousy	p. 23
Ways to Save	p. 23
Shop Around for Other Banking Options	p. 24
Automate Your Accounts	p. 25
Open a Business Account	p. 25
Credit Cards: Costing You an Arm and a Leg	p. 27
Your Pain, Their Gain	p. 28
Charging You Interest	p. 28
Charging You Fees	p. 29
Selling Other Services	p. 30
Credit Card Sucker Punches	p. 31
Bait and Switch Rates	p. 31
Ensuring Your Payments Are Late	p. 31
Payment Allocation	p. 33
Period Calculation Tricks	p. 33
Follow the Bouncing Rate	p. 34
The Truth Credit Card Companies Hide	p. 35
They Can Demand Full Payoff	p. 35
Inactivity Fees	p. 36
You're Protected Under the Law	p. 36
Ways to Save on Your Credit Cards	p. 37
Negotiate Your Rate	p. 37
Put Your Balance Out for Bid	p. 38
Negotiate Your Balance	p. 38
Monitor Your Credit Score	p. 39
Reform: Coming to a Credit Card Near You	p. 39
Grow Your Investing IQ	p. 41
The Investment Markets	p. 43
A Bull Market for the Media	p. 44
Is the Investing Media Trustworthy?	p. 44
The Media's Weapons: Fear and Greed	p. 45
"The Best 10 Money Moves to Make, Now!"	p. 46
Experts in Title Only	p. 46
Advertisers and Your Favorite Media	p. 47
Six Investing Truths That Aren't Necessarily So	p. 48
Stocks Are the Best Long-Term Investment	p. 49
Bonds Aren't Risky	p. 49
Blue-Chip Stocks Are Safer	p. 50
Buy Mutual Funds to Diversify	p. 51
Ratings Are Everything	p. 52
Anyone Can Invest for Themselves	p. 53
Tips from True Investing Geniuses	p. 54
Sir John Templeton	p. 55
Warren Buffet	p. 55
Peter Lynch	p. 56
John Bogle	p. 57
Will Rogers	p. 57
The Cons of Your Investment Pro	p. 59
How They Make Their Money	p. 60
Commissions	p. 61
Asset Management Fees	p. 61
Financial Planning Fees	p. 62
Wall Street's Revenue Tricks	p. 63
Hidden Commissions	p. 64
Account Maintenance Fees	p. 65
Limiting Your Money Market Options	p. 66
Cross Selling Other Financial Products	p. 66
The Fine Print	p. 66
You Can't Sue Us	p. 67
Our Credentials Aren't Real	p. 68
SIPC Protection Isn't the Same as FDIC	p. 68
We Play Golf a Lot for Free!	p. 69
Our Mutual Funds Won't Transfer	p. 70
Our Buy Ratings Might Be Comprised	p. 71
Save Yourself Some Money and Heartache	p. 71
Every Fee Is Negotiable	p. 72
Check Your Firm or Professional's Background	p. 73
The Power of a Complaint	p. 73
Your Mutual Funds	p. 75
Mutual Fund Costs	p. 76
Advisor-Sold vs. Direct-Sales Mutual Funds	p. 76
The Additional Costs of Advisor-Sold Shares	p. 77
Wrap Accounts	p. 78
Hidden Costs of ETFs and Closed-End Funds	p. 78
What the Mutual Fund Industry Doesn't Want You to Know	p. 79
Your Best Mutual Fund Investment: The Prospectus	p. 80
Style Drift	p. 81
Phantom Gains	p. 82
Tax Inefficiency	p. 83
The Risks of Low-Risk Funds	p. 83
Annuities Are Not Just Like Mutual Funds	p. 84
Save Some Money on Your Mutual Funds	p. 85
Your 401(k) and Retirement Plans	p. 89
Retirement Plan Potholes	p. 90
Higher Fees	p. 90
Single Mutual Fund Family 401(k) Providers	p. 91
Matching in Company Stock	p. 92
Automatic 401(k) Enrollment	p. 93
The Fine Print	p. 94
Vesting Schedules	p. 94
Borrowing a Bunch of Trouble	p. 95
Automatic Distributions	p. 96
The 60-Day Rollover Rule	p. 97
Turbocharge Your Retirement Plan	p. 98
Utilize an Outside Account	p. 98
Coordinate Contributions with a Roth IRA	p. 99
Coordinate Fund Usage with Outside Assets	p. 101
Target Date Funds	p. 101
NUA and Company Stock	p. 101
Build Your Real Estate IQ	p. 103
Buying and Selling a Home	p. 105
The Financial Myth of Home Ownership	p. 106
Who's Making the Money?	p. 107
Getting Hosed on Housing	p. 109
Now's the Best Time to Buy (or Sell)	p. 110
Under or Overbidding the Camps	p. 111
Avoiding For Sale by Owner (FSBO) Properties	p. 112
The Referral Circle	p. 113
Representing Both Sides	p. 113
The Fine Print	p. 114
Taxes	p. 114
Lost Deposits	p. 116
Broken Listings	p. 117
Charging for In-House Services	p. 117
Saving on Real Estate Commissions	p. 118
Other Tips for Boosting the Bottom Line	p. 119
Mortgages	p. 121
What Caused the Mortgage Meltdown?	p. 122
Using the Lowest Rates	p. 123
Buying Too Much Home	p. 123
Not Expecting a Downturn	p. 124
Drawing Out Their Equity	p. 124
How the Mortgage Industry Gets You	p. 125
Playing the Shell Game with Rates	p. 125
Origination Fees and Commissions	p. 126
Loan Fees	p. 127
Regular Refinancing	p. 129
Mortgage Fine Print to Watch For	p. 131
Saving Big on Your Mortgage	p. 132
Should You Pay the Points?	p. 132
The Bimonthly Payment Option	p. 133
Wholesale Lending	p. 134
Loan Modifications	p. 135
Living with Your Landlord	p. 137
The Best Time to Rent	p. 138
How-Landlords Get You	p. 139
Small, Regular Rent Increases	p. 140
Keeping Security Deposits	p. 141
Using Credit Checks to Gouge You	p. 143
The Fine Print	p. 144
Fees for Late Rent	p. 144
Breaking Your Lease	p. 145
Prohibited Activities	p. 146
Saving Money as a Tenant	p. 147
Life's Big Expenses	p. 149
Health Care	p. 151
The High Cost of Staying Healthy	p. 152
Protecting Yourself from a Sick System	p. 152
Confusing Co-Pays, Coinsurance, and Limits	p. 153
Reasonable Premiums-Until You Get Sick	p. 155
Billing You Before Your Insurance	p. 156
Pre-Existing Conditions	p. 157
Preauthorization and Denied Claims	p. 157
Discount Cards	p. 158
Nasty Surprises with Your Policy	p. 159
The Killer Cost of COBRA	p. 159
Long-Term Care and Disability	p. 160
College Kids and Coverage	p. 161
Ways to Save	p. 162
Go Group, Save Big	p. 162
Use an FSA	p. 162
Use an HSA	p. 163
Miscellaneous Ways to Save	p. 164
The Car Dealer	p. 167
The Big Leagues of Bamboozlement	p. 168
Getting You on the Lot	p. 168
Getting You to Test Drive	p. 169
Getting You to Sit Down	p. 169
How Dealerships Stick It to You	p. 170
Sticker Price Tricks	p. 170
The Add Ons	p. 171
Financing Tricks	p. 173
Your Trade-In	p. 175
The Fine Print	p. 176
Lemon Laws	p. 176
Warranty Conditions	p. 176
Leasing Options	p. 178
How to Save	p. 179
The Best Times to Shop	p. 179
Buy Away from Town	p. 180
Buying Slightly Used	p. 180
Negotiating a Price	p. 181
The High Costs of Higher Education	p. 183
College-Life's Most Expensive Party	p. 184
More Money, More Tricks	p. 186
Your College's "Dear Parent" Letter	p. 186
In-State Tuition Rules	p. 187
Financial Aid Offices and Preferred Lenders	p. 188
Private Student Loans-Too Good to Be True	p. 189
We Only Sell Some Section 529 Plans	p. 189
The Fine Print	p. 190
We May Take Back Your Scholarship	p. 191
We're a Private School-We Define "Need" Differently	p. 191
Transfer Students	p. 192
Federal Loan Interest Rates	p. 193
Tips for Covering the Costs	p. 194
Financial Aid for the Rich	p. 194
Tax Deductions and Credits	p. 195
Prepaid Tuition May Be a Great Investment	p. 196
Student Loan Cancellation Programs	p. 197
Sources of Free Money	p. 197
Life Insurance	p. 199
Understanding Insurance Commissions	p. 200
Fear: An Insurance Agent's Best Friend	p. 201
The Fear of Your Own Death	p. 201
The Fear of Your Loved One's Deaths	p. 202
The Fear of Funeral Costs	p. 203
The Fear of Becoming Uninsurable	p. 204
Insurance Is Not a Good Investment	p. 204
Illustrations: Don't Get Sucked In	p. 205
Cash Value or Death Benefit-You Only Get One	p. 205
We Charge More Than We Pay	p. 206
The IRS and Your Cash Value	p. 207
More Fine Print	p. 207
Insurance the Right Way	p. 208
Becoming Self-Insured	p. 209
Buy Term and Invest the Rest	p. 210
Insurance Company Ratings	p. 211
Section 1035 Exchanges	p. 212
Dealing with Your Uncle Sam	p. 213
Your Taxes	p. 215
How You Help Them Get You	p. 216
How Audits Get Selected	p. 216
The Biggest IRS Red Flags	p. 217
The Fine Print of the IRS	p. 219
The Alternative Minimum Tax	p. 220
Gift and Estate Taxes	p. 222
Self-Employment Taxes	p. 223
Pain in the IRS	p. 224
Getting Your Auditor to Go Easy	p. 224
Offers in Compromise	p. 225
Installment Agreements	p. 226
Blame It on Your Spouse	p. 226
Social Security and Medicare	p. 229
The Basics of Social Security	p. 230
Social Security Tips and Traps	p. 231
Retirement Age and Benefit Amount	p. 231
Social Security Taxation	p. 233
Other Social Security Wrinkles	p. 234
Tapping Social Security for Emergencies	p. 235
Survivorship Benefits	p. 235
Disability Benefits	p. 237
Medicare	p. 238
Medicare Parts A andB	p. 238
Medicare Parts C and D	p. 239
Safety Nets for Hard Times	p. 241
Don't Let Pride Get in the Way	p. 242
Tapping Your Own Assets	p. 242
Day-to-Day Survival	p. 244
Unemployment Insurance	p. 245
SNAP, WIC, and Other Programs	p. 246
The Earned Income Credit	p. 247
Bankruptcy: Hitting the Reset Button	p. 248
What Bankruptcy Can Do	p. 248
The Downside of Bankruptcy	p. 249
Keep Growing Your Financial IQ	p. 251
The 1-2-3-4 Financial IQ Study Plan	p. 252
One Class Per Year	p. 252
Two Magazine Subscriptions	p. 254
Three Books	p. 254
Four Quarterly Reviews	p. 255
Smart People Ask Questions	p. 256
Find a Financial Mentor	p. 257
Passing Along Your Financial IQ	p. 259
Appendixes
Glossary	p. 261
Resources	p. 269
Index	p. 277
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