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99 Cards in this Set
- Front
- Back
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Three things that change people more than anything:
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1. money 2. money that you didn't earn 3. Money that you have to share with someone else
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Three estate depleting expenses:
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1. probate 2. Estate Taxes 3. Confusion
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Probate:
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the identification, management, and liquidation of a deceased person's assets
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Living trust
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o Trusts avoid the probate process (very important benefit of trusts)
o Great planning blueprint- You can be very specific in who gets what. This eliminates much of the confusion and contention about dividing up estates. o Expedites estate settlement o Flexibility in carrying out wishing o Private document- wills are public documents and wills are not o After death asset protection- you can give the right to the trustee to distribute assets as he/she sees fit. -Less contestable than a will |
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will
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o In the case of a will, the deceased person still owns the asset
o In the case of a will, everything still needs to be probated o Whenever you give something to a court, it becomes public |
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living trusts DO NOT: (two things)
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oProtect assets during life
oAvoid Estate taxes |
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Living will:
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a. Agent or representative
b. States an individual’s desires how artificial life support should be used to sustain his or life should (s)he ever be reduced to a medical state where reasonable medical procedures cannot restore any acceptable quality of life |
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General Durable POA (Power of attorney)
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a. The power to act in behalf of someone, especially in regards to financial decisions
b.Attorney |
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8 fundamental Documents:
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1. will 2. living will 3. trust 4.general durable POA 5. Health Care POA 6. Personal History 7. Personal Letters 8. Family Medical History
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Four threats to retirement assets:
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1. foolish investments 2. major medical experience 3. Adult children who know you have money 4.Inexperienced Liquidity
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Eight Pillars of Perpectual Legacy:
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1. Mentor 2. Open Communication 3. Responsibilty Sharing 4. Endowed Resources 5.Higher Education 6.Orientation--future generations 7. Humanitarian 8. Family History
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will:
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a. Willmaker Plus was the top tanked program for making wills
b. Person who administers the will is known as a personal representative c. In the will, designate who will be the guardian of your children. Make sure you ask the guardian for permission before you name them guardian. |
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Living will:
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a. Agent or representative
b. States an individual’s desires how artificial life support should be used to sustain his or life should (s)he ever be reduced to a medical state where reasonable medical procedures cannot restore any acceptable quality of life |
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confidence as a businesswoman:
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1. preparation 2.immersion 3. separation
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why use credit union?
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- usually have lower fees because you’re the owner. Banks are constantly thinking of new fees to charge the customer.
a. Good place to get a credit card |
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why use Credit Cards?
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a. You can often earn rewards for purchases
b. If someone steals your card, you can appeal the charges and not pay c. Builds credit |
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Warranties
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a. Some are good, some are bad
b. A good idea when you buy a new car c. Cell phone warranties are also a good idea d. Avoid warranties on cheap items |
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Extended warranties
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ALWAYS avoid
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“Rent-To-Own” purchases...
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a. Always avoid
b. Products turn out to be immensely more expensive than they would have been if purchased up front c.Interest rates charged by Rent-To-Own companies are extremely high |
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Diets
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a. Most diets are very inefficient and only 1% of users actually lose weight
b. If you’re going to use one, use Weight Watchers c. Best answer is to exercise, eat less, and eat a balanced diet |
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Wealth of Great Health
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a. Get regular health check ups
b. Establish a health profile c. Minimize at risk health profiles by taking care of yourself |
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Give blood
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a. If you give blood, you get a free medical test
b. Plus, you’ re being charitable c. Also, get a flu shot-you’ll do everyone else a favor |
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Home and auto inspections
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a. Always get a used car inspected by a mechanic
b. Always get a CARFAX report when you buy a car c. When you buy a home, always get it inspected by a licensed inspector |
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Recreational vehicles, Cabins, Boats
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alwasy cheaper to rent
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Real Estate Time Shares
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a. If you’re going to buy, buy it on the secondary market (buy it “used”)
b. If you buy new, most of the money goes to the sales people c. Very difficult to sale when you own it because you have to pay annual maintenance fees d. Definitely not an investment |
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Fast Cash Anything
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a. Always avoid “Pay Day loans”, or quick cash or tax advances
b. These quick loans charge extremely high interest rates |
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Home buying formula:
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primary income - obligation x .35
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Equity and Debt consolidation loans
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a. AVOID (Remember Pres Monson’s talk on the Maka-feke)
b. 1 in 4 people owe more on their home than what it’s worth c. All the prophets have said pay off your home as soon as possible |
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23. Avoid obligating both incomes
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a. When you incur debts, just rely on one income to qualify for the loan
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25. Avoid “up-front” fees
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a. Many contractors will require payment up front, or before the work is performed.
b. When people try to pay you with an out-of-state check, don’t accept it |
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26. C.I.A. (Central Intelligence Awareness)
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a. Many companies keep information on you (insurance companies, credit bureaus)
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There are many organizations that are keeping information on you. The Fair Credit Reporting Act says that information that is kept must be accessible by the public. A great website for this is
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privacyrights.org
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d. You can get a free copy of your credit report from
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www.annualcreditreport.com
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i. You can get a free credit report from the three credit bureaus once a year:
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1. Equifax
2. Experian 3. Trans Union |
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how should you be smart in requesting your credit report?
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e. You can be smart and request a credit report every 4 months (Different bureau, every 4 months)
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g. FICO score (Fair Credit Isaac Corporation) deductions:
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1. Proportion of balance to loan amount too high
2. Lack of recent installment loans 3. Too few accounts with recent payments 4. Time since last account was opened too short 5. Number of established accounts 6. Too many revolving accounts 7. No recent revolving account balances |
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C.L.U.E. report
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a. Report that insurance companies keep on individuals
b. One more reason that you want to avoid small claims c. You also need to be careful what you ask your insurance agent about because that information can be recorded d. When you need to inquire something from your agent, always call and ask about ‘a friend’. That way they don’t report something that could be held against you in the future |
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Loyalty clubs at the supermarket
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a. What the company really wants to do is keep track of your spending habits
b. If you still want to get a supermarket card, you can sign up for the card and use the name “grocery shopper” and don’t put down address |
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Pre-tax equivalency Formula:
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afertax/ (1- tax rate)
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Rule of 72
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a rough estimate of how long it will take your money to double. 72/interest rate = amount of time it take money to double
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PAW formula
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(income X age / 10 ) 2 i think
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which journal ranks other journals?
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hulbert digest
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which journal was ranked # 1?
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Value Line No-load
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what is tax basis?
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the amount of money you pay tax on
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how much should you save?
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10%
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points of public speaking:
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1. attention-getter 2. energetic in delivery 3. structure speech 4. tie points with together transitions 5. tell your own story 6.include a visual aid 7. include testimony of experts 8. look at the audience 9. don't read your speech 10. include a "wow" factor 11. use a touch of humor 12.leave the audience with something to think about
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eight mistakes that expose you to online fraud:
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1. giving out personal info 2. paying with cash, check, or money order 3. letting retailers store your credit card data 4. using "soft" passwords or storing them where others can find them 5.Failing to keep up with computer security 6. Failing to keep records of your transactions 7. Failing to do your homework 8. Ignoring your financial statements
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A firewall:
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This is either hardware or software that will protect your computer from others gaining access to it via the Internet.
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Virus protection software:
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This can monitor both incoming and outgoing files for your computer, alerting you if you've received a known virus (and killing it). You'll need to update it frequently to protect against the latest viruses.
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Security patches
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for your computer's operating system: Hackers are continually finding new ways to exploit vulnerabilities in computer operating systems. According to the Internet Storm Center, an "unpatched" PC that's connected to the Internet would only make it about 20 minutes before being compromised by malicious programs. Downloading the latest security patches can help protect you against these threats.
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SCAM stands for:
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STINGY about giving our you rinfo, CHECK your financial info regularly, ASK periodically for a copy of your credit repot, MAINTAIN of your banking and financial accounts
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how a credit score breaks down... generally
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Types of Credit in Use -10%
Length of Credit History - 15% Amounts Owed-30% New Credit - 10% Payment History - 35% |
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one of the most important factors in a
credit score. |
whether you have paid past credit accounts on time.
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Index Fund
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o Investment company buys every company that is included in an index
o They then hold on to those stocks in the index o Eliminates management fee o 72% of index funds outperform their mutual fund equivalents |
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Mutual Funds
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have other fees,
Management fee-fee you pay for them to manage your money Custodial fee-fee to safeguard and protect the assets of the mutual fund |
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MULCE
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M-Medical payments to cover yourself in case of an accident. Most people don’t select this because health insurance does the same.
U-Uninsured or Underinsured motorist. Every state requires automobile owners to have insurance. You can purchase insurance that covers you if an uninsured or underinsured motorist runs into you. L-Liability. Medical and property damage of the other driver. If you have a cheap car, really not worth it to insure the damage of your own car. Therefore, liability only insurance allows you to insure you in case you damage another car. 100/300/50. 100 refers to the medical insurance they provide for person. The 300 is the total amount they will provide. The 50 is how much they’d pay to repair the other car. (Each of the three is in thousands: 100,000,300,000,50,000) C-Collision or comprehensive. If you have a cheap car, really not worth it to insure the damage of your own car. Therefore, liability only insurance allows you to insure you in case you damage another car. E-Emergency Road Service. |
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deductible
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the amount not paid for by the insurance
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premium
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what you pay monthly to keep a policy
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Four Federal Transfer Taxes:
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oIncome Tax
oF.I.C.A.-Social Security Tax-Most Americans pay more FICA tax than income tax (75%) oEstate Tax oGift Tax-If you give too much to someone, you have to pay a tax on the gift |
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There is double taxation on
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IRA’s, 401(k) Annuity, Series EE bonds
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Point of Choice
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The day you have the choice to either work or not work. When unearned income replaces your earned income.
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What are financial investments?
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Assets designed to go up in value
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Assets that increase in value
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-Stocks that pay dividends
-Bonds/CD/Savings that pay interest Real estate that pay rent Notes that pay income |
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Albert Einstein said
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“there is no greater power known to man than compounding interest, compound interest is the greatest mathematical discovery of all time, compounding is the 8th wonder of the world, compounding is mankind’s greatest invention because it allows for the reliable, systematic accumulation of wealth.”
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Why 401k plans are behaviorally efficient?
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1. If you don’t see it, you won’t miss it
2. Substantial penalty for early withdrawal 3. Someone else does all the work |
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Average household pays
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out $2300 dollars per month in debt payments
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b. 800% increase in per capita debt over the last
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30 years
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what percent of Americans is more than 30 days behind on any payment?
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1. Only 4.2% of Americans are more than 30 days behind on any payment
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what % of millionaires are homeowners?
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97%
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PAW:
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Prodigious accumulator of wealth
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UAW
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Underaverage accumulator of wealth
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net worth formula:
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Current Age *current income/10 tells you what your net worth should be
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Investment Rules
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a. Long-term
b. Familiarity with company or industry c. Dull/normal investments d. Twelve per ceng return over the past 10 years e. Same management team f. Increasing dividends |
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RESIRV:
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Recurring Expenses you Save and Invest in the Right Vehicle
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% of all companies invest the money in a trust account that has nothing to do with the companies’ stability?
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98% If the company goes broke it doesn’t matter because the money is not with the company, it is invested outside the company! A 401(k) is not affected by the bankruptcy of a company!!!!!
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Home Purchasing Formula!!!
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–(Take the monthly income of the primary breadwinner- subtract all monthly obligations [e.g. debt payments], including tithing) and then multiply that number by 35%. That is the maximum payment you can qualify for on a home.
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people could cut their medical expenses by 75% if they would do three things
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Get regular medical examinations
Establish their risk profile—literally sit down and take a test about diseases and illnesses are prevalent in your family. A profile will project those medical problems you are most likely to have in your life based on what other members of the family have experienced. Nothing has as great an impact as your family history of medical challenges. Take reasonable steps to minimize their health risks |
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Three Things Brother Marsh teaches the bishops and stake presidents
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• Challenge the bishops to receive the people as enthusiastically as Alma received the Zoramite converts.
• Second, he challenges the bishops to teach • Third, he tells the bishops that their research shows that the bishops are managing their resources just as poorly as they people they are leading |
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President Gordon B. Hinckley:
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But it is the labor and the thrift of people that make a nation strong. It is work and thrift that make the family independent.”
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5 Cs to a Happy Marriage
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1. Chemistry
2. Communication—Make sure you communicate the same way 3. Commitment to Christ 4. Cash Savings Account a. What does it suggest to you when someone shows you they are saving on an ongoing basis? It means that somehow they have an understanding of their needs and wants so that they can actually have money in a savings account that builds up over a long time. |
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Spiritual Efficiencies:
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1. Listen and Connect—Worship and Pray
2. Personal Responsibility 3. Inspiration Model 4.The Atonement of Christ 5. Pray for and Serve Others |
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What are the three things you have to do to get out of debt?
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1. Be Prayerful
2. Be Humble 3. Be Diligent |
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Modern Portfolio Theory
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Harry Markowitz from the University of Chicago began research about stock prices. Wrote an essay called “Portfolio Selection” which won the Nobel Prize in 1990
In a nutshell, came up with research that showed that long term performance in the stock market is very efficient and rational. Short term performance is irrational and inconsistent. |
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the three intelligences:
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1. Behavioral Intelligence
a. What actually works. b. 2. Financial Intelligence a. You still have to do a POC worksheet b. Other than the questions on the examinations, the real numbers part of the class is now over. c. Knowledge to get to the POC 3. Spiritual Intelligence a. Our Heavenly Father will be part of the team. b. Mentor c. Be willing to listen d. Guy is the most likely to talk about money e. Brother Marsh’s sister said: “its my husband’s responsibility to make the money, and it is my responsibility to make sure it is enough.” f. Elder Packer teaches that even the very best of things can become our worst enemy. |
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what works behavorially?
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oHome Purchase
o401(k) Participation oAccelerated Debt Reduction oMillion Dollar Choices oIncome producing real-estate (buying commercial real estate)—this one is not required. oIncome Producing Real Estate oOwning your own business |
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•What Doesn’t’ Work?
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o Debt Consolidation Loans
o Investment Life Insurance (cash value life insurance)—it is best to buy term life insurance. 80% of all people who purchase an investment life insurance policy, within 5 years will have stopped paying the premiums o Quest for Higher than Expected Yields—Higher than expected yield becomes the expected yield. o Traditional Budgeting Less than 1% of all people follow a formal budget for one year or longer o Rent-to-own Purchase Contracts Cost will usually be 2 or 3 times the retail value o Pay-day loans—tax anticipation loans Interest rate can go as high as 900% per year Which county in America has per-capita more pay day loans than any county in America? Utah County Why can they charge such high interest? • There was a Supreme Court ruling in 1998. Somebody was charged too much interest . Which law applies? The one where the business is domiciled or the one where the loan is made? South Dakota and Delaware have no usury laws. o Two-income households |
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SIOU
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Surprisingly Insightful, Objective, User-friendly websites
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Most health economists agree that the primary reason why health care costs are rising is...
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that the money we are spending in the medical marketplace is usually someone else’s.
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cd tax
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made with aftertax dollars, interest is taxed
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Portfolio Allocation
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Putting your money in more than one investment objective.
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5 critical paths
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a. Diversification-not putting all your eggs in one basket. Investing in more than one company.
b. Allocation-invest your money in more than one investment objective (ex. stocks, bonds, cash, real estate, CDs) c. Historical Pricing Models-If you look at the historical pricing of a sector, and the stock is selling for more than the average yield, it’s dangerous to buy. “Buy low, sell high” d. Manage the Managers-keeping track of who’s managing your money. What are their credentials, expertise, and objectives? e. Invest more money- Have the goal to continually invest more money. The very best return is how you manage your resources. |
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Municipal Bond tax
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a. Assume you put $25,000 in a municipal bond
b. That $25,000 you put in was with after tax dollars c. Interest earned on a municipal bond is tax exempt d. However, if the value of the bond increases, the increased amount is taxed as capital gains |
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3. Bond tax
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a. Assume you put $25,000 in a bond
b. That $25,000 you put in was with after tax dollars c. Interest gained on a bond is taxed as ordinary income d. An increase in value is taxed as capital gains |
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4. Stock tax
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a. Contribution is taxed as ordinary income
b. Dividends that you receive are taxed as capital gains c. Increase in value is taxed as capital gains |
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5. Mutual Fund tax
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a. Contribution is taxed as ordinary income
b. Interest earned in the fund is taxed as ordinary income c. Dividends from the fund are also taxed as capital gains d. Sometimes mutual funds realize a capital gain inside the mutual fund. Even if you have gain automatically re invested in the mutual fund, you pay taxes when you receive it and it is taxed as a capital gain. |
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6. Annuity tax
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a. Assume you put $25,000 in an annuity
b. Contribution has already been taxed as ordinary income c. Interest earned in the annuity is tax deferred d. Dividends earned in the annuity are tax deferred e. Capital gains distributions earned are also tax deferred f. All the earnings are taxed on liquidation. The earnings are taxed as ordinary income. This is a major disadvantage of an annuity. In a mutual fund you’d at least be paying capital gains on much of the earnings. |
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401k tax
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a. Contributions are tax deferred
b. Earnings are taxed on withdrawal, and are taxed as ordinary income |
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8. Roth IRA/ Roth 401(k) tax
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a. Contributions are taxed
b. All earnings are tax free |
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9. HSA tax
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a. Contributions are not taxed
b. No tax on qualified medical expenses c. If you don’t use it on medical expenses, you are taxed as ordinary income with the exception of paying Social Security Tax |
