Monthly Archives: September 2014

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Sometimes the Simple Solution… : How to Think About Investing (Fun With Spreadsheets)

Investing is hard to teach.  Talk to personal finance teachers and ask them what concept they find most challenging to teach to high school students and many will tell you it is investing.  How can you possibly cover a landscape that encompasses thousands of stocks, thousand of mutual funds, not to mention that other staple, bonds?  There are so many choices for you to teach (but also for investors to choose from), that it is easy to feel overwhelmed.  No surprise that the market for financial advisors is thriving in this sea of complexity.  Can’t we just teach our students “Don’t try this at home?”

But what if there was a simple solution?  One that didn’t require evaluating thousands of options but was elegant in its simplicity without sacrificing investment returns.  Having been an investor for over 25 years now and bought a few “can’t miss companies” and “mutual funds of the year” and “low priced stocks that couldn’t go lower,” I have personally experienced so many of the psychological misjudgments that afflict investors (check out this Charlie Munger speech laying them all out).  When I saw this article a year ago, I thought what a great way to teach

By |September 30th, 2014|Index Funds, Investing, Lesson Idea, Mutual Funds, Personal Finance|

What’s the Catch? Identity Theft Monitoring Services

Home Depot, Target, insert almost any retailer here.  Stories of data breaches abound so interest in credit monitoring or identity protection services are also growing.  Which makes the story this week about a fine levied on U.S. Bank all the more interesting.

Audio here:

Here are the details (from Marketplace):

The Consumer Financial Protection Bureau just fined U.S. Bank in connection with identity protection and credit monitoring services it was selling. Customers were charged for credit monitoring by a company the bank hired, called Affinion.

Banks need written permission to monitor a person’s credit report. But the CFPB says U.S. Bank started charging consumers before they signed permission forms the bank sent out. Their credit was never monitored, but they were charged anyway, according to the CFPB.

“The bureau determined that this conduct was an unfair practice and ordered U.S. Bank to repay consumers approximately $48 million,” says Deb Morris, the deputy enforcement director at the CFPB.

As for how consumers can protect themselves: if that free trial sounds too good to be true well…it probably is:

Mierzwinski says fraud in these anti-fraud products is widespread because they’re profitable, and banks

By |September 30th, 2014|Credit Cards, Identity Theft, Lesson Idea, Personal Finance|

Top 5 September Posts on Next Gen Personal Finance Blog

Here’s what people were reading this month:

Always interested to hear how some of these posts worked in the classroom.  Drop me a line at tim@nextgenpersonalfinance.org to let me know.  Thanks!

By |September 30th, 2014|Personal Finance|

Credit Card Trends

  • Your next debit card will likely be “chipped.”  Bank of America leading the way (MarketWatch)

Bank of America Corp. is the first major U.S. bank to issue debit cards with chip technology, a move that other banks are sure to follow, according to financial industry experts.  The bank says it already offers the chips on credit cards and will issue cards with chips when replacing expired cards and to new customers.

  • Watch out for those charges on your credit card (WSJ):

When consumers sign up for a credit card, most issuers will offer so-called identity-theft protection services and credit-monitoring services that are supposed to inform cardholders of possible signs of fraudulent activity on their cards. The pitches have picked up over the past four years as large data breaches at retailers and elsewhere have increased, compromising more consumer information. Issuers’ customer-service call centers also pitch the services to existing cardholders, as do many automated call services customers contact to activate their cards.

One problem: Many issuers have been enrolling new cardholders in these services without the proper authorization, and those consumers are often unaware that they’ve signed up for them or that they’re being charged.

  • How to establish a
By |September 30th, 2014|Budgeting, Credit Cards, Identity Theft, Personal Finance|

Question of the Day: What Is The Lifetime Value of A College Education (By Major)?

Another Question of the Day!

I have been waiting for a resource like this to demonstrate to students how lifetime earnings can vary significantly based on the major they select in college.  In other words, not all college degrees are created equally.  The Hamilton Project is out with a database showing lifetime earnings for 80 college majors.  They have an excellent interactive tool that allows students to select various majors (and types of degrees) and compare lifetime earnings for each of them.  It might be fun to have students select 3-4 majors they think they might be interested in and compare the potential outcomes.  This will lead to interesting conversations about whether students should follow the money (choose majors with high earning potential) or their passion (career they love but pays less).

Here’s the chart showing lifetime earnings by major (that’s millions of 2014 dollars on the top axis):

Median lifetime earnings

Here are the conclusions from their report which I would summarize as:  1) More education leads to more earnings.  2)  Students should take into account their future earnings prospects to determine appropriate level of student debt (i.e. Early childhood education

By |September 30th, 2014|Career, Paying for College, Policy, Question of the Day, Research|

Question of the Day: Why Are Fewer People Going to College?

College-enrollment-Census-Bureau-1024x765

Good opportunity to engage students in some critical thinking including interpreting data and reasoning skills as well as understanding the value of a college degree.

The chart above shows the downward trend.  PBS NewsHour highlights the factors at work here:

  • Strengthening economy and more jobs reduce flow to colleges.  The opposite occurs in a down economy.
  • This slight decrease follows boom of 3.2 million students between 2006-2011.
  • Sharper reduction in 2 year colleges where enrollment dropped by 10% while enrollment at four year colleges increased by 1%.
  • Among income groups, sharpest drop-off was among middle class students.
    • Could cost be an issue in particular for this group?
  • Value of a college education remains as strong as ever as the chart below shows
    • Students can see among Millenials that the gap between college educated students and high school graduates is increasing.

SDT-higher-education-02-11-2014-0-03

By |September 30th, 2014|Career, Paying for College, Question of the Day|

Activity: Mindfulness In Personal Finance

Reading this NYT article about mindfulness and how reflecting for even a few milliseconds about a purchase can influence our decision-making.  Here’s the research:

A recent study by Tobias Teichert and Jack Grinband discovered that “postponing the onset of the decision process by as little as 50 to 100 milliseconds enables the brain to focus attention on the most relevant information and block out irrelevant distractors.”

By postponing the decision process you are putting “some space” between the stimuli and the response and not letting impulses dominate.  So, how about asking students to keep a spending diary over a few weeks.  The goal would be for the students to reflect on purchases as they are making them and answer questions like that:

  • What is motivating you to make this purchase?
  • How are you feeling as you think about making the purchase?
  • How do you feel at the time of purchase?

Have them go back on a weekly basis and reflect on how they feel about these purchases a week later.  Are the emotions as strong?  Do they continue to see the value in their purchase?  This activity should yield some interesting conversations.

By |September 30th, 2014|Activity, Behavioral Finance|

Question of the Day: What’s Happening with Checking Fees? Hint: They Are Not Going Down.

Bankrate released survey today on banking fees.  Good opportunity for students to reinforce their understanding of key checking fee terms.  Here are the highlights from USA Today:

  • Out of network ATM fees and Overdraft Fees are surging:

The average fee for using an out-of-network ATM climbed 5% the past year to a new high of $4.35 per transaction, according to a survey released Monday by Bankrate.com.  Overdraft fees also surged, rising on average the past 12 months to $32.74. That’s the 16th consecutive record high, the firm said.

  • Free checking accounts still hard to find with only 38% of banks offering them:

The largest U.S. banks all offered free checking with no strings attached until 2009, when the share of all non-interest checking accounts that were free peaked at 76%, according to Bankrate. It’s now at 38%; that’s unchanged from last year and only slightly lower than 39% in 2012.  Even so, consumers looking for checking accounts without monthly fees have plenty of options. Many credit unions, smaller community banks and online banks offer no-strings checking accounts.

  • Still savvy consumers have opportunity to save on their checking accounts.  How?

Use your bank’s website to find fee-free ATMs or,

By |September 29th, 2014|Uncategorized|