There is treasure to be desired and oil in the dwelling of the wise; but a foolish man spendeth it up. Proverbs 21:20
We have finished our study of the Creation, and yes, on the 7th day God took a rest from his labors. We will continue to labor :) as we spend the next two months on Financial Literacy. We will be doing Dave Ramsey's Financial Peace for Homeschooled Teens. There will be several videos we will be watching, as well as some written work, and activities.
These next two months (March and April) will be a bit different. There will not be apprentice, journeyman, or master class. Instead I would like you all to come for the entire Vanguard day. Why? The financial principles we will be learning build upon one another. It doesn't make sense to learn about investing, if you do not know much about budgeting. If for some reason you are unable to stay the entire class I would like for you to watch the videos and complete the activities at home, so by the next week you are caught up with the rest of us.
Complete all of the following inspirements:
-Read Norman Vincent Pearle's "The Power of Positive Thinking." This book is old, and well known and should be easy to find. (This would typically be the Master book for the month, but again, I want you all to read the book because you are doing all of the inpsirements!)
-Go to LDS.org and search finances, self reliance, what the scriptures have to say in regards to wealth, etc. Spend some time perusing articles. (This is an inspirement where you have the freedom to choose which articles you read and what you focus on. There is much written. The idea is not to read every article, but to get you thinking about money in a Godly way.) Write down financial principles and scriptures as you come across them. Take notes on what you read.
-Listen to Dave Ramsey's Radio Show. You can hear real life situations of people dealing with their own finances that are recorded in the audio archives. Choose a specific on air call and write about the caller's situation and Dave's suggestion. Write your opinion as to the advice given.
-Peace Puppies are things we will learn more about in class, but basically they summarize what is learned in each section of the course. Memorize the first ten:
1. Avoid
“Stuffitis” – The Worship of “Stuff”
2. Plant
Seeds – Give money away to Worthy Causes
3. Develop Your
Own “Power over Purchase”
4. Find
Where You Are Naturally Gifted – Enjoy Your Work and Work Hard
5. Live
Substantially Below Your Income
6. Sacrifice
Now So You Can Have Peace Later
7. You Can
Always Spend More Than You Can Make
8. The Borrower
Is the Servant to the Lender; So Beware!
9. Check
Your Credit Report at Least Once Every Two Years
10. Handle
Credit Report Corrections Yourself
-Below is a pretest. Write your answers on a sheet of paper. After you take the test you can check your answers which are listed below the pretest. Don't peek :) Your score doesn't really matter, and you will probably get a lot wrong. That is okay. The pretest is so to give you an idea of what we will be learning about. Give the quiz to your parents too!
1. What are the first 5 things that you should list in a budget?
2. What is Term Insurance?
3. What is Whole Life Insurance?
4. What is meant by deductible?
5. What does the term “liquidity” mean?
6. Define…Mutual Fund.
7. What is meant by “diversification?”
8. How many types of insurance should a person have?
9. What is a bond?
10. What is the difference between a fixed annuity and a variable annuity?
11. What is meant by “the rule of 72?”
12. What amount of money do the majority of Americans retire on per year?
13. What is a dividend?
14. Define… Compound Interest.
15. What is a Roth IRA?
16. What is a traditional IRA?
17. What is the purpose of an UTMA?
18. Where does the term 401(k) come from?
19. If you borrowed $100,000 dollars to buy a home at 10% interest, how much interest would you have to pay?
20. What is the absolutely worst way to buy a car?
ANSWERS: DON"T PEEK :)
. Aside from giving and saving, Home (Rent/ Mortgage), Food, Transportation, Clothing, and Utilities
2. This is life insurance for a specified period of time; this is less expensive than cash value and is what is recommended for life insurance coverage.
3. Another name for cash value insurance; this is more expensive than term in order to fund a savings plan within the insurance; not recommended as the type of life insurance you need.
4. The amount you pay with an insurance company before they begin paying.
5. The availability of money
6. Mutual funds are pools of money that are managed by an investment company. They offer investors a variety of goals, depending on the fund and its investment charter.
7. To spread around, thus lowering one’s risk.
8. Disability, home, life, long-term care, health, and Auto
9. A debt instrument where a company owes you money.
10. Fixed annuity: Interest rate stays the same over time/ Variable: Interest rates adjusts.
11. A quick way to calculate the length of time it will take to double a sum of money. Divide 72 by the expected interest rate to determine the number of years (ie… 72divided by 8% =9 years).
12. $10,000
13. These are stock profits that are paid out to shareholders.
14. Interest paid on interest earned. Interest credited daily, monthly, quarterly, semi-annually, or annually on both principal and previously credited interest.
15. This is an after-tax investment where you have already paid tax on the money you are using but the investment grows tax-free.
16. Individual Retirement Account (IRA): A tax-deferred account for individuals with earned income and their non-working spouses.
17. In reference to leaving money/ items to children, the UTMA’s purpose it to extend the definition of gifts to include real estate, paintings, royalties, and patents.
18. U.S. Tax code.
19. The amount depends upon the length of the loan. The first year would be $10,000. However, today’s trends show that most Americans are taking at a 30-year mortgage and paying more than $200,000 in interest on their initial home price.
20. Lease
