Eric Tyson, MBA, is a bestselling personal finance author, counselor, and writer. He is the author of the national bestselling financial books Investing For Dummies, Personal Finance For Dummies, and Home Buying Kit For Dummies.

Introduction 1

About This Book 1

Foolish Assumptions 2

Icons Used in This Book 3

Beyond the Book 3

Where to Go from Here 3

Part 1: Getting Started with Personal Finance 5

Chapter 1: Your Financial Checkup 7

Calculating Your Financial Worth 8

Defining net worth 8

Figuring what you own: Financial assets 8

Determining what you owe: Financial liabilities 9

Netting the difference 10

Grasping the Importance of Your Savings Rate 10

Calculating your income and outgo 11

Assessing the change in your net worth 11

Understanding and Improving Your Credit Score 13

Deciphering how lenders use credit reports and scores 13

Obtaining your credit reports and fixing errors 14

Getting your credit score 15

Improving your credit reports and score 15

Comprehending Your Investment Options 16

Examining Insurance Coverage 17

Identifying Common Financial Mistakes Young Adults Make 18

Chapter 2: Budgeting, Goal Setting, and Valuing Saving 21

Developing a Savings Mindset 22

What It's Worth: Valuing Savings over Time 24

The power of continual savings 24

The rewards of earning a (slightly) higher annual return on your investment 25

Budgeting and Boosting Your Savings 26

Setting and Prioritizing Your Savings Goals 28

Identifying common goals of accomplished savers 28

Valuing retirement accounts and financial independence 29

Dealing with competing goals 30

Saving When You're Strapped 31

Chapter 3: Using Loans and Paying Down Debts 33

Eyeing the Causes of Generational Debt 34

Making the Most of Loans 35

Dealing With Student-Loan Debt 36

Tracking your student loans and making timely payments 36

Prioritizing the payback of student loans 37

Using education tax breaks 38

Weighing the costs and benefits of education expenditures 39

Making the most of student loans, grants, and other financial aid 40

Benefits for military people 41

Paying Off Consumer Debt 41

Kicking the credit-card habit 42

Discovering debit cards: Convenience without credit temptation 42

Lowering the interest rate on consumer debt 44

Negotiating better rates from your current credit card 44

Tapping investments to reduce consumer debt 45

Paying down balances 45

Getting Help for Extreme Debt 46

Seeking counseling 46

Considering bankruptcy 47

Preventing Consumer Debt Relapses 50

Chapter 4: Everything Credit: Scores and Reports 51

A Primer on Credit Reports and Credit Scores 52

Differentiating between credit reports and credit scores 52

Understanding how credit scores are determined 53

Valuing of a good credit score 55

Jump-starting your credit score as a young adult 55

Getting Your Hands on Your Credit Reports and Scores 56

Recommended websites for free credit scores 57

Websites to avoid 57

Scrutinizing Your Credit Reports to Improve Them 58

Identifying errors and getting them fixed 58

Boosting your credit score 59

Preventing Identity Theft 60

Part 2: Saving and Earning More 65

Chapter 5: Proven Ways to Spend Less and Save More 67

Containing Housing Costs 68

Reducing rental costs 68

Slicing homeowner expenses 71

Cutting Your Taxes 72

Managing Food and Restaurant Spending 73

Trimming Transportation Expenses 75

Finessing Fashion Finances 76

Relaxing on a Budget 78

Taming Technology Spending 79

Keeping Down Insurance Costs 81

Getting Affordable and Quality Professional Advice 81

Handling Healthcare Expenses 82

Chapter 6: Taxes: Reduce Them When You Can! 83

Understanding Taxable Income 83

Comparing Marginal Taxes 84

Changes from the Tax Cut and Jobs Act Bill 86

Reducing Taxes on Work Income 87

Contributing to retirement plans 87

Using health savings accounts 89

Deducting self-employment expenses 90

Increasing Your Deductions 91

Lowering Investment Income Taxes 92

Investing in tax-free money market funds and bonds 92

Selecting other tax-friendly investments 92

Making your profits long term 93

Enlisting Education Tax Breaks 93

Preparing Your Tax Return and Minimizing Your Taxes 94

Chapter 7: Housing: Comparing Renting and Buying 97

The Ins and Outs of Renting 97

Seeing the benefits of renting 98

Considering the long-term costs of renting 98

Completing your rental application 99

Figuring the Costs of Owning and Making It Happen Financially 100

Deciding to buy 100

Comparing the costs of owning versus renting 101

Considering your overall financial health 103

Calculating how much you can borrow 104

Accumulating your down payment 104

Finding the Right Property 105

Working with Real-Estate Agents 108

Financing Your Home 109

Understanding your mortgage options 109

Deciding which mortgage type is best for you 109

Avoiding negative amortization and interest-only loans 110

Getting your mortgage approved 111

Putting Your Deal Together 112

Chapter 8: Relationships and Money 115

Handling Roommates 115

Living-Together Contracts 117

Getting Married 118

Understanding Your Money Beliefs and Practices 120

Examining your money history 121

Exploring your attitudes toward money 122

Understanding your friends and money 123

Making sense of your environment and money 124

Getting a Grip on Procrastination Where Money Is Concerned 124

Diagnosing procrastination 124

Coming to terms with why you may procrastinate with money issues 125

Overcoming money avoidance 127

Chapter 9: Making the Most of Your Career 131

Getting Your Career Going 131

Putting everything in order 132

Educating and training your way to career success 133

Seeking value for your education dollars 133

Investing in your career 138

Exploring Entrepreneurial Options 138

Starting a small business 138

Purchasing a small business 140

Investing in a small business 140

Changing Jobs or Careers 141

The Young and the Unemployed 142

Understanding how joblessness can hit younger adults harder 142

Accessing unemployment benefits 143

Taking action 143

Part 3: Investing for Your Future Goals 145

Chapter 10: Successful Investing Principles 147

Examining Bonds and Other Lending Investments 148

Investing in bonds 148

Considering the downsides to lending 149

Exploring Stocks, Real Estate, and Small-Business Investments 150

Socking your money away in stocks 150

Generating wealth with real estate 153

Going the small-business investment route 155

Considering Options, Cryptocurrencies, and Other Hot Vehicles 156

Opting for options 156

Calculating cryptocurrencies 157

Noting leveraged and inverse ETFs aren't investments 158

Getting a Handle on Investment Risks 159

Establishing goals and risks 160

Comparing the risks of stocks and bonds 160

Spreading Your Investment Risks 161

Understanding why diversification is key 161

Allocating your assets 162

Holding onto your investments and shunning the herd 163

Selecting an Investment Firm 164

Evaluating Pundits and Experts 164

Chapter 11: Making the Best Use of Bank Accounts 167

Looking at Different Types of Banks 167

Brick-and-mortar banks 168

Online banks 168

Other choices 169

Understanding Your Bank Account Options 169

Transaction accounts 169

Options for getting cash 170

Savings accounts 171

Banking Online 171

Evaluating a bank: What to look for 171

Protecting yourself online 174

Considering Your Alternatives 175

Brokerage accounts with check writing 175

Money market funds 175

Chapter 12: Portfolios for a Purpose 177

Before You Begin Investing 177

Investing Nonretirement Account Money 178

Emergency money 178

Long-term money 179

Investing Retirement Account Money 182

Establishing and prioritizing retirement contributions 182

Allocating money in employer plans 183

Designating money in plans you design 185

Investing for Education 187

Understanding the importance of applying for financial aid 187

Paying for educational costs 190

Chapter 13: Real-Estate Investing 193

Understanding Real-Estate Investment Pros and Cons 193

Evaluating Simpler Real-Estate Investments 196

Assessing Residential Housing Investments 197

Investing in Commercial Real Estate 198

Shunning Sure-to-Lose Real-Estate Investments 199

Researching Where and What to Buy 201

Considering economic issues 201

Taking a look at the real-estate market 201

Examining property valuation and financial projections 203

Digging for a Good Deal 205

Part 4: Insurance: Protect Yourself, Your Loved Ones, and Your Assets 209

Chapter 14: Taking Care with Health Insurance 211

Making Sure You're Covered 212

Transitioning your coverage 212

Seeing how Obamacare changed your coverage 213