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    Shifei Chung
    Should a Financial Literacy Course be required in the...
    ELS session posted August 5, 2010 by Shifei Chung, last edited May 21, 2012 
    5794 Views, 42 Comments
    Should a Financial Literacy Course be required in the General Education Program for All College Students?
    names(s), affiliation(s):
    Shifei Chung (Rowan University) & Ramesh Narasimhan (Montclair State University)
    August 3, 2010 6:00pm - 7:30pm


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    • Robert E Jensen

      From the CPA Newsletter on September 3, 2014

      How retirement planning has changed since ERISA was enacted
      The Employee Retirement Income Security Act was enacted in 1974 in response to some much publicized failures of private defined benefit (or pension) plans. Rebecca Miller, CPA, Robert Lavenberg, CPA, J.D., and Ian MacKay, CPA, CGMA, mark ERISA's 40th anniversary with a look back at the challenges ERISA was originally intended to address and the issues facing retirees now and in the future. Journal of Accountancy print issue (9/2014)

      Bob Jensen's threads on personal finance ---

      Bob Jensen's threads on pension accounting ---

    • Robert E Jensen

      "Here's The Painstakingly Detailed Budget Of A Couple Who Earns Nearly $15,000 A Month," by Libby Kane, Business Insider, January 26, 2015

      Suppose you were teaching a financial literacy course and used the following monthly budget for a couple. What would you focus on to stimulate student debates on the issues.



      • The couple earns $180,000 after-tax withholdings and tax estimated additional payments per year (assuming both adults work giving rise to the day care allowance).

      • My calculation assuming a 4% APR 30-year mortgage initially is that the couple owns a home originally costing $345,150 plus whatever they made in a down payment. This price would be relatively high in a decadent farming town in Iowa and relatively low in a suburb of most major cities. It would be a tent in Silicon Valley. It would not be much of a house within a walking distance of virtually all major universities in the USA.

        The house probably cost a lot less if the $1,647.80 payment also covers property taxes and mortgage insurance. Have your students estimate the original cost of the home if the payments on the mortgage itself are only $1,000 per month. They must be living in an old shack or a cramped town house.

      • The life insurance seems relatively low for a family with young children.

      • The "out-to-eat" budget is relatively low and can be used up entirely with two nights out at nice restaurants per month. The family must eat out mostly at fast-food and pizza joints. One way to save money plus eat healthy meals is to eat at a nearby hospital like we did in both San Antonio (where the Northeast Baptist Hospital was only a block away). Eating at the hospital was cheaper than cooking at home. Erika worked full time at this hospital.

      • The electric bill of $200 would not cover our electric bill with heating and air conditioning while we lived in San Antonio where the electricity and gas bill was over $400 per month. In the White Mountains of New Hampshire electricity, propane and heating oil would be more like $1,000 per month. It's very cold up here.

      • I think for a younger family not of Medicare the medical, dental, and prescription drug allowance is way too low in the budget shown in the article below. For retired folks like us on Medicare the medical, dental and prescription outlays would be much, much higher --- more like $1,500 per month. Younger folks naively think Medicare is "free"  after you retire. It's not free when you add in the cost of Medicare itself, the cost of Medicare supplemental insurance, and the out-of-pocket costs of medicine not covered by Medicare D.

      • How about the other monthly estimates?
        Are they realistic for the USA?
        Are important items deleted in terms of most families?

        • In San Antonio where I watered my lawn with a sprinkling system my water and sewer bills were over $200 per month
        • My Time Warner cable bill is now over $160 per month
        • What about those monthly iPhone usage fees?
        • How about home owner insurance and umbrella (liability) insurance?
        • How about lawn and garden equipment such as a garden tractor and lawn mowers and snow throwers?
        • What about furniture and appliance costs? Up here in the boondocks I spend quite a lot on extended on-site warranties.


      When you teach from this budget you might go into more details regarding possible tax strategy and retirement strategy  pros and cons.


      "Here's The Painstakingly Detailed Budget Of A Couple Who Earns Nearly $15,000 A Month," by Libby Kane, Business Insider, January 26, 2015 --- 


      February 1, 2015 reply from Patricia Walters


      Not every place charges for water. We had a well in VA and we paid electricity and maintenance for the pump, not for the water.

      We had a lawn mower in VA. Here we have someone come and cut our grass who has the equipment, about 100 per month in the growing season only. No snow. Even in VA we had shovels, not power tools.

      No TV, only cable for internet. Biggest utility charges electricity (we have big OLD house) and phones.

      We don't know where these people live. Costs vary widely depending on location, even within counties.

      Are there homes in Fort Worth that cost over a million? Sure. But there are also homes in reasonable neighborhoods for less than $150,000. I live in one of those neighborhoods.

      I've lived in NYC, NJ, VA and now TX. Costs vary widely across those places and within those places.

      One if their biggest expenditure was school, which seemed likely to me.

      Why do you doubt the truth of their budget?



      February 2, 2015 reply from Bob Jensen

      Hi Patricia,

      I did not doubt the truth of their budget, but I did think they left a few things out or were ambiguous about some things that need to be clarified by a teacher or students using this budget in a financial literacy course.

      For example, the $1,687 mortgage payment could be the mortgage alone or it could also cover property taxes, homeowner insurance, and mortgage insurance. Take those away from the payment and you are left with a fairly low-sized mortgage.

      In my case the property taxes are $1,000 per month but they are not part of my mortgage payment in these mountains. In fact the property tax payment and the mortgage payment only differ by $200 because I paid over 60% down at the time of purchase. Later I refinanced the remaining mortgage for 3.6% for 30 years. I pay the homeowners insurance separately, and that's not cheap up here.

      Most people cannot afford such a large down payment unless they're retired. In rural mountain and ocean properties the banks typically require larger down payments than in towns. In many instances former owners must finance the homes they sell.

      When I taught at the University of Maine I had an ocean cottage that could not be financed except by an owner. Banks would not loan on shore property in those days. That made interest rates highly variable, because they were part and parcel to sales price negotiations. Owners also typically demand large down payments when they finance sales properties.

      I also wanted a mortgage so I could play the game of having more itemized tax deductions plus invest more in a long-term insured tax-exempt mutual fund that pays only slightly less than by mortgage interest rate. The standard deduction sucks, but you have to have a sizable amount of itemized deductions to cover the minimum threshold for itemized deductions..

      I could pay the mortgage off any time, but I don't want to due to a tax strategy that might be debated by students in a financial literacy course. That's why I suggest having students debate alternate tax strategies at the same time they are discussing household budgeting.

      Having a deep water well makes me not concerned about the cost of water usage. Wells only get expensive when you have to replace the well and or the pressure tank and pump. Two of my neighbors had to replace their wells, and it cost each of them thousands of dollars.

      With a well also comes a septic system. The risk here is having to replace the drain fields for broken tiles. That expense depends a lot on having sufficiently high ground for another field. You can't put a new drain field over an old drain field or in low land that does not drain well from rain and snow melt.

      A B&B down the road is having all sorts of troubles finding a suitable place for a new drain field. The small hotel has been empty for over a year in part because of this problem and the need for a new well.

      In San Antonio you could get housing relatively close to Trinity University for less than $200,000 but most faculty who do so either do not have children or send their children to private schools (which is really expensive). Also crime risks are higher near campus relative to most outer northern parts of the city. By higher crime risk I mean that I don't recommend walking near campus at night and having to have high quality home security systems.

      Trinity has very safe and well lighted walking, jogging, and biking trails on campus that are heavily patrolled by officers on bicycles. These trails are used a lot by neighbors not affiliated with the University. It's a public service.

      Thanks for your thoughts,

      Bob Jensen's personal finance helpers ---

    • Robert E Jensen

      Take a look at what exactly student athletes will learn in the new personal finance course at Ole Miss

      Jensen Comment
      Given that ignorance of personal finance is the greatest stress in families and the biggest reason for divorce I think personal finance should be part of the common core in all colleges and universities.

      "Teach Financial Literacy," by Steven Bahls, Chronicle of Higher Education, June 13, 2011 ---

      Most importantly take a look at some of the free training and education sites linked at

      Wharton Professor Olivia Mitchell on Worldwide Financial Literacy Participant02.pdf
      Thank you Jim Mahar for the heads up.

      Education: Federal Reserve Bank of Kansas City ---
      Note the Financial Fables section ---

      Helpers in planning for retirement ---

      Personal Financial Helpers:  From the Virginia Society of CPAs ---

      Video:  Investing for Inflation ---

      What five classic Disney movies can teach us about personal finance ---

      U.S. Social Security Retirement Benefit Calculators ---

      Continued at

      The following article is not specific enough for me to pass judgment on the content, but it has many of the correct headings. Because I am an accountant I would probably lean more toward some of the more technical aspects of personal finance such as income budgeting and grasp of the time value of money (which sadly is not what it used to be with today's miserable savings interest rates).

      For example, I think college graduates should be able to make technical comparisons about whether to buy or lease a car and to verify the annual percentage rate of a loan contract. When is it a good or bad idea to buy a service contract? Why is it a terrible idea to only make what your credit card company calls the minimum payment? When should you buy used or refurbished items on Amazon versus new items? It's a good idea to look for the used options, but it's not always a good idea to order a used item like a computer.

      Many of my colleagues would probably accuse me of being too technical in my vision of a personal finance class. I'm open to debate on this.

      When is it advisable to become an Amazon Prime member versus when it it a waste of money? For me it's a tremendous idea here in the boondocks, but it may not be the best idea for everybody.

      How necessary is your smart phone if you are paying for it on a tight budget? Bob Jensen only carries an old prepaid-time cell phone for calling out.

      "Take a look at what exactly student athletes will learn in the new personal finance course at Ole Miss," by Libby Kane, Business Insider, April 6, 2015 ---

    • Robert E Jensen

      This is the research you should do before picking a credit card --- 

      The Upshot: Is It Better to Rent or Buy? (real estate calculator) ---
      Jensen Comment
      My general advice for new faculty is not to buy a home until tenure is achieved except in hot markets where fast turnover profits are probable provided too much is paid initially. After tenure achievement the above calculator can be helpful.

      My priors were to invest as much as possible in long-term ownership of a house and the least possible in the long-term ownership of a very reliable car. 

      However, be careful where you buy real estate. Up in the White Mountains I advise mountain or lake views even though New Hampshire has a view tax.  There really aren't any gated neighborhoods up here, and nothing would be gained by having gated neighborhoods. In San Antonio I would not put big money into a house that's not in a gated neighborhood. Even if you're opposed philosophically to that concept, the fact is that expensive homes do not sell very well in San Antonio unless they are in gated neighborhoods with armed guards at the gates. I would have had much more capital gain on my big San Antonio house if it had been in a gated neighborhood. Sigh!


      The Upshot:  Is It better to Lease or Buy a Car? ---
      Jensen Comment
      Leasing became much more attractive when the Federal Reserve drove commercial interest rates toward zero. But that does not mean "more attractive" than buying in all instances. Much depends on the amount you drive and the terms of the lease in the context of  the amount you drive. It also depends a lot upon your willingness to drive older cars. When I worked in San Antonio where newish cars are stolen in unbelievable numbers daily my wife's car was a newish tiny Honda Civic, and I drove a very reliable battered up ancient Ford station wagon that had a newish engine and transmission under the hood. This ghetto-like car looked so bad that nobody would think of stealing it and driving it across the border to Mexico.

      In general, even in retirement, my wife and I do not mind driving well-maintained older cars. Our main car in the White Mountains (where car theft would be headline news) is a very reliable Subaru Forrester that we will probably drive until it is at least 20 years old (it's now five years old) or has over 100,000 miles.  The Subaru will probably be the last car we ever own. After that its car leasing for us unless we're in a nursing home. I also keep an unreliable old Jeep Cherokee in the barn that's used mostly for hauling brush to the dump. That will be in our barn on the day I die.

      My point is that leasing would probably not be the best choice for us until we're very old. However, leasing is the best choice for most of our children except for one son who puts a lot of miles on a car commuting a long distance to work in California.

    • Robert E Jensen
    • Robert E Jensen

      From the CPA Newsletter on November 19, 2015

      US ranks 14th in world for financial literacy
      The US ranked 14th in a survey of global financial literacy that was conducted in more than 140 countries. The researchers asked multiple-choice questions about topics such as interest and diversification. Only 57% of Americans received a passing grade. Find the AICPA's financial education resources at Forbes (11/18)

      Bob Jensen's personal finance helpers ---

    • Robert E Jensen

      Helpers for Student Loan Forgiveness and Cancellation ---

      Jensen Comment
      If you do not qualify for student loan forgiveness you should probably compare your current annual loan payments with payments if you privately refinance at the present low interest rates. However, you may lose some protections and options in doing so. Be careful about refinancing that sounds too good to be true. You might be able to refinance with your parents in a win-win situation if your parents consider you a good investment risk and you pay a higher interest rate than their safe investment alternatives. Read that as meaning you have a good job in a good profession and are not an unemployed aspiring artist or writer or getting a Ph.D. in a discipline where Ph.D. graduates are a dime a dozen.

      Whether or not you pay your student loan off aggressively by making above the minimum amounts due each year depends much upon what you would otherwise do with the money. Savings rates are so low that you are probably better off paying the loan off aggressively relative to saving. Risky investments are not the same as gambling, but you should probably be very cautious with putting money into risky investments like tech stocks until you have your student loans paid off. Also remember that there are transactions costs for buying and selling land, houses, and stocks. Short-term ownership (called flipping) of a house/condo is risky unless the buying deal was very good in a very hot housing market such as near a college or medical center. It helps in house flipping markets if you do the fixing up of a house yourself.

      My advice is to avoid buying new cars until your loan is paid off, although you may have to invest in a quality pre-owned car or lease modest cars at low rates. Think public transportation if you live in an urban area that has good public transportation. You can always rent an occasional car if needed for a trip.

      Bob Jensen's personal finance helpers are at

    • Robert E Jensen

      How little couples talk about money. It’s probably one of the last taboos except in heated arguments after it's too late.
      Suggestions for improving communications with partners about money

      Jensen Comment
      I found the best way to communicate about money with Erika was to let her take over the checkbook years and years ago even before we retired. That way when I talked about long-range planning her knowledge of the short-range ins and outs made her much more sympathetic and understanding about the long run. In the short run, however, she still won't tell me how much money is in the account --- in fear that I might spend too much foolishly if I know how much is available. She let's me carry one check in my billfold --- but that's strictly for emergencies.

      And what a relief it was to put bill paying out of my mind.
      Erika actually reconciles the checkbook to the penny which is something that I rounded off to the nearest $100 give or take another $100. This task is difficult for her since, as a surgical nurse by training long before computers, she does not even use a calculator let alone a computer. She was very good at counting sponges and sometimes had to tell the surgeon that a sponge was unaccounted for and must still be hidden in the body. One time a surgeon ignored her. Three weeks later he had to go back into the patient's body to look for the (now infected) sponge.

      Bob Jensen's personal finance helpers ---

    • Robert E Jensen

      How Credit Scores Work and five Lesser-Known Reasons Why Your Credit Score Drops ---

      Bob Jensen's threads on personal finance ---

      Kiplinger:  Three States to Avoid in Retirement ---

      Jensen Comment
      Millions of folks happily retired in what Kiplinger calls the "worst" retirement states. There are many reasons to retire, including a desire to be near family, opera, ballet, symphony orchestras, and the neighborhood you lived in for the past 35 years.
      Tax positives and negatives vary a lot with your particular situation. For example, most retirees don't have enough valuable assets to worry about estate taxes. In retirement income taxes may be negligible for many retirees.
      If you're on welfare blue states are generally more generous than red states but blue states are usually more expensive.

      Crime risks vary even within states. For example, I don't think our Village of Sugar Hill ever had a home invasion, but there've been some murderous ones 100 miles south in Manchester that is also part of New Hampshire.
      When choosing to leave San Antonio crime risk was one of our considerations. In San Antonio our house had heavy burglar bars for good reason. This, in part, possibly explains why we didn't get hit like some of our less-paranoid neighbors.

      Avoiding crime, congestion, traffic, and everlasting road construction was on our mind when we decided to leave the ant hill of San Antonio. Up in these mountains seeing one other car means it must be rush hour (except in foliage season when it's bumper-to-bumper in front of our cottage) ---

      When living in Tallahassee one our our friends was transplanted from Texas. He said what he missed most was Lone Star Beer and Texas swing music. In his case, none of his ex's lived in Texas. I never cared much for beer, but I really, really miss the swing music and line dancing.

      My neighbors down the road in these mountains are Boston Pops fanatics. But they also associate the Pops evenings with the five-star hotel that they love in downtown Boston. They would not retire In Massachusetts for all the tea in China. Furthermore, they would not enjoy the Boston Pops as much if the concerts were in the nearby Sugar Hill community center.

      Residents of Las Vegas are usually not addicted to gambling like frequent visitors from out of town. Residents in most places don't always deeply enjoy that which attracts their tourists.

      Home is where you hang your hat. Make the best of it and avoid the worst of it!
      A man probably would not be as happy as he thinks retired with a rich nymphomaniac who owns a chain of liquor stores. A woman may not be as happy with a retired eunuch who owns a chain of shoe stores.

      The marriage of George and Martha may not really be a "breakdown." George and Martha might actually prefer the challenges of this combative, albeit drunken, lifestyle ---

    • Robert E Jensen

      The State of Personal Finance, Faculty-Staff Edition:
      Survey of campus employees finds professors focus on saving for retirement and doubt their financial literacy; administrative staff worry more about the near term

      Jensen Comment
      What many workers in general forget is that the Federal Reserve virtually eliminated low risk, safe financial savings that in the past paid upwards of six percent per year in interest and now pay very close to zero interest. This means that savers must take on more financial risk to get decent returns on savings, particularly now that employers are shying away from fixed-benefit retirement plans.

      Bob Jensen's free helpers on personal finance are at

      I'm a long-time advocate that financial literacy should be added to the common core of skills in higher education. For example, the most common cause in breakdowns in relationships like marriage is ignorance about finance at the heart of relationships.