Jack Kapoor,
College of DuPage Les Dlabay,
Lake Forest College Robert J. Hughes,
Dallas County Community Colleges
ISBN: 0072510781 Copyright year: 2004
Preface
“Double your money in five years” “Eliminate your credit card debt”“Obtain your dream job” “Travel to a different country each year”“Cut your automobile insurance rates by one-third”
This book cannot promise you any of these. However, we
CAN promise you the opportunity, along with your efforts,
to achieve these and many other personal financial
goals.
While technology, the global economy, and other social
trends are changing the financial planning environment,
many fundamentals remain constant. Your ability
to make informed choices related to spending, saving,
borrowing, and investing continues to be the foundation
of long-term financial security.
A Framework for Decision Making
Each day we are surrounded with new choices for shopping,
television channels, and other activities. Money
choices can be intense; however, Personal Finance, Seventh
Edition, offers many tools to cope with these situations.
The steps of the financial planning decision-making
process are introduced in Chapter 1. This step-by-step approach
will help you identify and evaluate choices as well
as understand the consequences of your decisions in
terms of opportunity costs.
New Content and Features to This Edition
With a continued emphasis on technology, real-world decision
making, and practical advice from financial planning
professionals, this edition of Personal Finance
provides you with a strong foundation for your current
and future personal economic activities. In addition,
many topics and instructional features have been added or
enhanced to better serve both students and instructors.
Chapter 1 addresses the influence of the new economy
on your financial choices and career decisions. In addition,
this introductory chapter guides you in using online
research and websites for various financial planning activities.
Chapter 2 continues to provide complete directions
for planning and implementing a career search,
again with an emphasis on using the Internet in this
process.
In Chapter 3, the foundation of your financial decision
making is analyzed using personal financial statements
that are the basis for money management and budgeting
activities. Chapter 4 continues to provide a clear foundation
for understanding your tax responsibilities, along
with updated coverage of recent tax laws and e-filing of
your federal tax return.
As electronic and online banking expands in our society,
a need to better select and manage these services also
grows. Chapter 5 presents integrated coverage of cyberbanking
services, along with the basics of traditional savings
and checking accounts.
The consumer credit unit—Chapters 6 and 7—provides
updated material on debit/credit card fraud, identity
theft, the two-cycle average daily balance method of calculating
cost of credit, and using the Internet to obtain
credit and financial planning information.
Consumer spending is no longer restricted to stores,
telephone, and mail order. In Chapter 8, expanded coverage
of online shopping is provided in relation to established
purchasing strategies. The appendix for Chapter 8
offers an updated analysis for comparing motor vehicle
buying in light of low-rate financing and leasing alternatives.
In Chapter 9, an expanded view of home buying is
offered as a result of increased use of online activities for
selecting, financing, and finalizing a housing purchase.
The increased number of natural disasters has intensified
the need for home and property insurance. Chapter
10 starts with a plan for selecting needed insurance coverage,
which is followed by practical suggestions for understanding
and buying needed home and auto protection.
Chapter 11 presents new information on patientadvocacy
groups, skyrocketing costs of health insurance
for employees, long-term care insurance, and patients’
rights bills. An updated discussion of variable life insurance
and using the Internet to obtain life insurance information
is included in Chapter 12.
The investment unit—Chapters 13 to 17—provides
new information on portfolio management and asset allocation
in Chapter 13. There is also more information in
Chapter 13 on how the factors of age, amount of time before
retirement, and economic conditions affect investment
choices.
New material on the importance of corporate earnings
and other numerical measures that help investors evaluate
potential or existing stock investments is included in
Chapter 14. Increased coverage on evaluating investments
is also provided in Chapter 15, “Investing in
Bonds” and Chapter 16, “Investing in Mutual Funds.”
Chapter 16 presents new information on exchangetraded
funds (ETFs), asset allocation funds, and world
bond funds. This chapter also includes new material on
managed funds versus indexed funds. Finally, Chapter 16
continues to provide a number of exhibits that illustrate
the type of research information that is available to mutual
fund investors.
Chapter 17 presents new information on rising prices
of single-family and vacation homes, real estate investment
trusts, and Enron collectibles.
The retirement and estate planning unit—Chapters 18
and 19—now includes a discussion of qualified domestic
relations order, the Economic Growth and Tax Relief
Reconciliation Act of 2001, as it pertains to retirement
and estate planning, Coverdell Education Savings Accounts,
and ethical wills.Acknowledgments
We express our deepest appreciation for the efforts of the
colleagues who provided extensive comments for this
edition that contributed to the quality of the book you are
using.
Howard Bohnen
St. Cloud University
Raymond Diggle
Bethune Cookman College
Richard Grimm
Grove City College
David Haeberle
University of Indiana
Don Harwick
Lexington Community College
Ishappa Hullur
Morehead State University
Ken Mark
Kansas City Community College
David Martin
King’s College
Shee Wong
University of Minnesota
Many talented professionals at McGraw-Hill Higher Education
have contributed to the development of Personal
Finance, Seventh Edition. We are especially grateful to
Michele Janicek, Jennifer Rizzi, Mary Conzachi, Matt
Baldwin, and Carol Loreth.
We would also like to thank Anne Gleason, University
of Central Oklahoma, for creating all of the questions in
the self-study tutor software on the student CD-ROM;
and Virginia Junk, University of Idaho, for preparing the
PowerPoint Presentation System.
In addition, Jack Kapoor expresses special appreciation
to Theresa and Dave Kapoor, Kathryn Thumme, and
Karen Tucker for their typing, proofreading, and research
assistance. Finally, we thank our wives and families for
their patience, understanding, encouragement, and love
throughout the years since we started this project.A Note of Appreciation
Thousands of students at hundreds of colleges and universities
throughout the world have used the previous editions
of Personal Finance. We are honored that professors
and students have chosen our text to learn about personal
financial decision making. A text should always be evaluated
by the people who use it. We welcome your comments,
suggestions, and questions. Finally, we truly hope
that, as a result of studying personal finance, you will have
a fulfilling life that brings economic prosperity along with
satisfying personal relationships.
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2004 McGraw-Hill Higher Education