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The University of Arizona Free Personal Finance Site
Unbiased, State of the Art Personal Finance Information from the University of Arizona
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This is a free, state of the art course in the essentials of personal finance in America today. The estimated time of completion is 15 hours. You are free to work at your own pace, and you may leave the course and come back to it whenever you'd like. You could spend half an hour one day, then pick up where you left off the next day, and spend two hours, whatever's most convenient and enjoyable, anytime, 24/7/365.

The course involves reading sections and then answering questions on those sections. After you have submitted your responses, they will be checked by computer and you will see the correct answers, with clear explanations of why they are correct. Please do your best, as this is important material that can really help your personal financial success, but don't worry if you answers are incorrect. This isn't for a grade. Just learn why the correct answer is correct. This is all about learning – learning material which can really help you financially – and enjoying taking the course; I've taught this material to over 1,500 students at the University of Arizona, and overwhelmingly the feedback is that it's very interesting and enjoyable.

But let me stress again, the material in this course is extremely valuable.

I strongly believe that for most people, taking this course will be one of the most valuable things you will spend 15 hours on in your life.

Why is this?

It is essentially because personal finance has changed so much over the last generation. The environment is much riskier, and it's much easier to make mistakes and be financially ruined if you don't understand the fundamentals of personal finance for today's America. This is why we see an epidemic of financial distress. At the same time, if you study the material in this course well, learn how to avoid the traps and pitfalls, learn how to manage your money, and be a smart shopper, and learn the power of saving, then your financial future can be very bright indeed. It's just that things have changed so much over the last generation, and have become so much more risky and complicated, that a good personal finance education is crucial. And unfortunately, most Americans don't have one.

The bulk of the materials in this course are key fundamentals for personal finance today that are applicable and important for everyone, from young to old, and for every socioeconomic group. There are some sections that are of particular interest to certain groups, like the student loans section, and the how much to work after childbirth decision section, but even there, many outside of these groups will still have strong reasons to read these parts.

You may in the future have children going to college, or grandchildren, or the children of close friends. Likewise, even if you will not be having children (or any more children) your current offspring may in the not too far future face the how much to work after childbirth decision. In addition, learning about these situations, and how to handle them well, yields more general lessons that are widely applicable.

So now, without further ado, let's get started.

filing bankrupcy

Did you know that according to The Administrative Office for the United States Courts, in 2001 (the most recent year I have data on this) there were 1.1 million divorces in the United States, but there were actually even more bankruptcies, 1.5 million[1]? A child is currently more likely to go through his or her parent’s bankruptcy than their divorce. More people will file for bankruptcy this year than will graduate from college.

Did you know that if current trends continue, more than one in six single mothers will declare bankruptcy by the end of the decade? That the number of single mothers in bankruptcy increased by 600% between 1983 and 2003?


Did you know that 92% of those in bankruptcy qualify as middle class as defined by typical criteria such as going to college, owning a home, or having held a good job[3]? (Part of the reason is that declaring bankruptcy is not easy. It requires the payment upfront of legal and government fees that are now typically over one thousand dollars, although if successful, typically most, if not all, debts are discharged. Many poor people just live with untenable debt, garnishments, bill collectors, etc. as best they can).

Did you know that the number of car repossessions doubled between 1998 and 2003[4]? That the number of home foreclosures tripled between 1978 and 2003[5], and, of course, in 2008 they skyrocketed to levels not seen since the Great Depression.

For Sale Homes Foreclosed

Did you know that the probability of a person losing his or her job increased by 28% between 1973 and 2003[6]?

Did you know that experts calculate that an individual is now 49% more likely to be without health insurance than a generation ago[7]? That with soaring medical costs, the number of families declaring bankruptcy in the wake of a serious illness multiplied more than twenty fold between 1978 and 2003[8]? Did you know that about 1/3 of the U.S. population under the age of 65 spent at least some time without health insurance in 2006 or 2007[9]?

Did you know that between 1985 and 2005 average savings dropped from 11% of income to negative .5%, the first time the savings rate had been negative since the height of the Great Depression[10]?

Empty Piggy Banks

Due to changes in the economy and government protections, the United States is far more financially dangerous today than it was a generation ago. Then, there was a series of regulations in place to protect individuals and families. There were laws strictly limiting the interest and fees credit card companies could charge. Now, there is no limit. A credit card company can overnight raise your interest rate from 10% to 30%, for often vague or poor reasons, such as a rise in your balance, or a late payment, not even to the credit card company – and this happens all the time – as you will read during the course. There used to be serious legal limits on mortgage interest rates and fees; now “sub-prime” mortgages have interest rates as high as 20%, and that's not all. The fees can approach 20% of the amount borrowed.

credit card debt

Later, you will read an article from Consumer Reports which gives an example of a woman who took out a mortgage for $95,602, and paid $16,204 in upfront fees. She was charged $16,000 just to borrow $95,000, and that’s not even counting the exorbitant sub-prime interest rate. A generation ago this would have been illegal. But in 2007, 20 percent of all mortgages were sub-prime[11]. With high to exorbitant rates and fees, this is often called the “loan to own industry” (as in, they loan to you to eventually end up owning your home, and evicting you).

A generation ago loans with interest rates above 1,000% were available only from loan sharks. Today they are perfectly legal and available in almost every major city at “Payday Loan” shops. Deregulation has allowed for ever more complicated lending and insurance products, which can seem harmless, but can have devastating provisions in the fine print. Again, all of this was illegal a generation ago, but with recent deregulation this is no longer the case.

Newly Jobless

As if this weren’t reason enough to learn personal finance, health care and housing costs have skyrocketed, and employment and pensions have become far less secure.

This confluence of events has made the United States far more dangerous financially than it has ever been in modern times. Thus, it is vastly more important today that people understand personal finance, and the earlier the better, before they have gotten deeply into debt.

For those already too deeply into debt to ever get out, our Founding Fathers enacted bankruptcy laws to allow a second chance. Bankruptcy acts as an insurance policy for Americans against hard times, bad luck, and mistakes, so these things don't ruin you financially for the rest of your life. In fact, the insurance provided by bankruptcy laws is an important reason why Americans are so willing to take risks and innovate, starting entrepreneurial ventures and new careers, and going back to school.

If failure could mean debt that could never be escaped, far less Americans would take such risks, and as country we would be much poorer and less innovative. Such great Americans as Henry Ford, Abraham Lincoln, and Thomas Jefferson all had bankruptcies[12].

financial success is achievable

But the new 2005 bankruptcy law (BAPCPA) makes it much harder to file for bankruptcy. Many people will not be able to without first having to successfully complete a very difficult court enforced payment plan that lasts 3-5 years (Chapter 13). And if that plan is not completed successfully, another one may be assigned, and another one after that, if necessary. For many, it may be a very long hard road before they escape crushing debt[13]

This is true even though the great majority of Americans who end up needing bankruptcy relief were not irresponsible. Eighty-seven percent of the families in bankruptcy cited some combination of job loss, medical problems, or family breakup, things that can easily happen to the most responsible and hard working of people[14]. Still, if they had understood modern personal finance, as you will learn in this course, they certainly might have never been overtaken by debt, because they would have been much more capable of handling and weathering these things which are far more of a risk today than they were a generation ago.

If you study well the material in this course, learn how to avoid the traps and pitfalls, learn how to manage your money, and be a smart shopper, and learn the power of saving, then your financial future can be very bright indeed.

family afair

Did you know that if you paid off any debt, and saved $100 per week, about $400 a month, in a typical balanced stock fund, that you would be worth one million dollars after 31 years, if stocks ended up earning their historic average return? Did you know that even adjusting for projected inflation, you would still be worth 1 million today dollars in 44 years?

I know that in 2008 stocks did very poorly, but over the long run they have always done well. In fact, there has never been a 20 year period, going all the way back to the inception of the New York Stock Exchange in 1802, when American stocks have not returned more than the inflation rate[15]. And on average they have returned about 7 percentage points more than the inflation rate[16].

Clearly, you have a strong incentive to take this course, to do the reading carefully – without rushing or skimming through it – and obviously I am trying to impress that upon you. I think this is one of the most important courses you will ever take, so I really want to motivate you to take it seriously. In doing so, every student can look forward to a bright and prosperous future!

So, let's get started, with the foundation of personal finance today:

The Balanced Money Plan »

[1] Warren & Warren Tyagi (2003) The Two Income Trap; page 6, endnote 7

[2] Warren & Warren Tyagi (2003) The Two Income Trap; page 9, endnote 13

[3] Warren & Warren Tyagi (2003) The Two Income Trap; page 7, endnote 12

[4] Warren & Warren Tyagi (2003) The Two Income Trap; page 7, endnote 9

[5] Warren & Warren Tyagi (2003) The Two Income Trap; page 7, endnote 10

[6] Warren & Warren Tyagi (2003) The Two Income Trap; page 82, endnote 35

[7] Warren & Warren Tyagi (2003) The Two Income Trap; page 84, endnote 42

[8] Warren & Warren Tyagi (2003) The Two Income Trap; page 84, endnote 43

[9] "Facts About Health Care - Health Insurance Coverage" (National Coalition on Health Care n.d.)

[10] Bruce, Laura (2006) "Negative Personal Savings Rate: What Does it Mean?" at

[11] Kirchhoff, Sue (2007) "Predatory Mortgages Labeled 'Crisis', USA Today, February 8, 2007

[12] Trex, Ethan (2008) "Seven Famous People Who Survived Bankruptcy" at

[13] For those interested in learning more about bankruptcy, I recommend NOLO’s The New Bankruptcy: Will it Work for You? 2nd Edition, 2007. NOLO is an outstanding legal aid and information organization and they have a large series of excellent books written in a very clear and easy to understand way for laypeople as well as being highly authoritative. You can find excellent information on a wide variety of legal and personal finance subjects as well as a list of all of their books at their website:

[14] Warren & Warren Tyagi (2003) The Two Income Trap; page 81

[15] Siegel, Jeremy (2008) Stocks for the Long Run; page 24

[16] Siegel, Jeremy (2008) Stocks for the Long Run; page 20

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