ISBN-10: ISBN-13: SOUTH-WESTERN

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1 FIN 108, Personal Financial Management, 3 hours Instructor: Dr. Eurico J. Ferreira Office: SB - Room Phone: (812) Office Hours: To be announced Eurico.Ferreira@indstate.edu Textbook Gitman, Lawrence J. and Joehnk, Michael D. Personal Financial Planning, 11th edition, ISBN-10: ISBN-13: SOUTH-WESTERN Cengage Learning. The Course This course serves as Quantitative Literacy Foundational Studies 2010 course and as such must meet certain objectives (QLLO). For Quantitative Literacy they are: 1. Solve for one or more unknowns from available information using appropriate methods; 2. Represent and solve real-world problems employing appropriate mathematical models; 3. Answer questions using empirical methods; and 4. Critically evaluate a quantitatively-based argument. Because this course is part of the larger Foundational Studies Program, it is important to place its goals within the context of the program s goals. By the conclusion of your Foundational Studies Program at ISU, you will be able to meet the Foundational Studies Program Learning Objectives (FSLO) 1. Locate, critically read, and evaluate information to solve problems; 2. Critically evaluate the ideas of others; 3. Apply knowledge and skills within and across the fundamental ways of knowing (natural sciences, social and behavioral sciences, arts and humanities, mathematics, and history); 4. Demonstrate an appreciation of human expression through literature and fine and performing arts; 5. Demonstrate the skills for effective citizenship and stewardship; 6. Demonstrate an understanding of diverse cultures within and across societies; 7. Demonstrate the skills to place their current and local experience in a global, cultural, and historical context; 8. Demonstrate an understanding of the ethical implications of decisions and actions; 9. Apply principles of physical and emotional health to wellness; 10. Express yourself effectively, professionally, and persuasively both orally and in writing.

2 2 The program is also designed to build skills for applied learning. These Skill and Applied Learning Objectives (S&ALO) require that the course contribute to 1. Developing critical thinking skills. 2. Developing information literacy skills 3. Developing your writing skills (by including a graded writing component) This course will directly address all of the Quantitative Literacy Foundational Studies Objectives, all of the Skill and Applied Learning Objectives and all but two of the overall Foundational Studies Goals (4 and 9). Specifically, you will be required to 1) Identify the benefits of using personal financial planning technologies to manage your personal finances ( S&ALO#1; FSLO#1 & # 5). 2) Learn the financial planning process and be able to define your major financial goals (QLLO#2; S&ALO#1 and #2; FSLO#5). 3) Understand that personal financial plans must change according to your life situation (QLLO#2; S&ALO#1 & #2; and FSLO #8). 4) Understand how government, business, and consumer actions as well changing economic conditions affect personal financial goals (QLLO#4; S&ALO#1 & #2; and FSLO #6 & #7). 5) Evaluate the impact of age, marital status, education, geographic location, and career choice on personal income (QLLO#1 & #2; S&ALO#1 & #2; and FSLO #3, #7 & #8). 6) Recognize the importance of career planning and its relationship to personal financial planning (QLLO#4; S&ALO#1 & #2; and FSLO #5, #7 & #8). 7) Understanding the role of financial statements, professional financial planners, and special planning concerns in the financial planning process. (QLLO#1 & #2; S&ALO#1 & #2; and FSLO #3). 8) Put a monetary value on financial goals using time value of money concepts (QLLO#1 & #2; S&ALO#2; and FSLO #7). 9) Prepare a personal balance sheet (QLLO#1 & #2; S&ALO#1 & #2; and FSLO #1 and #3). 10) Generate a personal income and expense statement (QLLO#1 & #2; S&ALO#1 & #2; and FSLO #1 and #3). 11) Learning to develop a good record-keeping system and use ratios to interpret personal financial statements. (QLLO#1 & #2; S&ALO#1 & #2; and FSLO #1 and #3). 12) Construct a cash budget and use it to monitor and control spending (QLLO#1 & #2; S&ALO#1 & #2; and FSLO #1 and #3). 13) Understand how to manage your taxes (QLLO#4; S&ALO#1 & #2; and FSLO #5, #7 & #8). 14) Understand how to manage your cash and savings. (QLLO#4; S&ALO#1 & #2; and FSLO #5, #7 & #8). 15) Learn the options on making automobile and housing decisions(qllo#2, #3 & #4; S&ALO#1 & #2; and FSLO #1, #2 & #8). 16) Understand how to manage credit Borrowing and Using Consumer Loans (QLLO#2, #3 & #4; S&ALO#1 & #2; and FSLO #1, #2 & #8). 17) Learn the importance of managing your insurance needs (QLLO#2, #3 & #4; S&ALO#1 &

3 3 #2; and FSLO #1, #2 & #8). 18) Learn the importance of managing your investments. (QLLO#2, #3 & #4; S&ALO#1 & #2; and FSLO #1, #2 & #8). 19) Understand the importance of planning for retirement and estate planning (QLLO#2, #3 & #4; S&ALO#1 & #2; and FSLO #1, #2 & #8). 20) Learn to use a Personal Financial Planning Software (QLLO#2, #3 & #4; S&ALO#1 & #2; and FSLO #3 & #7). 21) Use blank worksheets provided with the textbook for dealing with several aspects of the personal financial planning process (QLLO#2, #3 & #4; S&ALO#1 & #2; and FSLO #1 & #7). 22) Write essays (in the context of quizzes and exams) to describe several aspects of the personal financial planning process (S&ALO#3; and FSLO #10). 23) Write answers to five selected concepts-in-review question in each chapter. You should select those questions based on your particular interest (S&ALO#3; and FSLO 10). Overall these objectives require that the course expose you to the methods and uses of six-parts of the personal financial planning: (1) foundations of financial planning; (2) managing basic assets; (3) managing credit; (4) managing insurance needs; (5) managing investments; (6) retirement and estate planning. The course organizational scheme revolves around financial decision making that is firmly established on an operational set of financial plans (FSLO #1, & #3). An important part of FIN 108, Personal Financial Management, is to alert you to erroneous assumptions of value and beliefs that personal financing plans are not necessary or, if they exist, are static. This course emphasizes the dynamics of the personal financial planning process by considering the impact of life changes birth, marriage, divorce, job and career, and death ( QLLO#2, #3 & #4; S&ALO#1 & #2; and FSLO #1 & #7). Personal financial management is also something that everyone deals with or is exposed to almost every day of their lives. FIN 108 will provide you with the tools to question, evaluate, and plan your own financial needs for the years to come both during the course and once the course has ended. You can become a more responsible citizen when you learn how to manage your assets and liabilities (FSLO #5). You can also be better prepared for changes and emergencies during your life cycle (FSLO #7). Grading Policy Attendance to the lectures is important for a good understanding of this course material and, therefore, may affect your final grade. Although, attendance will be randomly verified, attendance & class participation will be 5% of the student final grade. Students who miss three or more classes will not receive points for attendance and class participation. The remaining 95% of your grade will come from (1) Three Written Essays (10%) and (2) Quizzes (85%). At this time, it is best that you use Firefox 4 or Internet Explorer 6 or 7 to take any quiz, otherwise you may be disconnect from your attempt and, hence, preventing you from completion. Students may take up to fifteen quizzes on the scheduled dates. At the semester end, the instructor will average your higher twelve-quiz grades to compute your quizzes final grade.

4 4 Quizzes date are indicated below on the Course Tentative Sequence Plan. Scale: A (from 90 to higher final grade average); A- (from 89 to 88 final grade average); B+ (from 87 to 86 final grade average); B (from 85 to 80 final grade average); B - (from 79 to 78 final grade average); C+ (from 77 to 76 final grade average); C (from 75 to 70 final grade average); C - (from 69 to 68 final grade average); D+ (from 67 to 66 final grade average); D (from 65 to 60 final grade average); D- (from 59 to 57 final grade average). "The Sycamore Standard" Indiana State University Students at Indiana State University are expected to accept certain personal responsibilities that constitute the "standard" for behavior in a community of scholars. As a student at Indiana State University: I will practice personal and academic integrity; I will commit my energies to the pursuit of truth, learning, and scholarship; I will foster an environment conducive to the personal and academic accomplishment of all students; I will avoid activities that promote bigotry or intolerance; I will choose associations and define my relationships with others based on respect for individual rights and human dignity; I will conduct my life as a student in a manner that brings honor to me and to the University Community; I will discourage actions or behaviors by others that are contrary to these standards. Adopted by the Indiana State University Student Government Association April 17, 2002 AMERICAN WITH DISABILITES ACT STATEMENT Indiana State University seeks to provide effective services and accommodation for qualified individuals with documented disabilities. If you need an accommodation because of a documented disability, you are required to register with Disability Support Services at the beginning of the semester. Contact the Director of Student Support Services. The telephone number is and the office is located in Gillum Hall, Room 202A. The Director will ensure that you receive all the additional help that Indiana State offers. If you will require assistance during an emergency evacuation, notify your instructor immediately. Look for evacuation procedures posted in your classrooms. Laptop Usage Your use of a laptop is generally permitted as long as such usage remains within the bounds of the Code

5 5 of Student Conduct and it conforms to the provisions of its use as laid out in this syllabus. There may be occasions where laptop usage is forbidden and if that occurs, failure to comply with this direction will be viewed as a violation of the Code of Student Conduct. Academic Freedom Teachers are entitled to freedom in the classroom in discussing their subject, but they should be careful not to introduce into their teaching controversial matter which has no relation to their subject. The preceding comes from the American Association of University Professors statement on academic freedom. Though the entire statement1 speaks to many issues, it is this portion on the conduct of the course that is most relevant. For the purpose of Foundational Studies courses this means that faculty have the right to conduct their class in a fashion they deem appropriate as long as the material presented meets the learning objectives laid out by the entire faculty. 1

6 6 Fall 2010 FIN 108 Personal Financial Management Course Sequence For Twice Week Class Meetings Date Chapter Assignment Wednesday, August 25, 2010 Ch1 Underst. Fin. Plan. Process Monday, August 30, 2010 Ch1 Underst. Fin. Plan. Process Wednesday, September 01, 2010 Ch2 Your Fin. Statements & Plans Friday, September 03, 2010 Quiz Chapter 1 Saturday, September 04, 2010 Quiz Chapter 1 Sunday, September 05, 2010 Quiz Chapter 1 Monday, September 06, 2010 Labor Day Wednesday, September 08, 2010 Ch2 Your Fin. Statements & Plans Friday, September 10, 2010 Quiz Chapter 2 Saturday, September 11, 2010 Quiz Chapter 2 Sunday, September 12, 2010 Quiz Chapter 2 Monday, September 13, 2010 Ch3 Managing Your Taxes Wednesday, September 15, 2010 Ch3 Managing Your Taxes Written Essay#1 Friday, September 17, 2010 Quiz Chapter 3 Saturday, September 18, 2010 Quiz Chapter 3 Sunday, September 19, 2010 Quiz Chapter 3 Monday, September 20, 2010 Ch4 Manag. Cash & Savings Wednesday, September 22, 2010 Ch4 Manag. Cash & Savings Friday, September 24, 2010 Quiz Chapter 4 Saturday, September 25, 2010 Quiz Chapter 4 Sunday, September 26, 2010 Quiz Chapter 4 Monday, September 27, 2010 Ch5 Making Auto & Housing Dec. Wednesday, September 29, 2010 Ch5 Making Auto & Housing Dec. Friday, October 01, 2010 Quiz Chapter 5 Saturday, October 02, 2010 Quiz Chapter 5 Sunday, October 03, 2010 Quiz Chapter 5 Monday, October 04, 2010 Ch 6 Borrowing on Open Account Wednesday, October 06, 2010 Ch 6 Borrowing on Open Account Thursday, October 07, 2010 Quiz Chapter 6 Friday, October 08, 2010 Fall Break Saturday, October 09, 2010 Fall Break Sunday, October 10, 2010 Fall Break Monday, October 11, 2010 Ch 7 Using Consumer Loans Tuesday, October 12, 2010 Quiz Chapter 6 Wednesday, October 13, 2010 Ch 7 Using Consumer Loans Written Essay#2 Friday, October 15, 2010 Quiz Chapter 7 Saturday, October 16, 2010 Quiz Chapter 7 Sunday, October 17, 2010 Quiz Chapter 7 Monday, October 18, 2010 Ch 8 Insuring Your Life Wednesday, October 20, 2010 Ch 9 Insuring Your Health Friday, October 22, 2010 Quiz Chapter 8 Saturday, October 23, 2010 Quiz Chapter 8 Sunday, October 24, 2010 Quiz Chapter 8

7 7 Monday, October 25, 2010 Ch 9 Insuring Your Health Wednesday, October 27, 2010 Ch 10 Protecting Your Property Friday, October 29, 2010 Quiz Chapter 9 Saturday, October 30, 2010 Quiz Chapter 9 10 Sunday, October 31, 2010 Quiz Chapter 9 10 Monday, November 01, 2010 Ch 11 Investment Planning Wednesday, November 03, 2010 Ch 11 Investment Planning Friday, November 05, 2010 Quiz Chapter 11 Saturday, November 06, 2010 Quiz Chapter 11 Sunday, November 07, 2010 Quiz Chapter 11 Monday, November 08, 2010 Ch12 Investing In Stocks & Bonds Wednesday, November 10, 2010 Ch12 Investing In Stocks & Bonds Friday, November 12, 2010 Quiz Chapter 12 Written essay#3 Saturday, November 13, 2010 Quiz Chapter 13 Sunday, November 14, 2010 Quiz Chapter 14 Monday, November 15, 2010 Ch 13 Investing in Mutual Funds Wednesday, November 17, 2010 Ch 13 Investing in Mutual Funds Friday, November 19, 2010 Quiz Chapter 13 Saturday, November 20, 2010 Quiz Chapter 13 Sunday, November 21, 2010 Quiz Chapter 13 Monday, November 22, 2010 Ch 14 Planning for Retirement Wednesday, November 24, 2010 Thanksgiving Thursday, November 25, 2010 Thanksgiving Friday, November 26, 2010 Thanksgiving Saturday, November 27, 2010 Thanksgiving Sunday, November 28, 2010 Thanksgiving Monday, November 29, 2010 Ch 14 Planning for Retirement Wednesday, December 01, 2010 Ch 15 Preserving the Estate Friday, December 03, 2010 Quiz Chapter 14 Saturday, December 04, 2010 Quiz Chapter 14 Sunday, December 05, 2010 Quiz Chapter 14 Monday, December 06, 2010 Ch 15 Preserving the Estate Study Week Tuesday, December 07, 2010 Content to be determined Study Week Wednesday, December 08, 2010 Content to be determined Study Week Thursday, December 09, 2010 Content to be determined Study Week Friday, December 10, 2010 Content to be determined Study Week Monday, December 13, 2010 Quiz Chapter 15* Final Exams Tuesday, December 14, 2010 See NOTE below Final Exams Wednesday, December 15, 2010 Final Exams Thursday, December 16, 2010 Final Exams Friday, December 17, 2010 Final Exams NOTE: Quiz on Chapter 15 to be taken on the course final exam day

8 8 FIN 108 Course Narrative for Foundational Studies Quantitative Literacy Credit Personal Financial Management Personal Financial Planning is applied Economics with respect to all of the major personal financial problems that individuals and families encounter. This course is built around a model that links together all of the major elements of effective money management. All of the latest financial planning tools and techniques are discussed. The roles of various financial decisions in the overall personal financial planning process are clearly delineated. In every class period, the actions of an individual & family are shown to impact on personal financial planning. An important methodological resource will be the set of worksheets which accompanies the textbook. It will support the development of critical thinking, and demonstrate the use of financial models and statements which are important for personal financial planning. Summary of personal financial goals, analyzing the benefit of a second income, balance sheet and income and expense statements, computation of tax returns, comparing lease versus automobile purchases costs, home affordability analysis, rent-or-buy cost comparison, mortgage refinancing analysis, tracking consumer debt, to borrow or not to borrow, determining the need for life insurance, finding the amount of investment capital, estimating future retirement needs, annual cash budget by month, budget control schedule, and keeping tabs on the personal investment holdings are all issues to be examined in the course with support of that methodological resource. Students are required to critically compare competing personal finance goals. Differences of cases are explained so that students can use their experiences and insights to judge for themselves the efficacy of various models. Through assignments students are required to explore the data that exists on a number of different situations and through assessments they are required to analyze (typically through the use of finance models) these situations. Students are also required to give a written analysis on selected topics of importance.

9 9 Annotated Schedule Fall 2010 FIN 108 Personal Financial Management Course Tentative Sequence Plan For Twice Week Class Meetings ( Monday & Wednesday) Date Topic Wednesday, August 25, 2010 Ch1 Understanding the Financial Planning Process Rewards of sound financial planning, The personal financial planning process, Fom goals to plans a lifetime of planning, The planing environment, Your personal income determinants, using Personal Financial Planners Worsheet: Summary of Personal Financial Goals Wednesday, September 01, 2010 Ch2 Your Fin. Statements & Plans Mapping out your Financial Future, The time value of money, Preparing a statement of your financial condition, Measuring your income and expense, Preparing your personal financial statements, Setting up a cash budget Worksheets: (1) Analysing the benefit of a second income; (2) Balance sheet; (3) Income and expense statement; and (4) Annual cash budget by month Learning Objectives FSLO 1, 5 & 8 S&ALO 1 FSLO 1, 3 & 7 QLLO 1, 2 & 3 S&ALO 1, 2, 3, & 4 Monday, September 13, 2010 Monday, September 20, 2010 Monday, September 27, 2010 Monday, October 04, 2010 Monday, October 11, 2010 Monday, October 18, 2010 Wednesday, October 20, 2010 Wednesday, October 27, 2010 Ch3 Managing Your Taxes Principles of federal income taxes, Why taxable income matters, Calculating and filling your taxes, Effect tax planning, other forms of personal taxes Worksheets: (1) 2010 Tax return form (form 1040EZ); and (2) 2010 form 1040 September 15 Written Essay # 1 is due: Comment on the US tax system fairness Ch4 Management of Cash & Savings The role of cash management in personal financial planning, Today's financial services marketplace, Various cash management products, Establishing a savings program, Keeping a checking account Worsheet: An account reconciliation form statement Ch5 Making Auto & Housing Dec. Buying or leasing an automobile, Meeting housing needs, How much housing can you afford, The rental option, The home buying process, Financing the transaction Worksheets: (1) comparing automobile lease to buy; (2) home affordability analysis; and (3) rent or buy house cost comparison; (4) Mortage ref. analysis Ch 6 Borrowing on Open Account Basic concepts of credit, Types of open account credit, Obtaining and managing open account credit, Using credit wisely. Ch 7 Using Consumer Loans Basic features of consumer loans, Managing your credit, single payment loans, Installement loans, student loans Worsheets (1) Tracking your consumer debt; and (2) To borrow or not to borrow October 13 Written Essay # 2 is due: What are the implications of personal bankruptcy filings? Ch 8 Insuring Your Life Basic insurance concepts, How much life insurance is right for you, What kind of policy is right for you; Key features of life insurance policy Worsheet: Determining the need for life insurance Ch 9 Insuring Your Health The need for health care insurance coverage, Types and sources of health care plans, Medical expense coverage and policy provisions, Long term care insurance, Disability income insurance, Buying health care insurance Worksheets: (1) Estimating disability income insurance needs; (2) Health care plan checklist Ch 10 Protecting Your Property Basic principles of property insurance, Homeowner's insurance, auto insurance, Other property and liability insurance, Buying insurance and settling claims FSLO 1, 2, 5, & 10 QLLO 2, 3 & 4 S&ALO 1, 2, & 3 FSLO 1, 2, 3, 5, & 7 QLLO 2, 3 & 4 S&ALO 1, 2 & 3 FSLO 1, 2, 3, 5, 7, & 8 QLLO 1, 2, 3 & 4 S&ALO 1, 2 & 3 FSLO 1, 2, 3, 5, 7, & 8 QLLO 1, 2, 3 & 4 S&ALO 1, 2 & 3 FSLO 1, 2, 3, 5, 7, 8, & 10 QLLO 1, 2, 3 & 4 S&ALO 1, 2 & 3 FSLO 1, 2, 3, & 5 QLLO 1, 2, 3 & 4 S&ALO 1, 2 & 3 S&ALO 1 S&ALO 1, 2, & 3

10 10 Monday, November 01, 2010 Monday, November 08, 2010 Monday, November 15, 2010 Monday, November 22, 2010 Wednesday, December 01, 2010 Annotated Schedule Continued Ch 11 Investment Planning Objectives and rewards of investing, Securities market, Making transactions in the securities market, Becoming an informed trader, Online investing, Managing your investment holdings Worksheets: (1) Finding the amount of investment capital, (2) Keeping tabs on your investment holdings Ch12 Investing In Stocks & Bonds Risks and rewards of investing, Investing in common stocks, Investing in bonds, Preferred and convertibles November 11 Written Essay # 3 is due: Explain what TIPS are and discuss their advantages and disadvantages? Ch 13 Investing in Mutual Funds Mutual funds basics, Types of mutual funds and fund services, Making mutual funds investments Ch 14 Planning for Retirement Overview of retirement planning, Social security, Pension palns and retirement programs, annuities Worksheet: (1) Estimating future retirement needs Ch 15 Preserving the Estate Principles of estate planning, Wills, Trusts, Gift taxes, Estate taxes and planning Worksheets: (1) Checklist of items to keep in a safe deposit box; (2) Computing Federal Estate Tax due S&ALO 1 & 3 FSLO 1, 5, & 10 S&ALO 1 &3 S&ALO 1 S&ALO 1 S&ALO 1