Managing Your Money All-in-One For Dummies E-Book

• Herausgeber: John Wiley & Sons
• Kategorie: Ratgeber
• Sprache: Englisch

Seitenzahl: 1213

Veröffentlichungsjahr: 2008

Beschreibung

Want to take control of your finances once and for all? Managing Your Money All-in-One For Dummies combines expert money management with personal finance tips. From credit cards and insurance to taxes, investing, retirement, and more, seven mini-books show you how to improve your relationship with money -- no matter your age or stage of life. This easy-to-understand guide shows you how to assess your financial situation, calculate debt, prepare a budget, trim spending, boost your income, and improve your credit score. You'll find ways to run a money-smart household, reduce waste, and cut medical and transportation expenses as you tackle your debt head-on and develop good saving habits. You'll even get help choosing the right mortgage and avoiding foreclosure, saving for college or retirement, and determining your home-, car-, and life insurance needs. Discover how to: * Take charge of your finances * Manage home and personal finances * Lower your taxes and avoid tax audits * Plan a budget and scale back on expenses * Deal with debt and negotiate with creditors * Save and invest safely for college or retirement * Protect your money and assets from fraud and identity theft * Ensure a comfortable retirement * Plan your estate and safeguard a will or trust Managing Your Money All-in-One For Dummies brings you seven great books for the price of one. Can you think of a better way to start managing your money wisely?

Leseprobe

Managing Your Money All-in-One For Dummies®

Table of Contents

Introduction

Foolish Assumptions

How This Book Is Organized

Book I: Taking Charge of Your Finances

Book II: Managing Home and Personal Finances

Book III: Dealing with Debt

Book IV: Saving and Investing

Book V: Protecting Your Money and Assets

Book VI: Retiring Comfortably

Book VII: Planning Your Estate and Will

Icons Used in This Book

Where to Go from Here

Book I: Taking Charge of Your Finances

Chapter 1: Assessing Where You Are Financially

Some Preliminary Questions

Your Relationship with Money

Recognizing emotional spending

Living for the moment

Checking Out Your Credit Reports

Getting copies of your credit reports

Knowing why your reports matter

Finding Out Your FICO Score

Comparing Spending and Income

Gathering the necessary materials

Categorizing your expenses

Figuring out the fritter factor

Totaling spending and earnings

Calculating your financial bottom line

Assessing Your Spending Habits

Cataloging What You Own

Adding Up What You Owe

Chapter 2: Improving Your Relationship with Money

Working with Your Partner to Achieve Financial Goals

Recognizing your financial strengths and weaknesses

Identifying long-term goals

Establishing savings goals

Finding peaceful solutions to differences

Pulling together with your spouse or partner

Talking money with your children

Believing in Yourself

Handling Setbacks

Digging Out of Debt

Step 1: Acknowledge the problem

Step 2: Cut the cards

Step 3: Set a good budget and live within it

Step 4: Contact your creditors

Budgeting for the Future

Step 1: Categorize your expenses

Step 2: Estimate what you spend

Step 3: Calculate and adjust

Chapter 3: Building and Sticking to a Budget

Comparing Monthly Spending and Income

Tackling a Budget Deficit

Cutting expenses

Reducing debt before saving

Using other strategies

Paying the Important Stuff If You Can’t Pay Everything

Distinguishing between secured and unsecured debt

Knowing when to prioritize an unsecured debt

Examining a Budget Surplus

Finalizing and Sticking to Your Budget

Steeling your resolve

Checking your progress each month

Chapter 4: Cutting Spending and Boosting Income

Finding Ways to Spend Less

Looking for good deals

Spending less on your housing

Lowering your utility bills

Eating for less

Paying less for transportation

Having fun for less

Looking good for less

Dressing for less

Reducing your phone costs

Saving on prescription drugs

Inching down your insurance costs

Bringing in More Bucks

Earning more at your current job

Looking for a new job

Getting (and surviving) a second job

Considering freelancing

Chapter 5: Fixing Up Your Credit Report

Understanding Why a Credit Report Is Important

What Is a Credit Report, Anyway?

What your credit report says about you

Uncovering your credit report’s details

Who uses the info in your credit report?

Understanding How Bad Stuff Gets in Your Credit Report

Nobody’s perfect: Don’t expect a straight-A report card

Checking for errors: Creditors aren’t perfect, either

Looking at the accurate information

Deciphering Your Credit Score

Fleshing out credit score components

If you’re too thin: The Expansion score

Examining Specialized Credit Bureaus

Getting to know national check registries

Gambling with Central Credit Services

Book II: Managing Home and Personal Finances

Chapter 1: Running a Money-Smart Household

Reaching Out to Touch Someone

Saving on phone bills

Using email to stay in touch

Rediscovering the joys of letter writing

Saving on Climate Control

Dressing for the weather

Keeping your cool when the weather’s not

Warming the house

Cutting Back on Electricity and Gas Use

Improving your appliance efficiency

Shedding some light on the subject

Trash Talk: Controlling Garbage Costs

Reducing what you throw away

Reusing household items in creative ways

Reducing Television and Cable Expenses

Cutting Down on Water Use

Keeping a Ceiling on Housing Budgets

Saving money on rent

Saving money on home ownership

Cutting Transportation Costs

Finding a deal on a set of wheels

Using public transportation

Biking and walking

Finding bargains on airfare and rental cars

Opting to travel by train or bus

Purchasing Appliances

Keeping energy efficiency in mind

Shopping for scratch-and-dent and secondhand

Thinking twice about renting-to-own

Chapter 2: Home Ownership and Choosing the Right Mortgage

Mortgage Basics

Assessing Your Financial Situation

Typical loan expenses

Determining whether you can afford to buy a home

Is a Fixed-Rate Mortgage in Your Future?

Understanding common fixed-rate mortgage loans

The good news about fixed-rate mortgages

The bad news about fixed-rate mortgages

Adjusting to an Adjustable-Rate Loan

Understanding common adjustable-rate mortgage loans

The good news about adjustable-rate mortgages

The bad news about adjustable-rate mortgages

Deciding What Loan Is Best for You

Traditional fixed-rate mortgage

Traditional 5/1 ARM

5/1 interest-only ARM

Payment-option ARM (Example 1)

Payment-option ARM (Example 2)

Chapter 3: Avoiding Foreclosure

Understanding That Mortgages Are a Different Credit Animal

Seeing a foreclosure coming

Counting to 90

Knowing where to turn for help

Alternatives to Going Down with the Ship

Starting with short-term solutions

Considering solutions for long-term problems

Looking at longer-than-long-term solutions

Handling a foreclosure if one has started

Dealing with Deficiencies

Chapter 4: Keeping a Lid on Medical Costs

Saving on Medical Expenses

Keeping a close eye on bills

Looking into payment plans

Coordinating insurance benefits

Finding less-expensive prescriptions

Discovering What Makes a Great Health Insurance Plan

Deciding Between Individual and Group

Pricing

Underwriting

Benefit levels

Renewability

Coverage flexibility

Saving Money on Individual Coverage

Saving directly

Saving indirectly with self-care

Coping with Health Insurance Problems

Insuring the uninsurable

Staying insured through hard times

Insuring your kids when your policy no longer covers them

Evaluating insurance available through college

Understanding temporary health insurance

Continuing coverage following a divorce

Deciding on a conversion policy

Consider HIPAA instead

Taking Decisive Action

Reviewing bills with a fine-tooth comb

Making your plan pay what it should

Taking advantage of hospital discounts

Reducing your medical debt

Chapter 5: Using the Internet to Help Manage Your Finances

Giving Yourself an Online Financial Makeover

Using the Internet to Budget

Finding Online Resources to Track Your Income and Expenses

Using the Internet to Get Free Financial Advice

Finding Out What You’re Worth

Book III: Dealing with Debt

Chapter 1: Tackling What You Owe

Taking Stock of Your Finances

Using a Budget to Get Out of Debt

Taking the Right Steps When You Have Too Much Debt

Handling Debt Collectors

Realizing your rights

Understanding why debt collectors behave as they do

Getting a Financial Education

The difference between good debt and bad debt

Distinguishing between types of credit

Seeing yourself through a creditor’s eyes

Building a better credit history

Chapter 2: Understanding How Credit Works

Defining Credit: Spending Tomorrow’s Money Today

Meeting the Cast of Characters in the Credit Story

The buyer: I want that now!

The creditors: Heroes to the rescue

The credit bureaus: In a supporting role

Understanding the Consequences of Bad Credit

Paying fees

Being charged higher interest rates

Losing employment opportunities

Facing increased insurance premiums

Getting a divorce

Dealing with a Thin Credit File

When you’re new to the country

After one of life’s many transitions

Identity Theft: The Crime That Turns Good Credit Bad

Protecting your identity from theft

Taking action if you’re victimized

Chapter 3: Consolidating Your Debts

Knowing When Debt Consolidation Makes Sense

Considering Your Options

Transferring balances

Getting a bank loan

Borrowing against your life insurance policy

Borrowing from your 401(k) retirement plan

Avoiding Dangerous Debt-Consolidation Possibilities

Chapter 4: Negotiating with Creditors and Getting Help

Getting Ready to Negotiate

Listing all your debts

Zeroing in on certain debts first

Reviewing your budget

Pulling together your financial information

Getting Down to Business: Contacting Creditors

Making the Agreement Official: Putting It in Writing

Knowing the Deal with Credit Counseling

Finding a Reputable Credit Counseling Agency

Telling the good from the bad

Locating agencies in your area

Knowing what to ask and what to expect

Working with a Credit Counselor

Sharing your financial situation

Whittling down your debt with a debt-management plan

Avoiding Debt Settlement Firms

Being wary of false promises

Preventing worse financial problems

Getting Relief If You Get Ripped Off

Chapter 5: Considering Bankruptcy

Viewing Bankruptcy in a Historical Context

Debunking Bankruptcy Myths

“People who go bankrupt are sleazy deadbeats”

“Bankruptcy is the easy way out for folks who can pay their bills”

“Bankruptcy threatens the ethical foundations of our society”

“Honest folks pay a ‘tax’ to support people who are bankrupt”

Understanding What You Can Gain Through Bankruptcy

Stopping creditors in their tracks

Wiping out most of your debts

Catching up on back mortgage and car payments

Filing bankruptcy to pay some debts over time

Using bankruptcy to pay all your debts

Knowing What You Can Lose in Bankruptcy

Considering Alternatives to Bankruptcy

Introducing the Different Types of Personal Bankruptcy

Liquidations (Chapter 7)

Consumer reorganizations (Chapter 13)

Weighing the Consequences of Not Filing Bankruptcy

Claims secured by your car

Claims secured by your home

Student loans

Support obligations

Fines and restitution

Taxes

Lawsuits

Using the Statute of Limitations

Book IV: Saving and Investing

Chapter 1: Becoming a Saver

Eliminating Most of the Fat

Lowering Your Debt

Trimming Other Costs

Changing Your Perspective and Watching Your Savings Grow

Paying yourself first

Educating yourself about investing

Taking advantage of giveaways

Saving While in Debt

Chapter 2: Investing in Stocks, Bonds, and Mutual Funds

Stock: Owning a Piece of the Rock

Understanding stock

Conducting business in stock exchanges

Brushing up: a quick stock glossary

Picking a stock-investment strategy

Buying Bonds for Fixed Income

Understanding bonds

Sorting out different kinds of bonds

Interpreting bond ratings

Mutual Funds: The Power of Many

Understanding mutual funds

Defining different kinds of mutual funds

Selecting the best mutual funds

Doing It Your Way Versus Using a Broker

Full-service brokers

Discount brokers

Online brokers

Five Common Investing Mistakes

Investing before you’re ready

Investing without goals

Believing those “hot” tips

Not diversifying your portfolio

Selling too soon (or too late)

Chapter 3: Saving for Retirement

Setting a Target Date for Retirement

Determining when you can access retirement income

Figuring out what to do when you retire

Keeping the family gene pool in mind

Calculating the Size of Your Nest Egg

If you’re retiring in the near future

your retirement is further off

Using a retirement calculator

Developing a Retirement Savings Plan

Cutting down on your expenses

Considering sample plans

Sticking with your retirement savings plan for the long haul

Chapter 4: Saving for College

Doing the Numbers

Figuring up the costs

Saving efficiently

Exploring Section 529 Plans

Following the rules

Making your money work for you

Choosing the best options

Checking Out Coverdell Accounts

Understanding the rules and regulations

Getting the most from a Coverdell account

But Wait! There’s More!

Rediscovering U.S. savings bonds

Saving for college the old-fashioned way

Putting your faith in a trust fund

Saving in your retirement accounts

Accessing your home equity

Identifying sources of free money

Borrowing to fill in the gaps

Maximizing Your Savings, Minimizing Your Tax

Checking Out the Cost of College

Tackling tuition

Accounting for housing

Factoring in books and supplies

Looking into the Costs of Various Types of Schools

Exploring career and vocational training schools

Taking community college and continuing education classes

Going for a four-year public education

Getting your education in private

Chapter 5: Working with an Online Broker

Sorting Them Out: Selecting an Online Broker

What to look for in brokers

Considering costs

Comparing industry leaders

Checking online brokerage ratings

Opening Your Online Brokerage Account

Ready, Set, Go! Making Your First Online Trade

Using the right buying technique to increase profits

A few caveats before you trade

Knowing When to Hold and When to Fold

Book V: Protecting Your Money and Assets

Chapter 1: Combating Identity Theft

Protecting Yourself from Identity Thieves

Taking advantage of online transactions

Avoiding phishing scams

Keeping computer data safe

Keeping passwords private

Safeguarding your mail

Maintaining financial data in your home

Shielding your credit card number from identity thieves

Spotting Identify Theft When It Happens

Instituting an early-warning alert

Receiving a collections call

Discovering unrecognized credit card charges

Being denied credit or account access

Missing account statements

When Identity Theft Happens to You

Who you gonna call? Contacting everyone who needs to know

Taking advantage of the FACT Act

Sending out a fraud alert

Blocking that line

Accessing Credit after Identity Theft

Closing and reopening your accounts

Changing your PINs and passwords

Changing your Social Security number and driver’s license

Chapter 2: Online Banking

Online and Traditional Banks

Advantages of online banking

Online bank access

Accounting for Your Accounts

Savings account

Basic checking account

Interest-bearing checking account

MMDA or MMA

CD

Choosing an Online Bank That’s Right for You

Identifying your user profile

Seeing how the banks stack up

Don’t forget the fees when you shop

Laughing all the way to your online bank

Remote banking and your cell phone

Opening Your Online Bank Account

Chapter 3: Homeowner’s Insurance

Introducing the Six Parts of a Homeowner’s Policy

Insuring your residence (Coverage A)

Insuring detached structures (Coverage B)

Insuring your belongings (Coverage C)

Insuring additional living expenses (Coverage D)

Insuring your personal liability (Coverage E)

Insuring guests’ medical bills (Coverage F)

Choosing the Right Homeowner’s Property Coverages

Understanding the causes-of-loss options

Introducing the six most common homeowner’s policies

Establishing Property Coverage Limits

Determining the replacement cost of your home

Guaranteeing you’ll have enough insurance to rebuild

Estimating the cost to replace belongings

Choosing your deductible

Documenting Your Claim

Chapter 4: Auto Insurance Basics

Managing Your Lawsuit Risks

Reviewing noninsurance strategies

Buying liability insurance

Insuring Your Personal Injuries

Understanding how uninsured and underinsured motorist coverage works

Saving money on medical coverage

Dealing with Damage to Your Vehicle

Choosing cost-effective deductibles

Knowing when to drop collision and comprehensive coverage

Evaluating Road Service and Car Rental Coverages

Chapter 5: Buying Life Insurance

Assessing the Need

Who doesn’t need life insurance

Who does need life insurance

Determining How Much Coverage You Need

Looking at a hypothetical family

Using the multiple of income method

Using the Web to estimate needs

Speaking the Language

Understanding the Types of Life Insurance

Ideal use

Pricing

Agent commissions

Understanding the Variations of Permanent Life Insurance

Whole life

Universal life

Variable life

Cash value options when dropping permanent insurance

Understanding the Variations of Term Life Insurance

Annual renewable term (ART)

Fixed-rate level term

Decreasing term

Insurance from your mortgage company

Making Your Choice

Evaluating Life Insurance Sources

Considering an agent

Buying without an agent

Debunking Myths and Mistakes

Mistake: Trading cash value for death protection needs

Myth: Supplemental group life is cheaper

Mistake: Buying life insurance in pieces

Mistake: Accidental death/travel coverage

Mistake: Covering only one income

Mistake: Ignoring a homemaker’s value

Mistake: Covering children not parents

Mistake: Decreasing term insurance

Mistake: Being unrealistic about how much life insurance you can afford

Mistake: Buying before you need it

Myth: It’s cheaper when you’re young

Chapter 6: Dealing with the Tax Man

Filing Federal Taxes

Filing State Taxes

Coming Up with Deductions

Avoiding Tax Mistakes

Facing the Dreaded Audit

What Can Happen If You Don’t Pay on Time

Tallying penalties and interest

Being pressured to pay

Figuring out how to pay

Coping with Interest and Penalties

Dealing with Liens and Levies for Past-Due Taxes

Knowing how tax liens work

Losing your assets because of a levy

Getting Help

Book VI: Retiring Comfortably

Chapter 1: 401(k) and 403(b) Retirement Investing

What a 401(k) Does for You

Lowers how much tax you pay

Gets you something extra from your employer

Saving Without Tears

Taking Your Savings with You When You Change Jobs

Letting the Pros Work for You

Buying More When Prices Are Low

Improving Your Chances of an Ideal Retirement

Protecting Your Money

Meeting minimum standards

Avoiding losses in bankruptcy

Watching Out for Potential Pitfalls

Withdrawing money while you’re working is difficult

Taking money out before 591/2 costs more

Earning more may mean contributing less

Being at the mercy of your plan

Telling the Employer’s Point of View

403(b): Different Name, Same Tax Breaks

Stashing Away as Much as You Can: Contribution Info

Playing catch-up

Mix ’n match: Combining a 403(b) with other plans

Trekking Through Your Investment Options

Withdrawing Money: Watch Out for That Fee!

Taking Your 403(b) on the Road

Understanding ERISA Versus Non-ERISA 403(b) Plans

ERISA: Employer + plan provider

Non-ERISA: You + plan provider

Finding Out Rules for Church Plans

Chapter 2: Retiring Your Way: IRAs

Why an IRA?

The ABCs of IRAs

Types of IRAs

Basic IRA rules

Funding your IRA

Withdrawing from your IRA

Traditional IRAs

Roth IRAs: The New Kid in Town

Rolling Over Your IRA

Making the Most of Your IRA

Direct your own investments

Consider a Roth IRA

Do it — now!

Chapter 3: Paychecks from Your House: Reverse Mortgages

Understanding Reverse Mortgages

Checking out how it works

Being over the hill pays off

Getting rid of common misconceptions

Knowing what it isn’t

Choosing a Loan Product

Home Equity Conversion Mortgage

Home Keeper

Figuring Out the People in Your Mortgage

Counselor

Originator

Appraiser

Getting Paid

Figuring out how much you can get

Checking out payment options

Discovering the effect of the funds on your finances

Dealing with inflation and interest rates

Chapter 4: Managing Money in Retirement

Decisions, Decisions: What to Do with Your 401(k) Money

Being older can save you money

Foiling the dreaded early withdrawal penalty

Leaving money with your former employer

Paying Uncle Sam His Due: Required Withdrawals

Strategizing to Deal with the Tax Man

Which comes first: Plucking the chicken or emptying the nest egg?

More on that darned company stock

Managing Investments in Retirement

Live long and prosper

Be realistic about your expectations

Managing Risk and Maximizing Return

Living within Your Means for Life

Generating Predictable Income

IRA withdrawals

The annuity option

Your home is your asset

Chapter 5: Online Retirement Planning

Pop Quiz: How Ready Are You for Retirement?

Developing a Retirement Plan

Pensions

Social Security benefits

Using the Internet to Determine How Much You Need to Live On

Figuring out how much to save: A real-world example

Let the Internet do the heavy lifting

Using “what if?” scenarios

Saving for Retirement

The joys of 401(k) plans

Individual retirement accounts (IRAs)

Retirement plans for small businesses and the self-employed

Other retirement options

Book VII: Planning Your Estate and Will

Chapter 1: Fundamentals of Estate Planning

What Is an Estate?

The basics: Definitions and terminology

Property types

Types of property interest

Why You Need to Plan Your Estate

Why Your Estate-Planning Goals Differ from Your Neighbors’

The Critical Path Method to Planning Your Estate

Getting Help with Your Estate Planning

How to make sure your team of advisers is “FAIL” safe

Working with Certified Financial Planners (CFPs) and other professionals

Knowing what to expect from your accountant for your estate planning

Working with your insurance agent

Working with your attorney

Chapter 2: Where There’s a Will

Planning for Your Will

Getting to Know the Different Types of Wills

Simple wills

Other types of wills

Choosing Your Will’s Contents

Opening clauses

Giving clauses

Ending clauses

Safeguarding Your Will

Changing, Amending, and Revoking Your Will

Why you may need to change your will when something happens

Ways to change your will

Protecting Your Loved Ones from Your Unloved Ones

Figuring Out Your Will Status

Testacy: When you’ve nailed everything down

Intestacy: When you die with zero “will power”

Partial intestacy: When the vultures start circling

Chapter 3: Limitations of Wills: What You Can and Can’t Do

Making Your Peace with Statutes That Affect Your Will

Identifying Statutes That Your Will Can Change

Abatement: There’s not enough in the cupboard for everyone

Ademption: Some property is missing

Antilapse: Someone dies before you do

Divorce: High noon in Splitsville

Simultaneous death: Sorry, but we have to talk about it

Living (And Dying) with the Laws That Your Will Can’t Change

Community property

Spousal elective shares

Homestead allowance: Keeping a house for kiddies and spouse

Homestead exemption: How the law protects your house from your creditors

Exempt property: How the law protects your personal property from creditors

Family allowance: Drawing from your estate to protect your family

Oops! Taking care of VIPs who aren’t in the will

Chapter 4: Estate Planning Online

Calculating Your Estate’s Value Online

Understanding Wills and Trusts

Where there’s an online will, there’s a way

Avoiding probate

Getting the Basics of Trusts

Trusting in Living Trust to Avoid Probate

Joint Tenancy and Beneficiary Arrangements

Not all heirs are created equal

Don’t keep your estate plans hush-hush

Customizing Estate Planning for All Ages

Under 30 and loving it

Grooving in your midlife

Retired and enjoying the good life

Selecting an Estate Planner

Preparing to Meet Your Estate Planner

Chapter 5: Taking Care of Aging Parents with Durable Power of Attorney

Understanding Power of Attorney

Assessing what your power may cover

Knowing your responsibility

Determining Necessity

Going through a behavior checklist

Taking the first steps

Finding an Elder Law Attorney

Knowing what to look for

Finding a good elder law attorney

Using a Living Trust as an Alternative

Managing Your Money All-In-One For Dummies

by Ted Benna, Stephen R. Bucci, James P. Caher, John M. Caher, N. Brian Caverly, Peter Economy, Jack Hungelmann, John E. Lucas, Sarah Glendon Lyons, Margaret A. Munro, EA, Brenda Watson Newmann, Mary Reed, Jordan S. Simon, Kathleen Sindell, Deborah Taylor-Hough, PhD, John Ventura

Managing Your Money All-in-One For Dummies®

Published byWiley Publishing, Inc.111 River St.Hoboken, NJ 07030-5774www.wiley.com

Copyright © 2009 by Wiley Publishing, Inc., Indianapolis, Indiana

Published by Wiley Publishing, Inc., Indianapolis, Indiana

Published simultaneously in Canada

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About the Authors

Ted Benna is often called the “father of the 401(k)” because he created and gained IRS approval for the first 401(k) savings plan. Ted is a nationally recognized expert on retirement issues whose articles and comments have appeared in myriad publications. Ted has been profiled in The New York Times, USA Today, Fortune, and Kiplinger. During his career, Ted has helped thousands of employers establish, restructure, and administer their retirement programs. He is president and founder of the 401(k) Association. Ted is the coauthor of 401(k)s For Dummies.

Stephen R. Bucci is currently the president of the Money Management International Financial Education Foundation, www.mmifoundation.org, which provides funds and materials for essential money management education. In addition, he is helping to build one of the nation’s largest credit counseling services, Money Management International (MMI). MMI is not only accredited by the Council on Accreditation, but is also a member of both the Association of Independent Consumer Credit Counseling Agencies and the National Foundation for Consumer Credit — the umbrella associations for credit counseling nationwide. In addition, all of their counselors are certified — and trained to help you find the best way out of debt. Stephen is the author of Credit Repair Kit For Dummies, 2nd Edition.

James P. Caher is a practicing attorney with 30 years of experience, is a nationally recognized expert on consumer bankruptcies and authority on the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Jim has published scores of articles for bankruptcy professionals and is frequently called upon to analyze and interpret the complicated provisions of the 2005 bankruptcy law. He also serves on the editorial board of the American Bankruptcy Institute. Jim graduated from Niagara University and then earned his law degree from Memphis State University Law School, where he was a member of the Law Review and recipient of the American Jurisprudence Award for Excellence in the field of debtor-creditor relations. He filed his first consumer bankruptcy case shortly after graduating in 1975 and lives and practices in Eugene, Oregon. James is coauthor of Personal Bankruptcy Laws For Dummies.

John M. Caher is a legal journalist who has written about law and the courts for most of his long career. He has been Albany bureau chief for the New York Law Journal and state editor and legal affairs reporter for the Times Union of Albany, New York. His legal reportage has won more than two dozen awards, including prestigious honors from the American Bar Association, the New York State Bar Association, the Erie County Bar Association, and the Associated Press. John is coauthor of Personal Bankruptcy Laws For Dummies.

N. Brian Caverly is a practicing lawyer in Pennsylvania. He has practiced law since 1968, and in his practice emphasizes wills and estates, estate planning, and elder law. He holds an AB degree in economics from Bucknell University, and a JD degree from the Dickinson School of Law. He serves on the board of directors of the Angeline Elizabeth Kirby Memorial Health Center in Wilkes-Barre, a major charitable organization. Brian is also chairman of the Luzerne County Planning Commission. He presents lectures and writes articles and papers about various legal topics, including those related to estate planning. Brian is the coauthor of Estate Planning For Dummies.

Peter Economy lives in La Jolla, California and is a bestselling author or coauthor of more than 35 books, including Managing For Dummies and Consulting For Dummies with Bob Nelson, Home-Based Business For Dummies with Paul and Sarah Edwards, and Writing Children’s Books For Dummies with Lisa Rojany Buccieri. Peter is also Associate Editor for the Apex Award-winning magazine Leader to Leader.

Jack Hungelmann’s policy knowledge, problem-solving expertise, and coverage analysis was gained through more than 25 years in the insurance business as a claims adjuster, agent, and consultant. He has advised individuals and commercial enterprises on their insurance needs and has earned several distinguished designations. Jack graduated from the University of Minnesota in 1969 and has taught professional continuing education classes for both the CPCU and CIC societies. He has been published numerous times in American Agent & Broker magazine. He lives in Chanhassen, Minnesota with his wife Judy. Jack is the author of Insurance For Dummies.

John E. Lucas has been in the mortgage banking industry for over 40 years, actively originating mortgage loans in the Van Nuys, California area. When the Department of Housing and Urban Development (HUD) introduced the HECM reverse mortgage in 1989, he worked with one of the companies HUD chose to participate in the test program. He has lectured on reverse mortgages to a wide variety of organizations and groups such as senior centers, realtors, CPAs, financial planners, elder law attorneys, service clubs and university groups, and is a member of the National Reverse Mortgage Lenders Association. John is the coauthor of Reverse Mortgages For Dummies.

Sarah Glendon Lyons is a San Diego-based writer with a diverse portfolio of housing-industry experience. She holds a B.A. in English Language and Literature from the University of Arizona and studied at Australia’s University of Wollongong before joining Hanley Wood LLC, publishers of over 75 consumer home magazines. As an editor for Pfingsten Publishing’s Mortgage Originator magazine, she has written hundreds of articles for mortgage professionals. Although she has developed a wide scope of lending insight, her particular expertise is in the reverse mortgage field. Sarah offers reverse mortgage information to originators and consumers around the country. Her perspective as an unbiased researcher and consultant allows her to provide readers with both the benefits and challenges of reverse mortgages. Sarah is the coauthor of Reverse Mortgages For Dummies.

Margaret A. Munro, EA, is a tax consultant/advisor/writer/lecturer with over 30 years of experience in various areas of finance and taxation. She is an enrolled agent, licensed by the federal government to represent clients in the areas of tax and tax-related issues. She currently operates a widely diverse private practice that specializes in the financial concerns of families with school-age children, a group that is near and dear to her heart. She is a graduate of The Johns Hopkins University and has also attended University College Cork and the Pontifical Institute of Mediaeval Studies in Toronto. Peggy is the author of 529 & Other College Savings Plans For Dummies and Estate and Trust Administration For Dummies.

Brenda Watson Newmann is a writer and editor dedicated to helping ordinary folks understand complicated topics. She was in charge of editorial content for the mPower Cafe, a leading educational Web site for retirement investors. Under her direction, the site won accolades including Forbes magazine’s “Best of the Web.” Brenda keeps attuned to the concerns of 401(k) investors through the emails she receives regularly from readers. She frequently writes articles on retirement investing and has been interviewed by media outlets, such as USA Today and Investor’s Business Daily. Brenda began her writing career with The Associated Pres, and was a foreign correspondent in Germany and Switzerland. She is a graduate of Stanford University and the Johns Hopkins University School of Advanced International Studies. Brenda is the coauthor of 401(k)s For Dummies.

Mary Reed is a personal finance writer who has coauthored or ghostwritten numerous books on topics related to consumer money matters and legal rights. Mary has also written for the magazines Good Housekeeping, Home Office Computing, and Small Business Computing and she has ghostwritten numerous articles that have appeared in national and local publications. She is the owner of Mary Reed Public Relations, an Austin, Texas-based firm that provides public relations services to a wide variety of clients, including authors, publishers, attorneys, financial planners, healthcare professionals, retailers, hotels, restaurants, and nonprofits. She received her MBA from Boston University and her BA from Trinity University in Washington, DC. Mary is the coauthor of Managing Debt For Dummies.

Jordan S. Simon is vice president of asset management at Venture West, Inc., a Tucson, Arizona-based investment firm, where he has worked since 1988. Jordan focuses on real estate investments. He received his BA from the University of Arizona and his MBA from the University of Southern California, where he was the recipient of the Quon Award for outstanding university and community service. He is the coauthor of The Computer Professional’s Guide to Effective Communications and Estate Planning For Dummies.

Kathleen Sindell, PhD, is the author of numerous books on investing and Internet topics. She was contributing author to the Encyclopedia of Computer Science and online investing columnist for Investor Direct magazine. Dr. Sindell is an expert on electronic commerce and is an adjunct faculty member at The Johns Hopkins University MBA program. She is the former Associate Director of the Financial Management and Commercial Real Estate Programs for the University of Maryland, University College Graduate School of Management & Technology. She received her BA in Business from Antioch University, an MBA. in Finance from the California State University at San Jose, and a PhD in Administration and Management from Walden University, Institute for Advanced Studies. Dr. Sindell is the author of Managing Your Money Online For Dummies.

Deborah Taylor-Hough has been living the frugal lifestyle most of her life. Deborah is the editor/publisher of the Simple Times Newsletter, an email publication reaching tens of thousands of subscribers since 1998. She has authored several books on frugal living topics and has been featured extensively in television, radio, and print media throughout the United States and Canada. She frequently conducts workshops on frugal living, voluntary simplicity, and assorted homemaking topics for conferences, retreats, women’s groups, and church functions. Debi is the author of Frugal Living For Dummies.

John Ventura is a best-selling author and board-certified bankruptcy attorney. He is also adjunct professor at the University of Houston Law School and Director of the Texas Consumer Complaint Center at the Law School. John earned his JD degree from the University of Houston Law School. Later, he and a partner established a law firm in Texas, building it into one of the most successful consumer bankruptcy firms in the state. He subsequently began a successful consumer law firm in South Texas. He is also a regular speaker at law conferences around the country and serves on the Bankruptcy Council for the Texas Bar Association. John is the author of numerous books on consumer and small business legal matters, including Managing Debt For Dummies.

Publisher’s Acknowledgments

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Publishing and Editorial for Consumer Dummies

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Introduction

Welcome to Managing Your Money All-in-One For Dummies, a big one-stop shop designed to help you get control over your financial life!

This book tackles a lot of big topics, but we’ve tried to keep things simple, clear, and to-the-point. We’ve culled the best, juiciest information from a good sampling of For Dummies books on personal finance and compiled them into one fat volume. It’s absolutely packed with easy-to-grasp advice on all things having to do with managing your money. Whether you’re a homemaker, truck driver, burger flipper, or CEO — whether you’re interviewing for your first job or you retired ten years ago — we bet you’ll find scads of great tips and sound advice in these pages that will help you get a handle on everything from your credit cards to your health insurance, from your groceries to your taxes to your will.

If it has something to do with your personal relationship to your own money, it’s a good bet we talk about it in this book. Managing Your Money All-in-One For Dummies offers money-management and personal-finance tips to help assess your true financial situation and take charge of your economic life. You’ll find information on getting the best mortgage, saving for the future (whether for college or retirement), paying off debt, scaling back on expenses, managing home and personal budgets, repairing and improving your credit rating, planning an estate, banking online, saving and investing, and protecting your money and other assets.

The facts on the ground aren’t pretty at the moment. Real wages have been stagnant or declining for nearly 40 years in America. And in the current climate of economic uncertainty, skyrocketing home foreclosures, job cuts, bank failures, and unaffordable health insurance, many people feel more powerless than ever against mighty and faceless institutions that seem designed for nothing but to confuse and rip off. We’re here to tell you: It doesn’t have to be that way. By doing a little homework and taking a renewed interest in your own situation, you can reclaim many rights and advantages you probably didn’t know you had.

If information is power, then this book is like a gigantic supervitamin.

Foolish Assumptions

In order to shovel so much material on such a wide variety of topics into a single book that’s actually helpful and inviting, we make a few assumptions about you, the reader. See whether one or more of these shoes fit:

You can’t seem to get out from under credit card debt.

You’d like to find ways to spend less money, but the idea of sitting down and setting up a budget makes you feel slightly ill.

You’ve heard about how great it is to save for retirement in an IRA or 401(k), but the whole concept seems too complicated to deal with.

When tax time rolls around, you feel frightened and uncertain.

You can’t seem to keep up with mounting bills and wonder where in the world your paycheck goes every month.

You worry that you’ll ever be able to afford college for your kids.

You have a vague feeling that you should probably have certain kinds of insurance, but what they might be is a mystery.

You have health problems and are afraid they are going to end up bankrupting you.

If we’ve hit the mark with any (or, God forbid, all) of these descriptions, this book is most definitely for you.

How This Book Is Organized

Managing Your Money All-in-One For Dummies is organized so that you can easily and quickly access the information you’re looking for. We’ve arranged everything into seven “books,” each of which focuses on one aspect of your financial life. Without further ado, here’s how it’s all set up:

Book I: Taking Charge of Your Finances

We start at the very beginning and take a good, hard, honest — and yes, perhaps slightly painful — look at where you are now financially. (Sometimes pain leads to something good: Look at surgery, for example, or birth.) The chapters here ask that you be truthful with yourself and your habits when it comes to handling your own money. Only by seeing what you are actually, really, and truly doing with your cash now will you be able to make the most efficient and worthwhile improvements necessary to turn around your finances.

Before you know it you’ll be tracking where your hard-earned dollars go, easily maintaining a household budget, trimming away unnecessary spending, finding ways to make extra money, and even tackling that ugly but important beast: your credit report.

Book II: Managing Home and Personal Finances

Here is where we delve a bit deeper into how you deal with the money that comes in and goes out every month. Your home is your castle, as they say, and here is where we explore concrete and detailed ways of turning your household into a strong financial fort. In recent years, the American dream of owning a home has suffered seriously from the popped housing bubble, the housing market slump, the credit crisis, and rising mortgage defaults nationwide. That’s why it’s more important than ever to understand how to find and maintain the right kind of mortgage for you and how to avoid trouble with it down the road.

Housing is usually the largest piece of your monthly financial pie, but another increasingly large slice goes to health insurance and other health-related expenses. We devote a whole chapter on health insurance and ways to reduce your medical costs. And we address ways of using the greatest information tool of all time, the Internet, to help you in your new quest for financial self-empowerment.

Book III: Dealing with Debt

“In the midst of life we are in debt, et cetera,” sang one of the great bands of the 1980s (The Smiths, in case you have to ask), and truer words were never spoken. There’s little you can do to totally avoid debt in your life, and in some ways that’s not a terrible thing. You may be surprised to learn that some debts are a lot better than other debts. What you want to do is reduce your “bad” debts before worrying too much about your “good” ones.

The first step is to find out how much you owe and to whom. The next is to gain a little knowledge about what exactly credit is and how the different types really work. Remember: Knowledge is power. For those in need of a little bit more aggressive help credit-wise, we tackle the issues of debt consolidation (in which you bundle your debts into fewer payments), negotiating with creditors (yes, it is possible and in many cases very advisable), and seeking professional help from knowledgeable credit counselors who can size up your particular situation.

In the end, it may be that even after all that, you are still saddled with too much debt to keep your head above water. In that case, we give you the lowdown on whether, when, and how to declare bankruptcy and thereby give yourself a fresh start while protecting as much of your assets as possible. There is such a thing as a second chance, but if you need it, you need to do it the right way.

Book IV: Saving and Investing

Debt is only one side of the coin. We’ll call it tails. Heads, then, is all about keeping some of the money you have worked so hard to earn. It’s amazing how diligently people will work — only to unthinkingly fritter it away and have nothing to show for it at the end of the month. If you’re like most people, you have to change your thinking about saving money, and this book lays the groundwork for how to become a saver.

There are lots of ways to save money, and some are easier and work out better for you than others. The classic and historically most successful method is to invest your money in stocks, bonds, and mutual funds, and now there are cutting-edge ways of doing that online. We also cover the smartest ways to save up for giving the next generation that most important arrow in the financial quiver: a college education.

Book V: Protecting Your Money and Assets

Once you do get a grip on your finances and manage to start your nest egg, you may notice that your egg attracts predators and has become vulnerable to new dangers. One growing danger is that of identity theft, and you need to know how to avoid falling prey to those who would use information against you in order to take away what’s yours. And where do you keep your money? In the bank, right? Well, banking itself has gone through the online revolution, and it’s a very good idea to know options and pitfalls in this area.

The main way most people avoid financial disasters in their lives is by buying insurance, which (knock on wood) pays things off when bad things happen. Besides health insurance, which we cover in Book II, there are three other main forms of insuring yourself against catastrophic losses: homeowner’s insurance, auto insurance, and life insurance. We tell you what and what not to look for in all three categories.

There’s one other “predator” out there that drools over the thought of your moolah: That would be the government, which seems to want a piece of everything you do. It’s all very well and good, of course, to pay your fair share to enjoy the benefits of living in a modern society, but there’s no reason to pay more than that out of ignorance, is there? That’s why we include a chapter on how to deal intelligently with your tax bill and how to avoid tipping Uncle Sam unnecessarily.

Book VI: Retiring Comfortably

You see yourself laughing with friends on a boat, perhaps, a merrily clinking drink in your hand, with a little paper umbrella, recounting stories to captivated friends? Snapping photos of the Great Pyramid or strolling through some exotic, colorful bazaar? Or maybe you’d like to do nothing but play golf everyday and lunch in the sun? Well, we hope we’re not the first to tell you that Social Security isn’t going to cover that stuff. When it comes to clichés, we try to avoid them like the plague, but here’s one that is most definitely true: Failing to plan is planning to fail.

To enjoy your Golden Years to their full extent, you absolutely have to prepare for them, and the sooner the better. Fortunately, retirement plans such as IRAs, 401(k)s, and 403(b)s are excellent vehicles for doing just that. Also, if you’ve been paying off that big house that got you through your full nest period, there’s a way to make that house start paying you back: the reverse mortgage. The Internet is a great resource in these areas as well.

And once you are retired, that doesn’t mean you can slack off on all the financial tricks and skills you’ve gained — or you could very well end up spending your “retirement” greeting people at your neighborhood supermegacenter. That’s why we have a chapter on great ways of managing your money in retirement.

Book VII: Planning Your Estate and Will

It’s just a fact that even if you follow every piece of advice in this book and end up wealthy and happy beyond your wildest dreams, when it comes time to head off into the sunset you’ll have to leave your possessions behind. What will happen to your estate? Bad things, possibly, if you are careless.

The more you know about preparing for this eventuality, the more control you’ll have over what happens to your stuff after you’re gone. Here we give you lots of information on the best ways to gain and keep that control. And in many cases it’s not just you that you have to worry about, which is why we include a chapter on taking care of aging parents.

Icons Used in This Book

You’ll see a number of funny-looking little graphic elements sprinkled throughout this book. Here’s what they are and what they mean:

Marks concrete tips and tricks that you can put to use in giving you more control over your financial life.

Highlights passages that are good to keep in mind when it comes time to make decisions.

Alerts you to common mistakes that can trip you up and cause trouble when managing your money.

Notifies you that something is a bit more complex than usual, and that you can safely skip it if you’re in a hurry or only want to skim the surface of the topic.

Where to Go from Here

If you already have a specific interest in one particular area of managing your money, or have a sense of what you really need to tackle first, by all means flip to the Table of Contents or Index and zip straight to that section. You certainly are not expected to read this book cover to cover. On the other hand, if you’re here because you are well and truly lost when it comes to handling your finances, you may as well begin at the beginning with Book I, Chapter 1 and go from there.

However you end up using this book, we hope you at least gain some insight into better and smarter ways of keeping more and wasting less of what you work so hard for. And we hope you find the determination to apply some of the ideas here to your life. You’ll be very glad you did, we promise. Just keep in mind that even in tough times like these, there are a surprising number of things you can do to beat the system, even if it seems stacked against you.

The idea is to empower yourself. No one is going to stop you if you try, and no one is going to do it for you. So, buck up and steel yourself to look at your life more critically and honestly. We all have bad habits. Recognizing them is half the battle. Get ready to take charge of your life and get more out of it. Good luck! We know you can do it.

Book I

Taking Charge of Your Finances

In this book . . .

We ask you to take an unflinching look at your financial life and your relationship to your own money. Don’t be afraid! It’s not like you are going to be that surprised, is it? No, you know deep down approximately how bad things are. So why not face them once and for all and begin repairing your economic standing? And maybe things aren’t quite as bad as you suspect. In the end it’s not only financially rewarding to face the music, it’s also a tremendous load off your shoulders to feel that you are finally doing something about it. There’s a ton of stuff you can do immediately to begin improving your finances. So, what are you waiting for? Starting at Square One is what this book is about.

Here are the contents of Book I at a glance.

Chapter 1: Assessing Where You Are Financially 9

Chapter 2: Improving Your Relationship with Money 27

Chapter 3: Building and Sticking to a Budget 45

Chapter 4: Cutting Spending and Boosting Income 61

Chapter 5: Fixing Up Your Credit Report 81

Chapter 1

Assessing Where You Are Financially

In This Chapter

Being honest with yourself about money

Finding out about credit reports and your FICO score

Comparing your spending to your income

Figuring out what you own and what you owe

You’ve bought this book, so we assume you’re probably at least a little worried — maybe really worried — about your financial health. Perhaps your debts have you biting your nails, and you’re not sure what to do about them. We doubt you’re reading this book for the fun of it! And you probably don’t have a good handle on the true state of your finances. After all, it’s human nature to try to avoid bad news.

We understand. Facing financial facts can be unsettling and even scary. When you know the state of your finances, it becomes hard to ignore the fact that improving your financial situation requires changing your lifestyle and making some big sacrifices. But no matter how scary it is, confronting the reality of your financial situation is essential — and the good news is that seeking out this book is a terrific first step to doing just that.

This chapter begins your next step: figuring out where you are so you know where you need to go. Until you come face to face with the actual facts of your finances, you may find it impossible to develop the resolve and self- discipline you need to implement your plan of action. That’s why we begin with this series of fact-finding exercises to get you going.

The more bad news you get as you complete these exercises, the more critical it is that you get serious about dealing with your debts. The sooner you do that, the quicker and easier it will be to improve your finances and the less likely that your creditors will take some of your assets or that you’ll have to file for bankruptcy. So let’s get going!

Some Preliminary Questions

You can get a rough sense of your debt problem by honestly answering the following questions. The more “yes” answers, the more work you have to do.

Are you clueless about how much you owe your creditors?

Over time, is a growing percentage of your household income going toward paying your debts?

Do you ever pay your bills late because you don’t have enough money?

Have you stopped paying some of your debts?

Are you paying only the minimum due on some of your credit cards because you can’t afford to pay more?

Are you using credit and/or credit card cash advances to help pay debts and/or your basic living expenses, such as groceries, rent, or utilities?

Have you maxed out any of your credit cards, or have any of your cards been cancelled for nonpayment?

Do you have little or nothing in savings?

Have you borrowed money from friends or relatives to pay your bills?

Have debt collectors begun calling you, and/or are you receiving threatening notices from some of your creditors?

Are you having a hard time concentrating at work because you are worried about money?

Are you losing sleep because of your finances?

Have you and your spouse or partner begun to fight about money?

Are you drinking more or using illegal drugs to try to cope with your money worries?

Are you an overspender? According to Debtors Anonymous, most compulsive spenders answer “yes” to at least 8 of 15 questions. Go to www.debtorsanonymous.org/help/questions.htm and take the Debt Quiz.

Your Relationship with Money

You may have the misconception that you are what you buy. You may believe on some level that the more you spend, the more successful and important you are. Developing that mindset is easy because all of us are constantly bombarded with messages that equate money and stuff with success. How often do you see ads promoting frugality, saving, or self-denial? If you’re struggling to keep up with the Joneses, you may need to reevaluate your friendships. The Joneses may be driving you straight to the poorhouse.

Recognizing emotional spending

Maybe you spend money for emotional reasons. For example, think about what you do when you feel sad or disappointed, or when you want to celebrate a success. Do you head to the mall? Do you click on your favorite retail Web site? Do you treat yourself to an expensive meal or enjoy a weekend getaway even though you really can’t afford it? If so, spending may have become a sort of addiction. Everyone likes to reward themselves from time to time, but doing so continually is a problem, and losing track of whether you can afford to treat yourself is a cause for real concern.

If emotional spending describes your behavior to a T, you need to get a handle on it fast. One option is to meet with a mental health professional; you may qualify for help from a low-cost/no-cost clinic in your area. Or get involved with Debtors Anonymous (www.debtorsanonymous.org or 781-453-2743). DA uses the time-tested methods of Alcoholics Anonymous to help people understand why they spend and to gain control over their spending.

Living for the moment

Maybe your problem is that you “live for today” and don’t think about tomorrow. In some ways, living in the moment is great, sure — but not if you turn a blind eye toward your future. How do you know if you’ve got this attitude toward money? You probably

Use credit too much.

Don’t try to pay off your credit balances as quickly as possible, telling yourself there will be plenty of time to do that later.

Save little, if anything.

Rarely, if ever, take time to balance your checkbook, check out your credit reports and credit score, or maintain a household budget.

Such money attitudes are self-destructive, and they do catch up with you eventually. Because you’re reading this book, they may already have.

Checking Out Your Credit Reports

Three national credit-reporting companies operate in the United States: Equifax, Experian, and TransUnion. Reviewing the information in your credit report from each company is an excellent way to see your true financial picture.

Getting copies of your credit reports

For a comprehensive survey of your creditworthiness, order a copy of your credit report from each of the national credit-reporting agencies, not just from one. Each report may contain slightly different information about you, partly because not all creditors report all consumer account payment information to all three agencies.

You are entitled to one free copy of each of your credit reports every year. To order yours, go to www.annualcreditreport.com or call 877-FACT-ACT.

If you’ve already obtained free copies of your credit reports during the past 12 months, you must pay a fee to order additional copies. In most states, the cost is $10 per report (and some states also charge a sales tax), although the cost is less in some states. You can call your state attorney general’s office to find out.

Also, you are always entitled to a free credit report if

You are unemployed and intend to apply for a job within 60 days.

You are receiving public welfare assistance.

You believe that you have been the victim of identity theft.

You have been denied credit, employment, insurance, or a place to rent within the past 60 days because of information in your credit report.

To order additional copies of your credit reports after you’ve obtained your free annual ones, you must contact each of the three credit-reporting agencies individually. You can order the copies by mail, by phone, or online.

Equifax:www.equifax.com; 800-685-1111; Disclosure Department, P.O. Box 740241, Atlanta, GA 30374

Experian:www.experian.com; 888-397-3742; P.O. Box 2104, Allen, TX 75013

TransUnion:www.transunion.com; 800-888-4213; P.O. Box 1000, Chester, PA 19022

If you order additional copies by mail, put your request in a letter that includes the following information, and be sure to sign it:

Your full name (including Jr., Sr., III, and so on)

Your Social Security number

Your date of birth

Your current address and previous addresses for the past five years

Your phone number, including area code

The name of your current employer

Knowing why your reports matter

The credit report you get is the same one that your current creditors and potential future creditors use to make decisions about you. The more negative information is in your credit histories (such as past-due accounts, accounts in collection, accounts that your creditors have charged off as uncollectible, tax liens, and so on), the worse your finances are.

Your existing creditors may use the information to decide whether to raise the interest rates you are paying, lower your credit limits, or even cancel your credit. And whenever you apply for new credit, the creditors review your credit record information to decide whether to approve your application, how much credit to give to you, the interest rate you must pay, and so on.

Many insurance companies, landlords, and employers also review your credit record information. If they find a lot of negative information, insurance companies may not agree to insure you or may charge you higher-than-normal premiums; landlords may refuse to rent to you; and employers may not want to hire you or to give you the promotion you applied for.