1) The document discusses four common money mistakes people make, including expecting financial conditions to remain the same, only saving leftover money rather than budgeting savings, not having an emergency fund, and not asking for help when facing financial problems. 2) It then discusses how much student loan debt is too much, noting that the average student graduates with over $23,000 in loans and that excessive borrowing can hamper future financial goals. 3) The final section lists and explains 10 important financial terms everyone should know, such as time value of money, market volatility, inflation, asset allocation, and risk/return tradeoff.

1. Financial Life Designs
by Audrey W. Jones
April 2010
Audrey Wehr Jones
Audrey W. Jones, CFP®
Financial Life Desighner Four Money Mistakes You Can Learn From
3507 Medford Rd
Casselberry, FL 32707 It's hard to know when the economy will truly spending your money and
407-590-9372 recover, although there are signs that things you haven't set financial
awjones@cfl.rr.com
http://www.linkedin.com/in/audreywjones
are headed in the right direction. But if you goals, it's unlikely that you'll
want your own finances to stabilize over the see much financial progress.
long term, you'll need to evaluate what you've Go back to basics by prepar-
been doing right...and wrong. There's no ing (or reviewing) your
magic bullet, but avoiding these four money budget. If you tend to save
Hello Everyone, mistakes may help you survive and ultimately only what you have left over
thrive in any turbulent economy. every month, you can put
Welcome to my first Mistake 1: Expecting things to stay the yourself on a more disciplined course by hav-
newsletter! A new same ing a fixed amount taken out of your paycheck
look, as I start my own automatically for retirement. Or, you can set
firm. It's a familiar tale. Economic times were good. up automatic transfers from your checking
The stock market account to a savings or investment account.
went up, up, up. "Success does not
Home values (and consist in never Mistake 3: Not having an emergency fund
real estate prices) making mistakes
Know that if you have but in never making One of your savings priorities should be an
soared, credit was emergency fund. An emergency fund isn't
any questions during flowing, and the the same one a
this hectic tax season second time." glamorous, but this underappreciated work
job market was horse really pulls its weight during hard times.
I am here to help.Give robust. And George Bernard
me a call..... Having cash on hand that you can use for an
then...the bottom Shaw unexpected expense, or to pay bills if you lose
fell out. your job or become disabled, is vital because
At the heart of all economic bubbles is the it can help you avoid having to rely on credit
euphoric, yet ultimately mistaken, idea that the or tap your retirement savings. Without emer-
good times are here to stay. And when the gency savings to fall back on, worse financial
economic news is bad, it's just as easy to as- trouble may lie down the road.
sume that the tough times will remain. But Mistake 4: Not asking for help
In this issue: your own financial recovery will ultimately de-
pend on you not jumping on any bandwagon. Even if your finances are in good shape right
Four Money Mistakes You Can Instead, take a proactive, rather than reactive, now, you may be overdue for a checkup. A
Learn From close look at your financial plan will help you
approach to financial planning, no matter what
College Debt: How Much Is economic news you're hearing. Prepare your- identify potential strengths and weaknesses. If
Too Much? self for a variety of financial scenarios and you're already in financial trouble, don't let
avoid basing money decisions on emotion, or fear or shame prevent you from asking for
10 Financial Terms Everyone
Should Know you may find yourself making the same finan- help. Facing financial problems early may help
cial mistakes over and over. you make a full recovery. Many creditors are
What can affect the cost of willing to work with you, but this may be much
homeowners insurance? Mistake 2: Only saving your leftovers easier while your credit is still good, and while
Do you worry that you're not saving enough? you still have time to turn things around.
Do you routinely rely on credit rather than
cash to pay for the things you want or need?
Rather than blame your financial inertia on
your income, look a bit deeper, because the
real culprit may be the lack of financial priori-
ties. If you don't know exactly how you're

2. Page 2
College Debt: How Much Is Too Much?
According to a recent survey by the nonprofit National Postsecondary Student Aid Study).
College Savings Foundation, the confidence And this doesn't include private student loan
of parents in their ability to save for college debt, which has exploded in recent years due
dropped significantly over the past year (go to to the inability of federal loan borrowing limits
www.collegesavingsfoundation.org to read the to keep pace with skyrocketing college costs.
survey). That's not entirely surprising, consid-
ering the economic climate. But what is sur- The result is a new paradigm for millions of
prising is that, of parents surveyed, a whop- young adults--a crushing amount of student
ping 41% reported having saved nothing at loan debt that stretches from early to middle
all, and 28% reported having saved less than adulthood and can affect all major life deci-
$5,000 per child. sions, from what career path to choose, to
where to live, whether to go to graduate
The loan factor school, when to marry, have children, buy a
home, begin saving for retirement, and so on.
The trend of not saving enough makes fami-
lies heavily dependent on borrowing to fund And it doesn't end there. Parents who engage
college. In the survey above, 47% of parents in "extreme borrowing"--routinely taking out
said they expected to utilize student loans to large home equity loans, federal PLUS Loans,
pay for college. And parents seem inclined to or other private loans to fully fund the gap
borrow whatever it takes: 76% don't expect to without regard for the consequences--can
The trend of not
narrow their children's college choices. hamper themselves financially for years.
saving enough
makes families The cost factor How much is too much? Obviously, the an-
heavily dependent swer is different for every family. But waiting
on borrowing to Loans matter when you consider the cost of until spring of your child's senior year--as you
fund college. ...The college. According to the College Board's review individual financial aid awards--to think
result is a new Trends in College Pricing 2009 report, even about college affordability can be a mistake.
paradigm for though the Consumer Price Index declined To avoid falling into the "I guess we'll just bor-
millions of young 2.1% between July 2008 and July 2009, col- row whatever it takes" trap, families should
adults--a crushing lege costs rose across the board--a disturbing start thinking about costs much earlier.
amount of student but familiar pattern (to read the report, go to
loan debt that www.trends-collegeboard.com). Before filling out a college application...
stretches from early For the 2009/10 school year, the average cost • Get an idea of how much federal aid your
to middle adulthood of a public college increased 5.9% to $19,388, family can expect by using the calculator
and can affect all while the average cost of a private college at www.fafsa4caster.ed.gov.
major life increased 4.3% to $39,028, with elite private
decisions. colleges topping out at over $50,000 per year. • For each college, research the total cost
of attendance and the average merit aid
The College Board also noted that about two- award given to students with similar aca-
thirds of students receive grants, with the av- demic credentials as your child.
erage private college student receiving
$14,400 in total grant aid and federal tax • Know what a particular loan amount
benefits for 2009/10, and the average public today will end up costing tomorrow (e.g.,
college student receiving $5,400. But this still $40,000 in PLUS Loans at 8.5% with a
leaves approximately $25,000 for private un- 10-year repayment term will cost you
dergraduates and $14,000 for public under- $496 per month; $27,000 in Stafford
graduates to fund. Absent additional college Loans at 6.8% and a 10-year term equals
merit aid and/or outside scholarships to make $311 each month for your child).
up the difference, parents and/or their children • Consider your child's career aspirations,
must fill the gap. earning potential, and job prospects after
How much borrowing is too much? graduation. Will this school be a good
return on your investment? Also, is
The gap is where families can get in over their graduate school likely?
heads. Is there such a thing as borrowing too
much for college? In the iconic words of the • Talk to your child about how any debt
Magic 8 Ball®, "signs point to yes." taken on might impact your or your child's
future goals and dreams.
The average student now leaves school with
$23,186 in federal student loans (Source:

3. Financial Life Designs Page 3
10 Financial Terms Everyone Should Know
Understanding financial matters can be you will be able to retire. Once retired,
difficult because of the jargon used. Becoming preserving your net worth to last through your
familiar with these ten financial terms may retirement years is your goal.
help make your financial picture clearer. 6. Five C's of credit
1. Time value of money These are character, capacity, capital, collat-
The time value of money is the concept that eral, and conditions. They're the primary ele-
money on hand today is worth more than the ments lenders evaluate to determine whether
same amount of money in the future because to make you a loan. Why is it important? With
the money today can be invested to earn a better understanding of how your banker is
interest. Why is it important? Understanding going to view and assess your creditworthi-
that money today is worth more than the same ness, you will be better prepared to deliver
amount in the future can help you evaluate appropriate information to obtain the loan you
and compare investments that offer returns at want or get a better interest rate.
different times. 7. Sustainable withdrawal rate
Ten more terms to
2. Market volatility Sustainable withdrawal rate is the maximum look up
Market volatility measures the rate at which percentage that you can withdraw from an
• Equity
the price of a security moves up and down. If investment portfolio each year to provide
the price of a security historically changes income that will last, with reasonable certainty, • Gross Domestic
rapidly over a short period of time, its volatility as long as you need it. Why is it important? Product
is high. Conversely, if the price of a security Your retirement lifestyle will depend not only • Working capital
rarely changes, its volatility is low. Why is it on your assets and investment choices, but
also on how quickly you draw down your re- • Recession
important? Understanding volatility can help
you evaluate whether a particular investment tirement portfolio. • Triple net lease
is suited to your investing style and risk 8. Tax deferral • Net income
tolerance. • Roth IRA
Tax deferral refers to the opportunity to pay
3. Inflation income taxes in the future for investment inter- • Earned income
Inflation reflects any overall upward move- est and appreciation earned in the current • Debt/equity ratio
ment in the price of goods and services in the year. Why is it important? Tax-deferred
• P/E ratio
economy. Why is it important? Because infla- vehicles like IRAs and annuities produce
tion generally pushes the cost of goods and earnings that are not taxed until withdrawn.
services higher, any estimate of how much This allows those earnings to compound,
you'll need in the future--for example, how further adding to potential investment growth.
much you'll need to save for retirement-- 9. Risk/return trade-off
should take into account the potential impact
of inflation. This concept holds that, in order to achieve a
higher personal investment return, you must
4. Asset allocation be willing to accept greater risk. Why is it im-
This strategy means spreading investments portant? When considering your investments,
over a variety of asset categories, such as the goal is investing to get the greatest return
equities, cash, bonds, etc. Why is it impor- for the level of risk you're willing to take, or to
tant? How you allocate your assets depends minimize the risk involved in trying for a given
on a number of factors, including your risk return.
tolerance and your desired return. Diversifying 10. Annuity
your investments over asset classes can
potentially help you manage risk and volatility. An annuity is a contract where you pay money
to an insurance company in return for the
5. Net worth insurer's promise to pay it back, with interest,
in the future. Why is it important? You can
Net worth is what your total holdings are worth supplement other retirement savings with tax-
after subtracting all of your financial obliga- deferred annuity funds, and you can add to
tions. Why is it important? Your net worth will your retirement income with payments from
probably fund most of your retirement years. your annuity for a fixed period of time or for
Therefore, the faster and bigger your net the rest of your life.
worth grows, the earlier and more comfortably

4. Ask the Experts
What can affect the cost of homeowners insurance?
There are many factors that repair that some insurers either are signifi-
can affect the cost of home- cantly increasing premiums to insure mold
owners insurance. Here's a damage, or they're eliminating coverage
description of some of the completely.
more common factors. Rising repair or construction costs in your
Generally, as your home gets older, the cost area also will increase your insurance
Audrey Wehr Jones of insuring it may increase. Older homes have premium. If it'll cost more to repair or replace
Audrey W. Jones, CFP® more things that can go wrong, often related your home, it'll cost more to insure it as well.
Financial Life Desighner to outdated wiring, older plumbing, or lead
3507 Medford Rd Sometimes, you can cause your insurance
Casselberry, FL 32707 paint. rates to increase. Swings, trampolines, and
407-590-9372 The location of your home also can affect your other backyard equipment can add to your
awjones@cfl.rr.com
http://www.linkedin.com/in/audreywjones
insurance premium. Insurers generally regard premium. Owning a swimming pool, sauna, or
homes located in urban areas to be at a hot tub may increase your property's value as
higher risk of burglary than comparable subur- well as the risk of injury or property damage,
Forefield Inc. does not provide
legal, tax, or investment advice. ban homes, translating to a higher premium which will be reflected in your insurance bill.
All content provided by Forefield cost for metropolitan area houses. Insurance Based on the breed and temperament of your
is protected by copyright. may cost more if your home is located in an
Forefield is not responsible for dog, an insurer may consider it an increased
any modifications made to its area prone to a specific peril, such as floods, risk of causing injury, resulting in a higher
materials, or for the accuracy of or in a rural area far from a fire station or fire premium. If the breed of your dog is on the
information provided by other hydrant.
sources. insurer's "bad dog list," you may not be able to
Living in an area prone to claims for mold get coverage for injuries caused by the dog,
damage can increase your premium. In fact, or your current insurance can be cancelled
excessive mold damage can be so costly to altogether.
How can I reduce the cost of my homeowners insurance?
You may not have control over all of the fac- locking gate around your pool.
tors that affect the cost of your homeowners Before you get a dog, check with your insurer
insurance. But there may be some things you to be sure your new pet won't increase the
can do to save some money. cost of your insurance--or cause it to be can-
If your home is older, your insurer may lower celled. Also, advise your insurer that you've
your premium if you upgrade your heating, properly trained your pet and that you've
plumbing, or electrical systems to reduce the obtained all required vaccinations and tags.
risk of fire and water damage. Let your insurer Some insurers will raise your premiums if you
know when you've made these changes. file frequent (more than 2-3) claims of rela-
Selecting a larger deductible is another good tively small value. Try to use your insurance
way to lower your cost of insurance. You for major claims and consider self-insuring the
might want to put your premium savings in an rest.
emergency fund to pay the deductible, if Another way to save on your insurance costs
needed. is to buy your homeowners insurance and
Review your policy. You may be adding to the auto insurance from the same insurer. Most
cost of insurance by carrying extra coverage companies will discount the cost of insurance
for things that have declined in value or you if you buy two or more policies from them.
no longer own, like furs or jewelry. You may receive a discount from your insurer
Swimming pools can add to the cost of by improving your home's security. Ask your
Prepared by Forefield Inc, insurer if adding an anti-theft system, flood
insurance. However, many insurers may not
Copyright 2010 lights, or even dead-bolt locks will lower your
increase your rates if you show them that you
have safety features such as fencing or a premium.