Farnoosh Torabi - Be Money Smart: A Practical Guide for Starting Out, Starting Over & Staying on Track

A Practical Guide for Starting Out, Starting Over, and Staying on Track

Vice President, Publisher: Tim Moore
Associate Publisher and Director of Marketing: Amy Neidlinger
Executive Editor: Jeanne Glasser
Editorial Assistant: Pamela Boland
Development Editor: Russ Hall
Senior Marketing Manager: Julie Phifer
Assistant Marketing Manager: Megan Graue
Cover Designer: Alan Clements
Managing Editor: Kristy Hart
Project Editor: Betsy Harris
Copy Editor: Keith Cline
Proofreader: Water Crest Publishing
Indexer: Lisa Stumpf
Interior Designer: Gloria Schurick
Senior Compositor: Gloria Schurick
Manufacturing Buyer: Dan Uhrig

2012 by Farnoosh Torabi
Published by Pearson Education, Inc.
Publishing as FT Press
Upper Saddle River, New Jersey 07458

This book is sold with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting, or other professional services or advice by publishing this book. Each individual situation is unique. Thus, if legal or financial advice or other expert assistance is required in a specific situation, the services of a competent professional should be sought to ensure that the situation has been evaluated carefully and appropriately. The author and the publisher disclaim any liability, loss, or risk resulting directly or indirectly, from the use or application of any of the contents of this book.

FT Press offers excellent discounts on this book when ordered in quantity for bulk purchases or special sales. For more information, please contact U.S. Corporate and Government Sales, 1-800-382-3419, .

Company and product names mentioned herein are the trademarks or registered trademarks of their respective owners.

All rights reserved. No part of this book may be reproduced, in any form or by any means, without permission in writing from the publisher.

Printed in the United States of America

First Printing October 2011

ISBN-10: 0-13-288806-8
ISBN-13: 978-0-13-288806-6

Pearson Education LTD.
Pearson Education Australia PTY, Limited.
Pearson Education Singapore, Pte. Ltd.
Pearson Education North Asia, Ltd.
Pearson Education Canada, Ltd.
Pearson Educatin de Mexico, S.A. de C.V.
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Pearson Education Malaysia, Pte. Ltd.

Library of Congress Cataloging-in-Publication Data

Torabi, Farnoosh.
Be money smart : a practical guide for starting out, starting over, and staying on track / Farnoosh Torabi.
p. cm.
Includes index.
ISBN-13: 978-0-13-288806-6 (pbk. : alk. paper)
ISBN-10: 0-13-288806-8 (pbk. : alk. paper)
1. Finance, PersonalPsychological aspects. 2. MoneyPsychological aspects. 3. Financial security.
I. Title.
HG179.T5925 2011
332.024dc23
2011037077

For my family

I have the great fortune of knowing encouraging and inspiring individuals whove made my career and life an absolute joy, in addition to having helped spring my ideas and this book to life.

Thank you to my superb agent, Adam Kirschner, who pushed for this project, just as I was about to give up hope. Thank you to the very supportive and talented Pearson team: Jeanne Glasser, Tim Moore, and Julie Phifer. Thank you all for rallying behind me and reminding me to always think big. Boom!

This book could not have been possible without the generosity and brilliance of behavioral experts, teachers, and economists who shared with me their perspectives, theories, and thoughts. Thank you especially to the great Dan Ariely, Jay Ritter, Terri Ciochetti, and Joseph Brusuelas.

I am enormously grateful to the television producers who have allowed me to share my perspectives on their airwaves. First and foremost, Patricia Luchsinger, a magnificent producer at the NBC Today Show, who was the first person to take a serious chance on me and put me on live, national TV at a young age. Thanks for the big break and for inviting me back. Thank you to the excellent Katherine Billman, also from the Today Show. Thank you to all the brave and inspiring participants on Bank of Mom & Dad. And of course, monstrous thanks to my Bank of Mom & Dad family at ABC Daytime and BBC America who helped bring this very important program to life: Ann Miller, Lillian Lim, Marianne Fleschman, Allison Wallach, Bob Kirsh, Shirley Escott, Jerry Kolber, and Tracey Finley.

My deepest gratitude to all the individuals with whom Ive had the opportunity to collaborate in the past year, whove helped me extend my reach in educating everyday people about money. Im especially thankful for Christine Schirmer, Jen Garcia, Jen Fellner, Scott Gulbransen, Chelsea Marti, Kathryn Zambito, Courtney Leddy, Chris Lee, Kathleen McGraw, Katie Grafer, Denise Vitola, Kristen Ronan, Colleen McCarthy, and Naomi Borno.

I have wonderful friends who keep me brave: Kate Dailey, Bethany and Tim McGee, Ariel Gornizky, Kathryn Ricker, Tim Chan, Kafi Drexel, Margie Fox, Brian Maloney, David Dapko, Annika, Michael, Luke, and Blake OLooney, Susan, Michael, Allison, and Amanda Beacham, Kathy Braddock, Kelly and Eric Tiedeken, Christine and Mike Rzasa, Tim Hedden, Kristin Bentz, Susie Banikarim, and Dan Arnall. Thanks to all of you for your unconditional friendship and support.

Thank you to Dean Jim Thomas and Joyce Matthews and the entire Smeal College of Business at Pennsylvania State University, my alma mater.

A great thank you to my Lancaster, PA family for their love and support: Eileen and Phil Jaquith; Kate Dussinger; and Doug, Jean, and Bradley Dussinger.

Speaking of family, much love and a great big thank you to Aunt Sheren, Uncle Nasser, and my AZ cousins Alex and Allen.

Thank you to Adam and Sheila Torabi, my amazing parentsto whom I owe pretty much my entire life. The greatest gift they ever gave mebesides guidance, unconditional love, and trustwas my brother Todd back in 1991. With Todd, there is inspiration and joy. And the future always seems brighter.

Finally, I am blessed for my best friend and steady Tim Dussinger. Thank you for all the all.

Farnoosh Torabi is a personal finance expert, author, speaker, and TV personality. The New York Times calls her advice perfectly practical. Her first book, Youre So Money, was widely acclaimed for its candid, tell-all advice for young adults seeking financial independence.

Farnooshs latest television work includes SOAPnets Bank of Mom & Dad, where she coaches young women struggling with debt. She was also the resident finance expert on TLCs REAL SIMPLE. REAL LIFE.

Youve seen Farnoosh on Larry King Live, The View, Today, Good Morning America, The Early Show, Tyra, Fox News, MSNBC, and CNN. She was formerly a Senior Financial Correspondent and host of Wall Street Confidential with Jim Cramer for TheStreet.com TV.

Farnooshs work and advice have been profiled in The New York Times, The New York Post, Real Simple, Glamour, Marie Claire, Seventeen, Cosmopolitan, Money Magazine, AOL, People, and Entrepreneur Magazine.

Farnoosh attended Pennsylvania State University, graduating with honors in finance and international business. She also holds an M.S. in journalism from Columbia University.

The arrival of this book and its message, I suspect, could not have been better timed. Were more than two years into this great recession, and many of us are more confused than ever about our personal finances. With the financial and employment landscapes evolving before us, its difficult to return to the old, prescriptive advice weve grown accustomed to. Emotionally, weve got a lot going on; were angry, hurt, confused, and weve lost confidence. Our emotions have (and continue to) run high. By now we recognize that we need to change our ways, but not in a knee-jerk, reactionary way. After all, economic volatility is cyclical and will likely return in a new form in the near future. Whats needed is advice that doesnt just stem from the rules and regulations of the banking, credit, and financial world but is rooted in our behavior and habits. We need to understand ourselves, get honest, and make money one of the most personal issues and biggest priorities of our lives. If we can get a tighter hold on our minds, our actions, and our belief systems, we can be in control of anything, most importantly our financial lives.