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Dedication
To my wife, Theresa, and my children, Karen, Kathryn, and
Dave; and in the memory of my parents, Ram and Sheela
Kapoor
To my wife, Linda, and my children, Carissa and Kyle; and

the memory of my parents, Les and Mary Dlabay
To my mother, Barbara Y. Hughes; and my wife, Peggy
To my husband, David Hart; and my children, Alex and

Madelyn
Copyright © 2016 by McGraw-Hill Education
vii
Focus on . . . the Authors
Jack R. Kapoor, EdD, College of DuPage

Jack Kapoor is a professor of business and economics in the Business and Technology
Division of the College of DuPage, Glen Ellyn, Illinois, where he has taught business and
economics since 1969. He received his BA and MS from San Francisco State College and
his EdD from Northern Illinois University. He previously taught at Illinois Institute of
Technology’s Stuart School of Management, San Francisco State University’s School of
World Business, and other colleges. Professor Kapoor was awarded the Business and Tech-
nology Division’s Outstanding Professor Award for 1999–2000. He served as an assistant
national bank examiner for the U.S. Treasury Department and has been an international
trade consultant to Bolting Manufacturing Co., Ltd., Mumbai, India.
Dr. Kapoor is known internationally as a co-author of several textbooks, including
Business: A Practical Approach (Rand McNally), Business (Cengage Learning), Business
and Personal Finance (Glencoe), and Personal Finance (McGraw-Hill). He served as a
content consultant for the popular national television series The Business File: An Intro-
duction to Business and developed two full-length audio courses in Business and Personal
Finance. He has been quoted in many national newspapers and magazines, including USA
Today, U.S. News & World Report, the Chicago Sun-Times, Crain’s Small Business, the
Chicago Tribune, and other publications.
Dr. Kapoor has traveled around the world and has studied business practices in capital-
ist, socialist, and communist countries.
Les R. Dlabay, EdD, Lake Forest College

Teaching about the “Forgotten Majority” (the three billion people living on $2 or less a
day) is a priority of Les Dlabay, professor of business at Lake Forest College, Lake For-
est, Illinois. He believes our society can improve global business development through
volunteer time, knowledge sharing, and financial donations. In addition to writing several
textbooks, Dr. Dlabay teaches accounting and various international business courses. His
“hobbies” include a collection of cereal packages from over 100 countries and banknotes

from 200 countries, which are used to teach about economic, cultural, and political aspects
of international business environments.
His research involves informal and alternative financial services, microfinance, and
value chain facilitation in base-of-the-pyramid (BoP) market settings. Dlabay has pre-
sented more than 300 workshops and seminars for teachers and community organiza-
tions. He serves on the boards of Bright Hope International (www.brighthope.org), which
emphasizes microenterprise development through microfinance programs, and Andean
Aid (www.andeanaid.org), which provides tutoring assistance to school-age children in
Colombia and Venezuela. Professor Dlabay has a BS (Accounting) from the University of
Illinois, Chicago; an MBA from DePaul University; and an EdD in Business and Economic
Education from Northern Illinois University. He has twice received the “Great Teacher”
award at Lake Forest College.
viii
Focus on . . . the Authors ix
Robert J. Hughes, EdD, Dallas County

Community Colleges
Financial literacy! Only two words, but Bob Hughes, professor of business at Dallas County
Community Colleges, believes that these two words can change your life. Whether you
want to be rich or just manage the money you have, the ability to analyze financial deci-
sions and gather financial information are skills that can always be improved. Dr. Hughes
has taught personal finance, introduction to business, business math, small business man-
agement, small business finance, and accounting for over 35 years. In addition to Focus on
Personal Finance and Personal Finance, published by McGraw-Hill/Irwin, he has authored
college textbooks for Introduction to Business, Business Mathematics, and Small Business
Management. He also served as a content consultant for two popular national television
series, Dollars & Sense: Personal Finance for the 21st Century and It’s Strictly Business,
and he is the lead author for a business math project utilizing computer-assisted instruction
funded by the ALEKS Corporation. He received his BBA from Southern Nazarene Uni-
versity and his MBA and EdD from the University of North Texas. His hobbies include
writing, investing, collecting French antiques, art, and travel.
Melissa M. Hart, CPA North Carolina State University

Melissa Hart is a permanent lecturer in the Poole College of Management at North
Carolina State University. She was inducted into the Academy of Outstanding Teachers
in 2012. She teaches courses in personal finance and corporate finance. She has devel-
oped multiple ways to use technology to introduce real-life situations into the classroom
and the distance education environment. Spreading the word about financial literacy has
always been a passion of hers. It doesn’t stop at the classroom. Each year she shares her
common-sense approach of “No plan is a plan” to various student groups, clubs, high
schools, and outside organizations. She is a member of the North Carolina Association of
Certified Public Accountants (NCACPA) where she serves on the Accounting Education
Committee. She received her BBA from the University of Maryland and an MBA from
North Carolina State University. Prior to obtaining an MBA, she worked eight years in
public accounting in auditing, tax compliance, and consulting. Her hobbies include keep-
ing up with her family’s many extracurricular activities as well as working on various
crafts. She travels extensively with her family to enjoy the many cultures and beauty of the
state, the country, and the world.
Dear Personal Finance Students
and Professors
Question: How important are the financial decisions you make?
Answer: Because financial decisions can

change your life, they are very important. Just
for a moment think about the decisions you
make every day. For example:
• What happens if you run out of money

before your next payday?
• Should you pay cash or use a credit card?
• How much insurance do you need?
• Is this a good investment?
• How much should you save for
retirement?
For most people, the answers to questions like

these affect not only their financial security,
but also their quality of life. And while the answers to these questions are based
on your unique personal situation, this book and accompanying digital study tools
are designed to help you discover the answers to these questions, and many more.
Text (or eBook)

While the new, fifth edition of Focus on Personal Finance does not guarantee that
you will become a millionaire, it does provide the information you need to develop
a plan to achieve financial security. New to this edition is the “3 Steps to Financial
Literacy” feature. Each of the three steps is designed to give you a starting point

to help master the material in each chapter and includes websites and apps to help
you start your personal financial journey. Current content, examples, exhibits, and
box features within each chapter also illustrate how to apply important concepts to
your life. And at the end of each chapter, a chapter summary, discussion questions,
financial problems, and cases help you reinforce important concepts and review
for exams. This edition also includes a new continuing case that illustrates the
financial challenges a young couple experiences as they journey through the ups
and downs of life. Finally “Your Personal Financial Plan” sheets at the end of each
chapter help you build a plan that will enable you to achieve your personal and
financial goals both now and in the future.
x
Dear Personal Finance Students and Professors xi
Digital Package
As authors, we recognize the importance of providing quality digital products to
enhance learning. We’re especially proud of our digital study tools that accom-
pany this edition. For example, both the McGraw-Hill Connect™ and LearnSmart
websites contain student learning activities—all designed to help you experience
success. For more information about these digital products, visit the McGraw-Hill
website at www.mheducation.com.
Thank You
We sincerely thank you for your current and past support of Focus on Personal
Finance. We invite you to take a look at this new edition to see how Focus on Per-
sonal Finance can help you create the “right” financial plan to help you achieve
your personal and financial goals. Finally, we encourage you to email us if you
have comments or suggestions about the text or our digital study tools.
Welcome to the new Focus on Personal Finance!
Jack Kapoor
kapoorj@att.net
Les Dlabay
dlabay@lakeforest.edu
Bob Hughes
bhughes@dcccd.edu
Melissa Hart
mmhart@ncsu.edu
New to This Edition
The fifth edition of Focus on Personal Finance contains new and updated boxed features,
exhibits and tables, articles, and end-of-chapter material. The following grid highlights
some of the more significant content revisions made to Focus, 5e.
Global Changes for all chapters

• New chapter opener.
• Action items for each learning objective.
• A revised Your Personal Finance Dashboard feature at the end of each chapter.
• A new Continuing Case feature at the end of each chapter.
• Revised and updated problems.
• Updated websites and apps on all “Your Personal Financial Plan” sheets.
CHAPTER 1 • Revised Exhibit 1–1 with expanded financial activities for various life situations.
Personal Financial • New coverage of the role of the financial system for personal financial decisions.
Planning in Action • New Exhibit 1–2 with an overview of the financial intermediaries and markets
that facilitate personal financial decisions.
• Revised Figure It Out! feature on using time value of money for achieving finan-
cial goals comparing formula, table, spreadsheet, and financial calculator methods.
CHAPTER 2 • Revised Exhibit 2–1 with suggestions for storing and organizing financial docu-
Money Management ments in various formats.
Skills • New content on storing financial documents “in the cloud.”
• New in-text example for calculating net worth.
• Updated content on selecting a savings technique.
• New From the Pages of Kiplinger’s Personal Finance with suggestions for budget-
ing and tracking your finances.
• New end-of-chapter case to evaluate and recommend actions for a household budget.

CHAPTER 3 • New Caution! feature on IRS scams.
Taxes in Your Financial • Updated tax rate schedules (for 2014).
Plan • Updated section: Calculating your Tax.
• Revised Figure It Out! feature: Short-Term and Long-Term Capital Gains.
• Revised Personal Finance in Practice: New tax form exhibits.
• Revised Exhibits 3–3 and 3–4 give updated tax forms.
• Revised Exhibit 3–5, showing tax tables and tax rate schedules.
• Updated electronic filing instructions.
• New coverage: 529 plan tax implications.
• New From the Pages of Kiplinger’s Personal Finance feature on taxes to consider
when traveling.
• Revised content on tax strategies.
• Revised Figure It Out! feature: Tax Credits vs. Tax Deductions.
xii
New to This Edition xiii
CHAPTER 4 • Updated and expanded coverage of online and mobile banking.

Financial Services: • New coverage of the expanded use of and many fees associated with prepaid
Savings Plans and debit cards.
Payment Accounts • New Exhibit 4–2 provides an overview of mobile banking services.
• Updated coverage of “problematic” financial services such as pawnshops, payday
loan companies, and rent-to-own centers.
• New From the Pages of Kiplinger’s Personal Finance covering techniques for
enhanced saving.
• Updated coverage of various types of certificates of deposit.
• New coverage of peer-to-peer payments, which allows the transfer of money to
another person by e-mail or with a secured website.
• New Digi-Know? with coverage of chip-embedded credit and debit cards to
enhance security and reduce fraud.
CHAPTER 5 • New content in Advantages of Credit section highlighting the benefits that major
Consumer Credit credit card issuers provide to their customers.
Advantages, • New summary of advantages and disadvantages of credit.
Disadvantages • Updated Exhibit 5–2: Volume of Consumer Credit.
Sources, and Costs
• Updated Did You Know? feature in the Credit Card section.
• Updated statistics for stored value cards for 2014.
• Updated Did You Know? feature in the Applying for Credit section.
• New material on credit scores: What is a credit score and what factors are used to
calculate it?
• New Did You Know? feature: What’s in Your FICO Score?
• New material on FICO and VantageScore: the consequences of not maintaining a
sound credit score can be very costly.
• New What Can You Do to Improve Your Credit Score? section and information on
how you can avoid credit-repair scams.
• New From the Pages of Kiplinger’s Personal Finance feature on how to combat
data theft.
• New material in Cosigning a Loan section: Private lenders are placing borrowers
into default and making balance due all at once when the cosigner dies or files for
bankruptcy.
• New material on the Consumer Financial Protection Bureau’s activities in 2014.
• Updated material in the Chapter 7 Bankruptcy section on filing and administrative fees.
• Updated Exhibit 5–10: U.S. Consumer Bankruptcy Filings, 1980–2014.
CHAPTER 6 • New Did You Know? feature that provides money-saving tips and actions to avoid
Consumer Purchasing overspending.
Strategies and Wise • New Caution! feature warning shoppers about buying fake and counterfeit prod-
Buying of Motor ucts that can waste money and be dangerous.
Vehicles • New From the Pages of Kiplinger’s Personal Finance comparing various sources
of previously-driven vehicles.
• New “Upside Down” example warning consumers to avoid a situation in which
the loan amount owed may exceed the current value of the vehicle.
• Revised text coverage of the consumer complaint process.
xiv New to This Edition
CHAPTER 6 • New Exhibit 6–6 with detailed information for each step of the consumer com-
(Cont.) plaint process.
• New Did You Know? feature with suggested websites to assist with basic legal
documents.
CHAPTER 7 • Revised coverage of standard lease forms when renting.

Selecting and • New From the Pages of Kiplinger’s Personal Finance covering current advice on
Financing Housing renting or buying your housing.
• Updated information on the process for financing a home purchase.
• Revised content on types of mortgages.
• Updated information on common closing costs (Exhibit 7–9).
• Expanded information on actions to take when attempting to lower your property
taxes.
CHAPTER 8 • Added new material on Superstorm Sandy in the Potential Property Losses section.
Home and Automobile • Updated Personal Finance in Practice feature on flood facts.
Insurance • New From the Pages of Kiplinger’s Personal Finance feature: “If my home is
damaged by a summer storm, will my insurance cover repairs?”
• New Personal Finance in Practice feature: Are You Covered?
CHAPTER 9 • New From the Pages of Kiplinger’s Personal Finance feature on long-term care.
Health and Disability • Updated material in the Personal Finance in Practice box; HSAs: How They
Income insurance Work in 2014.
• New and revised material in the Health Insurance and the Patient Protection and
Affordable Care Act of 2010 section.
• New section on the Affordable Care Act and the Individual Shared Responsibility
provision.
• New Personal Finance in Practice feature on the Affordable Care Act: Checklist
for You and Your Family.
• Updated and revised the section on high medical costs.
• Updated Exhibit 9–6: U.S. National Health Expenditures, 1960–2022.
• New Did You Know? feature: The average cost of a 3-day hospital stay.

• New Did You Know? feature: Victims of medical identity theft.
CHAPTER 10 • Updated the How Long Will You Live? section.

Financial Planning with • Updated Exhibit 10–1: Life Expectancy Tables, All Races, 2009.
Life Insurance • Revised the Types of Life Insurance Companies and Policies section.
• New Did You Know? feature: 75 million American families depend on life insur-
ance products.
• Added new material in the Term Life Insurance section.
• New Did You Know? feature: 146 million individual life insurance policies in
force in 2013.
• Expanded the discussion on group life insurance.
• New Did You Know? feature: What to do if you lose your life insurance policy.
• New Did You Know? feature: Insurance industry payouts.
New to This Edition xv
CHAPTER 10 • Expanded discussion on annuities.

(Cont.) • New discussion on index annuities.
• New Caution! feature emphasizes that an annuity is a long-term financial contract.
CHAPTER 11 • A new From the Pages of Kiplinger’s Personal Finance feature provides tips for
Investing Basics and saving money and tactics to improve money management.
Evaluating Bonds • A new Did You Know? feature provides information about the Motley Fool and
Kiplinger websites.
• Updated material and new examples are used in the section How the Time Value
of Money Affects Your Investments.
• New material about the risks of lost income and decrease in value is provided in
the section Safety and Risk section.
• A new Exhibit 11–3 helps students determine their investment risk profile.
• In the Factors That Reduce Investment Risk section, updated statistics for the
long-term performance of stocks and bonds are provided.
• A new Digi-Know? feature provides information about the Treasury Direct
website at www.treasurydirect.gov.
• A new convertible bond example for Wesco Corporation is included in the Types
of Bonds section.
• New information about the speculative nature of high-yield (junk) bonds is pro-
vided in the Types of Bonds section.
• A new example describes how Union Pacific Corporation used a sinking fund to
make sure funds were available to repay a corporate bond issue.
• An updated Did You Know? feature provides information about the yields for
10-year U.S. treasury notes and high-grade corporate bonds.
• A new interest calculation for a 4 percent IBM bond is provided in the Interest
Income section.
• A new example for calculating approximate market value is included in the Dollar
Appreciation of Bond Value section.
• An updated Exhibit 11–7 provides current information found on the Yahoo! bond
website for an AT&T bond.
• An updated Case in Point provides revised or new investment options that students
must evaluate.
CHAPTER 12 • Updated statistics for the long-term performance of stocks and bonds is provided
Investing in Stocks in the Common and Preferred Stock section.
• A new Exhibit 12–1 provides information on the record date and ex-dividend date
for a Microsoft quarterly dividend.
• A new Did You Know? feature provides information about how fraudsters use a
practice called “pump and dump” to increase the price of a stock before selling the
stock at a profit.
• The Dollar Appreciation of Value section and a new Exhibit 12–2 illustrate how
investors made money by buying and then selling Johnson & Johnson stock at the
end of a three-year period.
• In the Possibility of Increased Value from Stock Splits section, the effect of a two-
for-one stock split by Under Armour is explained.
xvi New to This Edition
CHAPTER 12 • Exhibit 12–3 now provides revised definitions for blue-chip, micro cap, and penny
(Cont.) stocks.
• The information available on the Yahoo! Finance website for Facebook is discussed
in the updated The Internet section and a new Exhibit 12–4.
• A discussion of the information available from Value Line for the Disney Corpora-
tion is provided in the Stock Advisory Services section and a new Exhibit 12–5.
• A new From the Pages of Kiplinger’s Personal Finance feature presents information
about how investors can use the information in a firm’s annual report to become
better investors.
• An updated Did You Know? feature provides information on the Dow Jones
Industrial Average.
• New and updated examples are included in the Numerical Measures That influ-
ence Investment Decisions section.
• A new example includes information about projected earnings for Starbucks in the
Projected Earnings section.
• New information on beta and an example of a beta calculation for Google is pro-
vided in the Other Factors That Influence the Price of a Stock section.
• A new example describes how Papa Murphy’s used an initial public offering (IPO)
to obtain financing.
• A new Did You Know? feature describes investor options for holding securities
(physical certificates, street name, or direct registration) until they are sold.
• A new Exhibit 12–6 illustrates typical commissions charged for online, telephone,
and broker-assisted stock transactions.
• In the Sample Stock Transactions section, a new example provides information
about a limit order for eBay.
• In the Sample Stock Transactions section, a new example provides information
about a stop-loss order for General Motors.
• A new Personal Finance in Practice feature describes the techniques investors can
use to pick a winning stock.
• Exhibit 12–7 illustrates the dollar cost averaging concept for an investment in
Johnson & Johnson over a seven-year period using current stock values.
• In the Selling Short section, a new example describes how an investor could profit
using the selling short technique for a General Motors stock transaction.

• A new Case in Point asks students to evaluate the Disney Corporation using the
information in the Value Line report in Exhibit 12–5.
CHAPTER 13 • To illustrate how important funds are for investors, updated statistics are provided
Investing in Mutual in the Why Investors Choose Mutual Funds section.
Funds • An updated Did You Know? feature provides information about who owns mutual
funds.
• A new Exhibit 13–1 provides information about the type of securities contained in
the Invesco Dividend Income Fund.
• New statistics about the number of closed-end, exchange-traded, and open-end
funds are included in the Characteristics of Funds section.
• The fee table in Exhibit 13–2 has been updated to illustrate current fees for the
Davis Opportunity Fund.
• The investment objective for the Vanguard Mid-Cap Fund is now included in the
Classification of Mutual Funds section.
New to This Edition xvii
CHAPTER 13 • A new Did You Know? feature illustrates the type of funds investors use to obtain
(Cont.) their financial goals.
• The number of socially responsible funds has been updated in the Did You Know?
feature.
• A new From the Pages of Kiplinger’s Personal Finance feature describes how
employees can lower the fees associated with their retirement accounts.
• A new Exhibit 13–4 describes the information about the T. Rowe Price Value Fund
available from the Morningstar website.
• A detailed Morningstar research report for the Oakmark Global Select I Fund is
illustrated in Exhibit 13–5.
• A new Exhibit 13–6 describes a portion of the funds included in the “Kiplinger 25”
list of funds.
• In the Return on Investment section, the example for the Fidelity Stock Selector
All-Cap Fund has been updated with current price information.
• A new Did You Know? feature provides both new and updated information about
the characteristics of mutual fund owners.
• A new Case in Point asks students to evaluate the Oakmark Global Select I Fund
using the information in the Morningstar report illustrated in Exhibit 13–5.
CHAPTER 14 • New Saving Smart for Retirement section.

Starting Early: • Updated Exhibit 14–2: How an Average Older (651) Household Spends Its
Retirement and Estate Money.
Planning • New Caution! box on safeguarding your Social Security card.
• Revised Did You Know? feature: Estimated average monthly Social Security
benefits in 2014.
• Revised and updated the section on Individual Retirement Accounts.
• New Did You Know? feature: Roth IRAs versus traditional IRAs.
• New From the Pages of Kiplinger’s Personal Finance feature: Roth 401(k)s.
• New Did You Know? feature: IRA assets in 2013.
• Updated stated amount will.
• Updated credit shelter trust.
• Updated estate taxes and gift taxes.
APPENDIX A • New Exhibit A–1: Education compared to earnings and unemployment.

Education Financing, • Revised information for the 2014–15 academic year for loans and federal grants.
Loans, and Scholarships • New Exhibit A–3: Student loan default statistics.
APPENDIX B • New highlighted example on social media résumés through LinkedIn, Twitter, and
Developing a Career other online networks.
Search Strategy • Revised coverage for a professional presentation of your résumé.
• Additional suggestions for a résumé makeover (Exhibit B–1).
• Revised Exhibit B–2 with a sample cover letter.
• Updated coverage on techniques for submitting a résumé.
• New Exhibit B–4 with suggestions for updating career planning activities.
Focus on . . . Learning
GET INSIDE THE BOOK Three Steps to Financial Literacy
Getting your finances in order is simpler than you
think, and we’re here to show you how. These new
chapter opening features break down key action
items you need to take to address the most important
personal finance issues from the chapter, as part of this
edition’s emphasis on taking action. These steps tie in
to the “Your Personal Finance Dashboard” feature at
the end of each chapter.
3 Steps to Financial
Literacy . . .
Building an Emergency Fund
1
Determine the desired amount of your
emergency fund based on monthly financial
needs and income volatility. Most financial
advisors recommend three to nine months.
Website: money.com
2
Monitor your daily spending to locate possible
areas of reduced spending and increased
savings.
App: BUDGT or Mint
6 by McGraw-Hill Education
3
Decide where to keep your emergency fund.
Your choices include a bank, credit union, and
other financial institutions.
Website: www.findabetterbank.com
Learning Objective

References
ancial Decisions LO1.1
Identify social and economic
me money available. However, the amount, along with needs and influences on personal Citations in the margins next to the
vary from person to person. In this book, you will have the opportu- financial goals and decisions.
rent situation, learn about varied financial paths, and move forward relevant text refer to corresponding
security.
o handle their finances so that they get full satisfaction from each chapter objectives listed at the beginning
al financial goals may include buying a new car or a larger home,
eer training, contributing to charity, traveling extensively, and ensur-
kap61744_ch01_002-043.indd 2
of each chapter. 02/12/14 10:38 pm
ring working and retirement years. To achieve these and other goals,
ACTION ITEM
y and set priorities. Financial and personal satisfaction are the result
ss that is commonly referred to as personal money management or Do you have an emergency
nning. fund for unexpected
expenses?
Action Items
h Yes h No
uation and Financial Planning As part of this edition’s emphasis on
personal financial
nning is the process of managing your money to achieve personal
This planning process allows you to control your financial situation.
planning The process of taking action to gain financial skills,
managing your money to
or household has a unique situation; therefore, financial decisions
et specific needs and goals.
achieve personal economic
satisfaction.
new Action Items are posted at the
nancial plan can enhance the quality of your life and increase your
financial plan A formalized
start of each main section of a chapter.
ng uncertainty about your future needs and resources. A financial
port that summarizes your current financial situation, analyzes your
report that summarizes your
current financial situation,
These are designed to get you thinking
commends f t re financial acti ities Yo can create this doc ment
about what daily actions you can be
taking to achieve financial literacy and
xviii independence.
2-043.indd 3 02/12/14 10:39 pm

An interactive and engaging chapter opener gets students
organized and demonstrates the relevance of the material to
their own lives.
Learning Objectives
Learning objectives highlight the goals
of each chapter for easy reference.
Throughout the book, in the end-of-
chapter material, and even in the supple-
ment materials, these objectives provide
a valuable foundation for assessment. CHAPTER 2 LEARNING OBJECTIVES
In this chapter, you will learn to:
LO2.1 Identify the main components of wise money management.
LO2.2 Create a personal balance sheet and cash flow statement.
LO2.3 Develop and implement a personal budget.
LO2.4 Connect money management activities with saving for personal financial goals.
YOUR PERSONAL FINANCIAL PLAN SHEETS

5. Financial Documents and Records
6. Creating a Personal Balance Sheet
7. Creating a Personal Cash Flow Statement
8. Developing a Personal Budget
A Successful Money Management Plan LO2.1

Identify the main components
“Each month, I have too many days and not enough money. If the month were only 20 days of wise money management.
long budgeting would be easy ”
Your Personal Financial

Plan Sheets
A list of the “Your Personal Financial
Plan” worksheets for each chapter is
kap61744_ch02_044-073.indd 45
presented at the start of each chapter for 09/10/14 2:28 pm
easy reference.
xix
Examples
Worked-out examples featuring key concepts
and calculations appear throughout the text, a
valuable feature for students to see how personal
finance works in practice.
g p y y p p y
have not yet repaid. The more often you make payments, the lower the interest you’ll pay.
Most credit unions use this method.
EXAMPLE: Using the Simple Interest Formula on the

Declining Balance
Using simple interest on the declining balance to compute interest charges, the interest
on a 5 percent, $1,000 loan repaid in two payments, one at the end of the first half-year
and another at the end of the second half-year, would be $37.50, as follows:
First payment:
I5P3r3T
5 $1,000 3 0.05 3 1/2
5 $25 interest plus $500, or $525
Second payment:
I5P3r3T
5 $500 3 0.05 3 1/2
5 $12.50 interest plus the remaining balance of $500, or $512.50
Total payment on the loan:
$525 1 $512.50 5 $1,037.50
Using the APR formula,
2 3 n 3 I 2 3 2 3 $37.50 $150
APR 5 _________ 5 ______________ 5 _______ 5 0.05, or 5 percent
P(N 1 1) $1,000(2 1 1) $3,000
ADD-ON INTEREST With the add-on interest method, interest is calculated on the
full amount of the original principal, no matter how frequently you make payments. When
ff h l ih hi h d d h l
CAUTION!

stores, charging a meal at a restaurant, and using overdraft
-end credit. As you will soon see, you do not apply for open-
chase, as you do with closed-end credit. Rather, you can use
rchases you wish if you do not exceed your line of credit, the line of credit The dollar
dit the lender has made available to you. You may have to pay amount, which may or may
he use of credit, or other finance charges. Usually you have not be borrowed, that a
within 30 days without interest charges or to make set monthly
unt balance plus interest. Some creditors allow you a grace
lender makes available to a
borrower.
Key Terms
bill in full before you incur any interest charges. interest A periodic charge
ng check credit. Also called a bank line of credit, this is a for the use of credit. Key terms appear in bold type within the
ed amount that you can use by writing a special check.
ents over a set period. The finance charges are based on the
revolving check credit
A prearranged loan from a
text and are defined in the margins. A
he month and on the outstanding balance. bank for a specified amount;
also called a164
kap61744_ch05_140-187.indd bankline of list of key terms and page references is 11/24/14 11:42 AM
credit.
located at the end of each chapter.
pular. The average cardholder has more than nine credit
nd gasoline cards. Cardholders who pay off their balances in
wn as convenience users. Cardholders who do not pay off
known as borrowers. finance charge The total
offer a grace period, a time period during which no finance dollar amount paid to use
ccount. A finance charge is the total dollar amount you pay credit.
xx
145 11/24/14 11:42 AM
g
thods can help you select the best course of action for funding
Your Personal Financial ts, educational expenses, and retirement needs of dependents.
Plan Sheet References Sheet 1 Personal Financial Data

PRACTICE QUIZ 1–1
The integrated use of the “Your Personal
ration of the financial system and personal financial decisions?
Financial Plan” sheets is highlighted rson would tend to “suffer” or tend to “benefit” from inflation.
with an icon. This visual helps integrate
this study resource into the learning suffer
suffer
benefit
benefit
process and continue to track personal suffer

suffer
benefit
benefit
financial habits.
Apply Yourself!
e the recent inflation rate that reflects the change in price for
kap61744_ch01_002-043.indd 8 09/10/14 2:18 pm
PRACTICE QUIZ 1–1

1. How do personal and economic factors affect the operation of the financi Practice Quizzes
2. For each of the following situations, indicate if the person would tend to
(Circle your answer)
Practice Quizzes at the end of each
A person with money in a savings account. suffer benefit
A person who is borrowing money. suffer benefit major section provide questions to help
A person who is lending money. suffer benefit
A person receiving a fixed income amount. suffer benefit assess knowledge of the main ideas
covered in that section. These will deter-
Apply Yourself! mine whether concepts have been mas-
Using online research and discussion with others, calculate the recent inflatio tered or if a need exists to do additional
items frequently bought by you and your family.
study on certain topics.
kap61744_ch01_002-043.indd 8 09/10/14 2:18 pm
Exhibit 1–5 Financial Planning in Action

More Than a
Now Within a Year Year from Now
Assess your Short-Term Financial
current situation Strategies
Create and implement
a budget
Pay off credit card debts
Long-Term Financial
Exhibits and Tables

Obtain adequate
Develop financial insurance Strategies
goals Establish a regular Invest in financial
savings program instrument for long-term
Invest in safe, income- growth
producing financial Select tax-deferred
instruments investments
Select appropriate Use rental housing; Pay off consumer debts
Throughout the text, exhibits and tables plans of action

save for home purchase and home mortgage
More Than a
visually illustrate important personal Examples Now Within a Year
Year from Now
Life situation: Single parent

finance concepts and processes. 1. Goal: Provide $20,000 college fund
in 10 years
Make regular deposits to a
savings plan such as
certificates of deposit
Obtain life insurance for
dependent care in case of
premature death
Life situation: Young couple

Create and implement budget Continue investment program
2. Goal: Save for down payment to allow regular deposits to to provide for expanded
for home purchase savings or investment program housing needs for emergencies
Life situation: Middle-aged person

or couple Make monthly payments to
Purchase life insurance with
3. mutual funds investment
Goal: Provide for financial needs parents as beneficiaries
program
of parents
xxi
Focus on . . .
Personal Finance in Real Life
Time Value of Money Calculations for Achieving Financial Goals
Did You Know? did you know? STEP 2: Develop Your Financial Goal
According to the National Endowment for You should periodically analyze your financial values and goal
Each chapter contains several Did You Know? Financial Education, 70 percent of major lottery
winners end up with financial difficulties. These winners
The purpose of this analysis is to differentiate your needs fro
your wants. Specific financial goals are vital to financial pla
boxes. The yellow notes contain fun facts, often squander the funds awarded them, while others
overspend and many end up declaring bankruptcy.
ning. Others can suggest financial goals for you; however, yo
must decide which goals to pursue. Your financial goals ca
Having more money does not automatically mean range from spending all of your current income to developing a
information, and financial planning assistance making better financial planning choices. extensive savings and investment program for your future fina
cial security.
for wise personal financial actions.
Green Did You Know? boxes recommend CONSEQUENCES OF CHOICES Every decision close
socially conscious financial activities for did you know?

kap61744_ch01_002-043.indd 16
off alternatives. For example, a decision to invest in stock ma
mean you cannot take a vacation. A decision to go to school ful 20/11/14 5:43 pm
Nearly one billion people around the time may mean you cannot work full-time. Opportunity cost
students interested in giving back to others. world live on $1 or less a day. Various
what you give up by making a choice. These trade-offs cann
always be measured in dollars. However, the resources you giv
Blue Digi-Know? boxes share tips and topics organizations provide these people with
basic need items and future opportuni-
up (money or time) have a value that is lost.
on using technology to help manage your ties. Bright Hope International assists the
extreme poor by providing food, clothing,
EVALUATING RISK Uncertainty is also a part of ever
decision. Selecting a college major and choosing a career fie
involve risk. What if you don’t like working in this field or can
finances. shelter, health care, education, orphan not obtain employment in it? Other decisions involve a ver
support, microloans, job training, and low degree of risk, such as putting money in an insured sav
spiritual guidance. You can help to ings account or purchasing items that cost only a few dollar
Your chances of losing something of great value are low in thes
provide assistance to the extreme poor
situations.
at www.brighthope.org. In many financial decisions, identifying and evaluating ris
are difficult. Common risks to consider include:
for six years, starting at the end of the first year, you will hav
$357.65 at the end of that time ($50 3 7.153). The nearb
digi – know? “Figure It Out!” box presents examples of using future value
achieve financial goals.
The use of mobile apps for personal finan-
cial activities continues to expand with PRESENT VALUE OF A SINGLE AMOUNT Anoth
instant access to bank accounts, budget aspect of the time value of money involves determining the cu
amounts, investment information, and time rent value of an amount desired in the future. Present value
value of money calculations. Some of the the current value for a future amount based on a particular inte
est rate for a certain period of time. Present value computation
most popular are mint, Unsplurge
Unsplurge,, Easy also called discounting, allow you to determine how much
Money, and Pocket Money, with costs deposit now to obtain a desired total in the future. For exampl
ranging from free to a few dollars. using the present value table (Exhibit 1–3C), if you want $1,00
five years from now and you earn 5 percent on your savings, yo
need to deposit $784 ($1,000 3 0.784).
Kiplinger’s Personal Finance
Which Route Is Best for You? kap61744_ch01_002-043.indd 14 20/11/14 5:43 pm
CPO NON-CPO PRIVATE

PARTY
Certified pre-owned Dealers sell vehicles The cheapest way to
vehicles are as close they acquire at auc- buy a used car. Private
to a new-car-buying tion or through trade- sellers can sell a used
experience as you can ins that aren’t scooped car for a higher price
get. You’ll pay an extra up by the CPO pro- to you than they could
$1,500 to $2,500 com- grams. You’ll likely to a dealer, but they
pared with non-CPO pay at least 10% more can’t inflate the price

vehicles. to a dealer than to a as much.
private party.
Condition Excellent—models Mostly cosmetic It varies. Ask for
are five years old or reconditioning. Don’t maintenance
newer with fewer than expect repairs to be records and get a
60,000 miles. Because made. Most dealers vehicle history report
many CPOs are off- offer a vehicle history on AutoCheck.com or
lease, they have had report from Auto- Carfax.com.
Inspection
only one owner.
A 100- to 200-point
Check.com or Carfax
.com.
A dealer’s service You’re on your own. kap61744_ch01_002-043.indd 18
From the Pages 02/12/14 10:39 pm
inspection. Vehicles department inspects If the seller won’t
of . . . Kiplinger’s
FROM THE PAGES OF . . .
are repaired and the car, but get your agree to let you take
reconditioned. Worn own mechanic to go it to a mechanic,
parts are replaced, over the car before move on to the next
Warranty
saving money on
future maintenance.
Usually a year or two
you buy.
You get what’s left

prospect.
As with a dealer
Personal Finance
extension of new-car of the new-car war- sale, you get what’s
comprehensive and ranty. Resist the hard left of the new-car
power-train warranty,
backed by the man-
sell on an extended
warranty. Some states
warranty. If you get
stuck with a lemon, This one-page chapter feature presents
ufacturer, not the have laws to protect you have little or no
dealer. used-car buyers. recourse.
a recent article from the well-known
Financing Carmakers’ finance The F&I department You’ll have to pay

companies offer lower
rates than you’d pay
on non-CPO loans.
will arrange financing,
but dealers may get
a commission. Get
cash. If you need a
loan, consider draw-
ing on a home-equity
Kiplinger’s Personal Finance magazine
You may save hun-
dreds of dollars in
prequalified at your
bank or credit union
line, or get a used-
car loan at a bank or related to a chapter topic. Each article
interest. and compare offers. credit union.
Jessica L. Anderson covers a personal finance issue to

SOURCE: Reprinted by permission from Kiplinger’s Personal Finance. Copyright © 2014. The Kiplinger Washington Editors, Inc. consider, using the questions that
1. From your perspective, what are the benefits and drawbacks of each of the three alternatives for buying a
motor vehicle? accompany the article. This is an excel-
2. What factors should a person consider before buying an extended warranty?
3. What actions would you suggest when using any of the three alternatives presented in the article?
lent tool to develop critical thinking and
194
writing skills!
xxii
kap61744_ch06_188-217.indd 194 03/12/14 6:54 pm
Personal Finance in
Practice
These boxes offer information that can
assist you when faced with special sit-
uations and unique financial planning
decisions. They challenge you to apply
the concepts you have learned to your Personal Finance in Practice
life and record personal responses.
A Money Management SWOT Analysis
Many of these boxes have been updated SWOT (strengths, weaknesses, opportunities, threats) is a area provided, assess your strengths, weaknesses, oppor-
to include exercises and topics on ethics planning tool used by companies and other organizations.
This technique can also be used for your money manage-
tunities, and threats related to budgeting and money man-
agement. Do online research and talk with others to get
ment and budgeting activities. Listed below are examples ideas for your personal SWOT items.
in personal finance. of possible items for each SWOT category. Now, in the
Internal (personal) Factors External (economic, social) Influences
Strengths Opportunities
• saving 5–10 percent of income • phone apps for monitoring finances
• informed on personal finance topics • part-time work to supplement income
• no credit card debt • availability of no-fee bank account
• flexible job skills • low-interest-rate education loan
Your strengths: ____________________________ Potential opportunities: ____________________________
____________________________ ____________________________
Weaknesses Threats
• high level of credit card debt • lower market value of retirement fund
• no emergency fund • possible reduced hours at part-time job
• automobile in need of repairs • reduced home market value
• low current cash inflow • increased living costs (inflation)
Your weaknesses: ____________________________ Potential threats: ____________________________
____________________________ ____________________________
Creating a money management SWOT analysis is only opportunities, and avoid being a victim of threats. Through
a start. Next you need to select actions to build on your research and innovation, weaknesses and threats can
strengths, minimize your weaknesses, take advantage of become strengths and opportunities.
Figure It Out!
After-Tax Savings Rate of Return

The taxability of interest on your savings reduces your real 3. If the yield on your savings account is 6.25 percent,
0.0625 3 0.72 5 0.045.
rate of return. In other words, you lose some portion of
your interest to taxes. This calculation consists of the fol-
lowing steps: 4. Your after-tax rate of return is 4.5 percent. Figure It Out!
1. Determine your top tax bracket for federal income taxes. You may use the same procedure to determine the
real rate of return on your savings based on inflation. For
2. Subtract this rate, expressed as a decimal, from 1.0. example, if you are earning 6 percent on savings and infla-
tion is 5 percent, your real rate of return (after inflation) is
kap61744_ch02_044-073.indd 58
This boxed feature presents important 20/11/14 6:00 pm
3. Multiply the result by the yield on your savings account. 5.7 percent: 0.06 3 (1 2 0.05) 5 0.057.
4. This number, expressed as a percentage, is your after-
CALCULATION EXAMPLES:
mathematical applications relevant to
tax rate of return.
For example,
1. What would be the after-tax return for a person who is
receiving 4 percent on savings and is in a 15 percent
personal finance situations and concepts.
1. You are in the 28 percent tax bracket. tax bracket? ___________ %
2. 1.0 2 0.28 5 0.72. 2. What would be the after-tax value of $100 earned in
interest for a person who is in a 31 percent tax bracket?
$ ___________
ANSWERS 1. 3.4 percent 5 0.04 3 (1 2 0.15); 2. $69 5 $100 3 (1 2 0.31)
xxiii
Focus on . . .
Practice and Assessment
Personal Finance YOUR PERSONAL FINANCE DASHBOARD
Dashboard TE FIN
A key indicator of your potential financial success is the
percentage of income saved each month. Various finan-
cial institutions and savings instruments can be used to
UA AN
EQ CI implement this element of your financial plan.
AD AL
L
Having read the chapter, you now consider your 6 While most people in our society save nothing or very
Y
5 7
SE
4 8
CU
little, financial experts recommend a savings rate of
OU
3 9
RE
ER
2 10
between 5 and 10 percent. These funds might be
DANG
financial progress. The dashboard feature is 1
0
11
12
used for emergencies, unexpected expenses, or
short-term financial goals as well as long-term financial
security.
designed to help you monitor key performance P E R C E N T S A V I N G S R AT E
indicators in your personal financial situation. YOUR SITUATION: Are you able to set aside an amount for savings each month? Are there expenses you can
The next step will be to review your habits and reduce, or sources of increased income that could add to the amount you save each month? An improving savings rate
is the foundation for progress toward financial independence.
take action for better results. POSSIBLE ACTIONS TO TAKE
Reconsider your responses to the “Action Items” (in Consider various sources of financial services, such
the text margin) to determine actions you might take as credit unions, which often offer low-cost alterna-
for improved actions for the wise use of financial tives for financial services. For additional information
services. about credit unions, go to www.cuna.org and www
.creditunion.coop.
Conduct a web search of online banks to obtain
information on their services. Consider how changing Obtain current interest rates for CDs and other sav-
interest rates might affect your decision to use vari- ings plans at www.bankrate.com. For the latest rates
ous types of financial services. and information on U.S. savings bonds, go to www
.savingsbonds.gov.
Chapter Summary Chapter

LO4.1 Financial products such as sav- LO4.3 Commonly used savings plans Summary
ings plans, checking accounts, loans, trust include regular savings accounts, certifi-
services, and electronic banking are used cates of deposit, interest-earning checking
Organized by learning objective, this concise for managing daily financial activities.
LO4.2 Commercial banks, savings and
accounts, money market accounts, money
market funds, and U.S. savings bonds. Sav-
ings plans may be evaluated on the basis of
content summary is a great study and self- loan associations, mutual savings banks,
credit unions, life insurance companies,
investment companies, finance companies,
rate of return, inflation, tax considerations,
liquidity, safety, restrictions, and fees.
assessment tool, located conveniently at the mortgage companies, pawnshops, and check-
cashing outlets may be compared on the
LO4.4 Debit cards, online payment sys-
tems, and stored-value cards are increas-
basis of services offered, rates and fees, ing in use for payment activities. Regular
end of chapters. safety, convenience, and special programs checking accounts, activity accounts, and
kap61744_ch04_106-139.indd 131 24/11/14 6:22 pm
Key Formulas
Page Topic Formula
Key Formulas
50 Net worth Net worth 5 Total assets 2 Total liabilities
Example: 5 $125,000 2 $53,000
51 Debt ratio
5 $72,000
Debt ratio 5 Liabilities/Net worth
A list of Key Formulas and page refer-
Example: 5 $7,000/$21,000
5 0.33 ences appears at the end of select chap-
51 Current ratio Current ratio 5 Liquid assets/Current liabilities
ters, grouped for easy reference.

Example: 5 $8,500/$4,500
5 1.88
51 Liquidity ratio Liquidity ratio 5 Liquid assets/Monthly expenses
Example: 5 $8,500/$3,500
5 2.4
51 Debt-payments ratio Debt-payments ratio 5 Monthly credit payments/Take-home pay
Example: 5 $760/$3,800
5 0.20
51 Savings ratio Savings ratio 5 Amount saved per month/Gross monthly income
Example: 5 $460/$3,800
5 0.12
57 Cash surplus Cash surplus (or deficit) 5 Total inflows 2 Total outflows
(or deficit) Example: 5 $5,600 2 $4,970
$630 ( l )
kap61744_ch02_044-073.indd 64
Discussion
Questions
20/11/14 6:00 pm
Discussion Questions
1. Describe how advertisements, news articles, online sources, and personal observations
might be used to make wiser buying decisions. (LO6.1)
2. When using the research-based approach for purchasing described in this chapter,
which actions do you believe are overlooked by most shoppers? (LO6.2) These questions test qualitative analysis
3. What are potential concerns associated with obtaining furniture, appliances, and other
items from a rent-to-own business? (LO6.3)
4. What is a “certified pre-owned” vehicle? What are the benefits and drawbacks of this
of personal finance content.
type of purchase? (LO6.2)
5. While fraud usually involves deceptions against consumers, what are some “frauds”
that consumers commit against businesses? (LO6.3)
xxiv
Another random document with
no related content on Scribd:
name of it, but a traveller figured in it, who took his servant with him
to the heart of Africa. The latter, who was passionately fond of
travelling, and took an eager interest in all the doings and
adventures of explorers, made but one request, and that was to be
allowed to change his name of Joseph to that of Mohammed Ben
Abdullah. “It was more euphonious,” he said, and the audience
roared with laughter.
Well, Joseph was quite right, and if Barth had not done as he did,
the negroes and Tuaregs would never have remembered his
European name, it would never have become engraved on their
memories, it would never have been transmitted to their
descendants, and I should not have been able to solve all difficulties,
however great, and emerge safely from every situation, however
embarrassing, by the simple words “I am the son, or rather the
nephew of Abdul Kerim.”
It is impossible to admire too much the lofty, upright character of
Barth, which so impressed all with whom he came in contact on his
journey, that nearly half a century after his death the mere fact of his
having traversed a district—poor as he was, and exposed to all
manner of dangers, the friendship of Beckay his only safeguard—
should be enough to open the way for a pretended relation of his.
How few travellers could boast of having done as much, even in
modern times. Too many explorers have indeed, after forcing their
way through a country against the will of the natives, left behind
them a legacy of increased difficulty and danger to their successors.
I was very anxious to secure the services of a political agent with
a thorough knowledge of the country, and the language of the
Tuaregs. I wished to send him, if I could find him, in advance of our
party to take letters to the chiefs, or to plead our cause with them.
Acting on the advice of Hamadi, I chose a certain Sidi Hamet,
distantly connected with the Kuntas, and then employed in the
Custom House at Timbuktu, under one Said, the interpreter of the
Post-Office.
I must do this justice to Said, he yielded with anything but a good
grace to the employment of his subordinate on our service, and did
more to dissuade him than to further our wishes. We had to invoke
the aid of Commandant Rejou, and later, at Tosaye, Sidi Hamet
piteously entreated me to let him go back, and I expect Said’s
objection to his joining us had something to do with his faltering.
However, I forgive him with all my heart. Sidi Hamet was the
interpreter’s right hand, his chief source of information on every
subject, and he found it hard work to fulfil his own duties, even those
of an interpreter, without him.
On the 16th I went back to spend a day at Kabara, where I had
invited all the notables of Timbuktu to come and listen to the
wonders of the phonograph. It was an exhibition which long dwelt in
the memory of those present. Amongst the most attentive listeners
were the two sons of the chief of the Eastern Kuntas, who lives at
Mabrok. I felt sure that the rumour of the extraordinary things I had
done would precede me.
Commandant Rejou had already warned Sakhaui, or Sarrawi,
chief of the Igwadaren Aussa, the first Tuareg tribe we should meet
on our way down the river, of our approach. In the evening two
envoys from this chief arrived with a missive, which it was almost
impossible to decipher, but from which, in spite of its ludicrous
phraseology, we managed to make out two things, one being that
Sakhaui had no desire to see us, the other that he was very much
afraid of us.
We did our best to reassure and impress the messengers, and
finally succeeded in convincing them that we had no evil intentions
with regard to the Igwadaren, and armed with a fresh document from
us they set off to return to their chief.
Meanwhile Sidi Hamet, who had been well coached in what he
was to say and do, had started on his way to Aluatta, to ask him to
meet us at Kagha, a little village on the right bank about thirty-one
miles from Timbuktu. For the first time I now announced my
pretended relationship with Abdul Kerim, taking myself the Arab
name of Abd el Kader, or the servant of the Most High.
This mission with the Kuntas accomplished, Sidi Hamet was to go
to the Igwadaren of Sakhaui and wait for us.
Having settled everything to the best of our ability, visited the
boats, and repaired any little damage which had been done by the
way, we had now only to give ourselves up to the current of the river
and to the will of God.
It was not without a certain emotion that, on Wednesday, January
22, we started from Kabara, seen off by all our brother officers of the
garrison of Timbuktu, and escorted to our boats by a great crowd of
natives, who, with more or less enthusiasm, invoked the protection of
Allah on our behalf.
WE LEAVE KABARA.
As long as our boats were in sight of the station we could see

handkerchiefs and helmets waving to us in token of adieu, and when
the flag of the fort disappeared from view our hearts felt somewhat
oppressed, for we were leaving all that in our exile from France
represented our native country. Henceforth we five white men, with
our twenty-eight black followers, were thrown on our own resources,
and had to depend upon ourselves alone. How many of us would
return? How many of us were destined to sleep our last sleep
beneath the soil of Africa?
AT TIMBUKTU.
DROVE OF OXEN.
CHAPTER III
FROM TIMBUKTU TO TOSAYE
On January 22 we made a very short stage, and moored about

mid-day at Geïgelia, a little village picturesquely perched on rising
ground of a reddish hue, a little below the mouth of the stream,
which, as I have said, gives access to Day and Kabara.
We determined to spend the afternoon in making things snug.
Hitherto we had put off from day to day the task of arranging our
cabins. Now our three little craft are all the world to us, the floating
castles which must drift down with us to the sea, Inch Allah! (God
willing), as the Mussulmans say. We must shake down in them as
comfortably as possible.
I occupy the fore-cabin of the Davoust. On one side is my plank
bed, with, for mattress, the wrappings of the presents which we take
out one by one as required, replenishing them from the bales in the
hold.
On the other side is a big table, with packing cases serving as
legs. Everywhere books and instruments, an iron chest containing
the more valuable presents: caftans, velvet burnous, gold-
embroidered turbans, etc.
On the mats which cover the partitions, I have fixed the
photographs of a famous singer, purchased in the Rue de Rivoli, in a
moment of musical enthusiasm. I found them by chance at the
bottom of a trunk, into which they must have slipped when I was
leaving France. These portraits, as will be seen, played a part in the
politics of the Niger. Opposite them, an engraving of the President of
the Republic, or rather, Sultan of France, as they call him here. Nor
must the phonograph in its ingenious case be forgotten, with the
voltaic piles, Geissler’s tubes, little electric lamps, forming a fairy
crown, which is lighted on pressing a button. Such articles as have
hitherto figured in the baggage of none but the passengers of Jules
Verne.
The after-cabin is Père Hacquart’s sanctum, and also the arsenal.
The Father rests peacefully on a couch of rice and biscuit tins, with
the conventional bedding of package wrappings; on the partitions,
the ceiling, everywhere, I have fixed guns for presentation, revolvers,
etc., for exchange; a goodly number of cases of cartridges,
moreover, give this retreat the appearance of an armoury. On the
bridge, all round the machine-gun, are more cases, which serve as
benches for the oarsmen.
Our hold is a masterpiece of packing, due to Baudry’s ingenuity. I
defy the most skilful to insert as much as a needle more. On board
the Aube, the fore-cabin protects Baudry and Bluzet; there is not
much elbow-room for two, in such a confined space. The hinder one
is reserved for Taburet and his medicine chests.
The little barge Dantec, also provided with a shelter, will carry all
surplus articles. At present, until it is used as an infirmary, which I
trust may be as seldom as possible, it is the refuge of the destitute,
where Suleyman, the interpreter, and the Arab translator, Tierno
Abdulaye Dem, are quartered.
I may now describe more minutely our dusky auxiliaries. At first
there were twenty coolies, reduced to nineteen by the defection of
Matar Samba. Their head-man Digui, of whom I have spoken, will be
judged by his deeds; there is no need now to mention all the
blessings he deserves.
THE ‘AUBE’ AND HER CREW.
Suleyman Gundiamu and Tierno are the scholars of the party.

Suleyman almost speaks French, although he says la noce for un
os, cherchicane for certificat, and always translates keffir (Infidel) by
Christian. As for Tierno, he is a sly, cunning dog, of whose fidelity I
have often had my doubts: evidence is against me, however, and I
must do him the justice to say, that on all occasions he has sided
with us against his co-religionists, his compatriots, and even his
relations. Idle as a dormouse in everything but writing Arabic, but
isn’t that just what he is for? Altogether he is not a bad boy, and we
should scarcely find a better fellow amongst his people.
Our carpenter, Abdulaye, is a big Wolof, strong as Hercules,
intelligent, only idle by fits, and not very serious ones either.
“Abdulaye, something has gone wrong with your working hand!”
This is how we call him to order; if the appeal is not attended to, a
good blow follows as punishment; Abdulaye is aware of his guilt,
sets to work again, and does the tasks of four.
Abdulaye is certainly not a marabout. He is even addicted to
spirituous liquors, but he has not had many opportunities on the
journey of indulging this taste; he was, however, overcome on our
arrival at Dahomey. For six days we never set eyes on him, for he
was never sober.
My first acquaintance with Abdulaye arose from his love of the
bottle. In May 1894, when I took command of the flotilla, Abdulaye
having found the door of the store-room open, gave way to his
propensity, and I found him dead drunk beside a very respectable
number of empty bottles. The awakening was anything but pleasant,
and Abdulaye never forgets the capers he cut on that occasion.
Such is our staff, or I should rather say, these are the native officers
of our expedition. Besides this, each of us has his own servant. Mine
is Mamé, an intelligent Saracolais, who speaks Songhay, the
language of the blacks on the banks of the Niger from Jenné to
below Say. He is a very faithful and devoted lad; the point about him
is the excessive deliberation of every motion, which gives him
something of the appearance of a chameleon. Lucky fault, or rather
precious gift, which all who have been served by Sudanese will
appreciate. Thanks to it, Mamé has never broken anything of mine.
Baudry’s servant’s name is Mussa; his father is head-man of
Diamu, a village on the banks of the Senegal. He is the philosopher,
the learned man of our military establishment. He reads and writes
French pretty correctly, but his studies occupy some of the attention
due to his master. If Baudry has employed his talents as a teacher to
the full on a most willing pupil, in return his boots have seldom been
blacked—or rather greased—in the course of the voyage.
Fate decreed that Bluzet should have as servant a son of the
blacksmith of Mussa’s father. Fily is his name, and by reason of his
parentage he is the confidant and devoted slave of Mussa.
Provided he is treated firmly, Fily is an excellent servant, and a
cook of the first order (for that country, be it understood), and the
cakes we used to call his nougats aux arachides, have often been
fully appreciated at our table.
Lastly, Father Hacquart and Taburet have two boys at their
disposal, both answering to the name of Mamadu; to distinguish
them one is called Father Mamadu, the other Doctor Mamadu.
Add to these a yellow dog, Meyer by name, why so called I cannot
say, and the menagerie is complete.
We did possess two cats, one an excellent swimmer, in spite of all
preconceived notions; but these little animals, who behaved
themselves anything but decently on board, disappeared in the
course of a very few days.
In spite of his denials, I have always suspected Bluzet, a sworn
enemy of the feline race, of aiding and abetting their desertion, for
they seemed to have a special grudge against him.
I have forgotten old Abdul Dori, but he did not make a long stay
on board. I have already mentioned that I suspected him of evil
designs in taking service with us. He got me to advance him a pretty
round sum on the voyage to Massina, which he said he owed to one
of his countrymen, and desired to repay before he entered upon a
venture so full of danger. As soon as the sly rogue had gained his
end, he changed his tactics. From Sego, according to him, the
voyage would be comparatively easy. His debt paid, he attempted to
terrify my coolies, telling them the most ridiculous tales about the
ferocity of the Tuaregs, and giving the most discouraging account of
the rapids, which in the end we unfortunately found partly true.
He soon discovered he was wasting his time. My men came of
their own accord, and reported that Abdul was trying to dishearten
them. I soon made him understand I would not stand that kind of
thing. Seeing the failure of these manœuvres, and in no way anxious
to remain with us, he shammed sickness, pretending to be attacked
with dysentery. The doctor soon discovered the trick, and I told him
that, ill or well, he would have to follow me.
His plan having miscarried, he set about making himself really ill,
and lay down to sleep without any covering on the chilliest nights. At
this game, if he did not procure the dysentery of his dreams, he at
least contracted inflammation of both lungs, which developed the
very day of our departure. He remained two days longer with us;
then really seriously ill, he became delirious. Moved with pity, I
decided to send him back to Timbuktu in a canoe hired at the village
of Burrem. I don’t know what became of him, but I advise those who
may come across him hereafter, and are deceived by his honeyed
words and ways, to beware of him. As far as we are concerned, I
consider it a blessing that his cowardice overcame the desire for
doing evil. He might have proved a great source of danger,
especially at Say, his native place, where he would have aided and
abetted our enemies.
The first and most important object of the expedition was to trace
as correctly as possible the course of the river which we had to
follow. For this purpose I had observing instruments of very accurate
construction made for each barge, which would afford us the means
of making a triangulation of the river en route. Two barges were to
coast along the banks, while the third kept in the deep channel.
We tried this plan on January 23, the first day on which we
navigated an almost unknown region. It was soon found
impracticable. By evening we had gone less than four and a half
miles. At this rate, counting necessary stoppages, it would take a
year to reach the mouth of the river. We therefore adopted the
following plan: the Davoust followed the left bank; the Aube the right
one while on surveying duty, the two barges frequently taking their
places.
At the same time, Baudry on the Dantec tacked about in search of
the deep channel, taking frequent soundings. Any inaccuracies were
guarded against by taking the mean draught of the two larger
vessels, and constantly determining the position by astronomical
observations.
This system was invariably followed down to Ansongo, that is, for
the whole navigable course of the Niger. Though we did not secure
the accuracy of a regular survey, still to me it appeared quite
enough; for the first vessels that might come after us, will possess an
indication of the position of the deep channel relatively to the banks
and their configuration, the distances from one point to another, the
position of the villages, and the peculiarities of the soil, etc.
Below Ansongo, in the region of the rapids, Baudry and I had to
abandon all survey work, and devote our attention exclusively to the
boats. Bluzet completed the map, which is of no practical value, as it
is impossible to determine any navigable channel, especially for
steamers, in those dangerous rapids. The only object of its existence
is to prove that a navigable channel does not exist. So that all that
can be done is to choose the least undesirable means of access to
the Western Sudan from among the many that have been proposed.
After passing the villages of Koa, Burrem and Bori, where the
people came out in canoes with presents of goats, sheep, eggs and
poultry, we arrived abreast of Kagha, about one o’clock on the 25th.
The moment we reached the mouth of the creek which leads to it—
for the village is not on the main stream, but a little inland—we were
hailed from a canoe by a great giant with an intelligent face and
woolly hair, forming a halo round his head, which was more
picturesque than clean. He was a Kunta, knew French, had been in
the villages of Mediné and Nioro, in the French Sudan, and even
spoke a little Soninké, the maternal language of most of our coolies.
He acted as pilot for us, but, in spite of all his efforts, we could not
get up to Kagha, for there was not sufficient depth of water; so we
had to pitch our camp at the foot of a little hill covered with dwarf
palms rather more than a mile from the nearest huts.
A deputation of the Kuntas of the village soon joined us, who told
us that Sidi Hamet had arrived two days before with my letter for
Aluatta; but the latter was from home, and no one knew exactly
where to find him, nor if my missive had reached him.
In fact, fifteen days before, a band of Kel Gossi, a Tuareg tribe
whose territory is about the centre of the bend of the Niger, had
carried off a hundred head of cattle belonging to the chief of the
southern Kuntas; Aluatta had set off to overtake the raiders, and
induce them in the name of Allah and Mahomet to restore their ill-
gotten gains.
However extraordinary the following custom may appear, it is
actually prevalent in the Tuareg districts. One tribe steals from a
neighbour all or part of his herds; if the latter is not strong enough to
recover by force that which he has been deprived of, he tries
conciliation, and generally regains, if not all, at least a portion of his
chattels. This invariably occurs when the injured party is a marabout,
and be it remembered these raids do not involve war: the same Kel
Gossi will be quite prepared to come the next day to ask Aluatta to
implore for them the protection of Heaven, and to purchase
talismans from him.
Whatever the result, this troublesome episode made me fear I
should not see Aluatta. Unable to confer with him, I betook myself to
his relations and endeavoured to secure their friendship, telling them
the story of my connection with Barth, or Abdul Kerim.
This produced a marvellous change in their demeanour; reserved
before, they became most cordial. To strengthen the effect still
further I brought the phonograph into play. One of the head Kuntas
sang an Arab song in his tent. It was really the battle hymn of Hamet
Beckay, the friend of my “uncle,” and it was really something to see
the amazement of all when the instrument repeated the song. From
that time we were the best of friends. All expressed their regret that I
could not have a palaver with their chief. “Not wishing to deceive
you,” said they, “we will not promise a visit from Aluatta, but, if you
like to wait, you shall see his brother, Abiddin, who at this moment is
at Arhlal, about twelve miles away. We will send and fetch him at
once.”
The proposal pleased me too much to be refused, and the
messengers departed.
Along with our friends the Kuntas, there came a little band of
Tuareg Kel Temulai, who lived further down stream in the direction of
Ganto, who were evidently sent to give information.
They were tall, strong fellows, spare and active. As this tribe has
no camp on the banks of the river, I told them I should ascend the
creek which leads to Ganto for the purpose of seeing them. In fact, I
wished to ascertain their intentions. The Kel Temulai were one of the
two tribes which divided the dominion of the region around Timbuktu;
Kabara and the southern portion of the plain which surrounds the city
belong to them. The French drove them from it, and they fell back
towards the east, gathering round their chief Madunia, who lived
near Ganto and was more than a hundred years old.
On the next day, the 26th, a despatch actually arrived, which the
Commandant of Timbuktu had managed to send on to us by canoe.
A fortnight later we were to receive yet another at Rhergo, and our
delight may be imagined, for we had had no news from home for ten
months.
In the afternoon Abiddin arrived. Tall, strong, and well-made, he
looked anything but amiable, and was far from communicative. I
confess his first appearance struck me as anything but pleasing. He
was by no means anxious to get into our good graces, and replied
very dryly to my protestations of friendship. We talked together for
about an hour, but I failed altogether to mollify him, and I began to
despair of bringing him round.
In the evening I found out something more about him, and the
position he occupies in the country. He is older than Aluatta, but from
his very boyhood he showed such a warlike disposition, and one so
very unlike the gentle nature which is naturally expected of a
marabout, that his father named Aluatta his successor instead of
him, refusing him the baraka or paternal blessing usually bestowed
on the first-born. Does not this remind one of the story of Jacob and
Esau?
However, Abiddin did not seem to mind the elevation of his
brother to what should have been his own position as religious chief
of the Kuntas, but devoted himself gladly to the direction of the
warlike expeditions of his tribe.
He seems to excel as a leader, and the Kel Antassar, the tribe
which longest resisted French influence in the districts round
Timbuktu, knew something of his valour. At the head of a little body
of men he surprised their camp at least a hundred times, and I now
began to understand the real reason why Abiddin had treated me so
coldly; he would have liked to have been allowed to take his part in
the play now that, after what he thought our culpable inactivity of
more than a year, we had again made up our minds to act. This
would have given him a fine chance of revenging himself on his old
enemy N’Guna, the chief of the Kel Antassar. It really was a pity that
the authorities at Timbuktu had ignored the existence and the
character of such a man. If only as guides, he and his Kuntas would
have been admirable auxiliaries for us.
We concocted a diplomatic plan to win the confidence of Abiddin.
When he came to see us the next morning I dwelt much upon my
relation to Abdul Kerim, and I roused his curiosity by showing off the
phonograph. Then when his manner became a little less churlish, I
held my peace and let Father Hacquart have his turn. The father
began by taking him roundly to task in Arabic for his want of
politeness and amiability. He actually brought Abiddin to
acknowledge himself in the wrong, and ended by getting him to
promise not only to help us himself, but to give us recommendations
to his friends. In the evening he actually returned bringing us three
letters, one for Salla Uld Kara, another for a certain sheriff named
Hameit, whom we should meet beyond Al Walidj, and the third and
most important for Madidu, chief of the Awellimiden Tuaregs.
This letter for Madidu simply delighted me. I was to some extent
already acquainted with the various tribes we should have to deal
with on our way down the river. The first were the Igwadaren, divided
into two sections hostile to each other, under two chiefs, brothers,
though enemies, named Sakhaui and Sakhib. Beyond them we
should come to the Kel Es Suk, marabouts of the great Tuareg
family, a small tribe of the Tademeket Kel Burrum, to whose chief,
Yunes by name, Abiddin also gave us a letter; and beyond them, that
is to say, after passing Tosaye, we should enter the territory of the
great Awellimiden Confederation, but how far it extends I did not as
yet know.
Abiddin, who had passed a month with the chief of the
Awellimiden a year ago, could not say enough in his praise, whilst,
on the other hand, he warned us very earnestly against the small
tribes addicted to pilfering through whose districts we should have to
pass to begin with. “Madidu,” he said, “is a lion, the other chiefs are
mere jackals!”
“Madidu,” he added, “makes war, and of course the plunder he
takes in war is a lawful prize, but he would scorn to pillage peaceful
folk, such as the negro cultivators of the soil, or inoffensive
merchants with no one to fight for them, in the reckless manner of
the Kel Temulai or the Igwadaren. There is no one higher than
Madidu unless it be God.”
Of course I knew that Abiddin exaggerated, as all Orientals do,
and that much of his enthusiasm for Madidu was only cupboard love,
the result of the good cheer he had enjoyed in his camp. Still I
gathered from what he said that his chief really was somebody worth
reckoning with. Writing to the Lieutenant-Governor of the French
Sudan by the returning canoe which had brought our despatches I
said, “I am now pretty well convinced that if Madidu really wishes it
we shall pass without hindrance, but that if he opposes us we shall
have the greatest difficulty in going down the river.” This was,
however, but a façon de parler, for I was mentally resolved that, with
or without Madidu’s help and permission, we would go down the
Niger, though if he did try to prevent us, we should most likely leave
our bones in the river.
It will readily be understood how much this passage through the
Awellimiden district occupied our thoughts. It was the chief subject of
all our talks with Abiddin, and we had every reason to congratulate
ourselves on having so far won him over. But we meant to do far
more than that. He was altogether our friend now, and never left the
boat except to eat. I reminded him of the former grandeur of his race,
of Sidi Moktar and his brothers, who had acted as mediators
between the tribes of the neighbourhood, and pointed out to him that
it was the outburst of fanaticism, against which his grand-uncle had
struggled so hard, which had led to the decrease of the influence of
the Kuntas. We too, I told him, had to contend against those who
propagated the doctrines declared by Hamet Beckay to be false and
contrary to the true morality of Islam, and we had succeeded in what
that great man wished to accomplish, for we had driven back the
invading Toucouleurs.
If, I urged, we whites, who had considerable forces at our
disposal, made a firm alliance with the Kuntas, who would in their
turn place at our service all their religious influence, their ancient
power would be restored, they would be our trustworthy agents,
working loyally for the pacification of the country, which would owe to
them all the benefits of peace, for which they would never cease to
be grateful.
On the other hand, I pointed out, that if we made an alliance with
the Awellimidens, whose lands we did not in the least covet, all the
small pilfering tribes, such as the Igwadaren and the Kel Temulai,
would be compelled to cease their depredations, because all the
merchants on the river would be under the protection of the French,
or of their new friends. Placed as they would necessarily be between
us and the Awellimiden, they could not without risk of destruction, or
at least of severe reprisals, insult either of the two contracting
parties.
Abiddin seemed much taken by my arguments, which appealed
forcibly to his sympathies and intelligence. He was a decidedly
clever fellow, and I struck whilst the iron was hot, by adding that it
seemed to me that this proposal, if made to the Kunta chief, would
solve the problem of the pacification, and add immensely to the
value of the districts surrounding Timbuktu.
We should very soon relieve those under our protection from all
fear of molestation by the Tuaregs, we should promote the creation
of centres of commerce and outlets for trade, and moreover, we
should greatly reduce our expenses at Timbuktu, for our gains would
help us to pay and support the troops quartered in that town.
“It is evident,” answered Abiddin, “that if you could come to terms
with Madidu, and be really friends with him, it would be a very good
thing for us all. We shall, however, want somebody to act as go-
between, but the question is, whom could we choose.”
“Houa!” (thou), said Father Hacquart, suddenly striking into the
conversation. Abiddin started; the idea that he might go himself had
evidently not occurred to him. The father now put out all his
eloquence to persuade him, and finally won his consent.
Abiddin spent the whole of the next day with us, and asked the
doctor to give him some medical advice, for he suffered greatly from
rheumatism and cystitis. I arranged with him that we should go to
Rhergo, and there wait for news from him. If he should send us word
to go on we should know that he had already passed us, and was en
route for Madidu’s camp.
On the 29th, despairing of seeing Aluatta, who was still
negotiating with the Kel Gossi, we decided to leave Kagha, but we
had scarcely left our moorings when we were met by such a violent
wind that it was absolutely impossible to proceed, and we went to
take refuge in an opening on the left bank. It was not until after a
delay of two hours that we were at last able to go on and anchor
opposite Milali. We were asleep, when our watch aroused us with
the news that a canoe was approaching, the man in which was
shouting out something at the top of his voice. It turned out to be a
courier from Aluatta, who had at last received our despatch, and
would come the next day to Kagha, where he begged us if possible
to return.
Only too glad to hear from him at last, we went back the next day,
and about four o’clock in the afternoon Aluatta came to see us with
his retinue of followers. He was a handsome young fellow, with a
very dark skin and a most intelligent face, a gentle but rather proud
expression. He is supposed to have the gift of prophecy, and to be
able to perform miracles. It is said that he predicted the death of
Tidiani, a former chief of the Massina, a year before it took place.
Everything having already been settled with Abiddin, Aluatta had
only to ratify our agreement with his brother, and this he did readily.
Of course we showed off our phonograph and bicycle to our visitor,
and a telescope greatly aroused his admiration, because he was
able to see and recognize the people of Kagha through it. We spent
the whole January 30 with Aluatta, and then, this time in earnest, we
resumed our voyage.
INTERVIEW WITH ALUATTA.
We were dreadfully hindered by a strong contrary wind from the

east, and it was not until February 3 that we arrived at Kunta, where
we were to see the Kel Temulai.
At our approach the negroes of the village (the Tuaregs have their
encampment on the opposite side of the river some little distance
inland) at once begun carefully to sweep the bank where we should
disembark, and very soon our tent was up, our camp-stools were
beneath its shelter, and our visitors the Kel Temulai arrived, including
R’alif, the brother of R’abbas, chief of the tribe, with the two sons of
the latter and a small retinue.
The palaver was carried on under difficulties for want of some one
understanding the Ta-Masheg or the Tuareg language, and we had
to converse in Songhay, our servant Mamé acting as interpreter. This
was the first time we had seen the Tuaregs in their own land, and we
were all deeply interested in them. They are many of them very finely
built fellows, and their features, all you can see of them, for the lower
part of their faces is always obstinately hidden by the tagelmust or
veil, are of a purer Kel Temulai type than I have ever seen
elsewhere. They all wear breeches coming down to the instep, and
mantles, or as they call them bubus, of dark blue material. The more
important members of the tribe have a kind of pocket of red flannel
on their breasts. In the right hand they hold an iron spear some six
feet long, and on the left arm a dagger is kept in place by a bracelet
without causing its owner the slightest inconvenience, so that it is
always within easy reach of the hand, and can be used at a
moment’s notice. Lastly, a few of them also have a straight sword
with a cross for a hilt, reminding us of those in use in the Middle
Ages, and which is hung on the left side by a rope.
A LITTLE SLAVE GIRL OF RHERGO.

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To my wife, Linda, and my children, Carissa and Kyle; and

To my mother, Barbara Y. Hughes; and my wife, Peggy

To my husband, David Hart; and my children, Alex and

Jack R. Kapoor, EdD, College of DuPage

Les R. Dlabay, EdD, Lake Forest College

Copyright © 2016 by McGraw-Hill Education

Robert J. Hughes, EdD, Dallas County

Melissa M. Hart, CPA North Carolina State University

Answer: Because financial decisions can

• What happens if you run out of money

For most people, the answers to questions like

Text (or eBook)

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Welcome to the new Focus on Personal Finance!

Global Changes for all chapters

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CHAPTER 4 • Updated and expanded coverage of online and mobile banking.

CHAPTER 7 • Revised coverage of standard lease forms when renting.

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CHAPTER 10 • Updated the How Long Will You Live? section.

CHAPTER 10 • Expanded discussion on annuities.

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CHAPTER 14 • New Saving Smart for Retirement section.

APPENDIX A • New Exhibit A–1: Education compared to earnings and unemployment.

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YOUR PERSONAL FINANCIAL PLAN SHEETS

A Successful Money Management Plan LO2.1

Your Personal Financial

EXAMPLE: Using the Simple Interest Formula on the

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Plan Sheet References Sheet 1 Personal Financial Data

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process and continue to track personal suffer

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PRACTICE QUIZ 1–1

kap61744_ch01_002-043.indd 8 09/10/14 2:18 pm

Exhibit 1–5 Financial Planning in Action

Exhibits and Tables

Throughout the text, exhibits and tables plans of action

Life situation: Single parent

Life situation: Young couple

Life situation: Middle-aged person

socially conscious financial activities for did you know?

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CPO NON-CPO PRIVATE

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You get what’s left

Financing Carmakers’ ﬁnance The F&I department You’ll have to pay

Jessica L. Anderson covers a personal finance issue to

Internal (personal) Factors External (economic, social) Influences

After-Tax Savings Rate of Return

ANSWERS 1. 3.4 percent 5 0.04 3 (1 2 0.15); 2. $69 5 $100 3 (1 2 0.31)

take action for better results. POSSIBLE ACTIONS TO TAKE

Chapter Summary Chapter

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As long as our boats were in sight of the station we could see

FROM TIMBUKTU TO TOSAYE

On January 22 we made a very short stage, and moored about

Suleyman Gundiamu and Tierno are the scholars of the party.

We were dreadfully hindered by a strong contrary wind from the