The Skinny On™ Financial Smarts Challenge (1 of 3)

If you carry a balance on your credit card, interest starts running on any new purchases:

On the first business day of the month following the date of your purchase,
On the date your new bill is produced,
On the date of the new purchase, or
On the date your bill is due (after the grace period).

Albert Einstein said that the “most powerful force” in the universe is:

Inertia – that a body at rest will remain at rest until acted upon by an outside force,
Reactive energy – that for every action there is an equal and opposite reaction,
The will to survive, or
Compounding – interest earning interest upon interest.

What is the point of differentiation between income tax deductions that are “above the line” and those “below the line?”

Above the line deductions are generally greater in amount than those below the line,
Above the line deductions can be carried forward while those below the line cannot,
Above the line deductions are valuable whether or not one itemizes deductions, or
Above the line deductions are essentially tax credits.

Which of the following is true about an Option-Payment Mortgage:

These loans are generally self-amortizing,
The borrower is also the mortgagee,
The mortgage payments are fixed for a minimum 5-year period, or
These loans present a danger of negative amortization.

There cannot be a legally binding contract without:

An exchange or the promise of exchange of money,
Consideration – mutual obligations of value,
An outside date for performance, or
Written evidence of mutual promises.

Which of the following is the most accurate description of how a stock broker earns money:

A salary from the brokerage company with a year-end bonus for accurate stock selection,
The more winners he picks, the more he makes,
The greater the frequency and size of transactions, the more he makes, or
He receives additional compensation from companies that he follows and recommends.

Which of the following is the most accurate description of how a mortgage broker earns money:

The lower the interest rate he can get a borrower, the more he will make,
He is paid a flat fee by the lender the borrower selects,
The higher the interest rate on the selected loan, the more he makes, or
His income is tied to the percentage of conforming loans he makes.

The “Rule of 72” states that:

A sum of money will double in the number of years which results from dividing 72 by a fixed rate of return,
Compounded interest is not related to the frequency of compounding,
The interest paid on U.S. Savings Bonds is set by regulation (per 1972 law), or
A 1972 law requires banks to pay interest on checking accounts.

Which of the following is true about the United States Internal Revenue Code:

If your taxable income exceeds a specific level, all your income is taxed at a higher rate,
If your taxable income exceeds a specific level, only the amount in excess of that level is taxed at a higher rate,
The maximum tax rate is 55%, or
The difference between gross income and taxable income is the number of dependents.

If you use a real estate agent to help you purchase a home,

You will owe a fee to the agent if he identifies a home that meets your criteria,
The agent can work for your best interests even if paid by the seller,
The agent is always working for the seller’s best interest but must inform you of that fact, or
The agent can never work for both you and the seller at the same time.

What is meant by “pre-tax” money?

An expenditure which entitles you to a tax credit,
An expenditure which is deductible against taxable income,
A type of expenditure that was not considered income when the Tax Code was enacted, or
Payments to the IRS due before April – usually quarterly.

If you are renting an apartment and are threatened with a lawsuit when one of your visitors slips, falls and hurts himself in your apartment,

You cannot be sued, only the landlord,
You can be sued and should have liability insurance,
You can be sued but only up to the amount it would have cost to repair the defect that caused the fall, or
The landlord can terminate your lease if you are sued.

The most attractive feature of municipal bonds is that:

They offer the highest interest rates on any bond product,
The interest on these bonds is not subject to federal taxation,
The interest on these bonds is paid monthly, or
The interest on these bonds floats up and down with the prime rate.

Credit card issuers refer to people who pay their balance every month as:

Revolvers
Prime accounts,
Deadbeats, or
Credit Liners.

If you obtain a credit card with a low introductory rate on balance transfers, which is generally not true:

You will be charged a fee when you transfer higher rate balances to this card,
The rate on new charges will be at the introductory rate for the introductory period,
Your rate will increase dramatically after the introductory period is over, or
Your rate will increase dramatically if you are late with a payment during the introductory period.

Which of the following is the most likely to decrease your FICO score:

Piggybacking on a parent’s account,
Refusing a credit card offered by a national lender,
Closing a credit card that you have used for more than a year, or
Checking your credit score 3 times in a month.

If you are shopping for a home, which of the following should give you concern:

Your real estate agent recommending an in-house mortgage broker,
Your real estate agent recommending an in-house house inspector,
Your real estate agent recommending an in-house attorney, or
All of the above.

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Common sense tells us that young adults who grew up learning online have different attention and expectations for information delivery than those of the pre-internet age. The internet experience is quick, staccato-like, with lots of visuals – unlike anything that existed before it. As a result, the young adult does not have the patience for linear, page after page of text – specifically, the traditional textbook. They want The Skinny - a succinct synthesis of only what they need to know - no more or less.

It is our position that the format in which information is presented to students needs to be crafted to engage the internet-age reader. Crafted in The Skinny style. Whether delivered in old-fashioned print (books) or digitally (online learning), material should be presented in a style that meshes with the young adult mind – used to receiving content in short and fast bytes with lots of visuals and white space in between.

It is for this reason that we have developed The Skinny book series with several distinctions from traditional nonfiction writings:

1. Less material – a synthesis. Longer is not better. Our books are "skinny".

Length does not equate to impact. A University of California study compared the comprehension levels of students who received a 600-word explanation of how lightning formed with those who received an 80-word summary. The latter group scored significantly higher.

“A common instructional practice is to provide a lengthy verbal explanation, such as a textbook passage or classroom lecture. Indeed, instructors may believe that providing a lengthy verbal explanation fulfills their responsibility to provide information to the learner. Unfortunately, this practice is not very efficient for students … In the present study, there was no instructional treatment more effective in promoting retention and transfer than a summary. By reducing the load on the cognitive system, summaries may enable students to carry out the cognitive processes necessary for meaningful learning.”

When Less is More: Meaningful Learning from Visual and Verbal Summaries
- Mayer, Bove, Bryman (Journal of Educational Psychology, 1996)

2. Shorter sentences – on average about 20% fewer words per sentence. Our sentences are "skinny".

Given shortened attention spans, “less is more.”

“In an environment with a higher degree of distraction and heavier information demands, we often have the feeling of being distracted and unfocused … (the result is) INFOSTRESS … we must always be aware of the limited scope we have for receiving information.”

The Overflowing Brain: Information Overload and Limits of Working Memory
- Torkel Klingberg, Stockholm Brain Institute (2009)

3. Lots of visuals and white space. Our presentation is "skinny".

We know that people learn in different ways but most of us learn visually. Drawings, photos, symbols, charts and graphs assist the learning process.

“Psychologists have recognized the importance of the capacity to use various kinds of symbols … we garner messages through words, pictures, gestures, numbers, patterns and a whole lot of other symbolic forms.”

Multiple Intelligences
- Howard Gardner (Perseus, 2006)

In every one of 11 recent studies, students who received information in words and pictures performed better on tests than students who received the same information in words alone.

“Comparison of people’s memories for words with their memories for pictures of the same objects shows a superiority effect for pictures.”

How People Learn
- National Research Council (National Academies Press, 2000)

4. Story lines and dialogue. Illustrated and easily read in 1 hour, each Skinny book is explored through the lives of Billy and Beth – normal in all respects except one: they just happen to be stick people.

Students spend 90% of their time outside the classroom dealing with real-world situations. To the degree that instruction can match up with real-world experiences, it will engage the reader and have a deeper impact.

“Design and tell stories that enhance understanding of the concepts. Studies show that stories engage all parts of the brain because they touch on a learner’s experience, feelings, and actions.”

How the Brain Learns
- David Sousa (Corwin Press, 2006)

5. Conversational, with “visible author” in the story. The Skinny author's likeness appears in stick figure form in all of our stories.

Words on a page are squiggles to be deciphered. But, when the reader feels the author is speaking to him, the whole process is altered. No longer is the student pulling words off an inanimate page, now there is engagement.

“Research on discourse processing shows that people work harder to understand material when they feel they are in a conversation with a partner, rather than simply receiving information. Conversational style … when authors are visible, students might see the author as a ‘personal guide through an otherwise difficult terrain’.”

E-Learning and the Science of Instruction
- Clark and Mayer (Wiley, 2008)

The human brain is physiologically no different than what directed the Cro-Magnons 40,000 years ago. We are just putting increasing demands on it at an ever accelerating pace.

When Alvin Toffler wrote about “future shock,” the feeling of disorientation that comes with rapid change in our environment, he was speaking about the sixties! Today, fifty years later we are all overwhelmed at times.

With mass adoption of the internet and related digital devices, young readers are deluged with electronic stimuli and distractions. As a result, communicators and educators must work harder to capture their attention and willingness to engage.

The Skinny book series is one idea of how to convey important information to the young adult. There will be others. The format of nonfiction writing must keep pace with the amazing changes of our lifetime.