A couple of years ago I first mentioned that my state of Oklahoma was considering implementing financial education into the public-school curriculum.
Last year, our governor signed into law the Passport to Financial Literacy Act (related PDF), which I'm quite happy to see. Topics to be covered include:
Understanding interest, credit card debt, and online commerce;
Rights and responsibilities of renting or buying a home;
Savings and investing;
Planning for retirement;
Bankruptcy;
Banking and financial services;
Balancing a checkbook;
Understanding loans and borrowing money, including predatory lending and payday loans;
Understanding insurance;
Identity fraud and theft;
Charitable giving;
Understanding the financial impact and consequences of gambling;
Earning an income;
Understanding state and federal taxes.
'Tis a nice start, in my opinion. Now we'll see how seriously the school systems take it. As the parent of a pre-K daughter in our public schools, I'm sure I'll get to find out ... in about eight years. (Per the Act, personal-finance curriculum begins in the 7th grade.)
Those of you with an interest in history — and in particular, the Great Depression — may be interested in viewing these Powerpoint slides compiled at the Oklahoma Council on Economic Education's website:
If you're like me, you'll find that the 48 slides of Hooverville families do wonders for renewing your appreciation of our current economic landscape ... recession or no. And there are a few more related slideshows on this OCEE Teacher Resource page.
(NOTE: Microsoft makes available a free Powerpoint viewer for folks who don't have Powerpoint or the Office suite.)
There's not much redeeming value to this post, but goshdarnit, this message-board quote made me laugh. Someone asked what happens if you borrow money via Prosper (related posts), and then at some point, you can't make payments. The tongue-in-cheek response:
If you don't pay they send you an e-mail. If you don't pay after that they send you a stern e-mail. After that comes a very, very stern e-mail. As a last resort they send an email with an attached picture of a sad puppy.
Which, I'm told, is not all that different from what happens when you stop making your mortgage payment in some parts of the country these days.
Apparently ABC's World News Tonight is undertaking a series called "America's Kitchen Table" or some such thing. As best I can tell, the idea (can you guess it?) is to show us how Actual Real Americans (read: financial skills = questionable) are making it from day to day.
A recent episode cast ABC's spotlight on the Cramers, of Palmyra, PA.
"If Lisa Cramer had her choice, she would be a full-time stay-at-home mom to daughters Kate and Lindsey," ABC tells us. "Her husband Michael, a manager at an auto glass store, would be the breadwinner. But for now, the only way this Palmyra, Pa., family can make ends meet is for Lisa to work three part-time jobs."
For once I'm going to withhold much commentary on the Cramers' situation, and just let the video speak for itself.
One thing we know: The Cramers don't do the Baby Steps.
You'll want to check out the comments, too. As I write this, apparently Ms. Cramer has responded (04-16-08 @ 8:22am) to all those folks posting "negative feed back" and such. (I've saved her purported comment here, in case it gets yanked; more on this below.)
I find it interesting that yesterday morning, when my wife and I first saw this video, there was a comment posted by someone who seemed to indicate that he/she knew the Cramers, and that ABC had conveniently left out a lot of details regarding the story — details that were fairly unflattering to both ABC and the Cramers. That comment, however, was greatly edited sometime during the day, removing the vast bulk of the derogatory info. Then, last night, it was eliminated entirely.
Oh, how I wish I'd have screenshotted it.
Who "edited for content" that comment? The original poster? ABC editors? I dunno. Was it even true? Don't know about that, either. I just find it very, very interesting that a comment like that — specific, detailed, and unflattering as it was — somehow disappeared.
And the best part is: Most of the damage, you can't even see!
— Local Chrysler dealership radio ad
Yes. That's what OKC listeners are told by a local car dealership's current radio advertisement. The dealer just received a "huge" shipment of storm- and hail-damaged vehicles. Insurance has already paid hefty claims on the cars, so Dealer XYZ is passing the savings on to You, The Customer.
Gotta wonder what ad agency came up with that line.
Now that my taxes have been done and filed for a couple of weeks, I've taken the lead from a Fatwallet thread and calculated my household's (very simple) effective tax rate for 2007. It looked like so:
Ours is a three-person (one child; single income) household, by the way.
I'm not including use tax in there, or property taxes. Social Security taxes paid at my Day Job are not included. Self-employment taxes on my website income are included.
Any readers feel like sharing their effective tax rates?
Set aside some time for this video lecture; it's almost an hour long.
FWIW, I haven't yet had time to watch much of the video, so I can't offer an opinion on it. Just figured I'd post it for those of you who are, like me, sick enough to be interested in such things.
Now that we American consumers are all frothy and anxious to get our hands on this summer's Special Tax Unwinding and Preplanned Income reDistribution (STUPID) tax rebates, it's time for every business niche under the sun to urge us to SPEND OUR NEWFOUND CASH WITH THEM.
Ah yes ... vacations. Exactly what we liquidity-challenged (read: debt-burdened) folks need to get ourselves back on track. It's not what Suze Orman suggested, of course. But what does she know, anyway?
Not nearly as much as the tourism folks, apparently.
"But we have seen some behavior that even when they are pinched, vacations are a right of life," [economist and director of the Tourism Institute at the University of Tennessee] Morse said. "People will borrow money to take a vacation; it is that important to them."
But what about polls suggesting that folks will put their chunks of STUPID money toward debt and savings?
The research suggests that consumers will say "one thing before they get the money in their hand but after they get it, they actually spend more than they got in the rebate," he [Morse] said.
Morse cites a November study by three economists from the Federal Reserve Bank, the University of Nevada-Reno and the University of Pennsylvania's Wharton School examining consumer habits from a similar though smaller rebate in 2001. The researchers tracked activity of 75,000 credit card accounts.
The study found that many consumers used the rebates to pay down credit card debt, just as pre-rebate surveys suggested they would do. But three to nine months later, they used their newly freed-up credit to buy even more. On average, they spent 40 percent more than the original amount of their rebate.
"If consumers use the 2008 tax rebate in a similar fashion as the 2001 rebate study suggests, consumers will spend more of the (2008) rebate than originally planned, generating opportunities for boosting 2008 travel demand," Morse's report says.
"We are sure hoping that he is right," said Leon Downey, chairman of the Southeast Tourism Society and executive director of tourism in the Smokies tourism community of Pigeon Forge.
Morse's report created a buzz last week at a Southeast Tourism Society meeting in Asheville, N.C. Hotel and travel destination professionals from 12 states — from Little Rock, Ark., to St. Augustine, Fla. — left with plans to order up ad campaigns and design getaway packages aimed at the rebate audience.
Here's that Fed study, for those of you who are sick enough (as I am) to actually be interested in this stuff:
I'd say I have no words ... but we all know that would be a lie. So here goes.
"We're still both in shock that it could go from something so good to so bad so quick," said Kent, 59. "New Century in 60 days went from top of the heap to out of business."
Yeah? Well, you should've watched The Smartest Guys in the Room. That whole Enron thing? It's all about smart people who got greedy. Then they figured they could never fail. And then they got stupid.
You could've learned something.
The two didn't say exactly how much money they made at their last jobs but Kent admitted they each had six-figure incomes.
Today, they're trying to get by on his unemployment benefits of about $450 a week, which covers only about an eighth of the basic payments they owe every month.
Darn those payments, anyway. You mean they don't stop when the income does?
Their home equity line, mortgage, health and life insurance premiums alone cost about $10,000 a month. Still, they are trying to hang onto what they call their dream home with a view of the Pacific Ocean where they live with Mysti's 11-year old son.
Income of $1,800. Expenses of $10k plus.
That, friends, is some nasty math. So what's their roadmap from here?
"We've used up most of our reserves, cashed in her 401K," said Kent. "We're going Mach 1 into a wall. When we run into it, then we've got to decide what to do next."
Sounds like a hell of a plan to me. Let me know how that works out.
Despite their financial problems, the Copes have worked hard to protect their credit rating, staying current on bills. And they've made cutbacks: trading in Kent's Corvette for a Suburban and getting rid of the gardener, for example.
My gosh! What subhuman straits have we reduced these people to? Have we no decency?
Since he lost his job, Kent has gotten a real estate license and is trying to start a business selling the rapidly increasing inventory of foreclosed homes...
As a stock-trading mentor of mine used to say, "Lessons are repeated until they are learned." Apparently Mr. Cope didn't pay attention the first time, when Mysti lost her New Century job in May.
Or the second time, when he was sliced from First NLC Financial.
Or the third time, which is RIGHT FREAKIN' NOW. We're told that he watched as:
...former colleagues found jobs with other lenders, only to get laid off again when those firms closed up. Kent said some of the sales people he knows who still have jobs are actually the worst off.
"They may be employed by a company for months and months, but they can't close a deal," he said. "They've got the borrowers, but unless that thing is pure gold, it isn't made. It's a commission business. They're to the point frankly where they would rather get laid-off so they can go collect unemployment than be employed and make no money."
And still Our Hero wants to sell houses.
Take your seats again, please, Mr. and Mrs. Cope. Class is in session.
"You can't run into someone who isn't impacted by what's going on," said Kent. "It's very expensive to live in Orange County, and you pay a lot for your home and you can't get what it's worth now."
That's because YOU, Kent, don't get to determine what it's worth. What you PAID for the place has NO bearing on "what it's worth." One of those weird "market" things. Try reading Why Smart People Make Big Money Mistakes if you're fuzzy on this.
And yes, you can pick it up from your local library. It's a jaunt that'll be worth more than the cost of the gas for your Suburban.
Well ... maybe.
You know what I wonder? I wonder just when it is that a wonderful view of the Pacific Ocean becomes not quite so wonderful at all.
