Financial Literacy and Budget

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This topic contains 38 replies, has 0 voices, and was last updated by  hooper1961 3 years, 4 months ago.

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  • #606231

    hooper1961
    Member

    schools need to teach financial literacy.

    it is appalling how many people don’t understand how to simply balance a checkbook and properly use credit. credit is to purchase a home or basic transportation (a car that is easily affordable based on your budget). using credit (unless you pay the balance off every month) to buy a new IPod is not smart; yet too many people do this.

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    #782856

    redblack
    Participant

    what’s appalling is how easy it is to get credit. that should problem should be legislated away.

    want to teach average consumers something useful? teach them to not open a credit line every time they go to buy a big ticket item, and to use credit as a last resort – or as an emergency plan. you’ll miss it if you need it to fix a flooded basement but have already used it to remodel a kitchen. make a plan, save for stuff, and stick to the plan.

    want a car? pretend that you already have the car payment and save up a healthy down payment while working on improving your credit score. shop for low interest rate loans when you’re ready. and make sure you can afford to make at least 13 car payments a year, plus taxes, title, and insurance.

    #782857

    hooper1961
    Member

    agreed

    #782858

    DBP
    Member

    Anyone who goes into debt for an iPod needs a lesson in self-control more than a lesson on credit. However, self-control is not something you can learn at school.

    Ditto for common sense.

    #782859

    skeeter
    Participant

    The Washington State Society of CPAs has a wonderful financial literacy education program.

    http://www.wscpa.org/Content/FinLit.aspx

    Sadly I have not found the time to volunteer, but many, many, other have.

    It is really frustrating to see so many poor people taken advantage of because they lack the basic skills to make informed financial choices.

    #782860

    JoB
    Participant

    what amazes me is how many people who say they are financially literate don’t get the basics when it comes to public finances..

    #782861

    skeeter
    Participant

    JoB, when you make comments like #6 it seems like you are trying to pick a fight.

    We know that you disagree with some people on topics such as taxes and government spending. But that is not the topic of this thread.

    #782862

    JoB
    Participant

    i am not trying to pick a fight here..

    I am simply pointing out that teaching financial literacy wouldn’t have changed the circumstances for the vast majority of those who have found themselves bankruput in the last recession.

    jobs would have.

    regulation of the financial markets would have.

    cutting taxes and blaming those who found themselves financial victims .. not so much.

    cutting taxes doesn’t provide jobs ..

    and that apparently requires a financial literacy that is beyond too many posters :(

    #782863

    hooper1961
    Member

    JoB – too many people bought way more house than they could afford even with a job. And the damn bankers should be in jail for their lax underwriting standards. Financial literacy hopefully would have instilled the basics that after the teaser 4% rate it jacks up to whatever say 8% and the monthly payment goes from $1,500 to $3,000. Anyone with any bit of financial literacy would see how insane it was to sign on the dotted line. (The #’s are example for information). Many of the so called victims were also at fault for signing a loan paper they new was beyond their means to pay.

    The one that is really annoying is buy now 0% interest, read the fine print you miss one payment and the interest rate jacks up to 29.9%. These offers ensnare lots of folks, even people who pay but simply mess up on one payment. Best advice read the fine print.

    #782864

    JKB
    Participant

    Gotta side with hooper on this one. Lots of people manage their money badly, and often it’s because they just don’t understand. Ohhh, math is hard!

    JoB, the handling of personal finances is totally different from the tax/spend policies by which a government tries to manage an economy. You might have some good points there, but they belong in a new thread.

    #782865

    redblack
    Participant

    JKB: please don’t fall into that ideological trap. the financial meltdown was not caused by freddie and fannie – let alone the community reinvestment act – and some nameless, faceless government socialist lackeys insisting that those who shouldn’t have homes and can’t afford them were to blame for the financial meltdown.

    that disaster lies solely and squarely on the shoulders of people like jamie dimon. no amount of political diatribe will change that fact.

    ever.

    and never forget that the republicans in congress and the white house turned freddie/fannie into a private corporation whose charters and directives were dictated by wall street.

    the larger problem that i was trying to point out in post 2 is that financial institutions have one thing and one thing only as their primary motive:

    to keep americans in debt.

    and informed americans’ primary response should be to reject those “credit” lines that big money dangles in front of them.

    #782866

    JKB
    Participant

    Trap? What trap? I said nothing of the sort.

    Did not mention Freddy/Fannie or anything about the mortgage mess. Did not mention republicans, democrats, or any other particular breed of lackey.

    I claimed (without proof, but I assert the truths are self-evident) that many people mismanage their money, that it’s because they don’t understand finances at the personal level, and that government policy works differently from personal finances. Which of those did you disagree with?

    #782867

    redblack
    Participant

    JKB: this “personal responsibility” thing is a running theme with conservatives of late, and it’s at the crux of most of the hoop’s posts:

    that people who run up debts – or weight – are to blame for being suckered by “too good to be true” deals from lending institutions, when, in fact, the blame actually rests on the barkers and their lobbying firms.

    #782868

    JoB
    Participant

    hoop..

    i was once talked into signing a variable rate mortgage by my husband and a loan officer at our local credit union..

    turns out she didn’t bother disclosing that there was a kicker before the rate tied adjustment

    and luckily we signed the paperwork for our Washington state house in Oregon.

    We could have made our credit union eat that loan.

    We didn’t. We settled for a no fee set interest loan for the balance

    the loan officer who didn’t disclose was a recent transfer from one of the Washington state branches where the disclosure laws weren’t so strict.

    it turns out disclosure laws are highly dependent upon the laws in the state where you sign your paperwork..

    will financial literacy laws teach the differences between all states or will you simply label anyone who doesn’t know that they are different stupid?

    #782869

    hooper1961
    Member

    JoB – financially literacy is simply reading the fine print and don’t sign if you do not understand the document. and yes there is some personal responsibility involved.

    an acquaintance of mine use to sell cars, people making $2k a month gross were signing loans with $500+ payments at high interest rates. now it doesn’t take a rocket scientist to determine that this is not a bright thing to do.

    #782870

    meg
    Member

    Redblack, you mean bankers right?

    “…when, in fact, the blame actually rests on the barkers and their lobbying firms.”

    Yes, but blame rests first, upon politicians. There’s a little saying, goes like this:

    “To kick a politician in the nuts, aim for the banker’s chin.”

    #782871

    HMC Rich
    Participant

    Redblack. The CRA was part of the problem. So were the lending institutions who pushed Sub-Prime mortgages due to government interference. There were a lot of other factors contributing to the problem, but with 55 million loans out there and 27 million loans considered subprime or risky, inevitably, the market crashed. The government wanting too many people to be able to buy a house was a main cause of the housing market falling apart. I will say there were some other factors too, but you cannot say Freddie and Fannie were not culpable.

    This recession has affected most people. Myself included. In some ways, when I took a Home Equity loan awhile back, I was also at the time scratching my head, thinking, OK, for tax purposes, some of this might make sense, but some of it doesn’t. I wish I had listened to the little voice more. Then when I lost my former job, I asked the bank to lower my interest rate, but of course, it was too late. With our income cut by 60%, I must say, it has been an interesting journey with our mortgage.

    I would have been perfectly happy renting if the banks would have turned us down, but they didn’t. The banks were pushers, trying to sell anyone and everyone loans.

    #782872

    JoB
    Participant

    hoop..

    did i mention that i was a loan officer myself at the time.. accustomed to explaining and disclosing contracts?

    that fine print stuff can be a real killer…

    especially when it isn’t disclosed.

    Unless you get a copy of the loan documents a few days before signing them and go over them carefully.. possibly with the aid of an attorney..

    you really don’t know what you have signed..

    that little kicker was buried in a sub paragraph of a paragraph of small print…

    and in the State of Washington, it was perfectly legal not to disclose what turned out to be an essential component of that loan.

    #782873

    JoB
    Participant

    HMCRich

    “So were the lending institutions who pushed Sub-Prime mortgages due to government interference.”

    no.. government interference said they had to stop discriminating against borrowers because of their color and/or the neighborhood where they were attempting to purchase…

    banks promoted sub-prime loans because they were more profitable for the bank

    and because the bank didn’t have to carry the resulting loan..

    they could package and sell their risk to someone else.

    this whole the government made them do it story is just one more fantasy sold to cover the fraud perpetrated by the financial industry.

    #782874

    hooper1961
    Member

    JoB – BS the government had a big hand in this mess, as do the bankers AND the people who signed the loans.

    #782875

    JoB
    Participant

    hoop..

    “BS the government had a big hand in this mess”

    you can buy that if you want to…

    but it isn’t supported with the facts.

    #782876

    hooper1961
    Member

    JoB BS BS BS. The government heavily encouraged lending and standards were relaxed and the greed of bankers took hold. Was the government fully at fault NO. There were a lot of people at fault; including the bankers and the people who signed on the dotted line that they would pay back the loan.

    #782877

    meg
    Member

    It was the US govt. that legislated the twin ‘government sponsored entities’ Fannie & Freddie into two titanic-sized hedge funds, allowing them to be based upon the thinnest sliver of capital, yet amazingly, unlike non-govt. sponsored hedge funds, F&F enjoyed the full backing of the US govt. This meant, from the very start, the taxpayer was going to eat the “F&F” hedge funds’ losses, but not their gains.

    Read “Reckless Endangerment”, by Gretchen Morgenson. Great, great book. She was interviewed last year on Bill MOyers, too.

    #782878

    meg
    Member

    To post #1,

    While I usually love the idea of education, I feel cynical about this. Why bother, really? US govt. has created trillions in debt so far, and more so every day. People now living paycheck2paycheck or paydayloan2paydayloan, but why not become more indebted? It’s just “monkey see, monkey do”. Because if your govt. is broke and deep in the hole, you might as well be too. And, logically, because if you are young and have ‘future earnings’ (or you’re old and have ‘savings’ or retirement or whthaveyou), they will soon be coming after whatever you haven’t already spent… confiscating, taxing & double-taxing, devaluing.

    #782879

    WorldCitizen
    Participant
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