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personal finances


Debt.

It is so simple, I really don’t know why we even need to talk about it, but we do.  Here’s a “LABS” moment (LABS is short for Life Ain’t Brain Surgery):

YOU WILL GO INTO DEBT IF YOU SPEND MORE THAN YOU BRING IN!

Sorry folks … but I have to say it: Life Ain’t Brain Surgery.

Look … I did it. Terry did it. We all have spent more than we took in. And we knew we were going in debt. That didn’t make it right then, and it doesn’t make it right now. Don’t spend more than you make. Pay as you go. Good advice.

Sure, the house is different. Although, some folks will advocate that even going in debt for a home is a bad decision. Another argument for another day.

Why do so many Americans go so in debt? For what? STUFF! Just stuff. Shopping appears to me to be a pasttime, not a necessity. Quit buying stuff. Most folks don’t need it. Buy what you need. If you can’t afford it, don’t buy it. It ain’t brain surgery.

I think that this buying binge is contagious. Look at our congressional folks. They spend money like there is no tomorrow. I guess it is easy when it isn’t your money. But they need to stop spending money they don’t have, too. It is  insane to me.

Why the hell is the richest country on the earth in debt up to its eyeballs? Just doesn’t make sense to me. And why are so many young Americans in debt? Maybe they see the American government in debt and think it is OK. If the government set a better example, maybe Americans would follow suit. Makes sense to me.

Start teaching some financial responsibilities in grade school if need be. But let’s start teaching our children to stay out of debt. Debt is only good for the lenders – not the ones borrowing the money. Eliminate the need. It ain’t brain surgery.

Richard


Like most of us I have suffered through the typical lack of service at most Big Box stores.  Should we learn to accept this behavior as a result of the culture in today’s America or fight this attitude and try to be a change agent in a difficult and unruly world?

My crusade to change this behavior has met with dismal failure. Partially due to a lack of continual haranguing of management and partially due to the total ignorance of proper manners by some individuals employed at Big Box retailers.

Management is between a rock and a hard place because they need warm bodies in front of cash registers in order to take our money and then listen to us complain about the lack of service.  In some instances the manager has had very little if any training at customer relations and certainly little training in the art of managing uneducated employees.

Allow me to relate a quick example.  Last week I ventured into a local Wally World Mart for the purpose of purchasing two, that’s correct TWO IPOD’s.  My daughter and her husband both want one for Christmas.  The store I chose happened to be in a culturally deprived part of town but it was close to my workplace.  At the electronics counter I encountered three employees eating potato chips and drinking soft drinks.  They were pleasant enough but absolutely zero help.  Finally after a couple of minutes the older of the three asked if I needed help.  Why yes I replied I would like to purchase two IPODs.  She asked me to wait a minute while she paged another employee to help me.  Being in a jovial mood and with some time to kill I figured what the heck, I need an adventure and some laughs.  In about 10 minutes a young man approached and looked at me without saying a word.  He was about 6 feet 4 and 300 pounds and was unhappy he had to be disturbed.  He looked at potato chip lady and asked her something to which she responded with a point in my direction.  He mumbled something at me and I responded “IPOD” and off he went toward the IPOD display case.  I pointed to the style I wanted and he opened the case and immediately dropped one on the floor.  Not missing a beat he took two, (including the one he dropped) to the sales counter.  Here we were greeted by another employee wanting to buy a bag of chips with her employee card.  Naturally he took this employee in front of me and began trying to check her out.  Her card would not work and I was treated to another show of vast ineptness and lack of cultural skills.  At this point one of the original potato chip ladies looked at me and said you need to go to another Wally World Mart because we do not know what we are doing.  I took her advice only after telling Fat Albert that I had more shopping to do and would be back to get my IPOD’s later.  I got them at another store.

I might add that I attempted to see a manager at the store above and then I crossed town and ventured into another store and tried to find a manager with whom to offer some advice.  I failed in both instances because I was told all the managers were at lunch.  A wry plan by management I might add.  Always be busy when a customer wants to speak with you because you might have to make a decision.

Did I get angry and fume and fuss about the money I was spending in these stores just to be treated like a non customer?  No, I have learned to laugh and realize how sad our society has become.  Those working at big box retailers do not have any idea on how to get out of the cycle they are in.  They will continue to act the same way and demand more from Wally World and expect to work less.  I cannot be mad at the individuals because our government and society have created this attitude through dumb policies.   What I can do is refuse to spend money with organizations that do not appreciate my business and refuse to properly train employees.

Merry Christmas!!

Terry


Financial Education or The Lack thereof in The United States

A former client of mine loved the expression “You cannot cure stupid.”  This was not meant necessarily as a demeaning comment, the context in which it was used was to define mistakes made by individuals in his employ.  For example, stupid decisions were usually made by individuals who lacked the intellectual capacity to make an intelligent decision.   Ignorant decisions were usually made by those lacking information or lacking all of the facts.  In other words some individuals do not have the mental acuity to make good decisions while others make uninformed decisions. My client believed management should be able to know the difference in employees and use them according to their ability.  Not a bad philosophy in my opinion.

Now, what does any of this have to do with finance and education?  I believe the current financial crisis in our country is due in part to the same two terms, stupid or ignorant.  According to Forbes Magazine, consumer debt is currently at a seasonally adjusted rate of slightly over 2 Trillion. Yes, that is a T for Trillion, so you can add 12 zeros to the end of the two.  I have been told it would take around 30 years to count to one trillion.  I have no intention of finding out.  Revolving credit card debt averages slightly over $9,000 per household in the United States.  Fortunately my wife and I do not carry any credit card debt so we skew the average slightly.  Is all of this debt due to stupidity or to ignorance or a combination of both?

Having reached the age of maturity and growing weary of hauling laptop computers through airports, I took up instructing at a local 4 year institution a few years ago.  My classes are primarily freshman and sophomores and one of our projects involves determining payments and amortization schedules.  The project is straightforward and includes calculating payments for one used and one new vehicle at different interest rates and time periods.  We also include taking the difference in the two payments and investing in a savings account paying a fixed rate for five years.  The purpose of this exercise is to help students understand the power of interest over time and dollar amounts and to show how investing on a regular basis can increase ones wealth at a surprising rate.  The sad part of this exercise includes comments from students such as: What do you mean by taking the difference in two payments? What is a payment? Do I add the down payment into the amount financed” Why do I care about interest if I can afford the payment?  The list goes on.  Naturally, not all students have such a lack of knowledge regarding money and interest but the vast majority has no idea how the real world operates.  I might add that over 90% of my students own at least one credit card and over 60% are not employed while in school.  Let me see; credit cards, no income, college student, entertainment, clothes, food and all the other necessities of a normal young adult.  Where does the money come from and when if ever will it be repaid?

Although we cannot assign blame to any one person, issue or circumstance we can do something to help the next generation of adults before they become victims of consumerism.  As adults we owe it to ourselves to help cure this problem.  Who will be burdened with this debt in the future?  All of us because those who default or simply cannot pay will force the debt to be written off or declare bankruptcy.  The young people of today will be responsible for paying the social security of those currently in their 40’s and 50’s and they need to be gainfully employed without the specter of overwhelming debt.

What can we do in addition to wringing our hands and singing the blues?  Demand of your legislators that basic finance be taught no later than the 10th grade in high school.  Demand of your legislators to stop the ease with which credit cards are issued by financial institutions and so called credit card repairers!  More importantly we all owe it to ourselves and to the younger generation to learn the pain associated with the yoke of heavy debt.  Credit cards can be very useful tools for traveling, avoiding carrying large amounts of cash and for identification but they are not and should not be meant to satisfy our need for immediate gratification.  Basic understanding of personal finances should not be brain surgery.

Terry