It’s National Financial Literacy Month once again, and the economy continues to give off mixed signals, as do the actions and reactions of Americans. Economists and the Federal Reserve say that we still have a long way to go.
The bottom line is that it is as critical as ever that Americans continue to focus on their personal finances and the need to develop a smart, tailored and realistic financial plan that they can stick to.
I hope that you will visit www.MPNnow.com to review the “Back to the Financial Future” article from last year at this time, and the many other articles on personal finances that I have been privileged to write for the Messenger Post Newspapers, including the March 2009 Top Ten Tips To Achieve Financial Security.
This year I want to emphasize the four lessons that I find myself talking about more than ever when I speak in the high schools and colleges, and for faith communities and other interested groups.
(1) Money matters.
That may sound obvious, but after 20 years on the Bankruptcy Court Bench observing and interviewing people, and being especially sensitive to reports about spending habits and related trends, as a personal finance educator for the past 15 years, it is clear to me that it does not matter the way it once did.
A television program was recently trying to help a young, middle-class, suburban couple reduce their high prescription drug bills. It asked the couple how much their average monthly bill was. Confidently they answered,” $100, sometimes a little more.” It turns out it was $450. Would or could they be that wrong if there was no easy credit and money really did matter? I can’t count the number of debtors who said they had no idea how much credit card debt they had, or how much interest they were paying, until they filled out their bankruptcy schedules. What I do know is that my fourth-grade-educated, Sicilian, immigrant grandmother could have told you to the penny how much she spent on prescription drugs, and everything else, and how much credit card debt she had, if she ever had any.
(2) Be honest about “Good Debt.”
I hear so often that student loan, home mortgage or car loan debt is good debt, because we need an education, home and car. The reality is that the only good debt is debt that you can afford to repay and have a plan to repay.
It’s National Financial Literacy Month once again, and the economy continues to give off mixed signals, as do the actions and reactions of Americans. Economists and the Federal Reserve say that we still have a long way to go.
The bottom line is that it is as critical as ever that Americans continue to focus on their personal finances and the need to develop a smart, tailored and realistic financial plan that they can stick to.
I hope that you will visit www.MPNnow.com to review the “Back to the Financial Future” article from last year at this time, and the many other articles on personal finances that I have been privileged to write for the Messenger Post Newspapers, including the March 2009 Top Ten Tips To Achieve Financial Security.
This year I want to emphasize the four lessons that I find myself talking about more than ever when I speak in the high schools and colleges, and for faith communities and other interested groups.
(1) Money matters.
That may sound obvious, but after 20 years on the Bankruptcy Court Bench observing and interviewing people, and being especially sensitive to reports about spending habits and related trends, as a personal finance educator for the past 15 years, it is clear to me that it does not matter the way it once did.
A television program was recently trying to help a young, middle-class, suburban couple reduce their high prescription drug bills. It asked the couple how much their average monthly bill was. Confidently they answered,” $100, sometimes a little more.” It turns out it was $450. Would or could they be that wrong if there was no easy credit and money really did matter? I can’t count the number of debtors who said they had no idea how much credit card debt they had, or how much interest they were paying, until they filled out their bankruptcy schedules. What I do know is that my fourth-grade-educated, Sicilian, immigrant grandmother could have told you to the penny how much she spent on prescription drugs, and everything else, and how much credit card debt she had, if she ever had any.
(2) Be honest about “Good Debt.”
I hear so often that student loan, home mortgage or car loan debt is good debt, because we need an education, home and car. The reality is that the only good debt is debt that you can afford to repay and have a plan to repay.
Ask those Americans who have had their mortgages foreclosed, cars repossessed or will be forever burdened with student loan debt that is nondischargeable in bankruptcy, and that they will never realistically be able to repay, about good debt.
(3) Stop making wants, wishes, luxuries and conveniences into “Needs.”
We may be something like 25th in the world in math, and 17th in the world in science, but we are without a doubt No. 1 in the world at making that mistake. Are cell phones for people not in business, getting your nails done and having cable really “needs”?
There is nothing wrong with those things, but the problem arises when you don’t have enough money to go around, and you give yourself permission to go into debt for them, because “What choice do I have — I am just doing and buying things I need.”
(4) Stop believing that expenses you should be anticipating and saving for are “emergencies.”
Remember my grandmother. I know she would have laughed at me if I ever told her that having to replace my 25-year-old refrigerator or 30-year-old roof, or needing car repairs for my 10-year-old car, were emergencies that I had to pay for with a credit card, and then repay with interest over time. “You couldn’t have seen those expenses coming? Really.”
Please keep saving more, work on that budget so you can track your spending, and make good choices, use more cash, and avoid debt as much as possible.
John C. Ninfo II is a federal bankruptcy judge who founded the Credit Abuse Resistance
Education (CARE) Program, www.careprogram.us, a national initiative to teach high school and college students about the proper use of credit.
