Topic 146: On Being One's Own Financier

Carol:

Plastic or Paper?

Shortly after our move to Prescott in 1983, I applied for a credit card at the local store of a large retail chain. I was a sure bet—or so I thought—because I had worked continuously for ten years before moving and had a good credit history. I was denied the card because I was unemployed at the time even though my husband was employed and we had a joint checking account. I was so mad I boycotted that store for 5 years.
 

So, imagine my surprise in 2000 to find my college-freshman daughter inundated with unsolicited credit cards. She didn’t have a job, and she had no credit history. We talked about it at the time, and she decided to accept a single card, charge something small every month to establish a credit history, and pay it off. As far as I know she did that, and she has been practical about her finances ever since (although I may get a surprise to the contrary when I read her essay on today’s topic). I know she felt that she had really become her own “financier” when, in England, she sold a car, bought a new one, negotiated a loan, and later sold that car all without guidance from her father.
 

Unfortunately, many young people have gotten credit cards and voila instant money. Then, they have fallen into a spiral of debt by carrying over payments with outrageous interest rates or juggling payments between several different credit cards.   Currently, the average college undergraduate carries $2,200 in credit card debit, the figure rising to $5800 for graduate students.  Between 1992 and 2001, the average credit card debt among young adults who owed on their card increased by 55%. And,  a USA TODAY poll revealed that almost half of young adults who owed money had stopped paying off a debt, thus initiating such consequences as intervention of a collection agency, repossession of a car, or even bankruptcy (source: Williams).
 

Credit card debt is only one indicator of financial trouble in the making, and of course young people aren’t the only ones in trouble. Ben Stein, of TV and movie humor fame, is also a respected economist and these days he is paid to look closely at the financial habits of retirement-aged Americans. Says Stein, Americans are in trouble because they don’t save their money or plan for retirement: "This is the greatest crisis facing the country that people can do something about” (qtd. In Ackman). He notes that personal savings are all the more important because of the increasing gap between Social Security, Pension plans and retirement costs. Yet, 37% of US households do not have a retirement savings account of any kind (source: Ackman).   
 

A few years ago one of the families in our church took the trip of their dreams, a vacation with their four children to Scandinavia to meet distant relatives and explore their family roots. Dad worked for a public agency and Mom stayed home with the kids, so the trip was a luxury.  All six of them planned ways to earn the money for the trip. The parents even took on an early-morning  paper route to earn extra money they would need for the trip. No grumbling from the kids, no concern about paying off the credit cards because they would pay with paper, not plastic.  This family set a goal, worked together to achieve it, and had a memorable experience together—not just on the trip but in pulling together along the way. Those kids are grown now and have started their own families. I bet they have passed on their saving and spending common sense to their own children.
 

Paper, please.
 

Sources:
Ackman, Dan. “Retirement Doomsday.” Forbes.com   

Williams, Erica. “Students Need Help Combating Credit Card Debt.” Center for American Progress.

Megan:

The Greatest Ideas Somebody Already Thought Of

Well, Mom already told you how great I am with money, so I'm just going to update you on a previous post. Remember how I had three really great idea that I didn’t want to tell anyone about because I was afraid they might get stolen? Well, it turns out that someone (many someones) already invented them. The first was a personal library cataloguer using the barcode scanner in a smart phone. And they managed to put a spin on it that makes it appealing to more than just Book Geeks – it can also catalogue your music and DVD collections. The broader appeal is that if you need to make a claim, after a fire or a robbery, you can export the file to the insurance company.  Best of all – it’s available for free, which it was not going to be when I was the inventor.

Another idea I had at the same time was to develop facial recognition software that could be applied to one’s unsorted digital photos. Many people have already had that idea – Google’s Picassa is among them. Oh well.

My third idea was to develop a series of short animated films educating children and young people about how to be safe online. This was actually the most do-able of my ideas. I have a friend who is an animator ; he told me to come up with a script and we could put together a story board. I haven’t done it though. Other things kept coming up – interviews, a book deal that fell through, movies, and now, a puppy. There are probably dozens of versions of this idea out there, developed in schools and libraries across the country but maybe it’s still worth trying.

I’m sure it’s the dream of many unemployed people to come up with inventions and schemes that would pave the way towards financial independence. It’s the dream of many employed people as well. My Irish friend Sean was always coming up with ideas. My favorite was a crowd control barrier that doubled as anti-riot gear. Like most people, his ideas were mainly hypothetical, but one time he actually recruited investors and patented an idea he had for making trailers more stable in high winds. In the pub he would lament the failure of the big caravan companies to pick up his idea. “Just a little scrap of metal,” he would say, holding his hands about a foot a part. “A wee bit of metal and I could have been rich.”