Everybody Loves Your Money

I just read about a roadshow that teaches kids the basics about money.  I suppose it’s a start.  My preference would be to have a full curriculum in our schools to teach younger kids about personal finance.  Since we don’t have that, I guess we have to be glad that at least someone is making an attempt to teach our children about money.

This program is sponsored by the Department of Financial Institutions and is paid for with fines and penalties from various financial crimes etc.

The actors visit schools and have four skits that they go through over about 40 minutes.  The first skit is about budgeting and acts out a scenario where a father is trying to fit a lear jet in to their family budget.  Kind of extreme but I think it drives home the point.  The skit addresses the concept of needs over wants.

The second skit covers interest and shows the value of compound interest.  It’s done in a game show format.

The third skit covers loans and shows the kids what things really cost when you factor in interest.  The example they use is buying a car.

The final skit covers saving and points out that the average person will spend over $1 million dollars over a lifetime.  They give examples of making $10 and saving $2.  That would be great if kids could learn to save 20% of their income.  That would sure be a lot better than the current national savings average of -1%.

Anyway, the article is worth reading if only to give you a warm and happy feeling that maybe we can correct the financial disasters out there one kid at a time.

http://www.thenewstribune.com/261/story/58916.html

I guess it’s a sign that it’s getting harder for the banks and mortgage companies to find someone to loan money to.  I continue to get more letters from various lenders telling me that I am qualified to either refinance my home mortgage with them or take equity out of my home.

The latest is from my actual mortgage company.  The top of the page is a fake check and they start the letter with this:

“Dear XX,

Imagine if you were holding a check, made out to you, in the amount shown above.

What would you do with that money?  There are probably dozens of ways you could spend it … and all of them worthwhile.

For example, you could use up to $105,000 to pay off high-interest credit cards, for home improvements, a great vacation, a new car … whatever you want.  One thing’s certain …

You can take one step closer to making your financial dreams a reality by calling 1-800-XXX-XYYX before June 18, 2007.”

Yes, they actually bolded that text as well.  That would be quite the vacation for $105,000.  Just think of the car I could buy with $105,000.  Nowhere in the text above do they mention what kind of payment that would be or what the interest rate is.  As I read further, the best rate I could hope for is 7.75%.  They also don’t mention the length of the loan.  I have to dig deep in to the fine print to see that there is a $50 annual fee for this credit line and my interest rate can never exceed 21%.  Wow.  That sounds a little steep.

When I read this letter, my mind was replacing their text with what I was seeing in my head:

“Dear XX,

Imagine if you had a huge monthly payment and had sucked half of the equity out of your house.  Just think how that payment could put a financial burden on your monthly cash flow and hurt your long term net worth.

For example, you could blow all of your home equity on lots of things that either depreciate rapidly or spend the money on vacations you cannot afford … Anything you want with plenty of consequences depending on what you choose.

You can take one step closer to financial ruins by calling 1-800-XXX-XYYX before June 18, 2007″

The illusion that this is free money is absurd.  Most people reading personal finance blogs realize that this is not necessarily a good financial decision.  My general rule about making financial decisions is to never go for an offer that is unsolicited.  If I’m making decisions based on mailings I receive, it’s a sign that someone else is in control of my money.