Wednesday, August 04, 2010

Financial Education - How Dumb Are We?

I'm all about increasing the financial IQ of the average American.   On this blog I strive to explain concepts that I understand in ways that I hope others who may have less experience can understand.   I think the majority of the problems we have in our retail financial system are related to general ignorance around simple concepts.

Perhaps you've noticed that your credit card bills have changed their look a little bit, showing you how long it would take to pay off your bill and how much total you'd pay, and also giving you those metrics if you pay a little more than the minimum.  This is a start, and I've said before that all financial products should have a "one-pager" kinda like standardized nutritional information for food.  Even the most "complex" negative amortizing adjustable rate mortgage is not something that the average American cannot understand.  Dispense with the 15 pages of legal-eeze and synthesize the whole thing down into a series of bullet points:  

-THIS is your payment.  
-THIS is how long you make that payment for.  
-THIS is the interest rate the payment is based on.  
-THIS is when that rate can change.  
-THIS is what it changes based on.  
-THIS is how much it can change.  
-THIS is what your new payment could be at different interest rates.  
-THIS is what will happen to your payment when you have to actually start paying back the principal.  

etc etc etc.  

Today, though, I found the following story on Yahoo's main page. The hyperlink text was "Money Moves You Didn't Know Were Illegal."  The items inside are:

1) Signing someone else's name on a check
2) Using someone else's identity to obtain credit
3) Lying on a home loan application
4) Writing bad checks
5) Copying U.S. currency
6) Defacing U.S. currency.

I mean... Really? Are we that dumb that we need to be told that forgery, identity theft, perjury, bad checks and counterfeiting are illegal?  Is this helping anyone better manage their financial awareness?  Come on, mass market media - step it up.



Blurtman said...

Yes, people are that dumb, and the politicians know it.

My senator, Patty Murray(D-WA), is running for re-election. She voted against the wishes of an overwhelming majority of her constituents to bail out Wall Street (i.e., TARP bil). She voted to confirm Geithner and Bernanke.

She is now running an attack ad on her Republican opponent. It starts off with a litany of troubling recent events: "Bank bailouts, bonuses,...."

Umm, Patty, you voted for the Wall Street bailouts, and voted to confirm the engineers of the AIG bailouts, and...

Oh, never mond.

M. Terry said...

Umm, yes KD, we are that dumb. Its the same as the commercial that states "you ran up debt through no fault of your own".

Blue Moon said...

"6) Defacing U.S. currency."

I didn't know about this one... So the guy that wrote some girl's # on my Hamilton committed a crime.

I am really down about the way our society is set up -- we depend soooo much on discretionary spending, much of it on durable goods that we do not need. That is why we have resorted to these warnings on credit card statements. It's like someone telling you after a 3,000 calorie meal that the 1,300 calorie slice of chocolate turtle cheesecake isn't going to be healthy -- you already knew that, but in the heat of the moment maybe some sense will creep in.

Blurtman said...

How dumb are Americans?

Dog chews off drunk US man's toe in 'lifesaving move'
A dog chewed off its owner's toe while the Michigan man was passed out drunk in a move that could save his life.

Mark said...

Hey, people tell blatant lies on their resumes all the time - I guess they figure what's the big deal if they do it on a loan application.

They are probably not aware that inflating insurance claims is also against the law.

Transor Z said...

How much do you want to bet that signing someone else's name on a check is not necessarily forgery or uttering?

Onlooker said...


I don't know what you're getting at, but I will say that #1 is certainly the most benign on that list.

I mean really, they cite the signing of a "loved one's" name in the context of not doing it to steal or commit a fraud. Nobody's going to get charged with signing their spouse's name to cash the Xmas gift check, for instance. I've done it myself, numerous times. The prosecuting attorney's office won't be bothering with that one.

Now doing so to commit a theft is a whole different story. But that's not what was presented here, and therefore this one really doesn't belong in the list with the others which are much more serious.

Downtown Josh Brown said...

I'd like to see someone start a new ratings agency that was geared toward consumers. Credit card and mortgage companies would submit their contract language to ratings agency who would then either put their logo on it that its consumer-friendly or decline to.

The only trouble is, like most ratings agencies, we don;pt knwo who is going to pay for it to keep it unconflicted.

Anonymous said...


At least here in Mass, it isn't a crime at all as long as it isn't to defraud and you're authorized.


tversky23 said...

How dumb are we? The 6th most common search on google is for..."google".