(AV17536) Taking Control of Your Financial Future in Tough Times

good evening everyone
thank you for coming out tonight it is indeed a pleasure and an honor for me to
introduce dr. Jean Hogarth serving as the Helen LeBaron self an endowed chair
college of human sciences Ellen LeBaron Hilton
now share with the staff more than 1.3 million dollars from the
estate of Halle Berry Hubbard was served as the Dean for the
College are you of Home Economics not part of the college of human sciences as
she served in that role from 1952 until 1975
now throughout her career detailin is recognized as a visionary leader and to
advance women and well-being with children for the total share is selected
to advance priority areas that are central to our college of human sciences
in today’s world the college at this point has chosen to focus on the
critical issue of financial literacy dr.
five the characteristics of the Hilton share she’s a visionary leader and
excellent scholar and teacher and a national and international leader in the
field of financial capability and literacy she visit to Arkansas Lee is
the first of four weeks of business that she’ll be at Iowa State and during those
four weeks she will work with faculty students and state leaders visiting
classes speaking at several offices and where human faculty to enhance teaching
research and outreach efforts and these weeks are going to be spread throughout
here so she’s witnessing should be back you
know member and then she’ll be back here two times in spring dr. Mohler is
currently manager for consumer education and
of the division of consumer and Community Affairs and the veteran
American she joined the reserve in 1995 her previous experience includes seven
years of high school teaching on year on the operative expansion as a backing
different universe and 13 years on the consumer economics
faculty at Cornell University now Anna family deserve is responsible for
research and outreach initiatives related to consumer financial services
dr. holder is the author of numerous scholarly research articles as well as
consumer education resources on financial management both through
research and the consumer education programs that received awards for their
excellence for example she’s the recipient of the association of our
financial counseling plan education Mariella medicine educator
award and she’s mean a mentor and distinguished fat fellow by the American
Council on consumer interests and these are just a few of her awards and efforts
that whoever serves on several editorial boards and professional journals and
servants the co-editor of the 2008 Journal of consumer affairs to votes on
financial literacy she also serves on the advisory board for the Villanova
University Center for marketing and public policy the University of
Arizona’s research Advisory Council for the 18th chartered American Institute
for consumer financial education and research and the National Forum from a
low-income household say Lakes now whoever received a BS in education
from Bowling Green State University and about your MA
ehee in family and consumer economics from the Iowa State University that is
our topic this evening is taking control of your financial future in tough times
volume very marks the first – we’ll see – with questions and we invite you to
join us for refreshments officiousness so no further ado I watched a movie star honored he might tell you let me tell you just a little bit researchers degree from University of
Vermont her master’s from Cornell where I said underlined and a new PhD from
University of Chicago she schools from being a department to
being a college in four years here at she survived and it’s at the makita
Christian in 1959 summer 15 red 15 year anniversary of that isn’t as well as
campus turmoil seven sixties and seventies assembly pers on the campuses
in the sixties and seventies I can say that assessment accomplishment
something you might not know was that she was the first female city council
member desire she encouraged women to take a factory
movers and get involved policies that affected their families and their lives
I really love this quote from her that I have
because I hate you this is out of the world in 2009
as well as so again I want to recognize the great
honor of being too serious coming up there let me give you another quote it was the
best of times it was the worst of times foolishness it was the epoch of belief
it was the epoch of incredulity it was the season of light it was the season of
darkness this time in all familiar to you to sort
of breathe through today Charles Dickens married a hooker I have a chunk of my
nickname is Hogarth but I am married and my husband will say to you dad
he explains a lot about Charles Dickens to Mary over so where are we and how tough is it if
we talk about tough what I want to do is share with you just
some sort of status slides at certain point at where we are
these are exempt trends from 1975 to 19 2008 and in these slides I hold for the
you have figures and cartman but you can see that were behind the
mid-nineties in income but in fact in the u.s. trainings recently the most
recent numbers show that we need to come right now in 2009 it’s down a little bit
more it stammers 22.6% provides 2.8 percent relax for 24% for Asians
and 5.6% or in Spanish so the trend is downward they’ll be surprised to give you
unemployment rates have trended up my life is foggy not prevented air quotes
that they’re a little bit below the national average but I know that many of
you are feeling the effects of unemployment
communities I thought this was a fascinating slide as I developed the
numbers because the shows in Iowa is the mix in attracting the national trends in
bankruptcy and that biggest way that you see in 2005 really reflects the run of
the Pharisees prior to bankruptcy reform but what is more troubling is the fact
that we are trending up again from 2006 to 2008 I don’t have auto features for
this but national level credit card indices are are covering
above the 6% and in charge office in July I offer credit cards we’re at 10.5%
which is a new record for a credit card charge laughs the legacies just so they
needs your life in paying their bill charge-offs meaning the credit card
companies have just read you on sold your credit card data or just said no
we’re not and the national level I’m sure many of
you have been hearing about projected federal deficits I take a look at this
slide and it really worries me think about implications for tax burden in the
future and I will point out that these are annual deficits this is not
cumulative if I gave you the cumulative charge we would all be out of our state with interest rates if the government
finally starts to squeeze out a private island what will this do to the value of
the dollar internationally and what will this mean for the future of inflation the Federal Reserve on how to be under
Federal Reserve website hosts a credit conditions website that looks at a
variety of statistics that focus on delinquencies delinquencies for auto
loans bank cards mortgages I’ve put up here student loans and there are another
series of charts and this is heating man the darker the area the higher in this
case the student loan delinquencies from that are billing for nine days let me bring this a little bit closer at
home and I government ability of the franc can probably see it but mouse-over
a County and it will pop that coming out and give you specific information about
their coming and I selected Story County for obvious reasons here
these oolong delinquency rate in Surry County is up 6.6 percent higher than it
was a year ago I recognize that student loans are very
very complicated product the Federal Reserve in August just for these
significant rules on student loans difficult disclosures where we develop
the notice by doing a lot of consumer testing most of our new consumer is
nearly are based on interactions with consumers asking them what do they know
and they want to know what is meaningful to them how should we decide this
information and I was in the housing class yes
than the evolution of some more rigid structures that mean for memory one of
the things we found out about student loans is
our thrills number one they are there are disclosures while you’re shopping it
alone way to go fight for the loan and when you sign them along but they
were no disclosures when you actually have to start paying back door number
two we don’t know if we are moderating their
disclosures to the students or to their parents in the answer needs to be both
but we have to teach students as well as parents terms division substituted plums number
three students don’t know what to look for we talked to one student who didn’t
realize that you could get a deferred interest stream loan
so here is a Smurfs all who was trying to go to school and pick a club she just
firing numbers for students it turns out don’t always have our contacts for the
law a lot or a little what our payments on
$30,000 student loan debt it’s $350 a month a lot or a little
and another thing we discovered as we were talking to students were that
students don’t always think about the cumulative effect they look at it as
series one at a time long so I can be portable on my freshman year I can
afford the loan my sophomore junior senior me report but I’ve never stopped
to think about the fact that I’ve got four logs I’m going to take and at this
point I do want to mention that the average debt from an Iowa State students
on graduation or those with death is about 31,000
which is actually quite high not only within the state of Iowa but also
nationally if we turn foreclosures and I know those
are on everybody’s mind right now this shows you again another huge map to the
state Iowa the darker to read the higher to foreclosure rate in August there were
725 new foreclosures in Iowa and one out of every eighteen hundred dollars is in
foreclosure and that is up a 20% from August the good news sets of an
experience goodness is Iowa’s number 41 you have 40
other states and had negative in terms of how bad it is for foreclosure Nevada
Florida and California I’m number one two and three together with Michigan
Arizona and Illinois those days make up 60% of the foreclosures in August so there let me and just a couple other
little happy notes there and reflection financial markets so that mortgages are
work on Frank’s reversible moves around they’re very complicated products a new
rates around products we have to be thinking about
how your loans can apply to your credit card we make the payment cover your
tracks and transactions are cleared how difficult were you swipe your card at
the gas pump in your bank automatically blocks $50 on the under your checking
account but you only pop $30 over the gas one does that under $20 get release
patch in your account and the answer is not immediately you’ve heard people say
my 401k is now my – over 1k there are a lot of opportunities for frauds and
scams Minh and so if this is the worst of times
this is the foolishness and the Sailor and the darkness let’s try to see we can
figure out what the best of times and the light is and what I wanted to know
it’s not give you tips not saying can’t the change out of your pocket every
night and put it in a jelly jar at the end of the week came to the thing what I
want to try to do is give you some big picture control controls for animals for
human expansion sometimes so for those of you who are going to
fall asleep in president’s lecture here are the main points right now make
yourself think long term remember no much to lose you have and
remember the basics so let’s go through these one time I could tell the folks on
the 4-h model when I came to take care of yourself because it is ten our cans
of health and I think about taking care of yourself mentally emotionally
spiritually physically and then also stay financially so really you are an
important resource in all of this so taking care of yourself is really very
important the other night dinner I mentioned that I see a lot of parallels
between physical health and financial health and I see a lot of parallels
between nutritional management Evangeline in nutrition we talk about eating right
and exercising more I want you to notice acidity that I didn’t say eat less and
exercise more I said eat right and exercise more
it’s about calories in calories out nutritional density matters here
sometimes you can eat more low calorie food and absolutely loo this way
so it’s diet and exercise and it’s also diet and exercise in spending thinking
about spending right in earning more it’s all the calories in and calories
out or nutrition is all incoming and income at or as I like to say income and
outcome in financial management there are many many nutritional management in fact so many that exception has a
program called small steps to commune up and their evenings which are my words
not bears are you don’t get any one day you can’t get minimal so you can get
into financial difficulty in one day you’re probably knocking it out a
financial difficulties one day you have to start small but you have to start
think about my cutting out of that three o’clock so that does not only for your
waistline but also for your wand even Walmart now is advertising how much you
learn and you can say by reading a sack lunch a couple days a week and little
things add up if you thought you could save a dollar a day you can save three
hundred and fifty six dollars across the year if you can stay that down the room
week you’d be saving fifty three dollars so starts long but a start we always think about TD carousel really
also refers to taking care of a family and encourage you to think about weird
fewer kids take money when I was growing up I endured every one of my early
memories was my mom taking me to the bank to make bank deposits I hate to
tell you the last time it was I physically walked into a bank because
what I do is the ATM I go online and learning that kind of initial management
strategies very very important in the 21st century but it disconnects the
source of the income or the child children very very complicated thinkers
so the question is what kind of management money manager are you trying
to your children to be when you go to the grocery store does your heavy things
you’re buying bread milk eggs in cash back because what do you do you say
you’re just a debit card and give me 50 bucks right so what’s this you can wear
this one the other partners in here
so take care of your credit score’s I said this in the class this afternoon
your credits or really is your permit rather when you teach asleep
this is our goal under permanent record well your place for B is your memory
it’s made up of a number of components number one the biggest chunk of it is
your payment history are you paying your bills on time
number two is your credit usage ratio if you have a maximum credit line at $5,000
how much in that $5,000 starter usually if it’s a thousand dollars of credit
used ratio is a thousand to five thousand 150 or about 20 percent now
let’s suppose that your credit card company cuts your credit line you
haven’t done anything when you’re starting to get nervous and they cut
that 5,000 what just happened very beautiful
section right it went from one to five to one to twenty percent of its 60% you
are now the like a higher risk to credit companies your credit score goes down
and you’ve done nothing my advice to you in this situation is
start making extra payments on your credit card
another feature of your credit score it’s the length of your credit history
and your so so you who are students you have the longer you have a credit card
the better and that means you don’t serve your cards you don’t call them
white cards of another to another to another you need to keep those cards for
two to three years already build that life because another feature that is in
your credit score is the types of every week app do you have credit cards
student loans car loans mortgage loans what’s the music credit abou X is
considered healthy and finally what kind of enquiries are on your credit report
how many blue lines accreditor you love to be
and here I wanted to sell now a lot of people think that when they shop for
mortgage those are all things on their credit report and it means that their
score gets lower and lower and lower with every mortgage they shop and that
is not true generally if you shop through the same type of loan within
about a thirty day period it will be DS that you are shopping for the same
purchase so my decision is don’t worry about things on your credit
record from shopping but you are to shop shop efficiently do it in 30 days so the
strategies that we’ve talked about under take care of yourself are take care of
yourself take care of your family take care of your kids take care your credit
score in the next strategy I want you to call I’m sorry it’s one more
as the outputs of your credit score credit scores use sure they’re used to
give you long I approve you I denied but they’re also
used to set the interest rates we see less credit denials now and more I’ll
prove this one but you have to pay higher rates of a penalty
so interest rates it determined by this your insurance rates your car insurance
rates is tempered by your credit score so you can turn now to find for lungs
you might find yourself with a higher insurance rate if you go to rent an
apartment your landlord to pull the credit report
if you go to apply for a job your employer can pull a credit report on and
this is really important for those people who are getting times it requires
security clearances and this isn’t just people who work for TSA or security
guards or policemen the military is also for people who do this and the adult
information because the they have to know that they can rely on you as a
secure employee you’re not going to ceiling by these identity so it’s really
important to understand that the higher your credit report is you okay now the
next strategy approach is state long term and what about you today on the Turner I
also wanted to tell them you need to act now one of the real concerns I know is
when people lose their job they get laid off they think oh I’ll get her back I’ll
get Co pack of it Colbert and they go my sister-in-law happens to be out of job
for close to nine months she came over the Christmas season last year was
selling shoes at Macy’s – maybe Hannity and it took that Christmastime is shoe
selling experience to start a Kickstarter to actively building into
the job search long-term but these partners up here because to be the water
resources in order to harvest in September you have to plant industry and
so it is thinking that long term but emptiness
one of the things that I’ve been doing a lot of working recently in terms of
thinking about human behavior and how and better begin to grapple with
thinking long term is to go to the field of behavioral economics and behavioral
economics there are a number of features that I think are very interesting and
helpful to us as we think about dealing in financial type eyes one thing became
really kind of this call and endowment is it means that we value something more
than what it means worth what did we have it and I read three separate above
appears there’s a very very famous experiment done by Cornell investment
where he gave hugs and he paid by the Cornell mob from the class
and then it games the class the Hampton Classic at the corner loves how much
they would sell their mother so higher price it’s the examine effect
but I own is worth so much more than you could possibly be willing to pay and
that’s true for what my car when I go to sell my used car oh it’s a PHS soldier
my house it’s worth way more than that person is offering um in any plan on
buying and oh that car it’s a lemon and look at all those babies right you can’t
possibly so when you’re thinking long term you really do want to make sure and
you have to ask yourself am i suffering under the amount of effect is there
something that I’m unwilling to part with or get rid of because I really
would in fact that comes out of thinking
long-term it has to do with discount remarrying loss is way more than the
value games we are so worried about losing money that we forget about making
money and so we don’t sell off assets that aren’t producing for us because
loser anyway they’ll get this thing to turn around then let me give you an
example right now they’re saying this to somebody today there’s a Personal
Finance magazine advocating to seniors now because their
stocks or mutual funds and therefore when the eighties or IRAs are so long
Gretchen but if anywhere to sell them off they would be selling at a loss they
wouldn’t be getting as much so better to let them run and go take out a home
everyone a credit or a reverse mortgage because you can pay that back when the
stocks so bad enough and you can sell your stocks well is that really the best
financial advice to give something and I gotta tell you I think it’s very
circumstantial there’s some people from that strategy much work but there are
others there’s another example and that has to do with how I value the
future versus how I need to present what we want various by when we wanted if I
were to ask you right now there’s a reception interest and if I were to say
to you what do you hope is that that reception a lovely fruit plate or
cookies and cake and if I were to say you know next week’s university lecture
is going to do a section what would you like in next week’s university lecture a
lovely fruit or cookies and cake your answer if you’re like most people is
likely to be I want the cookies today and I want the fruit next week
and one of the interesting things what is the behavioral economy saying is
if we can get people to preview minute because they generally make the right
long-run incisions this use of fruit plate links to the questions how can we
get you to pre-order that fruit right now so that the next week when you come
back it’ll be there and you only have a choice and let me give you a classic
example I had lunch with a colleague and the Department of Treasury a couple of
months ago and in Treasury do protocol is you pre-ordered your lunch so I do
this lady pre-ordered the spinach salad I was still very silly what do they got
there he had four hammer if I had the menu in front of me that
day but I really need the spinach salad I
was another thing that they really haven’t
talked about his choice architecture how do we set up construction toys for
people or for myself even and in Nick Sanders for nudge
he talks on his whole thing cell phone book as he says I have a friend who’s
sitting on the couch here in school and she has decided to put the salad bar
first and the desserts last now what he suppose we happen to food choices if
she’d included those and the first thing you saw indicated if you have interior
visit deserves and to sound about this at again it’s not material that is
choice architecture what is how many in framing the choices how are you sending
them up let me give you another example because I love this one colleagues in
Chicago they should have a reserve thing do this study in an area of South
Chicago where if you are applying for you have to get credit us by the way the
law is declared unconstitutional because it was unfair discriminated racially and
but while it was still in effect he was able to do this very nice and natural
experiment study and keep about them people in fact got better lawns while
this choice architecture while this required counseling effect but it wasn’t
because they go to counseling in order to avoid counseling if it had the long
hand to high interest rate or too high of these you had to go to counseling so
they sought out loans with low interest rates and other foods the reason I have
this graphic up here is to remind us so you show that when people pay the
credit cards they tend to spend more money than when they came to cash so if
you’re having trouble with your credit cards put in a block of ice now the other thing that nigger
economics teaches us is how things are framed really dramatic and I love this
ad but I want to get one half of them well is it I’m going to get one or is it
half off in other words if I buy one is it only 50% of the price or is it only
50% of the price by violent and they give me another interesting kind of way
of framing what is evil like free but corporations don’t like to diminish the
value of their books in some car dealer it’s much more likely to offer you a
rebate or a lower interest rate than it is to blow over the price of the car so
you know you got one person on $17,000 and then three calamari but notice it’s
not $14,000 are it’s 17 – smooth so you’re still thinking 17 self-ratings
really another thing of a thinking long-term
has to do with what options are you considering every colleague at John
Lynch at University of Colorado who talks about their consideration set
he says a lot of the problems of the current mortgage situation were not
because people got the moron mortgage they got their own house and as I was
googling doing the little images to get pictures for this presentation I hid in
a McMansion and this case your product and then I actually read the text in the
turns out that this house is about five miles from Northern Virginia so sometimes so beautiful that you can
golf in more modest house and be just as happy in your lessons heartbeat as you
are in 10,000 square feet this goes not just houses but it goes to fruit away
from home my husband loves the Starbucks an ominous since when they become okay
to pay four dollars for coffee are your eyes bigger than your sunning
and oriwa another issue with reading long term
thinking about a choice set is a dilemma that we face in you want to open up that
considerations next think more broadly but if you start to be too broad it
inside me your decision-making there was a wonderful study that was done where
they went into the grocery store and they seven examples of samples in of six
jars of jam when I really finally have for everybody so six jars of jam people
came in and they sampled a jam stand with the jam bhattacharya next
week they came acting at 24 jars to other people who sample the jam only 3%
and the authors of the study are treated this to be so overwhelmed with the 24
choices that they just threw out their hands in the decision and kept rolling
average retirement down the road and so one of the things I don’t want to say to
you in terms of thinking on turkeys yes open up your chart set but open don’t
open about you broadly and may need to think a little bit about what
sustainable consumption is it really it sounds what you need versus waiting one
how many features do you really need on your cell phone and the other thing I want to encourage you
to do this I want to go back now to my rule is the law of the farm that says in
September think about suppose you started today saving a penny and
tomorrow you doubled it and the next day you doubled it and the next thing you
double it and so on how much money could you have by the minimum so we started
out of today’s Tuesday a penny – 82 cents Thursday for since Friday 8 cents
16:32 so the end of the week we have 64 cents a day you’re saying not actually
said every here who say 64 cents today after 10
days right I’ve been doing the double though level low after 10 days your
understanding $5 day by Parsifal cents after three weeks 21 days this is double
each time all right you’re singing $10,000 day after four weeks you saving 139 $42,000
day but notice what happens the real world
happens at the end of a period here it doesn’t happen unless you start with 1
cent 2 cents 4 7 8 all the compounding happens I want to
share a few things some of you’ve not heard a brutha 72 and I do not know why
this works but the 72 is this magic number if you take 72 and divided by the
interest rate it will tell you how long it will take for your milestone so if
your interest rate is 6% so we need to divide about 6 your mind 1112 years okay
obviously stay on the same my checkbook last weekend before I came here and I
have interest shiny at my bank the interest rate on my shining is point
zero five percent okay so they’ve got a payphone Turbots
you gotta start again in extra tools the first thing is awareness pay attention
to the world around you open and read your mail open agree those credit card
statements bank statement skills you can be getting nervous system changing the
terms by the way right now today September 22nd your credit card company
has to tell you the forty five days in advance is changing any of the terms or
interest rates on your credit card if you disagreed with the change concerns
you can breach the card and you paid off but if you don’t tell them you want to
free these in the comment and continue to head off if you’ve never open that
change in terms cents you can lose that right because you’re a grown-up so pay
attention get information and I would hope it
would get information not Sam snitches we would seek a trusted third party
sources like Cooperative Extension like the faculty and students family staff
here at the University other government websites like the
Federal Reserve and the Federal Trade Commission the difference between education and in
information is general education is how it applies to you and so I’m encourage
you to seek out the education to help you apply that information to your
situation personal finances after all personally it’s not okay combat always
really great information from you but why do I do with how do I apply that in
one situation so getting the basic tools for analysis in university critical menu
and I’m afraid of people in this slide are from an Iowa State Extension Program
called auntie’s project is you don’t know that his project airplane people in
this room who I think an important the other thing that’s really important
I only personally is to get advice I currently have some sort of my arm and
it was hurting and I was thinking it was gonna go away so the first thing I did
was paint myself men and there are a lot of financial problems that you can self
medicate you can start to figure out what you should be doing and then go do
it but after this ringerman just kept bothering my husband so I went to the
job so I now have a very stylish black belt
for placement here you can’t see the trust me
to help bring this gym is over I needed to seek out a professional
advice there’s nothing please no shame and
going to a doctor because I have tennis elbow and there should be no shame in
you seeking out really box on the financial advice when you are beyond the
self-medicating stage in financial abilities so I want to encourage you to
seek out a financial advice what else I want you choose advisors wisely never go
to descending quack doctor profession you know I didn’t just walk up ending in
on the street and say what should I do about my elbow I went to my physician so
you wanted to choose advisors wise and here you guys are so lucky because you
have the right here on campus and then you have
certified financial planners here who are able to work with you and talk with
you and help built a potential to play in a financial remedy for you and I want
to point out that this is in fact you can see the scratch moon up there funded
by the student body so thank you very much for that the other tool that you have is policy
and remember but a little area development said she wanted to encourage
women to get involved and take an interest in policies that affect their
lives if you see something using a state or
local or federal policy the difficulty could affect I can encourage you to get
active and take an active interest in this right your legislator condom in my
person another important tool that you can
is you I mentioned take care of yourself I would also say invest in yourself
Pauline your critical thinking skills educate yourself not just with formal
bells of any formal education and I only use the phrase lifelong learning
learning doesn’t end when you graduate sorry about that sweets it really does
you just you know underline you need to be able to discern when leaders raise
when it sounds too good to be true it probably is people to discern when it
sounds too good I ever be remiss if I didn’t mention an
important tool and here I have to say that my title for my crease in patient
is quiet from this website so I’m not this is the extension dialog style and
it is a partnership on all the property of extension services around the country
and you can go to extension dot a word and you can find a link to as an intial
security managing management of tires and there’s a lot of really great
information there on how to talk to kids about money on developing a budget on
figuring out how to manage an emergency fund those types of things
another important tool that you have is knowing your rights and responsibilities
so when do you take no for an answer and is slow aging let me explain that this
is from a YouTube video an apology United breaks guitars how many of you
heard about Oh am I
we sure are going into tonight legal home the night racing cars this is a
professional incision moralist artists don’t take on professional decisions
this guy put a new video up on YouTube because he did everything right he
followed the complaint protocol and he got no satisfaction so he said you know
I have a right to some redress here as a consumer and somebody posted this thing
like YouTube it’s like 20 million hits on it and it’s very very interesting to
think about gorilla concern tactics here if you’re not posting your consumer
complaints on YouTube at least logic complaints I understand your rights or
you can opt out when you can if you have ever I think most people know that if
you have a charge into credit card you don’t need is yours
you can simply not pay that portion of your credit card but you can’t just not
paying it have to credit-card company know that you are
disputing this part is a credit card bill
so it’s responsibility so it’s also writes an interesting website opinion and I
started this site that is mortgage nightmares and people are posting their
mortgage nightmares and calls you the Federal Reserve Board senator sites
means and it should read some of these stories so we don’t see you I will just
send you to this site and say you should read something story but it’s an
interesting thing about how our social networking and social media are starting
to become part of our consumer in terms of community resources I would
encourage you to think not only about once I have up on the screen but also
research social services from students on
your network resources cashier babies and a kidney exchange videos books and
please don’t forget about the library their best
okay the last strategies memory base basic number one companion ago she ate
when we did our mortgage testing for our disclosures we found that consumers were
more likely to shop around for a cell phone or a television than they
literally their origins almost everybody just went to the first
place that they applied and so render shopping and comparing and negotiating
pumps what should you look for do you look for monthly payment or interest
rates do for fees or total opinions and the answer is it depends on your
situation but understand do your homework shop prepare negotiate and
there are a lot of great shopping tools out on
and here’s where I need to pitch my own advertisement from the Federal Reserve
report we have a consumer credit website and it has a variety of not only
consumer information but also things in there tools and you will see on there
that there is a credit-card plans and u3 literally twice
a year go out on certain days this one happens to be from January to July they
are just now being posted but you can sort these data by interest rate or
annual freedom or alphabetically and you can find out which times have the lowest
rates for example in Jenny Meredith the best rate card out there was a credit
card another 42 percent APR and no another basic please understand the real
price of things in numeracy it’s really important here when we start talking
about Rioja licensing I have a colleague from the Boston reserve bank who did a
study with consumers who use Volunteer Income Tax Assistance tax preparation
people they’re waiting for her to have their taxes done on a quiz one of the
questions one six hundred divided by three fifty percent of the consumers got
that huh yeah that’s that’s really very sobering
and people who got that a single question right we’re more likely to make
entertaining this one time and we’re less likely to be in these foreclosure
situations so it’s not I guess it’s not just about knowing your numbers they’re
really understanding their real price of something what you may be shocked or
something on sales charge you know to credit card at in reality you could
literally double the price of that item in terms of Commerce I would also
encourage us to maybe it’s not just about the $3 a gallon for the answer
from Soros it’s also the pollution the environmental issues either whether it’s
ethanol or oil that doesn’t matter it’s the same for garbage how many landfills
to your health for investments and I believe we can more of us in it
we consider maybe that you are socially responsible consumption and more
sustainable consumption we talk about sustainable agriculture I think we need
to talk a little bit about sustainable profession as well in terms of
understanding costs let me show you one tool that we have on our federal
reserve’s website it’s a credit card calculator and in this case we have a
three thousand dollar credit card balance which is the median for people
who revolve and thirteen percent APR which is the average APR right now and
if you fill in those numbers on this credit card calculator page you get the
calculator out but you get an operator that tells you yeah you’re gonna pay me
the 60 bucks I’m taking 16 years to pay off this three thousand dollars and you
will have ten eighteen to twenty eight hundred dollars and interest any kind
this let’s talk about opportunity cost what is what else could you buy for
$2,800 and you’re betting on here after $2,800
your credit card company but would you be rather standing on a vacation or and upgrade to your house or I don’t
know more educational items we also have an intercept a real cost here’s what we
do we give you an option to do some of these what is typing on my calendar if I
wanted to pay over my balance in five years how much would I have to pay well
the answer there is 69 dollars a month and you know that’s not a whole lot
different than that you know it’s squeezed another nine dollars out of
your budget and look what it does it comes to your time five years and you’re
interesting to a thousand dollars thousand and six instead of making
minimum payments remember every 168 if you made those level 60 picado payments
what would that mean well everything you pay off your credit
card in the six years you pay 50 dollar changes some of them I say
understand the people cause the real cost of making only the minimum payments
is not paying the nursery’s measure or not paying a thousand but rather paid
2,800 another basic is to remember that their compasses cycles for a reason as I
was preparing these charts for this this lecture I find that an indigent of the
cyclical nature of our economy and I have a lot of things that you may be
down but we’re not out and we are enterprising in and this speaks a lot to
meeting diversification not only in your investments but also even income sources
and many of our families today are as well as they are because we mentioned
learners in our hustle there’s certainly enroll for experience
and rather maybe change in this environment and if I want to close with
the final and perhaps the biggest basic of all and that is spend less than penis I have to return to that of our
husband Charles Dickens annual income 20 endless senses mighty talented results
happiness and will become play touch and of expenses time I pass results yes sir
thank you very much maybe another art for a great inspiring
to talk during informational a few questions
I always explore with a statement if the bankers bank the Federal Reserve
was really doing her expect each other of oversight of the financial community
wire breaking predatory loans out there to be human and wider the more maybe
Home Office’s American than our McDonald’s franchises question and I
think that so let me say two things
I didn’t do my job I didn t she might explain them saying I’m seeking that I
might be happy that they have a better or there were certain things understand
so it was on there yeah you do you bring this other people that we hear
dysfunctional but I do feel a need to sign and say you know I think there’s a
lot of money to go around and I do think that that Reserve and
other federal regulators and I think we’re all together we all go see see the
officer commanding officer supervision the FDIC and
to a lesser extent did drop the ball I don’t think we were
as assertive as we could have Vienna the other part of this and this is going to
sound like a Washingtonian – making excuses but there are a lot of entities
out there that we do not regulate and we can’t step on the toes of the state
regulators so I wanna accept some of the blame that
I also want to share something is a problem we did a project with the US
Army and the even though there is a bill the tenon Act that caps payday lending
rates for military personnel it is very very difficult to enforce
and it’s often in force at the state level rather than federal law so I think
one of things that I would encourage you to do is to continue to support the work
that your state government is doing in national
encourage you to continue to write regulated your general congressmen and
Senators because they are ones that are going to be making decisions about how
financial services gets regulated in the future there is a bill ended in front of
Congress right now that would change the regulatory structure and creating super
Financial Services Protection Agency and some of these things with the perhaps
fewer of these things absolutely slip through the cracks
under such a very good question I think is your advice here was good but I see any cons only worthless and
this is why the Federal Reserve System controls all the money in all of this
all the private system and they have and hopefully firmly and they’ve got a
growing on those two or the vicious cycle the world a growing economy Plus they’d be in place the money there
for a devalues it as she’s built a fully paid for and pretended fat reserves old
war monument that’s the growing in the time we’re always paying more and more
and more we don’t apply as bankers that are doing people what they’re doing in
that student now as far as the all the congressmen senators and I don’t
know everything something that was much easier well thanks man
after 25 years I probably had forgotten more than most people in us who know and
we see God as a mobile economy and again because those things are privately and
please ah servers and innocent
we did break America that we want to but we choose not to it s empower the
perimeter has over us questions every hit an executive
decision of what your question is how are we going to control the Federal
Reserve System if they keep doing this bullied rug out from under us every time
we try to get a statement on an AP but offsetting boom and bust
this is 1913 and I really have to say
interesting question but it’s really beyond my expertise as a consumer person
to about the
I’m going to be much more autonomous focused on tennis
but I would encourage you to certainly pick up
and call people at a Federal Reserve and in part of emails because we can respond
to questions and concerns so you know hopefully question sorry and we have any more questions what I wanted and I thank you for coming
to speak with us tonight one question I have is there’s been a lot of emphasis
and focus on the idea of education and educating our students
how to be financially responsible for seven letters that should be the focus of policymakers
Porsche the focus should be at the college level
and primarily what what or how is it most effective delivered okay you know I’m an engineer and so I’m
going to tell you the educational evidence but one of the things we have
learned each in a lot of differences is that early morning sticks the most so the
earlier we can get to students with financial education messages the better
and that’s why I really want to encourage parents to be thinking about
the kinds of messages they’re sending to their children when they’re shopping
doing the exams showing I mean someone is it has changed because as my manager but I believe that early is very
important but it doesn’t stop remember when I said like long and I believe that there’s formal
learning being an incredibly hopeful so taking a course in high school taking a
course in college maybe of course email school in New York State where I taught
me when I was when I worked in New York City in
extension New York State had a requirement eighth grade for financial
education module so all of that really really helps having people all have
exposure to an intial education here in our state is very important because
there are different kinds of teachable moments in our lives right now if I were
to try to teach you about insurance and annuities they’re really good to take
but it’s not going to teach you about stopping for an apartment shopping for a
car showing for student loan it would be very stable and so I think one of the
things you have to do is prepare ourselves to be open and understanding
that whether those people know what’s happened in our lives and then see how
the education so do I believe it belongs in the
elementary schools do I think math belongs in elementary school we better
rather think reading it belongs in elementary school you bet do I think
that item is now mandatory teacher Qi tuning up and reading this by using the
examples from financial education for Japan thank you very much