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Thursday, April 4, 2013

Financial Education

When the great recession hit, many households hit rock bottom.  People found their house no longer was worth what they bought it at originally, people lost their jobs due to layoffs, and many people starting falling behind on their loans, mortgages, and credit card debt. Peoples lives got turn upside down it seems in an instance.  This might have been you reading that has been affected by this Great Recession.

Of course when the crisis happened there has been a bunch of finger pointing.  Especially in the last couple of years the less than fortunate termed the (99%) and the more fortunate termed the (1%) have been pointing fingers at each other.  Especially at the extremes at both ends of the spectrum.  I have heard and read of things such as "its the government programs subsidizing welfare that caused this" or "its the tax loopholes and the top 1% that caused this"  Although distribution of wealth has certainly taken a hit (that is another topic altogether), we are still one of the riches nations in the world.  I was listening to the radio the other day and heard a lady on the radio say her husband got deported to Mexico and only makes the equivalent of $10 a day here in the U.S.  So how ,in one of the richest country in the world, are there literally tons of people losing their houses, declaring bankruptcy, etc...  I will tell you.  It comes down to two things.  Now I preface this with I might have stole these idea and can't remember where.  Those two things are 'ignorance' and 'greed'

Now I am going to talk about greed first.  Greed it was helped caused the Great Recession.  Greed on the part of the bankers sure but also greed on the people who took the loans.  Now I will preface the rest of the paragraph by saying this.  Sure the 1% had a lot to do with the Great Recession but I find that winners take responsibility and losers blame.  True Fact.  A lot of people point fingers at the bank for the bailout and I was one of those people, but hello the bank borrows money from the people who invest with them through savings, checking etc.. and lends out to people.  Guess what those people didn't pay up so they got foreclosed on or filed Chapter 13.  Now I realize there are some unforeseeable circumstances that would legitimately have someone file for bankruptcy.  But 99% of the time it is because that person is not on a budget and they live outside of their means.  Subprime loans mainly caused the housing bubble to burst.  Keyword 'Sub' followed by 'Prime'. simple terms less than prime.  Not as good as Prime. It was created so people with bad credit scores or bad finances could borrow money.  "This seems like a recipe for success"  He says sarcastically.

Now ignorance is the other one.  Financial ignorance.  Thanks to my Dad and he constant teachings I was taught things such "only pay cash for your car", "emergency fund" etc..  He even taught me some of the baby steps of financial success as a kid.  Those have stuck with me since then.  I didn't always follow his advise.  I let the greed sometimes step in and say I want, I deserve to have this get in the way but his sound advice has got me out of hot water.  However, my case is the exception to the rule.  Many persons are not taught about how to handle money.  They are taught to get an education to find a good job.  That implies that once you have a good job your job will take care of you.  Americans have had a rude awakening that this isn't the case.  Retirement Pensions are all but extinct.  Heck being able to even know if you will have a job next month is over.  Some people are taught that the government is and should take care of this.  People if you think our government who is over $10 trillion in debt has the financial wisdom to take care of you in the future please please tell me the medication you are taking because it has to be some good stuff.  I can could go on and on and say a great majority of people are financially illiterate and uneducated.  They work for their "things or money" instead of having their "things or money" work for them.  I will include myself in this scenario because up until a year ago I let greed and little bit of ignorance have me work for stuff instead of stuff work for me.  I am on the path to having stuff work for me.

So my point is there needs to be more financial education especially at a younger age.  I believe Personal Finance class should be a required course in High School.  Handling money is better than the amount.  Ask any broke lottery winner.

I learned a lot of my new found financial literacy through the school of hard knocks, books, radio shows, etc.. I find constant education is the key.  But also good education is the key.  Study the people whom you want emulate and their practices and soon you will be on the road to their success.  If anyone is having financial troubles that read this blog please check out daveramsey.com or read his book the The Total Money Makeover.  It literally rocked my world.  Leave comments and tell me what you think.

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