Arthur Morris originated the installment loan. His Morris Plan,
the first to make credit available to the average citizen, began in 1916 despite common wisdom that lending money to working people was doomed to failure. Today, it’s hard to imagine how the US economy could function without credit. Using credit means being able to buy the things or services you need or want by borrowing the money to pay for them. When you arrange for credit, you agree to repay the lender the amount you have borrowed. You typically pay a finance charge, calculated as a percentage of the amount you borrowed, for the opportunity to use the credit. Loans and lines of credit, of which credit cards are the best-known example, are the types of credit people use most often. Loans allow you to borrow a specific amount as a lump sum and repay over time. Lines of credit give you revolving access to a fixed sum of money. Revolving means that as soon as you repay what you have borrowed, you can borrow it again. Creditors are willing, and often eager, to advance you the principal, or money you borrow, because they make money on the finance charges you   Read more…

The interaction between different financial disciplines is exciting to observe when they’re coordinated to support a family or business in their money goals. But there are other fiduciaries that are often neglected, but nevertheless needed. One such group are the department heads of Human Resources for firms. Surprisingly most HR responsibilities seem to focus on the healthcare arena and do little in the retirement planning area. Many HR heads may not be aware of their fiduciary responsibility to their employees under the jurisdiction of section 404c compliance requirements. This is a serious piece of legislation that dictates the education of retirement plan participants and the oversight of that education falls into the purview of HR. The liability for non-compliance is a significant exposure to HR and the company’s owners. One such remedy available to HR decision makers is the Society for Financial Awareness (SOFA), a 501(c)(3) non-profit based out of San Diego, California. They have qualified educators from the ranks of financial advisers, insurance agents, attorneys and CPAs. It’s strictly instructional. No product or practice is promoted. Educating people on money items is the core competency of SOFA. The courses are conducted in classroom fashion and are formatted to help   Read more…

Most people have a variety of financial advisers, but rarely do these individuals act like a team. Selecting someone to quarterback your financial team could be one the most important financial decisions you’ll ever make. Money matters are not a do-it-yourself activity. You need to partner with a knowledgeable and trusted fiduciary that you can envision as a future family friend.  You are going to need to vet this person and require character references that carry weight in the community. It’s even better to have other fiduciaries nominate your financial QB. Once that person is installed as your most trusted adviser, together you can build a team to support all the financial aspects that address your financial life. Good financial advisers will be the first to tell you that they are not experts on every financial topic. They generally have their own team of experts that address different areas of their finances like insurance, legal services, investments, banking, financial planning, etc. Your financial team should be comprised of members that are educators at heart. No one wants a group of type A salespeople in their life. You want advisers that take the time to bring you up to speed on   Read more…

All learning begins at home. The first step to financial freedom is debt management and elimination. If you pull your wallet or purse out, you’ll find that there are more charge cards than cash money. That should be the first sign that cash isn’t king, but debt is the dictator. Confessing your money mismanagement is the next step in debt management and elimination. But if you want to really leverage your lesson- do it in front of your children. Your humility will go a long way with them when you are unable to give them what they want.  Confession can be good for the soul, your pocketbook and your children. Money mistakes can be a learning experience for the entire family. Another great example is balancing the checkbook, creating a budget and monitoring debt reduction. When one credit card debt is retired, there should be a family celebration. Some families have taken debt reduction to a whole new level by retiring their mortgage and burning the paperwork as a family celebration. These events don’t require education, they require will execution. The event will imprint upon the psyche of your children and formulate a good foundation for their own financial profile   Read more…

Can you imagine a millennial graduate, with two bachelors of science in Physics and Calculus and a Masters in Mathematic Chaos, unable to secure a mortgage because his student loans are over $125,000 and he is earning a blue collar salary?  How could a Suma Cum Laude graduate not understand the consequences of accumulated debt when he can calculate the rate of expansion of the universe?  Something’s got to give. Parents need to organize a movement in their school districts at the elementary level to compel school boards to include financial education as part of their mandated core curriculum. How can you graduate from school with a four-point average in math and science and remain incapable of understanding the economic value of a purchase item and whether or not it’s a good deal? It just seems incomprehensible that young adults are granted significant lines of credit without the financial discipline that comes with financial stewardship. How can we create a generation of money smart and savvy kids who are able to make good financial decisions? Parents have to own this issue because it’s an issue of family prosperity into perpetuity that’s at stake. Most parents bemoan that fact that they   Read more…

Nothing in life is free. Money doesn’t grow on trees. These were the money mantras baby boomers heard from parents who lived through the Great Depression. Most of the baby boomer generation were brought up with a strong work ethic and most held down an after-school job, like cutting lawns or delivering the newspapers. Some had allowances for doing chores around the house. And a few were given allowances without doing anything. But for the most, if you wanted something, you got a job and saved for it. Some boomers thought that their Great Depression parents were stingy about money; thought they were tight fisted misers. Others viewed their parent’s conservative spending as frugality against an unknown future. After all, another Great Depression could emerge from a slow economy. Back in the Fonzie era your family’s wealth, or the lack thereof, was judged by the location of your home and the car that you drove. Securing a mortgage or a car loan wasn’t a slam-dunk. But that all changed with the invention of credit for about any item you could desire. Introducing easy access to large amounts of credit was the greatest contribution to the economy the baby boomers ever   Read more…