basic skills and debt

[LivingAlmostLarge]

So Nutria wrote about the fundamental causes of debt. But I don't think it really looks at how many people are struggling with debt because of lack of knowledge.

I volunteer at a shelter for people who are getting off the street or out of jail many of them have children and most were women. I help once a month running birthday parties for kids in the shelter.

Anyway this time at the party I let a couple of the kids help me run musical chairs type game with colors and shapes. Someone calls out a color shape on a card and the kid on it gets candy. They love it. But I realized that more than a few of the kids didn't know their shapes or colors. My 3 year old could likely do the color and shapes and some of these kids were in elementary school.

The truth is that these parents haven't had the opportunity and privilege to probably teach and read to their kids. Many don't have the financial means to own a car. So they are really stuck with the worse financial situation and it's very difficult to get out of.

When I was signing out there was a flyer for financial education for all people staying at the shelter. The signup sheet was FULL. It was being taught every saturday for 2 hours at a time for BASICS. Stuff I bet everyone on here would assume is basic knowledge. I signed up to help teach and free childcare would be provided.

Basics like what is a checking account, how to balance a checkbook, how to draw up a budget, taxes, credit cards, debt, payday loans (different types of debt), car loans, etc. Just basic finance skills probably many take for granted. I wanted to add in coupon clipping and trying to find deals but I have no idea how to apply it to life without a car to make life easier.

I mean everyone reading this is likely able to order things online for cheaper, there recently was an article how Amazon is delivering to mostly white versus african american areas. Also if you are online reading this you have the time and money to have internet.

It's stunning the differences you can have and part of it is education being taught by your parents. FWIW this shelter has a good rate of helping these people get into section 8 housing on their own in 12-18 months and teaching them life skills, and helping find jobs. So the people running it are really doing amazing with what they have.

I guess I think it's easy to say well get out of debt. Or americans have $8k in CC debt. But the truth is we probably don't understand the circumstances many people are in that cause these financial problems.

Your thoughts? Or suggestions? I'll be taking them to the finance class I'm going to help with.

[Nutria]

Well, yes, I did assume that people know how to add subtract, know when one number is bigger than another, and how much you earn in a month, and why spending more than you earn is a Bad Thing.

[snafu]

In ESL, money is a very popular topic to engage non English speaking individuals who resent these mandatory classes. They lack basic financial facts and seem to use what they learn.

If you can put across in positive words they need to get the underlying message that it's critical to listen and understand credit details given by every credit situation. They don't know/chose not to read the information on CC bills. For example, CC bills must display how much interest was added to the bill, every bill. They must show the percentage of interest and how many months it takes to pay the balance using only the minimum payment.

They need to know there are money rules. Know Due Date and make their payment two business days before the due date to ensure it posts on time or they will be charged a late fee. The more you utilize available credit on the CC over 30% the higher they raise the interest rates.

If you read Kiplinger's, they give an outline of someone's financial picture. One tool that I used was asking similar questions and asking participants to write their answers based on their specific circumstances.

[Nutria]

If you read Kiplinger's, they give an outline of someone's financial picture.

This month's newsletter?

[disneysteve]

I guess I think it's easy to say well get out of debt. Or americans have $8k in CC debt. But the truth is we probably don't understand the circumstances many people are in that cause these financial problems.

Your thoughts?

Well, yes, I did assume that people know how to add subtract, know when one number is bigger than another, and how much you earn in a month, and why spending more than you earn is a Bad Thing.

LAL, I think you're absolutely right. As Nutria said, if you assume people know basic stuff, you're already at a disadvantage in trying to help them. Many people simply don't know that stuff. They may not really be able to do simple math. They may not grasp how to not spend every penny that comes in.

I've shared many times that I work in a very poor area so I see this in action every day. I can't tell you how many times a patient has told the receptionist that their appointment has to be at the beginning of the month because that's when they'll have money for their copay. That's their reality. In their mind, the check comes on the 1st and when the money is gone, it's gone. There is no such thing as setting money aside to pay for a doctor visit on the 20th of the month.

A big problem in poor neighborhoods is access to basic services. You touched on it with things like a checking account, car, or internet access. We take those things for granted but they are like unicorns and leprechauns to these folks. You can't have a checking account if you have no savings with which to fund it. And unless you can find totally free checking, you'll be eaten alive with bank fees. Oh, and there isn't a bank anywhere in walking distance.

Cars? I have patients who take a taxi to get to my office. They spend $30-40 every time they need to come see me. If I need to refer them to a specialist in the next town, I might as well be sending them to the moon. They have no way to get there (or at least no affordable way).

I can talk to them all day about good nutrition, eating more fresh fruits and vegetables, etc., but if they buy their groceries at the corner convenience store, I could just as well be speaking Swahili. There isn't a grocery store for miles. Oh, and they may not have a working fridge or oven at home. Sometimes they may not even have power because they haven't been able to pay their bill.

You need to know the challenges that folks are facing to establish a starting point to teach and help them.

[dawnwes]

While there may be lack of knowledge, there is also lack of resources.

I can tell you that we will most likely not have huge medical bills because we have excellent health insurance.

We have reliable cars to get to reliable jobs and have the ability to drive to the deals and the cash to buy them.

We don't live day to day having to carry whatever food we can from the local grocery store that may be more of a convenience store.

However, most of the people I work with don't qualify for debt as we know it. They either borrow from friends or family or they wait to pay cash. They don't have a credit score or the ability to apply for a loan.

[sv2007]

So Nutria wrote about the fundamental causes of debt. But I don't think it really looks at how many people are struggling with debt because of lack of knowledge.

I volunteer at a shelter for people who are getting off the street or out of jail many of them have children and most were women. I help once a month running birthday parties for kids in the shelter.

Anyway this time at the party I let a couple of the kids help me run musical chairs type game with colors and shapes. Someone calls out a color shape on a card and the kid on it gets candy. They love it. But I realized that more than a few of the kids didn't know their shapes or colors. My 3 year old could likely do the color and shapes and some of these kids were in elementary school.

The truth is that these parents haven't had the opportunity and privilege to probably teach and read to their kids. Many don't have the financial means to own a car. So they are really stuck with the worse financial situation and it's very difficult to get out of.

When I was signing out there was a flyer for financial education for all people staying at the shelter. The signup sheet was FULL. It was being taught every saturday for 2 hours at a time for BASICS. Stuff I bet everyone on here would assume is basic knowledge. I signed up to help teach and free childcare would be provided.

Basics like what is a checking account, how to balance a checkbook, how to draw up a budget, taxes, credit cards, debt, payday loans (different types of debt), car loans, etc. Just basic finance skills probably many take for granted. I wanted to add in coupon clipping and trying to find deals but I have no idea how to apply it to life without a car to make life easier.

I mean everyone reading this is likely able to order things online for cheaper, there recently was an article how Amazon is delivering to mostly white versus african american areas. Also if you are online reading this you have the time and money to have internet.

It's stunning the differences you can have and part of it is education being taught by your parents. FWIW this shelter has a good rate of helping these people get into section 8 housing on their own in 12-18 months and teaching them life skills, and helping find jobs. So the people running it are really doing amazing with what they have.

I guess I think it's easy to say well get out of debt. Or americans have $8k in CC debt. But the truth is we probably don't understand the circumstances many people are in that cause these financial problems.

Your thoughts? Or suggestions? I'll be taking them to the finance class I'm going to help with.

I think the reason that some people go into debt buying an X box (i.e. non investment) is that they fail to understand the time value of money. Going into debt robs them long term investment return on the $ that they must now use to service debt.

I belong to a motorcycle forum and some times people get into trouble financing depreciating asset of a new bike. They did not fully understand that istead of immediate gratification which will then take 10 years to dig out of that hole, a simple investment of a few $ per day can get them that bike free and clear in 5 years.

The other issue that I think is happening (based on observation on news) is the debt people stay in debt by loading up more debt when they pay off their old ones. The cycle continues. Closing them forever to reaping investment returns on their money.