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The Value of the “One-Quarter.”
By Steve Smith
Part 1:
Over a 29-year career in both conventional and
financial education, one thing that has become
increasingly apparent to me is how lightly many
consumers take to paying an extra quarter – that is
paying an additional half or three-quarters of a point
when financing their homes, purchasing autos,
securing loans, and obtaining credit cards. This
nonchalant approach (that’s totally to a lending
institution’s advantage) has been very detrimental to
the overall financial health of many families.
There are a wide array of predators looking to exploit
uneducated consumers which place them in
undesirable situations. In every lower-income area in
the Metro- Atlanta area where I reside, corners are
flooded with pawn shops, payday loan stores, and title
pawn outlets.
One particular acquaintance of mine took out a title
loan of $5,000.00 on a vehicle she purchased four
months earlier after an insurance settlement. While
waiting for a subsequent annuity to cover the principle,
she paid $995.00 per month to keep the loan current.
She was paying more than 200% interest on that debt.
She ended up paying $3700.00 in interest and
penalties in less than four months. AND IT WAS
LEGALLY STIPULATED IN THE CONTRACT.
It’s no coincidence that when I venture into the middle
of upper-class neighborhoods, I rarely see these
businesses. Are lower-income areas targeted? I’ll let
you draw your conclusion. I know for sure that the
need for financial education at a young age is so
important. The MVET Way Newsletter, as well as
CEMN personal and business coaching, have become
a great resource for that education.
Part 2 will discuss decisions to consider in regards to
credit cards and mortgages
Personal Story
By Professor Harlin
Today, I saw an old client. This person had
come to pick up the remnants of his belongings
that had been left behind during his swift
transition because of a lack of funding. The
remnants where his personal belongings,
enough to fill up the back of a pickup truck,
easily. The old client showed up with a rolling
green trashcan. The one your gardener would
use to put cut grass and shrubs into. The trash
can was dirty, filthy dirty. The old client was
packing his belongings into this empty dirty
trashcan, and it just saddened me as I watch this
old client put about a fourth of his belongings
into the trashcan and then roll it down the street
to the new place of residency. I thought of this
client's predicament.
I reflected back to an earlier time when the
relationship was much, much more. I
remembered having encouraged this old client
to get a driver's license amongst the many other
attempts to help him move forward. I knew this
client had a wife and young child and now
another one on the way.