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The Value of the
“One-Quarter.”
By
Steve Smith
Part 2 of 3
In Part 1, we discussed the need to understand how a
quarter of a point can add up. By not being financially
savvy, you can become a victim of predatory
lending. This article will continue the importance of
understanding interest rates in regards to credit cards
and home loans.
A credit card offer, for example, that offers an
introductory rate of anything over 20% is not to any
consumer’s advantage even to establish or re-establish
credit, or to satisfy an immediate need. A competitive
interest rate should always be the goal of any educated
consumer no matter what their current financial status
presently is.
While consulting, and advising many personal clients,
I’ve come across decisions that were made in a time of
need that has hampered, if not destroyed any potential
progress that they may have in the future. On many
occasions, ridiculous interest rates were directly
related to subsequent tax liens, repossessions, and
bankruptcies they incurred.
Thousands of extra dollars can be paid on a mortgage
with as little as an eighth of a point added to the interest
rate on that loan. A $20,000 auto loan with an above
prime rate can allow for as much as 50-75% above the
actual cost of the vehicle over a 4-6 year period. In the
last few years, I’ve seen 84-month loans on vehicles
that double the original cost of the purchase price.
That’s seven years to pay for a vehicle that has
practically no value by the time the loan has been paid
off. We have to consider these facts before signing
away our rights.
Many of the facts previously stated are obvious to most
consumers, but the thought that “this is just a temporary
situation, and I’ll refinance
in 6 months
or a year” is the
ultimate goal. Unfortunately, due to unexpected
situations, the goal of refinancing these obligations
prematurely never comes to fruition. A laissez-faire
approach to what might have a profound effect on
future financial health is never to anyone’s benefit.
We have to pay attention to current interest rates
offered to consumers with good to excellent credit and
use that as a reference point. Make it a personal goal
to obtain excellent credit and use the resources
available to subscribers of this newsletter to do just
that. Every component of the MVET Way model is
designed to inspire and educate all racial and ethnic
backgrounds. Never underestimate the difference in a
“quarter point”.
A Personal Story
By Professor Harlin, M.A.
Part 2 of 3
Hope for Our Community
In the first article, I shared a personal story of one of my clients,
how he chose not to change, and my hope for him and his
family. In this article, I will focus on the hope for our
communities and the improvement efforts through financial
literacy.
It was once thought that a college education was the answer to
solving some of, if not most of, the major issues that many
communities have historically faced and continue to face today.
In an article “Racial Wealth Gap Persists Despite, study says- in
The New York Times” it stated “A college degree has long been
recognized as a great equalizer, a path for minorities to help
bridge the economic chasm that separates them from whites.
But the report, raises troubling questions about the ability of a
college education to narrow the racial and ethnic wealth gap.” If
in fact this statement is true, then a different answer is needed
for these communities. When considering and asking what is
needed, the idea of teaching financial literacy and educating
communities on how to use their monies may be of greater
benefit and value to these real people. The next question might
be, “How can this be done”?
Much of the research indicates multiple factors that should be
looked at when exploring how we can best introduce solutions
for bringing about significant change within our communities. My
list would begin with my top three. The first significant change
would begin
with financial literacy and education
. The second
relevant factor would identify
core issues
(You have to
understand your own history to bring about effective change.).
The third identified effort must be on teaching
critical thinking
skills
. With the overall goal being changing communities one
person at a time, we will have a greater chance of doing so with
the three identified key areas as our base. Once again, that is
looking at
financial literacy, core issues, and critical thinking
skills.
How can these skill sets be applied to bring hope and
change to our communities?