No. 667



Do you know the best time to catch an airplane? Some may say early in the morning before the airport is too congested or maybe late at night in many of our larger cities. With that said, the best time to catch any airplane is before it takes off.
Hope you are awake and won’t judge me too harshly for this simple way of introducing my topic for this column, but it seemed to fit what I hope to get across to you and others who read my thoughts each week. If this is your first time, welcome aboard. If you are a faithful reader, thank you so much for the opportunity to share various ideas, concepts and information with you. My greatest desire it that what I share is helpful and useful and that we can walk down the road of life together.
As you may know, I am a strong believer in education and I also believe that all worthwhile education is not found in the classrooms of America. There is a lot to be said for the person who reads, studies and works on their own and graduates from the school of experience. In today’s times, with the mortgage crisis and the price of gasoline at record levels, many people are cutting back on their spending and actually learning some things they failed to learn during good economic times. A few weeks ago I received a press release from the Center for Economic and Entrepreneurial Literacy that was most revealing.
This release touted a recent survey that underscores the need for increased education on personal finance and economic issues. This is really the basis for my earlier statement about the best time to catch an airplane. When it comes to understanding the conditions of a financial transaction, the best time to understand it is before, not after, you sign your name on the dotted line. In this vein you may be shocked, or at least surprised, at what this survey revealed. It found that 69 percent of the respondents do NOT know that you have to pay both the interest and on your entire balance as well as a late fee, when making a late credit card payment.
It also found that 97 percent of respondents can NOT identify the percentage that service fees typically take out of a $20 ATM withdrawal. More than 90 percent either didn’t know how much the fee would be or thought it was less than it really is. Nearly 70 percent of respondents did NOT identify “FICO score” as the most important factor in obtaining a home loan, when asked to choose from a list of four factors. Only 16 percent of respondents knew that you can withdraw money from a Roth IRA for education expenses, your first home purchase, and retirement spending. Another way to say this is that 84 percent did NOT know these things.
When so many Americans are unable to answer the most basic questions about personal finance and debt, it is clear that economic illiteracy is a problem that needs to be corrected in this country, said Kristen Lopez Eastlick, senior economic analyst for the Center for Economic and Entrepreneurial Literacy. I suspect this is also a part of the reason for the mortgage crisis and massive number of foreclosures in the home market. When people do not know or understand economic principles and concepts, they are vulnerable to unscrupulous lenders.
Here is a thought to ponder: Since gas is so high and people are traveling less and staying home more, wouldn’t this be a good time to take a course on economics or at least get some good books and read and study them in our spare time? With the knowledge mass today, it’s impossible to know everything, but a good understanding of economics should be a top priority.
(EDITOR'S NOTE: Jim Davidson is a public speaker and syndicated columnist. You may contact him at 2 Bentley Drive, Conway, AR 72034. To support literacy, buy his book: “Learning, Earning & Giving Back.”)