Over the last few weeks my friend and colleague Lisa Brammer and I have been writing about the need to improve our financial literacy. Taken as a whole we consumers are ‘woefully inadequate’ in terms of our understanding of basic financial instruments and ways to manage our personal finances, let alone how our economy works and what drives it.
Much of our writing has been in relation to Financial Literacy Month, which concluded this past April. Many financial institutions, as well as Federal and State Governments, used this month to promote greater understanding of critical financial concepts and provide basic tools that are available to the public to help put their financial lives in order.
That is no small task, however, and given the state of household debt it is like turning an aircraft carrier on a dime: it just does not happen quickly.
Yet, as the old saying goes, a long journey starts with a single step. And sometimes that single step is the hardest to take. But take it we must or at some point face some pretty dire consequences.
More in a moment on another unique educational tool the Federal Reserve of New York makes available to the public.
But first, to underscore the need for personal financial house cleaning, the New York Fed just released its report on first quarter household debt.
No surprise: we set yet another record for debt accumulation. Among the findings from the Fed (read the report here).
- Total household debt now stands at an unbelievable $13.67 trillion. All one can say is wow!
- Debt increased by $124 billion during the quarter.
- This is the 19th consecutive quarter that household debt has increased.
- Total household debt increased during this stretch by nearly $1 trillion ($993 billion).
- Mortgage balances rose by $120 billion while originations declined to the lowest level since the 3rd quarter of 2014.
- Student loan debt increased by another $29 billion to $1.49 trillion.
- New auto loans grew to $139 billion.
- Credit card balances fell slightly to $848 billion.
- Notes the New York Fed: “As of March 31, 4.6% of outstanding debt was in some stage of delinquency. Of the $623 billion of debt that is delinquent, $417 billion is seriously delinquent (at least 90 days late or “severely derogatory”).”
Clearly, we have our work cut out for us and greater focus needs to be put on financial education before this trend ends in disaster.
In an earlier blog I referenced a site run by the U.S. Government called “MyMoney.Gov” (www.mymoney.gov). Its focus is on basic financial literacy and education, and also provides basic financial management tools to help consumers put their affairs in order.
To my surprise, however, another tool has been made available by the New York Federal Reserve to educate young people in the hopes that earlier understanding will lead to mature financial decisions in adulthood.
Yes, comic books. And before you laugh and wonder about another crazy government project there is method to this madness, and comic books have been used by the Federal Reserve for years (since the 1950’s) as aids for teachers and other educators to enhance learning.
According to the New York Fed’s web site: “The New York Fed’s Educational Comic Book Series teaches students about basic economic principles and the Federal Reserve’s role in the financial system. Created for students at the middle school, high school, and introductory college levels, the series can help stimulate their curiosity and raise their awareness of careers in economics and finance.”
No Batman and Robin here however. Here we encounter (on the planet “Novus”) “Mr. Murt,” “Flora” and “Q-seven, a blue cube from the planet Alpha-Numerica” among other characters. Admittedly the comics don’t exactly have dynamic, action packed titles. Here you will find “The Story of Monetary Policy” and “The Story of the Federal Reserve System.”
Yet the intention is very good and the content easy to understand which makes understanding the fundamentals of how our overall economy works a little less wonky and a lot more every day. If you are an educator, or even someone just trying to understand what the Fed does, or what monetary policy is, check them out at https://www.newyorkfed.org/outreach-and-education/comic-books .
The fact is it will take an abundance of tools and an early start to drastically improve our financial literacy. However, it is crucial that this start now. Even if taken in small steps these efforts will help educate consumers on managing their burgeoning debt before the effects become catastrophic.
A. Alliance is here to help. We supply a key component in the economic chain to ensure our client’s recover their debts and keep their businesses operating smoothly in good times and in bad.
A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners. Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 14 years.
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