Guest Blog: Paying Off High-Interest Debt

Guest Post: Katie Bryan is the Communications Manager for America Saves, a national campaign involving more than 1,000 non-profit, government, and corporate groups that encourages individuals and families to save money and build personal wealth.

Borrowing more money than you can afford is costly in many ways. Americans spend well over $75 billion a year just on credit card interest and fees. That means that families who revolve credit card balances pay an average of $1,500 a year in interest and fees. If they saved that $1,500 in an account with a five percent yield, in 40 years they would have nearly $200,000! Taking on too much debt also lowers your credit score. That means you will end up paying higher interest rates on all your consumer and mortgage loans. A low credit score can also make it harder to rent an apartment, get utility services, and even get a job.

Too much debt isn’t just expensive. People with lots of debt often say they lack peace of mind. They worry constantly about paying off debts and making ends meet. The stress of these worries affects their family life, work performance, and other areas of their lives.

Are you in Trouble?
If you answer “yes” to any of the following questions, then you probably need to get your debts under better control:
1. Can you only afford to make minimum payments on your credit cards?
2. Do you worry about finding the money to make monthly car payments?
3. Do you borrow money to pay off old debts?
4. Have you used a home equity loan to refinance credit card debts, then run up new revolving balances on your cards?

The good news is that there is hope. With planning, discipline, patience, and maybe some outside help, almost anyone can reduce their debts and start to accumulate wealth.

How to reduce your Debts
The first step in getting out of debt is to stop borrowing. To do that, you have to stop spending more than you earn. So, make a budget and cut out any expenses you can. It may help to cut up your credit cards or lock them away in a safe place.

Set a Goal
• Example: I want to pay down $5,000 in debt in one year.

Make a Plan
• Figure out the most you can afford to pay each month to reduce your debts, then make those payments without fail. See if you can automatically pay your bills each month to ensure you make your payments on time.

TIP: If you have debts on more than one credit card, either pay off the card with the highest interest rate first and work your way down to the card with the lowest rate, or pay off the smallest loan first and work your way up to the largest. Once you’ve paid off your debts, don’t give in to the temptation to start over-spending again. Instead, take the money you were paying each month on your debts and begin to save it. That will give you a financial cushion the next time an emergency strikes.

Where to get help
In most communities, there are agencies that can help you manage your debts.

Consumer Credit Counseling Services
The most helpful and most widely available are non-profit Consumer Credit Counseling Services (CCCS). CCCS counselors can work with you privately to help you develop a budget, figure out your options, and negotiate with creditors to repay your debts. Call 1-800-388-2227 to locate the office nearest you.

Cooperative Extension Offices
Some national credit counseling non-profits, who provide advice online or over the phone, can also be helpful. However, others charge high fees for little service, so be sure to shop carefully. In many communities, Cooperative Extension offices offer workshops, home-study courses, and other services to help people manage their money, including their debts. Cooperative Extension offices are listed in the blue pages of the phone book under county government.

Are you ready to set your goal? 
America Saves, a non-profit that encourages individuals and families to save money and build personal wealth, can help you develop your goals and take action. When you join as a saver, you’ll receive the following benefits:
• Free subscription to the quarterly American Saver newsletter.
• Free monthly e-mail newsletters with savings advice from national experts.
• Free access to the members-only Savers Tracking Tool to help you reach your goals.
• 100 bonus credits with SaveUp

Katie Bryan is the Communications Manager for America Saves, a national campaign involving more than 1,000 non-profit, government, and corporate groups that encourages individuals and families to save money and build personal wealth. Follow America Saves on Facebook and Twitter.

The 4.0 That Really Matters

The Tedx Talk linked above is brilliant. I added the video as the hook for the lessons I crafted to help my students find the right college fit. In my earlier post, I provided a list of comprehensive tools and resources designed to connect students to the appropriate college, career field, and financial choice. The message in this video is not just the icing on the cake, it embodies the full meal.

PwC & Wharton Announce Conference Details

PwC and Knowledge@Wharton High School (KWHS) are proud to co-host the first PwC-KWHS Seminar for High School Educators on Business and Financial Responsibility, a three-day, intensive learning experience where educators can deepen their knowledge and teaching skills about financial literacy and business. The September 28-30 seminar on the Philadelphia campus of the Ivy League’s oldest business school is open to 150 public and private high school teachers, principals, administrators and superintendents.

The opening panel discussion will be on Supporting Financial Literacy and Business Responsibility Among Youth. I am honored to be joining the panel discussion with Georgette Phillips, vice dean with Wharton and Shannon Schulyer, corporate responsibility leader with PricewaterhouseCoopers. The discussion will be moderated by my friend Dan Kadlec of TIME.

To learn more about the seminar click here.

Quizlet

I created virtual flashcards using all of the terms from Jump$tart's National Standards. Click here for the hyperlink to my cards.

You can create games, quizzes, and of course use the flip cards as a study resource for your students. The video above is a 60 second tutorial about Quizlet and how to use it.

The History of Financial Education

The idea of teaching personal financial responsibility is far from new. A matter of fact, it can be traced back to the roots of our country.

Thomas Jefferson is widely regarded as one of our earliest supporters of public education. He founded the University of Virginia, and believed one of the most important elements of a free society was education. According to this CNN piece, he expected students to study reading, writing, business, personal rights and responsibilities.

John Adams agreed with Jefferson "All the perplexities, confusion, and distress in America arise not from defects in their Constitution or Confederation, nor from want or honor or virtue, so much as the downright ignorance of the nature of coin, credit, and circulation."

Fast forward around 200 years. Only four states have adopted a semester long course in personal finance as a graduation requirement. Roughly half the country has required that some sort of economic and financial literacy be taught.

I was hopeful the nasty ripple effects such as these following the financial collapse in 2008 would be a catalyst for a broad adoption of financial education in our schools. I am still hoping.

The Huffington Post reported in this piece that the government is telling us that student debt is holding back the economic recovery. Even worse, the S&P has reported that student debt could be the next big bubble to burst our economy.

Our public education system stresses to students the importance of continuing their education beyond high school but many fail to teach them anything about the financial responsibilities surrounding a choice that could lead to $100,000+ in student debt. As you can read here, there are tools available to help our students, we just seem to lack the will and commitment to broadly use them.

Teaching Taxation Through Blended Learning

I experimented last year with using these IRS taxation modules as the main driver of instruction, much of which was through homework assignments. The results were less than favorable, so back to the drawing board.

This year I am going to try a blended approach. The IRS modules are comprehensive and clearly the best educational resource available to teach taxation. After my experience last year, I am going to make the following adjustments:

• Start with a Simulation
• The short classroom simulation will be designed for students to experience the impact taxes have on spending, saving, investing, and giving.
• Transition into Direct Instruction: 
• Use a graphic organizer to illustrate the many forms of taxes.
• Clearly illustrate what 'progressive' taxation is and how it effects marginal tax rates. I will use this financial calculator and use different income levels to illustrate examples. This Investopedia video will be helpful as well.
• Use the most recent and relevant charts from chart king Ezra Klein to illustrate the different between
• Income tax rates before and after deductions for each income level. Stated differently, I will make sure they understand marginal tax rates at different income levels. 
• Effective tax rates, that is the net rate a taxpayer pays if you include all forms of taxes.
• Finish the direct instruction using more Ezra Klein charts to show how and why 51% of America does not pay federal income tax, and why billionaires like Warren Buffet pay a lower effective tax rate than me. In other words, I will open their eyes to the world of deductions.
• Scenario Based Instruction: 
• Use the online learning modules as resources for students to respond to scenarios of people with different income levels, deductions, family sizes, and ages. I will probably create ten different scenarios of people. Students will be randomly assigned a scenario. Each student will design an infographic using Wordle illustrating what tax implications there are for their selected scenario based on what they learned from the modules. Specifically, a visual of what they actually pay in federal income tax, state income tax, FICA, property tax, local income tax, etc. To find state and local tax rate information they will need to do a scavenger hunt using local .gov websites.
• Students will present their illustrations to the class so they can experience the wide ranging impact of taxation on people based on varying scenarios. 

Inequality and Financial Literacy

Annamaria Lusardi recently released the hyperlinked paper below. Dr. Lusardi is widely known as the Queen of Financial Literacy. You can follow her blog here and her Twitter feed here.

I made a case earlier last week in this piece for SmartBlog (a subsidiary of SmartBrief) that education, specifically financial education, could be an answer to rising inequality. As you can see here, it is a significant problem in the United States.

For those passionate about financial literacy, the following paper is fantastic work: Optimal Financial Knowledge and Wealth Inequality

Middle School Math Curriculum with Personal Finance Content

Money Math is a full Math curriculum aligned to middle school math standards with the application of personal finance concepts. It was developed by the US Treasury, University of Missouri St. Louis, Citi, and Jump$tart.

K-12 Turn Key Lessons to Teach Financial Literacy Skills

Financial education legislation is spreading across the country. According to this comprehensive NEFE study, teachers recognize the importance of a financial education but do not feel qualified to provide one.  The purpose of this post is to provide teachers who are financial literacy content novices with lessons that can be easily incorporated into various subject areas in the K-12 classroom.

Criteria established for the lessons:

• The tools and resources needed for the lessons are free
• The lessons can be integrated into core subject area classrooms
• The lessons are aligned to national standards
• The lessons are easily understood and applicable for content novices
• There are lessons for those who can incorporate technology and lessons for those who cannot

3 Turn Key Lessons for the Elementary Grades

• Avengers Comic Teaches Money Skills: Join Spider-Man and the Avengers in this exciting educational comic about saving money and saving the day. The heroes team up to defeat the villain Mole Man and his evil army, all the while learning important financial skills. The action-packed comic features a budgeting worksheet, finance terms and more.
• No technology required
• How Kids Earn Money: After clicking on the hyperlink click on the lesson entitled ‘How Kids Earn Money’. The Centsables is a comprehensive website full of quality lessons and robust support resources. 
• Technology is required
• My Classroom Economy: The classroom economy program is a robust classroom management system that benefits both teacher and students. The hyperlinked lesson is only part of a comprehensive experiential learning program.
• No technology required
• Summer Time Fun For Kids: Secret Millionaires Club

3 Turn Key Lesson for Middle School Grades

• You’re Going to College: Students explore the costs and the benefits of going to college. They participate in a three-part game designed to help them understand the decisions associated with attending college and the benefits available to college graduates.
• Technology is required
• The Secrets of Saving: In this lesson, participants will begin by completing a money scavenger hunt to create excitement about saving money. (Note – you need to create a free account with FEFE to download the lesson.
• Technology is not required
• How to Buy and Sell Stocks and Bonds: What is most important to understand about this lesson is it’s supported by Gen I Revolution.  Gen I Revolution is a terrific financial simulation for middle school students.
• Technology is required
• Summer Time Fun For Kids: Groove Nation

3 Turn Key Lessons for the High School Grades

• Credit, Debt and Prepaid Cards: You will need to scroll down to module 3. This lesson does not require technology, however it is best supported if students can play the Pro level of Financial Football online.
• Technology not required but recommended
• Opportunity Cost: Consumers are faced with tough choices because so many innovative and exciting products and services are available. Therefore, engraining a decision-making process that includes considering of opportunity cost is necessary to shape future consumer behavior.
• Technology is required
• How Much Does That Traffic Ticket Really Cost?: A comprehensive lesson on auto insurance and driving responsibilities created by the Ohio Insurance Institute
• Technology is not required
• Summer Time Fun For Kids: Bite Club

Hyperlinked K-12 National Standards & Best Practices

• Jump$tart is the gold standard of national standards for financial education. Most states use Jump$tart as the starting point for their standards.
• The Council for Economic Education is the gold standard of economic and financial literacy standards.
• PISA is clearly the most comprehensive international financial literacy assessment framework.
• National Standards for Family and Consumer Sciences Education
• National Business Education Association
• State Standards (Economic Literacy)
• Best Practices
• Money Lessons for Moms and Dads are ideal for summertime lessons.

Click here to review my “Comprehensive Financial Education Content, Curriculum, and Support Resources” LiveBinder.

Financial Education in the Math Classroom

If you are Math teacher looking for content to integrate into your math standards, a perfect resource is Financial Education in the Math Classroom managed in large part by my friend Dr. Valerie Klein. You can select a lesson based on math topics or finance topics.

A goal of the project is to maintain ongoing conversations about financial education, particularly in the mathematics classroom.