Dumb, Arrogant or Uneducated?

20- and 30-somethings are in a financial mess, says a recent MSN Money article. Then it asks: Is it because we're dumb, arrogant or simply uneducated?

The article goes on to answer it's own question. Evidently, it's not the first ("the problem is not lack of smarts," it says). It may be a little of the second (we "get out of college and we have to have that handbag and iPod" but it's not our fault because "it is so easy to take on debt"). But it is a whole lot of the third (the article bemoans that only 52% of high school seniors could pass a recent national financial literacy test).

The article lists other places, too, to lay the blame for our financial woes, including:

Our helicopter parents who coddled us
Increasingly complicated financial products
More financial temptations (e.g. credit cards on college campuses and easier access to student loans)

What's the article's solution? "The ray of hope is that government and business authorities are starting to take financial illiteracy seriously."

Interesting. I would wholeheartedly agree with encouraging more financial literacy education. But I wonder if in all the finger pointing, we're forgetting the most obvious target: ourselves.

It seems that we bemoan high tuition costs (often, rightly) but then act as if we have no other choice but to take out tens of thousands of dollars in loans. We like putting zero down on our houses (as opposed to the previous generation, who were required to put down 20%), but then we're offended that we might have to face the consequences: higher interest rates, higher insurance payments and more risk of foreclosure.

Even the young woman featured in the MSN article as an example of how Gen Y-ers struggle financially is described as a 28-year-old New Yorker with "a master's degree from a prestigious university, a successful career in photography, stamps in her passport from around the globe and, until recently, personal finances that were out of control" who complains that "no one had ever taught me to make a budget or balance a checkbook."

Come again? I mean, kudos that she's got her finances in order now, but ... a prestigious master's degree for a career in photography (along with $60,000 in prestigious student debt) and passport stamps from around the globe? And we're supposed to chalk her problems up to a lack of financial education?

I don't know. I know I'm stepping on toes, including mine, but I sometimes wonder if our generation doesn't just have a giant Scarlett O'Hara complex--we know what we should do, but we'll just think about that tomorrow.

Let's agree that more financial education is a good thing (although, don't even get me started on question #5 of the literacy test). But let's also agree that nothing replaces personal responsibility. If I'm an adult and I take out loans, buy on credit and spend more than I earn, I don't think it's my parents or my middle school econ teacher or the credit card company who are responsible.

I agree with Forrest Gump: "stupid is as stupid does." So I think the article missed one big thing. Sometimes, our generation is just acting dumb. And we need to stop, or we'll pay some serious consequences.

Comments

You can follow this conversation by subscribing to the comment feed for this post.

1. Rachael said the following at 8:46 AM on Aug 11:

I don't have everything in my life organized. I don't spend more than I have and don't have any loans or anything, but, I don't have a budget or anything, and feel very irresponsible and lazy for extended procrastinatation from some responsibilities of taking care of some stuff or putting forth enough effort to take care of some stuff. So...here I am.

This might be a thought that's hard to express, but I think sometimes in reference to the thought that "If......, then something's wrong" I think...well, what do we do when that "something's wrong"? What do we do when we're messed up, when we're in "that" category? There has to be a way to move forward.

So, back to the two words from that post on this blog..."But God."

Thank you God!!

2. mindlab said the following at 8:55 AM on Aug 11:

". . .dumb, arrogant or simply uneducated?"

Yes, yes, and yes. Many college grads (and older adults) I've known were dumb (choosing to walk through life without forethought), arrogant (resisting advice from their parents and/or elders), and uneducated (graduation =/= education).

Also, anyone with a stamped-up passport has no business complaining about their finances. That's just dumb :)

3. obewan said the following at 9:11 AM on Aug 11:

I would say some are arrogant. Even when I was in college way back in the 1980's, there were guys who would get the college loans approved and go right out and buy a $1500 stereo system on their new credit card.

4. Vincenzo said the following at 9:33 AM on Aug 11:

Very true Heather. I recommend a very good book called "The Millionaire Next Door" by Stanley and Danko. It compares and contrasts the lifestyles of the truly wealthy and those that just live a lavish lifestyle.

5. Matt C. said the following at 9:46 AM on Aug 11:

I can't help but remark that balancing your checkbook isn't a difficult thing to teach yourself. Nor is keeping track of money coming in and money going out.

I think there's a mindset among those who go preschool through graduate school without taking a break that school is the only place you can learn skills. It doesn't even occur to many young people (myself -5 years included) to figure things out for themselves. Just look at the "ray of hope" in the article: maybe government or business authorities (i.e. someone else) will do something about it.

6. Christina (in green) said the following at 9:51 AM on Aug 11:

I'll definitly claim "uneducated" for the Student Loans fiasco I'm in.

I got a moderate degree, from a small private college. And ended up graduating with over $30,000 in debt. They are what's been kicking my butt since I graduated.

I was the first of my siblings to go to college, so my parents didn't really know anything, and neither did I.

However, the rest of my finances I have in pretty decent order, though I do spend on a credit card without exceeding my income (building credit kinda thing). I only have 1 card in use. I have to say that education DID help in this department. But not high school education. Everything I know about budgeting, balancing a checkbook, tracking finances, and quicken I learned from my mother.

7. Jesse said the following at 10:09 AM on Aug 11:

I remember seeing a huge line of people signing up for a free pizza in the student union at Florida State. They were actually signing up for credit cards.

8. Mike Theemling said the following at 10:24 AM on Aug 11:

I'd say we are more impatient than anything.

We expect to have new cars, 4 bedroom houses, the latest electronic equipment, and our daily lattes in our 20's and early 30's when our parents and grandparents waited much longer to be at a standard of living that most younger adults expect to now.

And unfortunately, credit card companies (and recently subprime lenders) are willing to aid people into financial bondage.

But I guess the populace reflects the government and vice versa (with our out of control Federal spending). It's no wonder that we as a country are immediately heading towards a financial disaster with Social Security losing solvency, our dollar value lower, and insane debt (guess which country has claim on a lot of that debt? Hint: They are hosting the Olympics this year).

9. Kelly said the following at 10:47 AM on Aug 11:

Not necessarily! Anyone who has done a 'working holiday' will tell you otherwise. It's possible to travel very cheaply (backpacking) and work your way through several countries.

I'm a huge advocate of this as it teaches you SO MUCH about life, and the value of the dollar/euro/pound. As long as you're not travelling using your credit card as your regular source of income, that is!

10. Nicole said the following at 10:50 AM on Aug 11:

I do think that it would be wise to put financial education back into high schools. When I was in High school we lost ALL personal finance classes, as well as, art, drama, and a few sports due to budget cuts. I never learned about any personal finance until I actually started working. There is still much of it I don't really understand.

11. nikki said the following at 10:59 AM on Aug 11:

I'll echo the suggestion made by Matt (#5) that people need to learn to teach themselves. As someone who was homeschooled in a large family all the way through school, I know the value of self-motivation and just plain figuring stuff out on my own. (It's kind of the only solution to a frazzled mom of six kids trying to teach algebra, phonics, and biology all at the same time.) So I don't have a lot of pity for someone with a master's degree who said "no one ever taught her" to balance a checkbook. I would wonder why she would have the idea that someone WOULD HAVE to teach her. That is so pathetic.

"Financial skills" can often be boiled down to making sure the amount coming in is more than the amount going out. Doesn't take a degree, a teacher, a class, or even a high IQ to figure this stuff out. I think these people need to stop blaming some system out there for their ineptitude and start taking some personal responsibility. (And to be thorough, shame on parents for handing everything to their kids and not making them figure anything out themselves.) If people really thought about their situations for a few minutes, many would realize that their degree will be the most useless and expensive thing they own.

12. Chris said the following at 11:19 AM on Aug 11:

I think the answer for the woman in the article is quite simple: stupidity. From the article:

"He wrote me a letter that said, 'You've got to get your life together! Most of these bills aren't even open.' It was a really humbling thing," Wallace says. "But the next time, all my receipts were on a spreadsheet. No one had ever taught me to make a budget or balance a checkbook." What do you know about money?

She can't even open her bills? How does she even maintain a job?

As for others, I think a big part of it is parents. Just as with chemistry or geology, it's one thing to take a class on financial matters. It's another entirely to actually do it. And as long as these parents both a) permit a level of consumption at home that's not commensurate with income (e.g., buying cars for kids, paying for phone bills, etc) and b) shield kids from consequences as adults, no amount of education will fix things.

13. Rebecca said the following at 11:50 AM on Aug 11:

I find this post very interesting. Up until last year I had no debt beyond about $6,000 of school loans taken entirely to finance study abroad. Then I graduated, moved to the city and experienced the joys of under-employment. When I took the lease on my apartment I was making an income that could cover it adequately. Then my job situation changed. After two bouts of unemployment over a month each and with minimal savings, I took a teaching job that was rewarding on many fronts but did not cover all of my bills. Even with taking on additional tutoring jobs and sewing, I racked up almost $8,000 in unsecured debt in one year from paying bills and even my rent via credit. Now I have a much better paying job and significantly lower living expenses, but it will take some time to get all that debt paid off.

I come from a family that is fiscally conservative and I do not spend money lavishly. I am nearing 30 and try to live modestly and within my means. I've been balancing my check book since I was 15. But there were a lot of unexpected expenses involved in moving to the city and my parents were unable to offer me financial help in any form.

It is easy to be critical of our peers and their definitely serious debt problems. But being someone who is battling this same issue and feeling the stress of it, while coming from a background where I understood what good money management was supposed to look like, I feel like judgment should come slowly. Sometimes life overwhelms even the best planners.

BTW, my credit cards are all put away and my debt is not growing, but I know it will be more than a year before I am out from under the fruit of ONE year of bad financial decisions and circumstances.

14. Adam said the following at 11:58 AM on Aug 11:

I'm playing catch-up from past times of spending more than I'm bringing in (Nov. 14 to be totally debt free!)

I find that I have to fight the mindset that I need to live as well as my peer group (most of whom are older with families - sometimes 2 income). I also can't expect to keep up with my parents standard of living.

It also helps to really examine what your debt is in order to not fall into the same trap again. For instance, part of my debt was from school. It was pre-planned, and a wise investment.

Part of my debt is from strategic buying. It may make more sense to buy a washer and dryer on credit than to spend a lot of time, money, and fuel going to the laundromat for a few months until I can save up for one.

The third type of debt of have is just plain overspending. I find that I want the Next Big Thing. So I buy it - often with cash, and then use the plastic to float me til my next paycheck.

I have been very fortunate in that I didn't dig myself in a hole that I couldn't dig out of. It has been a huge learning experience for me. For years I had many of the lessons on money management drilled into my head by my very wise parents. I didn't take all of them to heart - and have had to pay the consequences.

15. Nicole Y said the following at 12:24 PM on Aug 11:

What I think it really boils down to is wanting what is above your means and an unwillingness to wait until you can really afford it. There needs to be a better grasp of the concenpt of needs vs. wants. You may genuinely need a car, but you don't need a brand new one. Many people want the newest and best, but aren't willing to work their way up to get it. Our parents worked years and established themselves before building a new home. Buying brand new furniture was something they planned and budgeted for sometimes for years. Now, it seems most young couples I know build houses for their first home and purchase all brand new appliances and furnitre on credit.

My husband and I are about 3 years away from paying off our house. We could very easily take out a much bigger loan for a mortgage on a newer, bigger house but we have chosen not to. Our house is very small and modest and over 50 years old. But we aren't sacrificing our lives to live in it. When I want to quit work to be a SAHM, we will have the financial freedom to do it. Getting out of debt - or not getting into debt is worth so much more than whatever it is we think we *need* to buy at the time.

16. Paul said the following at 1:06 PM on Aug 11:

I don't know about the US, but here in the UK there has actually been some miseducation going on too.

Our government has for the last decade been encouraging more and more people to go to university, telling them not to worry about the debts, because they will easily be paid for by the increased salaries that will be earned. At the same time, they have managed to increase the number of university places available by making them more expensive and by setting up new courses for people who would probably struggle with a traditional accademic subject (that's not to say that those people are dumb, just that a lot of them should probably be apprentices, learning a skilled trade instead).

Now we're seing an increasing number of graduates who are unable to find a job that will pay off their student debts in the way that they were promised. It begs the question of whether our government was dumb, arrogant or simply uneducated.

I don't think it's quite as simple as attitudes to debt and money though. We do not even have the same economic opportunities as our parents. I have a good masters degree in a traditional science subject, a good job and a frugal lifestyle, but I am still struggling to get an affordable mortgage on a first property before I reach 30 (something that my parents managed quite comfortably).

It's a problem that we should be taking seriously, because it has an impact on people's ability to settle down and start families. Ultimately it results in moral compromises that should concern us. I happen to think that the cause is the the extreme disproportionally with which wealth is now distributed within western nations. Obviously that shows me up as an economic lefty, but you're welcome to ignore my diognosis on the proviso that you take the underlying problem seriously.

17. Marc said the following at 1:09 PM on Aug 11:

I would say this firm yet loving slap on the wrist by Boundless is much needed. I myself used to buy on Debit (not Credit). I thought, "Hey, it's not Credit, so there's no interest. It just comes right-out of my account."

The problem: It does come out of my account, leaving me less money to have in-case of emergencies. And, no, Starbucks is not an emergency.

18. BDB said the following at 1:21 PM on Aug 11:

Hmmm...what about greed?

I didn't start accumulating credit card debt until I tried to keep up with friends who had a lot more money. If I had lived within my means, maybe college would have been less exciting, but I wouldn't have graduated with thousands of dollars in credit card debt.

Education can help. There was one class in Home Ec in Jr. High where a personal-finance movie was being shown. It was interesting-stuff my parents had never taught me. But then the teacher pulled me out to work on a project for her. I sometimes wonder how life might have been different had I stayed.

But there's also prayer. After paying off humongous student loans, it finally occurred to me that I never prayed before taking them out. There were a variety of fellowships and scholarships available for other students, had I spent time praying about it, perhaps God would have pointed me towards something as an alternative to loans.

Just this weekend I was having a conversation with a cousin who graduated from law school. She's considering going into bankruptcy law to "help people who are bankrupt through no fault of their own." I thought she meant people who got cancer and couldn't work. But she was talking about people doing greedy things like buying a zero-down house so they could flip it. That's greed!

It also reminds me of what an old investor told me once: "Greed is good but pigs get eaten."

There's a lot in the Bible about managing money wisely, too. So, I'd say that America's debt epidemic is just another symptom of a fallen humanity. The Discipline of Possessions is just as painful as other discipline, and yields the same benefits as other disciplines down the line.

19. Jim H. said the following at 2:12 PM on Aug 11:

Nikki #11,
Wow, what a great post!

I believe America is rapidly losing the character that made it great - rugged individualists who wanted to make their own way in life. Instead, we have a culture that demands spoon feeding for everything and is quick to blame everyone but themselves. As this mentaility becomes more pervasive, it will result in ever bigger, more intrusive nanny-state government who believes its mission is to guarantee outcomes rather than opportunity.

20. Shaun Eli said the following at 2:25 PM on Aug 11:

If half the students don't know something important, maybe we ought to teach it to them? After all, if we can spend a semester on health education why not a couple of hours on financial education? Simple stuff-- how interest charges are calculated, how mortgages (fixed-rate and adjustable) work, some common pitfalls of credit card use, what an IRA and 401(k) are and how compound interest/earnings growth work and why they're important.

A couple of important things I learned in business school:

1. You have to identify the problem in order to fix it.

2. Fix the problem and learn what went wrong to cause it. Much more important than blaming people for what you might believe are their own mistakes.

Sincerely,

Shaun Eli
www.BrainChampagne.com
Brain Champagne: Clever Comedy for Smart Minds (sm)

21. Mike said the following at 2:36 PM on Aug 11:

For once, I'm going to ease off on the 20-somethings and point a finger at another entity: their parents. How many parents teach their children about budgeting these days? Mine didn't. Oh, sure, we heard we couldn't go to McDonald's until next month, but we never knew why. I had to learn about budgeting myself the hard way - with bumpy credit card troubles.

So, while I'll certainly agree that lifestyle expectations and easy credit contribute to the problem, I think financial awareness is a life skill that needs to be modeled and taught in the home. Just my $0.02.

22. GHarri said the following at 2:55 PM on Aug 11:

Deep debt and bad credit is no way to enter the job market, right out of college. A part-time job and a debit card is a much better route. Even a traditional college loan beats a bucketload of maxed-out credit cards. Good discussion about credit cards and college going on here:
http://digits.hrblock.com/ssDigits/digits.php?rType=1&sPath=2441&sNode=2441&uId=294

23. Jonathon said the following at 5:54 PM on Aug 11:

I totally agree with you. This is just one more example of the culture of victimization we live in -- If I have a problem, its somebody else's fault, now I just have to figure out whose.

24. P&P said the following at 7:08 AM on Aug 12:

Good topic - it's nice to get away from the oil debate.

1. Family: I agree that this kind of education begins at home. Unfortunately, a number of these 20 somethings learned their freewheeling spending habits from their parents. Schools (both public and private) need to step in and explain how compound interest works in your favor in a savings account and against you with a credit card.

2. School loans: far too many private colleges are guilty of the financial aid bait and switch. Many students get starry-eyed when they're not only accepted into Expense University, they're thrilled to get a financial aid package. The part that Expense U doesn't tell is that financial aid diminishes with each year and tuition increase.

I went to a state college and by my junior (3rd) year, I saw some old high school classmates who transferred in because their aid ran out. Schools need to present a package that runs for four years so the student understands the level of debt they'll assume once they graduate.

3. The Big Bad Government: yes, they need to go back to regulating the credit industry. The documentary series on PBS, Frontline, has an excellent show about the credit industry and how out of hand it became under de-regulation. It's also a big part of why these companies are now caving in on themselves and are running to the Big Bad Government to bail them out.

4. The advertising industrial complex: repeat after me: "I really don't need this. I just think I do."

25. niki said the following at 8:46 AM on Aug 12:

Some have pointed out the problem as being dumb, or arrogant, or uneducated, or greedy, or some combination of these.

What is to be said of integrity? As some have explained, adults can't go on living as victims of their inadequate upbringing. Just like learning to swim, sometimes you can do it slowly (get introduced to the water, put your feet in, splash around a bit, dunk your head under, and so on), but sometimes, you learn by jumping in headfirst and fighting your way through the pain and fear and figuring out how to survive. Often, increasingly so, young adults may not have a choice in the matter.

What about resources for those? I think Boundless is one, in a way. It advocates avoiding student loans by all means possible, paying a healthy down payment on a mortgage, etc. What of those for whom it's too late? Already graduated with almost $50,000 in student loans (can't even dream of a mortgage at this point), unable to live with parents while saving up every scrap from an underpaid job, struggling to make it from one paycheck to another?

That's what I'd love to see here...

(Another two cents in the Boundless Bank!) :)

26. Shannon K said the following at 2:38 PM on Aug 12:

niki (#25) and others --

There are some really good free resources that can help guide those who didn't receive personal financial training from their parents or school. In my case, my parents did a great job of teaching me the basics (don't get into debt, spend less than you earn, etc.), but they taught me next to nothing about longer-term financial planning. When I realized my ignorance in that area, I spent a bunch of time educating myself by reading material from those like Crown Financial Ministries and Dave Ramsey. Both of these have tons of free information (on everything from getting out from under mountains of debt to building/giving wealth) on their websites, and if the woman in the article had just googled "financial help," she would have found them as the second and third search results.

27. Kyle said the following at 3:30 PM on Aug 12:

While I am perfectly happy with the schooling I've received (and the two degrees with it), I think many who have been funneled through the college track have not been shown an alternate means of building a viable, productive life. I have a brother who owns a barbershop and professionally plays music, as well as another brother who has his own music school and does professional gigs as well. The wherewithal to cultivate gifts and talents as a means of generating income and self-sufficiency was bred in us early in life. I consider us extremely blessed to have had that type of real-world education. It seems many people learn to do very specific things, but not how to apply God-given abilities to an ever-changing employment and financial landscape, which is essentially the principle of knowing how to hustle, or generate multiple streams of income. I think the art of the "hustle" is sorely lacking among my age bracket of 20-somethings.

At the same time, I came up in a niche of African-American, lower middle-class culture that extolled the virtues of getting an education so you can get a job. The problem is that vocational training is vocational training, whether it is through an electrician's apprenticeship or a high-priced bachelor's degree. If all we are training for is to get a job and make money, we are merely learning to become indebted to another master besides poverty. Too often jobs and money are viewed as solutions to problems rather than resources for positioning oneself for meaningful gains. We need fundamental clarity on how to position ourselves for successful living.

I know this much, I will be educating my kids in financial literacy early, and encouraging them to get their education at the best price possible (preferably free!).

28. BDB said the following at 4:48 PM on Aug 12:

niki (#25) wrote:

>>Already graduated with almost $50,000 in student loans (can't even dream of a mortgage at this point),<<

Well, that's why I had to buy a little, 900-sq-ft condo first. With real estate ownership as the goal, it really forced me to take a hard look at my past financial choices.

There are some free tools to help you figure things out. One thing that helped me was the mortgage calculator that gives you an honest answer of how much house you can afford. It uses real banking standards, not the subprime rules. And you can face the music privately.

29. Steve H said the following at 11:02 AM on Aug 13:

We have an organized system with multimedia tutorials, financial calculators, an user control panel and related articles for financial management and debt education. When members go through the materials they are equiped to solve many of their debt issues themselves.

We have several affiliate program relationships that can be utilized for those who refer and new members sign up.

Our program is perfect for high school or college students, those that are considering or now going through debt consolidation, credit repair or bankruptcy. Everyone needs basic financial and debt training or they will just fall back into debt again.

www.moderndebtsolutions.com

Best Regards,

Steve H