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Dear Friend,
Today, personal finance education is about much more than whether or not you can balance your checkbook. That remains essential, but the financial framework of the world around us is growing more and more complex for each of us in everyday life. It is hard to know where to turn for quality, unbiased personal financial information. That's why I'm so pleased to announce a new Ohio Treasury website devoted to providing the best personal financial advice and information to Ohioans, www.YourMoneyNowOnline.org . In addition, be on the lookout for monthly Your Money Now E-Newsletters such as this one.
A good bit of our time and money are absorbed by managing our personal finances: mortgages and home equity, health care and other kinds of insurance, credit cards, phone bills, car loans, utilities, higher education, and the list goes on and on.
For the first time since the Great Depression, Americans spend more than they save. The negative savings rate, record levels of foreclosures, and unprecedented levels of credit card debt are signals that we have big problems to resolve.
While many of our purchases are tangible consumer products that we can see, touch, and understand, the packaging and marketing of personal debt as an investment product is not. In recent years, personal debt—mortgages, auto loans, student loans—has been sold into secondary markets as packaged securities. The recent foreclosure crisis is a clear example of how financial markets can complicate traditional financing. They also can make it very rewarding for some companies to create more debt through aggressive lending that does not always serve your best interests as the customer. Keep in mind that debt itself is always an investment opportunity for somebody somewhere.
At the same time, fees, fines, and penalties have proliferated to an alarming extent. According to Bob Sullivan of MSNBC's The Red Tape Chronicles, a Consumer Reports study estimated in 2004 that hidden charges, “sneaky fees,” and late fines or penalties generated about $216 billion annually, costing each family about $4,000 a year.
Meanwhile, the rest of us are living by the personal finance lessons taught us by our parents (for those lucky enough to be taught anything at all)—in part, because we are still making the same wages as our parents. Today the median income for a fully employed male, adjusted for inflation, is nearly $800 less than his father made. By many measures, our generation is barely staying even, and in some key categories, like health care, we are falling behind. The prospect of going backwards financially is particularly paralyzing.
In fact, paralysis is one of the most common responses we see among people who are facing financial hardship. It understandable that they ignore the mail and phone messages; often it is nuanced marketing that contributed to their financial problems in the first place.
Without a doubt, good habits and a more careful mindset about money will help you avoid a lot of problems. But consumers of financial products today need even more sophisticated skills, sharpened on a regular basis, to be able to avoid the financial traps that can send them into an economic tailspin.
The reality is that very few of us can make sense of the pages of fine print that arrive with our monthly bills. You should not have to be a mechanical engineer to drive a car, and you should not have to be a contract lawyer to be treated fairly when you engage in the ordinary transactions of American life in the 21 st century.
It is no longer enough for a buyer, vaguely, to beware. We must “Be Aware” of the pros and cons of the countless money decisions that characterize our lives, whether it is deciding to buy or lease an auto, rent or buy a home, accept that low-interest teaser rate on a credit card, or save x percent by opening a store credit card with your large purchase today. Do you take the service warranty—or not? Is it smart to get insurance when you rent a car—or not? Did your child unintentionally open a half-dozen credit cards at college to get free pizza and does that mean you are on the hook? Could you cite your credit score, and how much could you save every year if it were fifty points higher? Do you know what steps you can take to raise it by those fifty points?
I believe that Ohioans, and the officials elected to represent their interests, should scrupulously examine the safety of the personal finance marketplace. We should start asking informed questions designed to protect our own pocketbooks as well as the broad interests of our communities. And then we must share that information far and wide.
This is going to be a challenging task. But we have many solid resources and the good will and fierce commitment to fairness that many share with us. Together we can gather information; teach our children, friends, and neighbors; and altogether be more vigilant and assertive. Financial predators count on our being distracted, ignorant, or apathetic. Let us show them otherwise.
Like many initiatives these days, we are turning to the Internet to give people a hand as well as a voice. “Your Money NOW,” which I am introducing to you today, will be a vibrant resource for consumer information, insight, discussion and feedback. It is designed to be interactive and thus responsive and continually evolving. You can help us set the direction of this joint effort to help people meet their array of financial needs. You can do that by visiting us at www.YourMoneyNowOnline.org .
I invite you to receive our monthly e-newsletter. We hope you will choose to review and share our monthly offerings, and regularly visit our web site as a resource to help you take on the battles of modern financial life. There, you can subscribe to RSS feeds for real-time financial information about current issues, and you can share with us your concerns, your ideas, and your suggestions.
Thank you very much for your time and attention, which we know are very precious commodities. Best wishes for a prosperous and well-informed New Year.
Sincerely,
Richard Cordray
Ohio Treasurer Related Items
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Your Money NOW 
