B.F. Pettingill, Jr., Ph.D., Economist, Comments on Instant Gratification vs. Future Economic Stability - Promoting Financial Literacy Through Cyberspace.PALM BEACH GARDENS, Fla. -- B.F. Pettingill, Jr., Ph.D., Economist, comments that according to US Department of Treasury, Senate Committee on Banking and Housing and Urban Affairs, from 1990 to 2005, the rate of personal bankruptcy in America increased over 69% and credit card debt Credit card debt is an example of unsecured consumer debt, accessed through ISO 7810 plastic credit cards. Debt results when a client of a credit card company purchases an item or service through the card system. increased to over $900 billion. Credit card safety-nets are used by nearly half of all Americans to avoid bankruptcy. To add insult to injury, in 2005, over $10.3 billion was charged by banks for overdraft fees, which only exacerbated this problem. Baby boomers or generation X'ers all are awash in debt. The term subprime loan Subprime Loan A loan that is offered at a rate above prime to individuals who do not qualify for prime rate loans. Notes: Subprime loans tend to have a rate that is 0.1% to 0.6% higher than the prime rate. is routinely used to entice individuals to purchase a home or refinance an existing mortgage. Subprime loans led individuals to believe available loans below the "prime rate;" but, these loans should be called "super high risk loans." Subprime loans are now maturing and Americans are discovering the truth about hidden costs and usurious usurious adj. referring to the interest on a debt which exceeds the maximum interest rate allowed by law. (See: usury) interest rates. Former Federal Reserve chairman Alan Greenspan Alan Greenspan Dr. Greenspan is Chairman of the Board of Governors of the Federal Reserve System. Dr. Greenspan also serves as Chairman of the Federal Open Market Committee (FOMC), the Fed's principal monetary policymaking body. stated, "In many respects, improving financial education is essential to ...help prevent people from making poor financial decisions that can take years to overcome." As financial systems become more complex, the responsibility of financial decision-making falls increasingly on individuals to manage their finances. One way to address this trend is public education. A broad-based financial literacy educational movement needs to be undertaken, with the emphasis placed on life long learning. Americans are conditioned to look for instant gratification, which hinders long-term financial planning Financial planning Evaluating the investing and financing options available to a firm. Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the firm in the form of a financial plan, and then comparing future performance against . By reprogramming Reprogramming refers to erasure and remodeling of epigenetic marks, such as DNA methylation, during mammalian development[1]. After fertilization some cells of the newly formed embryo migrate to the germinal ridge and will eventually become the germ cells one's thinking, i.e. delaying instant gratification, immediate satisfaction (debt) can be replaced by increased financial rewards. One simple solution is to educate individuals on financial literacy by explaining what is a "need" vs a "want." Next, reward individuals who take basic financial education classes online. Finally, each individual in America has a Social Security number; one could also carry a credit card number score, monitored on an annual basis; anyone who falls below a set range, would be required to take financial literacy remediation. Financial decisions must shift from the limbic system limbic system n. A group of deep brain structures, common to all mammals and including the hippocampus, amygdala, gyrus fornicatus, and connecting structures, associated with olfaction, emotion, motivation, behavior, and various autonomic functions. of decision-making (instant gratification) to the frontal lobe frontal lobe n. The largest portion of each cerebral hemisphere, anterior to the central sulcus. Frontal lobe The largest, most forward-facing part of each side or hemisphere of the brain. (rational decision) in order to avoid future crises. Please contact author for full text. |
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