Normally, my hairstylist and I talk about weekend plans, kids, maybe movies. As she snipped away on Friday, we covered those subjects and one more — the high price of gasoline.
Our conversation didn’t keep me from stopping after my haircut for a $2 cup of coffee.
It seems a little nuts to fret about rising costs while spending on frivolous luxuries, as though one hand doesn’t know or care what the other is doing.
Maybe I’ll blame my contradictory behavior on mixed messages from my government — or, I should say, governments.
In May, the federal Treasury Department will send out payments under the Economic Stimulus Act of 2008. Most taxpayers will get checks up to $600, and $300 more for each qualifying child. In a recent address, President Bush said the plan is expected to “increase consumer spending and lift our economy at a time when people otherwise might spend less.”
In short, Bush wants us to spend it — fast — for the good of the economy. I guess we’re supposed to worry about our personal financial health at some later date.
Anyway, my check isn’t in the mail, not yet. But last week I read an e-mail from the Washington state Department of Financial Institutions. And guess what? Gov. Chris Gregoire has designated the week of Feb. 24-March 2 as Washington Saves Week. “The governor is encouraging public and private organizations to work together to illustrate the importance of saving money,” the press release said.
Save, not spend? Does the president know the governor is pushing such a wild idea?
Obviously, we all wish we could save lots and still have extra cash to spend, but how many of us are in that boat? Even if you plan to boost the economy by spending your tax rebate for a boat down payment, saving is a smart habit.
Washington Saves Week is as good a time as any to begin. A partnership of the state Department of Financial Institutions, the Washington Society of Certified Public Accountants and Kirkland-based Consumer University, the effort includes free training programs in financial literacy.
“We are getting some mixed messages. Our goal is to provide financial education,” said Amy O’Donnell of the Washington Society of Certified Public Accountants. Members of the organization have volunteered at high schools across the state to help spare students from money troubles their elders may be experiencing.
“There’s so much debt, we have a zero savings rate nationwide. We adults are not necessarily the best role models,” O’Donnell said. “It’s pretty daunting to get out of debt. We’re hoping to give people little pieces of information to start making those changes.”
At Marysville-Pilchuck High School, Kyle Suits is the lead teacher for the School for the Entrepreneur, one of the school’s new small learning communities.
“Most people are financially illiterate, and, as a consequence, they pass on bad advice to kids,” Suits said. Among the myths he hears is that people must go into debt to build credit. He sees a growing number of high school teens with credit cards, mostly gas cards. “They go in for gas, but they get the chips and pop, too,” he said.
He also sees mixed messages, with the federal government encouraging spending while banks are raising interest rates on savings to coax people to save.
At 41, he has no debt beyond his mortgage. “Everything else is paid off,” said Suits, who hasn’t decided what to do with the federal rebate check.
While focusing on business and how to be a good employee, his classes include a heavy dose of personal finance. “I’ve shown kids by various means what saving money over 30 or 40 years can do, the miracle of compounding interest,” he said. “And if they have a mocha every day, how much they spend over the course of a year.”
Teens today spend money on things that didn’t exist when he and I were growing up. They’re paying for cell phones, phone service plans and iPods, he said. But some also contribute to their families’ household expenses. “Imagine the embarrassment of their parents having to ask,” Suits said.
With housing costs so high, he said it’s the norm for Marysville students to live at home after high school while attending community college. “In my day, the money we made working was more in line with the cost of things,” the teacher said.
When I started at the University of Washington in 1972, I told him, one quarter’s tuition was $144.
“That’s a textbook now,” he said.
Suits isn’t convinced we can spend our way out of our nation’s economic woes.
“As American citizens, we’re led to believe we have direct control over the economy. But economies expand and contract naturally,” he said. “Ride it out; it will expand again.”
Columnist Julie Muhlstein: 425-339-3460 or muhlstein@heraldnet.com.
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