Finance

Long before there was a financial crisis there was a slowing economy, talk of a recession, many looking for answers to pressing financial questions. Financial analysts being called upon to give answers to the public; one such guru was featured on the Oprah show answering debt questions of guests and audience members. Featured in the opening segment of the show was this guru counseling a woman in short, to get back to the basics of life and what was needed, reconnect with who she was and what life was truly about, largely based on the fact that when the husband’s business increased they could afford the best so they bought it as well as the fact the woman identified with the vehicle she drove, saw it as an extension of herself. Upon the guru finishing her advice both the financial expert and Oprah pointed to the guest as an example of many in America and how with the proliferation of materialism we, as a country, have lost our way. However, while this financial experts advice is usually sound, it still has holes and does nothing to curb the underlying problems including shyster loans given out to unsuspecting consumers, shyster tactics worthy of the original robber barons, names like Morgan, Rockefeller and Jay Gould whose decedents are still well known. It does nothing to curb the overwhelming problem of dwindling expertise in America that places many of the consuming public in hazardous financial and other situations.

Returning to the woman in the opening segment of the Oprah show who was chastised for not having money saved away for a rainy day and almost looked down upon for asking how it happened and when it was going to end; the financial adviser stated that it happened because she had no money saved up and it was going to end when the guest changed her perspective, got back to basics and realized her husband still has a paycheck it’s just not what it used to be. Yet those who saw the show would, and probably did see, that the woman, though explaining her personal situation, was asking a broader question about when her husbands type of business, and particularly the economy, was going to change. And people do tend to identify with the things they have if it’s the one item they really love, worked hard for or have a passion about, and that is not a bad thing for someone who supported her husband, if only emotionally, through the lean years of growing the business.

Those things do become an extension of self not just because of the brand, make or model but, many times, the personal fulfillment of having reached that level of success, being at a point where they can say yes I can afford this. It’s not about the brand it can be as simple sometimes as a hobby someone who likes classic cars may buy one, someone who’s into home theater may get one, someone who likes music equipment will buy that and yes those into fashion will buy brand named items; all of it a part of their unique personality. That concept did not change because it is a bigger item than clothing or a pair of shoes, or because onlookers decided to call it extravagant.

The subject of the economy was briefly mentioned by the financial guru in that she stated she was tired of people blaming the economy when quite frankly “we did this to ourselves.” Fact is, it’s simple math that the economic growth numbers are down, the fact is that there are less jobs and consumers spending less money. 80,000 jobs were cut in March 2008 alone, 32,000 that year as well as 42,000 temp jobs. Further you have to qualify we in the sentence above if you are a person not facing financial foreclosure, did not get an adjustable rate mortgage, if you are not one of the people who invested in real estate looking to get ahead, much of the we doesn’t apply to you. It does not apply to the renters being evicted from their apartments because the owners are in foreclosure. Not only that but people can have the six months to a year’s worth of living expenses saved up and still find themselves jobless, laid off or in other dire circumstances; even those facing foreclosure may not have been the victim of shyster loans but a victim of ever rising gas, heating and food costs. These people could well have been able to afford their mortgage when they started out and now can’t. For those who did invest in real-estate to try to get ahead, as featured on other news programs, another expert said in 5 to 8 years the housing market, in a particular area, would recover and start to rise, but no one struggling now has that long.

Another individual asking a question, this time an audience member, brought challenge to one of the gurus hard and fast rules about not taking out money from a 401k or making a loan on money in a 401k explaining she was behind on payments on a real-estate property and she wanted to just go into her 401k and deal with it; the guru then launches into what the $5,000 the woman wanted to withdraw would turn into in 10, 20, 30+ years down the road when this woman approaching 40 was in her 60’s 70’s and 80’s. The woman’s next question was what if I don’t live that long, to which the guru also had an answer talking about what if she did, what if she was unprepared at retirement, unable to financially function at retirement? The audience member’s last question was then “what am I supposed to do?” The financial adviser then said if the woman was looking for a quick fix what she needed to do was an IRA roll over, if she could pay it back within 90 days.

The final guest in this financial session of the Oprah show was a couple arguing over what to do with a mutual fund one wanted to keep the money they had put into the mutual fund and par for the course the financial expert of the day asked many questions, one to the woman in particular, asking if she knew what kind of mutual fund they had, if it was a good one; what is key here is the answer and the money expert of the day’s response. The woman gives a tentative unsure answer and then is nearly attacked by the expert saying the fact is you have X kind of mutual fund that’s getting this kind of rate so don’t tell me you have a good one when it may not be. The guru subsequently addresses audience members and TV viewers saying you have to do your research, you have to pick good mutual funds, you have to find reputable lenders.

All of the things presented on this show are open to debate and rebuttal on behalf of the consuming public; despite the expert’s assertion that American’s have done this to themselves, the truth is predatory lending practices are a problem. Case in point a couple who fought their foreclosure and won, when the judge ruled they were the victim of a bad loan; the government’s crack down on lax rules and shoddy practices that include no only the absence of insuring borrowers can pay back the money but pressured employees forced to make sales no matter what, withholding vital information for borrowers to make an informed choice, is a giant red flag.

As to the adviser’s directive to do research, it points to a larger problem in America, the fact that we must now research everything not just our financial options. We have to research the reputation of our doctors to find one that’s safe, this being an election year, we have to research our politicians to try to find ones that are both truthful and the best for the job, we have to investigate our children’s nanny their teachers, their school, make sure we are not taken by our auto mechanic, our home repair men, our computer repair people not just our tax preparer, our mortgage lenders, our accountants. Better yet we have become a nation of do it yourself everything, from do it yourself taxes, to do it yourself career creation and research; the average person now needs a PHD in computers to work their pc, a PHD in accounting and financial planning just to file taxes without getting taken, if you have a pet you need a degree in veterinary medicine to take care of them, a degree in education to make sure your children get quality learning and the list could go on forever.

There are no more experts, there are no more true solid facts to be given to the public; the point being that if you are a family with jobs working 40 hours a week taking care of 1,2 or more kids when do you the consumer have time to do all that research, something completely lost on this financial power house. And people can do their homework, people can choose a reputable lender and still become the victim of a bad, rouge employee not unlike the one who embezzled billions, with a B, of dollars that bought down a French financial institution.

The last two questions asked by guests and the subsequent answers showcase two other very powerful things when listening to this or any other financial expert. Looking at the way she handled the last guest for example, even though she is known for her tough no nonsense approach, she came off as aggressive, smug and just pain rude to a woman who gave an answer that clearly showed she was unsure and when presented with information contrary to her thinking, she, the guest, did not make a counter argument to insist she was right, yet she was met with an attack based on what the expert knew.

Yes this financial wiz of a woman does know lots about the world of money and many, many of the twists, turns and loopholes within it yet regardless of her claim to have gone through some of these situations and financial hardships herself, she would not have been able turn it around the way she has-with at least 3 published books to her name, one on the best sellers list, speaking engagements and so on if she did not have a natural instinct for knowing and finding facts in the financial world. This financial plethora of information seems to forget she has made her living finding out all she can about finances and the best ways to handle options and situations, has made a living giving advice to others, making her aware of information not widely known or easily found by the general public, a truth quickly forgotten by this expert in dealing with the woman and her 401K, who brightened considerably when given an alternative.

But perhaps the most damaging thing that should ignite a fire under the American public, in at least as much as they listen, or don’t to such so called experts, is echoed in the guest who when told how much money she would make if she left the money in her 401k, asked what if I don’t live that long? The truth is America may be a bit too materialist and somewhat foolish with it’s money, but what does it do for a person to save for much of their lives for the vacations, travel and other fond memory makers waiting for retirement and not live to see it or reach retirement minus the energy to do the things they want?

What does it do for you to reach that success or support your spouse in reaching that financial success, only to be told you must give it up because the economy turned bad; where is the reward for hard work? This is the greatest country in the world; if we cannot have more than subsistence and existence then they are right we have lost our way, only in things infinitely larger than the evils of materialism. The have things now generation, the have things now mentality and spending the money you have now guarantees you can make those memories and have those experiences, the things you can take with you beyond this life. Plus when your children ask for the occasional video game or other material thing, the resounding chorus can’t always be we can’t afford it, I’m saving for retirement or we’re saving for your college fund, because this, when said too often, can foster resentment and spawn poor financial habits in children who grow up thinking their parents could never afford anything.

Also, watching your child’s favorite movie with them is a wonderful bonding opportunity to get into their world, watching them as a family is a wonderful, safe thing everyone can do together playing a video game with your child is a wonderful moment for conversation; in between etiolating aliens you can talk about anything and everything, including serious issues. This is especially true for boys who are more likely to speak candidly about things on their mind, if their hands, bodies are occupied with another activities. For those who can afford it to begin with, one way to keep tabs on kids today, to know what they are doing is to make your home the neighborhood hang out; this means having the Nintendo or the X box along with access to the latest movies. And you must be very skeptical of someone who protests too much against those type of positives, the good things they can foster and the other negatives they can prevent, with the most precious of commodities, life.

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