Category: Consumer Education

My ten year old daughter complains about being the only one in her class to have never been on an airplane. My husband and I both travel for work; and when the kids were younger, the last thing we wanted to do with our precious time off was spend it slogging through airports. We’re lucky to have both of our families within driving distance. Now that they are getting older, we’d like to take a trip; but with the cost of everything going up, the far-away vacation is one of the first things to go.

I remember when I was a kid how exciting my first flight was. The pilot came out from the cockpit to give us “wings.” My daughter won’t have that experience. Yet, even with all the hassles of flying these days, I’d still like give her a “first flight” experience soon. In my travels, flying is almost always an adventure... although not usually a pleasant one.

It's amazing how corporate attitudes change over time. Sometime in the last nearly 40 years since Earth Day started being observed, "going green" has moved from an idea environmentalists talked about to a mission corporate America aspires to. In tonight's program, I interview Interbrand CEO Andy Bates about a survey his company sponsored. The survey asked consumers which corporate brands they perceive as "most green."

Surprisingly, those surveyed chose no company at all as the number one "most green" brand. But respondents did rate Toyota, BP, The Body Shop, and Honda as the next four "most green" companies. A triumph of corporate propaganda? Or is there something "authentic" that consumers sense about these four brands? Bates thinks that consumers do see a difference, particularly since Toyota and Honda have been first to market with hybrid vehicles. The Body Shop has long held itself as a purveyor of green-only products. BP has spent many billions to develop an alternative energy division.

To some on Main Street, Wall Street and all its financial shenanigans are to blame for the crumbling housing market. After all, if there hadn’t been a market for sub-prime mortgage debt, some people might have had a tougher time getting a mortgage and perhaps wouldn’t have bought homes they really couldn’t afford.

Now it appears Wall Street could also shoulder some of the blame for those skyhigh oil prices.

How to pay for college is a stressful subject. Honestly, it makes me want to bury my head in the sand. I opened a college savings account for my oldest daughter in 1999, dumping a small chunk of change in an “aggressive” tech fund, thinking I wanted to maximize return and not worry too much about risk, since at that time college was a long way off. Ok, so that didn’t work out. My “less risky” funds have not fared much better of late.

What is almost as stressing is all the talk about the high cost of college. Luke Swarthout, a higher education advocate for U.S. PIRG, compared college affordability to buying a car – if the only ones available were Bentleys and Rolls Royces. But I worry about the kids who want to go to college and get discouraged from even trying. There are affordable schools out there and with tuition assistance it can be a manageable expense. Why is it that colleges post such a high “sticker price,” even though the majority of their students don’t pay it?

It’s easy to understand why investors are piling into Bear Market funds.

Consider that the Direxion NASDAQ-100 Bear 2.5X Inverse Fund is up 35% year to date. It is designed to produce 2.5 times the inverse of the Nasdaq 100’s daily return. What most investors probably don’t know is that last year it tanked 36%.

This is a prime example of the volatility of these funds -- they can go down as quickly as they go up.

Historically, the stock market has gone up more often than it has gone down. So, while the funds may outperform in the short term, they don’t usually do well over long periods of time. That’s why financial planners say one of the most common mistakes investors make is holding bear market funds too long.

I don’t know about you but whenever someone uses the word "resilient" to explain what's behind a rebound in consumer spending -- I always cringe. What exactly does that mean? Typically, the term is heard in the following context. An analyst or economist, when pressed to justify an unexpected jump in household shopping, will often respond by saying "it looks like consumers are showing amazing resilience."

"Showing amazing resilience?" Where’s the insight in that observation? How does that explanation enlighten anyone?

By definition, someone demonstrating resilience means they are resourceful, imaginative, or creative in their actions. OK, we get that. But it seems to me it is such a vacuous term when used to explain consumer behavior.

I have gotten calls from people who are struggling to pay their mortgages, keep their homes, and avoid foreclosure. As a reporter, I can tell people’s stories, keep the issue in the spotlight, and broadcast information to people about their options. Unfortunately, I can’t “fix” people’s problems. But from the reporting I’ve done, I can tell you what I know. With home prices falling, it is certainly in lenders best interest to work out a loan. So the first option is to make contact with your lender. Lenders are in the business of making loans, not modifying bad ones, so it may be a frustrating process, but they are the ones who can change the loan, so it may be worth the effort. Document each contact, who you spoke with, what time, and what the response was.

The HopeNow alliance is the industry’s voluntary effort to work out troubled loans, so another choice is to visit http://www.hopenow.com/ or call 1-888-995-hope. Mortgage counselors may be able to help you understand your options and even make contact with the lender on your behalf.

It’s clear that many people who took out loans in the real estate boom didn’t really understand them. Today, the Department of Housing and Urban Development proposed the use of a new standardized form to help people know what they’re buying when they're shopping for a home loan. HUD estimates this will save consumers on average about $700.

This is the second time HUD has proposed changes. Last time, opposition by the industry kept reforms from taking place. There’s certain to be opposition to this form too, but given the current situation in the housing market, regulators should be more determined to get it done.

You can review HUD's press release about the new "Good Faith Estimate" form here: HUD PROPOSES MORTGAGE REFORM TO HELP CONSUMERS BETTER UNDERSTAND THEIR LOAN, SHOP FOR LOWER COSTS.

Do you think this form will help people understand their mortgages?

No one's shedding any tears for the position the credit rating agencies, like Moody's, now find themselves in. After rating a lot of now highly-suspect mortgage securities as "AAA," Moody's along with S&P and Fitch are taking the lumps from market critics. Moody's CEO Ray McDaniel issued something of a mea culpa during the interview I did with him today. McDaniel noted that Moody's did some things wrong, but also said that it's not realistic to expect any rating system to be able to foresee the kind of contagion that's spread through the credit markets.

The method of rating complex derivative mortgage-backed securities, such as collateralized debt obligations, with a simplistic "AAA" rating has also come under fire.

Stories of nonprofits that spend the bulk of their budgets on expenses and a relatively small percentage for their cause have created a high level of distrust. Bob Ottenhoff of GuideStar, which compiles data on nonprofits, says, "The era of assumed virtue is over." Many people who donate want to ensure their money is going for its intended purpose.

Figuring that out is not always so easy. As I explain in my report for the upcoming special NBR series "A Guide to Giving," the IRS 990 disclosures don't always tell the whole story and ratings from groups like Charity Navigator or Give.org may not measure what you care about most.