New Horizons: Advice from a Money Smart Man
Mary Ellen Flannery
Retired teacher Allen Cox needs only to pick up a newspaper to find grim validation for his new career as a leader in financial literacy programs for students.
With personal debt and bankruptcies rising, home foreclosures continuing to hit record highs, and identity theft a constant hazard, Cox’s work as managing director of the Maryland Coalition for Financial Literacy to educate young people—especially high school students—about money has become more important than ever.
Here are his thoughts on some of today’s most pressing financial issues.
Q: When you look at the headlines today, do you ever think: Oh boy, some people needed a lesson in financial literacy?
A: A lot of the current crisis steams from predatory lending, but you can’t be a victim of predatory lenders unless you’ve failed to understand how they can take advantage of you. If you can’t afford a $650,000 house, but somebody tells you that you can if you just do this and that with your money… you need to understand what you’re signing.
Q: What are some of the financial pitfalls for teachers?
A: It’s very easy to become a victim of identity theft fraud. With a Social Security number, anything is possible. You should know you can get free annual credit reports. Try www.annualcreditreport.com.
Q: How do you improve your credit rating?
A: All you really can do is call your creditors, set up a payment plan, and make those payments on time. Let’s face it: If you’ve missed payments or exceeded your limits, it’s going to hurt your credit score. Another thing: If you just call your credit card company and ask them to reduce your interest rate, they often will. Same with annual fees—it’s a very negotiable thing.
Q: It’s a tough thing to be a retiree on a fixed income, especially as private retirement accounts have tanked. Any advice?
A: For those people who haven’t yet retired, there’s the possibility of working an extra couple of years. If you’re eligible for Social Security right now, it really makes sense to wait until age 66 to collect. For people who already have retired, it’s difficult—especially if you’re upside-down in your mortgage. Think about part-time work. Think about boarders in the house or moving to a less expensive region.
Look at your children. Does every child need his own laptop, flat-screen television, or ticket to a big-name university? As an economist, I don’t understand why parents don’t say you’re going to a community college. They’re wonderful: they cover the basic courses, and then you can transfer after two years.
Q: Everybody wants free financial advice these days. Got any?
A: Live below your means. And pay yourself first—take a little bit every week for saving and investing. This is the best time to invest in the stock market. When in your life did you ever think GM would be $3 a share? This financial situation is a difficult one, but it will recover.