The most practical and useful class I took in high school was consumer economics.
It was an elective at Freedom High School and ran for just half a semester.
I most likely took it to avoid taking something more difficult. I can’t recall. Wayne Marish taught the class. He was also the track coach. I was a pretty good hurdler. I’m sure I figured that would make it even easier.
It certainly wasn’t trigonometry. But I’ve never forgotten what I learned.
Mr. Marish taught us how to balance a checkbook. He explained how interest rates work, what a mortgage is, how interest is compounded, why credit cards could be financially dangerous, and why you shouldn’t buy more than you can afford.
It was 1982. I was only 16, my income came from a morning newspaper route and I didn’t have a credit card. I’m pretty sure debit cards had yet to be invented. I had a basic checking account at the small bank branch around the corner. I wrote everything down in my checkbook ledger and checked it every month against the bank statement, just as Mr. Marish advised.
I still do it, despite the fact that in 35 years I’ve never found a bank error. Old habits die hard. Some of my younger colleagues marvel that I still write checks. My wife can’t believe I write down every debit card deduction in a checkbook. I can’t believe she writes down none.
The lessons of consumer economics were reinforced at home. Working class people understand the value of a dollar because each one is so precious. My grandmother had envelopes on her kitchen counter. When my grandfather got paid, the check was cashed and my grandmother stuffed the proper amount of cash in each envelope to pay the mortgage, gas bill, the “light” bill, which is what they called the electric bill in those days, the groceries, etc. Not a dime was spent until the bills were paid. Raising six kids on one electrician’s pay took discipline.
My dad was a single parent steelworker with two kids. He didn’t buy something until he had saved the money for it. New sofa, dining room set, a window unit air-conditioner. You saved first and bought it once you had the money. Debt was feared except with mortgages because real estate was an investment.
Last week, I heard the 1977 Billy Joel song “Scenes from an Italian Restaurant” on the radio. That’s the one that tells the story of the fictional mid-1970s couple Brenda and Eddie and their foray into dating, marriage, and, ultimately, divorce. It includes these lines:
“Well, they got an apartment with deep pile carpet and a couple of paintings from Sears. A big waterbed that they had bought with the bread that they had saved for a couple of years.”
I’m not sure many people still buy waterbeds, but it’s less likely that anyone saves for a couple of years before they do. Credit cards, installment plans and a very different attitude towards debt and saving now exist.
A recent survey showed that half of Americans don’t have $400 in savings for use in an emergency. What they do have is a lot of debt. The Federal Reserve reports Americans collective revolving debt, often referred to as credit card debt, is $1.021 trillion, the highest ever recorded. The previous record was $1.02 trillion in June 2008 when the Great Recession emerged in force. For a while, shaken consumers paid down their credit cards. But old habits die hard.
I’m not sure if high schools still offer classes in consumer economics. I hope so. I think it should be a mandatory class. But I also think driver’s education should be mandatory, along with a class teaching the basic skills of how to be a good employee, things like showing up for work, appearance, the need to stay drug free, how to interact with supervisors and customers. Those type of classes have the dual benefit of helping the individual live a safer and more financially secure life and benefiting the greater good of society.
Unfortunately, our governments at the state and national level can’t be looked to as an example of how to exercise financial discipline and responsibility. We are fortunate our municipal and county governments operate under laws that require their budgets to be balanced each year without borrowing.
Debt, borrowing and kicking costs and risks down the road to future generations and leaders is now the American way. This fall, Pennsylvania’s government leaders adopted a budget, four months late, that borrows $1.5 billion to balance it. This is like you taking out a loan from a bank to pay your mortgage. The farmers call it eating the seed corn. It means taking a loan to buy the groceries.
Mr. Marish must be pulling out whatever hair he has left.
The federal government has made this an art form. Once you’ve done something enough, you become numb to it. The tax cut bill skyrocketing through the Congress with the promise of a presidential signature by year’s end adds $1.5 trillion to the national debt. It’s hard to argue with tax cuts but — even factoring in for the short-term economic stimulus that is likely — the nonpartisan congressional Joint Committee on Taxation says $1 trillion will be added to the deficit and passed to our kids and grandkids. Most of us, myself included, can’t even grasp what a trillion is. Future generations will come to understand — the hard way.
About 15 percent of every federal budget already goes to pay old debt. Today’s victory laps and re-elections will long be over before the ceiling caves in and the bills come due. It’s strange how we admire past American generations for the resolve, discipline and sacrifice that provided us a better life but accept our own recklessness and lack of discipline as the new American way.
If Billy Joel was writing about Brenda and Eddie today it would seem less odd if the lyrics were:
“Well, they learned from the feds that the present is best when overcoming any financial fears.