Financial Management ResourcesFor Students and Teachers

Margaret VanGinkel Iowa State University Extension

We didn’t just have a perfect storm……We had a perfect TORNADO!!!

DisasterEconomyJob ChangesUnexpected income changes

The “Paradox of Thrift” (Economic Term)Keeping Up With the Smiths: The fallout from one family’s belt tightening

The Smiths cut back on phone service…

Many families in the Dallas area, Including the Smiths, above, had to cut back on spending, hurting local businesses.

As AT&T lays off 12,000 workers

The Smiths also stop eating out…

As Applebee’s revenues fall…

And its parent company, DineEquity lays off workers

The Smiths stop shopping at Brighton Collectibles…

Causing job worries for store manager Carol Rice…

Who eats out less at BJ’s Brewhouse

The Smiths stop getting lattes…

As Starbucks closes 28 stores in the Dallas area

A “New Normal” Was Inevitable• Previous economic trends were unsustainable

– “Housing (real estate) bubble” (inflated prices)– “Credit bubble” (household overspending and reckless

lending)– Securitization turned toxic (subprime mortgages)– Risky pools of derivative securities tied to mortgages (e.g.,

credit default swaps, credit default obligations)• Increased post-crisis government oversight• Reaction (over-reaction?) by financial services firms• The over-leveraged, debt-driven era of severely under-priced

risk is OVER!

Four Common Aftermaths of Financial Crisis

• Deep and prolonged asset market collapses– Housing prices– Stock Market indexes

• Profound declines in output (deleveraging)• High employment (in both public and private sector)• Explosion in government debt as tax revenues decline

Baby Boomers and Older Gen XersEspecially Affected By the Financial Crisis

• Fully experienced, not just one asset bubble – BUT TWO – during long stretches of their working lives– “Tech Bubble” and extraordinary run of double-digit stock

market returns in the late 1990s– “Housing Bubble” during much of the 2000s

• Limited recovery time for battered investment• Money Magazine (April 2009)

“A generation of Americans grew into middle age thinking that they had more wealth than they really did and their future was a lot more secure than it really was.”

Five Stages: How people Receive “Bad News”(Elizabeth Kubler-Ross Model)

“NORMAL”FUNCTIONING

Stages of the Grief Cycle RETURN TO MEANINGFUL LIFE

Shock and Denial•Avoidance•Confusion•Fear•Numbness•Blame

Anger•Frustration•Anxiety•Irritation•Embarrassment•Shame

•Empowerment•Security•Self-esteem•Meaning

Acceptance•Exploring options•A new plan in place

Depression andDetachment

•Overwhelmed•Blahs•Lack of energy•Helplessness

Dialogue and Bargaining•Reaching out to others•Desire to tell one’s story•Struggle to find meaning for what has happened

Characteristics of the “New Normal”An extended period of:• Slow U.S. economic growth• Low single-digit average annual stock returns• Stubbornly high unemployment levels• Precarious job security (public and private sector)• Tightened credit standards for loans• Increased household savings and debt repayment• Decreased household spending• Increased globalization: The world will get even flatter• Ultimately, when financial crisis abates, higher inflation (?)

Educators Can Help Students Prepare for the New Norm

• Goal-setting/Planning• Employment/Income• Spending Plans/Budgeting• How/Why spend $• Credit• Taxes• Home ownership• Saving/Investing• Retirement planning• Health Finance

Are You Ready for the New Norm?Resources

• ISU Extension– 4H materials: Consumer Savvy, – https://www.extension.iastate.edu/store/ListItems.aspx?Categ

oryID=14– http://www.extension.org/ - eXtension: family/finances

ISU Extension Resources

•Local Extension Office

•Resource Management Program Specialists

Hotlines - http://www.extension.iastate.edu/hotlines.htm

Teen Line - 800-443-8336

Iowa Concern – 800-477-1985

BETS OFF – 800- BETS OFF

Budget Basics

• Online• 3- 1 hour session• Interactive / or watch recorded sessions

Homebuyer Education Course

This online course will help you* decide if now is a good time to buy a home,* prepare for the home buying process and* shop for a mortgage that works for you.

Topics include:• financial basics• insurance• investing• retirement planning• planning for life events

Money Talk

Small Steps to Health & Wealth

• Online / “Live”• Identifies “small steps”

that will improve one’s health and finances

1 Communication & Goals 2 Income & Expenses 3 Develop a Spend Plan 4 Debt Repayment Strategies 5 Debt Repayment Plan 6 Build Financial Security7 Invest for your Future

• Online / Independent Study• Learning Coach Available• Receive weekly money tips via e-mail

NEFE – High School Financial Planning

"Planning to $tay Ahead", a personal financial management class for individuals who have filed for bankruptcy.

WORKPLACE ESSENTIALS ©

• “soft skills” training

Other Resources• www.njcfe.org – Information on finance• www.moneytalks4teens.org – University of California• http://www.nyse.com/ - New York Stock Exchange – Stock Market game• Rutgers – free CD with games, see handout• http://www.cnpp.usda.gov/USDAFoodPlansCostofFood.htm -USDA Cost

of Food Plans• http://www.aces.edu/ - Money Management Calendars• http://fefe.arizona.edu/ - Curriculum lesson plans• http://money.umd.edu/ - Personal finance seminar, usually in May• www.mymoney.gov – information, resources, tools, Money Smart• www.jumpstart.org – Coalition and clearinghouse/Money Smart week• www.NYSEMoneysense.com – New – online certification class for young

adults

New Economic Patterns

• Tight Credit• Constrained Spending• Low Investment Returns• Frugality is “IN”• Employment uncertain• High Unemployment• Decreased employee benefits• Uncertainty (taxes? Inflation?)

Welcome to the “New Normal”

In times of crisis and uncertainty, knowledge is

POWER!

Are You Ready???

For more information, contact:

Margaret VanGinkelHotlines Coordinator

10861 Douglas Ave, Suite BUrbandale, Iowa 50322

515-727-0656E-mail: vangin@iastate.edu