No matter who you believe is at fault in the subprime crisis -- borrowers, lenders, Jimmy Cayne, Alan Greenspan -- it's clear that millions of people took out mortgages they simply couldn't afford.
Were they stupid? No, just sadly uninformed.
So primly argues the current issue of U.S. News & World Report, which includes a special report on "financial illiteracy." It's the kind of story that often pops up in times of crisis -- when things are flush, no one cares as much that most Americans have no clue how to calculate interest on mortgages or credit card debt. But with more and more people apparently in hock, the handwringing -- and, of course, the finger-pointing -- over the sorry state of our financial literacy is a hot topic.
It's also one that comes with its share of ironies, considering the plethora of media outlets now dedicated to helping people untangle finance. Never before have so many magazines, columns, Web sites, blogs, cable networks, etc., covered business and finance -- and in a way they say is supposedly palatable to Average Joe. Over the past year or so, Condé Nast Publications has launched Portfolio as a business magazine for people who don't like business; Fox News started a business channel focused more on Main Street than Wall Street; and TheStreet.com rolled out MainStreet.com to deliver personal finance with a celebrity-heavy tabloid sheen. And they're not alone. The New York Times, particularly in its Sunday business section, and The Wall Street Journal have labored for years to make personal finance a topic regular people consume regularly.
But a funny thing happens when you try to dumb down finance to make it palatable and useful. It becomes, well, dumb. If you tuned into Fox Business last week, you caught Susan "Stop the Insanity" Powter (remember her?) urging people to exercise and, of course, buy her book; MainStreet.com told readers how to take a page from Drew Barrymore and deal with a hit-and-run accident.
Now we don't mean to pick on Fox or MainStreet.com (OK, maybe just a little). It's hard to get people to tune into or read about money, especially when everyone's gloomy. But the WSJ, of all places, provides a classic example of personal finance's slippery slope to cluelessness: Terri Cullen's ultrachatty "Fiscally Fit" column Wednesday on her family's decision to fire its lawn-care service and buy -- the drama! -- a lawn mower instead.
It's a first-person account (natch) of Terri's bickering with her husband, Gerry, over how to best care for their one-acre lawn (one acre!) in New Jersey. Gerry wants to buy a riding lawn mower; Terri worries about how that will interfere with Gerry's summer boating schedule; we wonder how much money this couple has. We learn about Gerry's ineptitude as a comparison shopper (and how Terri saves the day); we watch son Gerald hang around the garage; we hear Terri predict Gerry will give up mowing next year. By the time we finish, we're still trying to figure out exactly what financial lesson we just learned and why Gerry puts up with Terri.
The latter is a recurring feeling, as Gerry is a recurring character in Cullen's columns. So too is Gerald, Cullen's in-laws, parents and any number of friends and family members and their pseudofinancial foibles. The column overshares in a manner more closely associated with the blogosphere than newspapers. (Recent topics include her gambling trips with Mom to Atlantic City and Gerry's lingering anger over her parents' failure to fund their wedding.) But it wasn't always this way. Cullen's column started life on The Wall Street Journal Online in 2002 as your run-of-the-mill (read: dry) personal finance offering. But when a 2006 piece about her family's decision to pay off their mortgage early sent traffic soaring, her path beckoned.
As the Journal explained in a press release that year, Cullen's column was being recast "to put the 'personal' back into personal finance." From then on, Cullen would "use her own family's concerns -- from saving on grocery bills to dealing with health insurance -- as a springboard to examining issues" affecting readers. The pieces are now carried in the paper and online, and they are admittedly seductive in a "What-will-poor-Gerry-do-this-time?" sort of way.
But will they help anyone avoid a mortgage they can't afford? Probably not. After all, the Cullens seem to live in a really big house