A Blockbuster Night Becomes A Blockbuster Memory

It seems like yesterday when I was telling high school seniors that they couldn’t get a Blockbuster account in Boston without a credit card. The year was 2003 and the credit card industry was going through a new phase in its revolution – targeting college freshmen with credit cards.

My point back then was that we were heading into a plastic world because of the growing acceptance of online commerce (remember Internet usage had only been around in a significant way for 5 years at that point). Kids were going to be given credit cards at a rapid rate and they needed to know about the contradictions – that they can help establish credit but also get you into trouble fast if you don’t keep your eye on the ball.

Now Blockbuster is no more – they filed Chapter 11 bankruptcy last week and it appears that they wipe its balance sheet clean of debt. Senior bondholders owed about $630 million are hoping to convert all that debt into ownership stakes in a restructured Blockbuster. Lower-ranking bondholders owed about $300 million would be wiped out.

Blockbuster’s plight comes amid major shifts in how consumers view video content. Consumers now get most of their movies through vending machines operated by Redbox, a unit of Coinstar Inc., and from mail-order and online streaming giant Netflix Inc. Consumers have also gravitated toward cable on-demand services and getting films and television shows through gadgets such as Apple Inc.’s iPod and iPad.

So what’s my point?

The pace of change right now in terms of consumer tastes and desires is faster than ever. We want everything NOW – in the palm of our hand would even be better. All we have to do is sign up for the subscription services – X-Box, Netflix – Amazon – Bravio – the list goes on and on. $8.99 here - $4.99 there – don’t forget the data plan from your cell provider - $70 or so. It’s not cheap to buy entertainment convenience, but it’s your choice.

VHS & DVD movies, music CD’s, video games, books, magazines, newspapers – all being replaced by digital subscriptions. Have you calculated how much you spend on subscriptions each year?

Football and "Apps"

I was watching my beloved Patriots yesterday (we’re not EVEN going to talk about the game) – and I saw a boatload of commercials from the large players in the financial services arena advertising their products and services. No big deal – they’re always advertising on TV.

What struck me most during the game was the number of commercials featuring mobile banking. These usually followed the commercials about the new smart phones or iPads or 4g networks.

So I decided just for yuks that I would look at the available apps on my own smartphone (no it’s not an iPhone or a Droid – but I still happen to like the features considering my work experience began with those large planners from Franklin Planner.

I go to the “App store” on my phone, click on the category Finance and voila! Up pops 8 sub-categories with 138 apps all relating to Finance. Gadzooks!

• Banking – 21 apps
• Business – 20 apps
• Personal – 35 apps
• Stocks – 17 apps
• Budget – 20 apps
• Retirement – 5 apps (I guess “app people” are really thinking about retirement)
• Coupons – 2 apps
• Debt/Payments – 18 apps

When I look through some of these apps, some were straightforward, some not so much. The exercise really reinforced my instinct that if the next generation of consumers are going to use this type of technology that overall this is a good thing. They will have the ability to stay on top of their finances faster and in some cases, avoid becoming a victim much sooner than those of us in the paper generation.

However, it also reinforced my belief that personal financial knowledge is even more important in the tech-savvy world. Just because there’s an app doesn’t mean it’s a good app or that it’s accurate and reliable. If a personal has a basic understanding of personal finance, an adequate level of math skills, and a take-it-at-face-value attitude, then he/she should be able to identify the really good apps for them and be a great position to watch and manage their financial situation.

Basic, technical financial knowledge is still key and will need to evolve if it wants to connect with “app people”.

Now about this really cool football app I found……

We’re Back to School …and More Confused Than Ever

We New Englanders love our summers. We tend to take in the sunshine and put off those burning issues until after Labor Day. For the fun of it, I thought I would look back this summer and see what took place in terms of our collective treatment of money matters and see if we’re making any progress in understanding them. Here’s a snapshot of what I found:

• 73 percent of Americans who are in school or have school-aged children said their back-to-school budgets were either the same as last year’s or smaller, according to a Chase Slate — U.S. News Monitor survey in August. How’s that economic recovery going?


• Total household credit has contracted for seven straight quarters. Mortgage debt is down $462 billion from the peak, which it reached in November 2008. Bank-card borrowings, which peaked two months later, are off $126 billion. Auto loans have fallen $122 billion; home-equity lines, $77 billion. It’s great that debt levels are falling – can our economy adjust to a new spending culture?


• Home and car sales are plummeting again. Job growth has shrunk to a sliver. Personal bankruptcies are soaring. To use a well-worn line, “it’s about jobs stupid.”


• Under proposed regulations, announced July 23, for-profit colleges and universities would qualify for federal student aid only if enough former students were repaying their student loans, or if graduates generally earned enough to repay their debts. Can’t wait to see the metric calculation for this – bet it’s not ready until 2015.


• Thanks to provisions in the CARD Act, banks must now offer overdraft protection to consumers on an opt-in basis, meaning that you won’t get this “service” unless you specifically sign up for it. Have YOU read the information from your financial institution?


• We have a new watchdog – the Bureau of Consumer Financial Protection. This new agency will have the power to regulate a wide range of financial products and services, including credit counseling, payday loans, mortgages, credit cards and other bank products. And it won't be easy for other agencies to override the bureau's regulations. Additionally, the bureau will be charged with financially educating consumers. Oh really? Trouble is, by the time they get going and actually DO something, we’ll be smack in the middle of another presidential election.


• American colleges are spending a declining share of their budgets on instruction and more on administration and recreational facilities for students, according to a study of college costs this summer by the Delta Cost Project. I have no words for this...


• Tuition, on average, increased more rapidly over the decade at public institutions than it did at private ones. Average tuition rose 45 percent at public research universities and 36 percent at community colleges from 1998 to 2008, compared with about 21 percent at private research universities. Those darn pesky state budgets...


• U.S. Department of Education – now makes 100 percent of student loans as of July 1. Time will tell, but I predict this year’s college freshman are going to be pretty upset upon graduation when they are given 4 different coupon books to repay their student loans.


• An average of 9.1 percent of college graduates were unemployed in 2009, up from 5.5 percent in 2005 and 4.4 percent in 2000, according to the Department of Labor's Bureau of Labor Statistics. For those with some college experience but without a degree, that figure averaged 14.1 percent last year, compared to 21.5 percent of high school graduates with no time on a higher education campus. And you thought taking math is school was pretty lame…)


• Americans now owe more in student loan debt than they do for all credit card debt, according to a recent report published by the financial aid information website FinAid.org. And no frequent flier miles either…

So it seems to me that we need financial education more than ever, Guess it’s time to get back to work and get back to the mission.