Education Failure of Public Schools

 hrough 12 years of Grammar and High School, math courses are taught each and every year. Most people never utilize the High School "science directed" math courses they are taught such as Algebra, Trigonometry, Geometry, and Calculus.

Yet the math and Economics courses that they need to know in order to improve their own finances when they become adults, and also to knowledgably vote on what consistently is rated the number one issue in an election - Economics, is almost never taught.

Here are public school courses that need to be added to the curriculum:

1. How paying credit card interest only after a purchase can double the ultimate price you paid in just three years. An interest rate of 24% does that. If 18%, the cost doubles in 4 years. Take the number "72" and divide it by the interest rate to calculate how many years it takes to double.

2. Mortgages and how they work.

A. Calculating the lifetime costs of a home mortgage. Showing that a 15 year mortgage lifetime costs are significantly less than a 25 or 30 year mortgage lifetime costs. B. Showing that interest payments are front loaded into the early years of a mortgage so that very little principal is paid back.

B. Explaining that doubling your mortgage payments to pay your loan off early is both an interest free loan to the bank (do you really want to gift the bank that?) and potentially financially dangerous. Explain that such a move reduces your total savings so that if you lose your job or become too ill to work, you may lose your house to the bank before you can sell it and keep the equity you have in your house instead of losing all of it to the bank because banks keep the entire amount they get when they take over and sell your house, returning none of your equity to you. . Much better to invest that extra mortgage payment because you will likely have enough money to pay off your mortgage sooner, plus you will be in a better position to not lose your home and/or your equity in it in case of job loss or illness.

C. Explain the risks of variable rate mortgages. If interest rates rise, so will your mortgage payments.

3. What you need to know about investing:

A. The difference between stocks, mutual funds, ETFs, index funds, options and puts.

It is especially important to note that mutual funds have high annual fees compared to similar ETFs and that you can buy or sell an ETF when the stock market is open and instantly know the cost but a mutual fund's buy and costs are determined after the market closes. Also, that the S&P 500 mutual fund has historically done better than 70% of professionally managed stock market accounts.

B. The stock market historical growth rates. 100 years of history - Average doubling every 7 years when you put 4 to 5 consecutive 7 year periods together. Though that does not gaurantee future results, the probability is high.

C. The tremendous advantage of youth in investing.

For example, based on historical averages, a 23 year old who invests $1,000 every year until age 65 would collect $64,000 a year for 42 years starting at age 65 while starting investing as a 44 year old would amount to only $8,000 a year for 21 years. If you double the investment amount to $2,000 a year, then you double those returns amounts.

D. The huge lifetime advantages of Roth IRAs and 401Ks over Traditional IRAs and 401Ks.

Using 3C, would you rather pay taxes on $1,000 or taxes on $64,000? Then invest in Roth IRAs and 401Ks.

4. The National Economy:

A. Historically, how nations who went too far into debt had their Economies collapse, putting all their people in poverty and having extremely high inflation.

B. The history of Federal tax cut and tax increase impacts.

When you look at the 8 years following a tax cut, Federal tax revenues percentage growth increased substantially compared to the 8 years following a Federal tax increase. The reason is simple Economics.

1. A tax cut puts more take home pay into peoples pockets. Therefore, they spend more on goods and services which increases the number of workers needed to provide those goods and services. Therefore more people are working and paying taxes which ultimately increases Federal tax revenues collected substantially.

2. A tax increase reduces take home pay. With less money available to spend, the number of goods and services decreases. That reduces the need for workers to produce those goods and services, leading to layoffs and higher unemployment. With less people working and paying taxes, Federal revenue growth declines.