Here's How It Works

he idea went like this: Pick a community with a low average credit score; give away copies of Hooey Savvy's Cookie-Wise Pablo to kids at one school; challenge another local community to see which could improve its credit score most in a year; winner gets local bragging rights and better lending rates.

Unfortunately, from the research I've done and the people I've spoken to, that's not how it works.

A couple years ago Consumer Reports (CR) ran a piece about credit score companies and which one to go to for one's score. Along the way, CR did a nice job of educating the reader about who creates credit scores (lots of folks it turns out including Ford and I'm sure other car companies) and who uses the scores (lenders such as banks for mortgages or car dealerships for financing). So what did CR conclude?

"These credit scores probably aren't worth your money."

Not only is that not reassuring, but a disclaimer that one of the scores isn't even sold to lenders and is "not an endorsement or guarantee of your credit worthiness as seen by lenders" is scary. This sounds a lot like the testimony given by rating agencies before Congress that only said they provided "opinions" on creditworthiness. In other words, at the end of the day, lenders are going to choose which of your scores they like best (read can take you for).

As CR learned, one person can have a variety of credit scores, say, from good to excellent. So if I'm a lender and I see someone who qualifies as excellent, I'll want to lend to them, but at the "good" score rate to make more money.

Consumers have the power to ask what score a lender is using, but if you really need that loan are you going to bust the lender's chops? If you're the lender, are you going to take any flak from someone who needs your money when there's another sucker being born in your waiting room?

Lenders picking whatever number they want is bad news for borrowers. What's inconceivably worse than that? A bank (GS Capital Partners, take a wild guess what the GS stands for) buying a credit scoring company (TransUnion). What's to keep them from making everyone pay through the nose?

If I can't promise people that better credit scores will directly lead to better lending rates, I won't. Fortunately, I've come up with another idea which I'll bounce off folks in Texas when I get there next week.

Your Community on Hooey

s I work on the Kickstarter proposal and marketing plan for Hooey Savvy's Cookie-Wise Pablo, my kids book on financial education, I really want to show that it can have an impact on a community. To that end, I'd like to quantify that impact by tracking one community that reads Hooey against another similar community that does not.

Unfortunately, I sincerely doubt a single kids book can improve the average credit scores of a community in one, three, six or twelve months. It may take years. But, hey, you never know. Long story short, I'd like to show folks the progress they've made in a tangible and/or quantifiable way. What I do know is that it shouldn't take millions of tax payer dollars to achieve.

In Nudge, a book about libertarian paternalism, the authors, economists at the University of Chicago, give numerous examples of clever government initiatives that yield big results at little cost. Competition and public humiliation always seem to go down well. In this case, we could pit two communities against each other to see who can improve their average credit scores the most in a year...with the scores updated monthly in the local paper or painted on a wall in a very public place for all to see. Throwing in a prize for the winner (other than better credit scores and lending rates) never hurts. Getting elected officials to line up behind an out-of-towner might hurt.

Project Updates: Got a rather uncompetitive quote from the L.A. illustrator and so the search continues. Am hoping folks in Texas will be up to the task. Floramay Holliday is interested in giving some of Hooey's songs a go. She's got a great voice, lots of experience and a natural way about her music. I'm excited to hear what she comes up with. Thank you, Dewey Ervin, for bringing her talent to my attention. Have a meeting with Equifax next week in Atlanta. Looking forward to learning more about the company. Early work on my baseball work of fiction, The Boston Squeeze, continues to come together a little everyday.

Booked

ooked my flight to San Antonio today. Looking forward to talking with people in Corpus Christi and Harlingen, two cities with a couple of the lowest average credit scores in the country, about their experiences with money and education.

What do you wish they had taught you in school about money?

That Yankee Bastard

nce upon a time I played in a fantasy baseball league with a bunch of dudes from Georgia. My team name? That Yankee Bastard. TYB (or, in the rare week I had the upper hand, That Bastard) had its moments (Thank you, Justin Verlander, for that 86 point no-no in '07!). But having gone to school in the South, I have a good feeling for what flies and what hits the fan.

That being said, from what I've been told, Texas is not the South. I know Texans, I went to school with Texans, I like Texans. Believe it or not, I've found an odd kinship between New Yorkers and Texans. Both groups have a certain, "This is how we do things" mentality. (More explicitly, in NYC it's, "This is how we do things. Don't like it? Go fuck yourself." In Texas, I take the follow-up sentences to be implied.) Texas females are one of the few groups of newbies to NYC that I don't worry about.

But this time, I'll be on Texas turf.

Looking ahead, I've drafted a sketch of what I'd like to accomplish on this first trip:

1) It's important that I get a good feel for what financial education is being currently offered and how Hooey can complement that.

2) It's equally important to listen to folks in the community to make sure Hooey addresses the financial problems or gaps in learning that they say currently exist.

3) As a you-don't-even-have-to-open-your-mouth-'cause-we-already-know Yankee, I need to propose a simple, straight-forward, easily executable plan that will not get rejected out of hand. That plan, at this time, is to provide every public school third grader and every local public library in the chosen community with a free copy of Hooey Savvy's Cookie-Wise Pablo (in English or in Mexican-Spanish). I won't ask for it to become part of the curriculum and I won't ask for librarians to read it. I'd just like it to be available at home or in the local library.

4) I need to shake a lot of hands and arrange a lot of face time. I could easily email all the folks that I've built a database around, but they can just as easily drag and drop my ass into their trash cans. By making the trip I show I am interested in their community and that my ass, for as scrawny as it is, does not belong in the trash.

5) Thanks to the standards set by "No Child Left Behind" and the Texas Department of Education's buying power, it would behoove me to bring Hooey in line with these standards as best as possible.

Those are the broad strokes. Jamie Oliver didn't just show up in West Virginia and commandeer an elementary school kitchen. It takes time and trust. If I can put in the time and build the trust, hopefully I can accomplish a fraction of what he has.

Project Updates: The L.A. illustrator has looked at the text of Hooey, likes it and is putting together a budget proposal. To fill in other gaps in the budget, I've also reached out to a local video production guy about a short Kickstarter presentation, have put together a preliminary list of Kickstarter rewards to offer and have some musicians potentially interested in recording some of the songs from Hooey. The Boston Squeeze continues apace. Have finally found a format that will carry the story and, thanks to Mr. Patrick Jordan, I've staked out some possible locations for the Squeeze's fictional Boston-area stadium. It's not a Pettitte curve yet, but it sure ain't a hanging curve.

No A Students Anywhere

xperian, one of three major credit rating agencies, reported the top ten and bottom ten cities in the U.S. according to average credit score this past fall (on a scale of 501-990). The top ten cities clustered around the Midwest, notably Wisconsin (congrats Wausau (789), Madison (785), Green Bay (780) and LaCrosse (777)!). The bottom ten cities were overwhelmingly located in the South and Texas (Texas, of course, being Texas).

Those who reported on Experian's information hypothesized that the findings were based on two particular causes: high unemployment and high foreclosure rates. Nothing shocking there, I suppose. If you're unemployed how are you going to pay your bills and your mortgage?

But are those really the only two reasons?

Let's go to the 2010 U.S. Census for a minute, shall we? A little demographics, please. Each of the bottom ten cities had either Hispanic or African American majorities, often exceedingly so. The top ten? Not so much. Only San Francisco (781), helped by an Asian population of 33.3%, by a shade over 1.5% had a "minority" majority.

So minorities, Asians aside, don't know jack about how to balance their finances, right? They can't hold a job, they just take handouts from the government, right? Or they're all suckers. Yeah?

This reminds me of the folks who said the former-Soviet republics didn't understand capitalism and that's why their economies didn't take off after the fall of the Berlin Wall. As economist Hernando de Soto later explained, they understood capitalism, but their new governments never updated the laws to allow for capitalism, property rights in particular. In other words, the best explanation usually isn't that straightforward and requires a little more digging.

It's also difficult to overlook the long history in the U.S. of higher mortgage lending rates to minorities ("African-American borrowers pay an additional $425 for their loans. Latino borrowers pay an additional $400. (The average fee for all bowers was $3,133 on loans that averaged about $105,000)" (Thaler, Richard H. and Cass R. Sunstein. Nudge: Improving Decisions About Health, Wealth, and Happiness. New Haven: Yale University Press, 2008).

Here's my hypothesis: The top ten cities, Wisconsin's in particular, are areas known for their Scandinavian/Germanic roots and heritage. Are the Scandinavians and Germans financial geniuses? They seem to do well, but that's not what interests me. What interests me is how long they've been in the country, never mind the Midwest alone, and how they seem to have a tradition of handing down (pardon the repetition) good financial habits and knowledge.

The bottom ten cities? Three Texas cities (El Paso (710), Harlingen (686) and Corpus Christi (702)) on the list are near the Mexican border. I'm going to go out on a limb and say that a high percentage of the folks who live in these three cities do not speak English as a first language and have not been in the U.S. for longer than a generation or two. In other words, I have a feeling they have little to no tradition of handing down good financial habits and knowledge that fit within the U.S. financial and legal systems.

Question is, what will help them more? A Mexican-Spanish version of a book on financial education (to start a tradition of good financial habits) or something else, such as...receiving their monthly bills in Spanish? or having mortgage or credit card applications to review and fill out in Spanish? (assuming that is not already the case).

And the African American communities, you ask? English should not be a problem for them, you say. And you are probably right. The best hypothesis I can come up with is that white communities in the U.S. have had a 400 (approximately 12-13 generation) year head start in terms of amassing capital and partaking in the U.S. financial and legal worlds whereas the African American communities have had less than 100 years (or approximately 3-4 generations) as citizens with rights (ie, technically able of participating in the economy and politics of the country as opposed to being intentionally kept out which still happens informally). Never mind the interruption of knowledge transfer that incarceration brings which both communities have predominantly dealt with the last 20-30 years in particular (and that's erring on the short-end).

In short, I suspect we in the U.S. have relied upon family members to teach us about money because I don't think it is happening in school consistently if at all (Wherefore art thou, Home Ec?). While it's easy to target the bottom ten cities, Experian reports that the national average credit score in 2011 was around 749, or in terms of grades, a C. So the best cities with their 780s, are what C+/B- then? And 686 is, say, a D? No A students anywhere then.

Wall Street and Washington can point fingers at each other, but until we educate people better about money and the basic laws surrounding money, the same mistakes will continue to occur. 

Needless to say, I have some homework to do. Homework that requires a little travel and talking to folks.

How did I get here? I got here by asking myself, "Are you sure that the educational book you've written will answer the questions and problems of those who most need it?" I'm still not sure and so I'm going to find out.

Progress Report: Talking to an illustrator in L.A. for Hooey. Conceptually making progress with The Boston Squeeze to make it tighter because, to be honest, it was getting out of hand. If I can make it go from a knuckler that doesn't knuckle (its present condition) to a tightly wound Andy Pettitte curveball, I'll be a happy man.

Jimmying Square Pegs Into Round Holes

his week Spring Training ended and managers and general managers around baseball had to decide who to keep with the big club, who to send down and who to "designate for assignment", baseball's euphemism for getting canned.

The Yankees' Justin Maxwell, 28, hit .310 this spring, but because of the number of outfielders the Yanks already have, he got cut. Francisco Cervelli, 26, the Yankees' backup catcher the last few years got sent down to AAA after the club traded for another catcher who's older, has less experience and isn't as familiar with the club (probably as an insurance policy against the smattering of concussions that Cervelli's had the last few years). And then the Washington Nationals sent down John Lannan to AAA after being their Opening Day starter the last two years and having a good spring. Who knows what that was all about?

One of the hardest parts about writing is tossing out material. Last summer I outlined 10-12 pieces for a collection of baseball short stories. Each story had its own angle and its own cast of characters.  I liked all of it. Now that I've decided to make the collection of short stories into The Boston Squeeze, the brief history of a team, I have to admit that some of the stories and their characters won't make the cut.

I've been racking my brain how to make them all fit, but it just ends up being like jimmying square pegs into round holes. Sure, I could break out some sandpaper or a chisel, but they'll still wobble. They're not a good fit.

But like Cervelli, I know where to reach them when I need them. And hopefully they'll be back with the club soon.

Alicia's Blue Hats

ust finished watching Field of Dreams in preparation for Opening Day. While I've seen it a hundred times, this time I particularly appreciated the scene where Terrence Mann (James Earl Jones) interviews long-time residents of Chisholm, Minnesota about Archibald "Moonlight" Graham. The last man he interviews goes into great detail about Doc Graham's relationship with his wife...by telling a story about how shopkeepers in town stocked nothing but blue hats knowing that Doc would buy one for her if he walked by.

A lazy writer only creates Doc Graham. A good writer creates Doc and his wife. A great writer creates Doc, gives his wife a name (Alicia) and builds a history between them that we only hear about second hand - never see. Amen.