finances

Michigan’s high schools were given a D for financial literacy instruction.

That’s coming from a Champlain College study. The college’s Center for Financial Literacy took a look at all 50 states, examining their guidelines for teaching students how to be savvy consumers -- including instruction on loans, interest, stocks and other critical pieces of personal finance.

Yesterday, we brought you the story of Buy Here-Pay Here dealerships in the Midwest. These are places where the dealer finances car loans himself (BHPH is sometimes called in-house financing.).

Basically, he is the bank and he takes on all the risk. That’s especially true because BHPH dealers cater to people with bad credit – deep subprime customers who typically have credit scores less than 550.

It’s not hard to find people who are out of luck, out of work, and grateful for the opportunity to finance a car at all. But that opportunity comes at a steep price, which is either folded in or added on in the form of interest rates up to 25 percent.

So here are six tips to consider if you’re thinking about Buy Here-Pay Here:

Detroit Mayor Dave Bing addressed his city’s dire financial straits last night in a televised speech in which he said, “simply put, our city is in a financial crisis and city government is broken.”

“To avoid running out of money by spring, Bing says the city needs to do a whole range of things almost at once. They include increased health care and pension contributions for everyone, including retirees; and 10-percent wage cuts rather than furlough days for current employees. Bing says that needs to include the city’s public safety officers. Those departments eat up about 60% of Detroit’s budget. He adds the city needs to privatize some services—including public lighting, and to some extent its dysfunctional bus system,” Sarah Cwiek reports.

Cwiek was at the mayor’s address and says, “many think it’s only a matter of time before Detroit gets an emergency manager—and some, including Detroit City Council members, think the lack of specifics and deadlines in Bing’s speech made that even more likely.”

This morning, The Detroit Free Press had headlines that included an editorial titled, "Not good enough, Mr. Mayor," and a column by Stephen Henderson, "Numbers don't add up anywhere near city's needs."

The current credit crunch has made it harder for people to get loans from a bank. Gone are the days when you could walk into your local bank branch, flash your credit score and walk out with a loan. So many are turning to their friends and family for help...but is that a good idea?

To lend, or not to lend

When Pete and Michelle Baker wanted to buy a new house, they needed money for a down payment. Their down payment was tied up in their old house, which they hadn't sold yet.

In 1950, more than half of Americans owned their homes free and clear. No surprise that number has shrunk over the years.  But those who count themselves mortgage-free are still out there. The 2010 U.S. Census shows 1 out of every 3 homeowners owns their home free and clear. In a story produced for Marketplace Money, we look at what it takes to become mortgage-free.

Meet the Murphys

Mike and Kate Murphy live in a working-class neighborhood of Chicago, with two of their kids, Becky and Tommy, and their pet fish. They bought their charming, 3-bedroom brick house in 1996 for $156,000.

They originally started with a $110,000 mortgage. Mike Murphy says it was " obviously the largest mortgage we had ever taken out."

At the time, Kate brought in $30,000 a year, designing theater costumes part time. Mike was making $50,000 as a public school teacher:

At first they paid $1,100 a month on the mortgage. Refinancing dropped the payment to just under a $1,000. But they decided to pay a little more each month -- first $100, then $150 more.

Fast forward 13 years and they owned their house free and clear.

President Obama once considered Michigan Governor Jennifer Granholm for a supreme court judgeship.

Now, it looks like the administration was considering her for another job: the head of the new consumer financial protection agency.

But Granholm has declined to be considered for the position.

The Detroit News reports:

Former Michigan Gov. Jennifer Granholm said today she has no plans to head a new federal agency charged with protecting consumers of financial products such as mortgages and bank accounts.

Reuters reported that Federal Reserve board member Sarah Raskin also is under consideration to head the new consumer protection body called the Consumer Financial Protection Board.

You may think I am a little crazy, but while I was listening to  Mayor Dave Bing’s State of the City address last night, what kept running through my head was an ancient rock and roll song.

An early hit called Chantilly Lace, by a now half-forgotten artist called the Big Bopper, whose main claim to fame is dying in the same plane crash that killed Buddy Holly more than half a century ago.

Something happened this week which will, unless something changes soon, have the effect of finishing the job of effectively destroying the Detroit public schools. And maybe, Michigan’s future.

The state department of education has ordered Detroit to put in place a financial restructuring plan that would close half the district’s schools within two years. That would result in an  average high school class size of sixty-two students.

Governor Rick Snyder will speak later today in Lansing to the group Business Leaders for Michigan. He will release an outline of the data he thinks people need to understand the state’s budget crisis. He's expected to talk about his plans to reshape the state’s tax on businesses.

The Snyder administration has been circulating a draft version of a plan to scrap the complex and unpopular Michigan Business Tax in favor of a six-percent corporate income tax.

But the governor cautions his business tax reform plan remains a work in progress:

There’s a lot of speculation going on, and it’s a good dialouge to have out there in the public. I think we’re going to have a great plan based on simple, fair, and efficient.

The governor says he’d like to make paying Michigan’s corporate tax so simple it can all fit onto a single page. He wants it be an overall tax cut on Michigan’s business sector -- though some companies will pay more, some will pay less, and some will pay no business tax at all.

Manufacturers and other businesses say they are withholding judgment until they see how it might affect their bottom lines.