A Nation of Amateur Consumers

Nation of Amateur Consumer A Nation of Amateur Consumers

Am·a·teur; noun 1. One lacking in experience and competence.  Con·sum·er; noun 1. One that utilizes economic goods.  Cred·it; noun 1. The provision of money, goods, or services with the expectation of future payment.

Those 3 words, when combined, are a toxic combination because we all utilize goods and services and most of you obtain these goods and services via credit!  But what really makes this combination toxic is the fact that most people lack experience and competence, or as I like to refer to it, a “money consciousness” when it comes to what we need and want, in order to live a simpler and more sustainable life!

Make no mistake about it; you are an Amateur Consumer.  Don’t think so?  Did you take any comprehensive financial literacy courses in elementary, middle, high school, or even college about the differences between buying something with plastic – versus cash? Well, not only do most high schools not require any kind of financial literacy education, but according to the Council for Economic Education, only 16 states require testing of student knowledge in economics.  Scarier yet; that’s 3 fewer than in 2009 so we’re actually going backwards. Is it any wonder why we’re a nation of amateur consumers?

Financially Illiterate Society

Before you purchase anything on credit, as a matter of habit and mindset, do you ever think to yourself, “How will I pay this back if I lose my job, take a pay cut, or if my business closes?”  Most of us don’t ask the “what if” question and I was guilty of this as well before my crash and burn.  How many of you even stop and think for one second, “is this a need or want, or do I really need this anyway?”

[Quick side-note]: buying with cash is buying with money you actually have.  Buying with plastic makes you believe you purchased something with money you have – when you actually don’t!  And even if you buy something with cash, with the right “money consciousness” that decision would be made thoughtfully and correctly…in the beginning, where it needs to happen, in order to avoid credit and financial troubles and to live a happy and more fulfilling life!  I have found this out the hard way! Listen to this excellent interview on Surviving the Credit Crisis on Web Talk Radio where I touch on this subject here.

Did You Go To Harvard?

In a recent blog post in the Huffington Post, Elizabeth Warren who is now a U.S. Senator and was the driving force behind the creation of the Consumer Financial Protection Agency said that when she was a professor at Harvard, one of the classes she taught was contract law (for sure – no dummies there) and she asked her students to read a credit card agreement — either an offer that they’d received in the mail or the actual agreement they’d signed onto — and answer some basic questions. She said some were easy like; when is your bill is due? Do you get points?  She said her students always answered those.

However, the next questions she’d ask were; does your credit card have an arbitration clause, preventing you from suing in court if the company cheats you? No one knew the answer. How long it would take you to pay off a $1000 purchase with interest if you paid the minimum monthly payment? They didn’t have the answer to that either. She went on to say that when she assigned that basic question as homework, almost all of her students spent hour’s knee deep in fine print without finding the answer.  These were Harvard Law Students in a Harvard contract law class who couldn’t answer these questions; can you?  As amateur consumers, we need to educate ourselves better, before life happens to us!

Negative Credit Events An Outcome

Most people, and I’m talking from experience, think of the negative credit event that happened in their life, like foreclosure or bankruptcy, as the crisis itself.  For sure it’s a crisis and I have survived both, but you have to come to the realization that the foreclosure or bankruptcy is simply an outcome of whatever underlying crisis might have occurred in your life that either impacted your income – or caused expenses that you simply could not overcome financially. Lack of Comprehensive Financial Life Building Skills is one of those underlying root causes.

How can you begin to change your circumstances if you don’t correct the mindset that helped cause your financial crisis in the first place?  If you want to regain your upward mobility, you need to identify the root causes of your financial crisis, and if those root causes are still going on, what steps are you taking toward fixing them?  How are you creating a better ‘money consciousness’ moving forward?  This must be addressed first, before you can move forward, and after all, isn’t that what you really want to do; move forward living a simpler and more enjoyable life?

Can’t Play If You Don’t Know How

Fact is; you need to learn, as amateur consumers, how to make to make the system work for you and learn how to function within it instead of becoming a slave to it, or worse; become devastated by it!  No one is immune from credit and debt issues either.  In my 20 plus years of dealing with credit and financing, I have seen doctors, lawyers, clergy, policeman, firefighters, teachers, and professors alike, all dealing with credit and debt problems!  Without a doubt, credit and debt issues absolutely do not discriminate.  But why do you think that is?

I believe this is due to the fact that without the missing components of comprehensive financial literacy, we are all amateur consumers or as the Council for Economic Education put it; a society of financial illiterates.  If you’re looking to recover from credit and debt issues, there’s no way this can happen ‘long-term’ until you correct whatever mindset helped cause your credit and financial woes in the first place. I call this process ‘thought disruption”.

Even the Most Financially Literate Can Get in Trouble

Recently, in one of my LinkedIn group discussions about the plastic versus cash argument, someone commented about me, “Of course the fact that you had such financial hardships in the past will skew your view of credit card use.”  He went on to make his case about there being and obvious “distinction in profiles of the pay-in-fullers vs the debt carriers”, as if those that pay their balances in full are somehow more financially savvy than those who don’t.

I have two indisputable reasons why that thinking is wrong;  First, I offer myself up as proof.  I paid my balances in full every single month without fail before my crash and burn.  The problem was it usually totaled somewhere between $5000 to as much as $10,000 a month in any given month; as a college educated credit and finance professional!

I spent it because I could, as do millions of others.  The second is this report titled Do Payment Mechanisms Change the Way Consumers Perceive Products, which makes a clear distinction when using cash versus plastic.  The report points out that the use of a credit card as a payment mechanism increases the propensity to spend as compared to cash in otherwise identical purchase situations…and I spent!

As amateur consumers, you should read the report to learn more about the psychology of consumerism in order to protect yourself moving forward!



  1. Kristy says:

    Recovering from bad credit is one of the toughest things I have had to face in a long time. No fun at all!

  2. I noticed you typed ‘recovering’. That means you are doing something about it and regardless of the circumstances, your moving forward! Good for you Kristy. Let me know how I can help :)

  3. Jonathan says:


    Admitting you have a problem is the first step to getting it fixed. You’ll get your credit repaired eventually, just keep at it and don’t get discouraged =)

Leave a Reply to Lou Rodriguez Cancel reply