As joblessness and underemployment force many Americans to live on credit, it’s becoming especially important to educate young people about responsible saving and spending. A new video game from MTV’s college-focused web site, mtvU, aims to do just that.
Teenagers and college students often take cues from their peers when it comes to shopping for clothes, accessories, gadgets and games. Even as most of America is reining in their spending, some kids may still develop serious shopping habits, even though they may be short on cash. The solution is usually plastic.
Teaching Saving and Spending
Seemingly unmanageable debt has even led a few troubled young people to suicide, but better education could teach kids how to avoid the pressures of debt and, if they’re already deep in the red, how to get rid of it.
For young people to get a jump on personal financial education, MTV (Stock Quote: VIA) launched Debt Ski, a video game that features a happy piggy bank on a jet ski gathering coins and paying for necessities as well as luxury items. The pig, who also starts with a line of credit, navigates through a series of obstacles in order to maximize his savings, limit his debt and maintain his happiness level, which can be boosted by purchases but can plummet with severe debt.
Spending tsunamis, which represent unexpected life events leading to health expenses or cost of living increases, are the biggest threat to the piggy’s future and could significantly decrease savings or increase debt.
The problem with the game is, the pig can buy whatever he wants in the game, and the only major warning sign appears after the fact (when you lose the game), which can often happen in real life when you look at your credit card bill. The plain truth is that a game like Debt Ski isn’t going to provide anyone with any significant fiscal education. MTV, however, hopes that the game will gain popularity and drive young people to their financial education portal, Indebted.com, which has info about about saving, spending, credit cards, personal and government debt and their future impact. Debt Ski itself may not be a great financial tool (although it is pretty addictive), but at least MTV's heart seems to be in the right place.
“It’s never too early to start learning these principles,” says Ross Martin, senior vice president of development and production for MTV360. “We absolutely think the game will have mass appeal and permeate younger age groups as well. Embeddable and designed to spread virally, Debt Ski leverages the power of online gaming to reach young people everywhere online, from social networks to blogs,” says Martin.
Credit card companies have long tempted consumers of all ages with 0% APR credit card deals that are valid for a limited time, then slamming them with higher rates. They’ve tempted them to spend by raising credit limits and issuing convenience checks that can be used to pay for anything, or to put money in the bank. But with increasing defaults and bankruptcy filings, these practices have only made matters worse for the companies themselves. Credit card defaults are on the rise and some have suggested that the card industry might be on the verge of its own sub-prime lending fiasco. Credit card companies have provided billions of dollars in credit to consumer who may not have the means to pay off the balance, a problem that has been compounded by high interest rates (as much as 29.9%) and a variety of fees.
Credit card companies “now realize the horror that they’ve wrought,” says Adam Levin of Credit.com. “They need to curb those frisky consumers, but it takes two to be frisky,” he notes.
New rules are in the works to protect young consumers who are surrounded on college campuses by credit card company representatives eager to sign them up for a new card, often offering a T-shirt or other freebies for signing up.
The Credit Card Accountability, Responsibility and Disclosure Act, which has passed the Senate, would require prospective cardholders under 21 to have a parent or guardian co-sign on their credit card accounts. Credit card issuers would also need proof that the applicant can independently repay his or her debt, or proof the applicant has taken a certified financial literacy course. A similar bill is up for a vote in the House next week, and President Obama, who met with bank executives Thursday, has said he’s in favor of new rules against abusive credit card practices. (For more info, check out MainStreet's story on the proposed regulations.)
To find the best savings accounts, checking accounts and credit card rates, go to BankingMyWay.com.