We have been bought by convenience.

Yesterday I had the pleasure of talking about the Occupy Wall Street movment with 2 University of Washington students over lunch. We were in agreement over several points, the one that sticks out to me the most is:

Our country is too large. Its administration is too costly.

We discussed the anti-Vietnam protests in the 60s, led by student groups. The two students said that they couldn’t believe that nobody was protesting anymore, that people aren’t outraged, that students sit back. I offered the idea that students live very differently than they did then. College used to be something wealthy or very driven people attended. Student loans and credit cards were not so easily available. There is plenty to protest today, but the immediate appeal of Chipotle for lunch usually wins over students’ attention spans.

This got me thinking more about debt and credit cards. We have all read and heard about the evils of credit cards and how the average American debt is grossly overgrown. I think most people are familiar with the interest rates that credit cards charge, starting with 0% for some amount of time, then shooting to 15% or more. I think what most people fail to realize is how much credit cards charge businesses as a convenience for allowing customers to use their money so easily. These charges are usually one of the following: a) an interchange fee which is per-use, why some establishments will charge you an additional 50 cents for a small credit card transaction, or b) a percentage of the sale, which I have heard is up to 15%, or c) a monthly fee, allowing a certain amount of charges per month for a flat rate. (More information available from Wikipedia: http://en.wikipedia.org/wiki/Merchant_account.) Some companies will counter-act this loss of income by operating cash-only or offering a small discount as an incentive for cash payments.

This means you are giving credit card companies the annual fees (if you have a card that has an annual fee), the monthly interest (if you carry a balance forward), but also a cut of each thing you buy with the card. Businesses, to account for these fees, raise prices on their products. I am unsure if these considerations are accounted for in calculating our inflation rate over the past 20 years, I am curious to find out.

Pay in cash at the local businesses you would like to support. The more cash income they receive, the more competitive they can be against large corporations.

This leads me to a statement I want to make for the Occupy Wall Street movement. I support the symbolic gesture, but the first big move you should make as a group, to say anything to Wall Street, is to take as much of your money away from it as possible. Move your money to smaller, local banks, I recommend credit unions. The frequent response to this idea is that there are no atms for the credit unions when I need them.

1) My credit union refunds foreign atm fees, you can probably find one near you that does too.

2) See how much of your life you can manage with hard cash. This might require one extra trip to the bank each week, to either cash your paycheck, or withdraw enough cash to use for a week.

When the large banks of Wall Street mismanaged their investments, we did not scold them, we gave them more money. If the gov’t had to intervene (which I feel confident it did not) it could have offered policy to assist account holders to move their money to smaller banks. What would remain would be high-level investments, likely falling apart. Wealthy investors could have sued the investment firms, people could keep their small accounts, and the gov’t could still have that cash in its pocket…errr taken out of its debt.

As a friend reminded me last week, the meaning of economy is “one who manages a household”. If you want to see change in our economy, change the way you manage your house.

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