Thursday, November 03, 2005

Dude, Where's My Change?

Bank of America has come up with an idea that just might start America back on the road to savings.

Mr. and Mrs. Jones haven't been putting much of anything away for a rainy day these past few years. Instead, they've been doing things like buying homes they can't afford, putting more than 50 percent of their take-home pay toward a mortgage payment and lashing themselves to an exotic loan product that's sure to trap some like galley slaves in the belly of a Viking ship for the next three decades, or more. They're going to row, row, row their boat of debt gently down the stream until Geritol works its way into their daily diet.

Those lucky enough to already own their homes haven't been spared either. Instead of basking in the security of owning their homes outright, they took money out of their property and went to town with it. Every time you turned around during the salad days of this current Housing Bubble, it seemed somebody was taking out a home-equity line of credit. They were out booking cruises, buying big screen TVs, or having some part of their anatomy augmented.

Well, now that the housing market doesn't look so rosy anymore, and it's clear that the banks actually want to get paid back for the money people borrowed, the situation has frightened some economists, and rightly so. Most folks aren't going to be able to depend upon a single cent from Social Security 30 years from now, and some 401K plans are doing worse than good old savings accounts. Add it up and you're bound to agree that, come those hard, cold winter years of life, Mr. and Mrs. Jones are going to need some old fashioned cash in the bank just to keep food on the table, not to mention medicine in the cabinet. But, with so many dollars going to pay off those mortgages, it's not easy to face reality in the interim, to get serious about setting aside a few dollars for the future each month. It's hard for Americans to admit that it's time to pare back and do without things, like frothy coffee drinks.

And so, I see the brilliance in this — the Keep The Change program from Bank of America.

Here's how it works. You go to your local, non-chain coffee shop each morning and purchase a large Cafe au Lait for $3.43 by putting it on your debit card. Easy enough. People do it every day, even the ones who are mortgaged to their eyeballs. But, if you sign up for this plan, Bank of America's going to process that transaction as a $4 withdrawl from checking, giving $3.43 to that non-chain coffee shop, and putting the remaining $.57 into your savings account. It's just like that big honking change jar you have blocking open the bedroom door, except it's virtual.

Dude, you're on your way to retirement and you don't even have to be responsible enough to actually make a deposit into savings yourself!

AMERICA! This is YOUR plan!

Thanks to ideas like this, we'll be kickin' it in the low-rent district of Vegas in ... oh ... um ... 70 years.

— The Boy in the Big Housing Bubble