Last week American Student Assistance released an 8-minute movie horror movie called THE RED. It’s about debt, and after the film ends, there’s a call to action to face your own debt (“you can’t outrun it, all you can do is face it and fight it”). I spoke with ASA managing director Sue Burton about her organization and what they’re doing to help people confront their student loans.

LS: Tell me about your organization, Sue Burton.

SB: American Student Assistance has been around for 57 years helping borrowers navigate repaying loans. SALT is our program to help students get ahead of their loans. We’ve found the best way to help students manage their loans is to help them when they’re make borrowing decisions, to get them informed and engaged for when they ultimately leave school.

LS: Your movie gave me a knot in my stomach.

SB: The goal is to drive awareness of the power of solutions. So much is written about the problem of student loan debt—but we want students to feel empowered to take action, to look at solutions, to get themselves informed about their options. You can ask people if they have student loans and they’ll say, oh yeah, but you ask much, they have no idea.

Students are disengaged from the details of their loans and how to manage those loans—they’re paralyzed.

LS: What would you say to someone who wasn’t that worried about their debt. Or maybe wasn’t paying back their debt. Maybe because they were banking on eventual loan forgiveness.

SB: We do encounter quite a bit of what I’d call magical thinking. Students hear rumors of forgiveness, or maybe heard that you worked in a certain job, your loans would be forgiven. And that can be true, for some federal loans.

But students have so little engagement with their loans, we have to unpack what type they have, the nature of the loans they have. A mortgage is one borrowing decision—but student loans are usually 4 to 6 different borrowing decisions, and they can all have different terms. People confuse public and private loans. They think private loans and public loans are created equal and they’re not. So the first step is know what you’ve got.

The terrible tragedy of student loans is that they’ll follow you around; denial and avoidance is really not an option. That’s the message we’re trying to portray in this movie THE RED. Just avoiding them will get you in the end.

LS: Are you just focused on current students and new graduates?

SB: Our organization helps people of all ages. Our programs are for everyone. The shape of traditional student has really changed—even many of our active college students are now are in 40s or 50s. We help a lot of people into their 60s and 70s—some have ignored their loans and are now finding that their social security is being garnished, which is really difficult. We help borrowers in any stage of repayment, but we’re trying to reach students.

LS: After they have loans, or before?

SB: Both. We have partnerships with 150 colleges and we work with students to help people borrow less—how can you borrow the least amount possible?—and to borrow smart—to know the difference between a federal loan with a fixed interest rate and a private loan. So those are our goals: borrow less, borrow smart, and ultimately repay well

LS: Can you talk me through what happens when I call you up?

SB: The first thing is diagnosis, understanding the magnitude of your current debt situation. We have a loan management tool on the website to figure out what you owe. Then we help you to understand the particulars of your situation. If you have federal loans there may be a way to renegotiate, and we can do that—most of the people that we can help immediately qualify for income based repayment for those federal loans. We can’t renegotiate private loans, but we can give specific language and coach you on how to do it yourself. For instance, some banks are open to a student loan short sale, and while we can’t do that for you, we can give you them some things to say to the bank.

We also try to get you thinking that no loan is an island. We want you to think about your cash flow. I hate the word budget, it’s like a root canal.

LS: It IS a terrible word.

SB: And for a lot of students, their income is really sporadic, even after graduation. A budget presumes you are getting a steady paycheck, and that’s unrealistic for many people. So we have a cash flow tool that takes into account money in and money out even if it’s irregular.

LS: I’m wondering if you’ve found it hard reaching students and young adults because it’s just not that cool to worry about this stuff. My own debt spiraled because in a way, I thought, I’m too young and free to worry about this.

SB: Money is never really the end in itself, it’s the means to an end. We really try to structure our content in a way that is engaging and compelling. My eyes glaze over when I read Suze Orman. We’re more interested in making content that is cool and shareable, content that will help you save money, that you’ll want to share with your friends-like Groupon when it first launched, oh cool, now I can spend less, and I’m going to tell my friends.

I just think the majority of financial content presumes a rational practicality that I don’t think everyone can possess.

LS: Did you have student loans?

SB: I did have student loans. They were a quaint amount by today’s standard, and it was 80% of my starting salary out of school. I had three jobs, and that’s how I ultimately came to pay them off. And true confession, I used to market private student loans. We weren’t trying to take advantage of anyone. We were trying to keep people from putting $500 in textbooks on their high-interest credit cards, or using their home as collateral for a loan. Still, sometimes I joke that this job is my redemption tour.

After many years of paltry minimum payments, I finally paid off all of my credit card debt. One last payment, and it was gone.

My parents raised me to fear the plastic, and for that reason I was always shameful of my credit card balance. But I still managed to rack up a couple grand in debt. It was for plane tickets, clothes, concerts—whatever else I had to have in the moment that my paycheck wasn’t going to cover.

But I always made payments. Minimums, mostly. Big ones, sometimes. It was easier to make payments in large chunks, like when I got birthday money or a tax return check. For me it was all or nothing with paying it down: huge payments or the minimum. I couldn’t bring myself to actually set up a real budget that would allow me to whittle it down regularly. That would have involved facing the amount of money I wasted each month.

I was abusing the credit card, and I knew it. I couldn’t seem to—or didn’t want to—break the cycle.

But then I wiped the slate clean.

A recent confluence of events have changed my financial situation. I got a new job with a higher salary. I’ve been having steady freelance income. An unexpected gift from my grandmother and cashing out vacation days at my old job buoyed my account further. I no longer have to live paycheck to paycheck. It’s a strange feeling.

But still, the credit card balance sat for weeks before I touched it. I was so hesitant to make that final payment. Part of it was that I was scared that I would run out of money for the month after I parted with such a big dollar amount. What if something happened, and I needed it? But that anxiety was familiar—it was the anxiety I’d had every month for the past six years. Every month I feel the pangs of fear that I would run out of money before my next paycheck, because sometimes I did.

This was the first month I didn’t have to worry, but I still couldn’t shake the need for a monetary security blanket. I am more financially stable than I have ever been, and it scares me.

Despite the relief this financially security has given me, it means something. It’s a milestone. I can support myself, live comfortably, and actually save more than a hundred bucks a month. I can be an adult, financially speaking.

Paying off my credit card signified a major point of growing up for me. It feels like I pushed past my youth and can never go back.

No more odd jobs. No more waitressing. No more dreading the dentist bill. Not having a credit card balance, having enough money to pay it off—it meant stepping down from my 20-something, life-is-short, collect-every-possible-experience-even-if-it-means-draining-your-accounts lifestyle. I’m done spouting life stories from the underbelly of stunted adolescence.

I knew I couldn’t hang on to that credit card balance or my financially unstable youth any longer. But that last step towards adulthood was scary. So like an unprotected left at a busy intersection, I just did it real quick, before I had time to change my mind.

Heather Sundell lives in Los Angeles.

When I was growing up I never dreamed of being an astronaut or ballerina. I wanted to be a teacher, because it seemed like a steady, secure job. My family was poor. There’s not a fun, witty way to say that, so there it is. We were three kids, a single mother, and two cats, and our household income never topped $24,000. The average was $17,000.

We were poor, I knew it, and it sucked. It’s hard not to notice when your family buys food with a weird card that only works at the grocery store. Or that you frequently get letters with “FINAL NOTICE” emblazoned across the front. Or that you are never, ever supposed to answer the phone in case it is “a bad man wanting money.”

College was positioned as The Answer To All My Problems from a very young age. I think that happens with a lot of decently smart kids from poor families—college is the way up the ladder, the way out of a tiny basement apartment, the way to a six-figure income that will help not just you but also, hopefully, your family. You didn’t want to beat the kids who made fun of your Wal-Mart clothes, you wanted to join them. Upward mobility and all that.

College admissions offices were the gatekeepers to the Middle Class, my brain the key. Right.

I always knew I was going to college, and I always knew it was going to be My Thing. It would be on my back, my work that would hopefully get me a scholarship. My mom couldn’t even get approved for a Parent PLUS loan, so it was my name alone on the dotted line.

I did everything they say you should do, at least the things I had control over—gazillions of devoted extracurriculars, volunteer service, excellent grades, the hardest classes. But I went to a poor, rural school with three AP courses. My family only had enough money for me to take the ACT once, and with no fancy prep classes or training work or even books to help me practice.

After applications and offers came in, I had a couple of 50% cost-of-attendance scholarships. But once you factored in the cost of a private vs. public school, they were just as much or more than a public education would be without a scholarship. My name, my back, my thing. I decided to go to a community college for a year—it was cheap, I lived at home, my mom fed me—and then I transferred to the cheapest public university in my midwestern state.

I completed my degree in the standard four years. I worked 15 hours a week and still maxed out all of my federal aid, including loans. At graduation, I had $38,000 in student loans before interest.

I am working, thankfully. Right after graduation, I had four part-time jobs that added up to about 42 hours a week but only $1,000 a month. Then, six months later, I managed to secure The Perfect Gig. Perfect in its stability: full-time with benefits and a pay grade that lets me pay my bills). I make $28,000. I still can’t believe how fortunate I am.

I feel rich now, flush with money. My salary is more money than my single mother ever made when I was growing up. But it’s is also just a few thousand more than the in-state cost of attendance for one year at my public university. I’ve opted into an income-based repayment plan, and my student loan payment started at $0 a month. Which means: After getting my degree—the answer to every poor smart kid’s problems—I’m still really, really broke, deemed broke enough to not be able to pay back my loans yet. At this rate, I’ll be paying them still when I’m paying for my own kids, if I have my own kids, to go to school. If I weren’t on this program, my monthly loan payment would be more than my rent.

Which doesn’t make college really seem like much of a solution. I look at my student loan statements each month and feel angry and jaded toward a culture that tells poor kids that the only way to make anything of themselves is to take out a ton of loans to MAYBE have a tiny chance at competing for a job that dozens or hundreds of other people are also competing for.

I feel like someone tricked me along the way by telling me college was the answer, and I feel stupid for not having questioned that. I did enjoy college. I don’t regret my degree. I DO have a job now. But I don’t think that means the system worked for me. I think that means I’m lucky.

Kenzie Moore was almost a teacher. Now she writes and works at an arts center. Fewer kids, better wall art.

Over at LearnVest, Jill Davi shares her story about how she racked up $30,000 in credit card debt, and then paid it all off. It’s a nice “taking control of your finances” story, but like a lot of other narratives about people getting themselves out of debt, it follows a familiar storyline: Person with massive credit card debt decides to cut up her credit cards, then makes major life changes to cut back on spending (i.e. moving in with another person to pay less in rent, cutting out shopping completely, creating spreadsheets), and then pays off the massive debt load in a relatively short period of time (for Davi, it was paying off $30K in 18 months, while earning a little more than $30K a year—which is extraordinary).

I like a good “getting out of debt” story—they can be inspiring. I just wish they were sometimes a bit more relatable, because stories like these can make it sound like pulling yourself out of debt can be an easy thing to do, when it’s something a lot of people struggle with. I’d love to read a piece about someone who got herself or himself out of debt, but about how it wasn’t easy, how it took a lot of time to fix some deep-rooted, unhealthy habits, and how it’s fine if you fail a few times along the way, but that it can eventually be done. Anyone have a story like that?

Via Swiss Miss, this very nice print of this very nice and quaint and antiquated stamp.

Please pay us so I can pay Visa and they can pay XXX and he can pay XXX

Please pay us so I can pay American Express and they can pay XXX and he can pay XXX

Please pay us so I can pay Sallie Mae and they can pay XXX and he can pay XXX

Please pay us so I can pay Bank of America and they can pay XXX and he can pay XXX

Please pay us so I can pay Barclays and they can pay XXX and he can pay XXX

Please pay us so I can pay Citi and they can pay XXX and he can pay XXX

Please pay us so I can pay Chase and they can pay XXX and he can pay XXX

Take 10 minutes at the end of each day and record what you spent. Use a notebook or your favorite app and track it. Over time, you start to see patterns. You learn things you didn’t know about yourself in terms of what your spending says about your priorities. That will naturally lead to change.

One of the reasons I focus on spending is that people think tracking doesn’t help. A great (or not so great) example is the time I taught a financial literacy class to people who were working their way out of the local homeless shelter. The first week, 20 people would show up. I gave them a pocket-size spiral notebook and asked them to record everything they spent for one week and to come back so we could move onto the next step. No one ever came back. After a few weeks, we canceled the class.

In the Bucks blog, Carl Richards says we can learn a lot about ourselves and make improvements when we track our spending (although he argues that people don’t track their spending because they think it doesn’t help, whereas I think people don’t track their spending because it’s tedious and they just don’t want to do it).

For people who don’t like to track their spending, Richards says the best thing they can do is to track one number every week (i.e. how much they’re saving every week), which means you’re already ahead of the game if you do our weekend and monthly check-ins. Our own Amanda Tomas has learned via her own monthly column to cut down on how much she spends at the grocery store to help her get her savings goal on track. It’s also a lot more fun to track what we spend, save, and pay off when there’s an amazing community around to offer encouragement (thanks everyone).

I am a graduate student in a science department at an Ivy League university, and I don’t have any student loans. I never have. But getting here was not necessarily a great experience for me. Navigating college was a difficult choice between following my filial duty and choosing to do what I wanted to do. My filial duty won out.

My parents and I emigrated here from Eastern Europe in 1999. My father came first, with about $1,500 and a guaranteed hourly job as an engineer at a small firm staffed almost entirely by other Eastern Europeans. He worked a ton of overtime. My mother was a doctor, but she could not get a medical license in the U.S. and was unable to get a job for a long time after we moved. By the time I entered college, we were still a one-income family. My father was in charge of every aspect of our finances. During the first six or so months we were here, we rented one bedroom that the three of us shared. This was made especially poignant by the fact that we lived in a very affluent town, the kind where all my schoolmates had their own ponies and lived in houses that could comfortably be on the Real Housewives of Wherever.

I was lucky enough to get a full two-year scholarship to a tiny private college. I’d treated those years as free college, but I now realize this wasn’t the case. My parents had to fly me out there (it was on the other side of the country), and they started giving me an allowance, a luxury I had not had before. I was there because they helped me be there.

When my two-year scholarship was over, my father told me that I had to transfer. Tuition was over $40,000/year, and he told me that even with financial support from the school, I would be buried in loans. I didn’t want to transfer. I was upset about it. I was scared of losing the friends I’d spent two years making, and I was scared of trying to make new friends. My social life consumed my thoughts. My friends asked why I would just bow down to my father’s demands rather than try to fight back or get loans on my own.

Part of it was that I really admire my father, and I seek his approval in most matters—financial included. But I also knew he was right. The practical thing to do was to go to a state school to finish out my degree. It would be much cheaper, and the science program I was interested in was stronger. So I transferred to a huge state university in our hometown that cost about $8,000 per year, and lived at home with my parents. I am incredibly grateful to them, but I was resentful that I never had the free-wheeling college experience that seems to be glorified in the U.S., and I missed my friends and the small classes I used to take. My parents were paying my tuition, and I was living in their house. There were so generous, but I felt trapped by their decisions.

My parents do not expect that I will pay them back. Where we are from, family helps family. The money for college was never a loan. Sometimes I wish it were. If I had borrowed money from them, I think I would have felt more autonomy over my education—what to study, where to attend. Since it wasn’t a loan, there were strings attached.

There is little movement in this never-ending degree program, but I have no loans, I have a stipend, and in the end, I’ll have a Ph.D. I’m terrified of poverty and forced deprivation, and on this track, I don’t need to fear it. I’m passionate about cultural anthropology, and sometimes I daydream about taking off and teaching English in China. But I can’t square that with the person I’ve now become, after more than eight years of college.

I became a scientist because my parents were scientists. Other options didn’t seem as practical. The truth is, they weren’t. I’m proud of what I’ve accomplished, and my parents are, too. But I’m also looking forward to making my own decisions. Accepting the money meant I would do what they told me to do. I did, and now we’re done.

Camelia Smith is a third-year Ph.D. candidate.

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Previously in this discussion.

Helaine Olen spent several years as a personal finance writer and editor, beginning at The Los Angeles Times in the ’90s where she was the newspaper’s “Money Makeover” columnist. Over time, she came to the understanding that nobody in the personal finance industry really knows anything beyond very basic and common sense suggestions (i.e. live within your means). Olen says its empowering to learn how to manage our own money, but personal finance gurus like Suze Orman, Dave Ramsey, and Robert Kiyosaki, and networks like CNBC can’t tell you how the stock market or real estate will perform in the future, but are making a killing doling out conflicted advice and selling us complex financial products. This is just a small part of what’s wrong in the industry.

Olen’s book Pound Foolish: Exposing the Dark Side of the Personal Finance Industry, has been making waves since its release in January, and has received positive reviews, including praise from Jon Stewart, who had Olen on The Daily Show in February. “You guys should do an article about how Jon Stewart is the new Oprah,” Olen told me when I met up with her earlier this week. “Books really do sell. You could see the Amazon numbers after the taping—it jumped from 4,600 to number 22 in a day.” Here’s our conversation:

I thought your book was really terrific, and have been telling everyone to pick it up. I started my career covering politics in Washington D.C. and didn’t really think about personal finance until I started writing about it a few years ago. I remember picking up a few personal finance books to get myself acquainted with how it was being covered and not really being able to connect with a lot of the information. I don’t know a single person who decided to give up their coffee habit to fix their financial lives. I get a cup of coffee from Starbucks almost every day and I’m doing okay.

You know that’s part of the conclusion to the book that money advice is shrill, judgmental and absolutely oblivious. Just because David Bach can give up his lattes—which, by the way, I doubt, since he was profiled at a dinner party in 2004 ordering up food from Dean and Deluca, and I don’t need to tell you how expensive that is. It’s just oblivious.

And to be clear, you have no problem with common sense advice. Knowing how to manage and invest our own money is a good thing. But you also point out that pushing this idea that people aren’t saving enough or are spending too much money on lattes distracts us from the bigger things. For example, finding affordable housing and negotiating a bigger salary will do so much more for you than quitting your coffee habit.

What’s coming in is more important in one sense than what’s going out. We have this myth that we’re massive over spenders—and we have it for any number of reasons. I think in part because it can certainly seem that way. As I always tell people, you see me in a restaurant, but you probably won’t see me at a pharmacy getting a prescription, which is where my money is really going. It seems that way because relative to what it used to cost, things are much much cheaper. As I was pointing out to someone the other day, I don’t think in non-adjusted inflation terms that I could have gotten a T-shirt for $4.99 in 1971 down the street like I can right now. Stuff’s cheap and people buy it. And our salaries are falling—of course people aren’t saving money. There’s this whole idea that people are going to respond rationally—their salaries are going to fall and they’re going to save money. It doesn’t work that way. Certainly not in a society where your cost of health care, housing and education are skyrocketing.

Right, and the biggest reasons people get into deep financial trouble is not because they’re not saving properly, but because of these enormous costs associated with housing, education and health care, or a spiraling economy that results in job losses.

Could we all save better? We probably could. But it’s not what’s causing the problem. As I like to point out, in 1980, we had a 10 percent savings rate. I guess I find it hard to believe that in that 33-year period, we became collectively more financially ignorant and more irresponsible—that just defies reason. In fact, when you look at it, what happened was our salaries fell and our financial lives got more complicated. You hit a one, two. I was born in the mid-1960s when credit cards were less than 10 years old. Married women had no right to one, by the way, and wouldn’t for another decade. There were no retirement accounts and no ATMs. I swear, I remember when the ATM machine came to the Citibank on Nostrand Ave. in Brooklyn—it was really exciting! No gotcha mortgages—mortgages were very basic stuff. Second mortgages were not sold by the banks to people, or they were something you were supposed to be really embarrassed by because if you were desperate for money and got one, you never came out in public and said, “Hey I got this really cool thing, and look at the kitchen I redid!” It was just a different financial world.

Then there’s a turnaround where you blame people for the fact that the financial world changed on them. It strikes me as delusional at best, and outright wrong at worst. The banks had this idea that they’d invented all this stuff and gave people all these goodies, and we’re going to educate everyone on how to use them, and I actually don’t believe that. I think they know they’re not educating people on how to use their products. It’s not possible. And it became more complex, and at the same time, we needed the stuff, and by the stuff I mean yeah, people felt they needed to buy a house because they were told—well, they weren’t told not to buy a house beyond their means. Do you remember anyone saying that 10 years ago? Because I sure don’t. What I remember was, “If you don’t buy today, prices are going to go up tomorrow and you’re not going to be able to afford it, so here get this mortgage, and don’t worry, you’ll be able to refinance because housing goes up.” And this is what people were told over and over again: Housing doesn’t go down. You can go back and look at the literature. People weren’t saying, “You know, housing could go down, and it could go down by 40 percent. That nationwide crash? It can happen.” So, there’s this kind of obliviousness out there, and I think it’s in a lot of people’s interest for that obliviousness to exist.

So let’s talk about some of the financial gurus you discuss in your book. Suze Orman is one of these people who told people to run out and buy houses, and after the crash, she apologized and admitted that she was wrong. And you talk about this when it comes to people’s personal financial planners. They’re often wrong, but people will continue to listen to them. Why is that?

There’s a couple of things. These people present themselves as your friend for the most part. They’re not coming up to you and whipping you, at least, not initially. So that’s part of it—they’re going to give advice to you for your own good. Suze Orman is like the Jewish mother of personal finance. Second, we’re Americans and we want to believe! Personal finance exists in other countries, but it’s nowhere as big as it is here. And the reason is, objectively, we have some very deep income stagnation, we have huge disparities of wealth in this country, but people actually don’t know it, or don’t believe it if they’re told it. I’m sure you linked to that video last week that was on the PBS News Hour last year. And people don’t believe it. They think we’re Sweden, when in fact we’re actually Argentina or Chile. People are really sold on this idea that we are individuals in this society and that individuals can make it.

We’re not making it. So this culture of shame develops where people don’t want to admit that, “Oh I was born lower class and this is where I’m likely going to stay,” or “I’m really wealthy because I was born in Chappaqua”—to use a Bill Ackman example—and obviously he did a lot better than his parents, I feel sure about that, but he’s nonetheless, starting from a pretty high base to begin with. And we don’t like to admit to that in our country. So this industry really comes in and preys on that and the idea that we’re all individually responsible for our fate. We believe the myth of Horatio Alger in this country, but Horatio Alger wrote fiction. So it becomes this whole ideology where we’re sold on this idea that we can do it and we really believe this. We take a look at the economic situation out there, and we objectively know it’s pretty bad, but we internalize it as our own fault—and, because it’s our own fault, we’re pretty sure that there’s someone out there whose got the answer.

A number of people I interview in the book just fell for things again and again because they were so sure they could trust that somebody had the answer. I remember talking to one woman who was up in New Hampshire where she was just recounting to me these things: “Well, we were doing this, and then we went to this salesman at this free lunch and we hear that, so we put our money in that. And that didn’t work out.” And the advisor fired her after she started asking questions. And then they go to somebody they met through a church, and that doesn’t work out, and so on down the line. The reason it doesn’t work out is because if someone had the financial answer, would they come to either Mike or Helaine who could pay them maybe a couple thousand bucks, and say, “Hey, I got it!” or would they go elsewhere, say maybe Bill Gates, or even better, screw him entirely, get on a boat, hang out on the Caymans and start trading away happily because they don’t have to pay any taxes or tell anyone what they’re doing? So the idea that anybody out there is selling you the secret is absurd on its face. But we believe. And then we have things like CNBC, whose entire being is to convince you that they have answers. As I say in my chapter on CNBC, if Jim Cramer were saying, “You need to get out of the game!” they’d have no business model.

Another thing about “gurus” like Suze Orman and Dave Ramsey, as you point out, is that they’re trying to convince you that they were just like you once, and look at how they’re doing now! Suze Orman was once a waitress, and as the story goes, she really had to fight her way to success. Dave Ramsey bounced back from bankruptcy. And as you say, Orman and Ramsey did not become wildly successful because they saved better or invested smarter than everybody else—they became wildly successful because they were able to sell themselves and their products to people.

The whole genre of self-help depends on the story. It’s like almost being born again. You know: “I had my moment.” Suze has her moment with a waitress when she realizes the waitress is richer than her, and Dave Ramsey has this moment when he has to tell people that debt is bad. They’ve got the story, and people like that moment. And so we don’t ask the questions. And Suze Orman, to be fair, was a successful financial planner. She obviously had an ongoing business. Dave Ramsey was definitely in bankruptcy when he started. But we want to believe. And one of the things I find fascinating is the conflict of interest in their work. I work in a field where if I accepted coffee from a source, I have editors who could get quite angry at me. But people will say, but Suze and Dave need to make a living. First of all, do they have the right to make a living selling you conflicted advice? And second, Suze Orman’s got $30 million, doesn’t she already have enough of a living? What are you talking about? Dave Ramsey is worth lord alone knows what. It’s a conflict, and a basic conflict, and I don’t think they cop to it. Certainly Ramsey doesn’t. He still goes around telling people that you could still get 12 percent annual returns in the markets, and if you want to know how to do that, Dave has his “Endorsed Local Providers”, and you can go to them. I mean, you’ve got to be kidding. There’s no way to do that, that I’m aware of. There wasn’t a way to do that back in the ’90s during the bull market. You might have a year here, and a year there, but to plan on that is just absurd. And it’s not right. But people are scared, and they want to believe.

And to be fair to Suze and Dave, they’ve actually helped a segment of people who needed to be taught how to live within their means.

Yes, because certain people do need to be told very basic things. But that’s always true. I find it hard to believe that wasn’t true in 1980 or 1960. John D. Rockefeller’s father was a deadbeat, go look it up. So was Charles Dickens’s father. We’ve always had this issue, right? Mary Lincoln spent a lot more money on clothes than she should have when her husband was president. We’ve always had a certain percentage of people who do this. I don’t believe we have more than we used to. To the extent it’s easier—there’s credit—but that doesn’t mean that we’ve suddenly all lost it. And I think what these people are cautioning, is that that’s indeed what happened.

That we’ve somehow lost our way.

We lost our way. We used to live like the Waltons, and we had a house together. But the fact is that old people had this distressing tendency to end up in poor houses. And people who lost a parent were often placed in orphanages, and that was common basically up until Social Security. We have this false image about the past. Things like Social Security developed for a reason. They happened because we needed them. Someone didn’t wake up one day and say, let’s let people be irresponsible and not let them save for their retirement.

Let’s talk about retirement. The way we save for retirement now is a pretty modern invention in that it’s something we’ve tried doing just in my lifetime. As you mention in your book, with the 401(k) we sort of lucked out that it came into being during a time when we had a market boom in the ’90s, which generated an extraordinary amount of money. And then the crash happened, and people who were about ready to retire lost an extraordinary amount of money in their 401(k) accounts, which really shook our faith in the 401(k) system, which may not have been what it was if not for how the markets were when we started it.

It’s one of the great imponderables: Would this have happened the same way? You don’t have the answer and I don’t have the answer, but yes, it coincides with the great bull market. So you see this: “You know my little 401(k) is going to make me a millionaire, it’s the Little Engine That Could. Just keep putting your money in and—ka-ching—40 years later you’re going to be fine.” But there’s no comprehension that first, half the population didn’t have access to any of this stuff, that second, this wasn’t inevitable, and third, people believe this contradiction that market gains are inevitable and that their investing genius is responsible for their success, which of course made no sense.

And yet, this is the world I was brought into as a working adult: Hope that your 401(k) does well, and hope that your company offers you a match. What’s the alternative? Is there one?

If I knew the answer, I wouldn’t be writing this book. But there are a lot of different ideas out there. And I think, for me, this is why it was so important to talk about it. Because the conventional thinking right now is, well, we’ll go with the 401(k) because the pension system didn’t really work because a lot of people weren’t eligible for them, and companies were going bankrupt offering them anyway. Ellen Schultz actually disproved that one in her book Retirement Heist, which if you haven’t read, you should and do an interview with her.

Second, just because something didn’t work doesn’t mean the thing we have now that’s not really working should be kept, is my position. And you have to start from that premise. Most people don’t want to start from the premise that if something doesn’t work, we’ll just say we don’t have anything better. The first step to getting something better is to say it’s really not working. Suze Orman could probably tell you this. You have to have this moment when you recognize what’s going on. My moment is realizing that this is not working. We’ve had 30 plus years—if it was going to work, we’ve would have figured it out by now. And we’re starting to see things like the guaranteed pension plan, which is what California is looking into a version of now. You start to see things like in Australia where there are mandatory 9 percent contributions and employers are also responsible. England is moving in a similar direction. We’re concerned about fees, and well, England is banning commission sales, which is one way to knock out a certain percentage of conflicted advice. We need to start asking, “This isn’t working. What else is out there?” That’s the first step, and you go from there.

And that’s the thing Occupy sort of got, whatever people think of Occupy, and obviously I was a supporter to some extent, but they kind of got this idea that you have to get out there and say what’s going on. They were the first group that I know of in 30 plus years to take this instinctive leap that nobody else seems to have made. It’s astonishing to me. It was like, “Hey you have student loan debt, my house is being foreclosed on, he’s about to go bankrupt from his wife’s medical bills—maybe we’ve got a problem here.” And that was an amazing leap. And we’ve seen a change in the political discourse since that’s happened. It was extraordinary. A problem was being articulated. And of course “the 99 percent vs. the one percent” was just brilliant.

You need to begin to talk about this, and say what is right and not right. And what’s not right in my view—and I say this as someone who generally doesn’t like to judge money—is this idea of hectoring people about what they’re doing wrong. It falls into the, “if it was going to work, it would work.” It’s also offensive. There’s this disconnect where you see these people on television, where they’re wearing designer suits and they look quite wealthy, and they’re lecturing people on having smartphones. Smartphones have become the latte of our time, I’m convinced of that. Smartphones and premium cable channels are the new latte factor! It’s this bizarre combination of this Ayn Rand self-determination, “well, I made it, I’m better,” followed by this weird Victorian morality trap. There’s an oblivious factor, and it’s kind of offensive. I always think of the scene in Jane Eyre where she’s at the orphanage, and a guy comes in dressed to the nines and he’s bitching out all the little girls because all their hair are done up. It’s the same sort of thing, and yet we read Jane Eyre, and think, “Oh this is terrible, we’d never do a thing like that.” And of course we do it. We all do it, by the way, none of us are immune.

There were a lot of surprising things for me in your book, but one of the biggest surprises for me was discovering that financial literacy does not work. Let’s teach people when they’re young how to stay out of trouble! But as you say, the data shows that it’s just not working. One of the reasons why it’s not working is because financial literacy is usually supported by the financial services industry, which sounds good at first, until you realize that the financial services industry also lobbies against legislation that would make their products easier to understand by consumers.

The chapter on financial literacy broke my heart. The whole chapter started from one sentence from my book proposal: “I think in discussing some of the financial gurus—there is this explosion of information—yet the survey data shows that our financial knowledge had not moved the needle. What was going on?” I didn’t answer it in the proposal—I thought there was an answer! I start looking into it and thought, “Helaine Olen is going to discover why financial literacy doesn’t work—hah!” Well, yes, I did, and so did other people, and the answer is: There was no financial literate time, there was just less financial knowledge to be had. So by definition, a lot of people seemed a lot more financially literate in 1950 when you didn’t have to know what a gotcha mortgage was, or, to use a stupid example, you didn’t need to know how to use an ATM, so you didn’t need to know not to take out too much money from an ATM, because it didn’t exist. There’s no Golden Age of financial literacy.

So we’ve got this whole establishment saying, “Oh we’re going to teach people financial literacy.” And to be fair, hey, maybe there’s some way to do it at some point, but as of right now there hasn’t been any evidence that anybody has been able to do this. If you look at the data for other countries, the differences are marginal. There’s no country out there where you’ve got this incredibly financially literate population. That should probably tell you something right there.

Second, there’s a cluelessness factor—most people aren’t terribly interested in this stuff and are never going to be terribly interested in this stuff. It’s like going to a party and you run into a train aficionado (which I am) and they start talking and talking and your eyes begin glazing over, but they’re convinced if they keep talking to you you’re going to understand why it was really important that the Q train used to be called the D when Helaine Olen was growing up in the 1970s and the 1980s—and of course, you’re never going to give a shit. And people think because money is more important than that that it’s going to work, but guess what, it doesn’t.

And you have another problem coming in which is the most insidious of them all, which is who is supporting all of this? And the answer for the most part is not nice, general disinterested parties. This is an industry that is brought to you by the financial services sector. And you’ve got to think at some point, wait, so if this isn’t working, what’s going on here? And well, if you can say, “I can educate people to read a complex mortgage application, and maybe I won’t have to give them a plain vanilla one like they tried to get into Dodd-Frank,” which got rejected by Congress. So who is financial literacy really working for? Of course, if you want to be really cynical, financial literacy works quite well for some of the parties promoting it, but not for the reasons you think.

The final part, is that it sounds wonderful, right? How can you be against financial literacy? It’s like coming out being against teaching math, or apple pie. And the answer is on one level, if you want to teach it, whatever! We get taught all sorts of stuff in school. But that’s not what’s going on here. What they’re saying is that they’re going to teach it and it’s going to solve all this other stuff, and that’s just not true. The idea, in fact, when you think about it, that you could teach somebody about all of this stuff and assume that 20 years out they can read the prospectus for a product that might not have even existed at that time—it is absurd. And even if it did exist, it’s borderline absurd because think of all the stuff we learned in high school that we have no memory of now. The example I like to use is, “Tell me what the French and Indian War was and why it was so important to the American Revolution.” And everyone gives me these blank looks. If you’re not going to remember the Pythagorean theorem, how much will you remember of financial literacy? It just doesn’t work. I wish it did. The world would be a much better place if it did. And I feel like such a crank saying that.

Because the financial services industry has convinced us that we can only manage our money if we know how to use their products. And it starts right when we hit college.

I moved a couple of months ago and found this huge stash of files that we had to trash from the early 1990s, and we had all the checks to the supermarkets in Los Angeles. Because the supermarket didn’t take credit cards! And if you didn’t have cash, or the ATM was closed, you had to write a check. It was a different world. There’s no reason why people in college need credit cards.

But the financial services industry wants to convince them that they do, because they show up at college campuses, put out their tables, and convince you that you need to start building credit.

Why do you think they do that? That’s what I mean! And I feel like the meanest cynic in the world sometimes. So again, legislation is a huge thing. You probably also need campaign finance reform. And that’s one of the things I have in the book. You’d find these people, and they’d be fighting against quite reasonable reforms, and then you go look to see who was giving them money at Open Secrets, and you go, “Huh. How intriguing.” Of course that’s part of the problem. The financial services industry gives huge amounts of money to people in Congress.

Let’s talk about women and money. You have a chapter dedicated to the way women are specifically marketed to, and how they’re convinced they need help with their money to make their financial lives work. “Stop shopping so much!” they’re told. And again, that kind of discussion distracts from the big picture, which is a lot of the problems women have around money are because of things like pay inequality, or a lack of employer-supported maternity leave.

First of all, women are presumed incompetent and men are presumed competent. You look at the data and there’s really no difference: Both sexes are really equally financially incompetent. The kicker to this by the way is that men tend to get into more trouble because people who think they know more than they do actually are more likely to get into trouble. Women tend to ask more questions which seems to help them.

But women’s financial issues can really be explained not by the fact that they’re financially ignorant and going to the Barney’s warehouse sale. It’s because women earn less, have more responsibilities and live longer. One. Two. Three. There’s no epidemic of single dads out there. Nobody’s talking about, “Oh my god, these irresponsible single dads—how did they get themselves into this?” Women, by definition, even if they’re the most fiscally righteous person—they’re going to have a harder time pulling this off than men. If they’re earning less, have more responsibility, and living longer, this is not a point of contention. But it is. So the financial services industry has this issue about how they’re going to market to women, and so they say it: “You’ve got all these responsibilities and you work so hard, but you need to save more money, and then come to us and we’ll help you.”

The other part of this with women is there’s this weird language—it’s almost like simultaneous empowerment and infantilization. Men are presumed competent, but they’re also—just so you don’t think I’m overselling this—they’re also presumed incompetent and get sold on all the shit like The Money Show, and day trading schemes, futures trading, etc. This is a man’s world, and it’s not good stuff for the most part—understand that. Most people would be better off shoving their money into an index fund and moving on with their lives. But women are presumed incompetent, and it’s just not true. The data on women as spendthrifts is pretty nonexistent. Women do spend more money on clothes, but then on the other hand men spend more money on liquor and electronics and cars. We don’t talk about that.

And as some of the data shows in your book, it’s not that women aren’t fighting for themselves in the workplace. Women who ask for bigger salaries can be penalized by not being hired. It can be a very difficult thing to navigate.

So, after you wrote this book, did you change anything in your life?

Yes and no is the answer. I tend to get more enjoyment on what I spend now. But on the other hand, you think, oh god, you wrote this book, you either pulled all your money out of the stock market and buried it in the backyard. No. Or you’re really saving for retirement. And I am, but no more than before. It left me with this appreciation of how short life can be and how you do need to plan and be responsible—things don’t always work out. And, that had a more powerful impact on me than the fear of living in penury when I’m 90. I might not make it to 90. And I might regret that when I’m 90. And here’s the difference between me and Suze Orman: I understand this. I get the tradeoff I’m making here.

It didn’t change me as much as I might have thought. It gave me an appreciation of how uncertain things are. One of the things I really did learn that surprised me was that this whole idea of the stock market as this sort of guaranteed idea, for lack of a better phrase, which might not be true. Which makes instinctive sense. If you ever go to a geneticist, for example, about issues, they will tell you that they cannot be sure—at least this was true when I was looking at stuff when I was pregnant—if something really runs in your family for up to five generations. So why should someone be able to tell you about any certainty in the stock market? Just because you roll the die and keep getting double sixes, it doesn’t mean it’s going to happen the next time. That surprised me a lot, but it didn’t really change what I did.

I also walked away with this fundamental understanding that just because the stock market can crash tomorrow—and of course everyone thinks the stock market it going to crash tomorrow, right, it’s the recency effect, we all think history is going to repeat itself—one of the things being sold to people is—say that guy over there is a stock broker—”he’s got the secret.” Right? What he doesn’t say is that he could lose you more money that the stock market could lose you. We all assume if we’re going to buy it, we’re going to be the ones who figure out the trick that makes more money, so if the stock market loses 40 percent, we’re going to be fine when in fact, you can invest with a guru who loses you 80 percent. That doesn’t often occur to you because again, Americans are optimists. We don’t think that way. I think that way. I decided I’m going to stick with index funds.

This has been a fascinating discussion, and I really don’t want it to end. But one final thing. The last chapter of your book is about how we need to talk about our money. Occupy was one way to talk about it. Our entire site is devoted to the idea that we need to talk about money—all the good things and bad things and really ugly things. We encourage everyone to share their stories. And we post things like videos of Elizabeth Warren really going after the banking industry. And then—what comes next? What can we do in the face of these injustices? I suppose call and write to our politicians?

I say speak about it. Write about it. Talk about it. On a minor level, people ask, what can you do for you finances when you go to a financial advisor? Here’s a really easy one: Ask if they have a fiduciary duty to you. And people are like, “What are you taking about?” Ask if they have a legal duty to act in your best interest. Most people won’t do that. And people ask, “That a step?” Yes, it’s a major step because the industry is fighting really hard that they don’t need to have that for you. 401(k)s have fiduciaries. IRAs don’t always. Brokerages and broker dealers almost certainly do not. Basically, you’ve got to ask. That’s something you can do on a personal level.

On a bigger level: Be angry, be out there. When Occupy happens again, show up because it might help. People don’t know quite what to do. I guess I have a lot of faith that if you keep putting videos up like that, and I keep talking about this, and other people start talking about it, then something will eventually change. Because if enough people start talking, the status quo won’t hold up under those circumstances. I don’t know how it will happen. And I’m not a social activist in that way—I tend to be a very analytical person to a fault, and I admit that. That a lot of people realized that there is a problem after reading my book, that’s a step. People realized they had a problem, but I think they used to think it was an individual financial problem, and it’s clearly a collective one.

If you liked this discussion, you’ll love Helaine’s book, so pick up a copy, or borrow it from the library. (Find it on: Amazon | Indiebound)

I think it’s underreported how incredibly nice the customer service agents at Sallie Mae can be about you not paying back your loan.

Like a lot of people, I took out loans for college, and after graduation, spent my early twenties not making enough money to pay down my debts.

Eventually I took a job at an internet-y, start-up-y, new media, digital-type company where I was nicely compensated, and I started making payments on my loans. I was laid off after 18 months.

When I called Sallie Mae to break the bad news, the customer service agent sighed and told me it was OK, pumpkin—I could put the loan into deferment.

I asked how long I could do that, and I don’t remember what she said, but she certainly didn’t seem to be sweating it, so I figured I wouldn’t either. Pay it back. Don’t pay it back. Pay a little on it. Defer it. Whatever.

I hung up the phone feeling like a fucking champion. I had faced a major financial fear, and it had been resolved thanks to a mutual agreement to not worry about it.

Two years passed, and the loan collected about $15,000 in interest. I got more full-time work and started paying my Sallie Mae bill again, but it looked kinda ugly, and I began to consider deferring it again. They’d let me do it so many times before. I once deferred paying back the loan for a year simply because it was the only way I could afford to deal with the amount of late-charges I’d racked up.

Go to the website, click a few buttons, watch the amount due that month fade to zero, and chuck those payment slips in the recycling bin.

Pondering that option, the other day I logged into Salliemae.com and asked to reset my password—just how I do on the 26th of every month to pay the bill that is due on the 25th.

Right now I can pay a bill. And yet I cannot pay a bill. Paying a bill makes me upset. I get upset because seeing money that I have earned go toward something that will never go away feels futile. I looked at my outstanding balance and was struck by cold terror.

For about three months I’d been ignoring the $20 late charges and just paying the $247 due every month, thinking that the growing past-due balance would either disappear or get so big that it disappeared or… Obama? That $247, by the way, was only going to interest; it wasn’t even touching the principal.

So I called Sallie Mae to figure out what I’d done and what I could do. I started the call by telling the INCREDIBLY CHEERFUL agent that I’d been through periods when I couldn’t pay, but now I was ready to pay aggressively for however long it took to pay this thing down (hopefully not forever).

The agent told me I had set up a plan where I paid about as little as I could, but because of that, what I was paying was only going to interest, which was continuing to accrue. I could change the plan and pay more and some amount of it would go to the principal. This sounded good to me. This is what I wanted. I want to pay more, not less. But the agent kept bringing it back to paying less—so many times that it began to seem illogical to increase the monthly payment plan. I don’t think he was doing so for any other reason than he must get five billion calls every day from people who are like, oh my god, I cannot pay this bill. That’s gotta take a toll on a person.

In fairness, that’s been me for most of my relationship with Sallie Mae. But if a guy is telling you that you can lower your bill, and he seems really cool about it—shouldn’t you do that? Isn’t having a lower bill the point of life?

If I really dig in, maybe I can get the student loan bill lower than the cable bill.

It has taken me wa-a-a-ay too long to realize the difference between a loan payment and a cable bill. If you pay too much for your cable package you can cut back and get the plan that doesn’t include HBO, or you can cancel the whole thing. Don’t pay, and they cut your cable off. There’s no giant number that Time Warner has attached to your social security number that you need to pay down every month.

Loans, on the other hand, are a big number attached to your social security number, and you have to pay them back or the number gets bigger until you give them enough money to make it smaller. Buy some scratch-off tickets. Pack up your shit and disappear.

I’d figured this out with credit cards. Unlike Sallie Mae, credit card people are not very nice when you call them and ask for a lower monthly payment. Unless you can start throwing money at your credit card company in lump sums, you’re basically trapped in a cycle where your minimum payment goes only to interest forever and the amount you owe increases every month. They won’t help you. And so early on in my career as debtor, I paid off my credit cards.

But my experience with Salle Mae has been different. You can pay more to bring the debt down, but you could also pay less and bring the debt up, and they’re cool beans either way. You can also fill out a form and not pay it at all for a while.

Of course, I appreciate how nice the Sallie Mae customer service people have been to me.

I imagine they field a lot of rough calls.

I’ve definitely called them in rough times.

It’s just that there’s an institutional crack, a systemic fuck-up when no one—not even the people at Sallie Mae—acts like they expect these loans to be repaid. They’re just trying to figure out how to help you pay something toward your debt so you don’t get thrown out of a moving boxcar.

I am a person who has a lot of anxiety, embarrassment, and fear tied up in the debt that I owe. I will also admit to being kinda sorta clueless. So carrying all that baggage means that every few years when I experience a moment of clarity or something horrible happens to my ability to draw an income, I call up the owner of my student loan—and I get hosed.

You can’t get rid of student loans, not through bankruptcy or ever. If I’m allowed to grow a loan for YEARS after my education is complete, then who is the one making a living from my education? It’s not me.

Anyway, I visited the cold and logical Salliemae.com after this latest call and figured out a way to not just make payments, but to start paying the thing off. My loan will probably be paid off in ten years. At that point I will have been out of school for 23 years, which is how old I was when I had to make my first payment to Sallie Mae.

Frank Smith lives in Brooklyn.