Facing 25 online personal finance journalists, President Obama got personal, giving a glimpse into his own financial history — including the money advice his grandmother gave him and why the $125,000 in student loans he and his wife Michelle racked up was a good investment.
The president was an unscheduled drop-in guest at the Personal Finance Online Summit, an event held Wednesday at the White House. During the event, high-level administration economic officials gave an afternoon of on- and off-the-record briefings to an assorted group of online personal finance editors, myself included. The idea for the summit came, presidential message adviser Stephanie Cutter said, because “Americans are looking to take charge of their personal finance issues … and they’re looking to online sources to get it done.”
No major news was broken, which is why I’m writing a blog item rather than a news story, but the event had some fascinating moments, leading off with the president’s salute to his grandmother’s common-sense money advice — and why in one case it was smart to ignore it.
Asked what personal finance lesson he had learned, Obama paused, then said, “Don’t spend all your money.”
Then he brought up his grandmother, Madelyn Lee Payne Dunham, who helped raise him in Hawaii. “My grandmother worked her way up from being a secretary to a vice president of a regional bank. She was from Kansas, and she had a very straightforward view, which was, save a little bit of what you’re earning.”
That advice resonated, and he’s tried to follow it, “not always successfully.” By the time he and his wife Michelle Obama graduated from Harvard Law School, they accumulated $125,000 in student loan debt and “it took us 10 years to pay it off.”
That borrowing was OK, he said. “We were lucky, because we had gone to good law schools, and we knew that we could earn it. It was still a good investment.”
Obama then pivoted from the personal to the political. He argued there’s a similar difference between a government that simply spends and one that invests — an assertion that lawmakers are currently debating in full-throated roar.
“If we’re borrowing for things we don’t need, that’s a problem,” Obama said.
“There is a distinction to be made on spending on things that are going to make you more competitive over the long term, to increase your wealth, and spending on things you’d like to have, that aren’t really improving your life over the long term.”
Other presenters at the event included:
- Austan Goolsbee, the soon-to-depart chairman of the Council of Economic Advisers, who last year participated with CreditCards.com in an online town hall video on the Credit CARD Act of 2009.
- Anish Chopra, the administration’s chief technology officer, who enthusiastically described the efforts to use technology to encourage entrepreneurship. (One idea he’s pushing — a Yelp-like website that lets consumers rate federal government agencies.)
- Heather Zichal, adviser to the president on energy and climate change. She underscored a little-known success story: America has gone from producing just 2 percent of automotive electric batteries to 40 percent, she said.
- Elizabeth Warren, who is setting up the consumer watchdog agency created by the Wall Street reform law. “We’re here for regular folks,” she said, touting the Consumer Financial Protection Bureau’s “Know before you owe” program, whose goal is to simplify financial disclosure agreements. “Let’s try a competitive market,” she said. “Competitive markets work for consumers and for those who market products consumers want. They do not work for those whose business model is to fool people.”
The online reporters and editors at the summit included representatives of Bankrate.com, BNET (CBS interactive business network), Business Insider, CNNMoney, AOL/Huffington Post Daily Finance, eHow, Fool.com, Forbes, Yahoo Finance, MSN Money, The Economist, Newmax.com, The Consumerist, Morningstar and Investors.com.
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