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A few days ago, I caught a recent segment of ABC's Good Morning America. Host Robin Roberts (one of my favorites) interviewed GMA's financial contributor, the president of Ariel Investments, Mellody Hobson. Mellody was sharing her "Borrowing 101" tips.

After confirming that credit is hard to come by these days, Mellody offered "solutions" to the dilemma, including that you should consider asking a friend to co-sign for a loan if you can't get a loan on your own. Huh?

Sober Up! The Money Binge is Over

If you've been living under a rock, here's some cold water on your face.

• According to the financial expert on an NPR show I listened to on July 18, the annual rate of home foreclosures is nearly quadruple what it normally is.
• Families are taking in complete strangers as boarders in last ditch efforts to keep their homes.
• As of January 2008, the number of past due auto loans reached a 10-year high, and 12.4% of consumers have at least one late auto payment on file.
• A June 2008 Realty Trac report shows that one in every 501 US households received at least one foreclosure filing during the month of June, a 53 percent increase from June 2007 numbers.
• JP Morgan Chase, a bank with one of the strongest financial and management portfolios, announced last week that its second-quarter income dropped 53 percent, as credit card and home loan losses spread to borrowers with strong credit histories.

So why is a seasoned financial expert recommending that people with poor credit continue to use other people's money (OPM), even a friend's, to buy stuff without first considering alternatives to borrowing?

Yes, and there are other alternatives.

To be fair to GMA and Mellody, the focus of the segment was on how to borrow money. So they had to cover that. Having said that, it is irresponsible for a financial expert to fail to mention that one should consider alternatives before borrowing money.

Here are a few novel suggestions. First, how about assessing whether, in the first place, you even need the item you are thinking of buying with OPM? Second, if you do need the item, how about saving up for it?

Imagine that? Discipline + delayed gratification = saving your rear end.

I know the Hobson segment was about how to borrow money. But you can't separate the question of how to borrow money from the question whether you should borrow it in the first place. And you can't separate that question from the question whether you really need, and need right now, what you're thinking of buying.

Need vs. Want

You need a car when you don't have a car, you don't have a car pool option and you don't have access to public transporation -- yet you need to get to your job across town.

You want a car when you don't like the car you have, you don't like the people you could car pool with (or their cars) and you don't like the readily available public transportation system -- yet you need to get to your job across town.

In the first situation, you need a car so a short term borrowing situation may make sense if you can't buy one outright. In the latter situation, you want a car and have no business using OPM to get one.

OK, so ask me how I know. Yes, I was a money idiot in a past life.

These days, I like sleeping peacefully through the night. I like having dinner without creditors calling. I like answering the phone and not having to pretend I'm not home. These simple pleasures are the result of a cash only lifestyle.

So the next time someone suggests that you borrow money, or that you ask a friend to co-sign for you, first stop and think about whether you really need the item you are considering buying, and whether you need it now. Oh, and consider whether or not you want to ruin the friendship. If not, skip the OPM and save up for the item yourself.

Let's Learn From Our Mistakes

The money binge is over. It's time for us to be more than just consumers. We need to be savvy consumers. Think before you buy. Think before you borrow. Otherwise, you'll always be in debt, and I don't want that for you!!

After all, if all you are is a consumer, you'll just get consumed. And I didn't make that concept up. It's happening in every community across this nation. Don't let it happen to you.

What do you think?

Dire circumstances sometimes require us to do things we might not otherwise do. However, with a platform like GMA, and with so many people in debt up to their eyeballs, I think a financial expert should try to help us get out of the debt we have, not encourage us to multiply it.

What say you, Indies??! Tell us in the comments section below.

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Top Ten Tips For Teaching Children About Money
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One of the best things about being Indie is teaching children about money from an entrepreneurial perspective. I love showing my kids the connection between our business and our ability to care of our current and future needs as a family.

This past Monday, along with some of my fellow Mocha Moms, I was called upon by award winning journalist Michel Martin, host of NPR's Tell Me More, to share some of my best tips for teaching children about money. You can listen to the show audio here.

When it comes to money, we have to be vigilant and steadfast in teaching our children. We must arm them with a money mindset that helps them avoid ending up on the short end of the next economic meltdown. It's important for everyone, but especially for those of us who are not relying on a traditional job to secure our well being. To that end, I offer my tips for teaching children about money.

Donna Maria's Top 10 Tips For Teaching Children About Money

1. Start early. I started teaching my kids about money before they could talk. I talked to them about money. I showed them money. I let them touch money -- in my presence of course, for safety reasons. I let them push buttons when I was dealing with money -- the grocery story, ATM, etc. Anytime I was thinking about money, which was a lot, I said my thoughts out loud so my babies could hear them. This establishes your mindset early on as a parent to make sure you never miss an opportunity to teach your children about money.

2. Use mantras. Repetition works. From the time they can talk, teach them mantras. My favorite is, "There are 4 things you can do with money: spend it, save it, invest it, donate it." I say the first part, my kids say the second part. Another one: "Take care of your money and your money will: take care of you." Again, you say the first part and they say the second part. This confirms that your children are in control of their money and not the other way around.

3. Use coupons. Clip coupons to use for snacks and treats. At the grocery store, if your children can find a coupon for something they want, they can buy it. This lets them know that you should rarely buy anything at the grocery store unless you also have a coupon for it so you can save money.

4. Teach them to use cash. At the grocery store, show them that you are using cash so you don't overspend. Show them a credit card and let them feel the difference between that and cash. Let them know that both can be used to take care of yourself, but that when you use cash, you have more money left over for other things. As a simple example, tell them that, if you use a credit card, you're paying $1.25 for a candy bar that really only costs $1.00.

5. Teach them not to pay full price. Let them know that everything eventually goes on sale. Use newspaper circulars to teach this principle. Show them their favorite cereal in the grocery store and let them see the price in the store. Then show them a sale circular for the same product for less money at another store. Then go to the other store and buy the product (using coupons of course). This lets them see that they never have to pay full price, and they can use coupons on sale items to multiply savings.

6. Teach them about commercials. From the time they start watching kids' television, teach them the difference between content and a commercial. Let them know that commercials are trying to get them to give up their money. So, here's another mantra. When a commercial comes on, train your children to recognize what it really is. Here's a suggestion for a mantra when a commercial comes on:

Parent: What's that?
Child: A commercial.
Parent: What are they trying to do?
Child: Get our money.

7. Let them see you deposit money in the bank and pay bills. Most children see their parents take money out of the ATM, but with automatic deposits and fewer paper transactions these days, they don't often see you put money in the bank. Take some cash to the bank and let your children see you deposit it. In this way, you show them that you can't get money out unless you first put money in.

Also, let them see you pay bills. I know it's a hassle, but how else will they learn? I don't want my kids to be like me. My parents paid for everything, bless their hearts. They were money management champions, but they never passed the nuts and bolts on to me. When I went to college, they sent me off with a nice starter checking account, but I didn't know how to balance a checkbook.

What do you think happened next? Let me tell you about the $10.25 candy bar.

As a freshman, I wrote a check for $1.25 to pay for a candy bar. The check bounced and the bank imposed a $10 bounced check fee. Mom and dad closed the account and I was back to cash and food cards, which is what my money-dumb-self should have been using in the first place.

I don't want this to happen to my kids. Now and then, I take cash to their pre-school and let them see me pay the bill in cash. Their eyes get really wide when they see the huge wad of money being forked over.

In this country, 9 times out of 10, how much education you have is inextricably tied to how much money you are willing and/or able to pay for that education. Children benefit from being aware of this connection.

8. Save money in a big glass jar. Piggy banks are nice, but kids need to see money accumulate in order to understand how that happens. Instead of a piggy bank, help them put their money in a glass jar so they can see it add up. The smaller the jar the better at first because it looks like a lot more money that way.

9. Pass the plate and let them donate. Help them donate a percentage of the money they get as gifts or whatever. We try to use the 10% rule, helping them calculate 10% of each dollar for the collection plate at church. This can be done for any charitable organization that you and your family support.

10. Pay them for working in a business. Most families these days have some kind of small business at home. When my kids were just 2, they started emptying the trash in the home office for a quarter. This money goes into their money jar right away. Make the chores age appropriate, but remember that they don't really have to accomplish much to teach the lesson. If my son empties a trash can with 2 sheets of balled up paper in it, or my daughter does something as simple as wipe off the window sills or put all the pens in the pen holder, they still get paid. This teaches them that they have to work for money. If you connect the task to your business, it also teaches them a little about entrepreneurship. (You may also be able to deduct these payments on your taxes. Check with an accountant first.)

We do not compensate our children for doing chores around the house, because life doesn't work that way. Chores are a part of your contribution to the family. Mommy doesn't get paid for sorting the laundry, and neither will you.

But mommy does get paid in her business, and you can too.

When they ask for a new toy, we send them into the home office to clean it up, AFTER they've done their chores. Then they get paid. Then they can save up to buy their new toy.

What do you think?

Some may say I am stressing my kids about money. I disagree. It's not like all we talk about is money. Of course not.

On the other hand, I don't want to raise ignorant children who end up paying $10.25 for a candy bar because they don't know how the game is played. A $10.25 candy bar today becomes an adjustable interest rate worth hundreds of thousands of dollars tomorrow.

I am telling my kids like it is. Good stewardship, whether it's over money, environmental resources or our bodies, begins at home.

Money is a part of life. Money cannot make one happy. In fact, the love of money is the root of all evil. At the same time, money is a part of human existence. Whether you have a lot or a little of it, money impacts your life.

It's not about getting untold riches and countless gobs of money. My goal is to teach my children to respect money. To use it to acheive financial freedom and contentment. To take control of the money they earn so the money they earn does not control them.

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