The Federal Reserve of NY has a great simulation tool to see how your state’s consumers are faring when it comes to their financial health, in particular, when it comes to credit stress.  Select up to five states and you get a nice chart like the one below.  If you want to create a little suspense, you could take five neighboring states and ask students which one they believe is in the best shape when it comes to managing credit.

Here is their definition of credit stress:

An underlying assumption of Community Credit is that individuals’ credit behaviors affect not only their personal situation but also that of their community. To describe the credit behaviors of a community, we have created a 5 tier scale that measures the severity of community credit stress based on 4 quarter payment histories of residents.

I chose five states for my analysis: California, Mississippi, Ohio, and I couldn’t resist with the National Championship on the line this weekend (Alabama vs. Clemson of South Carolina):

The chart is not that clear, unfortunately, but should be better in the classroom.  A few questions for students:

• What percentage of people on national basis don’t have a good credit standing? Does this number surprise you?
• How would you define each of the five stages of credit stress (have to roll over the color coded “Tool tip” to get the answer)?
• Which state is suffering the greatest stress? The least stress?
• How do you think individual credit stress can also affect an overall community?

Oh, and if the upcoming game was based on credit health, Alabama would be favored by 2!

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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