The Bright and Dark Sides of Progress

The Motley Fool is celebrating 15 Years of Foolishness. Grab your party hats and relive a decade and a half of education, amusement, and enrichment.

Climb aboard the way-way-back machine -- we're taking a brief journey to the year 1993 to see how everyday folks of yore managed their money.

Look there! It's a guy reaching for plastic to pay for his groceries. Over yonder are eager homebuyers seeing how a little creative financing might get them into their dream home. There's someone lamenting the high costs of sending Junior to college and another person wondering if they should bother moving their money to a different bank for a slightly better interest rate.

Hold on a sec ... is this time-travel contraption actually working?

Same issues, new ways to deal
Little about the essentials of managing our personal finances has changed since The Motley Fool debuted on the scene. Back in 1993, people were living large on credit cards, looking to eke out a better interest rate for the little cash they were saving. They were crunching the numbers to find out if they could afford to send their kid to an out-of-state college.

But can you remember what a pain it was to do all that back then?

Evolution is in the details. Remember checkbooks? Having to talk to real live bank tellers? Scouring the financial pages in the paper to find out what the average interest rate was on a money market account? Those were the days -- you know, the days when buying a car, getting a mortgage, comparison shopping, all required some serious time on the telephone or in the car.

All of that has changed in the past 15 years -- heck, the past 10, five, or two, for that matter. Just as Regulation Fair Disclosure helped to level the playing field for the good of our investment portfolios, so, too, did the Web for the rest of our finances.

Today we have an unprecedented level of access to information, advice, and tools -- much of it once the sole province of financial professionals.

Our first peek inside the secret black box
One of the most momentous wins for regular folks took place just five years ago. In 2003, the Fair and Accurate Credit Transactions Act (FACTA) gave Americans the most important financial freebie of all: a free credit report every year from each of the major credit reporting bureaus -- Equifax (NYSE:EFX), Experian, and TransUnion -- via the government-authorized website annualcreditreport.com. (Admittedly, I felt a tad like a marketing huckster using the headline "Click Here for a Free Credit Report.")

Given credit's vital role in our financial well-being, this was a landmark. Our credit history is the basis for the interest rates we're charged on our loans, the insurance premiums we pay, and even a deciding factor for many employers as to whether they'll hire us.

Access to once insider-only tools is just one example of how much has changed in the past 15 years in how we manage our personal finances.  

Happy trails, paper
No longer do we have to blacken our hands with newsprint to find out where to get the best bang for our bank bucks. We've got Bankrate.com (NASDAQ:RATE) to show us how the rates on credit cards, CDs, mortgages and auto loans stack up against the banks in our county and across the country. Not in the mood to negotiate for a better rate on your mortgage? Let a service like LendingTree.com mediate and get banks and brokers to compete for your business. There's no more wondering whether the electronics store down the block has the best price on a printer -- or even if it has the model you want in stock. It takes only a few clicks to find out.

Today, consumers are calling the shots in every area of personal finances. Just flip open your laptop and you can:

Manage and track your cash flow in real time: Fifteen years ago, managing your cash flow and doing your taxes required a ledger and box of No. 2 pencils. Then in 1993, Intuit (NASDAQ:INTU) IPO'd and soon after introduced at-home, consumer-use budgeting and tax preparation software that today is nearly as sophisticated as the tools financial firms use.

These days, you don't need a disk (or your home computer or even a paid subscription) to see what's happening with your net worth at every moment. Just log in to free online tools like Mint.com (a Motley Fool partner), Geezeo.com, and Wesabe.com (QuickenOnline used to charge a fee, but is now free) -- just a handful of online money-buddy tools that made a splash this past year. They do all the heavy lifting via the Internet, tracking inflows and outflows and sending alerts when bills are due and when you're perilously close to your happy hour spending limits.

Find the best deal on absolutely everything: In the early 1990s, our popular "How to Buy a Car" area showed Fools how to get the best price on a new set of wheels by having car dealers bid against one another for your business. All you needed was a fax machine! Nowadays, buying a Toyota is practically as easy as purchasing toilet paper. Point, click, compare, get dealers to compete, pick up the keys.

Similarly, shopping at a garage sale -- or organizing one -- is so '90s. Now we have eBay, eBay drop-off centers, Craigslist.com, Half.com and countless others to help us hawk our wares and pick up a few bargains. Of course, the savvy modern-day shopper doesn't click "buy" or head to the mall without checking to see if there's a coupon. Toss aside the Sunday circulars: Just type "coupon code" and the name of the item or retailer into your Web browser and cut-and-paste or print out the savings.

Spy on the Joneses: Lifestyles of the Rich and Famous satisfied our voyeuristic tendencies for a while. But, let's be honest, it's much more interesting to spy on your acquaintances. Want to see what your neighbor paid for his house? No need for a trip to City Hall. Just look it up on Domania.com. Heck, you can even see how he landscaped his backyard via satellite and Google Earth.

To see how you stack up against your peers, you used to have to wait for Census results. Mint, Wesabe, and others don't make you wait. They aggregate user data to compare your money habits (like how much you shell out each month for groceries, dry cleaning, gifts, and gas) with other people in your demographic or geographic locale. CakeFinancial.com lets you peer into other people's portfolios, and CreditKarma.com shows you how you rate (credit-scorewise) to the masses.

Own a piece of the establishment: Some notable IPOs over the years gave us the chance to own a piece of the action. In just the past three years, Visa (NYSE:V), MasterCard (NYSE:MA), and Discover Financial Services (NYSE:DFS) have gone public or been spun off. They are the quintessential Lynchian investments -- products everyone uses. A lot.

We've come a long way, Fools -- for better and, sadly, for worse.

The dark side of progress
Despite the advances in modern money management -- online bill payment, for-sale-by-owner real estate websites, and that thing on the counter at McDonald's that takes your money when you wave your wallet in its general vicinity -- we can't ignore the seamier side of the money management evolution.

From the very beginning we Fools railed against the ravages of debt and did the math to convince all who would listen that, as much as we love investing, paying off high-interest debt comes first.

We piped up when mainstream lenders started stretching the ethical limits, pushing plastic on campuses and dreaming up new ways to drum up fee income and bury it in the fine print ("universal default clause" anyone?). And when the bottom-feeders went belly up, a new crop opened up shop and got even more creative.

When the folks in nice suits with big homes in the 'burbs got in on the action -- introducing the words "exotic" and "mortgage" to one another and gushing about forever-rising home values, our ears pricked up and we questioned the wisdom of the entire real estate machine.

Unfortunately, construction on the house of cards continued. By the early 2000s, easy, unfettered access to credit changed the entire economic equation. "No money down" was no longer just a cheesy marketing hook; it became a way of life.

Thanks to piggyback mortgages, interest-only adjustable rate financing, pick-your-payment plan options, and the like, a huge swath of the population that didn't have a prayer of achieving the American Dream of homeownership finally did. But at what cost?

What's got two thumbs and an interest-only ARM?
Of course, "they" aren't entirely to blame: With the choice of pay now or pay later, well, carpe diem on credit, right?

Let's face it, many of us let the leniency go to our heads. We traded up our lifestyles, put off saving for our futures, for that nebulous "someday," and even if we don't consume conspicuously, we've made a habit of living on credit. In the early 1990s, the average card holder carried "just" $3,000 in revolving credit card debt month to month. Today, we owe nearly triple -- $8,700 per household. Collectively we owe more than $800 billion to The Man. At this rate we're going to take on the national debt ticker -- by 2010 we'll owe almost $1.1 trillion.

Let's write the next chapter, together
As far as we Fools are concerned, the end of this saga is not written in stone. There will be more innovations -- and more dark times -- to come in the personal finance space. However, the real magic of the past decade and a half (and the next) isn't an information aggregator or some fancy financial product. It's people; lots and lots of smart, brave voices trading notes on every facet of personal finances.

If nothing else, over the past 15 years we've learned that people are resilient, resourceful and, when we band together, can overcome even the darkest-seeming financial forces. Remember, it wasn't Tom or David Gardner alone on that AOL discussion board that made The Motley Fool a phenomenon. It was every single person they enticed to join the conversation, each one raising the collective wisdom and the money smarts of all.

We started a frank conversation about finances 15 years ago. And we're just getting warmed up.