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Old 02-11-2011, 03:38 PM   #21
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Me too, I once bought a 12 year old Jaguar only to realize, about 3 months later, that I didn't make enough money to maintain it. Sold the Jag and bought a Volkswagen.
Nodak, that stuff is kind of funny looking back on it. I was clearing $955 a month my first year teaching, but had a $250 car payment. Insurance, gas, car property taxes, and payments were eating up over 40% of my take home pay, but I still had money to pay the rest of the bills and buy beer! One month, I remember spending $450 for new HI FI VCR when they first came out. Half my paycheck! INSANE, but I paid cash for it I remember.
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Old 02-11-2011, 03:45 PM   #22
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Nodak, that stuff is kind of funny looking back on it. I was clearing $955 a month my first year teaching, but had a $250 car payment. Insurance, gas, car property taxes, and payments were eating up over 40% of my take home pay, but I still had money to pay the rest of the bills and buy beer! One month, I remember spending $450 for new HI FI VCR when they first came out. Half my paycheck! INSANE, but I paid cash for it I remember.
The fact that I paid cash for stuff is what saved me. It kept me from buying too much. If I had used credit cards I'd still be making payments.
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Old 02-11-2011, 03:56 PM   #23
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When I were a lad growing up in England we were taught how to save for things we wanted and learned about interest rates at "junior school" (the 4 years between ages 7 and 11). I'm sure it is not like that now.

We were enrolled in the "Post Office Savings Bank" and issued with a pass book. Each Friday a teacher would man a table and everyone was encouraged to bring some money to deposit. The school would hold the pass books and once a month the interest would be added. I remember I used to get 1/- (1 shilling) from my mother to deposit. At the end of each term we were given our pass books to take home and it was up to us then to withdraw money if we wished.

It was a great way for kids to save for Christmas and/or for the summer holidays. When I left junior school I, like others, was in the saving habit and the Post Office, or other high street banks, would issue free savings boxes to kids for their savings accounts. You could put money into the box and not be able to get it back out. Periodically I or my mother would take it to the bank for them to open with a key, count and deposit the proceeds.

I don't remember any personal finance courses at school, but a required course for my engineering degree was Accountancy but no personal finance courses were on offer.
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Old 02-11-2011, 10:19 PM   #24
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It seem ridiculous to spend time learning algebra but not personal finance.

<snip>!
Agree, but perhaps we could do both. Just add two assignments to that algebra class.

Have one assignment that a student charges $3,000 on a credit card. The credit card charges 24% APR and the student makes twice the minimum payments (whatever they are). Compute 1) how long it will be before the $3,000 is paid off and 2) how much interest is paid on the $3,000.

Second assignment is student graduates at 18 and begins full-time work, beginining at $10 per hour, receives 4% annual raises during the next 20 years, saves 10% of what they earn each year and the savings are invested at an 6% return. How much will the student's savings be in 20 years (at age 38)? [I get $107K - hope I did the math right ].

Both are simple math, and might be pretty eyeopening.
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Old 02-11-2011, 11:42 PM   #25
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Interesting comments...

My SIL teaches in a very strong public high school. He has more than enough knowledge to teach personal finance but in his school the kids who need the information wouldn't enroll in the class because it won't earn kudos on the transcript for college. The other issue is that schools don't have the resources for many electives that the parents don't demand.

I agree with pb4uski that many concepts could be taught in mathematics. Many students claim that their education doesn't relate to 'real life', but that certainly does.

It may be up to programs like Scouting or Boys & Girls Clubs to put together personal finance classes.
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Old 02-12-2011, 02:33 AM   #26
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In my state it is a required semester course. As an educator, I noticed that a lot of students recieved value from the course, but far too many dont internalize what they learn. In their mind they treat it like a theoretical class with no impact on their current daily life. That is unfortunate, because personal finance can be a very interesting course of study. Education can only take you so far, you have to be willing to put the knowledge into practice, too.
My brother and SIL were in town the end of last month and I got in a discussion with SIL about this. I thought personal finance should be taught in high school, because everybody needs to know it, and (theoretically at least) everybody goes to high school. My SIL was opposed—she doubted high school is an optimal age for teaching the subject, and she might be right.

There was a series of articles in the NYT last fall on retirement-related subjects. One of them was about a behavioral finance experiment in which students were shown either current or age-progressed photos of themselves and then tested to see whether their financial decision making was affected. The students who saw the age-progressed images saved more—or at least that's what they said they would do, which is perhaps not quite the same thing. The same researchers are thinking about tools that would show you a sad face if you're drawing down your portfolio too fast after retirement.
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Old 02-12-2011, 11:15 AM   #27
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Good thread here.

I was fortunate to have a mother who taught me some basic finance stuff while I was a kid. I helped her with her monthly checks, seeing how her budget worked even though I did little more than lick the stamps and read some figures from her notebook. She did show me how to balance a checkbook, too, all before I turned 16. [Being a math wiz helped, too.] My parents paid mostly cash for a new car they bought when I was 9, greatly reducing their monthly payment on the small car loan. I learned from that the value of keeping personal debt down. My mom would later get me into investing some years later before she sadly passed away in 1995 at the early age of 59.

While I had a bank account when I was a kid, and later opened one with an ATM card (this was the early 1980s, so it was a fairly "new" concept) just before I went
to college. I would open my first checking account 2 years later and get my first credit card shortly after I finished college and began working full-time. I recall a controversy when I was at college when the college bookstore included an AMEX credit card application in each book bag, possibly encouraging college student to get one even if they had no way to pay the bills.
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Old 02-12-2011, 12:22 PM   #28
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Good thread here.

I was fortunate to have a mother who taught me some basic finance stuff while I was a kid. I helped her with her monthly checks, seeing how her budget worked even though I did little more than lick the stamps and read some figures from her notebook. She did show me how to balance a checkbook, too, all before I turned 16. [Being a math wiz helped, too.] My parents paid mostly cash for a new car they bought when I was 9, greatly reducing their monthly payment on the small car loan. I learned from that the value of keeping personal debt down. My mom would later get me into investing some years later before she sadly passed away in 1995 at the early age of 59.

While I had a bank account when I was a kid, and later opened one with an ATM card (this was the early 1980s, so it was a fairly "new" concept) just before I went
to college. I would open my first checking account 2 years later and get my first credit card shortly after I finished college and began working full-time. I recall a controversy when I was at college when the college bookstore included an AMEX credit card application in each book bag, possibly encouraging college student to get one even if they had no way to pay the bills.
It definitely appears to me the best way to learn is by parents setting a good example and learning at an early age to save. My take is society has somewhat went from savings based living to debt based. The "no money down", "easy financing" concepts suck the unsuspecting in. I have 3 credit cards (no money on them) that all have $25,000 limits on them. What is the purpose of that? I didnt ask for that limit, they gave it to me. Thank God I have self control, but some dont. How could an average income person ever pay high rate credit cards maxed out off?
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Old 02-12-2011, 01:07 PM   #29
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In over 16 years of formal education I do not recall ever having financial planning issues discussed in a classroom other than a finance class.

I knew about savings bonds and savings accounts and that's about it! After graduating from college I began reading about investing and financial planning and have continued doing so all of my life since that time. Self education seems to be a pretty good way to learn this stuff.
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Old 02-12-2011, 01:40 PM   #30
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I had to really think about how much financial education I received, both at home and in school.
Elementary school - Budget and checkbook skills via helping Mom check her figures as a young child for math practice, plus watching her write checks with me doing the envelopes and stamps.
Also basic word problems and percentages in general math classes, plus money tracking and record keeping via selling candy and Christmas cards door to door.
High school - slightly more difficult word problems in 9th grade general math. Babysitting and odd job money had to be saved first, with only a little spent on myself.
College - the only formal course I took was Business 100 (I majored in Physics). Budgeting, i.e. trying to stretch my summer earnings and in-semester College W*rk Study paychecks.
Career - the whole enchilada of budgeting & spending via being a Laboratory program manager responsible for an R&D supply and equipment budget and a Contracts Manager.

Since 1997 as a middle-aged adult...
Financial planning - self taught by reading books and articles and consulting a
fee-only FA for a 1-shot soup-to-nuts analysis.

I guess I didn't do so badly.
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Old 02-13-2011, 08:03 AM   #31
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My take is society has somewhat went from savings based living to debt based. The "no money down", "easy financing" concepts suck the unsuspecting in. I have 3 credit cards (no money on them) that all have $25,000 limits on them. What is the purpose of that?
I wondered about that too the last time I got a credit card and was amazed at the credit limit. If DW and I maxed out all of them we'd be over $50k in cc debt!

My thought was "Are the people in these banks nuts?" Who in their right mind would loan us that much in cc debt? Making the minimum payments it would take the rest of our lives to pay it off.

Oh. I just answered my own question. That's exactly what the banks want us to do.
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Old 02-14-2011, 04:55 PM   #32
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I'll raise my hand for a happy story.

I've mentioned before that my daughter has managed to be financially challenged by the college experience. No word yet on how that's working out, but now that she's 18 and has her hands on her assets, she has enough cash in her accounts to go for a while before having to sound the low-level alarm. Not that the casualty assistance team is standing by.

However the early signs are encouraging. USAA sent a rep to the NROTC unit for an hour's training on financial responsibility, and she noted that she'd already heard it all from us parents. She was inspired by that talk to go to the free credit-reporting website to check on her own record, and annoyed to find that she has no credit history. (That's because Citi wouldn't give a 13-year-old their own credit card, but will gladly make Dad the primary user.) She's trying to convince Citi (with my concurrence) to turn the card over to her. And after that she's going to apply to places like Fidelity, PenFed, NFCU, & USAA.

She's also busy enough with this semester's homework & studying that I don't think she's had many opportunities to spend money.

She did, however, test out the parental purse strings. We've told her that for the rest of her life, any time, anywhere, we'd spring for round-trip airfare to Hawaii. She pointed out that Hawaii was an awful long way to go for a one-week spring break. Instead of "wasting" all that money on a round-trip ticket, she proposed using the college fund for a (slightly) smaller amount of airfare to spend that week with friends in Chicago.

We told her "No thanks." We'd be happy to subsidize Hawaii, but the rest of the world was her funding challenge...

After next week's exams I think she's going to discover that she'd rather spend spring break in a study carrel.

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There should be a course, and it should go well beyond managing a checkbook. It would do wonders just to expose kids to how compound interest works (saving and borrowing), typical expenses for various things in the real world, a very brief look at taxes and retirement savings vehicles, etc. Presented the right way, it wouldn't have to be drudgery. If the light came on for 10% of students it would be super.
One problem would be pushback from parents. Any course worth doing would enable Junior to identify dumb things being done by Mom and Dad. Mom and Dad won't enjoy the ensuing discussion, and they'll complain to the school.
Well, thank goodness the kids aren't pointing out the dumb things being done by Mom & Dad these days.

But those damn parents, always complaining about the public schools and yet never homeschooling doing anything about it.

I'm sure glad parents don't complain about the school's handling of sex education health, political correctness Western history, evolution science, and Huckleberry Finn English literature...
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