Jenny's Budget and Finances for the Remainder of Sophomore Year
Oct 21, 2006
This document describes how we are going to handle your finances for the rest of this year. You and Mom and I will discuss this before we put this into effect.
History
Last year you created your budget for all of freshman year, and you started out with that amount ($1,973). By February that money was used up, in part because you had to pay start up costs for your painting internship (car, insurance, etc.).
We gave you interest-free loans totaling $7,250 to cover your startup costs and summer expenses. This loan was to be paid off in full on Oct. 15, 2006.
You worked extremely hard with your painting company, but because your expenses were high, you ended up with a net loss for the summer.
The expenses were high due in part to:
· High cell phone costs
·
· High automobile expenses
·
· Overdraft fees
·
Your income was lower than you expected despite your hard work, in part because you had not fully understood all of the profit sharing agreements.
The bottom line is that you ended up with a loss of about $1,000 for the spring/summer, and were not able to pay off the loans.
Basis of New Financial Arrangement
Last year we gave you a lump sum for the year, and let you manage your expenses. This year we'll do things differently. The new arrangement is based on three things:
1. Your responsibility for your summer losses
2.
3. Your lack of accounting for expenses
4.
5. Your attitude about the loan and spending
6.
Your Responsibility
I do not fault you for not making a profit this summer. You took a risk, and worked very hard. I doubt that you could have worked harder. However, you failed to make money, and you, as an adult, are the one that needs to accept the consequences of that.
Accounting For Expenses
By failing to keep track of your expenses, you had no idea until September that you were not making enough money to cover your expenses. You also failed to pay attention to the agreements with CWP that dictated how much money you'd receive for each job. Finally, by not balancing your checkbook, you incurred large overdraft fees, and have at least one major expense ($285) for which you cannot account.
Attitude
When I sent you an email on Sept 8 that summarized your loan amounts, and told you when they were due, you did not reply. When I sent you an email on Oct 14, saying:
The due date for the loan is tomorrow. Can you please pay me back as much as possible, and tell me what the status of future payments is?
you did not reply. Your sentence in an unrelated email on Oct 18, "Oh, and I have no money...." is not a reply to that.
If in September, you had called and said "Sorry, it looks as if I'm not going to be able pay off the loan" it would have helped .
New Financial Arrangement
Currently you have $119 in your checking account and $500 in your Vanguard money market account. Please confirm the Vanguard amount, then write me a Vanguard check for $400, mail it, and send me an email telling me that it's on its way.
When you receive the check from the insurance company, deposit it and transfer that amount to me. Same for any additional money your receive from CWP.
Here is a suggested budget that I came up with, based in part on the budget you created for yourself last year:
Jenny's Sophomore Year Budget
Per Month Per 6.5 Month Period
Travel 0 0
Books 52 340
Laundry 20
Food (non-meal-plan) 15
Toiletries 10
Entertainment 20
Miscellaneous 50
Clothing 15
Total 182
Income 288 1875
The income estimate is based on $75 per week, with 25 weeks of work between now and May 9.
Thus, according to this budget, your income will exceed your expenses by $100 each month.
Every month, you will transfer or mail a check for $50 to me such that it arrives before the first of the month. The first check will be due Nov 10, and every other check will be due on the first of the month. Please send me an email today saying "No Rubfish Removal" to prove to me that you read this document. If you cannot make a payment, let me know in advance. In addition, you will include a statement that shows what you spent money on during the preceding month. The statement should look something like this:
which represents your last month of spending.
I recommend that you try to save $50 per month for your next summer startup costs. We will probably not want to loan you money, so saving could be the difference between working in St. Louis or at Aztec grill.
Also, I would like you to read each email that we send you, and reply to it if appropriate.
Summary
I've tried to find a balance between helping with money and letting you take responsibility for it. We will not require you to pay back the entire $7,250 loan as long as you stick to the above arrangement.
And that's as good a way to handle that hypothesized scenario as anything I could suggest. 
