Getting your kid(s) off the parental payroll

[Nords]

Quote:

Originally Posted by walkinwood Kudos on maturity & thoughtfulness with which you have dealt with this rite of passage.

Thanks, but frankly my attitude has been more along the lines of "Woo-hoo!!"

Quote:

Originally Posted by MichaelB Same with taxes. They do them but still review with me.

Yep, that's on our list. She won't have the W-2s until Feb but she'll have all the data and can get started now.

Quote:

Originally Posted by MichaelB I am very glad we helped them open and fund (with unused college money) their Roth IRAs. This gives us a natural way to discuss investing, gets them focused on funding retirement early when it has the greatest impact. It also has given us a way to make cash gifts to the kids and still minimize the moral hazard. The fact that we began these discussions during college shows in their behaviour and attitudes later in life. My biggest regret was not shifting unused college funds into the Roth sooner.

We've talked about some sort of profit-sharing (her NROTC scholarship saves us nearly $17K/semester) and this seems like a great start.

When she graduates (and has her own income) then she'd have her Roth IRA and the TSP (if she stays Navy) or some other DC plan. I don't know how we'd continue the profit-sharing after graduation without it turning into a lifestyle-enhancement plan.

Or maybe that's not my problem. Maybe we'd just gift some profit-sharing each year for a few years with a cheery note: "Here's your inheritance, don't screw it up!". But there'd need to be some additional education & support along with that. Otherwise she'd blow an extra $500/month on rent for a really nice apartment.

Quote:

Originally Posted by LOL! Our bank (WellsFargo, I know it exists in Hawaii and Houston) has postage-paid envelopes to use to mail in deposits. And free accounts for young folks and us older folks as well.

I'll have to check into that. For all we know we have them with NFCU & PenFed as well, but I haven't mailed in a deposit in over a decade...

[HFWR]

My CU's ATMs do not require a deposit slip or envelope. The signed check is inserted, much like a deposit envelope would be, then scanned, then displayed, allowing the depositor to approve, or change their mind...

[av8er]

Quote:

Originally Posted by LOL! Our bank (WellsFargo, I know it exists in Hawaii and Houston) has postage-paid envelopes to use to mail in deposits. And free accounts for young folks and us older folks as well.

Same goes for USAA...you can request the postage-paid envelopes either online or by phone.

[nwsteve]

Quote:

Originally Posted by Nords We've talked about some sort of profit-sharing (her NROTC scholarship saves us nearly $17K/semester) and this seems like a great start. When she graduates (and has her own income) then she'd have her Roth IRA and the TSP (if she stays Navy) or some other DC plan. I don't know how we'd continue the profit-sharing after graduation without it turning into a lifestyle-enhancement plan.

Our approach with our DD has been to $$ match her Roth contributions each year. Last year she changed employers, so we paid the income tax instead on the conversion.
Nwsteve

[MichaelB]

Quote:

Originally Posted by Nords When she graduates (and has her own income) then she'd have her Roth IRA and the TSP (if she stays Navy) or some other DC plan. I don't know how we'd continue the profit-sharing after graduation without it turning into a lifestyle-enhancement plan. Or maybe that's not my problem. Maybe we'd just gift some profit-sharing each year for a few years with a cheery note: "Here's your inheritance, don't screw it up!". But there'd need to be some additional education & support along with that. Otherwise she'd blow an extra $500/month on rent for a really nice apartment.

We worry too about moral hazard but think so far we are safe. Our contributions are not regular, they are unannounced and they supplement instead of replace savings.

Calling it their inheritance is a good idea I think I'll borrow. Thanks.

[aida2003]

Quote:

Originally Posted by MichaelB I am very glad we helped them open and fund (with unused college money) their Roth IRAs. My biggest regret was not shifting unused college funds into the Roth sooner.

Could you please elaborate on the above? I thought a person needs earned income to fund a Roth IRA. How does unused college $$ play into this?

A great thread, but I think I'll have to start a similar thread in 10-15 years when my kids get there. Many things will probably change by then.

[Nords]

Quote:

Originally Posted by aida2003 Many things will probably change by then.

When we started saving for our kid's college in 1992, I bonds, Roth IRAs, and 529s were not available options... and EE bonds were actually a pretty decent deal.

[MichaelB]

Quote:

Originally Posted by aida2003 Could you please elaborate on the above? I thought a person needs earned income to fund a Roth IRA. How does unused college $$ play into this? A great thread, but I think I'll have to start a similar thread in 10-15 years when my kids get there. Many things will probably change by then.

When the kids were very young we opened UGMA accounts for them. We put in a small lump sum and added a monthly amount for a couple of years. This was in the mid 80's, the money was invested in equities and did very well.

When college time came our fortunes had changed and we didn't need to use those funds, so we left them intact with the agreement that they could not spend the money. After college we sat down with the kids and agreed they could keep the money if they used it to open and fund ROTH retirement accounts. The ROTH limit was $3K. The current value of the investments was greater that 3x the initial investments. each yearly transfer generated cap gains - and we still have some money yet to transfer.

They all worked during college. If I had begun to to this with their first paycheck 4 years earlier, there would have been fewer gains, less taxes to pay and the whole thing would have been completed years ago.

[akck]

With our CU, I believe my wife was listed as custodian and all she did was go in to have herself removed. As for a credit card, it's more difficult to get one for someone under 20 with the new CC laws. My son received offers for a student CC, but the one we tried declined him because he had no credit history, even though he was an authorized user on one of my accounts. What we did was to get him a secured CC ($500), through his CU account. This was to cover his incidental expenses he would be responsible for covering. When he comes home for Christmas break, we plan on seeing about changing the card to an unsecured card (will have been a year).

As a suggestion of a CS rep for one card, I split one of my CC and placed him as an authorized user with a limited balance. This second card was for emergencies (i.e., quick plane ticket home), school expenses we were sharing and anything we wanted him to get that we would cover.

As a result of the secured CC and student loans, he now has a credit history. We figured this out when he applied for his second year student loan and didn't need a co-signer. Also, the authorized user CC is reported on his credit report. If sometime next year, he is able to get a CC with a higher limit (for emergencies, etc.), we'll take back his authorized user card so he'll be totally separated from us credit-wise.

[Nords]

Update:
NFCU has a form to request removal of a joint owner. She keeps all her numbers on all her existing NFCU accounts, although some of them are only a digit or two different from mine. I filled out the form, mailed it off, and four days later I couldn't see her accounts on the website anymore. Now any money going from my checking account to hers is a "member-to-member transfer".

She's been having problems tracking (and controlling) her spending, her own damn fault to put it mildly, so she set up her checking account to automatically transfer a portion of her NROTC stipend to her savings account every payday. She's starting out slow while she re-estimates her budget, so we'll see how it works out. At least a seed has been planted. She's been spending way too much money keeping her spiffy new NROTC uniforms looking sharp, so spouse and I have been teaching her how "real Navy" does it.

As I mentioned on another thread she's signed herself up for a PenFed account, she linked her NFCU checking account to it, and she got ready to transfer money for CDs. PenFed immediately slapped a $50/day (that's only fifty dollars per day) limit on ACH transfers. I guess that's in effect until someone reviews the website activity next week and decides to trust that account for more money per day. Anyway it's a good thing that the PenFed thread (http://www.early-retirement.org/foru...ml#post1016083) mentioned using the NFCU account as a funding source for the CDs instead of doing ACHs, or we would've quashed all motivation of a newbie investor. So now she's set up her CDs/emergency fund in an account where it'll be difficult for her to impulsively raid the goodies.

She's signed herself up for a Fidelity account and filled out the asset-transfer forms. Fidelity apparently can do some IRA transfers online with some fund companies but the T. Rowe Price paperwork has to be snail-mailed in. She's linked her checking account to Fidelity so now she's ready to transfer more $$ over for her 2010 Roth contribution and pick a suitable fund. It'll be interesting to see if she decides to go international or small-cap value, index fund or ETF, or just total stock market. Over the last five years of her investor's education she's definitely proven to be a "set & forget" type. No Buffett hardwiring appears to exist.

She's considering her Amex "blue cash" credit-card offer, but she's also shopping NFCU's, USAA's, and PenFed's offers. I'm beginning to think that getting her own card (and getting off mine) may take a few extra weeks, but hopefully the application will be in the mail before she goes back to college.

I think she's decided not to mess with another ATM card. She can always use her NFCU ATM card around campus or in town (for a fee). There's also a check-cashing window on campus, but it's 20 minutes of standing in line before she has cold hard cash in her hot little hands. She hopes that the inconvenience will discourage her from impulsive spending. She'll have to let us know that works out.

Next week she needs to get a quote from Armed Forces Insurance on personal property policies. (Spouse and I don't insure our PP, but we can handle being burgled or burned out.) I'm not sure it's worth it for a laptop, a cell phone, and a few uniforms but it'll be a useful financial discussion.

Spouse and I have done a little soul-searching of our own and decided that we're not being as tough as we could. We've been fairly generous with the finances over the last four months (as have her grandparents and her aunt/uncle) but all it's teaching our progeny to do is to be more creative & innovative about new ways to tap into the college fund.

So far her solution to "ain't got no money" has been "go find more money" instead of "stop digging". After four months of college liberty lifestyle she has some amazing affluenza entitlement memories but not much else to show for it. She's realized this on her own, and she appears to have vowed to change her ways, but we've seen this act a couple times already and I'm skeptical. We won't say anything unless she brings it up, but she's got a surprise coming the next time she feels that the college fund "needs" to ride to the rescue.

She just realized that holiday break is half over, there's only 12 days left, and she hasn't even started her tax returns yet. As UncleMick says, heh-heh-heh...

[harley]

I was reading this thread, and it made me check something. I just realized we still have a small custodial account with TDAmeritrade for DD, who just turned 26. lol! I'm glad they keep track of these things for us.

Guess I'll have to figure out how to do the transfer. After New Year.

[Leonidas]

Quote:

Originally Posted by Nords I think she's decided not to mess with another ATM card. She can always use her NFCU ATM card around campus or in town (for a fee). There's also a check-cashing window on campus, but it's 20 minutes of standing in line before she has cold hard cash in her hot little hands. She hopes that the inconvenience will discourage her from impulsive spending. She'll have to let us know that works out.

Don't reveal this to her until she decides to get another ATM card, and then tell her about the Co-Op Network ATM:

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Welcome to CO-OP, the largest credit union-only ATM Network in the country. The CO-OP Network logo, which is located on the back of your credit union ATM card, gives you SURCHARGE-FREE access to 28,000 CO-OP Network ATMs. This includes: 9,000 deposit-taking ATMs and 5,500 7-Eleven locations (throughout the U.S. & Canada)

Looks like there are two of them inside the TMC just across the street from the main jogging path.

Easy to find, after I considered that my CU belongs to a similar network of CU ATMs that are free to use for customers of member CUs. It seemed reasonable that NFCU would not be behind the times, and so I went looking. There is a locator tool on the NFCU site. https://www.navyfederal.org/branches-atms/index.php

She has to wear a USMC t-shirt, or hang a recruiting poster in her room, as homage, if she uses the idea!

[Nords]

Quote:

Originally Posted by Leonidas There is a locator tool on the NFCU site. https://www.navyfederal.org/branches-atms/index.php She has to wear a USMC t-shirt, or hang a recruiting poster in her room, as homage, if she uses the idea!

Thanks, I'll pass that on!

Can the USMC t-shirt also have a USNA insignia on it? Never mind, just kidding.

Actually the Semper Fi heritage is being extremely well preserved by the NROTC unit's gunny sergeant. She was practically speechless when it came to describing his command presence and his insightful observations on midshipman performance (or lack thereof). "Dad, you wouldn't believe how he can [insert unbelievable Marine accomplishment here]!" Well, yeah, honey, I would believe that. Their fathers did the same for me too.

She now keenly appreciates what the universe's most powerful motivational speaker has done for her running times and her manual of arms...

[Nords]

Thanks again, Leonidas, she finally got around to taking a look at the ATM finder.

Turns out that she wants to make ATM deposits as well as withdrawals. The TMC ATMs are extremely conveniently located near her particular college, and they'll take her NFCU card without fees. The bad news appears to be that for the next three-plus years she's going to have to use deposit slips and snail mail for the paper checks that old-school grandparents people keep sending her.

She swears she's not going to let the ATM convenience derail her from her new standards of fiscal responsibility. I say the quicker she learns then the better.

She's wearing the red & gold EG&A today. I'm going to have to see if I can find her one of the old framed "few good men" recruiting posters for her to creatively graffiti up.

She's been checking into credit cards. Fidelity offers major cards (Amex, MC, & Visa) and Amex rebates 2%. USAA offers a MC with 1.25% cashback and seems to have the fewest gimmicks. I have my own Fidelity Amex (also accepted at Costco) and a USAA MC. The USAA card has 3x the credit limit of the Amex, so they're both good deals for different situations.

She also thought that those two cards offered the best deals and the least overlap if there's a problem with one of them.

Unfortunately USAA is whining about her lack of a credit record, while Fidelity has already sent her an "Amex blue cash" offer. Fidelity's online app didn't say "Yes", but it didn't say "No" either-- just that it would get back to her within 30 days. I guess she'll eventually get the Amex, pay a few monthly bills, and try again later with USAA. If both companies disapprove her then she'll go with NFCU or PenFed. I'm just hoping that Fidelity welcomes her with open arms and gives her a positive credit experience.

Yesterday she also noticed that T. Rowe Price has sent her Roth IRA funds to Fidelity. Next week she should be able to sell those out of her Fidelity account and buy their Spartan international & small-cap indexes. It was barely a week (over the Christmas weekend, too) from mailing the forms to Fidelity to watching the funds disappear from TRP.

I was talking to USAA yesterday about car insurance and had an "Ooops" moment. She's been renting ZipCars in Houston (one source of her self-imposed financial issues), and USAA reminded me that we don't carry collision/comprehensive insurance. If she needed accident protection then her rentals would have to include CDW. When she left for college I'd mentally decided that no rental-car company would rent to anyone under 25, let alone a teen, and I was wrong. But this little tidbit of unwelcome insurance news will hopefully help her avoid ZipCars until she can afford her own insurance.

Speaking of insurance, she learned that Armed Forces Insurance has a $25K minimum on personal property for $138/year. If we parents purchased that on top of our AFI homeowner/liability coverage then it'd be "only" $119. However she really just owns eight uniforms, a bunch of jeans/t-shirts/sweatshirts, a 13" Macbook, and an iPhone 3GS. I think she made the right decision to self-insure for now... it'll motivate her to take care of her stuff, too.

Seven days of break left. Today she's starting her tax returns!

[BigMoneyJim]

Quote:

Originally Posted by Nords The bad news appears to be that for the next three-plus years she's going to have to use deposit slips and snail mail for the paper checks that old-school grandparents people keep sending her.

Seems like I've heard that some places will let you scan & upload the checks for deposit now. Not long ago someone was asking for computer help trying this for Penfed.

I've heard of the ZipCars before and didn't realize they were in TX cities yet. I peeked at their site and found that they're not in the city so much as a bunch of universities. How clever of them!

[Lsbcal]

We've had our son on his own insurance policy because of possible "deep pocket" liability issues. Might cost more but we don't want anyone coming after us with a lawyer should he have an accident and injure someone. So far he's been a safe driver.

[Texas Proud]

Quote:

Originally Posted by BigMoneyJim Seems like I've heard that some places will let you scan & upload the checks for deposit now. Not long ago someone was asking for computer help trying this for Penfed. I've heard of the ZipCars before and didn't realize they were in TX cities yet. I peeked at their site and found that they're not in the city so much as a bunch of universities. How clever of them!

I didn't know Zip was here either.... but having them at a place where there is a high population that does not have cars is clever....

Nords, just have her buy the CDW and be done with it... I would think she does not drive that often... but who knows for sure...



Edit to add.... just looked and did not see anything in Houston.... but they did say 'insurance is included'.... but do not know if it is full or not...

[Nords]

Quote:

Originally Posted by BigMoneyJim Seems like I've heard that some places will let you scan & upload the checks for deposit now. Not long ago someone was asking for computer help trying this for Penfed.

PenFed and USAA both do it. She'd have to open a PenFed checking account to go with her CD, and it'd be another level of complexity in moving her money around. NFCU is promising to do iPhone deposit "any day now". The problem seems to be solving itself. She'll figure out what works best for her.

Quote:

Originally Posted by BigMoneyJim I've heard of the ZipCars before and didn't realize they were in TX cities yet. I peeked at their site and found that they're not in the city so much as a bunch of universities. How clever of them!

Blindsided the heck outta me too, and it sucked an unbelievable amount of cash out of her checking account-- because you just swipe your credit card, the computer unlocks your door, and away you go!

Quote:

Originally Posted by lsbcal We've had our son on his own insurance policy because of possible "deep pocket" liability issues. Might cost more but we don't want anyone coming after us with a lawyer should he have an accident and injure someone. So far he's been a safe driver.

One of her alleged Facebook "friends" posted a comment on her wall a couple months ago to the effect of "So, run any stop signs lately?" FB should come with a disclaimer "CAUTION: My Mommy and Daddy can read this wall too."

USAA cut us a real break a couple years ago when she passed her driver's exam-- since we had three drivers and just two cars, they classified her as the "occasional" driver and kept our policy at the same rates. Subsidizing her own policy today would cost us parents a godawful amount of money and encourage the very thing we're trying to discourage. I'd rather she have to pay her own ZipCar CDW and have one more reason not to rent the thing. Heaven forbid she should barter a car from a classmate or even (*gasp*) use her free student bus/rail pass.

The other day I asked her a question about getting around town, and she made a comment to the effect of "Yeah, but without a car I'd have to ride the Metro and then walk four blocks!"

I can't wait until she goes on summer training and sees how the "real Navy" lives...

[nwsteve]

Nord,
You mentioned the Zip cars are paid with a swipe of a credit card--many visas and mastercards include CDW as part of their bundled "benefits". I pretty sure most of the Fido cards do as well. Might want to confirm on her specific cards.
Nwsteve

[Nords]

Y'know, I'm still feeling ambushed by the whole ZipCar thing. It's not her fault that the company flew under my radar. I spent a considerable amount of time over the last few years trying to research the latest student dangers so that I could hold up my end of an intelligent discussion. I was all over the sex, drugs, rock&roll, alcohol, and credit-card aspects of college life that aren't already covered by the Uniform Code of Military Justice. I never even considered vehicle access, other than borrowing a friend's car (and being covered by their insurer). I never dreamed that any car company would rent to someone of that age, let alone someone trained to drive in the Aloha State instead of Houston's combat-zone freeways. We didn't even have an insurance conversation until she happened to casually mention that she'd been in a ZipCar, which at first I thought was a cute name for a friend's vehicle. It finally dawned on me that she was talking about the startup company product. And that she was driving it.

She says that part of the ZipCar's rental price is CDW. She didn't seem aware that she might have other CDW coverage from her/our old Citi card (which I never use so it's really "her" card) or one of her still-awaiting-approval new credit cards. I'm hoping that's no longer relevant. This break she's been talking more about ways to avoid using a ZipCar altogether. Heaven forbid she should have to use her legs, her bicycle, or (free) public transportation. Unlike my college days she doesn't seem inclined to spend her whole paycheck on beer. However the ZipCar habit has successfully vacuumed her checking account more than once.

It's led to a few funny conversations. Now that she has some college experience, we're talking about situations she's never anticipated-- like shopping with girlfriends who've never been inside a Goodwill and who eat out all weekend at the nice restaurants. We'd be talking with her about avoiding expenses by taking food back to the dorm room on Saturday afternoon (because the servery is closed on Saturday night) or eating care-package snacks in your room before going out with the group. Suddenly this lightbulb would flash over her head and she'd say "Oh, So-and-so does that, and I've always wondered why!!" Yeah, maybe So-and-so doesn't have enough money to afford that either. Maybe she's worth spending more time with, too.

Another "problem" is that she stopped tracking her spending because she never felt comfortable doing it near other people and just got too busy to think about it. Instead of catching up on her weekend receipts & Quicken while waiting for a Monday-morning class to start, she'd decided she needed to be in the privacy of her dorm room for an hour or two of "money day". The issue is that with NROTC and classes and studying and socializing, she's hardly ever in her dorm room-- and when she is she just wants to sleep. Four months later she has no idea where the money went. At least now that we've talked it over, she's more comfortable doing her finances in public.

She seems to have a handle on the academics, sex, drugs, rock&roll, and alcohol. So far the biggest college danger has been "hanging out with the rich kids". Or at least for their sake I hope they're rich kids...

I'll have to ask her if she wants help putting together budget v2.0. Nothing that she hasn't done before, although this time she's a lot more aware of the pitfalls.