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Old 04-26-2013, 12:31 PM   #121
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IIRC, the Millionaire Next Door noted that avoiding divorce was a factor in success.
Not in my case. I like my ex-wife, but she could never get the hang of dealing with money. Ten years after our divorce, she is still unable to live within her means and is badly in debt. There's no way I'd be looking at ER at 53, had I kept my caboose hooked to that train.
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Old 04-26-2013, 02:31 PM   #122
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At the time of my ER I noticed that there were three major reasons why others my age couldn't ER too. One is that they just weren't mentally ready for it but that doesn't pertain to this thread. The other was that they had bought a house recently and had a huge mortgage to pay for a long time to come. The third was that they had a young child still in the house. Either these people were not economically literate enough to think about their housing and family planning choices late in life or they decided that these choices/purchases were worth the extra years of w*rk. The trend to get married and have a family later in life is not only a factor in young people's lives. I've seen quite a bit of it in my own generation happening to people who divorced and remarried and were starting over again. The same economic principals apply but in a scenario we didn't contemplate when I was younger.
My youngest is set to graduate this year. How's that for timing since I'm retiring next year. He's going to graduate school, but will get a full ride so no more support from us. On the mortgage, the plan was to pay if off 4-5 years into retirement. We were able to refinance at such a low rate that the plan is to now let it go to term as I think we can beat the rate with our investments.
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Old 04-26-2013, 02:32 PM   #123
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Not in my case. I like my ex-wife, but she could never get the hang of dealing with money. Ten years after our divorce, she is still unable to live within her means and is badly in debt. There's no way I'd be looking at ER at 53, had I kept my caboose hooked to that train.
My ex is an example of a smart person who just doesn't care about money. She's free spirited and hard working, and very unmaterialistic. Those are a great combination when you are a poor college student and enjoying life, but as you get older it's a good idea to be a bit more considered in what you do and to think about finances and money. Unfortunately she's now in a job with no health insurance and needs an operation for some hearing loss she has in one ear. Hopefully she'll buy insurance when her state's health exchange is up. I hate to think what provision she's made for retirement.
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Old 04-26-2013, 07:03 PM   #124
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Well, to answer the OP's question I don't consider myself smart but I certainly have a lot to learn regarding personal finance. :-)
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Old 04-26-2013, 09:35 PM   #125
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I am having trouble figuring how to make retirement planning into a HS or college class. First day of class you could spend 5 minutes explaining LBYM, 5 more minutes talking about compounding, 5 more minutes talking about the advantages of tax deferred plans, 5 more minutes talking about the magic of employer match, 5 more minutes talking about dollar cost averaging into an assortmant of funds, 5 more minutes talking about leaving it alone till you have enough to retire. Then a quick five minute review and class dismissed. What else do you need to teach for the rest of the semester? Saving and investing basics which is all you really need for at least the first two decades of the accumulation phase really is dirt simple.
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Old 04-26-2013, 11:20 PM   #126
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I am having trouble figuring how to make retirement planning into a HS or college class. First day of class you could spend 5 minutes explaining LBYM, 5 more minutes talking about compounding, 5 more minutes talking about the advantages of tax deferred plans, 5 more minutes talking about the magic of employer match, 5 more minutes talking about dollar cost averaging into an assortmant of funds, 5 more minutes talking about leaving it alone till you have enough to retire. Then a quick five minute review and class dismissed. What else do you need to teach for the rest of the semester? Saving and investing basics which is all you really need for at least the first two decades of the accumulation phase really is dirt simple.
Good luck with that.
I am not sure that most people of high school age can envision ever 1) accumulating enough money to retire, or 2) ever getting older. That is just an audience that is not going to have a very good absorption rate. I sent my 19 year old great nephew a check for Christmas and found out that he doesn't even have a bank account. Had a friend who worked in an insurance agency about 12 years ago. The owner decided that all paychecks would be direct deposit only. The office was in an uproar because most did not have checking accounts. Adults. 401K participation rate: very low. In the little software company where I last w0rked the owner was not doing the 50+ catch-up deferral correctly and in the process of asking him to fix it, I found out that I was the only one doing catch-up and less than half of the employees were participating in the 401K.
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Old 04-27-2013, 04:19 AM   #127
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I am having trouble figuring how to make retirement planning into a HS or college class. First day of class you could spend 5 minutes explaining LBYM, 5 more minutes talking about compounding, 5 more minutes talking about the advantages of tax deferred plans, 5 more minutes talking about the magic of employer match, 5 more minutes talking about dollar cost averaging into an assortmant of funds, 5 more minutes talking about leaving it alone till you have enough to retire. Then a quick five minute review and class dismissed. What else do you need to teach for the rest of the semester? Saving and investing basics which is all you really need for at least the first two decades of the accumulation phase really is dirt simple.
I actually think it is easy. In addition to talking about it, run a game, case study, or simulation to reinforce those principles. You could have at least one class day devoted to each of those topics. You could add in additional topics as well, again giving the class "hands-on" to reinforce the concepts. In fact, you've given me an idea for a post-ER activity...
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Old 04-27-2013, 04:59 AM   #128
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I am having trouble figuring how to make retirement planning into a HS or college class. First day of class you could spend 5 minutes explaining LBYM, 5 more minutes talking about compounding, 5 more minutes talking about the advantages of tax deferred plans, 5 more minutes talking about the magic of employer match, 5 more minutes talking about dollar cost averaging into an assortmant of funds, 5 more minutes talking about leaving it alone till you have enough to retire. Then a quick five minute review and class dismissed. What else do you need to teach for the rest of the semester? Saving and investing basics which is all you really need for at least the first two decades of the accumulation phase really is dirt simple.
I mentioned before that we were required to take two financial classes in high school called Keystone and Capstone.

In Keystone, which you took freshman year, they mostly started off teaching us about workplace savings. They did an overview at first, then taught us how to get certain jobs, which degrees or fields paid which amounts, and then taught us about benefits and how they can help you save, like health plans, pensions, 401ks, and other work-related things. Then we spent some time on the bank accounts you should have as a working individual. We went pretty in depth, so that took a decent amount of the class time if I'm remembering correctly. We did a decent amount on savings out of work as well, learning about IRAs, stocks, and other investment vehicles before moving onto loan management. There we learned about building credit safely, taking responsible loans for your car, mortgage, and business. Entrepreneurship and individualism are really pushed for our generation, so managing your own business finances were also taught during that time.

Then in Capstone during senior year, we spent a short time reviewing the benefits you can get at certain jobs and varying degrees, and spent a lot more time on investment knowledge for the first semester. For Freshmen, instead of placing it in such a far away concept, they really just pushed the idea that your money will grow if you invest it wisely. Senior year they put it in the general context of retirement accounts, putting it away and not touching it. We also spent time looking at car and mortgage loans as investments rather than just money you have to spend. Elective economics, which I never took, discussed it in more detail, but at this point the class taught us about good times to buy and sell in the housing market, and treating your property like an asset.

We learned a few more things here and there, mostly about taxes, but that was split into the affect each lesson would have on your taxes (Self-employed, first-time homebuyer, ROTH vs traditional, etc) but those were the general standards and ideas we covered as a high school class. For reference, I am 19 and graduated in 2011, so the lessons are probably still what is employed in our schools here today.
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Old 04-27-2013, 07:44 AM   #129
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I am having trouble figuring how to make retirement planning into a HS or college class.
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Good luck with that.
The suggestion was for a Personal Finance course to provide a foundation, not retirement planning for HS or college. From another thread...
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Originally Posted by PBS: Retirement Gamble thread
I don't think anyone was proposing kids should study retirement planning, asset allocation or the mechanics of the stock market. To me personal finance is topics like:

Wage income and occupations
Expenses and budgets
Taxes
Credit cards
Loans and banks
Savings and savings instruments
Life, home and auto insurance
Buying a home
Basic investing
Basic economics
I took a college level elective in Personal Finance, easily filled a semester. And it won't soak in with some students, but that's true of any course. Some kids aren't exactly riveted in math, science, history, English classes - but they're required. And several people have suggested education is a root cause...
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Old 04-27-2013, 07:58 AM   #130
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I do not feel it has anything to do with taking classes. It has to do with parents exposing to their children the world finite resources and trade offs. They should be showing to their children as early as possible how much they make and how the budget the money. Shielding them from this I feel really prepares another generation of poor financial planning.
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Old 04-27-2013, 08:28 AM   #131
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I do not feel it has anything to do with taking classes. It has to do with parents exposing to their children the world finite resources and trade offs.
That only gets you so far, though. I think we need to draw a line between the folks suffering from consumer debt stemming from over-consumption and those suffering from more generalized financial weakness stemming from inadequate income to cover basic needs. What you mentioned would help the former, but not really make a difference with the latter.
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Old 04-27-2013, 08:32 AM   #132
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The suggestion was for a Personal Finance course to provide a foundation, not retirement planning for HS or college. From another thread...
I took a college level elective in Personal Finance, easily filled a semester. And it won't soak in with some students, but that's true of any course. Some kids aren't exactly riveted in math, science, history, English classes - but they're required. And several people have suggested education is a root cause...
I agree with the early foundation comment. At he very least people need to be exposed to things like the time value of money, the value of saving and the need to budget. These are critical factors needed to escape lifetime poverty.
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Old 04-27-2013, 09:02 AM   #133
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I do not feel it has anything to do with taking classes. It has to do with parents exposing to their children the world finite resources and trade offs. They should be showing to their children as early as possible how much they make and how the budget the money. Shielding them from this I feel really prepares another generation of poor financial planning.
Most parents don't have the knowledge to do that and would be bad examples. In most cases if the child followed the parents' example they'd live pay check to paycheck and carry a credit card balance.
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Old 04-27-2013, 09:03 AM   #134
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My family: three brothers, working class parents who never invested in anything outside of a home or a bank, but always LBM. All have graduate degrees now. One brother gives everything to EJ and doesn't know anything about how he is invested, but seems to "know it all" about everything else. Other bro is slightly more interested. Both think I am a large risk-taker because I have individual stocks in addition to my mutual funds (BRKB, PFE, AEP, LLY, etc - not what you'd call a speculative portfolio). Fortunately all of us are going to be okay in retirement, but vastly different paths.
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Old 04-27-2013, 09:29 AM   #135
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I do not feel it has anything to do with taking classes. It has to do with parents exposing to their children the world finite resources and trade offs. They should be showing to their children as early as possible how much they make and how the budget the money. Shielding them from this I feel really prepares another generation of poor financial planning.
And if the parents are financially illiterate? In any event, both (parents teaching & a formal class) would be advantageous even if the parents can teach their kids personal finance. I'll probably get flamed, but I'd say it's more important for kids to graduate HS with some personal finance fundamentals than some of what they're already required to take...
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Old 04-27-2013, 09:44 AM   #136
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And if the parents are financially illiterate? In any event, both (parents teaching & a formal class) would be advantageous even if the parents can teach their kids personal finance. I'll probably get flamed, but I'd say it's more important for kids to graduate HS with some personal finance fundamentals than some of what they're already required to take...

Some schools already do this - both of our children took a personal finance class in HS - but we live in an affluent district, don't know if all schools can provide this
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Old 04-27-2013, 09:48 AM   #137
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And if the parents are financially illiterate? In any event, both (parents teaching & a formal class) would be advantageous even if the parents can teach their kids personal finance. I'll probably get flamed, but I'd say it's more important for kids to graduate HS with some personal finance fundamentals than some of what they're already required to take...
Why not "kill two birds with one stone"; do literature and finance at the same time. Just let them read David Copperfield. I remember reading it in my early teens and the character of Mr Micawber made a big impression on me.......I believe that my frugality and saving nature was greatly influenced by the example of Mr. Micawber being carted off to debtor's prison. We obviously got compound interest, geometrical progressions and linear programming in maths and I remember some examples that involved choosing the best investment given certain time dependent returns and costs.
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Old 04-27-2013, 09:48 AM   #138
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No flame from me. I think it is a great idea. I have no idea what it would replace though.

I just looked at my county's HS curriculum, and there is only one personal finance elective class, that you would only take under a certain directed content group.

Instead, my state (along with 42 others) spend a lot of time "educating" us on the joys of life after winning the lottery.

And hey, if you miss the lottery, there's always getting drafted into a major league sport as a backup plan.
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Old 04-27-2013, 09:55 AM   #139
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So here's the course syllabus offered in our school system for "Personal Finance"

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This course prepares students to understand economic activities and challenges of individuals and families, the role of lifestyle goals in education and career choices, procedures in a successful job search, financial forms used in independent living, and shopping options and practices for meeting consumer needs. The course also prepares students to understand consumer rights, responsibilities, and information, protect personal and family resources, and apply procedures for managing personal finances. English language arts and mathematics are reinforced. Work-based learning strategies appropriate for this course include mentorship, school-based enterprise, service learning, and job shadowing.
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Old 04-27-2013, 10:03 AM   #140
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I don't know, this stuff seems like common sense to me. Save money, stay out of debt, stay on a budget, put some away in case of an emergency, live below your means, put your savings in a place where it'll earn more money. I remember Dave Ramsey's line, "We give you the same advice your grandmother gave you, only we keep our teeth in." I'll go back to the motivational angle -- a lot of this stuff is common sense, readily available to anyone with even a modest amount of interest in the subject. People would just rather not exert the effort to learn and apply this stuff. It is simple conceptually, you don't need an IQ above 85 to understand most of it. But once you know it, you have to pay attention, discipline yourself, act differently than other people, buck the cultural tides, say No to yourself, delay or deny gratification, etc. -- all things that people don't like to do. I think a class would help -- more information is always good -- but in the end, I do think it's more about motivation than information. imho, of course.
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