Kids, college, and frustrations.....

[spark0506]

We have 2 boys in college, one is a freshman and one is a junior. Our deal with both of them is that we will take care of tuition, room and board, for an undergraduate degree. They will be responsible for graduate school if they go that route. We also give them a cell phone and help a little bit with spending money, maybe 1,500-2,000 each. Both boys have been very irresponsible with how they deal with money and have spent foolishly and we can’t seem to get them to understand the difference between needs and wants. They will spend money, and money they don’t have...(credit card)...on things that they should never waste it on at this point in their lives such as itunes, eating out all the time, electronics, video games and expensive clothes. One has racked up over 4,000 in credit card debt and the other one has spent all his savings that was earmarked to get him thru the end of school in the spring. My DW and I are extremely frustrated as to how to deal with this; we have tried everything we can think of to teach them how to be responsible with their finances and we feel we’ve failed. Now we think we have to apply some tough love and let them figure out that THEY have to accept responsibility for their actions. They have to find their own solutions to their personal money problems and we’re not going to bail them out of it this time.

My question is …..How many of you have been in a similar situation and how did you deal with it?

Side bar….Both my DW and I live comfortable but well below our means. We have never carried foolish debt and never credit card debt. We are savers and we always pay cash for what we need and want. We were both divorced early on and the boys are from the previous marriages but we have always been the financial providers and we are the ones who encouraged college and the ones who are funding almost all of it.

 

[samclem]

Spark,
- I'll be interested in reading the replies, for I fear I'll be in your moccasins in a year or so.
- Small points:
-- Did they get a credit card on their own, or is this in your name/as cosigner, etc. If you are tied to these cards, I'd cut that off as step #1. They can get a debit card that will allow them to spend the $$ that you deposit in their bank account.
-- I'd think you'd want to keep them up-to-date on tuition payments, lab fees, etc. If possible, insulate their justified school spending from their personal fiancial woes by paying these fees yourself. You don't want them buying beer and pizza with tuition money, but you proably don't want them booted out of school for failre to pay, either.
-- Starving as a student is an invaluable part of their education--it sounds like they are learning exactly the wrong lessons now. I ate a lot of cheap food, didn't buy things, went on very cheap dates, etc as an undergrad, and it didn't hurt me a bit. I appreciated everything I had a lot more, and this lesson and this attitude stuck with me much longer than anything I learned in the classroom. And, ended up with lots more good stories. It sounds like, right now, you may be headed for an intergeneratonal dependency that will not end at graduation.

Just my two cents.

 

[youbet]

Has the junior behaved this way since he entered school or is this something that started this year? If it's been going on all along, how did you handle it during the first two years? If it just started, are the two boys at the same school and the arrival of the younger may have been the trigger?

There have been several extensive threads on the subject of paying for childrens' college educations here. Opinions vary from "make 'em work" to "treat 'em like little prince and princesses."

Now we think we have to apply some tough love and let them figure out that THEY have to accept responsibility for their actions. They have to find their own solutions to their personal money problems and we’re not going to bail them out of it this time.

Sounds like you know the answer but you're looking for some consensual validation before going ahead....... OK........ It's time for tough love. Assuming they have a dorm room, a meal ticket and tuition is all paid up, jerk the credit card and provide no additional spending money.

 

[REWahoo]

The financial lessons in life are best learned at a young age. Better they find out now how painful it is to live unnecessarily in debt than to find it out when they have families and much larger responsibilities. We did the 'tough love' thing with our two daughters who now thank us for it...quite a contrast to the reaction we got from them at the time.

 

[spark0506]

Has the junior behaved this way since he entered school or is this something that started this year? If it's been going on all along, how did you handle it during the first two years? If it just started, are the two boys at the same school and the arrival of the younger may have been the trigger?

Youbet,

The junior has been getting worse over the past 2 years and we have sat down with him numerous times and tried to help him with a budget. He just never sticks to it. They go to different schools.

-- Did they get a credit card on their own, or is this in your name/as cosigner, etc. I

Samclem,

They got the credit cards on their own. At first they had very small limits but the credit card companies are quick to raise the limit amounts and it’s like bees to honey.

 

[BarbaraAnne]

Have you considered having him work during breaks?

Our son, who is also in college has become much less frugal than he was in high school and it irritates us as well. He attributes it to dating, needing nicer clothes and food. He is slim, but eats a lot and most of it is fast food. We have college money set aside in a UTMA to cover his tuition, room and board and books.We also cover his car insurance and cell phone and give him a clothing budget. All other spending is covered by his summer employment and work during school breaks. Right now he is home for winter break for a month and works 40 hours a week at Target. This serves 2 purposes in that it gives him extra spending money and gives him an appreciation of what it takes to earn money. It is a good lesson.

He fortunately doesn't have a credit card in his name. We let him use one of our cards (with his name) and I check it online. He uses it for gas, etc. for which he pays us back. He has had the credit card since he was 16 and has never abused it. He knows I monitor it constantly and he would lose it if he did abuse it.

When kids are at college, they can easily get carried away with spending money frivolously, even if they were raised to be frugal. To get our son to appreciate the value of money and what it takes to earn it, our solution is for him to work. It's amazing how frugal he becomes after standing on his feet for 8 hours a day as a cashier!

 

[Nords]

After my freshman year I managed to rack up a few hundred "excess debt" in airline tickets on a card cosigned by my parents. I started making minimum payments and planned to pay off a portion of the principal each month over the next year or so. IIRC that was about $50/month.

Of course the paper statements went to my folk's house and I soon received a "WTF?" query. I explained the plan and was brushed off with a "We'll pay it, just don't do it again." I was so annoyed by my behavior and their response that I got my own card. Even after 27 years I've never again been tempted to exceed my ability to pay off the monthly balance.

This is no help to you, Spark, but for other parents of young kids I'd start 'em early and let them maximize their opportunities to make their mistakes at home. Our kid wanted a checking account at age 9 and quickly learned the importance of neat writing and correct math. She soon migrated to Quicken and then learned the importance of entering checks as soon as they're written. By this time she'd invested heavily in showing off her checkbook privilege with her school friends so despite a few tears & arguments she persevered. She paid the charges for bouncing a check (she only did it once) and she had to deal with losing her ATM card (she waited until the free replacement was mailed out a year later). Now she's doing fine, although she so seldom uses ATMs that she has trouble remembering her password.

All of that experience served her well when she got her first credit card (age 13) and had to handle her own clothing/toiletries budget. (Her motto: "Dress crappy, smell great.") Surprisingly, one of her first charges was to a movie theater that double-charged her, forcing her to submit a dispute form for the chargeback to get her money returned. She's totally familiar with tracking debts, balancing accounts, and making online payments. She turned 14 last month and earned $120 at her first part-time job, so this month we're going to start her Roth IRA.

Your college kids have had plenty of opportunities to benefit from your efforts to teach them. They want to be treated like grownups, so give it to 'em with both barrels. Cancel the credit cards and let them get their own. Keep making their tuition/room/board payments, directly to the payee if possible, and keep giving them their spending money if you think that's still appropriate. Otherwise they're on their own!

Changing the locks on your doors is a slightly more complicated decision... but if not I'd definitely be charging market rent and handing out eviction notices as appropriate.

After the tough love, the problems may not last for long. I bet hot chicks dig penniless college graduates who live with their parents.

 

[TromboneAl]

Hi, Spark, you're not alone. You can read a lot on this topic in a thread that I started a few months ago:

Your Input on Teenager/Money Issue

Sounds like the credit card has made it worse for you than for me.

The tough love solution seems to be working quite well in my case. She's on an austerity budget, and has survived on that, sending in a loan payment of $50 per month.

 

[macdaddy]

Spark, are your kids doing well in school? Is the junior set to graduate on time? If so, then you are ahead of the game. I would cancel the credit cards and help them pay them off, because you don't want their credit to tank, or you will be co-signing for their apartments when they start working. Review expenses - obviously things like fancy clothes or high end electronics are unnecessary luxuries. But I went to college in a city, not too long ago, and I know how expensive it can be. If you are financially comfortable, and your kids are doing well in school, then you want them to be able to go out and eat, and enjoy themselves once in awhile. If I was in your shoes, it would come down to how hard I thought they were working, and whether they had positive attitudes or negative combative attitudes...

 

[spark0506]

Thanks for all the tips and comments. The junior is getting good grades and aside from the poor money skills is doing well. Our youngest, the freshman, is a bit of another story. He kind of went wild his first semester and so this Christmas break might not be as enjoyable as he thinks.

We can easily take care of their foolish debt but I’m very hesitant. One, I don’t think it’s really helping them long term and they need to learn how to handle money now when the numbers are relative small instead of later in life when things can be much larger. Another reason, and maybe a selfish one, is we want to try to RE in the near future and we want our money to be there for us and not to be wasted on our kid’s spending habits. I have to admit that there are times, a lot lately, that I get tired of the never ending dollars that we seem to spend on our children.

 

[Nords]

We can easily take care of their foolish debt but I’m very hesitant. One, I don’t think it’s really helping them long term and they need to learn how to handle money now when the numbers are relative small instead of later in life when things can be much larger. Another reason, and maybe a selfish one, is we want to try to RE in the near future and we want our money to be there for us and not to be wasted on our kid’s spending habits.

Stick to your guns-- you're doing fine.

It's all in how you market the message and make it relevant to their biased perspective. You can remind them that it's time for you to save for retirement so that you don't have to come live with them when your money runs out...

 

[samclem]

Stick to your guns-- you're doing fine.

It's all in how you market the message and make it relevant to their biased perspective. You can remind them that it's time for you to save for retirement so that you don't have to come live with them when your money runs out...

Amen. I've found that heated discussions and lectures replete with accusations are not productive with our 17YO. (Hint: If the words "profligate," "wasterill," or "irresponsibe" come out of your mouth, you may be on the wrong track). Things have gone beter when I lay out the situation in an objective, non-judgemental way.

 

[dumpster56]

They need to get jobs, they need to pay their own way by the way many graduate school programs PAY THEM A STIPEND!

look I would have THEM take out loans!! Why should you continue to make them think it is still HIGH SCHOOL!

they are all over 18. Move on boyz!!

 

[dmpi]

As most have already mentioned, I would encourage them to get jobs to fund their non-educational wants.
Don't worry... it's easy to find a job these days.
Next I would pay their tuition directly to the school. Have them send the bill to you & you pay it. Same goes for room and board.
It sounds like the two kids are in the hole about equal. Tell them it's the end of the gravy train. No more allowances. Rather use structured gifts. Like $500/bithday & $500 for Xmas. Tell them what they are getting and when. After that... they are smart kids they will figure out how to budget. Good luck.

 

[region2]

To OP, I'm there too. Similar situation, two boys, a senior at expensive Midwest liberal arts college, gets work-study. Junior on athletic scholarship at Big State U out-of-state, latter has all tuition paid but not room and board. We agreed that they would have no tuition debts upon graduation. Both live in off-campus apartments with 1 to 3 roommates.

Here's what ended up working.

Pay their tuition, fees, etc.
Set up a budget (reasonable, not living like royalty) for room and board and "other expenses".
Pay the room and board expenses to them twice monthly in a check - just like work.
We told them they would be totally responsible for any stupid taxation - like bounced checks, credit card interest, legal fees, bail money, etc.
We do not check their accounts on-line.
The older boy has a credit card - the statement comes home and I mail it to his apartment.
And if they run out of money - we told them that we would help them to figure out where to get more money but it wouldn't be coming from us.

This happened after a few years of trial and error. We initially watched their accounts on-line like hawks, but got sick and tired of seeing their debit card charges at the local liquor store, clothes purchases, and a 120 dollar dinner for the older boy and his girlfriend. That one really frosted us. We decided that we were sending them too much dough and bailed them out one too many times for bounced checks, etc. We had a long heart-to-heart and told them that we were going to have an employer-employee relationship, that is, we were paying them a salary to be a student, not a playboy. That if they needed more money, they needed to have more income our less outgo - just like real life. We also told them that we were tired of them living better lifestyles than us - and that we had to pull back because we were thinking of retirement.

So far it is working. I have no idea where there money goes - I don't care anymore - but we haven't given them any more money than we decided upon.

It truly helps too that neither of them have cars on campus.