Your Input on Teenager/Money Issue

[SecondCor521]

I would suggest to the OP that he sit down and explain to his daughter what would happen in the real world had she borrowed the same $7K on a credit card or bank personal loan, which I think is roughly as follows:

1. She would probably accumulate late fees and/or jacked interest rates.
2. She would eventually be contacted by the creditor.
3. If she contacted the creditor, she could probably work out a payment plan.
4. Any forgiven debt would generate taxable income.
5. The debt could be discharged in bankruptcy, but then she'd have a harder time borrowing money.

If I were the dad in this case, I think I would, as the creditor, wait and hope for #3 for a while, but if I ran out of patience I would probably contact her and say "Here is the balance, I can either discharge it and I won't lend to you for another 7 years, or we can set up a payment plan."

Also, I think overall it depends a lot on the kid. Some kids will take advantage of a parent's graciousness and other's will appreciate it. I think that would sway my decisions.

2Cor521

 

[youbet]

I think all parents have a moral obligation to do the best by their kids they can, regardless of their circumstances.

Sure can't argue with that! In fact, I'd call it an understatement.

Giving money or material objects is easy, if you have the money. I'm not knocking it, heck I did it! But, the tough one to do the best by the kids is giving them time, being with them.

Some of the toughest decisions of my life involved balancing career, hobbies, personal goals, etc., vs. family time. Deciding to write a check for junior to go to the school of his choice......easy!

 

[Lazarus]

And what are the children’s obligations to the parents who are trying to help them get through College?

Many parents who think their children are going to college find out they don't or don't complete it after much money has been spent.

And I am not yet convinced that a college degree is required to be successful today. I think it's usually helpful to have one though. Many degree requiring jobs don’t pay very well considering how much the degree costs. Teaching perhaps?

A degree is not an entitlement to a good pay check, it takes a little more. Hard work, a good attitude, picking an in demand field ect.

 

[brewer12345]

I think all parents have a moral obligation to do the best by their kids they can, regardless of their circumstances. Someone just scraping by simply could not spend as much as I have for their kids' education. But someone who makes as much money as me and chooses to make their kids pay for their education so the kids will learn self sufficiency - pardon me but that is one king sized A-hole.

Hmmm, I have mixed feelings on the subject. As someone who quite reasonably can expect to retire in his 40s, I feel an obligation to provide for my children. That includes bringing them up to the point that they can make their way in the world as self-sufficient adults. But does that mean catering to their every whim and deliveringthem life on a gold plate? I think not. FWIW, 90+% of the people I have sen who were handed a cushy life on a silver platter ended up undirected, unfocused and somehow lacking in character on a very fundamental basis. So I think that my responsibility to my kids includes getting them through some of life's hard lessons without there being long term consequences.

But I don't think this is helping T-Al with his quandry. Al, did you decide what to do?

 

[sgeeeee]

. . . I think all parents have a moral obligation to do the best by their kids they can, regardless of their circumstances. Someone just scraping by simply could not spend as much as I have for their kids' education. But someone who makes as much money as me and chooses to make their kids pay for their education so the kids will learn self sufficiency - pardon me but that is one king sized A-hole.

Wow. I agree with you on most issues, donheff. But it seems to me that some parents might think that a child would get more out of an education they earned and worked for than from a free ride. It might not be right for all children or for all parents, but I think I've met a number of career college students who would have been better served by parents who made the ride less free.

 

[donheff]

Brewer & Sqeee: I may not be far from where you are coming from. I think kids need to work and learn the value of a buck. Both of ours worked in both HS and college. We never threw cars at them, or expensive clothes (although that is relative), or large allowances. Its college I am hung up on. I think a college degree is only a bit more of a basic than a HS degree was 50 years ago. If you can afford to cover room, board, and tuition I think you should. Why should your kids start out life with a pile of loans dragging like an anchor?

I don't think any of us "owe" our kids an expensive private school education. But covering them at a state university (even community college if we are not well off) seems like part of a reasonable send off. I would also acknowledge that spending time with your kids (someone else mentioned this a while back) is just as important. It may make sense to ER in time to be there fully through the teen years, even if that means you have less $ to spend on their college education. But I still think the best balance would be to try to ensure that you can at least get them to a state school without a big loan debt.

By the way T-Al, you are clearly doing well by your daughter. Your question doesn't involve the basics, it concerns how best to deal with an unusual loan situation without spoiling her or abandoning her -- a tough situation with no best answer.

 

[Mr._johngalt]

We came up with a"system" when our first born graduated from high school. No real science - just seemed fair. We split everything 50/50.
The kid had to come up with their half any way they could (loans and work).
I actually got off pretty cheap as my son ended up not going until years later and by then he was on his own and got lots of "free" assistance
(poverty level). My oldest daughter went to a real expensive private school
but had scholarships. Youngest daughter you know about. Wish I'd had more input. She's already worried about her loans and she just graduated in June.

JG

 

[astromeria]

Wow. I agree with you on most issues, donheff. But it seems to me that some parents might think that a child would get more out of an education they earned and worked for than from a free ride. It might not be right for all children or for all parents, but I think I've met a number of career college students who would have been better served by parents who made the ride less free.

I agree with sgeee (a rare, if slight, disagreeemtn with donhoff for me too). I doubt I would've studied so much anthropology if I'd had loans to pay back : And even though my son owed $20k when he got his degree, he's having no trouble paying it off on a middle school teacher's salary, and saving $20k besides (over 5 years). When I consider how poorly off I was at his age, he's lookin' good to me. I guess my particular form of child-coddling took place when my kids were littluns--I nursed them for 2.5 years apiece (sorry, don;t mean to gross anyone out!), I didn't work outside the home until they were both in elementary school, then I worked at a mother's hours job (9-2) until they were both in middle school--thereby delaying my professional career until I was almost 40. And DD started college just a couple years later!

 

[CCdaCE]

<snip>

By the way, that reminds me about my son. He kept dropping classes and extending his stay (chip off the old block - 6 year man). So I made him take on a student loan to cover a portion of the final year. After he got out and was successfully paying it back I stepped in and paid it off. He is now 32, owns a home and is living below his means.

<snip>

Dad? Is that you?

Same thing with me in college...

heheh, from my personal experience... Shortly after college, I borrowed $4k from my parents for part of a house downpayment. I paid 'em back $1500 or so, and slacked off. My parents haven't forgiven me of the debt, just renegotiated the terms ... to start payments again when they retire in 3 years. So, it seems fair that you shouldn't ever forgive the debt, just have her pay a modest amount in the meantime and more when she has a job (higher paying).

-CC

 

[donheff]

So, it seems fair that you shouldn't ever forgive the debt, just have her pay a modest amount in the meantime and more when she has a job (higher paying).

-CC

Paying off DS's loan was a karma thing - I borrowed $500 from my parents to buy a motorcycle to get to work during a year I took off from college and never paid it back. And I was the responsible kid - my parents always consulted with me about the impact of the 60s on my brothers

 

[azanon]

20 year olds fight our wars. Until recently 20 year olds had a lot of our babies. Probably many of us have mothers or grandmothers who were 20 or so when their first children were born.

20 year olds are perfectly capable of being adults. It is true that many of them don't much want to, but that holds for older people too.

Ha

You're exactly right. 50 and 60 year old somethings send in kids to fight and die for problems they created; problems they probably have little grasp of themselves.

Just because a kid can make another kid doesn't make them an adult. What concerns me, Ha, is that you're not aware of this.

A 20 year old is a budding, beginning adult, but most of them still need some help. Mean ole Azanon falls on the side of wanting to still help them along. Hmm, I seem to have created an anomoly you guys get to wrestle with. Certainly, i should be on the cold side that won't help, but i'm not.

 

[azanon]

Wow, you are one bitter whatever.
Tio z

What was your point? The only kind of bitterness I allow myself is the kind i take pleasure in. I'm well aware of the negative health effects of stress, and anything stressful I let go of very quickly for that reason. Trust me, revenge can be and often is very pleasurable.

 

[azanon]

I never thought that I'd read myself writing this, but you guys are all making the military academies look attractive...

I chuckle at those that thing that military academies are free. You pay out of your ass every single day, every minute of the day. It is the closest i've come to hell on earth, so far.

 

[azanon]

I think your decision is admirable. But I would disagree strongly that one must figure college costs into the decision to have children. Would you rather be a young person who needs to fund his own post secondary education or one who was never born?

The "never born" option doesn't give much respect to the resourcefulness of the child.

Ha

You're pretty decent at rationalizing. If only that could make it right.

 

[azanon]

One more post on this, lol.

I am sensitive to those families who simply do not make enough income to pay a substantial portion of a college education, and I realize sometimes the money genuinely isnt there. Fortunately, many of our laws are designed to provide increased financial aid for kids from families that simply are not of the means to have been able to save for it.

That being said, we're on an ER forum, where a poll showed the bulk of people sitting on a net worth in excess of 1 million dollars. We're on a forum where the majority of the people we're so successful with money and smart living that they can pull off retiring in their 50s, 40s, and sometimes even 30s. If this describes you, you can afford to help your son or dauther out pay the massive expense associated with college, and perhaps get them a cost effective, used car to start off on life since most places you need to go cannot be gotten to by foot. I'd be different if it just cost a few hundred bucks that they could easily save up for working at McDonalds from 16 to 18.

 

[youbet]

Az,

Have you opened a 529 or ESA account for your child yet?

 

[justin]

Az,

Where do you draw the line for subsidizing your kid's lifestyle? Clearly for you it is sometime after 21. You pay their way through college (including tuition, fees, a car+insurance, health ins., etc). Then they graduate at ~21-22, and by this time the car you gave them when they were 16 is worn out, so you get em another one? Do you give them a down payment for their first house? Pay for a big wedding?

Personally, I plan on setting aside $10000 per year per kid, inflation adjusted, for my 2 kids plus expenses and insurance for a car for each of em through college. That should cover all tuition at the local state schools and a lot of room and board. Of course, I don't see a problem with kids having minor student loans to repay, or with having a car loan right after college if that is how they want to spend their money. And I don't have a problem with expecting kids to get jobs/internships during the summer and/or school year. I think I'd be doing a disservice to them if I sheltered them from the cold reality that money is extremely important to living a comfortable lifestyle and things cost money, so keep that in mind when making your way through college and choosing a career.

 

[jeff2006]

"I study war and politics, so my children can study business and commerce, so their children can study literature and the arts" -- Pres. Adams

 

[TromboneAl]

Right. This isn't an issue of what you can afford. It's an issue of allowing your kids to learn about money.

The car is a good example here. When home she didn't need her own car -- we had two in the family and were able to share.

She bought her own car when she needed it for the painting work. She did the research, along with some help from you and me, did the legwork, and found an old Honda for $2,200. Someone backed into her in a parking lot, she got $1,400 from the insurance company and she didn't repair the damage. Then someone rear ended the car, totaling it, and she'll get $2,200 from the insurance company. So the car turned out to be a profit center. And she learned how to evaluate and buy a used car.

We could have afforded to buy her a brand new Lexus SUV. What would she have learned from that?

 

[justin]

We could have afforded to buy her a brand new Lexus SUV. What would she have learned from that?

If her classmates are anything like my classmates at the "elite" ( : ) school that I attended, the new Lex SUV is the norm for many kids.

Your daughter is probably experiencing the extravagance that the rich can "afford" and wondering why she hasn't experienced the same (since you are "rich"!). Most of her friends probably drive cars daddy bought for them and have credit cards daddy pays for them. Good luck to those children when they get out of college and eventually strike out on their own...

 

[youbet]

We could have afforded to buy her a brand new Lexus SUV. What would she have learned from that?

You could buy my kid a new Lexus SUV and he would learn that you are a kind and generous person. And, he will have his kids refer to you as "Uncle Al" and they will send you crayola art to hang on your fridge.

 

[region2]

Talk about Heresy. My youngest, age 20, attends U of Wash in Seattle, 1500 miles from home and he HAS NO CAR. It's a major hassle there. IMHO a car is not a necessity in college. Nice to have one, but you can always bum a ride.

I have followed this discussion with interest. Many great points. I think our kids' college expenses bug us because we were/ are frugal, college expenses are a big black hole, and we have no significant control with how they spend their time and our money. I just think it's important for the young uns to know that at some time, sooner than later, they will be on their own and that they should LBYM to prepare for the day.

 

[shiny]

T Al is not being a jerk and trying to control Jenny , he's trying to have the results of her learning on her own to deal with money.

 

[youbet]

I just think it's important for the young uns to know that at some time, sooner than later, they will be on their own and that they should LBYM to prepare for the day.

region2, in my heart I want to agree with you. I want to believe that those kids that "had it made" at college suffered when they got into the working world because they hadn't "toughened up" by working at college or at least LBYM at college.

It just doesn't always seem to be true. The playing field isn't level and often "justice" is never established. For example, no one worked harder to get through school than DW. She got up at 3:30 AM, 7 days a week and worked on the breakfast crew at the cafeteria through all four years. During the day, she held misc jobs working in the library, etc. She ran up loans that amounted to her first year's salary which took us several years to pay off. She still managed to graduate fourth in her class.

She's still in touch with two of her college girlfriends, one her roommate for their junior and senior years. They both came from rich families, arrived at school with cars, never had to work and loaned DW clothes she couldn't afford to buy. Guess what? They got good grades, had outstanding careers, one as an editor, the other as an entrepreneur, and got to very early ER due to large inheritances.

DW shrugs it off. But we made sure our son didn't have to set his alarm for 3:30 AM everyday. Nor his children. Sounds like you're doing the same.

 

[youbet]

My point? T Al is not being a jerk and trying to control Jenny like DH's dad, he's trying to have the results of her learning on her own to deal with money.

I understand your point. And, or course, TA would never be a jerk. But we don't really know what TA would do if Jenny called home and said she was changing schools and it was a plan that TA definitely could not agree with.

Now, that will be another interesting thread!!