Getting your kid(s) off the parental payroll

[aida2003]

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]

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]

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/forums/f28/funding-those-penfed-5-cds-53839.html#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]

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:

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]

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]

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]

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]

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.

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!

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.

 

[Texas Proud]

Nords... one of the things you should check on the Zipcar is the insurance.... remember... you have to have liability and coverage for the car... also check out how much CDW coverage there is...

As an example... one of our employees had a rental in the frozen north... a big hail storm came by and had its way with the car... every panel had dents and even some of the dents had dents... a couple of windows were cracked... the damage was well over $8K... then we found out the CDW was only $4K.... our company had to cough up the extra money... we did get it down some as they were going to charge us for 30 days of rental at $65 per day... when even they rent for a month at a lot less...

 

[aida2003]

Nords,

I am curious to ask about your comment in one of your more recent posts saying that "ZipCar wiped out her checking account". What did you mean by this: your DD rents too much (and in areas where she can easily walk or use public transportation) or that the service is very expensive?

It's fun to read this thread especially the parts where your DD meets rich kids and how their habits influence her behaviour....scary stuff for frugal parents.

 

[Sue J]

When our younger son was in college he noticed friends going out to eat and spending a lot more money than he was spending. Turns out they borrowed more in student loans than was needed for tuition and books and the excess was loaded onto a debit card. They were treating it as free money.

He graduated in Dec. 2009 and he has no student loans but many of his friends are now paying large payments on theirs.

 

[Nords]

I am curious to ask about your comment in one of your more recent posts saying that "ZipCar wiped out her checking account". What did you mean by this: your DD rents too much (and in areas where she can easily walk or use public transportation) or that the service is very expensive?

"Yes."

ZipCar offers two Honda Insights (2009? 2010 models?) and a late-model Volvo. I don't know if the rates differ by city (and neither does she) but in Houston she pays roughly $30 for half a day and $70 for a full day. OTOH she ran a friend up to the airport and drove right back to the Rice campus, and that two-hour drive was only $16. A comparable cab fare would've been about $45, although a shuttle bus might have beaten both of them.

Part of the problem is that she decides she "needs" a ZipCar to run errands that could be run on foot or via bicycle, or that it's too hot/sweaty for manual labor. Then 3-4 friends pile in (or she invites them) and she feels bashful about asking them to pay their fair share. Pretty soon everyone's lined up outside her door on a Saturday afternoon, they go out to eat, they go shopping, drop by a movie, they stop at the Chocolate Bar, and the party never ends...

The city runs a Metrorail and buses, both of which are free to Rice students. However the student consensus is that the routes are inconvenient, riders still have to walk several blocks from the stop to their ultimate destination, and they shut down too early in the evening. My personal feeling is that nobody tries very hard to plan ahead.

If I'd been renting a ZipCar at that age, my lack of [-]sobriety[/-] maturity & self-discipline aside, I would've been running a campus jitney and turning a profit. Feels kinda strange to talk to my teen about entrepreneurialism and assertiveness training. She used to be way too generous with our money. Now she's way too generous with her own money and I suspect that one or two of her "friends" may be manipulating & encouraging that behavior. The rest are just enjoying the fun while it lasts.

After spouse and I had a prolonged discussion, we think we're expecting 25-year-old cerebration out of an 18-year-old. We've been watching her behavior, hearing her thoughts and her logic, and seeing how she decides that she's "earned" the right to spend money. Yesterday she visited the Aloha Stadium Swap Meet to pick up local snacks for next semester. She saw a beautiful Hawaiian quilt for $225 but the vendor said it was on sale for $150. She didn't have the cash, of course, and walked on by. But then another vendor told her a silver ring normally costs $40 but "for her" it was only $25. She's been putting in a lot of working hours this week ($10/hour) and she's made over $100 so she decided to treat herself. I think the ring retails in Wal-Mart at around $10-$15 but it never occurred to her that (1) she doesn't need a ring, (2) it might be cheaper elsewhere, (3) she might really want that $25 in a month or two. She's proud of her new shiny thing but the money issues literally never occurred to her beyond the fact that she "saved" a lot of money by only spending $25 instead of $40... or $225.

She needs to learn how to "live poor" before she's ready to handle serious money.

We parents pay her $90/month iPhone bill (it's a great college productivity tool and worth the money) and NROTC gives her a $250/month tax-free stipend. We think it's reasonable to expect her to spend less than that.

Again, maybe I'm being hypersensitive and too harsh. However we spent a lot of time on her financial education and now we feel as if she's caught a wicked case of entitlement affluenza. We'll know more by May!

 

[Lsbcal]

Hi Nords, sounds like you are fighting the good fight. Who's winning?

Here's a report from our front lines:
The phone seems to be a real battle line. One can get a cheap one and a pay-as-you go plan for $30/mo unlimited (Page Plus uses Verizon network). We finally convinced DS to use that plan.

Now he's pushing for a new phone since the cheaper plans (i.e. not Verizon or ATT) don't give you a "free" one. I've just been smiling and telling him it's a bit too much at $180 or so. We all know how it's important to be able to text easily and how nobody actually talks to friends any more. That's theoretical knowledge on my part as I've never sent a text message.

DS lost his better phone when he put it in an area of someone's place that had some liquid he didn't find out about until too late. I think that means he lost it in a beer puddle. So now he's using the old phone whose battery is not new. He could buy a new battery ...

This is getting very boring even to me.

 

[Leonidas]

Undone by the ZipCar - I wouldn't have thought it possible.

Roomies and friends have a big impact. With oldest kiddo it turned out marvelously well, he made four or five close friends in the first few weeks and they stuck together. With half of them on full scholarships and paying for extras out of their own pocket (or stacking up huge student loan debts) there wasn't a lot of "hey, let's go spend money!" events in the group.

My boys' early financial educations were often based on riding around with me in the truck and listening to the people who called in to Dave Ramsey and Clark Howard to tell their tales of woe. Plus we would play a game of examining some offer or sales pitch and ask the question, "where's the scam?" They got to be pretty good at spotting a dumb financial idea.

A little more haphazard was turning their expenses over to them. Mostly it just involved me saying "I'm not paying for that." Oldest one got an iPhone for Xmas one year, but he pays for the data plan and before that he got whatever phone they were giving away free (or whatever he paid for on his own). That illustrated a general rule: Stuff that was a great idea if Dad was paying for it becomes really dumb when they have to pay for it.

The one question I have to know the answer to is: Why did she pay the $16 to drive her friend to the airport? It's not like Tulsa where the airport was ten minutes from campus and DS would just call to the apartment and say "pick a brother up." And it's not just about the money in H-town. Either airport is a far trip down a crowded freeway full of [-]maniacs[/-] people who know how to drive in this town (My driving lessons always included three parts: How the law says we do it, how courteous drivers do it, and "because we live in Houston this is how we have to do it in order to survive").

It would seem more appropriate for her friend to have paid the ZipCar fee and done it with gratitude.

Tulsa, like Houston, is a car city*. But being a resident of a good campus he did not have much of a driving need. Airport runs, Wal-Mart runs, etc., and everything else was either on campus or just outside. On that latter part I think Rice is a little weaker. He didn't take his car the first semester, but brought it later only to have the battery die due to lack of use.

*From a cop's point of view, pedestrians are so rare in many areas in Houston that they were almost suspicious in their very existence. At the very least I would often give them a second glance and wonder why they were walking and not riding. It's a little more pedestrian friendly now, but it will never win any awards for walkability.

Oh, and the green machine appreciates the t-shirt love.

 

[Bestwifeever]

Nords, you've laid a good foundation for your daughter but she's out of your nest now. She will make many, many mistakes along the way and the first semester of freshman year is tough. Maybe this battle of figuring out how to budget on her own should be hers for the winning or losing? The downside is small if she "loses" but the lesson will still be valuable, maybe more so because she learned it from her own actions?

 

[Nords]

I'm losing the expectations battle! I should've dialed myself back a bit.

The phone issue hasn't been texts or socializing as much as it's fueled her own trend of expectations. We see the Macbook and the iPhone (with its "unlimited" data plan) as essential college tools that she needed to learn how to use in high school and hit the ground running in college. They've succeeded beyond expectations in that regard-- very efficient use of Internet access, data sharing, study groups, and networking. Hours of studying have been saved by not having to run around finding an available computer or references. However she also regards them as lifestyle enhancers provided by the college fund. When her iPhone broke last week, while she was trapped in the AT&T-Apple finger-pointing pingpong, at one point she told me that the solution was to have the college fund buy an iPhone4. I said that we'd continue to pay the $90/month plan but upgrades were her problem and, as unpleasant as it might be to stick up for herself and demand warranty service, "Mommy & Daddy" were standing by to supply her with "silver bullets" in her struggle. In Hale Nords those phrases are affronts to her adulthood & independence, and she strode forth with enough pissed-off attitude to get the warranty service. Phone fixed, problem solved. As UncleMick says, heh-heh-heh.

We don't pay much attention to Ramsey & Howard in our house, but Suze Orman gets a lot of TV time. Now our daughter is very good at assessing someone's "Can I Afford It?" situation, and she can spot quibbling & rationalization a long ways off. But somehow she hasn't made the connection that Suze's teachings just might be related to her personal life.

She has lots of good friends and good mentors. Rice does not have the "us vs them" mentality that was so baked into my USNA years, and it's a wonderful thing. The problem is that she's so grateful for the friendship & mentoring that she tends to over-reciprocate by spending money on them. Re-reading my post, I didn't mean to give the impression that she spent $16 on the ZipCar to the airport-- the friend she gave the ride to paid for that. It was just one example of how at $8/hour it's a great car for an hour or two, although it really adds up over an entire day. There have been other times where she's had the whole gang in her car for the day and hasn't felt comfortable asking them to chip in.

I didn't appreciate the "car city" aspect. She knows there are places to "not go" and there seems to be a constant tug-of-war between Rice and the city over public transportation accessibility. But until that's resolved (if it ever is) and regardless of the reality, the students tend to view the public transportation as insufficient and unreliable. The problem is that the students also try to cram 8-12 people into one of their classmate's cars, and she rightly threw the safety flag on that idea. She just needs to fine-tune her solution.

She's making progress. When she came home her first idea on the ZipCar problem was to ship the Prius to Houston (~$1400) or to go buy a car of her own. Upon further reflection (recalling other students who hardly use their cars) now she sees it as more of a hassle than an asset. Or maybe it was because we told her she'd have to get her own insurance & gas if she wanted to be a Houston car owner. Once it wasn't supported by the college fund then it became a dumb idea?

As spouse and I compared notes from the last couple weeks, it's clear that our daughter doesn't (yet) have a handle on the big picture of budgeting. For example, when she overspent on one category (like "food" or "transportation") it didn't occur to her that she'd have to stop spending on some other category like"clothes". In her mind she still had money in the clothing budget and thus she had a right to spend money on clothing. Her solution to "food" & "transportation" was to get more money from the college fund, not to stop spending. She also thought that Neiman Marcus at the Galleria is where Houston shops for jeans & sweatshirts. Now it's true that Goodwill might not be in a wholesome neighborhood, yet she also knows where Target is. But that's not where the girlfriends took her, and she didn't stick up for her budget or hold out for lower prices. She just caved to peer pressure and had fun [-]shopping[/-] buying clothes.

She's still locked into a consumer/materialistic lifestyle. Although she claims she's going to get a handle on her spending, last night at home she was changing her iPhone to Houston time. Her idea was that when it was midnight in Houston she'd have a four-hour head start on the crowd of eager teens queued up for the midnight release of the new "must have" book to buy and download to her iPhone. It never seemed to occur to her that she could wait a few months and not join the consumer stampede for the latest craze. Or, heaven forbid, wait until it's at the library. Perhaps that behavior is age appropriate.

Yeah, I'm angry-- mostly at myself for thinking that this would all work out at such an early age. I'm extremely attracted to the long-term tax-deferred compounding advantages of being able to gift money to a young adult's TSP, 401(k), and Roth IRA. I thought we could do that with her and trust her to not raid the cookie jar. But observing her thought process makes me realize that she's just not mature enough yet. I can't hold her responsible, let alone be angry at her. It's not that she doesn't get it-- it's more of a case of not yet being capable of getting it. We taught her how to handle money, but she has a long way to go with learning how to manage it.

Really, she's succeeded on the risks of college life in the big city. She has decent grades, good support from NROTC and Rice mentors & most peers, and good behavior standards. She claims that she's not drinking and that she's not, um, engaging in other risky activities. I believe her. How would we feel if she came home to announce "Sure I have a 1.95 GPA but I made $450 profits this semester charging people to drive them around in a ZipCar!!"? She's definitely not Michael Dell, let alone hardwired to be Warren Buffett.

We've also realized that she's not ready to revisit a discussion of money management or profit-sharing of the college fund. Heck, neither are we parents. No matter how we try to spin it, it'd come across as accusing her of not being an adult and demeaning her independence. It may be true, but that's no way to internally motivate her. Right now she just needs to understand that the college fund is not supporting lifestyle expenses and that she needs to start saving. She's made some small steps in that direction, but she needs a lot of practice before we redesign our profit-sharing plan. I used to think that after graduation we'd be able to gift her the college fund remains for a year or few so that she could max her payroll deductions to the TSP and also fund her Roth IRA. Now I'm thinking that would just breed affluenza and instead she should figure out how to max her own savings. Perhaps at the most for every $2 she puts into a tax-deferred account we'd contribute $1, but she has to be internally motivated and not driven by financially-controlling parents. It doesn't matter what we parents think. She needs to figure this all out on her own, without our "help", and tell us her plan. Otherwise I'm just turning over the controls of a reactor plant to someone who hasn't even finished nuke power school yet...

I think I've been too focused on the potential of setting her up for FIRE. Like you say, Feever, it's time to back off and let her figure her financial independence out for herself.

I'm not sure who learned more this semester-- our daughter or us parents!

 

[Bestwifeever]

Nords, she is a lucky, lucky girl to have you and Mrs. Nords--she'll be fine. And learning how to come back on her own (i.e., get her finances in the order she wants them) from what she probably perceives as failing (as I can tell she has very high standards and expectations of herself, so to most people what is probably a minor issue, to her might be devastating) is also important to learn.

Is she still planning to bring a gaggle ("parliament") of Owls to your place for spring break and surf lessons?

 

[Sue J]

Some of the best lessons my kids learned came from buying something they wanted and then regretting it later because they were broke and had to wait for a payday. This happens to the younger son all the time and he's gotten very good at budgeting and planning ahead for upcoming expenses. The older son just makes plenty of money and can buy anything he wants. His self control comes from wanting to invest more. He-he-he.