College Budgeting Fail

by ssk

I just read this online and thought it might be a starting point for a blend of two of our favorite topics: paying for college and teaching fiscal responsibility.

22-year-old college student blows her $90,000 college fund and blames her parents

While this article (and the accompanying videos) is tongue-in-cheek, it makes you wonder about how you have done (or will do) teaching your children about finances. Has anyone encountered a young person like “Kim”?

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92 thoughts on “College Budgeting Fail

  1. I read this when it came out but seriously, shouldn’t her parents have sat down with her and talked to her about how to budget this money? I’m all for the school of hard knocks but I don’t think I’d hand over $90K to a teenager to manage. Most of the college kids I know all seem to be working while putting themselves through school because most of them do not come from even middle class households.

  2. I’d be curious about how the 90K was given to her. It does not seem to have any controls on use.

    Working part-time is embarrassing? What is she planning on doing after college?

    I do not get so much of this story.

  3. Tuition room and board at U of Georgia (in state) is $25,134. If she doesn’t have enough for senior year then she’s spent 15k over 3 years out of her college fund. That doesn’t seem all that irresponsible.

  4. Working part-time is embarrassing?

    Yes, only the poor kids (like me) had to work in college.

    What is she planning on doing after college?

    SAHM? Seriously though, for the children of the affluent, the first job they might ever have would be a professional job post college.

  5. OK, if her tuition/room/board is $25k per year, $90k would not last all 4 years. What did her parents expect her to do then? Why didn’t they say that at the beginning? Or better yet, say “We have a budget of $22.5k per year. This needs to cover tuition and ALL expenses. Therefore, we need a plan.”

    This sounds like a failure on all parties.

    I know plenty of people like Kim. It astounds me that they magically have money for toys and new gadgets, but no money to maintain the roof over their heads. But I also don’t see their credit card statements.

    DS received many generous monetary gifts for his baptism. All but $20 is sitting in a bank account for him (I’m slow on opening a college fund for him). The plan is to divide his gifts in a way that gives ~60% to college, ~30% to savings account that’s readily accessible and ~10% to a piggy bank (fun money).

  6. man, oh man, oh man, I would NOT cosign that loan if I were her parents even if she does get a job. She doesn’t sound entitled, she sounds like she has a spending addiction. A kid like that is scary.

  7. And how is it that her parents had no idea how she was mismanaging the money? My parents knew exactly how I was funding my education and where my money was going (not the small purchases, but things like trips).

  8. OK, I think this show went out and found someone who would be as outrageous as possible, to do whatever the TV equivalent of click-bait does.

  9. “Working part-time is embarrassing? Yes, only the poor kids (like me) had to work in college.”

    Maybe my UMC-raised kids like money and what it can do for them too much. Both worked on-campus or at least when they were at school.

  10. This is why you don’t give 18-year-olds their whole college fund at once! Also a good argument against custodial accounts and UTMA accounts, and why I always recommend distributing in the trustees’ discretion or in chunks at age 25/30/35 or similar.

    As a side note, I am working on the IRA rules as applied to trusts now, and they are awful and so complicated. Name your spouse as beneficiary and not your trust!

  11. she sounds like she has a spending addiction.

    $400/month is evidence of a spending addiction?

  12. I was impressed that she got through three years of college plus the trip to Europe on that money.
    If the money came straight into her control she may have not wanted to listen to her parents’ advice about making it last for the four years; she seems to type to say “it’s my money, I know what to do with it.”

  13. Agree with Rhett and Rhode — can’t fault her too much for not making it all the way (clearly there were some extras, like the “educational” trip to Europe, but $90K wasn’t likely to get her all the way there).

    What is galling is the attitude that she was entitled to a totally free college education, with no planning or budgeting or part-time jobs or loans on her part. Which, you know, leads me directly to blaming the parents, because it’s the rare kid who will just naturally intuit all those planning issues. But then again, this is all just told from her side – we have no idea how many times her parents might have tried to talk to her about these things and she just wasn’t listening. Certainly the “I won’t co-sign unless you get a job” response strikes me as a parent who is at their wit’s end vs. someone who is disengaged and dealing with this for the first time.

    We are already talking about this with DD; I think starting HS has her starting to think about what comes next, so she has recently been asking questions like how much is in her college fund. So we’re having sort of intro-level conversations about options and tradeoffs and such (for ex, if she wants to go to med school, she may want to be more price-sensitive on undergrad).

  14. “What is galling is the attitude that she was entitled to a totally free college education, with no planning or budgeting or part-time jobs or loans on her part.”

    In addition to what everyone has already, what might also be galling is her parents’ attitude. So the grandparents left her $90k… wonderful. What have they done for anyone lately?

    I hope that the reason they’re not helping the daughter pay the rest of the tuition is because they think she needs to learn some independence and responsibility and maybe that they’re setting money aside for their grandkids. Let’s hope that the parents aren’t the worthless generation that contributes nothing to the family pot.

  15. Yeah, after I read through the finances, I could see that she wasn’t spending too wildly. But she talked as if she did, which makes me wonder what the real story is. Was she paid to be on this show?

    I think one sided stories are very much to be distrusted. I have a certain relative who blames her family because she ended up living at home and going to the local U. But the real story is that her family begged and begged her to do her college applications, but she could not be bothered. She would often get belligerant when reminded. She also failed some HS math courses, mainly due to not doing any work. She probably had ADHD but this was at a time when it wasn’t recognized so much, especially in girls. Now it is 15 years later, and she is happy to tell everyone how her parents wouldn’t let her go away to college.

  16. Tuition room and board at U of Georgia (in state) is $25,134. If she doesn’t have enough for senior year then she’s spent 15k over 3 years out of her college fund. That doesn’t seem all that irresponsible.

    But if you qualify for the HOPE scholarship (maintain a B average), tuition is free. She should have had plenty to get through all 4 years. I feel bad for her parents – the article says the grandparents set up the fund, so perhaps she had access to all the $$ without them being able to give her a certain amount at a time. I feel bad for these parents.

    We talk to our kids about $$ and budgeting all the time. Probably too much.

  17. In addition to what everyone has already, what might also be galling is her parents’ attitude.

    I’m curious about the need for a co-signer. Do federal student loans require a co-signer?

    It seems like they don’t.

    “You don’t need a credit check or a cosigner to get most federal student loans. ”

    So, that she needed a co-signer would that indicate that her parents wealth/income made her ineligible?

  18. Yeah, Milo, I dunno, I didn’t get the “slacker parent” read here. Little data to go on, of course, but her “dad has worked for a zillion years and has a retirement account” comment implies that he works for a living (and that she’s pretty dismissive of it). And his “no cosigner unless you get a job” response implies that he is fed up with her dismissiveness of the need to earn what you get.

  19. I do think the parents bear some responsibility for this situation. At a minimum, they should have looked at the bank statements to see how quickly she was drawing down the balance.

    I have a friend who’s daughter is in grad school for library science. The program runs two days a week. The daughter doesn’t work, part time or otherwise, because her mother said it’s just too stressful and she needs to focus on her school work. She’s encouraging the daughter to take out loans, as many loans as she can get. I can’t quite remember the amount, maybe $60K so far? I almost fell of my chair as she was telling me this. All I could think was, you think school is stressful? Wait until she needs to pay off these loans.

    We’ve told our kids they each get x for college. Any amount above that is up to them (scholarships, loans, jobs). I’d like to do more, but that’s what we can manage with 4 consecutive years with two kids in school at the same time. DD is managing fine without loans. She works a lot during the summer and a bit during the school year. I think she almost works too much – I’ve told her to take some time off, take a vacation and do something with her friends. Work will always be there.

  20. “Do federal student loans require a co-signer?”

    No, loans to students do not. But the most that an undergrad can borrow each year is usually around $6,000. Federal loans to parents, however, have virtually no maximum.

  21. I guess in some cases giving her control of the money might have worked: I know that my kids are extremely frugal when they have to pay for things with their own money.

  22. On the other thread, someone asked me what I would do if my kid’s heart was set on a school that would entail a 60K loan. First of all, I am not totally anti-loan. Sometimes, they can be a very good idea. I had some loans from my college years – in particular, my first year at grad school, my TA position was only halftime. But in my case, I kept tabs on the loan amounts, and was easily able to pay them off once I was working. I am glad I took out those loans.

    If one of my kids was in that position, I would first pay attention to the reasons for wanting to attend the school. Being accepted to Stanford’s CS program and needing loans is a very different thing from being accepted at an expensive third tier college and wanting to major in medieval history, or worse, having no clue. So I would want to have a long discussion and go through all the numbers and the realistic amounts the kid would be earning. I realize that some kids won’t listen and might go off and get the loans anyway. But I wouldn’t be cosigning anything, that is for sure.

    Also, this discussion needs to start earlier, when the kid is choosing schools to apply to.

  23. One of my local friends (multimillionaire, I think) lives near the university and comments on how students are frequently eating at restaurants and drinking using student loan money they’ll have to pay back. It’s common and, we think, very unwise.

    I notice the Georgia costs don’t include fees or books/materials. In some fields, I think adding those expenses could raise the legitimate total to $30k.

    The question to work while in school or not is complicated. I didn’t work because I co-oped during semesters/summers, which paid better and looks better on a resume. I didn’t want to work during school- I preferred to take a zillion classes.

  24. “but her “dad has worked for a zillion years and has a retirement account” comment implies that he works for a living (and that she’s pretty dismissive of it).”

    True, true.

  25. I worked 15 hours a week, via work-study, while in college. I also worked FT every summer. I didn’t have a choice. Being on work study isn’t that bad though. I feel sorry for my students, many of whom are working 20 hours a week or more at minimum wage type jobs.

  26. The other thing I find sad with my students is that they don’t move on to CS internships. In CS, internships are PAID. They could make more money on less work. But my students are so wedded to their Best Buy stocking jobs, or whatever other crap they are doing, that they can’t see how to get out of that world. They see the intership listings coming out of our career service, but don’t realize that they could be applying to them. I think coming from a poor, immigrant background can really limit one’s mindset.

  27. CofC,

    In this case, knowing up front that $90K won’t cover all four years and she’ll be 20k short, she should have borrowed $5k per year and then her parents wouldn’t need to cosign. If the parents couldn’t contribute that would be the best option (other than working, etc.)

  28. Not sure I’d co-sign a loan for a child with that attitude, under any circumstances.

    We’ve had the “paying for college” talk–we will send DS anywhere he wants to go (though we will help him curate the target list of colleges). If he goes to state school or gets a scholarship, he gets to keep the money saved to apply for grad school, travel, down payment on house, etc.)

  29. One of my local friends (multimillionaire, I think) lives near the university and comments on how students are frequently eating at restaurants and drinking using student loan money they’ll have to pay back. It’s common and, we think, very unwise.

    How would he know where the money comes from?

  30. Loans are not always horrible, of course, as MM explains. I still like the idea of a kid, even of affluent parents, having a little skin in the game.

    Maybe this crazy story is one variant, but as I’ve helped guide my own kids along the path to college and beyond, it has become even more clear how important that guidance (and money) is in helping kids succeed. Arguably, it’s more important than ever before despite the measures that have been taken to supposedly minimize inequality. (NCLB comes to mind.) Low-income or clueless families can be a huge barrier. Of course, the kids who ultimately succeed despite the odds are probably head and shoulders above most others.

  31. Rhett – maybe she never filed a FAFSA, or didn’t file it on time for the senior year’s expenses. Not doing that can cause all sorts of drama (at least at my grad school), including being denied federal student loans.

  32. Ginger – I have two friends with library science degrees. Only one has a job in the field and it took her 4 years to get it. She was mid-30s living with her mom to make sure she could pay her bills. The mother should be telling the kid to not get that degree, or do it as cheaply as possible.

  33. On not taking a job but taking out loans – my coworker was a single parent who had to take out loans to fund her daughter’s education. The daughter did not work in the summer after high school nor did she work most of her freshman year. In fact she started to develop anxiety issues sitting around in the summer after high school. I couldn’t understand why a part time job in the summer or a very part time job in the freshman year were not considered. There was no talk almost until junior year of working to earn even spending money.

  34. Louise, I have a friend in the same boat. She admits that some of the reason she is not pushing her kids to do more is “because I got a divorce”. She has a lot of guilt that she feels like she made their lives tougher than they would have been, and I think it’s partially that she’s doing penance and partly she feels like the costs are her burden to bear. I don’t agree, but we all have our baggage.

  35. I couldn’t understand why a part time job in the summer or a very part time job in the freshman year were not considered.

    Look at MM’s comments about most “just for spending money” type part time jobs.

  36. MBT – my coworker I should clarify is also divorced, though amicably. Her ex-husband is not contributing to college expenses. My coworker can support her daughter and herself but she cannot fund college. Both she and her ex husband had credit issues, stemming from previous job losses so she had to get a relative to co-sign the first year’s loans. In the light of the credit issues etc.I would have thought that “less student loans, part time job” but that was not the case.

  37. if the parent is taking out loans, then a summer job would not be a “just for spending money” job. It would be a necessary job for college expenses, similar to the jobs I held every summer of college. My comments on whether a kid should take on an unnecessary summer job for its educational value have no bearing on a NECESSARY summer job. This isn’t about educational value, but about reducing the loan burden

  38. Both she and her ex husband had credit issues, stemming from previous job losses so she had to get a relative to co-sign…

    “The Marines are always hiring.”

  39. MM,

    The point would be that the divorced mom feels guilty about forcing her daughter to take one of the jobs that you feel should only be take under the most financially exigent circumstances.

  40. Another colleague has a son who is taking out loans as well. However, in this case the choice of major is such that paying off the loans is likely to be a major burden for the kid. I had suggested the city campus of the State U instead of a two hours down the road State U campus to save on room and board costs but my colleague said something like “going away to college will teach him responsibility”. Also it turns out that the kid changed to a worse two hour down the road campus he is attending because of a girl, so the whole situation has worsened, IMO.

  41. “so she had to get a relative to co-sign the first year’s loans”

    For a student with anxiety issues who won’t get a job to help with expenses? Oh boy, that sure sounds like a mistake.

  42. CoC, I’ve been thinking about your post about reducing inequality. Probably one of the reasons RMS and I see a liberal arts degree differently is that she knows lots of people who have been very successful with a liberal arts degree. The successful people I know with liberal arts degrees either went to graduate school (law or medicine), are teachers (who need a master’s now in my state), have a job where a college degree is preferred but not required (HVAC sales), or got a degree to fulfill their existing employer’s job requirement that a supervisor/manager have a bachelor’s degree.

    Figuring out what to major in, how to pay for it, when student loans are wise, etc. was very tough for me. It might be easier in the age of the Internet, but I agree that if neither of your parents works a professional job, there are aspects of the professional working world that you only figure out much later. And here, I’m not thinking of unionized jobs (teaching, nursing) as under the same rules.

  43. A comment on the idea that the parents should have checked the bank statements– it’s not necessarily accurate that they even *could*. If the bank statements go to the kid (or e-statements) and she’s over 18, she gets to make her own choices/mistakes. Unless the grandparents’ money came with some strings attached, it was likely her choice.

    That said, I was well aware that I had taken out loans, and when the semester’s check landed into my account, my job was to make sure that it paid tuition and then stretched where it needed to stretch, including adding in the component I earned through jobs (which I used to cover the suggested parent loans because my dad was not going to do that absent desperate circumstances). I sometimes wonder why I was so very clear on that (and didn’t exceed my income) and why other people ran up credit card debt, etc. I worry that part of why I was good at that is pure necessity from childhood, and that we’ll end up accidentally raising entitled twits who think we owe them a bail out every time. Which would make me very sad.

  44. Coc – things seem to be working in that the kid is now a junior on track to graduate. There is some job in the picture. However, I think the transition to a “real” job may be rough. The mother says that she wants her daughter to get her own place once she graduates and gets a “real” job.

  45. Rhett, I think you try hard to be clueless. I never said that jobs should not be taken except under “he most financially exigent circumstances.”. If you need the money, you need a job. Even McDonalds jobs have a monetary value. I just don’t think they have any educational value, so if you don’t need the money, why do it? And this is from someone who worked three burger flipping jobs after my freshman year, because I needed the money.

    My students work as stockers at Best Buy (they never seem to flip burgers) because they need the money. I just wish they could understand that they could make just as much money or more at a job which would also have educational value.

  46. Mooshi, how many students go to schools where you don’t have to move for appropriate job experience? I had to move places a couple states away where I didn’t know anyone and live for ~4 months. It wasn’t much fun and when I got back, my cohort had moved on to the next set of classes, so it affected friendships at school. Many/most land grant universities are somewhat rural.

    I think the ability to get professional experience without having to move is a huge advantage of your area.

  47. I just don’t think they have any educational value, so if you don’t need the money, why do it?

    Mental health value vs. spending the summer on the couch consumed by your own thoughts?

  48. I just wish they could understand that they could make just as much money or more at a job which would also have educational value.

    Are the jobs they could get that would have educational value of limited duration vs. having a somewhat permanent job at Best Buy?

  49. I never said that jobs should not be taken except under “he most financially exigent circumstances.”. If you need the money, you need a job.

    And the mom feels guilty that they need the money.

  50. Some people are just more savvy about how things work. I see this in my two oldest who are very young adults. Older one is a great worker, but he’s only ever had low level jobs where showing up on time consistently makes you stand out from many others. And once there, he does what his bosses want, shows flexibility (i.e. pull a double at the last minute when someone does not show up) asks some questions, usually gets promoted/more hours pretty quickly. But he keeps getting in his own way financially by e.g. :
    – forgetting, or maybe thinking courts/DMV will let go, his responsibility to show up/respond/pay the fines associated with traffic tickets so that when he renewed his license in the middle of all that the DMV now has a hold on the reissuance until the matter is cleared up. Not suspended, but he only has the temporary paper license instead of the real license and that expires in a couple of weeks. The court says he’s all good now and they notified the DMV a couple of days ago but he remains in bureaucratic limbo. A good lesson overall. Now, one can avoid having to deal with all that by not getting traffic tickets in the first place, but that’s another lesson.

    – Overdrawing the account he opened when he got to campus freshman year that he really didn’t use anymore but until recently had enough in it to cover the $8/month Hulu charges. Then ignoring the first notice that he was overdrawn by $1.02, without having incurred a fee. Instead of going to the bank and paying the $1.02 and then closing the account…he dawdled until the Hulu charged again and then the bank hit him with a $35 overdraft fee…so $1 became $44…and then he waited some more so $44 became $70. Then he finally went to close the account. He’s not that wealthy.

    DS2, on the other hand, manages his money actively. Always knows how much he has, does not get into situations such as his brother does. He takes on the bureaucracy (e.g. when ResLife screwed up his 2nd year housing assignment) when he knows he’s not getting a fair shake and is pretty successful. He’ll usually send us his draft complaint email to review before he fires it off, just in case, but normally I just tell him to send it since he leaves out gratuitous and incendiary comments and sticks to the crux of the matter.

    They grew up in the same house, heard the same (blah, blah, blah) from their parents, yet completely different results.

  51. The greatest gift my parents have ever given me was a fully paid college education. They paid public tuition, room & board for 4 years, but they made it very clear that I would be on my own after that. (And I would have to come up with the difference for a non-state school.) I also had to work every summer for gas, clothing, entertainment, and beer money. I was able to make enough life-guarding & swim-coaching that I didn’t have to work during the semester, which would have been pretty hard with 18 credit-hours. My learning-disabled brother and I both managed to earn engineering degrees in 4 years under this plan, but it was 20 years ago. Still, I’ve met plenty of more recent graduates from my school who finished in 4 years – you just have to be willing to take the 18-credit semesters as outlined in the program (and/or start with a lot of AP credit). Co-ops can definitely get messed up, though, because of courses that are only offered in alternating years or spring/fall rotations.

  52. My friend, who’s daughter is the library science student, seems to think that the money is there for the taking, with little or no consequences. Rhode, she would be thrilled if her kids lived with her after college. I just find it hard to believe that her daughter doesn’t do any kind of paid work – tutoring, subbing, working in a library, whatever – and she and her DH still pay her daughter’s car insurance, gas, and who knows what else. The daughter earned her undergraduate degree several years ago.

  53. Ginger – and it’s an POV I can’t even shoehorn myself into understanding. The financial consequences for the student are dire. If she can’t repay, she’ll be digging herself out of that ditch for years. But then she’ll have to live with mom, so I guess that’s what the mom wants?

    This talk about loans reminds me of a refinance advertisement I received from the RI student loan people. I know the target audience isn’t me… they offer really great interest rates to borrowers who get co-signers. The advert just screams “we know you kids have sh!tty credit”.

  54. “I just find it hard to believe that her daughter doesn’t do any kind of paid work – tutoring, subbing, working in a library, whatever – and she and her DH still pay her daughter’s car insurance, gas, and who knows what else.”

    Why is that hard to believe? Sounds like the daughter has a nice racket going, and neither she nor the mom see any reason to change it.

    @Tulip – ITA. I was almost consciously painful of the tuition costs and loan amounts and budgeting, because I didn’t really have a choice. My “parental support” was my dad’s $150/mo child support, and if the check didn’t show up by the 1st, my rent was late. I am so grateful my kids are in a better situation, and yet since they didn’t grow up in the same circumstances, they just don’t have that same sense of money as a scarce and valuable resource. So we have to parent differently than my parents did to avoid being the parents in the linked story. (And even then, there’s only so much you can do to fight nature — DD is just always going to be more of a spendthrift than DS).

  55. Some people are just more savvy about how things work.

    I don’t know if that’s it.

    From your description DS1 sounds like he’d rate high on agreeableness and low on conscientiousness. Your other son seems like he would rate high on conscientiousness but perhaps he’d rate lower on agreeableness? At least anecdotally, it seems that people who rank high on conscientiousness tend to rank lower on agreeableness because they (being conscientious) like things done the way they consider is correct.

  56. Fred, let’s hope either DS1 either improves or becomes better at dealing with life’s minutiae. I never realized it before, but I fall into the “very conscientious and only moderately agreeable” bucket. That means I get to keep track of the ongoing medical bill battles so they don’t go to collections, yay me.

  57. Just as a general life observation – it seems that “school” puts a huge premium on conscientiousness but life (and corporate America) tend to put more of a premium on extroversion and agreeableness.

  58. “I fall into the “very conscientious and only moderately agreeable” bucket.”

    Hillary?

  59. I think it is definitely true that some people are more savvy about how things work. I was with two friends yesterday, and one friend had to leave early because she had to meet someone to refinance her house. I said, why bother because I assumed that she had recently refinanced, but she said it has been 8 years!! The other friend mentions that she has never refinanced and she bought in 2003. She admitted that she didn’t know it would save so much money.
    I could not believe that they just left all of that money on the table as rates dropped, but they really seemed clueless about the savings. They just didn’t want to deal with the hassle of the paperwork.

    I had the opposite experience earlier in the day. Another friend is fighting one of the largest landlords in NYC and I think she will win. It is a classic NYC rent issue. Her father died in his rental apt last week on July 31. He already sent in his August rent and the landlord cashed the check. Also, he sent in the renewal on his new two year lease because the current lease expires on Aug 31. This guy has lived there since 1973, and he is grandfathered into all of these quirky NYC housing rules. If this were my father, I would have just packed up his stuff and left by August 31. My friend realized that she is the executor, and she is entitled to live in the apartment AND pay his old rent for two more years. The current rent is approx $5000 less per month than the current market rate for the apartment. Even though the landlord hasn’t signed the new lease yet, and this guy died….the lawyers already concluded that this woman could legally live in the apartment for two more years. She was savvy enough to know to ask the landlord – how much to get me out of the apt early.

    I consider myself NY savvy, but even I would not have known that I could ask a landlord to pay me to get out of a lease that starts a month after a person dies. She is hoping to get $60K for giving up the apt 24 months early. Some people just know how to work the system, and they are never afraid to ask for what they think they can get.

  60. “From your description DS1 sounds like he’d rate high on agreeableness and low on conscientiousness. Your other son seems like he would rate high on conscientiousness but perhaps he’d rate lower on agreeableness?”

    DS1 is a sales guy. That’s not how he makes his money now, but that’s how he will make his money. High on agreeableness “sure, we can do that”; low on conscientiousness, YUP.

    DS2 Conscientiousness +++. But also agreeableness +++. Truly everyone loves him. DW got a text from another mom yesterday saying “I saw your DS today at work (they work at the same place in very different jobs) and he’s such a wonderful young man!” Really, not just a ‘mom’ thing…he’s always got a crowd around him both boys and girls. And instead of the usual / common of degradation of college major from e.g. pre-med or engineering to business, he’s going the other way now having switched into a more rigorous major than he started in and adding two hard science minors to boot.

  61. WCE, my students are supremely lucky in that all they have to do is get on the subway and ride into Manhattan to have a wealth of interships available.

  62. OK, you can tell them I moved to a dry town in eastern Kentucky to have their opportunities when you give them your opening lecture.

  63. I hope we will not face this type of kid in our family. In general, as parents we set our budget for things – even as simple as school supplies – and if the kid wants something that exceeds the budget they either pay it themselves or they must justify why the parents should contribute more. Most of the time they have to pay it themselves, but sometimes they make a good enough argument to get us to kick in a little more.

  64. @WCE: was that uphill both ways through the snow? ;-)

    @Austin: similar. It’s amazing how their priorities change when they realize they have to spend their own money, isn’t it? It’s actually a very useful test of how much they care — once in a while, I’ll whip out the “ok, it’s your money” just to see how much they want something, even when I am willing to pay.

  65. I said, why bother because I assumed that she had recently refinanced, but she said it has been 8 years!!

    I had a similar reaction when I found out that a neighbor had started traveling for work but hadn’t signed up for any rewards programs. I grabbed my laptop and said, “You’re doing it now!”

  66. This article is exactly why, when I realized that my dad was going to continue giving significant annual gifts “for college” we set up a trust for each kid for those gifts to go into. I finally understood the gifts were part of his estate planning when they kept coming and I got up the nerve to ask his intentions. Since it took me a few years to understand his plan, 17 years later, DD has a significant sum in a UGTM account. Thank god she is super careful with money. If DS had that situation I would be worried he would blow it soon after hitting 18. If we do tap some of that money for college, we will be using that UGTM account first (after the 529 plans her father and I each have for her). DD has been told how much money she has and that it is for college if needed, but the rest goes to her at some point after, so she has choices to make, and some skin in the game.

    I would still like her to work some though, I know I benefited greatly from it. Although internships would be great.

  67. I’m hosting a kids’ get-together tonight and they’re talking politics. “I’m torn between Trump and [unintelligible]”. They seem to like Trump. Most are 18+ years old. God help us, I think.

  68. DS1 has a relatively small UTMA, which will be spent first for college tuition. Then the 529.

  69. CoC, you just know the wrong kids :-). I can’t imagine any of my two older kids preferring Trump. And my college students swing to the left of Bernie Sanders

  70. I think some kind of personal finance course would be valuable to most adults. I found about about many personal finance items through work. I came from another country with little exposure to the range of financial products so that was a minus. If I had worked in a different field I would still be ignorant. I talk a lot to my older kid about finances both personal and from
    a business viewpoint. My younger one still needs to grow up a little to understand.

  71. I can’t imagine any of my two older kids preferring Trump

    For the republican nomination? Hillary is 110% in favor of that plan.

  72. CoC, perhaps they meant they support his candidacy for maximum entertainment value, rather than because they think he’d be a good president?

  73. Trump offers the appeal of outsider, shake-things-up authenticity. He appeals to many of the same elements as Ron Paul, Rand Paul, and even Bernie Sanders.

    The problem for all of them is that they will never be any primary voter’s second choice. They can only stand out in a large field, when the moderates are all initially, but dispassionately divided between several more-established types. Trump has no chance once the field gets a little smaller. Sanders will hold out longer, but he will lose as soon as he gets to a few states that have more than a dozen or so black voters.

    I’m good and comfortable in front of the TV, watching The Factor. This will be fun.

  74. Maybe it was “I’m torn between Trump and “Sanders”. These kids may be going for the entertainment value.

  75. On refinancing…we last refinanced in early 2003 to a 15yr 5% fixed. Rates got below 4% for both 15yr fixed and 5yr ARMs the first time in mid-2010 and I looked into refi-ing then. But with closing costs added in and our then 8-yr horizon it was little better than breakeven for us. I looked again in 2011 when 5yr ARMs could be had for 3%, but with even a shorter horizon left, at this point about 6.5 yrs, again just about breakeven after closing costs. So we’ve just kept it. And we’ll probably just pay it off early next year.

  76. To Anon’s point on refinancing, we chose a local credit union over another lender because we could get a “rate adjustment” when rates dropped without having to go through a full refinance. We went through two rate adjustments at $350 each. Consider whether any local lenders offer rate adjustments without a full refinance if you (or your child or family member) is shopping for a mortgage.

  77. Perhaps we should do a post on the Big 5 personality traits to which Rhett linked…Any interest? If so, I will write something up over the weekend.

  78. Asked my daughter after the debate who she’d choose, and she said Trump. She said she just really wants to see how that would play out with someone like him as President. I think maybe at that age they don’t understand how horribly wrong things can go? My son is all-in for Bernie Sanders

  79. “Since it took me a few years to understand his plan, 17 years later, DD has a significant sum in a UGTM account.”

    And thus probably no shot at need-based aid.

    “If we do tap some of that money for college, we will be using that UGTM account first (after the 529 plans her father and I each have for her).”

    As I understand it, above +1.

    “DS1 has a relatively small UTMA, which will be spent first for college tuition. Then the 529.”

    Again, as I understand it, you’ll have a better chance to get need-based aid this way, as the UTMA is spent down.

  80. “DS1 is a sales guy. That’s not how he makes his money now, but that’s how he will make his money. High on agreeableness “sure, we can do that”; low on conscientiousness, YUP.”

    I hope he doesn’t turn into the sales guy that the factory folks hate, who makes sales by making promises without first making sure those promises are realistic. Or the sales guy that the bean counters hate, because keeping those promises make those sales unprofitable.

  81. ” I still like the idea of a kid, even of affluent parents, having a little skin in the game.”

    So do the top schools, the ones that meet full financial need. They expect the students will contribute their earnings to their education, and thus a need-based full ride will be about $6k/year less than the estimated full cost.

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