School teaches loans as a a way of life

I happened to get a copy of Dave Ramsey's "Total Money Makeover" recently, and I've enjoyed the radio show for a while, so it REALLY annoyed me when my 14 yr old (Nell) came home and told me about her Economics class Finance Project.

It sounds like a neat exercise. Each kid gets a job with income and they have to work out a budget. There are two things that stick in my craw.

If they can get married, the family gets $2000 and shares expenses. If they don't, the individual gets $500 and can share some expenses with a roommate. I told Nell to tell the teacher that marriage is an outdated patriarchal institution designed to subjugate women! She practiced that line, but ended up not using it because there were four more girls than guys in the class. I also think the marriage incentives are heterocentric.

Second, they have to apply for a car loan and a house loan. No, they can't buy a clunker with cash. They can buy a used car but they HAVE to get a car loan. They can't get a bicycle, or a motorcycle. It has to be a car! Rent until they save up a down payment for a house? Nope.

If the goal of the project is to teach about how loans work, I think it could be done differently. The way it is, it's teaching them that car loans are a way of life and anyone who doesn't have a car loan is a failure.

I wanted to talk to the teacher about it. Nell doesn't actually care, she hates the class, but my husband doesn't like me making waves unnecessarily (I admit he has good reason to fear that). So I'm consoling myself with a rant on here... thanks for listening! :)

I'd consider it a good lesson. Learning at this point, when it isn't real money, that taking on loans can make your life very, very difficult is a good thing! It's not that they are teaching them that they are just a part of life--they want to teach them what happens when you DO make them a part of life. Seeing the impact of big loan payments and seeing how interest works when you're a teenager can strengthen your resolve to not take on debt when you're older and the money is real.

We had a similar lesson when I was in high school and it made a big impact on me. I think I was always inclined to live frugally anyway, but seeing how credit card debt worked (and this was back before credit card companies became really evil) made me steer clear of it well into adulthood.

Sarah

... when I saw the thread topic, I thought it was going to be something else entirely.

Mind you, when I went to college, grants were much more freely available and student loan interest was very low. Still, when I signed my name on that dotted line, it was for more money than I could even imagine. Like most kids entering college for the first time, I'd only worked part time during the school year and temporary full-time jobs in the summer for low wages, and the amount I had to borrow was truly inconceivable to me.

That was before the credit card companies started handing out cards like candy to college kids. But when that started happening, I always believed that it was the student loans that softened up financially naive kids for the predatory credit card companies. They already owed ten or twenty or fifty times as much money as they'd earned in their entire lives, with - by definition - no plan to pay it back. "What could another little charge hurt?"

I wish that I would have learned about loans and interest. I hope that my kids get the opportunity to learn more about them.
I am extremely frugal and have had to take a loan to purchase more than one car, student loans to go to college, a loan to purchase a home, and an occasional loan to purchase an appliance that died unexpectedly when we were low on money (I am thinking about saving a lot of money to go on a trip to Kauai and hopping off of the plane and coming home to find our water heater dead).
I would highly doubt that your daughter's teacher has an underlying desire to teach her that she is to be subjugated to men and that if she does not have a car loan she is a failure. She is simply trying to simulate real world situations that students MIGHT find themselves in coming up in their future. I would suspect that there was some discussion about other alternatives and that for the sake of the assignment, these were the instructions to be followed.
She picked a few good things for the kids to experiment with - most high school kids want a car, and most high school kids want a relationship - most high school kids think that they can live on love and a dime in their pocket.

I wonder if you could talk to the teacher in a non-confrontational way...in a way that would improve the class instead of criticizing it. I think it's GREAT that personal finance is being taught AT ALL. It certainly wasn't even mentioned when I was in school, and that's too bad.

But, what if you could suggest improving the class in the following ways (if the teacher won't, at least you could work with Nell for a more complete picture):

Each kid gets a certain amount of money. If the teacher insists on the marriage thing, that's okay since it's reasonable to assume that most of the kids will end up getting married or sharing financial responsibility with someone.

Each kid can have options of what to do with that money: buy a new car with a loan, buy a clunker with cash, use public transit or bike, buy a house, rent, etc. They would also be required to put a certain percentage away for savings--and show how that savings grows with compound interest and regular contributions.

That's pretty complex, though, so maybe the teacher is trying to simplify things for the sake of teaching the basics. Is this just a segment of the class, not the whole class? I mean, I assume if they are learning how loans work, they will also learn how savings works, right? So maybe looking at the whole class instead of this segment will reveal a more balanced approach...I'd be interested to know if that is the case.

But really, any exposure is good in my book. You can always pick up the slack at home if it's important to you. My family never spoke of money, and I'm pretty much still in the woods about it at age 42.

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Originally Posted by Flybye

She picked a few good things for the kids to experiment with - most high school kids want a car, and most high school kids want a relationship - most high school kids think that they can live on love and a dime in their pocket.

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I agree, it's a good place to start. The teacher can't cover everything that could occur in these imaginary lives and budgets. Let us know how it plays out and what situations/discussions come up. It's a good start and nice idea to teach a lot of subjects.

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Originally Posted by tulip

really, any exposure is good in my book. You can always pick up the slack at home if it's important to you. My family never spoke of money, and I'm pretty much still in the woods about it at age 42.

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+1... at 50... and well aware of the position I put myself in by letting DH take care of all of that.

I know my 5th graders seem to think that they will have enough money to buy a brand new $60,000+ automobile and rent a really nice condo all without going to college. I've got one boy convinced he'll be a football star, even though his grades are in the toilet because he refuses to do anything that involves writing or reading. He's sure he's so good that he'll be allowed to play on the high school team anyway and get recruited right out of high school. I've watched him play... I don't see those superstar qualities yet. But he is only 10.

Children really don't have a clue what things cost, groceries, utilities, gas... They just don't think about it. Anything that gets them thinking about money beyond borrowing it from you and spending it, is good I think.

Veronica

The marriage aspect is puzzling. The same lesson can be taught with that part left out. It also complicates things because tax rates change based on marital status.

I do think it's good for kids to know that legal marriage (as opposed to spiritual and emotional commitment) is mostly about money. Just getting a lump sum is obviously a gross oversimplification, but hopefully it will spur discussion...

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Originally Posted by OakLeaf

+1... at 50... and well aware of the position I put myself in by letting DH take care of all of that.

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Yep...I'm almost 37 and pretty clueless about money, because I didn't grow up with any example of how it should be handled--at all. Luckily my hubby comes from a family where money management was just something they did and these people all move into retirement with some relative degree of wealth. But it scares me. My parents are both 65 and have almost no savings...and have never owned a house and are now pretty much f'd, since they have no choice but to keep paying rent. They can never retire. That's enough to scare me straight!

I wish my HS would have had more than just a unit on how to handle a checkbook. I could have really benefitted from understanding loans and credit cards and wise money management practices. $ matters make my head spin, now.

hmm....Mel, I agree that the teacher is backing old stereotypes with the 'marriage' thing. I also agree that there are other options to having a car... I see the benefit of teaching personal finance, but I think those two points above are troubling. I'm sure that (was it Tulip?) is correct thinking that the teacher is trying to simplify things, but if it was my child in a course like that, I would be inclined to make some waves. I like that your child practiced the line about marriage - love it, in fact! Would have loved to have heard the report had she delivered the line. Personal finance is one thing. Perpetuating puritanical belief systems is another. Maybe the teacher could give options to which kinds of loans the students have to take out (student loans with slightly lower interest rates than car loans... credit card debt with twice the interest rate of the next highest loan...) - and lose the marriage thing altogether. That seems really entirely superfluous to the actual lesson to be learned.

I don't think my marriage is outdated and my husband does make significantly more than I do, mostly out of career choice. Given those facts, I still don't feel "subjugated."

I love how non teachers try to second guess a teacher's lesson plan. "I'm sure it could be done better this way." Fine, get into teaching and do it your way.

Teaching is a fine balancing act. Have you considerd that the teacher may need to keep it simple so that all the students can grasp the concept. Hmmm... I bet that teacher still has some kids who don't know their basic math facts and can't read beyond a third grade level.

Veronica

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Originally Posted by Veronica

Children really don't have a clue what things cost, groceries, utilities, gas... They just don't think about it. Anything that gets them thinking about money beyond borrowing it from you and spending it, is good I think.

Veronica

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Well Melavi, at least your daughter went through the financial planning exercise, even though the scenarios didn't get the students to stretch their options of how to fit in consumer habits in relationship to personal values. (ie. alternative transportation vs. car).

Over the years, I've been intrigued how other people grew up in their family, quite ignorant of their family's financial situation. I was aware of my father's salary starting when I was around 12-13. I was told this stark fact because my parents were saddled with a house mortgage and 6 children.

And I knew the cost of the house also at that age.

and why we didn't have a car until I was 15. (I am the oldest child.)

and why we were refused money allowance as kids, why we couldn't go out even to buy penny candy, etc.

and why my mother sewed alot of our own clothing. Then she made sure her daughters learned how to sew. We wanted to because we wanted to be in fashion.

and the fact neither parent whipped out a credit card to pay for their purchases.

and why we ate lousy meat cuts, etc.

It is really important that parents model for their children, good spending and saving habits. But also equip them with skills and activities where saving money doesn't have to be continuously onerous.

I could trust any sibling to manage my money, when I reach that stage in life. Seriously. It is one area I know for certain we all share in common..saving money after watching parents work their butt off.

Melavi, I think you are over-reacting. The point of the project is to help these kids understand how much it really costs to live, and I think that is a good thing. It doesn't mean the lesson can't be continued at home, that you can't discuss how much money could be saved in interest by saving first for the car and buying it with cash, or buying 2 bikes and 1 car, etc., buying a clunker (but then factor in repair bills and reliability).

Our kids didn't really learn this until our daughter graduated from college and got her first job and apartment (which she is sharing with our son and a third roomate to reduce costs......). I think since we grew up poor we tried to protect our kids from this stuff, but it is good to understand what it costs to have various lifestyles, since this can factor into decisions about what careers to pursue, etc.

As an aside, I don't have any problem with marriage (about to celebrate our 25th anniversary) but again what you want to teach your children is your perogative as a parent. But it is a fact that expenses per person are less when 2 adults share resources and expenses, so what is wrong with them learning that.

I remember a similar exercise my daughters did in Jr. High. They were given a budget and a list of things that are pretty standard for life in the modern USA. It was an almost real-life lesson in budgeting for them, and I was glad it was a part of the curriculum. At least something resembling budgeting was being taught.

I found it interesting the way the two approached the lesson. Elder daughter took her (small) budget and squeezed each penny 'til it turned blue. She had problems spending it all, actually, and the teacher insisted that all the money be spent. The other daughter had the reverse problem, running out of money far before she had everything - of course, the muscle car had something to do with that. :rolleyes:

I'd say don't sweat this. No matter what else, your child will probably learn that money spends faster than you think it will - unless she's like my elder daughter.

*stepping on the soapbox

As a parent, I think it's our job to teach our kids the skills and values that we want them to take into their adulthood to help them be successful in pursuing their goals. And I think that we need to supplement our children's education as we see fit in order to make sure that they are receiving a balanced education. We are, also, able to give them the one-on-one time that is valuable in meeting the individual needs of our child. Things such as personal finance should really start at home anyway, even if it's to show our kids what not to do. With so many resources out there, it's not so difficult to educate ourselves if our knowledge is lacking so that we can better guide our children. I think that children appreciate a frank discussion of those matters even if they may not always seem like they are listening.

Our already taxed school systems can only do so much. I think the fact that some schools are teaching personal finance at all is to be commended. There still are many school districts that do not even broach the subject. Hopefully the children for whom their parents have not managed to teach them about it will get at least an introduction to thinking about how they will manage their money and get a discussion started in their own homes or with their peers. (Yes, sometimes teenagers do talk about such matter amongst themselves.) I think it's always a good idea to contact our children's teachers about any concerns we have. I'm finding that all the educators I've contacted are all too happy to have parent involvement and willing to share their curriculum notes. And most educators I know are happy to get feedback from parents and students so that they can make improvements to their curriculum for the future.

I know for myself I'm thankful that my dad involved me in the monthly budgeting of expenses. It was something that we started to do together when I was twelve. I think it helped me to have more realistic expectations of what my necessary expenses after high school would be than most of my peers at that time.

By the way, Veronica and others educators on the board, I highly appreciate what you do and admire that you have the strength of will and character to do it. There are some days that I can hardly manage my two children. I can only imagine what it's like to have to try to both educate and manage so many at once whose individual needs and capacities vary.

For some reason I have this terror of not being able to pay bills, and of being (unplannedly) financially dependent on someone else. So I'm a total nazi when it comes to budgeting and household finances. Not that I don't spend money, I'm more of a spendthrift than my dh, but I know it when I'm spending, and I know I can afford it. I will never forget one of my neighbours at uni asking if I could please chat with her dh about this, because he was getting very closed about this and wouldn't tell her how things were going. It turned out that he'd lost it completely, he'd stopped opening mail and had at least one full shopping bag full of unpaid bills.... :eek: It was terrifying! He wouldn't let me help much, but I showed him some practical tips and they finally got help from a counsellor. (And got divorced, whole 'nother story but his financial irresponsibility was definitely a large part of it).

So you bet, my son is going to leave this house with a working knowledge of how to set up a household budget, how to set money aside for regular bills and have them paid directly, and how to never ever buy things on credit unless they're an absolute necessity. And to never believe a bank that wants to lend you money.

Melalvie, it just occurred to me that there may be a method to their madness. Perhaps it's to illustrate that they can't live in either situation for very long without needing more resources if they dig themselves into that financial hole?

I don't know about the demography of your area but in the school district I graduated from there is a pretty high rate of teenage pregnancy, kids dropping out of school to get jobs and start a family, or doing so upon graduation. Can you believe it's considered one of the better school districts in the area? I know when I graduated from high school there were quite a few of my friends and acquaintances who were either pregnant, had been pregnant, planning to get pregnant, or had gotten someone else pregnant. Most of them did get married right after they graduated and only one of those marriages that I know of has survived. It's really surprising to find out how many of my fellow classmates have children that will be graduating from high school in a year or two. Sure, I have one that is graduating this year; but I got him the easy way: potty-trained, well behaved and I got to send him back to his mom after playing with him. My stepson attends the same high school I went to and things have not really gotten any better. So perhaps it's a double lesson for those who would make that choice that there is also a heavy financial burden along with the other responsibilities that come with making it?

In this exercise, are there any consequences on paper for making bad choices. e.g. bankrupt? If not what is the point of this instruction?

The concept of "power of compounding interest" is not that hard to teach in my mind. And if the game allows you to as some have said, to take alternative means of commute: walk, bike, mass transit instead of used car and then apply the power of compounding interest on the savings, I think the instruction will be very worth while. You can see how you can have your money work for you or against you.

Most people who get rich, get rich by having their money make money for them. And be frugal.

As for marriage thing, does it include partnership? and not just roomate.

Public schools are not the forum for discussing alternative lifestyles. For all of you who want kids to be aware that homosexual relationships are valid relationships, there are just as many parents who don't want their kids to hear anything at all about that or evolution.

Veronica

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Originally Posted by sgtiger

As a parent, I think it's our job to teach our kids the skills and values that we want them to take into their adulthood to help them be successful in pursuing their goals.

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That is SO true, but sadly- many times it NEVER happens and we educators have to try and teach the most basic things that we shouldn't *need* to (manners, respect, fiscal responsibility, etc).
Take it further with Nell, and have her do something similar at home with YOUR values and ideas. She may get more out of it with your lifestyle/values added to it.
Sadly- *most* people aren't taught this growing up (I wasn't) and end up in big debt because their eyes are bigger than their wallets (ahem: foreclosure problem currently-living beyond your means).

I teach something similar in my middle school class. I also have added the stock market as a learning tool. Students are given $100K to invest in the stock market and their grade depends on how well they do (given certain criteria too lengthy to discuss here). They monitor their stocks weekly and track their progress.
It's a good lesson in life. I had one student who bought $20K worth of stock, and not a week later the company sold out to another company and he lost all his money when the stock became worthless. A lesson in life that many adults have encountered- only with real money. He now said he'll research a company more before buying (something they were instructed to do).

Anywho- if you're really concerned about it, go speak with the teacher, but please keep in mind that I'm sure she's trying to do the best she can to teach them basic budgeting principles. I'm sure she's not trying to bring down the women with archaic thinking (which is subjective because I don't think marriage is, for instance).
Sometimes you have to make lessons like this as basic as possible because, like V said- there may be kids who don't even know how to add or read well at that age and you want them to get something out of it, too.

Just my $.02 as someone who creates lessons and then is CONSTANTLY questioned about my intentions and motives- even if there aren't any ill ones behind it.

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Originally Posted by Veronica

Public schools are not the forum for discussing alternative lifestyles. For all of you who want kids to be aware that homosexual relationships are valid relationships, there are just as many parents who don't want their kids to hear anything at all about that or evolution.

Veronica

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I like that. Very much. You are so right. I want my kids to know about many different aspects of humanity and love, just not taught from the school down the street!

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Originally Posted by Veronica

Public schools are not the forum for discussing alternative lifestyles. For all of you who want kids to be aware that homosexual relationships are valid relationships, there are just as many parents who don't want their kids to hear anything at all about that or evolution.

Veronica

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???
I just read this whole thread, and never saw anything about homosexuality? And schools teaching homosexuality? Did I miss something?

My high school had a graduation requirement that we all take a personal finance class. It was awesome, with similar exercises involving budgets for single households, single parent households, 2 adults, 2 parents plus kids. We had several scenarios to figure out, and had to fill out itemized 1040 forms for taxes. We also played with loans and what the real cost of an item came to if it was purchased with a credit card. I vividly remember getting UTTERLY lost during the discussion about interest, but the idea that "my" $50 TV would end up costing me nearly twice as much if I bought it on credit and paid the minimum every month made a big impact.

I am grateful to this very day for that graduation requirement. We complained about that class and how unfair it was that we had to do so much work for it and some of the scenarios seemed unreal, but it was one of the most valuable classes I took.

That's my interpretation of "partners," which was used.

Veronica

Partners can be hetero or homosexual. I guess in some eyes either is an "alternative lifestyle" but let's not drift from the main topic of finances

I wish my high school had covered a bit more than it did. We spent an age learning how to write a check and balance a checkbook :rolleyes:. We did learn how to fill out the simplest of income tax forms and the basics of credit cards, but not a whole lot else. Though I must say that the credit card discussion scared me away from ever wanting one. The "monthly budget" thing would have been helpful, as it's not something I was ever really exposed to. I went shopping with my mom, but never really paid attention to the cost of groceries until I got to college, went off the meal plan my junior year and started having to buy my own. :eek:

Wow, I'm really impressed at how many of you had any kind of financial education in school--even learning how to balance a checkbook. I had nothing remotely like that, and ended up getting asked to leave by my bank my freshman year in college because I had bounced 18 checks :eek::eek::eek:

I had never had a checkbook before and the cursory lesson about balancing a checkbook obviously did not stick. Neither was it paired with any discussion of a budget, so I did not learn to prioritize what I wanted and needed to buy.

I went to a very exclusive, high-achieving private high school. Perhaps they figured that all the kids there had financial ed at home. I did not--my parents were at work all the time to pay for the high school and had no time to teach me stuff at home. I hope they teach this stuff now.

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Originally Posted by tulip

ended up getting asked to leave by my bank my freshman year in college because I had bounced 18 checks :eek::eek::eek:

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I'm right there with you! My bank didn't ask me to leave, but I got a tongue lashing from the bank lady after a number of bounced checks. After I started crying, she changed gears and did some basic tutoring with me to teach me how to keep my checkbook- I was so embarrassed. I thought I was bright- I went to college on a full-ride scholarship for academics. Too bad I wasn't financially smart.:rolleyes:
I had NEVER been taught anything like that. I also was given a credit card my first week on campus and that was the start of my credit card downfall for the next 8 years. I had to learn the VERY hard way. My parents worked their fingers to the bone to pay for 8 kids- but I wish they'd taught us how to budget (considering they surely had to be geniuses to support a family of 10 on 2 non-degreed salaries).

Wow, what a discussion this generated. Well, it was just a rant. I don't actually intend to talk to the teacher about it. You are right, I'm thrilled they are teaching personal economics at all. Because all the training I got was in junior high, we learned how to write a check, and how to fill out an income tax form. And we played the stock market game in history.

I've been pleased because Nell's school exercise has opened up a lot of discussion at home. So SHE at least is learning what I think of car loans, and how it is possible to own a car, eventually even a very nice car, without a loan. And of course she sees how well I could get along without a car at all.

I'm not against marriage, by the way. My sister said, when she & her boyfriend moved in together a few years ago, "We don't need the blessings of a church we don't believe in or a government we don't support to be in love." (She's a little more radical than I am.)

My husband & I will celebrate 16 years of marriage in August. Oh--when Nell was practicing the "patriarchal institution" speech, he tried to interject a comment. We turned to him and told him it wasn't his place to speak. :D

Probably the only way the teacher could get anyone to partner up in marriages for the financial exercise, was to provide the incentives.

I'm thrilled that you're teaching your child that you can live without borrowing money and the value of saving. The school I teach at is very wealthy, and those kids see what their parents have and think it's normal to have a BMW at 16 or a 5000 sq ft house (and will probably want that when they graduate from college- not knowing how much it actually costs).
My first year there, one of my students asked me where my lake house was. I laughed out loud and said "baby- I only have ONE house, and it's not at the lake."

I wish more parents would teach their kids that you don't HAVE to get a car loan, mortgage yourself over your head, or keep up with the Jonses to live a great life! :)

It sounds like a great lesson, one I wished all students learned early. And really, it sounds like the big benefit is that you're teaching your daughter your values related to money and home management. The school can teach budgeting and stuff, but it's the values you teach that will give Nell something to save for or help her decide how to spend her money.

I was lucky that my Dad sat me down and taught me how to budget before I went off to college, and that my Mom and Dad both taught me to be careful with money. But I wish a lot of my students got that lesson than seem to.

The marriage thing is interesting. I don't like it, but in the real world, marriage is an economic benefit for many folks. At my university, they figured out that anyone who could take advantage of the married/family medical benefits (subsidized health care) could get up to $9K a year in an untaxed benefit. That's a LOT, and yet one more reason to think about how we organize our health care, insurance, and marriage laws. (Only recently could gay and lesbian domestic partners here use family health benefits; but they're taxed.)

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Originally Posted by Zen

Partners can be hetero or homosexual. I guess in some eyes either is an "alternative lifestyle" but let's not drift from the main topic of finances

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Party pooper :D:D:D:D:D

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Originally Posted by Melalvai

I've been pleased because Nell's school exercise has opened up a lot of discussion at home

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It is great that you are taking advantage of an opportunity handed to you. I love moments like those myself!