School teaches loans as a a way of life

[Melalvai]

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 I told Nell to tell the teacher that marriage is an outdated patriarchal institution designed to subjugate women!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!

[sfa]

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

[OakLeaf]

... 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?"

[Flybye]

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.

[tulip]

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.

[Trek420]

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 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.

[OakLeaf]

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.

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

[Veronica]

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

[Zen]

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.

[OakLeaf]

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...

[zoom-zoom]

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

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.

[ginny]

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.

[Veronica]

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

[shootingstar]

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

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.

[Triskeliongirl]

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.