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 I told Nell to tell the teacher that marriage is an outdated patriarchal institution designed to subjugate women!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

[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

[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.

[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.