Why NOT To Save For College

Yes, you read it correctly. There are some very good reasons not to save for your children’s college. Some, very, very, very good reasons not to save. People sometimes mix consumerism with the internal desire to give their children a better life with their own sublimations and misjudgements and end up thinking that they are responsible for doing everything themselves. In turn, they end up bankrupting themselves and doing their children a disservice.

Parents DO have responsibilities in their relationship with their children. I think that parents must:

  1. Take care of themselves, physically, spiritually, and emotionally.
  2. Build and maintain relationships with friends and family that are both functional and loving.
  3. Strive to improve themselves and their fortune.
  4. Model the behavior that they expect their children to follow.
  5. Discipline their children to ensure that they do.

Everything else is details!

If you notice, there isn’t anything there that says you have to be able to send your children to the best private college and let them live the high life. You might need to look at the best college values and your children might need to work. Deal with it!

Nothing Wrong With Student Loans (Part 2)

Here are some updates to my previous article

  1. Robert Reich wrote about the real problem with student loans, that the average consumer is being ripped off by finance companies and underserved by the government.
  2. The Washington Post exposes how student loan companies abuse your privacy in order to try and make a buck.

Now, do you still think that these people are the ones we want our children to do business with starting at 18?

Week 12 Homework

This lesson is titled ‘Collection Practices and Credit Bureaus’. This is critical information on how to monitor and improve your financial health. It discusses the laws and practices around credit and collections, and how to safely and efficiently navigate a system that was set up in order to do nothing less than take your money.

The homework for this week is:

  1. Read Chapters 9 and 22 in Financial Peace Revisited.

Next week is graduation night, remember to sign up for the potluck. Congrats to everyone who has made it this far!

Also, this week we would like to check our progress as a group (again). Take a moment to look at the questions and send your answer either via email or in person at our next class.

Lastly, we have some additional reading on this subject, if you are interested.

A Contrarian View of Saving

The New York Times has an interesting article highlighting some different ways of looking at savings. While analysts bemoan our negative savings rate, some academics and researchers are looking at it differently.

The argument between the sides is similar to the classic debate between the hardworking ants and lazy grasshoppers of Aesop’s fable. The financial planning industry says saving, even too much, provides a safety net and peace of mind, and possibly a gift to heirs at the end.

The economists answer that people would get more out of their money by using it when they are younger. “There is risk in saving too much,” Mr. Kotlikoff said. “You could end up squandering your youth rather than your money.”

One of my complaints about a lot of financial calculators is that they don’t seem to take life into account. There are times in our lives when we spend more or we save more, it is hard to keep it consistent year after year. Additionally, there are times when we have short-term investment opportunites that can be even more beneficial than socking it away in a Roth IRA.

So, who is right? My guess is that the truth lies somehwere down the middle. Finanical companies have a vested interest in having you save more, as that is how they make their living. Also, by giving conservative advice they never have to worry about a class action lawsuit. At the same time, I am not sure there is any real problem with having a few extra bucks when you might not be working for 40 years or so. I think the key is balance.

What Really Makes Us Tick

I loathe the expression “What makes him tick.” It is the American mind, looking for simple and singular solution, that uses the foolish expression. A person not only ticks, he also chimes and strikes the hour, falls and breaks and has to be put together again, and sometimes stops like an electric clock in a thunderstorm.

— James Thurber

Nothing Wrong With Student Loans?

The prevailing logic in our culture is that student loans are a good thing, or at least a necessary evil that is required in order to get an education. In reality they sap both our individual and collective futures. We take the people with the most energy, the most enthusiasm, and the most potential and saddle them with long-term financial commitments at exactly the wrong time.

Student loans are a student loans are a multi-billion dollar industry , in some ways a shady one. With hundreds of millions of dollars going through major universities there is a significant conflict of interest, establishing a relationship that will enrich an institution at the expense of its students. The New York Times published an article detailing the tangled relationship between Citibank and several universities. While no wrongdoing was admitted on anyones part, both parties agreed to pay restitution and to abide to a new code of conduct for student loan processing. That sure sounds like wrongdoing to me!

MasterCard Makes Identity Theft Easier!

I just saw a commercial that really struck a nerve. It is from MasterCard (I believe) and is touting the new proximity cards that don’t require a signature.

The ad is a story about a sick zookeeper who has his animals steal his card, then go to the store and get him chicken soup, a blanket, and other soothing things. Then the animals swipe the card and are able to buy the items without a signature or a second look from the merchant.

I thought this was an excellent commercial, at least from my point of view, as it showed how insecure these tools really are. It tells the world, any mammal can steal your identity!