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December 25, 2008

Teach school children about personal finance

Our high schools and colleges are doing a terrible job of preparing students for their place in the world. Required courses in basic math and personal finance could do a great deal of good.

There are basic guidelines for the amount of debt you can owe. Lodging and other monthly payments should not exceed 40 percent of your net income. This leaves the rest of your disposable income for food, gas, insurance, utilities and savings. This means you can’t live in a mansion and drive a new car unless your income warrants.

You can’t put living expenses that you should be paying cash for on credit cards, such as gas, food, utilities and entertainment. Some of these wonderful credit card companies will keep increasing your line of credit as bait so you will wind up with a nice balance and paying them lots of finance charges.

Unfortunately some professional credit grantors talk customers into credit they cannot afford. Then after years of putting marginal or bad credit on the books, hurting consumers, these businesses find that not only will their high interest rates not support the credit operation, but they come to the taxpayers for bailouts.

William S. Thompson
Olathe

Comments

NoMoreMrNiceGuy

Sol I agree however, many parents are inept in the area of basic finance and budgeting.
Again, what are priorities and what are truly extras, that definition varies based on various components. What percentage of net income should be the maximum allocated for rent or mortgage? Food? Utilities? Clothing? Emergency fund? Entertainment?
How much can someone crank up on credit cards or credit accounts without being in financial trouble? The answer to these should be objective, however, that does not appear to be the case if we look around society. I look at my grandparents and they would have defined neccessity entirely different from most of society today under the age of 50. On another note, government can dictate how much someone can or can not live on, they can do this arbitrarily and with absolute power. If you make say $2000 a month net income, the government can force you to live on ($500).

solomon

My mom and dad taught me. Lets blame schools for other things like basic math and reading skills.

T. Hanson

"Our high schools and colleges are doing a terrible job of preparing students for their place in the world."

Well a parent could teach a kid starting when they gets an allowance or $5 from his/her grandparents on their birthday. I could not buy a Nintendo (8-bit) system because I only had $90 after a summer of mowing lawns (the cost of a Super NES was $100 w/out tax). Did my parents fork in the extra $15? Nope, I had to wait another week.

I have a feeling other parents would cover the cost, which is not a bad thing but it does not really enforce saving or buying what you can with what you have in your child.

Oh well. I guess that will be one of my many tips for my new book called "Tips from a Single Guy that has no Kids to Parents that don't want my advice."

Due to be published sometime this spring. I am taking request!

 
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