"Not very difficult math. All you need to be able to do to answer the first is divide $1,000 by 20. In the second you simply need to be able to figure out that $30 is one percent of $3,000. It does take a little reasoning but nothing you wouldn’t find on a 4th grade math quiz. "
The way math is taught today, it is no surprise that so many are unable to even add.
Sorry, home ownership is not an expense. I own my home, live in it and will sell it when I want and still recover much of what I invested in it. OTOH, what I spend on my kids education - I don’t expect to ever see it back although it is an investment in my kids.
So deciding how much we are spending or the kid is borrowing in order to go to school is a big deal. Those going to JUCOs - not many are here seeking advice.
@warbrain - the man in question probably makes too much for financial aid, and he probably has a great retirement account. Heck, my family income is too high for FA as H and I both work at professional jobs. We are full pay. The point is, for the major his son wants, he can get as good an education at a state flag ship for ~25K/year as he can at the higher paid options. We didn’t have $100K saved for college for each daughter, so they chose affordable options that either have or will give them an excellent start. That’s what most middle income families do - and I admit we are definitely not middle-middle income, but not independently wealthy, either.
@mcat2 - I read the Forbes thing. We are better in all cases except mortgage debt. Smart decisions by contributing the max to 401K, staying at a single company for 30+++ years for the sake of pension and retiree medical, keeping enough in savings to cover when times were hard, etc. we bought a second home this year, but our total mortgage on two homes is less than many peoples’ single mortgage. No CC debt, no car notes. We are exceedingly fortunate, but we also did what we could to ensure that we’d be able to take care of ourselves.
I work with a lot of younger people who believe they will be 67-70 before they stop working. Lack of retiree medical coverage, no pension, stagnant wages. Some older people as well as they didn’t contribute to the 401 K from day one, frittered away income on unaffordable vacations and toys, and lived off of Visa.
My sympathies lie with those who work their rears off every single day to keep the rest of us moving, fed, have Meds and vaccines, spiritual care, and mentally healthy, and even when they do the right things, can’t get ahead.
The talk of paying the minimum balance, fiscal/financial illiteracy and complusive spending reminds me of this line from the Gabler article: “Until about five years ago, when I stopped using my credit cards altogether and started paying them off little by little with the help of a financial counselor, I’d always managed to pay at least the monthly minimum and sometimes more.”
NG didn’t get it and still doesn’t based on this statement. It’s almost like he’s patting himself on the back for paying off the minimum instead of seeing as part of his problem.
It’s scary to me that an educated person like NG would “pay the minimum on CCs and sometimes more.” We were raised NOT to ever pay ANY interest or finance charges. We raised our kids the same way. It really adds up how much folks pay in interest and fees.
If you can’t pay for the item in cash immediately or at the latest when the balance is on your CC statement, you do without.
Right. Paying off the minimum isn’t sound financial management; it’s just less awful than not paying the minimum!
I was surprised to learn my d was carrying a CC balance. I knew she knew better.
" mom, my deductible on my health insurance is $3000. I had to put my CT scan bill om my credit card"
That’s how many people get off track.
I only partly agree. I don’t think math skills are the most important factor. For established middle class families who make an “OK” living, I think the most important factor is self-discipline … having the willpower to stick to a budget, contribute to a regular savings plan, and resist temptations like shopping splurges or buying expensive new cars.
In my life, I’ve concluded that most people are actually pretty bad at this when it comes to money matters. They’re their own worst enemy. It’s human nature to make emotional decisions and give in to pleasant temptations – it’s almost exactly like asking “why are there so many very overweight people … all they have to do is not eat so much”. It’s not like the mathematics of calorie counting is that hard. Well, knowing what to do is easy; it’s doing it that’s hard. Our brains evolved to make good decisions foraging for food on the savannah, not for deciding whether to tap intangible lines of credit to buy bright, shiny things.
Here’s an example from CC. Many experienced posters on CC tell families “don’t go into debt to pay for college”. I can tell you that – speaking economically and mathematically – this advice is woefully overly simplistic. But it’s actually good advice for the vast majority of people since it imposes some strict discipline on them and prevents them from being their own worst enemy. Even if the discipline is artificial.
Even people who make an “OK” living mostly still pretty much operate by one rule … spend almost all of what you make. I’ve seen lots of people whose incomes double from say 50K to 100K over a few years. What happens is that their spending pretty much doubles too, and they still find they’re not saving very much money. It’s just human nature, and no one is immune to being tempted.
To be honest, I think the explanation for why most people give in to the temptation is mostly cultural. I’m generally contemptuous of those who hold up other countries as a model to be emulated, but if you look at many (particularly northern) European countries you find that their savings rates are quite a bit higher than ours … and the Asian countries have savings rates that completely put ours to shame, despite many being much poorer societies. Even two generations ago people in the US didn’t behave like this. Our culture changed much more than our economic circumstances.
I don’t think teaching “financial literacy” is the only (or even best) answer. For middle class families making an “OK” living, I think the best policy solution is to make changes that impose the discipline for them … for example, contributing to a 401K by default. I would also limit the access to consumer debt; raise required credit card minimum payments and make it harder to carry credit card balances year after year, and go back to requiring 20% downpayments to buy a house (if Millenials had any idea how badly they were @#%!$ over by policy makers who “helped” people by normalizing lower downpayment requirements, they’d hunt those same policy makers down and slow roast them over a low flame for a month).
We lived off our credit cards when going through 5 years of infertility treatment and finally adoption since way back when you paid doctors in cash and to adopt cash was needed too. Just the shot I had to take once a month was $1000. None of that was covered by insurance then. Now, not only is it covered but so is a percentage of adoption costs as part of H’s benefit package.
I admit that having a kid was much more a priority then being financially secure. We ended up with a massive amount of debt so for 5 years we did nothing but throw money at them to pay them down. We even went down to one car to cut our ins cost and maintenance costs. We actually figured out which card had the highest interest and paid as much as possible on that while paying only the minimum on the rest. Then we went on to the second card and so on.
We weren’t willing to do without a child.
I have long supported infrastructure spending. Not only does it benefit society, its a long-term benefit, and IMO, worthy of 30-year bonds.
Be careful what you wish for. A populist fiscal stimulus bill could easily become a Christmas tree, in which every lobbyist in DC gets his/her items added; essentially it becomes a Corporate stimulus bill, padding the incomes of the C-level execs, hedge funds and other big time investors.
Please don’t.
btw: a cynic might argue that we would need less positive stimulus if we had less (regulatory) negative stimulus. 
@Sue22 I respectfully disagree. If you ask the same thing about cookies, you won’t get right answers, either. You have 10 cookies today, everyday you don’t eat I will give you 20% of what you have. How long would it take for you to have 20 cookies if you don’t eat any? Maybe it sounds more fashionable to say people are financially challenged and created funacial courses to help them. Truth of matter is if basic math is lacking, they won’t learn or understand much.
^
@Igloo, The question didn’t require the tester to compute compound interest, simply recognize that compounding it results in a higher number than not compounding it. It would be as if your question was "You have 10 cookies today, everyday you don’t eat I will give you 20% of what you have. How long would it take for you to have 20 cookies if you don’t eat any? A. less than 5 years, B. 5 years, C. more than 5 years. It does require a little logic but it’s really not complicated math.
You gals are a tough group.
At least he tore up the credit cards.
I wonder how many people here are the glass half full folks? How many are the glass half empty folks?
“It’s human nature to make emotional decisions and give into pleasant temptations”
And Madison Avenue is very skilled at pushing the right buttons to get folks to part with their had earned cash and even the cash they haven’t earned yet.
I want to pull my hair out when a few spenders I know talk about some great sale and how it was too good to pass up. So you got something 50% off, that you probably didn’t need? NOT buying it would save you even more, 100%. 
^It’s the Costco conundrum. Paying $8 for something in the 40 oz. size when all you really need is the $3 10 oz. size.
“I wonder how many people here are the glass half full folks? How many are the glass half empty folks?”
Depends on what’s in the glass. 
@bluebayou, if people behaved better, we could have a lot fewer regs.
@dstark I consider myself pragmatic and a realist. I bet some do see that as being a “glass is half empty” type. I’m definitely not a Pollyanna. But it served me and my employers well given the skill set needed to do the job I made a career in and its saved me many times in my personal life as well. At the same time, I tend to be giving and sentimental in nature. I guess I’m a conundrum.
@al2simon
“impose discipline for them … for example, contributing to a 401K by default”
– you’re assuming those making an “OK living” work in places that offer 401K… but with almost 90% of Americans working for companies that employ 20 people or fewer, that’s not a realistic assumption. In fact, many of these Americans are paying for their own insurance… and we all know that can be a good $10,000 A YEAR for a family that’s pretty healthy. (I’m basing the latter on my famimly’s ACA costs + copays.)
Then they’re generally eligible to contribute to a deductible IRA (unless they make over $184,000 and their spouse is already covered by a retirement plan). Or they can just put the money in a piggy bank if all else fails. The point is to make saving a portion of their salary the default, particularly if it’s tax advantaged or match eligible. People are less tempted to spend what they never see, and it’s a smart decision in the long-term. That’s provided they make an “OK” living so they can support themselves, of course.