Summer is Coming, Can You Hear the Teachers Panic?

[FIT_Goat]

Today, the HR Director for the county I work in has proudly announced a new program for employees of the school.  They can get loans ranging from $500 to $5,000 through a company the school board has partnered with.

Their loans are available only to employees who are eligible for benefits who have worked here for more than a year, aka full time employees.  And, the loan payments are deducted directly from your pay.

"What is the cost of this fantastic service?" you ask?  It's 23.99% with a $25 fee to initiate the loan.  Why is the interest rate higher than almost all of my credit cards?  This loan is fairly secure, considering that the payments are coming out before the person gets paid.  You pay them back over 12-48 payroll deductions (which is 6-29 months based on our pay schedule).

I almost replied something snarky to the head of HR.  This sort of exploitative loan doesn't help teachers.  It makes things worse for them.  It also seems like these sort of emails always come right before the summer time.   They are aimed at those teachers who don't put away money for their summer, since we don't get paid all year.  I don't want to know how many fall prey to them.  I do know many teachers who don't save anything for the summers and plan [hope?] to be able to get part-time work to make ends meet until school restarts.

[zolotiyeruki]

Since it's a "partnership," I wonder what the school board's cut of the interest is...

[maizefolk]

School teachers don't get paid nine-over-twelve?

At my employer nine-over-twelve (you get paid 3/4th of your monthly wage each month including over the summer when you're theoretically not "on the job") in mandatory, which means they're holding on to a bunch of my money long after I've theoretically earned it. But the justification is always that folks won't budget and they don't want people running out of money over the summer.

[Just Joe]

Good grief! Maybe help your fellow teachers visit the local credit union and open accounts/loans there? The school board / superintendent ought to be ashamed of themselves.

As educators they ought to represent the best of local society - the educated people, the thinkers, the reasoned people.

Now they aren't any better than a high interest check cashing place.

[slugline]

Applications from math teachers will be delivered discreetly in plain brown wrappers. . . .

[FIT_Goat]

School teachers don't get paid nine-over-twelve?

We have a choice. It can be 22 times (really 21 and the last pay is double) or 24 times (really 21 and the last pay is quadruple).  I have been on 22 for ages, back when it was 22 or 26 and they would save four paychecks and just give them to you right before summer starts. I prefer to save my own money. I am actually irritated that they give me a double pay at the end, because they held some of my money back to make that payment.

Anyway, many teachers elect to take 22 and don't save for summer. Or they have expensive travel plans they haven't saved for. Can't save people from themselves.

[Missy B]

As a group, teachers seem below the bellcurve with financial literacy. I'm not sure why that should be; it's counter-intuitive, but I've heard more than enough stories by now to be certain of it.
I'm in Canada, where teachers are both very well compensated and fairly well insulated from the realities of the private labour market. Perhaps the all the goodies - excellent benefits, defined benefits pension, exceptional time off - has jaded them somewhat to the need to be aware of finances. Perhaps its something else.

I do know that here every teacher can elect to be paid their salary over the summer, so there is no need for cash-loan scams.

[SEAKSR]

The whole thing makes me wonder what kind of kickback shenanigans must be going on. With an employer like that, and a school no less, it's no wonder so many folks think the MMM community is crazy.

[westtoeast]

Off. This is bad. I see stuff like this pop into my mailbox at work sometimes and it always upsets me. I posted on some wall of shame last year about a holiday catalog that all us teachers were given where you sign up for TWO-year payment plans to purchase the latest toy and electronic trends as gifts. So basically you are still paying off gifts from Christmas 2016 when Christmas 2017 rolls around... yikes. I honestly don't understand how it is allowed for these companies to stick fliers in our mailboxes (but sometimes the offers even come through the union).

I'm also in a school where you cannot elect to receive payments over the summer. Even before I was MMM I at least had the sense to save for summer. I frontload my savings-- basically, I use all my disposable income during the first few months of school to set up my summer fund. Then for the rest of the year, I can contribute that income to my actual savings. This strategy just makes me feel better.

Yes, I have also noticed that financial literacy isn't always strong with teachers. However, I wonder how many folks in other professions would also struggle with 2.5 unpaid months every year!

[MrsPete]

School teachers don't get paid nine-over-twelve?

It would be ten-over-twelve ... and my county (or maybe it's state?) doesn't allow it.  However, our credit union -- which we all use since it's so much better than the bank -- offers a similar program.  You opt to have X amount of every paycheck diverted into a "summer spending account"; some people even opt to have "extra" put into the summer account, saying that they need more in the summer for vacations, etc.  And that summer savings account costs nothing; it's just a re-shuffling of the money that's yours. 

Yes, I have also noticed that financial literacy isn't always strong with teachers. However, I wonder how many folks in other professions would also struggle with 2.5 unpaid months every year!

In my fairly lengthy experience, it's feast or famine with teachers.  That is, their financial literary is either feast or famine.  A whole lot are very good with money:  I know a bunch of teachers who live in nice houses, have no debt, and have good side-jobs and solid plans for retirement.  On the other hand, I know a bunch who are the exact opposite.  I walked a math teacher though his pension options the other day and had to explain twice why he and his wife (also a teacher) should choose the survivor benefit rather than the maximum benefit ... in their situation, it's absolutely the right choice.  Honestly, it's about 50-50. 

My husband and I've done very well for ourselves ... in part because our pay/benefits are opposites:  He earns a strong paycheck but has little stability and poor retirement options.  I have a low paycheck but strong job stability and summers off (which was a big money /effort saver when the kids were smaller).  Ironically, a BUNCH of people I know are Engineer-Teacher combinations, and those people tend to be financially savvy. 

[Rural]

My husband was always forced to make an interest-free loan to his employers of 2/12 of his salary each year, which they paid out over the following summer when he was off contract. Frankly, teachers are treated so much like regular, non-contract employees that I don't see how the lack of timely pay for services rendered is legal under the federal labor laws, but it did mean that a bunch of the irresponsible people he worked with could keep a roof over their heads in the summer.

It's not an option in the university system - work a 10-month contract, you get paid ten months. But even that's complicated; we do have health insurance over the summer, with premiums taken out in the spring to cover it, if we are returning in the fall.

[WhiteTrashCash]

I think teaching is a very high stress job and that leads to a lot of problems with overspending and additional expenses they don't expect due to a desire for self-care. High stress environments activate the "fight or flight" response and they end up thinking in the moment instead of planning for the future. It would really help if all school districts did 12 month wages instead of 10 month as default, but a lot of schools don't even offer that option to teachers.

[RetiredAt63]

I think teaching is a very high stress job and that leads to a lot of problems with overspending and additional expenses they don't expect due to a desire for self-care. High stress environments activate the "fight or flight" response and they end up thinking in the moment instead of planning for the future. It would really help if all school districts did 12 month wages instead of 10 month as default, but a lot of schools don't even offer that option to teachers.

Thanks, WTC.  I have met so many people who think they can waltz in and teach a College specialty course.  They last one semester, we never see them again.

When I started teaching we had our annual pay divided in 26, even though our contracts were for 10 months.  Back in the days of no-computer banking, we got 5 cheques at the end of the year, and then we didn't see a paycheque again until after we had been back for 2-3 weeks.  My Ex used to look at all the money in the bank and want to spend it.  I could see that it had to last us and was not "extra".  Two bright people with pretty much the same education - but totally different takes on lump sum payments.  The union arranged for low-interest loans at a local Caisse populaire, just like they did when we were on strikes and some people were short.  Once direct deposit came along we got our pay all summer, problem solved.

[paddedhat]

In my fairly lengthy experience, it's feast or famine with teachers.  That is, their financial literary is either feast or famine.  A whole lot are very good with money:  I know a bunch of teachers who live in nice houses, have no debt, and have good side-jobs and solid plans for retirement.  On the other hand, I know a bunch who are the exact opposite.  I walked a math teacher though his pension options the other day and had to explain twice why he and his wife (also a teacher) should choose the survivor benefit rather than the maximum benefit ... in their situation, it's absolutely the right choice.  Honestly, it's about 50-50. 

[/quote]

My wife did a full 30 with a public school system and left at 55 Y.O.  Due to a lot of good decisions made over the years, we are quite comfortable.  You are spot on with the overall view of the situation however. For every older teacher we know who is really doing well, we know another who can't retire, or is retiring with a ton of debt, and a much lower pension, due to dumb decisions. The pension situation sure is interesting. When it came to pension choices, she had a fairly complex individual situation,  requiring a lot careful decisions. As a result we attended several group "exit" sessions where retiring teachers were preparing to submit their final paperwork. We were kind of stunned at how many teachers did their worksheet calculations and then stared at the bottom line in horror. They literally had zero clue as to what their post retirement check looked like. Some had a reality gap of thousands of dollars a month.  The other issue that really hurts many is that our state has a constitutionally mandated obligation to pay out the pensions, and a politically motivated mandate to NEVER, EVER approve a COLA adjustment. So, those that are lucky enough to live 30+ years as a pensioner, without additional investment income,  can really end up with a pretty meager existence as their pension gets consumed by inflation.

[Mezzie]

We get paid ten quadriweekly checks, so we have to save enough for three of those to get through summer. I separate my money myself, but one of our credit unions will do it automatically like someone above said.

[Playing with Fire UK]

Any participants in this shit show should be required to take next year's pay over twelve months / 26 paycheques.

I'm concerned that the school is effectively incentivised to discourage teachers from budgeting or offering to spread pay over the year as they'd miss out on the schools cut of the massive interest.

[facepalm]

As a group, teachers seem below the bellcurve with financial literacy. I'm not sure why that should be; it's counter-intuitive, but I've heard more than enough stories by now to be certain of it.

They are about average. The book "The Millionaire Next Door" suggests that you will find a higher number of teachers in millionaire households than you should expect. But I suspect that the majority of those millionaires are also married. Being married to the same spouse helps quite a bit.

From what I have seen in my district, most of the teachers that have been teaching over ten years and also happen to be married are doing ok. But the ones that can't control spending are not. These are the people that have to have two trucks, a boat, four dogs, and multiple vacations. A recipe for financial servitude, no matter what your profession. That was me for a number of years.

Those that have taught less than five have it the worst--fresh out of school, low on the salary schedule, student loan debt, and just starting to have kids or planning to. A trifecta of impoverishment.

[FIT_Goat]

I am sure the school district is getting some sort of kickback for promoting this.  I swear, it makes me angry how poor financial decisions are promoted by the school.  The 403b options are equally terrible, and I wonder if they are getting some benefit from selecting those specific providers and plans.

I know many teachers who don't have a plan to ever retire; they can't ever retire.  They are going to work until they are unable to.  A lot of teachers don't save.

There's a great friend of mine, who has been carrying $15k+ in credit card debt for 7+ years now, just paying the minimum or sometimes more before it gets back to the max.  I've offered to help her budget to get rid of it, and she says she wants me to look at her budget, but it never happens.  There's always an excuse why she can't pay it off right now.  She's not even the worst of the teachers I know.  So many tell me that they always "intend" to pay off their credit cards every month, but usually they can't.  When I ask why they don't just pull from savings and then refill the savings next month, they confess that they have no savings.  When I see those things that say the average American has less than $1,000 in savings, I believe it.  It might even be worse among my teacher friends.

[WhiteTrashCash]

I am sure the school district is getting some sort of kickback for promoting this.  I swear, it makes me angry how poor financial decisions are promoted by the school.  The 403b options are equally terrible, and I wonder if they are getting some benefit from selecting those specific providers and plans.

I know many teachers who don't have a plan to ever retire; they can't ever retire.  They are going to work until they are unable to.  A lot of teachers don't save.

There's a great friend of mine, who has been carrying $15k+ in credit card debt for 7+ years now, just paying the minimum or sometimes more before it gets back to the max.  I've offered to help her budget to get rid of it, and she says she wants me to look at her budget, but it never happens.  There's always an excuse why she can't pay it off right now.  She's not even the worst of the teachers I know.  So many tell me that they always "intend" to pay off their credit cards every month, but usually they can't.  When I ask why they don't just pull from savings and then refill the savings next month, they confess that they have no savings.  When I see those things that say the average American has less than $1,000 in savings, I believe it.  It might even be worse among my teacher friends.

Most Americans across the board don't know how to handle their own money because a great many people make a lot of money by keeping them ignorant. If Americans became financially literate, it would be a disaster for these people, so we have Wall Street bankers writing the high school financial literacy classes that do exist and advertisers constantly bombard people with lies to keep them spending money they don't have. May as well have Coca-Cola in charge of weight loss classes.

It's pretty much a guarantee that the school districts know what they are doing ripping off the teachers. Everyone wants their percentage.

[gimp]

As a group, teachers seem below the bellcurve with financial literacy. I'm not sure why that should be; it's counter-intuitive, but I've heard more than enough stories by now to be certain of it.

In most of the US, teaching is a fairly low-paid job. One would rarely earn anywhere near as much teaching material as they would practicing it. This attracts ... well, not exactly the most competent people. Some teachers are awesome and are purposefully taking a pay cut; but for probably the majority it's the best they can do.

[Secretly Saving]

School teachers don't get paid nine-over-twelve?

It would be ten-over-twelve ... and my county (or maybe it's state?) doesn't allow it.  However, our credit union -- which we all use since it's so much better than the bank -- offers a similar program.  You opt to have X amount of every paycheck diverted into a "summer spending account"; some people even opt to have "extra" put into the summer account, saying that they need more in the summer for vacations, etc.  And that summer savings account costs nothing; it's just a re-shuffling of the money that's yours. 

Yes, I have also noticed that financial literacy isn't always strong with teachers. However, I wonder how many folks in other professions would also struggle with 2.5 unpaid months every year!

In my fairly lengthy experience, it's feast or famine with teachers.  That is, their financial literary is either feast or famine.  A whole lot are very good with money:  I know a bunch of teachers who live in nice houses, have no debt, and have good side-jobs and solid plans for retirement.  On the other hand, I know a bunch who are the exact opposite.  I walked a math teacher though his pension options the other day and had to explain twice why he and his wife (also a teacher) should choose the survivor benefit rather than the maximum benefit ... in their situation, it's absolutely the right choice.  Honestly, it's about 50-50. 

My husband and I've done very well for ourselves ... in part because our pay/benefits are opposites:  He earns a strong paycheck but has little stability and poor retirement options.  I have a low paycheck but strong job stability and summers off (which was a big money /effort saver when the kids were smaller). Ironically, a BUNCH of people I know are Engineer-Teacher combinations, and those people tend to be financially savvy.

We're teacher and engineer.  I've found this statement to be true as well.  It generally seems to be a good combination for stability/financial security and level headed decision making.

[Travis]

Now they aren't any better than a high interest check cashing place.

That's where my mind went immediately.  If they need a loan to get through the summer and it is garnished over the next year, then they'll need another loan (possibly bigger) the following summer. Wash, rinse, rack up interest and fees.

[WhiteTrashCash]

One would rarely earn anywhere near as much teaching material as they would practicing it. This attracts ... well, not exactly the most competent people. Some teachers are awesome and are purposefully taking a pay cut; but for probably the majority it's the best they can do.

I think it's an unfortunate by-product of America's anti-intellectual culture that the stereotype exists that teachers are people who cannot do and who are forced to teach because of their own incompetence. Almost every teacher I've ever met is an expert in their field of study and could easily make a lot of money either doing it or doing something really easy like being a stock broker or app developer. They choose to be teachers because they want to help people and make the world a better place.

Maybe that makes them stupid, but I suppose that's up to each person's opinion of the value of public service.

[Just Joe]

I am sure the school district is getting some sort of kickback for promoting this.  I swear, it makes me angry how poor financial decisions are promoted by the school.  The 403b options are equally terrible, and I wonder if they are getting some benefit from selecting those specific providers and plans.

I know many teachers who don't have a plan to ever retire; they can't ever retire.  They are going to work until they are unable to.  A lot of teachers don't save.

There's a great friend of mine, who has been carrying $15k+ in credit card debt for 7+ years now, just paying the minimum or sometimes more before it gets back to the max.  I've offered to help her budget to get rid of it, and she says she wants me to look at her budget, but it never happens.  There's always an excuse why she can't pay it off right now.  She's not even the worst of the teachers I know.  So many tell me that they always "intend" to pay off their credit cards every month, but usually they can't.  When I ask why they don't just pull from savings and then refill the savings next month, they confess that they have no savings.  When I see those things that say the average American has less than $1,000 in savings, I believe it.  It might even be worse among my teacher friends.

Most Americans across the board don't know how to handle their own money because a great many people make a lot of money by keeping them ignorant. If Americans became financially literate, it would be a disaster for these people, so we have Wall Street bankers writing the high school financial literacy classes that do exist and advertisers constantly bombard people with lies to keep them spending money they don't have. May as well have Coca-Cola in charge of weight loss classes.

It's pretty much a guarantee that the school districts know what they are doing ripping off the teachers. Everyone wants their percentage.

You nailed it. Seems like our society collectively ought to be getting more wise each year but a good number of people I've met over the years seem to prefer to be ignorant and reject educated people.

[paddedhat]

In most of the US, teaching is a fairly low-paid job. One would rarely earn anywhere near as much teaching material as they would practicing it. This attracts ... well, not exactly the most competent people. Some teachers are awesome and are purposefully taking a pay cut; but for probably the majority it's the best they can do.

Absolutely ridiculous. Have spent a lifetime married to a teacher, and knowing many, many more, your bias is without merit.  Given recent, much stricter requirements for academic performance, and  "bar exam" level testing to get state certification, the caliber of educators has only gotten better.  Your, "best they can do" horseshit is no better than all the other baseless scorn heaped on the profession. Funny part is,  most who believe and repeat trash like this would be nowhere without the teachers that got them this far in life.

As for low pay it's simple,  you pay peanuts, you get monkeys.  My wife specialized in placement testing.  She evaluated every new and transfer student before they were placed in the classroom. It's amazing to compare teacher salaries and performance. It was nothing to have a relocating parent present a kid who was a star back home, top of their class, award winning, even. It was common to test these kids and find that they are at least a year behind.  At this point my wife would mention it at home, and I would try to guess which backward, right to work, low paying state the kid came from. Typically, FL, GA, or similar. If the kid came from a religious school from the same area, they could often be years behind, and need a lot of individual attention to catch up with their peers.

[maizefolk]

In most of the US, teaching is a fairly low-paid job. One would rarely earn anywhere near as much teaching material as they would practicing it. This attracts ... well, not exactly the most competent people. Some teachers are awesome and are purposefully taking a pay cut; but for probably the majority it's the best they can do.

Absolutely ridiculous. Have spent a lifetime married to a teacher, and knowing many, many more, your bias is without merit.  Given recent, much stricter requirements for academic performance, and  "bar exam" level testing to get state certification, the caliber of educators has only gotten better.  Your, "best they can do" horseshit is no better than all the other baseless scorn heaped on the profession. Funny part is,  most who believe and repeat trash like this would be nowhere without the teachers that got them this far in life.

As for low pay it's simple,  you pay peanuts, you get monkeys.  My wife specialized in placement testing.  She evaluated every new and transfer student before they were placed in the classroom. It's amazing to compare teacher salaries and performance. It was nothing to have a relocating parent present a kid who was a star back home, top of their class, award winning, even. It was common to test these kids and find that they are at least a year behind.  At this point my wife would mention it at home, and I would try to guess which backward, right to work, low paying state the kid came from. Typically, FL, GA, or similar. If the kid came from a religious school from the same area, they could often be years behind, and need a lot of individual attention to catch up with their peers.

Paddedhat, aren't the two paragraphs of your comment somewhat contradictory? If the students coming out of states school are a year or more behind, and you think the reason for that is because the states don't pay teachers enough, so they get bad teachers, doesn't that imply that you think there are a lot of teachers employed in the USA who aren't particularly good at their jobs?

I've known some great teachers. I've also known some terrible teachers. My own personal observation is that that older the population of teachers you look at the wider the distribution, because the okay teachers burn out and go do something else. The folks who teach for decades are either both gifted and not motivated by money, or aren't qualified to find any other job that would pay anywhere near as much. I was fortunate enough to learn from some of the former. And lucky to have had enough family support to get me through the years where I was trapped in classrooms with some of the latter.

[MrsPete]

For every older teacher we know who is really doing well, we know another who can't retire, or is retiring with a ton of debt, and a much lower pension, due to dumb decisions.

Yeah, I'll give a couple examples: 

- About two years ago one of my co-workers retired (nice house, sent her kids to private colleges, lots of vacations, new cars constantly ... yeah, lots of debt) ... and after she attended a retirement seminar, she came back horrified, saying that our pension is less than our current paychecks!  Um, yeah, I did know that.  How'd I know?  Well, the pension formula is public knowledge; it's in the benefits book they gave us all, and it's easy to find on the internet.  I attended that retirement seminar when I was not yet 30, so yeah, I did know -- to the penny -- how much my anticipated pension will be. 

- I was talking with a math teacher -- don't miss that detail, a math teacher -- who has a couple years to go, and he was asking if I understood the concept of choosing one of the four pension options.  I did, and we started running numbers.  He was inclined to go with the maximum pension number because he and his wife have NO other retirement savings, and they'll need the money ... and I had to show him twice that he and his teacher wife should BOTH go with the 100% survivorship option.  Finally he saw that they needed to give up about $250/month so that the spouse who dies second won't have his or her main income sliced in half. 

- I sometimes read an online teacher board, and I completely failed to help people there understand that, yes, with the Pension + Social Security option, you CAN have the state pay your Social Security until you turn 62 ... but that option means you're accepting a lower pension for the rest of your life.  They kept saying, "But my friend took it a decade ago, and her check didn't change when she turned 62."  Yeah, yeah, but ... oh, I just gave up.  Examples didn't help. 

On the other hand, a full 50% of my teacher friends live like I do:  On considerably less than they earn, paying off modest houses, driving modest cars, living frugal lives.  Those of us who've made these choices are heading for comfortable retirements. 

[MrsPete]

I know many teachers who don't have a plan to ever retire; they can't ever retire.  They are going to work until they are unable to.  A lot of teachers don't save.

Since teachers tend to have pensions, this doesn't make sense. 

Assume you're not saving and you're not trying to retire early: You put in your 30 years, and you start collecting your pension (which pays you about half your working salary and basic-basic health insurance).  Take the pension and work somewhere else part time (or seasonally).  You're now making roughly the same amount of money, but you're only working half as many hours.  You do that until you turn 62 and begin collecting Social Security. 

If you've been paying off a modest house for years so that your housing costs are very low, it wouldn't be hard at all to live on this ... with no real retirement savings at all.  Yes, you're assuming that the pension will remain stable ... but in the face of "I'll never retire at all", this isn't a bad plan.

[FIT_Goat]

Since teachers tend to have pensions, this doesn't make sense. 

Assume you're not saving and you're not trying to retire early: You put in your 30 years, and you start collecting your pension (which pays you about half your working salary and basic-basic health insurance).  Take the pension and work somewhere else part time (or seasonally).  You're now making roughly the same amount of money, but you're only working half as many hours.  You do that until you turn 62 and begin collecting Social Security. 

If you've been paying off a modest house for years so that your housing costs are very low, it wouldn't be hard at all to live on this ... with no real retirement savings at all.  Yes, you're assuming that the pension will remain stable ... but in the face of "I'll never retire at all", this isn't a bad plan.

Yes, 30 years would get you 48% of your average salary from the last 5 years you worked.  Teachers who are near that age now would still have a COLA factored in, also.  Thanks to fun changes, every year I work reduces the COLA percentage because they have removed it for everyone who started a few years ago.  I am not aware of any provisions for health care in our pension system, aside from a maximum of $150/mo to help you pay for your own after you have started getting the pension.

Now, someone who is living at > 100% of their income can't afford to retire on 48% of their current pay.

Their mortgage is probably less than 10 years old, because they did a cash-out refinance a few years ago and took the largest mortgage they could get approved for.  It's not going anywhere soon and it's for a large percentage of their income.  I know a teacher who should be 5 years away from retiring.  She had a foreclosure  6 or 7 years ago.  She's looking to buy a house now.  She's trying to get the maximum amount they will approve her for, even working 3 clubs and summer school, to boost her "apparent" pay to boost that number.  She has no intention of working those things when she gets the house.

Getting a job, in your 50s, that is part time and pays enough to make up the missing salary isn't easy.  Many of them are older women who have little real skills.  Oddly enough, those who do have skills that could get them a decent part time job are also able to retire on 48% of their income.

This describes a lot of teachers I know.  Teachers who intend to teach until they are 65+ because they don't have any other options.  Teachers who have debts that might never be paid back.  I know a teacher who takes a couple college credits every year to keep their student loans in deferment, forever, and has high six-figures of them.  They will rack up more debt in order to keep doing that and pushing the loans off even more.

I find the engineer/teacher thing amusing.  I left engineering to go into education.  How I ended up in elementary (and for a while ESE) is a long story and involved maximizing my loan forgiveness to reduce my loans balances.  So, I am both in one person.  And, I am definitely better off and more knowledgeable than many I work with.

[nobody123]

Financial issues aside, I find it hilarious that all of my teacher relatives / friends who complain about being underappreciated / underpaid from August -> April have been peppering their Facebook feeds about how they CAN'T WAIT for the school year to end because they're stressed out and need their two-plus month vacation, complete with memes of margaritas and beach scenes. 

Financially, I have seen it both ways.  I have a BIL/SIL teacher combo who did the right things financially and both retired mid-50s very comfortably.  Another BIL teacher is a financial train wreck and is planning on working indefinitely (until his mother passes and he gets enough of an inheritance to pay off his debts).  Another SIL is still teaching because she likes working, BIL is already retired with a state pension and they're financially fine.  Sibling teacher is doing OK, but I just showed them how to open an online savings account to improve on the 0.1% interest they were getting at a brick-and-mortar bank.

[talltexan]

I had a teacher friend at church tell me that he's so glad his son is already saving $400/month.

His son is 31, and unmarried.

[WhiteTrashCash]

I know many teachers who don't have a plan to ever retire; they can't ever retire.  They are going to work until they are unable to.  A lot of teachers don't save.

Since teachers tend to have pensions, this doesn't make sense. 

Assume you're not saving and you're not trying to retire early: You put in your 30 years, and you start collecting your pension (which pays you about half your working salary and basic-basic health insurance).  Take the pension and work somewhere else part time (or seasonally).  You're now making roughly the same amount of money, but you're only working half as many hours.  You do that until you turn 62 and begin collecting Social Security. 

If you've been paying off a modest house for years so that your housing costs are very low, it wouldn't be hard at all to live on this ... with no real retirement savings at all.  Yes, you're assuming that the pension will remain stable ... but in the face of "I'll never retire at all", this isn't a bad plan.

Well, if you read the news, it seems pretty obvious that teacher pension plans are not long for this world, so teachers should probably not plan on ever getting one if they are just starting out in the profession. In the state where I live, the teacher pension plan is so underfunded that we'd need to increase every resident's taxes by thousands and thousands of dollars per year to pay for it. Instead, what will probably happen is that the pension will be converted to a 403b administered by companies owned by state politicians' friends, the funds offered will be practically worthless, and the fees will be so high that teachers will get ripped off for hundreds of thousands of dollars by the time retirement comes around.

[MgoSam]

Speaking of teachers, has anyone here read "Millionaire Teacher" by Andrew Hallam? If so, is it worth checking out if you've read a few Personal Finance books like "The Millionaire Next Door?"

[TheGrimSqueaker]

Paddedhat, aren't the two paragraphs of your comment somewhat contradictory? If the students coming out of states school are a year or more behind, and you think the reason for that is because the states don't pay teachers enough, so they get bad teachers, doesn't that imply that you think there are a lot of teachers employed in the USA who aren't particularly good at their jobs?

I think he was talking about a difference in educational standards in some specific underperforming states. The states in question are in parts of the country where the pig-ignorant anti-education culture has reached critical mass. Where there's a sizable drug underclass, where the generational poverty is so pervasive that most kids are on some form of social assistance, or where it's socially acceptable for people to reach the age of majority and claim adult privileges without functioning like adults, most families don't have enough functional adults to go around. That means the kids don't get support in school and are often not even required to attend. It also means there's not much of a tax base to support schools and very little political will to improve them.

[gimp]

Ah yes, the indignant teachers.

I've been to school before. The majority of my teachers were not terribly intelligent people. They weren't idiots, but rarely did they astound me with their ability to do anything other than corral a room full of kids (which, admittedly, is a specialized and difficult skillset.) I went to a "good" public school in a "good" state.

I went to another school with teachers who were world-class. It was an exception, not the rule.

[SK Joyous]

As a group, teachers seem below the bellcurve with financial literacy. I'm not sure why that should be; it's counter-intuitive, but I've heard more than enough stories by now to be certain of it.
I'm in Canada, where teachers are both very well compensated and fairly well insulated from the realities of the private labour market. Perhaps the all the goodies - excellent benefits, defined benefits pension, exceptional time off - has jaded them somewhat to the need to be aware of finances. Perhaps its something else.

I do know that here every teacher can elect to be paid their salary over the summer, so there is no need for cash-loan scams.

I'm in Canada too, and both of my parents are teachers. I assume you're talking about modern teachers, or teachers somewhere else, because here our teachers (in the province) didn't get health/dental insurance until I was grown up and moved out, and defined pension plans went the way of the dodo back around 1980. The 'exceptional time off' is, of course, unpaid, and only recently have there been programs that will pay out over the 12 months - teachers had to do it themselves before that.  I do agree, however, that they seem to be generally below the bell curve on financial literacy, but I don't think their benefits are the reason. I think possibly it's because so many of them are idealists (I've observed that teaching attracts a particular kind of person - just generally, not every single one of them).

[SK Joyous]

Ah yes, the indignant teachers.

I've been to school before. The majority of my teachers were not terribly intelligent people. They weren't idiots, but rarely did they astound me with their ability to do anything other than corral a room full of kids (which, admittedly, is a specialized and difficult skillset.) I went to a "good" public school in a "good" state.

I went to another school with teachers who were world-class. It was an exception, not the rule.

Well, I feel sorry for your limited, anecdotal experience with teachers. I had many brilliant teachers (as have my children) that promoted critical thinking, analytical thinking, and awareness of current events. But you know, go on about the 'corralling', I'm sure that attitude certainly brings out the best in the teachers you encounter.

[bunchbikes]

Those that have taught less than five have it the worst--fresh out of school, low on the salary schedule, student loan debt, and just starting to have kids or planning to. A trifecta of impoverishment.

Yeah, I did 5 years of this hamster wheel bullshit and got out.

Gotta love annual raises that are half the rate of inflation.  Get paid a shit salary, and make less every year!

Not sure what I was thinking.

[bunchbikes]

Well, I feel sorry for your limited, anecdotal experience with teachers. I had many brilliant teachers (as have my children) that promoted critical thinking, analytical thinking, and awareness of current events. But you know, go on about the 'corralling', I'm sure that attitude certainly brings out the best in the teachers you encounter.

And your experience isn't limited and anecdotal?

[WhiteTrashCash]

Those that have taught less than five have it the worst--fresh out of school, low on the salary schedule, student loan debt, and just starting to have kids or planning to. A trifecta of impoverishment.

Yeah, I did 5 years of this hamster wheel bullshit and got out.

Gotta love annual raises that are half the rate of inflation.  Get paid a shit salary, and make less every year!

Not sure what I was thinking.

Teaching tends to attract idealists. Many of them realize that teaching isn't really like the way it's portrayed in the movies and then they move on to more lucrative occupations. It's unfortunate, but we simply don't value education in the USA. Why bother gaining knowledge and learning new skills when everybody is going to be a professional athlete or movie star or they are going to win big in the state lottery?

[MrsPete]

Since teachers tend to have pensions, this doesn't make sense. 

Assume you're not saving and you're not trying to retire early: You put in your 30 years, and you start collecting your pension (which pays you about half your working salary and basic-basic health insurance).  Take the pension and work somewhere else part time (or seasonally).  You're now making roughly the same amount of money, but you're only working half as many hours.  You do that until you turn 62 and begin collecting Social Security. 

If you've been paying off a modest house for years so that your housing costs are very low, it wouldn't be hard at all to live on this ... with no real retirement savings at all.  Yes, you're assuming that the pension will remain stable ... but in the face of "I'll never retire at all", this isn't a bad plan.

Yes, 30 years would get you 48% of your average salary from the last 5 years you worked.  Teachers who are near that age now would still have a COLA factored in, also.  Thanks to fun changes, every year I work reduces the COLA percentage because they have removed it for everyone who started a few years ago.  I am not aware of any provisions for health care in our pension system, aside from a maximum of $150/mo to help you pay for your own after you have started getting the pension.

Now, someone who is living at > 100% of their income can't afford to retire on 48% of their current pay.

Their mortgage is probably less than 10 years old, because they did a cash-out refinance a few years ago and took the largest mortgage they could get approved for.  It's not going anywhere soon and it's for a large percentage of their income.  I know a teacher who should be 5 years away from retiring.  She had a foreclosure  6 or 7 years ago.  She's looking to buy a house now.  She's trying to get the maximum amount they will approve her for, even working 3 clubs and summer school, to boost her "apparent" pay to boost that number.  She has no intention of working those things when she gets the house.

Getting a job, in your 50s, that is part time and pays enough to make up the missing salary isn't easy.  Many of them are older women who have little real skills.  Oddly enough, those who do have skills that could get them a decent part time job are also able to retire on 48% of their income.

This describes a lot of teachers I know.  Teachers who intend to teach until they are 65+ because they don't have any other options.  Teachers who have debts that might never be paid back.  I know a teacher who takes a couple college credits every year to keep their student loans in deferment, forever, and has high six-figures of them.  They will rack up more debt in order to keep doing that and pushing the loans off even more.

I find the engineer/teacher thing amusing.  I left engineering to go into education.  How I ended up in elementary (and for a while ESE) is a long story and involved maximizing my loan forgiveness to reduce my loans balances.  So, I am both in one person.  And, I am definitely better off and more knowledgeable than many I work with.

No, I still maintain that a teacher who's saved nothing ... but who has put in 30 years for a pension can make it ... along with a part time or seasonal job.  Think through the math:

- A teacher with 30 years experience in my state would receive a pension of about 2,000/month (depending upon options chosen) ... this is about half that person's gross salary at retirement.
- A teacher in my state who retires with 30 years experience would receive basic medical insurance at no cost
- Right away he or she is saving the 6.2% that was going into Social Security and the 8% that was paying into the teacher's pension fund ... and with less income coming in, he or she will pay less in taxes.
- This hypothetical person will cut down on professional clothing, gas and other work-related costs, so that's a bit more money that wouldn't need replacing. 
- At the same time, the person will have more time available, so he or she can cook from scratch and do things around the house that previously might've been outsourced. 
- As for the house being re-mortgaged, could be ... but teachers (and I'm no exception) lean towards conservative investments, and I think most would see the benefit in simply paying off the house.

The point:  All this means that less salary needs replacing.  I do think it's reasonable that this person could work somewhere three days a week and replace the "missing salary" and have the the same buying power. 

[FIT_Goat]

OK, but all those things are the things these teacher chose not to do up to this point.  They would consider it unreasonable and still work as a teacher.  Heck, if they are going to need a job, why not keep the one they currently have.  Sadly, they can slack pretty hard and avoid being terminated, for years, with a little correctly focused effort.  I don't believe my state has insurance for their situation, but it's great that yours does.

Could it be done?  Yes.  Will it be done?  I know several teachers with 25+ years in who have openly verbalized that they can't afford to retire and will keep working as long as they physically can.  It's not hypothetical with them.  They spend 100% or more of their annual salary and are unwilling to change their habits.  I know one teacher who has worked at my school since I attended it when I was 7, 29 years ago.  And she wasn't a new teacher at the time.  She tells me all the time that she will have to die in the classroom or win the lotto.

In theory, you might be correct.  In practice, as I experience at my school, I don't see it as often as you would expect.

[MrsPete]

OK, but all those things are the things these teacher chose not to do up to this point.  They would consider it unreasonable and still work as a teacher.  Heck, if they are going to need a job, why not keep the one they currently have. 

Because if this hypothetical teacher begins to draw a full pension, she'll be able to work three days a week instead of five days a week.  And likely at a job that doesn't require grading papers and planning lessons at home every evening. 

I know a number of people who are living this choice, so I know it works.  Of course you and I don't think it's an optimal situation, but it's quite possible for a teacher with a full-years pension to chop work hours in half.

[lemonde]

In most of the US, teaching is a fairly low-paid job. One would rarely earn anywhere near as much teaching material as they would practicing it. This attracts ... well, not exactly the most competent people. Some teachers are awesome and are purposefully taking a pay cut; but for probably the majority it's the best they can do.

Absolutely ridiculous. Have spent a lifetime married to a teacher, and knowing many, many more, your bias is without merit.  Given recent, much stricter requirements for academic performance, and  "bar exam" level testing to get state certification, the caliber of educators has only gotten better.  Your, "best they can do" horseshit is no better than all the other baseless scorn heaped on the profession. Funny part is,  most who believe and repeat trash like this would be nowhere without the teachers that got them this far in life.

Well said.

[infogoon]

None of the teachers I know are panicking -- most of them are in full Gloating Mode now that summer vacation is coming up. It's sort of a nice change of pace from Martyrdom Mode the other nine months of the year.

[bunchbikes]

I've been to school before. The majority of my teachers were not terribly intelligent people. They weren't idiots, but rarely did they astound me with their ability to do anything other than corral a room full of kids (which, admittedly, is a specialized and difficult skillset.) I went to a "good" public school in a "good" state.

The skill of "corralling kids" is a prerequistie to being a good teacher.

However, few teachers have the ability to do this effectively.

Doesn't matter how good your information is if no one hears it.

[nobody123]

None of the teachers I know are panicking -- most of them are in full Gloating Mode now that summer vacation is coming up. It's sort of a nice change of pace from Martyrdom Mode the other nine months of the year.

+1000

[StockBeard]

I would vocally complain if such a predatory loan was introduced in my company by an person with authority. People will get scammed into this

[talltexan]

My wife's employer is a large, publicly traded company. They recently announced a re-adjustment in pay, which resulted--effectively--in them delaying one week's worth of pay.

Her last of three March pay checks (she's paid every second Friday) was 1/2 of the normal amount. The company offered employees a program in which they could receive an interest free loan that would be paid back over the subsequent four pay periods, but we opted for the mustachian route and just bit the bullet.

Of course, I mis-calculated our account balance and racked up about $18 in fees anyway, but at least we're not paying back a loan to her employer.

[eddiejoe]

None of the teachers I know are panicking -- most of them are in full Gloating Mode now that summer vacation is coming up. It's sort of a nice change of pace from Martyrdom Mode the other nine months of the year.

+1000

Whenever I see a teacher's sob story on Facebook in March, I always want to comment on it in mid July asking them if they would be willing to trade and come be glued to my desk all summer.
_{(I'd probably want to trade back in the fall, but there are a lot of long sighs staring out my office window from May to September)}