Taking care of yourself financially

[bikebum]

Here's a story I heard from a friend. I'm not trying to make a point here; it's just a funny story.

Kid moves away for college and parents pay for everything. Kid drops out and doesn't tell parents. Parents keep sending money because they don't know. Kid uses the money to party. I think the parents found out after about a year.

That story is full of holes!  Those parents deserved to have their money wasted!

- They couldn't have been receiving bills from the college, so they must've been giving the kid money directly and trusting him to pay the bill himself.
- Did they never ask to see any grades?  Were they not signed up to see accounts and grades online?  If not, why not?  If you're paying, it's perfectly reasonable to have access to the results for which you're paying.
- Did they never visit?  Never realize the kid didn't have any stories to tell about difficult professors or projects done well? 

No sympathy for that set of parents.

Since it is full of holes, why are you concluding it is the parents' fault? I introduced it by saying it's just a funny story and I'm not making a point. Don't you like funny stories? I do :)

Definitely!  But this one's a funny story about parents who brought this on themselves.  Still funny.

Ah, I misread you, my bad :)

I first thought the funny part was picturing this kid just happily spending his parents' money on pizza and beer. "Yeah I didn't like school, so I quit. I don't really need a job, cuz my parents send me money since I'm in school, which I quit, so yeah, it all works out. Are you gonna pass that bong or what?" But yeah, the other side is just as good, the parents blindly sending the kid money and assuming he's still working hard in school without checking in. I guess it's kinda sad too, but mostly funny.

[erae]

1. I so appreciate the way my parents handled college expenses with my sibling and me.  In high school, probably when the oldest of us was a junior, we were sat down and told that while they wanted to give us the world, they could not do it at the risk of the house or their own retirement.  We were told that each one of us would have X funds available  for tuition, housing, and books (more than enough for a state school, not enough for most private schools). If we chose to go to a college that ended up being cheaper than X, mom and dad would hold on to the balance and we could request it for other investments: graduate studies, down payment on a house, car, etc.  If college cost more than X, it was on us to pick up the difference.  This created a situation in which the choices of the eldest child didn't influence the resources for the second child. Child A chose a private university and a semester in Europe, worked part-time during the four years to keep debt down, and graduated less than 5K in the hole (in an interest-free loan from mom and dad).  The other took a fat scholarship to a state school, didn't work, and ended up with a huge balance left over, which was used as FU money to leave a toxic job.  Both kids were given a surprise 15K towards a car upon graduation.  The idea being, "alright, now you have everything you need to be a productive adult.  our work here is done."

2. Tough to say.  We both began our 20's with a lot of freedom because we were debt free.  That's huge and we both appreciate it and have worked hard to maintain that freedom.  That may not be the case with all 20-somethings.

3. Probably not.  And if we have kids, I'd like to do something very similar for them.  I think their approach was very generous and they set up this system in a way that was very transparent and taught us how f*$&ing expensive college is while providing us with a smooth financial transition into adulthood.  They also made sure no one could piss away the money on ridiculous things. 

[prof61820]

I come from a pretty  well-off family, but it has always been I have to pay for half of everything until I'm out of college, where I will be on my own financially. I pay for half of college, car, car insurance, repairs, phone, and everything like that. I don't pay for rent or food to my parents when I'm at home, but I pay in full for anything else for myself (entertainment, dinners, etc).

Now that I'm in college, I see that around 70% of my friends don't pay for anything, and another 15% pay for a few things (like books only or part of a car). I also have 2 jobs in college, but the majority of people I know have just summer jobs. So I'd say roughly 15% of my friends have the same or higher level of financial responsibility as myself.

I feel like having "skin in the game" has really shaped my financial habits and gotten me so interesting in investing, frugality, financial education, and financial independence. There are times where I have seriously considered asking my parents if I could start paying for everything.

My questions are these:
1. How much financing were you responsible for?
2. How has that shaped the way you are today?
3. If you could go back and do it all over again, would you change anything?

1. How much financing were you responsible for?

A small inheritance from my grandmother helped pay for my first year of undergraduate education.  The GI Bill paid for the next three and helped with my first year of law school.  I borrowed about $55K (and received a scholarship and worked a little bit) to fund the rest of law school and it took me 18 years to pay off the SL debt ($10K right out of law school and mostly in the last 2 years - 15 years later - once I got the MMM wake up call).

2. How has that shaped the way you are today?

My grades were good when I was getting help from my family and were awesome once I started footing the bill myself.  The discipline I learned in the Army - plus 2 years of living abroad in the military (Hawaii and Asia) - helped give me the drive to do well so I could have more great travel/life experiences.  I will do what I can to give my kids this type of discipline but also try to ensure they are not saddled with debt when they leave college.

3. If you could go back and do it all over again, would you change anything?

Not really, the 2 years in the Army seemed like a decade but they really helped form me as a student and adult.  I do wish that my parents had counseled me a bit more on paying off debt as fast as possible before moving on to work that paid less but was more personally satisfying.

From a policy perspective, higher education is way too expensive for many students today to work and borrow to pay for it alone because they will leave school with a crushing debt just to get an undergraduate degree.  I wish that there was a national service program (both military and non-military) that would cover all college costs in exchange for 2-4 years of service to our nation.

[mikaty]

1. How much financing were you responsible for?
My family was pretty middle-class but struggled at times and throughout my childhood my mom often juggled credit cards to make ends meet.  My mom was very careful to shield us from this and I grew up happily believing we were relatively well off.  We were given an allowance and taught to budget since we were about 13.  While in school I worked part time as a waitress for 3 years before university and managed to save a little.  At this point my mom tried to teach us about investing through basic unit trusts but at such a young age it is a terrible thing to "lose" money.  So I stupidly withdrew my money at a loss (I was told that this was a bad idea and that the money would recover in time but my parents still allowed me to decide since it was my money).  My parents provided well for us (nice house, good clothes, annual holidays to the beach) but we weren't spoiled with "things".  Those we had to get for ourselves.  I remember buying my mom's old computer second hand when I wanted one for myself.

Undergraduate:
As part of my parents divorce settlement it was agreed that my dad would have to pay for 4 years of university (tuition and books), however I would be responsible for any subjects that I did not pass.  I had always achieved academically so this was rather sensible in my view.  I got many academic bursaries and my first year bursaries covered a reasoable portion of my second year as well.  For that reason my parents got me a new computer in my first year to reward me for my achievements (since I was studying IT and my old computer had packed up).  Besides that dad mostly paid for textbooks and whatever my bursaries didn't cover.  I continued working part-time while at university and used the money I earned to buy my first car.  I also lived at home during this time.

Postgrad: I did my Master's part-time while working full time and it took incredibly long to finish.  Initially I was footing the bill until I got a new manager who offered that the company reimburse me as a result of exceptionally poor annual increases at one time.  Apparently there was plenty of budget available for staff development but not for salaries.

2. How has that shaped the way you are today?
My parents taught me a lot about managing money and responsibility.  I have never accumulated general debt or lived beyond my means.

3. If you could go back and do it all over again, would you change anything?
I wish I would have understood that savings were more than just a way to accumulate money to spend on something expensive.  I never valued saving for investing or saving simply for the sake of saving.  I didn't always save with a specific goal in mind but when I made a decision on what those savings would be spent on it never bothered me to completely obliterate my savings and start from scratch.

[happyfeet]

Hubby and I are in our 50's.  Our parents covered all our college expenses and provided a car.  We had to pay for our entertainment money.  Pretty cushy.  We graduated into one of the crappiest economies but we both had a good work ethic and landed decent jobs.  Fast forward to our kids.  We also paid for everything and provided  a car/ins to each kid.  Our kids did not have to pay for books.  Probably too generous. They both had summer jobs and daughter worked some in school.  Both graduated college in four years and landed good jobs.  They both appreciate no debt for sure. But son could have had more skin in the game.  He spent a large chunk of his summer earnings and he was an engineering intern and hadn't saved enough to launch himself when his job landed him outside of where we live.  Gave him a small "graduation gift" and said we are DONE!  Figure it out.  He is.

Probably too generous on our part - but it worked out.

[rpr]

In the country and culture I grew up in, parents pay for college. The unemployment rate was quite high (>20%)  and there was no access to temp jobs in college.  There were no student loans either. Parents could get a loan but almost always those were usually secured against real estate. I got scholarships that covered both tuition and housing for four years. My parents paid for food and gave me a small allowance. Also, at that time it was not acceptable culturally for students to work when they were in school. In fact, I got a couple of summer and winter break internships and my parents were upset that I was working instead of studying. It was strange -- I expected them to be happy that I was making some money. Instead, they were offended.  My parents were not well off -- when I came to grad school in the USA, I had to get a loan in my country for the equivalent of $750 to pay for the expenses for the first month in the USA. However, grad school was completely covered by a student fellowship and assistantship. In fact, I was saving some money from the $1k I was getting at that time from the assistantship and sending it back to my parents in order to pay for education for my three other siblings.

[MicroRN]

My upper middle class parents paid for everything- tuition, books, rent, and meal plan, plus gave me spending money for gas (they paid for the car and insurance), food, and some entertainment.  It wasn't a huge amount of money, and I had part time jobs almost the entire time in was in college for extra spending money.  My parents were incredibly generous and I was incredibly lucky.

Now, I went to a state school with very cheap tuition given the quality education I got, so they were able to afford it without too much trouble.  I wanted to go to an expensive out-of-state school and instead I settled for a very good school that was in my hometown with their agreement that I wouldn't have to pay for anything (nor would I be responsible for any student loans).  Our agreement was that the money would stop as soon as I graduated. 

They also set me on a very good path when I was younger, teaching me about savings and budgeting, so I made it out of school with no debt of any kind and a good financial head on my shoulders when it came time for me to support myself and had even managed a few thousand in savings.  I certainly dabbled in debty in my early 20s, with credit cards and an auto loan, but it was never excessive (though I definitely regret it now).

I had an almost identical story.  My dad was a bankruptcy judge, so I got a lot of early lessons about fiscal responsibility.  My parents lived well, but didn't really care about keeping up with the neighbors.  Mom cooked from scratch at home.  All our cars were older, but paid off.  We got an allowance, but we were encouraged to earn our own money (petsitting/housesitting, babysitting, then eventually a high school job).  Parents paid for everything at a state school, including a small allowance.  However, they gave it to me as a monthly sum and I was expected to budget it out and write the checks for tuition and everything else.

I worked PT for extra money and to put some in savings.  I was expected to work FT during the summers. They provided me with an old but reliable car (14 year old Honda).  I lived with roommates in the student slum apartments.  I don't feel that I somehow would have done any better if I'd HAD to work more.  I very much appreciate what they did because it gave me the freedom to find a job I really wanted after college.  I had no debt, a car, some savings, and the skills for living on a budget. 

[MoneyCat]

I come from a pretty  well-off family, but it has always been I have to pay for half of everything until I'm out of college, where I will be on my own financially. I pay for half of college, car, car insurance, repairs, phone, and everything like that. I don't pay for rent or food to my parents when I'm at home, but I pay in full for anything else for myself (entertainment, dinners, etc).

Now that I'm in college, I see that around 70% of my friends don't pay for anything, and another 15% pay for a few things (like books only or part of a car). I also have 2 jobs in college, but the majority of people I know have just summer jobs. So I'd say roughly 15% of my friends have the same or higher level of financial responsibility as myself.

I feel like having "skin in the game" has really shaped my financial habits and gotten me so interesting in investing, frugality, financial education, and financial independence. There are times where I have seriously considered asking my parents if I could start paying for everything.

My questions are these:
1. How much financing were you responsible for?
2. How has that shaped the way you are today?
3. If you could go back and do it all over again, would you change anything?

I grew up in poverty, so...

1.)  I have had to pay for everything in my entire life except from food, clothing, and shelter from the ages of birth to 17.  I had to borrow to pay for college (whatever wasn't covered by grants and scholarships) and I had to provide my own transportation, my own books, and my own housing.

2.)  Having to be on my own from such a young age with absolutely no guidance was devastating.  I made a lot of mistakes with my college education's financing that I am still paying for today.  I really wish I had at least had somebody to explain financial matters to me when I was a teenager so I could have prepared better.

3.)  If I could go back, I would change my major to something more lucrative.  I would be Mustachian from the beginning and not spend so much money on worthless nonsense that ended up costing me a ridiculous amount of money.

[gt7152b]

I think it depends on the person. My parents had a nice inheritance from my grandfather that allowed them to pay all college expenses for me and my sisters. They wanted us to focus on classes and not be distracted by work. It was nice to have but looking back I just spent alot of idle time that I could have been working. I actually offered to coop (engineering) which would have covered all of my expenses and then some after freshman year but my Dad didn't want me taking the extra year to graduate since my younger sister was in the pipeline. I didn't really understand his reasoning other than not believing that I could cover my own expenses but I wasn't going to argue with giving up my life of leisure just yet. I was very academically motivated without "skin in the game" and making excellent grades was not a problem but in hindsight I could have learned and networked much more than I did. I knew exactly how much studying I needed to be ahead of the curve but I see now that I wasted potential to go way beyond that. I had alot of friends but hardly interacted with others in my classes/ major. It would have been really nice to have that network after graduation.

I was also very frugal in college and knew that my parent's money wasn't endless or an entitlement to be wasted. My mother once told me that it was cheaper to send me out of state than my sisters in state because they asked for so much shopping money. I always tried to find the cheapest places to live, ate on a small budget (mostly crap food but cheap), and didn't shop unless my Mom insisted while visiting. I learned most of these values from my grandfather and my mother's stories about him. He lived through the great depression and knew how important it was to save.

[JoyBlogette]

My questions are these:
1. How much financing were you responsible for?
2. How has that shaped the way you are today?
3. If you could go back and do it all over again, would you change anything?

1. My mom paid for my first semester of University (about $5000) and I paid for the rest
2. I really felt like I earned my degree.  It made me self-sufficient and confident in my ability to take care of myself.  I didn't see it as a "hard-ship" at all.  I worked during the off-terms and paid for everything as I went.  I graduated with no debt. 
3. I wouldn't change a thing.  I am so proud of paying for it myself.

[zhelud]

My questions are these:
1. How much financing were you responsible for?
2. How has that shaped the way you are today?
3. If you could go back and do it all over again, would you change anything?

1. My parents were determined not only to pay for 100% of my college expenses, but to save enough so that I could go to any college I chose.  Their view while I was growing up was that school was my "job" and that providing was theirs. I did have summer jobs and on-campus jobs at college to earn spending money, but my tuition and room/board was always paid for.

2. I've always been grateful that my parents thought of things this way, and I did my best to fulfill my end of things by being a good student.  My husband and I have the same attitude about our kids- their education is of great importance.  College savings is a priority for us, and I do expect that we will have enough to send both of our kids to whatever college they want to attend- and we'll be FI soon as well.

3. Although I am sure I would have learned valuable lessons by having to struggle a bit financially, I think I've done pretty well without them. I am a responsible, hard worker, I try not to complain about silly first-world problems, I am prudent with money, and I try to remember that I grew up with advantages that others may not have had.

[kestnuts]

1.My father bought me a (used, but reliable) car when I was a freshman in college, only because the vehicle I had saved all through high school to buy ended up being a lemon, and I lacked the income to repair or replace it. For my first two semesters of college, he gave me a $150 a month allowance for gas as well. Everything else was my responsibility. I took Pell Grants to pay for my classes, until the community college decided to cut those off (I took several years off, now they're saying they can't give me my aid because I took too long to finish my associates degree) I lived frugally, kept my expenses low, and worked as much as I could stand while still maintaining my GPA, sometimes upwards of 45 hours a week on a full time class schedule.

2. Most of my friends parents were less well off than mine, and some of my friends resented me even for the modest amount of help I got from my parents. I ended up either involuntarily cut off from, or found myself distancing from, a large number of close friends that made me feel less worthwhile as a person for accepting my parents help. It still amazes me how such trivial things can affect friendships. I'm very grateful to my Dad for his help, and while I don't intend to have children of my own, I hope to set up a modest college fund for my nephews when I'm more set financially.


3. If I could do it over again, I would have delayed going to college until after I turned 24, and no longer had to claim my parent's income on the FAFSA. Paying for my classes out of pocket, even at community college, was stressful and I ended up dropping out. When I returned, the college made claiming my financial aid very difficult because even though I had good grades, I hadn't completed a degree in X number of years. If I'd just worked and saved money until then, I wouldn't have had such a hassle to deal with.

[Annamal]

1) My parents paid tuition and let me live at home rent free for uni, I was responsible for paying for everything else (books, clothes, transportation etc)
2) My parents are pretty darned mustachian in a lot of ways so I always had the sense that this was a very temporary arrangement and that I had to save my money ( I did a lot of very strange student jobs as well as a little work for the university and came out of uni with enough money to get me set up to work in another city)
3) I would probably have appreciated my parents more, they are awesome.

One thing I really appreciate now is that I got very used to walking and biking everywhere, that stood me in good stead.

[MidwestGal]

• I joined the military right after high school and have been paying out of pocket as well as using VA education benefits, so all tuition and books were paid/earned by me.  I knew even at that young age that I wasn't financially ready yet, and didn't want to waste their hard-earned money.  My parents did send me small sums of money now and then, I suppose out of guilt because they took care of my sibling's entire post-secondary education.  They may be funding further graduate education in the near future but I'm not sure and it's none of my business.
• I go to every class, do all my homework, work well with others, and get great grades.  It's easier to appreciate the opportunity now that I'm older, I've earned it, and any money that goes to waste from bad school decisions could have been used for my family.  It makes me work harder, and hunger more.
• No.  I needed to learn discipline, and the military taught me that while dangling the benefits for later (now).  I would have wasted tens of thousands of dollars and felt horribly guilty afterward if my folks had paid for my schooling back then.  My sibling isn't a great student, but passes classes even though the drive may not be completely there.