Raising Kids in the Age of Foolishness

There are enough fools in the world!

Raising Kids in the Age of Foolishness:  Financial Advice #5

Warnings Against Debt and Greed

•             “The borrower is slave to the lender.” — Proverbs 22:7

•             “Do not wear yourself out to get rich; do not trust your own cleverness.” — Proverbs 23:4

This one is often quoted. When a man borrows money, he must work it off. Every month the bill comes due with interest. If you pay $100, you only get credited with paying $95. If you owe $1000 and you make minimum payments at 25% interest it will take you 52 years to pay it off and it would have costs you $25,000. You might want to check my math. This is why Dave says if you want to buy something, save up and pay cash in full. Sell something you own to get something you don’t own. Children need to learn two words: repossession and foreclosure. The bank owns that shiny new car sitting in your driveway, and they will own it until you make the final payment, and they send you the title. The bank owns your castle, moat and all, until you pay it off in thirty years. There is only one letter difference between “owe” and “own.” That difference is huge.

Slaves wear themselves out just to appear rich. They “share-crop” more than they can handle thinking they will make enough to save enough to break the cycle. They rob Peter to pay Paul until both Paul and Peter have disfellowshipped them. It is a roller-coaster ride that will leave you screaming, “I want to get off.”

Parents must teach their children wise financial practices. Teach them how “buying on time” works. Show them how credit cards can be used responsibly to build credit, offer temporary opportunities in transacting business, or useful in accounting if you pay them off before the interest kicks in. Personally, I like the practice of “no interest for 18 months” if you have the discipline to payoff that new HVAC in 18 months. The key to training our children in this area is teaching them self-discipline and delayed gratification. You might try lending to your children in a controlled environment. If they want something and you tell them you will buy it if they are willing to pay you back, write up a contract, a promissory note with terms and conditions. If they don’t pay the premium on the first, tack on interest to the loan. If they fail to pay by the end of the term, repossess those pokey man cards. Foreclose on that doll house. Or tell them they can work some extra chores to earn enough money to buy what they want and avoid answering to their master. They will get dose of how the world works.