Deanna Martin, writing for the Associated Press, has an article on Lawrence Central High School Teacher, Daniel Jackson, and his personal finance lessons. Seems like I could have done without my shop, cooking, art, or sewing classes for better education in personal finance. But, I don’t recall learning much of anything about mortgages, credit cards, checking accounts, utility bills or any of that nuts and bolts of running a household.
Soaring foreclosure rates and credit-card debt are spurring some states, including Indiana, to consider requiring personal finance classes to get a diploma, sparking criticism that parents should teach financial basics at home instead of schools packing life lessons into an already tight schedule.
God forbid schools teach life lessons. I’m not an advocate of the legislature micromanaging curriculum. I’m also not a huge fan of vocational courses — preferring instead the more general kind of thinking classes: science, math, english, literature. But money management is a lot more important than a lot of the crap I remember sitting through during my school years. For some reason, I remember getting stuck in two different 9 week classes of sewing. Those are hours of my life I’ll never get back. If schools are still forcing kids to take that kind of class, they need to ditch it and teach kids the basics of managing money.
In the course of debt collection, I don’t know how many crash courses I’ve had to give in the concept of interest.
Debtor: How much do I owe?
Me: $2,000.
Debtor: But it was only $1,500 when the judgment was entered.
Me: Yeah, but that was like 5 years ago.
Debtor: But I’ve been making payments and the balance never goes down.
Me: Your payments have generally been about $20 every 2 or 3 months and you haven’t made any payments in 6 months.
Debtor: But the balance hasn’t gone down at all, it has gone up.
Me: Every judgment in Indiana accrues interest at the rate of 8% per year.
Debtor: That’s not fair!
Me: Sure it is. First of all, my client isn’t a bank and didn’t agree to make you a loan. Second, interest just reflects the fact that money is more valuable now than it is later.
Debtor: Huh?
Me: Well, tell me this, would you rather have 100 bucks now or 100 bucks in ten years?
Debtor: Well, right now of course.
Me: There you go. All you have to do if you want to avoid more interest is pay the balance in full right now.
Just take a bit of exception to your statement on vocational education—perhaps because I spent 38 years teaching a vocational class (term generally dropped in order to be in line with “new education” thinking.) Point is that in my classes (agricultural science and business) the topics you discussed were included each year as part of business management class and section in other classes—and in a format set to interests and experiences of the students in the class. Now would I go so far as to say none of those students ever had any problems later—never since about anything in a class room simply (generally) does not relate (in student’s mind) to real world for them.
Gee, maybe we should have considered mandatory business math classes back in the 80s, when we were so busy removing the distinction between usury and loan sharking, and essentially eliminating FTC enforcement of deceptive practices law.
sparking criticism that parents should teach financial basics at home instead of schools packing life lessons into an already tight schedule.
If I had turned that sentence into my journalism professor, he’d have kicked me in the butt. Sparking criticism from WHO? Identify the people who oppose the notion.
I’m not sure I understand your objection to “vocational” courses. There have always been “applied” courses – Applied Physics teaching practical application of abstract physics theory, Applied Mathmatics doing the same. Students do better in applied courses because they see abstract concepts illustrated in real world examples. It’s a much better way to teach if you want students to remember what they learned months or years after they turn in their last final. Which we presumably do.
I agree with Jack, vocational classes aren’t the problem and serve a portion of the student population very well.
A local school corporation melded their vo-ag classes with their bio and life science classes. They have a greenhouse, a live animal barn and a rigorous classroom curriculum. The program is run like a business, is fairly self-sufficient and draws kids from many surrounding school districts. Typically the kids who graduate from the program each year (8-10) earn the equivalent of 2.5-3 full ride scholarships.
I am sure they would be better served sitting in a general kind of thinking class.
Also, using an example of a person you are collecting debt from is worthless. Most likely, even if they had been offered a personal finance class, they would still have problems.