photo by OiMax

Welcome to Sunday Conversation #12!  If you would like to participate in next week’s Sunday Conversation, simply ask your question in the comments section of today’s post and I will respond next Sunday. Remember, any subject is on the table (but keep it family-friendly).

When your teens leave the nest, how and when do you shift financial responsibility? I think college is a great transition period in life. You are away from home for the first time and take on new freedoms and responsibilities. Financial responsibilities just naturally start to shift because mom and dad are not there to take care of you anymore. But what about children who do not go away to college? My husband and I have an 18 year old at home who is going to the local junior college. So now the question is when and how do we start shifting her finances from our responsibility to hers? Should she be paying for her own cell phone now? What about medical bills? Car Insurance? What would you do?

- J

I can answer your question from a variety of angles, as I went off to school as a traditional student for my first two years of study, then returned home and lived with my grandfather while attending school and working part time, and finally finished up by working full time to put myself through school.  Each of these experiences taught different lessons, and they were all important.  As a parent, I have some ideas on how I’d like to see my own children’s educational plans go, but I’m all for allowing them choosing their own path.

In your situation, with an 18 year-old living at home and attending a local college, I think it is fair to begin to shift some of the financial responsibilities to her, starting with luxury items such as cell phones, subscriptions, extra clothing, etc.  I personally would not go so far as to charge rent to an adult child living at home while attending school, but if they decided to leave school to work full time I would like them to make some contribution to the household (unless there are extenuating circumstances such a divorce, illness, or financial hardship).  I would also continue to cover college-age children under my own medical insurance plan, as long as the provider allows for it.  Auto insurance may have a similar allowance for college kids, but if not I would offer to help with insurance assuming a car was required to attend school and/or work.

When I attended school as a traditional, on-campus student for my first two years I racked up a bit of student loan and credit card debt simply from living beyond my means.  I had worked part time jobs since my sophomore year of high school, so I was used to having a small amount of “fun money.”  However, the freedoms of a college lifestyle away from home introduced new opportunities for “fun,” so I spent in excess of my part time wages.  If I had it to do over again I would have attended a local school first, lived at home, and saved money and attended a larger university to complete my four-year degree.  Then again, I have no regrets because I met my wife at school during those first two years.

Ideally, I would like for my kids to be able to attend school without the additional burdens of a job.  I was raised by a single parent, and received no financial support from my father.  While my mom was able to cover room-and-board, and help with tuition, she didn’t have much left over for living expenses.  I worked part time to pay for gas, food, and when I moved to an off-campus apartment, a few of the utility expenses. There were some advantages to working, particularly later on when I worked full time to pay my own way.  I certainly appreciated the experience more, and paying my own tuition added to the incentive to earn good grades.

If your daughter works part time consider beginning to transferring over the responsibility to her for paying small bills.  If she does not work, consider providing a monthly stipend for her to live on, and out of that have her pay her own bill(s) such as the cell phone.  This will at least get her used to the idea of living on a budget, and begin to reinforce financial responsibility by allowing her to manage a finite supply of cash each month.

What is your favorite thing about running this website?

- Luke (@Money and Fitness Blog)

I touched on this briefly in my latest roundup post last Friday.  My favorite thing about running Frugal Dad is receiving emails from people who have been inspired to take control of their financial destiny. Unless you are famous, or have access to someone famous, or have access to a lot of money for marketing and self-promotion, it is hard for your ideas to have much reach.  Blogging has introduced a relatively inexpensive way to reach others and share ideas.  The thing I most enjoy about blogging is that I know every time I click “publish” nearly 3,000 people will receive my content.  In some ways that is a little intimidating, but I have embraced it as an opportunity to inspire others.  Maybe someone will learn from my mistakes.  Maybe a young person will avoid the same traps I fell for.  Maybe a seasoned financial expert will rethink their position for the better of their family’s financial future.

For others, Frugal Dad may just be a source of entertainment. I’m happy with that, too.  After all, we could all use a little comic relief these days!  Whatever your reason for visiting Frugal Dad, I’m glad you’re here and I hope you’ll stick around to follow me on this journey.

The calendars have been flipped to August, the beginning of a new month full of opportunities.  Make it a great one!

photo by OiMax

Welcome to Sunday Conversation #11! Just one question this week, but it is a deep topic and is probably deserving of its own post.  If you would like to participate in next week’s Sunday Conversation, simply ask your question in the comments section of today’s post and I will respond next Sunday. Remember, any subject is on the table (but keep it family-friendly).

“I have an 8 year old daughter who is very… uh.. materialistic. I’m ashamed that she loves her “things” A lot of people say it’s her age. Is there any way to curb this obsession? (I know turning off the TV is probably a good start).”

-Dana

Dana, this is an issue every parent struggles with at some point.  You’re correct in your assertion that the media certainly isn’t much help.  One of the reasons we decided to live with only basic cable was because of the constant advertising barrage children are subjected to, especially on channels dedicated to children’s programming.  The Disney Channel, for instance, is seemingly benign, but a large majority of their programming incorporates advertising for their own products, or plugs for other products, and most of their shows promote a never-ending message that rich is cool, and designer clothing is always “in.”  I equate most of their shows to soap operas for kids.

But television is not the only contributor to influencing a child’s level of materialism.   Parents are ultimately responsible for helping kids develop a frugal approach to life through their own example.  How many times have you heard parents bragging about their car, or their home, or their fabulous vacation in front of their kids?  How many times have you seen or heard parents making fun of an old beat up car, or a run-down house.  Over time these examples mold kids’ attitudes towards material things, and they incorrectly think anything less than the best is not good enough.

Sometimes, despite our best efforts, children develop an unhealthy level of materialism on their own.  How do we change these attitudes once they develop?  I personally believe the best way to cure kids of material desires is to make them humble.  Let kids volunteer with you at a local soup kitchen, or ride with you to donate items to the Salvation Army.  Make it a teachable moment by taking some time during the ride to and from to explain that some people have no beds, or bikes, or toys, or even clothing.  Do so not in the spirit of making them feel guilty for having nice things, but in the spirit of developing your kids into becoming “givers.”

Another idea is to allow your children to spend some time talking to others who have sacrificed, or done without, especially older generations who grew up in the Depression era.  My grandfather was born and raised in the Depression era, and often times went without shoes in the summer, and at times went without lunch or dinner when there was no money for food.  There were no electronics, no toys, no cars, no computers, no televisions, and much of the time, no power.  It is hard for kids in today’s environment of abundance to comprehend living with so little.  We are fortunate that my grandfather is close to both of our kids and has shared many stories of his youth with them.  I know it has had a profound effect on me, and as my kids get older it will on them as well (especially as I retell many of these stories to them).  If you don’t have a “Papa” to talk with at home, visit a retirement home, or church, or even consider picking up a kid-friendly book on the subject.  Children of the Great Depression is a great introduction to the history of the Depression era for young readers.  Welcome to Kit’s World is another great title, and aimed specifically at young girls.

Do you have ideas for helping to raise “frugal” kids?  Please share in the comment below, and remember to ask a question if you would like to see it addressed next Sunday.

photo by OiMax

Welcome to Sunday Conversation #10! If you would like to participate in next week’s Sunday Conversation, simply ask your question in the comments section of today’s post and I will respond next Sunday. Remember, any subject is on the table (but keep it family-friendly). 

“I just found your blog and I am enjoying catching up on all your posts. I was wondering if you might have a suggestion for a website that tracks CD rates. My Mother is a widow who is watching her pennies very carefully now that Dad is gone. She has money that needs to be rolled over and I know that there is a better way than watching the paper.”

- Janelle

Janelle, I’m sorry to hear about the loss of your Dad.  I know this is a difficult time for your family, and having financial responsibilities thrust upon your Mom makes it even more stressful for her.  As a fellow reader (Maha) recommended, I also find BankRate.com to be one of the best online sources for finding rate information.  In fact, BankRate.com also offers rate information on credit cards, mortgages, and a variety of other financial products.  Here are a few other sites that offer CD rate information:

• eMoney Central
• Bankaholic
• Interest.com

I hope one of these sites will provide some leads.  In a low-interest environment it is difficult find deposit products that offer high yields.  You may want to encourage her to check out a high-yield online savings account such as ING Direct to park money moving in and out of CDs, or other investments.  This way she is at least earning a decent rate in the interim.

“Where do you get the pictures you use on your blog? I’m working my way up to starting one of my own, but I know stock photos are expensive.”

- Maha

Maha, nearly all of the photos you see here at Frugal Dad are used under the Creative Commons license at Flickr.com.  Occasionally, I take my own pictures, such as those you may have seen of our garden.  Check out this thread over in Frugal Dad Forums for more information on using pictures from Flickr.

“My other question is this, have you addressed or discussed separate spousal accounts? We do that, and we have a joint account to pay for household stuff. We each get an allowance to spend as we please. Just curious about what you and your readers might think of this.”

- Also from Maha

I know many couples who have separate accounts, and a joint account that they both contribute to for household bills, the mortgage, etc.  This scenario seems to work particularly well with couples who marry late, or who have been divorced before.  In other words, separate accounts seem to work better for those couples who have lived independently, financially, for some time prior to marriage.

My wife and I have had combined finances since the day we married.  All of our accounts are joint accounts, and we pay all expenses (except for those related to my freelance work) out of a single checking account.   I don’t think having separate accounts is a necessarily a problem, unless one partner is hiding finances from the other.  Hiding finances is a symptom of a dysfunctional relationship.  So if you maintain separate accounts make sure your partner knows about them.

Welcome to Sunday Conversation #9! If you would like to participate in next week’s Sunday Conversation, simply ask your question in the comments section of today’s post and I will respond next Sunday. Remember, any subject is on the table (but keep it family-friendly).  All four questions this week related to money conversations, or making money.  Let’s have a look at what’s on reader’s minds.

Foxie asked an interesting question, “I ended up hanging out with some friends on the fourth, and one of the wives in the group mentioned lasik surgery. She continued on to say that she can only get it after her baby is born, her husband comes back from an upcoming deployment, and they get a handle on their credit cards. When she mentioned credit cards, I couldn’t really believe it. I suppose I just have been affected by the money taboo, but it was really unexpected to hear and made me feel rather awkward. (Not to mention I was just meeting most of these people for the first time, and somewhat admiring the house they had. That I knew there was a mortgage for, which I definitely wasn’t jealous of.)

My question, then, is this: Has anyone ever said something about their financial situation that just made you uncomfortable? I was rather shocked that she would so openly admit to having trouble with credit cards, but I suppose that’s the norm in America today, huh?

It is sad when mentioning that you are buried in credit card debt barely gets a reaction from company these days.  I suppose we have all been desensitized to huge debt loads because unfortunately it has become the norm. Think about how many times we read about people in blogs or news segments who are graduating school with $90,000 in student loan debt, or $50,000 on credit cards.  Twenty years ago people would be shocked.  Not today.

I’ve heard things mentioned by people at parties or in casual settings that have made me shake my head, and I’ve developed an ear for it as a blogger because it often turns into a story (with the names changes to protect the innocent!).  Just the other day I was writing at a local cafe and two girls were talking about a guy they both apparently liked.  For nearly ten minutes (it seemed) they went on and on about how much his car cost.  As if being able to go down to a car lot and sign up for a 60 month loan made you a financial catch.  Sad.

Hadias asks the following blogging question:  “What advice can you give regarding making money through blogging? What are some of the main ways that a person could earn money through their blog?”

There are a variety of ways to make money blogging.  Some are more successful than others, but just about all of them require one main ingredient–traffic.  Without traffic it is difficult to generate enough page views for ads to be profitable, either on a per-impression or per-click basis.  My best advice would be to build a strong readership, and traffic numbers, before getting too involved with trying to earn big money via blogging.  I made the mistake of trying to monetize Frugal Dad before it was ready, and by putting the “cart before the horse” I almost became discouraged and gave up, just before things really began to take off.  I’m far from the expert on this subject, but I know a great resource that I’ve used since day one.  Problogger.  I highly recommend signing up at his blog and reading through the hundreds of archived posts, all on the subject of building a better blog, monetization, etc.  Darren really has created a phenomenal resource for bloggers.

Tiffanie asks, “With Christmas approaching (ok…so it’s 5 1/2 months away, haha) and my husband and I on a VERY strict budget with very little to spend…how would you approach buying gifts for immediate family members (9 in all…4 parents, 2 young siblings (4 and 10), 3 siblings 19 years old) without appearing cheap? Is it worth it to take some of what we would send to credit cards in order to buy gifts? I don’t think we’ll be able to afford more than $25 per person! (and 6 of the 9 also have birthdays in December!…) This is the first year we’ve been so strapped for cash (I lost my job) and I’m not sure how to approach this! Any advice would be appreciated.”

There are a couple different approaches to take here.  I’ll describe things we’ve done in the past and you can decide which works best for your situation.  When I married my wife I entered a big family.  At the time my wife had eight cousins she was very close to, three grandparents still living, a mother and stepfather, and four aunts and uncles.  Needless to say, Christmas was a budget concern.  The first year I wanted to make a good impression, so we gave each cousin a little money and bought gifts for all the adults.  This was an expensive approach.

A few years later we recommended all the adults draw names, so each adult would only have to buy one present and then we could all pick up something small for each child.  It didn’t go over very well, but I still think this was a good compromise.  As the kids got older we continued to try to give a little money to each of them, but cut out gifts for the extended adults (and grown kids, 18+).

Finally, I’m sorry to hear of your job loss.  Unless your situation improves greatly between now and Christmas, I think any reasonable family member who knows your situation would understand you not buying them a gift.  There are many things you could do inexpensively in lieu of buying a gift.  Consider writing a family newsletter detailing the events of the past year for you and your husband (and any kids).  Or, perhaps you could put together a family recipe book to give to the adults and grown kids with records of favorite family recipes.  Family pictures in an inexpensive frame are also well-received gifts.

I guess the bottom line is this, you don’t have to spend a ton of money in the name of not appearing cheap.  You know your family’s situation better than anyone, and if you can’t afford to give gifts this year, then that’s just the way it will have to be.  You have to do what’s right for your household.  It might hurt someone’s feelings, but they will probably be over it by New Year’s!

Castocreations asked, “My MIL wants to buy a car. She plans to pay cash but she’s also on a very fixed, limited budget as she is retired with no retirement plan.

And she wants to pay cash for a NEW car!!! I have tried to talk her out of it, and think I’m making headway, but she continues to resist. She’s afraid of a “junker” and seems thrilled with the idea of a brand new car. *sigh*

I KNOW it’s a bad idea and we’re trying really hard to make sure she does the right thing. What are some concrete arguments and reassurances we can give her?”

This is a tough one.  Besides the challenge of trying to convince an “in-law” of anything, curing someone of new car fever is an uphill battle.  I would try to reason that gently used, late model cars are great buys because someone else has taken the majority of the hit on depreciation.  Remind her that a new car is “used” as soon as she drives it off the car lot.

New cars many times (not always) come with higher insurance premiums, which could add to her monthly expenses, something she can’t afford on a fixed income.  Tag fees and taxes could also increase her expenses more than a used car.  Also emphasize the opportunity cost of buying a more expensive new car versus a used car.  Let’s just say the difference is $10,000.  How much would that $10,000 earn if left untouched?  How much more security would she have with an extra $10,000 in savings, not tied up in a car?  And of course if the used car required any repairs she could use some of that $10,000 and still be way ahead.

Thanks to everyone for their questions, and the lively discussion we had on last week’s post.  Remember, if you have a question you’d like me to address next week, just leave it in the comments section.  Have a great week!

photo by OiMax

Welcome to Sunday Conversation #8! If you would like to participate in next week’s Sunday Conversation, simply ask your question in the comments section of today’s post and I will respond next Sunday. Remember, any subject is on the table (but keep it family-friendly).

Elliott of 21st Century Dad writes, “What are your thoughts on disclosing details to your children about having financial difficulties? While growing up, my parents had their own business so cashflow was always suspect. They did their best to insulate us from their money woes, but they weren’t very good at hiding the stress they were under. Despite these difficulties, they did managed to scrape together money (or debt) for school-related expenses, the occasional persuasively worded request, birthday gifts, and Christmas gifts.

What’s your take on this?”

Elliott, yours was the lone question this week, but one worthy of an entire post dedicated to its response.  When I was growing up, money was a taboo subject between parents and kids, and I think for the most part it should stay that way while kids are small.  I don’t particularly like the idea of sharing money woes with kids because it adds to the stress they already feel from the normal pressures of growing up – academics, fitting in, peer pressure, etc.  However, I do believe in talking about general personal finance concepts at an early age and instilling a healthy fear of large debts, overspending, etc.  My daughter has known about credit cards and their potential danger since she was five or six years old.

As kids grow older I think it is fair to clue them in on some aspects of your financial situation, but only in general terms.  I think is perfectly fine for teenagers to know you are working to pay off debt, or to save up for a down payment on a new home, etc.  Sharing these details with them will make the “no’s” to life’s wants more easy to accept because there is at least some tangible justification behind them (although “because I said so” is the official, universal parental justification for responding to any request – no explanation required).  I’m not sure I would share specific details with my kids such as my exact salary, or the exact amount of debt we owed, or the amount of our mortgage.  Stick to general terms.

Even though we may not intend to share the stress of money problems with our kids, children are intuitive and will eventually pick up on the strained relationship between parents.  This is just another reason to avoid debt, and work towards debt freedom if you are in debt.  It’s often quoted that money fights are one of the leading causes of divorce.  And many of those fights happen between couples deep in debt and struggling to make ends meet.  If you can’t get motivated to get out of debt for your own financial peace, at least do it for the peacefulness it brings to the rest of your household.

I’m interested to hear how readers feel about Elliott’s question?  Do you share money woes with your kids?

photo by OiMax