Teaching Personal Finance to Teachers

Discussion in 'Elementary Education' started by MWMnElmed, Aug 6, 2008.

  1. MWMnElmed

    MWMnElmed Companion

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    Aug 6, 2008

    Hello,

    I am going to be doing a workshop for fellow teachers in my district on basic personal finance. I will be teaching on debt habits and reduction/elimination, home purchase guide lines, car purchase guide lines, basic retirement planning, and in general financial peace of mind. I would love for the teachers on this forum to give me feed back on the biggest concerns, best habits, and pitfalls you have faced with your own, or others that you know regarding personal finances. Any help would be greatly appreciated. I want to help my fellow educators make the best financial decisions they can so they can enjoy their profession with a greater peace of mind.
     
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  3. princessa48

    princessa48 Companion

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    One of the best things that I have done is to start a 403B account. I do not get my health insurance through my school since I am covered by my husband's, so I get an extra $100 per pay for opting out of the school's insurance program. I opened up my 403B account and have that extra $100 going into it every payday. Since I've never really had that money in my hands, I don't get a chance to miss it. This will be my retirement spending in addition to my state teacher's pension. Since I opened the account when I was 25, I should have a very hefty amount in there by the time I retire.

    I also have broken down my mortgage payments into weekly installments. This means that instead of 12 monthly payments over the course of one year, I pay 13. That extra month goes right to the principal. I also pay $10 extra each payment. I know that doesn't sound like much, but that is $520 per year paid right to the principal.

    I also put at least $50 a week into my traditional savings account. This makes up my emergency funds.

    I think the most important thing is to establish a solid foundation for retirement at a very early stage in your career. This is especially important when you look at the state of social security. We are not guaranteed any of that, and chances are, it won't really be there when the people of my generation retire. I'm only 27, so I have a long way to go!
     
  4. MWMnElmed

    MWMnElmed Companion

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    In my state (Missouri) because teachers are part of a private pension program we do not pay into social security, but anything that we did pay into SS prior to teaching will not be available for us to draw at retirement because we will be getting a pension check. You are a very smart person and are well on your way to a comfortable retirement!

    Check into ING direct for your savings they pay 3% for savings accounts well above the .25% offered by most banks.
     
  5. bballlady

    bballlady Rookie

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    MAKE A BUDGET AND STICK TO IT. When my husband and I met with our minister prior to our marriage one of the things he told us to do was set a budget and stick to it. We still have a budget going strong today after 34 years! We have never been in debt. If we didn't have the money for something we waited until we had it. My husband is a builder and often got paid when the job was completed. We lived on my salary until he was paid. I made sure that a set amount of my salary was put aside each pay for summer expenses.(I still do this today) I opted for 21 checks instead of 24. Why should the school use my money. Also, find out if you can have your car/house insurance payments taken out of your pay. I do this and never miss the money. Plus I get additional discounts because I have payroll deductions. I agree with the 403B. Have it deducted and you'll never miss it. It is a good idea to try and pay down your mortgage, especially prior to retirement, but if doing so puts a strain on your budget or prevents you from saving for retirement use the money elsewhere. (don't spend it foolishly) My sons never wanted for anything. If it was necessary they got it. Name brand clothes, X Boxes, Disney vacations, were almost nonexistent. But after school activities(sports, Boy Scouts, PAL) were paid for because it kept them busy, and they were with their friends. I guess my main point is Spend within your means, even if it means not having everything you want. You will be much happier in the long run. I certainly have been. (Never been to Disney World and heard they just upped their one day ticket prices by another $10.)
     
  6. SpecialPreskoo

    SpecialPreskoo Moderator

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    DON'T GET A CREDIT CARD PERIOD!! LOL They are evil!! Don't overspend for things in your classroom.

    I'm trying to get out debt myself. I'm in a debt manage program right now. In 4 years I should be able to see the light at the end of the tunnel. :)

    Don't put college classes on credit cards. If you don't have enough money, you may just have to suck it up and get that side job.
     
  7. MWMnElmed

    MWMnElmed Companion

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    We fought our way out of debt in about 18 months, sold a house and a car, and anything of value that didn't have too much sentimental value. Once we were out of debt it was all worth it. Since then I have taken a 50% cut in pay to return to teaching and we are still comfortable financially! Stay on track and you can do it!
     
  8. teacherpippi

    teacherpippi Habitué

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    Buuuut... if you want to establish credit, a credit card is a good way to do so. My husband and I have one, and we pay it off each month, so there's nothing left on it.
     
  9. cmorris

    cmorris Comrade

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    I disagree about the credit cards, if managed appropriately. I find them essential for use online and at restaurants where they take my card to the back. I've heard too many horror stories about skimmers and theft. I don't want my debit card used fraudulently because it can take time for that money to be replaced.

    I also earn rewards. If I need to finance something on credit, which happens rarely, then I can use a balance transfer and pay minimal interest. If people pay their credit cards off every month, they don't get into trouble. However, for many people, credit cards can become a crutch. I recommend using creditboards.com to learn to use credit appropriately.

    Good credit is essential for insurance rates, mortgages, and loans. While some people shy away from credit cards because they know they are likely to spend more than they should, others don't. Individuals need to decide for themselves and make sure that they are armed with the correct information. I love my 12 credit cards and 800 credit scores, especially for being in my mid-twenties. My insurance rates are hard to beat and I got a fantastic mortgage loan.

    Other financial advice: budgets, snowballing for those in debt, emergency funds, retirement planning, etc.

    There are many "plans," and none of them are a one-size fits all. Please find a way for individuals to decide what would work best for them and their families.
     
  10. bballlady

    bballlady Rookie

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    Yes, in today's society a credit card is essential. But for people who are in debt they should be torn up until the debt is taken care of. Going to restaurants and buying online is not an option if you are in debt. Sometimes having many open accounts can have an adverse affect on your FICO score. People need to read each of the 3 large credit scoring companies policies to see what they base FICO scores on. Even though you may have a high score it may not be as high as lenders want because of numerous open accounts.
     
  11. MWMnElmed

    MWMnElmed Companion

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    All great points and advice. I still have one credit card, which I seldom use. As teachers where do you find yourselves overspending or what advice or guidance do you feel would be most helpful to educators?
     
  12. cmorris

    cmorris Comrade

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    I absolutely agree that for people getting out of debt, they should not use credit cards. However, they should not be closed. The credit reporting agencies only compile the information, they do not score it. Fair Issac (FICO) scores it. Credit cards, as open accounts, make up a huge amount of the credit score. They take into account the average age of accounts, credit utilization, and negatives. When I have received loans, most banks require a 650. 750 is considered pretty good. My score and those up to 850, are considered excellent (although it is very difficult to get 850!). I haven't been denied anything since I was a poor college student. In my opinion, it is difficult to get credit when it is needed, like when I had to have my wisdom teeth removed due to an abcess in college. I like having a lot of credit because it is not a temptation to me and I have it "just in case." My credit cards have upped my limits to almost 4X my income, I get balance transfer options constantly, and I have low rates to begin with. None have annual fees. My insurance rates can't get any lower when considering my credit history.
     
  13. Laini

    Laini Rookie

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    Other financial advice: budgets, snowballing for those in debt, emergency funds, retirement planning, etc.



    Are you a Dave Ramsey fan? He uses those terms and I recommend Financial Peace University to anyone who struggles in the area of money (even those who don't).
     
  14. MWMnElmed

    MWMnElmed Companion

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    I am familiar with Dave Ramsey so I would offer the advice that you should not keep credit cards around just because you may need it. Try to establish an emergency savings for those types of emergencies. I recommend ING direct. I get 3% interest paid on my savings and the withdrawls are automatic, so I never miss the money!
    http://home.ingdirect.com/
     
  15. Mable

    Mable Enthusiast

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    I like all of the ideas. Thanks for posting. Would LOVE for you to come to my school and present.
     
  16. paperheart

    paperheart Groupie

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    I think it is awesome that you want to help teachers out financially. I just wanted to caution you that, if you are not licensed in the financial field you need to be careful. For example, the ING 3% is still not the best out there for a short-term savings and investment account. While it is better than .25% it does not beat inflation.

    In general, teachers need to know that "guaranteed" means "guaranteed loss" For example, a guaranteed 3% means the bank knows they can make money off that investment. Afterall, who do you think the bank will give the risk to--you or them? When they give a consumer 3% its because they know they have a great chance of getting a higher percentage when they invest that money in the global economy. Additionally, 3% is losing money because you must subtract taxes on the dividends and inflation is about 4.4%. So in a year you gain 3% but must subtract 4.4% and then subtract taxes = guaranteed loss.

    I am licensed in the financial services field and I am still cautious about what I say to fellow teacher. But you are absolutely correct--teachers need and deserve the help. Maybe you can relay information you get from reputable financial magazines such as Money and Smart Money and even USA Today.

    Its also important not to give global advice with too much authority. In other words, teachers can be in their 20s, or 60s, healthy, or expected to live a shorter time span because of an illness, have a lot of debt, not have a lot of debt etc. Not all advice will fit every person. I sit down with families as my business outside of teaching. Each family gets a financial plan based on their needs and goals. No two families have ever had the same needs and goals so they get different plans, see what I mean?

    There is a neat link I can give you though. I found it the other day while adding links to my classroom blog.
    Financial Education

    Best wishes!
     
  17. MWMnElmed

    MWMnElmed Companion

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    Paperheart,

    I agree with you and the reason I recommended ING was as an alternative to relying on credit cards for emergencies. I think you would agree that is a better option. With many people I have worked with a 3% return on something saved is better than the 0% they are earning on nothing they are saving. I won't be giving specific financial advice, just debt management and general best savings practices. Have you worked with any teachers out side of school regarding personal finance, and if so have you found any common issues that teachers are dealing with? Thanks for your comments I appreciate the advice.
     
  18. wldywall

    wldywall Connoisseur

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    If you want to do that and do it right, then do Financial Peace University by Dave Ramsey. It is the most honest, practical and informative information I have ever recieved on personal finance....most of it is just common sense the common person does not think of. If nothing else, teach his baby steps and his zero-sum budget and the envelope system....trust me it works!
     
  19. cmorris

    cmorris Comrade

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    Dave Ramsey may be appropriate for some people, but not all. His approach is one of those "one size fits all." It is not practical for many people as he advocates zero debt, including student loans. For mortgages, he states you must have 20% down. That is not always realistic, especially on a teacher's salary. His plan also kills your credit score, which determines rates for insurance and mortgages. His approach may best apply to those drowning in debt or those that are personally adverse to any debt at all. However, his envelope system and snowballing can be effective for many people.
     
  20. wldywall

    wldywall Connoisseur

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    The 20% down for mortages is pretty much the industry standard right now. Also it is not hard at all to find mortage companies and insurance companies to do their underwriting themselves and they do not base things on your credit score. Would having a zero credit score make me happy, yes. But he does understand reasons behind protecting it, and paying off bill the way he suggests actually raises your scores which makes the other two issues non issues.

    As for student debt, I wish I knew of him before I took out 83,000 in student loan debt, it will take me 40+ years to pay it all off.

    I just do not understand anyone who tells me or anyone else that having debt is a good thing. Were were debt free besides my student loan before we bought our house. The freedom we had not having a million payments was wonderful. We have always paid cash for our cars (and I always had a nice one too) Debt is NOT neccessary.

    The debt snowball is something everyone can use, one of the major reasons people divorce and lose their homes is because of excessive debt, such as car loans and credit cards. The budget is the best one I have ever seen, and the envelope system is just plain old fashioned common sense. When you really study his methods and his reasoning it is one, not so absolute, and two good advice. Credit score is not everything. My credit score is low because of my student loan debt, but guess what? My insurance rates have GONE DOWN since I found an insurance agency that does its own underwriting....how much a year.....about $2000 a year. Worth it if you ask me.
     
  21. sue35

    sue35 Habitué

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    Oh Oh Oh!! Maybe you can answer a question that no one can answer for me. I asked this before but not to you.

    If I am going to stop working due to a disability by around 30 is there any reason I should put money in my retirement fund? I won't work that long and if I got it at 30 it would be such a small amount I would rather have the money now.

    Other than that question (which I guess really only applies to me) I would LOVE for someone to tell me what to do with my money. How much to put away and how to budget. For example, is it worth it to put such a small amount away per month?
     

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