I help prepare kids for their eventual financial futures. Which means, I get them when they’re young and teach them how to stay out of debt and build wealth. So being confronted with young adults who are already thousands of dollars in debt is a bit sobering for me.
I was asked to work with a group of foster kids (they’re actually 16-23 year olds) and teach them stuff about money. So on my first visit, I played a little game to see what they already knew. I was impressed that most were aware of the perils of credit card debt. But they were surprised to hear about the importance of credit scores and the power of compound interest. When I left, I handed them a tracking sheet so they could write down all of their expenses for the next week’s class, which was today.
Not one kid filled out the tracking sheet. So I found myself punting. I did a quick review of needs and wants. One girl showed a pack of cigarettes as one of her wants. Great. Another one had a coffee from Starbucks. And yet another was sitting there with a bag of Pepperidge Farm cookies and a large soda. “Lunch?” I asked. “Nope. I had to get cough medicine and it was there at the checkout.”
My goal for the day was to have them look at their tracked expenses and see where they were spending money that they could cut back on. Apparently we didn’t need the tracking sheets because I had physical samples sitting right in front of me.
So I showed them how much their oh, it’s just a few dollars spending habits cost them over a year. Cigarettes: $1264/year; Starbucks coffee: $1440!!
As expected, they were all shocked, and that includes the social workers who were there. Somehow this led to some pretty interesting discussions about debt. Specifically, their debt.
One has $120 in debt. Another isn’t quite sure but it’s in the hundreds. All owed to family and friends. And one, owes, she thinks, a whopping $6000. “Credit card debt?” I asked? “Nope. Fines,” she says. “Everything’s gone to collections. And you have to pay interest on it.”
I asked her how it happened. It started small with not paying the cable bill, then utilities. “It just kept snowballing,” she said. She’s so overwhelmed she can’t see a light at the end of the tunnel.
The next time I meet with them it will be in a smaller group. They will put together a concrete plan to get out and stay out of debt.
For so long I’ve been working with kids before debt. Today was my first real exposure to a group of kids after debt. My goal is to one day soon work with a group of kids post-debt. This group of kids.