I help prepare kids for their eventual financial futures.\u00a0 Which means, I get them when they’re young and teach them how to stay out of debt and build wealth.\u00a0 So being confronted with young adults who are already thousands of dollars in debt is a bit sobering for me.<\/p>\n
I was asked to work with a group of foster kids (they’re actually 16-23 year olds) and teach them stuff about money.\u00a0 So on my first visit, I played a little game to see what they already knew.\u00a0 I was impressed that most were aware of the perils of credit card debt.\u00a0 But they were surprised to hear about the importance of credit scores and the power of compound interest.\u00a0 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.<\/p>\n
Not one kid\u00a0filled out the tracking sheet.\u00a0 So I found myself punting.\u00a0 I did a quick review of needs and wants.\u00a0 One girl showed a pack of cigarettes as one of her wants.\u00a0 Great.\u00a0 Another one had a coffee from Starbucks.\u00a0 And yet another was sitting there with a bag of Pepperidge Farm cookies and a large soda.\u00a0 “Lunch?”\u00a0 I asked.\u00a0 “Nope.\u00a0 I had to get cough medicine and it was there at the checkout.”<\/p>\n
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.\u00a0 Apparently we didn’t need the tracking sheets because I had physical samples sitting right in front of me.<\/p>\n
So I showed them how much their oh, it’s just a few dollars<\/em> spending habits cost them over a year.\u00a0 Cigarettes:\u00a0 $1264\/year; Starbucks coffee:\u00a0 $1440!!<\/p>\n As expected, they were all shocked, and that includes the social workers who were there.\u00a0 Somehow this led to some pretty interesting discussions about debt.\u00a0 Specifically, their debt.<\/p>\n One has $120 in debt.\u00a0 Another isn’t quite sure but it’s in the hundreds.\u00a0 All owed to family and friends.\u00a0 And one, owes, she thinks, a whopping $6000.\u00a0 “Credit card debt?”\u00a0 I asked?\u00a0 “Nope.\u00a0 Fines,” she says.\u00a0 “Everything’s gone to collections.\u00a0 And you have to pay interest on it.”<\/p>\n I asked her how it happened.\u00a0 It started small with not paying the cable bill, then utilities.\u00a0 “It just kept snowballing,” she said.\u00a0 She’s so overwhelmed she can’t see a light at the end of the tunnel.<\/p>\n The next time I meet with them it will be in a smaller group.\u00a0\u00a0They\u00a0will put together\u00a0a concrete plan to get out and stay out of debt.\u00a0<\/p>\n