We're down to just two semesters left of college tuition. Paid on Friday, direct from our checking, spring 2022 is in the financial books. Of course I had to move money from a different account. I noticed again the credit card and payments option. Both have a 3% surcharge. Woah. Our portion after her scholarship is enough. While paying such a large chunk at a time is a hard swallow, but over the course of 4 years, that 3% charge would be enough lost cash to equal an entire year of her current meal plan. Alternative thinking it covers her added study abroad costs.
We've made dumb financing mistakes over our years as a family. Who hasn't, but we learn. Whenever possible, we try and plan ahead by paying ourselves in monthly increments and sticking aside for when due. It helps me delay purchases when I think about the cash needs and what we'd sacrifice in interest payments by not paying in full. As we get closer to retirement and a fixed income, it'll be critical not to add costs through fees for convenience or because we don't have the funds yet.
We've always been a use the credit card but pay it off before interest accrues family. I still think we need to tighten the use of the card in general. I don't want to lose the convenience or the cash back points, but use it more like a debit card where we track. I'm guilty of scratching my head when we pay the bill, not even remembering some of the items purchased. It's become too easy to pull out the card for minor purchases- fine if needed, but did I?
I remember shopping with one of my sister's who went crazy buying at a sale. This was ages ago when my older kids were still young and she had teenage kids at home still. I made a joke about my check book would be crying when I pay the bill. She dead face looked at me and said, well that's why I spread it out over several months. I still remember thinking that the interest had to just about wipe out her savings. She's my sister who's never denied herself and seems to be able to afford her lifestyle, but that did stick with me.
Now I'm trying to retrain myself to avoid a different dumb fee- the lack of cash savings fee. I know the more we can save in cash, the longer we can go before withdrawing from DH's retirement or the Roth. If we avoid losing interest until I retire, that's the same as avoiding lifestyle fees now. I'm not looking for austerity- just stopping stupid spending. It helps me decide, beyond our budget, if the price of something is the additional quality of life worth that much less in savings. Many times I suspect the answer will be no.
Right now I'm pricing out options for a reconisance trip to Washington DC and New York. As these are true fact finding, we'll try and avoid many restaurant meals, and give my daughter a taste of what living lean in a tiny apartment might be like. Relocation is expensive and so is accepting a position for less salary than she'll need to comfortably live on. This trip will be worth the money to give some direction to our daughter. I wish we had done more for the older two in the exploratory phase. Live and learn.
I remember when my children were small and I would say we couldn't afford this or that, and their answer was always, just write a cheque mommy. They've both since learned that doesn't work.ReplyDelete
I have a spreadsheet where I track my spending weekly. It helps me keep on top of the credit card (which I also pay off monthly to avoid interest costs). It's far too easy to just use the card and ignore how quickly it adds up.
Perhaps your daughter will consider having a roommate in her new home?
She may have a friend move east as well and they'd likely be roommates. She still wants to see possible options. I remember myself telling my mom to just write a check.Delete
I learned budgeting from my mum. She always said 'if you can't afford to buy it now then how will you be able to pay for it later'. If you want something badly enough save up for it. It's something I have always done and thank my lucky stars that I have enough savings in the bank to last me some time. Tony will retire this year but if he wanted to leave early we could manage.ReplyDelete
Well done to you learning from your mom. My husband has two years he says, but I too would like the flexibility to him to retire earlier.Delete
It's good to be able to see the light at the end of the tunnel on college tuition. I like how you compared the 3% fee to a years worth of meals. That is a lot of money!ReplyDelete
Yes, paying interest on credit cards is not the best financial move to make. You've done it right, Sam. :)
3% each semester really adds up. We've avoided interest but probably added other expenses due to convenience. That's what needs nipping.Delete
I remember at one time interest rates on credit cards were around 25% (I have no idea what they are now) and I was horrified. Buying now and paying later on a CC is insanity as far as I'm concerned. Also, when I lived in the States, that $25 charge for a bounced check??? I remember my husband bounced about six one month and I went ballistic at him! You are SOOOOO right to be planning ahead and avoiding those kinds of charges!ReplyDelete
Bounced checks and overdrafts can kill finances. Plus, if the bank does biggest first which they do, rest bounce making it worse.Delete
Hello Sam, It is an interesting and satisfactory exercise to compare a savings to an expenditure, but some people (certainly not you!) take this idea too far, and when they save money, they feel entitled to spend the same sum on something else, often frivolous. An example of this thinking might be, "I got the bank to rescind that $30 fee, so now we can celebrate by going out to dinner."ReplyDelete
We are saving for our early retirement now, so game playing defeats that purpose. I just like to see what the savings can illustrate.Delete
Smart move to do the trips with your daughter.ReplyDelete
I am not familiar with living in DC at all but know all too well about living in NY. It is not only the tiny apartments but the necessity of having a tiny apartment and a roommate (or 2) that can be difficult.
I know nothing of New York other but than it is expensive. Roommates are likely either place- studios would be more than 1/2 her take home potentially.Delete
When my son was little we used to give him a small amount of money to spend in the town. To start with he bought sweets which didn't last long and gradually he realised that he could buy toys or books from the charity shop and still have money leftover. When he was 15 he wanted a laptop and we made him save up for it so that he learnt to budget. He's earning a salary now, but still has worked out deals for his gym membership and other outgoings. ArilxReplyDelete
My older kids were savers, but for items. Now both are savers for their goals so nice to see. Youngest is still figuring things out.Delete
I have made every bad Fianacial move at least twice. But I am learning.ReplyDelete
Me too, Kim. We still have a long way to go and much to learn, but we sure are better than we were when we started our journey.Delete
No one does it perfectly. I cringe when I think of several blunders.Delete
I avoid paying interest. It hurts too much to have that extra charge! I only have two things that would charge me interest, anyway. Once, I stood at a Coke machine searching for change. My son suggested I write a check.ReplyDelete
Now coke machines take credit cards!Delete
Kudos on helping your kid for understanding money management. My folks never thought of that. Luckily, I have been mostly responsible with money although, I admit I could have done better between 27 and 32.ReplyDelete
That's an age when we think we should have nice things. We've been working and now time to indulge.Delete
All those little things really add up. I rarely use my credit card - only when I have to book a hotel, or I think I'm out of money on my debit card (our debit cards do not have the backing of a credit card here - if you run out of money in the account, you're out). I also pay it off immediately.ReplyDelete
Good for you for helping your kids get savvy at finance!
I rarely use my debit- just a tool we never got in the habit of. I just need to think more before any plastic comes out of my wallet.Delete
We went back to using cash (or at least as much as possible). I feel we have so much more control this way.ReplyDelete
It is easy to see how much is left. It's just so inconvenient to use cash though in so many plac s.Delete
I'm finding those holes in our spending recently as well, particularly ahead of and just after the holidays. All of the charges kind of blend together. We pay off our card every month, but it's still sometimes a charge we could have avoided altogether.ReplyDelete