Fool of Family Finance – Dean H.
I have decided to introduce a new “money and behavior” category. I am calling it “Fools of Finance”, in honor of our fellow citizens who act foolishly in their handling of our money (e.g., politicians) or their own money. When they make their money mistakes in a very public way, Mr. ToughMoneyLove believes it becomes fair game for commentary by others. If you throw me the bait, I’m going to take it.
As the saying goes, some people are placed on earth so that their mistakes can serve as a warning to others. How fortunate for me and for us that the news and personal finance media provide numerous Fools of Finance candidates. So on to today’s award.
Getting it Wrong on College Funding and Retirement
Today’s Fool of Finance is Dean W., who wrote a letter to the editors of Money Magazine. Dean’s letter was published in the May edition, in response to an April article called “Ease the Tuition Squeeze.” This is what Dean said:
Right now I am faced with coming up with lots more money for my two kids’ college bills that I have been able to save for retirement in 30 years of working. But I am determined not to send my children to cheaper schools. After all, they have worked hard, and I will not deprive them of the chance to go to the best possible colleges.
Well, Dean, your expression of support for your children is admirable but misguided in several ways.
First, you express a willingness to sacrifice your retirement savings to a goal of sending your children to an expensive college. That being the case, I hope that your children have shown equal commitment to sacrificing their future standard of living to support you in retirement. Since you took the time to read at least one article in Money Magazine, how about finding the articles that tell you what a bad idea it is to re-direct retirement savings toward college tuition.
Second, you wrongly assume that being a “cheaper school” disqualifies a college from being one of the “best possible.” This is the attitude that the hundreds of mediocre but expensive private colleges have survived on for years. They love folks like you, Dean, because you will borrow and spend vast sums of money for an educational return on investment that falls into the “horrible” category. In exchange, the colleges will continue to raise tuition faster than the inflationary rate. (For more on this, read my article on the national disgrace of the student loan debt machine.)
There are plenty of public universities that can more than meet the educational needs of your children. Do a little homework. The best school for your kids is one that is affordable.
Finally, Dean, the attitude that “your kids work hard so they deserve this” is so wrong. The “I deserve this” mentality played a key role in the credit and housing bubbles that brought our economy to its knees. Have you not been paying attention to anything that’s been going on around you?
You seem determined to pass the “you deserve it” spending rationalization on to your children. Hard work is great and brings its own reward. Piling on debt is not a reward for anyone. That is not the kind of personal finance legacy that you should be leaving your children. It is a first-rate debt creator.
So thanks to Dean H. – a fool of finance – for bringing his financial planning ideas to our attention so that we are reminded not to use them ourselves.