"12% savings, 100% interest debts, that'll teach 'em" blog discussion

de1amo

JulieGeorgiana wrote: »

This is a toughie... I look after all our family income. I would have bought a £2k car I could afford without a loan. As I am one to wait until I have the money before I buy (well I am now). Even my car was bought at 10 months old because it was 30% cheaper then new.

TBH my Husband sounds like your wife, this is why I look after the finances now

I don't think charging interest will make her pay up any better the 0%! I think the best thing is not to buy something usless you have the money first, then go 50/50!

i have saved the money -see my signature lol but the money really is for making me mortgage free before i am looking down the barrel of old age- we bought a new car because we got a very good pexchange on the old car that was 12 years old so it was a no brainer! i live abroad and cars are valued differently than the uk which means they keep value better-the old car was bought for 5000 lira new and we got 9500l'ra and it was 12 years old-thats what can happen in high inflation--you buy now or regret!

She has never past a few payments before forgetting the outstanding amount=i have cleared all her credit cards from pre marriage through to completely building a new life from scratch abroad=she says i must preserve my capital in the uk because the mortgage is there and ticking but her actins conflict with this---i reckon the bank savings rate could be good penalty lol thats 6\5 pc here/ i can get 20pc on safe investments

Errata

JulieGeorgiana wrote: »

:T Do you know... I think he would love that too :T

Of course he would! It's fair recompense for saving Martin Lewis the time and bother of having to think of something interesting to write on his blog. A worker is worthy of his hire

JulieGeorgiana

de1amo wrote: »

i have saved the money -see my signature lol but the money really is for making me mortgage free before i am looking down the barrel of old age- we bought a new car because we got a very good pexchange on the old car that was 12 years old so it was a no brainer! i live abroad and cars are valued differently than the uk which means they keep value better-the old car was bought for 5000 lira new and we got 9500l'ra and it was 12 years old-thats what can happen in high inflation--you buy now or regret!

Sounds like you made the right descision for you (sorry didn't see the signature!), you have an impressive amount saved

de1amo

the car was 29500 tl we used a 9500 deposit of an old car no one wanted --so cash outlay was 20000tl

---

the salesman advised us that the real price after a week between ordering and delivery should have been 1500tl higher-we checked the fiat website and indeed it has gone up--600 quid/1500tl--inflation is a nasty thing once it reaches double figures!---biggest regrets since living here has been not having work done sooner on my home because everything goes up like that--i get a quote then think about it for 6 months and wham bam the price goes up!

İ do wish i could instill financial discipline like you are doing with your son with my step daughter--she never wants much but the pocket money she gets she saves! --bank of step dad is a place for mum who supports step daughter to draw money!-i just dont get any thanks!--real dad is a worthless pile who makes promises that inspires the 'want' for things----' my darling daughter- i will buy you a laptop so you can talk to me all the time--no money and daughter ends up wanting!!---unless mum lends off me!---i do wish i could be as organised as you but i started out a soft touch and looks like it will be my lot!!

IanisAmazing

I think I like this ... but.. would like to know the general consensus on whether there is a problem with this ...
Giving your kid a 100% loan rate from such an early age ... Will this not make them consider this normal, and therefore anything better is good?
Also; if your child gets in financial trouble - for instance, at university - when away from home, will they come to their parents for help - or go elsewhere? Particularly with the parents having placed so much emphasis on teaching them financially.

I question this, partly, because my parents have placed a lot of emphasis on teaching me about looking after myself financially - which has worked in a sense - I'm training as an accountant - but, I am finding myself struggling financially and not wanting to go to my parents for help - I want them to be proud of their parenting.
???

JulieGeorgiana

IanisAmazing wrote: »

I think I like this ... but.. would like to know the general consensus on whether there is a problem with this ...
Giving your kid a 100% loan rate from such an early age ... Will this not make them consider this normal, and therefore anything better is good?
Also; if your child gets in financial trouble - for instance, at university - when away from home, will they come to their parents for help - or go elsewhere? Particularly with the parents having placed so much emphasis on teaching them financially.

I question this, partly, because my parents have placed a lot of emphasis on teaching me about looking after myself financially - which has worked in a sense - I'm training as an accountant - but, I am finding myself struggling financially and not wanting to go to my parents for help - I want them to be proud of their parenting.
???

As I said before, I personally will make sure it comes more in line with actual interest as he get's older. But how many parents buy their children toys at the supermarket when they ask for it? I don't buy my son toys and games when he asks... but I will let him buy them for himself. If he borrows from me, he learns a good lesson.

But he won't borrow from me, he saves instead.

If he saves and buys it himself it ultimately costs me the same but it makes him think about if he wants something or needs something.

He has this one toy he wants at the moment... but he is willing to wait until the summer (his birthday) to see if he can get it as a gift, because he told me he doesn't need it, and there might be something more important to spend his money on in the mean time.

I would hope that by talking to my son about my own debts, and bad choices, that my relationship with him will be open enough in the future that he would understand that if he told me he had done the same, they I would help him put a plan in action to get himself back out of trouble.

I hope more then anything he won't want to not come to me, because I can't judge him for something I did myself!

But you have a very valid point, one I worry about myself... but I am doing what I hope is the best for my son.

I don't just each him about money though, he cooks once a month, he has to stock take and write a list and shop within a budget.

I teach him how to bulk out food, talk to him about waste and show him how to batch cook. How to recycle, fix and mend.

I hope that all these lessons will ultimately make us closer and him more financially savvy!

And as a normal child... he spent some of his pocket money today on sweets and icecream so I would make milkshakes! Which is fine because it's not all about saving, but living within your means.

de1amo

I'm a fan of your theory julie--its a stradegy which is more than i have had of recent--as time goes along with young people you have to adapt and change-educate and responsed to situations but what your doing is proactive and i am sure will pay dividends in the long run!

Gorgeous_George

IanisAmazing wrote: »

...Giving your kid a 100% loan rate from such an early age ... Will this not make them consider this normal, and therefore anything better is good?...

100% may seem high but for a small loan of a few pounds is very reasonable IMHO. A credit check and identity check is costly and the APR should be much higher to cover administration fees. 2,500% would be nearer the mark

12% on savings is high but makes the maths easier for an 8 year old. It's about 5 x a typical savings rate. If you think 100% is high, it's only 5 x 20%.

If you charge interest you need to pay the taxman his share - that's the law. Maybe you could employ IanisAmazing to complete your tax return.

Seriously, well done.

Martin, get mum and son on TV. This simple idea needs massive publicity. How about a website where parents and kids can have a pretend bank account?

GG

JulieGeorgiana

de1amo wrote: »

I'm a fan of your theory julie

Thank you x

Gorgeous_George wrote: »

How about a website where parents and kids can have a pretend bank account?

Thanks for your comments.

I agree 100% isn't much, it was just easier... you borrow £10, you pay me back £20! No time limit, or month on month compounding interest. Just simple maths. I'm not going to lend him more the £10 at his age anyway.

BTW 12% APR was chosen because it's 1% a month... easy maths... say he has £61 so he gets 61p interest.

To address the above comment... my son has an actual bank account linked to mine. But it's low paying on the interest, but it makes it easier to move his 'interest' from me into it on payday.

Also means if he wants his money he has to wait until a friday when I go to the bank. He can't just spend his savings impulsively.

wildfrog

JulieGeorgiana wrote: »

I don't just each him about money though, he cooks once a month, he has to stock take and write a list and shop within a budget.

I teach him how to bulk out food, talk to him about waste and show him how to batch cook. How to recycle, fix and mend.

I hope that all these lessons will ultimately make us closer and him more financially savvy!

.

Amazing, I love this idea. I bet he will also have great memories of the time you spend teaching him as he growing up when he is older due to this. How many 8 year olds (or 18 year olds!) know about how to bulk out food or batch cooking?! The banking idea is awesome. If I do half as good a job of raising my boys as you are doing with yours I will be very proud.
My boys are still very young (3ys and nearly 1yr) but I think I will have a tendency to be one of these parents who fall into the trap of trying to do everything for their children rather than showing them how to do it themselves, and allowing them to make mistakes. I will need to fight this tendancy I think, for their sake and mine!