pocketmint

Movie helps kids relate to economic woes

If tough economic times are causing you stress, you can bet your kids are picking up on the tension as well. Knowing how much to tell them about financial matters can be tricky; you don’t want to overburden and worry them, but neither do you want to leave them surprised and unprepared.

I thought the movie Kit Kittredge: An American Girl made a terrific springboard for discussion with our kids, especially the younger one. Set in the middle of the Great Depression, the movie touches on economic issues — like unemployment, foreclosure, and homelessness — in a way that kids can relate to. The point-of-view character is a spunky ten-year-old girl who learns to cope with various changes that result from financial hardship.

It’s a fun movie, and so doesn’t come off as preachy or boring; the second half is basically a caper mystery, where intrepid children discover the truth that adults can’t see and chase down the bad guys, who are more comical than actually scary. Before the silliness, though, there is a lot of grounding in the Great Depression setting. Despite some grim events — her friend’s family loses their house to foreclosure; her own father loses his business and winds up eating in the soup kitchen — the overall tone of the movie is one of stubborn cheerfulness.

I’d guess ages six to twelve will get the most out of this movie. Our younger daughter was nine, and watching it sparked discussions about things from soup kitchens to the basics of mortgages and foreclosures. Here are a few more ideas for conversations with your kids based on scenarios in Kit Kittredge:

• Kit’s family begins to keep chickens and sell the eggs for extra income. What things might we do to generate extra cash?
• Kit’s mother sews dresses out of feedsack calico to save money. What storebought things can we try making at home more cheaply?
• Some of Kit’s classmates make fun of other kids for egg-selling and homemade dresses. Have you ever been teased or embarrassed about not having much money? What’s a good way to react?
• Kit’s father has to go to another city in search of a job, while her mother rents out rooms in their large house to make ends meet. What lifestyle changes might be in store for our family? How will we adapt to these changes?

Parental generosity versus financial limits

A recent conversation on the Get Rich Slowly forum about finances and children caught my eye — specifically, how do you balance the desire to give your children everything they want (or everything you did or didn’t have) with the practical need to limit expenses?

This is an issue that Jak and I negotiate regularly, because we have very different natural approaches. He is a pushover susceptible to unplanned financial generosity where the children are concerned, whereas I am a tightwad firmly grounded in the practical.

For example, we recently signed up for an expensive orthodontic regime for Michaela, who is fifteen. Jak and I agreed to pay extra for the best medical treatment but for none of the short-term cosmetic-only ‘upgrades’ that were offered, like clear or colored braces.

All was fine until, at the second ortho visit, Michaela started begging Daddy for the clear braces, which instantly triggered Jak’s kid-generosity reflex and returned the intra-parental negotiations to square one.

For my part, I remain relatively unswayed by pleading children. In Round Two negotiations what I proposed to Jak was this: we tell Michaela that we aren’t going to pay for the clear braces, but that if they are really important to her, she could earn the money herself between August and December (when the braces actually go on). This would be an achievable goal, as she earns $5/hour for chores at our house, including babysitting her younger sister, and occasionally earns more for babysitting elsewhere, along with money her mother pays her. (Currently she spends money almost as fast as she makes it, mostly on movies, at coffeeshops, and on the occasional expensive trendy clothing item.)

Privately, Jak and I agreed that if Michaela were motivated to earn the entire amount, we would surprise her by paying half, leaving her with $150 of her savings. My thought was that if Michaela weren’t willing to sacrifice anything to get the more unobtrusive braces, we shouldn’t be expected to do so. But if she proved she was willing to put in the extra effort, we would reward her by helping. This plan would have the added benefit of giving her more experience at saving and making tough financial choices, something I’ve been actively looking to promote.

Jak relayed the plan to Michaela — minus the secret match — and she dropped the whole idea. I think Jak was a little nonplussed that her desperate pleading had so easily turned to nonchalance, but I was unsurprised: like most kids, I think she values her own time and money very highly but has little concept of the cost to adults of either. Eventually, she will learn … before she’s a full adult herself, if I can manage it.

Despite the fact that Michaela didn’t ‘take the bait’ and choose to save for something she wanted, I think this was a very good approach, and plan to use it often over the next three years. Eventually there will be something that she is motivated to sacrifice for, and she’ll get that experience. In the meantime, we saved $300.

Read the forum conversation for some other good thoughts from parents about balancing generosity with financial limits.

(Photo by Pingu1963.)

Text message insanity, part two

In part one, I discussed the rampant texting habits of teenagers today and the rapidly rising cost of same.

The deceptive part of the text messaging phenomenon is that the cost is discussed in terms of a nickel here, a dime there, which makes it seem trivial. It’s not.

Wireless providers are collecting forty cents (they double-bill, hitting both the sender and receiver) to transfer a few lines of text. Sam at Gthing did the math to put this into perspective: if your internet bandwidth were charged at the same rate as text messages, downloading a single MP3 would cost about $24,000.*

This is why SMS is worth 100 billion dollars a year, and growing exponentially.

So what if you’re not a teenager, and you’re trying to keep your cell phone bill from skyrocketing? Here are a few suggestions:

• Get a smaller plan and stick to it. $5 will get you 200 messages from AT&T, 250 messages from Verizon, 300 from Sprint, and 400 from T-Mobile.
• Use email to send texts for free (but remember that the receiver will still be charged). T-Mobile, Verizon, and Sprint offer free web interfaces as well.
• Switch to a smaller carrier with lower rates.

Smaller companies aren’t rushing to hike SMS rates as quickly as the Big Four. I sampled four, all of which had better per-message deals:

• Alltel charges 15¢ to send and receive domestic messages. Alltel is the only wireless carrier large enough to have been rated along with the Big Four in Consumer Reports’ last study, where they outranked every other carrier in the metro areas for which CR had adequate survey data.
• Virgin Mobile, while arguably not small, is definitely an underdog in the current US market. They offer domestic text messages for 10¢ each way, international for 20¢ sent and 10¢ received.
• US Cellular charges 20¢ to send, but received messages are free.
• Cellular South charges 15¢ to send and receive, capped per month at $30.

(Photo by bigdiesel.)

* Calculations assume the average text message is 80 characters (the range is 1-160) and the average song is about 4 megabytes.

Text message insanity, part one

If you have a teen in your house, you’re likely already aware of what I’m about to tell you: this texting thing is way out of control.

We have a fifteen-year-old. Nearly every conversation Jak and I have with her involves a variation of the phrase, “Michaela, put your phone away and listen to me.” She can send five text messages in the time it takes me to utter half a sentence. Of course, you may have noticed that pithiness is not my strong suit, whereas her messages may be only five or six characters long and contain minimal semantic content. But still, the sheer volume is … impressive.

We didn’t buy her a cell phone. Jak and I discussed it, but I’d read a lot of stories about teens and their shockingly high texting bills. My position was that we could gift her a phone but she would first have to be prepared to pay her own phone bill — we weren’t going to add her to ours.

Unfortunately, this decision was trumped by grandparents, who provided Michaela with a cell phone and a line on their own plan. I cringed, but chose not to fight the fait accompli. Sure enough, she blew through her allotted 400 messages and started racking up the extra per-text charges to the tune of $50 per month. After a couple months of this, the grandparents put their foot down: control it or lose the phone.

I thought this would be a good time for Michaela to learn an economic lesson, but this was foiled again when she talked her mother into getting her a new, cooler phone and switching her to her mom’s plan. Mom, being at least one step ahead of the grandparents, signed Michaela up for unlimited text messaging, for which Michaela is supposed to reimburse her each month. I hear the reimbursement isn’t going so well, but at least she’s not racking up several dollars a day on overage.

Which brings us to this news: wireless companies have noticed the teen obsession with texting and are responding by … raising the price. When Michaela was spending about an extra $50 per month last year, that was at .10 per message. Since then Sprint, AT&T, and Verizon have all doubled their rates to .20. Now T-Mobile is quietly informing its customers that as of August 29, they will follow suit. Here’s a table comparing current rates (with T-Mobile’s upcoming increase indicated):

¹ Includes Canada, Mexico, Puerto Rico, & Virgin Islands

² Includes Canada

This doesn’t even cover photo and video messaging, which are invariably more expensive. If you have a teen on your shared plan, there’s really only one option: get a flat-rate unlimited text package. Here are the offerings from the Big Four wireless companies:

• Sprint: $20/month unlimited
• AT&T: $20/month unlimited
• Verizon doesn’t currently offer a true unlimited plan; for $20/month they’ll give you unlimited messages to other Verizon customers, and 5000 for everyone else. (If you can’t imagine anyone texting that much, you should read this article.)
• T-Mobile: $15/month unlimited. No official word yet on whether this will rise in August to $20 as well, but I would be shocked if it didn’t.

Of course, you could try to enforce a hard limit on text messages with your teen, but be prepared for a pitched battle if you do. If ours is any indication, the suggestion that one stop texting will be received much like the suggestion that one stop breathing.

In part two, I’ll discuss some options for those of us with more reasonable texting habits, along with some scary text message statistics.

(Photos by Sarah R and williamhartz.)

Cheaper student loans … for some

With a teenager set to graduate in three years, I’m paying a lot more attention to news about student loans these days. Kids from low-income families who start college this fall got some good news today, as four years of interest-rate cuts kicked in.

It’s questionable whether that last year of lower interest rates, which potentially covers Michaela’s freshman year, will benefit us at all; it only applies to need-based loans, and I fully expect our family to fall into the sizable gap between ‘eligible for need-based financial aid’ and ‘actually able to afford college’. But we shall see.

The San Francisco Chronicle has a comprehensive article on the changes, if you want to learn more.