Frugal Fridays: Economic Stimulus

Welcome to Frugal Fridays where we share money saving tips, discuss living frugally and generally talk about personal finance issues.  I heard a few unrelated news stories this week, and they made a connection when I started thinking about these economic stimulus checks that the government will soon be issuing.   Thoughts about how we approach debt and spending, how we should approach them started percolating around in my brain, and they are just going to come out here today, I can tell.  If you are interested in a meandering discussion of debt, savings, spending and charity in our society keep reading.  If you don't care about any of that, but just want some straight information about when these checks are coming and how much you can expect to receive, follow me below the jump, but skip to the end.

In the end, the most important thing to remember is that it's your money.  Don't let anyone else, including me, dictate what you do with it.  It's good to listen to different sources of advice and see different approaches, but it's your decision ultimately.

It all started when I heard as story on the radio explaining that what typically happens with economic stimulus packages is that most people use these windfalls to pay off existing debts, such as credit cards.  That's not the surprising point.  I would expect that because most people are struggling right now, they aren't going to take the money and go blow it.  The surprising part was that a few months after the checks go out, consumer spending goes up.  It's almost as though people are comfortable with a certain level of credit card debt.  If they pay down their balance far enough, they have no compunction about buying things on credit and running up a balance again.  As someone who thinks that credit card debt is something to always be avoided, I found this attitude distressing but then, before I got too deep wallowing in my own sense of smug superiority, I realized that in a sense I'm not so different.  I'm not comfortable with any credit card debt, but I am comfortable with a mortgage.  I feel no need to pay it down any faster than I have to.  A few years ago, when our house had drastically increased in value, we even felt comfortable refinancing and taking more money out to invest in other instruments.  Not to mention the fact that in order for this influx to successfully stimulate the economy (which will help all of us raise our standard of living) it needs to be spent on something that will generate new jobs.

So who am I to condemn those who carry credit card debt?  Shouldn't we let he among us who is neither a borrower nor a lender cast the first stone and people like me should just shut up?  No, I don't think so.  (Oh, like I'm ever going to shut up.  Be serious.)  Just because the issue of debt is not black and white doesn't meant that some shades of gray aren't significantly darker than others.  Although simplistic slogans like "just say no to debt" are not really helpful, there are some parameters you can evaluate when determining whether a given debt is one that is wise for you to take on.

Secured vs. Unsecured  
In general, I think it's a bad idea to borrow money to buy something that does not retain a value greater than or equal to your loan balance.  This would include things like consumables (meals, entertainment, travel) and also include hard goods that depreciate in value quickly (clothes, CDs, most electronics and furniture).  While real estate is the classic example of a purchase worthy of securing a loan, recent events have illustrated that that is not always a good choice.  Real estate is not guaranteed to hold its value in today's market.  

The one exception I might make to this rule is educational loans.  It may be wise to borrow money to pay for school, but only if that degree can reasonably be used to help you pay off those loans in the future.  If you are going to borrow tens of thousands of dollars to get a degree, try to be sure that you are not going to be spending much of your adult life working at a low paying job, or worse yet a job that you hate, to pay that off.  

Interest Rate and Fees
Look carefully at the interest rate you are being charged before you agree to any debt.  Consumer lending agencies, such as department stores, credit cards, and car dealerships,  often go to extreme lengths to distract you with other numbers such as the monthly payment or the payment-free term.  Don't let them bamfoozle you and ferret out the annual percentage rate you will pay before you sign.  Then be aware that after you have signed up, they can often change that rate to something higher, so be sure to monitor your statements and notice if anything changes.  Right now, I'd say if you can borrow money at less than 6% APR, that would be a great rate and less than 9% APR would probably be acceptable.  If you are being offered anything higher than this, shop around, you can probably do better.

Debt to Income Ratio
No matter how great an interest rate, you shouldn't take on more debt than you can comfortably repay in a fixed amount of time.  I've read that "experts" suggest your debt payments should be less than 36% of your gross income, but that seems pretty high to me.  I would aim for much lower than that.  Keep in mind that the term of your loan will vastly affect this number.  You might be more comfortable increasing your payment in order to reduce the term of your loan.  In fact, this would be a really good decision to make for high interest debt.  You want to pay that off as soon as possible.

This beings up another reason I am so leery of credit card debt.  Since the balance is constantly in flux, it's sometimes hard to tell how long it will take you to pay off the balance at your current payment rate and so it blurs the line between "paying down debt" and "taking on new expenses".

The Best Option For Your Stimulus Check
One last point I wanted to make before I go into the details of when and how much you will receive. There was another article that caught my attention this week: Money can buy happiness — if you give it away.  It turns out that according to new scientific research, spending money on others usually brings individuals more happiness than spending it on yourself.  So taking that check from the government and giving it to a charity (preferably one that will go out and spend it immediately) may be the best option of all.  Best for yourself, best for the economy and best for society.

Blah, Blah, Blah, I don't care.  Just tell me when I'll get my check and how big it will be!
First of all, to get an economic stimulus check you need to file a 2007 return.  If you don't file a 2007 return, but you do file one in 2008, you may get a check then, if you qualify.  Your qualification is based on your income in 2008.  Yes, it is only March, so how do they know what your income will be for the rest of this year?  Well, they don't, so if you file now, they use your 2007 income to determine the level of stimulus you will receive.  (For all of you who think that sounds dirty, please pull your minds out of the gutter, I am trying to have a serious discussion here!)  If, when you file in 2008, it turns out that you deserved more, you'll get an extra check then.  If it turns out you deserved less, you don't have to repay it, you get to keep the bonus.  The IRS has a simple calculator you can use to predict how much you will receive.  You need to have completed your 2007 tax return in order to use this calculator.

If you file your return by April 15, you will receive your check on a schedule that depends on the last 2 digits of your social security number.  If you are married filing jointly, it is the first social security number listed on your form that will be used.  If you use direct deposit, you will get your money much earlier than if you request a paper check.  Here are the schedules:

DIRECT DEPOSIT
If the last 2 digit of you SSN are 00 through 20, the deposit will be transmitted May 2
If the last 2 digit of you SSN are 21 through 75, the deposit will be transmitted May 9
If the last 2 digit of you SSN are 76 through 99, the deposit will be transmitted May 16

PAPER CHECK
If the last 2 digit of you SSN are 00 through 09, the check will be mailed May 16
If the last 2 digit of you SSN are 10 through 18, the check will be mailed May 23
If the last 2 digit of you SSN are 19 through 25, the check will be mailed May 30
If the last 2 digit of you SSN are 26 through 38, the check will be mailed June 6
If the last 2 digit of you SSN are 39 through 51, the check will be mailed June 13
If the last 2 digit of you SSN are 52 through 63, the check will be mailed June 20
If the last 2 digit of you SSN are 64 through 75, the check will be mailed June 27
If the last 2 digit of you SSN are 76 through 87, the check will be mailed July 4
If the last 2 digit of you SSN are 88 through 99, the check will be mailed July 11

Frugal Tip of the Week: If you are looking for software to help you track your expenses in real time, I've heard good things from other bloggers about mvelopes which will connect to your bank account and credit card and keep track of your spending daily.  If you are interested in trying them out, they have a 30 day free trial, but if you don't want to be charged, you must cancel before the 30 days is up.  There is a link from this blog that will let you sign up at a discounted rate.

I'm rerunning a slightly modified version of the poll I used the last time I did a diary on Bad Debt and Good Debt.

•  Stimulus Jar

  I'll be in and out so please add your thoughts and I'll respond eventually.

  If you are interested in writing a diary for this series, or you have a topic you'd like to see covered, or if you want to be added to the mailing list for announcing these diaries, email me: frugalfridays (at) gmail.com.

  by sarahnity on Fri Mar 21, 2008 at 12:52:41 PM PDT

•  buy a few silver dollars

  and put 'em in your mattress.  That's what I'm doing.  You gotta have something that'll be worth trading once the fecal matter impacts the rotating air circulation device.

  by bubbanomics on Fri Mar 21, 2008 at 12:56:23 PM PDT

  •  But won't the coins jingle

    when you're, uh, you know, on the mattress? That could raise some awkward questions.

    by pattyp on Fri Mar 21, 2008 at 01:44:01 PM PDT

•  what is secured vs unsecured

  are student loans unsecured.

  i gather credit card debt is unsecured.

  by terrypinder on Fri Mar 21, 2008 at 12:57:01 PM PDT

  •  Secured means there is an asset "securing it"

    In other words, if you had to sell that asset on the open market, you could repay the loan in full.  Credit card debt is technically unsecured, but if you used it to buy something you could sell (like your TV) AND you could fully pay off your balance with the proceeds of the sale, you might think of it as secured.  

    Student loans are unsecured because the asset you bought, an education, has zero value on the open market.  However, if you have student loans that you could pay off but you don't, in other words, you have enough in savings, but the loan interest is so low you are happy paying it off over time, I'd call that secured debt as well, at least for the purposes of the poll.

    by sarahnity on Fri Mar 21, 2008 at 01:04:21 PM PDT

    •  thanks

      that pushes my number up a tad. yuck.

      damn student loans (although I could pay them off in 3 years.....if I did nothing else but eat...)

      by terrypinder on Fri Mar 21, 2008 at 01:07:11 PM PDT

  •  An unsecured debt is one with no collateral

    For example a car loan is a secured debt because if you default, they'll come get your car.

    A home mortgage is a secured debt because if you default, they'll foreclose and throw you out of your house.

    A credit card is unsecured.  There's nothing for them to come reposess.

    A student loan is unsecured.  They can't come take your brain.

    by martydd on Fri Mar 21, 2008 at 01:06:32 PM PDT

•  Student loans are disastrous

  Especially since they cannot be discharged through bankruptcy - the only form of debt that is subject to such rules. I would caution students to be very, very, very cautious about borrowing, and if they decide to do so, to only go with the federal government. Private lenders are to be avoided no matter what.

  by eugene on Fri Mar 21, 2008 at 12:59:00 PM PDT

  •  I agree

    I know it is hard to give up the opportunity to go to your first choice of college, but life is full of things that you may wish to own, but you can't really afford.  Unfortunately, a liberal arts degree from an expensive school may be in that category for most people.

    by sarahnity on Fri Mar 21, 2008 at 01:07:24 PM PDT

  •  it's hard to make the case to borrow

    to go to a 30k/year school when most state colleges provide great bargains for the motivated student.  Motivated is, of course, the operative word.  The student has to seek out opportunity actively.  But borrowing 120k to get a bachelor's degree is hard to justify from a future earnings point of view.

    by bubbanomics on Fri Mar 21, 2008 at 01:15:41 PM PDT

    •  It depends . . .

      I went to expensive private schools for both my undergraduate and graduate degrees. And many years later, I'm still paying off my loans. Maybe from a purely financial perspective it wasn't a good investment. But I have no regrets. Both schools held particular appeal for me based on my interests, and I'm glad I didn't go anywhere else.

      by raatz on Fri Mar 21, 2008 at 04:54:12 PM PDT

  •  yes, but

    the big caveat is that a college education is usually worth taking out student loans for.  Of course, the problem is that people can be stupid about loans-- taking them out so that they can avoid having roommates, to buy a new car, and the like.  If you don't want to eat Ramen noodles, you really shouldn't be in college or grad school (besides, they're great if you season them yourself instead of using the packets that come with them-- just throw in some veggies and the like and they're quite yummy).
     and, of course, the expensive school only rarely makes up for the difference in price-- though it depends on your field.

    by history geek on Fri Mar 21, 2008 at 01:19:09 PM PDT

    •  Our kids worked in college

      One had only work study jobs during the year because her major required so much extra time, but she worked a lot of hours and saved up a couple thousand each summer to put towards living expenses. Another worked about 30 hours a week during the school year and maintained a good GPA in a technical field at a competitive school and still had time to have fun. Another worked full time and went to school part time; it took a long time, but he was working in his field while he was in school so he graduated with years of experience.

      by 1864 House on Fri Mar 21, 2008 at 02:23:27 PM PDT

  •  They're becoming a better deal, thanks to Dems

    The Democratic Congress passed a good bill last year (and Bush surprisingly signed it). There's still a long way to go though.

    by raatz on Fri Mar 21, 2008 at 04:48:48 PM PDT

    •  That there is

      Only when we have no more need of student loans, and forgiven all those currently outstanding, will we have succeeded.

      There is NO reason at all for student loans to exist. None.

      by eugene on Fri Mar 21, 2008 at 05:23:39 PM PDT

      •  "forgive all those currently outstanding"

        Music to my ears!

        Will you consider running for Congress?

        by raatz on Fri Mar 21, 2008 at 05:29:08 PM PDT

        •  Someday.

          Give me a few years...

          by eugene on Fri Mar 21, 2008 at 05:54:10 PM PDT

•  Economic stimulus neatly timed

  to help the failing economy survive through the electoral campaign. Any guesses when the real crash will come?

  by Bob Love on Fri Mar 21, 2008 at 01:05:50 PM PDT

  •  It's already here.

    The crash is happening right before our eyes. These checks will do little if anything to prevent the slide into the abyss.

    by eugene on Fri Mar 21, 2008 at 01:13:40 PM PDT

    •  cash it before it bounces, baybee.

      China's about to take us to school.... juvee debtor's prison school.

      by bubbanomics on Fri Mar 21, 2008 at 01:16:52 PM PDT

  •  Sorry, no clue

    You'd have to ask someone who understands macro-economics a whole lot better than I do.  I have a pretty firm grasp the micro stuff of our household, but beyond that, I'm pretty fuzzy.

    by sarahnity on Fri Mar 21, 2008 at 01:15:26 PM PDT

•  There's a group of folks at my church

  who are putting their heads together to come up with a worthy cause related to economic justice toward which to pool their rebate checks.

  In the AnnieJo family, alas, the rebate is already earmarked for summer childcare.  I guess we won't be quite as happy as our friends...

  by AnnieJo on Fri Mar 21, 2008 at 01:29:44 PM PDT

  •  My church, too

    We will be asking members - if possible - to contribute half of their check - with half going to the church fund and half going to a local mission.

    by 1864 House on Fri Mar 21, 2008 at 01:59:19 PM PDT

•  I'm planning to use my rebate

  to get another tattoo. I hope that will be enough to help stimulate the economy. If nothing else, it will stimulate guys who dig chicks with tattoos.

  by pattyp on Fri Mar 21, 2008 at 01:36:17 PM PDT

•  Holy moly!

  I just did the IRS calculator thingy and it said I'm getting back $600. I sure wasn't expecting that much. Now I can get two tattoos!

  by pattyp on Fri Mar 21, 2008 at 01:41:14 PM PDT

  •  i guess i should file

    i don't know what my check will go toward though.

    i could be responsible.

    or i could have fun.

    or i could find a way to be responsible and have fun.

    by terrypinder on Fri Mar 21, 2008 at 01:45:47 PM PDT

    •  I bet you can do both

      Pay a bill and donate some of the cash to someone who is worse off. Or donate to your local food bank. They need cash to buy perishables.

      by 1864 House on Fri Mar 21, 2008 at 02:17:12 PM PDT

•  I'm considering having my mortgage payment

  increased a few hundred dollars a month to get rid of it sooner.

  I come from a home where there were some pretty serious arguments about money and learned by example not to spend more than you make.  Dad was in the USAF and we qualified for subsidized lunches at school (late 70's, early 80's).  We got new clothes twice a year, period.  Mom grew up having to help can veggies for the winter, or they wouldn't have any at all (she was born in '43).  Dad always squeaked like a rusted wheel.  He used to get headaches having to spend $100, now I think it's up to 1k.  I did end up borrowing around 30k for college and had an 9% interest on it.  I paid in full several years early (due to living arrangements - and the interest was never tax deductable, nor was any other educational expense).

  I have a house that is taxed at 140k, but other houses of similar style have sold between 130 and 175k in the last 5 years in my neighborhood.  It is 1400sf, single house, with about 1/8 acre (typical for the area).  I have a 30 year fixed rate, at 5 5/8, principal of 106k and insurance and property tax are included in the monthly bill.  I bought the house in 2000 at 133k with a 20% down.  I'm paying $865 a month now and my takehome pay is around $2850 per month.  

  I have no other debt.  I paid cash for my 2007 Corolla (16,900 - after trading in an '89 Honda Accord with 88k miles on it).  My credit card is paid for every month (I put everything on it, gas, grocery, meds, fun, christmas, etc and average around $600 a month on it).

  I don't think I have a whole lot to worry about in the job department.  But one never really knows now a days.  I'm a mainframe computer programmer using PL/I, Cobol, CICS, DB2, IMS, etc. (which, I think puts me in a category of needed skill sets to cover the retiring baby boomers as most of these languages aren't taught anymore.)

  But, I'm scared shitless to call the mortgage place up to increase what will be taken out every month.  Will they applie it to the principal like I want??  Will they get the correct bank acct no (direct withdraw now and have had no issue)??  I also want to have it taken out of a different bank acct.

  Suggestions??

  by nchristine on Fri Mar 21, 2008 at 01:56:21 PM PDT

  •  This should be fairly easy

    However, make sure they know to apply anything over the regular payment to principal. The most common mistake is to put extra into the tax/insurance escrow account. Check your statements every month to be sure they are doing it right.

    ACH (automated clearing house) payments are virtually error free if they are set up correctly. However, it might be tricky to pull one payment from two different accounts; consider transferring the extra $ into the account the current payment is coming from.

    And know that even though you are "paid ahead" if you should have a personal financial crisis, you will still have to make your regular monthly payment. You may want to make sure you still have a couple of months worth in a savings account of some sort.

    If you have a big chunk of money, you can make a single principal reduction payment. Talk to your lender about this.

    by 1864 House on Fri Mar 21, 2008 at 02:11:57 PM PDT

    •  I also have 16k in savings.....

      I take after my dad in that I squeak if I have to spend too much money!!  I have my monthly pay check going into the account that the mortgage is drawn from, so the money's there.  I want to switch to my savings acct as it collects interest and once the xfer of withdrawal is secured, then xfer the paycheck direct deposit to the same savings acct.

      I've done some rough calcs in that currently, I bring home around 1k more than I spend.  I don't plan on increasing my payments that much, maybe $250 a month???

      Washington Mutual holds my mortgage.  If that makes any difference.

      by nchristine on Fri Mar 21, 2008 at 02:20:37 PM PDT

      •  Don't set up payments from a savings account!

        There is a federal regulation that limits electronic withdrawals from a savings account to only six per month. If you use your savings account for overdraft protection, or do transfers using online banking, you could end up having a payment request refused.

        There are WaMu's everywhere, so you should be able to go into an office and do this. As suggested below, that would be best so you can see what the person is writing down.

        If you have an extra $1k each month, a $250 increase in your payment sounds reasonable.

        Pump the rest into an emergency fund. I would suggest finding a good credit union (disclosure - I work at one) or a solid internet bank. Once you have about 6 months of living expenses, start investing in mutual funds. Not sure how old you are, but unless you want to work forever, you will need to earn a better rate of return than what you can get in a savings account or money market.

        There are some people here who will tell you that is not a good idea because the entire economy is going to collapse. Read and learn, then do what feels right for you - taking financial or investing advice from someone you don't know (even at dkos) is not always a good idea.

        Of course, paying off your house and having no debt will greatly decrease what you need for retirement, so you are on the right track.

        by 1864 House on Fri Mar 21, 2008 at 02:36:34 PM PDT

  •  is this something that you could do in person

    vs. over the telephone?  I know it would give me piece of mind to see that this was being handled to my specifications vs. trusting that it would be handled by someone receiving the directions over the phone.  

    These days, though, so many mortgages are handled by companies that are many states away.  I'm lucky that ours is handled by our local bank, which is within walking distance.

    If you can't do it in person, how about calling and then following up with a letter.  Get the name of the person whom you are speaking with and tell them you are sending a follow-up letter to their attention to confirm the details.  Perhaps consider sending a copy to their supervisor or the head of that department.  I'd suggest sending it registered or another similar option that will give you a receipt for tracking purposes.

    Good luck!

    by Ellicatt on Fri Mar 21, 2008 at 02:21:39 PM PDT

  •  First look at your loan documents

    There should be wording in there about pre-payment (you are trying to do a partial pre-payment) and make sure that there aren't any tricky bits there.  

    But before you decide to do this, you may want to consider other options.  Paying down your mortgage is exactly the same for you as putting money in a savings account that pays 5 5/8% interest, if you don't itemize your tax deductions.  If you do itemize, you are getting an extra tax benefit from the interest payments and you will lose that tax deduction sooner if you pay off the loan sooner, so it may be more like putting your money into a savings account at 4.5% interest.  But put that aside for now and look at your other investments.  Is there anyplace else you could put that money and make more than 5 5/8%?  If so, you may want to put your extra payments there rather than into your house.  

    Also consider your need for liquidity.  Are you going to want to access those savings at some time in the future?  For example, are you going to retire and need living expenses?  If you put the money into your mortgage, the only way to get it out is to either refinance, or sell the house.

    by sarahnity on Fri Mar 21, 2008 at 02:53:19 PM PDT

    •  Bigger than a baby's ARM (mortgage joke!)

      Is there anyplace else you could put that money and make more than 5 5/8%?  If so, you may want to put your extra payments there rather than into your house.

      Yeah, and tell us about it!  ING just dumped my money market APR to 3%.  You can't even find a 60-month CD paying 5% at this point.

      Though technically it's correct to look at paying off a loan as equivalent to investing in a vehicle with the same rate of return as the loan interest rate, I guess I don't see the choice exactly as Sarah does.

      Here's how I look at it:

      Let's say a homeowner refinances into a 15-year mortgage and in so doing saves $100,000 in interest over what she would have paid on a 30-yr mortage.

      Assuming all of that interest would have been deductible, and the homeowner's marginal income tax rate is 25%, she nets a savings of $75,000 over the life of the 15 year mortage.

      We can therefore say she "earned" $75,000 in 15 years by paying off her mortgage 15 years early; her return can be annualized to $5,000 per year.  One can also regard this as a risk-free return, in that the homeowner will realize these savings no matter what.

      Now think about it this way:  What risk-free investment could the homeowner have alternatively made with the $250/mo the refinanced loan would cost over the 30-year one that would match the annualized  return of $5,000, proved above?  

      Cherry on top:  There is no income or gains tax on the $75k savings!  

      by HobbyWizard on Fri Mar 21, 2008 at 04:04:59 PM PDT

  •  Principal only is your pal

    But, I'm scared shitless to call the mortgage place up to increase what will be taken out every month.  Will they apply it to the principal like I want??  .....
    Suggestions??

    Assuming there are no pre-payment penalties (read your mortgage agreement) you should have the option of making principal-only payments whenever you want in addition to your regular monthly mortgage payment.  In the old days, you could simply write a second check (to accompany the current mortgage payment) in the amount of the following month's principal component, and note what you were doing in your check memo.

    Ah, the good old days.  But the idea should still hold true, and it's a nice way to make a dent without committing to a higher monthly payment via a refi.  You just need to get an amortization schedule for your mortgage and figure out where you are.  It's best to do this in the early part of the loan, when the monthly payments are comprised overwhelmingly of interest on the principal balance.

    by HobbyWizard on Fri Mar 21, 2008 at 04:22:06 PM PDT

•  Hi, Sarah! Great stuff as always.

  Educational loans. These are big time scams for people who can't secure them properly. Example, my daughter. Who after many serious troubles (including childbirth) getting where she needed to be, found a school [UNC] and teachers who took her at her word that they had the knowledge she needed, and she was there to extract it from them. We had no money, so she got student loans and jobs and grants to get her through just 2 years more for her degree in theater tech (we have been performers since she was a child).

  She graduated with honors and was well on her way, when she got a job at a Baptist college managing their theaters and teaching. Because the theaters had been condemned years ago and the college wouldn't fix them, she made do with what was available. This led to her getting electrocuted while trying to wire a lighting board (she was not licensed, they wouldn't hire an electrician). That gave her epilepsy and suddenly her entire future went right down the drain.

  Worse, the college refused to pay her medical bills - which were considerable - the insurer insisting they don't cover "pre-existing conditions." I wrote them back saying that I'd just come off 7 years' worth of lawsuits against insurers who murdered my 21-year old son by spreadsheet, and I had nothing better to do with the rest of my life than take 'em down. They relented and paid, then the college fired her because she couldn't climb ladders, hang out in catwalks suspended 25 feet above the stage or be around flashing strobe lights anymore.

  Now she works retail for $10 an hour, 30 hours a week, no insurance. Feels lucky in this region to have that much, it's an art supply chain so at least she's able to use her contacts to stock and sell what the universities need for classes. She has a son who is graduating high school this year (and we'll all struggle to get him through college, even taking out loans). She owes more on the interest for her educational loans than she'll ever be able to pay, nobody cares that she can't use her degree to make a good living. This is flat-out loan-sharking - they've already been paid three times what she borrowed, hasn't touched the principal. Her epilepsy is never going to go away.

  Just noting that consumers are up the proverbial creek without a paddle, and nothing's going to help them. Best not to go into debt in the first place, earn a degree over 10 years paying for a class or two at night. For whatever good it'll do anyone, which isn't much. Grandson wanted to be a scientist, Duke and UNC have both offered not enough incentives to get him, he's valedictorian in a system where having a kid with an IQ over 100 is a regular big deal. Now he says he'll go into art and theater, take the incentives his mother earned as a local alum despite her situation. Here and there, as he can, while working to help pay the costs of living for his family - us.

  That's a tragic situation, more for what America loses by NOT having him as a scientist than for the struggle we'll engage to get him enough of a degree (in anything!) to get him $10 an hour instead of the usual $6 at Burger King. It's an official "depressed region," he's no desire to move to L.A. or Miami to make a living. Here is where we chose, here is where he grew up, and here is where he considers Home.

  Debt is a bad deal no matter what one uses it for. Unsecured debt is downright ruinous. We don't do credit cards, but many people these days depend on them just to get the pharmaceuticals they need to survive. I will honestly laugh when the rich take the fall for what the poor couldn't afford in the first place. But aside from mortgages (and those aren't so great these days either), best advice is STAY OUT OF DEBT. Buy used, not new. If you can't buy it, you don't need it.

  Thanks for yet another great post!

  by Joy Busey on Fri Mar 21, 2008 at 02:20:10 PM PDT

  •  I'm sorry to hear about your daughter

    I don't know if your grandson has looked outside of NC, but some of the more expensive high end schools are starting to offer very reduced or free tuition to middle class families.  For example, Standford charges no tuition for children whose family incomes is less than $45,000 and reduced tuition for families under $60,000.

    by sarahnity on Fri Mar 21, 2008 at 02:57:57 PM PDT

    •  Thanks, Sarah. Never thought...

      ...of applying out of state, since state students get automatic breaks and grants. Plus the alum break he'd get. Duke sponsored his science courses, their 'outreach' to this depressed region of their own state. But despite honor society, graduating rank and strong scientific showing on his SATs as well as advanced classes he aced, nobody's offered a free ride.

      ...he's not asking for a free ride, but he'll be attending the local community college for 2 years on a transfer AA because that's all we can afford. All of us together don't pull $40K a year and we work very hard. I write. Hubby's a photographer and performer - no, we don't report hat-tips when he eats fire downtown during tourist season. Mom works at the art supply store, as mentioned. None of us have insurance, knock on wood (because we've lots of that here).

      The nation loses him and the contributions he might have made to something other than entertainment. Though he's a fine entertainer, grew up on stage and on the streetcorners juggling and clowning for tips. The larger loss, we've lost nothing at all - he'll do fine no matter what happens to us or to the world.

      Thanks!

      by Joy Busey on Fri Mar 21, 2008 at 04:48:02 PM PDT

•  We're blowing ours

  on a trip back East to visit the parents and attend Netroots Nation.

  Yeah, I'm bad, I should do something nicer with it - but my daughter is getting bigger, my parents are getting older, and unless y'all hold one at the Santa Clara Convention Center I won't be able to afford to go, normally.

  by Moody Loner on Fri Mar 21, 2008 at 02:38:50 PM PDT

•  We're taking our check (likely $1800)

  and driving north to Montreal to spend it all in Canada. Bwahahahahahahaha.

  by mbzoltan on Fri Mar 21, 2008 at 05:14:46 PM PDT