So, I get a call from a family member the other day that really irks me about the current educational system when it comes to personal finance education.
This family member is 19, lives on their own (with a roommate), drives a beater that has been beaten (more about that in a little), works part time, and is going to school. She’s got a pretty full plate, and I’m impressed that she is trying to handle all of it. What really impresses me about her is that she is not too proud to ask for help and advice from her family. Many kids her age don’t have that sense of security of themselves.
This car that she drives: It sucks. Another member of this girl’s family (not my family) thought they were going to do her a favor by “buying” her a car for graduation. They both got a loan for (not at the time) more than the car is worth. A little over a year later, the car is falling apart, and the costs to repair are almost as much as she owes on the loan, and more than the car is worth. Either way, she doesn’t have the money to:
- Pay for the repairs
- Pay off the current loan and get into something better
I’ve struggled with how I allowed her to get to this point, but I also realize that part of being an adult is to make decisions. Some of those decisions will end well, and others will end badly. The result is only of mild importance now. Later in life, when she has kids, a house, or other life-altering situations, the results will be much more important. Right now, what is important is what she learns about her reactions. I never allowed her to do anything. In fact, as I said earlier, I think she is doing pretty well considering. Would I have advised against buying that car? Possibly, but that doesn’t matter either. It is more important that I can help her with what is, and not beat her over the head with what could have been.
It’s a hard situation, and she doesn’t have a whole lot of good options. It’s not a hopeless situation, but the solutions are difficult, and may be more than she is willing to put herself through. So my question to the readers: What would you tell her?