Wednesday, August 19, 2009

Advice for Financial Planning

Recently, a reader asked us to speak about plans for paying for college when you have a larger family. I must admit, "how will you pay for college?" is one of the more personal questions, once strangers have established that they are all, indeed, yours and you do, indeed, know how "it" happens.

Financing life with a large family is serious stuff, even long before college becomes an issue. We have found that finances have been an important area of growth in our marriage, which is why I volunteered to write about it and begin the conversation.

First of all, I think that small savings early on in marriage can really add up, and I would advise any young couple to begin, even as soon as their engagement, to talk about and plan financially for life as a family. We did not do this as much as we should, but my husband is financially prudent by nature (that makes one of us), so we made fairly good decisions, but if I had been really planning ahead I would have saved even more early on.

I firmly believe that it is a big mistake to go into debt to pay for a wedding party, whether the parents or the couple are paying, and I am hoping that one of the effects of the recent economic difficulties will be a cultural change on this issue. If you have the money and choose to spend it that way, have fun, but we must understand that a prudent and wonderful life can be begun without a fancy ring or a fancy cake, most of our grandparents began that way.

Recently, my husband found a program called Seven Steps to Becoming Financially Free. This is an AMAZING resource. I believe that this program should be made part of all marriage preparation courses in the Catholic Church, as well as offered for other parishioners. It is a legitimate and sound financial planning course combined with a bible study and prayer plan to help your understand financial stewardship. This concept of stewardship has really changed our outlook and we have had really positive conversations about money and been able to make much better, more peaceful decisions since we began the program. At the time that we started it, we were at a bit of an impasse, as the realities of first time home ownership were combining with the slowing economy to make money a real source of stress in our marriage. I would say that we are both much more comfortable with our financial situation and decision process now, even though the dollars and cents have not really changed. We know where our money goes, we have a plan for the present and the future, we do not feel gutted every time we have to talk about money and we do not spend money that we do not have.

Now, when it comes to paying for education, let's be honest -- there are many of us who have to finish paying for our own educations before we begin to think about our kids! Seriously, it is a goal of ours to not still be paying for our college when our oldest starts college. The answer here is something called "debt acceleration" and I encourage you to read more about it in the Seven Steps to Financial Freedom book and workbook.

In addition, please indulge me in a few other pieces of financial advice:

1. If you do not have children yet and you are both working, try to live on one income. This will help in two ways -- first of all, you will not have to factor in a drop in standard of living when you decide whether to stop working when you have children, and better still you will already have money in the bank as well. We did this, or pretty close, during the few years after college. My husband worked before we were married and he lived at home and saved a lot, and then we lived on less than our two incomes when we were newlyweds. When he went to law school, the money we saved together with his summer incomes went a long way to reducing the debt we had to take on.

2. Be open to less than ideal housing situations. Now, I am not suggesting that you live in a slum with extermination problems, but we made a very nice life in several very small, fairly unattractive apartments, in "uncool" neighborhoods, even with as many as four children. When your children are very small, you can stick them anywhere, so two bedrooms were really plenty for us until fairly recently. Our rent when he was in law school was a tiny amount, and we lived in a family housing complex which we loved, we made great friends and had a great time. Back then, they would loan you an almost unlimited amount of money when you were in school, so some of our friends lived in much nicer places, took vacations, etc, all on student loans. We lived on less as a family then most of the single folks. Because housing is your single biggest expense, you can make a big impact by being especially thoughtful in this area.

3. Get life insurance coverage for both parents. It would be catastrophic to lose your spouse, and while you cannot prepare for that, you can make sure that you would not have an immediate financial crisis as well. Many couples only hold insurance on the working parent, but think of this -- if a SAHM dies, her husband will have to pay someone to do everything that she does, or take time off from work for a while, or both. In the case of homeschoolers, children may have to go to school, and you may want private or parochial school to be an option in that case. Lastly, to just think of the worst possible scenario, if both parents were to die it is just irresponsible to leave someone else to care for a number of small children without putting the financial means in place. This is tough stuff, and I know it is tough to justify it if you are just barely making ends meet as it is, but please do not put this off.

4. Start now. You can enroll in Upromise and earn free contributions to a college savings account. You may have relatives who give your child money from time to time -- put these small gifts in an interest bearing account and they will add up. I believe that Valley National Bank gives 4% interest in a child's savings account, which is a pretty high rate for something with no minimum, and it is a great feeling for the kids to see the money start to compound. You might decide that rather than telling them the money is for college, you are saving it for their "future." That money might buy the used car which they drive to summer jobs in high school, or if you are in a position to pay for college they might use it for an engagement ring someday. That money might help to finance a year off before or during college to do mission work, something that would not be covered by student loans.

However, unless you have significant financial means, steer clear of making major contributions to a 529 type college savings account where you will be locked in to using the money for college. While there are benefits to this type of account, many of us would be better off paying down high-interest debt, including our own mortgage or student loans, rather than saving in this way.

5. Be open to the fact that your children may have to carry some debt from their education. While this may make it harder for them starting out, it may also help them to be financially prudent. Also, I think that when the time comes it is well worth considering whether some private colleges are really worth the money, when compared with honors programs at State universities.

6. Work hard every step of the way. Seriously, parents of large families are going to have to do more with less, and this may mean cleaning your own floors or having your teacher husband take several summer jobs. You are going to have to figure out how to have fun in the backyard rather than heading to Disney World, how to make the most out of hand-me-down clothes, how to use the library instead of the bookstore. The benefits will be great and we will grow in humility. Our children will be better off. However, I have recently made a decision to stop telling my children that we cannot do things because we they have a lot of siblings. I know a woman who says "that is not how we choose to spend our money" rather than "we do not have enough money for that" -- she is absolutely right, because this is a choice we are making about how we use our resources.

7. Put your life in God's hands. This is first, last and most important, and is an integral part of all areas of family planning. We are called to be stewards of our resources and talents, and to use them to make a return for the kingdom. I am not a providentialist, and I believe that this requires a delicate balance of prudence and trust in the Lord. As we have seen in the recent economy, many were tempted into living way beyond their means and are really suffering for it now, however, we can be open to children and live within our means if we are careful, and when we are generous with God, both in our tithes and in our generosity to life, He will show us the means.

30 comments:

Jennifer Frey said...

What a great post--thank you!

I would second the thought that private "big name" schools are often not worth the price tag, which is astronomical, as you ladies well know! I went to a large public university, was enrolled in the Honors Program there, graduated with honors and was accepted into a top 5 PhD program in my field. (ditto for my husband, whom I met in my program). Most of our colleagues are from Harvard, Princeton, Yale, etc., and I expected them to be much better prepared than I was. They were not.

I also like your thought that living with less is living with humility--it is so true! It is also to be more "green", which I think is just an extension of the sort of humble stewardship MA discusses here.

I have tried to get my husband to warm up to the idea of life insurance, but he's against it. If anyone has any good literature I could get him to read to change his mind I would appreciate it.

Allison said...

Great post!

I'm about 10 weeks from having my third child, and when we found out it's another boy (we're 3 for 3!), a good friend of mine said, "You can't have any more kids -- you won't be able to afford the groceries!"

It's so sad that people today feel pressured to limit their family size for the sake of spoiling the children they have. Some people limit their family size for other reasons, but this friend in particular has actually said the words, "I can't have any more - I won't be able to spoil them the way I want to."

When did it become a requirement in raising good adults, to provide new, brand-name clothes, an iPod, a cell phone, vacations, a car, and a free ride through college?

We have decided we will not be paying for college for our kids. My husband and I both finished college debt-free, without help from our parents. The kids will get loans and/or jobs, and when they graduate, if they have been responsible, we will help them pay their loans.

And, in the mean time, if the grocery budget gets tight, we'll water the soup.

Lisa said...

To Jennifer, who asked about convincing a spouse to go for life insurance:

At the whopping age of 31, my husband was diagnosed with a *very* serious medical issue. He was perfectly healthy, then suddenly this arose. We're extremely fortunate in that he recovered fully, but we didn't have life insurance yet. Instead of getting the normal (low) rates of someone in their early 30s, we're going to pay astronomically high rates because of this medical episode.

Perhaps you can present getting life insurance *now* when you're young and healthy to your husband as a way to save, even though he probably views view it as an additional expense. You'd lock in super low rates that you could very unexpectedly become ineligible for very suddenly.

Another note on life insurance -- be certain you have sufficient coverage. A friend of mine who is a SAHM thought they had enough coverage on her husband until their financial advisor pointed out the issue of health insurance. If your family is currently covered through your spouse's job, know that it will cost you a LOT more to get health insurance for your family independently if your spouse dies. You're getting insurance at a greatly reduced rate if you're doing it through an employer -- if you had to apply as an individual family, your rates would be MUCH GREATER than you're currently paying. It's important to get a health insurance quote *as an individual family* to see if your spouse's life insurance would allow you to meet that monthly expense. While I'm prayerful the Obama administration is able to get an affordable health plan passed, it's clear that could be a very long-time coming, so do make sure your life insurance coverage includes enough for private health insurance.

Maria said...

I plan on helping my children pay for college by...having lots of children! Seriously, children of large families, especially when the children are closely spaced, often max out in terms of financial aid from both government sources and their academic institution. Almost all financial aid forms take into account family size as well as the number of children a family has in college at one time. Also, as kids approach college age do some serious research on what is included on FASFA in determining aid eligibility.

Also, some states have great programs where high school students can earn free college during their high school years. From personal experience, I attended my local community college for free (including books) for my junior and senior year of high school through the state's Post-Secondary Program. I ended up graduating with my Associates Degree from college a week before I graduated as my high school's valedictorian. I had two years of college credits cost-free, plus I was still considered a graduating high school senior for all financial aid and academic scholarships. I recieved four years worth of aid and scholarship, which allowed me to pursue multiple degrees and study abroad at the private university I transferred to after high school graduation. All of my six younger siblings - and we all have differing degrees of academic ability - have participated in this program to varying levels and all have been very successful.

It's important to find out what your state may have available to you. Often innovative programs are not well advertised due to pressure by entrenched special interestes (like teacher unions) so do some homework. Thinking outside the box in terms of education can save a family much more than they could every put away themselves - not that financial prudence isn't important!

Ken Crawford said...

I heartily agree, particularly with #1 (which has other benefits as well... I know a number of couples who feel "trapped" working two jobs because they setup a lifestyle including an expensive house and expensive cars, that insists that both of them work to pay for it) and #3 (which occurred to me earlier this year when I realized that if my wife died I'd be up a creek financially trying to figure out how to pay for daycare).

Some ideas to add:
-Don't send the kids to private elementary or high school. I know this sounds contrary to our Catholic faith in some ways, but it's not mandatory to either homeschool or send them to Catholic school. I figured we'll save around $100k per child by avoiding Catholic schools and that doesn't include inflation. We'll homeschool if we ever feel that the public school is just too horrible to overcome with after-school catechesis and a proper upbringing, but Catholic school is just out of the question for us (one of my biggest complaints of the Church these days is how most Catholic schools goal for being "elite schools" far more than affordable).

-Consider moving to a state with a strong public college system. This is an add-on to #5. Not all state-school systems are equal both in quality of education and in cost (here in CA, public colleges are about 1/2 the cost of private, which is a lot more than in other states. On the other hand, we've got some of the best public Universities in the country.) Most states have some residency requirement for your children to get the in-state tuition.

-Pay off your house early. If you can have the house paid off before your kids go to college, that'll be a lot of income that can go to their college expenses that otherwise would be tied up. The same principle applies to other debt too like our own student loans.

JMB said...

These are all excellent points. I particularly like the one about Catholic schools. We live in an area that has excellent public schools and have saved ourselves so far close to 75K by not sending our four children to Catholic elementary school (3500 per year, per child). I'm not entirely convinced that Catholic hs is worth the $ either, since most of our local Catholic high schools are more sports orientated than academincally challenging (both boys and girls schools).

Also, keep in mind that many women do go back to work (many part time) when their children are older. My youngest will be starting 2nd grade and I've been looking out for a small part time position in a local doctor's office for some added income. Most of my friends have part time jobs.

Finally, as someone who has shlepped to Disney World, cruises and fancy vacations in the past, it just isn't worth it. We've been doing more road trips and quick weekend trips with the kids in the past two years and these have been much more fun and enjoyable for everyone involved. Besides who wants to travel by airplane these days? It's awful!

A lot can happen in 5 or 10 years. Don't worry about the future. My parents put 8 children through college without declaring bankruptcy.

Catherine said...

Thanks for the helpful perspective. I have also begun saying, "I don't want to spend our money on that" instead of "we can't afford it" because the second phrase can teach our children to feel deprived.

Also, we will definitely caution our children about the long-term cost of private colleges. Chances are high we won't be able to pay much for our children's college, and while we loved our expensive liberal arts college, we're still paying for it.

Kat said...

Mary Alice, thank you for taking the time to write this post! It sounds like you guys have done a great job with making your current situation work for you, as well as feeling more secure in your family's future.

In my experience, one of the best parts about a family budget has been that if something is in the budget, we feel free to spend that budgeted money. For example, if we have prayed about our budget and decide that $100 a month should go towards babysitting and date expenses, then we feel free to spend that $100 rather than feeling guilty every time we go on a date. The same goes for other "non-essentials" such as gifts for family members at Christmas, travel expenses, etc. We have had periods where we spend no money on these things, and other periods where they come back into the budget.

Anne said...

Thank you for the great suggestions!

The main thing I wanted to comment on was #2. I was so grateful for this! We just finished a stint living with my inlaws and then decided to rent again when buying a house seemed like too much of a stretch right now. It can be SO hard to fight the current of social opinion: "You have a kid? Well you HAVE to have a house-- with at least x number of bedrooms and a huge backyard!"

I always appreciate the reminder that living within your means is more important than conforming to society's expectations!

Right Said Red said...

Great post Mary Alice! Thank you for taking the time to share your wisdom with the rest of us!

You mentioned tithing at the end of your post, and I would like to comment on this aspect of financial planning. It may seem odd when you are trying to save to tithe (give more money away?), but I think tithing should be an integral part of any Christian family finances. What we give to God he gives back ten-fold. We are stewards of the money he has blessed us with, and we should think about our money on these terms. Often it is too easy to think about the money as "our" money, and leave God out of the picture. Including God in our finances is similar to including him in our marriage, he takes what is there and blesses it beyond measure. If you are not currently tithing (giving 10% of your income), I highly recommend moving in this direction. It often takes a little time to set up your finances around a tithe, but I think this a far more important aspect of financial planning than any college savings plan.

On a completely different note, I just want to say that I do disagree with the advice of one of the commentors -- save money on elementary and secondary education by sending your children to public schools. In certain cases this may be the wise or prudent choice, but there are other instances where this choice puts your child's moral education in jeapordy, OR threatens the existence of otherwise very good Catholic schools. Our Catholic school system is VERY disadvantaged by a forced public school system (which we all pay for whether we want to or not), and to just go with the public option for financial reasons can devastate some otherwise good Catholic communities! While I realize not all Catholic schools are orthodox, and everyone has a different financial situation, I would pray that finances ALONE do not cause people to choose public school over Catholic school. Often sending your child to a Catholic school is one of the best ways to participate in Parish life (and I say this as a homeschooling mom!). Education choices should be prayerfully considered, and public school should not be chosen simply because it is cheaper. Of course there are other reasons why a family might chose the public school over a Catholic school or homeschooling, but to make the decision simply to save money ignores the important role Catholic schools can serve in the lives of students.

Anonymous said...

I heartily second telling your kids you choose to spend your money another way. As a kid, two of my good friends were from big families & we sometimes argued about whether or not an only child is necessarily spoiled. Both of my friends in elementary school routinely heard from their parents, "no, we can't afford it" and concluded it was because they were many--and they were resentful, esp. toward the youngest kids. IF you're deliberately avoiding that, kudos!!

Anon4

Anonymous said...

Thanks for the great post, Mary Alice. Obviously much of it focuses on the "big picture" of finances, but I wanted to share a website that has helped me greatly in the past few months when it comes to the day to day spending. It is:

http://www.moneysavingmom.com

The author is a Christian mother of three who with her husband is currently saving to put 100% cash down on a new house. That seems pretty unheard of to me, but I've been quite inspired by keeping up with her site and have been able to save and stock up on all kinds of household and toiletry items. Food can still be difficult if you're particular about getting fresh meats and produce and such, but I've still saved a lot of money in the past few months. I've also been able to donate a ton of items, too. I might not be able to give $100 cash to the Catholic mission up the street, but I can certainly give $100 worth of shampoo, laundry detergent, etc., that I paid $10 for. It's really been a blessing in a number of ways to keep up with the site and some others like it, so I just wanted to share.

I look forward to reading the rest of the comments here and checking out the book you suggested! Thanks again, Mary Alice.

JMB said...

My point was, if you have a choice between a mediocre Catholic school and an excellent public school, don't be afraid to do it. Not all public schools are hotbeds of immorality. Not all families who attend Catholic school participate in the parish. In fact, I could count on one hand the number of Catholic school families that I see at Mass on Holy Days of Obligation (when the school is closed) and I am there with my children (whom I've taken out of public school to attend Mass). When our children attended our parochial school, the most common comment that I heard from other parents was "We're sending them here because we couldn't be bothered with the whole CCD/ going to church thing". I think it's also a misconception that families that send their children to public school don't participate in the parish. In our parish, only 5% of the families attend the Catholic school. A much larger percentage are at CCD, CYO, Men's sharing groups, Women's sharing groups, prayer groups and the like. The parish is for all families, not just the few who attend the school. If we can agree that parents can homeschool their children well, we should also be able to agree that parents can be devout and Orthodox and send their children to public school. Because doesn't it always start and end in the home?

Karen said...

Thanks for the tips.

Dave Ramsey has a chapter about paying for college in his book "The Total Money Makeover."

A great book on family finances I read recently is "America's Cheapest Family Gets You Right on the Money: Your Guide to Living Better, Spending Less, and Cashing in on Your Dreams" by Steve Economides and Annette Economides. They are a homeschooling family with 5 children. They show practical ways for anyone to get out of debt totally, as well as mention how their older children payed for college without loans.

Helen said...

Great post!

My husband and I have six children (our oldest is heading off to college next month – Princeton :D!). She chose Princeton, in part, because of their generous financial aid package. We have saved nothing for college, although both tithing and saving, as well as life insurance (for both of us) are integral parts of our budget.

I know this post is not on education choices, but I did want to comment on Ken’s comment. Our three oldest started out in public schools, but when our oldest child was ready for middle school, we switched to Catholic school. We made the switch for a variety of reasons, the most significant of which was our disappointment with the CCD program at our old parish. The parish had a school as well, but we chose not to send our children because it was too small and just not challenging enough.

We moved into a slightly larger house after baby #5, with a large catholic grammar school just down the street. We went to an open house and after much prayer and discussion, decided to enroll our children. It required a huge re-working of how we see our finances, but it has been well worth it. Our parish has a “fare-share” tuition policy, with a sliding scale based on income. While we pay the highest tuition because of our salary, the school also reduces the tuition for siblings, giving us basically a buy 2, get 2 free scenario. It’s a wonderful school, a model for others in our diocese and we don’t regret the financial sacrifice one bit. We have been blessed with very bright children who have gotten scholarships to our Diocesan Catholic high school and we’ve applied for financial aid from the diocese and from the schools themselves (which we pay back with volunteer hours). Our children are far better catechized than either me or my husband ever were. BTW, catholic school tuition counts toward the second 5% of your tithe (we’re at about 13% total with tuition, LOL).

I think the decision regarding schooling our children is a very personal one and what is right for one family, may not be right for another. I have nothing against public education, or home-schooling, but I also don’t think you can say that one choice is always better. Saint Paul tells us there are many gifts of the spirit, and that we need to pray to discern our gifts and talents. Some of us have a gift for education and feel called to home school, others do not. Some of us are blessed to have good, affordable catholic schools available, others do not. Like all things with our family, we pray and discern, and then pray some more, always putting our trust in the Lord, who has blessed us abundantly.

I know I’ve hogged this space, but I did want to make one other comment. I was humbled by the thought that we should stop saying “we can’t afford that” and start talking about our choices and values. This is an area I really need to work on. I often observe that our children feel sad because they don’t have all the toys/vacation/huge houses that their friends have and I’m sure I’ve communicated my own sense of want. While I see this struggle (for myself) as a chance to grow in holiness, I do want to be more sensitive to my children's feelings. I’ve tried to focus our children on the good things about our large family and submitting to God’s will (and grace), but I want to work on this area more; so thank you for the gentle reminder!

Kristen said...

This is slightly tangential, but has to do with budgeting:

My husband and I started "the Dave Ramsey" plan about 9 months ago and have changed a lot of spending/saving habits and are pleased with the outcome thus far. But what I wondered is: How much do you ladies spend on groceries per month? I get $400 per month for grocery items, and I am always out by the end of the month. There are two of us (three if you count the baby in me). $400 seemed ridiculous for groceries. It is either normal and you guys all spend the same, or I am missing major grocery shopping ideas that save money. (We eat "real food" and I never buy processed stuff for us.)

Sarahndipity said...

I agree with JMB about public school. My husband and I both attended public schools our entire lives, and neither of us left the faith. From what I've seen, whether you go to Catholic or public school makes little to no difference in how well you practice the faith as an adult. We still live in the area we grew up in, which has excellent public schools. All the teachers have master's degrees and are paid much more than Catholic school teachers, who I'm pretty sure do not need a master's or even an education degree. In our case, public school is the best bet. Whether or not your kids stay Catholic has to do with how well you pass down the faith at home, period. Kids aren't dumb, and I don't think they're as fragile or easily influenced as parents often think they are. If they have a strong foundation in the faith they aren't going to lose it simply by going to public school. And our kids are definitely going to CCD all the way through high school, too.

And yes, part of our decision to send them to public school is because it's free. Instead of paying thousands of dollars on Catholic school, we can save for college, so hopefully our kids won't have to take loans. As many commentors have mentioned, loans can take years to pay off and can seriously interfere with your ability to start a family and/or live on one income. My husband and I have no student loans because our parents paid for college. They were able to do this because a) they planned and saved well and b) we went to an in-state school. I also agree with JMB about living in a state with good colleges, if you can. Our state (Virginia) has some very good state schools. We hope to be able to pay for our kids’ college, but they are definitely going in-state.

I would also like to share one more piece of financial advice: Avoid credit card debt at all costs. Always pay off your balance in full each month. That’s what we’ve always done. If credit cards are really a problem, don’t use them. But we’ve found that we actually make money off our credit card, because we get 3-5% back on purchases at the end of the year. We use our credit card for everything we can, and make about $500 a year this way.

Right Said Red said...

I would just like to remind our readers that there are many people who have made huge sacrifices for our Catholic schools like our grandparents and great-grandparents. In the past and present, many faith-filled people give up big things financially because they have prayerfully considered this decision and determined that Catholic school is indeed worth it, and better for their children's moral and educational formation. Each situation is different, so to say it makes no difference can actually be quite upsetting to our readers who have made such a big financial and personal sacrifice in this regard.

Helen, thank you for your post. You hit on many of the things I was speaking of in my prior comment.

On a personal level, most of the faith-filled and active families in our parish send their children to our Catholic school. It is a wonderful community, and a really great place for the children. They all make huge sacrifices because of this choice, and I believe very strongly that God will reward them for their sacrifice.

I think we should move away from debating Catholic schools in the comments here, and start to make comments on other areas of financial planning. I have found the dismissive attitude of some of our readers toward our Catholics schools to be rather unsettling, and a reason I fear these schooling options won't be around for much longer.

Erin said...

Kristen:
My husband and I also started Dave Ramsey a few months ago, and I am constantly frustrated with our grocery budget. We budget about $200 for Costco and $300 for the grocery store. this includes all our toiletries, cleaning supplies, baby food, baby formula, etc (we have one baby-- 13 mo.). Some months we stay within, sometimes we don't, but I always think it seems high for just the three of us. We also prefer lots of fresh fruits and veggies and good meat (although my mantra lately to my husband has been "Dave Ramsey wouldn't buy those steaks."). We are pretty good about buying things on sale and using coupons, but we are still up there in the grocery budget. I'm open to ideas too!

Anonymous said...

Erin-
If you can cut baby food from your budget, it'll save a lot of money. We didn't for our first child, but for kid #2 I got a submersible blender (also called a stick blender). A good one costs about $30 and has a motor powerful enough to do ice cubes. I have a Cuisinart one I love. Put food in a measuring cup, put the blender in, and poof! instant baby food--and a hundred times easier to clean than a regular blender or food processor. We'd fill a number of small containers and freeze some, too. Our second child ate no purchased baby food except the instant cereal, and we saved a bundle! The clean-up time/effort was what kept us from doing this with a traditional blender or processor, and it's probably the best kitchen gadget I've ever bought.

Anon4

MargaretJDMom said...

Thanks for the reminder on life insurance for Mom! We need to do it in order to protect our family financially.

One little aside from someone who struggles in the budgeting department....I do have a "fun money" budget for treats, trips to McDonalds (the horror I know! :P ) and I do it in cash. It is amazing to me how much better I am about money when I actually hand it over, more so than even using my debit card and dutifully enter the amount in the ledger.

Also, regarding financing of catholic education, if you are someone who would like to attend catholic schools and can't afford, try talking to your pastor. Our parish is quite unconvential in that department....the parish lives stewardship in such a way that if the family is really tithing and volunteering etc. then the education is just part and parcel of stewardship. It is not "free" but if you have a lot of children it greatly reduces the overall cost.

Mary Alice said...

I am glad that so many of you have joined in the conversation. I wanted to add that I have obviously glossed over a lot of practical basics, but that is because I really did not want to repeat the things that I learned from 7 Steps -- I STRONGLY encourage all couples to do this program at home. There is a bible study that goes along with it that will radically change the way that you think about and talk about your finances, as well as some really important basic spiritual advice for establishing a healthy prayer life, which is key to good decision making in any area.

In the book, as part of a heavy emphasis on tithe, the author strongly encourages Catholic education and also encourages you to use part of your tithe towards the Catholic education of your children. I know that not everyone agrees with this, but if you are considering Catholic school and are concerned about money, but you are also tithing I think you might go to your Pastor and see what he advises. Even things like Vacation Bible School, which add up when you are a larger family, can be counted towards your tithe in this program. Lenahan's opinion is that you should NOT be turning away from quality Catholic education purely for financial reasons, and that in fact you should sacrifice in other areas in order to provide a Catholic education if at all possible.

Full Disclosure: I chose to remove my child from a parish school in order to homeschool him. I did this entirely for academic reasons. These decisions are individual and we should be careful, on both sides, not to paint with a broad stroke.

I add this just to highlight the FINANCIAL aspects of the decision as outlined in the resource that I recommend in the post.

Mary Alice said...

I am glad that so many of you have joined in the conversation. I wanted to add that I have obviously glossed over a lot of practical basics, but that is because I really did not want to repeat the things that I learned from 7 Steps -- I STRONGLY encourage all couples to do this program at home. There is a bible study that goes along with it that will radically change the way that you think about and talk about your finances, as well as some really important basic spiritual advice for establishing a healthy prayer life, which is key to good decision making in any area.

In the book, as part of a heavy emphasis on tithe, the author strongly encourages Catholic education and also encourages you to use part of your tithe towards the Catholic education of your children. I know that not everyone agrees with this, but if you are considering Catholic school and are concerned about money, but you are also tithing I think you might go to your Pastor and see what he advises. Even things like Vacation Bible School, which add up when you are a larger family, can be counted towards your tithe in this program. Lenahan's opinion is that you should NOT be turning away from quality Catholic education purely for financial reasons, and that in fact you should sacrifice in other areas in order to provide a Catholic education if at all possible.

Full Disclosure: I chose to remove my child from a parish school in order to homeschool him. I did this entirely for academic reasons. These decisions are individual and we should be careful, on both sides, not to paint with a broad stroke.

I add this just to highlight the FINANCIAL aspects of the decision as outlined in the resource that I recommend in the post.

Bridget said...

Thanks for the suggestion Mary Alice! I've been looking for something like this for awhile. I plan on buying the book!

As for tithing, this is a hard topic for me for a number of reasons. Most importantly, I just didn't grow up doing it and it wasn't spoken about in the parishes I attended. On another level, it seems unjust, like a flat tax of sorts. 10% of one family's income could be fancy vacation money while for another family it can cut into necessities like food. Also, I know it's biblical, but I imagine 10% meant something dramatically different for an agrarian people than it does today. Finally, my husband is in his 8th year of grad school and I'm doing everything I can to be a SAHM. We are doing everything we can to not take on addition loan and while I know we are not giving enough, 10% of our gross income seems incomprehensible right now.

This is probably a topic for another post. I bring this up in all humility because I know that I, like many catholics, need to be challenged in the area.

Yours in Christ,

Bridget

Kyra said...

This was such a good post! I haven't heard of the program you mentioned but I will definitely look into it now. I especially found the comments regarding the following helpful:
--weddings
--college loans
--housing situations

As a single mom in her twenties I don't have any credit card debt, however I do have a college loan the size of a small mortgage (!) There are many myths I find perpetuated in our culture regarding fincances. I don't know if it's because of the area where I live (the northeast) or the upper-middle-class demographic, but it seems the following is believed of almost everyone I know:
--you shouldn't marry and have children until you are "financially stable"
--marriage must begin with a big, expensive wedding and honeymoon, followed by moving into a brand new house.
--both spouses must work in order to pay off the big wedding and afford the big house.

I was so pleasantly surprised to see all of these issues addressed. I personally know that almost everyone my age who graduated from college faces huge loans and entry-level salaries, but I don't hear it talked about much. There is lots of advice on how to get loans for college before you start, but not the best ways to pay it off after the fact.

I especially worry about any young people under the age of thirty who are putting off marriage or children (or another child)specifically because of financial reasons. While I think there is value in being financially responsible, we should be careful not to measure our self-worth by our finances. I am just starting to get used to the idea that if I do marry someday, I'll be bringing debt into that marriage but it's not something I should be ashamed of. Also that if I don't ever marry, I may be a lifelong renter of one-bedroom apartments, and there's nothing wrong with that either. What my child wants most of me is my time and attention. He doesn't care if we live in a house with a backyard and a guest bedroom.

It's possible that one of the things contributing to our current economic crisis is too many couples our age believing a new 3-5 bedroom home is an entitlement or necessity rather than the "American Dream"... home ownership does not always make sense in every real estate market,on every budget, or in every family situation.

Ken Crawford said...

RightSaidRed, I completely agree with your points of why one should consider Catholic schools. There is a lot of good in many of them and they provide an important and necessary alternative to public schools.

At the same time, these points, including both my financial concerns about it and the value of Catholic schools you noted, are ALL things that parents need to consider. Sometimes finances are strapped enough on their own to make it alone a good enough reason to rule out Catholic school. I feel like you too easily dismiss finances in this equation.

I wish Catholic school in my neck of the woods (Northern California) was only $3500 a year as one commenter said. Here it's $6000 for elementary school and $12,000 for high school. Those are the cheapest options around. I've looked. I've called schools pretty far away to see if they were cheaper. None do. Plus, there are other Catholic schools that cost more. I probably could afford to send my eldest who is in 1st grade to Catholic school right now, although it basically force the elimination of all non-essential spending including going down to one car, even though they're 7 and 12 years old respectively, bought used and paid off, to lower my insurance costs. Even still, I just physically can't afford what it'll cost when my youngest is in 1st grade for them all to go to Catholic school when it'll be approaching $20k a year with it going a lot higher ($35k) when the eldest two reach high school. And we're planning of having more kids!

So, what would you suggest I do? Send the wife to work? Get a second job on top of my engineer job that already takes 50-60 hours a week? Only send my "favorite" two kids? Only send them for a few years each? Or perhaps not have had more than two so I could have sent them all to Catholic school?

To be clear, I'm not suggesting that your comments would imply poor answers to the above questions. What I am suggesting is that you're not fully thinking through your statement:

"Education choices should be prayerfully considered, and public school should not be chosen simply because it is cheaper. Of course there are other reasons why a family might chose the public school over a Catholic school or homeschooling, but to make the decision simply to save money ignores the important role Catholic schools can serve in the lives of students."

So, yes, you're reasons are all very good reasons and I do support Catholic schools and want to see them continue. But if a family is really talking about whether they can afford very simple things, much less any college support, Catholic schools need to be on the chopping block with everything else for expense controls.

There are times it is the only financially prudent thing to do and I think you're been too dismissive of that reality, perhaps unintentionally.

Personally, I fault the schools themselves for the situation. $3000 a year is over $100k a classroom per year. Particularly when so many of these schools have their facilities subsidized by the parish, as they should be, there's no excuse for not being able to operate a classroom for $100k a year. Add in the hiring of so many unorthodox teachers at so many schools and many of the schools being so overwhelmed by non-Catholic students that they naturally under-emphasize the religious instruction (particularly true in urban areas) that it's no longer a fair assumption that your kid will get a good Catholic education at many of these schools. This makes it even more difficult because the amount of research into each school and each teacher a most necessary and difficult task, on top of the huge financial outlay.

The reason Catholic schools are in danger is not because of a lack of faith or dedication from average Catholics, it's because of a lack of institutional control, both financially and catechetically.

just keepin' it real said...

Bridget: if your husband is in grad school, then you don't actually have an "income," right?
On the other hand, you are paying money for an internet connection.
:)

JMB said...

Ken,
Our parochial school costs $3500 per year per child, however, our local property taxes (Northern NJ) average 12K per house. Ours are closing in on 20K per year. Of the 20K we pay, 75% go to fund the public schools.

I'm not sure how the parish based parochial school system will survive the next 20 years in my area. The population of the town has increased over the past five years, but the enrollment at the parochial school has remained flat. The only thing that keeps it alive are the closing of other parochial schools within the county. If it weren't for the influx of those students, there would be no growth at all.

Therefore, as a parent of four children in public school and as a parishoner of a parish with a parocial school, I'm often at odds with the mentality that CCD is an after thought and those children enrolled (95% of the parish families) are considered, at best, second class Catholics.

Ken Crawford said...

JMB, thanks for the follow up info. I always find it interesting to see how different places do things. In California we take a "tax everything" model so the individual taxes are lower but it's significant when combined together. I pay about $5K in property taxes, which is fairly common (we've got some laws that make it REALLY complicated how much one pays in property tax based on when the house was purchased) about $3K in income tax, again common, about $2K a year in sales tax (or so the calculators tell me) and then a whole bunch of fees that are built into a bunch of other things (from garbage collection to gasoline to the electric bill). Everything combined would probably bring me up to par with your property tax. Guessing that you've got other taxes too, I bet you're spending more in state taxes than I am. What we don't have in CA that there's a lot of back East is toll roads.

But to the overall point I think you're making, the public schools and the associated high taxes to fund them really do put the damper on private schools. About half the CA budget goes to public schools, so if I could get $6k back, I could put another kid in Catholic school.

I've heard the issue of parish's with schools treating CCD as second rate but never seen it personally as both of the parishes we've been at while we've had kids don't have schools (although the current one has plans to build one someday). Interesting to hear it from yet another source.

Bridget said...

Dear "Just Keeping it Real"

1. We earn a small stipend and I have a very part time job to help defray our high rent costs in CA.

2. No, we don't pay for our internet connection. And, for that matter, we get free cable TV too, but we choose not to own a TV.

3. I asked those questions because I really want to grow in holiness in this area and I was hoping to gain some insights.