One Snarky Chica with Issues

Right now I’m sitting on top of a super-sized mountain of debt and wondering how I got here. Mostly it’s my own fault and I know that. However, I can’t help but have issues with the fact that my parents did nothing to educate me about money or debt. Sometimes I get really mad when I think about the 13 years that I have been working and not saving because I was financially ignorant. I have a 17 year old brother that is looking for his first job and, knowing my parents, is just as clueless as I was.

With that in mind, I made it my mission to teach him about all of the mistakes I have made and the consequences of having a lot of debt - having to work a job you hate just because it pays well. I also wanted to introduce him to the power of compound interest and show him how easy it is to be a millionaire when he retires if he starts now.

When I set out on this quest I wasn’t sure if he’d be receptive to what I was preaching. And even if he did pay attention I had no way of knowing if he would really listen to me and put it all into practice. After I had my hour plus conversation with him I honestly wasn’t sure it was going to stick.

Apparently, he was paying a lot more attention to what I was saying than I first thought.

My mother told me that she offered to buy him some new clothes for school two weeks ago. The kid doesn’t need any more clothes. Suprisingly he told her just that. She told me that he told her “I want you to take every penny that you planned on spending on clothes that I don’t need and open up a mutual fund for me.” The kid was serious, but she thought it was funny.

After his first day of school last week he called me when he got home. In his math class they were doing some problems involving interest rate calculation with mortgages as an example and he said he thought of me immediately. He called because he wasn’t sure what a mortgage was exactly and how it worked. I started explaining it to him and found out something alarming. He did not realize that getting a loan for something meant that you ended up paying more for it than the cost. He didn’t realize that a $150,000 house could cost you around twice that with a 30 year mortgage. He didn’t realize that my car I got new a few years ago (my last big money mistake) said $14,000-something on the sticker but will end up costing me over $18,000 in the end. He thought he could walk into a car dealership and pick out a $15,000 car and then tell the dealer that he could afford to send him only $200 each month. And at the end of it all only have paid $15,000 total…in $200 payments.

And yesterday, when I checked my email while eating breakfast I noticed an email he had sent me the night before with the subject line “mutual fund stuff.” I opened the email to see a link to the new Suze Orman article on Yahoo Finance and the comment “Did you know about this? Call me.” Seems the poor kid was all worried that when he opens up a mutual fund that he would not make as much as he could due to excessive fees. I told him what I know about funds and the various fees. And I told him as soon as he gets a job and a checking account I will help him open up an account and buy some mutual funds.

I kind of feel bad for a minute because the poor kid is going to have an ulcer before he graduates high school worrying about mutual fund fees. On the otherhand I’m happy about it all because I know that when he’s my age he’s going to be in a much better place financially.

If you have any teens in your life, please, educate them on finances as well! I had printed out a graph for him that shows the power of compound interest and how it’s better the sooner you start investing and that really illustrated the point for my brother. And if you have any thoughts on what mutual fund should be his first, please leave your advice in the comments. I’m leaning towards some Vanguard funds.