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Monday, February 7, 2011
I manned the car-buying station and explained the various choices of automobiles, ranging from a used Mercedes at $37,000 to a used Honda Accord at $6,200. Kids learned the concept of a down payment and how a bigger down payment gave them a smaller monthly payment on the loan. The down payment was duly recorded and subtracted in their personal check register.
Each student also borrowed at a different rate of interest determined by choosing tokens. They learned, by seeing explicit dollar amounts, that the better their credit the lower the rate of interest they paid on their loans.
In many cases, parents helped the kids make decisions on such things as what type of car to buy, how much to put down, etc. It was obvious that these discussions would continue long after the event was concluded as kids and their parents go through the real world and make real financial decisions which, in the end, is a big part of the mission of the project.
From my perspective, I have to say again that I felt it was a huge success, that it was a step up from last year, and that it enforces my belief that improving financial literacy is possible without spending huge amounts of money. Too many times when financial literacy is mentioned, people start talking about training teachers and buying expensive software, etc. and the perceived financial commitment snowballs. In the end, thumbs are twiddled and nothing gets done.
Kudos to Michelle Glassburn at makingCHANGE and Marlena Jareaux, author of the book, 26 Financial Things to Teach Your Parents, for putting on an exceptional event.