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Evaluating the Credit Card Offers

With Eldest leaving for college inside of six months, the nascent-adult mail has started to flow and one of the pieces to her the other day was a credit card application from First Financial Bank USA.  The bank is a credit card provider that specializes in credit for college students and touts itself as a leading quality provider of credit for new credit users.  Inside the envelope was a letter to the kids, a separate note to parents and a sticker sheet showing all of the options available to personalize the front of the student’s new card and the obvious message is that it’s a great time to get your first credit card so that you can learn to manage credit and build your infant credit history.

But is it really a great time to do that?

What bothers me about the continued marketing of credit to our young people is that it’s a recipe for life in an economy requiring a completely different mindset than before.  You need to understand something about the credit explosion of the past sixty years – it lubricated and accelerated the shift in our economy from an industrial spending base to a consumer spending base.  At the end of the Second World War, government and business leaders were at a crossroads and knew that signficant changes had to be made in the economic drivers.  From the Industrial Revolution until the Great Depression, economic growth had been predicated upon capital investment spending by business as the country grew and was developed.  That spending utterly collapsed in the Depression and despite the best efforts by FDR to get liquidity into the system via government spending, a traumatized American consumer literally threw the money into the mattress as protection for any further problems. 

At the end of WWII, the public debt was stretched by payment for the war effort and the government wasn’t seen as a viable alternative for economic growth and all eyes turned to the American Consumer to lead the way out.  The birth of the modern credit card – Diner’s Club – led to a realization that available consumer credit was a great way for the average American to lever his growing income into spending that could reshape the economy.  The fact that the US government allowed individuals to deduct their credit card interest from their income taxes until the mid 1980s was proof positive that consumer credit was a policy tool to push spending.  But we’re now at the point at which families not only have to delever – pay off the debts – but learn to live within their means and relearn that they themselves are the ones responsible for their own retirement and future; this is all within the framework of lessened income growth.

I’ll admit that the marketing to college students, the majority of whom now have their own credit cards, is better than it was. Prior to the passage of the CARD (Credit Card Accountability, Responsibility and Disclosure) Act of 2009, card issuers enticed students to their cards with such freebies as mugs, frisbees and t-shirts and the kids lapped it up; it was only after they began to receive the bills that they realized what they were in for. Colleges that permit marketing to students on campus are obligated to certain requirements and the shiny bangles that captured the attention of the previous generation of students are now gone. The CARD Act of 2009 went some way to cleaning up certain wild-west aspects of the retail credit industry. On the offering side, it did end the superficial bangle show that captured the fancy of many young adults. On the billing side, it also mandated that bills sent to cardholders show such things as the length of time required to pay off the amount owed if only the minimum amount was paid. This particular aspect alone was eye-opening for new users as they realized that making only the monthly minimum was a long-term financial hemorrhage.

One of the lines sold to the American consumer is that credit is simply another form of liquidity and that if you don’t have the money now, just use the plastic and pay it off later.  The problem is that the liquidity isn’t yours but someone else’s and that someone will demand repayment.  This is particularly hazy to the youngsters who haven’t the experience to fully comprehend this and are generally flush with the new-found personal and financial freedom that comes with college.

In the case of the offer to Eldest, the only thing that we had to do was show her the APR of 29% and she immediately blanched.  It wasn’t necessary to show her the misleading commentary nor take her to cardoffers.com, a website that offers side-by-side comparisons of the various cards available as well as cardholder comments critiquing their card.  In the case of First Financial Bank USA, there were more than 130 comments and the majority were strongly negative.  When it finally becomes time for Eldest to consider a card, then we’ll go to that site and parse through the card language to better understand the product.  For now however, she’s best served going through at least part of college without a credit card.  She’ll be forced to manage her cash and even learn to do without and if she’s pressed, her mother and I are only a phone call away. 

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Cannibalizing Our Young

There’s a recurrent theme in which a society, facing defeat, responds by using its youngsters – the seed corn – as a means of keeping itself alive.  Whether it’s the Germans in World War II or the Confederacy after 1864, the image is one of teens and children sent to the front line to stave off an inevitable defeat.  This is recently brought to mind as separate sources converged to illustrate that our present financial system is facing the destruction of its profitable bubble model as it now extends faux-friendly credit to the young and then feasts on them when they cannot repay.

The first source was a brief Fitch Ratings release that discussed the safety of Asset-Backed Securities composed of student loans.  The size of the student loan pool is now greater than auto notes and credit cards and is in the vicinity of $1 Trillion and according to the Federal Reserve Bank of New York, approximately 27% of these loans – more than a quarter of a trillion dollars – are now more than 30 days past due.  Of this amount, more than $67 Billion in student loans are more than 270 days in arrears, which is a technical default.  Student loan backed ABS products are no different from their well-known cousin, the Mortgage Backed Securities products in that the cash flow stems from the cumulative payments of all of the borrowers as they repay their loans.  Like the MBS however, there was a glut of lax loans made and more are now in default.  The bulk of the poor lending was done by the for-profit institutions whose admissions and financial aid people directed prospective students into taking on excessive loans and several years later, with the education finished and insufficient income, the student borrowers are going into default.  The for-profit colleges, such as Phoenix, made money while the students are held to account. For the record, the graduation rate at the for-profits is 22%, less than half of that for public universities. 

Fitch’s good news however, is that the ABS are relatively safe for two reasons.  First, the products were structured in a better fashion with greater contractual protection.  Second, the Federal government is backing the loans in multiple ABS via the FFELP (Family Federal Education Loan Program), under which the large majority of the loans were written.  This is great for the owners of the ABS, which happen to be almost entirely corporations and financial institutions.  For the actual individuals in the picture – those who are carrying the defaulting loans – it isn’t great as the Federal government expects to get the money back.  Corporations profit (for the win again!) as the US Department of Education is shelling out more than $1 billion in commissions to private contractors to collect on the deficient loans.  Naturally, these contractors are wholly-owned subsidiaries of such stalwarts as JPM and Sallie Mae.  One of the most glaring comments in the article was that a person in arrears on both taxes and student debt found the IRS to be more compassionate and willing to consider alternatives than the student debt collector; the IRS handles its collections issues internally.

The collections issue stems from the high-pressure methods and threats used on the individuals.  Bloomberg personalizes its story by focusing on a person in default, a disabled man who is 52 years of age; but the reality is that most of the students in default, of whom there are more than 5 million, are young adults.  These are not the life-experienced, uber-organized seniors but that group of adults with the least experience and cohesiveness; these are the adults with the fewest self-sufficient job opportunities and yet will be hounded into their adult years.  Their lives will be dogged and their ability to form households, which is crucial to any true recovery in the housing/construction sector, will be crippled for years to come as their meager financial resources are stripped.

People should be responsible for their debts.  But there is a systemic aspect here as those who are least experienced and able to evaluate the alternatives are most pressed to take on debt to better themselves and prepare for their future.  When the debt is incurred and the kids are into the world – without the opportunities available to previous generations – the pressure is on to honor the debt payments regardless of their circumstances and ability to pay.  The individuals will be hounded and threatened, while the entities which do the hounding are part of a group which increasingly ignores its own contractual obligations, dragging out payments, ignoring deadlines and gaming the system in any way to further their own fortunes at the expense of the whole.

In permitting a system to enslave and wreck the lives of a large segment of our young, we’re cutting off our own national future.  We’ve allowed a system to develop that is cannibalizing society’s future productive members, harnessing them to debts that will take years to satisfy and barring their ability to create their own households and families, the things that are crucial to the vitality of our country.  The combination of expensive higher education and harsh debt is certainly profitable in the moment.  But it’s continuance will prove to be its own destruction as fewer are able to participate and the weight of the process will collapse.  If we permit the present system to eat our young now, there won’t be enough productive members – or opportunities – to support a vibrant society and economy in the future.

 

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Boots on the Ground Economics:  Observing Change

If you follow the news, you’re going to hear that the jobs data shows a solid performance and that with the stock market at post-2008 highs, the economy has turned the corner and we’re on the mend.  But you look around or listen to others and the sense is that what’s reported doesn’t jibe with the reports.  Can you trust the news or is there a discrepancy?  How do you check what CNBC and Fox Business are throwing out?  You have two options.  The first is to go to the source material for the news reports themselves and the second is to simply pay attention to the small indicators around you.

There’s an increasing distrust of the main-stream media, and that’s especially if you get your economic news from cable sources such as Fox Business or CNBC.  The beauty of the internet is such that you can review the sources for these stories and we’ll take a gander at the US Bureau of Labor Statistics news release that provided the source for the HuffingtonPost.com article.  In the press release, the private payroll job rise actually came to 233,000 jobs instead of the 277,000 jobs overall that the HuffPo article referenced.  Of these 233,000:

  • 45000 were in the temporary employment sector (19%);
  • 41000 were in the food service sector (18%);
  • 61000 were in the health sector (26%).

More than a third of these job-finders are working for minimum wage/tips or no benefits while a full quarter of the job recipients are in a sector that’s heavily dependent upon government spending.  With the government spending a deficit greater than $1 T annually and attention sure to be paid to the Medicare/Medicaid budget segments – anybody notice the television commercials announcing the campaign against Medicare fraud – is there doubt that these programs will undergo significant reform in the future?  When this happens, the healthcare sector will be rocked and that sector will go flat at best.

If you sense that people are continuing to cut back or feeling the pinch, this macro-level view helps explain why that’s the case.  The jobs are there, but they aren’t the jobs that our grandparents, or even our parents, had and there’s no advancement future in a temporary position.

The other way to check out what’s going on is to simply pay attention to what’s going on around you.  A look at the state of youth sport programs in my area is a clear indicator of our situation.  Eldest has played soccer since elementary school and has participated in the area’s rec soccer league; she’s good enough that she’ll actually play Division III women’s soccer when she attends college in the fall.  Through all of that time, there have been teams at age levels from pre-K to U-19 and three years ago, the local rec league participation was strong enough that the U-19 (females between 15 and 19) level fielded three teams.  Two years ago, that division could field two teams of about 14 players apiece but with other activities and part-time jobs, there were games in which Eldest and her teammates played Ironman soccer, down a player for the entire game with no substitutions.  When Spring sign-up arrived again, I contacted the league and found that the U-19 division was defunct because there weren’t enough to field even one team.  There’s is cyclicality in any activity and I chalked the situation up to that.  In the meantime, Eldest asked to play for a nearby area’s soccer club in order to keep her skills up and she signed up for that team instead.

When no notice that any first practice was forthcoming, I spoke with that club’s president – who was also going to be coaching Eldest’s team as well – about the status.  After getting the details, we chatted and I discovered that his club, which historically fielded three or four teams at that level, was now down to one team of 19 girls.  This is actually more than you want for one well-stocked team but there weren’t enough for two teams and the decision was to turn no girl away.  Not only were these two clubs, that used to field five or six well-manned teams, down to only one team, but several of the 19 girls on the squad were like Eldest, soccer refugees from localities that could no longer field teams.  What was once an eight or nine team county league was now down to five and this couldn’t be explained by the cyclicality of a single club’s program.  It’s possible that the decline is due to families opting not to pay for soccer for the older kid because of stretched incomes, but not definitive. 

From my perspective, it wasn’t definitive until I had a conversation this weekend with Youngest’s baseball coach.  As we watched the boys throw and do warm-ups in the pouring rain, we discussed players and he commented that there were more boys moved up to this level than in any previous year.  I mentally ran through the teams and there are as many teams in this level as in previous years, but why were they moving the boys up instead of leaving them at the lower level?  It’s possible that the younger crop of boys simply has better skills than in previous seasons and that would account for the shift upwards.  But given the other conversation with the soccer club president, I suspect that it’s something different and related to money.

There’s a natural winnowing process in sports, in which most children get to try something new.  This is how the kids learn what they like or dislike and it helps teach some basic people skills apart from kicking a ball with the instep or loading up before you swing the bat and parents don’t begrudge the opportunity for their kid to have that opportunity.  But kids develop preferences as they grow and this contributes to that process; kids also understand more and aren’t stupid to what’s happening with their family.  I believe that the increasing stretch of the family budget is increasing the pinch and parents who, two decades before, might have permitted further exploration are now deciding that the kids are old enough to understand and cutting back accordingly.  This is exacerbated by gasoline prices at almost $4/gallon and the cost of driving to playing fields all over Hell and half of Georgia.  Am I positive that this is the case or am I viewing everything through money-colored lenses?  It’s impossible to say for certain, but I’ll keep these two Main Street datapoints in the back of my mind as I continue to watch what’s going on.  The point of the exercise is to see whether what’s happening on Main Street jibes with what Wall Street – and by extension, the government – says and at what point they diverge.

 

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Having “the Talk”

Part of fatherhood is living outside of your comfort zone, at least until you get the hang of whatever new thing that you’re having to do.  Changing diapers, learning to discern why your baby is crying, or reading The Idiot’s Guide to Soccer in order to coach a kimdergarten team are all examples of men doing things that they were simply never prepared for.  A major topic that takes men out of their comfort zone is having to teach "the birds and the bees" to their children; while most things are easily managed once you get the hang of them, having "the talk" will almost always be nebulous and fraught with uncertainty.  It is, however, one of the most important things that a father needs to do and that’s especially at a time when the media extols sexuality and fewer parents seem to monitor their kids.

So what are some of the things to consider?

First, having "the talk" implies that there’s actually going to be a verbal communication between you and your child.  As much as I loved my own father, my version involved walking into my bedroom while in middle school and finding a small book about human reproduction lying on my bed with no words or comments ever actually spoken.  The result, being one of the 7th grade walking dead, was that I put the booklet on the shelf and continued to get misinformation from my buddies; in today’s world, that’s the worst possible thing that could happen.  The fact that I got through unscathed is more of a testament to my own fear of screwing up, literally and figuratively.  Your kids want to know that you’re there, that they can depend upon you, and that there’s some stability and that only comes through ongoing efforts at communication. 

It’s helpful to understand that "the talk" isn’t and shouldn’t be a singular event.  There are different aspects including basic informational, aka the parts and the source of babies, then later the physical processes of puberty.  The basics of the body parts are something that can be done as early as the toddler and preschool years and a great time to do so is while they’re being bathed, naming the various parts as they’re being washed and rinsed.  The keys are repetition and simplicity, using the same terminology again and again until the kids are able to use the language themselves.  Simplicity means that you focus on the basic, visible body parts such as the penis or the vulva/vagina (actually, the vagina is inside the female and the vulva on the outside).  Don’t worry about what isn’t visible because at those ages, out of sight truly is out of mind but also expect to have to go over it multiple times until they’ve got it pat.

Since I was responsible for bathing the kids before my wife could make it home, one of the earliest questions that I faced with a young toddler was whether I should use the names for the anatomy – nipple, penis – or cute nicknames instead.  My own parents used nicknames, but after considering it and chatting with my wife, we decided to use the proper terminology.  There were several reasons for doing this:

  • Different parents might use different names and I clearly recall using the family nicknames in front of kids who laughed in my face;
  • I likewise recall hearing friends use their family’s phrasing – or even the proper terms – and having no idea what they meant;
  • It sets the standard for the years to come that in some matters, particularly involving the body and sexuality, I was clearly the parent and not a buddy or someone who spoke on the same level as their peers;
  • Using nicknames might send the signal that there’s something wrong or embarrassing with it, so you shouldn’t use the proper name;
  • It simply felt right as using cute terms made me feel ridiculous.

This isn’t about shame or something from the magical land of wonders.  It’s about body parts.

This earliest phase is also a time to start working on the basics of child safety, particularly regarding who’s allowed to touch their "private parts."  The littlest ones should hear very simple and consistent instructions with the catchphrase, tell Daddy and Mommy right away. 

Explaining where babies come from is a very personal choice, but remember one thing:  just because kids want to know something doesn’t mean that they want or need the full details.  Bill Cosby’s comment on children and information is spot on:  Daddy, why is there air?  To blow up basketballs, honey.  In our case, the kids knew at an early age that babies came from their mother but didn’t bother with the how and why until much later and that was the cue to go into the larger questions of love and sex – commitment, love, marriage.  These didn’t have to be lengthy conversations and in fact, could be simple comments passed back and forth.  When Eldest was a preschooler, we’d chat at the table and she stated consistently that she’d have a baby and then get married; my likewise consistent response was that marriage came before the baby and this dance continued until she further understood the idea of marriage. 

Don’t assume that the natural progression of the conversation is (1) body parts, (2) puberty/processes and (3) greater meaning of love and sex.  The reality is that most kids have little interest in the inner workings of the human body and view it like a TV set:  I just wanna make sure that it works when I press the power button.  Before they’ve reached that point of intellectual interest, they’ll have many encounters with both the media and unmonitored kids who push a physical, consequence-free view of sex so it’s important that you start your conversations with them early and often.  The point is to speak with them repeatedly and it can occur anywhere the opportunity presents itself, while riding in the car or under the driveway basketball pole. 

There will come a point at which you do have to start talking to them about the changes that will start happening with puberty.  Puberty isn’t a single event at which they’re suddenly adults and as I recall it, it sure as hell isn’t a magical time, either.  It’s a years-long process in which the body’s hormonal chemistry can change long before a hair sprouts on a face or a breast grows and it’s best that they have some clue of coming before they experience a physical event – wet dream or period – for which they’re wholly unprepared.  You can handle it like a seminar discussion with the child at the kitchen table for that specific purpose or you can look for clues or comments that it would a good time to broach the subject.  One son’s comment that he couldn’t sing as high as a few months ago led to a conversation about the physical aspects of puberty.  The point is to have the conversations and they need to be sooner than later.

One aspect of "the Talk" that fathers face is whether, what and how much to discuss with daughters.  I’m fortunate in that my wife had discussions with my daughter and most men are in the same boat.  For those men who don’t have the luxury of an adult woman in his daughter’s life, then it truly is imperative to determine how  you want to go about it.  There really is a gender divide here and it’s phenomenally uncomfortable for a father to talk about female sexual health with his daughter; when I consider the prospect of having to have done that, the concept of having my tongue ripped out isn’t so bad and the daughters find it uncomfortable as well.  In these cases, you have three options:

  • Get your information straight and enter the conversation yourself;
  • Sit down with your daughter and a woman that both you and your daughter trusts, such as another family member, school nurse or a teacher;
  • Arrange for the girl to sit down separately with that trusted woman while you remove yourself from that part of the process.

The point is that this is a bridge that must be crossed because the repercussions of not crossing it are high.  Even if you leave the female sexual health to the mother or another woman, there’s no reason that you shouldn’t be involved in every other aspect with your daughter. 

The point of this article isn’t to slam using a book or booklet to teach about puberty and the facts of life.  The point is that this topic isn’t a one-off event but repetitive over the course of years and that it can’t be covered solely by giving your kid printed material.  The book is helpful in assuring that the information is correct and consistently presented and many parents hit the puberty aspect by reading such a book with their children.  But a book alone won’t ease a child’s fear that the experience of a new event is harmful or that they’ve done something wrong, nor will it present your values and place situations in the proper context.  It might even be especially helpful for you to read so that you don’t goof and refer to a female reproductive organ as a Filipino Tube.

If men are going to truly take an equal role in the raising of the kids, then they must reconcile themselves to the notion that they have as important a role as the mother in teaching about the body, reproduction and sex.  Now go shoot hoops with the third grader and see what conversation evolves.

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What to do?  Managing Panhandlers

Tonight was an evening spent with Youngest at Disney’s John Carter on Mars, one of the rare exceptions that I bent the rule on taking a child to a PG-13 movie before their 13th birthday.  The action and special effects were excellent, but we spent some time sitting in the seats afterwards as I explained some of the background for the thousand year conflict in which the hero suddenly found himself.  When we left the theatre at 10:30 and entered the parking lot, I found myself, and Youngest, alone and being stopped by a panhandler with a sad tale of woe and in search of bus fare.  What to do?  What do you do in one of those distinctly unpleasant situations when you’re with your child?

As he approached, I stopped and he at least had the common sense to stop several feet away and not close any further.  He immediately went into his story about being stranded and in need of bus fare to somehow make it home to another county, despite being more than three miles from our local bus station.  As he plunged onwards into the story, I stood between him and Youngest and simply told Youngest to immediately go back into the lobby to wait for me.  The boy, who recognized that something was wildly amiss, complied without question and I heard him walk back.  

The panhandler was probably in his early twenties, with a closely shorn head and a poor growth of beard upon his chin and cheeks.  He was dressed in a loose camo jacket and a baseball cap worn askew on his head.  He had a sunken, haggard appearance and as the old expression goes, looked like he’d been ridden hard and put away wet.  My frank opinion was that he was a junkie looking for his next hit.  Before he could get further along, I simply pulled out my wallet and removed $6 with the comment that that was all that I could spare.  He took the money and thanked me, then actually removed his own driver’s license to show that he was legitimate; I have no idea as to whether it was a real or fake ID and frankly couldn’t have cared less at that moment.  He muttered about the embarrassment of his situation, then turned and walked off.  After seeing him move off into the next row of cars, I turned and returned to the theatre where Youngest was waiting for me in the lobby.

I asked him if he understood what had just happened and he admitted that he wasn’t clear, so I explained.  We spoke briefly, then at further length in the car, about panhandling and the fact that many of these stories weren’t true, but intended to elicit sympathy.  In the ideal world, we recognize it for what it is and decline, politely at first and more forcefully if necessary.  But in the ideal world, you aren’t accompanied by a child and this guy was smart enough to understand that his success rate rose in the presence of a child. 

When we got home, he did what kids do and immediately launched into the story to his mother.  We talked about the situation and I have to agree with her that my acquiescence in forking over a few bucks has reinforced his belief that panhandling parents is more profitable than other targets.  Likewise, she acknowledged that I had a good point in handling as I did.  Ultimately, Youngest stayed safe and the guy took off as soon as he got some cash.  I might even have handled it differently had Middle or Eldest been along instead of Youngest, provided that he’d even had the nerve to approach two or more full-sized people.

There’s a preferred way to handle unpleasant situations like panhandling, and giving over a few bucks isn’t preferred.  But having to contend with it while worried about your child’s safety often means that the optimal case isn’t practical in the moment.  Time and locale matter and the middle of a crowded city street is different than a darkened late evening parking lot.  The best that I could do – as I quickly considered it – was to simply move Youngest out as quickly as possible and avoid any reason for a potential conflict.  Yes, I’m frankly embarrassed but Youngest is now safely tucked into bed and tomorrow, when we’re both fresh, we’ll touch base about it again to learn what can be learned.

 

 

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Is Embarrassment a Disciplinary Tool?

Is it ever appropriate to purposefully embarrass a child in order to maintain control or apply discipline?

For all of the talk about how wonderful children are – and yes, they are – there’s another viewpoint and that’s one not discussed unless you’re sitting with a group of parents who are up to their elbows in raising and managing their children.  These folks, who do the toting, waiting and cajoling, are hardnosed because they see the unpleasant mess that comes with raising kids and when several parents gather, the philosophies, techniques and tactics naturally arise in conversation.  It was in such a gathering that I sat waiting for Youngest and the conversation turned to the question of embarrassing the child in front of her peers. 

One parent commented about a recent situation in which the child publicly misbehaved with a group of friends and was immediately chastised in front of the peers for a disciplinary two-fer.  Parental discipline was joined by peer embarrassment to lock down the misbehavior.  I don’t know the circumstances of the misbehavior, but the correction certainly met the criteria of handling discipline immediately and if the situation was serious in any way – such as bordering on illegality or physically dangerous – then that chastising in the moment would be entirely appropriate.  But it was in subsequent conversation that things became unclear.  Another parent commented that the presence of friends was immaterial to disciplining her kid and when others agreed, a third parent remarked that embarrassing the child publicly was a potent technique as the kid knew to stay in line when with peers.

I appreciate that last comment about the effect of a kid’s peers.  When kids are in groups – and this becomes more problematic towards and during the teen years – the group dynamic can become combustible and raucously out-of-control.  Middle-school boys are sometimes only a hairs-width away from devolving into a Lord of the Flies scenario.  With more parents either absent or failing to supervise their kids, the potential for misbehavior rises and anything that a frustrated or scared parent can do to put the brakes on errant behavior might seem to be fair play.  Both my wife and I have meted out discipline in the presence of friends but only because it had to be handled in the moment and frankly, that discipline extended to the friends as well.  If embarrassment arose, then it was purely a by-product of the situation.

To purposefully inflict embarrassment seems to be ultimately counterproductive however.  There’s a point where parents, fathers especially, become an embarrassment by sheer dint of…simply being parents, and fathers especially.  Oooohh, lookit that on his face.  He always has a few hairs that corkscrew out of his eyebrows like some demented cockroach on a meth bender.  Don’t mind him, he always breathes that way…  Given the typically lowered state of parent/child relations in the teen years, it doesn’t make much sense to further antagonise your kid and drive him further out of your sphere of influence.  Understand this:  if we’re going to raise our children to make their way in the world, then we have to allow them to use the teen years to move into it gradually with support and supervision.  This means that we have to recognize and work through all of the various other spheres that will touch upon them during this time.  There are people in this world who will happily, like Lampwick from Pinocchio, lead them astray to their own ends and without concern for their well-being and if we purposefully create ill-will, then we create an even steeper slope upon which we must walk.

As I considered the question for this article, I thought about how I’ve handled things with my own kids.  When I’ve seen something that requires immediate correction – typically involving a safety issue – then I’ve dealt with it in the moment and the chips fell where they may.  But more often than not, I’ve taken the child to the side, such as the other night.  In that instance, another kid was there and I pulled mine aside to straighten things out without fuss.  However, I also stated that if I witnessed the behavior again, then I would put both of them on the carpet and the chips would fall where they may.  The saving grace with this child is that I’ve managed to be consistent enough through the years that a follow-through was certain.  In this particular instance, the misbehavior ceased and I didn’t have to follow-through.

Embarrassment is a potent tool, lethal in it’s effect upon a child.  My choice would be to treat it as an unfortunate consequence of a necessary correction in the moment, but I wouldn’t utilize it as a sledge to hammer the kid.  Staying connected with them through the formative ‘tween and teen years is difficult enough.

 

 

 

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PracticalDad Price Index:  Splitting Out Food Items from the Marketbasket

The March 2012 PracticalDad Price Index is complete and the results show that while there’s been a slight rise from February’s result of 104.90 to March’s 105.26 (November 2010 = 100), this is still below the December 2011 peak of 106.49.  In real terms, the cost of the 47 item marketbasket is now 5.26% higher than the index inception in November 2010.

What’s most notable about the March result is that the price of a pound of 80% lean ground meat has jumped by 10% to $4.14.  Nothing else stands out except for peanut butter, which continues it’s rise and is now actually rationed in certain stores.

There’s been an ongoing debate about whether the present economic environment is inflationary or deflationary, with the focus on the most commonly viewed aspect of prices.  The data thus far has shown that the market basket peaked in December, 2011 and the subsequent index readings would support a deflationary conclusion.  But given the most recent commentary about an uptick in prices, this didn’t jibe with what I’ve seen.  Consequently, I re-examined the data and re-calculated the indices – with the same data – at three month intervals but only for actual food items.  The market basket is 47 items, but these include non-food products such as diapers, bath soap and household/beauty products. 

Month/Year               Regular Index               Food-only Index (recalculated)

11/10                         100                               100

02/11                         100.63                          100.46

05/11                         102.08                          103.76

08/11                         104.85                          106.52

11/11                         105.56                          106.38

02/12                         104.90                          107.67

The upshot is that when the non-food items are stripped out of the basket, the food categories (bread, cereal, dairy, grocery, meat, produce and staples) are actually rising and at an increasingly higher rate than non-food categories.  As money is continually injected into the system, it’s making the way into the commodities and food arenas with a correspondingly greater effect. 

 

 

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Piling On:  Student Loan Rate Increase

With the push for austerity continuing – despite persistently running a pesky trillion dollar budget deficit – the word is out that the government is acting to save several billion dollars by doubling the interest rate on subsidized Stafford loans.  The Stafford loan is one that’s used principally by lower and middle-income undergraduate students and the subsidized rate – where the government covers the interest cost while the student is in school – is slated to double from 3.4% to 6.8% starting in July 2012. 

The public is increasingly aware of the issue of student debt, which has now supplanted both auto loans and credit card debt in magnitude.  Couple this with the concept of doubling the interest rate and it’s newsworthy.  Before I start my own rant, I thought that it would be good to determine what this means in a real-world situation, for an 18 year old freshman set to attend good ol’ Wassamatta U.  The parameters of the subsidized Stafford loan are that it has a ten year repayment term with a present rate of 3.4%; a student with dependent status can borrow up to $20,500 cumulatively over four years (Scenario 1) and an independent student with no family support can borrow a total of $57,500 (Scenario 2).  Using the Bankrate.com student loan calculators with these parameters, the monthly repayments are shown below.

Scenario          3.4%          6.8%

1                      $201.76     $235.91

2                      $565.90     $661.71

The nominal figures, at least for the kid with dependent status, don’t seem to make much of a difference but those of us reading this are years beyond college and not staring at these bills with a deer-in-a-headlight expression on our faces.  There are several things that I take from this situation.

First, while our public spending is clearly out-of-control, a move like this smacks of a public relations move to show the electorate that Congress is on the ball to cut wasteful spending.  The problem however, is that this is simply piling on a group that is politically voiceless and powerless because of youth and a lack of experience.  The TBTF financial institutions are coddled and sheltered from the consequences of their actions and the middle-class still capable of getting a mortgage can obtain one at a rate less than 4%.  But these kids are going to have to accept a doubling of their interest rate.  Congress is simply trying to treat a hemorrhaging stump with a three inch gauze pad and medical tape.  We’ve pushed the concept of a knowledge-based economy for years yet when the kids are moving to prepare themselves, many with families that only have limited means to assist them, society and government are stating that they’re on their own.

Second, how far out of touch are the members of Congress from the typical American family with a kid facing the issue of paying for college?  The most recent data, as of 2010, shows that the average net worth of a member of Congress rose to $3.8 Million;  this is an increase of 23% from 2008.  When your financial situation is such that your kids aren’t going to face questions of paying for higher education and you live in a cloistered environment like the nation’s capital, you aren’t going to appreciate the real world, fly-over country consequences of your actions.

Third, there’s a further impact upon the economy.  Experts state that one of the large drivers of the economy is the homebuilding industry and construction.  However, we have an inventory glut of millions of empty houses and anything that impedes the formation of new households to whittle down that glut is ultimately counterproductive.  With kids coming out of school with tens of thousands of dollars in non-dischargeable debt wrapped around their neck, they’ll avoid any thought of forming a new household and the situation is only worsened.  Couple that with a higher young adult unemployment rate and lousy prospects and these guys are going to run for the family basement.

While people should be responsible for their own – and their kids – education, the reality is that this nation has a long history of supporting education.  The heritage of the land grant universities of the 19th century and the GI Bill of the 20th century demonstrate our ancestors’ recognition of the importance of education.  This proposed action by Congress is simply an act as short-sighted as these previous Congressional actions were far-sighted.

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Playin’ at the Crick:  Kids, Free Play and Safety

Youngest entered the door from the garage and even around the corner, I could hear the shoes squishing with each step.  Dad, he said, I’m really sorry but I just slipped into the creek when I was down there with the guys.  My first impulse was annoyance that the kid had gotten his feet wet in the winter, even if it has been an almost Spring-like day.  But after listening to him describe his adventures, there was a greater sense of pleasure that the boy was having a Huck Finn experience with his buddies in the out-of-doors and the sneakers simply went into the dryer.  Many parents compare their kids childhood with their own and the sense – at least from other fathers with whom I’ve talked – is that there’s far less unregulated and unsupervised play today than before.  If we want to encourage this return to some simpler pleasures for our kids, what are some things to bear in mind?

In this age of media-driven angst over child safety, the first and obvious concern is safety.  Every parent fears the prospect of a stranger abducting Junior since these cases make the top of each newscast, but the statistics – the most recent that I can find compiled in 2002 – show that of approximately 800,000 missing children, 69,000 arise from abduction and of these cases, only about 12,000 were taken by someone not related to the child.  While the numbers in 2012 are certainly different, I expect that the general proportions remain the same with only a small percentage of abductions from strangers.  Having said that, safety is still the predominant concern.

  • I’ve reinforced to the kids that they’re free to go to the creek, in a neighboring municipal park, only with another person and never alone.
  • I’ve made it a point to visit the area myself so that I can see what the environment is like.  In this particular case, I visited the area – along with other local spots which might be of interest to kids – when we moved into the neighborhood several years ago and am already familiar with where he’s playing.
  • Youngest has wanted to show me his "fort" and in the next several days, with decent weather, I’ll take him up on his offer so that I can get another glance at the area in which he and his buddies are playing.
  • While this is a small creek, he’s been told that he’s not to be down there after rainstorms because of higher water levels.
  • We’ve reviewed basic safety rules, such as might be found at Klaaskids.org.
  • The clear expectation is that he’ll only be there after clearing it with me first.
  • While I don’t believe that this merits a cell-phone, and others might disagree, it certainly means that he has to have a watch along with which to keep track of time.

We want our son to experience a wide variety of activities but he still needs the ability to simply play with friends.  The time spent at the creek is invaluable to his growth and development; he learns to interact with others in a free give-and-take that teaches compromise and resolution and it allows him to exercise his imagination.  Where else can he have a fort that boasts a second floor bedroom next to a laser battle station?

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Kids and “the Pill”

I never let the facts get in the way of a good story.

                          – Tom, a friend of the PracticalDad

Just like Tom doesn’t let a fact get into the way of a good story, so Rush Limbaugh didn’t get the facts straight in the face of an opportunity to once again provoke a conservative/liberal spitting contest.  The newest – and perhaps most costly – imbroglio arose when Limbaugh took a twenty-something female Georgetown University student to task when she appeared before Congress to press for government coverage of oral birth control, i.e. "the Pill", for all women.  Limbaugh looked at her age and student status, pronounced her a slut and the fight ensued.  Despite the wildly poor choice of words, his defenders are stating that the woman was herself disingenuous.  The fact lost in the newest skirmish of the culture war is that oral contraceptives actually have benefits apart from the prevention of pregnancy and that it’s not uncommon for its prescription to teenage girls because of these benefits.

Guys truly don’t understand the discomfort and pain that comes with a woman’s period.  We can nod our head in sympathy but we’ll simply never get it.  That said, something with which fathers should become familiar is the set of facts and processes of the menstual cycle even though the typical father thinks about his daughter’s reproductive health with the same relish that he considers next week’s colonoscopy.  Females have dealt with their cycles and periods and your daughter will do the same as she grows and matures, and there are over-the-counter medicines available to assist with the discomfort and symptoms.  However, there are occasionally instances in which a woman’s menstrual cycle operates outside the normal Bell Curve in terms of bleeding and period length and in these instances, an oral contraceptive is actually beneficial in regulating the system.  In these cases, the medicine – which it is – is prescribed and the fact that the patient might be only fifteen years of age wouldn’t necessarily be material if it helps control the situation and alleviate the symptoms.  A man might be philosophically opposed to the idea of a minor receiving an oral contraceptive but that opinion will probably change if he finds that his own child is suffering unnecessarily.

Certain things will jar a father and I suspect that the prescription of an oral contraceptive is near the very top of that list.  But what it means is that, even if Mom’s around to ride herd on the process and help the daughter, you need to be at least aware of the daughter’s reproductive health.  This doesn’t mean that you walk in and start asking about her reproductive organs – Eldest once commented to me that it felt odd that her father could actually talk intelligently about menstruation – but it does mean that you pay attention if the topic is raised, either by your daughter or her mother.  If there’s no mother around, then you simply have to swallow your discomfort and deal with it.  Anything that pertains to your child’s health is important to understand, even if you and your mate opt to have a particular sphere of influence by dint of your gender.

Should the government be responsible for covering oral contraceptives?  At one glance, perhaps not since the most common usage is for something of convenience rather than necessity.  But what Limbaugh and the other pundits need to understand is that when you paint with a very large brush, you also slop over the areas that have no place being painted in the first place.

For reference on the uses and other benefits of oral contraception, go to eMedExpert.com.