Recap of 2/4 Mentoring Event

The theme of yesterday's mentoring event was personal financial in a program titled "Control Your Money or It Will Control You". The focus was on financial responsibility and developing money management skills. The goal of the program was to help our students understand the difference between needs and wants, and to explain the basics of checking accounts, the dangers of credit cards and the benefits of saving.
The program was led by an exceptional guest speaker who developed this program especially for our kids and mentors. His is Stephen Sigmon, and he is a CPA with an accounting degree from the University of South Carolina. His current position is Manager of Corporate Financial Planning and Analysis at Weight Watchers International. His command of the subject matter and the audience was perfect for our program, and I cannot thank him enough for his participation and lending his expertise to our program.

Two topics in particular were the most relevant and impactful for the students: The Dangers of Credit Cards and The Benefits of Saving.

The Danger of Credit Cards
Stephen illustrated the dangers of incurring credit card debt with the following example (excerpted from his handout):

"Let’s pretend that you have just received a credit card, and you can borrow up to $2,000 and make a minimum payment of only $40 a month. The interest rate on your credit card is 18%. You've been wanting to buy a new big screen TV, and now you can have it all for only $40 a month if you use your credit card.

Let's look at the math and see how long it will take you to pay off this purchase at $40 per month, what you'll end up paying in interest, how long it will take to pay off the balance, and the total amount you'll end up paying for your $2,000 TV.

The minimum monthly payment on most credit cards is usually calculated as a certain percentage (i.e., 2%) of the total balance. This payment includes both interest and payments against the principal amount that you owe.

On the $2,000 TV, 2% of the balance is $40. At 18% interest, your $40 payment would include $30 in interest and only $10 towards the amount you borrowed (18% divided by 360 days = .05% per day times 30 days in a month times $2,000 outstanding balance equals $30 in interest).

If you pay the minimum balance each month (calculated as 2% of your outstanding balance), it will take you over 30 years to pay off your $2,000 TV. And you will have paid nearly $5,000 in interest. The $2,000 TV will have cost you nearly $7,000!

It is easy to get caught up in credit card offers that are "too good to pass up." But it is important to remember that buying on a credit card is never good for you if you do not have the money in your checking account to pay off your bill in full when you get it."

The Benefits of Saving
While financial math is not something that is not taught particularly at the secondary level (besides the section in Math class on simple vs. compound interest), Stephen illustrated the benefits of saving and interest in this excerpt from his handout:

"Now let’s consider what you could earn if you had put $20 a month ($5 a week) into your savings account earning 3% percent interest for the same number of years (30). Your $20 a month would be worth almost $12,000 and you would have earned over $4,000 in interest."

Here are some additional photos from the day's event:

36 More Small Schools Due in September

Yesterday, Mayor Bloomberg, along with Chancellor Klein, issued a press release announcing an expansion of the small school program next fall.

Official Press Release
For coverage in the New York Times

Discipline can only go so far. Without the drive emanating from the participant's view, our educational system will continue to be (and I hate to use a cliche in this instance, so I'll use many) "pushing a rope", "going against the grain", "swimming upstream", you name it. Without self-drive, it's almost impossible to just, in the words of Chris Rock, "get your learn on".

The LA Times has published an in-depth series called "The Vanishing Class" that explores the reasons for high drop-out in the Los Angeles Unified School district, the second largest school district in the country (I believe second only to New York). The reasons are aplenty: Economic, family circumstances, disciplinary reasons, academic difficulties, disillusionment with the educational system. But the Times took the added step of speaking to those students who had dropped out, and getting their take on the underlying causes, their current day-to-day while out of school, and their prospects for the future. Here's the introduction to the series:

"On a September day 4 1/2 years ago, nearly 1,100 ninth-graders — a little giddy, a little scared — arrived at Birmingham High School in Van Nuys. They were fifth-generation Americans and new arrivals, straight arrows and gangbangers, scholars and class clowns. On a radiant evening last June, 521 billowing figures in royal blue robes and yellow-tasseled mortarboards walked proudly across Birmingham's football field, practically floating on a carpet of whoops and shouts and blaring air horns, to accept their diplomas. It doesn't take a valedictorian to do the math: Somewhere along the way, Birmingham High lost more than half of the students who should have graduated."

Here is the article in full:
http://www.latimes.com/news/education/la-me-dropout29jan29,0,6750397.story