American Opportunity Education Tax Credit: Textbooks Included

For all the laments about the rising costs of college, there are plenty of people who pay low or no tuition. For some, perhaps most, this is need-based. For others, including many members of the middle class or beyond, this is merit based.

Why am I mentioning this? Because I have mentioned the American Opportunity Tax Credit to many people and not one had heard of it. There have long been tax credits for tuition and fees. And for most, tuition and fees ate up--and continue to eat up--the credit, In 2009-10 (and, I think extended in the recent lame duck congressional session), TEXTBOOKS are included in the $2500/year potential credit. TEXTBOOKS were never included before.

Because both of my children made use of their National Merit Scholarships, they pay no tuition or fees. THANK YOU CHILDREN FOR YOUR CHOICES. Like many, I have been appalled by textbook prices. Even with all my ingenuity and frugal bloodhound skills, I have seldom managed to save very much.

As of 2009, I can relax. The French text is $120 plus a $90 computer pad fee...well, tant pis.

But many don't know about this. My daughter wanted to lend her books to her pal last semester. The books were keepers and I didn't want them to go astray. Miss Em's friend had very high SATs and received free tuition at the same college. I told Miss Em to tell the friend to tell her parents that they would be eligible for the credit. Via the grapevine--from a doctor--a thank you.

Miss Em's hometown friend who received both need- and merit-based aid was lamenting the fact that she couldn't accompany us to Goodwill for a fun shop because she had to save for her textbooks. I told her to tell her mother about the credit. I hope she does.

Many students in Louisiana (TOPs program) and Georgia (HOPE credit) pay no tuition. Other states give free or reduced tuition to students--like my daughter's friend above--who have high SATs or ACTs (over 1400 seems to be required; over 1500 will be better. This is just for the first two parts. For the ACT, I think over 30 is the requirement. It may be higher.)

Even students at private schools may receive tuition scholarships. Textbooks, often not covered, are estimated to cost around $500/semester. I think this is a low estimate, since textbooks prices--like prescription drugs--are both required and prescribed by people often clueless about the cost to the users. Much has been written about the constant, unnecessary revisions in textbooks, which render used books unusable.

OK. Enough of that rant. For those who pay no or low tuition--and this perhaps applies to community college students in some areas--the American Opportunity credit can BE USED FOR TEXTBOOKS.

I hope Miss Em's pal's mom files an amended return for 2009 and 2010.

If you know anyone in a relevant situation, please pass on this info!

P.S. I am NOT A TAX EXPERT. LOOK INTO THIS YOURSELF. PLEASE.

Cloth Diapers and Education Funds?

I said to my son this evening: Using cloth diapers was the start of your education fund.

He scoffed, but then asked, "How long are kids in diapers?" I gave him the bad news, especially for boys, and multiplied by the two children in our family.
Four total diaper years X the $700/year that plastic diapers cost.

$2800 total or $1400 per child.

Not a bad beginning.

Unlike many writers on frugality, who recommend saving on the big stuff, I think savings accrue from a zillion little decisions.

Do you agree? If so, what were your most effective little decisions?

Student Loans and Bankruptcy

This is an issue taken up in today's New York Times. Over the past few years, there have been scads of articles featuring hapless recent grads of expensive private colleges, shocked at their loan burden. Interestingly, several of these students are grads of NYU.

Of course, this is an issue close to my heart, as my children regretfully declined acceptances from private colleges--complete with merit aid--and chose state institutions.

So I was inspired to pen a comment, which I am copying below. I wrote this in the heat of emotion without re-reading, fyi. So no guarantee of completeness or coherence.

I'm of several minds about this. Both my children got into prestigious private colleges--small liberal arts colleges. My husband and I had always dreamed of sending them to Oberlin, Kenyon,Reed, and the like. Yet when it came down to it, each chose a no-cost state institution--even at full-cost the price would have been very low.

Yes, teenagers are naive about money and the burden of interest payments. Yes, parents are complicit in urging the teens to go to a "top college." Yes, colleges have raised tuition in part BECAUSE of the ready availability of loans. And, as we found out last year, some college financial aid officers were receiving kickbacks from "preferred" lenders.

But I believe the laws were changed, in part, because graduates of law schools and med schools were declaring bankruptcy UPON graduation!

So I would suggest that colleges/banks be required--as credit card companies now are--to show what the payments will be down the road. But I also believe that families and students should take more responsibility about their college choices, especially when considering a private college. Tuition at private colleges has gone up at twice the rate of inflation.

Perhaps the ability to discharge student loans in bankruptcy will make the banks wary about lending vast sums of money to naive teenagers.

I think we've all seen the need to teach basic math skills and consumer awareness. I have heard from my own students, "I thought that it was an OK amount of debt because the bank said I could borrow it." Shades of the housing bubble.

What think you, dear readers? I said to Mr. FS--somewhat facetiously--that if we had known the laws would change we could have saved less money for the kids AND encouraged them to go for the prestigious college.

Frugal Note: Since I have copied and pasted this from a comment that will--perhaps--appear on the NYT website, I have created a twofer situation: two comments for the labor of one. This is more commonly known--in extreme couponing circles (of which I am not a part)--as a BOGO: buy one, get one free.

Using my Talents: Stocking the Pantry for Lucy Marmalade

Those of you with a bit of Biblical knowledge may recognize the allusion to the Parable of the Talents, which exhorts us to USE our talents, rather than burying them in the ground. Talent, incidentally, was a unit of currency in Biblical times, but the parable has been extended to mean that we should use our talents, in the sense of what our gifts are. Something of the double meaning emerges in Milton's poignant sonnet 19, where he meditates on his blindness:

WHEN I consider how my light is spent,
Ere half my days in this dark world and wide,
And that one talent which is death to hide
Lodged with me useless, though my soul more bent
To serve therewith my Maker. . ..

Really, I wish my talent were for something a bit more--shall we say, elevated--but it seems that my talent is for frugality. Well, that brings up one of my favorite ideas from Emerson, which I've cited here earlier:

There is a time in every man's education when he arrives at the conviction that envy is ignorance; that imitation is suicide; that he must take himself for better for worse as his portion; that though the wide universe is full of good, no kernel of nourishing corn can come to him but through his toil bestowed on that plot of ground which is given to him to till.

So, to use my talent today, I acquired 10 cans of bargain-priced tuna, which are now residing in Lucy Marmalade's closet. She will be on a vastly reduced meal plan next year. We figured that each time she prepares her own meal, she will save around $8.00, which can go to a meal out or whatever the heck she wants.

The tuna is in a bag. Also in bags in the closet: 20 cans of beans, quantities of oatmeal, canned tomatoes.

Note that this saves her money and time. It also saves me money, and doesn't really cost me time, since I am out and about in any case.

Here then, dear readers, is the beginning of a food future stockpile. Next year, I'll send her recipes!

Have you been stockpiling the food futures discussed by Funny's guest=poster?

Saving on Textbooks: I Should Just Give Up

So much terrible news in the world these days. The pictures from Haiti really bring home that my experience of Katrina Lite was indeed lite: within 3 days, the Red Cross was dishing up food downtown and, a few days after that, the streets were sufficiently cleared that you could drive to the Target parking lot where volunteers were handing out water, ice, and MREs (plus diapers and formula if you needed those things). The joke around here is that Louisiana is a third world country. But, of course, WE HAVE NO IDEA. And my cynical mind wonders if the CEOs of Goldman Sachs et al are relieved that news from Haiti knocked their smirking faces off the front pages.

SORRY. Oh yeah, TEXTBOOK PRICES.

It's easy enough to say: buy used or check out Amazon. What I did was check out Amazon, Powells, weigh the possibilities of rental on Chegg and other similar sites, and so forth. There is no easy answer. I did discover that the books my daughter had from first semester were basically worthless, but that the books she needed were expensive. WHY?

Books go into new editions with great rapidity. If your book is brand new, it has about 2 years of life. So, maybe, I would buy and then resell. If it is near the end of its lifespan, used might be cheap, but you will not be able to resell. Rental might be better. Example: the new edition of a book a friend needed will be coming out January 28. Just after the stock of the old ones will have been purchased.

For courses in history, literature, and so on that require regular books--not textbooks--you should check used bookstores and Powells. Or even the swap sites like paperbackswap.com. My daughter needed The Stranger, Grendel, A Room of One's Own. I had all these, but all are available at paperbackswap. If you are not a swapper you can buy credits from the site or from members, who sell them in the Book Bazaar.

So what did I do? Well, I had some of the books. Then I suggested borrowing. She did borrow a math book. Then I bought her French book and some other trade books at Powells. I saved about $50.00 on the French book.

Or so I thought. A new development, at least to me. The French book requires an on-line code, which comes with the new book. If you buy used, you need to pay $50.00 for the code. Savings: 0. Time wasted: quite a bit.

Ditto for the borrowed math book. The code costs $99.00; the new book costs $109.00. See where this is going?

My biggest savings will come from the US tax code. For 2009 and 2010, the tax credit for education has been expanded from tuition only to include books. Since my kids have tuition scholarships, I have not taken any tax credits. Now I can get a credit for the full cost of their books. So my search for cheaper books was an educational adventure. What I learned: you can't beat the textbook companies. At least, not much.

Clutter and Bargains: The Example of Babysitting

1968: I am 14 years old. My father is self-employed and his business is doing pretty well, so my mother is also working full-time. This is why I am going to buy my back-to-school clothing myself. In those days, a teenager could proffer a store credit card (visas et al were in the future for most families) and say "My mother said I could use this." In those innocent days, the teenager would be believed.

However, I tried to pay for as much as I could with my babysitting money. I had just raised my price from 50 cents an hour to 75 cents. I had lost a few customers to the price increase, including one family that fired me for not cleaning the house while I was there, but there were lots of children. Even at 75 cents, babysitting was so cheap that many of the moms left for hours on end on school days, often telling me that they were taking a course in "crafts." Or the couples went out at night for 8 or more hours. Little did I know that for some of these families, the 60s had arrived, with a full complement of John Updike-style infidelity during the day and "swinging" at night.

Anyway, I took the bus to A & S, a mid-priced department store that is probably no more. In fact, that whole genre seems to have disappeared. There I bought 4 items: a tan corduroy skirt, a tan and brown diagonal plaid skirt, a cream fisherman style sweater, and a brown v-neck sweater. You can tell that I was trying to mix and match, having probably read an article to that effect in Seventeen. So proud was I of my self-sufficiency that I remember the prices: $6.00, $8.00, $10.00, $6.00, for a grand total of $30.00. Except for the corduroy skirt, these items were probably synthetics, since the natural fibers movement of the 60s did not really hit till the 70s.

In other words, 40 hours of babysitting, which probably took me 3 or 4 weeks.

My daughter was 14 in 2005, owing to my late start on children. There are not too many kids around, so babysitting is in short supply. Happily, some children appeared across the street and Miss Em walked over to announce her availability. We wondered what to charge and guessed that $6.00 an hour would be the going rate. Much to her surprise, before she could announce her rates, she was given $60.00 for her 6 hours. We learned that $10.00 an hour was standard!

If Miss Em went to Target or Ross, she could buy clothing for about what I spent so many years ago. But her 4 items would only have taken 3 hours of work. Is it any wonder that our closets are overflowing and that the floors of most teenage rooms are dotted with clean and dirty piles of clothing?

Is it any wonder also that thrift stores are filled with near-new clothing? When I first went to thrift stores many years ago, the pickings were indeed slim. Now, I must keep myself from overbuying.

Sadly, the things that are really important, education and, most important, health care, are out of reach for many. These don't mess up your house either. Both have risen way faster than inflation, while clothing, plastic toys, and other junk are so cheap that it's easy to accumulate.

Last summer, Miss Em was asked to babysit for two kids while she was staying with my mother in Massachusetts. The east coast rate is even higher: she was paid $15.00 an hour and netted $120.00 for 8 hours of work.

Fiscal Incompatibility: Parental Worries?

For those of you parents in the audience, here's a worry to add to the list. And for those of you still searching for your perfect mate, here's something to think about. Namely: fiscal incompatibility.

After a year of worrying about the economy, I have noticed that I am still alive. And, though my retirement accounts are in the dust, that doesn't really affect my daily life. Luckily, Mr. FS and I are still employed. We don't have a scary mortgage. So a new worry has cropped up.

I have written about our family's choice of low- (actually no-) cost college for our children. I've also written about our decision to give our children the money in their college accounts when they are in their 20s (assuming they are not drug-addicted wastrels).

A sudden thought! I exclaimed to Mr. FS: What if our children's beloveds turn out to be vastly indebted? What if they decide to fall in love with the kids who said, "But Daddy, I HAVE to go to NYU. I will DIE if I don't. I don't CARE if I have to take out loans. It's worth it."

To which Daddy replied, "I just want you to be HAPPY. And, besides, college debt is GOOD DEBT. So while you're taking out your loan, I'll take one out too. It's WORTH it if it will make you HAPPY."

Just something to think about, folks. Hope I'm not being too mean-spirited here. What do you think about fiscal compatibility in relationships?

Letter from Reed College Prez Colin Diver and a Primer on Financial Aid

Poor Reed! People really don't understand how college financial aid works, so President Colin Diver sent a clarifying letter to all alum. Like me. And Mr. FS.

Diver explains that the college meets DEMONSTRATED FINANCIAL NEED of all who are admitted. NEED is the same whatever college you choose: it is based on a combination of family income, assets, etc. If your family is determined through the formula to be able to contribute $10,000, then that is what your family will contribute, whether you go to a state institution or to Harvard. Hence, if your family is low income, you can choose the most expensive college you get into.

Then there is MERIT aid. Most of the top colleges do not give MERIT aid. This is because they don't have to. Harvard, Williams, Reed--no MERIT aid. Schools that DO give MERIT aid do so not because they are NICE, but because they want to attract better students. The young woman featured in the Times essay got $13,000 (as I recall) from Reed. That was NEED. She got more from Willamette. That, no doubt, was a combination of NEED and MERIT. Most people don't know this.

We do. That is why our children ONLY applied to colleges that give MERIT aid. Indeed, they got substantial merit aid at all the colleges to which they applied. Some are famous: Tulane, for instance, throws MERIT money at applicants with high test scores. Some of the comments on the Times site urged Steve Jobs (!) and other rich alum to fund the young woman's education. Reed, as Diver points out, meets all NEED. My children would have loved Reed or Amherst or Swarthmore . . . but we did not want them to be enticed by colleges that cost so much. The student featured in the article was enticed by Reed; she was more enticed by the substantial merit aid she got from Willameete (also a fine college, by the way). She is doing what my children are doing; she just didn't know about it beforehand.

Another problem is that most families think they are NEEDY. My brother-in-law was shocked at the price of Reed. We told him that $50,000 is about what most private colleges of that caliber cost. Many families of our acquaintance tell their kids to apply "wherever they want." Then, these engineers and lawyers, who consider themselves "middle-class," are shocked that they don't qualify for NEED-based aid.

Reed is not, by the way, a very wealthy college, Grinnell, which does give merit aid, has an endowment that is twice as big as Reed's. That is why my son applied to Grinnell and not to Reed.

Reed, as Diver notes, is not entirely need-blind; that is, it does not admit students without regard to need. Only the very richest schools can be need-blind and, I suspect, some that were need-blind last year are no longer so.

Dear alumni:

I am writing to provide some additional information and context for the discussion of Reed College's financial aid policies contained in a June 10, 2009, article in the New York Times. The article was based on extensive research and interviews and open access to Reed's budgetary decision-making process and used Reed College as a case study to explore how American private educational institutions are coping with the economic downturn.

Some who have read the story were left with the impression that Reed has changed its financial aid policies or awarded less grant support to prospective and continuing students for the coming year. In fact, the opposite is true. Reed increased its financial aid budget by 7.8 percent for next year; we were able to offer aid to 14 percent more applicants for next year's incoming class compared to last year. For continuing students, we have increased financial aid awards as necessary to meet any adverse changes in their families' economic circumstances.

Reed's financial aid policy has been, and continues to be, based on three firmly held principles:

1. We award financial aid solely on the basis of financial need. Unlike many of our peers, we do not award "merit aid."
2. We meet 100 percent of the demonstrated financial aid need for all admitted students. Unlike many of our peers, we do not practice "gapping" (i.e., awarding less than 100 percent of need as a way to stretch financial aid dollars).
3. We guarantee that we will meet 100 percent of the demonstrated financial aid need of all continuing students by re-evaluating financial aid packages on an annual basis.

There is a fourth principle that we aspire to achieve, namely, to be fully need-blind. Ideally, the ability to pay should never enter into a decision of whether to admit a particular student. In recent years we have come quite close to attaining this ideal. The vast majority of applicants are admitted without consideration of family resources. But, compared to a handful of truly need-blind colleges and universities, we have had to put a limit on the number of students we could admit on a truly need-blind basis. The troubling news about the current recession--and the central message of the Times article--is that demand for financial aid has increased this year even faster than our sizable increase in the financial aid budget.

This does not mean that Reed is ungenerous in providing financial aid. Indeed, the case is quite to the contrary. Over the past 10 years, our financial aid budget has more than doubled. In the upcoming academic year, we expect that 51 percent of Reed students will receive financial aid, with the average annual grant awarded being $32,630. Of this amount, more than $30,000 comes directly from Reed's endowment and operating budget, with the remainder coming from state, federal, and other private sources. The percentage provided by these external sources has steadily diminished over time.

Nor does this mean that Reed has had to make compromises in the quality of its educational program. The college continues to attract a student body of uncommon intellectual passion and talent, and it maintains the academic rigor and intensity for which it is justly famous.

The recession has set us back in our longstanding aspiration to become fully need-blind. But it is, we hope, only a temporary setback. With the generous support of loyal alumni and friends and the momentum of the recently announced $200 million centennial campaign, we intend to redouble our efforts to build the endowment to the point of never again having to make the painful choices forced upon us by the current recession.

Sincerely,

Colin S. Diver
President

Paradox of Choice, Reed College, Tote Bags

I seem to specialize in bizarre juxtapositions as in the above title. As I mentioned yesterday, reading about my alma mater--Reed College--precipitated a minor stress attack. First of all, as I also mentioned, Reed is a college that inspires conflicting and conflicted emotions. Second, my realization that it would be madness for me to even think of sending my children to Reed made me feel like a failure as, not so much a parent, but as an earner. Truly, it is a head vs. heart kind of thing. In my head, I know that you can get a fine education anywhere (as well as a bad one); in my heart, I have a soft spot for a handful of fine liberal arts colleges.

But then there is the paradox of choice, which I've mentioned before. This is the title of a best-selling book by a professor at Swarthmore. This is one of those books that--sorry--you don't really need to read; the title tells the story. Too much choice is stress-inducing. I read an essay in, I think, the Wall Street Journal about a student who applied to 18 colleges, including Ivies, got into all of them, and was so flummoxed by her choices that she took a gap year. I found this pretty amusing: a student could not decide among loads of fine choices (at $50,000/year) and so took an expensive (I think it was $30,000) gap year trip that included "service." Total self- and over-indulgence as far as I'm concerned.

With both my children, I guess you could say that we minimized the paradox of choice by using as a criterion total cost. So perhaps it was good that money was an object for our family. I had a friend in college who was from a very wealthy family. We once went shopping and I gaped in shock as I watched her pick out a few items and take them to the cash register. Only when she was paying did she look to see how much the items cost. I remember thinking: "How can she choose when she can have anything?"

And, for a screeching transition, that's why I like Goodwill and thrift stores generally. Most of the stuff is awful. There are only a few nice items on any given day, thereby minimizing the paradox of choice.

Today, as is my wont, I took a spin to Goodwill for some stress relief. My faithful readers know that I have been mulling over a tote bag to carry my papers and books. So many choices! I wrote about how, even if I limited myself to LL Bean totes, I would have the color choice (so many!) AND the free monogram choice, etc. etc. Today at Goodwill I came upon two LL Bean totes, both new, both in natural canvas, size medium, short handles. One had lime green handles; one had red. Like all the other bags, these were $1.99.

Both also were monogrammed: AEB, EMP. When I was in dire graduate school poverty, I worked in a vintage clothing store, where I met some talented and eccentric people. One was Gail, who, sadly, never realized her dream of designing costumes for the theater. Her theory was that monogramming was only interesting if the initials weren't yours. As of today, I have adopted her theory. I don't like my initials. Each bag has one of my initials (those of you who like puzzles can figure out which it is).

So until I find the perfect tote bag, I now have 2 LL Bean totes, and the little Longchamp bag I found last week. All these are so useful that I will keep them even after (if?) I find my ideal.

Perhaps that is true too of college choices. One thing my son (now finished with his sophomore year) is that all his friends are happy with their college choices. Isn't that great?

Reed College and Me, My Children: The Usual Ambivalence

I have lots of plans for blog posts. Then I get sidetracked by something in the news. Today, as is my wont, I was reading the New York Times online and saw this headline: College in Need Closes Door To Needy Students. So I clicked and, of course, it was my college: Reed.

Reed is a school that inspires conflicted feelings. Indeed,these feelings are welling up as I type. Those who have been reading me for a while may recall that I have written on other sorts of ambivalence as well: mainly, that I have children who are as intellectually curious as I was, but that I simply cannot afford to send them to a private liberal arts college without severely affecting all of our futures. I won't go into all the details, but suffice it to say that Mr. FS (also a Reed alum, though we got together in grad school) and I together make little more than one English teacher--Robert Knapp--whose salary is mentioned in a comment.

I was comforted by the fact that my feelings are shared by some commenters: one mom
lamented, as I do, her inabilty to offer her children the same kind of education she got; others (rightly) note that you can get a great education anywhere. Read comment 114 for more details on the last.

I have a lot more to say, but I'm getting overwhelmed by those conflicting feelings mentioned above. Once again, let's retreat to the safety of numbers:

Talbots stock: $4.86
Edmund Andrews's Busted: Amazon rank 13,594
**Interesting note: my blog is mentioned in one of the comments on a review! Also, all of the 5-star reviewers have written only a single review--on this book--which suggests to me that these might be acquaintances (at least one owns up to this).

And, of immediate interest and benefit to me and mine, sugar is on sale for $1.79 for 4 pounds. Mr. FS needs some for his frugal homemade sportsdrink (for which, see his post with recipe). At least one thing is under control around here.

Border Crossings: College Choices and Student Loans

Little do you know, Dear Readers, that we have been on a road trip to Tuscaloosa, where dear Miss Em will be going to college. Out of all the zillions of colleges here and abroad, is that her ultimate choice? No, I don't suppose it is. Would she rather live in Paris, Boston, New York City, or San Francisco? No doubt. Would she rather go to a nurturing, top-quality liberal arts college like Swarthmore or Oberlin? No doubt.

I've written about the college choice issue before, so let me just aummarize. Miss Em had very high scores on some of the tests that count, so we applied to schools that offer substantial merit aid to those students. That limited our choices right off the bat.

Yes, here we are at the paradox of choice, which is the title of a book written by a professor from, as it happens, Swarthmore. His basic point is that too many choices create confusion and clutter. He noted that his students--brainy and savvy enough to get into a competitive college--are not as happy as one would expect: they are stressed out by all their choices. I had a similar experience when I had to choose kitchen cabinets. Even toothpaste can be a problem! So a key to greater contentment is to create boundaries.

I am thinking about this today because Gail Collins has a piece in the New York Times on college loans. Luckily, education loans will not be an issue for my family. Actually, being loan-free was a choice as outlined above.

Predictably, the essay includes a vignette: a student from Texas who went to NYU and found himself upon graduation the possessor of $50,000 in student loans. He claims that the lenders never told him what repayment would look like! I happen to think that lenders are just as manipulative with students as they are with uneducated subprime borrowerers (and that does not include the now-notorious Edmund Andrews). But that's not what I'm interested in right now.

In an earlier post, I suggested that we not "cross borders" in our experiences. Hence, you go to Disney World to have fun on the rides, not to eat overpriced mediocre food or to buy souvenirs. Similarly, you go to college for an education not to live in a great city. The student in the Collins essay said that he could have gone to a Texas state college for a bargain price (true dat), but that he wanted to be in New York.

How about this? Go to UT Austin (if you can get in; otherwise pick another excellent state college). then, in the summer, go to New York, stay in a youth hostel ($20.00/night); eat in ethnic restaurants, go to shows, museums, and people watch.

UT Austin: I'm guessing here--maybe $15,000/yr in-state for tuition, room, and board. Four years would be $60,000.

NYU: around $48,000/yr for tuition, room, and board. Four years add up to almost $200,000! (Note--if your family earns under around $80,000/year, you qualify for massive need-based aid, so go ahead and apply to NYU, BU, etc. You won't pay any more than you would at a public institution). Good colleges in great cities generally don't offer merit aid because they don't have to.

Mr. UT Austin would save $140,000 over 4 years. That's pretax income. That would pay for a lot of summers in New York City, In fact, it would probably cover several years in New York City after graduation!

Once again, I am in favor of thinking through the border issues. For college, this would involve separating location from education. If you are massively wealthy, it matters not a whit. If the college in Boston costs the same as the one in a tiny Louisiana town far from anything cultural, then it doesn't matter either. But if it does matter, think about the consequences both of crossing borders and of not crossing borders. Besides, I've heard that Austin, Texas is a great town.

The New Financial Advice and Mistakes I Did and Didn't Make

Like many people interested in frugality and personal finance, I have been a long-time reader of advice for the middle-class. Of late, advice is in short supply. Where are Jonathan Clements and Andrew Tobias?

Then, I saw "new financial advice" proffered on the CNN website. As far as I can tell, the advice was the opposite of the advice offered by experts in the recent gilded age (for some, not me). So it seems that we middle-class types should do the opposite of whatever is suggested.

All the advice is of the "locking the barn after the horse runs off" genre. How can you amass an emergency fund when you are laid off? Thanks for the great tip! Either you have one (thank heavens!) or you don't (what was I thinking?). I suppose if you're still working, you can get one going. That task would be made easier by the fact that frugality is now "in" and you don't need to apologize for carrying last year's "aspirational handbag."

One of my fave bloggers, Funny About Money, raised the topic: "What is the financial mistake you didn't make."

Here is my answer, related to my musings above:

All my mistakes came from following the advice of the financial press/experts. All the mistakes I didn’t make came from procrastinating or being stubborn.

Emergency Fund:I amassed a large cash emergency fund out of inertia, since I am a frugal girl married to a frugal fellow. At the time, I was told to “get the $$ working for me by investing it.”

House: I was also told to do a cash-out refi; I chose instead to pay off my house.

Here is what I'm doing now (subject to change): I am continuing to put my retirement into equity funds in same percentage as in days of yore. I have TIAA and Vanguard.

I'll probably sell my non-retirement funds that are in other families.

I will amass an even larger emergency fund. I want to have AT LEAST 5 years of base expenses in cash at retirement (10 years hence).

The above plans are possible thanks to two things. One is that I paid off my house, so my base expenses aren't that high. The other is that my children are good test-takers (of the standardized variety) and have chosen good programs at state universities that are willing to fund their tuition AND room and board. As I discussed in an earlier post, Mr. DFS and I will give them the money we saved in a 529 plan post-graduation. Luckily again (another mistake I did not make), the 529 plan is entirely in cash. So when they graduate, they can opt for a year of travel and return to a nice stash of cash for grad school or job search.

And don't forget: it's Thrifty Thursday!

What's a mistake? What's not? It depends on where you are when you need the money.

Frugal Cooking: Honey from a Weed

Readers of this obscure blog may have noticed that I have not posted regularly or responded to comments in my usual way. This is because three members of my Frugal Family were in Arkansas! This was another road trip to check out a college for our beloved Frugal Daughter, the Divine Miss Em. Why University of Arkansas? Because their Honors College was given a $200,000,000 grant by Alice Walton, widow of Sam Walton of Wal-Mart. That’s more than many college endowments. Although I will be writing today about a cookbook and not about colleges, college savings etc, let me say here that if you eliminate some of the usual suspects for your college-bound student, you will find tremendous bargains out there. Some of these less well-known schools, and schools in places deemed less desirable, really do try harder. And cost less.

Anyway, it was a long and miserable drive to Fayetteville. All we knew about the town was that it has “four seasons.” But what a delight! Fayetteville seems to be a little corner of the counter-culture (Who knew?). And the college is beautiful, even though many trees showed damage from the recent ice storm. In fact, the piles of broken branches and the trees with broken-off tops were reminiscent of our post-Katrina universe.

While Frugal Daughter had her interviews, Mr. FS and I nosed around. My favorite spot was Dickson Street Books, a crowded used bookstore, with a fabulous stock and the used bookstore smell, which brought me right back to Bloomington, Indiana and the much-loved Caveat Emptor (!), a wonderful used bookstore.

In a Proustian haze (or daze) of memory, I first asked where the literary theory section was. En route, I passed the cookbook section and there I found the one cookbook I would be—and was—willing to buy: Honey from a Weed by Patience Gray. The hardback English edition was a reasonable $12.00. Reader, I bought it.

When I started reading it, I discovered that this book, which I had checked out of the library in a town I no longer live in, was as good as I remembered. It is a feast of writing, offering a picture of a way of life that was vanishing—and soon may be gone.

Gray accompanied her “Sculptor” to various sites around the Mediterranean, as he sought marble for his work. Gray learned to live—and to cook and eat—as the locals did, with the fasting and feasting of a life where all food was precious.

Here is Gray’s more evocative prose:

Good cooking is the result of a balance struck between frugality and liberality . . . It is born out of communities where the supply of food is conditioned by the seasons.

Once we lose touch with the spendthrift aspect of nature’s provisions epitomized in the raising of a crop, we are in danger of losing touch with life itself. When Providence supplies the means, the preparation and sharing of food takes on a sacred aspect. The fact that every crop is of short duration promotes a spirit of making the best of it while it lasts and conserving part of it for future use. It also leads to periods of fasting and periods of feasting, which represent the extremes of the artist’s situation as well as the Greek Orthodox approach to food and the Catholic insistence on fasting, now abandoned. (pp. 11-12)

I hope you enjoy that little taste and I’ll offer more as I work my way through it.

Dear readers, any thoughts on college money issues? Prestige and practicality in school choices?

Any thoughts on Arkansas as a place to live and study?

And, my favorite topic: any less-well known cookbooks you would like to recommend? Share them here.

Teenagers and Money, Frugal This, Frugal That

Many of the bloggers I read have a sense of impending doom, as they wait to hear about the future of their employment. Given the economic situation, I sometimes feel that my frugal thoughts are awfully trivial. Here are a few of them.

Teenagers and Money: This is a topic that recurs. How does one teach teenagers about money? In truth, we teach them by our actions.

Example: my daughter's friend Sadie, whose parents lost their house two summers ago. They had been living in a small house in the country for 15 years. According to them, they got a notice saying they had to be out at the end of the month. So they left, and moved into a trailer on the farm of their employer. Only a few months later did I realize that these were probably the first people I knew (albeit tangentially) who had lost their house because of a sub-prime loan.

Sadie is a senior in high school. She works in a salon doing shampoos a few days a week. She takes home around $150 a week! Bossy me (an occupational hazard), I asked if she had a savings account. No. I asked if she saved any money. No. She explained that she had "expenses," which turned out to be pet food, meals out, and clothing (she has no car and lives with her parents). I launched into a lecture (an occupational hazard) about the importance of saving.

Next time I saw her, I repeated my questions (an occupational hazard). She said that while she still did not have a savings account, she keeps $80.00 in her room at all times for an emergency. This teen runs through $7000.00 plus a year! She's been working for two years and has $80.00.

Then I realized that her parents probably had out-earned Mr. DFS and me. We were in school till we were 30. We became teachers, not the most lucrative profession. These people did not go to college and began working at 18, buying a house then and starting a family.

Am I being too judgmental? Should I continue to ask questions and make suggestions?

Frugal This, Frugal That: Today, Mr. DFS and I, along with the rest of our department, had a free food opportunity, a catered lunch provided by a textbook publisher. We have 2 or 3 of these every couple of years. I'm not sure of the ethics here, but the food was delicious! We had seafood chowder and a waldorf salad (chicken, apples, and pecans), followed by king cake. If you're not from Louisiana, you probably don't know about this cake. It is cake topped in Mardi Gras colors--purple, green, and gold--and contains a tiny plastic baby. If you get the baby in your piece, you have to buy the next cake.

While I was eating, I was musing on the ethics of all this. Then I read about the perks gotten by various political figures recently. I suppose that they would scoff at my little lunch. Any thoughts, dear readers?

Frugal Dilemma: Our Frugal Daughter, though she does not supply posts as our Frugal Son does, is never far from our thoughts. She is up for two college scholarships. The competitions are on THE SAME WEEKEND and cannot be re-scheduled.
Choice 1: A big school in another state offers the chance to be one of 40 fellows, who are mentored and groomed by faculty. $1000 over whatever other scholarships you get. 50 students are invited to compete.
Choice 2: A private college offers FREE TUITION, ROOM and BOARD to 3 or 4 students. About 80 students are invited to compete. Frugal Daughter has already been given a scholarship almost equal to tuition.

School 1 offers an almost sure chance of a lesser benefit; school 2 offers an enormous benefit, but almost no chance.

At first she was drawn to the smaller school, mostly because of the wonderful recruiter. But now a good friend who goes there is saying the school is TOOOOO small and she wants to transfer. So Frugal Daughter is conflicted.

Aren't we lucky to have these trivial problems in these difficult times? Even so, dear readers, we welcome your counsel. Any thoughts on any of these?

Upscale lives; humble financial lessons

More from the New York Times on Wall Street types coping with unemployment and other woes. No, I'm not referring to the media circus on Alexandra Penney, who made her money with bestsellers like How to Make Love to a Man and is now blogging on losing all to Bernard Madoff. I am referring to an article yesterday on a family much downscale from Penney, but much upscale from me.

Read it here: http://www.nytimes.com/2009/01/11/fashion/11berrys.html?pagewanted=2

The essay is about the stress on marriages during financial meltdowns. Featured is a family from tony Darien CT, where Dad, formerly of a "boutique investment firm," is now unemployed. Mom, who left a fancy job to stay home with the kids, has gone back to work, though she doesn't make as much as Dad did. They have downsized from a nanny to an au pair, but are continuing with expensive kids' sports and lessons. Their relationship has its moments of tension (Mom wants to buy kids clothes from Ralph Lauren, rather than from Walmart), but is basically strong.

Why am I writing about this? Because in this article is some very humble financial advice. In spite of working for a "boutique investment firm," Dad paid off the house and put aside a substantial sum in a college fund. Paying off the mortgage has been generally touted only in the "frugality press"; mainstream financial advice has always been that you can make more by investing your money.

Ditto for college funds. Dad said that he once had enough to send both kids to Harvard. Not bad, considering kids were 5 and 6 when he lost his job 2 years ago. Two sets of Harvard tuition would have totaled about $360,000 2 years ago. Presumably, this is a cash account (I assume this because the family is dipping into this money to maintain their current lifestyle).

So: a paid off mortgage and a substantial cash fund, for emergencies or college or whatever. You can go a long time with one person working, no mortgage, and 8 years of Ivy League tuition payments.

Dear readers: what do you think of all these articles on the woes of the formerly wealthy?

College Savings: A Provocation

Even though I know a lot about colleges (being in the biz), I have trouble writing about the topic because I am so conflicted. Yet this is a potentially budget-busting item of interest to many.

Here are my conflicts: I LOVE the small liberal arts colleges (Oberlin, Grinnell, Kenyon, Reed, and the like), yet I am resentful of a number of things: of the fact that I am not in a tuition exchange (if I taught at a private college my kids could get free tuition at similar institutions), of the fact that if I quit my job, my kids could go virtually for free, but that if I keep working, our two-teacher family income keeps us from getting need aid …. STOP!!!!!

I am also conflicted because though I wanted my son to WANT to go to one of these schools, he didn’t seem to care that much, and eventually chose to go to the state university, which offered him a large scholarship.

Here is the controversial part: as compulsive savers, we created 529 accounts for each child. We funded them for the cost of four years of room and board at the state university (or the cost of one year at a private college). Luckily, as it happened, we did not choose a stock account, so the money remains safe in fixed income.

We told out son (our daughter’s decision is yet to come, but the same applies to her) that if the money wasn’t used, we would give it to him after college.

I’ve seen many discussions of college costs, agonized essays on “is it worth it,” comments like “since we can afford it, why not.” But I’ve never seen a student offered the choice:

Go to Grinnell and we’ll try to pay for it;
OR go to the less expensive school and YOU can have the college account.

Our son chose the latter, though he was not motivated by visions of future money. Rather, he wanted to be free of the pressure to work in the summers (though he did work) and he wanted to travel (he went to Korea for a month after his first college year). He also likes the idea that he’s not taking any money from us for college.

So far, we haven’t dipped into the fund at all and he will have enough money to travel the world for a year after college, return and buy a car, and have some left over for a down payment on a house.

What’s really important is that so far, he seems happy with his choice.


I am interested in what others think of this . . . not that we have many readers yet. Any comments? Is there anything wrong with offering our children the residue of the college savings account? Is there anything right with it?

I will be writing about more aspects of college—finances, quality, etc., in the future as soon as my heart palpitations subside!