Should we encourage our kids get a general liberal arts degree like history or English, if that moves them, or push them into something more practical, like accounting or computer science?

Is it money-smart to encourage our kids to go to community college or a cheap local school so they can live at home for their first two years? Would transferring into a bigger/more challenging school their junior year be OK, or will they miss out on having that quintessential four-year college experience?

Would we encourage our kids to pay for part of their college education, even if we could afford to pay for it ourselves? Does paying help kids feel like they have some “skin in the game”—in other words, give them a sense of accountability?

On the issue of how practical a degree should be: Most of our group fell into the camp of “a good education is its own reward.” However, a couple of us definitely leaned toward “It’d be nice to have a solid career track and some practical experience when you walk out of college.”

I can see both points of view. I studied communications, so I had some idea that I’d be working as a writer/ journalist/ public relations-type person. But I sure did envy the accounting majors who had recruiters coming to see them on campus, and often had job offers even before they got their diplomas. Overall, though, I’m still in favor of kids studying whatever seems like the best fit for their “career path guess.” And isn’t it really an educated guess? I mean, how many people know for sure what career path they’ll follow when they’re 18 years old?

It seems to me that college is a sorting ground: You take classes to help you decide what you enjoy and do well, and what areas of study are definitely not your cup of tea. My own bias is that if you end up finding that you’re passionate about history—even if you’re not going to teach or work at a historical society—chances are good that your history studies will somehow end up being meaningful in whatever work you do. You’ll understand historical trends, and you’ll know how to research and communicate well (as a result of the papers you write). Those aren’t bad skills to have in any job, right?

But my practical side says that if I were to do it again—and this is how I’ll counsel my own daughters—I’d take a few business courses, too. Maybe statistics and marketing. I could certainly use those skills while running my own writing business.

If your kid is paying for at least some of their college expenses—which I think they should—that will also encourage them to make their degree worthwhile. I was fortunate that my own parents paid for my tuition and room/board. However, I was expected to work during the summer to pay for books, clothes, gas/car insurance, entertainment and any extras.

And the deal was that my parents would have paid tuition and room/board for 4 years only. If I dinked around and took 5 years to graduate, that last year was on my dime. Graduate school would also have been my responsibility. I did think long and hard about it, and decided an advanced degree wasn’t really crucial in my line of work. But had someone else been paying, I might have gone to grad school, and it wouldn’t have been cheap.

Where do you stand on the concept of kids paying for part of their education, even if mom and dad can afford to pay every penny? Good life lesson or stingy parenting?

As for going to community college or a local school, then transferring—I honestly don’t know how I feel about that. I know many financial experts—including syndicated radio talk show host Clark Howard and Kiplinger’s Janet Bodnar—are heavily in favor of it.

I personally loved being at a small university for a full four years, getting to know my teachers and students really well. But I also agree that it sure would save some $$$ to have our daughters take most of their basic prerequisite classes at a cheaper school like a community college, then move on to a larger school.

If any of you transferred to a bigger college after two years, what do you say? Was it a tough transition or a smart move?

And where do you stand on the issue of your kid getting a “practical” degree like accounting, versus a more general degree like English? Are both equally worth the incredibly high price tag  you’ll pay these days?

When she turned 13, our oldest daughter stopped getting an allowance. Instead, we put her “on salary.” She gets a lot more money than ever before. She loves that. She’s also responsible for more of her own expenses than ever before. Her dad and I love that.

We can’t take complete credit for this idea. Mary Hunt over at DebtProofLiving.com based a good part of her book Debt-Proof Your Kids on this exact concept. And Susan Beacham, another of my favorite family money gurus, is a huge fan of giving tweens and teens more control over their finances. I’ve  interviewed both of them for my personal finance articles, and I couldn’t wait to use this approach in our family.

Here’s how it works, in a nutshell:

- We pay our daughter once a month. No more weekly allowances. It’s time for her to practice making her money last longer, just as if she were working at a real job.

- We give her money for everything we normally would spend on her. That means:

• Clothes & shoes
• School lunch money
• Gifts for friends and relatives
• Cell phone minutes. (She has a pay-as-you-go plan; when she runs out of money, she runs out of minutes!)
• Movies, snacks and other entertainment with friends. (We pay if we go somewhere as a family.)
• iTunes songs, books and magazines

Yes, it’s a LOT more money than our daughter used to get for an allowance–more than $100 a month. But it’s not costing her dad and I any more than before. This is $$ that was already part of our family budget. We’re simply handing the money over to our daughter instead.

- There are requirements. Our daughter must set aside a % of her money for long-term savings (college) and donating (her choice where it goes) right off the top. She needs to have a 5-minute “budget meeting” with her dad and I every month before she gets paid. She fills out a little budget sheet (at left) to plan where her money will go in the upcoming month.

She’s also required to keep her receipts and jot down all of her expenses during the month, so she’s aware of where her money goes. We review those together at the end of each month. But her dad and I don’t tell her how to spend her money or criticize her choices after the fact (even when it’s tempting!). After all, we want her to make a few mistakes now, while she’s only buying little stuff like jeans and lip gloss. Hopefully, she’ll have a better handle on money when she’s ready for bigger stuff, like college loans or cars.

- The setup is simple. We use a cute notebook (see top image) with zippered sections for each spending category. She keeps her cash in these zippered compartments until she’s ready to spend it–very much like an “envelope system” for an adult budget. Her long-term savings goes to the credit union.

The result? So far, so good! We been doing the salary system for about four months now, and I keep expecting some meltdown or unexpected expense–but nothing so far.

You know who this is hardest on? Me. Every time I instinctively pick up a cute pair of jeans in my daughter’s size on sale somewhere, or see a book she might like, I have to put it down and remind myself: My daughter is in charge of her own purchases now. And she’s great at it.

Our family hasn’t been to Walt Disney World yet (since we’re on the West Coast), but when we do, we’ll be taking a copy of my friend Kate Reilly’s book with us. It’s Walt Disney World Resort Extreme Vacation Guide for Kids. Read about it here. The cool thing is that it’s a travel guide for kids, not just for parents. Kate’s sons coauthored and helped illustrate the book.

Kate and her crew offer all sorts of ideas on how to have fun and save money with Mickey. For instance, I wish we had thought of their idea to make our own spiffy autograph book (rather than buying them at the park) when we went to Disneyland. The Disney books were spendy and just meh, nothing all that special. Another idea: Having kids make no-sew water bottle carriers, then filling, freezing and taking in your own water. Simple, smart.

Kate even offers an entire chapter on how kids can earn their own money for WDW Souvenirs. Ah, a mom after my own heart.

By the way, Kate’s blog, Polka Dot Suitcase, is really fun, too–lots of crafty activities and ideas for families. Kate is a homeschooling mom and those home-schoolers just seem to come up with the best ideas. Trek on over there sometime!

You WILL be able to still use your FSA for OTC “equipment” which I guess include bandages and contact lens solutions. Thank goodness for that! Lens solution is expensive!

The other big change coming in 2013:  You’ll only be able to put a max of $2,500 in your health FSA–half of today’s limit. Annoying, but good to know.

This is on ongoing issue in our household: How much of the cap do you fill with liquid laundry detergent?

I swear the detergent makers mark those little lines (1 load, 2, 3) so faintly that NO ONE will ever fill to just the “1 load” line– don’t you think? We have a smallish front-loading machine, so I know we can get by with the minimum amount of detergent. I can’t totally prove this, but I strongly suspect that when they do laundry, my husband and oldest daughter fill the cap willy nilly. The more detergent, the better, right? The laundry will simply be cleaner, right?

Not so! And finally, someone else agrees with me. According to this post from WalletPop, using too much laundry detergent not only costs you extra money buying soap, it can also gum up your machine and prematurely age your clothes. I knew it!

There’s a suggestion from Seventh Generation laundry detergent company co-founder Jeffrey Hollender that in many cases you can actually get away using NO soap at all; that the water and washing machine agitation does wonders for removing light dirt. I’m nixing that in this household. Way too many underpants around here to consider taking that risk! How about you?

Off to mark the “1 load” line on our laundry cap with a marker pen!

Why? Turns out that a lot of the strategies for successful weight loss can also be applied to your finances. But maybe you already knew that.The concept had occurred to me before, but I just wasn’t ready to absorb it until now. We often EAT more than we need for many of the same reasons we SPEND more than we need: To combat stress, to alleviate sadness, to deal with boredom, or just because we’re feeling like, darn it, we deserve to treat ourselves! Sound familiar?

When I started making myself track my food choices on a daily basis, it made sense to do the same with my money. Instead of tucking an ATM or credit card receipt into my wallet and recording it in my budgeting program (I use Quicken) a week or so later, I started entering my purchases every day. This way, I always have an up-to-date snapshot of how much we’ve spent–and how much we have left–in our budget. This process works well for us because we actually do have monthly budgets for every category of our spending, from groceries to clothing to personal money for my husband and me.

This may sound basic, but it’s a cornerstone of being financially accountable. It was sooo easy to spend a little more on eating out because, well, I hadn’t entered all our receipts yet so I wasn’t exactly sure how much was left in that budget category. But we had to be pretty close, so what the heck? Let’s get pizza!

When I started really tracking our money every day, I was “reminded” that actually, we chose to grab lunch out on Saturday AND we had gotten Chinese takeout with friends Sunday night. If we opted for a pizza, we were going over our eating-out budget. Is that really what we wanted to do? Did we really want to “steal” money from another budget category, like our vacation fund? Maybe the pizza could wait, because our other money goals were important, too.

Some other strategies I’m borrowing from weight loss and applying to our wallets:

Budget a little for splurges. I wouldn’t make it through the weight-loss monotony without a few treats here and there. So I purposely “budget” my calories and make good food choices so I have room for an ice cream here and there, or a few cookies after dinner. Looking forward to those treats keeps me from feeling deprived and makes the weight-loss process bearable.

Same goes for money. We’re saving for some home remodeling projects and a big trip. But those aren’t much fun TODAY. So we make a point to have some money earmarked every week for entertainment and eating out. Those “treats” help us stay on the money-saving wagon and keep us from binging big-time.

Make strategic trade-offs: When we eat out, I’ve started opting for no-cal lemon juice on my salad. Instead, I’ll use those banked calories (interesting how many “diet” words are financial in nature!) on a little extra cheese, or a modest dessert. We use the same trade-offs in our budget. One example: We’re not excited about expensive cable TV; we just don’t watch it enough to make it worthwhile. So we stick to a fairly basic family plan. On the other hand, buying organic meat and certain organic fruit/ vegetables is important to us. So I might spend a little more on those grocery items than my neighbor would. It’s a trade-off.

Nobody can plan your budget for you. I don’t eat exactly the same foods as the other folks at my weight-loss meetings. No one tells me what kind of exercise I must do. We learn the same basic principles, but I’m training for a 5K run, while the woman next to me is an enthusiastic swimmer. Our family budgets aren’t the same, either. Even if we made the same amount of money, the swimmer and I can–and should–make individual choices about our money.

Remember how the prevailing financial advice for a long time was “quit wasting money on lattes at Starbucks” and put that money into retirement instead? I’m not quibbling with the basic wisdom, but darn it, I like my occasional Starbucks! I’d rather economize elsewhere. In other words, everyone’s budget should reflect their personal priorities. You’ll be more apt to stick with it.

By the way, I’m not the first person to make the connection between dieting and dumping debt/ saving money. Just the other day, I ran onto a great new book on this very topic: Wealth Watchers by Alice Wood. Hers is a great story of racking up both extra weight and significant debt after a debilitating brain injury. Wood lost the weight and got her finances back on track using many of the principles I’ve talked about here. Check it out. It’s not a difficult read, and it will leave you feeling like you, too, can trim your money waste (pun intended!).

My dad, George Van House, died in September, just days after my last post about our family doing a “frugal month” challenge. I was devastated. He was my last living parent, and the person who really taught me everything I know–and value–about family money.

We continued to have a pretty frugal September after his death, but there were a few extra grocery purchases and eating-out fests with family. Plus, I just didn’t have the energy to cook that month. But you know, that’s OK. Everything changes when someone dies. It should.

I’ve had lots of time to reflect on my dad these past few months. And I wanted to put down in “ink” some of what he taught me about family money. So here goes. If you follow me, you’re a trooper. If not, this one’s for Dad.My dad was a frugal guy, a kid of the Depression. Grew up in a rural part of Nebraska. Said Christmas was all about a big meal and getting a piece of fruit and candy in his holiday stocking. He loosened up a bit as he got older, but he never squandered money. He was a faithful subscriber to Consumer Reports. He read grocery ads and clipped coupons when my mom was too busy. He researched pretty much every purchase he ever made.

After my dad retired, he did taxes part-time. He also golfed with some folks who were more well-heeled than our family. From them, he started to learn about investing. I admired that about him: That he never stopped learning, that he always listened to people who were doing things differently to see if there was anything he could borrow from their wisdom.

And yes, my dad did have chats with me about money. But more than anything, I remember what he DID about money. I learned more from his examples than from his words:

He had a budget. He never explained it to me, but I often saw my dad entering figures onto green ledger paper. (This was in the days before computers). Dad always used a mechanical pencil (the kind with lead you twist down) so his point would always be sharp. One time I looked over his shoulder (he wasn’t into sharing his financial details, so I had to be quick!) and saw that he was putting things into categories on his ledger paper: Mortgage, Groceries, Restaurants. That sort of thing.

When I graduated from college and had a very tiny salary to manage, the first thing that occurred to me was to buy ledger paper and sort my sorry little dollars into categories so I knew I had enough to cover essentials. It wasn’t really even a conscious choice. It just seemed like the natural thing to do. Someday, I trust that my daughters will adopt some of my financial habits just from watching me (though they hear me talk about it, too, and are wildly bored right now!)

He comparison-shopped. Again, not something Dad ever really talked about. But I saw him look at the grocery store circulars each week and make a little list of what to buy (on sale) at two or three different stores. He was able to match the sales to coupons like no one I’ve ever seen! Me, I just use TheGroceryGame. They do the sale-and-coupon matching for me. But I definitely learned the concept from my dad.

He researched big purchases. Consumer Reports was his purchasing Bible. Not only did he want to buy things at a good price, he wanted them to LAST. I admit: I’m a CR subscriber, too. It just feels wrong to buy something moderately expensive without checking out the reviews first.

He avoided debt. And he tried to get me to do the same, though I didn’t always listen. I begged to open a credit card account in late high school. Dad spent many hours explaining to me how easy it was to run up a balance and pay unnecessary interest. I insisted that I needed to build my credit history. Dad eventually gave in and cosigned my credit card application.

I actually did fine with credit until my last year of college. By then, I was tired of living on the edge, with money only for essentials and perhaps one pizza a month. I’ll never forget the day I bought on my credit card a much-envied pair of black jeans from the Gap–$30 that I absolutely couldn’t afford to part with. I didn’t pay off that credit card bill right away, and the interest dinged me for MONTHS. I was too ashamed to tell my dad that he was right. But he was.

He let me make financial mistakes–after fair warning. Such as my credit card dilemma, above. An even bigger mistake: He let me buy a car I couldn’t afford, right before my senior year of college. It was much too expensive for someone with a less-than-part-time income. A slightly used Honda Prelude for $7500! That’s even a lot for a college student today. I actually wish he had talked me out of it. Not only did the payments sometimes overwhelm me ($150 a month for seemingly forever), I hadn’t anticipated repair costs. Nor did I know much about preventative maintenance for cars. A bad combo all around. I had some very stressful moments my last year of college, trying to negotiate repair costs with an auto shop. But I’m grateful he let me try my wings a little. Better to make mistakes early in life than later, when the stakes are bigger.

He was my family banker. Dad financed the purchase of my Prelude–I paid him back instead of a bank. He later did the same when my husband and I bought another car. But he was all business about it: He insisted on using a contract and charging interest. Terms were explicitly spelled out: The payment due date, the charge for paying late, etc. At the end of my loan term, my dad gave me back my final payment as a gift–a lovely surprise! He did the same for my husband and me on our later car. And we paid him faithfully: I would have rather paid another creditor late than disappoint my banker-dad!

He invested regularly but conservatively. Dad learned about bonds from his retired golf buddies. He liked them all: Local municipal bonds, government bonds and bond mutual funds. He wasn’t interested in investing in anything flashy. And to be fair, he didn’t start investing until later in life, so bonds were a good choice. He knew he probably didn’t have 30 or 40 years to watch his investments rise and fall. He wanted them to plod along, earning conservative amounts of consistent income.

For this one trait, I thank my lucky stars. When I took over my dad’s financial affairs after he developed dementia, I didn’t have to touch his investment choices. I just watched over them. And when the market crashed in 2008-09, Dad’s investments remained virtually unscathed. That gave me great peace of mind.

Finally, he was a giver. As frugal as he was, my dad (and my mom when she was alive) felt strongly about philanthropy. He always gave money to favorite causes, from his church to the Parkinson’s Disease Association to families he knew were going through some hardship. I see now that he really got as much out of those donations as he gave. He earned a great feeling of being useful, being part of his community, being grateful for what he had in life. I hope to be able to do the same.

For all you’ve taught me, Dad, I thank you. Life won’t be the same without you.

Our family is on a “no-nonessential spending kick” for September. Why? We had a few hangover bills from a summer vacation and three unexpected car repairs. So a spending freeze seemed like a sane way to get our budget back on track.

Now, we’re pretty careful with our money anyway, so I thought, “How hard can this be?” Well, it’s only September 2. And I’ll tell ya the truth: It’s very, very hard!

I read a suggestion in financial celebrity Suze Orman’s 2009 Action Plan (which I downloaded for free; you can still read the first chapter here). It was: Don’t spend ANYTHING for one day. So during the last part of August, I kept trying to do that, in preparation for September. Emphasis on “kept trying.” I’d think: OK, this is an easy day to spend nothing. Then we desperately needed milk. Or it was my “mom’s night out” and I wanted to buy a cup of coffee with a friend. Or I needed to send in a check for my daughters’ lunch money.

So I’d put off the “spend nothing day” until tomorrow. But the funny thing was that something kept popping up—sometimes a need, sometimes a very strong “want”—and I found it really tough to go even one single day without spending at least a few bucks! I wondered: How the heck are we going to get through September?

Now, to be honest, it’s not a spend NOTHING month. However, it is a “spend only on really important stuff” month. For instance, we cut eating out altogether. And we don’t even eat out that much. But for September, we’re not even getting cheap burritos on Wednesday night (our typical “eating out” night) out at our favorite (and cheap) Mexican place.

We’ve also cut back on movie rentals and we’ve seriously stripped back our grocery budget for the month. Anything that wasn’t tied down, budget-wise, was fair game.

But there have been some unexpected bright spots:

• Free plants: My garden beds really, really need compost. I’ve been thinking about this a lot, trying to decide how I could get free mulch. And a few plants died and September is the ideal time to replace them. But on a tight budget—how?When you don’t have money, you get creative. And maybe opportunity finds you, too. Yesterday, I glanced at the plants at my local superstore. I noticed a table of pretty nasty looking plants—leaves wilted, etc. Two perennials I’ve been wanting were in the batch. I asked the salesperson if they were on sale, since they looked pretty wilted (but still very much alive.). Her response: “Oh, the store has written them off. They’re not for sale.” The upshot: They weren’t even going to mark the plants down—they were going to throw them away! They’d already been written out of the store’s books. My opportunity: She gave them to me for free! Savings: $30

• Free garden mulch: As I drove my kids home from school today, I noticed that a neighbor was having trees trimmed. The arborist was making a heck of a noise because he was shredding the branches and leaves. Hey, that’s mulch! I asked the guy if he’d be willing to dump the load around the corner at my house, and he happily did so for free. Thanks, Bruno Tree Care! I’ve got more than enough mulch to take care of my garden beds. Savings: $200.

• Free “drycleaning”: I noticed that our bed comforter really needed a cleaning. Normally, I take it to the drycleaners, since it’s too big to fit in our washer. Then I remembered: I have a bathtub. It can be hand washed—or, in my case, scrunched with my bare feet like I was stomping grapes, as my daughters watched and laughed!) And it does fit in our dryer, though it took 3 or 4 cycles to get all the water out. Savings: $40.
  
  Also, my husband has gotten in the habit of taking shirts to the drycleaners, but only because he hates to iron. This month, he offered to trade me a chore of my own if I’ll iron his shirts. I actually don’t mind ironing—especially if I can get him to do something I hate instead!—and we’ll save about $25 on unnecessary drycleaning.

• Free yogurt: I subscribe to The Grocery Game to get weekly lists of grocery sales and coupons to match them. But sometimes your local grocery store has unexpected sales on meat and dairy that are about to expire (they’re still perfectly safe to eat). This week, Yoplait yogurt was on sale at my Safeway for 60 cents each if you bought 10 or more. Two flavors also carried special “50 cents off” stickers because they were within a few days of their expiration. That took the yogurt down to 10 cents each. Pretty good! But I also had two coupons for 40 cents off six yogurts or more, and my store doubles coupons. The bottom line: I bought 12 Yoplaits and store paid me 40 cents back! Savings: $7.60

• Free cupcakes: My daughters were begging to get ice cream yesterday. “It’s the last day before school starts!” they wailed. “We should get something to celebrate!” I almost made an exception. But then we searched through our coupons and unused gift certificates. Found: 3 unused cupcake coupons from last Halloween (!) that almost ready to expire. Guess where we went for treats? Savings: $9
  

Now that I’m in the “no-spend” mindset, I’m sure even more ideas will occur to me. I fully admit: None of these are amazingly original. But when I had easy money in my pocket, I would never have thought of them.

How about you? What could you do differently if you didn’t spend money for a day…or more?