Does Your Teenager Need His or Her Own Ride?

Hey Paul: Our son just turned 16 and has his driving permit. He drives our family cars – a Toyota Camry and Chevy Tahoe. We plan to get him an inexpensive car once he earns his full license – what do you recommend?

My daughter is going through this rite of passage herself so I can give you a few insights from our experience. There are many websites that give practical advice on buying a car so I won’t go into the “common sense” ideas that others have penned much more eloquently. USAA has several good posts about teenage driving and insurance. One of USAA’s recommendations is staying away from compacts and SUV’s that have higher crash rates for teens; their top 10 are four-door sedans like your Camry.

For some of my readers money is no object but even if that is the case I recommend starting out all new drivers with a “beater”. My friend, Daniel Wrenne, has an excellent blog post on Navigating Car Buying Decisions. Daniel’s financial planning practice focuses on young physicians who could potentially buy an expensive car. But just because you can doesn’t mean you should, right?

His four points fit well with teenage drivers so I’ll modify them slightly to fit your family’s situation. First, start with the “Why”. Is the car to simply take your son from point A to point B? Will having an extra car free up Mom and Dad’s chauffeuring time? Is it a status symbol for him or his parents? Will owning a car teach responsibility or reveal immaturity? Of course it could be each of these to some extent.

The second point is determining the true cost of ownership. The sales price is only the first of many on-going costs. Daniel emphasizes the well known but often ignored high depreciation costs in the first few years. Buying a car at least five years allows the steepest drops in price. In our case we got a great deal on a 2004 Sebring for $1850. Title and sales tax were $138. Registration will be another $50. Of course there is a reason a car is selling for less than 10% of its original sticker price.

Lurking with every used car purchase is the preventative maintenance and the fear and reality of major repairs. Although my wife thinks I am completely over-the-top on this one I think a fitting metaphor is what you experience when you have your first child – it runs through your mind all the ways they can get hurt or worse. Of course over time you learn that that kids are pretty robust and stop sterilizing everything they own and checking on them in the middle of the night. Hopefully I’ll come to the comfort zone with Bethany’s car soon.

The third point is to set your budget. In your case it sounds like you are being very reasonable in looking for an inexpensive car for your son. I encourage you (or him) to be able to pay for the car up-front – NO financing! Living within his means may be one of the most important lessons you can teach him. I find it rather odd when I see luxury car commercials with great financing options. But perhaps that’s the American way. In our case Bethany lifeguarded two summers (pulling one girl from the drink) and her grandparents helped out to buy the Sebring.

An important part of the true cost of car ownership and budgeting is the added cost of adding a teenager to your auto policy. In most cases it is cheaper to add your child to your own policy rather than having them shop independently for a policy. As a rule of thumb plan on your auto insurance premiums doubling with the addition of a teenage driver. And that’s with a good student discount and driving course. In our case adding a third car even of much less value than our other two vehicles added about $35 a month to our premium. Adding Bethany to the family policy added another $75 a month. This took our monthly premium from $91 to around $200.

The final consideration is to beware of the mind tricks. To be honest these can involve important tradeoffs. Do I buy a newer car that has more safety features and less chance of major repairs? Does the gas-savings of a compact offset the risks of every other vehicle that I may run into being larger? Should I finance to truly get the car of my dreams? These issues may not be trivial but often cloud what are the more important decision factors.

So in conclusion look for a car that you can pay cash while doing the standard due diligence on repair and reliability. Bonus advice: Wait a few years until they get their own ride – I was 21 when I got my Honda Prelude and although open to some debate I think I turned out alright.

Dr. Paul Hamilton, CFP will be offering a free Social Security Workshop this Sunday, August 7, at the Jessamine Public Library from 3 to 4pm. It is not necessary but if you have one bring a laptop/tablet/smartphone and your SS questions. Contact Paul at with any questions.


No One Can Afford to be Poor

Hey Paul: What is the “ghetto tax”? I heard this mentioned on a blog about poverty in cities and how the poor are taxed more than others. Do we have a ghetto tax in Jessamine County?

The name “ghetto tax” is a bit misleading and it doesn’t necessarily apply to a “ghetto” and is definitely not a tax imposed by the government. The concept was popularized about a decade ago by a study conducted by the Brookings Institute. The study focused on the urban poor — “ghetto dwellers”.   The main idea is that the poor often pay more for things because of lack of access to the same deals as the middle-class or rich.

The study listed the following ghetto taxes that are better described as poverty premiums and a tally of what it may cost the typical poor person:

  1. Check Cashing: Using a check cashing service rather than a personal checking account costs 1% to 5% of the check’s value. Suppose you cash $1000 in checks each month with a 2% fee – this would a $240 annual ghetto tax.
  2. Pay-day Lenders: The fees can be upwards of 15%. The larger problem with this type of loans is that they are a temporary solution that creates a permanent problem as the loans are rolled over. Suppose you take out just one pay-day loan for $400 to pay your winter heating bill and fortunately a Christmas miracle pays it off when due paying fees of $60.
  3. Tax Refund Services: The advance payments of the tax refund could have implied interest rates of 70% to 1800%! Suppose you are due a $1000 refund but take $800 for immediate cash – you are down $200.
  4. Car Prices, Loans, & Insurance: For the exact same car and driving record the poor paid $50 to $500 more, an extra 2% on car financing and $50 to $1000 more for auto insurance! For a modest $5000 car suppose you get a good deal on the price but have to finance at 10% rather than a customer with good credit who would get an 8% auto loan. This will cost you about $70 each year over a five-year loan.
  5. Home mortgages & Insurance: The poor pay on average about 1% more on mortgage rates and about $300 more for home insurance. Suppose your 30-year mortgage on a $100,000 home is at a 5% rate rather than 4%. This is costing you an extra $700 each year in housing payments.
  6. Furniture, Appliances & Electronics: Renting-to-Own any of these is an expensive proposition. One example cited in the Brookings study was that a $200 TV ended up costing $700 once the interest charges were factored into the cost. Suppose you got a widescreen TV and the finance charges are $100 a year for five years.
  7. Grocery Prices: The lack of personal transportation forced some urban poor to shop at local grocery stores that tend to be smaller and with higher prices.  In Wilmore we’ve got the iconic Fitch’s IGA and in Nicholasville Walmart and Kroger’s each with competitive prices. So let’s suppose there is no ghetto tax on groceries.

The grand tally of the “ghetto tax” for this hypothetical poor Jessamine resident is $1370! Yes, it could be less if you do not “own” a home but it could easily be double or triple this amount if one finds himself in the throes of a pay-day-lender spiral or falls deeply into one of the other poverty premium traps.

So the answer to your question is yes, there is most definitely a ghetto tax that is subtly draining money off the local poor. Is there anything we can do to reduce or even completely avoid these financial dings? Yes, but it will require rethinking how we approach our finances.

A common theme through these poverty premiums is that the poor have to take on debt and then consequently pay higher rates due to weak credit scores or simply not shopping around for a better rate. My suggestion is plain and simple – if you do not have money to buy it with cash, then do not go into debt. This applies to cars, couches, appliances, electronics, clothes, and vacations. Buy used items or accept used furniture or appliances from Southland or one of many other local churches who pass along perfectly acceptable items.

A home is a bit different as very few will ever save up enough to pay cash; but if one can save enough to put down a 20% down payment and has no other debt then you may very well qualify for the best mortgage rates.

To save on tax processing you can do a few wise things. First, you should have no Federal or state taxes taken out of your pay check – it’s coming all back the following April if you are anywhere close to poor. In fact you can also be prepaid the Earned Income Tax Credit if you qualify. Second, do your own taxes using a free online software. If you can’t do this then bring your tax documents to the Jessamine public library early in the year for free tax filing sponsored by the AARP. You can file in early February and have your refund check within a week.

Finally open up a free or low cost ($5 a month) checking account. Talk to my friend Steve Smith at Town Square Bank or Jess Correll at First Southern National about an automatic savings strategy. Build up a $1000 emergency fund so you aren’t dragged under a pay-day-lender debt avalanche.

In summary by avoiding debt, not overpaying taxes, and using a bank for banking the poor and the rest of us can avoid the dreaded “ghetto tax”.




No One Gets Smart by Watching TV

Hey Paul: My kids are watching too much TV – it seems like it’s on all the time! If not watching the TV they are on their computer or cellphone. They are all great kids with good friends and are doing well in school. How much is too much screen time?

A recent Nielson study found that U.S. adults have broken the five-hour barrier in average daily television time. People over the age of 50 watch the most TV, somewhere in the range of 50 hours a week — over 7 hours a day! By way of comparison the average married couple talks to each other a total of five minutes each day.

The NY Times reports that “The amount of time you spend consuming media — watching TV, surfing the web on a computer, using an app on your phone, listening to the radio and so forth — continues to go up. Nielsen said that in 2015, Americans spent about nine and a half hours each day consuming content this way. This year? The average is 10 hours and 39 minutes.”

The University of Michigan School of Medicine has a concise summary of TV habits among Americans and how screen time competes with other activities as well as the potential long-run detrimental impacts.

UM reports that that children age 2 to 5 spend on average 32 hours a week in front of the tube – mostly watching shows but also playing games. The free baby-sitting may be necessary or at least a huge convenience for the stay-at-home parent but a virtual education is not likely what these toddlers are receiving from serious tube time.

An average American child will see 200,000 violent acts and 16,000 murders on TV by age 18. What starts with Bugs Bunny ends up in Game of Thrones.

71% of 8- to 18-year-olds have a TV in their bedroom. Kids with a TV in their bedroom spend an average of almost 1.5 hours more per day watching TV than kids without a TV in the bedroom. Take the screens out of their bedroom and turn that freed up time into something outdoors.

The American Academy of Pediatrics takes a “better-safe-than-sorry” stance on TV for young children: “It may be tempting to put your infant or toddler in front of the television, especially to watch shows created just for children under age two.

But the American Academy of Pediatrics says: Don’t do it!

These early years are crucial in a child’s development. The Academy is concerned about the impact of television programming intended for children younger than age two and how it could affect your child’s development. Pediatricians strongly oppose targeted programming, especially when it’s used to market toys, games, dolls, unhealthy food and other products to toddlers. Any positive effect of television on infants and toddlers is still open to question, but the benefits of parent-child interactions are proven. Under age two, talking, singing, reading, listening to music or playing are far more important to a child’s development than any TV show.”

Does TV make you poorer or do the poor just watch more TV? The Nielson study goes on to report “when looking at adult users of multimedia devices, black homes making under $50,000 averaged more than 33 monthly hours, Hispanic homes notched about 27 hours, and Asian-American homes had about 41 hours. In homes of these same ethnicities that made over $50,000, the monthly time spent with multimedia devices shrinks to 20 hours (black), nearly 19 hours (Hispanic) and 25 hours (Asian-American).”

I have a few pet peeves regarding television. Most the shows my kids watch not only have animals but talking animals. I don’t see why animals must have personalities and grand adventures. The entire Bible has only two talking animals (the snake in Genesis and oddly a talking donkey). I suppose there is a reason that C.S. Lewis’s Narnia series was made into movies and not The Screwtape Letters.

Another hangup I have with Sitcoms is the need for seemingly every actor’s line to be a  snide remark or comeback to the previous line with each sarcastic reply supported by piped-in audience laughter.  Is that how people should interact? Is it too much to ask to have regular conversations that build-up to the occasional hilarious scene?

Here are my suggestions for gauging the influence of TV on your family:

  1. Can you go without TV for a day? Try to go 24 hours with no screen time for the family – parents included.
  2. Whatever ages your children are spend a full day watching their shows. Count the number of talking animals for younger kid programs or the number of violent acts for older kids. Multiply it by 6000 (about the number of days in 18 years) – do you think that kind of repetition will have an impact on your child?
  3. Try the push-up game: have your child do a push-up every time the audience laughs. That could easily be 150 pushups in an hour program; if they watch five hours a day – look out Herschel Walker!
  4. Get all screens out of any child’s bedroom. Even Steve Jobs enforced this rule.
  5. Have dinner around a table looking at each other not the TV.
  6. Use a DVR to pre-record TV programs. Preferably you don’t have cable not only for the monetary outlay but more so for the time in can drain away from your life. For those with network stations you can get an inexpensive DVR from Amazon that will pause or record shows. Never watch another Cialis commercial!

Who Pays for College?

Hey Paul: Our daughter is headed off to college next year. Scholarships and financial aid will cover half the cost of college leaving $15K each year that we have to pay or borrow. We have some savings and ability to pay but certainly don’t have the full amount to cover all her college expenses. Should we pay for her college education or have her take out student loans?

College is the biggest investment most people will make other than their retirement and home. As you are experiencing first-hand the costs of college are staggering – we could buy a ski boat or take an around-the-world vacation each year if we didn’t have tuition payments to make. But then we would fall into one of Jeff Foxworthy’s definitions of “you know you’re a redneck if…. you’ve got more invested in your pickup truck than your college education.”

The decision of whom to burden with paying for college – either along the way out of savings or who is saddled with the student loan debt – is a tricky issue. An analogous decision is how to pay for government programs – should the rich pay higher taxes based on ability to pay or should those who are directly benefiting from the program foot the bill (e.g. toll roads)?

In your case the total bill over four years is $60,000. As I’ve mentioned in prior columns a college degree is worth about $1,000,000 in higher lifetime earnings. Of course the sole reason of attending college shouldn’t be solely to secure a large future earnings and even if that is the goal it isn’t always realized. Based on the premise that college is going to more than pay for itself, your daughter should take responsibility for paying her student loans off out of the proceeds of her future earnings.

It sounds like you have an aversion to debt and also want to limit how much debt your daughter is forced to accrue in getting a college education. Keep in mind that an undergraduate degree is usually just the beginning of a very pricey decade in her life. Many careers require a couple years or more of graduate school where the price tag is higher and the financial aid is sparse. Then she’ll meet some guy (also in debt) and have dreams of a big wedding on your tab. My point isn’t to forgo college or marriage but to keep in mind the bigger picture in how future expenses and debt can mount up.

Since you are willing and able to help pay for college, I suggest that you set up an incentive system to reward academic progress. As much as we talk about college graduates burdened with hefty school loans a bigger problem are college dropouts who have big loans and no diploma. So what we’re working towards is a payment split that balances your daughter being connected to the educational finances but not necessarily fully responsible for paying for college herself.

The first thing to establish is your own ability to pay. The standard advice in financial planning is to fund your retirement first. You can borrow to pay for college but not your retirement. I would add to that if you have any high-interest debt to make that your priority in eliminating before funding for college. Let’s assume you can devote $5000 each year towards paying your daughter’s college.

As I alluded to earlier the biggest problem facing parents isn’t paying for college. The biggest challenge is making sure your financial investment pays off with your daughter completing college. One life event you’ll soon face is that your 18 year old is no longer a minor and various privacy laws mean that you won’t be able to track how she’s doing in school the way you have for the previous dozen years. That is, the school is not allowed to divulge her grades to anyone without her permission.

Given that you will be partially funding her college experience I think it is entirely reasonable to be briefed on how that’s going by asking to see her grades. Most students won’t have any problem with this. If they do you can likely assume poor grades or they have become a Libertarian consumed with “their rights”.

There is no magic formula but a reasonable agreement could be that you’ll pay $5000 and take on half the student loans if your daughter is making progress toward graduating with a B average in four years. College expenses beyond the four years will be her responsibility.

The college experience is certainly intertwined with financial issues and challenges. Although my advice is to approach it as a “business decision” the greatest gains can be found by keeping involved in your daughter’s life. Conversations about hard topics like paying for college or how she’s changing her major (again) will likely be more important than who is signing the promissory note.




Jessamine High Then and Now

Hey Paul: How is high school different today then when you attended Jessamine High? What advice do you have for today’s high school students?

 A lot has changed since I graduated from Jessamine High in 1987. The classrooms are nearly identical but the athletic facilities are first rate – I ran on a gravel track. We started school at 7:50am before scholarly studies showed that teenagers are not awake then – something that I could have told them a long time ago.

In my class we had three students graduate with a 4.0 or higher – No, I wasn’t in that select group. Two of them are surgeons. In recent years with the explosion in popularity of AP classes about 30 students graduated with above a 4.0 – evidently in the future we are going to have a lot of doctors in the area.

We had basically the same problems that students get themselves into today. Human nature hasn’t evolved but the technology certainly has that amplifies our ability for good and bad. On that note I will say there is one trap that many students are falling into that is disastrous to learning and positioning themselves for academic success.

According to my reliable sources in many of the classes the majority of students are spending class staring into their cellphone. Are they just checking a score or news story? Is the technology being used to engage the students? I doubt it.

So my one piece of advice to high school students is to do whatever it takes to stay off their cellphone during class. I anticipate this sage advice that I conservatively value in the hundred of thousands to students will not be well received. I may become identified with #ProfNoseNuttin to which I’ll counter #DropoutsLiveInVanByTheRiver.



Advice for the “Average”

Hey Paul: I am average – in school, sports, size, and just about everything else. I won’t be going to Centre College as a pre-med major. I don’t take the advanced classes in school. I am not on a varsity team with the dream of a full-ride college scholarship. I am not a leader of any group. What advice can you give me?

In writing an “advice column” I wrestle with many factors – sounding authoritative but not a know-it-all, suggesting simple solutions but not over-simplifying complex issues, and suggesting paths to success with the realization that some paths are closed to many people.

The last few weeks I have focused on questions related to college with a focus on AP tests and other high-end academic pursuits. According to US News and World Report’s high school rankings, WJHS and EJHS have 46% and 28% of students who take at least one AP class. So you are in good company with a half to three-quarters of the students who are not taking an advanced class. By my estimation it is only the top 10% of students who are regularly taking AP classes at the local high schools.

US News goes on to assign a College Readiness Index based on AP participation to high schools. WJHS was a 35.5% and EJHS at 18.7%.  My suggestion in last week’s column on stringing together a half dozen AP exams probably appears unfathomable to the majority of students. So dialing back a bit – how about one (or two) AP classes as a goal?

Sports are big part of American culture with the victories of our local teams shared each week in this newspaper. As a former athlete, tortured fan of the Bengals and Reds, and semi-retired coach after dozens of rec league seasons, I have seen the upside and downsides of sports participation. Sports, somewhat like academics, favor the naturally gifted with fierce competition for playing time among the teammates (and occasionally their helicopter parent).

I do believe that some participation in sports is excellent at all ages and ability levels. By sports I mean exercise with an elevated heart rate. The addition of archery, bass fishing and bowling to the local high school teams don’t count. My personal bias is towards running – cross-country or track. The comradery of the local high school teams is terrific with the opportunity to measure your improvement and success against the clock.

A college admissions form once asked applicants to check a box if they considered themselves a “leader”. The story goes that a young man perhaps much like yourself couldn’t honestly identify any leadership skills so checked the no box. On his acceptance letter the admissions committee thanked him for his honesty and noted that he would be joining 5475 self-reported leaders at the University. Too many chiefs, not enough Indians.

Seriously I think the role and perceived importance of being a leader is over-rated. Yes, we need leaders in our homes, schools, and communities but a leader without contributors won’t accomplish much. I wouldn’t worry about not having a list of leadership roles to put on your resume’ – focus on adding value wherever needed.

A final note on being “average in everything”. I think you are selling yourself short. While college admissions or even society is fixated on a small number of metrics – test scores, points scored, or leadership – these are not all there is to value a person.

Someday you will likely be celebrated on Father’s or Mother’s Day as anything but average or ordinary. Let your family and close friends be the measure of your greatness.



Getting over College Sticker Price Shock

Hey Paul: Our high school son is looking at colleges in central Kentucky. He is a junior at WJHS. The Transylvania University website lists a “total cost” of $45,690 – about what we paid for our home a few decades ago! Your school, Asbury, posts total costs of around $35,000. How can college be worth these sky-high prices? What kind of “deal” can we expect?

When I attended UK about 25 years ago I believe the tuition was around $3000 a year and total cost around $6000. A student could combine relatively modest scholarships, financial aid, a summer job and a bit of help from parents and have no student loans. For this coming school year UK lists the total costs at $24,278! The magic of compounding growth is working against us. The typical annual increase of around 6% has doubled the costs every dozen years.

I have compiled some core information from four local colleges that may help clarify what you really are facing in terms of college “investment” (note the subtle change in wording from “cost”) as well as what a student can take from the college experience. This information is from the U.S. Dept. of Education’s College Scoreboard. See for complete information on these schools and any other colleges of interest.

Centre Transy Asbury UK
Family Income AVERAGE COST
$0-$30,000 $17,161 $15,256 $18,677 $9,743
$30,001-$48,000 $17,024 $16,435 $19,565 $11,831
$48,001-$75,000 $20,676 $19,470 $24,526 $15,416
$75,001-$110,000 $23,685 $23,085 $26,365 $17,779
$110,001+ $28,445 $25,716 $29,741 $18,220
Debt $26,063 $27,000 $26,000 $20,500
Starting Salary $45,000 $41,100 $34,100 $41,500
Graduation Rate 85% 73% 70% 60%
ACT Range 26-31 24-30 21-27 22-28

The first thing to note is that virtually no one pays “sticker price” – Even wealthy students that attend Transy get around $20,000 knocked off the sticker price. Your family’s income will be a major determinant of your financial aid package. For each of these four schools the lowest income students received about $10,000 more in financial aid.   Of course even the lower income student is looking at around 17 grand a year to attend a private college and around 10 grand to attend UK.

Keep in mind that these costs are averages – some students will receive more generous financial packages due to academic scholarships. Others will be eligible for further financial aid due to their specific financial situations. The College Scoreboard provides a link to each college’s Net Price Calculator that gives more precise estimates of potential financial aid packages.

Typically the “deal” includes the Kentucky Educational Excellence Scholarship (KEES), Kentucky State Grant and the college’s financial grants. Note that a grant is essentially a gift with no payback! The offer may also include Federal loans that like all other loans need to be paid back but often have no interest until six months after completing college.

The median student loan at the three private schools was around $26,000 – think about it like a car payment for the five years after college with a diploma in hand rather than a vehicle. Again that’s an average figure. I’ve known a few students with $100,000 in undergraduate debt and many with mid-five figure debts. That’s a heavy burden even before you start throwing in graduate school costs, a wedding, first home, and the first baby.

So, is it worth it? Yes, I think the college experience can be “the best four years of your life” and a springboard to a career that is not possible without a college degree. Over the years I know many college graduates that question the utility of their college degree but very few who would forgo college if they had to do it over again. On the other hand I know many people who regret they didn’t take advantage of continuing their education through college when they had the chance.

The one catch is that if you are going to invest tens of thousands of dollars a year than you better complete college – unless you are an NBA first-rounder. Half a degree is worth zilch. As I mentioned in last week’s column, college success is more about grit and wisdom than smarts.

Finances are important but don’t let money be the sole factor. The smaller classes and collegiality of a private college may be the difference between college success and dropping out.   Admission teams will work with you to “make it happen” and then the rest is up to you boy!



Is College for Everyone?

Hey Paul: I just graduated from East Jessamine. I was an ok student making mostly B’s. I didn’t take any AP classes. I haven’t decided what I want to do next in life. I’m thinking about working for a while and then maybe going to college. Do you think that is a good plan?

 You should join me at Asbury University this fall. Sorry, I’ll try to provide unbiased advice on this very important life decision. There is much I don’t know about your exact situation so some of my advice may or may not apply to your decision.

First let me congratulate you on earning a high school diploma. In doing so you’ve demonstrated a number of key life skills. You’ve avoided and perhaps overcome the educational derailers of trouble with the law or starting a family a little earlier than planned. You’ve been able to sit in a seat and listen for several hours each day – no small task and one that I didn’t do too well.

There are three general paths following high school – college, work, or the military. Of course there is a fourth path of living off your parent’s or the state’s generosity – but that’s not what we aiming for here.

Joining the Army, Navy, Air Force or Marines is not only patriotic but also a great way to build a career. My suggestion is to binge watch war movies ranging from Saving Private Ryan to Lone Survivor. If you end your movie marathon feeling called to serve your country then contact your local recruiter. My recommendation is that you go to college with the ROTC providing an introduction to military life as well as potentially covering your educational costs.

Taking a job after high school can literally buy you some time to figure out your next move. In some cases it may be necessary to have an income as you move on to living on your own or perhaps to afford paying for college. My observation has been that taking a year away from school can easily become a few years and then a permanent break from the classroom.

If you start a job I recommend at a minimum taking one course at JCTC in a subject that really interests you. Take a class that they didn’t offer in high school – auto technology, nursing, or marketing. Learn a practical skill and see if you have a natural flair for that type of work. This will keep you connected to formal learning that is essential for almost any career of choice.

What about college? Well despite what some say, college isn’t for everyone. Less than 20% of Kentuckians have a bachelor degree or higher. This statistic could suggest that only those in the top fifth of their high school class are solid prospects to go on to complete college. In your case I wouldn’t buy into the theory that because you were “average” in high school that you won’t be able to complete college.

I have been a professor at Asbury University for four years and before that taught a Marshall University – yes, as in the movie, We are Marshall! I’ve got to know hundreds of students that are probably much like you. They weren’t academic stars in high school but they made a decision, really a series of decision to make it through college.

Rev. Chuck Swindoll has a famous quote on how attitude and the choices we make are much more important than our circumstances:

“The longer I live, the more I realize the impact of attitude on life. Attitude, to me, is more important than facts. It is more important than the past, the education, the money, than circumstances, than failure, than successes, than what other people think or say or do. It is more important than appearance, giftedness or skill. It will make or break a company… a church… a home. The remarkable thing is we have a choice everyday regarding the attitude we will embrace for that day. We cannot change our past… we cannot change the fact that people will act in a certain way. We cannot change the inevitable. The only thing we can do is play on the one string we have, and that is our attitude. I am convinced that life is 10% what happens to me and 90% of how I react to it. And so it is with you… we are in charge of our Attitudes.”

The “average” students who succeeded in college found a balance – finding a major they enjoyed while sticking out classes that seemed a waste of time, connecting with a core group of friends through FCA, the Greek system or other gatherings of like-minded people. They went to class – 15 hours a week isn’t too much to ask, is it? Being successful in college is more about being wise than being smart.

To many people going to college is about preparing for a career. A rule-of-thumb is that college graduates makes about twice what high school graduates earn over a lifetime. At the state level this rule holds as states like Colorado and Massachusetts that have roughly twice as many college grads as KY and correspondingly about double our income per capita.

The formula: college degree = money = happiness, doesn’t hold true for many college graduates. A cynic could modify the equation to college degree equals huge student loans working in a job that doesn’t require a college degree equals regret. Perhaps this cynic needs a poster size version of the Swindoll quote.  My college equation looks like:

Wisdom + Grit = College degree = Fulfilling Career & Personal Life.

Of course many people can substitute “Army”, “Working” or “Being a Mom” for “College” and end up with everything you could want out of life!




Side Hustles Usually Won’t Bring a Pink Caddy

Hey Paul: I am working out from under a fair amount of debt. My job covers current living expenses but not much to put towards paying down debt. I am looking into taking on a second part-time job and will devote the money to debt reduction. I am a single mother with two school age children. What suggestions do you have for side hustles?

I applaud your efforts to work your way out of debt. Usually people start by focusing on their spending habits and try to cut out the luxuries we too easily see as necessities. In some cases there are some obvious culprits – fast-food restaurants, the $5 latte habit, home-shopping-network “deals”, etc. But at some point we hit a hard limit on what we can or at least are willing to cut from our spending.

Assuming you’ve cut your spending to the core then boosting the income sources is the next option. The hope is that you can find a job that is fun, has flexible hours and you can make some good money. And, just for clarity sake, let’s assume legal. This job description matches various “direct sales opportunities” that may fit your needs.

Let me give you our brief experience with direct sales. My wife (with my somewhat hesitant blessing) has tried a couple of ventures – as a Mary Kay and “31” consultant. Startup costs are modest but not trivial and the potential sales commissions are huge. But you’ve got to find customers which is nontrivial.

My wife was always able to make some early sales and she always had one major buyer. Unfortunately from a business perspective that was also my wife. In the end she might have broke even with her commissions covering the “internal sales.” Probably the biggest lesson we took from these experiences is that despite the corporate promises, nothing sells itself. Be prepared to hustle and put in some serious hours to be the break-out sales woman in your niche. Who knows – maybe you’ll have a pink Cadillac in a few years!

I will add that I don’t like the idea of selling to “friends and family” things that are going to burst their budget. Part of the direct sales pitch is the social aspect of getting together with your girlfriends enjoying free samples and snacks. Ultimately you are providing an experience that brings people the opportunity to buy a good product from a friend. My dismissing of this advantage falls into the critique of economists knowing the price of everything and the value of nothing.

If direct sales is not looking like a good fit for you then taking a position “beneath you” may be a humbling but necessary step. You are a professional but you may have to deliver pizzas or clean homes to make that extra $10 to $15 an hour.   That’s not an easy path but it is a temporary arrangement that many people will respect you for including your kids.


Seven Quick Money Fixes

Hey Paul: What are some of the easiest (and free) ways to improve our financial picture?

 I like your approach to tackling what may be big financial challenges by starting with the quick, simple and free actions. These small steps can in some cases solve or ward off much bigger problems. So without further ado here are some quick fixes.

Start by Filtering out the Noise. Do you get inundated each and every day with junkmail, spam emails, robo sales calls, and credit card applications? To reduce junkmail go to I also suggest setting up a token email account like to use for those one time signups requiring an email address. To opt out of credit card and debt relief solicitations go to To sign up for Do Not Call register at These won’t cut off all unwelcome marketing but it will dampen the noise allowing you to better hear the signals.

Money can only go one of three places – spent, saved or taxed. There are several popular, free apps such as Mint and Personal Capital that can track your spending and net worth. There is about 1 in a 1000 people that can manually keep a budget. Today’s technology takes over most of the legwork – if you are willing to trust access to your finances to the cloud.

A Big tax refund could have helped earlier. Suppose that just this week you got a check from the U.S. Treasury for $1000 – Myrtle Beach vacation or new couch? But suppose you’ve got some really nasty credit card debt sitting at 29.99% for over a year. If you had an extra $85 a month in your paycheck rather than giving the IRS an interest-free loan, you are paying down debt in this case saving roughly $300 in interest. You can adjust your withholdings at any time by filing an updated W4. Unfortunately the W4 doesn’t let you directly select the dollar amount of tax withholdings. The IRS and tax preparers have online calculators that can do this calculation for you. See

Doubling your money happens much more often through your employer’s retirement matching plan than at Keeneland. Not everyone works for an employer who will match their retirement contributions. Typically the employer matches your contribution up to say 3% of your earnings. There are variations in the plans such as vesting over a few years and the level of matching. I realize that some budgets are so tight that devoting even $100 a month to retirement may seem impossible. But if you can find that money by taking on that side hustle job or trimming back the entertainment or restaurant tabs, you will have effectively doubled your money with each retirement contribution.

Cash transactions remind us how long it took to earn that money. The convenience of credit cards or even debit cards or writing a check blur our wants and our ability to afford those toys. You don’t need to use cash for fixed transactions like your mortgage or utilities. Start by paying cash for the budget busters – restaurants and clothes.

Credit, Loans, Mortgages, or Capital are just nice names for Debt. I suggest cutting (literally) back to at most three credit cards. Preferably you primarily use a debit card that draws on your bank checking account. To see all your debt related accounts request your free credit report at It’s also good to know your credit score that can be purchased for less than $10 or is offered free with many credit cards.

Do you have an exit strategy in place?   Every adult needs a will. I have used the online software to create my will and a living trust. A living trust typically keeps your estate out of probate saving your heirs about 5% of the assets – maybe ask them to spring for the money to put a trust in place. There are a few different health related documents that are simple to complete (other than the contemplation of the scenarios when these would become effective) such as a living will and health and financial power of attorney.

Challenge yourself by completing one of these tasks today!

Dr. Paul Hamilton is an Associate Professor of Economics at Asbury University and a CFP providing financial coaching to middle-class Americans. He is available to provide free workshops to churches, local businesses and other groups.

Contact him at or