Over the last day or two, I’ve been going through the piles of email that have built up since the birth of my daughter and found a few stories worth sharing, which I’ll be sharing today and (maybe) tomorrow. Here’s the first one, from Amy:

I am thirty years old, college educated, and a certified teacher. For the past several years I have taught school and used that money to buy a house with an ARM. This past January I sold the house. The 18k I made on the sale I rolled over to pay debts.

Last year I took out credit cards and my intention was to sell the house and pay the cards. However, several small things like car accidents, a move to an apartment, and buying a truck took the air out of the plan.

When all was said and done, I still have $4,000 in student loans, and $35,000 in unsecured debt.

Now here is the sad part of my story. I was advised by a friend to “just walk away” from the unsecured debt. “Pay the student loan and forget the rest.” This came from a banker. “In a few years you will not have the unsecured debt. It will be a write off. Disappear for a while.”

Since I am a teacher, I decided to take a job overseas. I was being paid to teach under the table. It was not the best idea. I decided after two months to face the music, come home and start again.

Which leads me to today. I have no money in the bank. I have $35,000 in unsecured debt. My student loans are paid through January–but then I have the payment coming back at me. I have no assets except my truck, paid for, and my laptop. Luckily, my brother is letting me stay at his house while I look for a job.

Any advice you can give would be appreciated.

Before I say anything else, please note that if you have a significant amount of credit card debt, re-read the story above. It could happen to anyone who puts themselves in a shaky financial position.

First of all, I fully understand the logic behind the advice from the banker, but it’s not good advice for the next several years unless you intend to live elsewhere. Why? Doing that will destroy your credit and leave you with harassment from creditors for many years. If you live in a situation where it’s difficult for them to contact you and your credit doesn’t matter, then this might be a good move, though I personally consider it dishonorable to walk away from your debts.

So what can you do in your current situation? Here are the steps I would take to get back on track.

First, I would focus very hard on getting a job, even if it happens to not be a teaching job. Work evenings somewhere so that you at least have some income coming in, then beat the streets for other work during the day.

Next, I would utilize a reputable credit counseling service. This is a significant enough debt situation that most normal debt repayment plans will probably not work. As a general rule of thumb, for-profit agencies are generally less helpful than non-profits. I would start with Consumer Credit Counseling Service, though that’s not a recommendation.

Also, live as cheaply as you possibly can. Don’t spend a single dime unless you have to. Live like you were in college again, eating ramen noodles and living in a tiny room. Focus on getting your finances healthy before raising your standard of living.

Another tip: don’t be afraid to look for charity right now. Talk to local pastors and see if you can at least get some free meals. Don’t be proud - pride right now will cost you.

Perhaps some readers will have additional advice for Amy.

I’m a big advocate of entrepreneurship and I truly admire people who take the plunge. Here’s a question from a brave reader who went forward with his dream. I’ll call him Walt, for fun, after a character in one of my favorite books:

I’m starting a personal training business, and I’ve been marketing for about two weeks now. I’m waiting for the clients to roll in, but in the meantime, I’m spending all my savings.

At what point do I staunch the flow and get a part-time job to pay the bills? Keep in mind that I would make $10-15 an hour in a part-time job and $75 an hour training. I break even with 5 training sessions a week.

I have about a month before I can’t rely on my savings and HAVE to have some kind of money coming in.

If I were in Walt’s situation, here are the tactics I would use:

I would spend every single day for the next month, from sun up to sun down, marketing my business. I would have a huge pile of pamphlets describing my business and hit every single gym and health food store in the area looking for clients (depending on solicitation rules, of course).

I’d offer a big introductory discount. The one thing you need right now is customers that might become regular paying customers, so offer some ridiculously huge discounts right off the bat. “75% off your first session” or “Buy one session now, get one free later” might be good initiatives. Even better, if you know people who are trendsetters, give them a completely free session in exchange for spreading the word a bit for you.

I’d call every person I know that might be connected to the area of the business. If you’re doing personal training, likely you know people who are physically inclined. Hit up that list of people and let them know that you’re now doing personal training and ask if they know anyone who might be interested.

I’d invest the money in professional-looking promotional materials. Seriously, materials that look professionally designed and printed may be very pricey, but they create an image that your business is serious and that it is of quality reputation, whether it’s true or not.

What about the personal financial situation? Here are some tactics I’d use:

Get a night job. If you’re a personal trainer, you’re probably in good shape. Look especially hard for a job as a night watchman. That way, you can do that job at night, promote your business in the morning to people who might be potential customers, sleep during the day when you don’t have clients, promote a bit more in the evening, then work again. It sounds like a lot of work, but it’ll really pay off if you’re committed to the business. Then, when the business takes off, quit the night job and you’ll have renewed focus on your business.

Get a job where you can cross-promote. How about a job at a GNC or a health food store or a sporting goods place? These jobs might not pay well, but they’ll give you golden opportunities to promote your own business. Most of the time at businesses like these where the business itself is in alignment with what your side business is but they’re not in competition with each other, it’s completely acceptable to promote a side business in this way. If you can just convince one person a month, it won’t be long before you can go back to focusing on the business full time.

These tactics are all things I would use in your position, trying to get a small business off the ground.

What do you do when you can’t afford to reciprocate the generosity of others? Jane writes:

I’m 26 now, and it seems that everyone I know is getting married (including myself). The problem is that my friends and family are scattered throughout the country. If we were to attend each of their weddings, my fiancee and I would be paying for two round-trip flights, plus a hotel room, plus a wedding gift every few months. We simply can’t afford that, but I really wish that we could be at each of those weddings, because some of these people are very close family members and friends. Additionally, I worry about looking rude, because they’ve all found some way to get to our upcoming wedding. Do you have any suggestions for ways to explain politely that we can’t afford it? Is there anything we can do to communicate our love and support without actually going to the wedding? If we have to choose between friends’ weddings (attending some but not others), how can we keep some friends from feeling offended that we didn’t choose to attend theirs? If we do attend some of the weddings, do you have any suggestions for saving money while attending a wedding? Ordinarily we only visit cities where we know we can stay with friends, and we choose our travel times to minimize the cost of travel, but with a wedding those things are out of our control. Any ideas you might have would be greatly appreciated.

My personal advice would be to not attend any weddings that would require enough financial outpouring that it causes you to have difficulty paying your bills. Here are some important things to remember:

An invitation is not a requirement to attend. It’s merely a statement from the sender that they wish you to attend their event. One should never feel like they have to come to an event.

Honesty is the best policy. If you make a decision that you can’t afford to come, be honest about it. Call the person and explain exactly why you can’t come. If you think that you can’t do this for some reason, then what’s the basis of the “close” relationship that would compel you to go to their wedding in the first place?

Thoughtful gifts mean more than expensive ones. We got many expensive gifts for our wedding, but the two that really stood out were simply very thoughtful ones - and neither of those were expensive at all. Spend some time thinking about the people involved and your relationship to them. Often, a very good idea will eventually occur to you - and often it is one that isn’t particularly expensive, either.

Make every possible arrangement to reduce costs for out-of-towners to come to your wedding. Find places for everyone to stay if they can’t afford a hotel. Host meals for the out-of-town guests. In short, do whatever it takes to reduce the costs for people willing to make the trip to your wedding. This will be greatly appreciated by the people who do attend, and they may be more likely to help you in the same way if you choose to attend their wedding.

Another tip: if you do wish to attend some of the weddings, you should make a clear demarcation between the ones you will attend and the ones you won’t. For example, you may choose to only attend the weddings of people you are related to or just the weddings of people in your bridal party. This way, you avoid any hard decisions that may hurt feelings.

Bea wrote in with the following story:

I work at a small office and we have lost two employees this year….one left for more salary and benefits and another because they were moving out of state. While I was training one of the new replacements she mentioned her salary, which was $2 an hour more than my own. Now this person’s responsibilities will be equal or less than my own and I have eight years invested in my current position. I decided to discuss this with my boss and this did not go particularly well. I asked for a raise that would at least equal the new employee’s. I was told that I recently had a 50cent/hour raise and that business is slow and that my request could not be granted. When I pointed out the salary discrepancy between my salary and the new employee I was told that it had been difficult to fill the position and my boss had to meet this person’s requirements in order to fill the position. In that case I said I would be giving notice. My boss asked me to reconsider and she would think about raising my salary in 6 months. She asked me to think about it and let her know Monday.

So my question is, how have others in similar circumstances dealt with a situation like this? Any advice for me? Hubby supports my decision to leave if no increase in salary is given, we’ll tighten our budget and deal with it .We currently live on my husband’s salary and use mine for additional savings and the little things that come up.

Let’s isolate the facts here: an employee with eight years’ experience is training a new worker to do a very similar job. This new worker is getting $2 an hour more than the experienced one. When the experienced worker requested a raise, the boss essentially said no and justified the high pay for the new worker by saying the position was hard to fill.

If the boss is telling the full truth about the reason for hiring the new worker, then if the experienced one quits as well, it will cost the company significantly. Not only would they have to hire someone at the higher rate of the new worker, there would also be costs associated with training, plus the loss of productivity associated with moving from an old hand to a new one.

In this case, it pays to play hardball. It makes business sense for that person to pay Bea at least the same as the new worker if she requests it. It also makes business sense for the business owner to not pay Bea the higher rate, but given the alternative of losing an experienced worker, the business owner would decide in favor of the raise.

This, of course, assumes that the business owner is playing fair and also that Bea has a good work record to this point. If either of those assumptions fail, it’s quite possible that Bea could walk out of the job. My feeling is if the situation in the workplace is such that this raise request isn’t met, then it’s probably not a long-term healthy situation. The business owner was able to pay the new worker more - and it would presumably cost that much to fill Bea’s slot - so if Bea is let go, that means the business owner isn’t playing fair (not good) or the business really is in trouble (not good).

Since Bea would be able to quit and survive, my advice to Bea is to keep playing hardball if you believe you are valuable to the business. If you have a good work record and have a plan if you were to lose the job, I would stick to my guns. The other option is to cave, but by doing that, you’re (arguably) making yourself appear like a doormat and likely minimizing potential future pay increases (because the boss will see that you won’t fight for a raise - and thus why should you get any?).

Are there any other suggestions for Bea?

Every once in a while, I receive a story of a person who has slowly backed into a desperate financial situation. Usually, it’s pretty easy to root out the cause, so I often don’t share these horror stories with the world. Yesterday, though, I received a frightening email from a reader who laid out an incredibly painful story fraught with bad insurance choices, an overbearing parent, bad debt decisions, depression, sickness, and more. Let’s move through Maggie’s story piece by piece and see what advice we can use to help her out.

I am in way over my head in credit card debt and a personal loan… about $60k worth and growing.

Maggie has extensive personal debt right out of the chute, ignoring everything else. Likely, with that amount of personal debt, some of it is quite high interest.

I was on disability as of last September thru December for major depression. When it came time to decide if I was going to go back to work, go into long term disability or separate from my company, I did the stupid thing and left. This in actuality was a good thing for my mental well-being, but horrible for my financial situation. I didn’t think I would be unemployed for as long I as I was.

Maggie has some issues with depression as well. While I realize that clinical depression is a pretty severe medical condition, I do also know that debt can be an emotional drain. Also note that not going back to work at her previous job was identified as a good thing for her mental well-being, so it’s fair to conclude that Maggie was very unhappy at her previous job.

I just got a job this past June. So in essence I was without a paycheck since last October. I had a good deal of debt at that point but it was manageable. I was doing odd jobs to pull in money, but it was very small amounts, $100 here and there. I started living on the plastic and used one to pay off the other, etc. I was trying to clean up other parts of my life and get my mental capacity to be stable enough to take on even trying to look for work, which I didn’t really start doing until the end of February and not super seriously until almost April.

Maggie essentially took a six month period here in which she lived entirely on plastic without seriously looking for work. That’s going to be a huge financial drain for anyone. While part of me wants to say that she should have been looking seriously for employment from day one, that’s water under the bridge at this point.

I have a good and stable job right now with Columbia University, but I’m still waiting to become permanent (90 days and all that) and to get benefits.

Now, though, she has a full time job. This should enable her to start making a dent in fixing her earlier financial mistakes.

The problem is that I can’t afford my payments anymore and I am totally maxed out. I am also making less that I was, which is hard too.

In a nutshell, Maggie’s lifestyle for the last several months has far outstripped her income. It’s time to cut back big time.

Action Point #1: Learn how to live cheaper. Cut out every single bit of extraneous spending from your life. Get rid of cable television. Sell your car. Do whatever you have to do to lower your monthly expenses. Here’s a list of forty ways to reduce your monthly spending.

My rent is about 1100/m (i live in ny), phone $62, gas/tolls $350, electricity $80, food $200 and my paycheck at the moment is about 1140 biweekly. However, once the benefits kick in, I’ll have to pay union dues and health care. So potentially, I could lose up to another $200/m.

Her required living expenses right now add up to $1,792 a month, while her income after the benefits kick in is $2,270 per month. That gives only $478 a month in breathing room, and that $478 includes all debt repayment.

Action Point #2: Get rid of some of these expenses. You’re on the campus of Columbia on a daily basis, right? Use internet telephony (get a Skype account) to talk to friends and family and ditch the $62 a month for your phone. If there’s a subway entrance - or even a commuter rail line that gets to Grand Central - near where she lives, she should ditch the automobile, sell it, eliminate that $350 a month expense, and use that money to get rid of some of the most pressing high interest debt.

On top of that, I have MS, so I figure I will have doctor visits and medication that will tack on extra costs to my cash flow. Having the condition also makes it difficult for me to take on a second job because I can’t really handle too much stress or letting my body get too run down. The other problem is that a second job probably still won’t be enough to allow me to make my minimum payments.

Action Point #3: See whether or not your job at Columbia can be used to get treatment at the Columbia University Medical Center. Many universities associated with a medical school have very inexpensive or free care at the university’s medical center. Inquire about it.

The more I keep looking into things, it sounds more and more like I should file bankruptcy. I’m 28. I really don’t want to file, because I’m afraid they’ll touch what I’ve built up in my retirement funds.

There are retirement funds?

My family and friends can’t really help me, because no one really has extra cash lying around, and besides that, I’m terrified of telling them, embarassed, ashamed, and hate asking for help.

Action Point #4: Kick your pride to the curb right now. If pride is keeping you from being honest with people who love and care about you, pride is doing nothing more than standing in the way of you moving forward.

Normally, I wouldn’t care and would do anything to get rid of that debt, but my dad handles my IRA’s. He is the bain of my existence, a super control freak, and has the power to easily knock me back into depression.

So there are family issues involved here, too. If you’ve earned the money, how does your dad control your IRA?

Action Point #5: Regardless of your current financial situation, you need to get control over your own money. If you are actually being blocked from accessing or managing your own money, look for legal resolution. Seriously. This is a very unhealthy situation. As a functional adult, you should have control over your own assets.

Once you get control over your own assets, you need to look at the tax penalties for early IRA withdrawal. Generally, you’ll have to pay a ten percent penalty to withdraw this money early (unless it’s a Roth IRA, in which you can take out your own contributions without penalty), but in your situation, it may be worth it.

Is there anything else I can do? Is debt negotiation or settlement a good thing? Is there a way to get my debts down without touching my retirement funds? On top of that, how do I know who’s a reputable company versus people who are trying scam me? I’ve got nowhere to go.

If you declare bankruptcy, your retirement funds are quite likely exempt from the creditors, so that shouldn’t be a concern. If you are truly so far in debt that your IRA funds wouldn’t save you, you should likely consider bankruptcy, because credit counseling is likely not going to save you either.

Right now, you’re in a situation where basic living expenses are eating up 80% of your income and you have ongoing medical expenses as well. Something has to change in this scenario - it’s not tenable in the long term regardless of whether you can dig out of this debt situation. Here are some potential solutions to the situation, but most of them will require you to suck up some pride.

Know how bankruptcy works in your state. You may need to ask for legal help. See if there are opportunities for free legal help available to you as a Columbia employee. Lay out the situation and ask whether bankruptcy is right for you.

Move back home for a while. From the way your story sounds, you do have family that live in the area. Look into moving in with a family member for a few years until you can get your career and your financial situation on track. You can offer to pay rent if that makes the situation more comfortable.

Look at living in a less expensive part of the country. You didn’t specify what your job is, but you did specify it was at a university. Are there universities in the Midwest or South that offer similar programs? There are several good universities in Iowa, for example, that may have jobs in your specialty. If you’re saying “no” to this even without knowing there are jobs available, ask yourself why you’re immediately saying no.

Hopefully, readers will have more good suggestions for Maggie.

Earlier today, I opened a can of worms by suggesting that, if your budget is overly tight, you may wish to consider looking for a new home for your pet. My mention of this issue was extremely brief (not nearly enough to actually explore the issue in detail), but a number of readers grabbed ahold of this point and ran with it. Thus, I decided to move this discussion to a separate post so these issues could be explored in more detail.

Pets can be wonderful, valuable companions. I was particularly attached to my own dog growing up - some of my best memories are of playing Frisbee with him in the yard for hours every night after school. I’d toss the frisbee and he’d pause for a few seconds, then give chase at top speed, leaping in the air to catch it, then run back to me to be greeted with a playful petting and a scratch behind the ears. He used to sleep in my bed with me, too, right next to me, curled up next to my chest. I know full well how much a pet can mean to a person - and how much a person can mean to a pet.

Pet Considerations First of all, the decision to acquire a pet is a serious one and should merit some careful consideration. Pets require constant upkeep and attention - if you are unsure if you want a pet or do not know the effort involved in maintenance, look for a situation where you can perhaps watch someone else’s pet for a period while that person is traveling. Pets also have a constant cost - vet visits, food, litter, and other costs are regular and consistent.

You should also consider that a pet will begin to look on you as its caretaker and will form a deep bond with you. If you don’t believe that you will be able to care for a pet over a long period of time, you should strongly consider not getting one. A pet should be a long term commitment - if you’re not up for that, then you should strongly consider not getting a pet.

Unwanted Pets However, there’s a serious problem with pet ownership - what is the appropriate thing to do if the pet is no longer wanted by the owner? If this weren’t an issue, there would not be stray pets and pet shelters wouldn’t stay in business. I don’t feel that taking a pet to a shelter is a good choice - pets don’t deserve to live in a cage, ever. Some would argue that once you have a pet, it should be yours forever because the pet is attached to you, but that’s not healthy either - if the owner no longer wants the pet, it’s not psychologically a good situation for the pet or the owner.

I’m a strong believer in pet adoption, similar to how I feel about human adoption - it’s the most humane solution to a situation where a pet is not wanted by an owner, and that’s what I advocated earlier today. If an owner has a pet that they no longer want or can properly care for, or they discover that the responsibilities of pet ownership are a burden they aren’t prepared to handle, that owner should be responsible enough to find a safe, healthy home for that pet.

To summarize, if there are issues in your home and in your life that are causing an uncomfortable relationship between you and your pet (and finances can indeed be one of them), then you should consider selling your pet to or having your pet adopted by a loving family. It’s not good for you and it’s not good for the pet to continue in a stressful environment.

I expect the comments on this post to be quite interesting.

Recently, Fred wrote in outlining his situation:

I’m 35. I make $30K a year. I lose about $4K of that every year to child support. A divorce (and student loans) has placed me about $20K in debt. The region of the US I live in considers $30K a year a very good income. I have a wife who works part time all year as a bus driver (maybe we’ll be optimistic and call that $12K a year) and filed bankruptcy last year. I also have a 7 year old son, own a beat-up car, and rent a house.

How’s a guy like me, who’s struggling under severe debt, has few options for greater income, but wants to be able to send a son to college and eventually retire, to accomplish his goals?

Fred’s in a situation that a lot of Americans find themselves in at some point during their 20s and 30s. Fred is supposed to be saving for college and retirement, but finding the money for this is like squeezing water from a rock. How is Fred supposed to get ahead? Here are some things I would strongly consider if I were in Fred’s shoes.

Figure out what the biggest goal really is and focus on that. Is the college education the most important goal, or is it retirement? Most would advise not choosing between the two of them, but without a lot of money to work with, one should choose one or the other and try to do that one reasonably well instead of doing both at a pittance. My parents had less income than you did and basically chose to send me to college without major financial support - they bought textbooks for a couple semesters and that was about it.

Live everyday life as though you only made $25,000 a year. Fred mentions that he lives in a region of the country that considers $30,000 to be a very good income. If that’s the case, then living on $25,000 a year should be easily possible. Don’t even allow that extra $5,000 to touch your hands - set up automatic deductions from your paycheck into the accounts that you want - a 529 for your son and perhaps a Roth IRA for retirement.

Learn how to trim some money from your regular expenses. Many people often think they’re doing well with their regular food, electricity, and other bills, but they haven’t sat down and really looked at what they’re spending and whether there are other options. Try making a clear grocery list every time you shop for groceries - and stick to it. Buy items in bulk when it’s cheaper per item. Cut down on junk foods - they’re almost always the really wasteful part of the food bill - learn how to make similar items yourself in bulk and put them in the freezer, making them healthier, cheaper, and tastier.

Here’s an energy example: when you go to buy light bulbs, instead of buying the inexpensive regular bulbs, spend a bit more and buy CFLs - the curly-shaped ones. Stick to the name brand with them, though - Sylvania and GE. Why spend more? They will last for about as long as five incandescent bulbs on average, plus they use significantly less electricity over time. I recommend buying higher wattage CFLs than you’re used to - if you normally get 75 watt bulbs, buy the CFLs that are equivalent to 90 or 100 watts instead.

Always explore opportunities for more income. Many people become complacent with their income at some point in their lives, believing that they’ll never earn more than they’re earning right now, and from the tone of Fred’s comments, it looks like he may have reached that point. Never, ever fall into that complacency, especially with a college degree (which Fred seems to have). Keep your eyes open for opportunity all the time and don’t hesitate to chase interesting ones when they pop up. If you have some spare time, look at starting a side business and even get your children involved, as it can be a way to forge a bond between the two of you.

Yesterday, I had a very long IM conversation with a young cousin of mine who is in high school and has a pretty lucrative lawn care business going on right now. Most of my younger cadre of cousins and nieces and nephews look to me for advice on a lot of things that they would never ask their parents - I’m somehow identified as the oldest member of their generation in their eyes, and thus I “get it.”

Anyway, he wanted to know how he should handle the money since it was more than he had ever had before by far. He had also overheard me talking to others about investing - and he knew he should be making more than the 1% interest that he would make at the local bank.

Here’s all the advice I gave him - and knowing him, he’ll probably follow almost all of it to the letter. Feel free to chip in with any additional advice; I’ll send it along to him and also give this URL to similar-aged people who ask such questions.

Ask yourself “What do you want to do with this money?” It’s fine to have a lot of answers. Perhaps you want to save for a car or save for college. Maybe you want to go out and buy a Nintendo Wii. Possibly you’re thinking long-term already and are looking at a house down payment after your schooling is done. One other possibility that is probably way out of your consideration right now is retirement, but if you put even a little bit away for that right now, it will be an enormous amount by the time you retire (fifty years of compound interest, even on a little bit of money, can be enormous). It’s fine if you don’t want some of these things, or any of them.

Pick at least one relatively short term goal (two years or less) and at least one relatively long term goal (more than two years) In my cousin’s case, he wanted a car in the short term (he’s fourteen) and to save for a house down payment in the long term (he’s going to go to trade school and become an electrician). Those both seemed like incredibly sensible choices to me given his age, and I told him so.

Split your money into five piles. The first pile should be the taxes pile. I told him to call his parents’ tax preparer, tell the preparer how much he would make from mowing, and ask whether he would pay any taxes on that amount. I don’t believe he’ll owe any at all, but it’s a good value to instill in someone who doesn’t know anything at all about taxes yet.

The other four piles should divide up what remains. I would make a “pocket money” pile, so you can go out to the movies and other stuff with friends. I’d make a “business” pile, which would be used to repay any money you borrowed to buy equipment or gas - and also to buy more equipment or gas as needed. I’d also make a “short term goals” pile and a “long term goals” pile.

How should these piles be divided? It depends heavily on the business (some businesses will gobble more money than others) - make sure you have plenty of money to cover business expenses. Pay that first, then take the majority of what’s left and split that evenly between the long term and short term goals. The remainder is your pocket money. I used an example of $100 in income over a week for him: you might have to put $5 of that into taxes, leaving $95. You might also need $10 worth of gas and might need some more equipment in the future, so I’d put $20 in the equipment pile, leaving $75. I’d put the majority of that ($40) into savings, with $20 each into long term and short term savings, and then the other $15 I would spend as pocket money. I told him that if he does this all summer and again the following summer, he’ll be in excellent shape to get a used car after he turns sixteen and he’ll be in excellent shape for buying his own house when that comes around, too.

Where should the money be saved? I encouraged him to get a couple of online savings accounts linked to his account at his local bank (offering to help him if he had any questions). One should be for the short term savings and one for the long term savings. That way, he can’t be tempted to just stroll down to the bank branch, take out a bunch of money, and go buy something ridiculous, plus the interest benefits on many online savings accounts (I recommended ING Direct and HSBC Direct) are as high as 5%. If he puts in $20 a week each week this summer (for 13 weeks), he’d earn about $10 more just by having it sit in the online account for a year rather than at the local bank, and that’s not even including sign-up bonuses and the interest on the fairly nice balance he already has at that bank.

What about investing in stocks or real estate? Investing can wait. It’s quite possible that he may decide to use that down payment money to help buy a car in two years, and that’s the only chunk of money that I would even consider having him use for investments.

What about a Roth IRA or something? Again, that can wait. If his parents were doing investing for him, I might recommend it, but this young man is building up a solid income at the age of fourteen - the fact that he’s doing any financial planning now at all puts him way ahead of the game. Let him learn his lessons about the challenge of saving and investing this way so that his choices don’t have serious tax consequences.

In short, the real lessons that you can give to a teenager are the idea that you should put some of your money away for the long term and that some places are better than others to put your money. Drowning them in options and other issues will only tell them the same thing that their parents might have learned, that personal finance is scary when it really isn’t. If they’re interested, keep going with more suggestions, but focus on the core ideas of putting away some of your money for the long term. If they really get that piece, they’re already light years ahead of their peers.