Monday, July 30, 2012

Loans $$$

As children, our daughters received allowances to learn how to manage money and to buy their own treats. When they were about 10 and 7, the younger one suddenly never had any of her allowance left just the day after she received it. 

When I questioned them, I discovered that the youngest had made the mistake of borrowing a small amount from her big sister a few weeks before. In doing so she agreed to pay 1% interest a day, compounded, on that loan! 

Neither of them really understood what that meant and big sister began collecting 100% per day and the tab had really run up. They both learned a lesson in economics that day and big sister had to pay back the extortion and loaning little sister money was no longer allowed.

All of us need to learn the lesson of borrowing money and how it works. There are many small loan companies that do the same thing as big sister did but they know exactly what they are doing.

No comments:

Post a Comment