With work sheets laid out on the tables, the 11 high school students looked ready to dive into their group projects.
But this class exercise wasn't about trigonometry problems or physics theories. Instead, the teenagers were being tested on their financial smarts in a lesson called "Good Debt vs. Bad Debt."
The teachers who concocted the exercise were two financial planners who stood front and center this recent morning in a personal-finance class at Shawnee Mission North High School near Kansas City.
Problem one: Charging a $3,000 trip to the Galapagos Islands on your credit card when you only have $1,500 in savings. Good debt or bad debt?
"Bad debt," one student said. "You'd be emptying out your savings account to cover for the trip."
Next problem: Purchasing four chrome wheels for $1,500, two car-seat covers for $250 and a stereo system for $500 -- a total well over what you have in savings. Should the bill be swiped right onto your credit card?
"Sounds like an impulse purchase," said one student. "A bad debt."
Final problem: Putting $7,000 for a semester of college tuition and books on a credit card -- good debt or bad debt?
"College debt can be a good thing," one student said, because a degree should pay off down the road with a well-paying job.
But paying with the credit card? The group hesitated to respond.
"This is a trick question," said Doug Nelson, one of the financial planners. "Student loans can be good debt, but a credit card may not be the best way to pay."
Nelson, who is also a high school basketball coach and a former teacher, and fellow financial planner Dan Mathews have periodically talked to the students in the personal-finance class at Shawnee Mission North about banking, investments, insurance, budgeting, and debit and credit cards. On this visit, they also covered consumer loans, credit histories and scores, and college financial aid.
The goal, according to teacher Sara Marshall, is for students to learn the basic skills "that will help them make intelligent financial decisions as they go through their lives."
Marshall, who has taught the personal-finance class for two years, says teens need to get an early grasp on basic money concepts that they are encountering when shopping at the mall, purchasing a cell phone, saving for a car or running a summer business.
Her two guest lecturers emphasized the need for the teens to get off on the right foot.
"The best thing you can do is to make your payments on time," Mathews said.
Near the end of class, the students were asked what they learned.
"Be smart with your money," was the message from several students.
Then one classmate, who described herself as an impulse spender, talked about what had opened her eyes. She said she probably wouldn't have made mistakes with her debit card if she had taken the personal-finance class first.
"I'm in debt right now, just for $3 things," she said.
Now she thinks she'll get things right.
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