$100/month Teacher's Birthday Club at school?

[Fingolfin269]

Lol oh noes I lost $5 by participating in the birthday club. The 'fun' of the club may be worth $5.

 

[DrPizza]

The little things add up.

And you're doing the math wrong. If you count contributions from the start of the school year, and the payout is at the end of the last month of the school year, then you get $4.60 (rounding up) assuming constant 1% interest compounded monthly.

Ahh, you're right. Though simple rounding is $4.59. I was allowing him the extra 2 months of interest during the summer (and mistakenly also allowing him to contribute another $100 in July and August.)

Here's a possibility: what if he has a shared checking account with the wife? This gives him a way of having "secret" money that he can use on a really nice anniversary gift - if the $100 can be an automatic deduction & he has direct deposit with his paycheck. I only thought that because yesterday when I got my taxes back, I realized that we missed out on a couple hundred in charitable deductions because I had payroll automatically deduct my contributions & didn't realize my wife had no idea that I had done that.

 

[zanemoseley]

My work offers a "Christmas club" to the employees which makes slightly more sense as many of the plant workers aren't the best with money. This way they can take out a bit from each check to help buy presents at Christmas time. A birthday club doesn't make as much sense to me unless you like getting yourself a large gift every year, or I guess you could use it toward a vacation.

 

[Q]

If it works for him, cool. I don't see what the big deal is here.

 

[oogabooga]

Lol oh noes I lost $5 by participating in the birthday club. The 'fun' of the club may be worth $5.

Is this literally just a "forced" savings account? It seems odd to me since it's just a savings account and all the money in comes out as a gift. If some was held to have a party or something that might make some sense? Not sure what the benefit of this is.

 

[bigpimpatl]

Lol oh noes I lost $5 by participating in the birthday club. The 'fun' of the club may be worth $5.

You don't have to put it in a simple interest bearing account. There are so many options that take advantage of the time value money concept than putting it into an effectively 0% interest rate account. Technically speaking, this a negative investment. So even if you put that money in simple t-bills you'd get more money back.

edit: yep, overpaying by about $50. And this guy is a teacher...hopefully not math.

 

[vi edit]

I'm sure he probaly gets a refund at he end of the year on his taxes too. Go ahead and crucify him for that while you are at it.

 

[JTsyo]

This is a terrible idea since when get gets his $1K, he'll be more inclined to blow it on something unnecessary since it's his "birthday" money. Had the money been in a bank account he might have just consider it savings and let it be.

 

[Golgatha]

I'll take FDIC insurance over Birthday Club insurance TYVM.

 

[Krazy4Real]

I never understood the point of these things. Just save the money yourself.

 

[OutHouse]

Wow! He's missing out on a ton of interest! At 1% interest, he's missing out on *gasp* $5 in interest! Actually, with interest compounded monthly, $5.52!

edit: I see someone above mentioned 0.8% interest. He's missing $4.41 in interest. He could get a cup of coffee and a donut on his birthday at Dunkin Donuts with that interest.

lol i was just doing the math i my head to post this.

 

[dbk]

a lot of asians do this.. you get a group of 20 people.. each put in 1000 month.. on your turn (randomly chosen), you get 20k. Then until everyone gets a turn you pay back 1000 with interest. The advantage is being able to gain a huge lump sum at once, instead of accruing it yourself.

 

[PingSpike]

While pointless, interest rates are so awful on savings accounts now he's essentially lost out on only one snickers bar a year by participating in this.