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

JEDI

JEDI

Lifer
a friend of mine is a NYC teacher. he joined his school's teachers birthday club years ago.

he puts in $100/month during school months and gets $1000 on his birthday. (10 schools months in a year.) if he quits b4 his birthday, he gets the balance of what he put in.

basically it's a 0% interest savings acct. it's great for him since he's not that great with finances.

i have never heard of this, and google has failed me.
Anyone?
 
That's ridiculously stupid. Usually the "birthday club" at most places is pretty cheap (maybe $5 a month) and it's used to pay for a cake or something on people's birthdays.
 
sounds like the old 'christmas club' banks used to do, in the olden days, when we rode a dinosaur to the bank
http://en.wikipedia.org/wiki/Christmas_club
The Christmas club is a savings program that was first offered by various banks during the Great Depression. The concept is that bank customers deposit a set amount of money each week into a special savings account, and receive the money back at the end of the year for Christmas shopping.
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Yossarian said:
You would have to be pretty incompetent with your finances to think this was a good idea.
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Why?


kranky said:
I can't see any appeal to this at all.
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it appeals to my friend. he likes the forced savings.


marvdmartian said:
Except, a Christmas club would actually pay a small amount of interest. This "birthday club" might be making someone some interest, but it sure ain't any of the participants! 🙄
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yeah, i asked him where is the $ deposited until he gets his $1000? he doesnt know, nor does he care. 😱
especially since interest rates are at .8% or lower 🙁
 
JEDI said:
a friend of mine is a NYC teacher. he joined his school's teachers birthday club years ago.

he puts in $100/month during school months and gets $1000 on his birthday. (10 schools months in a year.) if he quits b4 his birthday, he gets the balance of what he put in.

basically it's a 0% interest savings acct. it's great for him since he's not that great with finances.

i have never heard of this, and google has failed me.
Anyone?
Click to expand...

Dunno about the US, but here most banks have forced savings schemes, or commitment devices to help you save. Putting money into a 0% interest account and taking the opportunity cost that goes with it, for no interest reward seems kind of strange to me.

But what happens if you birthday isn't in a school month?

sdifox said:
err, this doesn't make sense. Is there only ten teachers?
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It does make sense. Trust me on this one.
 
Why doesn't he just keep the $1,000 that's already in savings and earn interest on it over the course of the year?
 
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.
 
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There is no account were the money sits.

How it works is you have a bunch of teachers, they all put money into a pool. Those who birthday it is that month each get 1000 from the pool from that money, left over money is carried over for the next month, eventually all of the money will be used by the end of the year. It is more like a zero percent loan, the savings account, because if you join a month before your birthday, you put in a $100 for two months, but get a loan for a $1000.
 
DrPizza said:
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!
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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.
 
DrPizza said:
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.
Click to expand...

in addition, since its under $10, he won't have to report those interest earnings to IRS 🙂
 
DrPizza said:
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.
Click to expand...

The point is though that he could do all of this himself with a savings account while still having access to the money if he needed it for an emergency.
 
Should he put the money in a bank or savings and loan, his money would be guaranteed by the Federal Government.

Since he is giving it to one of his fellow teachers, his money isn't guaranteed.

In Risk Management 101, this is a fail.

Though, I understand that NYC public school teachers have a great retirement program. So maybe this just isn't enough money for him to be concerned about...

Uno
 
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