It’s that time of year again when students are returning to school. Some will be leaving their parents nest and living on their own for the first time. My oldest son attended university in our own city so he lived at home, saving us a housing expense.
However, my younger son decided to attend university in another city and, after tears and hugs, set up residence in the student housing in his first year.
Before year two we decided to purchase a house that he could live in. We found a five-bedroom house and, since I had saved and invested all the family allowance payments received over the years, I had a nice down payment. My son assured me that he could easily find four students to rent the extra rooms.
Related: How Much House Can I Afford?
I opened up a joint chequing account for depositing rent money and paying the mortgage, utility and other bills and I added $2000 overdraft protection in case all the rooms were not rented out all year or other unforeseen expenses came up.
Unfortunately, my son thought this “house account” was also for his own personal spending. The overdraft quickly reached the maximum and was never entirely paid the whole time we owned the house!
It is quite mortifying to be a banker and have a child with such poor money-management skills. Luckily, no thanks to him, all bills managed to get paid on time, there was not much tenant turnover and they didn’t wreck the house too badly. We ended up with a modest profit when it was sold, even after paying some capital gains tax.
Since the money originally was earmarked for him and his education I allowed him to keep the sales proceeds, and, I believe he used them to purchase a new house that he currently still owns and lives in with his wife and daughter. Hopefully, his money-management skills have improved.