Friday, February 09, 2007

Woman's good financial sense leads to windfall

Making wise personal finance decisions can be hard because they often require short-term sacrifices for long-term benefits. But they do pay off--and as one California woman found--even quite handsomely.

Hoping to help pay for her oldest daughter's tuition to the University of California, Berkeley, the woman decided to auction off a painting that once belonged to her grandmother, according to an Associated Press report. Instead of the few thousand dollars the woman was expecting the painting to fetch, she was stunned at the picture's final bid: a whopping $620,900.

A possibly difficult choice
Not having the needed funds for her child to attend a terrific school like Berkeley, Mom could have easily required the daughter to load up on student loans. As colleges go, Berkeley is a nice value; in-state undergraduate tuition for 2006-2007 averages only $7,800. Commuting to school from home, the daughter could conceivably graduate in four years with a "reasonable" $70,000 in debt.

But Mom faced head-on what may have been an emotionally difficult choice: Part with a painting that hung on the wall for years in her grandmother's home in Italy? Or strap her child (or the family overall) with a debt-load that might take years and years to pay off?

By choosing to sell the painting, the family can now afford to provide all of their children with higher educations without putting themselves behind the financial eight-ball. Maybe they can even have a more secure retirement.

The wisdom of avoiding debt
To be sure, the woman's experience is rare. The sold painting was unsigned, rumored to be the lost work of 17th-century Italian art master Pier Francesco Mola. Who knows if it is worth the price that the unnamed art dealer paid for it.

I won't be searching my parents' basement anytime soon for family heirlooms that could help pay our kids' college costs. But, like the mother in this story, I will do whatever I can to avoid overloading our family and our children with substantial student loan debt. That approach may not get us a cool $600,000, but I know that it, too, will have its rewards.

8 comments:

Lazy Man and Money said...

In reality this story doesn't have much to do about avoiding debt.

It seems to me that the woman should have had the painting appraised long ago. If I have an antique that I think is worth a "few thousand dollars", I'm going to triple check to see if it's worth even more.

It's simple bookkeeping to know what your assets regardless of whether you are in huge debt of in Scrooge McDuck's money bin.

Tammy said...

Aside from the price the painting fetched, there is a strong message in this story - what can you part with to solve this problem rather than go into massive debt. Often times we just go into debt blindly thinking it is our only choice. We have many choices - we are limited only by our view of life.

donna jean said...

tammy - I can't agree more. The partner is always going through his tons (literally) of possessions and telling me what things are worth. Just last night, he asked if maybe selling this one item now, having more cash for a house, and buying it again later if we really want/need it would be a good plan. I'm happy to see that those options are becoming more obvious in our household.

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