Let’s talk about debt, bay-bee

October 27, 2010 at 11:34 AM | Posted in Economista, Education | 8 Comments

Debt is a choice. Yes, a choice. I went to college. I accumulated lots of it. That was my choice. The average student debt is 25K. Ha! I WISH that was all I had, but I made my bed and now I’m laying in it. With coupons.

My parents cringe when I tell them how much I pay out in loan repayments every month. They don’t want to see me suffer like this. They wouldn’t have made this choice for me. But I made the decision and looking back, I would probably feign orphanage to get more financial aid do it again. Definitely with a few smarter adjustments but those were growing pains. My stubborn nature ignored all the parental forewarning about debt upon embarking on my college career. Now I have to deal with it. And I am. My reward was a degree from a kick-ass university, and experiences that have invaluably shaped my perspective on life. I am lucky enough to have found a job in my major, that I love, in a city I love, that allows me to live independently, not even look at Ramen noodles as a food choice and pays all my bills and then some. I don’t go a day without counting my blessings. I appreciate it greatly!!! Now were there alternatives that I could have taken to avoid all this debt? Absolutely! Go to a local college, live at home, or go to a community college for two years and then go to a university the last two years. Or just do community college/cheaper college all four years. I didn’t want to. I wanted to go big and not stay home.

My initial list consisted of VERY expensive out of state schools. My parents looked at it, blinked and laughed. “YOU WANNA GO WHERE??? ROFL” (If they knew what “ROFL” meant they would have said it 5 billion times) They said ‘that list better have ALL in-state schools and fast.’  They said one year at one of my out-of-state schools was two years at a state school that is just as good in my major. I thought about it and agreed. I got accepted to college, got little financial aid, a rinky dink scholarship and TONS of loan debt. I can’t complain though. I technically didn’t have to get a degree. But I did, I lived the dream and continue to do so. I experienced college life and I learned. Oh I learned, the hard way at that. I can proudly say I grew a hell of a lot more responsible with money. Oh believe that. I have long term and short term pay down plans, I consolidate, I cut out waste, I look for other streams of revenue, I have a 401K, I have a few savings accounts, I am on my bank account statements like white on rice, I pay down balances.

I can no longer be called the overdraft queen as my father called me in college. Every time I called him with another overdraft sob story he chastised me but still helped me out. But the last time he refused, he didn’t help me. “I’m not doing it, you are giving away all your money to the bank, just giving away your money.” I’ll tell you one thing. I didn’t overdraft after that day. I referred to all my father’s fiscal advice and applied it.  The smartest thing I’ve ever done to date, was listen to Daddy SaveBucks. Yea, I made some mistakes but I am SO GLAD I made those mistakes sooner rather than later. It’s no one’s fault but my own.

But some do blame others for debt. This is HIGHLY problematic….because oh I don’t know…maybe because YOU signed on the dotted line. Take ‘Neighbor’ for example. ‘Neighbor’ is a woman who blames the president for her unique predicament. Neighbor was out of work for a year, she’s a carpenter and it’s hard finding work when you’re a female carpenter. She said there’s gender discrimination. Fair enough.  Maybe there is. So to this end, Neighbor has been out of work for over a year. Her husband gets sporadic work. But not nearly enough to cover their expenses. They can’t pay them. The mortgage is one of them, which hasn’t been paid in over a year.

Neighbor could not conceive. She wanted a child. Very badly. She wants invitro. Invitro treatments are very expensive. So she takes out a $180,000 loan to cover these expenses. Neighbor does have a baby. Now the baby has no health care. Neither does Neighbor, and neither does her husband. Who does she blame? Obama. It’s his fault she cannot pay her mortgage and the reason why her family doesn’t have health care.  Now, let’s just do a bit of critical thinking here.

Was it Neighbor’s fault she couldn’t get carpenter work ? No

Was it Neighbor’s fault she didn’t look for other forms of work? Yes

Was it Neighbor’s fault her job didn’t offer health care coverage? Nope

Was it Neighbor’s fault she didn’t look into alternatives for health coverage? Yup

If Neighbor didn’t qualify for any of these options, was it wise to bring a child into the situation? Nu-uh

Was it Neighbor’s fault she couldn’t conceive? No way!

Was it Neighbor’s fault she is now saddled with a 180K loan, a child (which is an EXTREMELY expensive responsibility, her expenses continue LONG after conception) in addition to a mortgage? You betcha!

Now I’m not saying Neighbor is at fault for wanting a baby, an expensive baby I might add. But let’s not be fooled here, if I were to spend that much cash on a kid, he’d better be a prodigy or close to one. Maybe she will be. Now Neighbor is in a pretty pickle. But how did she get there? She put herself there. It was her choices, her debt but her mea culpa is non-existent. Debt is acquired. Debt is an agreement between the creditor and debtor. Key word “agreement.”  You can opt to have it or opt to not have it. It is purely up to the individual. There are circumstances that arise that make debt a hell of a burden. But that’s the cross you have to bear. And millions of people are bearing it. I don’t believe all debt is bad. It is all about how you handle it, and I firmly believe in handling your business. Whether it is consolidating, negotiating or rearranging, you gotta do what you gotta do. It is important to educate yourself and make wise decisions when choosing the debt you want to bear. Weigh your options, consider the pros and cons, the benefits, the rewards of this debt. You just have to be sure the pros will be worth its weight in the end.

How do you handle your debt? Do you think it’s a choice or necessity? What has your debt taught you, if anything?

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