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A majority of problem with getting and staying out of debt is actually getting to the place where you realize that the way that you currently think about money has got you into this hole, and without a change in the way that you’re thinking you don’t have a chance to get and stay out.
Our culture has gotten to the point that kitty cats and dead people can get approved for credit. This was dramatically displayed by a television commercial for Master Card. In the commercial, a zoo keeper has a cough, but leaves his Master Card behind in the elephant’s place. What does the caring elephant do, but go out and use Master Card’s new technology (and the zookeeper’s card) to buy soup, cough medicine and a blanket– awe.
The kicker? The elephant doesn’t return the card, or tell the zookeeper how he purchased the item, so just about the time the zookeeper’s feeling better and notices that his card is gone, he’s getting charged 25% interest on that $100.00 worth of medicine because he didn’t leave his insurance card with the elephant either.
I jest, but you get the picture. The credit industry is all about showing you how easy it is to spend their money, but not showing the fact that they’re constantly having to go before local governments because they end up charging the equivalent of usury. They do not tell you the statistics that say that– regardless of your mantra about paying the card off in full every month– you will carry a balance at some point in time (especially if your card is your emergency fund).
You need the mental reinforcement that you cash do it without debt, but you also need the plan. Have you gotten your starter emergency fund yet? If not, what are you waiting for?!
You are so right…about dead people and kitty cats having credit if they want it, thanks for the grin, btw. 🙂
What’s your advice to all our young people in college, racking up unbelievable student loan debt?
I’ve read that school loans are sometimes called the “Pet”– because of how much money you pay into it over time.
My advice to people in college? Participate in as many scholarship funds and get as much money as you can for entering essay contests and the like. Any money that you earn while working should go to your debt rather than spring break. And either stop going to get out of debt, or pay it off as soon as you get out and before you get married.
The better option? Be saving for college before you get there. Start planning now for those children’s college ed (but only after you’re saving for retirement).
Buy a cat? 🙂
Haha, Stephen…very funny! Honestly, I can’t get out of here without my laugh for the day! Thank you very much…
And thanks, MIn, for answering. I’m hearing of the student loans my nephews are racking up and I wonder how anyone will make a marriage work with that kind of debt going into it. It is sad but I think it’s probably one reason 47% of couples are living together instead of marrying. I hear that any medical profession at all will be a 6 figure debt automatically. It would behoove every parent to talk to their preteens even about the possibility of college and saving for it. Whether the parent’s create jobs for their kids, or allow them to have a paper route, or in our case, our oldest raises border collies and sells their pups. (I hope she only attends college if God leads her that direction)
At any rate, I’m a firm believer in picturing a bright future for our children, but realism demands that we also discuss how they’ll achieve that bright future!
On a serious note, the cost of higher education in the USA is a very serious issue. It discourages those from less well off homes from entering higher education, and saddles young people with debt that they may find difficult to pay off. Of course, US bankruptcy laws can help – but do we want thousands of young people declaring bankruptcy early in their lives?
Yes, saving for an education is important. Parents need to take a lead on this. The sums are too high to leave to the young people themselves. Scholarships are also important. I don’t know if churches there run scholarship schemes – but it seems to me that this would be a good act of Christian love towards our young people.
Ultimately, it would be better if student debt was either paid off through a graduate tax, or that the tuition element of the fees was funded by government (as we have here – although Tony Blair has introduced small “top up” fees for the first time, so maybe we are beginning to see the dismantling of that system here).
Maybe it is an issue you should take up with your congressman. 🙂
I think that if a church started having a scholarship program for young people, you would have to be careful how you set it up– otherwise you could have people potentially joining the church just to get some money.
There’s no reason, if you leverage time and do some good planning, that you cannot have a good deal of money available when the time for college comes around.
I think you are right that you would have to be careful about Christian scholarships – but that is not necessarily a reason not to do them.
It is indeed possible to save for college if you start early, but that usually requires the parents take the initiative. The merit of scholarships is in that they can meet the needs of people who (through no fault of their own) do not have the money saved for college.
Regards,
Stephen
While I was in HS it seemed like a big deal what college I went to. In reality, it was not. Unless you are going to one of the top 10 schools in the country what school you went to is only going to affect your first 1-2 jobs. With that said, my advice for school:
1) Assuming you are not able to get the scholarships you need from the college of your “dreams”, apply to community college. Get a 2 year Associates taking all the general classes required for your typical 4 year degree. While in school, work part-time to pay for school. Try to get low-paying internships in what you want to do, this will be more important than your education.
2) Transfer to a 4 year degree program at a local state school, applying for as many scholarships as you can. (If you must go to a non-state school at a bare minimum you’ve just cut off 2 years of the higher costs). Continue working part-time during the school year,and full-time in the summers concentrating on jobs that will help you do what you want to do when you graduate (Do not work in jobs you don’t want to do when you graduate if you can avoid it).
If you use #1 and #2 you should be able to pay the majority of your school expenses while you are in school. If you have money set aside for college you should be able to get your entire education without any financing at all.
I think you’re dead on there, Doug. Some people even say that you don’t need college at all. While I don’t go that far, I believe that more people are impressed by experience than by which college you went to.
“Of course, US bankruptcy laws can help – but do we want thousands of young people declaring bankruptcy early in their lives?”
If you have federal student loans bankruptcy might not even help. Many federal loans have provisions exempting them from bankruptcy proceedings.
A friend of mine has less than good credit. At one point between his 70k in federal student loans, his credit card debt, and his “bad credit” auto loan deal, he was in really bad shape. At the time he looked into declaring bankruptcy. What he found out was that filing bankruptcy would not get rid of his student loans and he would likely loose his car. As a result he would be in much worse shape than he was now.
He ended up getting his wages garnished for the federal loans. At the rate he’s paying it off he will quite literally be paying off his loans for the rest of his life.
And that’s the sick part. It’s also sick to think about people who just pay minimums and the pit that they are digging for themselves.