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Getting started now

November 9th, 2018 at 09:00 pm

I keep reading about these atrocious student loans. How people are trying to escape to the jungle. This guy was a philosophy major who owed only $20k Or a teacher who owed once in 2004 $35k but he couldn't pay so he stopped and the interest makes it now $100k+. I'm horrified.

But there are two parts. One a teacher couldn't make ends meet and pay off $35k? Even on a 30 year payment that's a $100/month. Assuming a 15 yeear payment that's a little over $200-300/month. I'm shocked that it was that difficult to pay.

I wonder if people are struggling to get started now because they have very high expectations upon starting out? That it's shocking they can't eat out, travel, etc. That perhaps the lifestyle they expected can't be had on an entry level job?

Or is it really that salaries are so low that owing even $100 is too much? Or is it that we now owe every month on EVERYTHING? That the teacher has the student loan, car payment, CC debt, medical bills just starting out?

I can see how nowadays where you are born and what your parents do makes such a big difference. That some people on this board are able (cheers) to fund college 100%. So their kids will walk out debt free. These same people likely talked to their kids so these same kids won't have CC debt or medical bills. Also these same kids might even be gifted a car so they are starting out with a car, no debt, and an education.

So you are starting from a position of power. I know that these same people on the board were like myself and when we started out we had some student loans, some car loans, maybe even medical and CC debt. But somehow we made it.

How did we manage? I see myself right now strategically thinking about setting my kids up for success. That I'm looking at their college funds of $28k and $22k (8 and 6). Plus we have earmarked this year potentially another $10k each for college. Along with around $5k in taxable accounts for them to just grow.

In all likelyhood our kids will not only have 100% free college, but will have a car, and possibly a home down payment help and maybe even a Roth IRA. So how far ahead of the curve will they be?

I just find it interesting.

6 Responses to “Getting started now”

  1. SavingBucks Says:

    My DD is in school out of state. She got some scholarships but we cash flow the remainder so she will graduate loan free in 5 years with two BS degrees and a minor. She did tell me that she only knows of one other sorority sister that has parents that are doing the same. The rest are on loans, working, etc. Some are headed for crash and burn because they use the loans for other expenses besides tuition and books and are not thinking about the future. A very good friend of hers is working a lot and has a small amount of loans. That young lady is from a single parent household where money was always tight. I think she will be in relatively good shape (IT major) after graduation.

    My oldest child is also in college but lives on his own and qualified for grants so he will also graduate debt free in May. He made a huge amount of financial missteps earlier but he has grown up and is planning to save for the future (finally!)

    What did I and DH do? Well, both of us did the long way around and did not graduate until our 30s. Life got in the way -- I married once, had one child, divorced, and then met DH at college. I was fortunate enough to have an employer who paid 90% of costs via tuition reimbursement. DH lived at home and his parents provided some assistance and he worked for the rest.

    We talk about finances all of the time and so far DD is very anti-debt. She does have a credit card from our local credit union with a small limit. It is paid off in full every month. Universities should have classes, seminars on how to manage money!

  2. LuckyRobin Says:

    I think the biggest mistake college grads make is thinking that they deserve the same style of living that their parents have right out of the gate. They don't think about the fact that their parents spent a lifetime working and making sacrifices to get to that level. They want instant gratification and they will take out ridiculous levels of debt to have it.

    I think it is great that you will be able to help your kids so much, but I caution you about paying for everything. I think they should have to work and save their money and contribute to both their educations, their cars, and their house down payments. Even if it is only a percentage, they need to have some skin in the game. By giving them everything, you may err the other way and end up with kids who are too dependent on you for everything. If Mom and Dad are always there to bail them out, they may make some really bad choices, too. I guess what I'm saying is it is great to help them be ahead of the curve, but make sure they aren't driving across the center lane and into oncoming traffic at the same time.

    I had to come up with 50% of my college tuition and book costs. My mother didn't care how, be it through cash or scholarships, but I had to come up with it and I couldn't take out a loan. I feel I cared a lot more about my education when I had to pay for part of it and figure out scholarships. Nowadays 50% might be a little harder, but maybe 25% would be a good number. My friends who had school paid for were often dropping classes left and right and goofing off. I kept my nose to the grindstone because I didn't want to lose the money I'd put into my education. I think it makes a huge difference in how kids turn out.

  3. CB in the City Says:

    I agree with LuckyRobin. If a child doesn't invest in his own education -- to some extent, at least -- he won't appreciate it. That doesn't mean he has to take out a loan (which I think is a bad idea) but earning some of his expenses will make him a better person in the long run.

  4. laura Says:

    We cash-flowed tuition for two years of community college for oldest. She earned an AA fulfilling gen ed requirements. She's not sure when she'll return to school since she's concentrating on a career right now. When that gig is up I wouldn't be surprised is she remains in the industry as a photographer.

    We are cash-flowing tuition for second oldest who is in her second year of community college. She went away for one semester and then decided to return home to stretch her funds further. She is working and saving now. She hopes to go to law school and is planning on an internship this summer at with her uncle's law firm. She also has a potential marriage this summer.

    Our sons are 11th grade and 8th grade. We assume older son will attend community college as well though he is interested in a 3+1 engineering degree with a state school. Our younger son would like to be in Southern California and surfing/hiking/kayaking. So who really knows about him.

    We've invested quite a bit of money into a parochial school education for all of them, and there have been scholarships and assistance along the way. I don't regret that decision because they're all kids to be proud of who've made wise choices and are people to be proud of. I think that the school environment supported what we've done at home. If we had put them in public school we probably wouldn've helped out more with college.

  5. Kylie Bartlett Says:

  6. livingalmostlarge Says:

    It is a big worry that they won't appreciate it. But how to balance it is the big question?

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