You know the old adage, that youth is wasted on the young? I remember feeling invincible and unafraid as a young person. I also had no idea about finances and fell into the easy trap of credit cards and student loans to solve my cash shortfall. I had no idea what would happen to my financial world in the future when piling up alot of debt and actually did not even care.
Little did I know that paying just the minimum doesn’t pay off your credit card…ever…but it simply helps the bank make money off of you. I learned the hard way when despite a nice income, my credit would get rejected. Not because I didn’t pay my bills…I did. But because my income to debt ratio was so high. It took years, but I eventually righted that ship. (Taught my boys not to make the same mistakes.)
I also never really understood the trap of the student loan. Listen it was the only way for me to get a higher education. I had no choice if I wanted to reach for the American Dream. But in truth, those loans are predatory. The fiction about the student loan legislation is that it was passed to protect the borrow (it wasn’t), but in reality it only protects the lender. (Now that the lender is the US government I don’t see that changing any time soon either.)
Another little nugget from my experience is that no one tells you when you put your student loans into forbearance, that the interest rate accumulates and adds to your loan. (Well they might have had to make the disclosure to me at the time, but I didn’t actually understand what that meant. Yes I was financially illiterate.) I never thought about it, until my $17,000 loan ended up being over $50,000 when the forbearance was over. (I also had no choice, as I had 2 sons with medical issues and their bills needed priority over my student loans.)
So when I started paying the loan back, there was the interest I continued to pay on top of the now $50,000 loan. It took years, actually decades to pay off, and I always laughed that I would be still paying off my loans, even after my boys had graduated from college. (I actually used the little inheritance I received from my mother’s estate to pay the end of my loans off before the boys entered college.)
We can talk about whether there should be student loan forgiveness or not. But the truth is that there is something truly wrong with how these loan are handled. There is also no real reason that college needs to cost $90,000 a year as well. I know the school my sons went to did not cost that much, and quite frankly they were also offered scholarships (They needed to maintain a B average or they would lose that scholarship). So that helped quite alot. I also vowed to find a way to pay out of pocket because I did not want them saddled with loans like I was. They went where we could afford for them to go without taking loans.
Borrowers do need to remember that student loans are the tax payers’ money. (That while everyone is entitled to a k-12 education, not everyone is meant for, or entitled to go to college. And just for the record, trade schools are not free either.) You owe the money you borrowed back to the government, meaning your neighbors, friends, and the community in general. If you want to have loan forgiveness then give something back to the society that funded your education. Join the military, join Americorp, work in underserved communities. You are not entitled to a golden ticket without anteing up.
Financial reckoning is one of the hardest lessons we learn as we grow, other than the hard facts you learn when you realize that the narcissistic hot guy/gal doesn’t really care about you at all (probably why Taylor Swift has such a loyal following).
They say it was easier financially when we were young. No, I don’t think so. Adulting is not easy no matter when you begin. There are always hard choices you will need to make, and you will also always need to deal with the consequences of those choices.
In truth, it is the odd young person who doesn’t make stupid mistakes with money. But at some point those mistakes are supposed to stop.
Unfortunately, however, as we age there are new types of charlatans and those that pray on the elderly. It is easy for evil people to take advantage of those without support or knowledge. Listen, if a financial columnist for one of the top magazines in the country can get conned out of $50,000, what hope is there for the rest of us?
I am not sure what to do other than educate myself and to remember that if something sounds off, or too good to be true, it really is. There is no get rich quick scheme (other than the lottery, which I do play- $5 a week . You never know- someone has to win, might as well be me.) I am not flashy, or adventurous. I am very conservative with my money.
However, I also feel like a bit of a jinx. Last time I invested on my own in the stock market there was the a huge crash-1997, and then when my finances were starting to get into good shape all hell broke loose in 2008. I decided to stop thinking I know anything about how to maximize my money, and also decided to stop counting my chickens before they hatch. I also wear talismans and have them all over my house, including lucky bamboo plants which are supposed to bring financial reward. (It may not help, but they really can’t hurt)
Meanwhile, I leave all kinds of investing to the people that run my 401K. It may not be the smartest way to handle my financial future, but one of the aspects of growing up is to recognize your strengths and weaknesses. My weakness is that I have no idea what I am doing when it comes to investing, and I need to let those who supposedly are more educated when it comes to financial decision making work their magic.
Listen, one of the best aspects of internet access to your financial information is that its ok if you can’t balance your checkbook (which I never could). You get immediate information, and can instantly keep track of what you spend, where you send it, and when it gets spent.
By the way, for the younger generations, checks are those little paper items your grandparents send you for your birthday, stuffed inside your card. It’s the way in which you can give people money without using Venmo or Zelle.
I know I can hear it now….”sigh” Boomer “sigh”…