Something's broken, people, and it isn't just that individual Americans are irresponsible spendthrifts.
I have a hard time seeing what's broken. Is a society in which people have to pay for the things they buy broken? If not, then what exactly is the problem?
As you say, the car is quite cheap and there isn't much credit card debt. There is about $20k in student debt; this doesn't seem like a remarkably large amount to me. Indeed, the large debts are the two house loans.
So... should a family with a little bit of debt take out a large mortgage to buy a house? I vote no. If anything is wrong with America, it's the idea that everyone should buy a house, and in particular the confusion between owning a house and having a mortgage.
What would you think of a family that had $103,245.11 in debt?
Sounds like a hell of a lot of debt, doesn't it?
Assuming the debtor is under 50, no, not really. It sounds like a lot of consumer debt, but that's not their situation.
The real red flag isn't the total amount of debt that family has, but that they still owe $9000k on a car that is four years old -- I can only imagine what sort of creative financing lead to that situation, when they'd have been much better served by buying an affordable used car.
LN, you consider that a large mortgage??
Sds, what that car debt suggests to me is that some lender charged an extortionate rate of interest. Possibly to a family that was irresponsible (though the financial profile there doesn't suggest it to me), or possibly to a family that really needed a *reliable* car and didn't have many options.
I have a hard time seeing what's broken. Is a society in which people have to pay for the things they buy broken? If not, then what exactly is the problem?
What is so hard to understand? If a family with a six-figure household income spends it all on unnecessarily high rent, lingerie, high heels, and $20 tubes of mascara, and therefore has nothing left to buy the house they deserve, then America has failed them, dammit.
And if you disagree, you hate people on welfare.
I must be missing something. I don't think that's a large debt at all. Is the house not worth $60K? Did they use the student loans, but not finish going to school? Do I just live in a much more expensive housing market?
I process loans for a living (a credit union people not an evil bank) and I gotta say, unless there is more to the story I think these people are having an unneeded pity party.
I would subtract their home loans from the total, because if they weren't paying a mortgage, they'd be paying rent. And when the mortgage is paid off, they'll have a solid asset.
That leaves about $40,000 of debt, which just seems like a crushing burden to have looming over them. How many people have an extra $40,000 left after income taxes, housing, insurance, groceries, utilities, health care, and other necessities are paid for? Let's assume the average interest rate on the car, education, personal, and credit card debts is 10%. That means $4,000 a year on just interest payments (aside from the mortgage). In five years, that's $20,000. Or $20,000 that can't be socked away in retirement savings and college funds for the kids.
Sure, a student loan is said to be a good bet, because your earning potential grows with a degree. But it's hard to make progress on saving for the future during all the years it takes to repay the student loans.
I have to say I also fail to see what is wrong with this amount of debt when it's diversified debt, $80,000 of which is student loans and a mortgage. Is it bankrupting them? I thought mortgages were "good debt." As long as they are able to pay the monthly payments (just like people who rent need to pay monthly rent), owing money on your house is not a problem.
$3500 in credit card debt would be a bit high for me personally, but it's not outrageous. So... sorry, but for me this post proves nothing. Debt is a way we get things done in America. Most people couldn't do things like own a home without it. The problem is owning a home has become a major source of income for people, whereas it used to be just... owning a home. So the prices wen crazy. But that's correcting, which is frankly a good thing (says the non-homeowner).
I think these people are having an unneeded pity party.
Did you notice that they're promising to give 10% of whatever anyone bids to Hospice?
I wouldn't be surprised if that's not a clue, people.
this post proves nothing. Debt is a way we get things done in America.
That's part of my point.
The average on the remaining $40,000 shouldn't be 10%. Student loans should have a lower rate. Also, you assume $4000 a year if they don't pay any of it down, which they should. This family should focus on paying off the highest rate debts first (probably credit card or car payment) and should put no more on the credit card.
Saying money you spend on debt is money you won't save is a bit of a red herring. I mean, money I spend on groceries is money I won't save. Money I spend on gas is money I won't save. But it's money you have to spend, right? It's a cost of living. Likewise, servicing debt is a cost of living, because you got things that you opted to (or had to) pay off over time, with interest, rather than saving up for them first. We make those trade offs in life.
If we want to talk about the price of tuition in relation to earning power, I think that's a different and totally worthwhile conversation to have.
So... are you saying we shouldn't use debt to get things done in America? Like, I can't save up for a house while I'm renting. I just can't. So if I couldn't get a loan for a house, I'd never have one. That's true of a lot of people for college.
I think we've used debt to an outrageous degree and for shit we don't need (I mean, I don't even think people need new cars). But if you use debt for with moderation and for reasonable purchases that you can afford to pay off, it's a very powerful and useful tool. But people need to be more educated about, absolutely. It's a complicated thing. I've been teaching myself a lot more about money and it's very empowering. It could be an interesting feature for this blog, for instance: resources for educating yourself about finances.
Bitch is right on here....
The debt described by Bitch is VERY MODEST and should be judged against what the family earns, which I surmise must be relatively little. Indeed, the home mortgage is very low, both relative to the US and to the region. Median home price is now just under 200K, about 145K in the midwest (which is the market for Erie, PA). The average amount owed on ALL mortgages in the US is just over 50% of the mortgage value. Also, a 30 year mortgage, at 6%, costs a family about $600 per month; the payments on their home/mortgage probably come in less than that, with relatively low property tax.
Further, it is not at all surprising that someone would owe 9K on a new car bought in 2004 (with the loan being about 3-4 years old at the most) because (as with all loans) most of the early payments are interest. And, Bitch is right, the folks probably got very bad terms for the loan.
What seems to me to be the crazy part of the story here is the student loans, which may be the most devastating part of that debt and what makes their situation untenable. Education loans have become a real albatross for many folks in the last 15 years and will only become more so.
The real wild card here is what the family earns, by the way. If they had a six-figure income, the amount of debt here would be absolutely manageable. My guess is that they have an income in the median range for the US (about 45-48K for a family of 4, though likely lower in Pennsylvania).
By my estimate the budget shown, would include payments as follows:
mortgage/property tax: $700
car payment: 30K at 6%, 5 years: $500
student loans: $800
credit card: $250 payments
Total debt service: 2250; 27K yearly.
(Start figuring out the rest of a prospective budget and you see what I mean...)
Put that against 50K in pre-tax income and you see how desperate the situation for the family might be.
And, what is their excess? Owning a small home, funding their own college through loans, and buying a small family car? These things are all advertised as the basic requirements, necessities even, for family living in the US. These staples only differ in community, size of home, cars, and education. The family here seems to be in the realm of the lower-middle of US families...
Some comparison data on family budgets:
http://www.epi.org/content.cfm/bp165
http://www.epi.org/content.cfm/
d...e_fambud_budget
How about some real empathy and discussion....
are you saying we shouldn't use debt to get things done in America?
Of course not. People have to live in the world they live in. What I'm saying is that we have a really fucked up attitude towards debt and money: on the one hand, debt's the only way for the vast majority of people to "get ahead," and on the other hand, if you *have* debt, you're an irresponsible asshole. Unless it's billions in debt, in which case you're a CEO or something. If you take risks with money and they pay off, you're a "smart investor" and a leader of industry; if you take risks with money and they go south, you're an asshole (unless, again, you're a CEO, in which case you just take the golden parachute and move on to the next job).
And it really is virtually impossible to live in a reasonable way without actively rejecting and working against virtually everything that we consider "normal."
You forgot the issue of MEDICAL DEBT.
LN, you consider that a large mortgage??
If that's not a large mortgage, then what's the big deal? They're only $100k in debt. Is that supposed to be some kind of problem?
Gosh, I guess not. They must be offering their house and car to anyone who'll take the debt off their hands because $100k of debt is no big deal.
Let me underscore Bitch's point, again.
Most people take debt for everyday life, but this becomes a problem when (increasingly) the only way to afford a very ordinary life moves beyond the reach of families taking on debt. And, by the way, the story here does not have space for a variety of necessary things like health care, retirement savings, or any personal enrichment (i.e. vacations and so forth.)
A little perspective and empathy might be in order... Not everyone who is needy is running a scam or pushing a grocery cart down the street.
I think the lesson here is that credit has to be managed just like money in the bank. As to whether their situation is bad, it depends in part on what their income is.
But having a mortgage and student loans in and of themselves aren't really a good indicator of living beyond one's means by themselves.
if they weren't paying a mortgage, they'd be paying rent. And when the mortgage is paid off, they'll have a solid asset.
Theoretically they could try selling the house. The fact that they haven't done this suggests that they have very little equity in the house, or that the house has very little value relative to the size of the mortgage.
Once again, having a mortgage is not the same as owning a home. A mortgage is a debt. A home is an asset.
If you don't borrow money, it's virtually impossible to buy a home. The magic of debt is it allows you to spread out your payments over time, so you can make a big purchase over 20-30 years rather than all at once at the end.
However, sometimes people get confused and think of debt as free money, just because it allows you to spend now and defer paying until later. People can attempt to "get ahead" in the here and now without having to immediately pay the price. For people who are poor and feel a lot of pressure while having little opportunity to get ahead, debt can be very tempting.
They must be offering their house and car to anyone who'll take the debt off their hands because $100k of debt is no big deal.
Yeah, $100k of debt is huge!
But a $60k mortgage? That's tiny!
You realize that a mortgage is a debt, right?
My back-of-envelope calculations say that a college education costs as much as a house.
So if you can't save up for a house while in college because you have to pay rent, and you pay off the house in twenty years, you're just in time for buying *another* house for your child's education.
And this is messed up, yes. That means my parents are paying loans on four houses, three of them diploma-shaped. Technically, my bachelor's degree is the most expensive of any of them.
Yes, LN, a mortgage is a debt, but it's in a different class. Ten years into a 30-year fixed loan, your income has generally risen and the prevailing housing costs have risen, but your housing costs remain stable.
We bought a two-bedroom condo 15 years ago, with the monthly payment commensurate with what we'd pay in rent for an apartment of that size. But now, 15 years later, we have a bunch of equity (the place is worth at least double what we bought it for) and we'd be paying almost double our monthly outlay if we were renting.
Other debts don't provide any such advantage. (Though paying off a car means you quit having car payments.)
Borrowing to buy a house also means you get a tax deduction for mortgage interest as well as property tax—renting for the same monthly amount doesn't give you this tax benefit. (Not sure if student loan interest is deductible.)
Theoretically they could try selling the house. The fact that they haven't done this suggests that they have very little equity in the house, or that the house has very little value relative to the size of the mortgage.
Or that the housing market has collapsed.
(And yes, Orange, student loan interest is deductible.)
Something's broken, people, and it isn't just that individual Americans are irresponsible spendthrifts.
How does asking for a handout with no demonstration of hardship/need equate to a broken system???
This is ridiculous--someone who wants another person to pay off their debt?
Mortgage and student loans aren't the worst kind of debt to have (my student loans are about $85k), and that's a LOW mortgage.
Heck, I'd love a fairy princess to step in and wipe out my student loans and mortgage, but this person doesn't even seem to have any compelling need.
I have read a ton of more compelling stories re: the american debt issue--people who lose jobs and are in danger of foreclosure, much more compelling than someone who wants free money.
Or, am I missing something?
Orange --
I understand what you're saying, but you should realize how lucky you've been.
It's not always the case that monthly payments will be commensurate to rent. In fact, most of the time, monthly payments are considerably higher than rent -- which makes sense, since otherwise people would be able to buy and rent out properties at virtually zero cost, thereby building up equity for free.
There are also property taxes and closing costs that renters do not have to pay. These can be considerable.
If you don't itemize your deductions (quite likely if you're fairly poor), there's no mortgage interest tax benefit.
It's true that borrowing money to purchase a rapidly appreciating asset is a smart idea. Of course it's also true that borrowing money to purchase a rapidly depreciating asset is a TERRIBLE idea. In all likelihood this family made the home purchase during a boom market and now is getting busted as home prices fall. It's important to realize that there's really no guarantee that homes will appreciate in value -- economist Robert Shiller estimates the real return on housing over the past 100 years to be something in the neighborhood of half a percent. (Even if your property has doubled in value over the past 15 years, that's an annual return of less than 4.7 percent per year, and don't forget about inflation. You probably would have received a significantly higher return investing in stocks over that time.)
this person doesn't even seem to have any compelling need.
Because after all, offering to trade a house and car for $100k is the kind of thing lazy people do all the time.
Or that the housing market has collapsed.
I believe I covered that when I wrote "the house has very little value relative to the size of the mortgage."
There is no guarantee that house prices will always rise. As I said in the very first comment:
If anything is wrong with America, it's the idea that everyone should buy a house, and in particular the confusion between owning a house and having a mortgage.
If you borrow a lot of money (relative to your income) to buy an asset that can fall in value, you are taking a serious risk. Without pointing fingers, this is something that everyone would be well served to know and understand.
But LN, is it not true that rents increase over time? Even if your house doesn't appreciate in value at all, if you have the same mortgage payments for 30 years, you'll be doing better than the folks whose landlords raise the monthly rent by $50 or $75 each year.
Of course, it doesn't make sense to buy more house than you can afford. But if you can afford to buy a house (with a decent, nonexploitative mortgage) and you stay in it for years, I don't see how it can be a bad deal financially. (I don't know what the hell people in NYC and California are supposed to do with those insane real estate prices, though.)
But LN, is it not true that rents increase over time? Even if your house doesn't appreciate in value at all, if you have the same mortgage payments for 30 years, you'll be doing better than the folks whose landlords raise the monthly rent by $50 or $75 each year.
Rents will indeed tend to increase over time -- there's basic inflation, and if there's a surge in real estate demand that drives up house prices, rents will also be affected.
However, I don't think you can do a straight comparison. The value of the property is partly determined by how much the owner could rent it out for -- so the fact that rents rise over time should be reflected somewhat in the price that the homebuyer pays.
I think you get it completely right when you say:
But if you can afford to buy a house (with a decent, nonexploitative mortgage) and you stay in it for years, I don't see how it can be a bad deal financially.
Yup. It's possible that it may not be the best possible deal you can get (nothing in life is certain), but it seems that you can't have too many regrets if you can afford to make the payments and live in the home for a long time. I'm certainly not arguing against homeownership in general, just against the idea that it's *always* a good thing to buy. Getting into too much debt really sucks and people should take this possibility into account when making decisions.
It does seem to me that more regulation of the real estate market is warranted. Foolish buyers create problems, not just for themselves, but for everyone. I have a hard time seeing why interest-only loans should be legal; they just seem like death traps for people who can't do math and have eyes bigger than their stomachs. If larger down payments were required, transaction fees were closely scrutinized, and that mortgage deduction was eliminated (or at least, restricted to the first $200,000 in the price), maybe prices would come back to earth and people wouldn't end up suckered into these things. I don't know as much about it as I should (being a renter and all), but I think it's fair to say that people are being given too much credit when they can't pay what they owe.
LN. You take Schiller out of context; he is comparing homes as a vehicle for investment, relative to markets and other investments. The argument: homes are places to live not places to invest your savings. Further, your sense of the housing market is also wrong. House values rise over time, especially over the course of a 10, 20, or 30 year mortgage. The only exceptions have been two small and extremely rare and very brief historical moments (now being one) when home prices have dropped for a period of a couple years. Moreover, Orange is correct that once you factor in home mortgage deductions, homes are indeed a better use of resources than renting, for most people most of the time. Also, there is a student loan deduction... However, for this family my guess is that they do not pay any income tax, but they do pay social security and medicare. Thus, this makes their effective tax rate at about 10-12%.
The family of modest means here is clearly not using its house for anything but shelter.
Bethany. You are missing this point: that working families are in a whole lot of hurt right now, and there is no indication that anything will be changing soon.
Dr. M, I'm pretty sure Orange was talking at least partly about real estate as an investment (for example, in saying that her place doubled in value over 15 years), and that LN was responding to that. Also, LN did not say that real estate prices don't rise; he was saying they don't generally rise as fast or as reliably as they did in Orange's timeframe.
As many have already commented, I am pretty confused by this post. I wouldn't count the home mortgage since as someone pointed out, it's a solid asset at the end of however many years. And student loans at what.. 20K is super modest. Those kids will soon get jobs and earn an income they would not be able to without college degrees.
Debt is a part of American life. Boo hoo. What's the alternative? Giving out houses and degrees for free?
Dr.M:
Orange's home had doubled (or more) in value over 15 years; this fact was being used as an argument for why buying is better than renting. So how on earth was I taking Shiller out of context? This is *exactly* the context in which Shiller made his point.
your sense of the housing market is also wrong. House values rise over time, especially over the course of a 10, 20, or 30 year mortgage
They don't necessarily rise significantly above inflation; in fact, this is Shiller's point. You agree with Shiller but disagree with me when I repeat him?
See this graph.
Moreover, Orange is correct that once you factor in home mortgage deductions, homes are indeed a better use of resources than renting, for most people most of the time.
This looks to be argument by assertion. Note that the vaunted home mortgage deduction also drives up home prices by making all mortgages more affordable. Similarly, as homebuying becomes a slam dunk (versus renting = throwing your money away), the demand for buying rises and the demand for renting falls, causing a shift in prices. I'm not saying that buying is dumb (hardly) but I've seen too many people think that there's no downside to it compared to renting. There are additional *costs* (duh) to buying and people would be better off doing an economic cost-benefit analysis instead of having an ideological commitment to buying.
The family of modest means here is clearly not using its house for anything but shelter.
In a boom market, there is a temptation to take out a bigger mortgage than you can afford because it seems that you will be able to easily refinance, sell the property, etc. (Also, there's a fear of being "left behind" as prices skyrocket.)
What I'm saying is that we have a really fucked up attitude towards debt and money: on the one hand, debt's the only way for the vast majority of people to "get ahead," and on the other hand, if you *have* debt, you're an irresponsible asshole.
You're not even trying anymore. Who argues this?
Excuse me while I rant a bit here:
I see several things broken in that scenario. First, why are we charging people to go to school? Education benefits everyone - it is in society's best interest to have you educated - so that should be provided for free, as it is in many Western countries. If you've got the brains and the will to get through 4 years of college, then by all means, let's make that happen. Want an advanced degee? Good for you! Let's pay for that, too, because we need more doctors and scientists than we are producing now. Our anti-intellectualism is putting us behind the rest of the developed world.
Then, there's the ridiculous inflation that has car and home prices through the roof. On top of that, there's the usurious interest charged on the home and car loans. Our Founders started a war over the price of tea. What would they think of our rate of interest on home loans and cars? I imagine their reaction would look a bit like the end of Fight Club. ("Our great war is a spiritual war; our Great Depression is our lives...")
Then let's look at the amount of taxes you pay - probably more than Warren Buffett or Bill Gates, and that's in a country where they never intended to charge the citizenry taxes on income - the income tax was intended to tax a new invention called a corporation. There exists no law allowing the government to tax individuals, anyway - the 16th Amendment was never ratified, but we're supposed to overlook that little detail. The IRS never seems to overlook a detail, though...
Learn this phrase, kids and repeat it to everyone you know:
"It's just another Republican trick to get ahold of your money."
That's applicable to interest rates, college tuition and student loans, home prices, car prices, privatization of Social Security, the cost of health care, the FDA, the AMA and income taxes.
I notice one of your first commentors above thought people should "pay for what they buy" - what a Good German! I'll bet he(?) thinks we spend too much money on welfare, too, and that socialized medicine is the path to ruin. And how dare you think you deserve to own your own home?! Don't you know that you don't qualify for the ownership society if you have to worry about the cost? You're supposed to be buying property for your rich landlord instead of expecting to have your own place. What upstarts you must be!
We've got a lovely class of elites in this country who feel perfectly entitled to bleed you dry at every turn. Our Republican friends never saw a law they didn't feel entitled to break, or a dollar they didn't feel entititled to have a piece of. They couldn't care less about the 18,000 people a year who die solely from lack of health insurance, or who lose their homes because they were tricked into betting on an unstable market. They don't care that you are struggling to meet your bills - I'm sure they think you should have joined the military instead. After all, the function of the working class is to provide soldiers, and war is good for the economy - if you're a defense contractor, that is. It keeps the competition for jobs down, too, so the unemployment rate appears to drop. It's a win-win if you don't count the dead - and they don't.
We don't just need another American Revolution, we need a French Revolution, complete with Guillotines.
Sorry about that - I get really steamed when I see good people just trying to get by have to deal with that kind of budget. Just be glad you are young and healthy enough to work for a living. If you were disabled or old, and reliant upon Social Security, life would be a lot tougher. How far would less than $12,000 a year go toward those bills?
Education benefits everyone - it is in society's best interest to have you educated - so that should be provided for free, as it is in many Western countries
in a country where they never intended to charge the citizenry taxes on income
Ah yes, let's educate everyone for free, and let's not pay any taxes! Whee! Ice cream AND a pony!
i was thinking the student loans were for the parents, but -- maybe not. these are modest debts, but only with a steady income, and perhaps that is what has happened here, an income was lost and now it is overwhelming.
the nonprofit donation thing is for HOSPICE. if i had to guess about the heartache behind this listing, it is that someone is extremely ill, and the family is collapsing financially.
if i had to guess about the heartache behind this listing, it is that someone is extremely ill, and the family is collapsing financially.
If that's the case, then what's broken in our society is perfectly clear -- the richest country in the world should have a good enough social safety net so that families are not bankrupted and crushed by illness and disease.
item type: karma support
subject area: hope
yes, LN, i absolutely agree about families not being crushed by illness and disease. but it does happen, a lot.
(Asshole comment: If you're willing to beg for $100k on the internet, would you be too shy to mention your dying loved one and his or her overwhelming medical bills?)
I don't know...$3,500 doesn't sound like a lot of credit card debt and $20k doesn't sound like much in school loans and the mortgage isn't outrageous and so on and so forth. if there's a point here, it seems to be that these things add up in ways people don't seem to anticipate. That's where being smarter about incurring debt would make sense. I think avoiding incurring standing debt is not a bad policy.
I say this as someone who came out of undergrad with more than $60,000 in loans, which I think was an incredibly stupid thing to do and I would never allow my kids to do it. They were not (even nearly) all subsidized, so the interest rates on some of them were relatively high. It was dumb and it was completely unnecessary.
It's hard to say anything more without going all confessional on you and starting to sound like "look! i'm better than you because I have less debt!" It's hard not to, though, because not everyone carries credit card debt, just as an example. So from a certain perspective that's $3500 that just doesn't need to be there. would that solve the problem? I suppose not but it wouldn't hurt.
I don't mean to sound like I'm not sympathetic. I am. I watched my sister go bankrupt last year and it pissed me off that she got talked into a really shitty mortgage deal, which resulted in her losing her house and then she needed a car and got talked into something she couldn't really afford and ended up losing the car, too. She made some foolish choices and yeah, she does spend money she doesn't have because it makes her feel better, but there are some things about her system that are designed to fuck people in her position over for profit and that is just plain evil. seriously, there is a circle in dante's hell for usurers for a reason.
about our system. not her system.
LN, maybe you are right. or maybe the post was a way of letting off steam, as they have struggled along this far without begging. i don't know.
i do know it is *very* hard for people hit with a huge medical [and financial] crisis to ask for help. especially if they have always been self-sufficient.
my point, really, is that i can take just one crisis to push a family doing reasonably well, managing their money reasonably frugally, into disaster.
the home improvement loan, by the way, may not have been anything frivolous. $5000 might be a badly needed roofing job, or the plumbing so shot to hell that it and the bathroom floor had to be replaced.
Well, we've currently got more than that on mortage alone, and we make quite a bit less than 6 figures.
However, if we were still making student loan payments, that'd be a killer.
Spouse and I both did the state school thing and graduated debt-free (with a lot of work on both our separate parts).
I think, almost more than the discussion about how houses don't always triple in value every 5 years, young people need some frank discussion about student loans, the payments that will be due on them, vs. the increased earning capacity they get from said loans -- and whether that expensive school is really worth the premium you pay for it. I've got many friends who, 15 yeas out from college, are still paying the equivalent of a house payment on student loans and have had it very seriously affect their ability to ... take longer maternity leaves, save for their retirement, buy houses, save for their own children's education. If anything, I think student debt is more fucked up than some of the crazy mortgage products -- and its certainly been fucked up longer.
oh my lord, those numbers are terrifying!
but then again, i'm a student part-timer making $3-4000 a year...and the $700 on my credit card is enough to terrify me.
LN - I'd have no problem paying taxes if it went for free higher education. Since 97 cents of tax dollars disappears into the gaping void that is the Military Industrial Complex, I have a problem with it. I used to be a fed, so i know as well as anyone how much of that is pure waste that benefits only a few people at the top of the power structure. It's obscene.
At least, LN, you do recognize that we need a better safety net in this country. 3 million homeless children in the richest country in the world is unacceptable. Veterans sleeping under bridges is shameful. We can do better and we should.
Anastasia - you were lucky to be able to stay out of debt. Most people in this culture don't have that luxury. People get into debt for many reasons and it's not fair to assume it's through some fault of theirs.
Student loans would be for the parents in an ideal world where parents paid for their kids education. I've seen cases where the kid had to work because the parents could have paid but wouldn't, and they wouldn't let the kid declare themselves independent because they wanted the tax deduction. The parents in that example were unbelievably selfish, and didn't value education in girls. In that case, the girl wanted to be a doctor. I hope she made it. If we lived in a smarter society, she could have made it easily in spite of her parents, but since it was the Reagan economy, the odds are that she didn't.
Most people can't even get a mortgage these days. Anyone who has a chance to buy their own home is incredibly lucky. People have the perception that the government protects people from usury. In most cases, it seems more like it supports usury, monopolies and other schemes meant to shift the wealth in this country upward.
LN applies a ridiculous and fictive standard of economic rationality that is beside the point.
First, taking Orange's example. A house that doubles in value over 15 years has appreciated at 4.8 percent (give or take a little bit), ahead of 3 percent inflation. Owning it that long would net about 1/3 of the principal paid, but payments would remain constant to salary levels of 15 years earlier. Orange's story is the point; clearly illustrating long-term expectations of home owners. Sure, the house is not a brilliant investment, but it is a reasonable one, especially because as most economists argue, the house is more than an investment vehicle, it is a home.
LN reads Shiller as saying buying a home as an investment is a bad idea. LN and I agree on this reading. But, Shiller does not argue that buying a home a bad idea. Rather, Shiller argues *only* that you don't buy it as an investment vehicle for retirement; better put your funds in the market or elsewhere (and buy less home.)
As for home values, everyone is *most* at risk in the early stages of taking on a large loan payment, be it for a car, house, or school. This is because the moment the loan is signed, the signator owes a carload of interest.
However, in an economy built around credit, as ours is, this is a bargain that the state, society, and major economic actors have worked to mitigate and all but guarantee. This approach to guaranteeing credit was most obviously highlighted during the Depression. Indeed, this was the point of the FHA and HOLC during the Depression, which first made inexpensive money available in large quantities to home buyers. As a result of such programs, followed by the GI Bill (based on similar principles), home ownership skyrocketed in the US, making this aspect of the American "dream" widely available.
Thus, anyone buying a home (whether in an up or down market) approaches the situation with a set of reasonable assumptions and expectations, especially when the home is a modest 50-year old bungalow, located in Erie PA and not silicon valley. These assumptions include a viable real estate market that will increase in value over time and an understanding that credit and other such things will continue to be available to prospective buyers.
Thus, to decry someone for buying a home as being economically irrational is to apply a standard that is ahistorical and depends on a belief that everyone is a hyper-rational economic actor (the principal fiction of economists, see below for more). This is especially true when the situation involves someone buying a modest home when you don't know the circumstances. We are not, after all, talking about a McMansion in San Jose that has appreciated 300 percent in two years. We are talking about a very stable housing market in Erie Pa.
So, don't buy LN's claims that this family is culpable for their situation because they did not behave with the supposed (and entirely fictive) rationality of an economist. Not only is economic rationality a reasonable moral or ethical standard, but it is entirely a fiction. For economics to work as a science, we must buy the notion of the individual rational actor and of rational markets. Funny how so-called "rational" markets have irrationality at their core. The perfect example can be found in the current housing crisis and one of its origins: namely the creation (by banks) of derivatives and other funky securities based on mortgages--all meant to mitigate and distribute risk.
And, by the way, the asshole comment says it all... blame the victim and don't find any fault in an economic and social system that is no longer working for ordinary Americans...
But LN, is it not true that rents increase over time?
Rents are by necessity tied to income. Real income adjusted for inflation has not been growing in most demographics, and a number of markets have seen many years of bubble activity in real estate but tied-to-inflation or no increase in rents.
We can look at Japan to understand that it's not ALWAYS the best investment - it took Japan 10 years to build a housing bubble, and 15 years to come off the downward slide. After which they were, what, 3% off the baseline? Back to 1980s land values, adjusted for inflation? 3% over 25 years is not a great investment vehicle vs. renting over the Long Term - there is an opportunity cost in mortgage as investment if you're paying anything but a *minor* ownership premium over renting. After all, the Japanese renter could put that extra 500 a month into a different investment vehicle. The majority would do better than 3% above inflation over 25 years.
And the Japanese always had savings.
How many Boomers have their main retirement investment in real estate?
How many Americans, like this family, have 100K in income and one financial emergency will wipe them out?
-------
I find the "don't be a whiner" philosophy rather funny. Making it all the individual's problem seems like scoffing at the assholes on the Titanic who were too lazy to learn to swim.
There's a particular vulnerability in the middle class which is a dangerous economic reality, if what you're looking for is a stable liberal democracy.
Should people contribute through work to society and their own maintenence? Yes. Do we do that using economic engines? Yes.
However, "shouldn't people have to pay for what they buy" begs a whole bunch of questions. It assumes a whole bunch of things, the greatest of which are assumptions straight from the neocon playbook.
Like: the market has appropriately valued each asset class.
Like: It is best when the market values necessities (air, food, shelter, water) as more expensive than iPods, because everyone needs basics.
Like: consumers are completely individual rational agents, with all the Choice they need, regardless of the bucks in their pocket - that the impoverished or middle class have the ability to choose "rationally" with the same freedom as the rich.
Like: labour is able to value itself appropriately in the market - that the rational individual choices of non unionized labour will not end up in a race to the bottom because people can just "wait for better money".
These things are hardly the Truth From God To Our Ears.
Let's set up a situation where we can understand that "you should have to pay for what you buy" would be a perverse way of constructing justice OR economy.
Imagine you're "buying" from the company store, and your work is valued at .0005% of the profits from your production, but you're forced to purchase at 300% of cost.
Should you have to? Is this right? Is it moral? Is it what we want for society?
Regardless of whether it is right or not, it often ends in armed insurrection.
Is THAT right? Or does ownership (The Company) justify all?
Wait! Yell the neocons, that's a Monopoly system! We're not in a monopoly market!
Yep. That's the argument.
Also! The store needs monied consumers!
Yep. That's also the argument.
Alot of people are saying that the educational loans are worth it. Yes, the majority of people with college degrees make more than those without, but the reality is starting salaries with a college degree are not high enough to cover the loans. I have students taking out anywhere from 4,000 - 20,000 dollars a year to go to college and they graduate starting with a 35,000 dollar salary. There are very few professions whose starting salaries allow one to live and pay off students loans quickly.
My god, Dr. M, that's sort of the smoking gun, isn't it:
So, don't buy LN's claims that this family is culpable for their situation because they did not behave with the supposed (and entirely fictive) rationality of an economist. Not only is economic rationality a reasonable moral or ethical standard, but it is entirely a fiction.
Because if the Chicago school was right, the market will work because we're rational actors.
But WHEN it's not working, Fox and Protestant work ethic and your average folk who think that Just the Way It Is (tm), will point at the actor and say - he's not acting rationally! ie: too selfish, too much credit, stupid stupid stupid.
If the market can't actually cope with how people actually are, then we will just end up in rich and poor and revolution, just like we've always done in history. Seems to me the market loves slaves most of all.
Arwen, re: Rents are by necessity tied to income. Real income adjusted for inflation has not been growing in most demographics, and a number of markets have seen many years of bubble activity in real estate but tied-to-inflation or no increase in rents.
That's not always the case, I don't think. In Chicago, property taxes just increased and landlords are passing the increase along to their tenants. I have two friends who can ill afford the $75 jump (one has had the same landlord for a decade and never had more than a $25 annual increase) so they're looking to move. I don't know that they'll find comparable places for what they pay now, though. Neither of them has anywhere near enough savings for a downpayment on a condo, though, even with the recent downturn in prices.
In one case, my friend has undergrad and grad school loans, her partner has loans and hopes to go to grad school this fall if they can afford it, and they have a baby who'd need daycare for his parents to work or go to school. Cheaper tuition and subsidized daycare sure would help them out—$75 doesn't sound like so much, less than $3 a day, but their budget doesn't have space for the rent increase.
I've got to say, I don't get this. That doesn't seem like all that much debt to me, given that it includes a mortgage payment. Shit, I owe $12,000 on a car (of course its brand new, and that should be going down pertty soon) and as a couple we have probably $30,000 in student loans. So without even a house, we owe $42,000. And I don't feel particularly horrible about that.
Secondly, I don't see how you'd have to be super desperate to give someone your house and car in exchange for paying off your debt if the amount of the debt is greater than the worth of the house+car (which it looks like it might very well be for them). Anyone want to pay off my debt? I'd give you my car! I don't have a house, but I'd give you the entire contents of my apartment too. Take this burden off my back, and its all yours!!!!!
Interesting that so many people assumed the student loans were for the kids. I don't know ANYONE whose parents are paying their student loans for them.
Jess, get a clue... just 'cause their circumstances aren't yours doesn't make them freeloaders looking for a good deal or not too desperate ....
I am absolutely certain they are desperate. Why else go through the public humiliation of Ebay? They are going to lose the house and car as it is to the bank. That's what will happen with the bankruptcy that is no doubt imminent. And, thanks to the new bankruptcy laws, they will keep their loans and credit card debt. Things seem pretty desperate to me, but then again I won't pretend to judge them by my fortunate life circumstances or life choices ...
http://www.redfin.com/stingray/d...ting-
id=1505001
$247 per square foot.
I mean, granite countertops, blah blah blah, but even a fixer-upper in the city is 300k. If I don't have at least 200k in debt if/when I buy a house out here, I'll be very surprised. I know Seattle hasn't popped as a bubble yet..
After that obvious "pity me too" 
and illustration that 100k isn't much---
I think the family needs much more support than they're getting. Their debt isn't that much (most of it is mortgage) but it seems that medical costs will do them in, which is very sad.
Orange - markets gentrify, and some markets decline - but overall, across the economy, rents have to be tied to income. If your friend's market was gentrifying, then there might be people to put in homes and hikes might be worth it. And richer people can afford more house.
However, overall in the economy, each person's wages must buy food, shelter, clothing, and then Other Stuff. The more money that goes to economic rent - non-producing capital, if you'd like - the less people have to spend on other things. We don't WANT all the Bitch PhDs spending 55% of their incomes to their homes - because then they have to stop subscribing to alternative papers and buying local. Next thing you know, Bitch PhD - who I'd categorize as middle to upper middle class, I think - is having to Economies of Scale all her other crap from Walmart, just like the rest of us. But walmart pays less well. It's a feedback cycle.
Rents are and will be tied to income from two sides of the economy. First: people who can't afford their homes move away, and apartments that sit empty are a useless carrying cost. The whole supply and demand equation works really well here - if it's too expensive, people won't live there. They'll of necessity either cram or flee to the suburbs. Second, the overall economy wants you to spend 70% of your income on other crap.
So yeah. Rents are tied to income. And when they're not, it's either because a market is getting richer renters, or it's an illness in the system; a fever, if you'd like.
I have that much in debt and it's ALL student loans. We rent and always will because we can't afford a house in Chicago, own our 8-year-old car outright, and pay our credit cards off every month.
I didn't know 10 years ago that people would PAY YOU to go to grad school. It honestly never occurred to me. I thought it was like college. I didn't have a mentor and the internet didn't exist for me back then.
Debt is a part of American life. Boo hoo. What's the alternative? Giving out houses and degrees for free?
You do realize that college educations cost a LOT less a generation or two ago, before state and federal budgets started slashing education spending, right? And replacing grants with loans?
Moreover, it's really easy when you're not in trouble to point fingers and say "oh, that person shouldn't have done that." I have no doubt that that family is telling themselves exactly the same thing. But the point is, you can make what to most people seems like a *perfectly reasonable* decision--e.g., to buy instead of renting--and then bam, the market blows up, or someone gets sick, or someone gets laid off, and all of a sudden everyone and their uncle is saying "oh, boo hoo, you made a stupid decision."
Of course, I'm sure no one who reads this blog has ever made a bad financial decision. Because we're all perfect.
We are low income but not in debt. Rent a small apartment (2 adults 2 kids in a 2 BR), drive a 2000 car that's paid for, and no credit card debt at he moment. Thanks to my parents and the govt I never had college loans, but it was my choice to never become heavily indebted since then. Scale down and live within your means.
Are there as many people living on the edge of financial disaster in other developed countries, or is it primarily an American thing? If so, why? American rates of home ownership, low savings rate, lack of health care, expensive college educations, lack of a safety net?
There absolutely is a problem.
And it's not irresponsible spendthrifts.
It's much much larger.
I just learned that about 40% of Americans never budget at all. Ever. I am guessing they don't even know how. And our society certainly doesn't place a priority on that skill, so they won't learn unless they're forced to.
This whole 'everyone deserves a house' crap is just marketing for banks and builders. If everyone deserved a house, then our tax dollars should buy everyone a house.
The American Dream is marketing, pure and simple.
It's not just teaching people to budget, though. Because you can budget perfectly, but still end up in real trouble if someone gets sick or loses a job. And what about paying for college?
In other developed countries, if I am not mistaken, higher education is much less expensive (if not free). And yes, there's health care. And a much, much stronger social safety net. And things like public transit, which means that people can live much more easily without cars, even in small towns, and frankly, a much lower standard of living in terms of everything from the size of houses to the amount of shopping people do.
When'd they put back the deductibility for student loan interest? They took it away sometime in the mid-80's, just in time for me to not get to use that.
Bitch, I do agree with you that European countries for example, have many benefits but we often overlook the fact that the population is madly taxed. If I am not mistaken, America pays one of the lowest tax rates in the developed world. So to get those benefits, I suspect anyone earning above $60k will be taxed much much more than at present.
And again, isn't state college in the US affordable? So I do think there is a source of good quality, low-cost education in the US, just that people choose to go to a private school. Which obviously they are then responsible to pay for.
Finally, I think a large part of this IS about teaching people to budget. Because, frankly, having $18k in perfectly avoidable debt as this family has is quite insane. The rest of it si good debt anyway which they will be able to pay off little by little as people in virtually every country do.
Three things:
1) You got a Ph.D. without taking an undergraduate course in economics (just a guess)
2) Like most of us, you routinely borrow money because you need things, not because you can pay for things.
3) The relevant metric is the ratio of debt to what you earn, which will say something about the relative burden of servicing the debt. Absolute debt is meaningless.
LN reads Shiller as saying buying a home as an investment is a bad idea.
No, *you* read me as saying that. In reality, I explicitly say the opposite. Here's an exact quote from me:
I'm not saying that buying is dumb (hardly) but I've seen too many people think that there's no downside to it compared to renting. There are additional *costs* (duh) to buying and people would be better off doing an economic cost-benefit analysis instead of having an ideological commitment to buying.
Thanks for the lecturing tone explaining to everyone what I'm saying, though! I guess men just like to explain things. I don't blame you though, it's a sociological and structural phenomenon.
And it really is virtually impossible to live in a reasonable way without actively rejecting and working against virtually everything that we consider "normal."
That's such a rich mouthful, I'm not sure what I'd say ifmy exact approach to even thinking of commenting here (though I'm a long-time, committed reader) weren't to keep myself on a strict diet.
isn't state college in the US affordable?
The California State system is $2,772 per year for state residents. That doesn't include books, lab fees, or room and board. Nor does it include additional "campus fees," which vary by campus. The average in-state student cost per semester for full time students is $3,521.
Resident tuition at the University of California campuses is higher: $4,190.75 per semester at Berkeley for undergraduates, again not including books, housing, or things like lab fees.
Whether or not that's "affordable" obviously depends on one's assets/income (or, more often, the assets/income of one's parents).
Keep in mind that the mission of public higher education has traditionally included providing affordable college educations to all classes of state residents. It is, after all, a *public* institution.
By the way, Dr.M, your comment is such an egregious misreading of what I've been saying that I don't know where to begin.
So, don't buy LN's claims that this family is culpable for their situation because they did not behave with the supposed (and entirely fictive) rationality of an economist. Not only is economic rationality a reasonable moral or ethical standard, but it is entirely a fiction.
Interesting. Let's walk through this. Obviously I have no idea about all the details of the family in question (neither does anyone else here, including you or Dr. B), but Dr. B immediately concluded from the ebay listing that "something is broken with America." In the very first comment to this thread, I wrote: "If anything is wrong with America, it's the idea that everyone should buy a house, and in particular the confusion between owning a house and having a mortgage."
I'm not sure how this translates to a "fictive" notion of economic rationality. I clearly understand that a lot of people don't live up to this rational ideal, because *I am suggesting that this is a problem in America*. So the question becomes whether or not people *should* live up to this ideal (of doing a cost-benefit analysis comparing renting and buying). I say they should. But in your response you decide to have your cake and eat it too. On one hand, you believe rational analysis suggests that home-buying is almost always better than renting. On the other hand, you essentially dismiss me for relying on rational analysis! WTF?
We have a genuine disagreement about whether or not renting is almost always inferior to buying. This digression about whether or not economic models accurately represent human behavior is completely irrelevant and inane. My claim is simply that people in America have been too wedded to the idea of owning a home, and that this is a problem. This claim may be right or wrong and we can have a discussion about it. I'll note that I've suggested several reasons why buying isn't a slam dunk: housing prices may fall, the mortgage deduction raises home prices (and can't be claimed if you don't itemize), there are closing fees and property taxes, and of course a lot of debt can be a serious burden. I've even summarized my argument quite succinctly as "there are additional *costs* to buying." In return, you talk about the fictional nature of economic rationality and the GI bill.
Should the family in question be blamed? This seems like an insensitive question (not really any of our business) and none of us know the actual details. But maybe we want to take this ebay listing and use it to launch a discussion about what is wrong with America that allowed this to happen. I know that the American dream and everyone owning a house makes us all feel warm and fuzzy but people who perceive that reality is different aren't necessarily bad neocon people.
Thus, anyone buying a home (whether in an up or down market) approaches the situation with a set of reasonable assumptions and expectations, especially when the home is a modest 50-year old bungalow, located in Erie PA and not silicon valley. These assumptions include a viable real estate market that will increase in value over time and an understanding that credit and other such things will continue to be available to prospective buyers.
Dr M, since we're getting all historical, how about adding these to the list of reasonable assumptions and expectations:
1. that buyers will take a few years to save 10-20% as a down payment.
2. that buyers will have a mortgage that involves actually paying off the principal and gaining equity.
The family in Erie seems to have missed out on these: they owe more than their house is worth. They were irresponsible, and more importantly, our regulatory systems failed when the banks were allowed to issue them loans they couldn't repay.
This said, I find it really really weird, Dr M, that you insist that it was unforgivably mean of LN to point out that they shouldn't have bought the house. Hello?! That statement is TRUE. Recognizing that truth is the first thing we need to do before educating prospective buyers and implementing regulatory change to protect future buyers from ending up selling their debt on Ebay. LN's pragmatism is a whole lot more likely to help people than your cheap pity.
I got tired of reading the same thing over and over and skipped most of the comments...
on the why don't they sell the house?? in TODAYS market, esp. because they're making it harder to get loans (friend w/ same income, no kids, better credit, couldn't get a loan where I could almost a year before hand), even a discount priced house isn't necessarily going to sell. typical price for the College Town I live near (and work in) is about 150k. there's a 3-4 bedroom house, with hardwood floors for 130, that STILL hasn't sold. Just a few years ago, at that price, that house would be long gone, even if it needed work.
As I've explained in other comments, I've got me an income that's roughly 150-200% of the poverty level. I'm poor enough for my disabled son to qualify for SSI (without that SSI, I'd not be able to afford my house; of course, if he wasn't disabled, where I live wouldn't be so important, and I'd have bought a cheaper house).
That said, I have a bit less than $90k in a mortgage. Granted, I just bought my house, less than a year ago. There were a small handful of houses available in not so great neighborhoods in a school district that would switch my disabled son's program, but, I kinda want him to stay in a program where he's making progress, and there's a very small student to teacher ratio.
Because I have 3 kids, and can't rent a 2 bedroom, having a mortgage is cheaper than renting. So the 'well they really shouldn't have got the mortgage' is a moot point. Granted they have to fix things broken, but they don't have to pay for those every single month, unless they take out a loan to fix it.
on the "they probably pay $800/month student loans" Shit, if they do, consolidate. I consolidated, my student loans are way more than theirs, and even a standard repayment was less than half of that after I consolidated. And then depending on your income, income contigent repayment can drop that even lower. For those curious, go to http://dlssonline.com or http://loanconsolidation.ed.gov.
I understand the differences in perspective, because I have a decent income now, my mother's decided I don't get what it's like to be poor. event though I'm still considered poor, by some standards... Even though I had my first kid at 19, and have pretty much had to have my own place since then and supported my family on $6 hr plus left over student aid. No, I really don't know what it's like (btw, I'm 29, stable steady income didn't come until 2k5, but I really just don't know what it's like)
Now that I've acknowledged that, I've noticed most of the detractors in these wildly active money posts seem to fall into a few categories:
Came from a privileged enough background that debt wasn't an issue.
Came from a lower class background but played the cards just right and came out ahead and decided everyone just has to do what they did.
Is still in college.
If you fall into one of those categories, um, I hate to break it to you, but you don't get it.
There is the consideration that certain requirements to get ahead in the US have costs that exceed the rate of inflation... like a college education (universities in my state gave up trying to get extra money from the state by keeping tuition costs down recently) So while having a moderate amount of debt wrapped up mostly in student loans and mortgage may not seem that bad, one can see how something is broken.
A debate has emerged on this thread entirely due to how folks are *reading* the experiences of people whom they know little or nothing about.
The debate is between those who read the family as irresponsible (economically or socially or in some way) and those who see their situation as emblematic of larger problems.
The first group blames the individual rather than the society, which underscores the power relations of contemporary society.
The latter folks are saying that their is a tragedy implied and contained in this story. It is the tragedy of modest expectations ripped apart by a social and economic world that is increasingly not viable. A singular aspect of this interpretive frame is confirmed by the heartlessness shown by folks making the first argument--blaming victims for their plight.
Further, for me at least, there is a knee-jerk reaction against those that
*are* reading the world through the lens of rational economics and applying that filter to everyone. In this classic application of Chicago School models, we are told that everyone *should* be a rational (read as cost/benefit) actor and if their financial situation does not give them access to the American dream (i.e. home ownership as one element), well they should opt out and trade down. In this worldview, the rich build assets (using the lending system backed by the government) and the poor can't. Moreover,anyone with marginal resources is effectively disenfranchised. After all, in order to do cost/benefit you need access to resources.
My strong lecturing tone to LN (and I am sorry for that) is because the truly horrible ramifications of a world in which human bonds are replaced with economic bonds and in which community civic ideals are replaced with purely economic connections. And, to me, that is what the comments on this thread have exposed--a world in which individuals (largely those without access to resources) are held responsible for their misfortune or for one mistake, without recourse or compassion among their neighbors. If that odious vision comes to pass, then God help us all.
Dr.M -- I agree completely.
America would be a lot better off if we had a cultural ideal of universal home ownership and we had an era of very low interest rates and easy credit. If that were the case, then I think most of the problems with the current housing crisis would have been avoided.
Oh wait.
Interestingly, you didn't seem to catch the problem with your lecturing tone. See, it wasn't that you were right and you hurt my sensitive feelings, it's that you were *wrong*. I know it's hard to believe, but:
1) I never said that homebuying was always a bad idea, contrary to your assertion; I simply said that it wasn't always a good idea (and you still haven't managed a counterargument)
2) Robert Shiller has been going on for years about how the American real estate market is vastly overpriced and clearly in a bubble. He wasn't doing this to warn rich investors and real estate speculators, he was doing this as a warning to families who thought rising home prices meant that buying was always a no-brainer, even if you have to overstretch yourself by taking out a very large mortgage. This is Robert Shiller 101. For you to not understand this, but still lecture me on how I'm taking Shiller out of context should be embarrassing.
Finally, I'll just note that in lieu of logical arguments you've basically resorted to "Well, there are two kinds of people in the world: people like me who believe in the American dream, and bastards who think that poor people are actually poor. What side do you want to be on?"
One last thing:
The first group blames the individual rather than the society, which underscores the power relations of contemporary society.
The latter folks are saying that their is a tragedy implied and contained in this story. It is the tragedy of modest expectations ripped apart by a social and economic world that is increasingly not viable. A singular aspect of this interpretive frame is confirmed by the heartlessness shown by folks making the first argument--blaming victims for their plight.
It's fascinating that from the point of view of the family, neither of these groups are doing shit for them. Whether you say "something is fucked up in America" or you say "homeownership isn't for everyone," it doesn't make a damned bit of difference. We are just people talking a bit of politics on a blog. Stop pretending that your views gain validity because you are this family's helping hand in a time of need.
BitchPhD said:
In other developed countries, if I am not mistaken, higher education is much less expensive (if not free). And yes, there's health care. And a much, much stronger social safety net. And things like public transit, which means that people can live much more easily without cars, even in small towns, and frankly, a much lower standard of living in terms of everything from the size of houses to the amount of shopping people do.
Exactly.
I think most of the readers of this blog are lefty types who agree that the US should have higher taxes, and free health care and education. But how many Americans would be willing to accept that some of the things we see as necessities are really luxuries, and alter their lifstyles accordingly? I'm an American living in Sweden, and while Sweden is an incredibly rich country, Swedes still live more modestly than Americans. More people ride bikes and live in apartments rather than houses even in small towns. Fewer families here have more than one car (and it's not that weird not to have a car at all).
I do think Americans need to stop keeping up with the Joneses and constantly raising the bar on what we need to own to be a "normal middle class family", and doing that is our own responsibility as individual members of a society, not the government's. Scaling down our lifestyles would be really good for the environment, too.
I don't understand the point of this post. First off, amount of debt means nothing without knowing how much money the family makes.
Secondly, what is the interest rate on all of those loans? Are they fixed interest or variable (such that they're only paying the interest or are paying principal as well)?
Lasty, what's wrong with having debt for things that will provide a return of some sort (student loans allow for school, so more jobs; house loan allows you to lock in a cost of housing to hedge against inflating rents; car allows you to go to work and make money) is a necessary function of a capital market. It allows you to consume now with your wealth while other people with savings who want to consume later can get a return for it waiting.
So again, what's the point?
That should read that "Debt is a necessary function of a capital market."
No, I am not shocked by it at all. I practiced bankruptcy law and your situation is not uncommon.
That being said, you have to understand the difference between "good" and "bad" debt. The mortgage is good debt becuase you have equity in the home. Also, you will own the home someday which is a great asset. Don't forget about your mortgage interest and propperty taxes being a huge deduction on your income tax.
And let's not forget the Student Loans. Sure, they are a pain in the ass. (It took me 11 years to pay off law school and grad school) but, the interest is an above the line deduction which can help your AGI.
All in all, you are not that bad off. I once had a potental client who had the amount you cite in credit card debt alone!!!(And yes, it was due to shameless spending. I threw him out of my office.)
I think some people didn't click the link and don't get that this is NOT BitchPhD's debt. She's linking to an eBay auction. and I'm guessing this family didn't actually think it'd go through, but they were trying to make a point. But then I think a lot of people post protests without reading into it well enough.
Oh and on the owing 9000 for a 2k4 car. I owe 8000 for a 2k3, that I got in November. Because my 2k5 used car got totaled in an accident. Insurance paid of the loan but the loan was still on my credit report when I got the 2k3 used car. So I'm essentially paying more for an older car now, and even more than that b/c of the interest rate. Because I didn't have my pick of dealers or cars this time around due to loan terms. So 9k for a 2k4 ford focus isn't ridiculous and its quite possible they bought it used.
A while back, you posted about being surprised that with your household income but no down payment saved, you couldn't get a mortgage.
It seems to me that maybe we're sort of seeing the flip side of the same coin here. Having a mortgage is expensive, and risky, and a lot of banks were willing to play with those risks in ways that led people to buy what they couldn't really afford. But not always, especially with mortgages for higher amounts (as would be typical in SoCal).
BUT, when I looked at that link, I didn't see a lot of the things others seem to have seen.
I don't know that this family bought the house recently. Or that there's a health issue behind the financial problems.
I gathered from the pictures that the kids were too young for college loans yet.
I guessed from the picture that the home improvement loan might have been completely necessary for home upkeep.
Did someone actually "buy" their debt for $1, or was this a way of getting donations? (I've never used ebay, and so don't really know the way it works except on the MOST basic level.)
I had a colleague that finally paid off all debts and alot could be contributed to credit cards. After that she cut up the cards and only purchased things with cash.
I am not trying to lump all people together here, but are people willing to live without the luxuries? I mean if someone is in such debt, do they still have cable, cell phones, things that we lived without just 10 to 20 years ago? I have a friend that refuses to get a cell phone for the simple fact that they do not want to be on call 24/7 for work, friends & family. I can't imagine not having a computer, but I have friends and students that don't have the money and don't buy one. I started to cut back by cancelling cable, using the library more rather than subscribe to magazines or buy books, consolidating my errands to save on gas, buying toys at garage sales, etc. I just found I was paying for things that were not essential. Part of that was due to increase in food prices. A little can add up to alot. No one wants to be told they are not entitled to spending, but when I grew up if you did not have the money for something you economized. As for college I went to city university and it was one of the best decisions I ever made. I had no debts and was able to pay for grad school without taking out loans. Do I wish that I could have attended a private art college, of course, but that's life. The profession I chose does not pay a high enough salary to cover living and loan expenses, let alone extra spending, so I think I planned accordingly.
On the subject of European countries paying for higher ed - I'd also look at the percentages of students going on to higher ed.
I haven't looked in a long time, but when I lived there and was in O-level prep classes, the numbers going to university were in the single digits, percentwise. Less than half of students back then were going on to school after O level/CSE/15+ exams.
The tradeoff in many countries for not loading your university graduates with crushing debt is - not having as many university graduates.
ALthough I've also watched, over the last 20 years, every university of which I have personal knowledge load up their middle-management with extra deans, heads of HR, publicity managers, development officers, and the like. My uncle retired in 1990 as dean of a major architecture school and was replaced by 3 people, all making more than he did. My school's HR person, who had been running the HR functions of our division for 20 years using post-its and Excel spreadsheets was replaced by two full-time people and 2 part-timers.
I personally just broke 100,000 in debt.
18,000 undergrad. The rest is law school. No car. No house. No credit cards. And I'm currently left wondering: Will the CCRA last long enough that I'll be able to choose a job freely, instead of to pay off my debt?
Will there be jobs for people in my position? (talented, yet profoundly unconnected graduates of second-tier law schools who did not end up as summer associates)
Why is it that colleges and graduate schools have gotten to a place where people in their early twenties, or their families, have to take on house-sized debt in order to attend? (Side thought- is the credit crunch a good thing in that way? If colleges find themselves unable to fill their rosters, because only the absolutely richest can attend, they'll have to rethink how tuition got so high, right? God, I'm so naive)
Why didn't I take that motherfucking scholarship?
Americans need to stop keeping up with the Joneses and constantly raising the bar on what we need to own to be a "normal middle class family", and doing that is our own responsibility as individual members of a society, not the government's.
But if you've lived abroad for any time at all, you also know that the lower standard of living in other countries *isn't* because Swedes (or Brits or Mexicans or whoever) are just better people than Americans. It's because there are *social norms*, many of which are, actually, created and/or encouraged by government programs.
People don't build their own houses: the size of houses is determined by developers, which is determined in part by the cost of land, tax structures, building restrictions (or the lack thereof), zoning, and so on. People ride bikes and take public transportation when doing so is convenient and cost-effective.
I gotta run, but you can see where I'm going with this.
"I think most of the readers of this blog are lefty types who agree that the US should have higher taxes, and free health care and education."
Maybe... the problem is so many people (me included) are hesitant to accept a system where the medium-high income folks are taxed more highly - it's idealistic and untrue, but most people like to think that if you're lucky you can do better than a lot of other people.
It's a motivation for picking fields of study, for staying in well-paying jobs.
It's the reason we get the top .1% from many professions of people coming from other countries to work here.
Maybe it's not fair that people who would rather work hard and not be in the American rat-race have little choice though...
Wow. The levels of moral judgment on these people for daring to have debt in a society that almost requires debt in order just to get by (and that is not with tons of luxuries) is astounding for so-called progressives.
Here's a story:
My husband and I have $40,000 in credit card debt right now(even after paying off $20,000 last year when our debt at that time was only $30,000-- gotta love interest). We own two cars-- both of which are 11 years old and taking public transit in my city is not an option-- we rent an extremely cheap house (cheaper than the rent on apartments in the crappiest neighborhoods in my city- we know the owner, just pay the property taxes in rent), we eat out maybe once a month, we have no health insurance, I am finishing a grad degree and he is self-employed in computers. The only "luxury" we regularly indulge in is renting movies ($8 per week). We have absolutely no savings and no additional retirement savings outside social security.
All of the debt we have on those credit cards are for the birth of our son, which had to be paid out-of-pocket; kidlet's well-checks and one trip to the ER, and other medical costs for us; paying for food in lean months; paying utilities on time; paying for books during undergrad; paying my grad tuition because my assistantship contract ran out; usurious interest (miss one payment and welcome to 30% interest rates). At this point, we can't even pay the interest on our debts. Every month just to eat, pay utilities, pay for gas-- just to meet our normal monthly expenses-- means we go an additional $500 to $1000 in debt. Both husband and I have been looking for better jobs, but we live in a metro area that is basically service industry and those jobs don't pay enough to cover the cost of childcare. Not to mention, we both keep falling into the "you're overqualified/educated for this" position.
How is a budget supposed to help when you've cut out almost every additional expense and yet your income still is insufficient for the minimum cost of living standards in your area?
But, nothing is fucked up about this system at all. Nothing to see here. Move along people.
http://
blackwomenblowthetrumpet....et.blogspot.com
I don't think that $200,000 in debt is outrageous - if the couple has an income that does not place them in danger of losing what they have worked so hard for.
In major cities, an "average" mortgage loan is $300,000 - $500,000. This is not to purchase a mansion!
A Master's degree at Harvard will cost $130,000 (including living expenses) after just two years.
Many people are attempting to compete with their neighbors and friends in order to look "successful" and therein lies the problem.
Thanks for letting me blow my trumpet!
Lisa
California public college costs are not the norm, B.
Eastern Illinois University, which isn't on a par with University of Illinois, just reported the following tuition hike:
University trustees voted Monday to raise the cost of a year of tuition for an in-state student taking 15 hours of classes a semester to $6,540 a year. Out-of-state students starting this fall will pay $19,593. On-campus housing costs were raised 6.5 percent in January and add up to $7,588.
So that's at least $56,000 for a four-year degree; a majority of today's college students, I believe, take five years or more, which further jacks up college costs.
History_mom, I can definitely see 3 things broken in your scary story:
- health insurance: If you are both working and can't afford it, (and have a kid!) that is messed up.
- grad school: paying tuition for a higher degree in the humanities is NEVER worth going into debt. I'm a PhD student in history at a top-five school, and my advisor's most recent student didn't even get an interview. Clearly, too many students are being encouraged to enter these programs under financially risky circumstances -- no one should be paying tuition for a PhD, and only wealthy kids with cash to pay upfront should even contemplate an MA.
- credit cards: that's some usurious interest.
I was arguing previously that owning a home is not possible without paying for it, and I stand by that. But the idea of a woman giving birth and raising a baby without health insurance -- that should not be happening in a civilized country. I wish you all the best, and I hope one of you finds a job with benefits really soon. Have you contemplated teaching grade school? The pay's not so hot but at least you and your family will be covered.
so many people (me included) are hesitant to accept a system where the medium-high income folks are taxed more highly - it's idealistic and untrue, but most people like to think that if you're lucky you can do better than a lot of other people.
Well, speaking as someone from a high-income family, I would be fucking thrilled to have our taxes go up if it meant universal health care. Shit, we pay $6k for our health insurance as it is, not to mention co-pays. *Or* the time and hassle of doing all the fucking paperwork and keeping track of shit like "health savings plans," etc. If our taxes went up $7-8k/year and the insurance costs went away? It would be a complete fucking wash.
If we paid higher local taxes and there were better public transit service, we could get rid of our car. We don't make payments on it, but we do buy gas.
If education were better funded, I wouldn't be giving PK's (public) school $100/month or so in office supplies, snacks, etc. I *might* not even be spending as much of my own time volunteering, if they could afford an aide in every classroom.
If there were more community after-school programs paid for by taxes (and our community isn't bad in that regard), we wouldn't end up paying for those.
All of which is to say that there are a *lot* of things that middle- and upper-middle class folks like us think they "need" (or at least want) for their families that they end up paying for out of pocket: education, healthcare, transportation. Then there's things like safe neighborhoods (which often means, "neighborhoods where community services like garbage collection, repairs, and graffiti control are provided by the local government"), which also cost people a lot of money. (And that "safe neighborhood" thing, by the way, is one reason why the emphasis on *owning* a home is as big as it is here; there's a stigma to renting, and in most places I've lived, neighborhoods with a lot of rentals have worse schools, more traffic, dirtier streets, etc.)
If we paid higher taxes, and the tradeoff was that those things were public goods, rather than things we had to pay for privately and directly, we'd have the things we want *and* a better community.
There exists no law allowing the government to tax individuals, anyway - the 16th Amendment was never ratified, but we're supposed to overlook that little detail. The IRS never seems to overlook a detail, though...
Oh, here we go.
See this for the 16th Amendment nonsense: http://evans-legal.com/dan/
tpfaq...ml#ratification
As for no law allowing taxation of individuals, what the hell do you call the first section of the Internal Revenue Code, which states that "There is hereby imposed on the taxable income of every [married individual, surviving spouse, head of a household, unmarried individual, or married individual filing a separate return] a tax determined in accordance with the following table.. ..”"
[The brackets are because each category of individual has its own section. Look for yourself: http://www.law.cornell.edu/uscod...01----000-
.html
Please, no more tax protester nonsense?
As I see it, a lot of the problem is that people have to be responsible for their own finances, but I don't know how people are supposed to learn how to do that. They often can't learn anything from their parents, because they weren't good with money. High schools and colleges don't teach anything about personal finance. So where do people get their information? From their friends, or from commercials on TV. I suppose there are really all kinds of free or inexpensive ways to get good information on handling household expenses, debt, budgets, etc., but people have to go looking for them. Like so much of life, it would be better with an instruction manual.
You can't be serious Nell, can you? Who on this thread ever argued that one can "own a home without paying for it?"
And, are you really telling history mom that she should consider teaching grade school for the health insurance. How do you know she's interested and/or qualified? Are you suggesting that grade school is the place for hard luck stories or anyone regardless of qualification? You clearly must not have kids, nor any sense of the extraordinarily challenging aspects of teaching young children. But, then again, at your "top five" history program you probably have no teaching training at all, right? Really, one doesn't really need training to be an effective teacher, do they? (And, by the way, TA-ing is not training.)
Of course, it's precisely such a complete misunderstanding of what's involved in effective teaching that is the prime reason that so many graduate students (both in and out of the "top five") don't get jobs or interviews. (And believe me, such sentiments come across in job applications, which too frequently display a sense of being entitled to an academic position--especially those from the so-called "top five," who too often believe that we should be awed by their pedigree and not their work, but that is another story.) Most troubling, though, to many PhDs haven't a clue of what's involved in good clue, much less a sense that they could/should (maybe) be/become good at it.
Still, nice of you Nell to condescend to give history mom the advice.
Aw, Dr.M gets so bothered when people are so presumptuous and condescending!
1. Are you suggesting that grade school is the place for hard luck stories or anyone regardless of qualification?
That's funny, nell's taught grade school!
2. You clearly must not have kids, nor any sense of the extraordinarily challenging aspects of teaching young children.
That's funny, nell's taught grade school!
3. But, then again, at your "top five" history program you probably have no teaching training at all, right? Really, one doesn't really need training to be an effective teacher, do they? (And, by the way, TA-ing is not training.)
That's funny, nell's taught grade school!
4. Of course, it's precisely such a complete misunderstanding of what's involved in effective teaching that is the prime reason that so many graduate students (both in and out of the "top five") don't get jobs or interviews.
That's funny, the reason people don't get job interviews has nothing to do with teaching, and everything to do with an over-saturated research job market with no openings! You're really on a roll man!
(And believe me, such sentiments come across in job applications, which too frequently display a sense of being entitled to an academic position--especially those from the so-called "top five," who too often believe that we should be awed by their pedigree and not their work, but that is another story.)
Bzzt, when there are 200 applicants for 1 academic position, it's ridiculous to blame the losers for seeming too entitled. See, this is an example of a "structural" problem.
Most troubling, though, to many PhDs haven't a clue of what's involved in good clue, much less a sense that they could/should (maybe) be/become good at it.
Not sure what this means, but judging from every other sentence in your comment I'm pretty sure it's wrong!
Still, nice of you Nell to condescend to give history mom the advice.
No one hates condescension as much as Dr.M!
History_Mom-- Your situation sounds like you could benefit from a Chapter 7 or Chapter 13 bankruptcy, depending on the specifics. I would strongly suggest seeing a bankruptcy attorney, ASAP*. Contrary to popular mythology, you can go through bankruptcy and still retain much of what you own; depending on your situation, you might be able to keep everything and get rid of those credit card debts.
By way of contrast, the family here has mostly debt that bankruptcy isn't designed to help; student loans are notoriously difficult to get rid of, and mortgages are hard too.
* Disclosure: I am a bankruptcy attorney, but focus on Chapter 11, which isn't right for your situation. But wherever you are, there should be somebody local who can guide you through the process.
LN and Dr. M., you're being dicks. Or bitches (and not in the good way). Knock it off. LN in particular.
Please, no more tax protester nonsense?
OMG, Just Saying and I actually agree on something for once!
On second thought, not having read the e-bay post, I missed the real point myself (but I still think you all have too).
Look where they are: Erie, PA. The rust belt. The place that's gotten hit the hardest by globalization.
That's the real issue here. The government has been aiding and abetting globalizing American companies for the last several decades, ignoring the plight of blue collar Americans hit by the consequences. A home is worthless if the factory that provides the only jobs in the city closes, and with that, families are left with no jobs, loss of their life savings equity, and inability to move to a new place with jobs. That's the problem with overencouraging home ownership.
I'm being a dick? nell gave some honest heartfelt advice to history_mom. Background: she's a history PhD student who is being modest by describing her school as top-5, and who is doing quite well in her program but nonetheless has fairly crap job prospects and is actually fairly likely to end up being a public school teacher after she gets her doctorate. DrM's comment might have been the most wrong comment in the history of the internet, which is really saying something.
Sometimes being a dick is quite appropriate, I think. But this is your blog.
What I meant is that you've been doing a lot of bitching at Dr. M in this thread. You guys don't like each other, that's cool. Time to let it go. (And yeah, Nell's comment was completely unobjectionable, but Dr. M. didn't seem personally rude about it, just argumentative.)
That's the problem with overencouraging home ownership
So the solution is that people should rent so that when their jobs disappear they can just pack up and move? Come on. Haul the kids out of school, say goodbye to friends and family--that's a little more difficult than you're acknowledging. Not to mention the expense of moving.
It's not a bad thing to have stable communities. It does mean that we--and by "we" I mean us, collectively: society, "the government"--need to invest in keeping those communities stable.
(And no, there's nothing wrong with renting, but come on.)
Wow, Dr M, how kind of you to explain to me what it's like to be a grade school teacher! It's true that I no longer -- after 5 years -- routinely dream about my first graders every night, so maybe I needed a refresher. And how insightful of you to suggest that when I go on the job market next year, my likely failure to get a decent offer will be the result of my poor teaching ability and crap research! You really made my day.
Ok, Bitch, what's your economic redevelopment plan for the rust belt then? I'm a cynic, admittedly, but it seems like it'd be a lot easier and more economically useful for the country to be able to have skilled labor where the factories are instead of trying to prop up the dying steel towns of Pennsylvania. But, unfortunately, the government has done neither, allowing (really encouraging) the jobs to vanish over the borders but also encouraging (via the income tax deduction, for one) people to buy homes and sink their savings into a single investment that can go down in value like any other asset.
I would consider this:
Still, nice of you Nell to condescend to give history mom the advice
quite rude. Incredibly rude, actually. The comments about not having any teaching experience and having a sense of entitlement were also quite rude and moreover completely absolutely 100% unwarranted.
Dr. M,
You're misreading me, I think. (Maybe next time you could misread me in a nicer way?) I'm not judging them, and I'm not assuming their situation is mine - I'm just saying that we can't assume their situation is desperate either. Sure the hospice thing might be a hint, but then again, maybe not. Sure they might be "humiliated" to auction their debt on ebay. I wouldn't be, personally. If I thought it had a chance in hell of working, I'd certain auction off my debt on ebay. (Any bidders?) Not out of desperation. Maybe as a freeloader, although if someone wants to buy my debt it seems that's their decision to make.
Please don't read things into what I'm saying. Its not all that complicated...I think this is a bizarre post, because the auction isn't revealing of any details. I think 100,000 in debt isn't a ghastly amount. I think that the assumption that they are paying their kid's loans is weird. I think its weird to assume you have to be desperate to auction your debt on ebay. That's all I'm saying.
Once upon a time, shivbunny used to build houses and where he worked went through a real esate boom much like the one we've seen in parts of the U.S.
What would happen is that people would buy a home with a mortgage that would give them a reasonable monthly payment for the first few years, call it $900/m, reasonable for their area. Completely within their means until five years later, the terms of the loan change and that $900 is now $1300. Add in an illness or a job loss and a situation where someone *was* making the most rational decision they could turns ugly fast.
(I also doubt they're paying their kids' loans as around $17K or so is around the maximum federally subsidized loan for four years of undergrad accrued to the student. It reads like someone is paying off their own college loans, which is fine; it's not a less honorable loan because it's one's own.)
Wow... blaming the victim sure is wrong when the victim is a phd candidate in a bad market but not when the victim is a family of five auctioning their home on ebay...
hmmm... but, bitch rules the roost and I follow her lead ... so ...
Nell, I only objected to the advice to teach grade school, colored by fact that I (as a university-based historian whose career has taken a colorful path) have interviewed way too many history phds or abds who think teaching doesn't matter (or have no idea that it matters.) I also happen to do way too much work at the k-12/16 divide and watch as historians (my colleagues, from my and other universities) shit all over grade school, middle-school, and high school teachers. I have also seen the reverse too. My apologies if my thoughts raised your anxieties.
So, good luck ... its a tough market.
does anyone here really think the ebay auction was serious? as in, they expected buyers? i think it was more on the lines of poetry, a cry to the universe.
everyone who has advanced economic theories blaming the poster can just go rest. what you have to say won't help, can't help them, financially or spiritually. to the extent you want to berate others holding debt, consider your job done. you made your points.
LN, I agree, which is why I told Dr. M. to knock it off too. (And yes, Dr. M. frequently discusses these things as if there were some absolute scale by which if one can be said to be higher on the class scale than someone else, one shouldn't complain, which is annoying.)
NotyetPhD, unsurprisingly, I do not have an economic redevelopment plan for the Rust Belt. I don't think, though, that lacking one means that I'm not entitled to point out when people are being screwed.
I think its weird to assume you have to be desperate to auction your debt on ebay.
Really? Huh.
Going into debt and nearly bankrupt for a PhD in History, all while supporting a child?
With all due respect to Mom, aren't some of the situations self created?
Do those pursuing advanced degrees consider the return-on-investment and future prospects of their degree?
I ask that sincerely. My degrees are in engineering, which although was less interesting to me - it enalbed me good job prospects with wide options. I'm not sure of the prospects of liberal arts or other advanced degrees - but it sounds quite negative.
I don't mean to sound insensitive, but life is tough, and we all have to be responsible for making good decisions in order to support our families.
although i didn't learn to spell.....enabled.
B, you're the norm today. I have half a house payment just in my head. That's life in these United States, the land of debt. I just hope they don't bring back the debtors' prisons.
Nell: Thank you for your thoughtful response. I agree, not having health insurance is probably responsible for more than half the non-interest portion of the debt and one reason I am a proponent of universal health care. Indeed, I often use my story when Libertarian or neo-cons proclaim the evils of socialized medicine-- often to no rebuttal. But the sad part is compared to many of my friends with health insurance, we are not really getting hit that hard on the big stuff (son's birth) because fewer employers provide adequate coverage for their employees (read: female), meaning workers are shouldering greater costs of medical care.
I applied to teach in my local school district, which claims a huge teacher shortage, but because I do not have three consecutive years of teaching (TAed for only two) or a teaching credential (the fast-track program is another 14 months) they would not even consider my application. I guess an M.A. in History isn't sufficient. I will try and get some work at my local community college this year-- but there are still no benefits. I am also not averse to working well out of my field (always have before I got the assistantship).
Dave: Thanks again for placing the blame solely on the individual. I bet we examined EVERYONE's personal history and economic decisions we could blame them instead of addressing the institutional causes of debt in this country. Our system is predicated on getting you into the debt cycle (by hyping consumerism) and once you are there preventing you from exiting it. This is not a bug in the system, but a feature. Could my husband and I have made some better choices along the way? Of course. But that is true of everyone I know-- even those blissfully debt-free. Not being in debt is often more luck than strategy.
I come from a family of teachers, but I guess I should have gotten the business degree for more money even though I hate business. Oh wait, even business majors aren't getting high-paying jobs because there aren't enough of them to go around and MBAs are now considered overvalued for the economic benefits.
Or I could be an engineer, except that I never developed an aptitude for calculus (though I am quite good at algebra).
Or I could have gone into computers-- wait, nope my husband already IS in computers and anyone familiar with that industry knows there is a glut in the market and most of the technical jobs (when not freelancing) are poorly paid. The problem with freelancing is the lack of stability-- some months you make $10,000 and others you make $2000-- it's hard to put together a budget planning for that kind of fluctuation.
Dave, how do you think we should create teachers, professional historians, and all the other jobs for which the liberal arts exist? Who is supposed to educate the future doctors, engineers, scientists, and MBAs if not those willing to be overeducated and underpaid? The sheer presumption of this kind of thinking truly astounds me.
"I think its weird to assume you have to be desperate to auction your debt on ebay.
Really? Huh."
Yeah, really. Like I said, I'd do it in a heartbeat if I thought there was any chance it would work. And I certainly am not desperate - my financial situation is pretty decent for someone of my age. So there's evidence that there are at least some people in the world who would do it if they were not desperate. I'd also do it in a heartbeat as a sort of joke - to make a point of some kind (what kind? I don't know exactly.)
The other thing I think is weird (there are SO many things I think are weird about this! Can you tell? ) is that you're assuming its not a joke. It seems pretty irrational for anyone to assume that an ebay buyer would want to buy their debt! It seems entirely plausible to me that some person just threw this up there as a "hey, wonder what would happen if..." kind of thing.
Mom, of course we need and value advanced liberal arts. My point was not based on degrading the value, but instead related to the demand vs. supply. I'm guessing supply far exceeds demand for such degrees - which is risk. Was this risk considered?
I don't agree being debt free is related to luck. It takes responsibility and a hard work ethic. While many have which may be considered unlucky (such as health issues, layoff, etc) there is also a systemic issue in this country related to spending beyond one's means and making poor decisions.
Unemployement is low in North America.... in fact you mentioned the teacher shortage in your area. I think a lower risk decision would have considered meeting the requirements to fulfill this. Perhaps you did.
Sure, it's not as glamorous, but perhaps a better financial decision which provides excellent benefits including the health care so desired. This was my point about considering ROI and risk.
People many times do what they 'want' versus a more responsibile decision. There is strong correlation between debt and decisions based on 'want'......
So does it make any sense to pay for an advanced liberal arts degree (either PhD or MA)? To me it seems like given the (lack of) potential of increased earning power from those degrees, that paying for them has to be considered a luxury. Are grad schools honest about the cost/benefit of their programs? Are people honest with themselves about the cost/benefit of their degrees?
that's the problem with encouraging home ownership
Of course, the non-rustbelt jobs that rustbelt residents could move to get aren't, for the most part, high-paying manufacturing jobs.
Further, when you are working class, moving away from your network of friends and family and extended family is a very big deal, because you rely on them for a lot. When childcare is prohibitively expensive, who watches the kids? When home repairs are prohibitively expensive, who walks you through your first toilet reseating, or circuit rewiring, or drywall job? Your parents. Your big sister. Your uncle. Your cousin. Who invites you to dinner when your pantry is a little low? Your best friend from high school. Who gives you a ride to the plant when your car's broken down? Your neighbor.
I grew up in a blue-collar neighborhood like that, in an extended family like that. And we moved 400 miles away in search of academic jobs that pay, or promise to someday pay, middle to upper-middle class salaries. But without that network - everything is harder, and costs more. That network is worth more than a few points in the Standard of LIving calculation, and packing up and leaving it behind is not something people do lightly.
Elliotg -- no, grad schools are not honest about the cost/benefit of their programs. Even in the sciences, where most people get their degrees paid for, there's not a lot of honesty about the real numbers of academic jobs, the real numbers on salaries, the real costs of spending that long waiting to start your career and get into the workforce, of delaying kids, delaying settling down (whether as a renter or buyer) , delaying beginning retirement savings. Not really much honesty at all. Programs need fresh blood to serve the serf-class role of Graduate Student, so there's really not much cause for them to be honest, in the end.
Sara, do you mean to imply that universities should warn their grad students that there will be a cost to delaying childbearing? That seems kind of odd to me. Every job has costs to your personal life, and I don't really know of any jobs where they outline those costs for you.
I'm currently a grad student in biology, and I have been told that job prospects are pretty terrible. So I feel like there is a degree of honesty there. Of course that's just my personal experience.
It would be interesting to discuss the issue of choosing to have children. I know that Bitch has argued in the past that most people don't have much choice, but I disagree. There's been a pattern in the past century that as the education levels have risen in an area/country, people have had fewer children. That leads me to believe there's been some choice involved.
But in the past 10-15 years or so, there seems to be an ideology in the US, especially in white folks, that really emphasizes reproduction and bigger families.
But even questioning the ideology is difficult.
(NB. I'm not criticizing this family, but questioning the ideology. For all I know, the five people in the ebay photo are paid models on a photo shoot.)
Yes, indeed Bitch, I do come down harder on those on top of the scale than those on the bottom. There is a philosophical and moral reason for this: those at the top of the ladder receive a greater portion of the benefits than those at the bottom, and are obligated to take a richer portion of the responsibility, no matter how unfair.
As with so many other folks, I started at the bottom and worked hard and went way up. Does that make me better? No. Does it make me fortunate? Yes. Does it make me more empathic? Perhaps, but only for those struggling with real crises. And, that is a personal flaw-- a perspective that can lead to excesses when folks spend time blaming those who are obviously suffering (putting an ad on ebay is suffering.) I am really sorry that I don't see the plight of elite graduate students in the same vein as the suffering of lower-middle class families on the verge of losing their home. I just cannot figure out how they are the same, although the suffering is certainly as real.
Nonetheless, I should have taken a moment before "bitching." Your approbations are warranted. I apologized upthread to Nell (before you posted your comments.) And, I apologize again for being insensitive. She wrote on a different topic, and my comments were not at all warranted.
By the way, I am also so glad that LN put it all in perspective: "DrM's comment might have been the most wrong comment in the history of the internet..." 
(Although that made me smile, it was not worth the price of being insensitive to Nell.)
There are people making an individualistic argument here that looks like: "people should have to pay for what they buy" or "europeans buy less crap than americans do".
There are others of us who are saying: that sentiment or understanding of economy has been marketed, and is pretty new, actually. Let's talk about the philosophy as a whole, not one of it's more major commandments.
It's not a moral absolute and it's not how Sweden runs - although it is how Chile runs.
It's been marketed in moral terms as being 'responsible' to your 'decisions', with the idea that this is possible. And we want to be responsible people, don't we?
Still, economically, it is no more the absolute box-standard way the world is -- or even how CAPITALISM is -- than is Christ or Buddha. In fact, I'd say that I'm roughly capitalist (although very pink), but this individualism is fundy to the fucking extreme. Seriously. The Chicago school tolerates no "moral deviation" in order for its "nirvana" to work.
AND it is a particular way of valuing individual choice in economy that is actually quite new.
I've been following the real estate bubble *as a product* of Greenspan's interpretation of Freidman for some time, and I'm deeply concerned that there'll be years of hellish contraction, and contraction is politically destabilizing. Rich and poor gaps are widening. On top of this, environmental crises? (Perhaps converting the economy away from oil will be sufficient to pull the rabbit from the hat. )
I feel sorry for whomever the next President is. There's no money in the coffers for New Deals, and China's got the debt.
(In other words, for me, the Real Estate bubble is a symptom of something I've been watching. Although it seems to me that making economic rent become the main vehicle for wealth "production" in a society is like having an economy sit around and smoke Opium and call the resulting hallucinations "construction". )
The truth *overall* - come away from the individual, and "my friend's rent is higher" or "my other friend is an asshole" - the macrocosm is that real wages have NOT grown in decades and that the middle class is downwardly mobile, and that the wealth and wage gap is growing.
Yes, we have more iPods and TVs and cable, and these are the affordable things. Yes, the Consumer Stuff is Flying Fast and Thick. However, a choice between Coke and Pepsi is not a great economic victory if your average working family has to work two, three, four jobs to make do; because it's food, shelter, education, and health care that REALLY eat the money. The Nikes and iPods are a bit of a distraction. Even if you buy new Nikes every month, $1500/year, how far does that get you in health care?
There are serious *assumptions* being made under the individualistic argument. You're assuming that the price tag on items means something, and that the good choices you make today will mean anything but Opium Hallucination tomorrow. The Chicago school depends on that - depends on you feeling smart and moral and good - because when you go under it's then your fault. Considering the entire middle class is going under, it's rather interesting that it still sells.
$1500/year, how far does that get you in health care?
Well, it can at least get you pretty far in other categories. Only sayin'.
That's not a lot of debt. Nobody sensible would say it was particularly irresponsible to have that sort of debt (except the personal finance wowsers who go OH NOES! U HAZ CREDIT CARDZ DEBT!" at the slightest opportunity). These people may have a problem but it isn't the level of debt, which is perfectly normal.
blaming the victim sure is wrong when the victim is a phd candidate in a bad market but not when the victim is a family of five auctioning their home on ebay...
Or you may view an overemphasis on home ownership as something of a structural problem, as Dr.B and others have alluded to in this thread (differences in school quality and neighborhood quality are tied to homeownership, there is a lack of rental properties in some areas, etc.) Certainly President Bush has been blabbing about an "ownership society" for years, and financial institutions have made a lot of money from the hopes and dreams of aspiring Americans. Nowhere have I blamed the family in question; in fact I explicitly stated that I thought this was an insensitive question and none of our damned business, especially since no one here knows all the details.
By the way, I don't view nell as a victim; I was simply describing her situation honestly and accurately. The fact of the matter is that the job market in academia for the humanities is absolutely atrocious. This is not a problem for nell: she loves what she does and will have other options upon completing her degree.
But if I may draw an analogy with the housing crisis, there is an over-idealization of higher education in certain segments of American society, and universities foster and exploit this in order to draw on a very cheap labor pool. This is just a fact. Of course there are those who believe that if you state this fact, you are "blaming the victim" and not acknowledging that society has broken down in some way by not providing enough professorships to allow all graduate students to fulfill their dreams. They think they display true compassion by (1) insisting that there is no such thing as a rational economic analysis when it comes to pursuing a PhD and then (2) bemoaning the tragedy that follows.
Dr M,
It wasn't your "insensitivity" that bothered me so much as the fact that you made false and insulting claims about me. For some reason my saying that I attend an elite school (in the context of, if my prospects aren't good, then paying for grad school isn't a good financial bet) really set you off. I can only surmise that you harbor some bitterness about being rejected from some top schools or something. You know what? Everyone who's ever applied to grad school knows that there's a lot of randomness in admissions. But you have an academic job now, right? You're set! You're middle-aged! Get over it already.
Nell: I have apologized, twice, for being over the top. You surely need not accept my apology nor acknowledge it. But, for a third time, let me say I am sorry. I am sorry to have made insulting claims about you. My comment obviously hurt your feelings and/or pride so badly that you can't let it go (and caused you to make claims of the sort that you yourself resented.) I did indeed violate a social norm, and I do again apologize for casting aspersions on your character. I wish that I had not been so acerbic. I certainly wish you the best.
Jess,
No, I'm not saying that grad school apps should come with italicized warnings that say "Hey, Smart People! We need you to breed!"
That was just one point in my overall larger statement: Grad schools are not, as a rule, very honest about the cost/benefit of the time and money it takes to get a graduate degree vs. what you will be doing with it afterwards. At least, the programs with which I am familiar have not been.
Delayed childbearing is just one of the many things that come out of the decision to get a postsecondary degree, and I'm not sure why you lit on that to call me on, versus asking if grad schools should warn all applicants that delaying putting money in their Roth IRAs for another 6-10 years might seriously affect their quality of life in retirement? I'm not actually one of those opt-out-everyone-must-breed-to-be fulfilled type feminists, if that's what your implication was?
I am quite surprise by the defending of grad school and that people should be entitled to academic positions simply because they have a degree. Where I come from grad school is a major luxury usually accompanied with the question, 'what can you do with that?' And if teaching is the only thing, well then the cost is not worth it. It feels like there was a big trend for people to get higher degrees since the job market was and is flooded with people with bachelors. I know people with 2-3 master's degrees and they are not making more money. Some changed careers, though. Going to school to acquire knowledge for personal fulfillment is a luxury.
"$292.71 Credit card self" I would say you are amazing, and can my friends and I study at your feet?
No, Sara, that's not what I was trying to imply, and I'm not sure why I picked that specific example either, except that maybe it seemed most extreme to me. Sorry, that was a bit unfair. I don't think that my program or my husband's has really said anything at all with regards to cost/benefit actually...but I don't go to seminars about that sort of thing or anything, so maybe they do and I just don't know it.
Also, I suppose that as a current student I'm not really in a position to say whether or not my program is being honest with me, given that I don't see the larger picture yet (and don't plan to go into academia anyway).
I am so thankful for the opportunity to go to grad school and to have chances in life. To never have to work a shitty job and know that I will be working that same shitty job for the next 50 years. Forget the money, that in itself is a huge gift. That's what I see grad school as giving me. And maybe I won't end up squarely in the upper middle class (or even the middle middle class, because of the choices I make) but I have the hope of finding a career that I believe in and enjoy. That's so amazing. And when I see people complain about low salaries in academia, or the other costs of being there, I just...I don't know. I want to remind them that they are lucky.
Ask me in a few years though. I may be a bit more jaded by then.
Mom, of course we need and value advanced liberal arts. My point was not based on degrading the value, but instead related to the demand vs. supply. I'm guessing supply far exceeds demand for such degrees - which is risk. Was this risk considered?
Yes, as a matter of fact I did consider the "risk". But then, there are also too many MBAs in this count, a degree economists have argued for years is so valuable. We also have too many people getting degrees in IT and other computer technical jobs. Again, degrees that we were assured (when we started college over a decade ago) would be so valuable. Our economy is skewing towards the service industry-- jobs for which you do not need a degree and also don't pay enough to keep up with the minimum cost of living in most areas. I live in a town that is 80% service industry. You do the math-- even a liberal arts degree puts me in a better position than without as far as long-term economic growth goes.
I don't agree being debt free is related to luck. It takes responsibility and a hard work ethic. While many have which may be considered unlucky (such as health issues, layoff, etc) there is also a systemic issue in this country related to spending beyond one's means and making poor decisions.
See what you just did there? You just made debt a moral quality and implied that those who have debt are irresponsible and lazy. My husband has worked full-time since age 13; other than the final year of undergrad and the year and a half since I had my son, I have worked full-time since I was 18, and before that I spent every weekend for four years babysitting to make money. There is nothing wrong with our work ethic. There is something wrong with our system when two, productive adults can work full-time jobs and still not make enough money to make their minimum living requirements (food, rent, transportation). We are not alone here. Sure, we could each get additional jobs and never see each other and have daycares raise our son, have a shorter life expectancy, and still be unable to retire but I happen to think that a system that demands this is broken. YMMV.
Unemployement is low in North America.... in fact you mentioned the teacher shortage in your area. I think a lower risk decision would have considered meeting the requirements to fulfill this. Perhaps you did.
Sure, it's not as glamorous, but perhaps a better financial decision which provides excellent benefits including the health care so desired. This was my point about considering ROI and risk.
I guess you didn't read above when I said that the school district, despite their teacher shortage would not even consider my application. This is also in spite of the incentive program they run which gives those who leave business and science fields a $10,000 income bonus to come and teach and gives them three years, while teaching, to get their credential. If you teach a liberal arts field, they are not so generous. So yes, I have considered getting my teaching credential, but it will still take me 14 months and money I don't have to do it.
On top of that, while the overall unemployment rate in the U.S. is fairly low, it is in fact rising AND my city is almost two percent higher than the national average.
And glamour was exactly why I got into history...are you fucking kidding?
People many times do what they 'want' versus a more responsibile decision. There is strong correlation between debt and decisions based on 'want'......
You are right. I wanted to have major surgery a couple years ago. My husband wanted to get into his car accident. I wanted to go without insurance when my son was born-- oh wait, nope we tried to get insurance before I got pregnant but it would have cost more with prenatal coverage because having children is a "choice". You know, it's just a "want" to feed myself and my family healthy foods-- imagine how much money I could save if I just ate at McDonald's everyday! And utilities, those are pretty negotiable too. What the fuck have I been thinking? I guess I really shoudl re-prioritze and stop feeling so damn entitled.
I am quite surprise by the defending of grad school and that people should be entitled to academic positions simply because they have a degree. . . .Going to school to acquire knowledge for personal fulfillment is a luxury.
So what is it you're objecting to here, again? The fact that people went to graduate school because they wanted to get academic jobs, or the fact that they went to graduate school without wanting to get academic jobs?
Dr. B-- The two options the original poster mentions aren't mutually exclusive. It's not like the academic job market is a secret. Many people going to grad school won't be able to get academic jobs. Therefore, it is naive to expect an academic job merely because one has an advanced degree, and the ability to attend grad school merely for personal fulfillment is a luxury. I think calling many grad students "smart suckers" is about right: http://www.villagevoice.com/
news...tz,53011,1.html
Indeed, that's exactly why I went to professional instead of grad school.
Of course, none of that undercuts the right of profs to bitch about students. It's a time honored tradition.
The last line of my last post is a non sequitur, because I thought this was in one of Prof Vane's threads about student email. Sorry about that. They kind of bled together into a similar discussion and I got confused.
Even in the sciences, where most people get their degrees paid for, there's not a lot of honesty about the real numbers of academic jobs, the real numbers on salaries, the real costs of spending that long waiting to start your career and get into the workforce, of delaying kids, delaying settling down (whether as a renter or buyer) , delaying beginning retirement savings. Not really much honesty at all.
The first is a problem of academia. The second can be found very easily, given that salaries at almost all state universities are public information. And all the others apply to any other low-wage job. Which is a strong argument for personal finance education in high school; it's not such a strong argument that grad schools need to talk about the realities of compounding interest in their admissions letters.
Mom, i'm sorry about your surgery and husbands accident. It does seem you've been unlucky.
We disagree on the risks and future prospects between professional and advanced liberal arts degrees. It's not my intent to win an arguement with you.
I'll stop here and agree we disagree.
I was just responding to a few comments defending people's decision to go to grad school and the job expectations.
I am not denying that there is a problem in employment where the bulk are low salary service jobs. However, the more historymom writes, the more I think her individual case is poor judgement. Many of us have higher degrees, yet are in such high debt, more than college loans. I don't mean to sound snarky, but the educated voices are very aware of all the factors against the individual in society and somehow still struggle to be debt free and prosperous. Something is not connecting.
Marie-- Fuck off. No really. Fuck off. Where from my posts have you had any place to conclude that "poor judgment" has had anything to do with our financial situation?
But isn't so much nicer peering down from your moral high horse at the rest of us obviously lesser mortals who dare to have debt in America?
It's not like the academic job market is a secret. Many people going to grad school won't be able to get academic jobs. Therefore, it is naive to expect an academic job merely because one has an advanced degree,
And strangely, most applicants to graduate school are young people in their early 20s, a prime age for "naive idealism," especially when dealing with people who have so far been accustomed to being exceptional.
Plus all the stuff that history mom said about not being able to actually predict the future.
I can say though, as a 22 year old who just started grad school (and got into every school I applied to, including some very good ones - so you could say I fit into the category of people who are accustomed to being exceptional) that I was and am well aware that the academic job market is crap. That really really has NOT been kept a secret from me.
Dr. B-- It is true that most applicants to graduate school are young people in their early 20s. Those people are allowed to smoke, drink, and have had the right to propel thousands of pounds of steel down the highway at thousands of feet per minute for nearly ten years. And, by definition, they've survived the rigors of undergraduate study (which, granted, can be less than rigorous). At some point they're old enough and experienced enough to be expected to research before making major life changes. It's not like the academic job market is even available to anybody who asks; it's common knowledge. Ask a room of 30 undergraduates what one can do with a liberal arts PhD, and you'll doubtless receives jokes about working at Starbucks.
Indeed, that's why those who have graduate degrees generally can't discharge student loan debts in bankruptcy merely because they're struggling: The situation is self-inflicted, barring external circumstances.
History_Mom's situation is the exception, not the rule; as I indicated previously, what she's describing is exactly the sort of situation where somebody can even discharge student loans via bankruptcy.
Yes, young adults are legally adults, and are in charge of their own lives.
Nonetheless, they are inexperienced. One can do all the research in the world, and still fail to understand what it will *feel like* to spend 5-10 years working very hard, internalizing the norms of the field ("if you don't get a R1 job you are a FAILURE"), and become increasingly stressed and anxious because, in fact, one *does* "know" that one's employment prospects are "terrible" and one will "only be fit to work at Starbucks".
The fact of the matter, of course, is that that isn't true; PhDs are quite employable in other fields, thankyouvermuch. But it's still psychologically difficult, y'see, to make that shift.
See, one can *rationally* know things and yet *still* have feelings, or make decisions, for other reasons. That doesn't make one stupid. It makes one human.
I'll second Bitch's point here. For me, the surprising thing about graduate school is how quickly and how deeply one internalizes the idea that an academic life is the only one worth living. I have told myself over and over when applying and in graduate school "You know this won't necessarily lead anywhere; it's just for fun." Nonetheless, it's true that if I quit, I will feel like my co-grad students will think of me as a failure, and more painfully, that my advisor will think I was a waste of time. When I started grad school, the opinions of these strangers didn't matter to me. Now, they are no longer strangers and it would grieve me to let my advisor down.
Again, I'm not complaining. I've enjoyed my research a lot and think that my dissertation is a meaningful contribution to the field. I've made friends, learned how to write, and even saved a little money. This academic social pressure is strong, but not strong enough to make me take a shitty job in the middle of nowhere. And I'll burn in hell before I cobble together a life of adjunct teaching. But it is, it really is more powerful than one might think, even for the forwarned and wary.
ya know, i'm about to go back to grad school and i have been day-dreaming about buying a home. Not because I have the money to, but because I like the feeling of stability that it gives to me (realistic or not). It would also mean no fighting to find an apartment that takes pets. No agonizing over whether I should try to find roommates or take out another student loan (still $20,500 left over from undergrad and my master's program).
I know I can't. And I know I won't because I don't have the money to. But the really terrifying thing is that I feel like maybe, if I'm really lucky and perpetually frugal, that it will only be a possibility when I'm 45 or 50--so at least a dozen years from now.
I'm single and have no children so everyone expects me to have little to no expenses...therefore, to have lots of money to throw around. Ha! I wish. After I completed the fafsa they told me my EFC (expected family contribution) was estimated at $19,111 because I made 60,000 gross last year. My net salary was about $41,000 after federal, state, and city taxes and social security and medicare deductions. After I paid my rent (utilities NOT included) and minimum student loan payment it brought that figure down to $20,000. Hunh. So if I go by the fafsa calculations, I have $899 for the entire YEAR left over for utilities, pet care, groceries and frivolous things like my subway card and toiletries (that $1.99 shampoo was really a treat).
Yeah, LN, the system ain't broke it's us greedy, shiftless Americans. How stupid of me not to figure it out.
I don't think there is anything wrong with Americans thinking of home ownership as part of the American dream--I don't think it's spoiled or selfish--it's natural. In fact, it's downright biological to fight for your own space/territory.
Unfortunately we've slid into a realm where it's hard to get ahead (or even easily pay your bills) even for those who work hard, consistently and are frugal. I hope that changes. I don't think home ownership should only be relegated to upper middle class and above. But I suppose I'm biased because I've never been there...
I'd also say that there's knowing, as a fact in your head, that the academic job market is crap when you're 22 or 23 or 24 and full of love of the field and fervor for learning.
And there's knowing, 5 or 6 years on, after several years of being used as cheap labor by an overscheduled, distant professor, given very little guidance or support, living in a rathole, eating cheap, drinking bad beer and running up debt -- that the job market is crap.
(if I sound bitter, I'll say that my husband and I got through his grad school debt free, I tightwadded us through his 6 years of postdoc debt-free, managed to have our kids while he was a postdoc (research associate, technically), and have arrived at him having a Real Job and us having a house. We don't have a lot of disposable income, but we have attained the middle class, finally, at nearly 40. He loves his work, I love living in university towns and working touchy-feely social science jobs, and we're happy generally with how it all turned out)
We made it, but we've watched folks around us declare bankruptcy, drop out, move to trailers in the Arizona desert, leave academia for high school teaching, leave academia for HR work, and in one notable case, leave academia via suicide. We also have seen his colleagues patent new discoveries, get top-level jobs, speak to major elected officials about world-altering things, and publish books.
But those who achieved the iconic academic brand of success are far outnumbered by those who didn't. And those who succeeded in traditional terms are not always the ones everyone thought would be the hotshots when they were all 24.
Hisory mom, putting your story on the internet will always receive judgement. I may be the only person actually writing it, but others are thinking it. There are circumstances that one can not help in aquiring debt such as medical issues, etc. From reading your comments I am left with alot of questions. Why not major in education rather than history? I know it is late to change at this point, but that would have been a good start. I live in a metro area that offers signing bonuses for high need subjects in high need schools, so I am familiar with some of the things you mentioned. When I was in graduate school for art education, I was explicitly told by my professors and the board of ed to get dually certified for elementary school. There was a much better chance at getting a job teaching if I did. I don't want to teach young kids so I refused. Art is the least high need area even compared with history, so I need to be willing to do something else if I can't get a job teaching art. Why keep going to graduate school, acquiring more debt if the job market is that bad?
Marie, you're a judgmental twit. There is a lot of my story that I will not put on the internet that provides much more context for the decisions we've made. But really, I don't think it should be necessary to have to prove I am a responsible and hardworking person BEFORE people believe that our debt is not simply the result of moral failings or being materialistic. The point of my story was that even people who do things right almost all the time (who is perfect here? don't raise your hands all at once, now) and are just trying to make ends meet, still can find themselves in massive amounts of debt BECAUSE THE SYSTEM IS DEEPLY FUCKED.
Once again, it is not a bug in the system that people get caught in the debt cycle and cannot get out short of bankruptcy in most cases. When lenders can jack the interest rates so high you spend all your time simply paying off interest, you have to admit that this is a feature of the system.
Be thankful if none of your errors --from that one impulsive purchase, picking the "wrong" major when you thought it would be a good choice, buying a house in a market that sours, not being able to predict the effing future-- don't result in high levels of debt. And stop thinking it is because you are some morally superior individual who is just smarter/less greedy/financially savvier than those who do end up in debt. Most of our debt is medical in nature-- now you tell me how we were supposed to have better "judgment" about that? Oh, that's right, good health is also a moral quality in our fucked up system.
paying my grad tuition because my assistantship contract ran out;
So yes, I have considered getting my teaching credential, but it will still take me 14 months and money I don't have to do it.
history_mom, it seems as if you understand that it would make much more sense financially to take the money you're currently pouring into grad school, which will not lead to a job, and instead spend that money on your teaching credential. Instead, you're choosing to continue to pour money which you don't have into a degree with no return.
So, fine. I'm not claiming that you're not "responsible and hardworking" or that you exhibit "moral failings" or are "materialistic". However, I am claiming that your anger and bitterness about your debt, and the sense that you feel wronged, doesn't make a lot of sense given the financial decision that you're currently making. Lots of people would love to throw their budget to the wind and enroll in grad school. They don't.
Or I could have gone into computers-- wait, nope my husband already IS in computers and anyone familiar with that industry knows there is a glut in the market and most of the technical jobs (when not freelancing) are poorly paid.
This is completely, utterly untrue.
.....and most computer jobs (when not freelancing) offer insurance, which would have resulted in avoiding the medical expenses.
I work in computers. Most freelancer's want the freedom and flexibility. Again, this is a 'want' that usually results in a bad result (i.e. no insurance, volatile income, etc).
I said i wasn't going to comment...sorry, the discussion evolved since then.
My experience, and my husband also works in tech, is that what history mom is saying is correct. Perhaps it depends on where she's located.
And, you know people, it's rude to offer advice when people aren't actually asking for it. Clearly history_mom doesn't welcome strangers second-guessing her; have some manners, and stop.
B, the comments were not intended as advice. Mom created a dialog related to how it's the systems fault. Some on the thread didn't fully agree and engaged in a discussion related to how some different personal decisions could have resulted in a more positive outcome, suggesting that it perhaps isn't only the system that is broke but also personal decisions which impact it.
I agree there are a multitude of other issues and variables which affect the outcome - and it's not appropriate to discuss them in detail on a public thread.
That said, I wish HMom the best. The comments were not intended to be disrespectful...in fact, even after some reccieved insults they still responded respectfully.
I think having different perspectives, including those outside the acadamy is positive and improves the dialog and balance of your nice blog. If you don't agree, then i'll shut up and go back to lurking.
It is interesting how financial issues seem to provoke tremendous response and emotion, which is indicative of the stress the country is currently under with subprime/healthcare/economy, etc.
sorry about the typos..received (and probably others).
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