A Penny For Your Thoughts

Image“It is thrifty to prepare today for the wants of tomorrow.” -Aesop

There once was a small boy accompanying his grandmother on errands around a small town. The boy noticed a penny on the sidewalk and eagerly picked it up. He showed the elderly woman his find with the excitement that only small children seems to find upon discovering a misplaced copper coin. The grandmother was equally as excited for she had lived during the Great Depression and understood how precious money was and what it felt like to go without. The woman beamed at the boy and hugged him and stated she was thankful for his appreciation of a penny. She then recounted a similar incident which had taken place sometime earlier with the boy’s cousin. The cousin saw a penny on the ground and passed it by. The woman asked the boy why he had not stopped to pick it up. The cousin replied, “I will not dirty my hands for anything less than a quarter.” Thus, the boy who valued the penny became the favorite of the old woman.

You may be wondering what the point of this story is and what is has to do with my current process of getting out of debt. I believe it has everything to do with what I am going through and this is why. The generation that grew up during the 1930’s and 1940’s understood what it meant to go without. From the poverty of the Depression to the rationing of materials during World War II, this generation adapted to the difficulties of having little money and few resources. As these people grew older the United States witnessed immense growth and an abundance of wealth, but many did not stop practicing Depression era habits. As children and grandchildren were born they looked at their elders as strange for hiding money in the house or storing jars and large cans in pantries and basements. They dismissed these practices as crazy habits of people from an time long past. Unfortunately, a few generations later the United States is witnessing the exact opposite end of the spectrum with individuals practicing extreme financial irresponsibility. This is because my generation, which someone has coined “the millennials,”  exhibits an unprecedented sense of entitlement that has grown worse from generation to generation. We are the the indifferent cousin.

I am no different than anyone else in my peer group. I felt entitled to all that life had to offer me and I believed that at no time should I have to experience any discomfort. Media constantly tells us that it we need to “Just Do It” and that it is all about me. So that is how our generation views life and that is how we approach money. Many people take out student loans that are much larger than they need to cover school, and they spend the rest on cars, a flat screen tv, video games, and parties. Many people believe they are entitled to all of these things because without them they will not be truly happy. The Millennials have bastardized the Latin phrase Carpe Diem and changed it into YOLO (You Only Live Once), which is the justification to do things that may adversely impact us without taking responsibility for it when it does. For many their parents bail them out of their problems, but this only acts as an appeasement because as these people get older they have no understanding of the consequences of their actions. These college students now will eventually be adults in the work force practicing the same financial irresponsibility. People then wonder how this generation is so in debt and why the student debt crisis just keeps growing. People blame it on the exorbitant cost of education but if we are honest with ourselves it is because there are a lot of young kids who are making bad choices whether or not they realize it. If school is too expensive then go somewhere cheaper. If tuition keeps rising consider transferring to a place that is more affordable. Instead of thinking along these lines people just take on more debt to remedy an already terrible situation. For the Millennials we believe that we deserve to go to whatever school we want and we see community colleges or more affordable and less prestigious school as the penny we will not dirty our hands for.

For me personally, I have begun to appreciate pennies a lot more after hearing that story. The boy in it is actually my current debt counselor. Since he told me this anecdote I have begun picking up any penny that I see. This practice of saving pennies is essential for my current struggle to get out of debt. Every little bit helps when you have so much to repay. There are also parallels that can be drawn between a penny and a person in debt. A penny is the lowest form of money in circulation, but being deeply in debt makes you realize that you are also one of the lowest members of the financial system. Like the penny, debtors are looked on as pariahs that are overlooked by employers and lenders. We are the people often scorned because we should have known better, but there is still value to be found in people who are experiencing financial hardship. For those who can make it out of debt you learn a resilience and perhaps the most intimate understanding of the value of money. For people like me life has come full circle and now I can relate, in part, to those who survived the Great Depression. I realize just how little I really have and just how much a penny is actually worth. As I press on with my plans to get a better handle on my debt I take strength in the fact that if I go without now I will never have to go without in the future.

 

 

 

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The Beginning of the End (of Debt)

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“Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.” -Ogden Nash

My life is no longer my own and it is my fault. I am $67,000 in debt between three credit cards, several federal student loans, and one private loan which I have affectionately named “The Beast” because it is unsubsidized through Sallie Mae and will cost me the most when all is said and done. Let me be a cautionary tale to you dear reader. As Ogden Nash so eloquently stated getting into debt never seems as horrible a thing until you realize the mountain you must climb after enjoying a downhill ride. At no point will I ask for pity because, as I said before, I put myself here. Let me tell you my story.

I graduated from high school in 2007 and the world was at my feet. I wanted to go into broadcast journalism, but I also realized I would be paying for college myself as my parents did not have the means to support me. I started at a community college which I was able to go to for close to free based on federal and state financial aid. All I was told was “Accept everything in your reward letter except the unsubsidized loans. Those are bad.” I did not know why they were bad but I stayed away from them, and this is where I took on my first federal subsidized loans. No interest and no payments until 6 months after college! It sounds great because as an 18 year old kid you think, “That’s four or five years away I’m sure I’ll have life figured out by then and have a great job too!” My second year was when the trouble started. I had a scholarship, I had financial aid, and I was living off campus in an apartment. I figured I was set but as time went on money started getting tighter and I could not find a job near me. I didn’t have a car and I walked most days about a mile to school. Finally I reached a month where I knew there was no way I could cover rent. So I frantically called different people to try and come up with a solution. The answer I received was “Do a cash advance on your credit card to cover it.”

*Side Note: Credit card companies are smart. They target young kids with credit cards right as they enter college in order to start putting them in debt. If there is not someone around to carefully monitor how a student uses their card it can cause major problems. The average human mind does not fully develop until 25 for men and 22 for women. This means people with a lot of growing up to do are unwittingly putting themselves in a bad situation with credit cards that can adversely impact their future.*

My experience with credit cards at this point had been positive. I would use it and pay it off and each time the company would give me more and more credit. By my junior year of college I had a $10,000 limit but I digress. This cash advance would set the tone for my understanding of what to do if you are out of money. I am paying for my mistakes now.

After my two year school I started looking at top journalism schools and was accepted to one out in the Midwest. It cost $30,000 a year to attend but once again I was receiving a scholarship and there was federal aid available so I figured everything would work out like everyone said it would. I was able to switch my residency to the state where I was going to school, but it takes a year before you gain the status financially. So I paid full price for out of state tuition for the first year. I knew this would be a lot but once again the answer appeared in the form of a $15,000 private student loan. Thus, The Beast was born. All I needed was a cosigner and I had enough money to pay for school and I was happy. The terms seemed reasonable and I was confident I would have no trouble paying it. In hindsight I had no idea what I was signing up for, and I sugarcoated it when I talked to the person who cosigned it. I began paying interest on it immediately. $135 a month but I had the money and I figured everything would be good.

I ended up switching majors within the next two years and settled on Psychology because I had always been adept at empathizing with people and knew I was good at listening and helping people solve their problems. I lived in an apartment and worked part time but there were several times I could not cover all of my expenses so I turned to my cards. A cash advance here and a cash advance there. I was too proud to ask for help and too stupid to realize I was digging myself a bigger hole. In my final year of college things really became bad. I was out of work, out of money, still in school, and the debt was starting to pile up. I could not pay my credit cards, I was often late on my rent, and I barely managed to make my loan payments every month. I felt I had a stronger obligation to pay that bill because I did not want to let the cosigner down. I even took out two unsubsidized federal loans to help try and make ends meet. There were days I did not eat and I relied a lot on friends to get me through. My family helped where they could, covering my last few months of rent so I could at least graduate. I moved home after graduation with the knowledge that a degree in Psychology is in essence worthless and that I needed to figure out my debt situation. Currently all my credit cards have been shut down and everything is in collections. The only thing I have been able to keep current are my loans which are deferred for several more months.

The difference between me and a lot of other debt stories out there is this. I do not have a good job out of college. Many people bemoan their sacrifices from paying back their six figure debt with a $60,000 – 70,000 job or how their spouse helped shoulder the burden by having a job as well. I am single, 24 years old, and I am attempting to fight my way out of debt working jobs that only pay a little better than minimum wage.

So that is my story and that is why I am here. I want to share my experience with anyone willing to listen. I want advice from anyone willing to give it, but most of all I want to show that it is possible to climb a mountain of debt. Now I begin a new chapter in my life and I hope others can learn from my experiences. The effects of debt are not merely financial. Yes, it hurts your credit score and your ability to get loans, but there are physical, mental, and emotional effects as well. As more and more college students graduate into a world of debt enslavement I urge you not to be overcome by your debt. The best way to begin the process of debt relief is to accept that your life must change significantly. You will have to sacrifice so much more than you ever thought. You will have to devote long hours to work, less hours to pleasure, and realize that the money in your pocket or bank account is no longer your own. This is the world of debt and you must embrace it or never be able to rid yourself from it. There will be no summer vacation for me and I have had to find alternative ways to have fun because there are no longer funds for movies or the bar. I even gave up a relationship because I knew in the end it would cost me time money I did not have to give. Some people may think this is extreme but the reality is if you are over your head in debt this is life. My advice to anyone in my situation is this. These will be your darkest days but if you weather the storm and pull through it will become your greatest accomplishment.

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