Occasionally, I read commercially published articles which provide advice very different to what I have found successful in my own experience. I will be highlighting these articles periodically in a "I Won't Follow This Advice" segment. These segments represent my opinion and one should consult a professional before making any decisions. Here's segment #3.While the following article is not giving advice, I am including it to address the issues it shares. Based on the frequency of student debt issues, the situation seems to reflect a belief that unlimited use of debt for a college education is acceptable. In my experience, the cost of (and debt from) a college education should be proportional to the salaries of the jobs one can get.
The USA Today series Young & In Debt describes a graduate taking on $165,000 of student loan debt to become a chiropractor. In addition, she has $9000 in credit card debt and a $4000 car loan. She has a full time job as a chiropractor and a part-time job as a personal trainer, and earns about $44,000 per year. Unfortunately, after living expenses, there isn't much money left to pay off the loans.
As I wrote earlier, a college education should be part of one's wealth building plans. It is important that the cost of college pay out, specifically through a higher paying job. While I do not know all the details from the USA Today story, I could not justify the spending $165,000 to get an education for two jobs that pay $44,000. My college education cost 135% of my starting salary and my student loans were about 40% of my starting salary. Even with the expected increase of college costs, I would not want my daughter to spend more than 250% of her starting salary on college nor have over 50% of her starting salary in student loans.
For more on Ideas You Can Use, check back every Tuesday for a new segment.
Photo Credit: morgueFile.com, Clara Natoli
This is not financial advice. Please consult a professional advisor.
Copyright © 2007 Achievement Catalyst, LLC
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2 comments:
i graduated college with a masters degree and $3500 in credit card debt.
but i didn't keep my frugal ways.
2 months later that was paid off and replaced with a 25k car loan debt (yeah it was stupid).
a year later my credit card debt was back up to 5k (i borrowed money in "invest" and lost it)and my car loan hadn't budged.
but i've been debt free for about 4 years now (only loans are on rental properties and they all have 20% equity)
@Adventure,
Congratulations on being debt free. I read you profile. Good luck on using rental properties to retire at 34. Sounds like a good plan.
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