Proverbs 22:7

The rich rule over the poor, and the borrower is slave to the lender.

Saturday, September 15, 2012

This is why I'm no longer "normal."

It's been way too long since I've posted a blog. Forgive me. This one will be a long post to make up for it :) August is the month from Hades at work with back to school, and this year I was extra busy because in addition to doing my regular work, I had to prepare everything for turnover to a new employee so I could move into a new position. Maybe I'll do another post about that later.. but for now, I've moved into a new role and I'm SUPER excited about it.

You've all heard me gripe and complain about student loans for 3+ years now. I hate these darn things so much that whenever I have the opportunity to try to persuade someone against taking out student loans, I will. Even if it's on a public message board (I know, I know, bad idea...I just couldn't help myself.)

There was a recent conversation on a message board I frequent that started off talking about Chicago teacher unions strike.... One thing led to another, and one of the offshoots of the conversation became about how hard it is to live on only $X amount of dollars per month. $X being approximately $2500.

Okay, now I know that in some parts of the country, $2500 (take home pay) is not alot of money depending on the cost of living for your area. However, where I live, and with the choices Jonny and I have made, $2500 is completely doable. So I responded to this conversation outlining exactly how and why this was doable with the following:

  • $250 for tithe (we actually tithe on our gross pay, but for simplicity sake and privacy, this calculation will tithe on net)
  • $625 for house/homeowners insurance
  • $400 groceries/lunch/restaurants
  • $125 electricity (average)
  • $17 Garbage pick up
  • $30 Water
  • $62 Cell Phones for 2 people
  • $43 Home Security
  • $48 Internet
  • $8 Netflix
  • $37 Pest Service
  • $320 Gas/Car Maintenance
  • $85 for Car Insurance
  • $400 Blow ($50 per person per week for miscellaneous, household purchases, other unforeseen expenses)

And $50 left over for savings or or whatever else....

Now granted.... this is tight. This does not give any wiggle room for anything else... and this only includes "regular living expenses." but it's pretty much a complete list of everything we expect on a monthly basis. Anything that's not listed, such as doctor visits, etc, can be pulled from savings, or from the blow money each month if necessary. The point I was trying to make is that in my area is is COMPLETELY DOABLE to live on a measly $2500 per month. Before Jonny got his job, I mentioned how stressed I was about being able to continue to make payments toward the student loans. Our regular expenses wasn't the issue. I made the money to cover our regular expenses. I did not, however, make enough money to continue to throw payments at the student loans and I desperately did not want to defer them because I want them PAID OFF AND OUT OF MY LIFE.

Something important to point out about the monthly budget above. You don't see a car payment. You don't see cable. You don't see an expensive cell phone plan. You also don't see credit card debt or student loan debt. In other words - if you make practical and smart choices, it's possible to live on a small budget, and not suffer.

Yes, Jonny and I have student loans to pay. No, it's not included in the budget above. The budget above IS however, our true monthly budget, for the most part, except for our student loan payments and any other out of the ordinary expenses we may run into. If we had not incurred student loan debt, we could live on $2500 a month for our regular expenses and everything else.... everything else, could be used to save, invest, pay down the house, and have a ton of fun in the process. Instead though, right now, that "everything else" is being thrown as fast as I can throw it at those awful student loans.

If you and your family make more than $2500... could you live on a budget like the one above? No, the budget doesn't take families with kids into consideration, so of course you would need to include expenses for your children, such as day care, after school programs, extra money for their expenses, etc. I get it, really, I do. But I'm not there yet. The budget above is for a childless couple. One who has chosen to give up fancy cell phones, cable, and luxurious new cars, in order make it work. One day, we'll probably get cable or a satellite service, but for now, we can't justify the cost, and really don't need it. So back to what I was saying - could you live on $2500 a month? If so.. how much extra would you have left over after these expenses are taken care of? $500? $800? $1500? Maybe more than that? Can you dream about the extra things that you could do with that extra money that you would have if you weren't having to pay it to a car payment, a credit card payment, or student loans? I can... and it makes me sick to my stomach that such a large portion (almost 20%) of our paychecks are going to our student loans. 20% of our take home pay is being ripped out from underneath us before we can even breathe each month because we took on the stupid tax of all these student loans.

*Sigh* I could totally use that money to landscape my yard, upgrade my kitchen cabinets, redo the flooring in my house, travel, save for retirement, remodel, give more to charities, my church, or AXiD, plan a car replacement fund, etc etc. Unfortunately, because I did stupid by taking out student loans, I have an obligation to pay those off first before I have fun with extra money.

Okay, so back to the message board story. I shared this budget on the board, and explained that this was an example of our true budget, less our student loans. I explained that to those who said it could not be done that yes it could, provided you make smart decisions. Smart decisions including not taking out a car loan or lease, or student loans and having to make a monthly payment. Smart decision such as not paying for cable if you can't really justify the cost. Smart decisions such as going without a fancy phone plan (side note, I believe you all know that Jonny and I had blackberries for YEARS with a $145 a month cost. Now we pay $62 a month for a no-contract, pay as you go plan. Yeah, fancy cell phones are a complete rip off. iPhone5? No thank you. Not worth the additional expense for me.) etc etc.

Well, as you can imagine... the Normal People on the message board ripped me apart for even suggesting that it's realistic to live without those things. And shame on me for calling student loans a Stupid Tax. Here are some of the comments I got:

  • I know that some students get student loans when they don't really need to, but not everyone qualifies for federal financial aid, Pell grants, and/or scholarships. And even if they do qualify for one/more of those, that's not always enough to cover the total cost of tuition/books/room/food ... Student loans are, for many students, necessary. I'm not sure I'd call securing money for your education a 'stupid tax'.
  • How is it a tax? It's a voluntarily incurred debt.
    • Oh my goodness. Do you take everything at literal face value? Definition of stupid tax: something I shouldn't have had to pay for if I hadn't done something stupid. The "something stupid" in this case, is taking out stupid loans, rather than working a little more hours, or being a little more responsible with the money I DID have when I was in college. Voluntarily incurred debt - yes. Some people (like many of you, apparently ) think that debt is the only way to get a "good" education. I used to, too. But I was wrong. If I had done things differently, and avoid student loans, I could be living very comfortably right now. But I have the weight of student loans dragging me down, preventing me from doing things I really want to be able to do. So, in that sense, it's motivation to work harder. I'll work harder, rather than gripe and complain about how someone else got a better deal than me.
  • I don't know why you feel the need to respond with such emotion - it's possible to have rational discussions on GC. Well, with some people it is, anyway.

    I disagree with you as well. There are, in fact, some people who "need" loans in order to pay for school. When the average cost for one year at a public institution is around $16K, it's naive to think that everyone can work full time while attending school. It's equally naive to assume that everyone is military or peace corps material. 

    I've agreed that there are opportunities out there that some people fail to investigate, but you don't seem to recognize that all these alternatives you speak so highly of aren't within every student's reach. 

    Some people need student loans.
    • I couldn't even respond to this person. She's making excuses. Everyone has options available to them, they just have to be diligent to investigate them. You DON'T have to go to college immediately following high school. You can work and save money, or go to school part time. You can join the military/peace corps (which I had previously mentioned in another response which is why she disputed that in her comment above). It's apparent that she was too busy making excuses to see the rationale that there are ways to make it work without going in to debt. I really wish I had known all this before it was too late for me. I spent my military money and then some :(
      • Side Note.... $16K? Really? I just checked the current tuition and fees rate at SPSU, and for 12 hours, it's $3350 per semester, or $6700 a year. More than when I was in school obviously, but that's nowhere near $16K. I'm sorry that I didn't feel the need to go to a school with a more popular name and a larger bill.) Now, add in the housing plan and meal fee, and okay, current rates at my school are close to $16K... but there are ways to make that work without taking on that much debt! 
  • But some people in some circumstances may find it is the best option for them. Here's a thought: you decide what's best for you and your family, and give others the same courtesy.
    • Sure. However, I also feel that I have a responsibility to at least plant the seed in a young person's head that they don't have to listen to what's "normal" by taking out student loans just because they are available. Just because it's an option doesn't mean it's the best option. If there are students reading this, they need to know there are ways to avoid debt, and to avoid those chains once they do get a big boy or big girl job.

Student Loans are NOT a necessary evil. Please please, if you're young, and you're reading this, do your research. Find scholarships. Get a job. Have a garage sell. Start your own business. Cut back on un-necessary expenses (Greek life is an investment in your future, don't cut that out! Plus, scholarships are available.)

Meanwhile, Jonny and I are still looking for a way for make an extra $1000-1200 a month to throw at our student loans to pay them off quicker. Hopefully we'll find a solution before too much longer.

Have a great weekend, y'all :)