Monday, February 27, 2012

Gimme Shelter

So last week in Business Week, I read a depressing article. Let me be clear, the news that student debt is getting in the way of many of my highly educated peers ability to buy their own homes is not surprising to me. In fact, I’m a little confused as to where anyone got the idea that $100,000 in debt wouldn’t stand in the way of another giant loan. This is simple economics – you got a loan to invest in your education. You got your education and you were lucky enough to use it to get a high paying job. Your first priority should be paying off that loan with the additional income you are gaining from you investment, not making another huge (and probably worthless) investment.

Photo: Chad Fisk
We could live here...
I would equate this to my mother’s simple rules about playtime when I was growing up. If I finished my chores and homework, I could have the rest of my time to play or read or do whatever I wanted. It was a simple rule, and it’s stuck with me into adulthood, right along with “eat your vegetables before you can have dessert”. However, it’s becoming clear that I might be more alone in this thinking than I thought…
The Grige is constantly amazed at my imperative that we must get all of our cleaning and laundry done on Saturday morning before we can enjoy the rest of the weekend. I am militant about this rule, and it’s nearly impossible for me to enjoy a fun activity if I know that chores are at home waiting for me. Sometimes I try to disguise my obsession with the excuse that “well, people might come over unexpectedly and I want the house to look nice”, but the Grige is not buying it. I will completely lose my s*** if we have plans for breakfast on a Saturday morning and don’t get all the chores done on Friday night and he just has to deal with that as gallantly as he can.
Cleaning is waaaay more important than sleep.
His ability to push important tasks to the back burner and focus on the present has made me wonder if I might be missing something. Like maybe, if I keep playing by the rules like this, I will miss out on important opportunities. This weekend, I might miss out on a bike ride with friends. But down the road, we might miss out on owning a home or having kids because I’m obsessed with paying off our student debt first. It’s kind of a scary thought when we live in a society where debt is a necessity for “normal” life.
Photo: Me
Looking over this cliff is essentially how I feel about debt.
The counter-argument to my “finish your chores” rule is that if you make enough money to make your student loan payments (whatever they may be) and also your projected home payments, there is no reason that you should not be eligible for a home loan. It doesn’t sound totally crazy, but you can see why it makes banks nervous. Student loans are essentially impossible to default on. They will follow you through bankruptcy all the way to your grave and probably beyond. Home loans are much easier to get rid of by comparison, so if a financially strapped person is in the unfortunate position of choosing which bill to pay, the student loan is probably going to win. The bank just ends up with a home that has probably lost value since it was purchased instead of the cold, hard cash they love so dearly.
It will be interesting to see where we land on this, because young people are going to continue furthering their education to try to get ahead, successfully or not. It’s interesting to think that this very endeavor may be hindering us from having the same things our newfound educationand accompanying affluence were supposed to get us. For now, I’m going to keep eating my vegetables, dream about dessert and play it safe. But stay tuned, because I just bought some GRE books of my own…

Double E

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