Why do people take on so much debt?

[DCLMP]

No I think we should be asking ourselves since we voted for these members who keep putting us farther and farther into debt.

I've stopped because it all seems pretty hopeless.

 

[afan]

college cost variances for public schools these days floor me. my oldest graduated from one of our state universities in '18 and the cost then was about $8k per year. the top public university here (which ranks in the top 40 nation wide) is still fairly reasonable with 2023/2024 tuition at just shy of $13,000 per year.

A lot aren't getting the same funding from the state as before and they have to make it up somewhere. That's not the sole reason but is part of it just like local school districts that have had budget cuts.

 

[Dulcee]

just curious-what does childcare run these days? i was paying what i felt was exhorbitant amounts for my littles in the late 90's (and our wages in no way shape or form were keeping up with the cost of living).

For our oldest (now 9) we paid approximately $1000 a month for his full-day pre-k.

Our younger two (2 and 4) are in the same program is now $1500 a month for a single child, we get a "slight" discount for the second child which puts us at about $35k a year in just child care.

We are in what I would call a middle-of-the-road program for our area, it's not all the bells and whistles but it is a higher level of safety, education etc (i.e. actual preschool curriculum versus just general daycare). Thinking about saving for our kids college is almost laughable when I consider that we are already paying college tuition for them just so we can go to work.

 

[focusondisney]

My student loan debt is crushing. Yes, I know that I took the loans. But I'm paying what some people pay to rent an apartment per month and the principal never goes down. It's frustrating and upsetting. I literally cry over the debt but it is what it is right now. I can't change it. All we can do is pay down what we can. We aren't horrible people.

I really think those types of student loans are predatory & something needs to be done about them. Lenders take advantage of young people who end up paying them the majority of their lives & can never get out from under. There is no other lender in the country who can get away with that. It’s just wrong & terrifying what is happening to people just trying to get an education.

 

[gottalovepluto]

Ah, you beat me to it. Our kids both had to take it to graduate but I attended the same school district and it wasn't even an elective in the 80s.
Our kids are both savers because of it.



Both of our kids attended trade schools (welder & electrician). The welder, 23, attended 4 months of school at a cost of $9k, which we paid, and earned 6 figures last year. One year into a 5 year car loan, he has paid off 80% of it and saved $40k for a house down payment.
The electrician, 27, has been working FT since he left college after 1 semester, and wasn't sure what he wanted to do for a career for a while. I offered to help him pay for trade school and he told me money is not an issue. It was $12k. He just finished a few weeks ago and is still job searching. He has $60k in a Vanguard investment fund to someday buy a house. Both have been saving for retirement for years.

I don't mind that they're both still living with us because if they were paying rent, they'd never be able to save for a house. I'd much rather them save for extra down payment plus some extra on top of that, so they can afford to paint, decorate, buy furniture, etc without wiping out all of their savings.

A lot of high-paying jobs require a college degree but not everyone who doesn't attend college is earning low wages. Most of ds23's friends can't afford the fun toys he enjoys such as riding his dirt bike or snowboarding. Sometimes he goes alone because of it. He seems to have a good balance between having fun while he's young but still saving money too.

When I was in HS, college was only for the really smart kids. Now they have kids convinced that college is for everyone and it's the only path to a decent job and good life. Lately it seems that unless parents foot the bill, it's a path to a life full of soul-crushing debt. Kids are graduating with student loans that are more than what we paid for our house. That is insane.

I would rather them work on lowering the cost of college for everyone, look at factors that have college costs soaring way faster than inflation and everything else, instead of cancelling loans for some.
Colleges are gouging kids and getting away with it. It's criminal.

Cancelling student loans does nothing to control the cost itself.

You mean things like an entire year worth of bs general ed classes & make you a better person classes that American academia specifically loves? Because yup. Waste of dough that but if you don’t pay you don’t get the degree. Rest of the world doesn’t put up with that nonsense and it shaves a year off their undergrad.

I’m glad your kids found/are finding paths they fit better in, it’s such a detriment to our society that these paths are not emphasized as equally as college

 

[Twilghtsprkle]

college cost variances for public schools these days floor me. my oldest graduated from one of our state universities in '18 and the cost then was about $8k per year. the top public university here (which ranks in the top 40 nation wide) is still fairly reasonable with 2023/2024 tuition at just shy of $13,000 per year.

College is crazy expensive. The cost for a year at the state university I went to is what I paid for all 4 years! And that’s just tuition, not the cost of living on campus. My husband keeps bringing up his school as a choice for our older daughter, but 1 year there costs way more than 4 years at the state university.

The thing is both our daughters are ok with state schools. I taught them that unless they are going into something super specialized, they can get the education in state. Plus they have an inheritance from their aunt & uncle who passed from COVID that would more than cover in state school if they live at home and allow them to get used cars. There is definitely something to be said about graduating with no debt.

 

[barkley]

For our oldest (now 9) we paid approximately $1000 a month for his full-day pre-k.

Our younger two (2 and 4) are in the same program is now $1500 a month for a single child, we get a "slight" discount for the second child which puts us at about $35k a year in just child care.

We are in what I would call a middle-of-the-road program for our area, it's not all the bells and whistles but it is a higher level of safety, education etc (i.e. actual preschool curriculum versus just general daycare). Thinking about saving for our kids college is almost laughable when I consider that we are already paying college tuition for them just so we can go to work.

it sounds similar to the set-up my kids were in. we wanted (obviously) safe but also more of a curriculum based as they aged up in preschool b/c even the public schools were making it apparant that their expectation was that when a kid hit kindergarten the had to have the basics under their belt (it was much more like what 1st graders had been taught back when in was teaching in the 80's). in 1994 we were paying $900 for a single child for 'daycare' (preschool did'nt start until age 3 1/2 i think) and it was around $1200 each when they aged up into a full day which was 1/2 day preschool with the hours before and after deemed as 'childcare'.

i get you on the saving for college aspect-many a parent with kids who had gone entirely through private schools from k-8th (because these daycares and preschools were the only options in our area and were affiliated/feeder schools) opted to transfer their kids to public for high school in order to be able to set aside some college savings (or just BEGIN to set aside for their own retirement).

 

[mjkacmom]

college cost variances for public schools these days floor me. my oldest graduated from one of our state universities in '18 and the cost then was about $8k per year. the top public university here (which ranks in the top 40 nation wide) is still fairly reasonable with 2023/2024 tuition at just shy of $13,000 per year.

It’s closer to $15,000 here in state, plus $15,000 for room/board. Not everyone is in commuting distance.

 

[mjkacmom]

I think UMass Amherst is 40k now (In-State), but they have a D1-A Football Program now........ that losses almost every game. And a head coach that makes $800k/year. Should have stayed at the D1-AA level or what every it was before.

Rutgers coach gets 6+ million, Clemson 11 million (and I know many weren’t thrilled when Rutgers joined big 10).

 

[barkley]

College is crazy expensive. The cost for a year at the state university I went to is what I paid for all 4 years!

i just checked the website for the state university i graduated from-roughly the same amount of increases but given that i graduated just about 40 years ago it does'nt seem like that big of a sticker shock to me (their current tuition is just shy of $7k per year).

I taught them that unless they are going into something super specialized, they can get the education in state.

i so agree on this. i never understood the desire to go to some overpriced school for a major where the place you attended made absolutly no difference professionaly. i know with some careers it's where the degree was earned that drives hiring, making connections in college helps create professional opportunities...but with many careers it's that you have the degree and moreso-you have the same professional licensing and certifications that are issued on the same paper with the same state seals to everyone no matter where they attended. we have a family member who had this mindset and i strongly suspect is passing it on to their next generation-the place they attended for a straight forward 4 year degree and k-12 teaching credential costs (before fees and supplies/god help you if you opt to live on campus...) $120,000 while the state university just down the road can achieve the identical degree and credential in the low $30k range. with teaching salaries in the state they live in that debt will outlive them, their kids and their grandkids.

 

[barkley]

It’s closer to $15,000 here in state, plus $15,000 for room/board. Not everyone is in commuting distance.

even if you can commute the local state university here won't let you as a first year student. back several years ago when the state said that public institutions had to be accountable for their spending and scale back tuition the institutions suddenly decided to find another revenue source and began mandating new/under age 21 students live in their overpriced dorms. there are a few exceptions you can get an exemption for but those are few and far between so a student can figure on living with 2 other students in sparse housing but paying 2x their annual tuition for it.

 

[Starport Seven-Five]

The other thing with state vs private schools is that there are some majors where a larger public university is just a better fit. I went for Mechanical Engineering and was being pushed towards this tiny private school by family members. Their lab resources/tools were outdated and would have been a detriment to my education. The state school I went to had hundreds of millions in research grants and state of the art facilities so I had exposure to the same tools I now use in my career.

just curious-what does childcare run these days? i was paying what i felt was exhorbitant amounts for my littles in the late 90's (and our wages in no way shape or form were keeping up with the cost of living).

We're paying $373.50 per week with a 10% employer discount for our toddler. We are in the Detroit area so I would call it mid cost of living.

I really think those types of student loans are predatory & something needs to be done about them. Lenders take advantage of young people who end up paying them the majority of their lives & can never get out from under. There is no other lender in the country who can get away with that. It’s just wrong & terrifying what is happening to people just trying to get an education.

It is a catch 22 because you also don't want to block out people from pursuing an education. So many jobs that didn't require a degree 30 years ago now require a BA/BS just to get an interview.

 

[HerRoyalHighness]

FOMO in various different ways . There is a person on youtube...Hannah Alonzo. She is adding in a series on influencers. Is very interesting when she breaks down it all.

 

[mi*vida*loca]

Putting a big down payment on a house isn’t feasible for a lot of people. I bought my home and did FHA loan with 3.5% down. My mortgage was the same price as my rent on a small 3 bedroom apartment was going to be with the new increase. It didn’t make sense for us to wait any longer and save 20-50%. Thank god we bought in 2019 before Covid hit and prices and rates went through the roof.

I bought my first home in 2008 and we all know how that went. I also got separated in 2009 with the divorce finalized in 2010 so that house went down the drain so had to wait a while to buy again.

Having a car payment on a newer car sucks but makes sense for many reasons. Stability and security since new cars come with better warranties.

One of my saving graces after my divorce was not having to deal with car issues as a single mom. I had a car payment but my car was reliable with a warranty. So I had a fixed payment and wasn’t draining money into fixing a car. Or missing work due to car troubles like I saw other coworkers dealing with.

We all don’t live the same lives.

 

[DisneyHardin]

Sadly a lot of State Universities have lost their way and have raised their costs exponentially in the last 20 years

I can't believe how much the cost of college has gone up. I graduated college in 2000. I went to a State University and I think it was about $4500/year when I went and I just looked it up and it's now $10,000/year for tuition - I'm sure room and board has gone up equally.

My sister and I were extremely lucky when it came to college. We both did well academically and went to college virtually free - our Mom was a single mom who was a teacher - she couldn't afford to bankroll our college educations. I went to a State School on a full tuition scholarship - Mom did pay my room and board. My sister was much smarter than me and she went to a fancy private college on a full scholarship that even included room and board. Neither of us went into particularly high paying careers, so I am so thankful we didn't have student loans to contend with after graduation.

 

[pindecisive]

[Edited first line out of consideration for another poster]

I have a friend who regularly posts about how he cannot afford the medical expenses for his cat or how he cannot afford to rent a truck or how he cannot afford plane fare. His posts are interspaced with posts about his new action figure of the month or his new outfit item of the moment he's had specially made.

Cats cost money. Feeding, vaccinations, toys, medical costs. He should never have adopted one because he can't afford it - but he was lonely as a single man. "Shouldn't have done it" applies to almost everything he spends money on. "It'll make me happy" is probably what he tells himself, every single time.

Every single dollar you spend is actually equal to about 6 dollars of interest in your lifetime. By spending that dollar you're losing all its earning power.

People make unwise financial decisions when they have no long term goal, or are put into stressful situations. Those who grow up with poverty mindsets have to unlearn eating habits, shopping habits, and teach themselves how to regulate or remove the dopamine rush that comes with the "saving money" part of discount shopping.

It's hard to learn the "I have enough" mindset - but once you have it, you either learn to change your situation to improve your means, or live well enough within your means to save money.

TLDR: Most people are not financially literate. "78% of Americans live paycheck to paycheck."

 

[pindecisive]

For our oldest (now 9) we paid approximately $1000 a month for his full-day pre-k.

Our younger two (2 and 4) are in the same program is now $1500 a month for a single child, we get a "slight" discount for the second child which puts us at about $35k a year in just child care.

We are in what I would call a middle-of-the-road program for our area, it's not all the bells and whistles but it is a higher level of safety, education etc (i.e. actual preschool curriculum versus just general daycare). Thinking about saving for our kids college is almost laughable when I consider that we are already paying college tuition for them just so we can go to work.

Most finance people recommend to save for retirement versus saving for college for your kids. Especially since kids these days can attend CC for general ed ($170/class in CA), and then work through a fully online program as slow as they want while still working.

Although trade school is a great choice in the short term, it's not a good choice in the long term as it limits their ability to switch careers if they get hurt in a workplace incident or if the industry evaporates. These days most recruiters won't consider hiring someone without a BA/BS and I've heard firsthand of companies refusing to promote without a degree.

Get the degree first, then attend the trade school - cover all your bases so that if you need to switch industries, you have the ability to.

 

[gmi3804]

We live in a society that encourages spending money we don’t have on things we don’t need to impress those we don’t like.

Fact: You work hardest for the money you make from nine to five (or the equivalent) at a job. That money, like magic, reproduces itself when spent/invested correctly. And buying cinnamon brooms at the Cracker Barrel gift shop (or the equivalent) isn’t smart spending/investing. That’s how the rich get richer.

 

[tvguy]

The common refrain of judging food stamps users for having a new IPhone is a classic example. However people may not realize a smart phone is almost a mandatory purchase in today’s world and required for things such as your job or online booking of medical appointments. These same people may not have a laptop to use. Also with financing it becomes much more affordable.

Well, NOBODY needs an Iphone. That's the issue. A $50 Smartphone from Target or Walmart will do everything they need to do for hundreds less. HOWEVER, that doesn't matter because low income folks get cell phones and service at no charge thanks to $1.11 Universal Access fee all cell phone users pay each month per phone to pay for those phone.s

 

[tvguy]

On paper, teaching financial responsibility is a wonderful idea. But it would never work because too many people would not agree with what was being taught.
As long as we have people that complain about having $60,000 in education debt to pay for something that they will take with them the rest of their life......but don't think twice about buying a $60,000 car every 8 years, we can't solve the problem.