Wednesday, March 2, 2016

I'm Talking Debt and How We're Teaching Our Kids to Avoid It

It's one of my new favorite songs.

I like the music, I like the nostalgia. I don't like the truth of it.

There are a lot of stressed out people in this world of ours.

One of the big reasons for this is debt.

So much debt.

Bryan and I chose to go into debt back when the kids were young/being born.

I hated it.

It wasn't that we were strapped for cash all the time. We had enough money to make the payments, but my nerves were always on edge about it.

Thoughts of Bryan losing his job and us being destitute were frequently on my mind.

The amount of money we were losing in interest ticked me off.

Thankfully, Bryan saw how much it bothered me and was willing to scrimp and save and pay those loans off as fast as we possibly could.

And we've never gone back.

I found myself in a conversation about debt not too long ago. I was just sitting and listening as folks told of the arguments they had with their spouses about debt and spending. They all had quite large sums of debt. At one point, someone asked me about our debt. I replied that we had none. It makes me nervous to have it and I hate it, so we don't have any. One person then said, "Well, you're lucky. Bryan makes enough money that you don't have to have any."

It's not the first time I've heard that sentiment. I have heard it said over and over again that only rich people don't have to have debt.

I don't agree.

As far as I can see, debt is most often a mindset. There are people that make $500,000 per year who are in debt up to their eyeballs, yet a man who makes $50,000 retires with over a million dollars saved up.

Sometimes, debt is beyond our control. Sadly, a medical emergency or chronic illness can send a family into bankruptcy, but most of the time debt is a result of choices that we make.

Borrowing money these days could not be easier. The government hands out student loans practically willy nilly. When a kid goes to college, credit card companies line up to sign them up. You can buy everything from jewelry to phones to carpet through "financing". Problem is, all of this comes at a huge cost.

Our parents didn't have these same problems. Debt wasn't nearly so easy to come by when they were raising us, and debt wasn't something that was discussed much. When it was time for us and our peers to go out on our own, many of us were caught off guard. We didn't know the pitfalls. We didn't know the toll debt could take. We walked right into it.

Our kids are on the verge of making some important decisions. Decisions that will affect the rest of their lives. We have been and are going to continue to teach them and guide them to make smart choices, then cross our fingers and pray that they listen.

 The biggest points we want them to hear:

1. College is about the education, not the "college experience" or the name of the school.

We are stressing to our kids that the point of college is to learn, and the point of that learning is to get good jobs that they enjoy. (First things first, pick a major that teaches you something useful. A major in European History might be interesting, but it doesn't have many career choices to go with it.) As long as they do well in their classes, the name of the college doesn't mean all that much. For example, Bryan was accepted to every law school to which he applied. He could have gone to Michigan, which was ranked one of the best schools in the country, but we chose Indiana. Knowing we wanted to live in Indianapolis when he graduated, and knowing that a majority of new hires at Indianapolis law firms came from Indiana's law school, we saw no reason to take out tens of thousands in loans to pay for a Michigan diploma. Same goes for our kids. Our kids have done well enough in school and on their standardized tests to get into just about any school they choose. However, the amount of scholarship money they get from each will vary greatly. Even though Buttercup would like to go to Notre Dame, it just doesn't make sense to borrow $50,000 to do so when she could borrow nothing and get a top-notch architecture degree from Ball State.

2. Making the choice to go into debt now limits the choices you have in the future.

It doesn't take long to get into crushing debt. A person borrows $40,000 to go to college. That person marries someone who has $30,000 of her own student loans. They finance two cars, and boom, they have over $100,000 in debt to pay off. Choices are taken away. They can't take the jobs they really want because they need the higher salary of the jobs they dislike to pay the bills. The couple has a baby, but despite their desire, neither can stay home with that baby because one salary won't cover the payments on their loans. A friend of theirs has a medical issue and there is a fundraiser to help pay medical expenses. The couple wants to be generous, but they can't because being generous means there won't be enough money for them to pay their own bills.

None of us knows what the future will bring, but making smart choices now will give them more options when that future unfolds.

3. Live below your means.

I think (hope (pray)) we have taught our kids that having the newest and nicest and most isn't the goal in life and these things won't make them happy. Being content and grateful for what we have instead of pining for things we don't will make for a much happier life. With this type of mindset, it is much easier to say no to the bigger house that stretches your finances, and instead buy the smaller house that allows you to save money for emergencies. With this mindset, it is easier to drive a car that has a door which doesn't open and rust as its paint color until you have saved enough cash to buy that dream car.

Saving money is important. It is important to have money in the bank for the "just in case". Just in case you lose your job, you have money saved to pay for food and housing for several months while you find a new one. Just in case the furnace goes out, you have the money to buy a new one. It is also important to save for retirement. Pensions are few and far between, and social security simply isn't enough to keep you from being a burden to your own children. When a bulk of your paycheck goes to paying off loans, there is precious little to go towards savings.

4. Borrowing money is expensive.

Borrow $28,000 to buy a brand new truck on a three year loan with 3.7% interest, that truck actually costs you almost $32,000.

Put $5,000 on a credit card with a modest 18% interest rate. If you pay $200 per month, never adding another purchase to it, it will take you almost three years and $6,400 to pay it off. If you pay only the minimum payment the credit card company requires, it will take even longer and cost a lot more.

Imagine what you could have done with that money. Saved some for retirement. Given some to your favorite charity. Bought those shoes you really liked.

It really gets expensive when it snowballs. You are making enough money to make your payments, but not enough to build up a savings. All is fine until your car breaks down. You don't have the money to fix it, so you have to put the repairs on your credit card. More debt, more interest, more money going out the window, and now you are having trouble making payments. Things can go downhill from there even faster.

Even more important than the amount of money you waste is the expense you pay in peace of mind. It is stressful to have those bills hanging over your head. That splurge Christmas present you put on your credit card doesn't bring any happiness when you're still paying it off long after the person you gave it to has stopped appreciating it. That student loan is a weight that exhausts you when you are working a second job to make ends meet. Fighting with your spouse over where the money goes puts a wedge between the two of you that is hard to overcome.

It just isn't worth it.

Yes, Bryan and I are fortunate to have a generous income, but we haven't always had it.

Besides the fact we could only afford to live in a roach-infested, horrible apartment eating the cheapest of the cheap food for the three years Bryan was in law school, both of us have divorced parents. Both of us helped our previously stay-at-home mothers pay for necessities when we were still teens and young adults ourselves. While we never went hungry, we saw what it was like to struggle financially. We saw how a tragic event can throw a family into financial instability.

Some might say that's probably what makes me so nervous about debt.

Our kids have not gone through the experiences we have. They don't know what financial instability feels like. They don't know what debt feels like. It is our job to teach them what debt is, what the downfalls of it are, and how to make good choices that give them the best chance at avoiding it.

I really, really don't want that song of being stressed out to apply to them when they're adults.

If you have anything to add, any other ideas I should pass on, please let me know. While I am knowledgeable on the subject, I'm no expert, and I would love to hear your thoughts.

Have a lovely day!


  1. Hubby and I were both married before and both of them spent money like it was growing on the tree out back. It didn't matter how much money you made it would never be enough. Then hubby and I got together and paid off the lowest bill then the next lowest bill always taking all the money from the last bill to the new bill along with whatever that bills amount was. Pretty soon we were debt free. I so agree that you have to manage credit cards carefully. We have them for travel, but we pay them off each month. All the work we're doing on our boat is cash. We don't like debt either.

    Have a fabulous day. ☺

    1. Friends of mine have gone through a program by Dave Ramsey, and that is exactly how he teaches people to get out of debt! It works!
      We also have one credit card for travel-type things that gets paid off each month. It gives us a bit more peace of mind to have the protections, seeing as how our credit card number gets stolen approximately once each year.

  2. thank you for sharing this post- debt a major stressor - I am very stressed about finances - partly because we live in a very expensive part of the country - from school taxes - to property taxes - to just heating and bring power to our home....we have learned our lesson the hard especially after I lost two jobs with 18 months apart because of the economy- but that was six years ago - we live or try to live below our means or just at our level - but it is scary and because I felt the stress of losing a job or two that fear doesn't go away part of though wants to breath because we are on our way but I dare not...

    as far as college - both of my kids have a lot of catching up to do - we have wonderful colleges that can help them achieve a good education - if they need to go to a community college to gain more credits to go to a four year college so be it - and if they want a trade school instead that is fine too - but the rule after high school you need to study something....

    also about the debt you are absolutely right it is on so many levels - because it is a choice.

    and as for being told you're lucky just quote Seneca "Luck is what happens when preparation meets opportunity"


    1. We are fortunate to live someplace with a low cost of living with relatively low property taxes.
      Unfortunately, lots and lots of people our age have had to learn the hard way. Sounds like you learned the really, really hard way. Two job losses would make anyone nervous about finances, even many years later. Good news is, you learned, and you're doing your very best to stay on the right path.

      I have actually begged my kids to go to community college and learn a trade. Seriously, if just one of them could please go into something useful to me. Mechanics, plumbers, and electricians will always have jobs, and I could really use one in the family. :)

      Great quote! I will be keeping that one in mind!

  3. I love that you're teaching your kids this! My parents always were against debt for the most part, but I definitely got in over my head with school. I didn't get any more than I needed, and I had scholarships and grants in undergrad, but it's still been a burden for a while now. I'm so grateful that I at least didn't have credit card debt as well! So much better for your kids to start out life without that weight hanging on. It IS a choice, and we can't make better choices unless we recognize that .

    1. We are going to be the first generation to still be paying off their own school debt while also trying to pay for their kids' college. It is a heavy, heavy burden many, many people are lugging around. I heard on the radio recently, a financial guy said it is appropriate for college students to borrow the amount of one year's salary of the profession they are studying. I about flipped my lid when I heard that. No wonder there is a debt problem when financial people give such horrible advice.

  4. This is such, SUCH a great post and a wonderful, wonderful way to live. I've spent my life with my family in debt due to inadequate earnings, depression-affected earnings, and not-enough-education-affected-earnings, and we have CONSTANTLY been bailed out by family members who got it right somehow. I am DETERMINED to save first. I know I need to get a degree in the end, but I want to do it in as low-impact a way as possible, and save, save, save in the meantime.

    Being in debt makes me itchy.

    1. You are fortunate to have family to help you out. Learning the hard way isn't without it's benefits. As long as you learn from past mistakes, and figure out ways to avoid making those mistakes again, those mistakes have been helpful. You learned, and you are taking steps to do things the smartest way now. Keep that goal in mind and you will get there, even if it takes a little longer than you wanted. :)

    2. I need to learn to learn from other people's mistakes, instead of being determined to make my own :) Long-term and sustainable is how I know I need to play it :) Thank you, for your input, too :)

  5. Such good things to keep in mind. I am a wreck when we owe money. We are paying off a few things and I can't wait till it's done. Thankfully we have no credit card debt. School loans are a very heavy debt. My son did community college for two years and then finished at a local University. Not too much debt. My daughter the same, we worked together so no one would be unable to pay. She has friends who owe $60-100,000 for a bachelor's degree. It's important to learn to say NO to yourself.

    1. That is a great way to keep college affordable! Good for your kids (and you!) for doing it the smart way.

      It should be impossible for kids to take out such huge loans, especially when they are getting degrees for careers that won't pay half the cost of getting the degree. Shame on the government for handing them out. Most 18 year olds don't have the foresight to see what damage they are doing getting those loans. We as parents need to guide them and prevent them as much as possible from taking that path.

  6. J2 is moving out this month (with a room mate). While I really worry about him being able to afford it...I think this will be a great experience for him and if he has to move home...hopefully he will have learned an invaluable lesson. :)

    1. Pretty sure most parents are worried when their kids move out. I know I will be. Life lessons can be tough, but they work. :) Hope the transition goes as well as it possibly can.

  7. I was going to comment, "Yes, #1!!" and then I read #'s 2, 3, and 4. Yes to all of them!!

    We've been very, very blessed to have both grown up with a debt-is-bad mindset, and in our late 20's, we're debt free. It's a state that very few of our friends share, unfortunately. I had a ton of college debt (all paid off now), while hubby went to community college and worked his butt off to graduate in only 3 years- spending 1 year at a state school to finish his BA. So much smarter.

    And I completely agree- making money has nothing to do with being debt free. We both work at a Bible Camp, for the love of Pete. Not a lot of money in Bible Camp maintenance, I'll tell you that. It's about how you live your life. I only buy clothes from Goodwill (except underwear- I splurge on a $7 pack of new ones every couple years...). We don't have cable, internet, or SmartPhones. Does that suck sometimes? Yep. But I think that being financially secure (and being able to give to causes we believe in!) is worth the little bit of suckage.

    Thank you for this post. So, so true.

    1. So many things I like about your comment, and not just that you agree with me. :)

      Good for you, being debt free!!! That is almost unheard of for people in their 20s. You and your husband are wise beyond your years.

      I am glad to hear you splurge on brand-new underwear. :)

      A little bit of suckage (thank you for that awesome word) is absolutely worth it.

  8. This is really spot on and ideas I'm trying to instill in my children. I've become more vocal about the financial choices I am making. I want them to understand that I am paying down debt, which means we might have to sacrifice something in the "right now" in order to have a better future. I think it is good for them to understand these basic ideas long before they have to practice them themselves!

    1. It seems lots of conversations with our kids have been popping up about money and debt lately. Just yesterday, they noticed writing on the windshields of cars on a used car lot. We talked about what %APR and "cash deal" means.
      We won't be going on spring break this year. When the kids ask why, we are quick to tell them that we have one or maybe two cars to buy this year. Vacation means we don't have the money for the car when the time comes.
      It really is a culmination of many, many conversations for the years the kids live with us that does the best good, I think. I love to hear about parents having these conversations.


Thank you for taking the time to tell me what you're thinking!