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760 thou is NOT "nearly a million". And I spotted that headline, last night, in my YouTube suggestions. I'm not about to click on a video from that creepy jackass.
The credit card debt and personal loans are bad. The mortgage is GOOD. The student loans CAN be good (positioned them to make a lot of money, it seems). The car loans are good, assuming they got decent rates. Their debt is not out of line, considering they're just starting out, and that it's roughly triple their income. The home is apparently a basic 'starter home', and the cars must be modestly-priced, too.
I feel pretty much the way you do about this.
A lot of unanswered questions. How much equity do they have in the house? What were the personal loans for?
Its a lot of debt, but it may just be a sign of the times. Living well requires money and a willingness to incur debt. A $230,000 income would allow disciplined people to service a debt of this size.
When my wife and I were in our late twenties our financial picture looked somewhat similar. We gambled and chose to buy a large home in a good area because we could afford it. Today that home has more tripled in value.
Honestly, I'd rather see people do this than not get an education, live in a poor area, have junk cars etc.
To me, this lifestyle makes far more sense than the penny pinchers who are trying to retire early with a FIRE formula. My philosophy that people should incur debt, work hard, pay off that debt, and lead a comfortable lifestyle at all stages of their life.
I think these people owe money, but they know what they are doing.
Years ago my wife and I had cc debt of $29,000, and I felt like we were drowning in debt. Just paying the interest on the debt was crushing. We got it all paid off and never went there again. Yes, we use credit cards all the time, but we pay them off in full each month.
Credit cards have very high interest rates. If you have solid credit ratings, you are still gonna pay 9, 10 or 11%. And if you miss a payment, the service charges can be as much as 25%. And if one card starts to charge you 25%, it won’t be long before the others follow.
If they don’t do anything else, they should pay down that cc debt ASAP. They should pay off the highest-cost loans first, then get the others paid off.
760 thou is NOT "nearly a million". And I spotted that headline, last night, in my YouTube suggestions. I'm not about to click on a video from that creepy jackass.
The credit card debt and personal loans are bad. The mortgage is GOOD. The student loans CAN be good (positioned them to make a lot of money, it seems). The car loans are good, assuming they got decent rates. Their debt is not out of line, considering they're just starting out, and that it's roughly triple their income. The home is apparently a basic 'starter home', and the cars must be modestly-priced, too.
The house was a rental condo. They live either with her parents or his. I think they have way too much debt. Dave told her to sell the condo and use it to pay off the debt, and I concur.
If it was just the student loans and the mortgage, it wouldn't be too awful.
Creepy jackass? Isn't that a little harsh? The man uses common sense ideas to help people turn around bad financial situations and address the bad financial decision making that got them there. He's been there himself, and he uses his experience to help others. Personally, I think he's great.
I agree with the bolded. I rate him above "creepy jackass" but below "great".
What is the point? Is this the face of success? What is success? Why do people continue to take out student loans this high?
I was going to finance my graduate education but the loan counseling changed my mind. They tell you what you are in for but you do it any way. That unsub loan interest is a beast. It never stops.
People need to start using their heads. I continue to meet more and more people who owe $100,000+ in loans. None of them make 6 figures. SMH
If owing $200k on a mortgage to be paid over the next 20 years is "debt", then why isn't $200k that will have to be paid in rent over the next 20 years considered "debt"? It's the cost of housing. You will be paying it either way.
Apples and Oranges --- 20 years of paying rent leaves you with nothing. 20 years of paying a mortgage leaves you with an asset - that you can either keep living in, or rent out for income. Big difference.
Now that being said, $200,000 of mortgage debt is worse than $100,000 of mortgage debt. I'd take the lower amount always..... assuming you can find a $100,000 home in Washington DC that isn't in the middle of the ghetto. (I hope this word isn't politically incorrect these days).
What is the point? Is this the face of success? What is success? Why do people continue to take out student loans this high?
I was going to finance my graduate education but the loan counseling changed my mind. They tell you what you are in for but you do it any way. That unsub loan interest is a beast. It never stops.
People need to start using their heads. I continue to meet more and more people who owe $100,000+ in loans. None of them make 6 figures. SMH
Presumably if they are doing the PSLF, it will get forgiven in 10 years regardless of how much it is. She said on the video they both work for government, so both of them have eligible loans. The issue with PSLF is that it typically means that the loans aren’t that high when you take them out, but if you start out with a low salary and are making the minimum, which is usually 15% of AGI when you are married, it will go up quite a bit at the beginning of your career. I know people who had over $100K of debt who started out in government careers that paid between $40-50K. Their payments were very low, so that debt just kept creeping up, particularly if you are consolidating at interest rates close to 8%.
Apples and Oranges --- 20 years of paying rent leaves you with nothing.
I marvel when people state opinion as fact.
Most of these kinds of discussions must be nuanced. Blanket statements are not. Which is why many beliefs and opinions regarding finances, debt, budgeting, investing, "affordability" -- really boil down to how a person feels emotionally about such things.
A person CAN use debt to their financial advantage. AND paying rent for 20 years can leave a person quite well off.
In this case it's my opinion, but it's also true.
A person can "invest in their house" and end up with xxxx.00 amount of money after selling the home to get the equity out -- OR -- they could have put money aside instead of buying a house, and have just as much money (even calculating homeownership tax breaks) as the person who bought a house. AND the person who rented all those years had no repair/maintenance costs (which are NOT tax deductible), no ownership responsibility, could much more easily move if the job required it, etc.
As for the couple's student loan debt, that also could in certain circumstances be debatable about whether it's bad debt. One factor -- if not the main one is -- was that education, those degrees worth it in terms of earnings over a lifetime. There are two threads right now on the employment forum about whether getting a master's degree or higher -- especially after age 40 or 50 is "worth it."
It seems more people (not just here, but in general) are judgmental -- or so as not to use that word -- have stronger opinions -- about others having credit card debt vs student loan debt.
The couple we've been discussing is not necessarily in a bad place financially. We certainly can't say whether they are or are not, without seeing more of their financial picture.
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