World of Lucky (![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png)
worldoflucky) wrote2010-03-20 09:33 am
worldoflucky) wrote2010-03-20 09:33 am
School, Age and Debt
The last few days I have had a few people ask me about my school/age/debt situation. I will be 39 later this year, I have accrued a little bit under $60k in student loans (closer to $55, but I prefer to round up) plus the wife will also accrue probably that much, and I only graduated 2 years ago and have yet to start truly paying on my student loan due to wife's medical bills.
They have asked me "what is the point of going to school and accruing that debt, especially at my age, wont it take forever to pay back?". First, I do not begrudge the debt in any way. I grew up incredibly poor (as in living in a car with the family poor, not a "I am a poor person who is actually middle class but mommy and daddy wouldn't buy me a pony" poor). I never had hope of my family putting me through school. In addition, the side effect of that was I had no training as a child to handle such thing as college. True you could work your way through school and make it, and some people do, unfortunately I didn't have a good tool kit for that when I was younger. I had to work full time at minimum wage jobs to support my parents (probably one of the reasons I don't have kids, I pretty much already do have a 62 and 61 year old teenagers).
When I did consider going back to school it was when I was 28. However, while I did work some of the time, my grades suffered horribly. In order to keep my grades good I needed to draw loans out and not work full time. At this same time![[livejournal.com profile]](https://www.dreamwidth.org/img/external/lj-userinfo.gif)
ethicalcannibal went back to school as well. In order to make it by we had to do loans. Also, the fact I switched majors half-way through was the other obstacle. I was over half way through my computer science degree and I realized three things. The first was outsourcing was hurting jobs, the second and more important, I hate sitting there writing code for other people. I love doing it for myself, but I hate doing for others. Finally Computer Science will help you emigrate, but its not nearly as good as Accounting. So I switched to accounting and accrued the extra debt.
Now to get back to what I was talking about. Its true, my student loans will cost me about $400 a month (for the rest of my life, or so it seems) plus whatever the payments for the wife. However, the income level I am at is more than $400 more a month then what I was making. Being an Assistant State Auditor isn't a huge paycheck, I know people that work at phone centers that make about what I do, but it is way better than what I was making. The second and even better part is my job is easier. Minimum wage jobs are harder, don't let anyone making big bucks fool you. True, there is a lot of stress, I am responsible for auditing billions of dollars with the county, hundreds of millions for cities/towns/school district and there is a lot of responsibility. However, its not nearly as bad as trying to make it by on $9.00 an hour. That alone makes it worth the payments for loans.
The next big reason its worth it is my retirement. Unlike others, I didn't select a 401k from my employers, rather I took the defined benefit pension (2% per year I worked,average of my best 5 years of wages). I work 30 years and I can retire on 60% of my average income for my five highest income years. True, its not as high as can be made in the stock market, but its guaranteed. I will walk away with it and not have to worry about Madoff, the stock market or anything (plus the retirement increases on an average COLA as well). Plus, if I die, I have set it up where the wife can receive my benefits for the rest of her life. In addition I can participate in 401k investment if I want. This sort of thing is not possible on any low income wage. Sorry Walmart may offer you a small 401k, but its not guaranteed and its unlikely you will get it. Hell, my wife has worked for 10 years as a nurse and never got retirement (and I never got it when I managed a medical clinic). That is worth the debt as well.
The second question people ask, but with that debt, aren't you too old to pay it back. Not at all. The wife is back in school and in three years she will graduate at approximately age 42 and will be in the same type of field as I (hopefully a state auditor as well). Until then I will take a one year deferment this year to attempt to pay off medical bills. Then we will maintain the status of our debt by basic payments while she is in school. However, when she graduates, we will live on my income (which is higher than I ever would have gotten working retail), while we toss her entire pay into debts. I figure we will be paid off within 4-5 years, but lets round it up and say 8 years (in case of emergencies, unforseen debt, etc). That means by age 50 we should be fully out of debt. We will still be in the middle of our careers (although at this point she can work part time if she wants and just do her building thing). We will have no debt and age 50+ does not mean you are too old to travel and do things.
So to those who ask, no I don't think I was too old to go to school, nor did I get too much in debt and even if I paid student loans for the rest of my life, lived just as close to poverty as I do now, it would still be better than not going to school.
Oh, and I do realize I went in a tangent with this post, I will try and keep it more concise next time :)
They have asked me "what is the point of going to school and accruing that debt, especially at my age, wont it take forever to pay back?". First, I do not begrudge the debt in any way. I grew up incredibly poor (as in living in a car with the family poor, not a "I am a poor person who is actually middle class but mommy and daddy wouldn't buy me a pony" poor). I never had hope of my family putting me through school. In addition, the side effect of that was I had no training as a child to handle such thing as college. True you could work your way through school and make it, and some people do, unfortunately I didn't have a good tool kit for that when I was younger. I had to work full time at minimum wage jobs to support my parents (probably one of the reasons I don't have kids, I pretty much already do have a 62 and 61 year old teenagers).
When I did consider going back to school it was when I was 28. However, while I did work some of the time, my grades suffered horribly. In order to keep my grades good I needed to draw loans out and not work full time. At this same time
ethicalcannibal went back to school as well. In order to make it by we had to do loans. Also, the fact I switched majors half-way through was the other obstacle. I was over half way through my computer science degree and I realized three things. The first was outsourcing was hurting jobs, the second and more important, I hate sitting there writing code for other people. I love doing it for myself, but I hate doing for others. Finally Computer Science will help you emigrate, but its not nearly as good as Accounting. So I switched to accounting and accrued the extra debt.Now to get back to what I was talking about. Its true, my student loans will cost me about $400 a month (for the rest of my life, or so it seems) plus whatever the payments for the wife. However, the income level I am at is more than $400 more a month then what I was making. Being an Assistant State Auditor isn't a huge paycheck, I know people that work at phone centers that make about what I do, but it is way better than what I was making. The second and even better part is my job is easier. Minimum wage jobs are harder, don't let anyone making big bucks fool you. True, there is a lot of stress, I am responsible for auditing billions of dollars with the county, hundreds of millions for cities/towns/school district and there is a lot of responsibility. However, its not nearly as bad as trying to make it by on $9.00 an hour. That alone makes it worth the payments for loans.
The next big reason its worth it is my retirement. Unlike others, I didn't select a 401k from my employers, rather I took the defined benefit pension (2% per year I worked,average of my best 5 years of wages). I work 30 years and I can retire on 60% of my average income for my five highest income years. True, its not as high as can be made in the stock market, but its guaranteed. I will walk away with it and not have to worry about Madoff, the stock market or anything (plus the retirement increases on an average COLA as well). Plus, if I die, I have set it up where the wife can receive my benefits for the rest of her life. In addition I can participate in 401k investment if I want. This sort of thing is not possible on any low income wage. Sorry Walmart may offer you a small 401k, but its not guaranteed and its unlikely you will get it. Hell, my wife has worked for 10 years as a nurse and never got retirement (and I never got it when I managed a medical clinic). That is worth the debt as well.
The second question people ask, but with that debt, aren't you too old to pay it back. Not at all. The wife is back in school and in three years she will graduate at approximately age 42 and will be in the same type of field as I (hopefully a state auditor as well). Until then I will take a one year deferment this year to attempt to pay off medical bills. Then we will maintain the status of our debt by basic payments while she is in school. However, when she graduates, we will live on my income (which is higher than I ever would have gotten working retail), while we toss her entire pay into debts. I figure we will be paid off within 4-5 years, but lets round it up and say 8 years (in case of emergencies, unforseen debt, etc). That means by age 50 we should be fully out of debt. We will still be in the middle of our careers (although at this point she can work part time if she wants and just do her building thing). We will have no debt and age 50+ does not mean you are too old to travel and do things.
So to those who ask, no I don't think I was too old to go to school, nor did I get too much in debt and even if I paid student loans for the rest of my life, lived just as close to poverty as I do now, it would still be better than not going to school.
Oh, and I do realize I went in a tangent with this post, I will try and keep it more concise next time :)
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I do plan on expanding into 401k as a tertiary item, when I can put the money into it :)
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I'm not all that clear on what a 401K is, but I presume it's something like our Superannuation. Basically, this is how it works:
Your employer must pay super for you if you are eligible. To be eligible you must be:
* aged 18 years or over but under 70 years of age, and
* paid at least $450 (before tax) in a calendar month.
If you are entitled to super guarantee payments, your employer must pay a minimum of 9% of your earnings base into your super account. Super funds are managed by trustees. Each fund has its own rules but must also follow government rules, designed to ensure your super is properly managed.
You also have, unfortunately, a mandatory contribution yourself of 5%. So basically, this is how it works. If you earn $1000/week, they subtract $50/week from your before-tax earnings and put it into your super fund. Your employer then puts $90/week OUT OF THE COMPANY INCOME into your super fund. I'm in a good position on that front as my employer puts in 12% - it's a 9% minimum, and employers often use that as an incentive or negotiating point - they get a tax cut on their super contributions.
Super funds are very carefully monitored too - even more than normal investment funds or the like. There's a guaranteed minimum return rate over the course of your super, and you get to pick your own fund and can change it if you like. You can also make voluntary contributions to your super fund and get a tax break on them.
I prefer managing my own investments & savings, but it's still a great system on the whole.
Oh yeah, and did I mention that you rock? :)
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Oh, and its sort of like Superannuation. You put 5% of your income into a certain stock/investment plan. The employer puts 2.5-5% in as well (if you are fortunate you get a matching employer, otherwise a lot of them only do 50% of your money).
You can pick from multiple types of investment plans (safe and low interest to high risk/high reward). Personally while thats nice, I like the reliable retirement (which I do put 5% away every paycheck, but at least I know its there). I will do my own 401k on the side when we catch up monetarily.
Although I am thinking Australia for a vacation might be doable in 12-14 months, although I think the wife will want to do Disney Land first.
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And you know, whenever you good folks can arrange for the vacation we're here! Just give us advance warning and we'll let you know the best time to come down weather-wise and get things set up for fun.
And we understand, your wife prefers Mickey Mouse to us ... sniff ... ;)
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