Daily Worth provides an email service that brings financial discussion points and information to my attention. I consider myself financially naive; I have some basic tools, but I really do not know what I am doing. Daily Worth helps me slowly gain vernacular, awareness, and insight to how to craft a financial plan that will help me reach the future I see for myself. You can sign up for the email here*.
In keeping with the Cinquecento Project theme of focusing on the positive, here are my five most positive thoughts on my current state of debt:
1. Lessons learned. Life is a game of making choices about how to collect, use and preserve resources. Money is one resource. Time is another. I traded my time in law school for money and now I am trading time at work for the money to repay my loans. It is that simple. All of the side effects of this exchange are points of education for how I make future exchanges. (Side effects include: wobbly career arc, resentment of law school/policy makers, jealousy of those who have repaid their debt, self-hatred and self-doubt for arriving here, etc.) Another example: the 7.5% interest rate on my student loans compared to the low housing and car loan rates (3-5%) seems to tell me that society values consumerism over education. It also tells me that I was an ostrich with my head in the sand when I took on those loans. Lessons learned that will help me moving forward.
2. No credit card debt makes me feel free. Like nearly half of the respondents to the Mint.com poll above, I abhor credit card debt. Perhaps it is because I have been paying back a car loan, a student loan, or both for nearly a decade. I incorporated the interest portion of these payments into my life philosophy as as a fee for the ability to act (car to get to work/travel/family; attend classes at school); to pay a credit card company extra money is more like paying an extra fee for owning something (no action required). The actions are ones which I could take without the tools (car, professors), but that would be much more difficult (walking/biking/bussing; self-teaching with library books). To me, it is the opposite of shopping for discounted or sale items, it is paying an unnecessary premium on clothes, gas, travel, whatever is on the credit card. As a thrifty shopper, paying credit card interest undoes all the work I put into finding deals and using products thoroughly before discarding them. I paid interest one time to a credit card company while I was still an undergrad and since then I have been skilled and stubborn enough (it takes both, I think) to have avoided interest fees on my credit card.
3. Getting over my fear of debt. The echoes of the Great Depression instilled a fear of debt in my psyche; Aunt Fern’s stories of never buying anything unless you had the money in hand helped my fear take root, too. Now that I have significant student loan debt, I find that I actually live life a little more fully. This reflection echoes the life choices piece (#1), with a bent toward risk-taking and engaging in the moment. When I was living with well relatively low debt in my early-mid 20s (around $5,000, none of it credit card), I could theorize on numerous paths my life might take. Over my gap years (between undergrad and law school) I managed to tiptoe down several of these paths. As soon as the time came to commit to a certain path, I would leap back, scared of the financial (and other) consequences of committing. Now that I am bound to my debt for the next 12-23 years, I have had to make friends with it. The result is that I am more open to taking risks. After all, what have I to lose? I’m already in debt up to my ears and my world hasn’t fallen apart! Who knows what other fears have been holding me back?
4. I’m the lucky one. No matter the amount of debt, I am still among the small percentage of people worldwide who are fortunate enough to devote myself to study. I am not toiling in a factory, my body is not subjected to violence, and I have always had shelter, food, clothing and love. I am lucky to have this particular challenge to struggle against.
5. Realizing I believe in myself. This debt was and is an investment in myself. It was risky and though I was a bit of an ostrich when it came to sourcing the debt (seriously – 7.5% interest rate – ugh!), I knowingly took the risk because I believed enough in myself. I still believe in myself and know that I will eventually get to a place where I am not so scared and frustrated by the numbers.
What about you?
What do you think about Debt? Credit card or otherwise? Have you had positive experience where taking on debt helped you achieve another life goal? Is there something I am missing?
*Note: While useful to me, I tend to find that Daily Worth is geared toward a person who is more consumerist that I am. Still, the information is most often thought provoking at the very least and reminds me how much power I have over what my financial future looks like at the most.