November 30, 2010 | File under: Schooling • Society and Pressures
Zero money down! No interest for two years! We are constantly bombarded with messages telling us to “buy now, pay later.” The concept of living life on credit has become so accepted, and to some degree, encouraged, in society that many people rarely think twice about purchasing items they would not otherwise be able to afford without the assistance of Visa or American Express. And given that our economy largely depends upon the constant flow of consumer credit, borrowing money even for non-essential goods such as plasma TVs or luxury cars has lost much of its stigma as irresponsible personal finance. So it is no surprise young people willingly take on tens of thousands, or even close to two hundred thousand dollars, in educational debt without as much as a second thought. I mean, that’s a necessity, right? Everyone is entitled to an education! But assuming such a massive obligation with no certainty as to future income is a huge mistake.
Social acceptance of consumer debt is but one of several factors that encourage people to sign over many years of their life to credit companies. There are also the common beliefs that one must earn a college degree to acquire the skills for respected jobs, that college is a rite of passage that every young person deserves to experience, and many other pressures that provide easy encouragement to sign on the dotted line. The debtor mentality provides the perfect rationalization: everyone else is doing it, right?
What happened to saving for college? Some people still do it, but in addition to the challenge of saving an amount of money equal to rapidly rising education costs, there is also a disincentive to amassing substantial savings because doing so disqualifies one for financial aid. Colleges dole out grants, or free money, to students demonstrating financial need. Someone coming from a family with an income equal to that of a student qualifying for aid will not receive an equal benefit if that person’s family made sacrifices to establish a college fund that qualifies as an “asset.” The student with no savings may live among many consumer good luxuries and enjoy frequent expensive vacations, but with no money in sources that colleges measure when determining need, they have an advantage over the student with a college fund that is reflected on financial aid forms. Why try so hard to save when free grants and low-interest loans are so plentiful? Why forego the luxury goods that everyone else enjoys? If you’re going to borrow some, you might as well spare yourself the hassle of saving money and borrow it all, right? “Go big or go home” is the motto many live by.
November 15, 2010 | File under: Advice and Lessons • Schooling
I went to a top five law school. Are you impressed? Well, you should be, or so I was always led to believe. Growing up, I was always enamored with the idea of attending a prestigious school. Harvard, Yale, Princeton —- the names are just saturated with prestige and command instant respect. Primary education reinforces the belief that attending one of these sanctified institutions provides a free pass to career success. And with career success comes happiness. Or so the myth goes.
November 11, 2010 | File under: Advice and Lessons • On the Job
A colleague and friend of mine at a law firm where I previously worked admitted to me once that she had a hard time saying no to the persistent and increasing demands that were placed on her by people in our firm. It was clear she was being taken advantage of by some partners who took for granted her diligent work habits and her willingness to sacrifice personal and family time when client needs appeared pressing. As it usually goes in a law firm, the partners were apt to interpret “client needs” as requiring service at all hours, and my friend was repeatedly the one called to duty because she was perceived as always being available. Understandably, her stamina was depleted after many years of this and she ultimately left for greener pastures.