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My friends are really cool. When I approached Aaron and Mary about the possibility of doing a guest post on the topic of student loans, I knew it would be good, but I didn’t know it would be THIS good. Very little is talked about with student loans… I remember my friends in college who were there on loans often had a very blasé attitude about spending money and are regretting it now. Simply stated, people don’t get it, and Mary and Aaron know firsthand what they mean.
You see, Mary is my college bestie’s big sister, and I have had the ultimate friend crush on her since she and Aaron were featured on the Dave Ramsey Show, talking about how they managed to get out of debt. Here they are today.. #friendcrush….
Don’t they totally look like the type of people you want to hang out with? Does that make me creepy? Maybe.
Without further adieu, a word about student loans from Aaron and Mary.. Mary also blogs, so please please please pop on over. She is an eloquent writer with so many fun ideas and thoughts. You can find her blog HERE.
Dear 18 year old us,
How’s it going? This is us! Only 15-20 years later (spoiler alert, Mary, you ended up being kind of a cougar). We’re not going to spoil the surprise by telling you who you’re going to marry (but it’s gonna be good), how many kids you are going to have (not a couple), or even where you’re going to work. We’ll let you go ahead and experience all the fun life has to offer. We wanted to take a hot second though and talk to you two about money. The lesson of money management is worth us going back in time and telling you about. The reality of money is one thing we’d both do differently if we could go back to our 18 year old selves. So, we decided to write you two a letter. We’re even going to provide some tips to you, 18 year old selves, so buckle up.
Student loans can be dangerous
Since we’ve been out of school, the #1 thing we’ve seen that has challenged people’s grown up lives are student loans. It is so challenging because although er’body has a kick butt time for 4, 5, or even 6 years, eventually that real world is going to hit. Here’s the thing that was hard for us to fully understand… student loans AREN’T.FREE.MONEY, you’re borrowing the money and then you gotta pay it back with interest. So, please consider that as you’re making your college choice and borrowing money each year (Mary, this especially includes that $1,000 loan you’re going to take out your senior year of college to ‘party). If you are choosing a $40,000 per year school? That means once you graduate, you’ll owe $160,000 back to the place you’ve borrowed it from. Let’s do some math. That’s $160,000 student loan, if you decide to take 20 years to pay it off, will be $1,200 every month. Do you really want to take 20 years of your income paying on something that took four years to achieve. Trust us, future selves, the answer is NO.
Jobs don’t start out at $100,000
Also, along with that $160,000 student loan, please think carefully about what you major in. We know that you want to be a teacher or feel called to ministry and want to work for a church one day. But, please start to look at what these professions make in terms of salary. In either of those professions, you’ll be making about $36,000 tops out of school. So that’s almost $3,000 that you’ll be making each month before you take taxes, so about $2,500 after taxes. Hey, remember that $1,200 student loan payment? That’s sucking up your income. So you have about $1,300 that you have left to spend each month. Did you notice that you haven’t eaten, gotten gas for your car, put any clothes on, slept in a bed, turned on any lights? So please also consider what type of career you want after college when making college choices and taking out loans. Unless you’re majoring in a nerd degree making some very nice nerd money, you’ll have very little money once you get out of school. So don’t reduce it even more with a large loan payment. Read this right younger selves, we’re not telling you not to do ministry, we are telling you to think through how you’re going to afford to get that ministry degree. These professions are important, they are needed, but they aren’t going to help you pay off tens of thousands of dollars of debt.
Starting a family
You don’t know this now, but once you graduate, you start to notice your friends around you getting married and having kids. Lots and lots of them will, it’s what happens in life. It’s gonna happen for you too (even if for a few years in your mid twenties you think it never will). You’re going to find Mr./Mrs. Right and fall in love and get engaged and have a fabulous wedding. But remember that rhyme, first come love, then comes marriage, then comes….a baby! Kids are wonderful. I’m going to ruin the surprise a little, you have at least 1 child. It’s wonderful. However, you’re going to think about your new child and wonder who’s going to take care of the little one. You two are going to have to wrestle with if one of you will be staying home. However, there’s a large elephant in the room, that student loan payment. One of you staying at home means that you make less income. Can you afford that kind of a financial hit? Many people can’t and you’ll have friends of yours who would love to stay at home with their little one but can’t afford it. Mainly because they have that huge $1,200 student loan payment that have to keep paying for at least 20 years. So again, think about your future family as you make choices right now.
So there it is, younger version of us. I could share so much more but there is only so much time. So I’ll leave it at that. Money is in the Top 3 most important things that shape your life. So we wanted to share the things that we’ve experienced first-hand and noticed from our friends and peers. Good luck and I hope you consider this as you make big decisions! We might write you one more letter next week to spoiler alert the choices we made after we got married to pull ourselves out of the cycle of debt we created prior to marriage! Stay tuned.
Love, Older You