The traditional parent advises their kid to go to school, get that great job, own a home and then raise a family. According to them, these are the foolproof steps toward financial success.
But the thing is, what worked for them may not necessarily work for their children. Times have changed, and no one knows that better than one Liz Weeks.
On the Hook
The lady followed her parents’ advice, but that required her to borrow over $165,000 to attend college and later law school. And although Ms. Weeks is now a Seattle attorney who has made monthly payments for the past ten years in service of her student loans, she is still on the hook for over $140,000.
She is also yet to save for that down payment, so she doesn’t own a home yet. With the boom in the economy, owning a home has become more expensive in Seattle. Back in 1989, houses went for an average of $77,300 which is $163,773 when adjusted for inflation.
In 2019, you have to part with at least $542,700 if you want to own a decent home. Do you now see the pickle that Ms. Weeks is in? As she puts it, her finances have been stressing her out for as long as she can remember, especially because she has to factor in her debt before she makes any financial decision.
The attorney is 32, so she falls into the millennial generation, and most of the individuals in this group are having challenges similar to hers. For them, the playing field is starkly different from the one their parents knew.
For starters, they have higher student loans which take forever to be repaid. The cost of housing doesn’t make things any easier, and the fact that millennials aren’t in a rush to get married means that individuals are dealing with everything all on their own.
For those who are married, numerous studies reveal that compared to previous generations, young millennial households have fewer assets and an even lower income.
The Financial Landscape Redefinition
But these changes didn’t just happen overnight. In the past three decades, the financial landscape in America has redefined itself, and with it the lives of young Americans. Achieving the American dream is becoming increasingly difficult, but that doesn’t mean that you should throw in the towel.
When it comes to debt, your parents must have told you that student loans are “good debt.” It may have been the case for them, but don’t jump right into it. Compared to 1978, college tuition has increased by 1,375% in 2019. What does that tell you? You’ll have to borrow over and beyond what your parents did.
Getting that degree is great, and no one disapproves of that. But what if you don’t land that dream job? How then are you to get out of debt? Over the past half a decade, more than 2 million people with student debt have defaulted on their loans. Will you be one of them?
Before applying for student loans, consider your starting salary after college and graduate school. If it’s more than your loans, then they’re a good investment. If not, think long and hard about your best move.
