As I pulled out of the parking lot from school, the steering wheel made an odd creaking sound. Like an old man bending down to pick up a pencil off the floor. I chalked it up to the cold and put it out of my mind. I’m creaky in the cold, so the car must be, too. I had a bag full of ungraded finals and a three page shopping list.
I bought preppy shirts for the boys and took them into Manhattan for Steve’s office party.
The next day, as I tucked presents for the kids’ teachers into their backpacks, I felt a lump in the back of my throat. I AM NOT SICK. I AM NOT SICK. Oh, that’s nothing.
I had a two hour cocktail party for the neighborhood, which turned into a seven hour party. The last guest left after I went to bed. The naughty neighborhood children trashed the upstairs of the house. The next day, we found our dresses and ties on the bottom of our closet, Jonah’s piggie bank had been robbed, and Steve’s computer icons had all been renamed "xoljskdjalkslfsdlkj."
The car sound got a little louder over the next few days. Even Jonah said something as I dropped him off at his Taikwondo practice with a box of minty chocolates for his teacher. "Why is the car making that sound, mom?" "IT’S NOTHING. IT’S JUST THE COLD." If you shout loud enough, you can convince yourself of anything.
On the 23rd, I shopped for the ingredients for Christmas Eve celebrations on the Shop Rite website. I sneezed ten times in a row. And printed out the holiday newsletter. And popped the boys’ slacks in the dryer.
On the 24th, we hosted Christmas Eve with the twelve fishy appetizers. Then set up Santa’s loot.
We woke up at 6 on the 25th to the sounds of kids shouting over new scooters and video games. I took some pictures and vaguely noticed feeling warm.
On the way to my mom’s house for dinner, Steve drove the car for the first time. "What is that sound?!!!" "Ignore it and it will go away." "NO, IT WON’T."
During dinner, I finally admitted defeat and took a nap on the sofa.
On the 26th, we dropped the creaky car at Jimmy’s, the car dude. He called later with the bad news of a broken steering column. $1,600. I went to Urgent Care with the kids in tow, where I had to wait for an hour for a 27 year old doctor to tell me what I already knew. I had a sinus infection.
Three parties later. I’m finally starting to feel like myself again. The car hasn’t returned yet, but the parts have been ordered. I am still picking up little pieces of wrapping paper from behind the sofa and the tree is seriously shedding.
Amy P has been sending links to debt bloggers. I knew that there were a few bloggers that wrote about their adventures finding their way out of debt (and begging for handouts), but I wasn’t aware that there was a whole subculture of debt-bloggers. Amy feels more sympathy for them than I do. Who the hell racks up $50,000 in credit card debt? I know there are a whole lot of families in big trouble because they got those adjustable rate mortgages, but I can’t help but question their judgment. Didn’t everyone tell them they were insane?
I suppose they also must have heard the rumblings and the creaks and the aches of upcoming disaster and said "ignore it and it will go away."
Apt. 11d 
Well, up until a year or so ago, we had $25K in credit card debt. We went into childbearing debt-free, but the reduced income (we spent two of the last 8 years with one income, and about 3 with about 1.5 incomes) hit us hard. We also moved 4 times in 5 years, and my car was totaled once in an accident, and we bought unwisely afterward (but were in a tough position where we had to buy fast as I was commuting to a job 45 minutes away in Maine in February). We borrowed from credit cards to get that car, and we simply bought the next car (which we still have) for $4000 on Paypal. In other words, it’s pretty easy to rack up that kind of debt. My husband and I should have been more forward thinking when we were childless yuppies living the high life in Park Slope, but we weren’t, so we had no debt, but also no savings.
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I know quite a few people who financed their fertility treatments on credit cards….
(I did spend a lot of the holidays in homes decorated to within an inch of their lives, and found myself wondering what those families’ credit-card bills might look like. I look through enough catalogs to know they didn’t decorate on the cheap, and I know enough about their household incomes to wonder where the heck they are getting that sort of cash.
Or maybe I’m just trying to console myself for all the bare walls in my house.)
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Sorry, me again. From one of the debt bloggers: “As I have said in the past, my wife wants a Coach purse so that’s what ended up happening. Turns out you can’t have a Coach purse without the matching wallet to go with it. Grand total for all of this was $700 and yes it went on a credit card.”
See? Coach purses are EVIL. 😉
That marriage sounds like a nightmare. I am so glad that my husband and I share similar values about money.
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Over Christmas, my aunt was complaining about her credit card debt. Yet she has a housecleaner, despite being a SAHM. Some people just don’t get it. There’s nothing I could buy that I value more than my family’s financial security — we owe it to our children.
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Jody,
Can you say HELOC?
Laura,
My other main hangout lately has been thehousingbubbleblog.com. Those people are completely different–they won’t be happy until the last flipper, the last HELOC artist, and the last realtor are kicked out into the snow, along with their families and their dogs.
Credit cards are only a facet of the debt issue–you’ve got your HELOCs, your killer mortgages, pay day loans, student loans, car loans, car leases, medical debts, etc. It’s not money that makes the world go round, it’s debt. I think there are some big ethical issues with student loans, since the kids taking them out have no idea how big $10,000 is (or 20K, or 30K, or 40K, or whatever). I had a measly $6,000 undergraduate student loan, and the end is only now in sight. At $65 a month, $6,000 is eternity.
When we were young parents freshly arrived in suburban MD, living on a single junior faculty salary and spending half my husband’s take home pay on a nice (too nice, actually) two bedroom apartment, I didn’t really see the impossibility of what we were trying to do. I couponed and cooked like crazy, but we were still sinking deeper and deeper every month. Later on, we were somewhat better off, but most importantly, we had four years of free housing. Theoretically, that should have produced a house downpayment, but we were having a really good time in NW DC. Also, for years I was spending the money and my husband was writing the checks (and occasionally griping), and neither of us was working on the big picture. We didn’t have a plan. In our defense, we did have two little kids, and not sleeping for years does interfere with long-range planning. Somehow, about a year ago, I woke up, and started paying attention. For the past three or so months, I’ve known to the dollar exactly how much we’ve spent, and we’ve managed to spend less than we make. That may sound ridiculous to some of you uber-responsible people out there, but it was really revolutionary to me. (And I really hate those citibank ads now that make it sound like citibank is giving people free money out of the goodness of their hearts.)
As things are now, we have $1400 in old credit card debt, my $1400 student loan, and $8200 on our very first car. That’s a typical debt load for an American family, I think, but that doesn’t make it feel any better. We’ll be done with it in about two years at the rate of $475 a month. Tonight was budget night, and there was some bad news–the income stream for my husband’s paying hobby (programming for PDAs) is drying up for reasons beyond his control, and it may be gone for good. There was much wailing and gnashing of teeth, but we got the numbers to work out, and we even added two new budget categories: a small amount to cover taxes on online purchases (my husband teaches ethics, alas), and a medium sized amount to save for Christmas. I’m hoping the programming receipts will rebound a bit, but if they don’t, the recreational babysitting fund is going to be axed, at least temporarily (that’s not a permanent solution since it’s eventually going to go for Baby D.’s school tuition).
What about a house? We’re not going to buy until 1) our debt is gone 2) we have a large emergency fund and 3) we have a decent downpayment. That is going to take 2-4 years, but we’ll be OK. It’s not like real estate always goes up…Anyway, Texas property taxes run 2-3 percent, and the plan is to pay as little as I can for a cute house in a reasonably safe neighborhood, ideally paying it off in about 10 years, by which time our kids will be in the college years.
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Isn’t there good debt and bad debt? No one has any problem with the debt for education, because, theoretically (no PhDs, people), you’ll get a return on your investment. Cars are okay if they are needed for work and are of the used Toyota variety. Medical expenses are up there, too.
But making debt out of purchases of Coach purses and iPods… well, that’s stupid. (Laughing that you found that, Wendy.)
Amy, when you are figuring out your budget, keep in mind that your husband will be getting raises every year. You’ll save a ton of money, when the kids are done with pre-school. Try using Quicken to keep an eye on money. And, when both kids are in school, you can get a part time job. Don’t worry about paying off the house — that’s Good debt.
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It’s true that in the past education cost has always been considered good debt, along with a mortgage. But I personally wonder if part of the housing bubble was because people took that good debt label too literally. Not every mortgage is good debt; not every degree will pay for itself. (Witness the kids who pay $80K for culinary school, only to end up with an $8/hr line cook job.)
In the end much of this is about all of us learning to live within our means. (Ouch.)
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We took out government student loans while I was in graduate school, living in DC. And weve had debt from car loans and the occasional other major expense (read: getting the children born) over the years. But we never had any consumer or credit card debt, at least not any worth mentioning, for the first 13 or so years of our marriage. My wife was originally the one obsessed with tracking every purchase (she came into the marriage with a lot more nuts-and-bolts financial sense than I, having had to finance her own education, whereas I was a scholarship boy), but over the years I’ve absorbed her concerns and added to them. We also share a basically frugal outlook on life. Still, neither of us were prepared for how much owning a home costs. I don’t mean mortgages; I mean replacing the water heater and fixing the refrigerator and tearing out the fence, etc., etc. We’d been renters until a little over a year ago, and all the advice we’d received about owning a home simply didn’t sink in; I suppose you just have to live it. So anyway, for the first time we genuinely can’t quite afford our already pretty low-key lifestyle, and are unwilling to cut back even more (piano lessons for the two oldest girls, yoga class for Melissa, buying meat and eggs at the farmers market rather than at Wal-Mart, and so forth). So we’ve got about $7000 on the credit card; chicken feed compared to some others, I know, but still it’s the most consumer debt we’ve ever carried, and I’m not sure my raises are going to keep up with our expenses in the relative short-term. Unless itemizing (which we’ve also never done before) results in some serious refunds from the federal government, we’re probably going to have to adjust ourselves to carrying this (and hoping it doesn’t get too much bigger) for the next decade or so. It’s helping me a little more sympathetic to others, at least.
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Jen makes a point that I’ve seen one or two other places, but that I think hasn’t gotten a good enough hearing. If easy credit caused the housing bubble, education (where costs are also rising well above inflation) may also be in a bubble caused by the same sort of loose lending practices. Nobody who’s making money on the scam says, “Kid, you’re a performing arts major. There’s no way you should be going deeply into debt to finance this.” And student loans can’t be walked away from, so a student loan for an unrenumerative field is in some ways a lot worse than putting a hundred Coach bags on credit cards.
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Russell – You’ll get a big chunk of money in April. Get a good accountant. Ours charges $200 and it is worth every penny. Our washing machine died on christmas morning, so I hear your pain.
Amy – There’s a place in hell for all those graduate programs that allow students to accumulate $70,000-90,000 worth of student loan debt without any heart to heart chats along the way about what that will mean for their future.
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Amen, Laura. Unless you’re going to be a doctor, a lawyer, etc., large graduate school debt is a no-no. I think borrowed money just isn’t experienced as real, for some weird psychological reason. Lord knows that if you had the money in cash (saved a few hundred dollars at a time), you probably wouldn’t drop $15,000 a year or whatever for a creative writing program.
I really would question both the good debt/bad debt distinction, and the idea that future raises will save one’s bacon. That second item led to years of bad choices on my part, so I’m just going to pretend that my husband’s salary will just keep up with inflation. With regard to the good debt/bad debt thing, we need to start earning interest rather than paying it, so the plan is 1) pay off debt 2) build emergency fund (for stuff like RAF mentions) at the same rate as we paid off the debt 3) build down payment fund for first house at that same rate 4) kick up retirement 5) start kids’ college savings. A small inheritance may cover the down payment, so it may not take as long as it would otherwise. With regard to my future employment, any income from that will probably be covering the kids’ private school tuition, at least PK-8. Also, I hear teenagers are expensive critters. In any case, I’m not banking on any increase in disposable income.
Right now we could get a newish house in the suburbs for $150,000. Existing home prices here are sticky, but trending down–they’re not running out of land in Texas. I’ve seen a rehabbed house on the edge of the fancy, historic part of town go from $325,000 to $249,000, and it’s still not selling. The same houses have been sitting on the MLS for the better part of a year and more new houses should be flooding onto the MLS in a few weeks. Plus, lumber and other construction costs are down, so builders can build more cheaply and it’s not crazy to think of building a house ourselves (a year of poring over home magazines and books has made me very fussy about floor plans). 10 years to pay off the house may be too aggressive, but we certainly should aim for no more than 15 years. I would dearly love to be mortgage-free before the college bills start coming.
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Somewhere in Laura’s recent thread on adjuncting there was a commenter who said, “Reason #4 that I prefer adjuncting: it’s a ‘clean’ profession.” (The implication here that you’re not doing any harm? Or that you’re not getting physically dirty? I guess the former.)
I read that and thought, who has this guy been talking to?? How many former opera majors have I hired who speak bitterly, and at great length, about how their debt load has unalterably damaged their futures? Clean, indeed.
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One piece of advice is to contribute as much as possible to tax-deferred retirement accounts whenever you can. Even if you are carrying high interest debt, the math of a 401K contribution may be in your favor. Also, an automatic 401K contribution is a good mechanism to enforce discipline in the “flush” years where expenses are unexpectedly low.
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Here’s a quote from the inimitable Dave Ramsey on the subject of credit cards:
“Most of America uses credit crds to catch all of life’s “emergencies.” Some of these so-called emergencies are events like Christmas. Christmas is not an emergency; it doesn’t sneak up on you. Christmas is always in December; they don’t move it…”
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Amy – There’s a place in hell for all those graduate programs that allow students to accumulate $70,000-90,000 worth of student loan debt without any heart to heart chats along the way about what that will mean for their future.
Why limit the blame to graduate programs? I work with a bunch of young adults who have $20k in loans from degrees from middling liberal arts colleges who developed hardly any marketable skills, the colleges’ promotional material about how much employers will value their “ability to think” aside…
I agree with Amy that the “good” debt distinction is totally meaningless in the age of ARMs, 40-year mortgages, and astounding student loan burdens. If for no other reason than that it prevents one from paying off the “bad” debt.
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Here are a few more ideas for college (we’re still a long ways away from dealing with this stuff in practice, so this is not experience-tested advice):
1. Faculty discounts on tuition (where applicable–some schools have reciprocal arrangements)
2. State schools (or at least no mediocre, expensive private schools)
3. In-state tuition
4. Summer jobs during high school and college (there are big bucks to be made on the babysitter circuit)
5. Kids should fund at least part of their extracurriculars in high school (there was a lady on the Dave Ramsey Show a while back who was hiding $1,000 monthly equestrian expenses from her husband–one child’s extracurricular activity had just gotten out of hand)
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As an adjunct for the past nine years, I’ve tried to have some version of that “heart-to-heart chat” with my students. I send them to the Web to back-read Invisible Adjunct, I point them to the job listings and various “First Person” columns at the Chronicle, and last semester I even organized a grad-school symposium where a dozen of my colleagues told their stories and fielded students’ questions.
Rarely do undergraduates who have supposedly “learned how to think” pause to consider this entirely new side of the story. My students are, in fact, bright adult undergraduates, but they’re anxious to rise above their present circumstances, their dreams beguile them, and they avoid any realistic evaluation of those huge loan amounts.
I’ll continue to make my case to students–I feel ethically bound to do so–but I know that there’s really no stopping someone who’s determined to go into debt for a dream, whether that dream is earning a graduate degree in medieval studies or buying a house at the top of the market.
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As an adjunct for the past nine years, I’ve tried to have some version of that “heart-to-heart chat” with my students. I send them to the Web to back-read Invisible Adjunct, I point them to the job listings and various “First Person” columns at the Chronicle, and last semester I even organized a grad-school symposium where a dozen of my colleagues told their stories and fielded students’ questions.
Rarely do undergraduates who have supposedly “learned how to think” pause to consider this entirely new side of the story. My students are, in fact, bright adult undergraduates, but they’re anxious to rise above their present circumstances, their dreams beguile them, and they avoid any realistic evaluation of those huge loan amounts.
I’ll continue to make my case to students–I feel ethically bound to do so–but I know that there’s really no stopping someone who’s determined to go into debt for a dream, whether that dream is earning a graduate degree in medieval studies or buying a house at the top of the market.
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we’ve never had any credit card debt (i’m thinking it doesn’t count if you pay it off every month. We had car, student, and house loans, I think that whether those are good debt depends on the specifics, and there are a lot of folks who profit from those loans who have behaved unethically.
Our lack of debt load depended on having a small inheritance (I don’t know how we’d have done without it, bit it meant we could by what we needed and wanted –but my wants would never have extended to coach purses then.) We also delayed children, and have always had two incomes. And we financed our educations without the ridiculous debt burden folks take on these days. People are financing lexus educations that they can’t afford these days, because they can.
I’m wary of trying to save people from themselves by restricting credit, but colleges really need to rethink their role on all of this. They’ve financed themselves by getting 18 year pods to take pm huge debts.
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Then there’s the issue of how colleges partner with credit card companies to entice 18-year-olds with practically no income to pile up credit card debt on top of their student loans. The combination of student loans to cover tuition and credit card debt to cover living expenses allows both universities and students to live large. Unfortunately, only the students have to pick up the bill, and even bankruptcy won’t get you out of those federal student loans, which are yours as long as you are able-bodied. I remember how despairing a fellow student was at his $10,000 in credit card debt back in the early 90s, and if you watch Maxed Out, two of the major figures in the documentary are the mothers of students who committed suicide over $10,000 in debt. To us big people, that may not sound like much–yucky, but not insurmountable–but when you have no income and little life experience, it could easily seem that there’s no way out. (If I were queen for a day, I’d show Maxed Out at college freshman orientation, or preferably to all high school students, several times if necessary.)
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I think some blame also needs to be laid on contemporary middle-class child-rearing methods. That upper-middle class culture (soccer, violin, and schoolwork) does do a good job keeping kids safely occupied during those dangerous middle school and high school years and preparing them academically for college, but I think some important life skills are being neglected. One small cultural difference I’ve seen since moving from DC to Texas is that while in DC, our student sitters wanted cash rather than checks and never had change, our Texas student sitters (a number of whom are young marrieds) take checks. Likewise, when my husband needed to do reimbursements for cultural programming back in DC, he needed to either put the money on their student accounts or give them exact change in cash (we were like a huge ATM for a while). This suggests that few of those DC college students had working checking or savings accounts.
I’m making a mental note to make sure that our kids have experience earning money, paying for expenses, and dealing with a checking and savings account long before they leave for college. Not to mention making sure that they understand the workings of the washing machine before they leave home. (Our family lived in a dorm up until this summer, and many were the times I overheard a male college student there appealing for help, never having operated a washing machine in his life. Don’t let that be your kid. Of course there are now campus laundry services, so the kiddies actually don’t need laundry skills. Someday, this person will be your daughter’s husband.)
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Amy, or your son’s wife. I went off to college never having used a washing machine. To this day, my husband does laundry about 80-90% of the time. And he does 100% of the ironing.
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The violin/soccer/schoolwork form of child-raising now being used by all affluent families is the Asian form: a child’s job is their eduction; working for money would be a distraction from commitment to that job. I’ve just been reading “Yang the youngest”, about a violin playing family of chinese imigrants living in Seattle, and one of the conflicts in that book is the third daughter’s desire to earn babysitting money, when her parents want her to concentrate on her education (i.e. violin).
And, I don’t think it’s the Asian students who are getting into significant debt. Of course, an Asian family doesn’t solve the problem by just buying the things that the girl was trying to earn money to buy; she just has to do without them, because she can neither get the money from her parents nor earn it (because earning money for clothes is not seen as a valuable use of one’s time as a young person).
I do agree that child-raising practices share some of the blame, but I think the solution is to teach more responsibility in general, not necessarily by telling kids to work for their money.
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Just like the “good debt/bad debt” distinction, I think for a lot of us intellectuals (and I include myself in that) there’s a “good spending/bad spending” distinction, where spending on travel and enrichment activities (like Russell’s family’s music and yoga classes) are good, and spending on consumer goods (coach bags, fancy cars) is bad.
But we live in a world where things are cheap and services are expensive. So, if you think you’re being virtuous by only buying experiences and not things, you can wind up spending more than you planned…
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Elizabeth makes a great point. Most of the line items I have trouble removing from our family budget are not things.
I’m a big stickler about the kids seeing both sets of grandparents twice a year. One set lives in Denver, which means flights. Four seats, twice a year. So without ever taking a real vacation, we’ve already racked up at least $2000 a year in flights. Plus rental car for a week.
Other things pull on the same “maintain connection” heart strings. Family pictures and Christmas cards printed with said photo. ($150) Cel phones to make sure we can be available during the day if the school calls; Internet at home to allow for e-mail. ($200 a month.) A monthly date night with my husband. ($100) At some point it starts feeling like, what’s the point of working so hard if you lose connection with the people in your life? And once you’ve gone down that path you’re pretty likely to just whip out the credit card!
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bj,
It might be different in a family of musicians, but I think that often, advanced music instruction is the junior version of paying big bucks for a graduate degree in a low-paying field. Instruments can cost as much as a new car, lessons and camps are expensive, and every now and then you need new strings or whatever. And for what kind of future? Even practicing six hours a day from one’s teens, the career prospects of a classical musician stink even worse than those of a comparative lit PHD. (And I’d say the same about kiddie sports, too.)
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I just looked in at mydebtblog.com. The guy there had just posted his and his wife’s student loan totals. She just finished an MA and now owes a total of over $100,000 in student loans. Oh, and the MA was for teaching. The payment just for her student loans will be around $700 a month.
That blog is a bit soap-operaish and I occasionally wonder if it isn’t somewhat fictionalized. Now I really hope so, because if that’s really their situation, even under the most optimistic scenario it will take them a decade to pay off just her student loans.
(The wife is the Coach bag person you may remember from upthread.)
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