The youngest of my sons is about to graduate with $20,000 in student debt. In the fall he will be living in another city and going to another university and will probably incur another $20,000 in debt. When he finally finishes school he will be $40,000 in debt.
The elder of my sons will graduate at Christmas and he will owe about $40,000 too. So much debt.
Each of my sons will be $40,000 in debt and will start the next phase of their lives in a big hole of debt.
The oldest has a job lined up that will gross about $50,000 each year to start and that is a good starting wage but he is the expensive son who eats the paleo diet (lots of expensive meat) and likes to attend professional sporting events and big concerts. He will need a newer car when he graduates because his is falling apart and he has to have a car for his job. His employer pays mileage but the car has to be able to get him there reliably.
$20,000 of the elder’s debt is government loans but the other $20,000 is a student line of credit that I cosigned for. If he quits paying then I am on the hook for the payments. I am confident that he will pay and after he graduates I will encourage him to move the money to a regular line of credit so that my name is not on it.
The younger son will also owe approximately $40,000 upon graduation in 2 years. He is the overly social son who is always going out. He likes small concerts and hanging out at pubs with friends or meeting for wings. Beer is a big part of his budget. I am hoping that my youngest can get by on more government student loans and keep his student line of credit that I cosigned for to $10,000. He will have a bit of a struggle getting hired in his field of choice and may have to take other employment to pay his bills. He may have to work 2 jobs. 1 to live on and the other to pay his student debt. He thinks a good way to save money when he graduates in 2 years is to move back home with his mother.
It will take them both years to pay this debt off and will slow them from starting important parts of their financial futures like home purchases and retirement savings. They will both be in their early 30s before they can be student debt free. I have had lengthy discussions with both of them about student debt but I am not sure if young people can truly appreciate what a burden big monthly payments are. Most young people wear rose-coloured glasses.
Education is the only way to get ahead financially but better decisions on how the money was spent while getting those educations would have decreased the amount owing. “But you have already seen Kenny Chesney in concert. Why do you have to go again?” “Maybe you could go to wing night every other week instead of every week?” I have said it until I am blue in the face but who listens to their mother?
I have my own debt problems to deal with but I have always felt serious guilt about not being able to help them more with their school expenses. Trying to get through university with a low income mother is a tough struggle but it is what they are stuck with and they never whine and never complain.
I would like to offer them financial help in the future but the best thing I can do for their future is to get my own finances together and to always be able to take care of myself.
I think you’re a really giving mother who like all parents, want the best for her kids.
I’m sure those notes of yours about spending less to get ahead, will get through to them sooner or later.
When I was a kid, looking at actual numbers helped. Wing nights for 52 weeks versus 26 weeks, and then putting that into an account for 40 years… that certainly opened my eyes.
I think the best thing you can do is be open and talk to them about your debt and not having saved enough. Honesty works the best, and it really hits home when they realize this is a big deal to you, and it will be a big deal to their lives in the future. The sooner they start, the better.
I have always been open with the finances. They know how much I make and how much things actually cost. All I can do is hope they decide to be more careful with their finances sooner rather than later.
Do they know your debt? And that you feel like you didn’t save enough to retirement yet because you started later?
They will. If they hang out with people who talk and think about those things, and when they start thinking about a family, wanting to buy a home… it all comes down on them. It really is better to start today rather than tomorrow, but you can’t force people to budget and cut back on expenses without seeing the long-term effects.
They receive regular statements for the line of credits from the bank and from the govenment loan organization. The government states the total amount owed how much the minimum monthly payment will be. I ask them for the totals on a fairly regular basis. I know how much they owe but when I ask they have to say it out loud.
They know how much I have and how much I don’t have.
“I have always been open with the finances.”
That is amazing and very good! It seems that with most families, money is never discussed. I never knew how much my parents made and it drove me nuts. I wanted some point of reference so I could understand what it took to live. Eventually, I snuck down and peeked in the file cabinet (don’t tell them).
Do either children save any money? Does it do any good to try to educate them? DId they learn anything about personal finance in school?
I have young children myself, so this is a great source of interest to me. I plan on being as open as possible when the time comes. For now, we set our kids (6 and 3) up with multiplie piggy banks. One is for saving, another for spending and a 3rd for charity. Every contribution to the spending PB has to be matched in the saving one.
Children don’t learn anything about finance in school but they are very bright people who understand math and can figure out interest and they are both very aware of current affairs and that means they know about fiscal cliffs and economic unrest in Greece and other things people need to know to make decisions.
They always had to earn their own pocket money when they were very young and are both hard workers. The younger has some saved to go to school out of town but no where near enough to pay his tuition or his rent. He will have to figure the rest out on his own.
I am not sure you can tell your children anything. They have always been allowed to make their own decisions even if they are bad ones. They are good decent human beings and lots of women think having either of them as a son-in-law would be a wonderful thing. I am hopeful that they will get the money thing straightened out and they do as well with that as they do with the successes in the rest of their lives.
Oh if you want a really good book to give to your sons, I suggest finding a used copy, or a library copy of The Millionaire Teacher. I wish I had that book when I started, it would have put me on the fast track a lot quicker. The other book that changed my life is Millionaire Next Door.
Where will your older son be living? If it’s an apartment see if he can live with roommates near work. You should ask cashrebel what advice he has for your kids because I think he’s around your kids age. Your kids probably don’t want to take advice from you (sorry) but might take it from someone their age.
So your son is going to have a car loan and student loans to worry about so short after graduating?! This worries me! Make sure he doesn’t go all baller and buy a BMW or something.
He lives in a house with bunch of other young broke men who are finishing school or getting started on his career. He will stay there for another year or so.
He won’t go crazy for a hot car because insurance for young men in Canada is a fortune and if you get anything sporty then insuranc eats all of your pay cheque and there is no money left for beer.
I like Cash Rebel but I can hardly get him to read my blog so I am not sure if I could get him to read anything I recommend. The last thing I convinced him to read that he actually liked was an Archie comic and that was about 14 years ago.
Color me crazy but I don’t see that as a huge amount of debt. I graduated more than 20 years ago with $25k of student loan debt making $23k/year and had paid it off in just over 3 years. I was also a single mother at the time. So I’m not seeing an issue here with some diligent focus.
My oldest son is 24 – it sounds like yours are just a bit younger than that. Trust me, their frontal lobes grow between 21-24 and they’re (finally!) able to see long term consequences.
It seems like a huge amount of debt to me. Today I am $19,800 in debt and it will take me at least 2 more years to pay off. I think it is wonderful that you were able to put approximately 35% of your income towards you debt and pay it off so quickly but I find it hard to pay the 29% of my income that I am currently attempting to throw at the debt but I am finding it hard to meet my other expenses.
It will take them many years to dig out of the debt.
Hopefully by the time my babies are college age there will be another alternative to college and taking student loans. My wife and I were lucky enough to receive free college through our employer so we had a huge leg up on our friends who had chosen the more traditional path.
The current alternative to student loans is very wealthy parents or the military.
My oldest is in a co-op program so he did make a lot of money on his work semesters but he just spent more.
The military is the new stepping stone to the middle class!
It has worked out wonderfully well for a friend of my oldest son. He had no hope of a future and came from a very low income upbringing. The Canadian Navy has trained him to be an electrician and when he leaves service he will have a good trade to support his family with.
The Canadian military will pay for your education to be a doctor, lawyer, nurse, mechanic and a host of other professions as long as you commit to a certain number of years of service. My youngest son has considered this option but he does not think it is for him.