Debt-Tolerant?
Posted on March 11, 2007 10 Comments
I overheard an interesting conversation between my aunt (Jody) and a cousin’s husband (Tonio) at a baby shower last week. Jody was commenting on what a beautiful house Tonio had, and how lovely he and his wife had furnished it. Jody said that it was very impressive, because when she was Tonio’s age, she and her family were still living in a small apartment.
“That’s because my generation is more debt tolerant, according to (I think he said) my financial advisor,” said Tonio.
“Debt tolerant, is that what we’re calling it now?” laughed Jody. “I like that.”
As I listened, the phrase struck me. Have generations of easy credit made those of us in our late 20′s-early 30′s more able to take on larger loans (credit cards, mortgages, car loans, education loans) than in generations past? And if so, what does that say about our generation? If we’re likely to put down less for downpayments and take on more, aren’t we in essence selling our souls? Should we work as a group to become less debt tolerant?
Becoming less debt tolerant would mean, of course, giving up on our lifestyle. Smaller houses, less cars, etc. But at the same time, taking on debt may be a sign of the upwardly mobile. You take on education debt because you anticipate it will result in a higher income later down the line. At the same time, you can afford to take on debt for a home, car, furnishings, etc., because you know eventually you’ll be able to pay it off with the higher income you’ll be earning.
In the comments from my last post, “CRS” said that her mother told her she’d always be in debt, it’s just managing it that matters. I think this is a wise piece of advice. After all, it’s highly unlikely that most Americans can actually afford to purchase a home in full, or an education, for that matter. Most of us will spend our best years in debt.
I’ve been in educational debt since I was 18, and once I’m finished paying that off, I’ll immediately take on a mortgage debt. I’ve carried a debt to furnish my apartment (it’s paid off), and to build my computer (also paid off). I’ll probably take on more educational debt in the future.
The point is to find a happy medium – watch how much debt you take on, and balance your income so that as you pay off that debt, you can afford to put money into savings for your future. While you might always be in debt (not all debt is bad, mind you), you don’t always need to feel like you’re in the hole, or that you’ve sold your soul. Debt may be the American way, but you DO have a choice of how much you take on. Debt tolerant is our burden, but debt savvy is our means.
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10 Responses to “Debt-Tolerant?”
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March 11th, 2007 @ 11:14 pm
Great post. I am starting to wonder as gas prices, electricity and the cost of living in general increases while salaries stay the same, will the debt we incur become more out of control. I beleive if we are not careful with debt as a society, we are in for a rude awakening.
March 12th, 2007 @ 2:01 am
I hate the idea of becoming ‘debt tolerant’, the word almost makes me sick to my stomach. Maybe it is the thought that things can SO easily get out of control.
Ugh, I don’t ever want to be debt tolerant. Good post!
March 12th, 2007 @ 2:25 am
If we are able to pay debt off, then we are able to save money to eliminate the debt in the first place and buy with money we have saved. Do I think that’s necssarily true about a house? No. About living room furniture? Yes. But we gotta have it NOW because OMG what would happen if I had ugly cheap mismatched furniture for a year while I saved money to buy decent furniture?
March 12th, 2007 @ 2:38 am
I absolutely hate debt…but not so much that I didn’t get a student loan in order to pay the rent during college.
That being said, I am attacking that student loan with a vengeance now that I’m graduated and have a little money to throw at it. With $5,250 in loans (starting balance), I expect I’ll have it paid off in less than 4 months. That’s how much I hate it.
From the above, you can probably guess my opinion of those who willingly take on debt in order to finance a lifestyle they don’t really own. It’s pretentious, prideful, and a little sad. We care so much about what others think of us, and we have so little ability to delay gratification that we sell ourselves into slavery to get that which does not ultimately satisfy.
March 12th, 2007 @ 7:45 pm
The advice that I like relating to debt is to only take debt for things that will appreciate, like houses or education (an investment in yourself so that your income appreciates). Taking debt for things that will depreciate, like consumer goods and cars, is generally a bad idea if you can avoid it.
March 12th, 2007 @ 11:56 pm
Oh, I hope I didn’t give the impression that my cousins live an extravagant lifestyle! They have a beautiful house, but it’s not flashy or filled with non-necessary. They are some of the most grounded, nice and caring people I know and I’d feel horribly embarrased if I made it seem that way. It was just the phrase that struck me, that’s all.
March 12th, 2007 @ 11:57 pm
Meant to say filled with non-necessities… they just are super talented decorators and their house has a unique appeal to it.
March 13th, 2007 @ 12:33 am
I like that. I’ve tried to stay out of debt, but it gets so hard when you see how much you owe in educational debt. Then stupid things pop up like insurance doing some weird thing where they won’t cover your dental checkups every 4 months, but 9 months instead, or something breaks/breaks down… *sigh* it’s neverending.
Your post reminded me to remember to SAVE the money aside first, then buy it in full instead of on credit all the time. It’s an easy trap to fall into.
April 15th, 2007 @ 9:18 pm
To all you young’uns out there:
My husband and I are in our early 50s. Our furniture is still mismatched. My husband drives his late father’s car, a 1980-something Olds. We get most of our clothes from thrift stores. We living in a small house on 1 quarter acre. Our “vacations” are trips to take care of business with our elderly parents. It took me six years of night school to get my BA, in the 1980s, when nobody gave a damn that I was a working woman trying to climb the corporate ladder while putting myself through school. I had no rich daddy, no rich mommy, no husband, no government assistance, except student loans, which took me 12 years to pay off. Why? Because on the road to trying to live the so-called American dream with all the “subsidized” baby-boomers out there, life took over and we had huge debt from illness and accidents and loss of work. IOW, folks, things we couldn’t control..on top of all the normal mistakes people can and do make. And yes, we are still surrounded by people who go to Europe every 15 minutes, travel on the weekend, own boats, have huge houses and Hummers. Most of them cannot fathom what life is like…whether they’re in debt or not. BTW, my husband and I are spending our “vacation” money to fly home to bury his mother, who isn’t expected to live another 48 hours. PS: I have an uncompleted MA and my husband is a summa cum laude grad with an MS in Computer Engineering and is gainfully employed. My point is that if you blow your load on stupid stuff, you won’t have any money when the really big shit (like death and illness) hit the fan. Maybe you’ll be one of the lucky ones…and that’s what you all are counting on, but remember Jon Donne: “Ask not for whom the bell tolls–it tolls for thee.” Meet the working poor! Be proactive and conscious.
June 29th, 2007 @ 5:38 am
Debt is a happy medium. I have 47k in student loans, but its at a manageble rate and for a good cause. However the 26k in credit card debt I racked up was not. Life is turning around after a year and some cutting back. Our American Society sends a message of “buy materialistic crap”, that we buy to impress people who don’t care.
I would rather own things, than have things own me. I will get there eventually.