https://fortune.com/2023/06/10/millennial-couple-student-debt-cant-afford-kids-family-6-figure/amp/ Sent from my iPhone
Another example of the impact of student debt (Fortune) [$64k debt, $166k/year income in upstate NY]
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So the couple have a combined pre-tax income of $166k and she earns $125k, which means that her spouse earns $41,000/year. If you divide that by 2000 hr worked in a year (40 hr/week * 52 weeks - assume 2 weeks off), then that means that her spouse earns about $20.50/hour.
Thereâs a simple solution to this. The spouse needs to find a better paying job.
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Iâm struggling to empathize with how hard it is for 29 year olds making a combined income of $166k per year to not be able to âhave it allâ: buy a house, pay down student loan debt, save for retirement, live the way they want and also have children.
Frankly, it sounded like Kelly doesnât want to have kids and feels like saying she canât afford it sounds better than she doesnât want them. Or, Kelly really struggled to prioritize what she actually wants because the idea that any of us âshouldâ be able to afford everything on our wish list all at once is a childâs idea of adulthood.
If they were serious about knocking out their student loan debt, they could do it in under a year - 2 years if they didnât want to go full bore. But theyâd have to want to do that, as opposed to the other things theyâve chosen to do instead.
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Someone once told me that if we waited to have children until we thought we could afford them, we would never have kids. I think they were right.
And we had $0 of student debt. Actually when we had our first childâŠwe didnât have any debtâŠat all.
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Itâs not always that simple, at least not for everyone.
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Fair point.
But if the couple is serious about wanting to knock down their student debt, go get a 2nd part time job to make extra $$, all of which would go towards paying down the debt.
Both of them could do this and make significant progress in 12 monthsâ time.
Where thereâs a will, thereâs a way.
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Im not sure I understand the âcancel student debtâ argument.
If you cancel student debt, it will make peopleâs lives better. Ok, got that.
How is cancelling student debt any different than handing every American a check for $20k? Giving anyone $20k will make their lives better.
Why the focus only on student debt?
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âThe thousands they are saving each monthâŠâ
So Iâd rather keep/save my own paycheck than payback the taxpayers. Got it.
ââŠthe $166,000 they earn puts them well above the median U.S. household income, but things are tough âŠâ
yeah, sure, itâs tough living on ~2.5x the median US household income.
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Her income recently doubled. She seems to be reacting to how tight their cashflow was, not how more relaxed it likely is now. And if her H is truly only making around $40k, maybe he should be a SAHD? Depends on the cost of childcare where they live.
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While I try to be sympathetic, and I understand everyoneâs life situation is different, every time I read one of these things I feel like people just need to buckle down, live more cheaply for a few years, and value paying off their debt more than whatever else they want to spend their money.
I had a few advantages that made my situation a little bit easier than some peopleâa $5000 graduation gift from my grandparents, and a boyfriend who (although he was and still is as my husband now extremely cheap) had a high enough paying job that he could take me out to dinner a couple of times a week. But, I graduated with the maximum student loans in 2000 (so, $27,500?). I made $33,000 my first year out of college and $38,000 my second year. And, I paid my loans off by the end of the second year. Those two years were extremely bare-bones for me. But at the end of them, every penny I made was mine.
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I totally agree with you. I feel like a curmudgeon but seriously? If you want to take care of your student loan debt of $64k and you make $166k - it is more than doable.
They are making ~$14k a month, pre-tax.
Paying off the student debt in a year would mean making $5.4k payments each month.
Even after taxes, deductions, etc - they should be bringing home at least $10k a month. If they had been living on $100k a year before her big raise - it shouldnât be that difficult to live cheaply for the next 12-18 months and just knock out that debt.
But you have to be willing to live cheap. Not going out, not buying new clothes, not taking vacations. Throwing all available âextraâ cash into debt repayment. According the article, theyâve been saving âthousands per monthâ. Now that they have a cushion - prioritize debt repayment and get it done.
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I think that there is often a bias to the how-student-loans-ruined-my-life articles. I rarely see articles focused on the non-completers whose loans have ballooned due to not being able to afford payments; this is the group that concerns me, because they honestly canât afford to repay their loans and accruing interest keeps piling on. They are poor and undereducated, so they donât make a pretty story. Instead, the focus is on people who make a decent amount of money & have a good chance of moving up in their careers. There is a woe is me focus that strikes me as whiny. Itâs not like their debt is actually crippling them. And spare me the kids are too expensive because of my loans pity party. Kids are too expensive period. If you really want them, you figure it out. I guess Iâm feeling ornery, but the young woman is not poor.
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If you have a loan, pay it back.
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They will be the ones here on these forums some years later (after their income has increased) complaining about not getting college financial aid anywhere but not being able to afford even an in state public university for a kid going to college.
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(Sorry, not a parent)
This is the big catch. Many people in my generation (old end of Gen Z) and a generation above (millennials) have decided that while kids may be ânice to haveâ, itâs not worth working a second job or making other (career-wise) burdensome sacrifices for. With regards to kids, there is becoming less and less of a âwillâ purely due to the âwayâ presented to us.
This is a trend observed in most first-world societies, from East Asia to Western Europe and now finally the US. Inflation soars, prices increase, people see themselves become poorer and poorer (materially) when stacked against their parents and grandparents in the same part of life, and as a result, people cut out non-vital* expenses (with potential kids often being on the forefront of the chopping block).
*Important note: our generation and millennials consider self-care and time for relaxation and enjoyment to be vital, which goes against norms of older generations and incurs a more expensive lifestyle.
Interesting reads on this subject globally:
- Asiaâs advanced economies now have lower birth rates than Japan
- 'Lying flat': Why some Chinese are putting work second
- âVanishing like glaciersâ: plunging birthrate threatens Italian schools | Italy | The Guardian
- https://fortune.com/2023/01/12/millennials-broken-economy-delay-children-birthrate/
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If younger generations, as a whole, are prioritizing working less hours, taking more vacations and eating out more, etc, then that could indeed incur a more expensive lifestyle. In which case they still would need to be employed at jobs that can allow them to meet their obligations and have enough.left over to afford their chosen lifestyle.
Children can cost quite a bit of money and so yes, they might not be a priority for some, and thatâs ok. One probably shouldnât have a child/children unless they are going to be a priority. My wife and I have sacrificed things in order to have our children, that was a choice we made. We still managed to buy houses, buy cars, have vacations, eat out, save for retirement and future college costs, etc. Without children we could have certainly done more extravagant things but we chose to have kids so we just did things a bit different. In the end, we made a choice that was right for us. Everyone has to make choices in life.
As for the family in the article. They already have a two bedroom home which I would presume is sufficient for having a child in. They donât need a bigger house first. I assume that house has also appreciated just like the larger houses they want so theyâve gained equity that could be used in the future. They have extra income that they are saving so they could be using that extra to pay obligations. As stated above, they have options available to tighten their budget or expand their income to either pay off debt or afford more things, including children if they choose. They have made choices to get to where they are and now they have to make more choices to get where they want to be next, just like everyone else. Unfortunately not many have unlimited funds and the means to do absolutely everything. Iâm sure theyâll figure it out one way or another.
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Interesting priorities while complaining and comparing to prior generations who had and have a very different work ethic and ethos.
Millennials and GenZ also should prioritize putting away some of the money theyâre spending on self-care and relaxation/enjoyment for retirement because no (or fewer) kids equals no (or smaller) safety nets in the future, as well as all sorts of other detrimental societal effects (but thatâs for another thread).
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From what I have seen, there are only a very small number of schools that justify any substantial debt for an undergraduate education. If this lady only makes 125K at 29, and she only recently got to 6-figures, she didnât go to one of these institutions. She either had no one advising her in her life or she got some terrible advice. Also, if you want to have kids and live a certain lifestyle, donât marry a guy who is only capable of making 41K seven years after college.
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Kelly, who is 29
âIâm kind of playing catch-up,â Kelly tells Fortune. âI should have been saving for 10 years and I wasnât.â
I donât know too many 19 year olds who are saving for retirement. I think itâs reasonable to expect not to start saving until at least age 25 so they may be a few years behind but not materially. They also earn significantly more than the median income so while they may have lost out on some compound interest (but probably not much since their savings would not have been significant) they can make it up with higher savings now. To pay off the student debt they could just continue living on the income Kelly was earning before and using the extra to pay off the student debt. It shouldnât take too long.
As to the rest they could make having a family work if they really wanted to, but Iâm not sure that they do.
I agree.
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This. Or they could use the spouseâs whole take home pay to pay off the college loans. That wouldnât take too long either. And Kellyâs additional higher income should be able to support themâŠunless they are living way beyond their means. If that is the case, they might benefit from a financial counselor who can advise them.
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