One thing the article I posted last week does not cover is this: realizing that a large portion of this is not just big screen tv’s or jewellery and cars that people can’t really afford, but that it is educational debt. It’s interesting how we’ve created a society where most often, the ‘smartest’ people are saddled with the biggest debt.
Think about it.
You spend 4-10 years getting a post secondary education they are up to their eye-balls in debt = Age 22-28 into the workforce
You spend the first 10 years of their career trying to pay for it. It makes zero sense = Age 32-38 finally out of debt
You’ve lost the first 15-20 years of all your disposable income when others have been plugging along working, for what?
You earn maybe another $50K a year to just lose half to taxes?
Then lucky you, you spend the next 20 years in a panic trying to make up for lost time climbing the ladder while everyone else just plugged along working.
So you make another $1,000,000 taxable dollars that your less educated peer made with a lesser salary.
Woohoo.
It makes NO sense to me. Listen, I’m not saying go work at the Quickie Mart Einstein, and I am absolutely not saying don’t get a post-secondary education, what I’m saying is do it without taking on debt. Do whatever it takes to pay for your education as you go, work summers, evenings and weekends if that’s what it takes. Then bingo, the gift of making $50K more a year has it’s benefits, and those benefits can be seen right away.
Here’s the alternative.
Graduate from high school.
Work your tail off going to trade school, college or University for however long you’d like.
Graduate at 22 DEBT FREE.
Spend the next 30 years in a lower tax bracket, investing the money that you would have used to pay interest and minimum payments on your school loan, if you had one.
Rough numbers with average yields, by my calculations translate to over $15,000,000 compared to the $1,000,000 above.
Hmmmmmm. Which one is better? What can I say, I’m one of those ‘educated people’, but I was lucky enough to not ever take a student loan, so my money has always been mine, and continues to be that way. Consider this if you are going to be a student, are one with debt, or you are a parent. Higher Education = More Work and Crappy Return.
Cheers,
Julie
Hi Julie
ReplyDeleteI disagree with your stance that a higher education = more work and a crappy return. That will only be true if the individual wants it to be that way. As you went on to say, if they do whatever it takes to pay the debt as they go along, and they, and their parents, have planned properly for it in the first place, then there is no reason to graduate owing $100k, unless of course they are so highly educated that there is no other choice. Like you, I'm saying that it can be done, it's going to take some work however. Our grandkids get heaps and heaps of crap showered on them by doting grandparents with good intentions. If the parents had any brains, they'd be insisting we put the money into a college fund or a TFSA for the kids instead. These same parents think that they've got it all figured out. I don't think so! The secret may be as simple as start early and have a plan. We are in so much trouble in this country and we don't want to know, or hear it. If the parents don't have the sense to plan, then the kids will be shortchanged and their opportunities will be limited, or, as you say, they'll end up with huge debt and more work and a crappy return. I'll let you know in 20 years how that story works out.
Cheers.