That’s an understatement

It seems the Boomers kept taking so much equity out of their homes they’re finding it hard to retire.  An article on the subject has this to say about the phenomenon:

Rising debt levels also reflect a psychological shift among Americans, financial advisors and economists say.

“People who lived through the Great Depression came out of that period with a great aversion to debt,” said Lori Trawinski, director of banking and finance with AARP’s Public Policy Institute. “As a culture we have loosened our opinion of debt.”

Loosened our opinion?  How about completely giving in to it?  Whether it’s the national debt, the annual budget deficits or our own personal spending habits, everyone seems to have just accepted that ever-more-massive numbers are a fact of life on this side of the ledger.

And in doing so, we are building our own literal living debtor’s prisons.

Even the spectacle of hundreds of thousands of Americans losing their homes in the recent economic downturn hasn’t caused a fundamental shift in thinking about debt yet.  People still whip out the credit card to buy the latest iPhone, or take out tens of thousands of non-dischargeable debt to pursue increasingly questionable degrees that may or may not contribute to landing a job.

We didn’t get here overnight.  Those who’ve been paying attention have been talking about the exponential growth in debt, and how one day there would be a reckoning.

Regular readers know that I’ve spent years teaching my Musketeers that “debt = slavery.”  They understand the concept that taking on debt gives someone else a higher priority on your life and earnings that you yourself have.  They’ve seen that in the last 20+ years their parents have bought only two new cars (and one used one–paid in cash–when having two vehicles became necessary).  And now, as the oldest Musketeer is in his first semester of college (at a relatively inexpensive but highly praised community college) it’s still cash on the barrel.  He worked for nearly a year after graduating home school.  Between what he saved to add to what his mother and I put away, his AA degree is banked.  We’re almost to that point with the Middle Musketeer, who graduates this year, and still have several years before the Youngest has college in his sights.  We’ve explained that our goal was to have the first two years provided for each of them, but that if they want a full Bachelor’s Degree they’re going to have to play a larger role in getting there.  That said, we’ve discouraged them from taking on any debt for school, which seems to have become a means of enslaving the last couple generations of graduates.  Because of that, I have no intention of cosigning for any “student” loans.  I would rather they alternate work and school, even if living at home longer, in order to graduate debt-free, than to get on the cookie-cutter mill of four or five years of school followed by a decade or more of loan payments.

I realize many people have entered a cycle of debt just to meet basic necessities.  I also understand, as the article above points out, that attitudes in this area have changed substantially and thus peer pressure can be crushing.  The Oldest Musketeer was one of only two in his high school graduation ceremony that didn’t have a declared college plan.  But he’s also now one of of maybe two that doesn’t have a bank saddling him for a long ride even as he studies.  I think that’s a good tradeoff, no matter how many eyebrows might be raised at first.

Take “the path less traveled” — and less leveraged.  It’ll make all the difference…

“Be not one of those who give pledges,
    who put up security for debts.
If you have nothing with which to pay,
    why should your bed be taken from under you?”

Proverbs 22:26-27

College and Congressional qualifications

…have apparently become a topic of conversation in Georgia:

A leading Republican candidate for U.S. Senate in Georgia criticized a fellow primary opponent for having only a high school degree. David Perdue, a businessman and first-time candidate for office, was touting his experience and education to a group of voters in January when he made a reference to “a high school graduate in this race.”

That candidate is Karen Handel, the former secretary of state and gubernatorial candidate. Handel left an abusive home at age 17, according to her campaign, and finished high school. She never graduated from college.

“Look at the backgrounds. Look at the credentials. There’s a high school graduate in this race, okay? I’m sorry,” Perdue told a group of Republicans in Bibb County. The Atlanta Journal-Constitution has the video

The Perdue campaign told the AJC in a statement that “David was simply making the case that he is the most qualified person in this race to help get our economy back on track so that we can start paying down the massive federal debt. His comment was based on facts that are a matter of public record.”

Here we see a glimpse of the arrogance of the would-be ruling elite.  Question: who do you think knows ‘real life’ for the average American best: someone who went straight to college and became a successful (and wealthy) businessman, or someone who clearly had enough character to overcome an abusive childhood and achieve at least the responsibility of Secretary of State for Georgia?  Which candidate will relate better to the challenges most of their constituents face?  Which is more likely to favor legislation the strengthens the hand of their fellow college-graduate-turned-successful-socialites?

Admittedly, I know little else about any of these candidates’ backgrounds (I’m not a Georgia voter, so have not followed this race until now).  But I truly hope this conversation becomes widespread, for two reasons:

– It’s long past time we re-examine what ‘representative government’ means.  I don’t think it means a legislative caste drawn almost exclusively from a pool of the wealthy and highly credentialed.  Do we want bright, intelligent, empathetic representatives?  Absolutely.  I’m not certain a college education necessarily implies or guarantees any of those traits anymore.

– Which comes to the second point: we need to have an honest conversation about the value of college today.

The Perdue campaign, in their response to this public kerfuffle, made reference to the need to pay down the national debt.  I have no idea whether Perdue used student loans to get his allegedly all-important degree, or whether he was fortunate enough to pay as he went.  Regardless, it seems Handel didn’t attempt college by taking on massive amounts of debt, as is the case for far too many people these days.

Who, then, is more likely to have the values of thrift and discretion that are essential to staunching the bleeding of ever-increasing debt?  Just a thought…

I firmly believe the college model as most people approach it today is outdated.  It has become yet another big business, bilking consumers for as much as the market will bear–and then some–while returning as little as possible in many cases.  In addition, what college provides these days is often less ‘education’ than it is ‘indoctrination’ — and that may in fact be part of the concern over Handel’s lack thereof (“oh, no!  She hasn’t spent four–or more–years studying Feminist Studies and The History of ethnic grievances!  We can’t have that in Congress!)

The well-ingrained social assumption that a college degree is essential to make a living today is simply not true, as a handful of individuals like Mike Rowe are quick to point out.  Hard work and character are still enough to make a way in this world, although the cards are often stacked against them.  An over-emphasis on credentialism undermines what a merit society is supposed to be.*

Higher education is hitting the outer limits of a bubble that has gone on for decades.  Without the availability of easy loans, there is no way tuition could have skyrocketed to the levels it has reached.  It’s well past time to ask what the return on this debt-driven experience really is, and whether it’s really an essential part of developing tomorrow’s workers, leaders and entrepreneurs.  We may just find that it’s become part of the machinery that keeps the ‘sheeple’ on desired tracks.


* This is not just an academic discussion for our family.  The Oldest Musketeer is a high school graduate now.  He has been working an entry level job this year, while we examined his options.  He knows what he’d like to do, and it does require a certain amount of credentialing… but not necessarily a 4-year college degree.  He is but one example of many young men and women who would benefit from a more trade-school approach that focuses on what they find fulfilling, instead of the university model that saddles so many youngsters with mandatory classes they will never use…and the debt that pays for them.  As such, we’ve been careful to select a two-year Associate Degree program that focuses on the core skills and credentials he’s trying to obtain.  By doing so, we’re plotting out a five-semester track for which we already have money saved to cover slightly more than three of the five if he continues to live at home.  If the plan completes as envisioned, he’ll graduate with a degree in something he wants to do, with no debt hanging over his head (or Mom and Dad’s).  There were some who showed signs of curiosity when he didn’t immediately follow his peers off to school last Fall.  As homeschoolers, we’re used to the occasional eyebrow.  I can say that this year of work and self-discovery was a valuable investment in its own right, and I’ve enjoyed watching him grow.  My point is simply that there has never been–and never will be–a ‘one size fits all’ solution to getting the next generation on its feet and self-sustaining.  No child–or society–should be left on autopilot.  ((this postscript added with the approval of the Oldest Musketeer))