I'm 29 Years Old With Nearly $1,000,000 In Debt!

[ruzara5]

Here you should start. Already. With some research and testing. You could start to dig out of this morass. You nosed in for the degree. NOW. Get into a mentality shift and get some hustle started. It can be done.

 

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[Ksalazar]

Sorry to burst this bubble, but money is hard to come by. It takes a decade or more to become rich. "Hustling" burnes you out by 40. Getting a job is your best bet. College works. Doctors make $200k+ per year. Doctors who marry other doctors make $500k per year.

The few "red colored" balls that come out of the gumball machine are the lottery winners. Those are the ones that write books or make youtube channels about how easy it is...

That's the sad truth. Most of you are brainwashed.

Mic drop. Forum closed.

The truth is most people just cant do the work required, they are lazy, and quit when things get hard. Simply put they are soft it drives me crazy how soft people are and quick to blame the world. The people I still spend my time around with tend to forward thinking and highly motivated individuals. One friend of mine has built up a kiosk business 3 years in already making 6 figures oh and hes 23. Another a shuttling business over 6 figures 34. The truth is going to school has value but I dont agree it makes you educated just gives you information that you can use. Experience makes you educated not memorizing content in a book. Id rather read books and go to workshops but it has value but a job will only limit your income and require you to work to pay off the debt that you put yourself into for that student loan you needed to get into an industry that might not need you due to simplification. I dont have a degree but I currently make more than a person with a bachelors degree would. Jobs lead to complacency, complacency leads to no income growth. If you rely on a job for income and dont invest in yourself or invest your income in assets that produce REAL income. You will forever be broke and rely on a job. On top of the fact that income growth hasn't kept up with inflation good luck. Walmart will always have positions for me Ill pass on that and focus on generating real income. To secure my loved ones and family.

Mic drop forum reopened for more debate

 

[Sanj Modha]

F*ck me. Your headline got my attention!

My advice is liquidate fast: sell the house, car, etc.

Also, sell your bodies to make up any shortfall. Desperate times and all that.

 

[JG17]

A good friend of mine says this about vehicles "Let the doctors and lawyers pay the depreciation on vehicles. I'll buy them a couple of years old for 50% off".

Love this quote. Thanks for sharing.

 

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[RazorCut]

can't they just declare bankruptcy?

everything except the student dept should go away?

I think that the US is similar to the UK in the fact that bankruptcy screws up your life for a decade. If you can dig yourself out of your hole in 3-5 years wouldn't it be a more sensible option to do that?

Plus the actual act of having very little disposable income for an extended period of time would create valuable lessons and strong habits that would be hugely beneficial in stopping a re-occurrence happening again (as @Andy Black indicated).

 

[Andy Black]

I know a few doctors in their early to mid 30's. They are all in the same situation.

Their entire time in school they are shoved unlimited credit down their throats, all the while idolizing the doctors who all drive brand new Audi's and BMW who live in the million dollar homes that are full of the consumer goods.

They don't stand a chance. The system sets them up to live in a perpetual debt cycle of living beyond their means, and it starts well before they even hit their residency.

A good friend of mine says this about vehicles "Let the doctors and lawyers pay the depreciation on vehicles. I'll buy them a couple of years old for 50% off".

Whoa. Talk about getting deeper and deeper into the script.

 

[Shepherd]

This week I finished listening to TMF and while nearing the end I was thinking "I've got so much out of it. Probably even more than someone who went to college and studied MBA". Let alone this guy who is a million dollars in debt. I'm sure he can buy a copy of TMF now to get out of debt.

And if you study MBA what do you learn exactly? Will it prepare you to being an entrepreneur? Or is it more for if you want a career in corporate life?

I have a MBA and it was a great experience. I learned a lot and many of my professors were successful in business themselves. I met high achievers and it definitely gave me confidence in terms of being able to compete with the big dogs.

It also humbled me and taught me I didn't know as much as I thought I did. I got to go behind the scenes of some huge businesses and understand the mechanics of how they are run. I also learned some simple lessons on efficiency and market strategy. I dare say it prepped me to have an open mind for TMF material and ability to process information on this board.

My day job paid for it, though, so my example may not be the best one in terms of ROI. It wasn't a prestigious school and the cost wasn't comparatively high. I never had any illusions that the title would lead to anything beyond knowledge, except maybe opening a couple doors to day jobs while I built my dream.

 

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[Kak]

Pardon my ignorance, but I've never really understood why this happens.
Hopefully someone can clear this up for me.

How does any institution lend such a huge amount of money (say upper 6 figures) to people who may never be able to pay the loans back?

Is there any consideration of the risk on the lending institution's part?

This!

I don't know the inner workings of the student loan beast that lends frivolously, but what I do know is that this is the kind of thing that happens when a market is over regulated.

Under a strictly free market capitalistic lending system, the lender would be in the business of making money and would examine the strength of the client, their likelihood of paying it back and set the interest rate accordingly.

Obviously competition of lenders, the clients history with money, and choice of a more solid career path should be what keeps those rates down. It isn't.

You could probably get a 3 percent loan for 300 grand to learn about gender and you would end up knowing less about gender when you graduate.

 

[G-Man]

This!

I don't know the inner workings of the student loan beast that lends frivolously, but what I do know is that this is the kind of thing that happens when a market is over regulated.

Under a strictly free market capitalistic lending system, the lender would be in the business of making money and would examine the strength of the client, their likelihood of paying it back and set the interest rate accordingly.

Obviously competition of lenders, the clients history with money, and choice of a more solid career path should be what keeps those rates down. It isn't.

You could probably get a 3 percent loan for 300 grand to learn about gender.

It's not just regulation - regulation is the explicit terms of the system. There are also the implicit terms of the system. Taleb talks a lot about this. So if, for example, the federal government has no explicit obligation to bail out financial institutions in times of crisis, but historically does so, this is going to create a pattern of behavior as though the government did have the obligation to bail out - these are the implicit rules of the system.

My dad talks about a capitalistic student lending system all the time. He said that to qualify for a student loan the banker told him to change his major from physics to engineering (one has more jobs than the other), and he had to report his grades to the bank. Just a little different than now.

 

[biophase]

The home is a rental, they can sell a collect about $70k if I remember correctly. $230k a year means about $160k after taxes. So if they live on $30k a year, they can pay down $130k a year. So after 1 year, the CC debt is gone. After year 2, the car and personal loan and some of the student loan. I guess after year 4 they should be in the clear.

I think they should sell the cars, get 2 beaters at $3-$5k each. Maybe get someone to consolidate the personal and CC debt, or negotiate a smaller buy out of the loan by using the thread of bankruptcy.

If they can remove the $35k car and get the $180k in debt down to $90k. They could knock this out in 3 years.

 

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[YoungPadawan]

can't they just declare bankruptcy?

everything except the student dept should go away?

 

[DustinH]

The home is a rental, they can sell a collect about $70k if I remember correctly. $230k a year means about $160k after taxes. So if they live on $30k a year, they can pay down $130k a year. So after 1 year, the CC debt is gone. After year 2, the car and personal loan and some of the student loan. I guess after year 4 they should be in the clear.

I think they should sell the cars, get 2 beaters at $3-$5k each. Maybe get someone to consolidate the personal and CC debt, or negotiate a smaller buy out of the loan by using the thread of bankruptcy.

If they can remove the $35k car and get the $180k in debt down to $90k. They could knock this out in 3 years.

One thing to add to the cost of borrowing so much money, especially for W-2 employees, is how much money you have to make to pay off credit card and student loan debt. The debt service for those is not tax deductible so you pay them off with after-tax money. Assuming they pay a typical average of 30% in taxes, they would have to make $194,000 to pay off $136,000 in credit card debt. To pay off $335,000 they would have to make about $480,000 in income. None of this is including the accruing interest on the loans. Just talking about this is stressing me out, and I have no skin in the game.

 

[ZF Lee]

This!

I don't know the inner workings of the student loan beast that lends frivolously, but what I do know is that this is the kind of thing that happens when a market is over regulated.

Under a strictly free market capitalistic lending system, the lender would be in the business of making money and would examine the strength of the client, their likelihood of paying it back and set the interest rate accordingly.

Obviously competition of lenders, the clients history with money, and choice of a more solid career path should be what keeps those rates down. It isn't.

You could probably get a 3 percent loan for 300 grand to learn about gender and you would end up knowing less about gender when you graduate.

Blame the poor folks in the banks who are forced to keep quotas to hit every month.

You know that salesmanship has gone into the gutter when you hear young finance chaps begging over the phone for you to help them clear the quota....

When the folks are forced to chase quotas as opposed to selling the packages to only those who truly qualify, the wild lending continues as more people are brought into loans.

I'm not against sales quotas, but I'd expect banks to concentrate on providing additional value to existing customers, as opposed to 'hunting new prey' like money-chasing F*ckers. Maybe something like offering free courses to stuff like creating business credit lines and retirement funds ( doesn't hurt to put a little money on the side), which could lead more customers to purchase their relevant products. A lead magnet, in other words. For another thing, they could improve their websites and ATM machines, which are still pretty much in the 1990s, as today's technology is concerned.

 

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[ZCP]

so where do you find what his plan was for them?

 

[Suzanne Bazemore]

I continuously LOL when all my family members have brand new cars. In the meantime I bring in double their yearly salary and drive a $3,000 car that is paid off.

new car + new car insurance = ~$300/mo car payment + $100/mo full coverage insurance
vs.
used card + used car insurance = $0/mo car payment + $20/mo liabilty insurance + $300/YR repairs maybe

Same here. My van is 13 years old, but I like it so I'm still driving it. I was just having this conversation a few weeks ago with a family member who likes to buy what he wants. He thinks I deprive myself. What I realized I am doing, after reading TMF and Unscripted , is trying to live debt-free so I can save money for investments to improve my means. My freedom is worth more to me than a new house or a new car. My reward when I make it as a fastlaner will be a new car, and maybe a new house, but in the meantime, I am happy where I am because not having those extra expenses gives me the opportunity to try to live how I want.

 

[Suzanne Bazemore]

I can literally hear the anxiety on her voice when he tells that they will need to live below their means. Wow.

Yes, I heard that anxiety, too. Did you catch that they are living with her parents, because they offered to help? So they feel less anxious about living with her parents than they do about reducing their lifestyle costs.

 

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[BrooklynHustle]

HOW THE F$*& CAN SOMEONE SO SMART BE SO STUPID!

This is slowlane mentality taken to extreme.

This is what happens when huge student loans numb you into thinking that debt doesn't really matter, until it escalates to a point where you come out of your cosy coma and realise you are in deep doo doo...

And this is DEEEEEP DOO DOO...

Ladies and gentlemen here we have a newly married couple. She is 29 years old and he is 32.

Their combined debt consists of:

335k student loan debt
136k credit card debt
44k personal loans
35k car loans
Plus the mortgage.

I think this should be made required viewing in every university and school in the land. There are some serious lessons to be learned here:

View: https://www.youtube.com/watch?v=rMk7CKwJ8OM

What the F*ck??

 

[RazorCut]

What the f*ck??

Is that shock or disbelief?

 

[BrooklynHustle]

Is that shock or disbelief?

At what point does someone say "enough is enough"?

 

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[RazorCut]

At what point does someone say "enough is enough"?

Denial is a powerful coping mechanism but eventually they have to take their heads out of the sand and face reality otherwise they suffocate.

 

[BrooklynHustle]

Denial is a powerful coping mechanism but eventually they have to take their heads out of the sand and face reality otherwise they suffocate.

Funny timing... last night my wife had us watching a "reality show" where this couple was in a crippling debt situation made worse by their decisions. I saw about 15-20 minutes before I had to retire to bed.

The husband (a doctor) was ready to face reality and downsize from the ridiculous home they were RENTING for $8-10k month... don't remember the figure exactly.

The wife (a stay-at-home mother) agreed in principle, but was having a very hard time even giving a chance to any of the houses they looked at. She even offered to get a part time job so she could take over some of the smaller bills (essentially a drop in the bucket).

Seems that a lot of her identity was tied up in being the kind of person that lived in a ridiculous house that others would envy, even if it was the biggest thing keeping them in financial jeopardy.

Crazy... but yet I wonder how common this is.

 

[Andy Black]

Seems that a lot of her identity was tied up in being the kind of person that lived in a ridiculous house that others would envy, even if it was the biggest thing keeping them in financial jeopardy.

Like the man said, it’s not a Maths problem...

 

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[BrooklynHustle]

Like the man said, it’s not a Maths problem...

INDEED!

 

[The Abundant Man]

Crazy... but yet I wonder how common this is.

Very common

 

[BrooklynHustle]

Very common

Yikes...

 

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[AquaQuell]

I always wonder if this is mostly a phenomenon of the US?

To be honest I've not heard of people amassing THIS MUCH debt ever but at the same time credit card debt isn't something I've come across very much in Europe. So far I've lived in Germany and the UK and while I don't watch traditional TV, it's just not something that I've encountered in other media formats either.

Google just told me that there has been a German TV Show about debt in the past. We're looking at amounts of 17 000 - 30 000 Euro on average (this mostly relates to a household rather than an individual). On the "celebrity version" of said show there's a former actor with 53 000 Euro of debt. In most cases that's personal loans, not credit card debt.

 

[Knugs]

I always wonder if this is mostly a phenomenon of the US?

To be honest I've not heard of people amassing THIS MUCH debt ever but at the same time credit card debt isn't something I've come across very much in Europe. So far I've lived in Germany and the UK and while I don't watch traditional TV, it's just not something that I've encountered in other media formats either.

Google just told me that there has been a German TV Show about debt in the past. We're looking at amounts of 17 000 - 30 000 Euro on average (this mostly relates to a household rather than an individual). On the "celebrity version" of said show there's a former actor with 53 000 Euro of debt. In most cases that's personal loans, not credit card debt.

New UK student loans.
We might have free German University but thats subsidised by giving half away in tax

 

[Rabby]

I flipped out at the part: "we both work in government." Of course you do, no doubt in charge of a departmental budget with your MBA and Public Policy degrees

And if you study MBA what do you learn exactly? Will it prepare you to being an entrepreneur? Or is it more for if you want a career in corporate life?

A lot of MBA programs are preparing people for employment. Corporate managers, etc. It's become a credential where the HR department checks a box and maybe you're eligible for a raise or promotion.

Sorry to burst this bubble, but money is hard to come by. It takes a decade or more to become rich. "Hustling" burnes you out by 40. Getting a job is your best bet. College works. Doctors make $200k+ per year. Doctors who marry other doctors make $500k per year.

LOL. Assuming this is sarcasm. Poe's law!

I know several doctors and lawyers who can't figure out how to pay down their debt. I've also met people who keep getting more degrees because student loan payments aren't due if you're currently pursuing a degree. One guy I knew was going for a double PhD because it would take longer. Two useless subjects of course.

By the way, the debts aren't high just because of tuition. I used to assume that. But as it turns out, people finance their living expenses with these loans. The money is easy come so guess what? Living expenses could mean luxury apartments and eating out every day. And hey, maybe lease a Lexus? Who checks on what they're spending the money on anyway?

Under a strictly free market capitalistic lending system, the lender would be in the business of making money and would examine the strength of the client, their likelihood of paying it back and set the interest rate accordingly.

We're not making bad loans, we're fighting inequality. Providing opportunities to the poor!

The rhetoric may be political and class based, but I think a lot of it is economics -- policy makers follow flawed economic theory, try to keep the currency moving, keep "spending" up to "strengthen" the "economy" as they understand it. Or as it serves some metric they care about.

These are the metrics, the numbers that incentives and votes are based on. Consumer spending is up! Everything's Ok! Never mind that the average household is underwater.

Sub-prime mortgages were the same scenario. Certain lenders (not all of them) and a majority of policymakers wanted to push them. Same rhetoric -- opportunity, equality, access to capital. The lenders survived on incentives, subsidies, and permission to use convoluted accounting practices to avoid receivership. Meanwhile, conservative bank CFOs were threatened with audits, discrimination suits, receivership, or forced to resign under pressure from regulators.

More traditional bankers can lobby for less regulation, but it falls on deaf ears when "spending" or "consumption" economic theories prevail over "production" theories. We'll always fall into debt if we're consuming more than we produce, but people don't want to acknowledge that. It's probably not even a consideration in today's public policy, the subject the young woman on the phone studied.

The anointed say "consumption" has to be distributed equally among all. Debt programs are one way to finance that, and you don't have to raise people's level of production to do it. Any type of debt can become the vehicle: home loans, school loans, business loans, payday loans. Ultimately it will hurt the people who are supposedly being helped, along with everyone else, because we have people living on debt that's over 10x their production level. But hey, that "consumer spending" number went up another tick! Alright!

 

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[DustinH]

Seems that a lot of her identity was tied up in being the kind of person that lived in a ridiculous house that others would envy, even if it was the biggest thing keeping them in financial jeopardy.

Crazy... but yet I wonder how common this is.

"Living in a house you can't afford to impress people you don't like is not a good way to manage money."

 

[DustinH]

I always wonder if this is mostly a phenomenon of the US?

To be honest I've not heard of people amassing THIS MUCH debt ever but at the same time credit card debt isn't something I've come across very much in Europe. So far I've lived in Germany and the UK and while I don't watch traditional TV, it's just not something that I've encountered in other media formats either.

Google just told me that there has been a German TV Show about debt in the past. We're looking at amounts of 17 000 - 30 000 Euro on average (this mostly relates to a household rather than an individual). On the "celebrity version" of said show there's a former actor with 53 000 Euro of debt. In most cases that's personal loans, not credit card debt.

53,000 Euros is about $60,000. That's nothing here in the US. A drop in the bucket.

If you want your mind blown by personal debt numbers then go on YouTube and watch Dave Ramsey's show. We are talking lots of people with $200,000-$500,000 in non-mortgage debt. It's accumulated by student loans, credit cards, cars, business loans, etc.

There's a lot of people in rough spot but they don't understand any of it. On his show you only hear about the small percentage that actually have to courage to call into the show and talk about to a national audience.