For love OR money?

[claphands22]

America is absolutely funny about regulating investments.

 

Lack of consumer debt regulation allowed the founders of Youtube to start a company with massive credit card debt and sell out for a winning lottery ticket, but our same lack regulation also causes penny stock scams, payday loans and (currently) massive unforgivable student loans with low ROI attached.

 

There needs to be massive student loan reform in the US.  Most people are familiar of the problems associated with Law schools, but the problem has also started to trickled down to other professional programs: pharmacy, osteopathic medicine, optometry and dentistry. DTEJD1997's lawyer friend is definitely in a bad situation but to give an example of how school cost have become menacingly high, check out USC's cost of attendance for dental school, $426,523! Of course that number doesn't even include the 4 years of opportunity cost, the additional year of a probable residency and the cost of buying a practice.

[Peregrine]

Does she like practicing law? I think that's the major question. A lot of people get into things without truly understanding what they want, though not all get into it with a huge pile of debt either.

 

IMO, if you truly have passion for something, you will ultimately become good at it. And in time, the market will hand you the rents that you deserve.

 

Probably the best thing for her to do right now is to decide on what she wants to do and then go after it relentlessly. Worrying about her problems will get her no where (and probably will serve to put her a few steps backward too).

[Guest ajc]

I agree with Kraven on this. How long before a substantial percentage of these loans get written off. I give it a decade.

 

You don't exactly have to be the most astute strategist to see that an issue like that can make an entire political career or even get your candidate into the highest office one day.

Banks and expensive educational institutions will have their asses kicked, a generation of students will have debt forgiven and Mr/Mrs presidential candidate will get themselves a helluva lot of votes.

Same old, same old really. Just a slightly different issue this time around.

 

As for the woman in question - I'd say it comes down to whether it's an error in judgement that was allowed to go on for too long, or if the idiocy is in fact terminal.

For her sake, let's hope she's not called Patsy*...

 

(* I tried to resist, but I couldn't. Like some people and easy credit, I guess.)

[watsa_is_a_randian_hero]

It would not play a factor.  I've actually been on a couple of dates where one was upwards of 300k in student debt (doctor) and it seems like they all discose it to see if they would run away.

 

  My theory is if they are working on trying to pay it off then its good enough for me.  If it got to a point where we were going to get married then I would get rid of the debt myself to take that stress out of the relationship.

 

Well, there is a BIG difference in the situation you described...The doctor is likely to be able to pay that debt off.

 

This poor woman is not likely to make any significant progress on her loans.  She is not even paying the INTEREST on them now.

 

She is most likely NOT going to be able to earn her way out as an attorney.  As time progresses, she MIGHT be able to make more than $25k a year, but the odds are stacked against her.

 

Every six months there are more attorneys entering the market.

 

This jurisdiction also will changes made to the appointment system in the new year.  The changes will result in the same amount of work being handed out to more attorneys.  Thus, her work level might eventually go to one day a week average (for appointments).

 

The only way out of her debt is if she maybe got into a different field.  Unfortunately, her education is law and journalism, not medicine or business...

 

I have to disagree to an extent.  Right now the doctor is not covering covering the interest charges each year.  They don't make 200k right off the bat.  They have to get through fellowhips and what not that really pays crap.  Doctors always flood to the field that is in need with doctors thus pushing down the payscale.

 

I know many doctors who have had very large signing bonuses.  I know 2 who are in primary care who had their loans completely paid off by the hospital system they signed on with. 

[Uccmal]

Does she like practicing law? I think that's the major question. A lot of people get into things without truly understanding what they want, though not all get into it with a huge pile of debt either.

 

IMO, if you truly have passion for something, you will ultimately become good at it. And in time, the market will hand you the rents that you deserve.

 

Probably the best thing for her to do right now is to decide on what she wants to do and then go after it relentlessly. Worrying about her problems will get her no where (and probably will serve to put her a few steps backward too).

 

I agree whole heartedly with this.  If a.person likes/loves practicing law then necessity will breed invention. 

 

This young lady who writes this blog was offered a job in something related to personal finance because someone saw her potential on the blog.

http://my-alternate-life.com/

 

She has no formal background in the topic; i.e certifications, education. 

 

A friend of mine I met wanted to get into value investing as a profession.  He moved to Toronto, got an unrelated job crunching numbers at a mutual fund shop.  He produced numerous very pro analyses and basically pestered local value shops.  He got a job. 

 

I personally think that living at home, and refusing to relocate stifles the creativity/ desperation needed to push forward.  If she is still single, she needs to upset the apple cart, move to a place that needs lawyers, and get on with it.  I would guarantee a positive outcome.  Being in real duress unleashes creativity - all assuming no mental health issues or addictions. 

 

On the other topic: A marriage/long term committed relationship is also a business relationship.  Couples who dont treat it as such, have problems.  Not romantic but true.  The best way for her to meet a good partner is also the same as above.  Unless your George Costanza, of course.  I am not talking about gold digging BTW, just a stable adult relationship.

 

[alwaysinvert]

As for a man bailing her out?  Maybe? Who knows?  The cynic in me thinks that a man who has enough capital/earnings that $250k is not a significant factor is going to get a younger/less indebted woman?

 

I don't think every well-off guy can get a young hot babe. In fact, I'm sure of it. It's more a question of what her requirements are... You said she was attractive and somewhat intelligent and she has two degrees. If that's the case she will be fine in the relationship department as soon as her bar gets lowered from Bradley Cooper lookalike to merely above average. Her main problem is that the biological clock is ticking so she doesn't have loads of time on her hands.

[wisdom]

Agree with Jbird, Kraven and Zarley -

 

Doesn't matter if you have money to burn.

 

I would question her decision making - would you not consider your future before taking on that amount of debt?

 

But, people learn through experience and she might be wiser for the experience - $250k in debt.

 

Impossible to know unless you know the person.

[Valuebo]

The whole notion of considering ROI on education spending is an interesting one.  I had a GF back in the day who decided she needed a PhD in Psychology.  She wound up going to a private college in Southern California where she was on track to rack up something like $150-200k in student loans while she got her degree.  While she conceptually understood what she was doing, she knew so many people who had gone that path that it seemed reasonable to her even though she could do the math on debt repayments and her likely salary range.  We "broke up" during her first year (not for financial reasons), so I don't know how that all worked out for her.  Would I have broken it off for financial reasons at some point?  I don't know.

 

Things worked out fine for me, as a soon met the girl who would become my wife.  She was, and still is, a gainfully employed civil engineer with no school debt.

 

 

 

Oh, you don't get paid in America while getting your PhD? Here in Belgium you generally get $2500(+)/month during the time you get your PhD. The difference!

 

I'm completely shocked by the willingness of people overseas to take on serious amounts of debts to get a degree. I almost fell I wasted my time getting mine and aside from opportunity cost, books etc and 500€/year it was free!

 

 

Does she like practicing law? I think that's the major question. A lot of people get into things without truly understanding what they want, though not all get into it with a huge pile of debt either.

 

IMO, if you truly have passion for something, you will ultimately become good at it. And in time, the market will hand you the rents that you deserve.

 

Probably the best thing for her to do right now is to decide on what she wants to do and then go after it relentlessly. Worrying about her problems will get her no where (and probably will serve to put her a few steps backward too).

 

I agree whole heartedly with this.  If a.person likes/loves practicing law then necessity will breed invention. 

 

This young lady who writes this blog was offered a job in something related to personal finance because someone saw her potential on the blog.

http://my-alternate-life.com/

 

She has no formal background in the topic; i.e certifications, education. 

 

A friend of mine I met wanted to get into value investing as a profession.  He moved to Toronto, got an unrelated job crunching numbers at a mutual fund shop.  He produced numerous very pro analyses and basically pestered local value shops.  He got a job. 

 

I personally think that living at home, and refusing to relocate stifles the creativity/ desperation needed to push forward.  If she is still single, she needs to upset the apple cart, move to a place that needs lawyers, and get on with it.  I would guarantee a positive outcome.  Being in real duress unleashes creativity - all assuming no mental health issues or addictions. 

 

On the other topic: A marriage/long term committed relationship is also a business relationship.  Couples who dont treat it as such, have problems.  Not romantic but true.  The best way for her to meet a good partner is also the same as above.  Unless your George Costanza, of course.  I am not talking about gold digging BTW, just a stable adult relationship.

 

 

Great post, thanks. ++

[wachtwoord]

I'm going to present to options which are at best morally questionable but her situation is so shitty they are the only real ways out I can see:

 

1. Flee. Leave the States, get a new identity elsewhere and start over.

 

2. Get knocked up by some rich guy and convince him to marry you (at least she's attractive and many men are really clueless). After a few years you can leave him again.

 

Like I said, not the best of options but purely rationally probably the best two options from the woman's viewpoint  :(

 

Edit:

 

I forgot to answer the question. For me it would not matter as long as I could shield myself completely from being liable for the student debt. Then long term she should probably stop working (except if she likes it) because it's a complete waste of time earning wise (and a spouse without income is not something I would mind). I'm not sure if it's possible in the US to shield yourself in this fashion. In my country just not marrying is likely not enough as the mere act of living together for a prolonged period (even platonically) creates liabilities. I'm not sure of the details though. If I were in the situation I would certainly make sure I knew exactly what I was getting into.

 

Oh, you don't get paid in America while getting your PhD? Here in Belgium you generally get $2500(+)/month during the time you get your PhD. The difference!

 

I'm completely shocked by the willingness of people overseas to take on serious amounts of debts to get a degree. I almost fell I wasted my time getting mine and aside from opportunity cost, books etc and 500€/year it was free!

 

Same here in the Netherlands. The PhD I did was fun, I got to travel the world, made nice contacts and I learned things (mostly actually unrelated to the PhD, value investing is one of them). It's unlikely I'll be hired because of the degree however. Most people don't even understand I don't want to look at their mole :)

[siddharth18]

 

Great thread DTEJD1997. I think this thread highlights a lot of issues that aren't discussed/considered by studends today before pursuing higher education. It reminds you of the quote - "Not everything that counts can be counted and not everything that can be counted counts." For everything that you acquire/receive in life, you have to consider the explicit and implicit costs. Everything in life has as price-tag but not every price tag is visible.

 

It is for this reason I decided to forego medical school in favor of running a business after high school. Spending 7-9 years of my life after high school, incurring hundreds of thousands in debt and sacrificing my youth while being forced to rote arcane medical terminology was something that seemed like a very high price to pay for assured middle class salary for the rest of my life.

 

It also brings to mind the notion that you don't go to Harvard for the education, but the connections.

 

I also agree with the below:

 

I agree whole heartedly with this.  If a.person likes/loves practicing law then necessity will breed invention. 

 

This young lady who writes this blog was offered a job in something related to personal finance because someone saw her potential on the blog.

http://my-alternate-life.com/

 

She has no formal background in the topic; i.e certifications, education. 

 

A friend of mine I met wanted to get into value investing as a profession.  He moved to Toronto, got an unrelated job crunching numbers at a mutual fund shop.  He produced numerous very pro analyses and basically pestered local value shops.  He got a job. 

 

I personally think that living at home, and refusing to relocate stifles the creativity/ desperation needed to push forward.  If she is still single, she needs to upset the apple cart, move to a place that needs lawyers, and get on with it.  I would guarantee a positive outcome.  Being in real duress unleashes creativity - all assuming no mental health issues or addictions. 

 

Begin in real duress is the best catalyst of exploring all available avenues of success. The immigrants of 19th and 20th century who came to USA - came with nothing (in some cases they borrowed money for a ticket to USA) and had to find everything on their own - food, shelter, clothing. This is what made 1st generation immigrants more successful in USA (even today) compared to 2nd and 3rd generation immigrants.

 

And let's not forget Dr. Mike Burry's obsession and incessant drive that led him to be discovered by Joel Greenblatt which led him to creating Scion Capital.

 

You must never confuse knowledge with education and if you have the drive you will a way to succeed even in the face of insurmountable odds.

[LC]

If I had that much debt and zero prospects...I would probably leave the country as well. Morally suspect, but otherwise you are guaranteed a life of constant financial stress and poverty. That is no life.

[Peregrine]

If I had that much debt and zero prospects...I would probably leave the country as well. Morally suspect, but otherwise you are guaranteed a life of constant financial stress and poverty. That is no life.

 

I think people ultimate make their own prospects and I think running away from your problems generally compounds your problems.

[LC]

If I had that much debt and zero prospects...I would probably leave the country as well. Morally suspect, but otherwise you are guaranteed a life of constant financial stress and poverty. That is no life.

 

I think people ultimate make their own prospects and I think running away from your problems generally compounds your problems.

I generally agree but I think there are exceptions. Sometimes you are born into good prospects (Buffett being born in America) and likewise sometimes you are put into an insurmountable situation.

 

Now, if the question is choosing to take out hundreds of thousands of debt...that is a whole other issue.

[Guest]

Why doesn't she go into sales? If she's half way good looking, she'll do fine. She's evidently fairly intelligent.

[Peregrine]

If I had that much debt and zero prospects...I would probably leave the country as well. Morally suspect, but otherwise you are guaranteed a life of constant financial stress and poverty. That is no life.

 

I think people ultimate make their own prospects and I think running away from your problems generally compounds your problems.

I generally agree but I think there are exceptions. Sometimes you are born into good prospects (Buffett being born in America) and likewise sometimes you are put into an insurmountable situation.

 

Now, if the question is choosing to take out hundreds of thousands of debt...that is a whole other issue.

 

So what are her insurmountable odds? She lives in the richest country in the world, she's healthy, she has shelter and food, she has a source of income however meager it is, and she has huge debt that will probably leave her with negative net worth for a while. Right now, she just needs to increase her income enough to where she can start chipping away at that debt a little at a time.

[stylized_fact]

While she probably knows about this already and I'm not sure about eligibility in this case, there is a student loan forgiveness program for people who engage in a commitment of public service employment.

 

http://studentaid.ed.gov/sites/default/files/public-service-loan-forgiveness.pdf

[LC]

If I had that much debt and zero prospects...I would probably leave the country as well. Morally suspect, but otherwise you are guaranteed a life of constant financial stress and poverty. That is no life.

 

I think people ultimate make their own prospects and I think running away from your problems generally compounds your problems.

I generally agree but I think there are exceptions. Sometimes you are born into good prospects (Buffett being born in America) and likewise sometimes you are put into an insurmountable situation.

 

Now, if the question is choosing to take out hundreds of thousands of debt...that is a whole other issue.

 

So what are her insurmountable odds? She lives in the richest country in the world, she's healthy, she has shelter and food, she has a source of income however meager it is, and she has huge debt that will probably leave her with negative net worth for a while. Right now, she just needs to increase her income enough to where she can start chipping away at that debt a little at a time.

 

I assume zero prospects...Im not sure what her situation really is. I was speaking more in a hypothetical case, not specific to this woman.

[Peregrine]

If I had that much debt and zero prospects...I would probably leave the country as well. Morally suspect, but otherwise you are guaranteed a life of constant financial stress and poverty. That is no life.

 

I think people ultimate make their own prospects and I think running away from your problems generally compounds your problems.

I generally agree but I think there are exceptions. Sometimes you are born into good prospects (Buffett being born in America) and likewise sometimes you are put into an insurmountable situation.

 

Now, if the question is choosing to take out hundreds of thousands of debt...that is a whole other issue.

 

So what are her insurmountable odds? She lives in the richest country in the world, she's healthy, she has shelter and food, she has a source of income however meager it is, and she has huge debt that will probably leave her with negative net worth for a while. Right now, she just needs to increase her income enough to where she can start chipping away at that debt a little at a time.

 

I assume zero prospects...Im not sure what her situation really is. I was speaking more in a hypothetical case, not specific to this woman.

 

Yep. I think the insurmountable situation would be that of the African baby born into a place with no food or shelter or the person dying of cancer.

 

I think that people, particularly those of the developed world, become so entrapped in their own worlds that they lose perspective. This woman may never have a lot of money, but that doesn't mean she can't still live a very fulfilling life.

 

Needless to say, all of us will meet our ends eventually but it's how we make use of that time that counts.

[thecynic]

She has a small amount of success and gets some appointments and a few retainers.  The problem is that she is not really getting enough work.  She gets MAYBE 2 days of paid work per week.  Without any partner/associate, she has to do all the research herself and has a steep learning curve.  She frequently works 3-4 hours for every 1 that she gets paid.  The end result is that she is making about $25k a year!

Unless someone has worked 15-16 hours a day, 6-7 days a week, with the sole objective of improving his/her lot, I just don't think they have tried hard enough. If I were in her position, I'd find additional jobs to do, work hard and always keep an eye out for advancement.

 

Would the debt and earning ability of your girlfriend/boyfriend/fiancee play a role in deciding to have a relationship with them?

I think personal qualities are much more important than money. Money is just a side effect of some of those qualities. So definitely someone's current debt status would not stop me from having a relationship with them.

[matjone]

I know a lot of people in the same situation, and I think a lot of them aren't too concerned with getting them paid off.  If you can take a second job, move in a studio apartment and eat rice and beans for a couple years to get out of debt you can get motivated to do it.  When you have to do it for 10 or 15 years most of us are just going to say to hell with it.

[AZ_Value]

Let's put aside the part about whether a man would consider her or not, like we say in French quoting Blaise Pascal "Le coeur a ses raisons que la raison ignore" - "The heart has its reasons of which reason knows nothing."

She sounds like a reasonable lady and if some dude falls in love with her, the debt might not be a big factor when weighed against his feelings towards her.

 

I'm more concerned about all these quotes below:

 

This poor woman is not likely to make any significant progress on her loans.  She is not even paying the INTEREST on them now.

 

She is most likely NOT going to be able to earn her way out as an attorney.  As time progresses, she MIGHT be able to make more than $25k a year, but the odds are stacked against her.

 

The only way out of her debt is if she maybe got into a different field.  Unfortunately, her education is law and journalism, not medicine or business...

 

DTEJD1997,

Is this solely your reading of the situation or is this also her attitude towards her debt?

If it is how she thinks about her predicament then IMO the most helpful thing a person can do for her is to teach her Charlie Munger's philosophy about complaining and whining. It never leads anywhere. So what if she's a journalism and law major and it's not working out. Adapt and keep plugging along until it works out, I don't see how whining about it is going to help.

 

I was born and raised in a small African country torn apart by civil war, what do you figure the odds were for me making it to where I am today?

 

She, and many people, should realize that by simply waking up everyday in America and the opportunities it has to offer, she is de facto ahead of most of the human population. So never ever feel sorry for yourself and keep plugging along as Charlie Munger would say.

 

I'd have her watch this video starting at the 12 min mark.

 

[AZ_Value]

 

Yep. I think the insurmountable situation would be that of the African baby born into a place with no food or shelter or the person dying of cancer.

 

I think that people, particularly those of the developed world, become so entrapped in their own worlds that they lose perspective. This woman may never have a lot of money, but that doesn't mean she can't still live a very fulfilling life.

 

Needless to say, all of us will meet our ends eventually but it's how we make use of that time that counts.

 

+1

[Alekbaylee]

With a journalism and law degree, she could write a book about her experience (and other people in the same boat) to expose this "scam" and sensitize people.

 

Hopefully it becomes a best seller and she could pay off her monumental debt!

[ERICOPOLY]

What is her interest rate on the student loan?  Even if it is 5%, that's only $12,500 per year.

 

All that matters really is the cash flow. 

 

Her problem isn't the $12,500 she pays on the debt... it's the $25,000 she is bringing in. 

 

Get one of these school teacher gigs that start at $50k over on that other thread.  A teaching job is a great gig for a working mother, as you've got summers off when your kids are at home with nothing to do.

 

 

[DTEJD1997]

DTEJD1997,

Is this solely your reading of the situation or is this also her attitude towards her debt?

If it is how she thinks about her predicament then IMO the most helpful thing a person can do for her is to teach her Charlie Munger's philosophy about complaining and whining. It never leads anywhere. So what if she's a journalism and law major and it's not working out. Adapt and keep plugging along until it works out, I don't see how whining about it is going to help.

 

I was born and raised in a small African country torn apart by civil war, what do you figure the odds were for me making it to where I am today?

 

She, and many people, should realize that by simply waking up everyday in America and the opportunities it has to offer, she is de facto ahead of most of the human population. So never ever feel sorry for yourself and keep plugging along as Charlie Munger would say.

 

You bring up some very good points.  People in the USA are truly blessed.  No matter how "poor" we are, we have food in our bellies, roofs over our heads, and clothes on our backs.  We also have opportunities, to one degree or another.

 

I am just an acquaintance/friend of this woman.  She also knows some of my family members.  So this is PARTLY my reading of her situation, partly what she has conveyed to me.

 

I do have SOME amount of sympathy for her.  Society in USA says "go to school", "study hard", "get an education".  I can remember Suze Orman, and other financial "charlatans" prattling on how good student loans were, as it was an "investment" in yourself, and those are the best kind you can make.

 

This woman had a somewhat "sheltered" existence.  She comes from a good family and a good town...  I know her parents were very proud of her to get an education and advanced degree and admittance to the bar.  None of them thought she would still be living at home in her 30's.  She is living at home because she has to, not because she wants to.

 

She does work, and has a "good" work ethic.  She will work 40 hour weeks.  She will even work more.  Is she working 80 hour weeks?  no...

 

It is only recently that she is wrapping her head around her situation...She always thought if she was plugging away, things would work out.  It is only in the past few months that it is dawning on her that it might not.

 

I also know that she has some tremendous cognitive dissonance about her education, understandably so.  There is also the "sunk cost" problem.  It is very easy to say "walk away", but in practice it is not that easy.

 

There is also the problem that the law schools say our graduates make "$85,000 a year!", when the real result may not even be half of that.  So here she is thinking that if I work a bit harder, I'm going to make more money...just got to hang in there.  That is not the case.  Of course, there are exceptions.

 

I think the BEST course of action for her is to start learning a bit of economics and business.  Get a 2nd part time job and use that solely towards paying off/down her debt.  Also use that as an entry to another profession.

 

It is NOT that she is lazy, stupid, or shifty...she is just in a very, very difficult position and it has taken her a long time to "wake up", which she is starting to do....

 

I tell her tale to the board as I found it interesting how the economics of the situation interact with all aspects of one's life in one way or another.  I also thought it interesting that she is not some statistical outlier, this is happening to a good percentage of young(er) folks in the USA.

 

To all our foreign members, anything beyond high school usually costs money to attend.  Sometimes a student will get a scholarship which may be partial or even full...but that is relatively rare.  Graduate school, especially law school, is expensive.  There are some law schools which now cost OVER $50k a year solely in tuition.  The other very odd thing about law school is that Harvard is ranked #1, cost?  $50k a year.  Western New England, VERY low rank, cost $40k.

 

Anybody graduating from Harvard will most likely have a good outcome...Anybody graduating from Western New England will be lucky to get a job that pays money!  Something that is very low quality costs almost the same as something of tremendous quality.  Price is NO indicator of quality/outcome in law school...

 

I think this discussion thread could be tied with the "Income Inequality" thread.  This is one way that happens.  Too much education is also a sure fire path to downward mobility...