For love OR money?

[fareastwarriors]

She and others should check out http://www.bogleheads.org/ and post on their forum. The site has many useful advice/articles on person finance. The board members are friendly and knowledgeable.

[giofranchi]

Hey all:

 

I had a very unusual situation the other day...really made me think...

 

I had lunch with a younger attorney.  She is a nice looking woman in her early/mid 30's.  This was a "friendly" lunch, and we are platonic friends...

 

She is somewhat intelligent, well dressed, nice looking, good personality. 

 

After lunch, she told me of her situation, which she assured me is relatively common amongst her compatriots.

 

So her is her story...

 

She went to a small, well regarded, regional liberal arts school.  She majored in journalism.  After graduating, she had a good amount of student debt, and tried to get a job as journalist.  That didn't happen.  The closest she got were a few unpaid internships.

 

She worked a few odd jobs, but could not get any traction.  After a few years, she decided to go to law school.  She went to a lower ranked school in the Mid-West.

 

While in law school, she had an unpaid clerking position.  She also had an unpaid internship with a couple of different law firms.  She worked hard, networked, and graduated on time.  After passing the bar, she continued to look for a paid position.  After a year or so of this, she simply could not find one.  She then decided to open her own criminal defense practice.  She is now chasing criminal appointments in various courts.

 

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!

 

She took out student loans to go to law school.  She is on "income based repayment" for her loans.  The payments she is making do not even cover the interest expense, so the principal goes up every year.  The balance of her student loans are now just over $250,000.

 

She lives at home.

 

She drives a late model junker.

 

She recently broke up with her long term boyfriend.  She admits that her debt played a MAJOR factor in the breakup.  Now she is worried that she will not have a serious, long term relationship.  She thinks most men will take a pass when they learn of the amount of debt she has.  She is worried that she will not be able to get married and start/have a family.

 

I am not sure what to think.  I would never have thought that debt would make a big deal in a relationship.  HOWEVER, the amount of her debt is simply staggering.  In her area of the country, that could EASILY buy a tremendous house.  I doubt she will ever be able to be hired on in a law firm.  I doubt that she will EVER be able to earn her way out of her situation working as an attorney.  The legal market in her area is simply terrible, and it is rapidly getting worse.  Bankruptcy is simply not an option as student loans are not discharged in bankruptcy.  At the end of 20 years on IBR, her loans will be discharged.  She will be in her early/mid 50's when this happens.

 

So I've been thinking about her situation.  I think she is in a very difficult spot.  Also made me wonder just how many others are like her...

 

So my question to the board:

 

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

 

Basically, I think the most important thing is to know the person very well… To know who she really is, and what she really wants… I mean, is all that debt just a “one-time mistake”? Or, if freed from her debt, is she destined to make the same mistake over and over again?

I am financially independent and could easily enough free her from her debt and make her financially independent too… Yet, it is not clearly a matter of what I could or couldn’t do for her… Instead, it is a matter of what she can do for herself!

Besides, I am such a cheapskate that how would I be supposed to get along well and enjoy my relationship with a woman who constantly fall into debt?!?! It would be torture both for me and for her!

 

Here is an nice and funny anecdote: biaggio came to visit me in Milan a few weeks ago, and I tried to be a good host… Of course, I invited him to a restaurant and offered him a good lunch… But, when it finally came the time to pay for our delicious meal, biaggio noted that Mr. Buffett and I have one thing in common (Alas! One and only one! ::))… I had a terrible time trying to take my wallet out of the pocket in my overcoat!! ;D ;D ;D

 

So, my advice would be: try and get to know who she really is.

If she has recognized her mistake, wants to change and behave like you do, and truly desire a productive life and to build wealth with you, I’d give her a chance and even help her. Chances are she would be grateful to you for the rest of her life.

If, on the other hand, debt is just “the way” she is, and you understand she has no serious intention of making any change, then there is nothing you can really do.

 

Cheers!

 

Gio

 

[newyorkminute]

If I read these post, I feel lucky to be born in Europe.

 

University costs here 500 euros/year for average to rich people and only 80 euros/year for people under a certain income level. (except textbooks offcourse, that's estimated on 200 euros a year).

 

My university degree costed me roughly 12k with all costs (university, housing, food, .. ) included.

 

God bless America? Only the happy few I guess..

[Ian L]

I have no idea how it can cost $50k tuition per year. If there are say, 20 hours tuition per week with over 35 weeks per year that works out at $71 per hour. Taking into account much of that tuition will be sitting in a lecture hall with many other students, it means someone is making a lot of money.

[Hielko]

Yeah, it seems that education is a profitable business for someone in the US...

 

I live in the Netherlands: tuition for me was ~$2.5K/year and a decent part of that amount was paid by the state using a loan that will be discharged when you graduate. If your parents have a low income you actually get more money than the tuition cost, but you also need money for books/housing/food to complete your study (and you can actually get a loan with a very low interest rate from the state when you study for this). There are some voices that want to change this system though as part of the austerity measures, but I'm personally doubtful if that's really a good idea: a move towards a more US-like education system would seem to be harmful for the education level of the population in the long run. Unlike the girl in the topic start there must also be people out there in the US that could have gotten a good education, but didn't because they were afraid of, or unable to pay the high costs.

[wachtwoord]

If I read these post, I feel lucky to be born in Europe.

 

University costs here 500 euros/year for average to rich people and only 80 euros/year for people under a certain income level. (except textbooks offcourse, that's estimated on 200 euros a year).

 

My university degree costed me roughly 12k with all costs (university, housing, food, .. ) included.

 

God bless America? Only the happy few I guess..

 

The Netherlands is 1500-1800 Euros per year to attend university. BUT only for Europeans, people from outside the EU pay 12-15k Euro. THAT is the real price, the rest is just subsidized. I'm  lucky to have been able to take advantage of this, but now I'm done I would like them to stop it as soon as possible. This is paid from tax money!

 

Being a PhD candidate is considered a researcher job at a university so you get a salary (ranging from 2k Euro to 2.8k Euro monthly, but don't compare wages because taxes are insane here compared to the US) and pay no tuition because of this. We also don't follow classes as PhD candidates though :)

[CorpRaider]

She should angle for a public defender gig and do the public service forgiveness thing after 10 years.  If she's really into criminal defense and willing to move to podunk USA, I doubt it would be a problem.

 

Re: the love or debt thing; I think its just another factor.  The biggest worry would be if the existence of the debt would place a strain on your relationship.  I don't see why it would unless you assumed liability for the debt or commingled assets.  The biggest financial impacts from a marriage are obviously the impact on your health and potential for divorce.  Of course those are harder to assess than the existence of a liability.  Its like picking a business with a strained balance sheet but with great estimated future cash generating potential.  The cigar butters would probably not be able to get around the balance sheet.  hah!

[SharperDingaan]

Just to stir the pot  ;)

 

There is zero reason why she cant do something else; ie: teach English in Asia, construction, truck driving, tv production, write magazine articles/books, join the army, war correspondent, etc. Thousands before her have done exactly that - she isn't special.

 

She made her own bed, & knew the risks. Thousands of other women before her have been in the same position, & all of them have come to their own solutions. They may not have liked their choices, but they made them; including marrying below their station.

 

Everybody grows up.

 

SD

 

 

[rkbabang]

I have no idea how it can cost $50k tuition per year. If there are say, 20 hours tuition per week with over 35 weeks per year that works out at $71 per hour. Taking into account much of that tuition will be sitting in a lecture hall with many other students, it means someone is making a lot of money.

 

Universities With the Largest Financial Endowments

 

Harvard Salaries by the Numbers

 

 

 

[boilermaker75]

Seems show (prestige) is important .... only she cant pay for it .....

Not the brightest .... will not move to a better locale, because bank of dad will not fund it (closet brat?) ...

 

Cant declare bankruptcy.... so marrying out is the next highest & best use of depreciating age & looks ....

Optimal if hubby is a rain-making sugar daddy, with the good taste to croak out within 5-10 years ?

Expensive to terminate early.

High risk, low return.

 

If you're really so inclined, just buy a good hooker ....

or set her up as a madam!

 

Reminded me of Charlie Sheen's response to the judge who was sentencing him for using a prostitute as to why a man like him would pay for sex. Sheen's response was, "I don't pay them for sex, I pay them to leave."

[Guest wellmont]

I have no idea how it can cost $50k tuition per year. If there are say, 20 hours tuition per week with over 35 weeks per year that works out at $71 per hour. Taking into account much of that tuition will be sitting in a lecture hall with many other students, it means someone is making a lot of money.

 

harvard is not in the business of "breaking even".

[Ghost]

DTEJD1997 move on to the next fish. 

 

Money/Finances is the number 2 reason for divorce, so yes earning power and debt make a big difference. 

 

 

[Ham Hockers]

Related:

 

http://marginalrevolution.com/marginalrevolution/2013/11/the-changing-income-distribution-for-lawyers-average-is-over.html

 

http://socialevolutionforum.com/2013/11/10/bimodal-lawyers-how-extreme-competition-breeds-extreme-inequality/

 

[DTEJD1997]

Hey all:

 

Just an update on this situation...

 

I wish I had better news...

 

This young attorney was not able to make a go of it.  She is facing eviction as she has not been able to make enough money to even pay her rent.  She is in the process of moving back in with her parents.

 

She has profoundly bad money management skills and also a very poor business sense. 

 

Some people are just not cut out to run their own business.

[ScottHall]

Well, that's unfortunate.

 

What's even more unfortunate is how so many people are marks for the formal education system. After decades of indoctrination through after school specials and government propaganda, it has become almost a sacred cow that going to school is good for you.

 

It probably is, to an extent, but it's no silver bullet and can be very harmful to yourself if you take it too far. As a fourth grade dropout, I am in a better position than a lot of people who spent money on college educations because they bought in to the delusion that college is the golden ticket to the good life.

 

This is the sort of thing that happens when people don't stop to ask questions. College must be good for me, because I've been told it was ever since I was 4 years old. Everyone else is doing it, and the whole country can't be full of idiots, right?

 

The combination of social proof and positive reinforcement from those in authority makes for a hell of a cocktail, and an even more wicked hangover.

[Gamecock-YT]

Well, that's unfortunate.

 

What's even more unfortunate is how so many people are marks for the formal education system. After decades of indoctrination through after school specials and government propaganda, it has become almost a sacred cow that going to school is good for you.

 

It probably is, to an extent, but it's no silver bullet and can be very harmful to yourself if you take it too far. As a fourth grade dropout, I am in a better position than a lot of people who spent money on college educations because they bought in to the delusion that college is the golden ticket to the good life.

 

This is the sort of thing that happens when people don't stop to ask questions. College must be good for me, because I've been told it was ever since I was 4 years old. Everyone else is doing it, and the whole country can't be full of idiots, right?

 

The combination of social proof and positive reinforcement from those in authority makes for a hell of a cocktail, and an even more wicked hangover.

 

I tend to agree, but at some point you have to be responsible for your own actions.

[ERICOPOLY]

As a fourth grade dropout, I am in a better position than a lot of people who spent money on college educations because they bought in to the delusion that college is the golden ticket to the good life.

 

How did you manage to drop out of the fourth grade?  The police would take my kids away if I tried that on them.

[merkhet]

Home schooling?

[jeffmori7]

Well, that's unfortunate.

 

What's even more unfortunate is how so many people are marks for the formal education system. After decades of indoctrination through after school specials and government propaganda, it has become almost a sacred cow that going to school is good for you.

 

It probably is, to an extent, but it's no silver bullet and can be very harmful to yourself if you take it too far. As a fourth grade dropout, I am in a better position than a lot of people who spent money on college educations because they bought in to the delusion that college is the golden ticket to the good life.

 

This is the sort of thing that happens when people don't stop to ask questions. College must be good for me, because I've been told it was ever since I was 4 years old. Everyone else is doing it, and the whole country can't be full of idiots, right?

 

The combination of social proof and positive reinforcement from those in authority makes for a hell of a cocktail, and an even more wicked hangover.

 

Scott, I would think you make an error here. It is not because it worked out well for you than it would for everyone. I tend to think that statistically, people who drop out of school so young won't really succeed, they would proably have many problems just dealing with simple real-life situation because they would miss important skills like reading, writing and counting a bit. Education is statistically better for the whole population, even though there always will be some people that would have done better otherwise.

[Zorrofan]

Education is important but do you have to go to college?  What about something like learning a trade?  Does society put too much emphasis on a college education - i.e. become a lawyer, doctor or accountant - and look down on those who choose to learn a trade instead?  I believe in Germany (perhaps Frommi or another could comment) that at age 16 you are screened for vocational versus academic training, and there is greater co-operation between business, industry and the educational system with regards to mentoring those interested in the trades....

 

cheers

Zorro

[rkbabang]

As a fourth grade dropout, I am in a better position than a lot of people who spent money on college educations because they bought in to the delusion that college is the golden ticket to the good life.

 

How did you manage to drop out of the fourth grade?  The police would take my kids away if I tried that on them.

 

In most states you can drop out when you are 16 regardless of what grade you are in. Maybe he stayed back a few times.  :)

 

But seriously if he was home schooled he was probably better off, and even if not, truancy laws may or may not be enforced depending on where you live. My Dad's family immigrated to the US when he was 8 years old and his parents sent him to work on a farm rather than enroll him in school.  He never did learn how to read or write.

 

[TwoCitiesCapital]

Education, like other things, is reliant on finite resources. Making statements on the benefits of education without consideration of the costs is a one sided decision with incomplete information.

 

This is exactly what Americans have been pressured to do. Encouraging the mentality of receiving an education at all costs paired with easy credit availability and a social stigma for those without has long allowed colleges to operate with no price accountability.

 

I went to school in Mississippi. I work in New York City. I know people who make 2-3x as much as I do because they were able to obtain better educations from better schools. Their discretionary income is less than mine after taxes and student loans and will continue to be for the next several years. Some for a decade or more. Furthermore, they're three years behind me in acquiring work experience and savings.

 

Some of them will certainly come out ahead of me financially, but many others won't. It certainly begs the question if an Ivy League school, or private university, is worth the cost if some kid from the worst state in the country for education can have more discretionary income with a lower paying job.

 

Summary:

Education is great. There's a cost associated that can make it not so great. School isn't the only place for education. I've learned more from this board and books then I did by getting my degree in economics.

[ERICOPOLY]

I know people who make 2-3x as much as I do because they were able to obtain better educations from better schools. Their discretionary income is less than mine after taxes and student loans and will continue to be for the next several years. Some for a decade or more. Furthermore, they're three years behind me in acquiring work experience and savings.

 

I think the benefit would be clearer if they came from wealthy families with an estate-tax burden.  The money is 40% lost to taxes already -- by purchasing the education for the kids, you pass along their future income stream estate-tax free. 

 

It would be harder to directly gift them the future income stream -- let's put it that way.  So you save taxes while also giving them something to do that is respectable.

 

[merkhet]

Education, like other things, is reliant on finite resources. Making statements on the benefits of education without consideration of the costs is a one sided decision with incomplete information.

 

This is exactly what Americans have been pressured to do. Encouraging the mentality of receiving an education at all costs paired with easy credit availability and a social stigma for those without has long allowed colleges to operate with no price accountability.

 

I went to school in Mississippi. I work in New York City. I know people who make 2-3x as much as I do because they were able to obtain better educations from better schools. Their discretionary income is less than mine after taxes and student loans and will continue to be for the next several years. Some for a decade or more. Furthermore, they're three years behind me in acquiring work experience and savings.

 

Some of them will certainly come out ahead of me financially, but many others won't. It certainly begs the question if an Ivy League school, or private university, is worth the cost if some kid from the worst state in the country for education can have more discretionary income with a lower paying job.

 

Summary:

Education is great. There's a cost associated that can make it not so great. School isn't the only place for education. I've learned more from this board and books then I did by getting my degree in economics.

 

Anyone else find it amusing that, on a post about education, there's a TL;DR at the end? :)

[ukvalueinvestment]

The UK University system used to be "European", in that you didn't really pay for university, and you got grants for living costs.  In the past decade it has become more "American".  University fees are £9k per year and you take loans for these and living costs.

 

I'm undecided about the costs/benefits of charging large amounts for eduation.  I see both sides of the argument. 

 

I would say, though, that it feels very odd to this Brit that in the US it is apparently possible to have easier access to university if your parents went there (or am I wrong)?  This surely isn't very fair?