Generation Debt

[Sandi]

"I feel it is my obligation, if I can do it, to put my children through school and, because it’s awfully hard for young people to raise a down payment, to make it for them on their first houses, or at least pledge collateral for it"

WOW, Ridgerunner! I thought I was the only person on planet Earth who felt that way. My thinking is that children don’t ask to be born; we choose to bring them into the world and owe them a lot, including as much education as they want. I really don’t understand the attitude of parents who tell their kids, Once you’re 18, you’re on your own. If you feel that way about your chidlren, and if they’re such a burden, why did you have them anyway?

One reason my husband and I are hanging onto our house, rather than trading up and going into debt for a new house, is because housing in this area is so expensive that we want to be able to leave it to him when we’re gone.

I admire your attitude very much.

 

[BLB_Oregon]

"I feel it is my obligation, if I can do it, to put my children through school and, because it’s awfully hard for young people to raise a down payment, to make it for them on their first houses, or at least pledge collateral for it"

WOW, Ridgerunner! I thought I was the only person on planet Earth who felt that way. My thinking is that children don’t ask to be born; we choose to bring them into the world and owe them a lot, including as much education as they want. I really don’t understand the attitude of parents who tell their kids, Once you’re 18, you’re on your own. If you feel that way about your chidlren, and if they’re such a burden, why did you have them anyway?

One reason my husband and I are hanging onto our house, rather than trading up and going into debt for a new house, is because housing in this area is so expensive that we want to be able to leave it to him when we’re gone.

I admire your attitude very much.

I think the object is to expect this of yourself but not to raise your children to expect it of you. You cannot guarantee them what help you will be able to give them, after all. Every day you have is a gift to you, everything you have is a gift to you. What you can do for them always depends both on Providence and what you discern is the best for your child’s welfare. There are adult children who are not best served by this kind of help. They shouldn’t think themselves put upon when they don’t get it.

A sense of entitlement is a huge handicap in this life. None of us “asked to be born.” What of that? Who asked God to breathe life into Adam? The debt we owe each other is a debt of love. It isn’t something we should learn to demand, but something we must always be grateful for.

 

[Rob_s_Wife]

I think the object is to expect this of yourself but not to raise your children to expect it of you. You cannot guarantee them what help you will be able to give them, after all. Every day you have is a gift to you, everything you have is a gift to you. What you can do for them always depends both on Providence and what you discern is the best for your child’s welfare. There are adult children who are not best served by this kind of help. They shouldn’t think themselves put upon when they don’t get it.

A sense of entitlement is a huge handicap in this life. None of us “asked to be born.” What of that? Who asked God to breathe life into Adam? The debt we owe each other is a debt of love. It isn’t something we should learn to demand, but something we must always be grateful for.

Yes. This is very much how we feel with our “family takes care of family” motto. Yes, I hope to help my children (if nothing else they can always live with us!) but the greater achievement is teaching them to care for each other and, yes, even for their parents one day. It’s not entitlement to one. It’s loving care to all in the family. Parent for child, child for parent, and sibling for sibling. Ideally, this would even carry over to cousin for cousin and child for grandparent or aunt/uncle.

 

[BLB_Oregon]

**I completely disagree about fretting over credit and credit ratings. **I couldn’t care less about my credit score and it has not affected our loans (house and 2 yr loan on a car). We learned this years ago, but I hear Dave Ramsey speaks about this too and gives some really good advice.

Get a manual underwriter (35% of all banking institutions have them) for any loan you do want. And remember, most of the time, they want you to have the loan more than you need the loan. (Those most in need, probably can’t afford a loan!) Be willing to walk if you don’t get favorable terms and know what favorable terms are. Negotiate, negotiate, negotiate! They are not doing you a favor. You are bringing them business and they will make a huge profit off you, so don’t feel like you have to just take whatever they give. The biggest mistake people make is not knowing what they can negotiate or being unwilling to do it. (timid)

We have a checking debit card with all the perks of a credit card (theft coverage and so on). For reservations, it hasn’t been a problem yet. We usually just drive the baby van everywhere. We go for apartment suites for our hotel stays because they suit our large family better (2 bedrooms, fold out sofa in a little living area and a kitchenette). The debit credit card to hold and cash at checkout as always been fine. We don’t fly much as a family or that might be a credit card issue… If we truely found a need, I wouldn’t get a credit card - I’d get a charge card, such as AMEX**.**

This is what I mean. When my brother was in his mid-twenties, he found himself out of school with a job and no debt, while all his friends were loaded with debt. He decided to buy a house…he thought it would be a good investment, and besides, he was feeling way too old to be living at home. (Since he made himself a useful adult there and didn’t lounge around like a lump, my parents would have never kicked him out.)

He found that at that time his credit rating was bad because he hadn’t been employed for long and because he’d lived at home or shared a rental that was in someone else’s name. He’d never taken out a student loan. Never mind that he had substantial savings: he had essentially no credit history. He bought a small car that he had planned to purchase anyway, but took six months to pay for it. At that time, this was a big help to his ability to get a loan. Incidentally, he found that having a house payment to make was a great reason to refuse friends who tried to hit him up for loans. (His daughters are out of college, and he still lives in that house! Good investment!)

As for American Express, I don’t see the advantage, because I always pay off my credit card every month. If you’re disciplined, it there isn’t a draw-back to a credit card. That means, though, that when you say you’ll only use the line of credit “if you need it” that you know the difference between “want” and “need” and under what circumstances you should even consider that kind of loan.

 

[StephanieC]

I’ve been thinking about another aspect to this sad phenomenon: the role of television.

While sick with the flu one week, I watched a lot of HGTV (Home & Garden TV). Maybe there was something about watching so much in a big dosage, but I realized that the messages that many of the shows were sending were actually affecting me.

Suddenly, I felt this annoying dissatisfaction with our home, our kitchen, etc.! Now, I am a very frugal, “make do with what you’ve got,” dumpster-dive for furniture kind of gal. I really like working hard & creating the things that we need and use in our home. I hate spending too much money for anything.

So when I finally traced these feelings of dissatisfaction back to watching all of that HGTV, I began watching again (in smaller doses) with new eyes.

What I see are many people who seem to be expecting happiness to appear poof the minute they have the perfectly designed, state of the art you name it.

Also, this weekend I was transfixed by the TV in the pizza parlor where we walked to pick up our pizza. It was tuned in to “MTV Cribs”, a show I had never seen before that moment, but I assume is just a new version of “Lifestyles of the Rich & Famous.” So much pointless opulence! So much excess! It really was sad.

Not that any of this excuses “Generation Debt.” But it opened my eyes to how powerful the message is, "You need this. You deserve this. Go ahead and buy this. It’ll make you happy. See? These people did & now they’re happy"

 

[BLB_Oregon]

I’ve been thinking about another aspect to this sad phenomenon: the role of television.

While sick with the flu one week, I watched a lot of HGTV (Home & Garden TV). Maybe there was something about watching so much in a big dosage, but I realized that the messages that many of the shows were sending were actually affecting me.

Suddenly, I felt this annoying dissatisfaction with our home, our kitchen, etc.! Now, I am a very frugal, “make do with what you’ve got,” dumpster-dive for furniture kind of gal. I really like working hard & creating the things that we need and use in our home. I hate spending too much money for anything.

We call HGTV the Your House Isn’t Good Enough Channel. (The History Channel has been dubbed the "war and engineering channel.) Likewise, “What Not to Wear” could be titled, “Look at Yourself! Your Friends Think You are a Wreck!”

We still watch it (HGTV), if for no other reason than that our boys like any show that involves tearing walls apart. And really, there are some ideas for how small changes that cost no money can make a nice difference: moving furniture or simply having less stuff, for that matter. Also, they have some kind of clever ideas for make-it-yourself furniture, if you already know which ideas will hold up and which are too flimsy to bother with.

Nevertheless, we still have the combined bedroom furniture that my husband had in college. Our twins have “twin” beds that don’t match. They don’t care. And, since one of these days we are going to have to replace our bedspread, on account of it having gotten to the point that it is literally falling apart, it isn’t so bad that I know which of those things currently in fashion that we’re likely to want for the long run.

 

[KittyKat]

We have a lot of friends that are in big trouble just because they like stuff. Okay so we like stuff but it has been a lot nicer to know that we have money in savings.

 

[lotusblossom]

My husband and I both just graduated college, got married, and are expecting as well within the past six months. We feel blessed, but financially, it has been a burden. We went to a private Catholic college, with parents who were unable to help us financially for the most part, and graduated with our degrees and roughly 80K each. What is sad about this is that we both received minimal financial aid due to our parents’ incomes (this is what happens when you have one income and a big family).

So, here we are, with fresh loans and just beginning payments and I’m working like crazy so I can stay at home once the baby is born. Because this baby is on the way, my parents have graciously offered to pay for half my loans because they are now in a much better financial position than they were four years ago. Thankfully, God blessed us both with excellent jobs right away with very nice incomes. We chose to live near Chicago so we could both work in the city so we’d make more. However, the cost of living is higher, so once my husband gets his grad degree (he’s a teacher so the school will compensate him for most of it), we are moving farther out where land is affordable (as well as more than a 2 bedroom house ).

I also have been trying to get rid of credit card debt which I rung up from studying abroad (which is FINALLY paid off now!). I’ve not been the best with money - neither were my parents, but my husband was raised with parents who handled finances well. We were both not spoiled, worked throughout high school, he paid for his first car (and is paying for his second one now), worked through college and are learning to live without the extras. It’s going to be rough, but the debt is the result of an amazing four years of spiritual formation and close fellowship that I wouldn’t trade for anything. Plus, it’s where we met .

 

[Karin]

What is sad about this is that we both received minimal financial aid due to our parents’ incomes (this is what happens when you have one income and a big family).
.

Confused???
You recieved little FA becuase you came from a BIG family with only one income?
That does not sound right.

 

[lotusblossom]

Confused???
You recieved little FA becuase you came from a BIG family with only one income?
That does not sound right.

Sorry…many times I type too fast and give no clarification. My dad (as well as my husband’s father) makes a very good income. However, with our two income society, having as many children as they have (6), to be able to afford paying for college, my mom would have had to work as well. Instead, she chose to stay at home with us and homeschool the youngest four (I’m the oldest). When it came time to filling out the FAFSA, it didn’t take into enough account how many mouths my dad is feeding with his “huge” income, nor did it take into account how much money we’ve lost over the years due to moving and losing money on the houses we’ve sold and paycuts to live near family, etc.

I hope that makes more sense .

 

[Karin]

Sorry…many times I type too fast and give no clarification. My dad (as well as my husband’s father) makes a very good income. However, with our two income society, having as many children as they have (6), to be able to afford paying for college, my mom would have had to work as well. Instead, she chose to stay at home with us and homeschool the youngest four (I’m the oldest). When it came time to filling out the FAFSA, it didn’t take into enough account how many mouths my dad is feeding with his “huge” income, nor did it take into account how much money we’ve lost over the years due to moving and losing money on the houses we’ve sold and paycuts to live near family, etc.

I hope that makes more sense .

Little more sense…

 

[hasikelee]

Sorry…many times I type too fast and give no clarification. My dad (as well as my husband’s father) makes a very good income. However, with our two income society, having as many children as they have (6), to be able to afford paying for college, my mom would have had to work as well. Instead, she chose to stay at home with us and homeschool the youngest four (I’m the oldest). When it came time to filling out the FAFSA, it didn’t take into enough account how many mouths my dad is feeding with his “huge” income, nor did it take into account how much money we’ve lost over the years due to moving and losing money on the houses we’ve sold and paycuts to live near family, etc.

I hope that makes more sense .

Same problem I went through in my junior year. I received NO financial aid other than my academic scholarships even though my dad is the sole breadwinner and we had 11 mouths to feed.

 

[Karin]

Same problem I went through in my junior year. I received NO financial aid other than my academic scholarships even though my dad is the sole breadwinner and we had 11 mouths to feed.

Did you guys fill out the FSFA form correctly?
I looked at it and it specifically asks about other dependents your folks have and other kids in school etc…how did you guys not quailfy for more aide?

 

[gmarie21]

Being basically debt free (one car loan at less than $300/month) and having an 800 credit rating, I sit and wonder myself how my peers with college debt, credit card debt, and making 30-40 K per/year (yet probably making 20K or so once the debt is subtracted) can receive a mortgage to buy a house while I am told I can’t afford anything b/c I make about 20K per year. Even when my car is paid off in a year or so, my affordablity will be lower than those in debt beyond a mortgage. It just doesn’t make sense to me

 

[Rob_s_Wife]

Being basically debt free (one car loan at less than $300/month) and having an 800 credit rating, I sit and wonder myself how my peers with college debt, credit card debt, and making 30-40 K per/year (yet probably making 20K or so once the debt is subtracted) can receive a mortgage to buy a house while I am told I can’t afford anything b/c I make about 20K per year. Even when my car is paid off in a year or so, my affordablity will be lower than those in debt beyond a mortgage. It just doesn’t make sense to me

aw yes.

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you need a manual underwriter, that will help greatly.

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What the bank does is this:
You say you make blank amount
They type it into the computer and it spits out that you cap out at blank amount for debt (including a home). A typical number to hear is that you cannot afford a home that costs more than 3 times your yearly income. (Which puts you at looking for a 60k home - good luck finding it).
When you come in wanting more than that - they say no, you can’t afford it because the formula they uses ASSUMES you have other debt and makes no allowances for if you do not.

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A manual underwriter does more than type in a formula in a calculator. They look at your personal actual income and debt and history. There’s more flexibility and usually better financing. For example, you have no other debt, which means it should be much easier to pay the only thing you do have - the loan you are asking for, which lowers the rate a bit. (Rate = risk factor of non-payment) Also, you have no other debt, so they can raise that home affordability number a bit with ruining you’re overall debt to income ratio.

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Now all this assumes you are smart enough to do the math and think one of 2 things:

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"OMG 3 times my yearly income is a big chunk of my paycheck! I can afford it only if I never want to buy t.p again and only bathe when people start to avoid me."

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**or **

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"Yeah! Thanks to that huge down payment, I can get that house and still have livable monthly payments!"

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I don’t know if you can afford a home or not. But I certainly agree you can’t assume those peers of yours can afford theirs either.

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Also remember that owning a home is NOT always the smarter thing. There are values to renting sometimes.

 

[BLB_Oregon]

Being basically debt free (one car loan at less than $300/month) and having an 800 credit rating, I sit and wonder myself how my peers with college debt, credit card debt, and making 30-40 K per/year (yet probably making 20K or so once the debt is subtracted) can receive a mortgage to buy a house while I am told I can’t afford anything b/c I make about 20K per year. Even when my car is paid off in a year or so, my affordablity will be lower than those in debt beyond a mortgage. It just doesn’t make sense to me

Listen to Martha (Rob’s Wife)…either you’re talking to the wrong people or your friends kept looking until they found someone who would tell them what they wanted to hear. As she implies, one would guess that it is both! Either that, or your friends were able to hit up the Bank of Mom and Dad or Grandma and Grandpa’s Financial Group for a big chunk of their sizeable down payment and/or a co-sign on their loans.

Also remember that owning a home is NOT always the smarter thing. There are values to renting sometimes.

Yes. Particularly if a) you are the kind that can identify the amount you save by renting over buying and pay yourself that first towards some other investment that doesn’t incur property taxes and b) there is a disparity between rental rates and purchase prices that makes renting attractive OR you don’t think you’ll be at your current location long enough to recoup your closing costs and realtor’s fees from both purchase and resale.

Nevertheless, if an opportunity presents itself there is something to be said for having a home that you can’t be turned out of on someone else’s say-so, that you can alter to suit your needs, that you can put sweat equity into for your own benefit instead of for your landlord’s.

Besides, I know a fellow who told me that having a house payment to make when you’re in your twenties is a great way to keep your “friends” from hitting you up for a loan!

 

[hasikelee]

Being basically debt free (one car loan at less than $300/month) and having an 800 credit rating, I sit and wonder myself how my peers with college debt, credit card debt, and making 30-40 K per/year (yet probably making 20K or so once the debt is subtracted) can receive a mortgage to buy a house while I am told I can’t afford anything b/c I make about 20K per year. Even when my car is paid off in a year or so, my affordablity will be lower than those in debt beyond a mortgage. It just doesn’t make sense to me

Are you getting pre-approved with a basic bank or loan officer?

Do you have a large down payment available and extra cash to cover the closing costs?

 

[maria29]

Listen to Martha (Rob’s Wife)…either you’re talking to the wrong people or your friends kept looking until they found someone who would tell them what they wanted to hear. As she implies, one would guess that it is both! Either that, or your friends were able to hit up the Bank of Mom and Dad or Grandma and Grandpa’s Financial Group for a big chunk of their sizeable down payment and/or a co-sign on their loans.

What about downpayment and closing cost assistance grants? We have found several that will cover all of our closing costs as well as programs since we are first time home buyers that will let us buy a house with as little as 1-5% down.

 

[gmarie21]

I have found an organization that I am working with that helps a lot, however, if my car is paid off, they can only offer a mortgage of about $120,000. In my area, that buys a one bedroom condo (maybe) in a usually gang infested area of the suburbs or a house in an area that is 100% toxic (not allowed to go into basements b/c of the toxins in the ground). Talk about no safe options. However, I’ll try to find out more about buying a forclosure home/condo/townhome, that may work.

 

[lotusblossom]

Did you guys fill out the FSFA form correctly?
I looked at it and it specifically asks about other dependents your folks have and other kids in school etc…how did you guys not quailfy for more aide?

Yes, in fact, I never filled out one by myself - my dad usually did it for me or I did it with him. It does ask about other dependents, but going to a private school had a lot to do with it too. I would have gotten a lot more financial aid had I gone to a public, state school. It was my choice definitely, and I could have chosen to incur less debt, but my faith was my priority and I don’t regret it, esp. after hearing all my friends constantly either 1. complain about having no real friends b/c everyone was so superficial or 2. getting into the drinking and sex thing.