JOE WEBB AND CO. – THE WRITTEN WORLD

LESSON #28: BORROW LESS MONEY

Posted in Lessons by The Books Production Team on October 29, 2008

LESSON #28: BORROW LESS MONEY

typewriter11          You know, being safely ensconced in the midst of America’s never-ending War on Terror, it seems as if I had somehow completely forgotten about our concurrent War on Drugs.  I guess I kind of just assumed that Nancy Reagan’s platform issue had disappeared like so many other great relics of the 1980s and 1990s – including Crystal Clear Pepsi, Max Headroom, and the guy who played Balki on Perfect Strangers.  But, lo and behold, that all changed this morning when I was awakened by the sounds of police sirens as the FDA made a massive drug raid on one of the three-story colonial houses two doors down from my condo.  The whole situation just made me shake my head, mutter incoherent phrases, and eventually settle on the appropriate response of “WTF, mates?”

          To make matters stranger, over the course of the morning, it became clear that the government had all kinds of cool toys for sniffing out contraband.  So, evidently, we’re still pumping plenty of dollars into the War on Drugs.  Just check out this magic 8-ball machine!  It’s good to know that, at the very least, the FDA has developed a sense of irony over the last twenty years – and after seeing this thing in action, I wouldn’t be at all surprised if it’s got a special button you can push that instantly blares Mark Morrison’s “Return of the Mack” at an ear-exploding decibel level.  That feature alone would be enough to make me give up my black market business and “just say no.”  Still, I wish a little more of that money went into educating America’s undergraduates on that other oh-so-addictive drug – the Student Loan – because for a lot of collegians, the habit of borrowing money is even harder to break.

          Now, like most drugs, there’s a way to appropriately use the Student Loan, and a way to abuse it.  To make this point a little clearer, let’s explore an analogy.  If, in some freak flag-football accident, you break your leg, the doctor is likely to prescribe for you a certain amount of Vicodin.  You should take this as directed; it’s necessary to keep your pain below a tolerable threshold.  If, however, you purchase a bottle of Vicodin from the 34-year-old waiter who lives in your apartment complex, and proceed to go Robo-Trippin’ on the weekends by chasing three Vicodin with a bottle of Robitussin, then you are abusing the miracle of modern medicine.  The same principle applies to the Student Loan.  When the concept was introduced as part of the Higher Education Act of 1965, the idea was to offer students the money they would need for the necessities of a college education.  What are these necessities?  Tuition, Room, Board, and Books.  Over the years, however, as the average American teenager’s sense of entitlement has grown, the presumed necessities of the college education have expanded to include a string of hundred-dollar bar tabs and a monthly allotment of purchases from the J. Crew Catalog.  If you are borrowing money for your college education, you must be very careful lest you fall into this trap.

          You see, what should be obvious, but is instead somehow misunderstood or ignored, is the fact that the student loan is one of the few loans in America that absolutely must be paid back.  Unlike your mortgage, your car loan, or your credit cards, there is no way to declare bankruptcy or default on a student loan; the only way you can be absolved of your obligation is by dying, which seems like it would be a silly way to get out of your monthly payments.  Every penny you borrow must be returned, with years of accrued interest, and thus the decision to borrow money to buy a sweater from J. Crew is like the arbitrary decision made by Dennis and Sweet Dee in Season 2 of “It’s Always Sunny in Philadelphia” to become crack-heads.  It just doesn’t make any sense, and once you start, it’s really hard to stop.  Using Student Loan money as an undergraduate to buy Natty Light and Box Wine ensures that you will still be drinking Natty Light and Box Wine when you’re 40 years old – and Lesson #18 has already made it clear that this is not a good idea.  So kids, just say no.

          And this now brings me to the Mecca of the Student Loan system – graduate school.  One of the most difficult financial truths of the twenty-first century is that most high-profile jobs require some sort of graduate education, but taking on a massive amount of student debt is roughly akin to Faust’s deal with Mephistopheles.  In exchange for unlimited knowledge, you must agree to be a slave to the system for at least the first ten years following graduation – if you are not prudent.  Take, for example, law school.  I seldom run into a lawyer who has attended a private law school without encumbering him or herself with upwards of $100,000 in student loans.  If you choose this route, this means two things: #1) upon your graduation, you will own the equivalent of a three-bedroom Midwestern house that doesn’t have a single piece of hardwood-flooring or any running water; and #2) you must practice corporate law for at least the next ten years in order to make monthly payments in excess of $1500 on your non-default-able debt.  Now, considering the second aspect of this scenario, I give you this piece of advice.  Before entering law school you must be absolutely certain that you are capable of doing well enough while there to secure corporate employment in a very tight job-market, and you must be cognizant of the fact that $1500 a month after taxes equates to nearly $30,000 a year in annual pre-tax salary.  If your desire is to practice non-profit environmental law, then you’d better go to the cheapest decent law school you can find – otherwise, you’re fucked.  Because unless you’ve got a full ride, it is impossible to both attend Duke and practice law somewhere other than a big firm.

           So, the bottom line of today’s lesson is simple: Borrow Less Money.  You may not be able to have everything you want right now if you follow this principle, but you’ll have a lot more financial flexibility in the future.  And I can’t think of a single instance where flexibility is anything other than awesome.

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9 Responses

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  1. UVA Mike said, on October 29, 2008 at 8:52 pm

    So, is it just a horrible idea if I start taking out student loans to support my crack habit?

  2. MS said, on October 29, 2008 at 10:34 pm

    WIz, are you referring to Marlow’s Faust, Goethe’s, or Thomas Mann’s? Because there’s a 79% chance that if taking out excessive amounts of unnecessary student loan credit would have made be as symphonically suite (Oh! the devilish wit of homophones) as Adrian Leverkuhn, I might have been willing to consider a more aggressive borrowing plan. Alas, I’ll always be a little bit more like Bronson Pinchot than the syphilitic composer from Kaisersaschern. Which means Mark Linn-Baker (Larry Appleton) has a better shot of hanging with the Tussin-chuggin’ Miss December with her candy-cane bikini and her green teeth. I’m signing off to go do my anti-dance-of-joy: http://www.youtube.com/watch?v=GfPg5LjGYz8

  3. drwizard said, on October 30, 2008 at 12:09 am

    Mike – yes, bad idea. Worse than the pet rock.

    MS – that video is ridiculous. Who in the hell green-lit that sitcom, and how did it stay on TV for seven years?

  4. Carlin said, on October 30, 2008 at 12:58 am

    Wow. So much to say. First of all- (kinda) sorry I missed all the drama in my old stomping grounds! But more importantly, it is indeed vital to consider your future occupation and salary when considering your grad school options. There were people in my very competitive, private graduate school, paying $40,000 a pop for two years. Keep in mind, in my field, that is roughly the starting salary, and there isn’t exactly a huge margin for growth along your career trajectory. I know you want to attend the best school you can get into for several reasons- but you have to instead look at the bigger picture and go to the best school for you, not necessarily the best-ranked school.

    Equally as important to know is that scholarship offers are not final offers!!! If you received a scholarship offer with your acceptance letter, that means you are a desired candidate, so use it. If you are offered 25%, ask for 50. If you are offered 100%, ask for a stipend. All they can do is say no. But, be smart about this before you blow your chances. Wait until you have offers from other schools as bargaining power. And this is one time when procrastination is key. Schools usually divy out most/or all their alloted financial aid money with the initial offers to the best candidates. But if you wait until later in the game, after a student with a full ride offer has declined, well now the school has an extra $40k in a pool, so it’s not as big of a deal for you to ask for 10 of it. So.. wait til the last minute- and play hard ball!!

  5. Meghan Jansen said, on October 30, 2008 at 2:06 am

    That’s really good information, Carlin! It never even occurred to me to ask for more scholarship money, and now I’m kicking myself.

    As for the giant 8-ball, I did a little research, and turns out its just like a regular magic 8-ball, but bigger, which makes its magic more powerful. They turn on the tractor in front of a house, shake the 8-ball into a frenzy, and then wait for the response. Does this house have any drugs? Outcome does not look probable.

  6. Greece Lightning said, on October 30, 2008 at 2:28 pm

    So…I was a chemistry minor in college, and one of the experiments that we got to perform was the making of Crystal Clear Pepsi. Surprisingly, what a lot of people don’t know, is that chemistry is a lot like magic, and this is certainly the case in this instance.

    Here’s what you do. All you need is a really fast centrifuge and a really loud stereo to play that stupid Van Halen song “Right Now.” Dump four bottles of regular Pepsi into the centrifuge, turn on the stereo, and set that motherfucker to spinning like crazy. Boom. You’ve now got crystal clear Pepsi.

    The trick also works for turning coffee grounds into Sea Salt and motor oil into Human plasma.

  7. Barry H said, on October 30, 2008 at 3:48 pm

    it’s so true – every month when I write that $1136 check all I can think about is some of the stupid shit that I spent my money on in college. why did I buy so many crappy X-box games, so many seasons of Seinfeld, and so many rounds of shots? because I was an idiot – and now I owe Wachovia $84,000.

  8. LU said, on October 31, 2008 at 5:32 am

    I would argue, though, that one acceptable non-school related way to use your student loan is to purchase contraceptives, especially if you ignore Dr. Wizard’s sage advice in lesson 15 and are just looking for the easy hook-ups. Although, even if you follow Dr. Wizard’s advice and go on dates, you might still score the proverbial home run. In either case, there’s nothing that’s going to dramatically increase your room and board costs while in school more than adding a new person (or more…) to the mix. Trust me on this one, and head on out with your refund check to stock up on this one necessity for the semester.

  9. drwizard said, on October 31, 2008 at 4:30 pm

    LU: +1 on the birth control.


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