Dealing with Debt: WSJ on Young Couples and Debt

debtbookThe Wall Street Journal has a helpful article by Jeff Opdyke called “With This Debt, I Thee Wed” on managing debt in marriage.  It’s an adaptation from the new book Financially Ever After: The Couples’ Guide to Managing Money, which looks very helpful.

Here are a few nuggets to chew on:

“Couples today routinely enter marriage already laden with debt — student loans, car leases, credit cards. In a recent survey of seven major economies, PayPal, eBay’s online-payment service, found that American couples typically enter into their relationships with more debt than their foreign counterparts. This is akin to arriving on your wedding day with a negative dowry.”

Many couples accrue endless debt in this way:

“For instance, it’s Friday night and you want to eat out, and you’re choosing between the pricey sushi joint you’re craving and the much cheaper café. You’re carrying a combined $25,000 on two or more credit cards, and you think to yourself, “What difference is another $100?”

That’s the beginning of the end.

You’re digging a deeper hole because you think there’s no way out of the hole to begin with. As the debt grows, though, so will tension in your marriage, because just about every discretionary dollar you earn will be earmarked for some creditor. You and your spouse will feel increasingly incapable of living your life and end up mad at one another. This isn’t what you signed up for.”

**********************

It strikes me that many of us enter marriage with so much debt because we’ve been highly unwise in how we spend money.  In addition, many of us carry so much debt going into marriage that we adopt a laissez-faire approach to spending–”Well, we’re already $40,000 in the whole, what’s another pair of expensive shoes?”–or the like.  As Opendyke says, that will kill a couple’s financial prospects.

Many of us have so much from college expenses that it will take us decades to pay it off.  This is a scary prospect, one that my generation must address as we raise our children.  It’s great to get a name-brand education, but if that’s going to set us tens of thousands of dollars in the hole, I would seriously question if that’s worth it.  Maybe the family as a whole will have to swallow some pride and the student in question will have to forego some opportunities, but the specter of debt many of my generation face seems to make that worth it.

One other matter: there is a huge need for men to step up here, pre- and post-marriage.  Too many guys live like idiots before marriage and enter it without any clue, any plan, as to how to direct the finances of a family.  They make dumb, sometimes selfish, decisions with their budget and put the family in the tank as a result.  As one who does not naturally enjoy managing finances, I can say that it is imperative that men like me, sometimes lazy but commissioned by God to lead their families, set a strong course for the budget.

As a man, lead the way for your family not simply in devotions or getting to church–lead them budgetarily.  Teach your children what restraint and self-discipline looks like, budget sacrificially to bless your wife and relieve her of totally unnecessary stress, and plan for the future so you can give sacrificially to the church and missions.  Make the hard decisions about eating out, buying a new car, getting a new tv.  Above all, save every penny that you can, like the rich do.  The poor throw their money at things that deteriorate in value, while wealthy people by and large save.

And many of us would be wise to pick up Opdyke’s book–it looks very helpful.  It would go a long way in helping both men and women to be wise with the resources God has given us to use for His glory.

  • http://www.founders.org/blog tom ascol

    Owen:
    Good words. Thanks for posting this and recommending the book. As someone with 3 degrees and 6 kids, 1 of whom has finished a BS and 4 of whom are in college, I don’t know of an undergraduate education that is worth going into debt to obtain. That goes for most graduate degrees, as well. There is too little Christian thinking on this issue in our day. Thanks for making a contribution to this important subject with your post. I will be sending many people here to read it.

    ta

  • Larry Geiger

    “I don’t know of an undergraduate education that is worth going into debt to obtain.”

    That’s a rather broad statement and I’m sure that lot’s of careful, conservative people will disagree with it, or at least some part of it. Putting words in his mouth, maybe what Tom meant was:

    “I don’t know of an undergraduate education that is worth paying for totally by spending that will saddle most of your entire future with debt.”

    First, for just the world’s view, many economic models show that a college education WILL pay for itself several times over during a person’s career. Particularly a professional degree (engineering, architecture, pharmacy, medicine, etc).

    Second, I know many people who borrowed strictly for some or all of their educational expenses who quickly paid those loans off after becoming employed and who now enjoy very successful careers.

    Third, I do know of people that tried to completely live off debt money (room, board, expenses, and education costs) for four years who are now saddled with debt which is a problem.

    Debt is certainly a problem, and something to be avoided normally, but to relegate a young person to a career somewhat below their aspirations just to avoid all debt, seems a bit drastic.

    Many young people work very hard to support themselves and are very careful borrowers for their educational expenses. I think these young people should be commended.

  • owenstrachan

    Larry,

    There’s definitely a balance here. Here’s my original statement: “It’s great to get a name-brand education, but if that’s going to set us tens of thousands of dollars in the hole, I would seriously question if that’s worth it.” I stand by this, though I’m certainly not saying I’m the authority or something silly like that.

    I’m guessing that Tom is speaking out of his referenced experience. I think that there are certain degrees worth much investment and time, but I think what Tom is getting at is that the pendulum has swung way too far in the wrong direction. Many of us leverage ourselves to the hilt to get a fancy degree, only to find that we then have to work like mad for years just to climb out of the hole (let alone save!).

    This is not a good situation, especially when it’s so widespread. We overvalue name-brand education today and undervalue financial solvency. With credit cards and loans at our fingertips (at least in past years), many of my generation haven’t thought twice about the choices they’re making, which will saddle them with loads of debt for years to come. This is by no means the only educational paradigm today, but it is an all-too-common one that very few people seem to think hard about.

    It is interesting, in addition, to note that in various studies, including those of Fortune 500 CEOs, many of them did not go to big-name schools or possess big-time degrees. Tom is, I’m guessing, making this point. The actual windfall of an Ivy League education may be far less than one thinks, especially if one works hard and well. Much of our obsession with brand-name education comes from pride, not wisdom; self-regard, not familial care.

    It’s one thing to get a prominent degree if it makes fiscal and personal sense; it’s another to do so out of a desperation for social status. I wouldn’t be in this PhD program if it affected my family negatively, or if my wife had to work; and I wouldn’t have gone to a school like Bowdoin College if it was going to sink me or my parents financially.

    Some quick responses. Tom–thanks for your kind words, and for weighing in.

  • http://www.founders.org/blog tom ascol

    Larry:

    If I have engaged in overstatement, it’s not by much. I am not speaking out of any lack of appreciation for formal education. As I said, my family has already spent thousands of hours in various halls of academia and we are not nearly finished. I am speaking out of a concern for a Christian worldview that is more informed by biblical than conventional wisdom.

    There are many, many assumptions in those economic models that you cite. I greatly appreciate some of the views that Charles Murray has articulated in his protests against the unjustifiably exalted views of a college degree that too many in our day hold. Marvin Olasky has an insightful interview with him here.

    Owen, again, thanks for addressing this issue.

  • chuck p

    I agree balance is required. For instance, to go to a high dollar private college to get a teaching degree when the local school system doesn’t care which college you attened and pays you the same is not smart. In some fields it does matter and may give you opportunities that other schools don’t. Going to a lower cost community college and transferring in the last two years is another example of cost saving.

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  • http://courtedrippin.blogspot.com/ dripable

    I agree completely!!


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