More Advice for the Low Salary Grad: Live Like You Should Have When You Were a Student

Honestly, if a recent grad is making only $1000/month in a worthy endeavor, STAYING OUT OF DEBT is of the utmost importance. I would say: Live like a student. Except for the fact that most students live like they are middle- and upper-middle class people, either on the parental dole or getting into debt. So my advice is Live like you should have when you were a student. Every bit of debt you avoid is a blessing for your future. The recent grad of my acquaintance asked me what he should stockpile. After the rice and beans recommended yesterday, I would pick up some canned tomatoes and cheese. Best place for cheese is Costco or Sam's Club. Or Trader Joe's. So now you won't die of starvation. Any more advice?

Art, Debt, Sharecropping

What does it say about me that I wrote about a consignment shop in Alabama before I wrote about the Kentuck art festival, which was why we visited Miss Em to begin with. I guess I am shallow.

The festival was wonderful, but there was so much to look at. It was quite overwhelming. Since I suffer from decision-making anxiety, I didn't get anything. Miss Em bought a pretty ring; she is very sure of her decisions.

One of the booths had a huge line. The artist--who, according to Miss Em is very well-known--produces letter press posters. These had pithy sayings, many having to do with coffee. Some shaded to the too-cute-for-me. One celebrated Samuel Mockbee, the great Alabama architect who, before a too-early death, focused on housing for the poor. Miss Em's friends hadn't heard of him, but I told them to look him up.

One of Miss Em's friends said, Miss Em: you should buy this one! It was a poster saying A penny saved is a penny earned. I guess Miss Em is frugal like her mom and dad.

Then I saw another one. Sadly, I cannot remember the exact saying. It was along the lines of Don't be a sharecropper to your credit card company. Unlike the Franklin saying, this one took a bit of time to figure out. Like the Franklin saying, this one is full of wisdom. Truly, if you have credit card debt, which often involves ridiculously high interest rates which make it ever harder to extricate yourself from debt, you are working for the credit card company. The company gets a piece of what you earn, perhaps forever.

Have you seen any pithy sayings of late?

Au revoir, mon fils and an idea for the recent graduate

Frugal Son is home for two more days and then off to his new job in France. Yes, job. Low-paying, but that's OK. In fact, I would love the job myself. He--along with a squadron of others--will be assisting in English language classes all over France. His pay: around 800 euros a month after taxes. HOWEVER, he will only work for 7 months, which include 8 weeks of vacation!

He just found out that he is one of the lucky ones who will receive free room and board right at the lycee where he will work. So--as he said--My salary just went up. His work week is 12 hours/week! Because of his free room and board, he will have plenty of money for travel.

What's the idea? Go abroad, graduate. Every American is in possession of something desired the world over: the English language. Many recent grads are heading to Korea, for instance, which is noted for its extremely high pay. Korea, in fact, has become the place of choice for grads with student debt: housing is provided, costs are low. You can pay off some--or all--of your debt in a few years and see Asia on the side.

Besides, it looks good on your resume. Living abroad gives you skills only talked about in today's popular major: international studies.

I have read so many sad articles about recent graduates un- and under-employed. No, I will not link to them.

Isn't Frugal Son lucky?

Listen to Funny: Debt Consolidation and Getting Out of Debt

Once again Funny About Money has taken the time to explain something: debt consolidators are not your friends. Some of these outfits are OK--sorta--but it's hard to tell the real non-profits from the faux non-profits. Funny mentions that she is often offered "free posts" by these companies: so one gets an advertisement disguised as a blog post.

All I know is that the two people I know who sought help from debt consolidation companies--more than TEN years ago--are STILL paying their debt. One person told me the debt has grown--and then listed all the reasons why this was a good thing (??).

The best book I've seen on getting out of debt is an inexpensive paperback based on the model of Debtor's Anonymous: How to Get Out of Debt, Stay Out of Debt, and Live Prosperously.

I learned a lot from this book; it is more than a get out of debt tome: it's also about how to value your life.

Student Debt Encore Encore

I'm supposed to be relaxing; I turned in my grades last night. But this morning I listened to yet another installment of Student Debt Woes and Warnings. This time it was NPR.

I noticed that the students with the most debt attended private colleges. I can't help thinking that these schools, with their increases at double the rate of inflation for many years, are to some degree complicit in the problem. There are fewer articles on how student debt is GOOD DEBT. (Similarly, there are fewer articles on how MORTGAGE DEBT is GOOD DEBT). The idea was that GOOD DEBT was an investment in an appreciating asset, while bad debt was spending on a depreciating asset--like a television.

All I have to say at the moment: consider public education. Your debt will be smaller.

I have other things to say too, but will do so later. Oh yeah. Can't resist. Take the student debt quoted when you apply for your loan and MULTIPLY BY FOUR. And add on for the inevitable inflation factor.

Any words of wisdom on this topic?

What Do You Think of Defaulting to Reduce Debt

So...an encouraging headline from the Wall Street Journal: Debt Levels Lowest in Years! Then I read the accompanying article, whose first sentence attributes the happy news to a combination of defaulting on debt and saving more. Strange bedfellows? Or am I missing something?

Here's the vignette that most caught my eye:

Morari Shah, a 59-year-old Miami entrepreneur and real-estate investor, is among those taking a radical approach to reducing debts.


Since late 2008, he and his wife have slashed their total debt from nearly $1 million to zero by walking away from the mortgages on four rental properties and paying off two others, all of which lost about half their value in the housing bust. He's no longer taking up to $4,000 from his monthly income to pay mortgage interest that the rental income didn't cover.

Instead, he and his wife are fulfilling their goal of building a new $350,000, four-bedroom home in the Dallas suburb of Lewisville, where they plan to retire. "It's a big relief," said Mr. Shah. "We went through some rough times, but now I'm comfortable and don't have to worry about my retirement."



What a role model! I still worry about my retirement, so I seem to be doing something wrong.

Am I being too puritanical in my response?

Debt Settlement: More Consumer Friendly

Thankfully, I have no debts to settle. Nevertheless, every few days, I get a robocall: "Are you in credit card debt? We can help reduce your debt."

The other day, I was talking to my Goodwill friend Joan (our friendship is based on the fact that we share a shoe size): she is retired from Bellsouth, gets social security, and works as a sub at the high school (even though she is not a college grad!), so I always figured she was OK financially. Not so, as it happens. She told me she confined her shopping to Goodwill so she could pay off her credit card debt. Then she said, "I was in so deep I was going to one of those companies..."

"Don't do it!" I exclaimed. "I have a colleague who signed up about 10 years ago and is in worse shape than when she started."

"I know," said Joan. "I have a friend who worked with Wells Fargo and she ended up losing her house."

These people are not your friends, in spite of the rhetoric.

Thanks to the new more consumer-friendly financial regulations going into effect, debt relief companies will no longer be able to collect fees up front.

"Consumers who are very deeply in debt and don't know how to pay it down are trying to do the right thing by signing up with these companies, and they end up paying thousands and thousands of dollars in fees and filing for bankruptcy anyway," said Lauren Bowne, a staff attorney at the Consumers Union. "Now, that shouldn't happen anymore."


Sounds like Joan's friend and my colleague.

If you need to get out of overwhelming debt, see the classic tome.

I learned a lot from this book. It is a masterpiece. And no fees to questionable organizations.

Debt Busters on CNN

It's wonderful to read about people getting out of debt. I love to see all their tips and strategies, all honey to the frugal heart.

So, check out this feature on CNN, which presents 8 "get out of debt" stories. You may faint when you get to the last one. The woman explains how "negotiating" with her credit card companies got her debt (incurred when starting a business that failed) reduced from $110,000 to $39,000! Honestly, if it were me, I would be too embarrassed to put my picture and name out there for all to see.

However, I don't need to go on; the comments do that for me. The others featured are so responsible and honorable. Love their stories.

Am I being too hard on Melody?

Rich Man, Poor Man, Beggarman, Thief: Update on Frugal Favors

Update of Frugal Favors: The "poor woman" from Goodwill pressed a $20.00 bill in my hand the other day. "I couldn't live with the stress," she said. So I gave her the leather jacket that has been residing in the trunk of my car.

Duchesse noted in a comment that she would have taken a check for $8.00 from my "rich[er]" co-worker. Well, I don't know. New bank fees often involve a punitive charge to the depositor as well as to the writer of the bad check. And I had heard many a discussion of creditor calls and hidden shopping bags and multiple accounts and post-dated checks from this person. Having over a month to come up with $8.00 in cash seemed like easy "terms."

I don't have a moral to draw from this, except to say that some people--like my Goodwill pal, and like me, for that matter--find indebtedness intolerable.