Saturday, May 16, 2015

Recent Grads: Toss The Cap, Keep Common Sense

Mid-May in Madison,Wisconsin means that most likely our last night with frost is behind us, most likely.  We can safely tuck away our wool socks and the long-underwear that got us through another Wisconsin winter.  Put away the fleece? Well that is really a year round option here -- summer nights can be quite cool, especially for those trips north, so we keep it handy.  Mid-May also brings a flurry of activity on the University of Wisconsin - Madison campus.  Over the weekend tens of thousands of undergrads, graduate and professional students will toss a cap into the air and leave the campus for the next phase in life.

Many will likely carry the same burden I did upon completing my last and final degree (1995 Undergrad, 1998 Masters, 2001 Law degree) -- student loans.  When I crossed that stage down on campus in May of 2001 I had three degrees, and just over $97,000 in student loans.  Fourteen years later I live just a few miles from the graduation venue, returning to my hometown after stints away. Unlike many of my fellow graduates, I am debt free with the exception of a small mortgage. The $97,000 in loans was gone by 2006 -- and do no instantly say "oh, well you're a lawyer, it's easy to pay off loans when you pull in six-figures."  I was not that kind of lawyer.

Those nine years of school focused on government and policy, and upon graduation I accepted a job with a State government institution here in Madison.  My salary was not six-figures, it wasn't even close.  How did the loans disappear?  I didn't win the lottery or receive a windfall inheritance.  What I did do was live frugally, more frugally than I ever had before.  Determined to free myself of the shackles known as student loans, I got fired up and paid them off.

Sure, there were lots of little tricks I used -- using a drying rack rather than paying $0.75 to use the apartment dryer or sending in payments twice a month in order to eat away at the loan principal.  But the big one, the key -- I didn't live like "a lawyer".  Reflecting back on that transition in my life from a student to a professional I remember very clearly a conversation I had with a relative.  We were sitting on bleachers watching middle school baseball (wearing fleece!), "well now that you'll be a lawyer you should buy the kind of car a lawyer drives".  I took this as a dig towards my 1991 Honda Civic.  Understated it was, but such a step up from the 1984 Honda I'd previously owned -- free of air conditioning, but also power locks and power steering.  Yet in her mind, lawyers drove sparkly new imports.

The thought that immediately came to mind, but  one I held in was "I am a lawyer, so whatever I drive is what a lawyer drives." Not interested in a debate on my frugal ways, I let the comment pass and changed the topic to the game in front of us.  But it was that comment that captures the key to paying off loans -- don't live the life marketers or others think you should live.  Keep living like a student, a very poor student, for just a few more years and you'll receive the delight of saving for your kids college via 529 plans rather than chipping away at the mountain of debt you acquired before American Idol was even an idea let alone in its last season on TV.

My advice dear Grad --throw that cap high, and then return to your student ways.  Think bus passes, roommates, restaurants with no white table clothes, clothes drying on your shower rod, and if you must have a car, one that is paid for, outdated, and reliable.  Do this, and the debt you needed to get that degree will fade, opening yourself to even more opportunity than you have today.

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