Tuesday April 20, 2010 | Real World Financial Education

April 19, 2010 at 9:54 am | Posted in Coming Up | 16 Comments

Pile of money.

We’ll meet two local authors who have each recently released books about young people, personal finance and debt. Rock Hill’s Mike Duralia and Charlotte’s Logan Abrams both graduated from college with a big wake-up call that they had big debt and a lack of the basics in personal finance to guide them through the path to being debt-free. We’ll hear about what lessons they learned along the way and why they think it’s so important to all of us for young people to learn about personal finance early in life.
Logan Abrams – Author of Debt-U: How Higher Education Breeds a Lifestyle of Debt
Mike Duralia – Author of The Real Life 101 Handbook

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  1. I look forward to this show. Student loan debt is an increasingly critical issue that is severely interrupting the financial and personal lives of millions of American young adults. I’m pretty sure the student loan bubble is in the process of popping just as the housing bubble did a few years back.

    I attended UNC Charlotte for 3.5 years and racked up around 30,000 in student loan debt…and I was poor at that time, drove a 20 year old car, lived at home to save money, barely ate out, no expensive luxuries, etc. And I worked part-time too, but that made little difference in the grand scheme since I made so little. This debt still hangs over my head, and it will take a very long time to pay off — about 1/4 of my monthly salary goes just toward paying off student loans (and it’ll still take over 10 years to pay off), which means I cannot get a new car, or buy a home, start a family, etc. I’m 27, and I’ll probably be close to 40 before it gets paid off — it is absurd.

    A crucial point to understand is that because we recent college graduates have to repay so much per month just for student loans (HUNDREDS per month on average), that means we cannot circulate that money in the larger economy to provide the consumer boost it desperately needs these days. I’m sure more young adults would buy new cars, homes, appliances, computers, clothing, vacations, etc if they didn’t have to pay so much of their salary per month to repaying outrageous student loan debt.

    These large student loan debts are literally holding back an entire generation of young adult college grads who are being forced to put our lives on hold because of the debt that hangs over our heads merely for doing the ‘responsible’ thing in obtaining a higher education. I know MANY recent graduates (young adults all) who have been forced to move back in with their parents just to save money, or else delay marriage and parenthood because of their student loan debts, are unable to save enough for a down payment on a house because they repay so much in student loan debt per month, and so on. And for the people who went to grad school (for an MA or PhD) or law school/med school, their debts are usually much higher…often six figures. The terrible economy isn’t helping either, with more and more people forced in to default because of macroeconomic circumstances which are system-wide and out of everyone’s control.

    This nation needs some kind of comprehensive student loan reform NOW. The economy will not recover until millions of young adult college grads get some kind of relief from this horrible debt-burden which hangs like a dead albatross around our necks.

    • Great comment Realist-

      I don’t think student loan reform is the answer, i think better financial education is the ultimate better answer. Student loan “reform” is just going to transfer the burden of cost to another portion of society, which i don’t agree with.

      The degree is loosing value and I think colleges and universities are just starting to realize this fact. With better education on the options of college and what the degree is actually worth in high school, i think students would make different decisions and begin to change the market for the college degree.

      The loans are crushing a generation, and more importantly putting serious risk to the asset of a higher education workforce. A baby born today will see college at 3 times current costs, which in my opinion will likely mean since salaries aren’t rising nearly as fast, the degree won’t be worth it. So we are less than 1 generation away, and that is what I really want to change.

      Debt U

  2. I remember getting a real adult lesson in finance when I discovered what it meant to be upside down on a car loan.

    As for student loans, I’m 42 and still paying them off. I went to UNC, NOW there is a program at the school to enable kids like I was to attend college and graduate without being saddled with tousands of dollars in debt. I applaud that effort, but wish more could be done for people like me who have and are still struggling to pay off this enormous amount of debt. Obviously I’m not saving as much for retirement as I should be in large part due to student loans.

  3. As you discuss the value of education and the return on the investment after gradutation, I’d like to hear some thoughts on these online MBA programs at Keller, University of Pheonix, Strayer, etc. They are advertising their universities everywhere and the convenience is appealing, but would a potential employer put my resume in a better pile based on an MBA from Keller Graduate School?

    • Alley,

      I earned both and undergraduate degree in engineering and an MBA. Each degree only helped me get my first job in that field. It was my experience and accomplishments that allowed me to move into different roles in the future.

      As Logan points out in his book, you have to evaluate the return on your investment for the MBA. What do you hope to accomplish with it? Are you getting the MBA just to make more money or are you interested in acquiring more skills? I obtained my MBA to broaden my skills and education but ironically my current job is in engineering and the MBA is not “necessary” for my current responsibilities.

      I have a good friend that got his MBA from Univ of Phoenix at age 42. While the degree is “helpful”, he is very good at what he does. He may be paid a premium for the MBA but he earned it without debt; he paid as he went. Took him longer but his lifestyle didn’t suffer.

      I guess the point is you have to decide what is best for you, what you are willing to sacrifice and what you expect you will really gain from the MBA.

      Good luck!

  4. How about not spending more than you make or not borrowing more than you can pay back? It sounds crazy, I know.

    • Amen Gregg. Discipline is the key to obtaining financial goals and it sounds like you are well on your way!

      • Thanks Mr. Duralia. I don’t understand the whining about college debt. I have none but then again I didn’t go to college. Nobody made me. I’m doing fine. So is Rush Limbaugh and Oprah. They didn’t go to college either. It all comes down to choices.

    • Greg-

      As a high school student, how do I know what I can pay back? How do I know what I will make?

      Isn’t a larger part of the problem the lack of education on these topics in high school? In the book I discuss unrealistic expectations as a huge reason students get in financial trouble. But where do these expectations come from? Well, we let the schools set them so of course they are unrealistic, just as the tuition charged is unrealistic.

      They approach students like- Borrow $50,000 now for college and by the time you are 30 you will be making $100,000+ for the next 30 years. Sounds like a great investment right?

      I do like your suggestion for people in their mid 20’s and 30’s they need the advice you posted above.
      Debt U

  5. Thank you for this show — many more like it are needed. Dave Ramsey does a great public service with his financial teaching shows, classes, and seminars. Four years ago my son did his high school senior exit project on students’ perceptions of and knowledge about what they would need money-wise for retirement, and the role of Social Security in retirement planning. He also gauged their understanding of the federal government’s handling of the money we “contribute” into this “retirement program.” All of the students thought the money would be sitting in an account just for them, and that it would take care of all their retirement needs. None had a remotely realistic understanding of anything about saving for retirement, or the fact that Social Security is a wealth transfer Ponzi scheme, or that it is in deep financial trouble. He did pre- and post-presentation questionaires to judge the students’ understanding. It is a complex subject, and something most students may have felt they didn’t need to worry about then — but it was a wake up call. My son learned a lot, and we thought it really pointed to a subject schools should address vigorously. Financial literacy is important to every single one of us, no matter what our eventual jobs; and as we have learned in the last few years, SOME people’s ignorance and irresponsible behavior affects ALL of us. Wish our elected representatives would also learn responsible financial behavior!

  6. Enjoyed the show! I teach a career prep. course in a public high school for the arts. My juniors are just learning about the decisions they’ll have to make, our seniors are in the midst of it.We’ve been trying to get this sort of information to them. These books sound like they will be a great resource. I’m ordering them for me and may be able to get them for the class (depending on budget) or at least copies in our library. Thank You! C Tucker

    • C Tucker,

      Feel free to contact me through my website if I can help in any way!

      Mike Duralia.

    • That is great, thanks so much.

      Feel free to e-mail me with any way i can help logan@debt-u.com

      I have been speaking to high school students for the past couple months and the reaction has been great. Unfortunately it is hard to get in front of many because of the bureaucratic school systems, but I am trying!!

      Debt U

  7. I very much enjoyed the show today and hope that the audience found the discussion interesting.

    My book is the starting point for you to obtain some basic information about a variety of topics so that you can further YOUR education and make the best decisions for YOUR specific circumstances and YOUR financial goals.

    I hope you will follow my blog and become a fan on Facebook through the links on my website http://www.rl101handbook.com.

    Best Wishes,

    Mike Duralia.
    Author, The Real Life 101 Handbook

  8. Thanks for all the great comments and questions on the show.

    I will be doing a book signing/speaking event at the RealEyes Bookstore in NODA May 1st at 6:00 p.m

    If you can’t make that please check out http://www.debt-u.com for more info on the book and media clips.

    Logan Abrams
    Author- Debt U

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