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Posts Tagged ‘Debt’

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Simplify, Simplify

In America, American Literature, Arts & Letters, Economics on June 12, 2024 at 1:04 pm

This piece originally appeared here in the Troy Messenger.

“Young Americans are starting out with more credit-card debt than generations before them,” reports Oyin Adedoyin in The Wall Street Journal. She notes that the “average credit-card balance for 22- to 24-year-olds was $2,834 in the last quarter of 2023, compared with an average inflation-adjusted balance of $2,248 in the same period in 2013.”

Debt has become a growing problem across the United States, affecting more than just credit card users and Gen Z.

The Federal Reserve Bank of New York indicates that aggregate household debt balances rose by $212 billion in the final quarter of last year and have surged by $3.4 trillion since 2019. Those figures likely increased since the report was issued in the first quarter of 2024.

Recent college graduates face a difficult job market and high student loan balances. Decades of ready access to federal loans enabled universities to hike tuition and hire expensive administrators, passing costs onto students.

Government monetary policy, targeting inflation driven by pandemic-era measures, resulted in high interest rates. Rising prices and interest rates cause young people to delay marriage and homebuying while accumulating large credit card balances for everyday expenses like groceries or gas.  

Are you struggling with credit card debt?

I’m no financial-planning expert, but here are some tips I learned while managing credit card debt as a young professional.

Whenever you receive a surprise check, like a work bonus or birthday gift, put some of it toward paying off your credit card.

If you have multiple cards, prioritize clearing the one with the highest interest rate first. Then tackle the card with the next highest rate until you’ve satisfied all debts.

You could try the snowball method, paying off the card with the smallest balance and then moving on to the next highest balance, and so forth, until you are debt-free.

Make more than the minimum payment whenever possible.

Beware of credit card debt service providers or counseling agencies. I know people who paid these companies every month, only to discover later—after their credit card company sued them—that the payments weren’t used to pay off their debt as promised.

Remember, these companies charge you to help with your debt, which is problematic when you’re already struggling financially.

Look around your house. What do you own that you don’t need? Host a garage sale or use Facebook Marketplace to sell items.

Debt, like trouble, is easy to get into, but hard to get out of. Heed the sage advice of Henry David Thoreau, who supplies this month’s “Word to the Wise”: “Simplify, simplify.”

An idealist who stressed individualism and self-reliance, Thoreau famously lived in a cabin he built at Walden Pond on land owned by his friend and mentor, Ralph Waldo Emerson. His prescription for wellbeing was straightforward: possess fewer things, depend less on pricey goods or services, cultivate your own food, spend less money, and define yourself by your beliefs rather than your belongings.

Don’t clutter life with things; enrich it with experiences. Spend time outdoors with loved ones. Rank quality over quantity when making purchases.

Don’t live above your means. Do more with less.  Downsize. Dollar stores offer similar products to high-end grocery stores. Choose fuel-efficient, budget-friendly cars, as all vehicles lose value once driven off the lot.

Children don’t need expensive gifts to have fun. When my kids were little, I bought them expensive Christmas presents, but they preferred playing with the boxes the gifts came in.

Liberate yourself from financial burdens and lead a more fulfilling life. The bottom line is, we overcomplicate rather than simplify. But simplifying alleviates unnecessary stress.

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Advice for millennials

In Economics on April 5, 2023 at 6:00 am

This piece originally appeared here in Alabama Political Reporter.

Millennials are hurting. Recently The Wall Street Journal ran an article titled “Americans in their 30s are piling on debt.” The author, Gina Heeb, claimed that Americans “in their 30s have racked up debt at a historic clip since the pandemic.” “Their balances,” she wrote, “hit more than $3.8 trillion in the fourth quarter.”

Heeb warned that “the debt buildup could worsen a generational wealth gap that was already on the rise for millennials.” She factored inflation, interest rates, childcare, home prices, cost of living, and student loan debt as causes.

There’s more to the story: millennials, the largest demographic in our workforce, began their careers during the Great Recession, a period of low wages and high unemployment. Their struggle to find good jobs and build careers made it difficult for them to pay off loans and debt. Businesses during the recession froze hiring and cut staff, salaries, and benefits. Millennials fell behind. As of 2020, over half of adults between 18 and 29 still lived with their parents.

Student loans, university administrative staff, the race to improve and expand facilities—these magnified the costs of higher education. As a result, millennials took on substantial debt to pay for college.

Those whose parents could afford the price of college began careers ahead of students from low-income families who depended on loans and worked through college, sacrificing study time to earn rent money through odd jobs and menial labor.

Some millennials believe they can’t find jobs as easily as their parents did. They don’t want to work for an employer for decades until they earn a company watch or their names on a plaque. Many of them work freelance jobs or part-time gigs lacking health insurance benefits or retirement contributions. Some may enjoy the flexibility that contract work provides, but others would prefer more stability.

What’s to be done?

Mass student-loan forgiveness isn’t the answer, although anyone with student loan debt should research whether they’re eligible for income-based repayment plans or loan forgiveness under current rules.

Families should continue supporting their adult children or relatives. Maybe it’s good that so many young adults still live with their parents. After all, aren’t families supposed to be close and nurturing? For centuries extended families cohabitated, if not in the same house, then at least on the same land. If parents aid their children well into adulthood, might the children one day reciprocate, taking care of their parents who reach old age? Is it so bad to see hearth and home return to the center of community?

Regardless, millennials must learn to budget, save, and invest, ensuring that expenses don’t exceed incomes. They must put away for retirement even if retirement seems far off.

Rather than ordering new credit cards, millennials should avoid debt by living within their means. If they receive tax refunds, they should save or invest them, or use them to pay off debt, but they shouldn’t spend them on luxury goods or exotic vacations. They should build an emergency fund for unforeseeable exigencies such as home or vehicle repairs.

Millennials are sometimes accused of embracing socialism, but that does not appear to be so. A 2019 Gallup poll suggested that half of young adults viewed socialism favorably. Yet the same poll indicated that 83 percent viewed “free enterprise” favorably.

That’s promising. Free enterprise will help millennials as older generations age out of the workforce. Free enterprise yields competition, which, in turn, incentivizes companies to innovate, produce goods more efficiently, and allocate resources more effectively. The net result is to boost production, increase demand for labor, and multiply opportunities.  

Millennials should embrace entrepreneurship and challenge barriers to entry that stifle innovation. People should be free to discover and create, find needed fixes to difficult problems, improve existing technologies, invent new products, and cultivate partnerships in different markets.

But before millennials, or other younger generations for that matter, can change society, let alone the world, they must change themselves. They must work hard, improve their credit scores, pay bills on time, avoid bank overdrafts and excessive borrowing, consolidate debt into lower interest loans, establish sound financial goals, and invest (if possible) in diversified funds or assets that appreciate in value.

Millennials, heed the words of Benjamin Franklin: “Beware of little expenses; a small leak will sink a great ship.” And hang in there! I’m a millennial too, and I can feel it: Spring is just around the corner.

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Can the Humanities Be Saved?

In Arts & Letters, Humanities, Literary Theory & Criticism, Literature, News and Current Events, Pedagogy, Teaching on December 1, 2011 at 12:00 am

James Banks is a doctoral student studying Renaissance and Restoration English literature at the University of Rochester. He also contributes to the American Interest Online. He has been a Fellow with the Intercollegiate Studies Institute Honors Program; in addition to The Literary Lawyer, he has written for the Intercollegiate Review, First Principles and The Heritage Foundation’s blog The Foundry. A native of Idaho’s panhandle, he lives in upstate New York and serves in the New York Army National Guard.

 

Humanities professors hear the bell tolling and are probably beginning to wonder if the next toll will be the last. In response to the impending crisis of student debts, the Modern Language Association (MLA) issued a “formal statement” condemning the rapid increase in tuition and calling on federal and state institutions to do something about it:

Public attention has been directed recently to the educational debt students accumulate in the course of undergraduate, as well as graduate, study. A major contributing factor has been the increasing portion of educational costs students must bear in the form of loans. To reduce debt burdens in the future, we call on Congress, state legislatures, and institutions of higher education to calibrate educational costs and student aid in ways that will keep student debt within strict limits. We also call on them to hold in check tuition increases, which often far outpace inflation, and to ensure that degree programs allow for timely completion.

This statement may be gobbledygook; it’s easy for academics to call for keeping student tuition within strict limits, but it is very hard to actually curb tuition rates. If the MLA wanted to make news, it would have issued a few recommendations for how to, say, tear down the gymnasium, privatize student housing, experiment with virtual conferences, or limit salary increases.

MLA’s concern about student debt and funding for the humanities is still news, though. It indicates that humanities departments are getting wind of the fact that, in tough economic times, they are going to be the first to lose students, and with state governments and universities tightening their belts, programs losing students are going to be first to get axed, if that’s what things come to.

Humanities departments won’t save themselves by doing what they have always done, which is to make moralist pronouncements and then leave the hard work of paying the bills to the administrations and government. Survival of these departments will require a more radical stance. Critics of the humanities predictably responded to the MLA statement by saying that humanities departments have brought the impending crisis on themselves by teaching classes with names like “GaGa for Gaga: Sex, Gender and Identity” instead of the good old-fashioned “Introduction to Chaucer, Shakespeare and Milton.”

It’s true that humanities departments would probably have more students if they stuck to a more traditional curriculum (which would also make for less embarrassing conversations between students and their grandparents, who want to know what their grandchildren are studying at school), but humanities departments have changed less than conservative critics claim. Although curriculum content in the humanities has evolved, humanities students can still read Shakespeare if they want to, and the place of the humanities in universities has not changed radically. 

The idea behind departments like English, philosophy and history was not to help people live longer but to help them live better. Writers, philosophers and historians may not be more moral than the average human being—in many cases, they are less so—but wrestling with the moral dilemmas that the humanities present could at least train tomorrow’s leaders to exercise their moral instincts. Humanities departments still see themselves as being the moral conscience of the higher education system, and, by extension, high culture.

However, as the moral standards of the academy and America’s mainstream culture have diverged, humanities departments have been demoted from being moral authorities to being moralistic beadles; to the rest of the academy, humanities faculty are ivory tower preachers who occasionally publish articles on America’s promiscuous history of imperialism and who host forums about cultural failures at the nexus of race, class and gender. Read the rest of this entry »