Blind Borrowing…
I want my content to be as useful as possible, so I thought it would be a good idea to research what finance questions were googled the most and focus some of my attention there. I learned a lot. First, I learned that by and large Google isn’t used for answering money questions, because (depending on which list you read) not a single money question made the top 100 most asked. I’ll tell you what did: “How old is Taylor Swift?”, “Why do dogs eat grass?”, and “When does McDonald’s stop serving breakfast?”. Obviously, I had to clarify my search criteria and limit the results to money questions.
Unfortunately, I then had to wade through a series of what I like to call “hack questions”, such as “How do I make $100k a month?” and “How do I get rid of debt without paying it?”. If I had the answers to these questions I would probably be giving TED talks, not writing a blog, but the unfortunate truth is that financial success for most people doesn’t come from a quick hack or a “financial band-aid”. Needless to say, this blog is for the realists and the rational, not the clickbait crowd.
So, really, what is the most googled finance topic?
Loans.
Predominantly student loans, but followed closely by credit card loans and mortgages. Being in debt stresses people out! For the purpose of simplicity, this post will focus only on student loans. Here’s just a few quick facts that reveal why the average debt-laden alumni is firing off loan queries into the world’s most popular search engine:
Most student loans cannot be eliminated through bankruptcy. They’re just like your most embarrassing memories: with you for life.
Student loan forgiveness is notoriously elusive. According to the U.S Department of Education $153 billion has been approved to be distributed (huge number, right?). Dividing that by $1.77 trillion total debt means 8.6% of all student debt may be forgiven. It should be noted that politics have a major effect on this number as well as the actual forgiveness rate.
Want to buy a house after college? Student loans are looked at by mortgage lenders, making it even harder for graduates to get approved for home ownership.
On average, people spend just over 21 years paying off their student loans. This means you’re “debt free by 43”, assuming everything stays on track.
Making minimum payments can result in a little something called negative amortization, which basically means that while you are making payments, your total balance actually goes up.
But there is hope, and this is not a path you are forced down at gunpoint. Here’s some guidelines and ideas:
Obviously, limit or avoid student loans if at all possible. There are many avenues for this, such as scholarships, Federal Student Aid (FAFSA), college choice, and lowering college lifestyle.
Loan consolidation. I hesitate to put this one here, because the case has been made that lumping everything into one account with a lower interest rate may actually cause you to be less proactive in paying off the balance. But, understand the psychology, and mathematically this can save you money in the long run.
The “gap year method”. Consider taking a year off to stockpile tuition money. While effective, be warned that some who temporarily step off the college path never return.
Self-evaluate. Make sure that you are passionate about the degree you’re working towards. Graduating with a degree you won’t use is a sure-fire way to waste time and money.
Stay proactive. Whatever you do, and whatever your situation, take the time to truly understand your position and explore all options. Make a college roadmap and stick to it, don’t lose focus. As my 6th grade teacher always said; “If you go the extra mile, you’ll always find yourself ahead.”.
Let me be clear: I’m not saying to avoid college, that’s not at all what I mean. I’m just trying to spread awareness that (contrary to popular belief) a college degree is not “invaluable”. A degree can be the key that opens many doors of opportunity, but it can also be the key that locks the door to a more debt-free and stress-free life. Everything has a cost and a value, make sure you understand the product and the price.
If you know someone (perhaps a high school senior) considering the opportunities that a college education can offer, show them this post, or even better, sit down with them and talk it through over a cup of coffee. It just might be one of the most important conversations of their life. At the very least they’ll know that you care about them.
Interested? Confused? Related Question? Rebuttal?
brett@centennialsec.com or use the “Contact” tab above.
