My DH shares a lab bench next to a very nice girl going to medical school in the fall. A very nice, expensive, private medical school. When she walks out she’ll owe at least $200k in tuition and probably have taken out another $100k in living expenses, we’re in a HCOLA after all. Ouch right?
Well yesterday my DH came home complaining about doctors (since she’s going to be one), and how they spend money. First off she’s 25 and she makes $50k/year now. Not bad, but she’s giving it up for her dream of being a doctor. Very admirable because it’s a long haul.
Anyway she currently drives an Audi bought by her parents as a graduation gift. It’s had a lot of problems and she wants to buy a new car rather than repair it. So she decided to ask her parents for another new car. Answer? NO. She wants a volvo because she doesn’t want a cheap car.
So she tells my DH what’s another $30k in debt if she’s racking up $xxx,xxx of student loan debt for medical school? Just add it to her tab. She’ll worry about it later. He told her it all adds up in the end. But she says she’ll have to live like a pauper for a long time otherwise, so she might as well keep adding to her tab.
This shocked my DH. We’re ultra-conservative with our finances in the sense that we’ve taken out $17k in debt for his MBA. And as we’ve done so it’s hurt our souls to be in debt other than the mortgage. This is his first student loan debt ever. And it seemed like a lot. We’ll likely take out the $8500 again this year, but we are very aware that we’ll come out owing what feels like a lot.
It’s enough to have bought DH a new car. A nice new car no less. And instead this young woman just thinks nothing of financing a new car. She feels she’s in the hole already what’s a little more dirt to shovel out? Is this the new mentality of people?
Or have we as a society always felt this way? Is this the reason why car loans are running rampant? What’s another $20k on top of our $50k of student debt? We personally can’t justify buying a newer (used or new) car when we have student loans. It weighs so heavily on our minds. But it feels like many people just say “add it to my tab.” I have no idea when does it stop? When do you start paying it all back?
If this mentality continues I wonder where we’ll end up? Maybe less in CC debt because people are becoming more aware. But instead we’ll replace it with car loans and student loans.
8 responses so far ↓
1 Future Millionaire // May 10, 2008 at 5:49 pm
Wow - I hope she steps into reality soon before its too late. I realize that doctors make very healthy incomes but if she’s going to be 100k+ in student loan debt that’s a monthly payment of over $1,300.
2 dogatemyfinances // May 10, 2008 at 6:36 pm
It’s hard for me to judge those on the long slog to being a doctor. It’s one thing to drive your crummy car, worried about breaking down for a few years in college and grad school. It’s another when you’re 27 and still years off real money.
She probably has no idea what her tab is. If the kids in med school thought about that, they could never make it through. They have to put their heads in the sand. I’m guessing her parents will help her when it comes down to it.
3 Livingalmostlarge // May 10, 2008 at 9:31 pm
Nope she’s going to start medical school in the fall. I am guessing though that she will end up having help from her parents, so I don’t know if she’ll need $200k in tuition loans.
4 Jim ~ mydebtblog.com // May 12, 2008 at 2:19 pm
How much money does a doctor have to earn before it’s ‘real money’? They aren’t kids either but adults that have made the decision to go to school for a decade to do what they do. I don’t think this arrogance of having a ‘tab’ is anything new to younger people. When you are in college and borrowing money on student loans, living with your credit cards, life is very easy. Flip that around and try to pay off debt, which is much more difficult. Since she has so much in student loan debt, it’s nothing to throw a car in the mix. At least she is a doctor and may one day make a salary that would justify her lifestyle. Her line of thinking is not far from the rest though.
5 Livingalmostlarge // May 12, 2008 at 7:15 pm
Hmm…Jim you may have a point.
6 Philip // May 13, 2008 at 3:53 am
The only good thing going for her is that she’s going to be a Doctor. Biggest problem here though is her attitude. The way it is now she’ll graduate from Medical school, land a job with a great income, and then decide that she’s been sacrificing all these years so she’ll finance another new car, an expensive home and who knows what else. The way she’s going she’ll be broke all the way up to retirement. I’d love it if she sat down next to me… I can tell her what the other side of her situation looks like… It’s not much fun.
7 My.Cold.Dead.Hands // May 16, 2008 at 3:07 am
It’s called the sunk cost fallacy.
Basically, it’s the idea that I’m in it this deep, I may as well sink a little lower.
It’s always been a part of the way people make bad decisions, but this generation is the first to be okay with doing it with money on a large scale.
8 LivingAlmostLarge // May 16, 2008 at 2:20 pm
Trust me sometimes I feel that way as well. Because of our mortgage it feels like a huge hole we’re in.
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