In high school, I read a book, I cannot remember the name or author, but it was written by a celebrity talking about the different types of debts. The key takeaway, as I recall, is that good credits or acceptable loans are home mortgages and student loans. Purchasing a home allows people to build equity over time and serves as an investment. Students’ loans or I think they were trying to say that higher education will enable people to earn a higher income.
The reality of homeownership
I am grateful that I could access financing to pay for my house and now have $30,000 in equity, which is money that I could potentially borrow against with a fee. However, I won’t truly own my home until the banknote has been paid off. Until then, the bank has the authority to call my banknote and foreclosure on my house for nonpayment. Even after the home is paid off, the city has the power to auction if off if I am behind on my taxes just so that they can collect what is owed to them. Additionally, the government can use “eminent domain” to usurp me from my home/land for public use. In the end, the place I live at is not mine. I am just its caretaker with certain benefits afforded with many associated liabilities. Even so, I love “owning” my home and knowing that I took the necessary steps and was deemed “worthy” by the bank to be entrusted with a mortgage.
Student loans
Going to school, I had the opportunity to receive federal grants, apply for scholarships, and participate in an internship which helped to reduce the cost of my higher education price tag. The total cost for my undergraduate and graduate degree totaled $160,000. I financed over 1/3 of the cost with federal student loans and graduated with $51,440 in debt. With the unsecured loans accumulating interest while I was in school, my total loans were around $63,000, with the accrued interest added to my principles once I graduated. I have been actively paying my loans while participating in the Income-Driven Repayment plan since my grace period ended after school, with just a few months of administrative forbearance due to transferring my loans from Great Lakes to FedLoan. Until a few years ago, when I learned and started to budget my money, I did not realize I was going into more debt each month because of my student loans. At first, it was $200 per month, and then it continued to build over time. The amount I was paying as part of the repayment plan was insufficient to cover the interest owed on the loans.
I recently wrote a piece entitled, “Letter to My Younger Self on Student Loans,” where I shared what I would have done differently, not that I am a little more mature and have experienced life-carrying debt. Please check it out and share it.
I agree that homeownership enables people to build equity and a college degree, but it does not necessarily, creates a pathway for job opportunities. Going into debt for either of these items no longer seems appealing to me. I cannot wait to become debt free, and live a life of financial peace.