By Luke V. Erickson
Personal and Family Finance Educator
Alex* took a deep breath as he drove down Main Street, his pulse and mind racing with bittersweet exhilaration. With the windows down and wind blowing through his hair, he shifted into third gear and savored the seamlessness of the gear transition in his brand-new car. It felt good to be rid of that ancient beast of an automobile he had inherited from his parents. Alex thought to himself—not for the first time—that his purchase might even help him get a few more dates. Besides, he was 24 and had just one year of school left. "I deserve it," he thought. But the next thought wasn't quite as pleasant: "The car may impress some people, but what would they think if they knew how much debt I'm dragging around with it?"
It wasn't only the debt of the new car that worried him. His credit card statements, maybe five or six of them, had a balance of a few hundred dollars each. One even had a balance of more than $1,000. He had done the math and knew that even if he applied every cent he made at the part-time job he had taken to get through school, it would take months to pay off those credit cards, and that wasn't including any interest or other potential fees. To top it all off, he had several student loans he had used to pay for tuition, books, and some living expenses.
This reminded Alex of a newspaper cartoon he had seen that showed a 90-year-old man telling his wife after mailing a letter, "Now that we've finally paid off our student loans, we can start saving for retirement." Alex smiled. It was only a joke, right? It couldn't really turn out that way, could it?