We must love debt because we sure have a lot of it. The average American household is carrying more than $15,000 just in credit card debt and most also have a mortgage and at least one auto loan. On top of this many are still dragging around debt from their college years. For example, last spring’s college grads averaged more than $25,000 in student loan debts. When you add it all up, American households have an average of $144,283 in debts.
Some debts can’t be avoided
Unless you’re a member of that fortunate 1% you’ll have to borrow money in the form of a mortgage to buy a house. You’ll probably also need to borrow money to buy a car. But you don’t have to borrow money for a college education. In fact you probably shouldn’t.
Has college become a scam?
It’s almost impossible to find a politician that doesn’t preach the idea that everyone should go to college. They often promote college by trumpeting the fact that over their lifetimes, college graduates earn $1 million more than those that didn’t get a college degree. However, this is totally misleading. The people who go to college are different from those that don’t. They’re more likely to have had two parents, did better in high school and would likely make more money even if they hadn’t gone to college.
Some people do benefit
Students with full scholarships or rich parents that don’t have to go deeply into debt to get a college education might profit from one. So, too, could people that intend to land jobs in academia or to get a job where a college degree is required. But the truth about a college education is that half of today’s recent college graduates are working jobs that don’t require a degree. As an example of this, 80,000 of the bartenders in America have bachelor’s degrees.
It’s just a “signaling” device
If you are able to get into one of the elite universities and graduate from it, this is considered to be mostly a “signaling” device that tells prospective employers you’re a bright person and they can then begin teaching you the things you really need to know. What this translates into is that it’s the employers and not the colleges that are turning students into valuable contributors to society. This implies that college is more of a hurdle that an investment.
Some degrees are practically worthless
Making matters even worse is the fact that some college degrees are practically worthless. If your idea of following your passion is preschool education, art history, social work or culinary arts, you might just as well fogetaboutit. People with these majors earn – if they’re able to land a job at all – can look forward to a mid-career salaries of $55,000 a year or less. And that’s not their starting salary but the salary they could look forward to in midcareer.
What can and can’t be negotiated
One of the worst things about student loan debts is that they can’t be negotiated. If you graduate from college owing $30,000 you’ll have that $30,000 debt hanging over you until you pay it off. However, if you’re also carrying unsecured debt such as credit card debt it can be negotiated. In fact, it can be settled or paid off for less than you owe. Reputable debt settlement companies such as National Debt Relief are usually able to settle debts for about fifty cents on the dollar.
Debt settlement companies don’t work free
Could you settle your debts yourself? Of course. However, the overwhelming majority of people struggling with debt use a debt settlement company. Reputable debt settlement companies generally charge a flat fee for their services that ranges from 15% to 25%. That might seem like a lot until you do the math. Let’s say that you owe $20,000 on your credit cards. If the debt settlement company were to charge you 25% that would be $5000. But if it settles that $20,000 in debts for $10,000 you would still come out $5000 ahead. And most important, you’d be debt free.
Debt settlement doesn’t happen overnight
The other important thing to understand about debt settlement is that it’s not an instant solution. If you were able to get a debt consolidation loan and use the funds to pay off your creditors, you’d have almost an instant solution to your problems. In comparison, debt settlement can take anywhere from two to four years depending on how much you owe. On the upside you would have a fixed monthly payment and would know exactly when you would be debt free. And that would surely take a lot of the stress out of your life.