Hi Kids. People have been commenting that there has been less useful information and more paranoia, idiocy and douche-baggery in recent posts SO yours truly has decided to start at the beginning with this simple principle: You are taxed on what you make, and you pay interest on what you borrow. If this simple truth does not inform your big picture than you are hopelessly at risk of over borrowing.

Now I know what you’re thinking, if you got into a school good enough to merit borrowing to attend, then you should be able to add and subtract right? I am sure each of us has made decisions that are different from what we would have chosen as our answer if our situation had been presented to us as a word problem on the SAT.

Let’s take the following example. Most students, generally speaking would be willing to borrow twice as much money for an education where graduates typically earn twice as much. After all debt is a one time expense and you can enjoy your higher salary for the rest of your life right? Now let’s apply our new Golden Rule.

Turns out the take home of someone who makes 100k isn’t twice that of our buddy making 50k. Uncle Money Bags is taxed at a much higher rate. Now let’s turn to the debt. Turns out Uncle Money Bags had to take out private loans with a much higher interest rate and his monthly payments are well over twice that of our buddy making 50k.

But still things will even out right? Eventually Uncle Money Bags will win out, I mean he wants his money so…badly. Maybe it does and maybe it doesn’t. The heavy borrower is much more likely to pay several times the principle over the course of the loan. Also Uncle Money Bags could get laid off at which point he has no bankruptcy protection. In theory he has the option of forebearance. However a bank or loaning institution is less likely to trade money for a sob story as the tooth fairy is to trade a quarter for eight inches of used floss. Turns out a debt is a lifetime expense while your income is tied to the job security in your field and the economy as a whole.

I realize I am biased. My main source of income has just switched from snow shoveling to washing the undercarriages of cars with my new invention “hose on a stick” and I live at home. My own mom is ashamed of me and rather than recite my sad saga just tells church members I have a drug problem.