Sad But True

Got this from a reader.

My big gripe with personal finance authors is the general and casual assumption that the reader has an income in the neighborhood - or at least within shouting distance - of the average American income.  Sure, if you have an average income, you have no excuse if you're living paycheck to paycheck.

But what if you start out with student loan debt and get stuck in a dead-end minimum-wage job?  Were you wrong in incurring the student loan debt?  Are you mismanaging your money?

Hope he didn't throw me in with those other personal finance authors.  Personally, I believe that most Americans that make the average American income are still living paycheck to paycheck.

But I will admit that writing personal finance stuff is difficult because you have to pick an audience.  Mine happens to be soon to be or recent graduates that have completed a four year college education.  I assume you have zero to a lot of debt, about to embark on a long journey.  If you screw it up financially it will be a long, painful journey but if you don't it will be ok and could be a lot of fun.  I don't write for the dullard in the class because he/she isn't going to be reading this stuff anyway.  Authors have to start somewhere and they pick 'average' because, well, average is average.  It's where most people are but there are exceptions and you, and most recent graduates, are exceptions.  You don't make the average American salary but probably will make, and soon exceed, the average.  But the real rub is in the second paragraph.

But what if you start out with student loan debt and get stuck in a dead-end minimum-wage job?  Were you wrong in incurring the student loan debt?  Are you mismanaging your money?

If you incurred a lot of student loan debt and are 'stuck' in a dead-end minimum wage job then, yes, you were wrong to incur the debt and yes, you are mismanaging your money.  Actually, you are mismanaging someone elses money that you will have to pay back. 

Sorry, sad but true.  As my wife says, that's life in the bigs. 

Because it should not have happened.  How do you incur a lot of student loan debt and get stuck in a dead-end minimum wage job?  That may have, and did, occur in the Great Depression or when I graduated--the second worse recession after the Great Depression but, hey, this is 2006.  4.7% unemployment. 

So what is going on here?  Perhaps a less than marketable degree.  I know all about these as I was a history major undergrad.  Wouldn't trade it in for the world but not real marketable.  But I know a guy that was a history major, graduated in 2004 and makes $54,000 a year of which 20% is tax free.  Pretty good deal?  You bet.  But don't think it's all easy, you might get shot at because this is the salary and benefits of a first lieutenant in the United States military.  I know because my son is one.

His sister is one year out of school and makes a bit less but not a lot less.  A business major, yes.  But the smart thing she did was go into an industry that is booming right now--the energy industry.  That's the oil bidness for those not in Texas.  Her roommate, a biology major, makes about the same with a similar job in the same industry.  The industry could go bust tomorrow but for today the two of them are making a whole lot more than minimum wage.   

So, yes, if you incurred a lot of student debt and are 'stuck' in a minimum wage job then you are mismanaging your money.  You are also miserable.  But you can get out. 

I just don't have enough details.  So if the reader can send in the college, major, current job and amount of debt we could get started on saying good bye to the minimum wage and concentrate on making some real money.

Comments

[Susan]

That's not money mismanagement, it's career mismanagement. You *can* get a good-paying (not great, but good) job with any college degree, within a couple years of graduating. You just have to be willing to get up in the morning, work normal hours, sit at a desk, etc. Not everyone is. It's not a lack of thrift or frugality, but I think for many it is shortsighted.

That's presuming we're talking about a college graduate in a low-paying job with no plans to do otherwise. Plenty of us spend time in those jobs temporarily between other things, and that's a whole 'nother kettle of fish.

[Michele]

I completely sympathize with the frustration towards the many PF bloggers who assume that people who don’t have the income to save a substantial amount are mismanaging their money. I live frugally and I look at my college loan debt as an investment, but I make $18,000/year and after loan payments, rent, mandatory expenses, and savings for graduate school, I don’t have much left for retirement savings. I work at a small nonprofit (doing a job I love, which is certainly worth something) after two years earning almost nothing doing Peace Corps. My salary will increase over the years of course, but I might never reach the income that some of my friends started out with right after college in investment banking. Does that mean I made a bad investment? Perhaps that’s where it is hard for PF bloggers who work in private sector jobs with significant advancement opportunity to relate.

[Super Saver]

A colleague once told me that Success = Knowledge + Skill (to use knowledge) + Opportunity + Will. Education generally only provides the knowledge component. And the other components are equally if not more important. Good luck to your reader as they work towards success.

[3 Things About Money]

The best advice I received about student loans (that I ignored and suffered for it) was to live on what you lived on in college and pay the rest to student loans until you are done. Fast track payments, on the theory that just after college, you are used to that lifestyle, so pay the debt down as fast as possible.

[Kimber]

I graduated with a finance degree and two years related experience. Even with this, it took me over 1,000 (yes, you read that right, 1,000 and I stopped counting over 1,000 'cause it was getting me depressed) applications to get my first entry level job. I made $25,000 as a receptionist/accountant/LAN administrator/salesgal. I took that job, added it to the resume, and kept applying. 6 months later, I moved up to a pure accounting job making $30,000. A year later, I moved to another job making $40,000 and so on.
Entry level is just that entry level. We're not supposed to stay there. As a mentor once told me "People feed you only when you're hungry."

[Kira]

I have to agree that if you have a four year college degree and you are working a minimum wage job, something went wrong there. The very least you could do is be an administrative assistant for $20k a year, if you have NO other skills. There seems to be a disconnect between college and a job - lots of people just get a degree, any degree, and then are surprised when no one hires them because they can't actually do anything useful.

[prlinkbiz]

While I write to help women become financially free, I focus on growth, which is different than most PF Bloggers and applies to everyone. I do not believe in stuck. This is America. You create your own future here. Agree with Uncle Bill- that money was mismanaged. Taking some responsibility is the first step. You can have a fresh start anytime you choose!