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We Need to Stop Normalizing Big Debt Payoff

We Need to Stop Normalizing Big Debt Payoff

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I’m sure you’ve seen the clickbait headlines – paying off hundreds of thousands of dollars in debt in a ridiculously short time. Heck that’s me too: How I Paid Off $112,000 in Debt in 18 Months.

My story is very boring. I didn’t win the lottery or find some benefactor. I had a high salary, which is in line with what I expected from my degree. Then I lived reasonably but frugally.

I love the boringness of my big debt payoff story. Of course, others can find it disappointing for being so boring. With student loans exploding, people are looking for hope. The stories with the highest debt and the lowest incomes get a lot of fanfare but they’re not realistic. This can be a problem if regular people start thinking that paying off big debts is easy – it’s not. Getting into big debt on a low-income is a disaster. We need to stop normalizing big debt payoff stories and start glamorizing boring debt payoff. 

The Problem with Exciting Debt Payoff Stories

Yes it’s intriguing to read about how someone can pay off a huge debt without a big salary. But big debt payoff stories are getting too trendy. Bigger, more outrageous stories are constantly pushing more typical stories down. Big debt payoff starts to sound normal, and that’s bad. 

Consider what happened when I was interviewed for a site regarding my debt payoff story. One of the comments said something to the effect of:

Well of course she could pay off her debt with her high salary. Why can’t we have more stories of people who quickly pay off large sums of debt on low salaries?

Bitter much?

The commenter might as well have asked why don’t we see more miracles. The main reason we don’t have large debt payoff stories from the low-income is because the math doesn’t work.
My $112k loan would have cost $1,200/month for 10 years. If we assume that someone makes a median salary of $42,000/year after taxes or $3500/month, that’s 1/3 of their salary for the next 10 years. Of course that person can increase their salary and then write about how they paid off their debt in fewer years with a higher salary – cue the criticism. But the higher salary is a necessity, not a flaw in the story.

Big Debt Means Big Problems

There are stories of people who graduate with hundreds of thousands of dollars of debt who work at the poverty line. Yes, this makes for the start of an interesting story but the vast majority of these stories do not end well. This is not something to aspire to. It’s not healthy to think that these stories are anything but extremely stressful and uncertain. 
People shouldn’t get into big student loan debt and have a low salary job. Let’s not pretend that this is a normal situation with a likely happy ending. If you have a huge debt load, your solution is to get a higher-paying job or a rich ailing uncle. 
Often when I see someone paying off huge debts on a low- to mid- salary, they give advice, which is really a listing of their lucky breaks. The number one piece of advice is “live rent-free with their parents.” Most people can’t get free rent from their parents close to their work. That’s a lucky break. Ditto when someone mentions inheritances, selling off big-ticket items, significant others who subsidize living costs. This is not personal finance advice – this is just bragging. You might as well just say, I used this big pile of money to pay off my loans – and you can too!

Low, Slow Debt Payoff is the Norm

Having high debt with a low salary is a dire situation that requires immediate action, not a fun frilly story for our lunch breaks. Yes, these stories reel us in like a mystery that can be solved – but there are no magic cures. Either the person drastically increases their income or is saved by luck. You save yourself or someone else saves you. There are no other alternative for a happy ending. What we should be talking about is why this person needed to be saved in the first place. 

The reason we don’t hear about high debt -high salary or low-debt payoff stories is because they’re boring. But boring payoff is normal, it’s good, it’s low-stress. That’s something to celebrate, not dismiss. 

It’s good to remember though that low, slow debt payoff is normal and having high debt is atypical. While the numbers of those with six-figure debts is rising, it’s still only 6% of all student loan borrowers. Those with high debts are overrepresented in defaults – at 30%. But those with high debt also likely took on those debts to secure high-paying jobs – such as doctors, lawyers, CEO. High debt is not meant for low-paying jobs.

Big Debt Payoff Disguises Big Problems

Yes we can congratulate and admire someone for having the fortitude to pay off a mountain of debt. But we need to acknowledge that these stories are outliers. We need to talk about out-of-control higher education costs and how easy (and dangerous) it is to get into ridiculous amounts of debt for low-paying degrees.

When I was a high school senior, I thought taking any kind of student loan debt was fine and normal. Because my parents had saved for my education, there were no repercussions for my ignorance. But for those without the means to make these mistakes, this ignorance about student loans could be the biggest mistake of one’s life. 

There’s no need to blame those who take on too much debt – it’s the system, not the person at fault. But we have a role in ensuring that fewer people do it. It’s dangerous to normalize the idea of graduating with a ton of debt with only low-income job prospects. We have to ensure that people realize how dire a situation can be with high debt. 

Let’s Not Forget The Fundamentals of Finance

It’s great that there are inspirational student loan debt payoff stories. But let’s not forget the fundamentals – the rule of thumb is not to have higher total debt than your median first year salary. Also generally don’t to go to NYU. Or get an MFA. 
If you are planning to buy a car, people will tell you to plan for the costs of the car and for maintenance. They won’t bring up internet articles of people who bought a Ferrari and happened to win the lottery to keep up with the costs. Don’t let hope be your Plan B. Also don’t let it be your Plan A.
Big debt payoff stories make it seem like you can go into serious debt without a plan, fumble around, and recover with amazing results. It’s a fairy tale. And it’s frightening to think that others might underestimate the danger of poisoned apples because of others’ happy endings.

Conclusion – Stop Normalizing Big Debt Payoff

So yes, I had six figures of debt and six figures of income. My debt payoff story is  really boring. I’m proud that it’s boring.
I don’t want to encourage anyone to have an exciting debt payoff story where they pay off a crazy sum of money in a short period of time on a low salary because, even if successful, that’s a recipe for a very stressful life. 
Boring is good when it comes to money. Prevention is most of the battle. And even better if you go your own way. Small debts, rising incomes – we should normalize and glorify that. 

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