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Ask Dave

Hopeless With A Mountain Of Student Loans

Sara and her husband are on Baby Step 2. How do you not let the hopelessness take over? They have $300,000 in debt. Dave says it's both the philosophy of it and the mechanics.

QUESTION: Sara in San Antonio and her husband are on Baby Step 2. As she looks at the numbers, she feels a lot of hopelessness because their debt is significant. How do you not let the hopelessness take over? They have $300,000 in debt. Dave says it’s both the philosophy of it and the mechanics.

ANSWER: You’re probably going to struggle for the next seven years. I think when he leaves the Air Force and goes into the open market and makes $200,000 a year is when this debt is going to get knocked out. I think you’re going to struggle until then.

You can make a conscious choice to be a stay-at-home mom and homeschool your four kids, and by doing that, you’re making a conscious choice to wait seven years to make any huge traction. I’m okay with that, but just know that that’s the choice you’re making. Sharon stayed home with our kids. I’m not belittling staying home with your kids. You guys have spent an awful lot of money on education with no thought as to how you were going to turn that money spent into money—how you were going to monetize those degrees. That’s what the problem here is. Normally, when you have $300,000 in student loan debt, you have a $200,000 income somewhere to start to offset that, and/or your master’s degree puts you into education and you’re making probably $100,000 a year, give or take. You’re not going to be doing that with four little kids that you’re homeschooling.

The tradeoff for you to be homeschooling these kids and home with them after you spent all this money on this degree is going to be seven years of hard times while you guys get him out of the Air Force and he can get his income up. My guess is he’s not going to make much more than he’s making now in the Air Force. Let me just go ahead and tell you he gave up his financial ability to serve the country past seven years when you made these decisions. He has a first responsibility to his family, and that’s to clean up this mess. He doesn’t have the option anymore to go past seven years. You need to get that real clear in both of your heads. You guys are all about serving everybody, and you’re so broke you can’t pay attention. You’re going to pay some prices for this. It’s not going to be easy. I’m not telling you to be overwhelmed. I’m just saying don’t be expectant that you’re going to pay this off making $60,000 with four kids at home. It’s going to take a while, and when he gets his seven years, he’s going to be in the open market. He has to in order to clean up the student loan mess that the two of you made.