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Before we get started I need to add a disclaimer up front. Periodically a topic comes up at the office where I shed financial advice in a less than politically correct manner. What you read here is a scene that took place as I left the office last night. When I get into one of those moods—usually induced by an overdose of caffeine—the advice I give is solid coupled with a massive dose of sarcasm. If you are easily offended you might want to take a pass on today’s post.
The topic of college costs came up and the payment of student loans. I have no sympathy. Student loans are a cancer that need to be excised immediately. The argument was other debt should be paid first before student loans. I disagreed. Let’s listen in on the conversation.
Tyler speaking to Dawn: You shouldn’t pay off student loans first.
Wealthy Accountant: Yes you should. Do you know how hard student loans are to discharge? The darn things follow you like the plague.
Tyler: But she has a car loan.
Dawn: The interest is higher on the car.
WA: Yeah, yeah, I forgot about that. Yes, you should pay the higher interest loan off first. You shouldn’t have student loans in the first place. You don’t need student loans to go to college; it’s not part of the curriculum.
Dawn: I did pay for college on my own. I needed money to live so I used my student loans to pay bills.
WA: Insane! You used borrowed money to live!? Borrowed money you can’t even get away from no matter how bad things gets!? The first test of going to college is getting there. Student loans are not “getting there”; it is cheating. If you don’t have enough money to go to college you need to find the money to get there. That is the test. I never borrowed a penny to attend college.
Dawn: But college was cheaper back then and you never finished or got a degree.
WA: Smart ass! Back then minimum wage was $3.25 an hour and I worked on the family farm for 50 cents an hour. Don’t tell me about how hard it is. There are more scholarships today than ever before. If you don’t have money to attend college you get grants and scholarships. Period. If you can’t find scholarships and get them you are unqualified to go to college because you failed the first test. And as for never finishing college or getting a degree, I started a business, this business. I can always hire people with degrees. I only needed to have the education. I have no need or desire to have a piece of paper hanging on the wall telling the world how smart I am. My piece of paper is that sign out in front of the building. It says I own this fucking place and make the rules around here. Beats any college degree I ever would have earned. I never wanted a degree; I wanted an education. I took business and accounting classes to teach me what I needed to know and took sociology and psych classes so I could understand how the fuck people think. [It sounds like I was coming off angry; I wasn’t. I was smiling the whole time and everyone knew I was being sarcastic and on a roll.]
Dawn: Well, I have the student loans now so there is nothing I can do.
WA: Oh, yes there is.
Dawn: How? I have a car payment that is killing me.
WA: What is your car payment?
Dawn: About $400.
WA: Okay, here is what you do. You sell the car and buy a replacement for cash. If all you have is $500 then that is all the car you can afford. Even if the damn thing dies in 5 weeks you are still ahead. Take the $400 you would have made in car payments and put it in the bank. In a year you can buy a nicer, more dependable car.
Dawn: I did that once. My old boss sold me a car for $2,000. He was nice and forgave the last few payments to him because the transmission died when I went to Milwaukee. It cost $2,500 to fix the car so I didn’t have a car again.
WA [faints, sniffing salts bring him back]: Are you out of your fucking mind! $2,500! You know what I would have done? I would have went over the Jahnke’s [Jahnke’s is a local auto salvage yard] and got a transmission there for $350 or less. It’s an old car, who cares about new parts. Then you take it over to the high school or tech college and offer it as a shop projects. Shit, you offer some kids a couple hundred bucks to drop the transmission and they’d be cumming in their pants for a week. Hell, some of the guys working at Jahnke’s probably moonlight. Cheaper than shit. By the way, remember when a deer hit my car. Yes, the deer hit my car; I did not hit the deer. Damn thing hit the side panel over the front wheel well. I asked my insurance and they said it would cost $4,000 to fix and I have a $1,000 deductible. I checked around and a guy over in Sherwood does body work charging $800. Know what I did? Saved $200 up front and dropped collision on my car, saving several hundred more per year. It’s not worth it.
Dawn: It doesn’t matter. I don’t have $500 for a car.
WA: Wonderful! Here is what you do. Sell the damn car and rent a vehicle. Yeah! Rent a vehicle. Enterprise says they’ll pick you up. Call their bluff. Fuck’em. Tell’em you need to be to work by eight so they better have their ass over here by seven. They’ll do it. Get the cheapest car they have. Use a credit card with a bonus reward and get the car for less than what you are paying now. Think of it this way. The credit card gives you 2% back and gives you a tax-free $500 cash bonus after you spend three grand. Right. You only rent the car for the days you need and carpool the rest of the days. If the car breaks down it is the rental company’s problem. Oil changes, tires are all the rental company’s problem. Most credit cards include free car insurance when you use their card to pay for the rental. Just check with the credit card company. Credit cards can have some really good deals people never use. Now take the money you would have paid and put it in the bank. In a year or so you have enough to buy your own car. Ta-daa!
Dawn: Man, you are tight. Where do you come up with all this stuff?
I was on a role by this time so understand what you are about to read might offend some people. This is your last chance to bail.
WA: Well, you see, about four, five years ago my oldest daughter started looking into the family history. It seems there it some Jewish blood on my mother’s side. It does explain why I felt oppressed all these years. So all this stuff comes naturally to me because I am a Jew. I am also German. A German Jew. So I can tell kraut jokes, and for four or five years now I can tell Jew jokes. You see, I can’t use the “N” word because I am not black. I’m a kraut so I can tell kraut jokes; as fortune would have it, I’m also a tiny bit Jew, so I tell a tiny few Jewish jokes especially when it comes to money. Imagine for a moment if you will if I were a black German Jew. Can you imagine the jokes I could tell. I could be shot in the back while unarmed by the police while charging you usury rates on a loan while feeling superior to all the world. Imagine. Instead, I am just a humble accountant. A wealthy accountant, for sure. But what would you expect; I am a Jew.
Okay, I offended everyone by now and I don’t care. I always make the joke about me and I never degrade someone outside the groups/s I run in. Truth is frugality is not a Jewish trait; it is the trait of smart people. Calling someone a Jew because they are frugal is a compliment, you know. I get carried away at times, but there is something to learn when I spew my sick, distorted humor. As carried away as I get, there is a grain of truth to my rant.
College is expensive and more difficult to pay for than in my younger days. But there are more scholarship opportunities than ever before, too. I hate student loans with a passion. I would do anything to avoid such caustic debt. I agree with Tyler, pay off the higher interest loan first. Then role up your sleeves and put a nail right through the skull of that student loan. Yes, it is okay to pay it off early. The fucking student loan in not, I repeat, not a 30 year mortgage. Stop treating it like one.
My car ideas get waaaay out there. I get it. Dawn really does need a car to get to work. Biking is impossible where she lives compared to my office. I shared different advice with her on that: Sell the house, move closer to work and live without a car until you can afford one. A taxi is cheaper (or Uber) the few times a month you need to run errands with the need for trunk space. Using credit cards with bonuses and a car rental also has merit. I’m not saying it is the way to go, but you should run the numbers. If money is tight you take whatever steps are necessary to solve the problem. You don’t need a car; there are alternatives. Lots of them.
Take control of your life. Reduce spending below your income level, investing the rest. Don’t tell me that is Jewish either, “Not that there is anything wrong with that”, as Seinfeld would say. Spending responsibly, saving, investing, expecting a profit on your business ventures, demanding interest on loans issued, and carefully managing your money is NOT Jewish; it is capitalist! And you, my friend are a capitalist! Now I want you to go back and re-read this post and replace the word Jew and Jewish with capitalist. There. It wasn’t so bad. Now you have nothing to be offended by unless you have something against capitalists. Do you?
I have an unfair advantage over you in all this. I am a Jew; something like one-eighth Jew, if my daughter’s calculations are correct. It was enough to give me an advantage over you. Some guys have all the luck. Live with it. Remember, you can learn a lot from a capitalist, I mean, a Jew.