Money Talks, So Should You

Quarter-Life Chronicle: The financial benefits of being a pessimist

Abby Dalton
by Abby Dalton , Dimespring 30

As an adolescent, I witnessed the fairly traumatic divorce of my parents. As a naturally anxious child, I believed the worst possible scenario was always around the corner, and after watching that marriage implode, I was at least proven partially correct.

I’m therefore always stunned when I encounter people  friends, family, internet commenters  who seem to assume that the worst could never happen to them. Maybe they’re willfully naive or blindly optimistic, but I’m generally shocked when people haven’t anticipated and prepared for the worst.

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For instance, recently I informally polled a few friends about whether or not they had discussed their parents’ retirement. The answers were varied: some had discussed it generally, others had had conversations with their siblings about who would care for their parents in the event of financial or medical support. One friend, whose mother is an immensely successful businesswoman, commented that her mother was planning to work until she died, so she wasn’t particularly concerned.

While this is an admirable outlook and I’m glad her mother enjoys her job well enough that she wants to continue performing it for as long as possible, it ignores the obvious possibility that maintaining a productive career until you drop dead on your way into the office one day isn’t necessarily what life holds in store. Plenty of people age well, but others suffer from terrible health issues that hinder them physically, mentally and emotionally.

Even if you want to go on working, it’s not always possible. While I don’t want my friend to imagine the demise of her parents, I would like her to consider the possibility that a discussion about the future  how her parents plan to retire, if they’ve spoken with a financial planner, etc.  would be worthwhile.

As a future part-time graduate student, I’ve noticed a similar trend among people applying to graduate programs. I lurk on a popular message board for admitted graduate students and have been following the financial aid travails of a number of people who post there.

I’ll be going to a school that, while highly ranked and recognized, does not fund its full-time students well. One young woman, so excited about the brand image of one graduate program she was accepted to, turned down a fully funded offer at another (higher ranked) institution before even seeing the financial aid package from the school she accepted.

I’ve read as various applicants expressed dismay at their alarmingly disappointing financial aid packages (with many people only receiving unsubsidized loans and no grant money at all), and then convinced themselves that the school’s name brand will make taking on around $40,000-60,000 in debt worthwhile.

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This field, while rewarding, does not pay on par with fields like law and business, so to see some students discussing how it’s much less debt than a business school student would take on and is therefore completely fine makes me cringe.

Another student (who has never worked full-time and is still an undergraduate) has been repeatedly mentioning Income-Based Repayment, and how that will make everyone’s life easier. The catch, of course, is that while IBR is a good program that can enable people to go into fields that desperately need the talent, it doesn’t lessen your loan burden; it just spreads it out over more time, and often costs more in interest than your debt was originally worth.

I understand the inclination to see the bright side in these kinds of situations. If you’re accepted into a great program that you’re very excited about, it’s tempting to convince yourself that all that debt will be worth it and that you’re guaranteed to get a dream job (and repay your loans easily) at the end. But I can’t help but wish that some members of my generation would be a little more pessimistic, even if only to be pleasantly surprised when things turned out better than you’d expected.

 

Abby Dalton graduated with a BA in English and history in 2008. She’s worked in publishing and the non-profit sector, first in New York and now in the Boston area. She currently works on program coordination at a major university in the northeast, where her husband is a graduate student. They live with their cat, Norman. Abby is a member of the  Dimespring 30, a community of bloggers sharing their thoughts, experiences and perspectives on personal finance.