Good debt vs. bad debt: part 1

Both my husband and I were raised to abhor credit card debt. We both got credit cards rather young (17-year-olds generally should NOT have credit, in my opinion) but we always paid off the balances at the end of the month. I can count on one hand the number of times (twice) that I wasn’t able to pay off the card, and the pain and agony it caused me taught me that I don’t do well with debt.

However, I decided to take on some supposedly ‘good debt’ in order to further my education. My parents were generous enough to pay for my undergraduate studies at our local state university, but graduate school was up to me. Since I was already working a job in the field I wanted to further study, it seemed silly to give up the work experience to do school full time. Luckily, there was a part-time program within driving distance that would allow me to keep my job and get my degree.

This didn’t come without some of its own stress, of course. Aside from coursework, I felt fairly bad about borrowing for school. Even Stafford subsidized (where the govt. pays the interest while you’re in school) and unsubsidized (where they don’t) loans at 6.7% were painful to borrow. I knew, though, that if I stuck with it, my future job would allow me to pay off my loans and still be able to eat something a little better than ramen noodles for 10 years while my debts got paid off. The thing that comforted me was my cost-benefit analysis of education vs. no education.

Now, cost-benefit analysis is probably part of life in ways we don’t even think about, from the decision to get two Netflix discs at a time or three, or to buy organic vegetables or regular, or even whether or not to spruce up your home with some new paint and appliances. All of those decisions will be made based on the weighing of facts. Do I want the inconvenience of only one movie home at a time to save a few bucks? Do I think organics taste better so I’m willing to shell out for them? Do I know that investing in my home will cause its value to go up, along with my enjoyment of the space?

So, my cost-benefit analysis of school went something like this:
1) What kind of jobs can I get with this degree?
2) Can I possibly get a job like that without the degree?
3) What kind of salary can I make with and without the degree?
4) Would the average salary I could get with the degree be enough to pay off my debt? I used a calculator like this one to decide.

After I weighed those questions, I knew–based on looking at job descriptions and salaries for a few months–I could get a more lucrative (and satisfying) job with the degree than without. I also knew that, while I could ‘make it’ on a job without the degree, I would be much more comfortable in a slightly higher paying position, even paying some money toward my debt.

However, this didn’t go exactly to plan… (part 2 tomorrow!).

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