COURTNEY McNAIR has been out of college for three years. She has a degree in political science and Spanish. She also has the same address she had in high school and the same bedroom in her parents’ Los Angeles home. Not to mention $40,000 in student loan debt, $2,000 in credit card bills and $10,000 left to pay on her red 2008 Chrysler PT Cruiser.
And this is what she worries about: winning the lottery.
“I’ll just spend it all and have no idea where it went,” said the 25-year-old graduate of Wellesley College.
That would be a luxurious problem. At the moment, she’s taking out more loans for graduate school in an effort to pursue a career as a special education teacher.
So someday she’ll have a steady income. Her biggest problem, however, is getting a better grip on where her money goes. She doesn’t know how to budget and hasn’t put much thought into her financial future. “I’ve always hated money; I’m scared of it,” said Ms. McNair.
After she graduated in 2008, Ms. McNair took the first job she was offered, as a match coordinator at the Los Angeles Boys and Girls Club. It paid $25 an hour, but she didn’t like working in an office. She switched to tutoring high school students, for $13 an hour, three hours a day. “That was enough to, I guess, swing it for a while. Make my car payments, pay my phone bill and all that other stuff.”
Now she’s tutoring and working part time for a foundation started by her parents, who are both lawyers. The foundation provides low-cost legal services for students with special needs and eventually hopes to open a charter school. Her father, Greg, pays her $13 an hour. Her parents don’t charge her rent, but she has to do the grocery shopping and make dinner for her family four nights a week. She’s also responsible for all expenses related to her terrier, Queen Anne.
The McNairs have three other daughters, including a 22-year-old who lives at home. But she didn’t want to end up like her sister, so she didn’t take out student loans.
Margaret McNair, Courtney’s mother, said her children had expectations different from hers when she finished school. “When I was in my 20s, I couldn’t wait to get out there,” she said. “Nobody could hold me back.”
A 2009 survey by CollegeGrad.com found that 80 percent of college graduates moved back in with their parents. And Courtney said that many of her friends were back in their old bedrooms, too. “So it doesn’t feel like, oh my gosh, I’m the only one still here. I figure if I’m 30 and living at home, there’s something wrong.”
Without better budgeting skills, however, she could easily end up having to stay in her childhood bedroom. Ms. McNair decided about a year ago that she wanted to teach special education students. For that, she needed to return to school. So she’s taking classes at California State University, Los Angeles.
According to PayScale.com, the starting salary for a special-education teacher is $29,000 to $40,000. After graduate school, Ms. McNair will owe roughly $50,000 in student loans, with payments of over $500 a month.
Lauren Lyons Cole, 29, is a certified financial planner in New York City. Her concern about Ms. McNair’s situation is the risk of taking on more loan debt than she will earn when she graduates. “I see that so many young people don’t understand that $40,000 a year, $50,000, even $60,000, it just really doesn’t go far,” she said.
But to Ms. McNair, that kind of salary seems comparable to winning the lottery. Asked about her dream financial situation, she replied, “I’d find a job that paid me goo-gobs of money to do what I love.” Her definition of “goo-gobs”?
Something around $25 an hour. Or $52,000 a year.
Ms. Cole said Ms. McNair was wise to pursue a graduate degree in a field where there were jobs. But she was underestimating the salary she should ultimately shoot for, given her education and skills. “Nobody’s telling her that she has to work on Wall Street or sell her soul,” Ms. Cole said. “But the reality is life is expensive.”
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There are a lot of ways to save for college, and some can be better than others. In this blog I’ll describe some of the best college savings options and what the advantages and disadvantages are.
