<p>I’m been reading this board for a few hours now, and it is truely a treasure trove of information. That said I have some questions about the disdain for loans some seem to have. </p>
<p>Personally I do not like debt or credit at all. I have no credit score because I don’t buy anything I don’t have the cash for. However I am 25 years old and I’m going to spend the next few years attending my state’s university and getting my batchelor’s degree. I also am planning to attend the 1 year master of accountancy program and then take the CPA exam. My expectation is that I will incur approximately 7k in loans per year. A 4 year degree and a 1 year masters program, minus my associate’s degree courses than transfer(a pitiful few) and I think I can finish in three or four years. So lets go high and say it ends up as 40k in loans. Assuming I keep my nose to the grindstone and get my CPA, won’t my increased earning potential(almost 100% placement in good private firms upon completion of the MoAcc program) make the decision to go in hock worthwhile? After talking to a couple of CPAs who have graduated from my university of choice they say it is worth it for the networking and internship program alone. I don’t know. I was really very confident about my course of action but after reading some of the folks on here who do this aid stuff for a living I am decidedly less enthusiastic about it. I just kind of assumed the investment in a better education would reap a higher level of earnings over the course of your life and more than make up for it, but maybe I was way off base. Thoughts?</p>
<p>As you may have read, some folks are proponants of the rule of thumb of “dont exceed one years base salary for college debt”. I usually LOVE Rules of Thumb(s). This one seems suitable to me.</p>
<p>Problems arise with extreme cases where young people rack up $80 k in debt including some cc or revolving credit (read HIGH int rates), and come out of school into a career that nets them an annual salary of of $35 k.</p>
<p>You are debt free now, have reportedly never used a credit card or used any credit whatsoever, and are going to study to be a CPA. You ought to be able to run the numbers seven ways from Sunday and figure out for yourself whether you feel comfortable with any amount of debt you might have.</p>
<p>Probably not many people on here are going to be tell you what you don’t already know, or have the ability to calculate readily with your whizbang financial calculator.</p>
<p>As far as your lifetime higher levels of earning…well …to make estmates such as this, you need to make assumptions about a lot of things.</p>
<p>But do I think that in the long run you will more than make a marginally better life for yourself and your family with a college education (including some initial debt), than without one? Yes I do. But you know about the long run right?</p>
<p>In the long run everyone is dead. (my little silver lined message for the day)</p>
<p>Even if you hate credit/debt, you should get a credit card and build credit history. Treat the credit card just as cash - NEVER buy anything that you can not pay for in cash and ALWAYS pay in full and in time.</p>
<p>My son started with a credit limit of $250 when he was 18. Now he is 20 and his credit line is $10,000.</p>
<p>How much debt is OK? It varies with people. One year’s base salary in mind is too high (assuming you would make about $50 K). In my opinion, it should not be more than the cost of a decent brand new car (we are not talking about Lexuses or Infinities). Just noticed that you also want to get a CPA. In that case about 30 K should be OK.</p>