nearly $20,000 upon graduation. But those are just averages. For many of us, the picture is considerably bleaker. And there’s a certain stigma attached to having personal debt, which can make it uncomfortable to talk—or even think—about. But even if you’re in deep—however you got there—you can still get out, as some Mount Holyoke alums are proving. In the Red—From Debt and Embarrassment Mary Smith ’04 (not her real name) is $55,000 in debt, with $12,000 on credit cards, $18,000 on a car loan, and $25,000 still to pay on student loans. “I definitely feel in over my head,” she says. After graduation, Smith went to England, where she earned a master’s degree— funded mainly through student loans and credit cards. Now back in the United States, she admits she sprung for a new vehicle rather than buying a cheaper used one and is “addicted to traveling,” which ratchets up her credit-card balances. Karen T. Lee ’85 panicked two years ago when she realized she owed $80,000— including a $40,000 mortgage and $5,000 in student loans she deferred while finishing her PhD. The rest she attributes to living off credit cards when she was between jobs, a general “lack of restraint with money, and a couple of bad decisions”—like renting a costly apartment. “Credit cards,” she adds, “are evil.” Kate M. Axt ’01 left MHC owing $15,000 in student loans. She has paid that down to $10,000, but in the meantime accumulated another $25,000 in credit-card debt. Moving to New York City and furnishing her living space accounts for about $10,000 of that, she says; “I tried to do it economically, but it added up.” Still, she admits making “some purchases that didn’t need to be made, including clothes, eating out, and an iPod.” Her parents covered her student loans while she was at MHC, but once she graduated Clare M. Robbins ’04 took over the $65,000 balance. She says she
didn’t have a “practical understanding of what it would be like to manage my money, to manage debt”—which in her case now includes credit-card balances. If she’d had better “financial literacy skills,” Robbins says, her situation might not have felt so overwhelming.
“A house, a car, and school are all worth going into debt for. But you have to be able to pay them off. That’s the key.”
How to Be a Cheapskate and Still Keep Smiling If you’re cash-poor and tempted to use your credit card, consider these tips from Lori Macellaro Kelman ’82, who considers herself something of a cheapskate who still knows how to have fun: • Cook at home, eat at home. Make your own coffee, bring your own lunch. This can save you hundreds, even thousands, of dollars a year.
Susan Bushey ’96 That’s not an uncommon sentiment. As Consumer Credit Counseling Services points out, “Generally speaking, we are not taught in school how to handle budgeting and credit issues. For the most part, we have had to learn about [these] on our own. Unfortunately, many of us have learned the hard way.” What’s Worth Going Into the Red? Robbins has given herself a reprieve by putting some student loans in forbearance and arranging for graduated payments on others. In retrospect, she and other alumnae have asked themselves: If I had it to do over again, would I make the same financial choices? What’s worth being in the red for, and what isn’t? “Graduate school was worth every penny,” Smith says. “Even some of the debt from my travels I would not trade for the world; the memories are too precious. But do I wish I had not gone on shopping sprees in Europe and put everything on credit cards? Definitely.” Nowadays Lee could justify getting loans for a car, an education, and a home—but that’s it. Even that mindset is “incredibly different from two years ago, when I would have gone into debt for just about anything,” she says. “A house, a car—if you need one where
• Find cheap ways to keep culture in your life. Go to museums on “free” nights, and visit local art galleries. Seek cheap tickets to plays (go to previews, volunteer to serve as an usher). And if you must see first-run movies (you can save a lot renting them later), go to the cheaper first showing.
• Cancel cable TV and watch shows at a friend’s or on DVDs from your local library. “Bottom line,” says Kelman: “Decide which things that cost money really matter to you and which ones you can do without or skimp on. There are plenty of choices (clothes, makeup, transportation) where you can spend more or less money.”
Mou n t Ho lyo k e Al u m na e Qua r t e r ly
Summer 2007
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