Debt-free or bust: maybe I wanna bust

January 23, 2013 4:22 PM

I currently have a high paying desk job, but want to live free and make art. Should I save my money or aggressively pay down my student loans?

At the end of graduate school, my art career finally started to take off. But after finishing my M.F.A., I came out penniless, and with moderate student debt from my undergrad years. This debt is both Canadian and American and amounts to less than $20k. However, I come from a family that is very debt-conscious, and any debt hanging over my head feels weighty. So my good-souled parents basically insisted that I stay with them to save money, maybe find a job in the meantime and pay off my loans.

I now have a contract position. It is a desk job. It pays incredibly well for entry level. I hate it. It's incredibly depressing, and hindering the very artmaking I wanted it to subsidize.

My parents, however, think it is a God-given opportunity to pay off my student loans. I want to live free and make art; they want this for me too. But they think I should use this opportunity -- maybe the only time I'll make this much money in a good while -- to get my loans completely paid off so I can live without debt. For what it's worth, I also don't have any retirement savings.

However, because of the length of my contract and the fact that I've applied for art residencies, PhD programs and such for later this year, I won't have paid off all my debt by the end of this. I will have made a sizable dent, but won't have knocked it out entirely. And, when I leave this position, I will have a small amount of savings -- but not much.

It struck me this morning, as I flung another fistful of money into the abyss that is my federal student loan, that it might be a better idea to pay one of the two loans off entirely, or almost entirely, and bank what extra I would have put into the other loan so that next year I can travel and research the project I'm working on, or have enough money to live on should I be awarded an arts residency or be admitted into one of the postgrad programs I've applied for, or realize my dream: move to a mid-size town, live in a Tumbleweed House, and make art on the cheap. I'd still have a monthly loan payment of ~$100, and my total debt would be around $6000.

However, I know my parents would discourage me from doing this. Also, I worry that not paying off this debt would lead me into further debt, or just force me to take another shitty job, much shittier than the one I have now, to pay this off down the line -- or worse: I'd mismanage it, and spend it all. But $6000 would go a long way for me, day-to-day living-wise.

What's the better plan of action here? Paying off the loan, or saving the money? And how can I guarantee I'll save that money instead of frittering it away? I've got a TFSA, which is good for locking money into, but could do with some other strategies.

One other thing to note: I've started to make money -- a meager amount -- from my art. Should I be admitted into any of the things I've applied for, I'll make more money from teaching art and possibly selling it. So I'm not intending to go jobless forever.

Also, I realize that I'm very lucky to have this job right now and don't want to sound ungrateful for it. I want to make sure I do the best thing -- the right thing -- with what I've been given.

posted by Miss T.Horn to work & money (14 answers total)

Speaking as someone who had around 30K of student loan debt at 25, which is now significantly more student loan debt than that - your parents are right. Pay it off. If you get along with your parents, finish the contract position, continue to live with them, get another job and keep it until the loan is paid off. It will help build your credit, which will help you in whatever else you do throughout your life, and it will free you from indentured servitude to the Department of Education.

Plus - making art on the cheap is great as long as you're healthy. You won't always be healthy. I'm all about the artistry, but I'd also advise that you do something that will make you real retirement-savings, health-care-savings cash until you hit it big.
posted by kythuen at 4:35 PM on January 23 [2 favorites]

Personally, I'd pay off the debt. It sounds boring and it sucks, but not having debt will open way more doors for you as an artist than will a tiny house or spending that money on travel.
posted by zug at 4:42 PM on January 23 [1 favorite]

Pay it off. Swallow your pride and/or boredom, bear down and do it. The (relatively) short-term misery involved with dealing with it now is going to pay off tenfold in the future.
posted by BlahLaLa at 4:44 PM on January 23 [1 favorite]

It's not like your artistic ability will vanish. I think you should pay down the loan as fast as possible (two jobs, three jobs!) and then set sail with no extra baggage.
posted by Ideefixe at 4:47 PM on January 23 [2 favorites]

It's pretty much six and one half dozen the other, but there are two good reasons to pay down the debt instead of saving the money. The first is just math--I don't know the interest rate on your loans, but I am presuming that it is higher than the less than 1% or whatever it is that you would get by putting money in the bank. So from strictly a net worth perspective, it is more advantageous to pay off the debt (assuming there is such a disparity in the interest rates). The second is that as long as your parents are subsidizing you by allowing you to save money and live with them, they are going to believe that their opinion on this matters, and since it's a close call either way, you should consider appeasing them. They are making it possible for you to even be in this position where you can choose between these two desirable alternatives, after all, and they may feel unappreciated if you spurn their reasonable advice, even if it is for another reasonable alternative.
posted by MoonOrb at 4:59 PM on January 23 [1 favorite]

Pay it off. Once it's done, it's done, and you *never have to think about it again*. You say you want to be "free" being beholden to crappy jobs for old student loans is not freedom. Pay off the debt, have no obligations, and then you'll really be free. Freedom is the absence of obligations to others.

Also, don't buy a tumbleweed house, they're ridiculously expensive for what they are. You can buy a fifth-wheel travel trailer, which is basically the same idea, with the same amenities, for probably less than half as much. No seriously, compare: tumbleweed house and trailer. You could save enough to pay off the whole debt by buying cheaper housing.
posted by tylerkaraszewski at 5:00 PM on January 23 [1 favorite]

I'm a bit confused here - let me see if I have all the pieces right; because I'm not entirely sure what is prompting this question in the first place.

* You have a contract position now. Does this position have a finite end date and you're trying to figure out what to do when that position ends?

* You talk about paying something down right now. Have you gotten a windfall that you didn't mention in here?

All that said - your parents and you are BOTH right. I'm well past student loan payments, but I've had other debt; and my own writing is indeed suffering as a result of the time I've been putting in trying to get the debt paid down. However, that work (only 2 years to wipe out a debt I've had since 2002) is going to leave me totally debt-free by summer, and I will be able to take a pay CUT if I have to in order to get a lower-key job. Getting the debt paid off really fast will be a good thing. After all, you don't know how long it may take one of the fellowships to pay off.

But you also don't want to lose your art. That was one dissent that a co-worker gave me when I was preparing to take this corporate job - "you don't want anything to get in the way of your writing," he warned. I agreed - but took this job anyway, and yep, it's gotten in the way of my writing. If I had the past two years to do over, I'd still take a day job, but I'd be more aggressive about hanging on to my free time because I'm too exhausted to write much these days and have had to do a little bit of clawing-my-way-back to carving out writing time.

So yes, keep the desk job and get rid of the debt - but make sure there is still a way to carve out time for your art while you're doing it. And the debt going away will make so much of a difference.
posted by EmpressCallipygos at 5:03 PM on January 23 [1 favorite]

I was in a similar situation - high paying job, high debt load, wanted to quit and chase my dream. I started paying down my loans aggressively. After paying them down substantially, but not completely off, I found a job in the field I wanted to pursue, and my lower loan payment meant that I could take it. I have not regretted it for one day.

So I would say this: IF your loans are a burden on you and will prevent you from making art, pay them down aggressively. But if you feel you can manage the payment on an artist's income, then saving the money instead may not be a bad idea. Just be aware that the tradeoff is that the loans will nag at you for years and years and years -- this is really your one chance to pay them down like mad.

Another idea - think about this a while longer. It sounds like you have a contract for the depressing desk job for a while yet. Stash the money in a separate, online, hard-to-reach account that you try not to think about. Live on as little as you can. Your parents don't have to know what you're doing with the money, right? Keep it safe and warm while you give yourself more time to decide what to do. You keep all your options open this way.
posted by payoto at 5:08 PM on January 23

If you feel that you have momentum in your career, capitalize on it. It sounds like you have a manageable amount of debt, and while I'm honestly confused by a lot of the specifics in your question, I don't think you should cast aside your MFA to pay off the debt acquired to get said MFA.

But if this is a situation in which you pay down your loans aggressively for a defined, relatively short period of time, then you should do that.

And also: Why are you giving your parents' opinion so much weight? Are you financially dependent on them? If not, none of this is any of their damn business. It's your life.
posted by ablazingsaddle at 5:20 PM on January 23 [1 favorite]

Hmm, monthly loan payment of ~$100 on a $6000 debt that's probably at at least 4 or 5% interest - at that rate it's going to take you over 5 YEARS to pay the debt off! (I used a simple mortgage amortization calculator to figure that out)

do you really wanna be beholden to that federal loan abyss for over 5 MORE YEARS!? I can tell you right now that I wouldn't! There's absolutely no way. But then again I'm not an artist. Anyway, I can see what you're saying and how tempting it is to save $6000 to spend on yourself and your future arty lifestyle, but good lord, take this opportunity to become debt free.

I mean, there's no reason you have to go all or nothing here either. You could save yourself $2000 and put $4000 into the debt, and then you'd be able to pay off the remainder in less than 2 years of $100/month payments, by my calculation. That sounds far more palatable to me. (Also, do you have an emergency fund aside from your 'small savings'? You need an emergency fund and then you can think about retirement savings)
posted by treehorn+bunny at 5:24 PM on January 23

I'm an artist and as soon as I finished my MFA, I did everything I could to pay off my student loans. It made a huge difference by giving me a lot more financial freedom, while some of my classmates are still suffering through paying their debts, which are ballooning. Once you get rid of that debt, the sucky day job goes away and you can make art-full time, and all the art residencies and stuff will still be there.
posted by geryon at 6:20 PM on January 23 [1 favorite]

Thank you, everyone, for the advice. It's refreshing to hear from people who've been through the debt repayment tunnel and come out the other side. Sometimes it's hard to see long term when you're young and squirming in the present, I guess. I'll take your advice and keep chucking my cash into the student loan chasm. One day, it will fill.
posted by Miss T.Horn at 7:27 PM on January 23

Following on to the advice about the Tumbleweed house - it seems like the biggest draw for that house is that it's cute. But you are an artist!!! You can buy the cheaper ugly house and make it cute in your own special way for a lot less money.
posted by CathyG at 9:34 AM on January 24

I didn't mention this in my post but I graduated with $185,000 in loans. When I graduated, my highest interest federal loans were racking up $13 in interest PER DAY. Talk about feeling like you are throwing money into a chasm. I tried to make this as meaningful to myself as I could - instead of looking at the total amount (which barely decreased at all in my first 2 years of repayment because interest was building almost as quickly as I could pay), I tracked how much interest was accruing per day and watched that number decrease. It felt great when I made it down to $10 and realized that I had saved myself $3 every single day from that point on.

I suggest to hold yourself to debt repayment that you try strategies like this to make it seem more meaningful to you. If you really feel like your money's going into a black hole, it's easy to see how you can get disillusioned and feel like it's not making a difference, want to spend the money on something that feels more real. Are you tracking how long you will have until you pay it off? Have you tried making projections showing when you would pay it off using different monthly payment amounts? Made a chart that you can cross off when you make a payment? Have some way of reminding yourself of the reward/payoff you will have when you achieve the freedom of zero debt? (like a photo in your wallet?) Just a few ideas to help keep you on track. You can do it!
posted by treehorn+bunny at 6:58 PM on January 26