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You need 3 things in life to be successful and happy.

money

Money

fitness

Fitness

relationships

Relationships

Without money, fitness (health) and relationships, it’ll be difficult to lead a fulfilled life. Why, you ask? Well, think of it this way. Everyone is always looking to find a way to be happy. But the problem is, no one really has a clue as to what that really means. When we are kids, they, the parents and teachers, always asked us, “What do you want to be when you grow up?”. I responded with POWER RANGERS!!!! Our elders scolded us for such a “silly” answer. We’re raised by our parents to go to school, get good grades and go to college. Be a doctor. Be a lawyer. Be an engineer. Specialize, specialize, specialize! But what ends up happening is that we pursue and plan to get a good job and be secure, but end up sacrificing many aspects of our lives. More and more people are confused and lack direction due to this false reality that we live in. Think of the following…

What is the point of being the wealthiest person in the world, when you are sick or have no one to share the wealth with?

Or, you can be really healthy, but without money; if you are homeless (extreme)/worried about your financial situation, god forbid if you don’t have a roof over your head or food on the table, you wouldn’t be too happy about your situation.

You can have all the relationships in the world, but without money, how can you spend time nurturing those relationships? Or if you’re sick, it’ll be hard to keep up with your friends.

I am in the Gen Y, or Millennial Generation.  I was one of these people, lost in the sea of false hope and promises. I’ve worked in corporate America. I’ve worked in non-profits. I’ve worked in construction. I’ve worked in graphic design firms. I’ve worked in sales. I’ve worked in nightlife. I’ve worked in restaurants and bars. They were all the same to me. They were all part of this insane rat race, where you have to always have to have someone else dictate to you what you can and cannot do, what your limitations are and why you cannot step out of bounds. All for what? Money. The majority of us are trading our time for money, and sacrificing our own personal lives, health and relationships in the process. See Divorce Rates.

I started to pay attention to LIFE.
I started to pay attention to the people around me.
I started to pay attention to the results of the people who gave me “advice”.
I started to pay attention to the facts. (Google search results and wikipedia results are not facts)
I finally started to take action.

See, I watched my older brother go through college, and watched as he spent a pretty penny on NYU and Katherine Gibbs, only to end up working at a dead end job (supervisor at a real estate appraisal firm) making roughly $13 a hour, $27,000 a year. He didn’t even work in his field of study (computer science and accounting)! He also recently told me that his boss might shut down the business, because business is slow. So he’s 29 years old now, and still living at home because he doesn’t have a choice. Now, you can call me crazy, but there was an article that showed how majority of college grads today CANNOT afford to move out on their own or be financially independent. Why? Because student loans are ludicrous!

Think about the numbers:
Private school tuition is rising at a rate of 3% to 10% a year! When was the last time you saw your job increase your pay annually at that rate? The information that is being taught to you is the SAME, so why is it costing you more money at an exponential rate every single year?

Let’s take NYU, an average of $63,000 a year over the course of 5 years (for argument’s sake, we know not everyone completes college in 4 years). That means you’ve accrued over $315,000 in debt. Let’s hypothetically say you got half of it paid by financial aid, grants and scholarships. You still owe $157,500, either from borrowing it from the bank or depleting your parent’s savings. Let’s take the route of student loans, since we know that most people do not have savings in America. Currently student loan interest rates are “Undergraduates this fall will borrow at a 3.9 percent interest rate for subsidized and unsubsidized loans. Graduate students would have access to loans at 5.4 percent, and parents would borrow at 6.4 percent. The rates would be locked in for that year’s loan, but each year’s loan could be more expensive than the last.” and they are on the rise!

They actually state on http://www.finaid.org/calculators/loanpayments.phtml, that STAFFORD loans are at 6.8% and federal loans are at 7.9%! I don’t know the validity of those percentages, but let’s just utilize their calculator at the bottom of the page, to work out the numbers at 3.4% interest and see how long it’ll take to pay off:

Loan Balance: $157,500.00
Adjusted Loan Balance: $157,500.00
Loan Interest Rate: 3.40%
Loan Fees: 0.00%
Loan Term: 30 years
Minimum Payment: $50.00
Enrollment Status: In Repayment
Degree Program: Bachelor’s Degree
Total Years in College: 4 years
Average Debt per Year: $39,375.00
 
Monthly Loan Payment: $698.48
Number of Payments: 361
 
Cumulative Payments: $251,454.64
Total Interest Paid: $93,954.64

Note: The monthly loan payment was calculated at 360 payments of $698.48 plus a final payment of $1.84.

It is estimated that you will need an annual salary of at least $83,817.60 to be able to afford to repay this loan. This estimate assumes that 10% of your gross monthly income will be devoted to repaying your student loans. This corresponds to a debt-to-income ratio of 1.9. If you use 15% of your gross monthly income to repay the loan, you will need an annual salary of only $55,878.40, but you may experience some financial difficulty.This corresponds to a debt-to-income ratio of 2.8.

The following table lists the minimum income necessary to repay the debt without encountering a partial economic hardship. Partial economic hardship is defined as having annual education loan payments in excess of 15 percent of discretionary income, where discretionary income is the amount by which Adjusted Gross Income (AGI) exceeds 150 percent of the poverty line. This figure is shown in the Minimum AGI (IBR) column. The Minimum AGI (ICR) column uses an alternate definition of economic hardship, based on 20 percent of discretionary income which is defined as the excess of AGI over 100 percent of the poverty line.

Using a loan term of 30 years instead of standard 10-year repayment reduces the monthly loan payment by $851.61 (54.9%), but increases the total interest paid by $65,444.42 (229.5%).

With a loan term of 30 years, you will still be repaying your debt when your children enroll in college.

You’re probably saying to yourself, Richard, what does this have to do with anything? Here’s the truth of the matter. College and education are amazing things to have under your belt. You will for sure, without a doubt, make more money than the average person who is a laborer. However, this is when you have to pay attention to the numbers. Remember, based on that calculator, its assuming you get a great job where you make over $80,000 a year, stay in stability for 30 years. Here’s the jarring truth; most people do not make $80,000 a year (avg income $26k)(household income chart (2+workers per household)); most people go through 10+ career changes in their life (WSJ). Here’s the thing… if you want to be happy, do you really want to pay off your student loans at 54 years old? If yes, then that is when you start to live life. I don’t know if I can wait that long before I can begin to live my life. Isn’t it any wonder why people today are unhappy, confused and searching for an answer?

In my next segment to The Trifecta to Success and Happiness, I’ll be covering the lack of health and relationships. Leave me a comment or shoot me a message on facebook! I’d love to discuss this with you! See you next time!

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