Golden-Crowned Flying Fox

Recently while doing some research, I read a parent’s statement about teens and student loans, “Very few if any teens have any conception of what it means to have a loan or repay one. It’s just magic right now, you sign your name and money appears.”

I totally agree but I think we can amend the statement to read “Very few if any teens people have any conception of what it means to have a loan or repay one. It’s just magic right now, you sign your name and money appears.”

Teens are not the only ones that make life-altering decisions armed with almost no knowledge of the subject. Adults do it all the time.

How do you know what you know?

If I asked a group of my friends what they know of the Giant Golden-Crowned Flying Fox, most would reply nothing but let me google that.

Ask that same group what they know of student loans or home mortgages or car leases and they would admit to some knowledge on the subject. After all, these are things they’ve done, their parents did, their friends and neighbors do.

When I amended the statement to read, “Very few if any teens people have any conception of what it means to have a loan or repay one.” I didn’t mean most people have never had loans. Most people have taken out loans and most people have paid off some debt. However, most people, maybe even you, have never sat down and studied what that debt costs them.

Being familiar with a subject is not the same as being knowledgeable.

If you’re thinking of leasing a car, have you actually done a cost comparison? Put real numbers on a spreadsheet – including risk.

If you think keeping your mortgage is smart because of the tax break, have you computed those savings?

Let’s assume you have a $200,000 balance on your mortgage at an interest rate of 5%, that’s $10,000 a year that you pay to the bank. If your income puts you into a 25% tax bracket, then not having a mortgage (or interest to go with it) means you pay $2,500 to the government on that extra $10,000 in the form of taxes. Do you really think it’s smart to pay the bank $10,000 so you don’t have to pay the government $2,500?

When it comes to your future security and freedom, you need to treat every decision like the subject of the Giant Golden-Crowned Flying Fox.  You don’t know enough. Get online, get out the calculator or the spreadsheet and prove to yourself what you think you know. Read differing opinions and make your decision based on real information.