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Letters 08-25-14

Save America

I read your paper because it’s free and I enjoy the ads. But I struggle through the left wing tripe that fills every page, from political cartoons to the vitriolic pen of Mr. Tuttle. What a shame this beautiful area of the state has such an abundance of Socialist/democrats. Or perhaps the silent majority chooses to stay silent...

Doom, Yet a Cup Half Full

In the news we are told of the civil unrest at Ferguson, Mo; ISIS war radicals in Iraq and Syria; the great corporate tax heist at home. You name it. Trouble, trouble, everywhere. It seems to me the U.S. Congress is partially to blame...

Uncomfortable Questions

defending the positions of the Israelis vs Hamas are far too narrow. Even Mr. Tuttle seems to have failed in looking deeply into the divide. American media is not biased against Israel, nor or are they pro Palestine or Hamas...

The Evolution of Man Revisited

As the expectations of manhood evolve, so too do the rules of love. In Mr. Holmes’s statement [from “Our Therapist Will See Us Now” in last week’s issue] he narrows the key to a successful relationship to the basic need to have your wants and needs understood, and it is on this point I expand...

Home · Articles · News · Features · Economics 101
. . . .

Economics 101

Anne Stanton - April 13th, 2009
Economics 101
Anne Stanton 4/13/09


To be honest, Joe Schoonover would prefer not to live frugally, but he has a vision.
It’s called paying off his student loan that he’s now pared down to $65,000. The school loan payment eats up about 60 percent of his monthly take-home pay, which doesn’t leave a whole lot for much else.
That’s why Schoonover, like a lot of college grads, had to ask his grandma for help after graduating a year ago. His grandma lives on Spider Lake and owns one cabin, which she rents out, and another that doesn’t meet rental standards since it lacks a shower. She told Schoonover that he could live in the un-rentable cabin for free in return for doing maintenance and odd jobs on the property.
Schoonover, now 24, gratefully accepted the deal. Unlike many of his friends who had to move in with their parents, he can live alone and independently. “I’m getting the best of both worlds. I get my own place, and I don’t have to pay rent, so I’m really happy right now.”
Even before the recession hit, college graduates were returning home in droves. Nearly 60 percent of college graduates moved back home after graduating, according to a 2006 survey conducted by Experience, Inc., a provider of career services to students and alumni.
Another poll, showed that 77 percent of college graduate job seekers moved home in 2008, up from 73 percent in 2007 and 67 percent in 2006. That poll was conducted by collegegrad.com, an entry level job website.

NO LONGER A STIGMA
An article on the website reported that there were many reasons for the trend. For one, college grads don’t have to suffer the stigma of living at home because so many of their friends are doing the same thing. Jobs have also been tough to get, and college graduates think they’re going to get better jobs or higher salaries than are actually out there. Lastly, college is really expensive.
That was the case with Schoonover. He earned a dual major in economics and Spanish from Hillsdale College, a private school with a rigorous curriculum. Because the reputation of the school is excellent, he had anticipated getting a job with a policy think tank or as a political staffer.
“I thought Merrill Lynch would be a really great place to work,” he said, laughing about his prospects with the venerable financial institution, which was one of the first to go belly up last fall.
When Schoonover graduated a year ago, his job prospects were limited. The financial industry had already begun its descent into a collapse, and firms had slowed down their hiring. He also took a test with Homeland Security for a U.S. border patrol job, which he passed easily. “That was a very viable option for me, with a much larger salary and job security. However, it would have meant moving across the country, a huge life change, and I wasn’t prepared for that.”
He ultimately accepted a job offer to work as a teller for Northwestern Bank, and was grateful to get a job in Michigan. Although the salary offer was relatively low, he felt his long-term prospects were good because Northwestern Bank hasn’t suffered the economic ravages of the mortgage crisis. That’s because the bank’s loan policy has remained conservative over the last several years while other banks were giving out questionable and risky loans, Schoonover said.
FREEZING INSIDE
But Schoonover admits his salary doesn’t go far, which his why he lives in his grandma’s 300-square-foot cabin.
When I visited Schoonover, he greeted me out in his driveway wearing a long blue robe. He always wears a robe, he said, because his cabin is freezing inside. He keeps the temperature to about 50 degrees because the cabin is only partially insulated; if he turned the thermostat any higher, it would send his fuel bill skyrocketing.
“I can’t get it too cold, or my goldfish will die,” he said, laughing.
Schoonover provided a good-natured tour of his cabin, which didn’t take long. His kitchen is a narrow hallway with worn counters and tired appliances. The bathroom consists of a toilet, sink, and no shower. He has one room where he keeps his computer, and a living room where he watches TV. There’s not an item in the cabin that wasn’t free or that cost more than $10, including his aquarium. The cabin was mostly furnished when he moved in. Generous friends and relatives donated their old televisions.
In the morning, he puts on his robe and walks 10 feet next door to his grandma’s cabin for his shower. “It can be a cold walk in the morning. Coming back is even colder.” Twice, when temperatures dropped well below zero, his pipes froze. He fixed the problem by pouring salt down the drain. He doesn’t subscribe to a newspaper. “Why pay for a newspaper when everything is online or you can listen to WTCM or NPR? Our generation is growing up and we don’t need newspapers. I think that’s the reason all the newspapers are dying.”
He drives a 1993 Buick with a dent in the door -- “Not a babe magnet, but it’s paid for.”
Yes, life feels a bit on the camping side, but there are lots of amenities. Cable television and a view each morning of the lake. Three televisions on top of each other so Schoonover can watch three games at the same time. He also takes a Latin dance class and works out at a gym, his membership paid through work. He goes out to eat fairly frequently—“Here’s a tip: you can eat out at lunch for half the price of dinner.”
Frugality only goes so far.
“I can pay for the essentials of my life. I’m not in grinding poverty by any means.”

PAY-OFF?
Most kids hear, at some point in their lives, that a college degree will mean an additional $1 million in earnings over their lifetime.
Schoonover is confident that’s true, and acknowledges that earnings are lowest right out of college. By the time he graduated, his school loan had climbed to $68,000 despite working his way through college. His yearly tuition bill averaged around $18,000, plus he paid his room and board. He shared a house with four other guys, but the costs still added up. His dad, a special education teacher, required that Schoonover pick up the entire cost of his education. “He’s a big believer in you value what you work far.” His sister also has to pay for her education at a Bible college.
Schoonover believes that his father was right; he worked much harder than other students, who received a free ride from their parents. The pay-off period for his school loan is 15 years, but he’d like to pay it off in 10 years by continuing to live at this bare-bones existence. He’s got the loan down to $65,000, and wants to refinance it at a lower interest rate and a fixed rate. “No one will even consider that right now”
Schoonover is a half-full kind of guy. Because he didn’t have any investments, he feels lucky that he didn’t see them “shrink and die.”
Schoonover, who regularly reads the Economist, (Britain’s version of Newsweek) worries that the billions of dollars spent to bail out the banks and the auto companies will translate into inflation or higher taxes in the future. He also worries that some of the major lending countries, such as China, will pull their money out of the United States if the amount of national debt climbs too high and destabilizes the economy.
As for himself, he’s not borrowing any more money, and will devote any forthcoming raises to paying off his student loans. Meantime, life isn’t bad. Summer is almost here, and that means playing a lot of baseball and fishing on the lake.
“Happiness doesn’t come with more stuff, from buying things. It comes from your belief in God, from your friends and from experiences. A Jet Ski would be nice, so would a leather couch. But spending your money on something you don’t need with money you don’t have—that spells disaster. I like spending money; I’m just careful about how I do it.”

“Less is More” is an ongoing series about people who live frugally, with purpose and a positive attitude.

 
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