In the last decade, student loan debt has increased by 170% in the United States; it is now $1.4 trillion. That amount is owed by 44 million people, 8 million of whom are in default.
For students that graduated last year, the average amount of debt that they will take into their adult lives is $37,172. There are lots of problems with these statistics, and one is that this amount of debt, which is $620 billion more than the total US credit card debt, is simply not sustainable.
The student debt bubble is going to burst, and with the cost of tuition rising every year, it may happen sooner than previously expected. Another problem is that if young professionals spend the first parts of their career trying to pay off their college tuition, how are they going to go about buying a house?
As a consequence of the financial crash of 2008, mortgage interest rates are still low which was intended and continues to be a motivating force for people to buy. However, many young people will soon find that their credit rating is not good enough to secure a mortgage, irrespective of the interest rate, and if they could get one, they would struggle to pay for both it and their student loan.
The middle class is shrinking in America, which is a bad sign for everyone. However, home ownership is part of the American narrative. The mortgage is not the only expense that you have to worry about. Here are a few others to consider:
Investing in a home is obviously a massive expense, and it, therefore, makes sense that you will want to protect it. The best way of doing that is by investing in home insurance. It is sometimes said that insurance is for pessimists, but in the event of a fire or flood, pessimists suddenly start to seem like realists. It is not just for the property itself though. While your belongings may have sentimental value which cannot be replaced by an insurance claim, they will have you covered for the rest of your household.
If you live in a city like New York, you may find yourself living in a co-op apartment. This obviously brings with it extra costs compared with owning a condo. The payments that will be expected of you by the building’s co-op board will be charged either every year or every month.
In any case, they are something that you have to plan for. Another thing that you have to be mindful of in a city like New York is the cost of making changes to your apartment. If you want to put up a wall. for instance, you will need to first get permission from the co-op board, and then permission from the city in the form of planning permission.
To change something as simple as the placement of a socket in your wall, you will need an electrical permit. These costs are levied against you on top of the actual costs of the work itself. Deciding to undertake any work should, therefore, be a slow, careful process.