It’s crazy to say, but my one year old twins have a higher net worth than I do.
Because of Christmas, their birthdays, and our own contributions to their accounts, they each have investments worth over $500 each. Even if we never add to them again (which we totally will) that would be a nice chunk of change after the market has worked its magic and they can access it 18 years from now.
Still, you would think my net worth would be more than $500 but because of our student loans, it’s not.
Six Figures of Education Debt
I try not to worry too much about net worth. After all, when you have six figures of education debt, it can be a bit depressing to think about. My husband is nearing the end of his medical school career. In fact, we only have one more semester to pay for, but at over $30,000 per semester plus extra money for books, board exams, travel, and general living expenses, he has now crossed over the $300,000 owed threshold, something we knew would happen but still stings a bit.
I wish I could say that was our only student loan burden, but he and I both have master’s degrees and combined the loans for those are also over $100,000 now, mostly due to the private loan he took out for his master’s degree in public health.
Reducing the Burden
I know these numbers are scary to read and there are usually two responses. Some people think we’re totally foolish for going down that path and see no end in sight. Others just think that because my husband will be a doctor, we’ll have no problem paying it back. Neither of those are correct, really. The burden is serious and we feel it, and even on a six figure salary, it’s going to take significant discipline and teamwork to pay it off, which of course, is something we’re ready for and have been preparing for during the last five years of being in school.
We’ve had some small successes. I’ve been able to work hard and send back big chunks of student loans from time to time, but over the last few disbursements, I’ve taken the max and saved the money for emergencies. Once I know that my husband has matched into a residency and will have a job, I will take that saved money and make a large payment back towards his loans to kick off the process. Until now, we are just sitting with the cash waiting for the next step.
Many people would disagree with our decision to take out living loans even though my monthly income can for the most part take care of our family, but we’re worriers and we like to have large emergency funds and absolutely hate the idea of living paycheck to paycheck because we’ve been there before.
Plus, as parents, we have very large expenses and are constantly thinking about ways to save money: ways to save money on groceries especially now that we want our kids to eat nice food, ways to save money on life insurance, because if something happened to either one of us, it would be devastating, and ways to save money on health insurance, because our policy costs us over $7,000 per year for our family, and we don’t skimp on our health.
Add all of that to our desire to max out my Roth IRA, pay down my own student loans, save enough for residency interviews, and it’s a little clearer why I like to keep cash in my high yield savings accounts just in case.
I know we have a long road ahead of us, and sometimes the outlook seems bleak. However, one thing I do know and can count on is that our children will be set up so they will not have to take out student loans. I’m proud that those little babies have a higher net worth than their parents, because it means we’re making things better for the next generation. All I can hope is that the lessons we impart to them over the next two decades will make them responsible with the money we’re investing for them and that they use it wisely.
Do you have student loan debt? How are you saving for your children’s future?
19 responses to “Why My 1 Year Olds Have a Higher Net Worth Than I Do”
My daughter has her own bank account and I always told her that we need to be extra careful with our money. I’m glad that whenever she has money, she always told me to put it directly into her bank account.
So important to teach our children better than we were taught. We have three and they know more about personal finance than I ever did at their age and that’s a good thing!
I think it’s great the Budget Blonde babies (toddlers?) are off to a great start! I’m trying to do the same with my own two.
I’m wondering if there are programs that seek MDs for underserved areas and that pay a portion of student loans if the Dr. commits to serving for a period of time. Might be something to consider for helping alleviate that student debt.
I love that you’ve got the beans off to a good start. That’s great!!
Sounds like the beans are off to an awesome start! I’m hoping that we can help Little Miss out enough that she won’t have any school loans either!
Just the mention of student loans gives me anxiety! I feel you on the worrywart side of things though. With kids of my own, having savings is just that little bit of burden off your shoulders.
You are doing a great service for the beans! I know your own debt is stressful, but I have faith you’ll make it work. Keep up the good work!
That’s a funny way to look at net worth. I guess if you have no expenses or debt then you’re well off. In other words, if you’re not a grown up! Sounds like you have a good plan for your family and will greatly increase your income soon. Good luck!
Young doctors have a very tough row to hoe in this country. It is an important profession that unfortunately has a high barrier to entry. I imagine many of our best and brightest give up on their dreams to enter the profession due to the risk inherent with the loans. Thanks to your husband, and to you, for adding another good doctor to the world.
I’m currently paying off what are now six figure law school student loans thanks to interest. I am focusing on aggressive payoff for my consumer debt and then will switch to the monstrous loans. It’s so easy to feel discouraged and accept that they’ll be there forever, but I don’t want them hanging over my head for life. Once my consumer debt is paid off I’ll even out between saving and paying. Good job focusing on real life! I don’t blame you for wanting an emergency fund at all. Living off of student loans was so scary.
I’m a medical social worker and the only thing keeping me from totally panicking about my graduate school related student loan debt is doing the Public Service Loan Forgiveness program. While 10 years is a long time to carry the debt, knowing that I can make really reasonable payments monthly for ten years and have the burden lifted at the end of that stretch is huge. My toddler also has a higher net worth than I do by your logic. 😉
Yes that is a great program – it’ll fly by!
As early as 1 year old they have investment, I am very impressed. When I have a child, I would like to start with this kind of investment. By the way,I just paid my student loan last two years ago.
My 2 year old has a few thousand in his 529 but he’s still way ahead of me as far as net worth! But you’re right with student loans, it’s hard to use net worth as a barometer because they are “supposed” to be an investment. And I totally feel you that people think if you’re a doctor you should have no problems with loans. They’re a large monthly expense that you’ll have to pay for many years, and with kids and everything else life throws your way, it’s important to have that cushion. Sometimes I get the urge to use some of my emergency fund to pay off a loan, but I realize if something major were to happen soon after, we’d be in trouble.
Great post Cat. We should have a party when we get our net worth to 0!
I don´t have any student loan debt, but my husband does. We´re working on paying off my consumer debt first, and then we´ll tackle his. All while trying to be wise about saving for the future too–it´s quite a balancing act! You´re doing great, keep it up! Cheers 🙂
I was at a seminar with Donald Trump a while back, He told a story about him and Marla Maples walking down the streets of NY City. They passed a beggar on the streets. Donald said to Marla, “You know, that beggar is worth about $1,000,000,000 more than I am”.
Marla said “Is that Beggar a billionaire?”. Donald replied, “No, I figure that beggar is worth nothing.”
So, sometimes, even wealthy people are not worth much.