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Drowning in debt
Young professionals are living beyond their means and paying for it

by jason soriano

It was 2003, and no one––especially those who knew them well–– could have predicted the financial misery that awaited Lauren Traubenberg and Jason Schmick. By all accounts, the attractive young couple was responsible, hard working and successful beyond their years.

Having already completed one degree at UW-Madison, Traubenberg was midway through her second bachelor’s degree, this time in nursing, at Edgewood College in Madison. Even after six long years of classes and endless hours in the library, Traubenberg’s confidence was unshaken. After all, she had known for years she wanted to enter the challenging and well-paid field of nursing, and two more years of school weren’t going to stop her. “I just wanted to get life started,” Traubenberg recalls.

Schmick’s prospects were equally bright. A talented Web designer and computer software expert, Schmick was the office manager for a prominent mobile disc jockey company in Wisconsin. In addition, his professional success attracted a number of freelance jobs and prospective employers. The two lived together but rarely saw one another, with Traubenberg taking 15 to 18 hours of credits per semester and both working more than 45 hours a week. When they did manage to squeeze in a quiet dinner alone, the two talked about marriage and home ownership. Together they seemed unstoppable. 

Less than a year later, Traubenberg realized she and Schmick were on the verge of financial collapse. Credit card debts totaling more than $15,000 threatened to destroy every aspect of their lives. Their credit rating, job advancements, a home loan––even their relationship showed signs of strain.

 “I realized we were in a lot of trouble,” Traubenberg says.

Their families questioned how two intelligent, hard working young professionals fell so far into debt and how such serious financial problems escaped their notice. The answer is simple. They lived beyond their means and spent more money than they made. The simple calculations that drew this couple into debt draw thousands of other young professionals into such dire circumstances every year.

Can there be a “good” debt?
Debt. For many people it’s a dirty word, an unpaid financial burden weighing heavily on their daily lives. It makes sense to blame debt for all of life’s troubles, but for many college graduates, debt is the only way to get a degree. Nationwide, tuition increases outpaced economic growth and government grant increases, so students who needed grant money the most received smaller percentages of their tuition each semester. This necessitated more borrowing. As a result, almost 64 percent of all college undergraduates in 2000 borrowed money for college, making loans a necessary evil for many students. But the payoffs for investing in a degree are huge. According to the U.S. Census Bureau, an individual with a bachelor’s degree earns almost $1 million more than someone with only a high school education over the course of a lifetime.

“Student loans themselves aren’t considered bad debt,” says Kathy Estock, the marketing coordinator at the UW Credit Union. According to Estock, many long-term investments like college or buying a house often require a person to enter into a debt of some sort.

When your eyes are bigger than your wallet
But even if these “good debts” can’t immediately hurt a young professional, some other financial choices early in a professional career are not as benign. Michelle Manson, a 23-year-old graduate of UW-Madison and a registered dietician, understands the temptations a new career and “high salary” can bring.

Raised by a fiscally conservative father, Manson lived paycheck to paycheck in college and even moved back into her parent’s house after she graduated, to save as much money as possible. So when she was hired by a nursing home for about $35,000 a year, she was astounded. 

“I had a grown-up salary with no expenses and no financial responsibilities,” Manson says. She’s not alone. Some starting salaries seem so high compared to most minimum wage college jobs, that many young professionals try to live a lifestyle they can’t really afford.
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curb magazine 2005: balance for wisconsin's young professionals