FOQ: I want to serve in a low paying, justice based career. How much debt is ok?

10-28-15Reviewing the finances of hundreds of folks over the years I’ve developed a little rule of thumb or suggested guideline that you might find helpful:

Keep your total accumulated student loan debt below the anticipated annual income of your first job out of school.

So for example, if you anticipate getting a job as a youth pastor out of seminary, keep your total debt (between undergrad and grad school) under $35,000.
The larger your debt, the larger the compound interest working against you – it’s like the snowball effect except its rolling toward you not away from you.

Why do I like this? It scales – there should be different levels of acceptable debt risk based on your projected income. It’s easy to remember. It isn’t as draconian as ‘no debt ever’ feels to those who have already borrowed. It is attainable. If you’ve already or are anticipating borrowing more than that, you need to know that’s a big red flag.

This doesn’t mean getting debt free will be easy – you’re going to have to make dramatic sacrifices to get out of the way of that snowball rolling toward you. But your percentages of winning are much higher.

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