“Here I lie without anger or regret …
I’m in no one’s debt.” from “Hobo Jungle” as performed by The Band
Robert Redford directed “The Legend of Bagger Vance,” a movie set in the early years of the Great Depression. Issues regarding bankruptcy and debt pervade the film.
Matt Damon plays Rannulph Junah, a troubled World War I veteran living in Savannah, Ga. Junah once captured the Georgia State Golf Championship and was considered the city’s shining young star, but the wholesale slaughter of his company on a European battlefield leaves him without inspiration or ambition. Junah eventually competes against Walter Hagen and Bobby Jones and saves Savannah’s honor and the fortunes of Krewe Island, a development inherited by his former sweetheart Adele Invergordon.
Adele’s great golf match is staged to pay the bills left by her father, who built Krewe Island but then killed himself in the wake of the economic crash. When reproached about her family’s debts, Adele tells the city fathers: “… I intend to pay them off … in time.”
On the same subject, Junah tells young Hardy Greaves (caddy Bagger Vance’s assistant) not to be ashamed of his father’s manual laborer’s job: “Your dad’s sweeping (streets) because he took every dime he had … and used it to pay every man and woman he owed … instead of declaring bankruptcy like everyone … Your daddy stared adversity in the eye and beat it back with a broom.”
What adult hasn’t despaired at how difficult it is to pay our long term debts, especially those with high interest rates? When we see our children assuming large debt, we instinctively want to wave a cautionary flag.
Student loan debt has increased by 84 percent since the Great Recession and now, at $1.2 trillion, it’s the largest single form of debt held by Americans, surpassing even credit card debt and auto loan debt. According to The Project on Student Debt, 40 million Americans now carry at least one student loan after leaving school, and the average balance has zoomed from $23,000 to $29,000 since the recession.
Fifty-three percent of Florida graduates carry an average of $24,017 in student loan debt. In Georgia, 61 percent leave school owing an average of $24,517. Fifty-four percent of Alabamians finish college owing an average of $28,895.
There are several troubling related issues. Miss a payment and it impacts your credit, just like missing a mortgage or car payment. Secondly, when young people finally enjoy gainful employment, they must utilize their income to service their student loan debt, often in lieu of putting a down payment on a house or buying a new car. GDP is driven by consumer spending. When dollars are channeled toward debt payments instead of toward family and retail purchases, the individual pocketbook and the American economy suffer.
Margaret R. McDowell, ChFC, AIF, a syndicated economic columnist, is the founder of Arbor Wealth Management, LLC, (850-608-6121 — www.arborwealth.net), a “fee-only” registered investment advisory firm located near Sandestin. This column should not be considered personalized investment advice and provides no assurance that any specific strategy or investment will be suitable or profitable for an investor.