Stop Blaming Others for Life’s Limits and Work Out a Plan Within Them

Q: Your column about the person who was overwhelmed with student debt really touched a nerve. What I would like to hear from our illustrious presidential contenders is what exactly they are going to do about the student loan process in this country. Why do we have to pay prime rate (and over) in interest on these loans? Every time Alan Greenspan starts talking about interest rates, I get zapped once more.

Oh, sure, I get a tax deduction but what good is it? I still owed the government money this year as not enough was taken out. If I have more money taken out for taxes, I don’t have enough to pay my monthly obligations--those besides the loan payments such as life insurance and my MasterCard bill.

I’m 44 and single and extremely underpaid when you take into consideration my education and current job experience, but I was an undergraduate in liberal arts and have a master’s in history--totally useless. The student loan system needs to be revamped--big time.

A: I had to edit your letter considerably because otherwise it would have filled this column. The theme, summarized: Your life’s a mess, and none of it is your fault. Yes, it’s unfortunate that you don’t make more money. It’s unfortunate your degree didn’t set you up for wealth. It may even be unfortunate that all college education isn’t free. But you don’t, it didn’t, and it’s not.

My question to you is, what are you doing about it? And no, waiting for someone else to fix it--especially a politician--is not a valid answer.

Reality is that we can’t have everything we want, and we have to make choices. The sunny side of that grim understanding is that once we acknowledge life’s limits, we can begin to fashion a plan to get what we really want.

If you really want to make more money, figure out a way to do that. A second job, a sideline business, even training for a new, more lucrative field might make sense.

If you really want to get out of debt, then strip your expenses to the bone and do what it takes to be debt-free. “Your Money or Your Life” by Joe Dominguez and Vicki Robin could be a life-changing read for you. (The first thing to pitch may be that life insurance policy--why do you need life insurance if you’re single and have no dependents?)

If you want a more comfortable lifestyle now, consolidate your loans and stretch the payments over 20 or 30 years. Yes, you’ll pay more in interest over the long run, but you should be able to save for retirement and have a few luxuries.

Waiting for someone else to change your life is foolish and a waste of time. Only you can do that, and now is a good time to start.

IRS Transcripts Available

Q: Several weeks ago you had a letter from a reader whose Social Security records did not accurately reflect her 1983 earnings, and she had long since discarded her income tax returns. I was a revenue agent for the IRS for 17 years and wanted to suggest a solution. Although she may not be able to get a copy of the old returns, she can request what’s known as a transcript from the IRS. She may need to file a Freedom of Information Act request. The transcript should show her wages, which should be enough to satisfy Social Security.

A: Thank you for the excellent suggestion. It’s unlikely her benefits would be much affected by the missing year, because Social Security uses a person’s 35 highest earning years to calculate a benefit and she was about 20 years from retiring. But your suggestion might come in handy for others whose wages were not properly reported to Social Security and who don’t have their tax returns to prove their earnings.

Let Harry Potter Balance the Books

Q: The Christmas season is approaching and I would like to give my 11-year-old niece a book on money and investing. Do you know of any that are appropriate for that age group?

A: No. Harry Potter books are appropriate for that age group. Financial books are not.

This comes from a woman who would love to foist personal finance books on everyone she sees, particularly the young and even more particularly young family members, who still have time to avoid the mistakes their parents made. Fortunately, I have a husband to curb those instincts, who reminds me what I thought of aunties who gave good-for-you books when I was that age.

Once your niece is well into her teenage years, you might consider slipping her one of many finance books available for people her age--people who have had some experience with money so that they’re able to relate to a book about finance. Even then, it’s an iffy proposition.

If you want to buy your niece a few shares of a stock or a mutual fund, then go ahead--that might be a better approach to getting her interested in investing. But make sure you include the Harry Potter book, too, if you want to keep your status as the World’s Coolest Auntie.

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Liz Pulliam Weston is a personal finance writer for The Times. Questions can be sent to liz.pulliam@latimes.com or to Money Talk, Business Section, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012. She regrets that she cannot respond personally. For past Money Talk columns, visit The Times’ Web site at https://www.latimes.com/moneytalk.