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Comment by Irregardless | Hacker News Reader

> She graduated in 1994 with more than $100,000 of debt. Within three years, she had one daughter, a surprise set of twins, and was earning less than $50,000 per year.

3 kids while earning < $50k and trying to pay off > $100k in debt? If that's not the embodiment of America's dire lack of financial and family planning skills, then I don't know what is.

> "I’ve stressed to my daughter the importance of not borrowing any money."

Maybe she should just teach them to make responsible decisions instead? Borrowing money can be the right thing to do, but you need to carefully measure the costs and benefits.

Also, it would help not to have 3 kids when you're up to your ears in debt and only earning enough money to support yourself.

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I read this as: as much as possible, poor, unfortunate, or unlucky decisions you made in your early 20s should follow you around for the rest of your life (60+ yrs).

By extension, having children is a privilege only for either those who were lucky enough to be born into wealth (i.e. no or minimal debt) or those who were lucky enough to make the correct decisions early in life.

> Also, it would help not to have 3 kids when you're up to your ears in debt

if she fails to pay it off in her lifetime, do her children pick up the debt?

Public loans at least are cancelled when you die.

Thanks for the info. I take it the private loans are made against the estate.

Your primary moral duty is to repay debt, eh?

Unimportant things like "giving your life meaning" are unimportant.

As a consumer your only duty is to obey they law.

However, moral duty is relevant when it comes to how society should think about debt. Everyone has things they would like to do if they had more money. Society should not be arranged to give people a free pass just because they want to do something that requires money.

> However, moral duty is relevant when it comes to how society should think about debt.

A debt is a contractual obligation and should be treated as such. One should not moralize contractual obligations.

E.g. During the housing crisis, there was a lot of moralizing about homeowners walking away from their underwater mortgages. Moralizing about debt in that way is bullshit. When lenders make a loan secured by collateral, they take the risk of the value of that collateral dropping. There is absolutely nothing immoral about forcing a lender to eat a risk it knowingly on.

Similarly, a corporation would not hesitate for a second, on moral grounds, to restructure its debts through bankruptcy, and neither should individuals. No moralizing needs to enter the equation. There is a penalty for declaring bankruptcy and failing to pay your debts, and that is future lenders being wary of lending you money. There is no need to add a moral dimension to the issue.

What I meant was that when designing rules for bankruptcy etc., but also for how education is funded and other things, society has high level goals which are guided by morality.

My point was that when society considers what it's goals are, it should never be a goal that a person should be able to do things that "give their life meaning" when they can't afford them, because ultimately it is a person's own responsibility how they manage their money.

So my post was aimed at people who thought "isn't it horrible that this woman can't do what she wants in life simply because she can't afford it"

If people thought this way on a large scale interest rates would probably be moderately higher than they are today. It's not clear to me if that would be an improvement on the status quo.

>a corporation would not hesitate for a second, on moral grounds, to restructure its debts through bankruptcy, and neither should individuals.

I see what you're saying, but I really dislike that way of thinking, because it's justifying something bad by saying "That's what others are doing"

That's like saying that because BP are spilling oil into the oceans and getting away with it, you shouldn't stop doing it yourself.

The world would be a better place if morals were used in more decisions, not less.

You're begging the question. Spilling oil into the oceans inherently hurts people and the environment in an uncompensated way. Bankruptcy, meanwhile, is just part of the rules of the game, just as much as enforceable debt obligations are part of the rules of the game. Everyone knows, a priori that repayment obligations can be enforced by recourse to the courts, and everyone also knows, a priori, that those obligations can be discharged by those same courts (what the federal court giveth it can taketh away). Because bankruptcy is part of the rules of the game, it's priced into interest rates. When a bank loans you money, it expects you to default with some probability and charges you a premium for that risk. There is nothing immoral about forcing them to eat the consequence if the risk you compensated them for.

It's not a matter of ignoring morality. It's a matter of not ascribing a moral dimension to something that doesn't inherently have one.

In that vein, Google "efficient breach."

Isn't that also known as "ruthless default"? :)

But by your own words, this woman's bankruptcy does hurt other people... the people looking to get a loan later. They are now paying the even higher interest rate due to her bankruptcy being priced in. The more people that default, the higher the probability that the next person will default and the higher the premium the bank charges for that risk.

The rates for subsequent borrowers will only go up if her bankruptcy was unexpected. That is to say, if the bank charged her interest assuming 10 of 100 loans would default, and she is one of those 10, then her bankruptcy does not change the interest rate the bank charges. On the other hand, if the default rate is higher than the bank expected, whose fault is that?

They can only do so much to predict the future based on the past. When they fund loans today based on today's default rate they have no way to know what crisis hits in 3 years to cause a spike in defaulted loans. The system must correct itself with enough padding to cover the smaller fluctuations.

> Society should not be arranged to give people a free pass just because they want to do something that requires money.

Why not?

I mean, if it works for that society and it's democratically passed, why shouldn't a society do whatever it wants?

Use of the word 'should' makes it sound like there's a moral imperative for us to not help each other. I don't think that's the case, and I think there's a good argument that in future we'll need to consider different types of society that deal with abundance rather than scarcity; for example, with universal living wages.

What I meant was that the amount of wealth redistribution would be a function of your income, not the fact that you really need more money to do a particular thing.

So if I decide it would be really life assuming to quit my job and become an artist, society doesn't have more duty to help me do this than they do to help anyone else on a particular income.

Hey... give your life all the meaning you want... just don't come crying when people start coming around looking to collect all the debt you rack up while doing it.

She could have given as much meaning to her life as she wanted without racking up > 100K in debt. All this does is encourage people to not take responsibility of their own voluntary actions. (And no I am not referring to the children).

I call her 50% responsible. The other half is the lender (gov't-backed entity) squeezing her at relatively high interest. They shouldn't have got so greedy. Now they'll get no more out of her, and of course taxpayers eat the loss.

Interest rates were high back then. 8% is right on par with average student loan and mortgage loan interest rates of the late 90's. So she was not really getting squeezed. She was agreeing to what most people taking a loan were agreeing to at that time.

Exactly; how much of a "surprise" could the kids really have been?

Well, twins probably would have been a surprise. That's probably what the article was referring to; who expects twins?

Twins are much more common among people using fertility drugs than the majority of the population; so if you are on those drugs, you might expect them.

P.S. not trying to be snarky, just thought it was an interesting fact

Twins are unexpected, but surely they knew at least one child will be born? Even one extra is a huge commitment when you don't have the means.

Read the quote carefully. IMO it is not saying that the pregnancy was a surprise, but that twins was a surprise.

Which is exactly my point.

Contraceptives sometimes fail. Sometimes you make a really bad judgement call. Sometimes the guy might be an asshole intentionally break/remove the condom. Sometimes bad things happen.

Not everybody is comfortable with using abortions to deal with unplanned pregnancies even if it is the financially expedient thing to do.

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