Supreme Court nominee Sonia Sotomayor’s personal finances were a hot topic last week, after disclosure forms revealed that she has nearly $16,000 in credit card debt, and owes another $15,000 to her dentist. There’s no shortage of discussions in the blogosphere about whether having that kind of debt is responsible behavior (see positive, negative). But I saw very little quantitative analysis of how much Judge Sotomayor’s debt is actually costing her.
Let’s assume that her credit card debt is on a low-interest card. According to Bankrate.com, she’d have an annual interest rate of about 9%. If she’s only making the minimum payment each month, she won’t finish paying off that credit card for 154 months, or April 2022.
The $15,000 in dental loans will probably take less time, as the lenders I found online tend to only offer loan terms for a few years. Still, with interest rates as high as 25% APR, a four-year loan could cost $8873 in interest alone. She’s probably not paying such a high rate, but if she missed a payment her rate might reset (called universal default).
While carrying around $31K in debt is certainly not something a financial advisor would recommend, Judge Sotomayor is probably better equipped to deal with that debt than your average family of 4. Sotomayor doesn’t have any kids (which means no saving for college), has a lifetime job security either on the appeals court or the Supreme Court, both with a salary around $200k, and gold-plated health and retirement benefits. That’s quite a contrast to the average American family whose household income is in the mid-40′s.
