Friday, December 18, 2015

Financial Picture, Part II: Lifestyle Choices

personal photo of Santorini, Greece

The idea for this post has been floating around in the back of my mind ever since Franish's monthly budget post in May, when she received a reader question about whether it'd be more accurate to factor interest into her shopping budgets because of her student loans. Her answer touched on the difficult balancing act between  living one's adult life and being in a profession that goes hand in hand with massive student debt. Now that I've been more explicit about my circumstances, I finally feel like I can write about this topic without sounding vague and maybe a little foolish.

Repayment of six-figure student loans is a marathon, one that will hopefully only take me seven years. Combine the time spent on repayment, the time spent in school, and the time spent planning for and applying for school, and the total number of years is likely to be more than a decade. For doctors or dentists, the timeline is, inevitably, even longer due to longer training periods. One would likely go insane if they spent the entire time weighing every single spending decision against how much extra time it would add to the repayment period and how much interest would ultimately accrue as a result. If one wishes to start a family, particularly as a woman, there are biological and other reasons not to put off that financially weighty decision for that long.

Harsh calculations about how much interest will accrue are useful, by the way, and I think everyone should try them, ideally before matriculating. The schools and lenders (even the US government) are, perhaps unsurprisingly, in no hurry to give applicants the nitty-gritty details. Sure, they provide all the information necessary to calculate everything, but I don't think these institutions are ever as upfront and blunt as they should be about the cold hard numbers, given how young and relatively inexperienced much of their customer base often is.

My point is, there are limits to how much one can sacrifice for the sole motivation of cutting down on repayment time (and reducing the resulting interest burden). Those limits are more relevant and concrete, I admit, when it comes to making room for things like weddings, having children, and buying property versus just making room for a shopping budget or for travel. Regardless, I believe that a young working adult who has a plan and is on track for eventual repayment and other financial goals should be able to indulge in fun things that makes them happy once in a while, within reason. As a student, I veered too far in that direction, and even now I question my own judgment on whether I am still too willing to go a little too far in favor of indulging myself, but I don't think my larger stance on this is right.

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