Tuesday, October 2, 2007

I'm hemorrhaging money!

I will have significant educational debt (we're talking six figures) when I graduate. I plan to live like a student another couple of years and pay off my loans within 5 years. The plan is ambitious but possible. When I start work I will earn a lawyer's salary, but work a lawyer's hours, which will mean not a lot of time to go out and spend. So if I can live off less than half of my income (I should be able to, some people raise families on that), I will be able to meet my debt repayment goals.

The big problem will be keeping my focus whilst working among lawyers, who are notorious for consuming. Unlike many of my peers I will not be buying a brand new fancy car upon commencement of my career. My own car is still pretty new (about 5 years) and has been quite reliable. Not dropping 35,000+ on a rapidly depreciating asset that I won't be using much (public transportation is good in my city and will be my method of commuting) is pretty easy. What will be hard is not running into an upscale store and buying a pair of jeans (on sale for only $200!) as a reward for a stressful week, or not spending three times as much on meal because it's just easier to eat out than to cook for myself.

I plan to keep a leash on my spending by putting only a portion of my income into my checking account and the rest into harder to touch savings or investment accounts. I can't trust myself, I need the external enforcement. I'm a little concerned about having a credit card. I wish to build up a credit history, but worry that without close monitoring I will get careless. Perhaps the early payment of my student loans will be enough without having an actual credit card, but I'm not sure.

These concerns are exacerbated by the fact that I've been living a little fast and loose lately (my trip a couple weekends ago was rather expensive). I haven't been thinking too much about the money going out. Last week I ate lunch out every day but one. I would prefer not to burn through my loans so that I can return some of the money at the end of the year. With that in mind I have decided to make two changes:
  1. Start using cash. Right now I use a debit check card to pay for everything. It's a whole lot easier to put down a piece of plastic than to count out bills, so this would reign in my spending.
  2. Limit meals out to three a week, total. That may sound like a lot, but I am not talking about three dinners. Eating out would include paying for the meal in the school cafeteria, so I will be bringing most of my lunches to school.
It feels good to set up a plan. Now to execute!


I ran across a blog about money issues for GLBT people: Queercents. I've read a couple articles, some of which have a sort of sanctimonious anti-materialistic bent (particularly the article on Board Games), but I am going to poke around to see if there is some useful information.


Tim in Italy said...

It's obviously time to consider a Sugar Daddy. You work in an upscale part of town, you're good looking, well-educated and don't have a lot of free time (easy outs). Let daddy worry about those loans! All you need to worry about is your case load and your six-pack. And when the going gets tough, explain to daddy how nice Bermuda is this time of year.

Drew said...

Hey man, just a quick thought. I recently finished grad school with over 100 grand of debt. I know that it is tempting to pay that off as soon as possible, but with direct deposit and on time payment discounts pushing the interest rate down to 2.5%, I think that it makes sense to take 30 years to pay it off and invest instead. Even if you just put it in an online savings account, you are up 2%. It may be different depending on your interest rate, but I just wanted to throw it out there for you. Good luck with the remainder of law school.