Favorite Good Cause

The problem I’ve had with managing my money is that in the short term, things often seem very futile. This mainly comes from the fact that I am in graduate school and my stipend in very inadequate. I’ve had a constant conversation with myself about opportunity costs and whether it’s completely foolhardy for me to be in school (from a financial perspective), but since I’m getting closer to being able to see the end, my current approach is to sit tight, work hard, and keep looking beyond the short term. That doesn’t mean ignoring the short term–on a poverty stipend living in Manhattan, that would mean sure disaster! But I’m beginning to accept that the short term doesn’t have to be the whole story.

Last week I had yet another good hard look at my student loan debt and realized that I’d better make a plan about how I’m going to pay this off one day, figure out how long it will take, and whether I will ever, ever in this lifetime be solvent.

The numbers looked surprisingly good–as long as I’m willing to accept that I’ll have to put a defined percentage of my earnings into both paying off the loans and investing in my retirement after I graduate. I have a plan. Given the magic of compounding returns, the sooner I start saving, the better. My plan has a mix of debt repayment and investment, but there is a point where my net worth will finally be positive! Hooray! It will come long before my student loan debt is paid off. When I get to that point, I’ll be comparing the rate that the interest is accumulating to the rate of returns on investments and make the appropriate allocations based on what the numbers show.

Throughout the last year I’ve been thinking that I was going to be priced out of the career that I’ve worked so hard to build, so a rosier long term projection is very good news. I should be able to retire very secure at a reasonable age–if I keep evaluating the plan and make sure I’m following it.

There is a point where my money will start working for me rather than against me. The sense of futility fades when I can see that I’m working for something.

Keeping cash flow positive is the big trick. On what they pay me, that is no small feat. For right now, I’m including student loans as income and not looking on that as negative cash flow, which is a bit of a cheat, but it is a conscious decision because otherwise I would have to leave school. Keeping the cash flow positive even with that assumption is still a trick. The number of impossible feats I can take on at once is limited, so I’m trying to work from where I am.

So for today…it’s time to go do work and do what I can. We’re trying to cure blindness. I think it’s a worthwhile thing to do. If I manage my money well, maybe, just maybe, I’ll be able to afford to keep doing it until the research pays off.

Money isn’t everything…but it’s what determines whether I can or can’t do the other things that are important to me. I think that’s a good enough reason to pay attention.