Financial advice

Day 265 | $3,720.97 paid | $8,175.76 until freedom

I’ve moved a lot of money around in the last few days, so my bank account is showing below $4000 for the first time in years. It’s utterly terrifying, and should explain why I haven’t made a payment into my loan in a while.

Where’d it go?

The Secretary of State took $200

The City of Seattle took $45

Washington State took $20

My new credit union took $1000

I still have some tied up in the lamps that I’ve made for Graypants (invoice to go out tonight!)

I think it can all be considered initial investment, and I really do think that this shifting of money is going to work out for me in the long-run (and hopefully the medium-run, for the sake of NMMD). But knowing this stuff only helps a little bit. I’m a man of habit, so seeing a number that usually hovers around $6000 reduced to $3800 makes my skin crawl.

I have smart friends, but

I have two friends who live in San Francisco who are pursuing PhDs in computer science. All their student loans are deferred while they’re in “school” and they have very consistent amounts of income. As such they’re putting all their extra into money market accounts and index funds and the like. I’ve been having a conversation with them.

Facts come up like that I could put my money into an index fund and earn about 10% per year, thus earning more in interest than I lose to my student loans, and so it would be a better investment to do so. Or that pretty much anyone who doesn’t put away $1000 per month every month starting at age 12 is totally screwed.

I’m electing to ignore this information, because I made a promise to the so-called internet. Everything I’m doing is for the sake of nuking a couple of loans. I can never be sure that what I’m doing is a good idea until it’s too late, but I have to do something, and I can’t do things that I know won’t help me achieve my goal by May.

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2 Comments

Filed under numbers, strategy

2 responses to “Financial advice

  1. ScottO

    Index funds are still a gamble. Your loans are not. You may or may not make 10% interest on your investment, but you WILL pay the interest on your loans, with penalties if you can’t. And those required payments are a drag on your liquidity and cash flow.

    You are already investing in yourself, and it seems to be paying off. I don’t see why you would need to gamble on an index fund rather than the more conservative investment of destroying your debt.

  2. ScottO

    You won’t actually have interest on you loans until the deferment runs out, I suppose. But I still think the point stands. One is a gamble, one is a sure thing. Given your capital situation and the fact that your payoff amount truly is within reach, I cant imagine foregoing the sure thing.

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