Budgeting Dilemma: How Do You Decide What You Can Afford?

This is a guest post from No Debt MBA, who is trying to pay for an MBA from a top-five business school without student loans. This is a post that asks questions but offers no answers.

My significant other and I had an interesting discussion the other night. We were trying to make plans for a week of vacation this summer and were deciding between two different options:

    • A cross-country trip with plane tickets where we'd spend some nights staying with friends and spend days touristing and eating out.

 

  • Driving to a nearby state or national park and camp or backpacking for a week.

I'm headed to business school in the fall, and my first tuition bill is due in a few weeks. Can you guess which option I advocated?

What can I afford?
The discussion brought up an interesting question of what kind of luxuries I can afford right now. Neither vacation plan was particularly extravagant by most measures, but the first would cost over $1000 per person and the second would be under $500 per person (even if we bought new gear).

I have enough money in my savings account right now to pay either bill; however, I see that money as being earmarked for business school. I don't have enough to pay for both years of my MBA, even when I make some reasonable projections of future income (such as next summer's internship). Do I really want to add a $1000 vacation on top of this?

My significant other pointed out that I probably have more than enough to cover the rest of my goal and have fun if I use my Roth IRA, which I had considered as a vehicle for saving for my MBA, but also as retirement savings. I countered that raiding my retirement savings or taking out student loans for a vacation was financially irresponsible and against my values. Plus we could have a fun, but less whizz-bang vacation around here for a lot less.

Note: Before you think my significant other is crazy or a spendthrift, let me note that this trip had been under discussion for a long time. We had planned to stay with people we know to avoid most of the hotel costs, and the trip would have been paid for in cash. I've basically gotten financial cold feet.

 

Seeking balance
We decided to stay local for our vacation, but I don't think either of us felt particularly good about the discussion. The question of what I can afford will continue to be a problem since I'll still have cash sitting in the bank to pay for next year's MBA expenses and my basic living expenses. But my significant other will be continuing to work and has a right to be interested in maintaining a lifestyle that reflects that.

So the question is: What can I afford? How can I tell? Can I afford to eat out tonight? Go to a concert? Buy new clothes? Up our $25/week grocery budget?

It's very important to me to meet my goal of graduating debt-free. So far, my significant other has been supportive. But there's definitely a balance to be struck here. That balance will keep my goal sustainable and help me avoid burnout. It will also keep my significant other from going crazy and resenting my extreme frugality and goal of staying debt free.

I've incorporated basic living expenses into my budget estimate. I know I'll need to buy food, pay rent and utilities, and have a way to get around. But the question is how much else can I afford. Additional expenses just make my goal harder to reach. At the same time, I don't want to make my significant other miserable for the next two years.

J.D. has his balanced money formula, but how does something like that work (or any budget at all, for that matter) when you have no income coming in and a limited amount of savings?

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Katrijn
Katrijn
8 years ago

It sounds as if you’re keeping completely separate finances – changing that (even in some minor ways) might offer a possible solution. When I started working, my significant other was still in college. Not only was he not making any money, school was costing him money in tuition fees, travel expense and school supplies. I wasn’t earning enough money to pay for all our shared expenses, so we decided to split the rent down the middle, but I would pay for utilities and groceries. After he started working, I decided to go back to school and we switched the arrangement:… Read more »

Jeroen
Jeroen
8 years ago

Yes, it can be very difficult when you’re partner has a significant higher income. This year I was in a similar position, we would be going to Belgium for a few days but in the end I was not prepared to take a huge bite out of my savings for that, considering I already had to be a bit tight with money because we are saving for our wedding in September…

Katrijn
Katrijn
8 years ago

Also: after detracting all the non-avoidable costs (in my case: rent, healthcare, tuition, taxes, travel expense, sports club membership, newspaper subscription) from the money I had saved for the year, I divided the leftover by twelve and that was my monthly budget for personal expenses. I could afford whatever fit in the budget. And if the money was gone, it was gone and I’d have to wait for next month. But because of the arrangement with my significant other, I never had to worry about being able to eat or turn on a light. This worked for me without driving… Read more »

Hannibal
Hannibal
8 years ago

Consider hitch-hiking. I have hitched from Vermont to New Orleans and on to LA and met a lot of lovely people. Plus a couple of strange ones, too – but not threatening.

Good luck!

slccom
slccom
8 years ago
Reply to  Hannibal

That is amazingly irresponsible advice. You were lucky, not smart!

Theresa
Theresa
8 years ago
Reply to  Hannibal

Instead of hitch-hiking, use a rideshare service. CouchSurfing.org has several groups devoted to this, and you can view the profile of the person you’d be riding with, read their references, email/phone them beforehand. Much safer — and you’ll meet a new friend!

bon
bon
8 years ago

Do you ever watch the Suze Orman show? You may be entertained by her “Can I afford it?” segment each week (you can download the show for free on itunes). Her rules of thumb tend to be that you can afford something if: * You have an 8 month emergency fund * You have enough liquid money on top of that to pay for what you want * You only have mortgage debt, if any * Your retirement savings are on pace (and not considered liquid) I think it is a fairly good formula – however given that your income… Read more »

JSM
JSM
8 years ago
Reply to  bon

Good reply Bon. I will have to look up that segment. I always have this question. With all her points checked I still wonder – should we be saving more (and not spending – hence what can we afford)? Should we be saving more for summer camps when my children are a few years old, more for this, that, and the other that I don’t foresee in the future. Some purchases I do in a split second but some we agonize over for ever. I think maybe a list of priorities is important too. Really sit down and think about… Read more »

Rosa+Rugosa
Rosa+Rugosa
8 years ago
Reply to  JSM

And don’t forget that you’re not going to live forever. I’m not a fan of enormous austerity now, because you can only hope there will be a later!

bon
bon
8 years ago
Reply to  JSM

I agree 100% with the prioritizing – I love Suze’s advice but it is a bit generic. You should definitely download the shows, her other segment great is called “How am I doing?” where she tells people if they are on track for a certain goal (i.e. retirement, paying for kid’s college, etc.). I’m a big personal finance nerd so I watch every week 🙂

Nancy+L.
Nancy+L.
8 years ago

My husband & I have relatively separate finances, so we often have discussions like this. Our method is that if there is no compelling reason from a family perspective (such as truly not having the money or having a more important need), the partner that wants the pricier option covers the additional cost for both. For example, if he doesn’t feel like cooking, he’ll buy the take out. If I *really* want us to go to visit family, I save up and pay for it. The key to making this work is that neither partner should be overspending. When we… Read more »

tim
tim
8 years ago

If your significant other had a similar financial goal (saving for a down payment, retiring a debt, whatever) you might better see eye-to-eye on the frugality thing. That’s not an easy sell if they’re not in that mindset, but it’s worth a conversation at least. Keep in mind if your relationship is built to last, 2 years is just a blip in the scheme of things. If you put the work in to keep the relationship healthy some financial tension won’t kill you. Once you’re back to work, hopefully pulling down a good salary and debt-free you’ll have plenty of… Read more »

Holly
Holly
8 years ago
Reply to  tim

I’ll second the blip comment.

If your SO is not a spendthrift, if you are planning to marry, and your SO is willing to help pay off any loans, just take a loan and enjoy the trip.

Once you are in school, particulary for the first year, you will have NO time to spend with your SO. Consider this the modest price you pay to maintain the relationship. (I remember drivign 3 hours each way to see my husband at b-school, when he could only spare 30 minutes to have dinner with me.)

Andy
Andy
8 years ago
Reply to  tim

Tim, Great post! Two years really isn’t that long and even if you went without a vacation for two years I’m sure you and your relationship would still survive. If you can graduate from a top MBA program debt free and get a decent paying job from it, your vacation options in the future will be outstanding! Work together with your significant other to reach this goal together. It can be beneficial to your relationship. I know it works for some, but I’m against the separate accounts for married couples. I think a marriage is two becoming one and a… Read more »

Chickybeth
Chickybeth
8 years ago

It seems like you already know what you can and can’t afford, so why string along the other person by planning this trip you knew you wouldn’t want to spend money on?

Suba
Suba
8 years ago
Reply to  Chickybeth

I have the same question. It looks like you have set your priorities and a spending plan to go with it. So it looks like you are really asking whether graduating with no debt should be a priority or vacationing now should be a priority. This is how we decide if we can afford something – 1) If there is no money to pay for it (and if it is not an urgent medical payment), we cannot afford it. 2) We have all the savings in a “goal oriented” savings system. Every single dollar has a goal and a name.… Read more »

Karen in MN
Karen in MN
8 years ago

I’ve found it works best for me to “look ahead” in my finances and decide what I can afford for the upcoming year. This lets me know if I’ll have “extra” to spend on something special that comes up during the year. It helps me to already have in my mind whether I’m “underspending” or “slightly overspending” for scheduled things during the entire year. Knowing all this helps me to not feel guilty if I do decide to spend on the something special. For example, I’ll think: My car will be paid off near the end of this year, so… Read more »

Dan
Dan
8 years ago
Reply to  Karen in MN

That’s what we do. I actually have four different planning horizons — retirement, the next few years, this year, and this month. Retirement is set-it and forget-it. Right now, I just fund my 401k. Between my match and my contribution, it’s 11%. I want to increase that a bit in a few years. “The next few years” covers major expenses that are likely to arise in the next 5 or so years. This would be a house down payment, new furniture, and travel. By planning this way, we can choose to take a particularly nice vacation one year, if we… Read more »

STRONGside
STRONGside
8 years ago

Just a thought, but have you explored the graduate Assistantship or Fellowship options that might exist within your MBA program? Most of these programs will cost you a fraction of the normal tuition price, and they will also pay you a monthly stipend.

I work at a large public college, and I have found that many people choose to pursue a program that offers assistantships as opposed to pursuing another graduate degree that does not. For example, a grad. degree in econ or marketing versus an MBA, so they could take advantage of virtually free tuition.

Just something to consider.

BIGSeth
BIGSeth
8 years ago

I’m sure this comment will piss some people off but I think you’re a bit too hung up on graduating totally debt free.

If you can get a low interest rate student loan then I think you would both be a bit better off by balancing out your spending over the coming years versus the self imposed rags to riches scenario.

Shara
Shara
8 years ago
Reply to  BIGSeth

I might not have said it like that, but it’s a valid point. Student loans don’t have to be large. There is a lot of room between zero debt and tens of thousands of dollars. If you will have a happier family and less stress at home by borrowing $2500 over the next two years to bridge the gap and cover modest choices like this one, that would be worth it to me.

Dan
Dan
8 years ago
Reply to  Shara

I made the conscious choice to borrow $33k for one year of grad school (tuition was $22k). My program was only 1 year for full-time students. Did I want to borrow that kind of money? Not really. Not on top of $50k for my BS. I looked at being a part-time student, but there are economies of scale for full-time students. Also consider that while I was in school, I would likely just have a “pay the bills” job. Taking out $30k for grad school was at best wise, and at worst, not foolish. The repayment on a $10k loan… Read more »

Lincoln
Lincoln
8 years ago
Reply to  BIGSeth

I think this is an excellent point.

AnneD
AnneD
8 years ago
Reply to  BIGSeth

I don’t think this is wrong. I agree. It seems like a gimmick to promote his pf writing career.

A small, reasonable amount of debt can be an effective way to get an education. Especially an upper degree where the chance of getting a decent job afterwards is favourable.

Why create stress? Obviously the answer here is to create situations that make for interesting blog posts.

Dan
Dan
8 years ago
Reply to  BIGSeth

I agree. My wife and I have some pretty low-interest, but sizeable student loans. Because they are so low, paying them off soon becomes more of a philosophical and less of a PF choice. Especially when one starts to make time value of money calculations, I can’t see the point of trying to make $800/mo payments for ten years when I can make $500/mo payments for 20 years.

Laundry Lady
Laundry Lady
8 years ago
Reply to  Dan

I guess it depends on what you call low interest rate. My husband’s student loans were mostly at 6.8%, which was about the same as our mortgage at the times. I don’t consider that really low.

Dan
Dan
8 years ago
Reply to  Laundry Lady

6.8% isn’t really low, but strangely enough, that’s the “face value” of most of my graduate loans. I have “promotions” on the account that after I pay the loan for 24 months, they reduce the rate by 1%, and then after 12 more months, it reduces another 1%. Plus, I get a 0.25% reduction for auto-draft. So, after the 36-month mark, I’ll be at 4.55%. That’s a good rate, and fixed. I have only one student loan with a rate above 5%, and that’s a GRAD PLUS loan at 7%. My undergraduate loans are in a similar boat — rates… Read more »

Jaime B
Jaime B
8 years ago
Reply to  Laundry Lady

I was able to consolidate my loans in ’09 with Direct Loans (feds) under a 2.5% int rate. My monthly payment is $122. Right now I’m only paying $150 while I concentrate on saving money to put into house repairs and other things. I would love to pay off my loan in a lump sum next year but for such a low interest rate it’s more profitable to concentrate on other things right now. lol, on the other hand my tax deduction on the interest is so low now. I would absolutely rather have a super low interest rate than… Read more »

lawyerette
lawyerette
8 years ago
Reply to  Laundry Lady

People who aren’t familiar with the current state of student loans tend to be really in the dark. In the late 90s and early 00s (aughts?) interest rates were about 3-4% if not lower. Anyone who started grad school after 2006 is paying rates closer to 7% (6.8 was the Stafford rate while I was in school) so most young JDs/MBAs/MDs have 100K+ in debt at rates averaging 6-8% (and more in some cases – I think PLUS loans were 8.5% while I was in school). I make enough money to cover my loans even on a 10 year plan,… Read more »

Lindsay
Lindsay
8 years ago
Reply to  Dan

Dan,

Are you up for sharing the institution you work with to get your interest rates on your student loans reduced in that way? My husband and I are in the same boat re: large amount of loans, and while I wouldn’t trade the experience nor what has resulted, I wouldn’t mind decreasing our rates a little more.

Thanks,
Lindsay

Dan
Dan
8 years ago
Reply to  Lindsay

Lindsay,

The lender on those loans is PNC Bank, and the servicer is Great Lakes. This reduction thing was part of my loan package when the loans originated, so your mileage will definitely vary. Good luck.

Mike Holman
Mike Holman
8 years ago

Rather than debate about vacations you might not be able to afford – I would figure out a travel budget you are comfortable with (it might be zero) first and then figure out a vacation that fits.

I don’t like the word “affordable” in a lot of these contexts. I can “afford” to buy a $100,000 sports car given that I can make the payments, but that doesn’t make it a good financial idea.

skeptic
skeptic
8 years ago

It sounds like you’re already living a pretty frugal life. Given that context, I think you should definitely take whichever of these trips your significant other prefers. $1,000 isn’t a huge deal for a future MBA. Although I bet you’ll find ways to make up the money, I think it would be much better to fail to reach your goal and graduate with $1,000 in debt than to renege on a trip you and your partner have been discussing for a long time. And although I can’t really claim to know your relationship based on one blog post, I will… Read more »

slccom
slccom
8 years ago
Reply to  skeptic

MBAs are not magic carpets to riches any more.

Counter-Point
Counter-Point
8 years ago
Reply to  slccom

From a Top-5 MBA Program, they are.

Bareheadedwoman
Bareheadedwoman
8 years ago
Reply to  Counter-Point

based on the depreciation value of the BS and the current reassessment of the state school MBA, give it 5 more years and even the top schools will have lost their “magic carpet” gas. We’ve come back ’round full circle and it is no longer “what you know” in this country but “who you know.” Part and parcel of this destructive path our country is on. Besides, at no point does the article say he’s going ivy…in fact, if he is at all convinced that a debt free MBA not subsidized by scholarship or family money is possible, I would… Read more »

Pamela
Pamela
8 years ago

I don’t see this post being about answering the question, “How do you decide what you can afford?”. It feels to me that this is really about communication, expectations, goals, and respect. The money is just the vehicle for all those bigger topics. According to your post, you decided as a couple to take a trip to visit friends. And now, you’re getting cold feet. If you wanted to stay with your original plans, there are many things you could do besides robbing your retirement or school funds: sell something, get a short term job, plan a bargain trip (cook… Read more »

E.+Murphy
E.+Murphy
8 years ago
Reply to  Pamela

In the year 2011 it is extremely difficult to know exactly what level in a relationship a “significant other” falls. So perhaps she’s wondering a bit if her putting her life (or at least nice vacations) on hold for a couple of years is really a good investment in you. You are at very different points financially right now. Are you still going to even be together once your earning potential comes back? If you look at it that way, you might see the concern from her side of the fence. Also, am I the only one who is horrified… Read more »

James
James
8 years ago
Reply to  E.+Murphy

I believe he said that the money was in a *ROTH* IRA. Roth IRAs can withdraw the principal at any time for any reason without penalty (because you put the money in after taxes). You just can’t withdraw the gains tax free.

And, I haven’t seen the investment mix in the Roth – it could be TIPS, bonds and CDs – in which case it’s a great savings vehicle because if you end up not using it, you can pull it all out tax free at retirement.

Mom of five
Mom of five
8 years ago
Reply to  E.+Murphy

Thanks to what amounts to a no income limit Roth, we’ve put our kids’ tuition funds into one. We’ve got 401k’s and a much smaller traditional IRA that we haven’t added to in years. We can take out the principle from a Roth anytime and can take all of it without penalty once we reach 55. Since it’s technically a retirement account, it won’t count as heavily toward assets if our kids get financial aid. If we don’t have to take it for tuition, it’s gravy for retirement.

Ru
Ru
8 years ago
Reply to  Pamela

“According to your post, you decided as a couple to take a trip to visit friends. And now, you’re getting cold feet.”- you and I totally have the same point of view here. I felt that was really mean of the writer of this post! He blew off his friends in another state, who he probably gets to see once every few years, because of a worry about a small amount of debt. I am a student myself, and I scrimp and save like crazy so I can visit my friends around the world. Yes, when you’ve got £2 a… Read more »

El Nerdo
El Nerdo
8 years ago
Reply to  Ru

ah, the poverty jet-set… i remember the days when i was a part of it. it was great! but my long distance relationship ended, my credit cards exploded, and i ended up broke.

Bareheadedwoman
Bareheadedwoman
8 years ago
Reply to  El Nerdo

the TSA has been the biggest positive influence on reducing my travel budget, to date.

Max From Liquid
Max From Liquid
8 years ago

Perhaps it might have helped if you had this discussion when you were making the decision to get your MBA, as you were realizing you would have to cut back on expenses. I would not ever suggest raiding a retirement account, while the money may be applied to tuition, in reality it is for the vacation. What can you afford? You can afford ANYTHING as long as you are LIQUID, which means all your debt is paid off (except your mortgage) and your emergency fund is adequate. What is adequate? Enough to cover expenses for the amount of time it… Read more »

indio
indio
8 years ago

I totally understand your desire to be debt free, however is it fair to your SO? Essentially for 2 yrs, while you pursue your dream, your SO is putting their lifestyle on hold to accommodate you. Sure the person could go on vacation alone, but how much fun is that? There will be less joint fun because of your goals. I think you need to find a way to make sure that both of you have some stake in this degree and ultimately the relationship, or it might not last the 2 yrs.

chacha1
chacha1
8 years ago
Reply to  indio

Have to disagree. They are both still independent actors, they are not a single financial unit – that much is clear.

What would NOT be fair – for either party – would be for someone to spend more than they can really afford, damage their long-term goals, and carry resentment about that forward.

The SO is in a position to do whatever s/he wants. If a vacation (or other lifestyle expenses) is THAT important, s/he should cover the cost. If it’s something s/he can’t afford alone, that’s IMO a red flag about the expectations involved.

Panda
Panda
8 years ago

My partner and I have these types of discussions quite a bit. By Orman’s advice, I can afford almost anything, but it comes back to JD’s idea of I can afford _anything_ not _everything_. So we use targeted savings, but then I get slightly concerned when what I’m doing is raiding one savings account for another or changing the priority of my goals.

Ivanka
Ivanka
8 years ago

Have you discussed very clearly with your significant other what are her goals (financial or lifestyle) for that period? It would help if you plan together and you may need to invest a bit (or rather accept some financial tension) to keep her happy. Relationships are all about balance. When I did my MBA, my husband (we had just married and came to US from abroad) left his job to join me – and spouses of students are not allowed to work. He started his own MBA next year, so we had 2-3 very difficult years, but all our finances… Read more »

Corinne
Corinne
8 years ago

My husband and I are having this same dilemma right now. We have the money now to be less frugal and afford some of the luxuries that we want but how do you decide which and how much? It’s all kind of arbitrary when you’re in a good financial place. Will saving $100 month more make us happier long term than spending it on something we enjoy? I don’t know.

Pamela
Pamela
8 years ago
Reply to  Corinne

Are you in a place where you could begin to or increase your giving to causes important to you?

That will bring you even more joy than figuring out if you can spend a little more on yourselves.

Financial Manager
Financial Manager
8 years ago

If I’m doing a quick review of my finances, I will simply add up all of my monthly bills including rent, utilities, hair cuts, food, clothing, gas, car repairs, home repairs, credit bills, and student loans. Anything left over is completely disposable and can be used any way I’d like.

Keep in mind that if you use this money to create a new monthly payment, your disposable income will decrease moving forward.

K.C.
K.C.
8 years ago

My experience has been that we can always afford that which is most important to us. If graduating debt-free is your top priority, your spending will reflect that. If making your significant other happy is more important, your spending will reflect that.

Adam P
Adam P
8 years ago

This article brings up two distinct but interesting topics to me. One is: is an enjoyable vacation worth slowing down or delaying a financial goal such as becoming 100% debt free or an 8 month emergency fund or what have you. and two: What sort of compromise is to be made between two people in a serious relationship (perhaps not married yet tho) where one person makes significantly more than the other? I struggle with both these issues. I am saving for a house downpayment, which here in Toronto with soaring house prices can never quite be big enough (I’m… Read more »

Katie+B
Katie+B
8 years ago
Reply to  Adam P

Go to Buenos Aires. I was in your position a few years ago, chose to save the money, and have regretted it since. It’s tricky with savings, but you can’t lose the forest for the trees.

lawyerette
lawyerette
8 years ago
Reply to  Katie+B

Ditto. There’s money, but there’s also living. I would go, do it as cheaply as I could, but still go.

Jaime B
Jaime B
8 years ago
Reply to  Adam P

I agree with Katie. Based on what you’ve written here, I would go to Buenos Aires. You have to have balance in your life, especially when you’re not riding the poverty line. I’m assuming that if you’re able to sock away 100k for a down payment, then you don’t have any other debts weighing you down and aren’t the working poor. So in that case, it doesn’t make sense to not do something so special for yourself and your friends.

Mary
Mary
8 years ago
Reply to  Adam P

Go to Buenos Aires. Finances aside, it’s just an amazing city!

El Nerdo
El Nerdo
8 years ago

The local vacation was the smart choice obviously. The problem seems to me not a financial one but a… what do you call this… “relationship” one. How to make compromises. You are being pressured to spending beyond your means, the other person is being forced to cut back in their “lifestyle” (whatever that means). It’s always that way in a relationship, one way or another, you give up something for something else. If it’s not money it’s where you choose to live, or whose career takes priority when there is a conflict, or whether you have children or not and… Read more »

chacha1
chacha1
8 years ago
Reply to  El Nerdo

I agree, this is a relationship issue more than a financial issue. No Debt MBA has been very clear about what s/he wants. The SO (and by the use of that term I infer that they are *not* married and probably not living together – or, if living together, they probably split the costs 50/50) is not being quite so clear about what s/he wants. The MBA program can’t have been a surprise. It’s for a finite period of time. There is a plan in place. IMO the SO needs to come clean about whether *any* lifestyle contraction is acceptable.… Read more »

Mom of five
Mom of five
8 years ago

Are you two married? If so, I think you might have a deeper issue. Everything was my savings, my values, etc. Even if spouses keep separate finances, goals should be respected and if one spouse places importance on a nicer vacation, well, then that needs to be a mutual goal, just like a debt free MBA needs to be.

If you’re not married, I guess I hope it’s not in your future unless you can get better at compromising.

Julia
Julia
8 years ago

Presumably you’re going into a top-tier MBA program so you can get a high paying job after graduation. You won’t be able to contribute any more into the Roth IRA once you start making that six-figure salary.

Instead of taking money out of the Roth IRA, you should be putting in *more*. As other posters mentioned, you’re better off with a low-interest student loan if the vacation is really such a priority.

spiralingsnails
spiralingsnails
8 years ago

Since I was living off of financial aid during college I had multiple shorter time-frames to work with, but it was a similar situation of having a large chunk of money at the start of each semester that had to last me not just until the end of the current semester but until the next semester’s financial aid check would roll in. So basically I took the total amount of money I had at the beginning of each semester (say $4,000), subtracted the amount I wanted to have left over as a safety cushion at the end of the semester… Read more »

Samantha
Samantha
8 years ago

I felt like this article did not belong on GRS. This isn’t up to the standards. It isn’t a good article, it doesn’t bring up any good points.

And how many times can you say “significant other” in one post? (Seven, apparently) I found it a bit off-putting.

chacha1
chacha1
8 years ago
Reply to  Samantha

I thought the use of Significant Other was probably to mask gender so that gender roles did not become a topic of discussion.

It’s a different sort of article, bringing up a question that MANY couples face, so I think it was very worthwhile.

Mom of five
Mom of five
8 years ago
Reply to  chacha1

The thing is the answer to this problem is so different depending upon the relationship. Is the significant other Mr./Ms Right or just Mr./Ms Right Now? And gender doesn’t matter. If it’s just a right now sort of relationship, then NoDebtMBA should be upfront and save the money. But if it is (or soon will be) a marriage situation then NoDebtMBA needs to suck it up and take the vacation they’ve planned and looked forward to for a long time, particularly since the SO really still wants to do it. Dying on your sword for $1000 if it’s the person… Read more »

Bareheadedwoman
Bareheadedwoman
8 years ago
Reply to  Mom of five

how is entering into a three way contract necessary for determining the commitment factor in a “SO” relationship?

Would it have helped you if they stated how long they have currently and whether or not they planned to be together indefinitely?

Some of us choose not to enter that contract just so WE can make the choice on which finances to keep separate rather than having an outside entity make those choices for us.

The government does not define one’s commitment to another human (but not for lack of trying on its part).

RJ
RJ
8 years ago

In general, please don’t make the mistake of thinking that since you’re significant other will be making more money than you, the amount of money you spend to “keep up” so they don’t have to adjust their lifestyle represents how much you care about them. And if there is substance to the relationship it won’t make or break how they feel about you. But more specifically to your dillema, if you’ve been discussing this vacation for a long time then what was your plan to pay for it then? What had you talked about? If your significant other is upset… Read more »

Kevin+M
Kevin+M
8 years ago

If it is just cold feet, like you mention, take the trip you’ve agreed to and figure out a way to make up the extra $500 in the next 2 years. It’s not THAT much money to risk pissing off your SO.

That being said, an honest conversation with your SO about your fears might convince him/her to reconsider. Something like “My first tuition payment is due shortly, I’m worried about cash flow, what do you think about a less expensive vacation?”

Lindsay
Lindsay
8 years ago

I guess I’m getting hung up on the details, but I don’t understand why you have to spend $1000 to go backpacking. Why don’t you go camping at a nearby National Park for three nights and spend only $250 on gas, camping, admission to park, and groceries to bbq? You will have a fun experience, a few days out of town and not stress about it costing so much to get away. I’m in college right now. My tuition is paid, but our living expenses and incidentals are not all covered by my husband’s income. So I will probably graduate… Read more »

Amanda
Amanda
8 years ago
Reply to  Lindsay

Instead of *new* camping gear what about Freecycle or Craigslist?!

SV
SV
8 years ago

If I were in your position, I think I would open another bank account (maybe even a 3-month or 6-month CD) where you could stash your tuition money until you need it. This way, whatever is left in your regular bank account(s) is fair game, and you’ll earn a little extra interest on the money for school! Good luck!

Katelyn
Katelyn
8 years ago

Don’t be cheap, especially if you’d already decided to go. Go on the trip with your partner, see your friends, have some good food, and come back refreshed

Jeffrey Trull
Jeffrey Trull
8 years ago

This is a very intriguing problem. My girlfriend is also in school right now, and she knows she won’t be able to make it out without depleting savings (although she doesn’t have the same debt-free goal that you do). I don’t think this has to be an “all or nothing” situation. I know you’re committed to finishing debt-free, but what if you were only $1,000 in debt? Would that really be that different than having no debt? I think it’s cool to say that you got your MBA without debt, but I’m not convinced that taking on a little bit… Read more »

Ely
Ely
8 years ago

I had this problem when I was under-employed. When you barely make enough to pay rent and the debt load is climbing, you can’t afford anything. Even when you can pay your bills but you have no cushion, you can’t afford anything. Trouble is, when you can’t afford anything for a really long time, the temptation is to just say “screw it” and do what you want. I know I did this more than once. Maybe it kept me sane; maybe it just set me back. A tough question indeed.

Tyler+Karaszewski
Tyler+Karaszewski
8 years ago

significant other, significant other, significant other, significant other, significant other, significant other, significant other…

It would be a lot less repetitive if at some point you just started writing “he”.

chacha1
chacha1
8 years ago

True, but maybe it’s not a “he.”

As I wrote above, I think the use of S.O. was to mask gender, because anyone who reads GRS knows that once a relationship question comes up, the marriage police come out of the woodwork and the discussion becomes all about gender roles and not about the immediate question.

Which in this case is really “how much do I compromise my financial/life goals to please someone I care about who isn’t directly contributing to those goals.”

AnneD
AnneD
8 years ago
Reply to  chacha1

There are no marriage police here. Just people with opinions.

In my mind, once you are serious about being with someone gender doesn’t make a difference. The real issue is how to consider their needs and wants and how your relationship is affected by your goals.

It’s a perfectly valid part of the pf puzzle. The personal part!

Ryan
Ryan
8 years ago

I think the poster needs to consider the opportunity cost of his time, get over the cold feet feeling, and take the silghtly more expensive trip. It’s quite likely that this trip will occur, if not now, at some point in the future. (Since it’s to visit friends and obviously important to SO). After the poster completes the MBA, and perhaps becomes an employee, it will require use of paid time off. So the question to me is “how much does the poster anticipate valuing a week’s vacation time in the future?, because not taking the trip now (while unattached… Read more »

Shara
Shara
8 years ago

I threw out the concept of *afford* a long time ago as a conscious decision regarding a specific friend. She made considerably less than me and in some contexts the phrase “I can’t afford it” felt almost patronizing, so I switched it with “That’s not in my budget.” That concept applies here. Your problem is that your budget isn’t defined, or your budget IS defined and you don’t have enough to cover everything (sounds like the latter). So you have one of two options: 1) Write a reasonable budget including vacations and other non-survival expenses and everything gets an equal… Read more »

Ginger
Ginger
8 years ago

I do agree that you worry too much about the No Debt part of your MBA but I understand why. I still think you should pull out the full subsidized portion of your student loans the first year and still them in a high yield savings or checking and make some money on it but it is your choice. Either your money in your Roth was for education and your expenses (which may or may not include vacation) or it was for retirement, which was it? I doubt you have the money that might be needed for school in stocks… Read more »

Jake
Jake
8 years ago

As someone who went to & graduated from a Top 5 business school, let me offer some observations: Typically you have less money and more time / opportunity to do unique, fun stuff before or during b-school, while you have more money, less (no) time after b-school, esp. if you have kids. You need to trade-off on that dimension. When I was in business school I was quite frugal and opted out of some of the fun but expensive stuff like an internship in Uruguay, trip to New Zealand, trip to China etc. Looking back, I wish I would have… Read more »

lawyerette
lawyerette
8 years ago
Reply to  Jake

I’m going to echo this, and add in the fact that you will miss out on the biggest part of the experience at most top 5 MBA programs – the networking – if you aren’t willing to go into debt. Like it or not, most of your classmates will be taking trips all over the world and running up bar tabs. I went to a top 5 law school, most of my close friends graduated from HBS/GSB/Columbia/Kellogg/Wharton, and it’s the same thing everywhere. While you definitely have the right idea about keeping a lid on the debt and not going… Read more »

Emily
Emily
8 years ago
Reply to  Jake

Co-signed. Also, why on earth are you going to business school if you can’t spend $1000 to visit friends? B-school is a silly investment proposition if you aren’t prepared to spend money (a lot of money) in order to build relationships and a great network. I’m a graduate of a top law school and I think you’re CRAZY to put your friendships and your SO behind your “no debt” fixation. Way better investment would be getting a part-time TAship or RAship while you’re in school.

KDB
KDB
8 years ago

A great question to ask. You can approach it strictly from a numbers point of view, but you lose some perspective. You need to consider more than just what you “can” afford by adding some prioritization to your spending needs.

Amber
Amber
8 years ago

Was there a reason that camping on the west coast was ruled out? Plane tickets are very cheap right now too. It seems like you could bring down that $1000 with a little more effort invested in planning and still get the destination and visit with friends you both really want, before you get completely tied up in MBA-Stuff.

NetWorthProtect
NetWorthProtect
8 years ago

First off, great job on pursuing an MBA debt-free and for really thinking through your expenses. Not tapping your IRA or taking on debt for vacation is definitely a wise choice. I think one more year of roughing it through year two of your MBA and then you can really treat yourself. Hopefully there will be a job out there for a freshly minted MBA and you will be in a good spot. Let’s just hope the economy holds up for you or your blog keeps going strong…. wishful thinking

phoenix
phoenix
8 years ago

My problem is that you seem to change the rules of the game an awful lot. Initially, you told your SO that you were planning to use your Roth IRA as a vehicle to save for your MBA, as well as for retirement. Now, you phrase it as if you followed up on YOUR initial idea, you would be “raiding” your retirement funds, even if it’s for this small amount and YOU had planned on using at least part for this money during your MBA. Next, you mentioned that you and your SO talked for quite some time about a… Read more »

Sara
Sara
8 years ago
Reply to  phoenix

Totally in agreement with you! It sounds like NoDebtMBA’s SO already made tons of frugal decisions to be able to afford the trip – and then she’s changing her mind because it’s still not cheap enough. If I were the S/O, I would be extremely upset that “MBA with absolutely NO Debt” took priority over our relationship, and a special trip that we had been planning for a long time.

Rosa
Rosa
8 years ago
Reply to  phoenix

My partner would do this – every bit of savings we had, no matter where/what it was put or earmarked for, he would find some reason not to spend. Some whatif. But I’ll need that money to replace the roof someday! Or what if the car breaks down completely? We finally put a cap on the “emergency” fund and started an additional “spending” fund. NoDebtMBA should have a place tuition money is kept, and save separately for other expenses (like this trip) so she’s not tempted to either overspend and not have tuition money, or overworry and not get to… Read more »

Laundry Lady
Laundry Lady
8 years ago

I agree with above posters that “Can I afford it?” really isn’t the right question. Yes, you can afford it. But is it compatible with your financial goals? While the Suze Orman formula is ideal, it won’t work for all of us. Based on that my husband and I shouldn’t purchase a luxury as small as a pizza for the next 10 or 20 years. Sometimes when you are faced with large debt (like our nearly $50,000 in student loans) you need to allow for small luxuries, assuming that you plan for the costs in advance and don’t get caught… Read more »

Janice Salomon
Janice Salomon
8 years ago

All things being equal and planned for—just toss a coin. Your heart will tell you which side you want. Go with that. Seriously. If you’ve done all the work saving, budgeting, planning, etc., what possible difference could $500 make in terms of a lifetime of good times with people you love. Take it from a 64 year old. Plan the work, work the plan and have fun every once in a while. Don’t sweat the small stuff.

El Nerdo
El Nerdo
8 years ago
Reply to  Janice Salomon

Maybe to you it’s small stuff but this person is having to choose between tuition payments and the trip. You can’t squeeze blood from a rock. No money means no money.

Amanda
Amanda
8 years ago

Don’t go. I can “afford” a lot of things, because I have money in the bank. But if they’re not categorized in vacation or eat out, I don’t do it. You’re stealing from your future self if you go. There are times when I “blew” my budget and just went. Looking back I wish that I hadn’t. I do think you should go on an alternative trip. A camping trip that costs next to nothing close to home. If SO wants to go visit friends and SO has $1000, SO can go alone. But if you’re expecting SO to pay… Read more »

Rosa
Rosa
8 years ago
Reply to  Amanda

It’s not like the spouse who gets done with law school and trades the long-suffering first spouse for another is an unheard-of story.

Otherwise I agree with what you said – expecting the SO to pay for something at the last minute, instead of talking about it in the initial planning, feels manipulative and unfair.

smedleyb
smedleyb
8 years ago

First, congrats on your desire to graduate debt-free. Student loans = modern day indentured servitude.

Second, if you love the girl, and the trip is worth it, invest some money into the relationship and take the better trip. Experiences are priceless. And we’re talking about a few hundred dollars here, which is a mere pimple on an Elephant’s arse as far as a your financial future is concerned.

Brodie
Brodie
8 years ago

You should find out about Health Month, a site that makes healthy lifestyle behaviours into a game.

maggie
maggie
8 years ago

One thing to keep in mind, there’s absolutley nothing wrong with seperate vacations either. Go camping together – then if your partner still feels they want to do something more and can afford it, there’s no reason they can’t go ahead and do that too on their own.

Meg
Meg
8 years ago

It seems to me that a compromise had already been reached and now you are trying to back out or change the terms due to your “cold feet.” If you have realized that you’re not comfortable with vacations after all while you’re getting your education, that is something you can keep in mind going forward. But it’s unfair to try to back out of or change plans that have been made. However on the larger question, the bottom line is that the sacrificing needs to go both ways. SO is spending less than s/he could and wants to, and occassionally… Read more »

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