

MBA Repays $100,000 Harvard Student Loan in 7 Months - codegeek
http://www.cnbc.com/id/48925884

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debacle
How many graduates are:

    
    
      1. From Harvard
      2. Making over 100k
      3. Have a house
      4. And a retirement account
      5. Have 1300 a month in disposable income.
    

This is pretty much a non-story.

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maxerickson
Harvard MBA discovers personal budget!

The part where he cashed out the IRA at a 40% penalty to do it does suggest
that much of the debt problem that gets so much attention is personal in
nature. I would think it might occur to an MBA to apply a little bit of that
business training to their personal finances.

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genwin
It's a 10% penalty. The rest is presumably taxes that were just deferred
anyway. If the guaranteed rate of return for the IRA was 1% and the student
loan was 5% interest, he'd easily come out ahead by retirement. Especially
since tax rates will almost certainly be a lot higher in the future.

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maxerickson
You comment elsewhere about a $99k IRA. It was a $12k IRA.

He netted ~$8k from selling it. That adds a few months of whatever he was
doing to come up with the part that wasn't covered by the IRA and bike.

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elchief
1\. Don't be poor

2\. Don't be not rich

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ChuckMcM
I think it is more interesting that folks that graduate from college don't
know how to budget. A surprising number of young people I've interacted with
were astonished at my 'you can leave easily on $500/month for food' comment.
[1]

[1]
[https://docs.google.com/spreadsheet/ccc?key=0Atwe7dq6iPQHdDU...](https://docs.google.com/spreadsheet/ccc?key=0Atwe7dq6iPQHdDU2bjNBY1AxMTE1R3pNMWVFLTgzZFE)

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dfxm12
He _cashed out a retirement plan_ to partly pay down his debt! He is less
stressed about this!

Some people have more money than sense. Student loans are relatively low
interest & you can take your time paying them off. The future value of the
money is that retirement plan is going to be so much more than any interest
that would have accumulated on the loan.

Debt isn't necessarily bad!

~~~
debacle
As someone with a drastically negative net worth, I can honestly say that in
this economy having debt around your neck is much more stressful than I am
really comfortable with, even considering the low interest rates on student
loans.

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dfxm12
My point is: is it stressful just because you _feel_ it is stressful, or did
you actually put a plan/budget together and feel stressed out after looking at
the results of that?

Think about this, would you rather be stressed about this now, when you have a
lifetime of earnings & potential ahead of you, or later, when you realize you
can't retire when you want to because your retirement fund is low?

N.B.: I don't know your specific situation, but I'm speaking in general
terms/about the article.

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debacle
Logically, it makes more sense to pay off the loans on schedule, and put
additional payments into a vehicle that will provide returns that will outpace
the interest rates on the loans.

However, personally, I would rather have no debt.

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s_henry_paulson
Step 1: Adopt Frugal spending habits, and focus on paying down your debt.

Step 2: Write a book.

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rprasad
TLDR: Wealthy individual from wealthy family who already owns a home, a car, a
motorcycle a sizable retirement account (for his age), who made almost
$100k/year (at the start of his experiment) and has $1300 in disposal income
each month _after all expenses_ was able to pay off his loans in 7 months.

For those of us who are not already wealthy, this is a non-story.

