I wanted to write another entry about leadership, but I couldn’t shake the Finance jargon from my mind. We are fast approaching Finals season and I wanted to put down some random thoughts about our money situation.
Business school is just a tad bit expensive. It’s $100K+ that you’ll never really see again. If you do full-time, it’ll be even more since you’re foregoing your opportunity cost of income. You’d like to think that your diploma means something, but you won’t ever really know if that money was better spent toward a down-payment, car, or that really rare baseball card you’ve always wanted. Thankfully, I can’t really think of it like a financial ROI model (because I’d get really bummed out). If I did, well, I’d be a pretty silly investor with an insane appetite for risk.
In all Finance classes, they teach you about two concepts: time-value of money and the discounted cash flows (DCF) method for evaluating projects. Time-value of money is simply noting that a dollar today is worth something else tomorrow. The DCF method is just a fancy way of evaluating how much something is worth by how much money it’ll spit out adjusted for the time-value of money. As much as I tried to fit our personal finances into these models, I can’t make it work.
My wife and I are deciding on where to go this summer. We want to take one last major vacation before we *gulp* start a family… one day. *gulp* However, given that we’ve got major bills to pay *cough* (mortgage) in addition to Kelly’s new venture, we’re a bit strapped for cash to say the least. I am often reminded that our first date was at Boulevard, a pricey restaurant in San Francisco– I should’ve set the bar much, much lower.
We’ve been eating at Subway a lot lately. We learned the entire menu. We know which sandwiches are $5 foot-longs and when to stop by to land a fresh batch of snickerdoodles. I’ve probably gone through 20 free cookies from my loyalty card alone. Days of $20 entrees are now a distant memory.
It’s not my intention to paint a sad situation. I’m really trying to say is that I’ve learned to enjoy what I have. The reality is that most of us will finish with a marketable degree and hopefully, some money-savvy to boot. It’ll keep us off the streets, so the two years of Subway and movie matinees are less like survival training and more like an appreciation of what you have. Due to our lack of disposable income, we’ve learn to live without a lot of things. We live without cable and we drive a decade-old Honda Accord.
When I was at Walmart, I’d always hear stories about how Mr. Walton would drive around his beaten up truck despite being one of the wealthiest men in the world. I think it’s that level of frugality that makes money mean something. I always hear stories about how Americans don’t save enough and it’s a big fear of mine that I’ll fall into that trap. My wife says I’m way too frugal to even come close, but when you start going into major debt (due to school and a mortgage), you start thinking, “hey, what’s another few grand?”
Unfortunately, they don’t really teach you personal finance in business school. Then again, maybe that’s why we’re willing to shell out $100K+ for a degree!
