Taking student loans even though I don’t “technically” have to

A thing that I’ve been struggling with lately is the amount I should save money for hard times vs. how much I will spend enjoying life these days. One of the initial post I’ve written for this blog was about an MBA student who took out extra loans traveling. Now, more than actually, I understand why he / she did so. Many personal finance blog writers have written on spending cash to travel while they have outstanding student loans or financial debt, so this isn’t a new dilemma.

Here’s the thing in relation to CB’s grad school practice – we don’t “technically” have to obtain student loans – at the very least not right now. We are able to squeeze by, maybe which has a $5, 000 bridge financing from family we will repay once When i start my full-time career next year. But now I will be considering taking out $20, 000 so that we won't be feeling such a fiscal crunch next year. Before I get kicked out from the personal finance blogger clb, though, let me condition my case.

Here is my thought process… that begin with taking out a Stafford bank loan for CB’s tuition up coming year.

We have about $65, 000 in savings today, that will have to be able to last us until August/September of 2014 once i start my full occasion job. This $65, 000 will have to pay for (a) the last semester of educational costs at ~$22, 000, (b) CB’s educational costs for Winter/Spring quarters, (c) our Roth IRAs for 2014, and (d) all our bills until I start the job. We will end up being barely scraping by. If we sign up for a $20, 000 Stafford bank loan, however, we can cover CB’s tuition and bills and have an extra cash to play with with regard to summer travels and with regard to maxing out my 401K within 2014. 2015 will be the first full year of earning a salary since 2011, so that if I pinch several pennies, I will have the capacity to max out our Roth IRAs ($11, 000) and pay for CB’s tuition/living expenses ($42, 000) all away from my salary, which post-my max-2015-401K contribution will be somewhere around $7, 000/month.

About the one hand, student loans are debt that could really weigh you decrease. On the other side, I also really wish to enjoy our time together come july 1st, take advantage of the spare time I would have before I start working, and make up to the 401K contribution that I wasn’t able to make in 2013. The particular $20, 000 Stafford loan will be $22, 040 once curiosity (8. 5%, 1% loan fees) is factored in, for a 2-year settlement period.

Bottom-line, I am seriously leaning towards obtaining a $20, 000 education loan for CB’s graduate school (so that this money we would have allocated to his tuition would visit travel in the summer and I am able to max out my 2014 401K).

Most of my MBA friends come in the same boat. Many of them are studying abroad along with planning big trips through Asia to Australia to be able to Europe, from Latin The usa to Africa, and again. I have talked to be able to different alumni, actually, about this very topic of obtaining more student loans so that you can travel. I want to be certain I’m not being too shortsighted once i forgo these opportunities, but I also wish to be careful about mortgaging the future.

Several MBA alumni I’ve spoken to said that this money they’ve spent was all worth the cost – even though they had to defend myself against more loans for your travel portion than they can have otherwise. After most, most of us obtain good jobs after graduation that will allow us in order to the loans. And when you finally start working, the vacations get genuinely compressed and it’s rare to travel with your friends or spouse for weeks on each time. One alum, however, offered a slightly unique perspective – he said it absolutely was easy to get overly enthusiastic during school, continent-hopping each and every break. The experience, he / she said, was phenomenal, nevertheless the cost is pretty heavy also. And now that he has been out of school for 5 years and working hard in order to his student loans, there are moments when he wishes yet have spent more conservatively during school.

While i graduate from my method, the only debt we now have are undergraduate college student loans at ~$18, 000 (at a weighted interest rate of 2%) and the ~$2, 500 car note (5%) we are not in a rush to pay off. Committing to more student loans if we could have technically scrimped our way through sounds like a terrible personal financial decision, but I’m thinking it’s a superb life decision. I wish to think this through several more…