Personal Discount Rate
I have been thinking about myself as an investment class. I will start in a few months at MBB making about $90k. If I stay, I'll be pulling down $170 in two years. Both of those numbers are significantly more than my broke-ass current net worth. My question is, with my annual growth rate at >50% CAGR, should I be blowing cash now and carrying credit card balances for a few months until I start?
I ask this because some 2nd year analysts in my office told me that I should spend every cent I have and then some. They have 60k just sitting there and each pay check makes them no happier. They say 5 grand in school would have made me happier than 20 grand now.
What do you think, have the summer of my life and start in August in debt a few grand that I can pay off with my first paycheck?
Mathematically/logically, you should be overspending now based on the premise that your income will accelerate at a rapid pace and each dollar gives you more marginal utility now than it will in the future.
However -- if you ever get tripped up along the way (lose your job), you'll quickly find yourself pretty screwed. So the real question becomes, how risk adverse are you?
FYI -- You'll quickly realize that a few grand is nothing once you're making $90+k a year.
Agree with the above. In addition, there are a bunch of cards that offer introductory 0% APR for 6months or more... look into one of those and then your personal discount rate won't even matter.
Seriously, go out with a BANG.
We talkin kegs of Bud Light!!
Be careful...a little overspending is fine for now, but don't overdo it (unless your parents are loaded and can bail you out).
Besides, money and enjoyment are not uber correlated. I've had just as much fun getting a $5 pitcher with friends at a bar than I have spending $500 at a club. No need to go crazy...be smart with your money.
Start by not referring to yourself as an asset class because you sound like an idiot. Everyone should build a cash cushion or emergency fund that includes 3-6 months of living expenses. With that said, you should absolutely have a blast before beginning work as I suspect that the life of a consultant is fcking miserable.
Hire some high class hookers and then try and swipe your card in their ass.
Thanks to the first few of you. The rest, I guess, come as expected. Not really sure how I would describe it, but CompBanker captured it pretty well.
I feel pretty secure in my upcoming position, really no chance of layoffs. Growing, severely understaffed office. Parents wouldn't bail me out though...
My only question is if it is worth it to get another credit card. I have $10k+ in limit on a few cards with perfect credit. If i go about 4g in debt at 13% interest and carry it for about 3 months, it ends up at about $200. Dealing with credit card companies when applying is always a pain in the ass with income verification and shit. Worth all that to prevent $200 in interest charges?
3rd year consultants make 170K? I thought it would be way less...especially before MBA
What would be the appropriate discount rate to use (Originally Posted: 05/20/2011)
to calculate the NPV of child support? And how much extra risk do I need to account for since the baby daddy is a gambler/trader.
Horizon is 22 years since the sucka has to pay for college.
Thanks!
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