Graduation Present or Pay Off Debt?
In just 2 months from now, I should be graduating with my masters degree from The Johns Hopkins University (an engineering degree, not medical). I was accepted in May 2007, and started my first class in September 2007. Now, over 2 years later, I have just 2 classes standing in my way. It’s been a stressful 2 years, and lately my personal and professional life (including this site) have taken a hit due to the stress.
While the program cost roughly $28,000, with a combination of tuition reimbursements (last employer) and a sign-on bonus (current employer), my out of pocket cost for this program was $8,000 or so (I don’t have Quicken with me to check the exact amount). Not bad for a full masters degree from a prestigious, private university.
What is my graduation present?
Good question! For the last 2 years, I’ve been lusting over flat screen TVs, but my wife has told me I need to wait till I graduate to get one as a present. Although I could have just went out and bought it with cash (thanks to getting rid of so much of our other debt), I honored her wishes this whole time. Now that the end is sooooo close, I’ve been picturing that TV in our living room, especially with football season and the fresh fall TV schedule in full swing.
But I’m not settling for any regular flat screen TV. No no no, I want an LED LCD TV. These are the latest TVs that are lighted by light emitting diodes (LED) rather than fluorescent tubes (or plasma, which isn’t really a backlight). The LED LCD TVs are thinner, more energy efficient and give more of a “true black” than regular LCDs, without the ghosting effect that plasma TVs get.
While I’ve been saving up for the TV, and prices for LED LCD TVs have dropped drastically in just the last few months, at $2400 and up for the 50″ range, they’re just too expensive to justify, especially compared to their fluorescent counterparts. So what do I do?
Are we out of debt yet?
Another goal that I had was to pay off my undergraduate student loan before I graduated with my masters. Right now, that amount stands at around $6,000. I had the money ready for it, but unfortunately we had to spend $7,000 for pool repair this fall (the bill is yet to arrive).
Which goal is more important to me? Spending $2000+ on a new TV or paying off my $6000 student loan?
I’ll have to admit that I REALLLLLY want that new TV, but right now, the debt is nagging me. While I’ve been back in school, the loan was placed into deferred status, and the federal government has been paying the interest on the loan on my behalf. I’ve still been paying $200 a month over the last 2 years, sometimes more, but haven’t felt pushed to get rid of the debt since I wasn’t paying interest. But now it’s crunch time for 2 goals, and I can only work towards one.
TV or Debt Reduction?
I actually already had this conversation with my wife this past week, and I think I surprised her by saying I’m going to pay down debt and postpone the TV purchase. One reason is that I want to get out of non-mortgage debt ASAP, but the other is that I think the prices on these new TVs will come down even more. I’m willing to spend up to $1500 for a high quality 240hz LED LCD TV in the 50″ range, but not $2500-3000.
For now, I’m going to work hard to pay off that student loan debt. I don’t think I’ll get it paid off in the next 2 months, but at least I can cut it down by another third or more.
And perhaps I’ll make a good example for you, my readers 🙂