$160K in MBA Debt and How I’m Managing It
$160K in MBA Debt and How I’m Managing It
This is an interview with Tamar Nisbett.
I am from Brooklyn, New York, but I recently moved to Los Angeles to start my job as a content strategist at Netflix. I graduated from Stanford Graduate School of Business with my MBA in June 2020, and accumulated six-figures in student loan debt throughout that journey. It was a lot of money, but I definitely think it was worth it. That said, I had to figure out the loan journey myself, and didn’t know anyone from a similar background to me who I could ask about how they financed their business school journey. So, I hope to help those on their debt-free journey.
How much student debt are you tackling (or have tackled)?
I took out about $160,000 in student loans to get my MBA at Stanford. Saying that number sounds crazy, right?! Business school costs about $125,000 per year, and between financial aid and my savings I covered about $90,000 of it, but needed to finance the rest. Could I have taken out $140,000 in loans instead? Probably, if I sacrificed eating out and living in a great house and traveling. It sounds silly, but these are the extra things that make business school a special experience, and I didn’t want to miss out on them. I would have to pay back loans no matter what, but I couldn’t get the time back that I spent with my friends. This is certainly not everyone’s approach to business school, but I’m glad I did it big.
I also technically had access to savings in my 401K, but knew that it would be a better idea to take out loans and pay them back, rather than use all of my savings and retirement money.
What was your financial situation growing up?
I grew up in Brooklyn, NY, (the best borough - not biased!) and come from a humble background. I had everything I needed, but my parents couldn’t have afforded to send me to private schools without immense financial aid. I was fortunate to receive a full scholarship to attend a private boarding high school. Many kids there were from wealthy families or connected to business and politics in a way I didn’t even know existed. Being in that environment expanded my mind to what I could accomplish. Afterward, I attended Columbia University for my bachelor’s, and received enough financial aid that my family paid almost nothing. I didn’t have any debt in college because of the scholarships I received, for which I’m very grateful. This also meant that I was figuring out the loan process for the first time in grad school!
How have your views on money changed over time?
I don’t think I’ll ever feel like I have enough money to not worry about not having anything. Logically, I know that’s not necessarily fair, but I still have a feeling that I’ll wake up and everything I worked for will be gone. Even now, I’ve worked at large tech companies and have multiple degrees, but I still feel like “I don’t have any money.” I’m not sure that feeling will ever go away. But, I think that’s okay! I am super proud of where I’m from, and of my family for giving me everything they could. And this feeling I carry with me has made me good at saving money (although there was a time where I wasn’t good at saving) - definitely a plus.
What was difficult or confusing at first, and how did you navigate the challenging times?
The most challenging part of paying off my debt was figuring out how to start. I didn’t have really good friends to reach out to and ask how they were handling their student loans.
The second hardest thing was finding my lenders! It was a mess. The company that had my original loan was bought by a different company, and I had the hardest time simply finding where to log in to see all my loans. That took a few days, but after that, everything went more smoothly.
Can you tell us a bit more about your financial progress and what your goals are?
For two years, I spent a lot of money on business school and made zero dollars, so I definitely felt that I was starting from scratch when I graduated. My first goal was to refinance my loans so I wouldn’t pay as much in interest (which I did). My other goal was to build up my 6-month emergency fund – I am super proud that I’m almost to that goal!
What are some budgeting hacks you’ve tried that have worked for you?
Automatic savings are my jam! Set it and forget it. I never want to see the money in my checking account that I don’t even want the opportunity to spend. At work, I can determine how much of each paycheck goes into my checking account versus my savings account, so I truly never have to worry about transferring money to my savings myself. I also have an investment account with Wealthfront, and that account takes money automatically from my savings account.
In my budget, I know exactly how much I’m making per month, how much of that is going to student loans, how much of it goes to rent, and other monthly expenses. I check in with my finances through the Mint app to know what is happening weekly, but I like knowing that if I were to do nothing and leave it alone, everything would be taken care of.
What are some of the strategies you implemented to pay off your debt?
I just made my first student loan payment, and I feel really happy because it has a much lower interest rate and payment than my original loan. Also, if I ever want to pay off the loan early, there is no fee. So, even though I’m at the beginning of my student debt-free journey, I feel confident about paying it off. And, it’s fun to see the amount I owe go down every month.
When did you start taking your wealth-building journey?
I started to think about building wealth when I started working at Google. Google had a great 401K match program, and employees receive Google stock, so I felt like I should know a little bit about both of those options. I tried to max it out my 401k every year. Even though I was interested in saving, I didn’t start creating specific goals around wealth building until more recently.
What are some money habits you adopted?
Automating savings and checking is number 1! Another habit I adopted by accident was cooking more. Due to COVID, I started cooking more habitually, and it was really fun, but I also saw how much money I was actually saving. Now, if I buy coffee, it’s more of a treat where I go on a walk and make it a whole thing.
I also try not to use apps for food delivery as much as possible for two reasons: 1)they take a percentage of the restaurant’s profit, and we’re trying to keep restaurants alive these days! I do sometimes order delivery but much less often than before. 2) I save more money by ordering directly (yes, picking up the phone!) and walking or driving instead of paying delivery fees. I support local restaurants and save money–it’s a win-win.
What would you tell your younger self?
I would tell young Tamar to look at what she is spending. I used to look at my account and say, “Omg, I don’t have any more money left!” but I didn’t know why, and the task of finding out seemed so daunting that I never really took a closer look. I wish I had downloaded a system a little earlier to make the process of managing my money less scary.
I think I went from not looking at my account at all to obsessively tracking what I spend, and I try to live in a happy medium now. So my mantra is probably, “Treat yo self, but not too much.”
Three pieces of advice?
1: Automate your payments as much as possible.
2: If you have loans, be proactive and look into refinancing. It takes about 10 minutes to do a soft pull and just see if the market has something better for your bank account.
3: Have a positive attitude about your finances. When I was scared and nervous about looking at my account, I had a miserable time. But there’s no need to punish yourself. Grab a nice treat, review your account, forgive yourself for the stupid number of lattes you bought last month, and try to do a bit better in the next few weeks. It’s all good!
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