# How to balance debts and enjoying life?

TL;DR: I am currently struggling hard to balance paying debts and "enjoying life".

My situation is:

• I am 25, and I live in France.
• I have a double-degree from a top French Engineering school ("Grande Ecole") - and a top 20 American university. Degrees are Master of Science.
• I started working ~2 months ago with 39k€ (15k€ at 1.9%/yr + 24k€ at 1%/yr) in debts (due to the US degree).
• I have ~12k€ saved.
• I still have a couple years before having to pay the principal.
• I work at a great research institute, in 3D Vision, earning ~2400€ net/mo (the contract is for 18 months, up to 36).

My thoughts right now:

• Do a PhD as soon as possible, as it turns out to be necessary for my career. About 90% of people in my work environment either have a PhD or are doing one. Note that I can legally break my contract only after at least 18 months, with a 6 month delay (délai de carence, 1/3 of completed work time) if the PhD is in the same company.
• In France - or at least in my company -, there seems to be an "untold" age limit of ~27 for starting a PhD (can anyone confirm this?)
• As my expenses are quite small (I am living with my parents), I can save about 2000€ / mo if I don't do any "unnecessary expenses". This way, I can pay my debts before the 18-month limit and start a PhD right after.
• Not sure if it is relevant, but I am also considering having my own startup in a few years.

The problem is that I can pay off my debt fairly fast, at the cost (!) of not spending my money in anything else. People often tell me: "This is the best time of your life", "you should enjoy life", and this drives me nuts.

Reasons to pay off my debt as soon as possible:

• I won't enjoy peace of mind before paying it.
• I will earn significantly less when I start a PhD (~1700€/mo net ?)
• I will have more fun later?

Reasons not to:

• Enjoy life while "I am young" and not miss opportunities to have fun?
• The interest rate is small (< 2% / year)
• And what if I do other loans (e.g. mortgage)? Can I reasonably put off enjoying life to pay a mortgage in 10 years instead of, say, 30 years.

EDIT: Clarifications about the debts and interest rates.

• I would say the primary difference between someone under 27 starting a PhD and someone over 27 is that the older student is more certain that the PhD is relevant to their long-term goals. Leaving gainful employment to go back to school full-time is hard to do unless you know their will be a long-term payoff. – chepner Jun 10 '17 at 13:20
• With debt you enjoy life now and pay for it later. Without debt you get the pain out of the way now and enjoy life later. Generally it takes a long longer to get out of debt that it does to get into debt, so you decide which you want more. Some fun now and a lot of pain later or less pain now and more fun later? – D Stanley Jun 12 '17 at 20:27
• "People often tell me: "This is the best time of your life", "you should enjoy life", and this drives me nuts." - that is a sign of maturity. Mature people eat their vegetables before dessert. You know what they'll be when you're enjoying life later? Broke. – D Stanley Jun 12 '17 at 20:30
• @DStanley To pay now or not to pay now, that is the question... Though I'd really like to get rid of them asap as I'm not sure what I'll be doing in a couple years (I'm going for the PhD, but nothing is sure). Which is one of the main reasons why I'm asking this question btw! – user57430 Jun 12 '17 at 20:34
• Do not go into more debt if you are uncertain that you'll reap the benefit. If you can work and pay as you go that's fine but the last thing you want is a pile of student loan debt and no means to pay it off. – D Stanley Jun 12 '17 at 20:36

## 3 Answers

Your main reason to not pay off your debts right now seems to be:

Enjoy life while "I am young" and not miss opportunities to have fun?

I think the good news is that having fun usually does not require spending a lot of money. I would propose that most of the times when we considered something fun it had more to do with who we were with than what we were actually doing. Of course there are many fun things that are expensive, but there are even more fun things that require little money at all.

My suggestion to you would be to prioritize your debt in a responsible way such that you have a plan to pay it off quickly, but if something comes along that does require extra money, don't be afraid to make an adjustment. For example, you can try to put 2000€ towards your debt every month, but if some exciting adventure comes along that you really want to do and it costs 1000€ one month, you shouldn't feel like you absolutely must turn it down. That month you could put 1000€ towards debt and the other 1000€ towards the adventure. I wouldn't recommend taking an adventure every month, but I wouldn't always turn one down either. Besides, I think most of the time you can have lots of fun for free.

• Thanks, this makes sense. Do you have any suggestions about fun stuff to do around Paris? – user57430 Jun 11 '17 at 9:48
• @user57430 - unfortunately I do not live in Paris so I can't help you there. – TTT Jun 12 '17 at 16:46
• @user57430: Move somewhere else? My own ideas of inexpensive fun include hiking, biking, cross-country skiing and such, all of which are difficult to do in major cities. But tastes differ. – jamesqf Jun 12 '17 at 18:12

The title question suggests an answer - Balance.

There are countless stories of misers who saved their money but led miserable lives.

Keep in mind, you are looking at debt while still earning an income lower than you'll see after you get your PHD. Don't add more debt while working towards the PHD, but don't think that this is the time to aggressively pay it off, either.

I'd look at it this way - when you get a full time job, money itself will be cheaper, it will cost you fewer hours to earn the same number of Euros. When I was in college, the US minimum wage was just over $3/hr, but I had an engineering degree and back then, a starting salary of over$20/hr. While still in school, my time was precious, and the \$10,000 I borrowed (for spending money) was 3300 hours that I didn't need to work, but it was paid back with just 500 work-hours.

Your question also goes to the future, a home purchase. There are 2 approaches. First pay off the student loan, then save for the down payment. For many anti-debt people, this is ideal. But, if your goal is to be in the house sooner, save now for the down payment and only pay the minimum on the loan. Once you are in the house, you can decide to pay the student loan faster, but 1.5%? I'd just pay the mortgage faster.

I don't know the cost of housing where you will choose to live, but in general, I'd suggest finding the house that you can afford on a 15 year mortgage, but take out a 30. This will give you flexibility in your budget. Life happens, and it's tough to plan for every possible outcome. I'd prefer to have room in the budget for the first years in the house, and for potential marriage and the kids that may follow. It's far easier to pay extra on loans than to get lower payments when you realize the budget is too tight.

Happy to update/edit to address any comments you may have.

• stories of misers who saved their money: this is pretty much my fear... As a sidenote, my job as an engineer is my first full-time job (I earn €2400 net/mo). Is it underpaid, then? – user57430 Jun 11 '17 at 9:51
• In general, saving 15% will suffice, especially starting so young. If you can save this much, you can then budget the rest to balance between debt payoff and entertainment. No, 30K 'net'/yr is great. – JoeTaxpayer Jun 11 '17 at 10:28
• I updated my question clarifying the debts. Should I pay the smallest or the biggest one before? – user57430 Jun 12 '17 at 20:23
• The higher rate debt should be the first one to target with extra payments, if you go that route. – JoeTaxpayer Jun 12 '17 at 21:16

There's no formula for how much is the ideal amount to spend on entertainment and fun. As JoeTaxpayer says, it's all about balance.

Maybe relative costs are different in France than in the US where I live, but here, housing and the things that go with it -- electricity, heat, insurance, maybe a few other miscellaneous items -- are usually a huge portion of a young person's expenses. If you don't mind living with your parents -- and they don't mind having you -- you can save a lot of money.

There are lots of things you can do for fun that don't cost a lot of money. If your idea of fun is collecting fancy cars and making round-the-world trips, yes, that can get expensive fast. When I was in my 20s, my entertainment mostly consisted of going to movies, amusement parks, and occasional concerts; and playing computer games. Those aren't super expensive as long as you don't do them every day. And keeping my car running, which saved money over buying a new car.

These days I'm in a situation analogous to yours: I'm getting older, and so I'm trying to build up a retirement account so I can retire comfortably. So I have to balance how much I put away for retirement with spending on fun things now. I have certain targets, and so I budget that I will put this amount away for retirement every month, and my spending money is what I have left. I think that's better than, spend whatever I want on fun, and then put what's left toward retirement. The latter plan is probably a fast route to debt.