Whatisthis wrote: ahduth wrote:
Whatisthis wrote:So, the OP’s original debt shouldn’t be viewed as a pure sunk cost, as it has not been paid (though it has been incurred) and, as such, any future decision needs to consider this obligation (e.g. he shouldn’t go and take a job that pays too little to make the necessary payments).
I wasn't referring to you so much as well-hello-there and everyone before you, but since you invited me so kindly to pick apart your definitions, let's have at.
You explicitly tie the debt and the costs, even though they are two entirely distinct accounting concepts. When you say an item has not been paid, though it has been incurred, you could be talking about an accrual of sorts I guess? All of that is okay, I know everyone isn't an accountant.
I do however object to the way sunk cost is being thrown around here. Is his undergraduate tuition a sunk cost? Yes. Do we care if the 75k in debt came from it or some other source? No. He could have 75k in debt from buying a Maserati, and it'd be the same thing in my book. Debt is debt. Calling the 75k a sunk cost might imply that he is throwing good money after bad on the same venture. It's just unnecessary in this context. He has 75k in debt, and now he's considering law school. Done.
My choice of language was not the best, as I was referring to the initial expense and not the debt itself as being the sunk cost. The debt is an existing obligation which must be considered in making future decisions (you still have to make sure you can meet your obligations). I thought I acknowledged this in my first post, but it was sloppy. But even if the debt is not a sunk cost (in that you can’t completely ignore it), the debt already exists… It is important to acknowledge that the decision to go to law school doesn’t change this fact. And assuming that attending law school will put the OP in better financial situation, then the previous debt shouldn’t really factor into the equation (see my original post). Of course, this requires some big assumptions, and also ignores factors like having to work biglaw conditions while barely qualifying as middle class.
Yeah I'm just being a dick about the sunk cost thing, because I'm an accountant and that's what we're do. We sit around being dicks when people try and have normal conversations.
Basically delaying school to pay off the debt is pretty stupid. The OP would have to be able to get a job that netted him income equal to his post-law school salary minus whatever additional interest charges he would have accrued on the 75k had he gone straight to law school. And in that case, he should... not go to law school if it's a strictly financial decision, because he'd already probably be making six figures.
Since it's NOT a strictly financial decision, and he wants to like... be a judge and shit, he should go now. We have the further reason you pointed out (I think), that his post-law school income will be significantly higher, and will allow him to pay off the debt much more easily than if he tried to pay it off now.