Monday, September 8, 2014

Meaning and Numbers

So, when I was in high school, we had two kinds of physics we could take: one which was math-heavy and targeted at better overall students, and one that was more "conceptual" and targeted at weaker students. It's a long story how this happened exactly, but I ended up taking both. I did much better in the supposedly harder class, because identifying the right time to use an equation and then doing the math, that I could do. Not a problem. Actually understanding the meaning behind all the numbers...that was difficult.

I was reading My Debt Emergency the other day, and she had a post with a link to a contest where you could win $10,000. She's got $118,000 in student loans, so I assume she'd use the $10,000 to make a big payment on that. I would have done the same, last year. (As long as we're at this, here's a link to enter the contest yourself. Heads up: if you use that link, I get some extra entries.)

But then I stopped and realized, you know, $10000 would have been more than half of my entire student loan debt. It would barely make a dent in MDE's. I know both those things, intellectually, and I realize our situations are very different. And yet: I can't really get my head around that difference. $10,000 is over 1/5 of my yearly salary. $10,000 is 1/12 of MDE's student loans. $10,000 is not quite 50% of my (now paid off) student loans. I could go on like this, but honestly, I don't really process $10,000 as anything but "a lot of money." Once you get me past $100 or so, it's all conceptual physics.

In thinking about this, though, I realized that there was a hack, something I could do that *does* make sense to me, that makes money seem "real" enough that I can actually understand it. I can think in terms of "expense months."

Take my retirement account. I've read a bunch of articles about having 8x your salary saved up, or drawing down at the rate of 4% a year, and so on, and I nod along, but they don't really mean much to me. What I can do, however, is look at my account and say "I think my living expenses will be about $3000 a month when I retire. Social Security should cover -- being very conservative here -- $1000 of that. So, if I have $2000, that is one month of retirement." A little envelope math showed me that, in the very optimistic scenario where I retire at 65 and die at 95, I need 360 "expense months." (240 is probably more accurate, but obviously it's better to be conservative and have a little something to leave to my nieces/nephews/godchildren.)

As of right now, I have three months' worth of retirement saved up. Well, three months down, 357 to go! And hey, if I win that contest, I'll suddenly have five more months in the bank.


  1. Yep, break it down into manageable goals. It's all about perspective, and I'm all for charts to cross things off :)

    Does that mean you did the calculus based physics?

    1. I love a good chart! And yes, I did the calculus based physics, the year *after* I did the "conceptual" kind. It probably helped that I was actually taking calculus at the same time, so I was getting the same stuff in two classes at once.