When he graduated from the Harvard Business School three years ago this month, the economy was a wreck. Nearly one in four of his classmates didn’t have a job at graduation in May of 2009. Yet, Joe Mihalic, then 26, was able to land a job with Dell in Austin, Texas, at twice as much as the $52,000 a year he made before earning his MBA.
But there was some overhang from his experience in Boston: roughly $101,000 in loans that he had to borrow to get the degree, even after Harvard gave him $54,000 in fellowship support.
Mihalic, of course, is hardly alone. The average debt of a Harvard MBA last year was $77,880, up from $73,110 a year earlier. Wharton MBAs, however, racked up average debt loads estimated to be an unprecedented $114,000, and the median financial burden for an MBA from a top ten business school from the Class of 2011 is about $88,500.
Despite Mihalic’s six-figure burden in the midst of the economic downturn, he gleefully jumped into a free-spending lifestyle that had defined his MBA experience. He bought a 2004 BWM M3 in the same month he graduated from Harvard. From Thursday to Saturday nights, he did the town with pricey dinners and drinks. For his 28th birthday, he bar hopped with friends in a black stretch Hummer. Though Mihalic had budgeted $850 a month for entertainment, he was commonly spending $1,300 monthly.
AFTER MAKING $22,000 IN MONTHLY PAYMENTS, THE HARVARD MBA STILL OWED $90,717
But there was one place where he didn’t slough off. For 21 months straight, he dutifully made the monthly $1,057 payments on his student debt. It wasn’t until the summer of last year when he checked his balance and was thrown into shock. After paying out more than $22,000, he still owed $90,717, a sum that exceeded his after-tax salary for a year.
A back-of-the-envelope calculation showed that he would pay $42,000 in additional interest if the loans went to their natural 10- and 15-year terms. That is when he vowed to go on an extreme financial diet to get rid of the financial burden. “Student loans are a strange animal,” he reasoned. “Unlike a payment towards a car loan or a mortgage, a student loan payment doesn’t go towards something that is benefitting me in a direct way.”
Mihalic, now manager of strategic alliances and business development at Dell, vowed to do “everything in my power–short of lying, cheating, and stealing–to pay down this debt in the next ten months.” Except that in his case, he also decided to chronicle the journey on a blog called “No More Harvard Debt.” The idea to anonymously write about the sacrifices he was about to make occurred last August after knocking out a cover letter to apply for a weekend delivery job.
LOOKING FOR PART-TIME WEEKEND WORK WITH A HARVARD MBA AND A FORTUNE 50 JOB
Even to him, taking a part-time position to pay down more of his debt seemed like a peculiar thing to do as a Harvard MBA with a six-figure management job at a Fortune 50 company. “I took a step back and it wasn’t until I stopped laughing at myself that I realized others might enjoy laughing at me, too,” he recalls. “The blog started as a joke. I had every intention of following through on my challenge when I started it, but I wanted to let people be amused by it and get a laugh at it, too.”
Over the next seven and one-half months, through 88 separate posts, he vividly describes his novel experience. His blog is at times introspective, witty, and sincere, often inspirational. His finances are laid bare, open for all to see as if he were dissecting a frog in a high school lab class. From his $20 haircuts to his monthly car insurance of $171, he meticulously details every expense and just about every source of revenue in his life. Mihalic even shares an itemized credit card statement with a month’s typical charges in Austin’s 20-something bars and restaurants (among the charges were a $107.85 bill at Chez Nous, an $86.80 tab at La Condesa and a $68.13 purchase at Kona Grill). Always, he writes with humor and flair on what it is like to live a remarkably frugal life–at least for a Harvard MBA.