When I was in grad school, I faced near-constant financial problems. My income was barely adequate, and the variety of streams it came from meant that my access to the money I’d already earned was often delayed in unpredictable ways. My one advantage was a good credit rating. I had gotten my first credit card as an undergrad, and I used it sparingly and paid it in full nearly every month. After a semester abroad, I was carrying a balance, and I took out a small bank loan to pay it off. So I had drawn on a significant amount of credit and used it responsibly. I understand that not everyone starts from this point, so my strategies may be inapplicable for many people.

My goal was to keep my spending within the limits of my income and subsidized student loans. Like most grad students, I maintained a pretty austere lifestyle, but nonetheless there were times when I was forced to engage in deficit spending. My strategy for coping with the difficulties of financial management during these periods was based on three simple principles:

1. Think short-term: Long-term questions like how I was going to pay everything off were moot. The important thing was how I was going to keep meeting my immediate obligations until the next influx of cash came.

2. Favor liquidity: Given my access to credit, the only hard constraint was the availability of cash (meaning money in my checking account). If given a choice between going further into debt or making a cash payment that would quickly put me at risk of not being able to meet another cash obligation, I always chose going further into debt.

3. Preserve the credit rating: This meant always paying every bill by whatever means necessary. If I missed a single payment, that could lead to a decline in my credit-worthiness, leading to higher minimum payments and a decline in liquidity that could further endanger my ability to meet my