Author Topic: Grad degree make sense for ER?  (Read 4054 times)

so.mpls

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Grad degree make sense for ER?
« on: June 26, 2014, 08:51:54 AM »
Hi there mustachians,

I'm wondering if anyone has any experience going back to school to increase their salary.  I'm 25, married, and earning a decent salary (42k).  My wife also works full time earning 40k.  Right now, we're able to save about 40% of our income, which should allow us to hit our SWR at about 40-42.  That number should go down as our salaries increase w/ our experience.

However, my current job cover  75% of tuition for graduate classes at the local university (U of MN).  I could keep working full time, and do a part time MBA program and graduate in 3-5 years.  This would probably cost me Around $25k, including books, online fees, etc.

So, obviously doing this will increase my salary, but will it be substantial enough to offset the costs and opportunity cost of adding that 25k to the 'stache?  It's impossible to calculate this exactly as I can't say for sure what my future salary will be with or without the MBA.  The longer I work, the more it would pay off, but if I'm hoping to retire at 37-38 anyways, I'm only getting 7-8 years of higher earning potential.

Has anyone here been faced with a similar decision?  Am I overlooking some obvious factor?

Thanks all

matchewed

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Re: Grad degree make sense for ER?
« Reply #1 on: June 26, 2014, 09:03:31 AM »
If you can't answer how valuable a MBA would be in your particular field then there isn't much of a way to answer the question. You'll need to dig further with people in your field or where you want to be in your field to get that answer. Once you have that answer you'll know whether it is mathematically worth it. Then you're just left with the squishier questions of value and time investment.

Cwadda

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Re: Grad degree make sense for ER?
« Reply #2 on: June 26, 2014, 09:08:03 AM »
If you pay 25k over 4 years, that's $6250 per year. Does your current job have you then locked in to work there for X amount of years after you finish getting the degree?

If you make 60k with an MBA then after 1.5 years, you already have your monetary investment back. Seems like a good deal to me. Plus with an MBA your opportunities become much larger.

Matchewed is right in saying look into how valuable an MBA is for your field.
« Last Edit: June 26, 2014, 09:09:51 AM by Cwadda »

so.mpls

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Re: Grad degree make sense for ER?
« Reply #3 on: June 26, 2014, 11:59:11 AM »
Thanks for the replies, guys. 

ivyhedge

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Re: Grad degree make sense for ER?
« Reply #4 on: June 26, 2014, 12:15:22 PM »
If you can't answer how valuable a MBA would be in your particular field then there isn't much of a way to answer the question. You'll need to dig further with people in your field or where you want to be in your field to get that answer. Once you have that answer you'll know whether it is mathematically worth it. Then you're just left with the squishier questions of value and time investment.


^This. We have 7 degrees between the two of us and only one really didn't add the value we anticipated. But it was hardly a waste.

MarciaB

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Re: Grad degree make sense for ER?
« Reply #5 on: June 26, 2014, 12:15:59 PM »
My 2 cents - an MBA is a dandy degree and comes in handy for both employment and non-employment purposes (like figuring your personal finances). The ROI is pretty good, especially if someone is paying for a good chunk of it.

My experience with listening to other people over the last 20 years is that an MBA isn't as valuable as a stand-alone degree as it is as an addition to an existing (career focused) degree. You don't say what line of work you're in, but adding an MBA to a degree in architecture, law, education (which is what I did), engineering, library science, medicine, etc. etc. is a great way to give yourself options for career advancement (big upgrades in responsibility and pay). Even over a short time frame like 8-10 years this can make a big difference in FI/net worth.

JGB

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Re: Grad degree make sense for ER?
« Reply #6 on: June 26, 2014, 12:21:15 PM »
I'm another person on the "you need to see what it actually gains you" list. My guess is that an MBA will be worth it

On the other hand, I got my MS in Computer Science and received no extra pay from it. In fact, because I was not working full time while earning it, I lost out on over a year's salary.

Chranstronaut

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Re: Grad degree make sense for ER?
« Reply #7 on: June 26, 2014, 12:30:48 PM »
My personal opinion is always, "Do you really want an MBA/graduate degree?  Or do you just feel like you SHOULD get one?"  I think the individualist side of Mustachianism speaks to me a lot here. I would rather look for fun ways to earn a small amount of extra cash than feel tied to something less interesting that I feel obligated to do.  FWIW, I've been doing grad school online, fully paid by employer, while working full time.  It brings a lot of extra stress to my life.  If I didn't actively enjoy the classes and focus on what I want to learn (relevant to my field, but not necessarily what my employer wants most from me), I wouldn't think it was worth it.  Even being cost-free to me, I would quit if it stopped being fun and that makes me feel a lot more relaxed.

While you won't have to cover a huge portion of the tuition yourself, I really like Jacob's analysis of student loans on ERE and I think it presents an interesting framework around thinking of the true cost of higher education:

http://earlyretirementextreme.com/student-loans-vs-dcf-analysis.html

darkadams00

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Re: Grad degree make sense for ER?
« Reply #8 on: June 26, 2014, 08:11:00 PM »
I earned two master's degrees concurrently (neither was an MBA). The one master's degree gave me the skills to do what I do every day and gave me a 50% pay increase the first year after graduation. Within 5 years after graduation, my income was 150% higher than pre-grad school. The second degree helped me get the job (highly competitive company, most employees have at least one grad degree) but doesn't impact or benefit my work output at all. The workload in grad school was brutal, but worth the effort and a great milestone and learning experience for me. I was free and clear from grad school expenses in very short order afterwards.

I agree with the other posters. Research, not only your anticipated job pay, but also research the college/department that you will be entering. Some MBAs are worth more than others. Some business schools work harder to help you get a good job afterwards than others. Find out where graduates have gone on to work, how much specifically they were earning starting out, how many had employment by graduation, etc. If a department can't give you that information, then you might be relying on "industry averages" that don't work out for your specific dept/locale, making your decision more difficult.

so.mpls

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Re: Grad degree make sense for ER?
« Reply #9 on: June 27, 2014, 09:01:07 AM »
Thanks again for the replies everyone, really helpful.

I think I am going to go for it - After running the numbers as best as I could, I'll only need a salary bump of 10% to break even financially before my target retirement date.   I'm in database marketing (I basically just write SQL queries and report/analyze numbers), so after researching what I could on the field, I think I'll be able to increase my salary enough to retire sooner than I would otherwise. I'm not tied to my company because of the program, so I'm free to leave whenever a better offer comes along.

NewStachian

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Re: Grad degree make sense for ER?
« Reply #10 on: June 27, 2014, 02:08:36 PM »
I forget where I read this, so I apologize for not posting a source, but I did read that a Masters, in general, is the best ROI degree. It sets you significantly apart from regular undergrads, but doesn't buy you the time out of the industry of a PhD. I got a masters in computer science and made the full tuition back in under 4 months at a new job. It was very worth it.

Field is important and the school's reputation is important. If you're paying for a degree, even only 25%, I'd hunt around for the school with the best reputation. MBA's are highly school-dependent in terms of how much they're worth. Some MBA's will almost guarantee a starting salary of $150k+ while others can add no value whatsoever to your resume and can be a waste of time. Assuming you plan to use this degree down the road, take a look at what this school is ranked and see where their grads are now. Also, make sure that's the degree you want. If you have any interest in a technical field I would consider going that route. Technical masters can make you a killing if you're in that specific field and add a significant "wow, this guy did something super hard" if you're going for another field.