Hi guys!
Have been reading MMM for some time, and although I am kind of frugal and good with money, I discovered a completely new level of money management.
Before I presnet the facts and questions, I want to say that I am incredibly grateful for my current situation. I want to begin by giving you a brief overview at my country's finnacials, so you can better evaluate the situation.
Ok, so here we go (LONG)
Peru:
In Peru, salary is mostly expressed in monthly gross amount. We are paid once a mont, but also double on July and december (by law) and once in november (the money is under your name in a separate bank account, accesible only when unemployed) so basically the normal employed peruvian charges 15 monthly wages a year, of which he can only spend 14.
Mínimum wage : S/.750 a month (Exchange rate with USD is 3.02, so we will go with USD 250 a month)
Average Income: S/.1,250 a month ( Around USD 6,250 a year)
The economists use a 5 tier system to determine socioeconomic status, and is categorized between A,B,C,D AND E according to gross monthly income:
A: Over S/.9,600 soles a month (USD3,200)
B: Between 1,200 and 2,400 a month (USD 400-800)
C: Over 800 and under 1,200 a month (USD 266-400)
D: Between 600 and 800 a month (USD 200-266)
E: Lower than 600 a month ( USD 200)
Poor developing country, yes, but also lots of money in the higher status.
So, to start with case study:
32 years old, married with a 7 year old kid. Like to work (have been doing it since I was 18) and probably will until 45-50. retirement age in Peru is 65.
EducationBachelor of Business. Master's Degree in Marketing (ESIC, SPAIN). Graduate Diploma in Finance.
Income:Only income is my job, I am a territory manager for a big corporation.
Gross montly is 6,150 (USD 2,050),
Take home pay (after taxes and 10% pension) = USD 1,433
My company pays a hefty profit share and the end of each year, so total annual take home pay is USD 34,400 (49,200 GROSS)
Wife is also employed (at a lower salary in different company), and has an annual take home pay of USD 12,000
My employer gives me a 8.25% yearly raise (inflation is about 2%)
http://www.ibtimes.com/6-percent-gdp-growth-lowest-inflation-rate-latin-america-peru-2014-1538248Current Expenses:We try to live a modest life (compared to our peers in same income bracket)
* Condo HOA: USD 66 a month
*Utilities (Water, electricity and gas): USD 42 a month on average.
*Cable and Internet : USD 43 (the only sell the package.. no internet without cable)
* Country Club fees : USD 93 (long story, my family have been ,members forever) Also get free gym and private beach Access. (
www.clubregatas.org.pe)
* Groceries : Between USD 260 and 233 a month, we try to buy in bulk.
* Private School : USD 200 (cheapest opf the good quality private schools. Not facepunch worthy, our public schools are rated worst in the world... Google before facepunch please).
*Transportation: USD 20 ish
* "Fun" Money (wine, tickets, etc) : USD 150 a month.
My employer pays for my car, gas, insurance and registration. Wife takes public trasporation to work (USD 0.80 round trip).
Employer pays for my lunch ( Up to USD 10 a day)
Assets:- Condo : 990 sq ft, valued at around USD 130k . Upper middle class neighborhood, 3 bedrooms 3 bathrooms.
-Savings : Total savings is USD 12,800. Currently in high yield CD (6%)
Liabilities / DEBTAbsolutely NONE. Have worked my ass off to pay for everything I own in COLD HARD CASH.
So, DW and I are facing a dilemma:
GRAD SCHOOL (MBA)
This is the program I'm thinking about:
a) Top MBA in the country (USD 25,400 considering the mandatory trip to europe for double degree)
http://www.centrum.pucp.edu.pe/es/contenido.php?8201/presenciales/mba_gerencial_internacional.htmlProgram is part time, employer will not help with tuition, as buying another company ( a USD 650 million deal) has company "short". Also, profit sharing has been steadily declining for the last five years (dollar fluctuation, company aquisitions) from around 14 salarys to the actual 9.
The thing is, that having a "good" job, a nice annual raise and a relatively high savings rate make the decisión to further my education really hard, because:
* It will be really hard to get a promotion in the company, as most people are "lifers" (40+ years in the company... extremely rare everywhere else in the country)
* Most other Jobs I could get with the MBA pay around USD 4k to 4.5k Gross a month, so take home pay would be around USD 45k.. and in Peru, most companies don´t give annual raises.
So basically, I would be getting the MBA to "be prepared" to take on additional responsability within the company, and also to "hedge" against job loss (quicker to get a job with an MBA).
What would the Mustache do?
Comments, suggestions and reviews welcome!!!