Author Topic: Get CPA or Nah?  (Read 699 times)

teltic

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Get CPA or Nah?
« on: April 30, 2019, 06:16:01 PM »
Hello!

Mini Resume:
Age: 28; Single
Salary: $101k
NW: $250k
Annual Expenses ~$25k
Masters in Finance

I just got a new job, and I feel like my salary is peaking unless I get a CPA/other cert. Reading online it seems I can get an additional ~$10k a year getting a CPA.. Estimates are 400 hours to prepare for the exams.

Is it worth the time, as I am planning on early retirement?  networthify.com tells me I'll be FI in 3.7 years, but realistically I'll want to live off a ~$40k salary (to support a future wife and kids), meaning I'll probably be working for another 7-10 years...

Would you pursue it?  I'll admit that there are times I feel burned out of work, and fantasize working in software (something different, but also makes good money).  I am worried studying accounting on top of my job will cause faster burnout. I do suck at exams (100% excuse).  Although I do enjoy learning...


Anyway, would love any input.  Do I practice being retired with my free time now and pick up hobbies?  Or study to get the CPA to make more money, resulting in a quicker retirement?

The_Pretender

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Re: Get CPA or Nah?
« Reply #1 on: April 30, 2019, 09:00:59 PM »
I'd lean more towards "Nah".  I sat for the CPA and had all of the resources to pass the exams at the time.  I fell short.  I was so burned out and bummed.  On top of starting my new career I let the other exams I passed lapse.  I went to work for mega corp, and I noticed CPAs didn't necessarily make more money.  The roles w/in my company which preferred CPA, were not roles I'd want also.  People who worked hard and exceeded got the promotions or raises, not so much getting a promotion just due to credentials.

I view a CPA as a way to open doors... You have several doors open for you right now w/ having ~5 years of work , solid base salary.  But if you feel a CPA will open those doors you would want to walk through then go for it.  The doors a CPA would open for me, I do not see myself walking through, so I did not fret too much about it.

One option, is to do Coast FI...  In your case, you are on the path of FI in 3-5 years.  Once you reach that.  You could always throttle back to working a job with less stress but covers the future expected expenses combined w/ future spouse.  This gives you the ability to be more flexible and creative.  Try different industries or learn different roles.  Maybe work for a non-profit which pay poorly but you only need enough to cover your monthly expenses.  Earn enough to cover the bills while letting investments coast & grow. 

frugaldrummer

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Re: Get CPA or Nah?
« Reply #2 on: April 30, 2019, 09:24:01 PM »
CPA exam is notoriously hard to pass. (My mom passed all parts the first time but she had years of bookkeeping experience working with my CPA father and after his death, another CPA. And she's brilliant - go mom! She's 87 now.)

Seems like a lot of work for only $10k more a year if it's not something you're super interested in doing for its own sake. Seems like there might be an easier way to make that extra money. Buy a house and get two roommates to make the payments and add to your net worth? Personal finance coaching side hustle?

Civex

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Re: Get CPA or Nah?
« Reply #3 on: April 30, 2019, 09:55:10 PM »
Not an accountant, but I'd do it.

28 and single, you have plenty of time to study, work, and enjoy hobbies. From what I've heard, it's much easier to pass rigorous exams when you are younger and not as far out from college. Even if it doesn't initially net you a big salary bump, it gives you an edge over some of your peer group and distinguishes you.

I studied for and passed a credentialing exam with a similar level of difficulty at 29 (last year.) After passing, my employer paid for my study material and exam fees and gave me a small (~$1200/year) raise. While not "worth it" on a financial balance sheet, (I studied for ~15 hours/week for 5 months) it has put me into a small group of employees that have achieved it, with 50% of them being in leadership roles.

The way I look at it is that it can potentially open doors and give you an edge-the market could tank for the next 10 years and we may not be able to achieve FI as rapidly as we hope, so I'll hedge my bets.

BicycleB

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Re: Get CPA or Nah?
« Reply #4 on: April 30, 2019, 10:29:55 PM »
Judgment call!

Pro:
IF - IIFF! - the CPA jobs don't require extra hours, 400 hours to get the cert implies you generate roughly $30,000 at FI and $60,000 at FIRE, resulting in $75 to $150/hour pretax depending on how long you work. Since you are already earning $40/hour or so, the studying is a good earning activity, at least before accounting for tax and the costs of certification. If you're really going to work another 6+ years, a slight advantage, plus the flexibility previous posters mentioned.

Con:
Boring (you don't sound excited)
Won't be profitable if you quit 4 years instead of 7
Involves extra work with little acceleration of FIRE

I vote no. Start learning to enjoy your non-work hours.

mozar

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Re: Get CPA or Nah?
« Reply #5 on: April 30, 2019, 11:13:48 PM »
It can be a good idea if you want to consult after FIRE. I think it's worth it if you are sure you want to stay in accounting.  But if you're not excited about it you're not going to be able to stay motivated for the long haul. The thought that you wish you were doing something else is still going to be there and distraction and studying don't go together

morethanconquerors

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Re: Get CPA or Nah?
« Reply #6 on: May 01, 2019, 07:17:13 AM »
CPA here.

The exam process was very grueling, but definitely doable as long as you put in the time. You absolutely need to have the motivation and desire to do it or you will find every excuse not to finish. I have had multiple coworkers order the materials and not even make it through a month of studying.

Your salary looks great for the accounting industry. I am a similar age and make 20% less than you. Would you like to go into public accounting after your hypothetical CPA? The sky is the limit for your salary in that field, but the hours tend to be terrible and burn out is extremely high.

Another item to consider -- Does your company cover materials/test fees? For me personally, my company covered everything for me to study and take the exams which would have been $4,000 out of pocket. It might be beneficial to do now, avoid the costs, and then you would have it forever and have some more flexibility once you RE.


DadJokes

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Re: Get CPA or Nah?
« Reply #7 on: May 01, 2019, 07:32:18 AM »
I just got my CPA certification. It's well worth it in my case, since I have an expected 15 years of working left. I also took it immediately out of school and am a very good test taker. If you haven't had the information drilled into your head for the past few years, it is very difficult to pass using the study software alone. The further removed from school you are, the more difficult the exams are to pass. Add that to the fact that you say you aren't good at tests, and I would avoid the CPA exam like the plague.

You already have a pretty respectable income, and you are fairly close to FI. Getting married also generally comes with the addition of a spouse's income, so the 3.7 years timeline is probably closer to accurate than a 7-10 year one.

Practicing being retired early sounds like a blast. That's what I do with what little free time I have, and it's amazing.

teltic

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Re: Get CPA or Nah?
« Reply #8 on: May 01, 2019, 11:38:48 AM »
Thanks for all the input!  If you couldn't tell in my writing, I'm leaning on "nah".

I work in corporate finance, so while a CPA would obviously help, and probably lead to a higher salary, I think I can succeed without it.

Work will pay for it, but I have to wait for my 6 month mark here, AND pass the exam.


I'll keep thinking about this all... I love to learn and be challenged... But the "Coast FI" idea sounds fun as well!

redhead84

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Re: Get CPA or Nah?
« Reply #9 on: May 01, 2019, 12:16:59 PM »
Another CPA here. I sat for all four sections of the exam in the first year after my college graduation and passed on the first try. On top of the large time commitment required for studying, you also need to factor in the expense of the exams and study materials which can add up to a few thousand dollars.

I am glad I have the credential, but it is not absolutely necessary. A CPA is only required for certain types of accounting jobs. For many positions, a CPA is nice to have but relevant experience is more likely to land you the job.

If you look at the next role(s) you hope to move into, do the individuals currently in those roles have a CPA? Do you work for a public company or hope to work for a public company in the future? If no, I'd be inclined to skip the CPA.


Proud Foot

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Re: Get CPA or Nah?
« Reply #10 on: May 01, 2019, 03:18:38 PM »
Thanks for all the input!  If you couldn't tell in my writing, I'm leaning on "nah".

I work in corporate finance, so while a CPA would obviously help, and probably lead to a higher salary, I think I can succeed without it.

Work will pay for it, but I have to wait for my 6 month mark here, AND pass the exam.


I'll keep thinking about this all... I love to learn and be challenged... But the "Coast FI" idea sounds fun as well!

What area of corporate finance do you work in? Depending on the area and what future roles are in your future as you continue to advance you might find different certification provide more of a benefit. With your masters in finance I would consider looking at the CFA.