Author Topic: To go back to school or not go back? That is the question.  (Read 4525 times)

nbuss14

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To go back to school or not go back? That is the question.
« on: April 10, 2014, 07:00:46 AM »
I would just like to share my story with others as I feel like it might be a little helpful to others who earn way more income than I do an still seem to struggle getting out of debt and/or investing or saving money. I am 25 and I have a very modest salary at this point. I went to college and got my degree in Psychology working as much as I could while in school to offset the costs. I graduated almost three years ago and I just found a job in my field six months ago. Fort the past three years I have been working as a server at a fine local restaurant making a decent amount. I also have the advantage of living with my dad rent free but I am still doing everything I can do get out of debt. When I got my job in my field six months ago my starting salary was 25,316. I also have kept my job as a server to increase the amount I earn to contribute to my debt. Every single penny I have earned at my salaried job has been put towards my student loan debt which is the only debt I have that hovers at around 33,000. I plan to put every single penny I earn there toward that debt until its gone. My other expenses are easily covered by what I earn working as a sever (food, car insurance, gas, phone). These are the only expenses that I allow myself. New clothes, new shoes, or anything else that is not needed is not purchased. If I continue on this plan I will have my debt wiped out in a little over two years. So I guess what gets me is people who earn 100,000k a year and struggle getting out of debt is mind boggling. If I earned that much I would be out of debt well within a year, probably six months. I am following what is written on here. My debt is an emergency and needs to be treated as such. I am certain that I would have been more lackadaisical on these debts if it wasn’t for finding the MMM site (which I found because I am a reader over at raptitude.com) I thank you so much for the insight, motivation, and general badassidty that you are passing on to the rest of us. You have inspired me, and gave me hope and confidence in my financial future more than I have ever had!

Now with all this I realize as I exercise my frugality muscles I am achieving some goals however, I am being set back my a low income and low time freedom. Would it be a good idea to go back to school for prepare for a higher paying job as I am doing about the best I can on my current level of income?

Thanks for any insights, help, and suggestions!!! 

Rebecca Stapler

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Re: To go back to school or not go back? That is the question.
« Reply #1 on: April 10, 2014, 07:19:01 AM »
As to your confusion about how people can earn $100k/year and still be in debt ... those people may not be living rent free and may have childcare costs and a lot more debt from school! (JMO, since I am one of "those people.")

As to your question about whether to go back to school, it depends on (1) what field you'd go into (2) whether you could do any self education that would get you the same amount of experience / credibility (3) how much schools in that field cost and (4) what your expected salary and job prospects would be after you graduate.

Can you tell us some more? I'm afraid I'm not familiar with what kind of job is in the psychology field that doesn't require an advanced degree. Are you interested in getting licensed or getting a Masters in Psychology for clinical practice or research purposes?

Dibbels81

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Re: To go back to school or not go back? That is the question.
« Reply #2 on: April 10, 2014, 07:57:21 AM »
I'm single, 32, and currently "back in school."  I received two performance degrees in music in my 20's, but now I'm pursuing a graduate degree in medical Speech Pathology.  I was doing OK for myself working full-time, pulling in around 35k yearly, no debt, and annual expenses around 18k.  My job was pleasant but dead-end, and felt I had a lot more to offer the world.  Around the time I was applying for grad schools I got into MMM, which made me question whether taking two years off from work plus 30k in tuition from my savings would be worth it.  My answer was a yes.  Some rules for a college-based career change that I came up with:

1.) There has to be a demand for the new job.  Medical therapist have a very low unemployment rate.  Going back to school for World History degree at this point is forbidden.
2.) There must be a significant jump in pay.  Average salary for my new profession is 75k. 
3.) It must be a State-school, and you must pay for a majority of it with cash.  Adding 40k on top of another 30k in student loans isn't the way to go.
4.) It must be timely.  2-3 years max.
5.) You must be passionate about it.  It would be silly to go back to school just to get a degree that pays more money, when most people on this site have come to realize that more money does not equal happiness (rather financial security=happiness).  I will be treating people with voice disorders, and with my background and passion for singing, I couldn't have picked a better profession.         

rubybeth

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Re: To go back to school or not go back? That is the question.
« Reply #3 on: April 10, 2014, 08:06:07 AM »
What degree would you get? Same field (psychology)? And how much would the degree cost? And how much of a salary increase would you see? You really have to do a cost-benefit analysis on these things.

My DH is currently in grad school to become a Licensed Marriage and Family Therapist (LMFT) but he debated on which degree program to select for many months, because Licensed Social Workers and Licensed Clinical Counselors qualify for the same jobs, at least in our state (Minnesota), as well as, of course, Clinical Psychologists. Psychiatry was off the table because of the length of schooling and our current ages (early 30s). He's going part-time in a program that's supposed to be two years, but for him, will be closer to four because he's basically working full time in addition to doing school (I wouldn't recommend this, but it hasn't killed him... yet).

Gerard

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Re: To go back to school or not go back? That is the question.
« Reply #4 on: April 10, 2014, 08:49:24 AM »
Various random thoughts:
*OP, congratulations on the level of badassity it takes to wipe out that much debt on that low a salary. I know what it's like to do a job that eats up all the time you need to either find a better job or think your way out of your current situation. In my case, it did end up with my going back to school, but I was lucky enough to live somewhere with low tuition, and my bosses were flexible and let me take my vacation time in two-hour blocks so that I could get through my courses faster.
*Dibbels, congrats on getting into SLP school. In Canada, at least, that's a very competitive programme (in part because the govt keeps the number of places low, because there aren't enough jobs for all the people who want to do it).
*Apologies for stating the obvious here, but be sure you're getting your employability info from somewhere other than the schools. Education faculties in Canada are still talking about how all the boomers are going to retire and thousands of teaching jobs will open up, but it's just not happening. (The metaphor/parable I often hear is, don't ask a car salesman whether you need a new car.)
*Also, how well did you do in your first degree? Are your grades good enough that you'll qualify for a lot of scholarships for your new degree? If you're not that good at school, why would you go back?

Cpa Cat

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Re: To go back to school or not go back? That is the question.
« Reply #5 on: April 10, 2014, 09:51:11 AM »
If you go back, go back with a specific goal in mind. Not just "Oh, well, I'd like to make more money."

Because if all you're looking for is a high ROI on school, you should go back for accounting or finance or IT something.

But if you have a specific career that you want to do but can't because you need a higher level degree - then whatever - follow your dreams. I might suggest killing your current student loan debt first, which may give you time to get to know what options are available in your field, now that you're working in something related.

When I went back, I saved my tuition up so that I could get through debt-free. It worked out well. I ended up getting scholarships and did an internship, so it actually cost about half what I expected. I left school with a job offer - that's another thing to check out when you're looking at programs - pre and post graduation placement rates. They should have that data. If they don't, it's probably because it's awful.


Thegoblinchief

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Re: To go back to school or not go back? That is the question.
« Reply #6 on: April 11, 2014, 06:50:47 PM »
What's the interest rate?

The rate is what makes a debt an emergency, less so the amount. Below 5%, pay yourself first by investing it.

+1 to other advice, but consider if there are careers you'd like that don't require a new degree at all.

CarDude

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Re: To go back to school or not go back? That is the question.
« Reply #7 on: April 11, 2014, 07:19:17 PM »
Yup. Definitely do the math to make sure you're actually getting a pay boost from the job.

Maderhold

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Re: To go back to school or not go back? That is the question.
« Reply #8 on: April 15, 2014, 12:35:13 AM »
I am in a very similar position. I'm 24, graduated 3 years ago. I had been working in the field in which I graduated (apparel merchandising and design) but HATED it. I had also been working part time at a restaurant during that time, and decided to leave my retail low-level management job with benefits to work in a restaurant with a flexible schedule but considerably higher pay (working full time, I should make around $30k this year, more if I am able to get more night/weekend shifts this summer and fall). I lived at home with the parents for a year which allowed me to pay down my 20k in debt in just over a year.

 I now plan to return to school this fall for a new degree in dietetics. My tuition will be between $2500-3200 a semester. I'll be going part time, since I already have credits from my previous degree, so the cost will vary a bit depending on credits, and while I know I'll be able to pay as I go, I would have no buffer whatsoever. My parents stepped in and just offered to pay my tuition if I maintain a high GPA and cover my living expenses. So now, I should have a few thousand extra, and I'm not sure the optimal place for me to put it. I know when I finish the degree, I will have to complete a 6 month to a year long internship, unpaid, sometimes you even have to pay  the institution to teach you and offer the internship, so I want to be sure I have living expenses readily available for at least a year. It will take me four years to get through this program, then a year long internship, after which I should be able to land a job in the $40-50k range, with good benefits, possibilities for advancement, and definitely opportunity to work for myself in the field during my retirement offering nutritional counseling and diet plans.

Anyway, my question is what is the best use of my money? Obviously put it somewhere it can work for me, the question is where? I currently have a Roth IRA with investments of about $2500. I just opened it in December, so I'm new to this whole saving money thing. I always used to think money was for spending, never realized until I started reading this blog last fall how stupid that was. I only have about $1500 in my bank right now as my "emergency" fund (that's about two months of expenses if something extreme were to happen). But I have no loans and my credit card balance is only about $500 right now (paid in full every month). I'd like to have a little more in my bank account for easy accessibility, but I'd also consider maxing out my IRA contributions or even opening an additional investment account of some kind to have my extra pay earn me a little money while I go through these next four years so I land on good footing for my internship. I should have a surplus of about $1000 a month with my current frugal expenses through the middle of august before school starts. After that, it is hard to say, my focus will be on excelling in my courses, but I will be working part time, at least enough to cover my living expenses, and hopefully a little more. But even if I get another 4 grand into an investment account, and maybe another $200 or so a month for the next four years, that could earn me some decent money to live off of when I need to take it out in 4 years. Just looking for suggestions on how to optimize the savings and what the best strategy would be given my circumstances.

Argyle

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Re: To go back to school or not go back? That is the question.
« Reply #9 on: April 15, 2014, 12:43:46 AM »
There are many jobs you can get with only a BA in Psychology.  In fact the vast majority of jobs will not ask you what you majored in.  What you need to find is an entry-level job in a field you might be interested in.  So it helps to think of what kind of day your ideal workday would be -- working with people?  With customers?  Alone?  Indoors?  Outdoors?  Find the kind of jobs that have the kind of thing you like and ask the people in them how they got where they are.  There are a ton of people in jobs they just worked up to -- insurance people started as lowly clerks, people in banking started as tellers, people in management started as car rental desk clerks or as real estate clerks or as retail people on the floor of a department store.  You don't have to go into more debt by getting another degree.  And be aware that if you do get another degree, there's no guarantee you'll land a job in that field -- and if you do, there's more debt to pay off.  I vote for steering clear of more schooling.

TomTX

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Re: To go back to school or not go back? That is the question.
« Reply #10 on: April 15, 2014, 05:30:57 AM »
I would work at least 2 years in a "Real" job before considering going back to school. Shorter stints don't look as good to someone hiring.  6 months doesn't look like much, or it looks like you are a flake. 2 years and you are no longer 'no experience.'  You also have a good story for the interview "While I really appreciate my current job, and I have learned a lot - I have also leaned that after two years with no chance to move up anytime soon, I am looking for a new challenge...." Benefits of waiting:

1) You will look a LOT better to most hiring managers
2) All your debt will be paid off
3) You should have ~$15,000 saved up.
4) You have another 18 months to research what degree you would pursue (if you really want to).
5) You will have the option of looking for a better job around the 2 year mark.
6) Being debt free with cash on hand and a car, you can easily move anywhere in the country for a better job. You don't currently live in the best paying market for psychologists*

Without your debt being paid off, you are pretty much chained to living in your parents' basement. With experience and $15k in cash, you have a huge variety of options.

*I have no idea where the OP lives, but the random chance he lives in the best paying market by chance is vanishingly small. Especially with a $25k starting salary.

samburger

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Re: To go back to school or not go back? That is the question.
« Reply #11 on: April 15, 2014, 06:56:27 AM »
I would work at least 2 years in a "Real" job before considering going back to school. Shorter stints don't look as good to someone hiring.  6 months doesn't look like much, or it looks like you are a flake. 2 years and you are no longer 'no experience.'  You also have a good story for the interview "While I really appreciate my current job, and I have learned a lot - I have also leaned that after two years with no chance to move up anytime soon, I am looking for a new challenge...." Benefits of waiting:

1) You will look a LOT better to most hiring managers
2) All your debt will be paid off
3) You should have ~$15,000 saved up.
4) You have another 18 months to research what degree you would pursue (if you really want to).
5) You will have the option of looking for a better job around the 2 year mark.
6) Being debt free with cash on hand and a car, you can easily move anywhere in the country for a better job. You don't currently live in the best paying market for psychologists*

Without your debt being paid off, you are pretty much chained to living in your parents' basement. With experience and $15k in cash, you have a huge variety of options.

*I have no idea where the OP lives, but the random chance he lives in the best paying market by chance is vanishingly small. Especially with a $25k starting salary.

This is great advice.