Hello All, I have a lot of respect for this community so I am coming here for advice...
I have begun the process of looking into an MBA. I purchased study books for the GMAT (used off Craigslist in mustachian fashion) and want to consider methods of financing the degree before I get too deep into the studying process.
My Info:
- Just turned 24 years old
- Live in New York, NY.....share an apartment with 3 friends...my portion is $988/mo
- Work in Finance for a major media company making $65K base salary with potential for small bonus @ year end
- I have zero debt currently, my undergraduate degree from a major university was financed equally by scholarships and the generosity of my parents
Breakdown of $
Approx $16K liquid cash
$29K in brokerage account
$13.5K in Roth IRA
$14.5K in 401(K)
Have a used car with around $3K KBB value I will sell also
I believe I in pretty good shape for someone my age. I am highly motivated/focused at work, having increased my salary from $47.5K less than two years ago to $65K in about 17 months.
My company has a lot of resources and I have access to great visibility here, I believe an MBA from a great school would set me on a great career path. Basically, I have zero concerns about the payback of the degree over time.
I have calculated that degree from my choice school would cost around $130K including books etc. As someone who has never had debt, I am wondering what portion of my savings I can be comfortable with using to finance the degree? I don't for see any other major expenses and I save over $1K a month currently.
***Forgot to mention, I will plan to work during the duration of school and have hope to get $5K max per year from my job for schooling
Thanks for the help!
I'm also in a similar boat. Purchased the Manhattan GMAT review and will start studying in mid-June. I'm planning to take it for the first time in mid-Aug, a solid 2 months, depending on how studying goes. I would like to do my best, since I want to go to the highest ranked school I can get into (within reason, of course).
Few points:
- I would buy a new(er) review course. If you score even 10 points higher, it may be helpful in the grand scheme of your career. Saving $500 on a sub-par review won't help you. This assumes you got something out of date and not one of the better review courses... Regardless, how much you study is more important than which course you use.
- You don't have a ton of accessible money (16k cash and 29k brokerage). I wouldn't deplete the cash below 10k, and you could liquidate the 29k brokerage if you want, but it's probably sub-optimal considering you'll have to pay capital gain taxes.
- If you are at the NYU/Columbia level, I wouldn't worry about the debt too much. You're working, so living costs will at least be covered, and part of your tuition/fees as well.
- I imagine you could take out full loans, and start making payments even while they are deferred (or even if they aren't deferred, just start paying anyway).
- Assuming you get $5k/yr from employer tuition assistance, and you keep working, you could probably graduate with <$100k in loans AND be in a much better negotiating position for promotions/better experience.
IMO, a good MBA is worthwhile assuming you want a career that pays commensurately to the cost of the program (both in the short-term and in long-term optionality).
General advice I've heard before suggests you should make more than your total student debt in gross income your first yr working (so >$100k salary after graduation assuming you have $100k loans outstanding upon graduation). You won't be rolling in the dough, especially in NYC, but it will likely put you on a solid path to continue developing your career.
To your question about paying:
- I would keep the brokerage account in full, and also keep at least $15k in cash. Since you now save ~$1k/mo, you should be able to save up another ~$15k by fall 2015 and ~$30k by fall 2016 (depending on when you decide to enroll).
Great that you have no debt right now. Keep up the solid progress, and good luck preparing for the GMAT!