Life situation: 24 year-old male, single, no dependents, (currently) Southern California in the USA.
Gross yearly salary: $77,400 (with a couple thousand dollars more due to overtime)
Yearly take-home: $54,600 ($4550/mo)
Yearly Retirement Account Contributions: $1550 (current balance $3820) (Roth 401k, maxing employer match)
Other pay deductions (yearly):
Medical: $840
Dental: $50
Total: $910/yearTax withholding: $21,000 (2 allowances)
Current expenses/saving:
Food - $175/mo
Rent - $750/mo
Utilities (gas + electric) - $50/mo (averaged over a full year, costs are highly seasonal)
Misc - $100/mo
I know, I might get yelled at for a big "misc" category, but I get a haircut every ~2 months, buy a new pack of soap and shampoo at Costco every ~3, see a movie between zero and one times per month, buy between zero and two books per month, refill my bus pass monthly but sometimes twice a month, pay for gas for friends every few weeks, buy some clothes twice a year - I budget this as "misc" because my spending in these areas is erratic and I don't want to maintain a full-on yearly budget. $200/mo is a "do not exceed" number that I sometimes get close to, but my [tracked] average spending here is ~$100/mo and I dynamically adjust my spending to hit that average over time, targeting normalization within 2 months. Round off to entertainment/kicknacks $70, household + personal maintenance $30 if you must
Long-term spending - $100/mo (this is a virtual account transfer, not an expenditure)
Cash savings - $100/mo (see Assets for justification)
Therapy - $200/mo (paid out of HSA, which has no additional contributions from the employee side, but I'm running out of money for it)
Total (minus therapy): $1275Subscriptions:
Costco $60/year
NYT Crossword $40/year
Total: $100/year / $8/moDebt service: ~$3,200/mo (>=$2,900 in 4 paycheck months, >=$3,900 in 5-paycheck months - spare cash not saved or spent goes here)
Assets (as of Dec 1):
$8,500 savings (much lower than I'd like with high-deductible healthcare)
$1,200 long-term spending, currently earmarked for furniture, cats, grad school applications (on credit card until end-of-month account settling), and moving expenses
Liabilities:
NO short-term debt
Private student loan - $16,550 (started at $62,060) @ 4.81% fixed-rate (refinanced). Projected payoff May 2020 (possibly April depending on tax refund).
Federal student loans - $18,360 (started at $20,500) @~4.00% fixed rate (dollar-averaged, "true" APR will be less since I'm going to target the higher-interest components first). Projected payoff ??? (it is
possible that between Christmas, a birthday, and a tax refund I will be able to pay this off before the fall, but I do not expect that to happen and am not yet able to budget around a grad student stipend. If I am not able to pay this off I will probably find a way to refinance while I still have fat paychecks coming in and repay within a couple of years.)
School-subsidized loan - $5,000 @ 0%, no repayment schedule (my school administered this loan out of its endowment directly; I do intend to pay this back once my other loans are gone, but don't expect they'll bother me about it for another few years)
Total: $39,910Question:
Am I in good enough shape to go to grad school for mechanical engineering in the fall?
What I'd be missing out on:
~1 year of maxed retirement account contributions
Vesting in another ~$2,000 of retirement account contributions
$10,000 cash savings target
What I'd be gaining:
Quality of life. I hate this city and am in a pretty bad depressive spiral due to a total lack of social life and a pretty terrible living situation, and I don't want to incur moving expenses twice in a short period of time. Gaining QoL without increasing spending is not a real possibility.
Career trajectory. A PhD in mechanical engineering aligns with my career goals and I have serious doubts about my ability to stay fresh and sharp for another year given the skill decay I've experienced in the past year and a half.
Given that I'm trading off qualitative vs quantitative gains, I guess what I'm really asking here is: "just how stupid is it to take a low-wage job for 5-6 years in my mid-20s when I don't have any substantial savings?"