Demotivated to save money because of grad school
I have been working for about a year now and was able to save up ~$25k (including sign-on). Since I am planning to go back to school for a MBA in 2 years. Chances are I will save up about $50-60k. That's only about half the tuition for a top MBA program! So after I get my MBA, I will not only be broke, but also be severly in debt. This has greatly demotivated me in saving money.
Has this been an issue for anyone? Would you rather spend more now since you know you won't be able to live the same lifestyle in years?
Yeah, don't save any money now, so you can be in even more debt after your MBA!
Yea what the hell are you even asking? Why would you blow the cash that you said won't even be half the cost of an upcoming expenditure? What's the plan then? Spend all your money and default because fuck it, you're going to be in debt anyway, YOLO right?
Go big or go home. Spend the 50k on hookers and booze. You can claim most of it back as entertainment.
wtf? Would you rather graduate $100k in debt or $50k in debt?
On the surface a stupid question by OP, but if being broke going into B-school will get you more financial aid...maybe worth it on net terms if you value your lifestyle over the next year more than the difference in aid? I have no idea how bschool aid packages work fyi
1.) Track your progress. Have a picture of some building at HBS and beneath it, a thermometer or a checkbox tally between $0 and $170K. Every $1k, mark off another box.
2.) Don't forget that you can withdraw penalty free from your 401k for college tuition!!!! You should be maxing out your 401k when you are in the 28% tax bracket NOW and withdrawing later when you're in the 0, 10 , or 15% tax bracket.
3.) Student debt is the closest thing we have to debt peonage in the US today. You can NEVER get out of it besides paying it back. And there are degrees of it. Worse, as your debt goes up from $30K to $50K to $100K, your interest rates go from 2% subsidized to 5% private to 10% private. Think of every dollar you save today as earning you 10% nearly guaranteed interest for when you DO go to b-school.
So that first $25K has made b-school a possibility. Every dollar you save after that is cutting your debt from $125K down to $50K, even $30K. And not having undefaultable wage-garnishmentable student debt hanging over your head is a REALLY good feeling.
Think like a businessman. If you MUST pay for school, the accruals are what matter, not the cash.
Sorry for asking a stupid question. I somehow had the impression that the less money I have going in to b-school, the more money I will receive as grant/scholarship.
^^^True, but your 401k balance either doesn't count as much as cash or doesn't count at all towards your EFC. And different schools do things differently. At Chicago, the tuition bill is generally what you pay or take out in loans. At some of the coastal M7 schools, they have grants for that.
There are a gazillion reasons to max out your 401k contribution every year if you think you might go to b-school or grad school. The main reason is tax arbitrage, but if you're hoping for need-based grants, 401k dollars make you "poorer" than cash dollars do.
If you're really evil, you might save something by talking to a life insurance company about annuities or whole life policies after you max out your 401k, but do you really want to take money from the kids who really need it? I am just happy enough paying a 5% federal tax rate and 0% state rate on the money I save for tuition.
Trying to cut your taxes on tuition savings is perfectly fine. In a perfect world, tuition that acted as an investment would be tax deductible not unlike a 401k. But do the honorable thing. If you have the money, cover the cost of your degree. If it costs Harvard $140K to put you through their MBA program and the tuition is $160K, don't take more than $20K in grants if you have $200K socked away somewhere.
Save your money, you need it either way. You might change your mind about going to b-school anyway.
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