This is my situation: Graduated with a BA in history and teaching credentials last May. Because there is no hope for new teachers in the job market, I am in graduate school for a Masters in accounting degree that will take about two years. I recently got a job for a tax firm that starts me off with $12 an hour, 40 hr week plus overtime during tax season. I will receive a 401k and insurance benefits if I do a good job in the next few months and they decide to keep me as a permanent employee. I currently live at home with my parents and I am 25. I want to get out and buy my own condo, but I want to be smart with my money.
There is a good chance that throughout time I will receive a rise in pay, but let's assume I am making $12 an hour and saving. I have no major expenses, other than paying for car gas. How long do you think I will be able to live on my own without running into a financial catastrophe? I will have student loans to pay back monthly, maybe it would be wise to trim my student loan debt before even thinking about living on my own. But is it feasible for me to be able to live on my own in the next few years assuming I save my money and spend conservatively?
My current plan is to be able to at least put down a 30% down-payment. I might even try to go for 40%.
I live in Illinois.
this is just my opinion but I think alot of people make the msitake of geting more education whch equals more debt. have you tried getting an accounting position where maybe they will pay for part or all of your schooling?
im all for buying a place its often cheaper than renting maybe get a two bedroom and rent a room to a friend and have part of your mortgage paid. i bought a house at a young age currently hav two friends living with me paying my entire mortgage. that said having a house sort of prevents you from moving or taking a transfer which is often something offered to younger employees who arnet tied down as a way to move up in the company quicker.
also prior to owning a home when i was living with my parents it was like if i quit one job to take another and i hated it i had that option of quitting and being unemployed for a bit while i looked for a new job. once you have a mortgage you need steady employment.
some people may disagree with me but rather than putting 30% or more down I'd go FHA and put 3.5% dwn, if you dont want to pay pmi maybe do 20% however interest rates are so low there's really no reason to put that much down your not saving much on interest I would put that money away for a rainy day fund. Id much rather have a big rainy day fund than save 3% on that extra 10k or 20k
Find an online cost of living calculator and a take-home pay calculator
Back them up by actually researching what rent will cost in your area by looking at apartment listings, taking a look at your family's grocery bill, figuring out utility rates, etc.
Figure 6 months' expenses as an emergency fund
Housing shouldn't cost more than 25-33% of your take-home pay
Then find an online calculator about savings rates and condo prices, a monthly mortgage payment calculator. Consider carefully HOA dues. When I was looking at condos, HOA dues were 25-66% of the estimated mortgage payments.
Can't find a good entry level gig with a BA, so you figure it'll be easier with a masters?, and you will be using student loans to further your education?
More debt is NEVER a better option.
If you really feel compelled to get the masters, stay living with your parents until you have ALL the debt cleared up.
See if your university offers courses on common sense, take those and try to develop wisdom, before you go into debt for useless knowledge.
So maybe a BA in History and teaching certificate isn't the best way to get a job these days. Sounds like he's living and learning. Hindsight is 20/20.
Now, I'm not saying that's what everyone should do (get more education), but I think you are overgeneralizing.
Common sense? I suggest you find those classes as well.
Calculate the ROI for the cost of the education (http://www.blog.epravesh.com/?p=105).
If he is having trouble finding a good paying gig with a BA and TC, a masters is not likely to help.
He needs work experience right now, not more debt.
How's that for common sense, Spanky?
How is a masters in a completely different field not going to help? At least around here, someone with an MA in accounting would have an easy time finding a good job. Especially when compared to someone with a BA in history and teaching certificate.
Now, if he went back to get a masters in education, I would see your point.
I have one friend who got a ba in accounting, Had trouble getting a job so went and got two masters on specifically geared towards real estate accounting and i forget what the other was for. He's spent all this time in school nad all this money on school and he still has no real work experience. with a ba in accounting nad two masters in accounting he's currently doing an unpaid internship with the girlscouts. i think most employers would rather see some solid real world work experience even if not your dream job or high level accounting than another degree.
Well, getting two masters is a different story.
I do agree that work experience is key. And the OP is getting great experience at an accounting firm.
I don't see a loss in opportunity costs. He already landed a job in the field. He can use the people he works with for direct insight into what he is learning in school, and can use it real time to work for promotions and more responsibility which will then directly increase the experience as well as the opportunities for increased experience.
As somone who has gone back to school, the indirect costs are only what you want them to be. 2 years now for many more drastically better in the future. Even near future will be drastically improved if he lands a far superior job to slugging up without the education.
1 and 4 are really the same. You have to ask yourself, in 5 years, 3 years after graduation, where am I going to be at as having stayed at the $12 level with maybe 3% raises, competeing in the work force for not a lot of teacher openings as well as students coming out who at least got their undergrad in a more math/business related field.
Saying that I recently went back to school for my MBA at 36(37 now), I did all of those calculations, esp as like this guy, one of my undergrad majors was History.
Your common sense is nothing more than your idea of what constitutes good debt vs bad debt, as well as your own bias against the probabilty of higher education giving more possibilities in job opportunities as well as potential income.
So you are in graduate school now? Aren't school loans deferred while you're in school?
I would hold off on saving for a condo. Keep living with your parents until you graduate, or find a cheap room in a shared house. I don't know your area, but $12/hr full-time seems like plenty to live off of. I guess it depends on your standards of "living".
I am in grad school for an accounting degree. I could not get anywhere with a history degree and teaching is a profession that is on its death bed. Accounting is a field that is in demand. According to the occupational handbook, the accounting profession is expected to grow in the next decade. The education plus the experience I will be getting at this tax job sounds like a pretty good strategy. This to me feels like "common sense." Education might be a waste of time for about 70% of the majors out there, but I don't believe accounting is one of them.
I think that given the times we live in, I should hold off on the condo.