I’ve spent a long time thinking about it and I’ve realized that I’m just not going to do an entire Master’s degree while working full-time. I can’t sustain that level of working for that long and focus on that many things at once. So, instead, I’ve decided to plan on taking a year off to get my MS (Master of Science) at a local university.
One of the things I’ve learned about myself is that I’m much more likely to do something when you take away many of the barriers, especially making it financially in reach. I wasn’t that interested in buying property until I had a ton of cash saved up that I didn’t know what to do with. Now that I’ve got the mortgage balance under $200,000, I’m going to work on saving up the entire cost of tuition for the Master’s degree and a year’s worth of bare bone living expenses, in addition to the $20,000 cash savings buffer I already have. If even with the money saved up to do this, I still don’t want to do it, then maybe I really don’t want to.
I calculated that I need to save about another $57,000 from what I have already started to set aside. In order to save this amount, I’m going to stop making extra payments on the mortgage and send all of my non-retirement account savings to this savings account. I am estimating that I will reach the goal by August to October of next year. If I change my mind and don’t end up going to grad school, I can always throw this money at the mortgage instead. Since I’m still considering this and saving money, I’m not going to consider applying for the 2014-2015 school year and will instead evaluate for the 2015-2016 school year.
What does a bare bones budget look like?
- $1,205 Mortgage payment (still paying at least the payment on the original loan) – adjust down to the required amount of $1,027. I could also recast the mortgage for a cost of $100, which would lower the required payment to about $800. (savings in cash flow: $400)
- $21.19 Cell phone – the bare minimum on Ting would be $18.21 per month (savings in cash flow: $3)
- $31 Internet – this is the bare bones as this is the slowest speed of internet that they offer
- HOA dues and property taxes – no bare bones version of this
- $52 Electricity – monthly average. I’ve cut this down quite a bit, but I think I can continue to cut it down further.
- $99/year ($8.25/month) Dropbox – paying for storage and sync’ing files between my computers. I would keep this.
- $1,626/year ($135/month) Insurance policies (includes auto and condo policies) and renewing my vehicle tabs. This rate was shopped around for. I would do that again if it helped to lower the rate. There is no way to lower the cost of renewing the vehicle tabs other than to get rid of the car.
- $163/month (average) Sports. I would eliminate all of these costs and spend time running and doing yoga at home.
- $3/month (saving to spend) to replace driver’s license and passport as they expire
- $250/month Entertainment: books, movies, food out with friends, etc. I would cut this down to $75/month since I also eliminated sports. (Savings on cash flow: $175)
- $20/month Dining out by myself. I would cut this out completely and just count it in Entertainment if I do.
- $170/month Groceries. I would increase this to $200/month to account for not eating out as much. (Savings on cash flow: $-30)
- $65/month Work lunches out. I would eliminate this.
- $42/month Presents. I would reduce this to about $17/month. (Savings on cash flow; $25)
- $30/month (average) Household goods. This covers toilet paper, light bulbs, paper towels, Kleenex, batteries, laundry detergent, dryer sheets, dish soap, dishwasher detergent, bathroom cleaner, hand soap, etc. I’m still figuring out what this number should be, but this is about the average spent in 2013.
- $20/month Eyebrows. I would cut this.
- $6/month (average) Hair cuts. I would go to a hair school instead at a cost of $14/year or an average of $1/month. (Savings on cash flow: $5)
- $20/month (average) Toiletries: hair elastics, toothpaste, feminine products, body wash, shampoo, conditioner, shaving cream, hand cream, etc.
- $8/month (average) Spa. I would eliminate this since I don’t value it all that much.
- $48/month (future spending) New electronics (cell phone, laptop, modem, purse, MP3 player). I would put off setting aside further money for these until the situation improved.
- $48/month (average) Fuel for my car.
- $5/month (average) Maintenance for my car.
- $350/month (average) Travel. I would eliminate this.
My existing budget adds up to $3,221/month. The bare bones budget version would add up to $2,130, saving about $1,250 per month in cash flow.
Other options include:
1) Selling the furniture in the second bedroom and taking on a roommate. Approximate expense reduction per month: $800, reducing overall bare bones expenses to $1,330, which isn’t bad. That’s just under $16,000/year. This would really help because over half of my expenses in my bare bones budget is housing and because I own my condo, it is trickier to move. If worst came to worst, I could probably sell the condo and pocket about $160,000 in cash, which would help to cover rent later.
2) Selling my car. I could probably sell it for around $11,000, which would eliminate several costs (car insurance, renewing my vehicle tabs, and car maintenance). Technically it would also eliminate the fuel cost, but I would say that would cost just as much as taxis and car sharing would if I had no car. Savings on cash flow: possibly $115/month, but hard to tell based on how much taxis and car sharing would cost. The real advantage here would be gaining the $11,000 from selling the car. If I was in a real bind, I could sell the car and that would provide me another 5 months or so of expenses at the bare bones level.