While I was interviewing last year, one of my interviewers asked me what I would do if I was retired. I was surprised I got asked this question since the person clearly knew how long I’ve been out of undergrad and probably from that I’m still in my twenties! It’s not so crazy to hear people in their forties mentioning this, but asking someone in their twenties? That seems bizarre to me. Anyway, I thought about it for a moment (I was caught a bit off guard) and told the person that I would go to grad school in X subfield. They told me that I could do that while working for them, since their company has tuition benefits. That got me thinking and…
I applied to grad school for X subfield of my current field! I got in! I’m pretty stoked! And scared and nervous all at the same time. But very excited!
I’d been mostly putting off grad school because it seemed like a terrible financial move (it will cost money, have an opportunity cost, and will not increase my income) and it seemed like a lot of work. My last employer wouldn’t pay a cent towards grad school. My new employer however has a sweet tuition benefits program, with no waiting period, meaning that my Master’s degree will only cost me possibly very little (somewhere around one month’s average normal expenses is my estimate). And it seems that I’ll be able to pay for my tuition with a credit card, so I may try to pick some interesting credit cards to churn with tuition.
I’ve saved up enough to pay for the entire program myself in cash and have enough to cover a year’s worth of living expenses (by some definition). I figure I would recast the mortgage and reduce some expenses, so that amount would probably last me for a second year. I could cash flow this, but I decided I felt more comfortable saving up the whole amount so that I could quit my job to do this full-time if I wanted to. Why would I choose to keep this cash even though my now-employer will pay for basically the whole program?
1) I have to pay for each course upfront and then they’ll pay me back once I finish it successfully.
2) Options! This cash will allow me to quit and pursue the Master’s program full-time if I want to, if I decide I’d rather do that than stay in industry.
My plan is to use my tuition savings account to pay for grad school and then when my employer reimburses me for the courses, use that money for whatever my next savings goal is.
My family is blue collar millionaire next door raised in working class families and didn’t really value education (my parents didn’t realize that I would likely go to college if given the opportunity until I was in high school…), but did value good work ethic and holding a job at all times, so this plan to go to grad school when it won’t increase my income has taken a long time for me to be okay with. Plus, the requisite amount of time thinking about spending this much money (five figures if my employer didn’t pay for it) on something for myself.
This is a better splurge than a comparably priced car as it is an experience rather than stuff. If my employer wasn’t paying, I would pay for it in cash.
There are a few different paths my next five years could take financially at this point:
- I proceed through the Master’s degree part-time, my employer pays for it in full, and nothing changes in my job when I’m done the Master’s degree. I’ve gained some knowledge, but continue at my job.
- I proceed through the Master’s degree part-time, my employer pays for it in full, and I change groups/teams to do something more in line with this new specialization once I have my new degree. This would see most of my grad school savings tossed into other savings buckets as time goes on and my (cash) emergency fund reduced back down to $20k-ish.
- I proceed through the Master’s degree part-time, my employer pays for it in full, and I decide to pursue a PhD after I finish the Master’s degree. This would see most of my grad school savings tossed into other savings buckets as time goes on, but I would probably keep my (cash) emergency fund around $30-40k in this case to help with the lower income. The mortgage will very likely be paid off before this point, which will help keep expenses lower, and the SWR on my investment portfolio should be around $1,800/month, though I would try my best to keep my expenses under/around the grad student stipend and let my investments continue growing.
- At some point during the Master’s degree, I decide it’s far more interesting than my full-time job and decide to quit and pursue the Master’s degree full-time and then continue on to a PhD. If the mortgage isn’t paid off, I’ll recast it, and slash expenses like crazy in order to let my savings account last for a while and keep my expenses low in preparation for a grad student stipend once I start the PhD. The SWR on my investment portfolio at this point will likely barely even cover the HOA dues and property taxes on my condo, so I’ll definitely need to acquire some more income at a later point.
- I decide I hate grad school and skip out partway through with no/minimal money lost and continue saving and look for a new path to pursue after I reach FI.
I can’t believe this is finally happening! I’m so excited!