By reducing my expenses and working part-time, I’ve been able to come out well in the positive during my grad studies. I live mostly on my part-time earnings and I’ve put my fellowship money toward debt repayment and savings. Most schools offer money to all of their thesis-writing students. If you’re not writing a thesis, you have time to work… A master’s shouldn’t make you poor.

Another thought on the Masters program. Bobbi needs to look at the total package not just the actual cost of school. Sometimes more expensive programs are able to offer better financial aid packets which can either mitigate the cost difference or even result in a lower out of pocket cost. Also look at the cost of living in one area versus another and what your transportation options/costs are (my tuition for college included free use of the public bus system in town year round anywhere in town not just to the college). I would especially suggest that Bobbi build her college budget now before she pays tuition. It may be an eye opener as it may end up costing more than she thinks to complete her masters. The cost of the Masters degree also needs to be weighed against the expected increase in earnings. If there is going to be little to no increase in earnings then the degree doesn’t make sense until Bobbi is completely debt free. On the other hand she may earn enough in the first few years after college to pay for any additional debt incurred for the new degree.

i guess my point is that the debt is in her name and until it is all paid in full she needs to incorporate having to pay that off into all her budgets/job choices/education requirements.

gail–i think i’m cursed never to win one of your contests! thanks for everything gail.

Many positions provide housing, and there are often opportunities to earn extra money. I recommend Bobbi looks online at “Dave’s ESL Cafe” to get a sense of all the possibilities.

I don’t have a tremendous amount of time to post, so I’ll keep my answer very short and sweet. Despite being very eager to go get her masters, I think it would be very wise of her to pay off her current debt first , before adding another huge bundle.Stay with the ESL position, as well as consider working another position part-time and battle with that debt bulge and save as well until its gone. There’s nothing wrong with her to go back to school within a few years. Her situation is way too risky, it could ruin her life!

As a side note to Gail about the coin jar, I’m not planning to grab the change on a monthly basis to deposit and collect interest on the small amount (maybe 25 dollars a month?). My goal isn’t to make more money than what’s in there, but more so to save some coins from myself and family members and wait for about a year to see how much I collected to utilize those funds towards a necessity of some sort (such as winter tires for next year!) Should I collect
and deposit the money on a monthly basis with this situation?

Respectfully,
Josef

What is great about the student loan is that it is tax deductible and is usually at a lower interest rate. As a long term approach, she might want to consider keeping this loan as long as possible, i.e. a ten year period. Instead of paying down the loan, invest the payments. This is the same thing as leveraged investing except that she is unlikely to qualify for any sort of investment loan at this point.

For example, instead of her father paying down the student loan, she should invest the money. At worst, the credit card and line of credit (not deductible) should be paid down first.

Going Back to School

This is something you want to do soon, before you get too comfortable having a regular income. Don’t postpone it. A frugal lifestyle will help her the most. She needs to pay down that credit card and then stop using it so much. Talk to the bank about getting a student rate on the line of credit while you are doing your masters.

If she is doing a research thesis masters, talk to the supervisor about getting funding and assistance.

Invest your new loan in something secure as soon as you get it.

I read this blog nearly daily and watch your show often. Today, I was paying my bills and thought, “I can’t send XX (my highest interest rate credit card) an extra $600 because we won’t have enough money to just spend.”

Then I heard your voice in my head say, “Are you nuts?”

And you were right. LOL. If I keep the extra in our checking we may just blow it. So I wrote the check for the whole $600 extra and sent it off. I feel liberated because I didn’t give in to temptation. I already paid everything else and grocery shopped so we don’t need the extra right now anyway.

Thank you for becoming my conscience!

I don’t know what degree she has, a degree should get you a job that pays a decent salary. Perhaps Bobbi wants to teach, so keep teaching and find another part time job. OR, volunteer to teach ESL a few hours a week, and find a job that will pay you a decent salary. I’m making a few assumptions, based on the fact that Bobbi’s take home is $1600, I’m guessing that she is working for $12.00/hour, or she is not working 40 hours.

With a university degree, there are jobs that should pay her more. Has she tried to find a job at a utility? Government? Factory? This is a debt crisis, and having started out with about half the debt Bobbi is carrying, I can say that I don’t envy her. There has to be a better paying job she would qualify for.

Additionally, I would recommend living with parents or finding an extra roomate and seriously limiting spending. (use gails jars, they work!)

I also like all the ideas posted above that advise trying to figuring out a way to find TA work or scholarships during university. I would also seriously consider putting off grad school for 1 year or looking into a shorter college diploma that would get her into her chosen field sooner. WHile is whole heartedly believe that education is valuable in itself, please don’t bankrupt your next 10-20 years to get a degree that won’t help you get a good paying job.

Best of luck in the future, Bobbi. I hope that my advice has sparked at least one idea.

As a numerically challenged individual, i have no ‘hard numbers’ which would help ‘Bobbi’. I do however, admire her choice of ‘job’ for the moment – ESL teacher and equally applaud her desire for a graduate degree. The only advice that i can offer is to say THANK-YOU to a man who will help you with student debt and not to ‘mortgage’ your future for a goal which could be pared down or somewhat adjusted until more cash is available. Don’t shelve your Masters/PhD objective, perhaps backburner it for another semester or two.

On a different note, i just wanted to thank each of you for your resolve strengthening words everyday. I read Gail in the am and your subsequent comments later in the evening. As a result of doing this and watching TDDUP for years, our budget/finances have never looked better. We are consumer debt free and even in the throes of this economy are moving faster toward our goal of debt-free than i thought my accountability avoiding self could move.

My ‘hunka, hunka, burnin’ love’ and main bread winner is in the auto-supplier business…the foundational impetus for the financial resolve. Late last week he found his name on an org. chart in the office…we cheered and danced a jig…safe for the moment!!

again, thanx all for your insight and tips…

Here is what I see regarding Bobbi.
I did not have the interest rates for her credit card or line of credit, so I made the assumption that they were 18.9% and 7% respectively. Ultimately, the exact rate does not matter for what I’ve determined.

I calculated that to pay off the current debts of $4,000 credit card and 25000 line of credit in 3 years, it would cost $933.18 per month total.
Given that Bobbi makes 16000 net per month, this is an exorbitant debt burden — more than half her monthly net pay. So, immediately, two things come to mind:
1) see if she can consolidate her 4,000 into her line of credit to lower the Card interest rate (and making her payments a little bit smaller each month).
2) Earn more money by taking up a second job on the weekends.

However, even if she did this and managed to pay down $933.18 per month, after one year, she would still have approximately $2860 (credit card portion) + 17096.92 = $19956 and change in debt. (and paid about $2000 in interest).

So, my third recommendation, in addition to the two above, is: postpone your Master’s education for two additional years while she pays off her existing debt. Try to be as conservative as possible with regards to rent and living costs during this time to maximize income. (small flat, frugal living).

Also – if there is any room in her budget, she should open a high interest savings account and put as much money aside for her $25,000 future educational needs. If she opens a high interest savings account, to reach $25,000 would entail setting aside approximately $660 per month over 3 years. Given her debt load, this may not be feasible even with a second job to cover costs, but any amount saved would help.
Finally: Look into the Student Budget Sheet on this website and make sure that it will truly cost $25,000. She needs to have a budget organized for her return to student life. Also, look into scholarships, grants etc — they are not a sure thing, but well worth applying for and may help out considerably. Finally, if possible, having a job whilst being a student — TAing, part-time work etc. — is worth looking into.

These are my recommendations regarding Bobbi’s plans!
Good luck!
xx
Chantal