‘I make about 42K/year but feel like I’m stagnating wage-wise, considering going back to school to double my income’: What should I consider before tapping into my 85K savings to pay for tuition?

Hi Money Minder,

Hey Money Minder,

I’m 37 and feeling a bit stuck in my job. I make about 42K a year, but my wage isn’t keeping up with the cost of living. I don’t want to be doing this forever, so I’m thinking of going back to school for a 3-year program that could double my income and give me more job options.

Right now, I have 65K in a high yield savings account (4.25%), 20K in a 9-month CD at 5%, some money in mutual funds that I don’t really pay attention to, and about 5K for emergencies. I’m also maxing out my Roth and my employer’s 401K match. My car is paid off, and rent is only 600 bucks a month.

I won’t be able to work much while in school, so I’ll probably have to use student loans and dip into my savings. I’m applying for grants that could cover my tuition, but I’m wondering if there are other ways to pay for school. Do you think I should keep my 65K in savings until I need it for tuition next year?

Thanks for any advice you can give me!

Best,
Future Success Story

Response from THE MONEY MINDER: Thank you for reaching out. How can we assist you today?

"Hello There,"

I understand your concerns about feeling stuck in your current job and wanting to pursue a different path by going back to school for a program that could potentially double your income. It’s commendable that you have carefully saved and invested your money to prepare for this transition. Considering your financial situation, priorities, and goals, tapping into your savings to fund your education while minimizing student loans might be a practical approach. Since you won’t be able to work much during school, having a solid financial plan in place is crucial.

Before using your savings for tuition, consider exploring additional financial aid options such as scholarships, grants, and work-study programs. Applying for all available aid can help lessen the burden of student loans and preserve your savings for emergencies or other future financial needs. When the time comes to pay for tuition, carefully evaluate how much you will need to withdraw from your savings and factor in any potential income sources during your studies.

In terms of your savings allocation, since your tuition payment is approaching next fall, it might be beneficial to keep the majority of your money in liquid assets to be easily accessible when needed. However, you may also want to explore other investment opportunities considering your long-term financial goals and risk tolerance. A balanced approach to managing your savings can help you navigate the financial challenges of going back to school while maintaining your financial stability.

Remember to continue monitoring your financial situation and adjust your strategy as needed. Planning ahead and being diligent about managing your finances can help you make a smooth transition to a new career path. Best of luck with your educational pursuits, and feel free to reach out for further financial advice as you navigate this exciting new chapter.

Farewell from THE MONEY MINDER.