23 year old at a crossroad

Submitted by Original_Bath_5164 t3_11clmuz in personalfinance

Background

  • 55k in student loan debt(20k private 5.5%), my parents' messy divorce caused me to get cut off sophomore year due to drama blah blah stayed in an expensive school because of a girl. (regret)
  • Degree in urban and regional planning
  • Currently, live at home making 54k full-time. 3.2k a month about 2k going into savings a month.
  • $6700 in savings accounts, $1500 in a pension through my employer
  • $2300 in a 401k, $800 I invest, $500 in a roth ira (I just started)

The Issue

  • I started a master's program, only took 2 classes to see how I would like it, urban planning again but with a focus on a more lucrative specialzization, and took this semester to evaluate my options. (apply to other full-time jobs) Now I have offers but one would require me to go back to school and go 25k~ more in debt.
  • Offer 1: Construction management company 29/hr plus overtime and bonuses. 401k etc. Think I can probably make 70-75k if I work hard and put in the hours.
  • Offer 2: Internship with a consulting firm. 35/hr no benefits but with overtime opportunities, I would finish my current full-time job until this starts for two and a half months and then back to grad school full-time for 1 ½ years. Would do some part-time work during school a return offer of 85-95k is what I’d be looking at once I’m done. But again this would be under loans placing me probably around 80k in total student loan debt when it’s all said and done.

My take

  • Coming from a shitty financial situation recently I just want what will give me stability in the long run. I don’t want to go into more debt if it’s not worth it, but I am stuck because I don’t know if this is me thinking short-term (being able to move out of my house and start a career).
  • My long-term goals are to be able to support a small family and retire and live comfortably by 50
  • Typically planning jobs aren’t too lucrative starting out but I’ve been pretty effective in job interviews and applications in more technical areas. Would like to do either consulting or real estate as I have no interest in being a basic city planner at the moment but could see myself doing it when I’m older to collect a pension and have a cozy job.
  • The consulting job sounds WAY more interesting but if I’m making money with offer 1 there certainly is a trade-off.

Question

  • From a purely financial standpoint, I believe option one would be better, but option 2 might have a better rate of return in the long run. How should I balance short-term success over potential earnings in the long run? Stability is important but I keep hearing now is the age to take risks. Thanks for any help!
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Comments

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Kekulzor t1_ja3nw8m wrote

I'd do option 1. Going much further into debt sounds detrimental for a potential 10k upside. That gets you earning and out of debt faster.

Benefits like healthcare and a 401k will probably be worth almost just as much or more than the extra 5$ an hour or whatever.

I think my current benefits package accounts for an almost 20% increase to my base salary if you viewed it as an aggregate.

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vmikeb t1_ja3oc07 wrote

Do the math over the long term, and see what plays out. You have to take into consideration how comfortable you are with taking on debt (personally I’m debt averse, but some people can absolutely sleep well at night while floating 30% DTI).

The guarantee of a better job due to an internship that pays better than a job that might not lead you to better prospects is attractive in my mind. You can always do your own investing in Roth IRAs etc, and if need be buy your own health insurance (or get it from your college).

Look at your goals, see where your loan payoffs get you vs your career path and what you could be earning because of the degree, and remember there’s literally no bad choice here. It’s all a matter of “which good path do I want to take?”

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Original_Bath_5164 OP t1_ja3qqyw wrote

Replying to Kekulzor (#2,027,457)

Yeah, of course, and I'm still on my mom's health insurance Until 25. The benefits will also be there with a full-time offer. No 401k would suck for a long time as I want to contribute to that as much as possible early.

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Original_Bath_5164 OP t1_ja3rqpa wrote

Replying to vmikeb (#2,027,539)

I'm on my mom's health insurance for another year and a half so I'll only be uninsured, for give or take three months.

That's a positive spin on it, I'm just really restless to get my life started, and I don't want that to be my deciding factor.

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vmikeb t1_ja3sez2 wrote

Replying to Original_Bath_5164 (#2,028,221)

I get it, and it’s tough when you’re on one side of the bridge looking at your options like “I don’t want to mess up! This is the rest of my life!”

But in all reality there are dozens of decisions you can make, and regardless of what you choose, you can always make a different choice if one doesn’t turn out for you. Hell - you can quit your current path, move to Brazil and sell nuts on the freeway, but that’s not a very fun path to pursue compared to the other two you listed 😂

My $0.02 - taking on debt for a bigger paycheck isn’t a terrible idea, just make it the shortest you can make it. You’ll be able to defer loan payments while in school, and afterwards you’ll get paid more which means you can pay down that debt faster. HTH

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Kekulzor t1_ja3tp77 wrote

Replying to Original_Bath_5164 (#2,028,022)

You could probably punch all the numbers into excel to calculate the actual payoff / crossovers.

I.e. how much extra debt accrued vs. the potential upside. You also have to factor in years of experience since while you might have a higher starting salary once you have racked up the extra 30k in debt; the other job you have accumulated 2+ years of experience and might be eligible for a promotion or raise or could switch to another company for the same amount of money.

School is losing money. Work is earning money. You really want to do as little school as possible. Those who can do, do. Those who can't teach

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jgomez916 t1_ja3uyes wrote

I think option one is a better option because it avoid debts and give you time to explore. 23 is very young and so much can change in 2-5 years.

To be a consultant you need a great deal of experience and expertise. You can try Real Estate if you want. Typically all you have to do is take 3 classes and pass one state license test.

At 23 I graduated with $10k in student loans and I was so debt adverse I didn’t wanted to work for free doing practicum a for 2 years in an MSW Program or add $20k more in debt. I got a full time job that would allowed me to save and qualify for a home loan in 2 years. Then I bought my first property at 25.

I am 28 and I think I made the best choice to forgoe a Masters in my field of social work. I make $35/hour in a role that tops out at $46/hour and I didn’t need a Masters. I am a hiring manager and I interviewed Master Degree holders all the time.I might still get one in the future and pay cash for it so I’ll be a better candidate for executive program manager roles that pay $45-$60/hour.

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ThenNeedleworker1905 t1_ja42j1a wrote

Replying to jgomez916 (#2,028,775)

Have a different interview on monday with a real estate consulting firm! That would honestly be the dream but most places hire with masters degrees so wish me luck.

I see what you’re saying just hard for me to juggle personal finance vs goals considering how niche the field is that I want to do.

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