Need advice about debt and school...

[shaselai]

Here's my situation:
I am 99% going to B school in summer and by that time I know I won't be able to pay off all my CC debts(they are on 0% apr now till summerish). I do have savings in my Roth IRA which i can take a small chunk and pay off everything but naturally at a penalty... So is that the "best" way for me to resolve the CC debt issue or should I use some money i borrow for school to pay it off with no IRA penalties? I prob need to borrow a lot for school anyway... thanks!

[Slug]

I would use the student loans. These are likely interest-deferred until graduation. So, you're just delaying the inevitable payback. However, if like me, you are in a far superior financial position in terms of income post B school, then I suggest paying down the debt a bit might be a good use for your signing bonus. Also, remember if you do a paid internship in the summer between 1st and 2nd year, you can contribute to a Roth while in school.

[thomsoad]

Here's my situation:
I am 99% going to B school in summer and by that time I know I won't be able to pay off all my CC debts(they are on 0% apr now till summerish). I do have savings in my Roth IRA which i can take a small chunk and pay off everything but naturally at a penalty... So is that the "best" way for me to resolve the CC debt issue or should I use some money i borrow for school to pay it off with no IRA penalties? I prob need to borrow a lot for school anyway... thanks!

I wouldnt touch the IRA ... BUT if you insist on this route ... You will be assessed a 10% penalty on the amount of GAIN you have made. Also you will be taxed normal income tax on that gain as well. So expect to pay 40% to the government on any profit that IRA made

[BuckyBadger]

nevermind -- misread

[Hector]

use student loan if you must. try not to use cc in future if you cant pay in full.

[shaselai]

i see... Well loan wise I probably need almost all for loans so I guess a little extra on top of it to pay off CC is not too bad... It's funny because one MBA student said they use the loans like "monopoly money" lol. Yeah I am also hoping the post MBA career will give me a boost finiancially but it will still take a bit to pay off all the loans though....

[Hector]

i see... Well loan wise I probably need almost all for loans so I guess a little extra on top of it to pay off CC is not too bad... It's funny because one MBA student said they use the loans like "monopoly money" lol. Yeah I am also hoping the post MBA career will give me a boost finiancially but it will still take a bit to pay off all the loans though....

Yeah, because of current job market its not easy to justify taking students loans sometimes. If you are studying to become doctor or nurse, I dont think there is an alternative. But it is not necessary that one will get higher paying job with masters in business and engineering.

[Slug]

Yeah, because of current job market its not easy to justify taking students loans sometimes. If you are studying to become doctor or nurse, I dont think there is an alternative. But it is not necessary that one will get higher paying job with masters in business and engineering.

This completely depends on where you're starting. If you're a teacher making a low wage and go back to B school to become a marketer or a banker, you can easily make 3x-6x more coming out. Again, completely dependent on current salary and future job type though.

[disneysteve]

Here's my situation:
I am 99% going to B school in summer and by that time I know I won't be able to pay off all my CC debts(they are on 0% apr now till summerish). I do have savings in my Roth IRA which i can take a small chunk and pay off everything but naturally at a penalty... So is that the "best" way for me to resolve the CC debt issue or should I use some money i borrow for school to pay it off with no IRA penalties? I prob need to borrow a lot for school anyway... thanks!

I'm a little concerned about your attitude toward debt as well as how well thought out your plan is to go to school. "prob need to borrow a lot for school" sounds to me like you haven't really thought this through. Do you know how much school will cost? What will your income be during the time you attend school? Will you continue to work? How much CC debt do you have, and why do you have it? What is your anticipated income once you complete the program of study?

I think you need to know the answers to all of those questions.

[jerrycates]

For the best of the best advice is to personally ask a professional financial advisor. Any thread will be of great help, that is so true. However, it is still different if you can actually discuss these matters in person.

[DebbieL]

Many "professional" financial advisors are glorified sales people (with the possible exception of fee-only based advisors). In any case, I don't think a financial advisor is needed here. OP doesn't need help with allocating a portfolio of investments or planning for retirement (based on their question). At some point in the future they might need one, but I don't think it is necessary for this issue. If I were the OP, I would just do my research and see if this additional education really is worth taking on the debt for. Some are, and some aren't. Choose wisely.

[shaselai]

I'm a little concerned about your attitude toward debt as well as how well thought out your plan is to go to school. "prob need to borrow a lot for school" sounds to me like you haven't really thought this through. Do you know how much school will cost? What will your income be during the time you attend school? Will you continue to work? How much CC debt do you have, and why do you have it? What is your anticipated income once you complete the program of study?

I think you need to know the answers to all of those questions.

well by my calculations i will have maybe 2-5k credit card debt by then and school is estimated to cost 60k/yr....

[DebbieL]

60K/year? Holy smokes. I would have second thoughts about that. Isn't there anywhere less expensive you could go? Wow.

[shaselai]

well that figure is including estimated living expenses... yeah b school tuitions all around 40k or so unless state school...

[disneysteve]

well that figure is including estimated living expenses... yeah b school tuitions all around 40k or so unless state school...

Is that a 4-year program? So you're looking at upwards of $160,000 just for school. Of course, tuition will rise 6-10%/year so the actual total will be even higher. Then there is books and other supplies. So let's say 200K by the time you are done.

How do you intend to pay for that and your living expenses during that time? What will your income be during that time? How much will you likely need to borrow?

How much less would a state school be? I find it rather hard to believe that all business schools cost 40K/year.