What to do with $50,000...

[caught_between]

Presumably in the next year sometime, I will be receiving an inheritance from my grandfather for +/- $50,000 (it's taking a while to wrap up his estate). I would like to use this for grad school, presumably for my M.A., since it looks like my chances of being accepted directly into a Ph.D. program are pretty slim. It has always been my dream to do my graduate work full-time while not working, so that I can (for once!!!) really throw myself into the program. In the past, for financial reasons, I've always had to have a job, and it's constantly hindered me from performing my best scholastically. I'd like to emphasize that my level of performance in this M.A. program will be of the utmost importance, specifically because I will be relying upon that to eventually get me into a decent Ph.D. program.

This $50,000 will (just barely) cover the cost of tuition and me not working for 2 years. Should I do it? The obvious answer seems like yes, but that is $50,000 (well, more like $35,000, if I were to use it to pay only tuition, and then work) I could be putting in the bank. I am not well-off and neither is my family, so $50,000 is a huge sum of money to me. It makes me cringe to think none will be leftover after my degree. I will already have about $40,000 in undergrad gov't loans when I graduate with my B.A. in May, by the way.

[ultraviolet]

This is a tricky question. If I were you I would do everything I could to minimize the cost of getting an MA - apply to state schools, and for any and all funding available. If you are unable to get any funding, perhaps you could take out loans for half the cost, and invest the rest of your 50 grand. I would try to talk to a financial investor if I were you, to see what kind of interest that money could earn while you are in school. Depending on interest rates it's possible it would be cheaper to take out loans and let your money accrue interest while you're in school, and then pay things off when you're out of school.

In sum, try to talk to someone who knows a lot about money. In the end you have to do what you think is best for you. I think if it were me, I would try to save at least a part of the inheritance for a rainy day.

Best of luck to you.

[purplepepper]

This is a tricky question. If I were you I would do everything I could to minimize the cost of getting an MA - apply to state schools, and for any and all funding available. If you are unable to get any funding, perhaps you could take out loans for half the cost, and invest the rest of your 50 grand. I would try to talk to a financial investor if I were you, to see what kind of interest that money could earn while you are in school. Depending on interest rates it's possible it would be cheaper to take out loans and let your money accrue interest while you're in school, and then pay things off when you're out of school.

In sum, try to talk to someone who knows a lot about money. In the end you have to do what you think is best for you. I think if it were me, I would try to save at least a part of the inheritance for a rainy day.

Best of luck to you.

$50,000 is too much to spend for an MA. Definitely, definitely, pay off completely the undergrad loans that you have now. It will feel great!!!!! interests rates suck now, but save the rest of the money. in a CD or savings account. If you want to do the MA, think about doing it part time so you can work and support yourself through it. Try to minimize spending and go to a cheap school (if you do well, you still havea great chance of getting into a good Phd program).

Save as much money as you can. My husband and I make combined $25,000/year with my stipend and his pt job...we really don't have money (we do have savings though) But we are debt free and have insurance (car/health/dental/blah blah), so we are very comfortable. It's much better to live that way than with debt from undergrad hanging over your head and no savings.

[caught_between]

$50,000 is too much to spend for an MA. Definitely, definitely, pay off completely the undergrad loans that you have now. It will feel great!!!!! interests rates suck now, but save the rest of the money. in a CD or savings account. If you want to do the MA, think about doing it part time so you can work and support yourself through it. Try to minimize spending and go to a cheap school (if you do well, you still havea great chance of getting into a good Phd program).

Save as much money as you can. My husband and I make combined $25,000/year with my stipend and his pt job...we really don't have money (we do have savings though) But we are debt free and have insurance (car/health/dental/blah blah), so we are very comfortable. It's much better to live that way than with debt from undergrad hanging over your head and no savings.

Thanks for the advice, but I really, really do not want to work and go for my M.A. I have dragged out my B.A. for years and years doing the work/school thing. And, as I mentioned above, I never seem to be able to fully commit to school because I have to work.

I know $50,000 may sound like a lot for an M.A., but I am factoring in living expenses for two years. It's really not that extraordinary, all things considered. Tuition is $6,500/year for the state school I have in mind: $13,000 (2 years). Then, living expenses for 9 months per year for two years at $2,000/month (includes rent, bills, and spending) = $36,000.

Investing half the money and taking out loans for the other half may be an option, as the previous poster stated. I should probably talk to a financial advisor. But the bottom line is that I am going to try anything not to work while doing my M.A. I have largely been unsuccessful at the work/school thing, as I always have to have a job with tons of responsibility if I intend to make more than $10/hr (and for working to even be worth it financially, for that matter).

Edited October 20, 2009 by Sarah

[rising_star]

I know $50,000 may sound like a lot for an M.A., but I am factoring in living expenses for two years. It's really not that extraordinary, all things considered. Tuition is $6,500/year for the state school I have in mind: $13,000 (2 years). Then, living expenses for 9 months per year for two years at $2,000/month (includes rent, bills, and spending) = $36,000.

I would try to get a TA position at the university, which would likely be teaching freshman comp. The experience will help you decide if this career is the right one for you and give you valuable teaching experience so you aren't thrown off when you have to TA as a PhD student. As for living expenses, are you in an expensive area? Because your budget for living expenses are more than what most PhD students (outside of NYC and maybe Chicago) make in a month... If you plan to continue on to the PhD, you'll have to cut down your living expenses if you plan to live even close to what your stipend is.

[caught_between]

I would try to get a TA position at the university, which would likely be teaching freshman comp. The experience will help you decide if this career is the right one for you and give you valuable teaching experience so you aren't thrown off when you have to TA as a PhD student. As for living expenses, are you in an expensive area? Because your budget for living expenses are more than what most PhD students (outside of NYC and maybe Chicago) make in a month... If you plan to continue on to the PhD, you'll have to cut down your living expenses if you plan to live even close to what your stipend is.

Thanks Star! Great idea about trying to acquire a TA position...I will certainly attempt to do that. I live in San Diego which is not as expensive as NYC or SF, but my half of the rent is $950/month. My fiance and I rent a house for $1,900/month which is a very good deal here. We are also looking to buy in the next year, and with housing prices so low, there are plenty of options in our price range. I don't anticipate our mortgage (even everything included - tax, insurance, PMI) to total more than our current monthly rent. I also have a car payment, gas, utilities & groceries in addition to that which brings my total bills to about $1,500/month. Then I factored in about $500 for free spending. However, this is solely if I go by "my half" of things. Next year when my fiance and I get married, we will combine our money, and since he has a job that pays pretty well, I likely won't have to spend $2,000 a month of my inheritance. I was just trying to throw out the maximum spending situation. I realize that PhD stipends are around $1,200/month after taxes, and so I anticipte that contribution should be fine as long as he and I are combining our money. At least I would still be contributing half the mortgage and bills.

Thanks again for the TA advice!

[mudlark]

Thanks Star! Great idea about trying to acquire a TA position...I will certainly attempt to do that. I live in San Diego which is not as expensive as NYC or SF, but my half of the rent is $950/month. My fiance and I rent a house for $1,900/month which is a very good deal here. We are also looking to buy in the next year, and with housing prices so low, there are plenty of options in our price range. I don't anticipate our mortgage (even everything included - tax, insurance, PMI) to total more than our current monthly rent. I also have a car payment, gas, utilities & groceries in addition to that which brings my total bills to about $1,500/month. Then I factored in about $500 for free spending. However, this is solely if I go by "my half" of things. Next year when my fiance and I get married, we will combine our money, and since he has a job that pays pretty well, I likely won't have to spend $2,000 a month of my inheritance. I was just trying to throw out the maximum spending situation. I realize that PhD stipends are around $1,200/month after taxes, and so I anticipte that contribution should be fine as long as he and I are combining our money. At least I would still be contributing half the mortgage and bills.

Thanks again for the TA advice!

I agree with the comments above. Try to get funding for your MA. Graduate school should be something that pays you money (albeit not much ), not something that costs you money. $50 000 is absolutely too much money to spend on an MA. All academics juggle work and research. It's a good habit to get into. You may also be surprised at how rewarding TA or RA work is compared to other jobs, and how well it (ideally) can work with your research, instead of detracting from it.

There's one thing about your last post that confuses me, though. You say that you're going to apply to PhD programs after your MA, but you're buying a house? What if the only PhD program that funds you is on the other side of the country? Heck, what if the only MA program that funds you is on the other side of the country? That's only money. You also have to think about fit and the reputation of the program. If you move for either degree, and it's almost certain that you'll have to move for one or the other, you won't have lived in the house for long enough to make it worthwhile. Why are you limiting yourself geographically at exactly the time when you're most likely to need to move for your education?