Wondering if I made a mistake by going back to school.

[Harlech]

Hi all. I've been lurking here a while and decided to post. Sorry for the long winded post in advance.

My chief concern for my own retirement at this time is that I am in the middle of a career change. When my wife and I planned out this move, we calculated to the best of our ability, the risks and rewards Primarily due to the economic meltdown, many of our assumptions turned out to be way too optimistic.

Before returning to school, I had a small business in another country. I was saving ~$15,000 a year. While I expected to grow the business more, doing so would have involved risking a large investment in a very competitive market. Because of this, and other reasons, we decided to sell and pursue a different path.

I am now half way through a professional degree in the U.S. The entire educational process, for me, will take a total of 5 years and I currently have 2 years left. New graduates in my field make $95-$110k per year. (The most recent information I have.)

I will also, however, have roughly $210,000 in federal student loan debt at a variety of interest rates. This is taking into account the fact that my wife and I are working hard to minimize our loans. (In addition to the program, we are both working and raising a new baby.) We will be 33 years old when I graduate.

My wife plans on pursuing a career here in the U.S. but she is not a native English speaker and she will also have to return to school as well. We figure she is currently 5-6 years away from working because of the fact we are focusing on getting me through school first.

I still feel that I made the right move financially. However, I am starting to worry more and more about my ballooning student loan debt and the ~$28,000 dollars a year it will take to pay it off in a semi-reasonable time frame.

I'd really like to retire between the age of 58 and 60, giving me only 25-27 years to save for retirement as well as deal with the student loan albatross.

Is there a way to see if we've made the right move? I know there are some calculators frequently touted on this forum, but I haven't made the time to play around with them yet.

 

[rescueme]

Is there a way to see if we've made the right move?

Calculators aside, what are your options if you find you did not make the right move?

Sometimes, options are more important than the "numbers", regardless of calculator...

 

[chinaco]

What is your field? Will you be very employable with little chance of job loss? In other words does the field have low supply and high demand? Will that likely hold true be for the long-term (the duration of your planned career)?

You said the starting average wage was around $100k. What is the average wage for an experienced person with 10 to 15 years experience?

Since you living in a different country anyway. You might consider locating yourself in an area where jobs are plentiful for your profession... often the supply/demand gap can drive up compensation. Obviously, you should consider the cost of living in in the area. Balance!

Two professional incomes should help you to achieve your FIRE goal.

You (and your DW) might consider if your DW can go to work sooner rather than later. That may help reduce your dependence on loans while you are in school. The language barrier may present some challenges. But that will not get any easier. Besides, it will probably provide her with quicker acclimation into the culture and speed her learning process of the language.

The answer to your FIRE goal... it is a planning and math exercise. I know you are busy... but during your break (between semesters) you might take a little time to work on it.

 

[Texas Proud]

The decision is made.... you are more than half way there.... it does not matter IF you made the wrong decision or not, it is made...


NOW you have to decide if it is worth it to finish what you started or go back to what you were doing (if you can)... that means you still have to pay off the student loans that you have with whatever income you were making (or can make now).... since you did not list that salary, it is hard to say which way is the best...

Your wife's decision has nothing to do with what you should do (at least on a calculator basis).... they are separate decision IMO...

 

[jIMOh]

You should not get in the habit of looking back on decisions. You made a plan, you weighed options, you made a decision. If you second guess that decision, do you think if you plan a retirement, weigh retirement options, then actually retire you would second guess that too?

I would focus on 3-4 parts of the plan going forward.

You appear to be debt averse. 200k debt for a 100k salary sounds OK to me. If you are earning "little" now, once you start working you should have free cash flow to pay down those loans in 4-5 years.

For example if household income NOW is 40k per year, and you will make 100k salary, that 60k difference could be applied 100% to student loans, and 4 years later you are debt free.

The key to success is living below your means.

You are doing that now. The day you graduate keep the lifestyle the same and use the extra cash to fund goals like being debt free and retirement.

Other aspects of the plan would include getting a house, funding retirement and similar. If you save 30-50% of your income, achieving the goals should not be an issue... you just won't achieve them all the year you graduate.

 

[obgyn65]

I agree with chinaco this is the most important question the OP needs to answer.

What is your field? Will you be very employable with little chance of job loss? In other words does the field have low supply and high demand? Will that likely hold true be for the long-term (the duration of your planned career)?

 

[FreeAtLast]

Once you make a decision and start on a new path you can expect some bumps in the road. Is there anything that has changed a great deal since you first made the decision?

You might be getting nervous because the loan balances are going up and there is no income from the new profession yet.

 

[harley]

Since you are putting a fair amount of personal information out here, I would recommend removing your email address from your location. Unless it's totally made up, you might be setting yourself up for spamming or scamming. There is power in anonymity. Just my opinion.

 

[Harlech]

Sorry for the late follow up. I typed a reply several days ago, but it seems to have been eaten by forum gremlins.

I wrote the post after trying to 'run the numbers' again. Before the switch, I was on track to early retirement, but now it seems like it is going to take serious effort to get back on track. It is doable, but, I was a little depressed at the time I made the post. I know that now is a bit too late to change, I am too far in debt to consider backing out now. (Not to mention that so far, I am enjoying what I'm doing.)

To answer some of the posts:

-I'm pursuing a doctorate of Pharmacy. Recent salary increases has compressed the pay scale upwards, so experience may not necessarily mean a significant increase in income. The only way to seriously improve income is to either move into management for a chain or hang your own shingle. I'd love to specialize and do more clinically oriented work at a hospital, but spending one or two years of residency after graduation/licensing to make less money and potentially worse hours is a hard pill to swallow. I expect my field to be less difficult to find and keep a job when compared to most other industries. America is getting older and a large contingent of baby boomer pharmacists are approaching retirement.

-I was actually living abroad and moved back to the States to pursue the career change.

-Circumstances have changed significantly since starting this career change. Due to a few different unexpected changes, I'll be racking up ~$75,000 more in debt than I had planned. Specifically policy was changed the summer before I started so that I was no longer eligible to receive in-state tuition. I also had assumed that federal student loans could still be consolidated at a low interest rate, which is no longer true.

-Due to my wife's current earning potential, and a recent addition to the family, we figure it is a better that she stays part time in school. This way she makes progress towards her own career goals and allows me to work part time. If she worked, I'd either have to stop working or her paycheck would largely go to pay for childcare.

I am not panicked over my situation; it is still far from being a bad situation. It was shocking to sit down and finally figure out exactly how much the changes had set our plans back.