How am I doing so far? what could be improved?

[DKAS]

Hello everyone,

I've followed the forum for sometime and so thankful that I have gotten some good advice and tips. Finally decided to participate as I feel stuck at how I can grow my income and save more. Hope someone can help.

My situation;
29 year old single with B.A, supporting my elderly parents.

My income:
Full time job working for local govt agency earning approx $4900 gross/monthly (great job security since I have more than 5 years seniority right now, however hard to get promoted and I have already reached the max level of pay at the position).There are a lot of deductions so net is only $2900/monthly).
Part-time job earning $3500 gross/year (seasonal job doing something I like and have been doing it for 4 years now)
Only one parent receives Social Security (only $600/month)

Expenses:
Rent 1100 (High COL State and city)
Vehicle Payment $250/month (Have $10,000 left with 2.5% recently refi-ed)
Vehicle Insurance $125/month
Gas $150 (Varies)
Cable/internet/home phone $150 (I rather not have TV or the home phone but parents get bored at home)
Cell Phone $140 (paying for parents bill and temp paying for a relative)
Gym $42/month
Utilities 100
Electricity $60
Groceries $450 (parents take care of almost all grocery expense out of Social Security money)
Going out with friends $100/month (Varies)
Unexpected expenses $200(new tires, passport fee etc.)

Savings
Liquid savings $39,000
Pension $22,000 (only counting my contributions here)
457 deferred comp $3,000 (increased my contributions to $100 monthly)
Roth IRA $3300

I would love to get feedback on how I've done saving wise and where I could improve.
Things I am already working on to increase income"
Starting a blog (yes I'm being realistic that it will take time to grow so not expecting much for a year at least)
Improving Certification at my part-time job which could double my income to maybe $8000/year.

Should I quit my full-time job to find something with long-term growth? go back to school to get an MBA?

Sorry if this post is lengthy, I'll take any advice I can get. Thank you so much.

[disneysteve]

Welcome.

Can you break down the deductions from pay? They total just over 40% which is an awful lot.
Your rent is very high at 38% of take home.
You bought too much car. How much could you get for it if you sold it privately today?
Why are you paying for a relative's cell phone? Let them pay their own bills.
What income and assets do your parents have in addition to the $600 SS?

[DKAS]

Can you break down the deductions from pay? They total just over 40% which is an awful lot.
Yes, it is horrible. I don't have access to my paycheck at the moment but deductions consist of Health insurance, Deferred Comp, Mandatory Pension contributions, mandatory union dues, taxes for Fed and CA.

Your rent is very high at 38% of take home.
I was paying $800 for a studio until 6 months ago but having parents around, place was too small. I'm in CA, so the 1100 for 2BR feel like a deal in comparison to what others pay in the same area.

You bought too much car. How much could you get for it if you sold it privately today
Yes, you're absolutely correct. Stupid mistake coming out of college. I just checked and private value is at least $13500.I'm just not familiar with the subject much, do you think it's a good idea to sell around that value and use the cash plus possible 0% finance to get a cheaper or used car?

Why are you paying for a relative's cell phone? Let them pay their own bills.
they lost jobs and only asked for this favor to answer potential employers, one spouse just got a job last week, and I have already mentioned it to them.

What income and assets do your parents have in addition to the $600 SS?
Nada. Parents raised me and 6 other siblings so not anything saved for retirement at all and father did not let mother work at all. He only paid for my college education with only $3000 Student loan debt i had to borrow, so I am very thankful and feel that I should be there for them as well when they need me.

BTW Steve, I believe you are one of the great resources on the web and I've always loved reading your perspectives on different issues.

[snafu]

Is this also a cultural situation? Age and health of parents? Can they possibly do anything to bring in income? All the greeters at McD and W/Mart are seniors for example. Is your mom eligible for any government program? If you were not able to take them in, where would they live?

Can you explore availability of part time MBA programs? Alternatively, every university offers Distance Education, courses are offered on-line.











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[DKAS]

Thanks for replying Snafu. Yes it is a cultural thing as well as my father's age and illness so he can't work. I just looked up a state program where my mother could possibly work as caretaker so thank you for that. I try to stay away from welfare like Food Stamps program as we're not in a needy situation. My idea is to increase income in the long-run and keep on saving to eventually own assets.

I will probably have to do distance education for an MBA. I will do my research, but you guys know of any decent affordable online universities that might be good to check out?

[kork13]

Originally Posted by DKAS

I will probably have to do distance education for an MBA. I will do my research, but you guys know of any decent affordable online universities that might be good to check out?

I won't necessarily offer it as a good/affordable option (simply because I have no idea what to compare it against), but AN option would be the American Public University. It's entirely online, classes are $325/credit hour (most courses are 3 credits/$975), total of 36 credits required. I only know/recommend it because I'm working my own master's through them--there are no good options for me living here in Japan, so I went online. Again, I can't speak for the quality of the program, but a friend of mine is doing an MBA with them and seems to be enjoying and doing well with it. I would probably recommend hitting the internet (google) in search of options.

As far as making it more affordable, you should definitely ask your job's HR division if they provide any tuition assistance programs for higher education. MANY companies and governments offer tuition assistance, particularly if the degree is in an applicable field of study, so you just need to ask.

[Hector]

Originally Posted by DKAS

Vehicle Payment $250/month (Have $10,000 left with 2.5% recently refi-ed)
Vehicle Insurance $125/month

You mentioned that your car is worth 13k. I would sell the car and buy a used cheap car.

Originally Posted by DKAS

Liquid savings $39,000

If I don’t see big expenses in near future, I won’t try to increase this. I would try to put all my savings into retirement accounts.

Originally Posted by DKAS

Should I quit my full-time job to find something with long-term growth? go back to school to get an MBA?

I would start looking, but wont go to school to get MBA if I am already making 60k and main purpose of getting MBA is to get higher paying job.

People think that getting MBA means 6 figures salary. I dont think thats the reality. Also when you go to school, you wont earn/save for those two years plus people end up with 50k+ debt.

IMO getting part time MBA when employer is paying your fees(at least partially) is much better than 2 year MBA paid by loans for someone who is responsible to take care of elderly parents.

[disneysteve]

Originally Posted by DKAS

Vehicle Payment $250/month (Have $10,000 left

Savings
Liquid savings $39,000

2 options:

1. Sell the car for $13,500. Pay off the $10,000 debt. Use the $3,500 difference plus some of your liquid savings to buy a reasonable used car between 5K and 10K.

2. Take 10K from liquid savings and pay off the car. Then just keep it until the wheels fall off. Use the $250/month to replenish your savings.

[DKAS]

Kork 13,

Thanks for the APU link, never heard of it but the cost is 1/3 of most of the other online Grad schools. Surprisingly, majority has given good reviews to this place when I searched online and I read in one of the review that books are free, is that true? That's usually a huge expense.

To answer your question about HR, we do have a program but it is very specific and can only do it at a specific university with specific major. Its in Social Work and I just don't see myself working and enjoying that field alot. I am really good with managing stress but I'm not sure I can work with other extremely stressful people. Also, I feel doing social work would not make a significant increase in my salary so I feel its almost not worth it to go this route.

[DKAS]

Thank you Hector, although 60K may sound really decent but it's in Great State of CA!!! Prices keeps going up and income levels are not.

Although your assumption is true with most people regarding MBA, but I do not expect to make six figures right after doing an MBA. I think of it as a long term investment that would provided consistently higher income than I currently make. I am leaning towards part-time MBA but I think I will have to pay it myself or loans since my work would pay for a very specific degree only which I do not want.

As far as my liquid savings, I keep increasing those for emergency savings, potential down payment, or if I see a good passive income investment oppurtunity. I figured beween my pension, SS, Deferred Comp and Roth I am doing okay for retirement.

[DKAS]

Originally Posted by disneysteve

2 options:

1. Sell the car for $13,500. Pay off the $10,000 debt. Use the $3,500 difference plus some of your liquid savings to buy a reasonable used car between 5K and 10K.

2. Take 10K from liquid savings and pay off the car. Then just keep it until the wheels fall off. Use the $250/month to replenish your savings.

Thank you Steve, I feel like steps you listed are the most immediate ones I should take. Car is my only ongoing debt so it would also feel good psychologically.

[kork13]

Originally Posted by DKAS

Kork 13,
Thanks for the APU link, never heard of it but the cost is 1/3 of most of the other online Grad schools. Surprisingly, majority has given good reviews to this place when I searched online and I read in one of the review that books are free, is that true? That's usually a huge expense.

My understanding is that they include the cost of borrowing books (mailed back after the course is over) in their tuition fees for UNDERGRADUATE courses. However, for Master's courses, you have to buy all of your books. However, they're slowly transitioning to many of the books being offered (for free) in PDF format in the online classroom. Also, they have a large online library that students have free access to. Finally, they also frequently use books that are available as (less expensive) e-books. All of that said, if you prefer to hold a physical book in hand, all of their books are available commercially (through Amazon, etc.)--they don't use proprietary textbooks then charge you a boatload for them. So at least we have that going for us.

If it really is 1/3 the price, that's great news. However, be careful in comparing costs--some places list tuition fees per course, and others per credit. As I mentioned already, APU/AMU charges $325/credit (most classes are 3 credit hours, so $975/course). I just want to make sure that's clear...

It's a shame that your work doesn't offer a more liberal tuition assistance program. On the upside, most online programs are developed specifically to allow you to take them slowly, so you normally have the flexibility to sign up for them as you have the time/money available to do them.

Last thought for now.... Alot of people will boo-hoo an online degree. In part, it's a valid argument, in that it may not be as thorough or demanding as a regular "sit in class and listen to lectures" program. However, you're still learning, putting forth the effort to further your education, and that says alot for a person's determination to continue developing themselves. So if you have the interest in pursuing a master's, go for it, and stick to your guns. Make the most of it, and you'll learn alot.

[TBH]

I like Steve's advice re: car. I also think your idea of getting a part time MBA is a good one, but I'd think and research about what kind of job you'd expect to get afterwards so you can make sure you really need the MBA.

Also--you mentioned that your parents have no savings because they raised 6 kids. I agree that we should help our parents when they're older if we can. Are your siblings helping out at all? Maybe they could help out in small ways--have one of them put your parents on their cell phone plan. Have another one pay the cable bill. Or ask them all to pitch in $100/month toward groceries etc. Maybe they are already helping, but it seems unfair for you to be the only one helping them when there are five other people who also benefited from your parents' generosity growing up.

It seems like you are doing great considering you have two dependents. Your attitude is great, your savings rate is great under the circumstances. Get rid of the car debt, think long-term about your career, and keep plugging away at the retirement contributions.

[snshijuptr]

Originally Posted by TBH

Also--you mentioned that your parents have no savings because they raised 6 kids. I agree that we should help our parents when they're older if we can. Are your siblings helping out at all? Maybe they could help out in small ways--have one of them put your parents on their cell phone plan. Have another one pay the cable bill. Or ask them all to pitch in $100/month toward groceries etc. Maybe they are already helping, but it seems unfair for you to be the only one helping them when there are five other people who also benefited from your parents' generosity growing up.

I second this. I don't care if your siblings are unemployed or living in another state, they need to be helping out either monetarily or with physical labor. If they can't afford to contribute an amount similar to what you are then they need to be over at your place helping out Mom & Dad while you are at work (e.g. taking Dad to the doctor, taking Mom out grocery shopping, cooking for you all, etc). It seems like you are the only one supporting your parents.

[DKAS]

Originally Posted by kork13

My understanding is that they include the cost of borrowing books (mailed back after the course is over) in their tuition fees for UNDERGRADUATE courses. However, for Master's courses, you have to buy all of your books. However, they're slowly transitioning to many of the books being offered (for free) in PDF format in the online classroom. Also, they have a large online library that students have free access to. Finally, they also frequently use books that are available as (less expensive) e-books. All of that said, if you prefer to hold a physical book in hand, all of their books are available commercially (through Amazon, etc.)--they don't use proprietary textbooks then charge you a boatload for them. So at least we have that going for us.

If it really is 1/3 the price, that's great news. However, be careful in comparing costs--some places list tuition fees per course, and others per credit. As I mentioned already, APU/AMU charges $325/credit (most classes are 3 credit hours, so $975/course). I just want to make sure that's clear...

It's a shame that your work doesn't offer a more liberal tuition assistance program. On the upside, most online programs are developed specifically to allow you to take them slowly, so you normally have the flexibility to sign up for them as you have the time/money available to do them.

Last thought for now.... Alot of people will boo-hoo an online degree. In part, it's a valid argument, in that it may not be as thorough or demanding as a regular "sit in class and listen to lectures" program. However, you're still learning, putting forth the effort to further your education, and that says alot for a person's determination to continue developing themselves. So if you have the interest in pursuing a master's, go for it, and stick to your guns. Make the most of it, and you'll learn alot.

Thank you for clarifying the books cost, I would definately prefer an actual book over an ebook when it comes to studying. And I'm sorry, When I said 1/3 cost I was referring to some of the cost estimates I looked at from higher ranked universities. So That may not be a fair comparison.

As far as your last point, it is a good one and does make me think twice about an online only program. However, don't have much choice there with full-time job. I feel lucky to get my B.A from one of the best universities in the state with a respectable major. I wonder if that would help my resume in the future if I choose the online option.

[DKAS]

Originally Posted by TBH

I like Steve's advice re: car. I also think your idea of getting a part time MBA is a good one, but I'd think and research about what kind of job you'd expect to get afterwards so you can make sure you really need the MBA.

Also--you mentioned that your parents have no savings because they raised 6 kids. I agree that we should help our parents when they're older if we can. Are your siblings helping out at all? Maybe they could help out in small ways--have one of them put your parents on their cell phone plan. Have another one pay the cable bill. Or ask them all to pitch in $100/month toward groceries etc. Maybe they are already helping, but it seems unfair for you to be the only one helping them when there are five other people who also benefited from your parents' generosity growing up.

It seems like you are doing great considering you have two dependents. Your attitude is great, your savings rate is great under the circumstances. Get rid of the car debt, think long-term about your career, and keep plugging away at the retirement contributions.

Thank you for the postive encouragment. No, I don't get any help from any of my siblings. Infact, couple of them that were still in CA recently moved out of state fully knowing I could use some support specially with my father's illness. I have never asked any of them for anything but the fact that they don't even consider it, does piss me off at times. I understand they have their own families and a couple of them are not doing great financially but it would not take much of an effort to provide some support even if its non-financial. Actually, couple of them have actually asked for support from my parents which I find incredibly ignorant.

[snafu]

While those who know nothing about demands and standards of post graduate distance education may hold a lower opinion, I assure you distance education courses with *accredited* universities have an incredibly high standard. Most charge more per course or per credit hour than brick & mortar schools primarily because the profs are highly ranked in their specialty. The major benefit to the student is the one-on-one on-line time with prof and the support from the cohort.

The most important thing for you to do is decide what you want long term. Where do you see yourself in 5 yrs...10 yrs. What is your career path?

Parents: You may have to take the lead and remind your siblings of their responsibility to their parents according to your cultural norms. They need to remember their parents made sacrifices to see that they got what the needed when they needed it, as best they could provide. Were they sent to community care/foster homes when things got tough? In China we often saw how much effort elderly grandparents put out for grandchildren. WOW!

[PatientSaver]

Why is only one parent collecting SS? I believe someone who didn't work much could still collect SS; if that's your mother's case, she would collect based on her husband's earnings.

[DKAS]

Quick update: My mother got the job as a caretaker and it will bring in $1,000/month to our household income. My small blog should be up soon, I've began studying to advance my income level for my part-time job (should take up rest of the year). Also, researching on sellling and buying a used car. Thank you all for your support.

[DKAS]

PatientSaver,

Regarding SS, my mother has a few years left for retirement age so I have not explored that. However, now that she has earnings, it should help her in the future. I believe you have to have certain number of quarters of earnings to qualify for any Social Security.