Need advice on paying off CC debt using roth...

**Hector** · 05-13-2011, 11:17 AM

Originally posted by shaselai View Post

4.My parents can take loan up to 200k at 2.9% till 2027(or 2017?)..

You already posted this question and users here think that its not a good idea .

Originally posted by shaselai View Post

5. getting a part time job is a no-no - discouraged by the school and the rigorous of the program (FT) doesn't allow much at all

What are you going to study that you cant do a part time job?

**shaselai** · 05-13-2011, 12:25 PM

Originally posted by Hector View Post

You already posted this question and users here think that its not a good idea .

What are you going to study that you cant do a part time job?

i mentioned about that later on in the discussion about parents but i put it in situation anyway to show there are "options". Well Business school is Full time, besides going to classes, there will be meetings, going to company presentations, job area club activities hw etc.

**Hector** · 05-13-2011, 12:46 PM

Originally posted by shaselai View Post

i mentioned about that later on in the discussion about parents but i put it in situation anyway to show there are "options". Well Business school is Full time, besides going to classes, there will be meetings, going to company presentations, job area club activities hw etc.

You are making a big deal about going to business school. Its not a big deal to go business school and it is absolutely feasible to work part time while you are studying.

If I were you, I would keep working till I pay my CC debt before even thinking about going for masters degree.

**Ubesh** · 05-13-2011, 01:08 PM

I did 4 B.S.'s in 5 yrs while working two part-time jobs. 3.4 gpa wasn't the best but I made it. You can work a part-time job and go to school. Taking money from the Roth wouldn't be the best thing to do in my opinion.

Don't know what your apr etc is. But get a job and make payments as large as possible and just knock it out.

**Slug** · 05-14-2011, 05:37 AM

I'll side with the OP on that business schools absolutely look down on you for having outside employment while going full-time. There is so much work beyond the classwork, especially in year 1, that it would virtually impossible to keep up.

I recommend 2 things. First, look into workstudy within your program. 10 hours a week managing the library or computer lab is doable and commonplace. It's not going to eliminate your debt, but it will help a little.

Second, see if you can do the 0% transfer game one more time to push the debt into your second year. A couple of things will have happened by then. The first is you will have already gone on internship during the summer of year 1. You'll make somewhere around $80-90k if you annualized your 10 weeks plus your living stipend. That will give you a healthy sum to throw at your debt. Everything you do in year 1 should be focused on getting the best possible internship. Secondly, if you do a great job on the internship, you'll either leave with an offer or have one by early fall. You'll also be interviewing for other full-time positions. Hopefully by the winter break, you'll have a full-time job locked up starting in June. These typically pay a nice signing bonus which should be able to knock out even more debt.

My basic advice in this case is to defer your debt as long as possible because you're doing an activity that will be life changing from a personal finance perspective. When you emerge from B school, you will be a different person and part of that will be new student loan debt and another part is a nice salary that will provide far more than a livable wage.

MBA '06

**disneysteve** · 05-14-2011, 06:53 AM

Ignoring all the side issues and whether or not this is a good idea...

You can withdraw the money you have contributed to your Roth at any time and for any reason without any penalty. So if you put in $5,000 last year, you can take out $5,000 this year with no repercussions or tax implications. You only start running into trouble if you withdraw an amount greater than your contributions. I would avoid doing that.

**jpg7n16** · 05-14-2011, 10:08 AM

FWIW - I think this is a terrible idea.

Why on earth would you want to unplug your retirement to pay off a 0% loan???

And then what happens when you need to pay for living expenses? Would you just charge them back on the CC?

If so - then you just stopped your retirement, wasted your 3 years of contributions, and paid off 0% debt to let you borrow it back at 15-20%.

ie - a terrible idea.

(DS is right about the tax implications - if you've contributed that $14k, and it's worth $14k, then you can withdraw it all with no tax or penalties, but why on earth you'd want to I have no idea.)

**shaselai** · 05-16-2011, 05:59 AM

ok, so i have a clearer picture of the financial aid for next year. estimated budget is ~71k and i can borrow up to that via direct subsidized, unsubsidized and direct graduate plus loans - but i am not sure how much i can actually use to pay off loans... Half of the loans will be applied for fall semester and other half for spring semester. So if i try to defer my CC debt that ends next year and can't get a 0% deal anymore should I try to pay it off with as less roth as possible or wait it out?

**Cassius King** · 05-16-2011, 07:40 AM

What field are you going in to Business School to study for? What is the anticipated income you would make when you got out? How did you rack up $13k in credit card debt?

Going to college isn't a quick fix for income/spending problems. Most people go to college thinking they'll graduate to a sizable income. Before you put yourself in insurmountable debt, I would answer all these questions and be very comfortable with it.

**bjl584** · 05-16-2011, 08:17 AM

OP, how old are you?

Is going to this school an absolute necessity at this time? Could you put it off for a few years until you get yourself in a better situation financially speaking?

Something that should be helping you (school and a degree) is running the risk of setting you waaaay back financially.

If possible, I would hold off on school, pay off the CC, and save up some cash so that you don't need so many student loans.

**MonkeyMama** · 05-16-2011, 09:38 AM

I'd also rethink working. I don't know any one who went to business school and didn't work (MBA or undergrad). If it is so intense that you can not work, what about summer? How long is the program? Just one year? I'd hope, for it to be that intense and expensive.

Do you know that many employers will pay for you to get a business degree? I would absolutely look into that option rather than take on so much debt. Likewise, I don't get the impression that many business degrees are worth very much without experience. I don't know what kind of work experience/background you have. I assume you are pursuing some sort of graduate degree - where more experience would be useful.

Some of these Graduate programs really push unrealistic ideas in ther students' heads. I'd be careful. A program that discourages employment sounds like a red flag to me. All that said, my regional experience may be unique. You can take my opinion with a grain of salt. I always advise getting a regional mentor in these type situations. I see big differences depending where you live and what your career goals are. Where I live, any one with common sense is going to get an employer to fund their education. They are going to work and take a few years, because otherwise the degree is mostly useless. I've seen many people with no mentors or solid advice who wasted their money on these type degrees when there were better/cheaper options to their career goals. Get some advice outside of school marketing - good advice for anyone out there.

**frugalgirl** · 05-16-2011, 10:36 AM

Originally posted by MonkeyMama View Post

I'd also rethink working. I don't know any one who went to business school and didn't work (MBA or undergrad). If it is so intense that you can not work, what about summer? How long is the program? Just one year? I'd hope, for it to be that intense and expensive.

It depends on the school. Some top notch MBA programs are extremely intense and last in the 15 month range. I worked very long hours in a laboratory doing research in grad school and would see the MBA students up really late working on very complex assignments. There were math classes that our engineering students who worked on computer simulation projects would take through the business school. I can easily see where there would be no time for a job in this situation.

I don't know what the job market is like these days, but those MBA students were snatched up for great-paying jobs as soon as they finished. Again, this was a top-notch program at a big-name school - not your average university program.

**shaselai** · 05-16-2011, 10:41 AM

to answer some questions:
What field are you going in to Business School to study for?
Consulting / banking.

What is the anticipated income you would make when you got out?
well financial services mean 94k and consulting mean 107k but there's always low and highs...

How did you rack up $13k in credit card debt?
bad decisions...

OP, how old are you?
29

Is going to this school an absolute necessity at this time? Could you put it off for a few years until you get yourself in a better situation financially speaking?

Actually my age is slightly above average age for MBA folks (~28). waiting a couple of years would probably mean harder to get in - i am trying to change careers as well so the older you get the harder to justify changing careers.

Summer programs:
Yes, one thing about the intensity of the program (like many other MBA programs) is internship. It usually spans the whole summer and there's some money to be earned here.

Length:
it is 2 year program - typical of most FT MBA programs in US (europe typically 1 or 1.5 years).

Do you know employers will pay for degree?
Yes. However, where i am working(upstate NY) there's not a good school around - the only one close is Cornell but that is too far. Also, i am trying to switch careers and MBA schools typically dont let people sponsored by companies interview for positions from other companies on campus since they(and the sponsorer) is expecting you to return to the company. Plus FT is very important for MBA since employers prefer that over PT because of more interactions etc.

@MonkeyMama
Yes i do agree that if one is sticking in same industry/company could have the company sponsor and stay with that company for cuple of years later then hop around but that takes a longer planning since you need to be:
A. get into a company near the school of choice
B. get into that school when time comes.

@frugalgirl
the school i am going to is top 20 in us news.. it is probably not the top-notch big name school you mentioned?(H/W/S?)

**frugalgirl** · 05-16-2011, 10:50 AM

Originally posted by shaselai View Post

@frugalgirl
the school i am going to is top 20 in us news.. it is probably not the top-notch big name school you mentioned?(H/W/S?)

I think anything in the top 20 probably qualifies as top-notch... And, no, I was not referring to any of the three you allude to.

Need advice on paying off CC debt using roth...