Personal: How much did you save before pursuing your MBA?

Question

Hi group,

Preface: I feel as though I've lived a truly blessed professional career. That said, the prospect of going two years salary-less with $120K in costs years is, at least initially, daunting.

So I'm wondering:  Roughly how much did you save before matriculating? Stocks, equity in the house, cash -- anything fairly liquid.

To make the story a little more personal -- I want to get married, take care of my spouse, etc., but pursuing an MBA at the same time requires a good bit of boldness.

I know this is a potentially a very personal question, so I fully understand if few, if anyone, chooses to disclose. However, ball park figures might help prospective MBAs know they are far from alone in facing the costs.

I can lead by example --I am in the 100K range. I'm a few years out of school and live pretty modestly.

Thanks everyone.

Best,

Dominion

jasonc · Answer

currently... ~40k
by the time I matriclate (assuming I get in)... ~60k

yeah I don't save much for an unmarried guy who doesn't have to pay for food on the weekdays haha

food & entertainment with the gf on the weekend eats me up

dominion · Answer

Jason -- thanks for the post. Yes absolutely, the costs that accompany a girlfriend can handicap.

lumone · Answer

Women share our sorrow, double our joy and triple our expenses  - French saying

solaris1 · Answer

I will probably end up taking just over 70k (more if the stock market continues to tank) in loans to cover living, fees and other expenses over two years. I've known I was going to graduate school since I finished college, so I have enough money saved up to meet future tuition expenses at least.

If my calculations are right, the loan payments should come out to around $820 a month approximately over 10 years.

Scary.

togafoot · Answer

I'm slightly older than most MBA candidates, so I've managed to save a bit more (but not as much as finance guys). But I do have a wife and 2 kids who are not working. Saved up enough so that I don't need to take any loans and will still have home equity and some cash & equity savings afterwards.

highhopes · Answer

Well at this point, it looks like my housing plans should include a cardboard box :-D

I'm just kidding, but I don't think I'll have much more than about $75,000. I'm looking at Kellogg, in which case I might consider the cardboard box and Duke, in which case hopefully I can take a step up from the box.

fooFighter · Answer

Currently I've saved $30k. By next year I hope to save $50k (with the 30k combined)

isa · Answer

currently have around 70k...hope by next year to have around 90k...

riverripper · Answer

Dont worry about it...you are going to feel super poor in school. Don't include your 401k or IRAs in your plans to pay for school, I know some people thought about doing this but it is a bad idea...especially with a tanking stock market. Most people I know are taking max loans, even people with very significant savings. I am of the mind why pay out of pocket when some companies are offering tuition reimbursment these days, I know some of the ones I have researched pay 10-15k a year towards loan repayment...so that will cover most of a loan payment. If you get a job at one of these then you probably wasted your own money...when you graduate you could always pay off a lot of your loans at once if you wanted.

MGOBLUE2 · Answer

I disagree to an extent. I do not think you should take on debt if you do not need to. That doesn't mean you should ignore loans with low interest rates. I am just saying that to gamble on the prospect that your future employer will assume some of the debt is not necessarily wise.

This is the conservative approach, but there is no shame in graduating with minimal debt, especially with the large salary you will have post-MBA.

riverripper · Answer

It is a risk but some of the people with the most money I know took max loans because they were of the mind they could beat the interest rate they would pay on their loans. You hate to think about it but with the economy there is the potential that even from an UE you could graduate without a job. If you dont have savings at that point you are in trouble.

Just marry your girlfriend before you go to school, make her support you for those two years. Thats more than fair payback for all the dinners, movies, shows, trips, whatever else you paid for.

Just marry your girlfriend before you go to school, make her support you for those two years. Thats more than fair payback for all the dinners, movies, shows, trips, whatever else you paid for.

MGOBLUE2 · Answer

Several relatives of mine have suggested that. Just don't tell her!

jasonc · Answer

That was my plan (shes in law school, so after she graduates... cha-ching!) but I think she may drop out this year and go back to work as a consultant - I guess I can still make her support me haha.

refurb · Answer

My plan is as follows:

- I've got enough saved in an ING account for two years of living expenses
- tuition I'm taking loans out for, even though I've got enough in investments to pay for it

My reason for taking out loans is that it would be too much of a hassle to sell off investments and have to rebalance my existing investments.

I think of it this way. I'll probably pay 8% or so for loans, but my investments should get me 5-8% over the long run. So best case scenario, it costs me nothing to borrow the money (versus using my own), worse case, it costs me a few percentage points of interest (which won't add up to much if I pay it off quickly).

I have to admit, that the idea of going from maxing out your 401k and Roth IRA each year, to having no income is going to suck.

However, I'm not going to be penny wise and pound foolish. I won't compromise my MBA experience just to save $5-10K (say taking a few international trips). That doesn't make any sense at all.

RF

kryzak · Answer

Considering a few months ago I had enough equity in the house to pay for both years of personal expenses and some tuition, right now it looks like I have just enough to pay for 1.5 years of living expenses, roughly $40-50K. I would definitely keep some cash on hand, in case you need it when you graduate. Student loans are much easier to get than personal loans when you get out of school, so I would max out any Federal Stafford loans you can get (subsidized or unsubsidized), and then get other loans (PLUS or private) as needed. I probably will get full Staffords both years and some PLUS/private the 2nd year, totalling to about $50-60K.

solaris1 · Answer

There's a good 3.5% spread between the PLUS loans and the private loans offered to creditworthy students of most top business schools (I've seen prime minus 0.50%).

Keep that in mind kryzak and the others. Will save you a bundle in interest if you can pay off the private loans portion of your MBA debt within a couple of years of graduating.

Even if the Fed starts to increase rates later this year, it will be a while before the private loans are as expensive as the PLUS. You Class of 2010 folks are luckier in that regard as opposed to us (hopeful) 2011'ers.

kryzak · Answer

solaris, thanks for the info. Will definitely look at the private loans (I believe Berkeley offers some that doesn't require fees and guarantee you Tier 1) when I get them next year. I should be able to survive this year without loans (other than the Staffords)

dominion · Answer

Thanks for the advice and info everyone. Facing these monster loans, there's an odd sort of camaraderie.

Audio · Answer

Wow, how did people manage to save that amount of money?? I was proud of my 12k, but it seems pretty crap in comparison with others! :shock:

And I'm 30, so definitively not young. I'm looking at 160k debt, not a nice perspective.

Personal: How much did you save before pursuing your MBA?

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