Jan 11 2012

Investing in our greatest asset and going back to school (for cheap)



(Photo: scubasteveo)

Our primary household income comes straight from my husband’s employer. His ability to earn income in the future is our family’s greatest asset.

Shane graduated four years ago with a business degree. At age 26, he can expect to be in the work force for at least another 33 years, possibly more.

We aren’t certain that his current skillset and credentials will translate to him having plenty of career options in the future.

So, Shane is going to continue his education. He wants to pursue his master’s degree in accounting and then sit for the CPA exam. We think having his CPA will give him many more options — qualifying for more types of jobs and starting his own side business if he wants.

It’s hard to say if this would mean an immediate salary increase. Perhaps. We aren’t counting on it.

Most importantly, we think it will help him be more employable.

After checking with IUPUI, we discovered he’ll need two undergrad accounting classes before he can enroll as a master’s student. The earliest he can enroll is the second summer session to give us a full year of being Indiana residents. He’ll begin his master’s program in spring 2013.

At one class per semester, and 30 hours needed (36, if we’re counting undergrad hours), it’s going to take several years to complete. He can do 9-10.5 credit hours per year max.

How will we pay for it?

Shane’s employer will reimburse us 100% of the tuition and fees — IF he earns an “A” in the class. They’ll reimburse 75% for a B.

Note the key word “reimburse.” We’ll have to pay for the course upfront and then submit his final grade before we get money back. We’re on the hook for paying for books, school supplies, and a parking pass.

The undergrad tuition and fees are $1,059 per 3-hour class, plus books. When he’s at the graduate level, it’ll be $1,843 per 3-hour class. That is, until they go and raise tuition again.

A fun surprise: IUPUI is discounting tuition for the summer 2012 term for undergrads. So, his class this summer will cost $758.

We have around five months to save for the first tuition payment.

We’ll keep saving after that point, too, to have enough once he’s at the more expensive graduate fee rate.

Where will we save for tuition?

I opened an Indiana 529 account with Shane as the beneficiary. We’ll transfer money straight into this account, and we selected low-risk, low-fee investment options since we’ll need the money soon.

Putting the money in the Indiana 529 account, as opposed to putting it in a regular savings account with our bank, is a BIG deal. We’ll get a huge 20% tax credit back on our state taxes. So, when we put in $1,200, we’ll get $240 off our Indiana state income taxes for the current year. That’s like getting free textbooks! Big deal! In addition, since we’ll use the money for his school expenses, we will not have to pay federal taxes on the growth.

Compare that with putting $1,200 in a savings account. No tax benefit. And the gain will be taxed. No thanks.

When we finally do get the tuition reimbursement from the employer, you can bet your sweet bippy we’ll put it back in the 529 plan. Rise n’ repeat.

What if your employer doesn’t offer tuition reimbursement?

If your employer won’t pay for your schooling, but you want to take classes anyway, you should look into the Lifetime Learning Credit (and other tax credits that might fit your situation better).

This federal tax credit will reduce your federal income tax by as much as $2,000 in that tax year, assuming you meet the requirements. So, if you are paying more than $2k/year in federal taxes, you could pay $2k in qualified tuition and expenses to your own education and you can reduce your tax bill.

Put another way, if you’re earning enough income to pay at least $2k in federal taxes, you can get as much as $2k/year in “free” tuition. Following me here?

Shane’s employer will cover up to $4k/year in expenses. Once he’s in his master’s program, that’ll cover like 7.5 credit hours. Beyond that, we’ll need to pay. That’s where our Lifetime Learning Credit will come in. You can’t claim the LLC on money that’s reimbursed by an employer, but once we’ve maxed that out, we’ll be able to claim that tax credit.

When I combine the 529 state income tax credit, the employer reimbursement, and the Lifetime Learning Credit, Shane’s master’s degree should cost us very little in money. It’ll be a big time commitment, but it’s something that almost certainly will pay off on down the road.

Other expenses:

Since we have a financial interest in Shane earning good grades, and we also want to ya know, see him and spend time with him, we’ll probably hire some things out. For instance, if he’s taking classes in the summer, we might hire out our lawn mowing for that time. Or we’ll hire out other house repairs and maintenance tasks.

His time is valuable and when it’s limited like that, we’ll want to make the best use of his free time.

Same goes for my time. It’s valuable, and it’ll be more limited. I’ll consider hiring a mother’s helper or something of the sort to help my own workload.

Have you gone back to school? Has your spouse? How did you get through it?

Posted under Uncategorized | 10 Comments »

10 Responses to “Investing in our greatest asset and going back to school (for cheap)”

  1. I posted on your FB page as well.

    I just graduated with my ADN last month and now am studying to take my RN boards. I have 2 other degrees (one associates and a bachelors), but I feel they are useless compared to my nursing degree now!

    My husband (as of this past Monday) is now a full-time student at Iowa State University, rather than the local community college. He’ll be there about 3 to 3 1/2 years with the goal of medical school afterwards. We’ve been blessed with a VA rehab program that is paying for his bachelor’s (including books and supplies).

    It does take a lot of juggling-time for study, time for family, enough rest, etc. But it can be done!

    After my first semester of nursing school, my husband and I had a discussion about our house and what we could do to eliminate some stresses in our life. In the summer of 2010, we sold our house and became renters. It took a lot of stress off both of us as now we weren’t responsible if the furnace broke or the dishwasher quit (both of which happened in our rentals). During that season of life, it was a lot of simple meals: waffles for dinner, grilled cheese, etc. On paper plates. I felt guilty at first but the time spent doing dishes or fixing more elaborate meals was better spent with our son. I don’t regret any of the decisions we made.

    Good luck!
    jennifer´s last post ..a new year and some goals

  2. Sounds like you really sorted out a plan to make it work. That is fantastic that the VA is paying for your husband’s education!

    And yeah — paper plates and simple meals = fine by me!

  3. It’s smart to go back to school when you have an exact plan for what you will do with the education and how you will pay for it!

    It’s what my husband did when he quit his job to go back for his master’s… he was able to get a graduate assistantship that paid for tuition and came with health insurance. Within a year of getting his degree, he found a job he loves that doubled his income and had better hours than his old job!

    Best financial move we ever made!
    Christina @ Northern Cheapskate´s last post ..Free Admission to 100 + National Parks

  4. I worked for IUPUI and got 50% off in-state tuition. That was years ago, but a great deal. Never regretted it–my Master’s IS how I earn a living. My nephew is a CPA (BSU) he worked a Graduate Assistant to pay for his MS in accounting. While that may not be an option saving up for the first three classes should do it–then the reimbursements will pay for the rest.
    Lisa´s last post ..Menu Plan Monday–Almost Grocery Shopping Allowed Edition

  5. Yeah I think we’ll have enough time to save the first $800ish, and then while that class is underway we can keep on saving for the next tuition payment. Once we start getting reimbursed that’ll help a ton.

    Our final reimbursement check can go to whatever our most pressing financial need is (several years from now!) but maybe we’ll put a chunk back in the 529s, but this time for the kids.

    I’m grateful he can do one class at a time instead of a full semester load at once. That would be much more difficult to pay for upfront!
    Kacie´s last post ..Investing in our greatest asset and going back to school (for cheap)

  6. Great that he is going back to school. I have been out of school for 20 years and now that my children are older I want to reenter the work force. My first degree is useless without a master degree. So, a year and half ago I decided to go back and get my nursing license. I had to talk 6 classes in order to get into nursing school. I just got into nursing school and I have 2 classes left before the serious work begins in the fall. We have been fortunate to be able to pay for the classes from my husband’s income. Now I am saving for nursing school tuition which will be about $10,000 over two years. We are cutting back and trying to keep from going into savings. I will look into tax savings for the 2010 tax year.

    When he starts school make sure you look into ebooks, renting books and buying them from other than the school.

    Good luck!

  7. Congrats on having such a well thought out plan that’s realistic. My employer only gives you financial support if you’re doing an accounting designation (ACCA, CGA, CPA). And even then, you’re bound to them for a few years. I’m not really bothered by that because my MBA is my effort to enhance me, so that I can become more “employable.” If only a higher degree meant lots more money. sigh.
    Dannielle @ Odd Cents´s last post ..Comment on Beginners’ Tips for Trading on the Stock Market by Jeffrey

  8. That’s one thing I forgot to mention — Shane doesn’t have any obligation to stay with his company for any set period of time. That’s nice! If his previous employer paid his tuition, he’d have to stay with them for an additional 3 years or something like that.

  9. Since he is planning to do one class at a time, make sure you check how long he has to complete the program once he starts. I doubt it will be an issue, but I know my MBA program had a limit (it was either 5 or 7 years).

    When my husband and I were dating, planning our wedding and first married, we were both in school. I was working full time, and in a part-time MBA program (2 classes per term). He was in school full time (finishing a BS) and did part time work. I took a summer off school to plan our wedding. Other than that, it just meant that we had a lot of homework dates and quiet nights at home.

    Depending on what kind of student Shane is, look into the option of taking classes online. I ended up doing half mine in a classroom and half online, which helped my time and schedule a lot. Online classes definitely required more self-motivation, but we had video lectures, online chat discussions and one session on campus per semester. It was also suprisingly real-world, considering how often I work on projects with people in other states or countries in my current job.

  10. GREAT post as always! There is a good chance that he will see immediate salary increase once he completes the CPA exams. Though of course, it’s always good not to count on it, but if his company doesn’t want to reward him for his hard work, another company will, believe me. Any of my friends who have gotten their CPA make considerably more than before and usually not long after finishing up. I think it’s great he’ll be able to further his education and his career interests without too much fuss or hassle.

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Hey! I'm Kacie, wife and mother of 3. I write about my family's finance: how we save money, improve our spending, and plan for the future.

I hope I can inspire and encourage you to improve your situation. See disclosure.

I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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