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Need Financial Advice: No Job, Student Loans, but 401K

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gradstudentwoes
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Need Financial Advice: No Job, Student Loans, but 401K  Reply with quote  

Hello. I'm Jack, a first time poster to this forum. Thank you all for this wonderful resource. I had a question and was wondering if I could ask you all for advice.

I just graduated from Graduate School in Social Work as a second career late in my life. My previous career was in Finance.

My problem is: I am now $150 K in debt. I have yet to find a paying job. But I have a 401K and Roth IRA combined worth $100K. (About $50K a piece). My savings is low ($10K).

My loan repayment is coming up, and I'll need to be able to pay $5K / month. (Living expenses plus my monthly loan payments.)

My question is: If I do not get a job by the end of the year (when my runway runs out) should I 1. Dip into my 401K and Roth IRA to pay for my living expenses and loan repayment? OR 2. Ask parents for money? (They would be willing to help me, but it would be a blow to my ego I admit) Or 3. Other option I am not seeing right now.

Thank you so much for any help you can provide. I really appreciate that this resource is here!
Post Thu Nov 05, 2015 1:51 am
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littleroc02us
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The salary for a Social Worker in the US ranges from 30k to 62k, so IMO that isn't much for a graduate degree. Was the entire 150k from your graduate degree? I hope not, because the ROI wasn't very good I hate to say. Is the job market where you live due to no colleges or community colleges in the area, or what field are you targeting? You may need to focus your search for a job in the field to where it's heavily needed and to a much larger city. If these numbers are correct in your field, it's going to take a long time to pay your SL's off.
You asked about borrowing money or taking out retirement to pay for your student loans. That isn't going to solve the problem long term, although it does bring the balance down. Right now you need to focus on the getting a job or jobs and even more jobs. Income is what you need long term. Can you put the loans on forbearance for a year or two. In the meantime, start paying down the loan with whatever jobs you find in the meantime. Uber is hiring, Pizza delivery is hiring, handyman services, etc...... Once you have income coming in, I'd take 9k of the 10k in savings and use that towards the loan. Then I'd take out your contributions from the Roth IRA, which won't be taxed and put that towards the loan. Doing both those ideas should put you down around 100k in student loans within a years time.
Lastly, it is extremely important again that you find employment. Start working.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Thu Nov 05, 2015 3:54 am
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oldguy
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quote:
Graduate School in Social Work as a second career late in my life. My previous career was in Finance.


Jack, you're the classic story that we've seen in the 'money magazines' for the last few years - ie, a social worker graduate with over $100k in loans and about a $40k probable income stream. Those two simply don't pencil out, your loan interest alone will eat up your low income - you can never repay it.

In your case, you have a major jump on most people in your situation - ie, you have a Finance background to fall back on. I would go right back into Finance, work up to a $100,000 in a few years and put together a plan to repay that $150k in addition to living costs.
You could look into combining the two skills - Financial Counseling, assisting clients who are over-their-heads in car debt, credit cars, helocs, and set up financial/family planning programs for them?

What is your life-situation? Young, single, renting? Or mid-age, married, a couple kids, cars, house, etc? Sadly, in either case, you'll probably need to liquidate your retirement accounts and start over (that's the first time I've ever told anyone to do that, it's a last resort). After fed & CA taxes and penalties, you'll probably net about $75k to $80k from your 401k/roth accounts, the tax bites are brutal. And I say "sadly" cuz you had a good start, your $100k fund, placed at 11%/yr for 30 yrs, would have been $2,300,000. Sad
Post Thu Nov 05, 2015 4:31 am
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gradstudentwoes
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Thanks so much all for the great replies. I seem to be in a pickle. Though I do feel some regret at having made this choice, I suppose all I can do now is pound the pavement and get moving. If anyone has any other advice, I'm all ears. Thanks so much for all of this great advice.
Post Fri Nov 06, 2015 6:37 pm
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oldguy
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quote:
I seem to be in a pickle. Though I do feel some regret at having made this choice, I suppose all I can do now is pound the pavement and get moving. If anyone has any other advice, I'm all ears.


Yeah, it will be tough. My DW is an RN, the SWers there are low paid. They fill out insurance forms for patients who are unable to navigate the system and have no relatives that can step in. When times are tough, there is little demand for SW, people find a way to get it done themselves rather than hire help.

Again, if you have a Finance background, I would fall-back on that. If you continue searching for SW, you could be jobless for several months
Post Fri Nov 06, 2015 8:22 pm
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