by trivialremote
Intro
After obtaining an undergraduate degree and spending a few years in my industry, I will be pursuing a graduate degree starting Fall 2018. I am laying out my finances, and need to accept/reject loan offers imminently. I am in my mid-20s.
Expected Finances in September 2018:
| Account | Amount |
|---|---|
| Savings | $14,500 |
| Vanguard Brokerage (VTSAX) | $29,500 |
| Vanguard Brokerage (VTIAX) | $13,500 |
| 401k | $21,750 |
| Vanguard IRA | $12,500 |
I have no loans and I own a reliable car with low miles.
Estimated Costs
It is typical to complete my degree within 2 years. I estimate my cost of attendance to be between $75,000 – $100,000 over this period. (Cost of attendance is the grand total of all academic, living, and personal expenses.)
Loan Offers
I am offered the following Direct Unsubsidized Loans for the 2018-2019 academic year:
- Fall: $6,300 @ 6% interest
- Winter: $6,300 @ 6% interest
- Spring: $6,300 @ 6% interest
I must accept/reject all of them by May. I may accept as little or as much of the loans as I choose. I would expect to be offered similar loans for the Fall 2019 year. I can apply for Summer loans as well.
I also have a $15,000 limit credit card @ 10.75% interest (paid in full every month).
Financial Recommendations?
- Should I accept any of the 2018-2019 Direct Unsubsidized Loans?
- Should I move my Vanguard brokerage account holdings to more conservative accounts?
- If so, how much, where (bonds? CDs?), and when?
- In which order should I “drain” my accounts (of course leaving an emergency fund)?
- E.g: Savings -> Brokerage accounts -> IRA -> 401k -> Loans ?
Thank you!
Comment:
Even including all expenses that’s really expensive but seeing as you’ve already accepted the school that’s a moot point.
1) I would wait until next year to cash out your funds(obviously not your retirement). YOur taxable income will be lower so your capital gains tax would be lower.
2)If you move them to more conservative holdings that will require a sale which means a taxable event. But yes since you need this money you’ll most likely want bond funds or even a CD would work as long as you know you won’t need it for the term of the CD.