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May 02

Hi,

It's Beth from the WIR. I haven't blogged in weeks since I really haven't had much to say...not that this ever stopped me in the past. LOL. I've been crazy busy w/ school, and I'm heading into mid-terms. I'm still loving school...it still feels like it's the right thing...I'm starting to hear exciting feedback from my classmates and the faculty, and my good friend who owns a spa continues to offer me a job when I'm licensed! Pretty heady stuff in general. I recently got this quarter's student loan check in my hot little hands...and it quickly went to pay for fun and exciting things like property taxes and car maintenance, etc. I did put some in ING, and I have a smidge left in checking. I know, I know, it's terrible to accrue new debt (such as student loan), but it's really the only way to get through school this quickly (one year) without having to work and go to school. Most of the students who are working and going to school take 2-3 years to complete the program, and they have the added problem of trying to remember things they studied years ago when it comes time to take both the national & state licensing exams. Sorry if I sound defensive, but I know people will howl (as they usually do) when they read about my student loan. And soon I have to apply for the next chunk of student loan money since the new academic year starts in June, and I could only get a student loan for the last six months of the 2005/2006 academic year.

It occured to me recently that there will be a 3-4 month gap between when I finish the massage program (December 2006) and when I am licensed (Spring 2007, if all goes well). I was somewhat flummoxed about what to do for income during that time, since it's illegal to touch people for money w/out a license. That's right, eventually I'll be...LICENSED TO TOUCH (coming to a theater near you). However, a TA in one of my classes told me that there's murmurring amongst the faculty that I might be a possible TA candidate in the near future! Very cool and flattering possibility, although now I'm feeling even more pressure to study hard and do well in classes. I didn't want to pump her for information and seem over-anxious, but my impression is that the TAs are generally students who have finished the program and are prepping for the licensing exams or they have recently been licensed. I'm trying to think of a casual way to find out more about becoming a TA...as well as the pay! It would be an excellent way to make some money and keep things fresh in my mind for the exams. It would even be a cool way to supplement my income after I'm licensed.

I have a class that focuses on the pragmatic business aspect of massage therapy. One assignment was to interview someone from a spa to see how feasible it would be to earn a living in that environment. I chatted up my friend about the cost of working at her spa (where I'd be an independent contractor and rent a space). Based on what she told me, my hubby and I crunched the numbers. I could work 20-25 hours a week and make a living akin to what I earned as a federal employee! In the massage/bodywork world, you really can't (shouldn't) physically work full-time if you want to have a long career and not burn out your body. I'm so excited that my future plans are finally beginning to gel. I could work 20 hours at my friend's spa, pick up extra work as a TA, have more time to spend w/ my daughter and hubby, and still have time to volunteer and give massages each week for AIDS patients!! Mia would be so proud that I'm finally starting to develop post-school plans. Yeah!!!

And finally, my hubby and I sent in all the necessary paperwork to rollover our 2 Roth IRAs and my federal IRA. Bill Schulteis (author of The Coffeehouse Investor) said it would probably be somewhat of a hassle, and he spoke the truth. It has been an interesting process involving lots of errors (ok, mostly on my part) and lots of phone calls, but I think in another month or two, we'll have our IRAs nicely tucked away in Vanguard's Star Fund. It will be a huge relief to have all that done. Now I just have to get my hubby to switch his 401k over to another fund that Bill S. recommended.

By the way, go Steph!! Congratulations on the jaw-dropping commission!!! My vote is that you put the extra $ toward whatever is your highest interest rate debt. I know others are proponents of squirreling away as much as you can, but paying interest on debt is never a happy thing (she says while hypocritically continuing to accrue interest-ridden debt herself.) LOL Have a great week!!! Beth

6:25 PM | Blog it

Comments (22)

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	Kit wrote: I went to school for something I loved - history - with absolutely no intention of pursuing the field after graduation. I went to school for the experiences, to live somewhere completely different, on my own, and have memories and bonds that will last forever. I loved, loved, loved studying history - but that field does not pay the kind of money to support the lifestyle I want. THAT'S important - make sure that you will be paid the kind of money you want to be able to live off of. If not, relegate what you love to a hobby/volunteer and find something you like with that pays what you want. Not hate, not love, but like. For me, it turned into love, but it took a few years. I do admire all of the posters who live on a nonprofit salary, I couldn't do that, and I'm completely honest about that fact, ugly as it is. So...off to the business world I went after graduation. Spent the next 4 years working 70-80 hour weeks in my job, and going to school part time at night for a 2nd bachelors in accounting (some semesters traveling for work for weeks at a time, so only showing up for exams). And paying off student loans for a degree I ostensibly never used. It was so hard, and was so much work, and no life to speak of for months on end. (on the plus side, however, I did not have the free time to get myself into cc trouble). But, the price you pay, I suppose - and for me, it has paid off in spades. I don't ever regret getting a liberal arts education, and I have found that it has been invaluable, so much more so than if I had just gone and gotten a business degree. It took a lot of years to pay off the student loans from that history degree, and a lot of people are floored when I tell them that's what my major was. But the versatility that that education has given me, the ability to be so much more than a numbers person, more than a finance person, more than a computer person - it's about all of the other stuff, the problem-solving skills, the ability to digest and effect change, understanding philosophically and practically what motivates teams and individuals and getting them to achieve - that has shone through in every position I've ever had. And now I'm paid for what I bring to the table, not for the work I actually do. That's a big difference. The happy middle ground between educational expenses and the payoff? I hope you find it, or at least are comfortable with the possibilities. It is so hard, with all of the uncertaintly about how/where you will land - but take advantage of the opportunity that you have invested in yourself. May 5
	Kat wrote: Corollary to what I just said--the amount you can reasonably finance increases with the pay of the job you expect to hold after graduation. I 100% advocate majoring in something you love, but be realistic. If you want to be an artist after graduation, don't take out huge student loans. If you want to be an engineer, you have more flexibility, but I would still recommend borrowing as little as possible. Don't graduate from school and complain that no one's paying big bucks for your undergraduate degree in basketweaving. If you want to major in basketweaving--great, I think artists bring a lot to the world that can't be measured in dollars and cents. Just don't expect to get a lot of dollars and cents for your degree. May 5
	Kat wrote: I agree there's nothing wrong with with taking out loans to finance a college education. In fact, I think (and a lot of studies prove) that its an economically wise desicion. That said, I think someone really needs to think twice before taking out loans to finance say, Harvard. Yes Harvard is a great school, but it's not $25,000/year better than the local state university. College education is what you make of it--you can get a crappy education at Harvard or a good one at State U. Besides, if you can get into Harvard, a lot of other really good schools are probably going to be offering some good scholarships. My conclusion--graduate $40K in debt if you need to to get an education, but don't graduate $120K in debt--that's buying something you can't afford. May 5
	Jill wrote: I refuse to believe that students loans are bad. There is no way you can convince me otherwise. Why? Because an investment in yourself is the most important thing, everyone should try to have a job they enjoy so they can be mentally and physically healthy during their careers. However, you do not have to go to a private school for a degree in the social sciences, you could go to a good state school and take out less loans. You could work part-time to supplement the loans, instead of taking out the maxmimum. The point is make a blanket statement that loans are bad, is crazy. If that were TRUE, then we'd be quickly divided into a have and have not society. A society divided by class and income not by race, religion, etc. Only rich people would be able to send their kids to school to perpetuate them getting higher paying jobs. There would be no help if you were born into a poor family. Does this sound like the principals the US was founded on? No, and that's why student loans are in place to help people move towards their goals and dreams. I think that telling your kids student loans are bad and they don't pay off, your basically shooting your kids dreams and aspirations down. What you should do is discuss true college costs, what they will make coming out, what they plan on doing, and how the numbers will really work. Go Beth! I'm really happy to hear your going back for something you love. I believe that happiness in a career = more money because you work harder and shine more when you love your job. May 4
	Sarah wrote: No Name, I checked out the link that you provided for me and it is WONDERFUL!! Thank you so much!! This will help me also with my budgeting(since I don't have a budget and didn't know where to start!). Thank you again! Proth, thank you for helping me understand a little more! I guess I will be able to learn about all this. It's funny, I never figured myself having to worry about investments and IRAs and all that stuff!! And here I am, trying to learn all I can! Thank you again!! May 4
	Steph wrote: Thanks Beth for the props! BTW, It took me like 8 months to roll my 401k into an IRA. Money is confusing for a reason. The less we know, the less our money can grow! May 4
	proth wrote: OK, one more. When you contribute to a regular IRA you normally do that with money from a checking or savings account. Yes, you have already paid taxes on that money, but when you file your taxes you get a deduction for the amount that you have contributed (not rolled over) into the IRA - so you essentially are contributing with pre tax dollars. And yes, when you take withdrawals from a regular IRA you will be taxed. That's why if you are young and in a lower tax bracket a Roth IRA is a great deal. If you convert to a Roth from a regular IRA you will need to pay taxes, however think of it this way. Let's say I am still young. I have $1,000 in a regular IRA. If I convert I pay taxes on $1,000. I don't make a great deal of money, so I'm taxed at a fairly low percent. Let's also say that over 30 odd years my investment grows to $10,000 just through the power of time and componding. When I withdraw the money from my Roth IRA I will avoid paying taxes on $10,000. If I do not convert I avoid paying taxes on $1,000, but I will be taxed on the entire $10,000 . Which is best depends on your personal situation which you should understand and analyze. Tell yourself that all of this is not confusing. It is complex in some ways but you have the power not to be confused. You can learn about these things and understand them. Then you can make the best choices for yourself. May 3
	proth wrote: It is possible to convert a regular IRA into a Roth IRA. It is not possible to convert directly from a 401K to a Roth - you must make the intermediate step. There are short term as well as long term tax implications in doing this. A regular IRA is money that has never been taxed, it grows tax free and you pay tax on the money when you withdraw it. A Roth IRA is funded by after tax money, it grows tax free but you pay no tax on the money you withdraw. Obviously there would be some taxes to bear if you convert a regular IRA to a Roth - but the conversion may be better for you in the long run. You have a long time ahead of you for that $1,000 to grow and taxes paid today may look paltry compared to the taxes you will pay on your withdrawals after 30 odd years of componded growth. I am not an expert on IRA conversions and you should contact someone who is. I am providing a url for one web site that deals in information on conversions. http://www.rothira-advisor.com/roth_summary.htm You can and should do further research for yourself. A Roth IRA is a great deal from the government. If only "Uncle Bill" :>) had taken care of me by allowing folks like me to contribute to a Roth IRA, a chunk of my retirement savings would reside in this instrument. In fact, if your employer does not match your 401K contribution, it might be best to be sure that you contribute the maximum to your Roth IRA before putting money in your 401K. Again, you must make the anaylsis for yourself based on your tax situation and the basis for the "discretionary gift" of company stock. (Also, I will add if your new employer offers only company stock as an investment option in your 401K it is much safer to make sure a goodly part of your retirement nest egg is in investments that you can choose. Just chant "Remember Enron" over and over.) Hope this is helpful. May 3
	Cathy wrote: I'm right in the midst of this 401k/IRA situation right now, so this is so timely! I recently just rolled over a 401k from a previous employer to an IRA at Fidelity. From what I understand, when you open a rollover IRA, you can roll that over to a Roth IRA, but you'll have to pay the taxes (because the money was originally contributed pre-tax to the 401k). My understanding of a Roth IRA is that contributions are made with after-tax dollars (right?), but aren't traditional and rollovers pre-tax? I just checked with Fidelity, and they said if I want to make additional contributions to the rollover IRA, it comes from either my checking or savings.....money on which I've already paid taxes! When I retire, and start withdrawing money from the IRA, won't the gov't take out taxes again? Unless it's a Roth? Maybe the thing to do is to rollover the 401k from the previous employer into a rollover IRA and leave it alone and in the meantime open a separate Roth IRA to continue making the contributions to? I work for a very small company that doesn't offer a 401k, my job is pretty secure and I'm not planning to leave anytime soon, but I still want to plan for my retirement someday. There's so many choices and things to do....it's confusing. May 3
	Jen wrote: Proth, I just reread your last comment, and from what you said, once I roll my 401k into an IRA, I can then put it into my Roth IRA? May 3
	Jen wrote: I will look into setting up an IRA, I am currently putting $50/month into a Roth IRA, I have been for a year now. With a traditional IRA, would I be required to make regular contributions? I am planning on contributing at least 5% of my new salary to 401k, but would I be better served to put that into an IRA instead? My new company doesn't match, but they will give a discretionary "gift" of company stock into my 401k. Part of me wants to get used to my new salary ($24k) and bring my emergency fund back to where it was before I quit my previous job. Once that is taken care of, hopefully within a month or two, I will keep up with my previous savings plan of roughly $100 into my 401k per month, and another $100/month split between a regular savings account and my Roth IRA. I have been religious about savings at least that much per month, and more if I can handle it. Since graduating from college, I have tried to view monthly savings as mandatory expense, like my student loan payment. May 3
	proth wrote: In general employers match contributions made while you are employed, not rollovers, so you would lose nothing by putting your rollover money in an IRA. I am suggesting that one option is to roll the "old employer" 401K into an IRA and contribute to the maximum allowable in the IRA as well as contibuting "new employer" 401K. It is possible to do both. Another poster has put in a link that directs you to a site that seems to explain some financial basics. I commend it to you, Sarah. May 3
	(no name) wrote: sarah, I did a quick search and the following website looks like a good beginners guide to investing, the last few pages are dedicated to ira, 401k explanations. http://www.dallasfed.org/ca/wealth/pdfs/wealth.pdf Good Luck! May 3
	Sarah again wrote: Ok, I am sorry, but I thought of another question. Does an IRA collect interest?? I guess if it does then the interest would take place of the match by the employer. Can anyone help me understand what an IRA is or lead me to a site that will explain it for me?? I am trying to get my husband to think more about saving and retirement and all of that stuff, but I don't know enough myself to even begin to educate him. We were actually talking the other day about savings(which is a BIG step for us!!), so I am encouraged to learn more! May 3
	Sarah wrote: Ok, I have a question. My employer matches my contributions up to 3%. If I took the money in my 401K and rolled it over into an IRA, then I would lose that match, correct? Are ya'll suggesting that she roll the money into an IRA and still deposit into her 401K with her new employer to get the match(if they match). Or that she start depositing into her IRA? Sorry, just trying to get it straight, in case I am ever in this position! May 3
	proth wrote: Since when is just over $1,000 not worth taking care of as well as possible? If you have an IRA you can make contributions above and beyond your 401K and the amount can become significant. Additionally, you might find it advantageous to convert your regular IRA to a Roth IRA which may be better in your circumstances. That cannot be done with a 401K. To answer your question about the timing of the rollover - you must have another retirement account open in order to do a rollover. This may mean that you would not be eligible for a rollover for three months. You may wish to talk to your new employer about this and see if the account can be opened even if you cannot contribute. Again, with an IRA you could contribute during those three months - you would be in control of your money - not your employer. May 3
	Cheryl wrote: Jen--I was just watching Suze O. last Saturday night (yes, I live an exciting life), and she addressed your 401K 20% question directly. The key is to have where you want the money going already set-up before you take the funds. Then, when your former employer cuts the check have them make it payable to the company where you are going to put the $$ (example: Fidelity). When the former employer has a company on the check, they can release it for the entire amount in your 401K. I think she said by law if the check has your name on it, they must take the 20% taxes out of the check. May 3
	Pepper wrote: Beth, the salon I get my hair done at just opened up room for massage and the young lady who is going to be working there is not licensed yet so she is doind "free" massages but accepting tips. This way she is keeping everything in her mid, getting practice for her exams, and building her clientel. Good Luck. May 3
	Jen wrote: The 401k has only a little over $1,000 in it so I don't know if an IRA will make that big of a difference, but I will look more closely at the paperwork. If I have to wait 3 months to contribute to the 401k with my new employer, can I still have it rolled over right away? May 2
	proth wrote: When rolling over a 401K you need to be carefull not to have the money sent to you directly. You want to have it sent directly to the custodian of your new retirement account. In this way you will avoid the 20% that would be withheld. You may wish to consider rolling over your 401K not into another 401K, but into an IRA. Not having your retirement money in your employer's plan may give you more attractive investment options. Unlike some posters, I have found 401K rollovers to be very simple. The financial institution with which I work has a group of people dedicated to doing rollovers and they have been most helpful. May 2

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