I recently made a large purchase. I haven't added up how much it has cost me in total, but I think around $50,000. No, not a new car. I bought a Master's degree.
Whether or not that was a good decision is something I've never really examined in depth. However when I saw the NY Times debate, "What is a Master's degree worth" I thought it might be a good opportunity to do so.
By all financial accounts my Master's has not been worth it (so far).
The year before I started the program full-time (I had been going part-time and working for a while), I earned $107,000, however that included a large payout for vacation time, probably north of $20,000. So the opportunity cost was at least $107,000, not to mention a possible bonus and other perks such as paying for part of my gym and Internet fee (yes, best perks ever).
So, my job was high-paying one with lots of perks. But, I quit. I barely made any money for a whole year.
So opportunity cost = $110,000 (conservatively)
Actual fee = $55,000 (conservatively)
Plus, I paid for part of it in student loans (about $20,000, with an interest rate of 6.8% that started accruing immediately. I paid it off less than a year after I took it out, but I paid interest.
Interest: $1,500 (conservatively)
Why then did I spend all of this money? I had worked and traveled for work, even living bi-coastly, for 11 years. I was burned out. And I was not intellectually challenged at all. I thought I'd make a career switch.
By the time I was done with my degree, I was feeling much less stressed; however, my priorities had changed. I didn't feel like switching careers and taking the inevitable pay cut. I got an offer for another high-paying job in the same field as the one I worked in before. And at that point I had other priorities. After not having a job for a year, I couldn't wait to start saving again, for retirement and for a down payment for an apartment.
So, overall the degree has cost me at least $167,000 and it has landed me in essentially the same place I was before I got it. Would I trade it for $167,000 in cash? I wouldn't. This little exercise has reminded me that there are things more important in life than money. For me, education was one of those things at the time I made the decision.