Wisest option to pay for second career education
Tl;dr by anecdata I paid for my master's degree from investments/savings with a HELOC backstop  It appears you don't have the 62k cash needed for tuition and living expenses so your decision is between financing a degree by selling your investments or a loan.   Ultimately this comes down to the yes/no sell decision on the investments.  Some things to consider: To me it sounds like you need to come up with 67K (30+37), part of the time you can work in the current job, part of the time you could work a lower paying part time job (for a year).  Lets assume that you can earn 15K for that year, and you can save 5K from your current job.  (I'd try and save more, but what ever you can do.) 67 - 15 - 5 = 47    I'd sell the investment property.  First you will have some funds to throw at this need, second you expense should go down as you don't have a payment on this property. 47 - 26 = 21  You have 32K in cash which is a lot for someone in your expense range.  Six months would be 15K, so I would use some of that cash: 21 - 17 = 4 Now you are really close.  If needed I'd use the investments to cover the last 4k or even more of the on hand cash.  However, could you do something to reduce that amount further ...like working more. Your first step should be to visit with the financial aid office of the university that you are considering attending, perhaps even before filling out the FAFSA. You may be eligible for grants, scholarships, and subsidized loans, as well as unsubsidized loans. You should pursue the first two options first, and then when you know how much remains to be financed, we can evaluate which of your investments you might liquidate if further financing is needed. There are a range of views on debt on this board. I take a very cautious approach to going in to debt. I worked full-time and took night classes to finish my degree without debt, but depending on your program that might not be an option. It seems that you also have a healthy relationship with debt considering the shape of your savings and finances as outlined above. Apart from the above information about how much money could be obtained and at what interest rates, the other missing information is your current salary, and your expected salary range after completing the program. With all of that information I could make specific recommendations, but at this point, my only recommendation is to avoid liquidating any retirement accounts in your effort to invest in yourself if at all possible.
The essential (and obvious) thing to avoid getting back into debt (or to reduce debt if you have it) is to make your total income exceed your total expenses. That means either increasing your income or reducing your total expenses.   Either take effort.   Basically, you need a plan. If your plan is to increase income, work out how.  If the plan is to increase hours in your current, you need to allow for your needs (sleep, rest, etc) and also convince your employer they will benefit by paying you to work more hours.   If your intent is to increase your hourly rate, you need to convince a current or prospective employer that you have the capacity, skills, etc to deliver more on the job, so you are worth paying more.    If your intent is to get qualifications so you can get a better paying job, work out how much effort (studying, etc) you will apply, over how long, what expenses you will carry (fees, textbooks, etc), and how long you will carry them for (will you accept working some years in a higher paying job, to clear the debt?). Most of those options involve a lot of work, take time, and often mean carrying debt until you are in a position to pay it off.     There is nothing wrong with getting a job while studying, but you have to be realistic about the demands.   There is nothing sacrosanct about studying that means you shouldn't have a job.   However, you need to be clear how many hours you can work in a job before your studies will suffer unnecessarily, and possibly accept the need to study part time so you can work (which means the study will take longer, but you won't struggle as much financially). If your plan is to reduce expenses, you need a budget.    Itemize all of your spend.  Don't hide anything from that list, no matter how small.   Work out which of the things you need (paying off debt is one), which you can get rid of, which you need to reduce - and by how much.   Be brutal with reducing or eliminating the non-essentials no matter how much you would prefer otherwise.  Keep going until you have a budget in which your expenses are less than your income.   Then stick to it - there is no other answer.    Revisit your budget regularly, so you can handle things you haven't previously planned for (say, rent increase, increase fees for something you need, etc).    If your income increases (or you have a windfall), don't simply drop the budget - the best way to get in trouble is to neglect the budget, and get into a pattern of spending more than you have.   Instead, incorporate the changes into your budget - and plan how you will use the extra income.   There is nothing wrong with increasing your spend on non-essentials, but the purpose of the budget is to keep control of how you do that, by keeping track of what you can afford. Probably the biggest tax-deferment available to US workers is through employee-sponsored investment plans like the 401k.  If you meet the income limits, you could also use a Traditional IRA if you do not have a 401k at work.  But keep in mind that you are really just deferring taxes here.  The US Government will eventually get their due. :) One way which you may find interesting is by using 529 plans, or other college investment plans, to save for your child's (or your) college expenses.  Generally, contributions up to a certain amount are deductible on your state taxes, and are exempt from Federal and State taxes when used for qualifying education expenses.  The state deduction can lower your taxes and help you save for college for your children, if that is a desire of yours. Look into the Coverdell Education Savings Account (ESA). This is like a Roth IRA for higher education expenses.   Withdrawals are tax free when used for qualified expenses. Contributions are capped at $2000/year per beneficiary (not per account) so it works well for young kids, and not so well for kids about to go to College. This program (like all tax law) are prone to changes due to action (or inaction) in the US Congress.  Currently, some of the benefits are set to sunset in 2010 though they are expected to be renewed in some form by Congress this year. "So you are off to a really good start.  Congratulations on being debt free and having a nice income. Being an IT contractor can be financially rewarding, but also have some risks to it much like investing.  With your disposable income I would not shy away from investing in further training through sites like PluralSite or CodeSchool to improve weak skills.  They are not terribly expensive for a person in your situation.  If you were loaded down with debt and payments, the story would be different. Having an emergency fund will help you be a good IT contractor as it adds stability to your life.  I would keep  £10K or so in a boring savings account.  Think of it not as an investment, but as insurance against life's woes.  Having such a fund allows you to go after a high paying job you might fail at, or invest with impunity.   I would encourage you to take an intermediary step:  Moving out on your own.  I would encourage renting before buying even if it is just a room in someone else's home.  I would try to be out of the house in less than 3 months.  Being on your own helps you mature in ways that can only be accomplished by being on your own.  It will also reduce the culture shock of buying your own home or entering into an adult relationship. I would put a minimum of £300/month in growth stock mutual funds.  Keeping this around 15% of your income is a good metric.  If available you may want to put this in tax favored retirement accounts.  (Sorry but I am woefully ignorant of UK retirement savings).  This becomes your retire at 60 fund.  (Starting now, you can retire well before 68.)  For now stick to an index fund, and once it gets to 25K, you may want to look to diversify. For the rest of your disposable income I'd invest in something safe and secure.  The amount of your disposable income will change, presumably, as you will have additional expenses for rent and food.  This will become your buy a house fund.  This is something that should be safe and secure.  Something like a bond fund, money market, dividend producing stocks, or preferred stocks.   I am currently doing something like this and have 50% in a savings account, 25% in a ""Blue chip index fund"", and 25% in a preferred stock fund.  This way you have some decent stability of principle while also having some ability to grow.   Once you have that built up to about 12K and you feel comfortable you can start shopping for a house.  You may want to be at the high end of your area, so you should try and save at least 10%; or, you may want to be really weird and save the whole thing and buy your house for cash.  If you are still single you may want to rent a room or two so your home can generate income.   Here in the US there can be other ways to generate income from your property.  One example is a home that has a separate area (and room) to park a boat.  A boat owner will pay some decent money to have a place to park their boat and there is very little impact to the owner.  Be creative and perhaps find a way where a potential property could also produce income. Good luck, check back in with progress and further questions! Edit:  After some reading, ISA seem like a really good deal." Get an education. A bachelor's degree preferably, but AA or even a certificate are fine too. It will increase your earning potential significantly and over your lifetime it will earn you a lot of money.  You make around $30,000 a year now, median salary for someone with a bachelors in the humanities is around $45,000. If you degree is in the STEM field, that goes up to $55,000 - $65,000 range. Second best option is to start a small business of some kind that does not require substantial investment. Handyman comes to mind as an example or some sort of billing service maybe? I would not recommend self directed investment in the stock market - most people lose money and since you don't have a lot of money to invest, commissions and fees will eat up a significant portion of it. I would usually recommend a CD but interest rates it's not really worth it. "Exactly. I'll ""retire"" from teaching in two years and will be given the chance to take half of my retirement in one lump sum payment and take home $1,000 a month, or take nothing and bring home 2,000 a month. The other thing to remember is the 30% tax payment that next April. That's tough.   This looks like a no-brainer because in just seven years, I'd eclipse the cash out. However, I might do it because I'll take the money and possibly pay off a rental home. With a rental, I'll be able to raise the rent if inflation kicks in. Of course, if deflation continues, that might be a bad move. The thing is, I'll be able to decide." Yes, you can do what you are contemplating doing, and it works quite well. Just don't get the university's payroll office too riled by going in each June, July, August and September to adjust your payroll withholding! Do it at the end of the summer when perhaps most of your contract income for the year has already been received and you have a fairly good estimate for what your tax bill will be for the coming year. Don't forget to include Social Security and Medicare taxes (both employee's share as well as employer's share) on your contract income in estimating the tax due. The nice thing about paying estimated taxes via payroll deduction is that all that tax money can be counted as having been paid in four equal and timely quarterly payments of estimated tax, regardless of when the money was actually withheld from your university paycheck. You could (if you wanted to, and had a fat salary from the university, heh heh) have all the tax due on your contract income withheld from just your last paycheck of the year! But whether you increase the withholding in August or in December, do remember to change it back after the last paycheck of the year has been received so that next year's withholding starts out at a more mellow pace. "My spouse will only be entering medical school within 2 years at the earliest, and will likely be there for about 4-5 years. If she get's into the school she wants we would not have to move This is probably the biggest return on investment that you can get.  Sure, you could invest what you have in the market and take out tens or hundreds of thousands of dollars on ""cheap"" medical school loans, but consider this: Figure out how much you need for all 4-5 years, and develop a plan to make sure you can cash-flow the entire education.   Bootstrapping a software company has potential for high rewards, but a much greater risk.  you could get 10X back or you could lose it all.  With your income, you've got plenty of time to save for college, so I don't see that as a huge win now.  I would also dump the lease - you can probably get a much better car for $16k that the five-year old one you have when the lease is up. (or get a similar car for less money).  With no debt and a good income you do not need a credit score. The lease probably didn't help it that much anyways - you're paying more for the lease than any benefit you would get by a higher score." "If you have wage income that is reported on a W2 form, you can contribute the maximum of your wages, what you can afford, or $5500 in a Roth IRA.   One advantage of this is that the nominal amounts you contribute can always be removed without tax consequences, so a Roth IRA can be a deep emergency fund (i.e., if the choice is $2000 in cash as emergency fund or $2000 in cash in a 2015 Roth IRA contribution, choice 2 gives you more flexibility and optimistic upside at the risk of not being able to draw on interest/gains until you retire or claim losses on your tax return).  If you let April 15 2016 pass by without making a Roth IRA contribution, you lose the 2015 limit forever.  If you are presently a student and partially employed, you are most likely in the lowest marginal tax rate you will be in for decades, which utilizes the Roth tax game effectively.   If you're estimating ""a few hundred"", then what you pick as an investment is going to be less important than making the contributions.  That is, you can pick any mutual fund that strikes your fancy and be prepared to gain or lose, call it $50/year (or pick a single stock and be prepared to lose it all).  At some point, you need to understand your emotions around volatility, and the only tuition for this school is taking a loss and having the presence of mind to examine any panic responses you may have.  No reason not to learn this on ""a few hundred"".  While it's not ideal to have losses in a Roth, ""a few hundred"" is not consequential in the long run.   If you're not prepared at this time in your life for the possibility of losing it all (or will need the money within a year or few, as your edit suggests), keep it in cash and try to reduce your expenses to contribute more.  Can you contribute another $100?  You will have more money at the end of the year than investment choice will likely return." Just looking at your question I can tell it's not worth it financially, even if you didn't borrow the money to do it. At your current rate, you'll be making 54,384 in 5 years, which is roughly a growth of 2.5% per year.  If you go for the masters, in 5 years you'll be making 55,680, with roughly the same growth rate (2.5%). So it's costing you $70,000 (the cost of school plus the 2 years of reduced income) to raise your salary by $1,300.  The payback period would be about 25 years.  It would be MUCH worse if you borrowed the money to do it. Not a chance. You need to find a fiduciary advisor pronto. Yes, you are getting a large amount of money, but you'll probably have to deal with higher than average health expenses and lower earning potential for years to come. You need to make sure the $1.2 million lasts you, and for that you need professional advice, not something you read on the Internet. Finding a knowledgeable advisor who has your interests at heart at a reasonable rate is the key here.  These articles are a good start on what to look for: http://www.investopedia.com/articles/financialcareers/08/fiduciary-planner.asp https://www.forbes.com/sites/janetnovack/2013/09/20/6-pointed-questions-to-ask-before-hiring-a-financial-advisor/#2e2b91c489fe http://www.investopedia.com/articles/professionaleducation/11/suitability-fiduciary-standards.asp You should also consider what your earning potential is. You rule out college but at 26, you can have a long productive career and earn way more money than the $1.2 million you are going to get. Debt is no fun. Getting out of debt to replace it with more debt is no fun. In both cases, you are making an investment in your child's future. That's laudable, but there might be other ways to economize on the education costs. I prefer HELOC debt because I can deduct the interest (as you pointed out) and it usually allows re-borrowing if other cash-flow problems crop up. The downside of borrowing against your house is that your house could be foreclosed if you become insolvent, and you will lose your buffer if you max out the equity now. The same problem exists with a 2nd mortgage. The fact that you would still have a mortgage either way does make the option more attractive though (or less unattractive anyway). I would go with option B. That is safer, as it would leave you with more options, in case of an unexpected job loss or an emergency. First pay off all existing debt. Then set up at least 6 month emergency fund.  Freelancing exposes you to way more risks than employment. Then buy GIC's to cover and match the maturity of  your expected education fees. Only 'play' with what is left.  Don't over think it.  Buy a low-cost (less than 0.5%) passive large-index mutual fund covering either the S&P or TSX. Or you know, going from 28k to 50k because I got my degree was 100% worth the 66k of debt I took out to fund myself. Spending 100k overall to get my wife and me through school bumped our pay by 40k a year.   In honesty, even a lot of risk-averse people look at school and think it's a great plan because, by and large, in-demand degrees pay for themselves quickly when the economy isn't in a recession.   edit: to further clarify, a lot of our debt was used for daycare and paying our mortgage and bills while we did school. The tuition itself was almost entirely paid for through grants and scholarships. It wasn't like playing the lottery, it was a methodical and logical approach to handling our finances that led us both to agree that quitting work for a couple years was worthwhile, and we had the credit and FICO score to pull it off.