Ava
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Post by Ava on Oct 27, 2013 10:35:49 GMT -5
I have only two debts; the student loan and the condo mortgage. The condo mortgage is $65,000 @ 4.875% for 29 years (I refinanced last year under HUMP). I am worried about both debts, for different reasons. The mortgage worries me because the condo is underwater BIG TIME. I cannot sell it, period. Besides, since I've been here most of the condos have turned into rentals, so not sure a buyer could get approved to buy from me. Condo will, most certainly, be turned into a rental when I move out of CT. For now that I live here, my mortgage and common charges are less than what I would pay if I had to rent. I don't want to be a landlord but may have no choice. Will use management company. My main worry is my student loan. Lately, I've been thinking a lot about it. I have a $25,000 loan for my bachelor degree. I was paying $189 a month under the graduated payments program. That amount was going to increase every two years. I was making payments all right on that debt. Now I'm attending school for my MBA and my payments have gone into deferment.I am doing good in the program, and I am happy with it. But I'm worried about the debt I'm accumulating. So far, it's $10,250. It will be about $30,750 by the time I'm done. I take the maximum they offer because I cannot work a second job while on school. If something happens and I need money, I have to have it. Another reason is that I take summer classes to graduate early, and I use the extra money to pay for them. I also use it to pay for extra gas, school books, car repairs. I'll owe around 56K or 57K by the time I graduate. I am starting to worry a lot about that. Will I be able to pay it back? How? Would it affect my plan of moving out of CT the minute I get my MBA? I currently make 39K a year after getting the bachelor. I have $8,500 in my EF. Am I borrowing too much?
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Deleted
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Post by Deleted on Oct 27, 2013 11:12:05 GMT -5
Ava, I think you worrying too much. You need to wrap your head around Uncle phil5185 's concept of building wealth. How much more would you be making today if you had your MBA, 60k? You will have recovered that school loan debt in about 3 years and you will have the benefit of the higher earnings for 20+ years. That's a pretty good return on your investment.
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swamp
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Post by swamp on Oct 27, 2013 11:13:21 GMT -5
I thought DH's and my student loans were huge. After a few years of experiencr, they have enabled us to get 6 figure jobs.
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Ava
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Post by Ava on Oct 27, 2013 11:29:11 GMT -5
Yes, I know the loans will enable me to make more money. I am also thinking around 60K when I graduate. I worry a lot about financial issues, but that's mainly because I'm on my own so it all falls on my shoulders, whether I make it or break it. And 56 or 57K sound like a ton of money to me.
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Deleted
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Post by Deleted on Oct 27, 2013 11:42:16 GMT -5
Meh, you'll get over it. Wait until you're close to being $1M in debt like I am. I know it's scary at first but it's not like you've got cc debt that you'll be paying on for years after you've thrown away/eaten/used whatever you bought. Your degree will likely lead to ever higher paying jobs over that 20 year period. Can you imagine that at some point your salary in 20 years could come close to $180k? By that time your student loan balance will seem quaint in comparison.
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Pants
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Post by Pants on Oct 27, 2013 12:21:24 GMT -5
Ava - it depends on what job you want after your MBA of course, but the average starting salary for my MBA class was about 80k. I went to a good school, but not ivies or anything.
I have $90k in debt from my MBA. It's manageable on the new salary.
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Ava
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Post by Ava on Oct 27, 2013 13:14:02 GMT -5
Bsbound; thanks for the info. That would make me feel better. I just have to focus on the better income I'll get, not just the debt I'm generating. I don't have credit card debt at all, fortunately. All I have are those two debts. It's just that besides the condo, I've never taken that kind of debt before; it seems to be so much. And yes, I worry a lot about financial stuff. I am looking forward to the increased salary, though My undergraduate is in accounting, and the MBA doesn't have a concentration but I'm taking all the electives in accounting and finance. I currently work at a financial institution. The school I attend is the local state university. That bothers me a little bit because it's not a well known school except for people who live around the area. The program is good and it has changed my life. I don't feel as depressed as before; just thinking on all the tests, group projects, class participation, etc. Doing good in school and getting good grades are a huge help to my self-esteem. I am getting out of this state as soon as I graduate, though. But I hope with good grades and a good work history I'll be able to land a good job in another state. 80 K a year would be a dream come true!
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Post by Deleted on Oct 27, 2013 14:32:17 GMT -5
Bachelors loan @ $25K + deferment interest @ 3K MBA loan @ 31K What is the total cost of the MBA program? Are you cashflowing part of it because that seems inexpensive for MBA. I can't get one at that price at any of my state U's! Reputation of the State U's there is fine. They don't carry the same rep as UCONN, but don't think that actually matters out of state.
So, $60K debt at the end. So long as you KNOW you will complete the program and not drop out, then you will be fine. Your only problem occurs if you don't finish the program, but incur a large portion of the debt.
I don't know where bsbound lives but $80K would be high for a new MBA with limited work experience in my area. I think you have less than a year in finance/bank experience, so will have about 3 years of entry level experience plus MBA at the end. For an employer in the Northeast, I think you start at around $60K. If you go to Florida (I think I remember you hate the cold weather) then your salary will be quite a bit lower. There are many warmer states to choose from, but higher income = higher COLA. Make sure you check both out as you are looking for those future job opportunities.
Condo - your condo is worth less than $65K? What was the HUMP refinance you mention (never heard of that loan)? If it did not address the underwater issue, what was the purpose of the program loan and why didn't you select an option that mitigated it being underwater? - - Are you sure your value is still that low? Guessing the area you are in is near where I recently sold a family home and values got trashed, but I didn't think reasonable 2/1s were that low still.
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Rocky Mtn Saver
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Post by Rocky Mtn Saver on Oct 27, 2013 15:00:38 GMT -5
I would just be careful of using the loans for non-school stuff, like you mentioned car repairs and gas, etc. Use it for school, sure, but I wouldn't put things like gas on non-dischargable debt. Otherwise, I think the advice here is very sound!
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justme
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Post by justme on Oct 27, 2013 15:28:08 GMT -5
Rockit's point is something to consider. Granted I graduated in 2009, which was a crappy year to find a job, but I haven't made it to $60k yet with my MBA and I live in Florida. Not saying stop the MBA, but if you are wanting to move to Florida definitely keep the salary of those places in mind when taking out the loans.
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Ava
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Post by Ava on Oct 27, 2013 17:58:03 GMT -5
What is the total cost of the MBA program? Are you cashflowing part of it because that seems inexpensive for MBA. I can't get one at that price at any of my state U's! Reputation of the State U's there is fine. They don't carry the same rep as UCONN, but don't think that actually matters out of state.So, $60K debt at the end. So long as you KNOW you will complete the program and not drop out, then you will be fine. Your only problem occurs if you don't finish the program, but incur a large portion of the debt.The total cost of the MBA depends on how many classes you want to attend per semester. Three classes (nine credits) is considered full-time. You can take up to five classes for the same price @ $6,500 a semester. If you want to take more classes, you have to pay more for each additional class. The school I'm attending is in the CT public school system, but it's not UCONN. I will definitely complete the program. I am doing great, and I love it. This is my third time in school; associate, bachelor, and now this. I had enrolled in another program in May that wasn't a match and I dropped it after the first day because I knew it won't work. The school decided not to charge me anything for my one day in classes. But I'm here to complete my degree. think you have less than a year in finance/bank experience, so will have about 3 years of entry level experience plus MBA at the end. For an employer in the Northeast, I think you start at around $60K. If you go to Florida (I think I remember you hate the cold weather) then your salary will be quite a bit lower. There are many warmer states to choose from, but higher income = higher COLA. Make sure you check both out as you are looking for those future job opportunities.
I will have three years of experience when I graduate. In the Northeast 60K sounds about right, but I don't want to stay here. In Florida I'll probably make less and still have the big loans. I also plan to take the CPA after I finish this program, that should help me make more money. Don't want to stay in the Northeast; it's cold and boring in the area I live. Condo - your condo is worth less than $65K? What was the HUMP refinance you mention (never heard of that loan)? If it did not address the underwater issue, what was the purpose of the program loan and why didn't you select an option that mitigated it being underwater? - - Are you sure your value is still that low?
My condo was valued at $49,990 last year when I refinanced. It was worth 65K when I bought it in 2008. The HUMP was a program available for homeowners who had good credit but were unable to refinance when rates got low because they were underwater on their mortgages. My rate went from almost 7% to my current rate and reduced my payments by $100 a month. The condo is located in a city (town?) with very bad reputation; lots of unemployment, welfare, etc. There's also nothing to do here; in order to get to NYC you have to drive 45 minutes to the train station and then ride the train for 90 minutes. The ticket costs $14 each way. We have a train station here but the train only comes by four times a day, at very inconvenient hours. If you want a job, it's difficult to find something in this depressed area where I live. My job is 50 minutes away. If you want a good job you are guaranteed a long commute. That's why the condo is so cheap. But it's a good, comfortable home and I like it a lot . Will miss it when I move.
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Pants
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Post by Pants on Oct 27, 2013 17:59:41 GMT -5
I could be off on the salary, but people from my Midwestern business school went literally everywhere - Boston and Bentonville, Arkansas and Cincinatti and Nebraska and Minneapolis and Miami. So it's not just HCOLAs. Granted most people had a little more experience than ava when they came in, so that could definitely be a factor. Also I was in a ranked program vs. the local state school, which probably helped too.
Justme - What do you do? Some of my classmates are making around $60k, but they all ended up at non-profits.
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Ava
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Post by Ava on Oct 27, 2013 17:59:57 GMT -5
Justzombies;
I guess that's what worries me the most. Florida pays low wages. I keep an eye on available jobs through Indeed and I'm always surprised by the pay. The other day I saw an ad for an experienced accountant for 42K a year. And the cost of living is not that low there.
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Peace Of Mind
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Post by Peace Of Mind on Oct 27, 2013 18:26:03 GMT -5
Ava, I think you worrying too much. You need to wrap your head around Uncle phil5185 's concept of building wealth. How much more would you be making today if you had your MBA, 60k? You will have recovered that school loan debt in about 3 years and you will have the benefit of the higher earnings for 20+ years. That's a pretty good return on your investment. Stop looking backwards and look forwards now. Just don't incur any more debt (other than school) and you will be fine and laughing at those paltry amounts one day.
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justme
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Post by justme on Oct 27, 2013 18:35:37 GMT -5
I could be off on the salary, but people from my Midwestern business school went literally everywhere - Boston and Bentonville, Arkansas and Cincinatti and Nebraska and Minneapolis and Miami. So it's not just HCOLAs. Granted most people had a little more experience than ava when they came in, so that could definitely be a factor. Also I was in a ranked program vs. the local state school, which probably helped too.
Justme - What do you do? Some of my classmates are making around $60k, but they all ended up at non-profits. I'm a cost/financial analyst. I'm in the defense industry and didn't work FT before I started my MBA. I'm sure that plays into it a bit. Though 2009 was a really crappy time to graduate undergrad or grad - I tried to move but didn't get any interviews. I'm starting to look into my options, when I started the benefits were making up for the lower pay, but they've cut benefits (and I haven't gotten health insurance info yet so they might cut that too) and they got tighter on promotions (based on years worked, so even though I've been kicking ass I have to wait at least 2 more years for my next promotion). Making a jump in the industry is pretty tough with all the crap going on and pretty much everyone I meet has stayed in the defense industry just switched between military, government, and private industry...so on my own figuring it out if I decide to jump out of the industry.
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Post by Deleted on Oct 27, 2013 18:37:27 GMT -5
Yes, I understood that you are not at UCONN. I have a guess at which of the 4 you are at based on the price range you originally said on your condo. I sold a home about 30 min from where I think you are a little over a year ago & it is depressed and absolutely nothing going on there, so not a great area for a single to be in.
I agree that housing costs in FL are not that much lower than the specific town you are in; but you only have to go an hour or so from where you are, whether CT or MA and you are dealing with extremely high cost real estate areas. You are in a rather unusual little pocket, that doesn't reflect the general costs of the area.
Your costs for the MBA are absolutely fantastic, so I think you will come out of that program with a valuable degree at a bargain price (my local U costs $60K tuition for same program). So, I think you have done these decisions and come out with the best scenario you could have.
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Ava
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Post by Ava on Oct 27, 2013 19:19:08 GMT -5
Thanks, Rockit. I have put a lot of thoughts in my decisions. Like I said before, I'm a worrier. It's by nature but also by need; being on my own here I have to think twice before making any move. The condo is in a very depressed area, but like you said, I'm surrounded by very expensive areas with very high COLA. Overall, I don't regret buying it. It would be impossible for me to survive in CT if I didn't live where I live. Besides that, I don't think it would be hard to rent it in the future because there are ton of people in the same boat as me here. The condo is nice, has two bedrooms, one 1/2 baths, and a garage. The school was chosen for several reasons; closeness, price, good reputation. I made the best decisions I could with what I had to work with. Maybe I've made some mistake, but I've tried my best. All in all, I think my situation has improved with my decisions. Graduating on time with good grades is my next goal. After that is moving out and moving on. I have great memories of this area; I started out here, I made a few good friends, I went to school and got my degrees, but it's not the place I want to live for the rest of my working life. Like you said, it's a very bad area for a single person to live in.
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Deleted
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Post by Deleted on Oct 27, 2013 22:50:19 GMT -5
Ava it sounds like you are doing great! I'm so glad you're happy with your MBA program!
I too think you are probably worrying too much, for the reasons given above. This said, I agree with Rocky Mountain Saver that you should try to use those loans only for tuition / books, and (ideally) not car repairs, gas, etc.
If I'm not mistaken, your employer is paying part of your MBA. What are you doing / planning to do with those reimbursements? I may be wrong about you being reimbursed.
Other thought: I'm not sure how deferred student loans work, but given that you completed your bachelors, and were managing to pay the $189 per month for those SLs, I'm assuming you could continue to pay on them? Or set that money aside in savings / EF (whatever) while the loans are in deferment, and pay a chunk off once they come out?
I agree with the others that you will be FINE, and that the SLs are definitely an investment in your future. But since you're debt-averse, maybe keep paying the undergrad monthly, or keep saving that amount monthly, and even if you continue to borrow as much as you can for the MBA, just use that money to pay for books and tuition, and put the rest into savings? That way it's there if you need it. But maybe once you finish school, if you don't use what's left after paying for just tuition and books, you could either:
- have enough saved to pay off a chunk of your undergrad SLs
OR
- have enough saved to be able to bring enough money to the table to finally get out of your underwater condo. That's IF / WHEN you decide to move away, after you've finished your MBA
Personally, that would be my goal. Either one or the other. BUT, that's obviously assuming I wouldn't either starve to death / not be able to go home or have my mom over in the meantime LOL.
As always, good luck to you!
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Ava
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Post by Ava on Oct 28, 2013 6:13:10 GMT -5
Thanks, Debthaven. I'm doing great at school, which is very important for me. My work will cover $2,400 a year for tuition. I didn't qualify for 2013 because you have to notify them two weeks before classes start to get reimbursement. I was still working with financial aid, and the bursar's and registrar's office a week before classes. So, I couldn't get that money. I will get it for next semester. It's not much, but it helps. I know getting all the loan money is not that good an idea. It's just that my costs increase when I go to school, and I worry about not being able to go to school or continue working if the car breaks down, or what if I lose my job, etc. I also would need money to move once I finish school. Moving across country is expensive. I am going to put the money in the EF and let it sit there, not use it for everyday things unless I absolutely have to. Fortunately, this is my last time in school; I'm out of it after the Master. I don't plan to pay on the condo; it's way too much money ($15,000 underwater plus closing costs). All the condos for rent in the complex have rented so that's what I'll do, at least until the tide changes and I'm able to sell. If not, I'll continue to rent using a management company.
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tskeeter
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Post by tskeeter on Oct 28, 2013 11:12:13 GMT -5
Bsbound; thanks for the info. That would make me feel better. I just have to focus on the better income I'll get, not just the debt I'm generating. I don't have credit card debt at all, fortunately. All I have are those two debts. It's just that besides the condo, I've never taken that kind of debt before; it seems to be so much. And yes, I worry a lot about financial stuff. I am looking forward to the increased salary, though My undergraduate is in accounting, and the MBA doesn't have a concentration but I'm taking all the electives in accounting and finance. I currently work at a financial institution. The school I attend is the local state university. That bothers me a little bit because it's not a well known school except for people who live around the area. The program is good and it has changed my life. I don't feel as depressed as before; just thinking on all the tests, group projects, class participation, etc. Doing good in school and getting good grades are a huge help to my self-esteem. I am getting out of this state as soon as I graduate, though. But I hope with good grades and a good work history I'll be able to land a good job in another state. 80 K a year would be a dream come true! Ava, you might consider taking electives outside accounting and finance. A narrow, really deep education in a specialized field limits you to jobs in that field. A broader education expands your understanding of more facets of businesses, which can expand the number of fields you may be able to work in, or which can expand your understanding and make you more versitile. For example, while working in accounting and finance for food processing companies, I learned a lot about packaging materials, food safety and sanitation, and marketing from people I worked with. My understanding of packaging materials and the issues associated with different types of materials made me a front runner for a job with a packaging materials company. And my understanding of marketing and the market place allowed me to recognize that I was working in an operation that was on a slow down hill slide. My conclusion was that either the brand would be sold to a competitor, who would not want the facility or the staff, or the business would eventually be shut down and abandon. This conclusion spurred me to search for other opportunities. Six months after I left, the brand was sold to a competitor, who layed off the staff and shut down the plant. As far as your education at a state university is concerned, I don't know that I would worry very much. John Stumpf, the CEO of Wells Fargo banks, was a classmate of mine at a state university that doesn't have a national reputation, just good programs. The fact that he did not attend an Ivy does not seem to have hurt John's career much. Nor has a state university education hurt the other Fortune 500 CEO's who were awarded degrees by my alma mater. Once you get beyond the first job after school, people are more concerned with your background, experience, and successes than they are with where you went to school. They are paying for what you can do, not the name of the university on your diploma. I've worked with Harvard MBA's who were let go, while those of us with more pedestrian state university diplomas enjoyed long careers with the same employer.
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Deleted
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Post by Deleted on Oct 28, 2013 13:05:02 GMT -5
Ava, forget Florida, come to Houston If I remember correctly you are from South America? There are lots and lots of people from South America and all over the world here. I just moved about 4 months ago and I love it. Yes it gets hot and humid for a couple of months in the summer but I think it is bareable. ETA: Oh and I meant to say, there are a ton of jobs here...
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Ava
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Post by Ava on Oct 28, 2013 22:17:22 GMT -5
Tskeeter; thanks for the advice. The program I'm in is well balanced, I think. It has Marketing, Organizational Behavior, Managerial Finance, Business Law, etc. There are eight basic courses, and the school waived four for me. So I'm doing the rest. Upper classes are five, which I'll do next. There are only three electives. Then there's the final project that takes a semester. I am recently branching into finance classes, because at first I wanted to do only accounting. If time allows, I'll do some extra electives. I can take up to five classes per semester for the same price. So far I've picked two accounting and one finance. Bunnysmom; I know Texas is doing great. Though I still would prefer Miami, I am considering other areas, too. In Texas I think I would love Austin. I'm also thinking of California, Las Vegas, Phoenix Arizona, Atlanta Georgia, and Austin Texas. I would prefer Miami, but I'm learning to open my mind a little bit. Maybe Houston would be great. It all depends on where I can land a job. What I really want is good weather, no snow, and a big city. The rest is negotiable. But I'm scheduled to graduate on December 2014, so plenty of time yet.
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Rocky Mtn Saver
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Post by Rocky Mtn Saver on Oct 29, 2013 8:05:50 GMT -5
While some 'etc' might become unavoidable on the student loans, I'd do a lot of budget finagling before I'd accept that, personally. It would be my last resort. Unless a car was bought specifically for school and is used for nothing else, repairs/maint should be a line item in the budget, a household expense. And if I were to go back to school as a working adult, I'd probably have much less time/energy for budget categories like entertainment, travel, and unnecessary shopping. Hence, I should be able to shave savings from such categories in order to backfill added gas expense.
If a person puts that $1000 of fuel on their student loans, but then spends $1000 of their own budget going to spring break, it's kinda of a chicken/egg thing as to what they really fiinanced with those nondischargeable student loans.
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Post by Deleted on Oct 29, 2013 8:47:51 GMT -5
Another positive for Houston versus Miami is the cost of living... Just saying
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tcu2003
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Post by tcu2003 on Nov 1, 2013 22:43:23 GMT -5
Another positive for Houston versus Miami is the cost of living... Just saying But...it's Houston... If you want Texas, I'd vote Fort Worth or maybe Dallas...if you can live close to work. Austin is nice, but it's also kind of pricey - and both Houston and DFW both have MUCH better airports, especially if you want direct international flights.
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