Commentary Archives - Page 2 of 2

Controversial Statement Of The Day: Not Everyone Should Go To College

I‘m about to make a controversial statement. Brace yourself. Here it goes:

Not everyone should go to college.

In this day and age it has almost become an untouchable gospel that everyone should go to college, and if you don't, there's no way that you can succeed in life. Without a 4 year degree, you might as well kiss your future life goodbye. You'll never amount to anything!

I on the other hand would like to offer a counter argument – that not everyone should go to college. For many it would just un-necessarily saddle them with huge mountains of debt, for a degree they aren't really going to use – or that doesn't have the value they expect it will.

Why Shouldn't Some People Go To College?

There are several reasons why I think college may not be the right choice for some people. I'll list them out below.

A Degree Isn't What It Used To Be

A college degree isn't as highly prized as it once was. It could almost be argued that a college degree is now worth about the same as a high school degree was in the past.

One big conclusion that can be drawn from the PayScale data is that college—and college alone—may not be the great investment it was once thought to be. Richard Vedder, director of the Center for College Affordability & Productivity in Washington, D.C., notes that with the college-educated accounting for a larger percentage of Americans, the bachelor’s degree has been devalued, and its ROI has taken a hit. “We have credential inflation in America. A college degree has become mundane and ordinary,” Vedder said. “We used to send kids to college to become lawyers and doctors. Now we send them to college to work at Walmart.”

The Return On Investment Isn't As Great As Some Would Have You Believe

The ROI that you'll get by graduating and getting your degree isn't as great as some might have you believe. In the past it was assumed that most people could expect to earn anywhere from $900,000-$1,600,000 more over a working lifetime just because they got a degree. A study released by Payscale.com found, however, that the return on investment for those who got a degree was much lower than that for most colleges and majors. The study found that the ROI for a college degree was anywhere from just under $400,000 to just over $600,000. That is still a substantial amount, and for many that will be enough, but remember to go in with eyes wide open, and realize that it may not be as great as you had hoped. The ROI will vary greatly by major and specialization as well.

Not Everyone Needs A 4 Year Degree

Far too often people that don't really even need to go to a 4 year school end up going and piling up a mountain of debt. Instead for many of them they could have attended a cheaper 2 year trade or vocational school, picked up a useful trade, and found a good paying job – without all of the hefty school loans. My wife is one example. Instead of attending a 4 year school like many of her friends (who ended up just having kids and not needing a degree anyway) she attended a 2 year school in a specialty she enjoyed. She loved it, and didn't spend nearly as much as her peers – who ended up not using their expensive degrees!

Advanced Degrees Often Lead To Higher Consumption Spending Behavior

One thing that people don't often talk about is how you may end up with a higher paying job when you get an advanced degree, but quite often it also comes along with learned high consumption spending behavior as well. When we're in school for a long period of time we learn that it is accepted behavior for those with an advanced degree to be high earners, and also high spenders. Thomas J. Stanley explains via an example in his book the Millionaire Next Door:

Being well educated has certain economic drawbacks.

Victor’s well-educated adult children have learned that a high level of consumption is expected of people who spend many years in college and professional schools. Today his children are under accumulators of wealth. They are the opposite of their father, the blue-collar, successful business owner. His children have become Americanized. They are part of the high-consuming, employment-postponing generation.

Going To College Is Still A Good Bet For Many

Ok, now that I've spent an entire post talking about the downsides of getting a 4 year college degree, I want to make sure that I mention that I still think that college is a good bet for many people.

Studies showed that people who saw an especially good ROI on their education include those in technical and engineering schools, and those that required an advanced degree to get certified (lawyers/doctors).

If you are going to go to college, make sure that you're shopping around for the best school for your major, at the best price. You'll often find that the schools where you get your best return on your money aren't the ones you thought they might be. So be sure to do y0ur due diligence.

What do you think about college education – is it pushed on far too many kids who aren't ready for it, or on others who may not necessarily need to go to college? Tell us your thoughts in the comments.

Do You Suffer From George Costanza Wallet? (AKA Thick Wallet Syndrome)

By Mr. Money 3 Comments

Over the years I've gone through different patterns in my financial life.

I have the times where I'm dutifully following our family's budget, and constantly keeping track of what is coming in, and what is going out. I'm on top of things.

Then there are the times when I just don't stay on top of things as much as normal. I let things get a little bit out of control because sometimes it just feels like we're doing well enough – that we don't have to keep as close an eye on how things are going.

When we start getting into that routine of not looking at things very closely, I tend to let things slide. I start collecting receipts, coupons and checks to be deposited (and more) in my wallet, and it slowly starts getting fatter and fatter. I end up getting what I like to call “Thick Wallet Syndrome”.

I'm not the only one who gets this problem apparently, as it was the subject of an entire episode of “Seinfeld”.

George has a wallet so thick that it forces him to sit on an incline. It even starts to give him back problems. His wallet keeps getting bigger and bigger until near the end of the episode, his wallet is bursting at the seams. It can take no more. He tries to put one last receipt in the wallet, and it explodes in a shower of business cards, receipts, coupons and everything else he holds dear.

View what happens in the video below.

So what's the solution to the problem of thick wallet?

For me, it's just a matter of getting to the point where I can't sit on the wallet anymore. I end up having to take my wallet out every time I sit down. When it gets to that point, I know it's time to take stock of things.

It's time to:

Enter receipts into You Need A Budget.
Shred receipts.
Get rid of random business cards from people I'll never call.
Get rid of duplicate health insurance, auto insurance and other cards.
Deposit checks.
Take out all but the most important family photos.

For me the thick wallet is only a symptom of a larger “I don't care about my finances right now” attitude.

If it only goes on for a week or two, it's no big deal. But if it turns into a month or more – look out. Back problems (and money problems?) can't be far behind.

It's time to start watching the budget again, and tracking what we're spending a bit closer.

I know this post isn't completely serious – but have any of you actually gotten to that point where your wallet is so thick that you sit on an incline? Why does your wallet get so big? Have you considered a man-purse like Jerry Seinfeld (or Euro bag as he calls it?)

10 Things That Broke People Do (That Keep Them Broke)

By Mr. Money 28 Comments

We've all got friends in our lives that are nice people, but they always seem to be broke.

They don't have a dime to their name, and if you ask them why, they don't have a clue.

It never seems that they can figure out why they're short on cash.

Today I want to look at a few reasons why broke people are broke, and why they'll most likely continue that way (unless they make some major changes).

10 Reasons Why You're Broke

Here are a few of the reasons why people find themselves without money.

Their problems are never their fault: Broke people don't like to take responsibility for their problems, they will often shift blame and say it's someone else's fault. They blame their friends, family and the government. They believe the old saying, “the little guy just can’t get ahead“.
What's a budget?: A lot of people who are broke find themselves that way because they have no idea where their money is going. They've never done a budget. Their money quickly disappears every month into an endless black hole of large and small expenses.
They don’t plan for the future. Today is all that matters: Money doesn't stick around for future uses because it is all spent today. Saving and planning for the future are foreign concepts.
Money gets spent on things that aren't needed: We've all got those friends who just can't help themselves – they already have a couch, but they find a design they like better and buy it – even though they can't afford it. They have a phone, but decide to buy the newest greatest Iphone.
Keeping up with the neighbors: Far too often people will buy a house in a neighborhood they can't afford, and then they end up spending even more money on the other lifestyle accessories to keep up with the Joneses. They end up buying a nicer car, a boat, expensive landscaping, etc. One bad spending decision begets another.
You paid what?: Broke people far too often don't know how to find a good deal and even more often don't negotiate to get a better deal. Why pay more than you have to?
Credit is their best friend: They don't practice delayed gratification, and they would never save for something they want. Just put it on the credit card until it's maxed! We'll figure out how to pay it some other time!
They rely on others to get them out of trouble : We’ve probably all know someone who always ends up going to their parents, family or friends to help them pay for one of their debts. They get in debt up to their ears, and then when they can't pay for it, it's back to mommy and daddy's house to beg for money.
Why budget for the future when I can have fun today: They don't like to plan ahead for tomorrow because it seems so far away. Instead, let's eat drink and be merry today!
They are all about appearances: Broke people often are broke because they would rather have others think they are doing well, or are wealthy, than actually do the hard work of actually finding a way to be wealthy. The result? They spend a bunch of money on things they don't need in order to appear like they've got power and influence.

Obviously this list of things that broke people do isn't exhaustive, but it is more of a way to get people thinking about how and why they're making the decisions about their money that they are.

If you can catch nip some of these behaviors in the bud, you'll be much better off for it.

Have you ever engaged in any of these behaviors? Do you have a broke friend or family member that just can't seem to get out of a hole? Tell us about it in the comments!

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