Category Archives: College

I’m Tired of Hearing How Bad Millennials Have It

I’m a millennial myself so I feel like I’m qualified to discuss this subject (and with a financial independence twist of course). I do a horrendous job of not following the news. I always catch myself on the websites of numerous online business news companies seeing what is going on. Many bloggers have written about how horrible following the media is on a day to day basis, and I totally agree, but it doesn’t mean I do a good job of blocking it out. The sad reality is that doom and gloom headlines equal clicks and views.

Lately, and I think this is partially due to it being election season, the hot topic has been Millennials. Every channel you flip to or online news article you read is how bad Millennials have it. They live at home with their parents. They are drowning in debt. They are the first generation in the U.S. worse off than their parents. They can’t afford a home. They can’t find their dream job. They are working at Starbucks. The list goes on and on.

Now are some Millennials having a tough go at it? Of course they are, I’m sure of it. But Millennials as a whole? I don’t think so.

Let’s start with education. I graduated undergrad with about $30k of student loans. Was this more than my parents had? Yes, but that’s because they didn’t go to college! College wasn’t a “given” for our parents. Statistically speaking less than 50% of high school graduates headed off to college in 1975 (due to a variety of reasons such as war), whereas this number is about 65% today. When I was in high school I had a course to college mapped out for my by my teachers and counselor. Take these AP classes. Play a sport. Get involved in an extracurricular activity. I followed their lead and next thing you know, I was off to my school of choice with a partial scholarship.

Investing and Retirement
Our pal Jack Bogle didn’t create the index fund until 1976. If our parents wanted to invest some dough in equities, they had to do it through a broker and pick stocks, or buy expensive mutual funds with load fees and commissions. Now we have extremely cheap (or free) online brokerage accounts. I set up my Vanguard account in minutes and with a click of a button I can invest money whenever I want.

The 401k was created in about 1981 when some random guy noticed a loop-hole in the Internal Revenue Code. Before that it was much harder for workers to shield earnings from income taxes. Now you might be saying “well my parents have a pension!” Pensions are great if you have them but they are also handcuffs tying you to your employer. People notice that our parents spend decades with the same employer, that’s because people are taught to be slaves to their pensions since this will help them through their golden years. When in reality in most cases, you would of been better off socking money away in a 401k and IRA and retiring on your own terms.

Home Buying
30 year mortgage interest rates were above 10% from late 1978 to until almost 1991! Today you can get a 30 year fixed for about 3.75%. Maybe these low interest rates are inflating home values, but could you image taking out a mortgage at 12%?!? Also this community has also blogged about how owning a home is becoming less of the “American Dream.” Us millennials are okay with renting, and would rather spend money on travel and experiences instead. I may be an outlier but if I never own a home, I would be A.O.K. with that.

Unemployment currently sits below 5% which is below historical averages. The internet allows us to search for jobs all over the country and globe at the click of a button. Our parents relied on the classifieds and maybe a trade magazine when job searching (well they never really did this because they are tied to their pensions), and we can see open jobs in our field in Seattle, Boston, or Richmond instantly and submit our resume with a click. For those who are employed, inflation adjusted gas prices are below the historical average, easing the burden of commuting.

Health and Technology
This doesn’t even need an explanation. We have the internet, our parents didn’t, and the medical breakthroughs that have happened in the past 30 years have us living way longer than our parents and grandparents. Certain diseases which were death sentences 40 years ago, are easily curable today. I’m going to have to agree with our friend Warren Buffett who recently said “The babies being born in America today are the luckiest crop in history.” I don’t believe we have it bad at all!

Do you have it worse off than your parents? Is being a millennial the pits?

The Cost of an Education

Last week I posted about how I just crossed the six figure mark with my net worth. Out of that post came some comments about my student loans which got me thinking. Everyone’s financial journey through college is different. Some people leave college debt free, while others are less fortunate and might be paying for their education for at least a decade. Below are a few examples of scenarios of people I’ve come across through my collegiate and working years:

  1. Parents had a college fund set up for them from birth, paid cash for whole education. Left college with zero debt.
  2. Lived at home for first two years while attending community college. Transferred to university after two years and maybe took out a couple small loans.
  3. Went to a private school, funded everything themselves. Left college with ~$100k of student loans.
  4. Grew up in single parent household. Grants, financial aid, and scholarships covered everything. Left college with zero debt.
  5. Killed it in high school. Was in all the clubs. Crushed the standardized tests. Scholarships paid for almost everything.

Personally, I was a mixture of many of the scenarios above. Below is a little peak into my pre-college and college years, mostly from an expense standpoint.

High School – I always tried in high school and got good grades. Once junior year rolled around I started enrolling in Advanced Placement and college cooperative courses. By the end of senior year I had over 20 college credit hours completed, all at a cost of less than a thousand bucks total. I also did well on the SAT’s and secured a half tuition scholarship to my state’s university.

College – Grandma and Grandpa covered my first semester freshman year. Aren’t grandparents great?! Loans covered second semester. After freshman year I calculated that I could actually graduate college in three years, if I stuck exactly to a course plan I mapped out. Since I knew I was responsible for a majority of the cost of my education, I figured out it was a no-brainer. Loans covered years two and three (with some help from my parents), and I graduated after my third year. At this point I had taken out approximately $29,000 in loans.

Master’s – A week after I graduated with my Bachelor’s degree I started my Master’s program. The program ran about $20,000 but my employer was footing the bill for half. Therefore I took out $10,000 in new loans to cover the rest of the balance. I worked while obtaining this degree, and it took me just over a year to finish. It was a tough year but I definitely wanted to get it over fast, and I wasn’t going to suspend my career while getting it.

I always had jobs in high school through college and that covered my books, eating out, trips, and of course beer. All said and done I walked away from college in about four years with a bachelor’s and a master’s degree and about $39,000 in student loans (not including interest that had accrued in the meantime).

Overall I think I made out pretty well. $39,000 in loans for two degrees wasn’t too bad, and I knew people who were far worse off. The monthly payments were definitely manageable for me and I was throwing any extra cash I earned at the loans with the highest interest rates as soon as my income started coming in. I even paid them down while they were deferred when I was obtaining my second degree. As you can tell I was not a fan of them and wanted them to disappear fast. Today my balance is below $8,000 and the interest rate is quite low at 3%, so I don’t have as much hate towards them anymore.

My key financial takeaways from my college years are:

  1. Take advantage of classes in high school in which you can earn college credits on the cheap.
  2. Apply to both public and private universities as the financial aid packages and scholarships offered will differ. I only applied to my one state university since it was the only place I wanted to go. I wish I had applied to some private schools as well since with my grades and test scores, I probably could have gotten a healthy financial package comparable or even better than what I received at the state school.
  3. Apply for as many scholarships as possible. I didn’t really take advantage of this, and I really wish I did.
  4. Major in a degree that will get you a decently well paying career right out of college. I’d definitely say go the STEM route or business (i.e. accounting or finance).
  5. Always have a part-time job to help pay for books, food, and fun activities.
  6. Take advantage of your employer and encourage them to help foot the bill of further education.

Sometimes I wish I just went into a trade such as carpentry or electrical, and began earning a decent paycheck at 18 right after high school. But then I think I wouldn’t have the finance and accounting background I have today to enable me to be diligent in my path down the financial independence lane. Also I don’t think I could put a price on the friends I made and my experiences. College was definitely the way to go for me, even after figuring in all the costs.

How did you finance your education? Any tips for people starting to plan their college careers? Was it worth it?