How To Value A College Education To Help An Abysmal Net Worth

Educational Attainment By Wealth Status ChartThere will inevitably be someone in a net worth related article comment how he or she isn’t doing so great due to all of his or her student loans. Because so much of wealth creation is about having the right positive mindset, I fear folks burdened by heavy student loans may be dragged down by a defeatist mentality.

I’d like to change this mindset by placing a specific value on our higher education. The older I get, the more I realize education is the most valuable asset of all. Education is what will break the poverty cycle. Education will provide the means for people to become better communicators, better employees, better entrepreneurs, and better citizens. Yet curiously, we pay our high school educators some of the lowest wages and charge exorbitant private college tuition. Sounds like a good business to own!

Nobody spends money on things that aren’t worth its value unless they are being extorted. The item might lose value over time, but at the time of purchase the value is worth exactly its price. So when someone comes to me and says they have a negative net worth of $30,000 due to $35,000 in student debt, I’m going to counteract their belief by asking what they spent on their college tuition to come up with its value.

Should I Go To Public Or Private University? Depends On Your Fear And Guilt Tolerance

The College of William & Mary Wren Building

Wren Building at The College of William & Mary (Public)

“What if I graduate from private school and have to live at home with my parents because I can’t find a job?”

“What if I graduate from private school and end up back at McDonald’s?”

“What if I graduate from private school and end up getting the same job with the same pay as my public school friends?”

“What if I bleed my parents dry to the point they have to work many more years to afford retirement?”

“What if I drop out of private school halfway through, thereby wasting all that time and money?”

I asked myself these questions over and over again when deciding between public university or private university. My parents weren’t rich nor was I smart enough to get large amounts of scholarship money from private schools, so I felt extra pressure to make the right choice.

My thesis is that the more fearful you are of failure and the more guilt you feel about spending money, the more you should consider going to public school. If you are unaware that 870 million people in the world suffer from malnourishment every day, then what do you really care about wasting food on your plate or gorging yourself to oblivion? If you know your wealthy parents will hook you up with a job at their company after graduation, does it really matter you spend $44,000 in tuition going to Boston University when U. Mass-Amherst costs $13,400 in tuition and provides just as good an education? Of course not.

In the end I decided there was no way in hell I was going to attend a private school that cost $25,000 a year in tuition back in the 1990’s if it wasn’t in the top 10. All subjects are taught off the same text books anyway. Some of the intro courses are even taught by teacher assistants. Why pay a premium?

I was even considering going to community college for two years and then transferring over to a four year institution to save my parents more money. But thankfully William & Mary accepted me despite my average SAT score. Virginia has some other great public schools including UVA, Virginia Tech, James Madison, and Mary Washington so it didn’t seem right to not take advantage of the public school system.

When I wrote “Average Inheritance By Country,” I was merely guessing at the $3,000 a year tuition my college charged back in 1995. After doing some digging online, it turns out my guesstimate was pretty spot on at $2,890 a year. The reason why I remember the cost 18 years later is because I was extremely sensitive to my family’s finances.

There’s No Need To Worry About Other People’s Finances

Although I’ve got a lot of opinionated posts, it doesn’t really matter if you disagree with my stance so long as what you do with your money doesn’t adversely affect others. If your way works for you that’s all that matters. If it stops working for you then you might just find yourself on a site like mine searching for answers.

I’ve learned long ago that you can’t force anybody to do anything. They’ve got to experience some sort of hardship on their own before they are willing to change. Maybe it takes a heart attack to stop eating so poorly. Or maybe it takes a massive market correction to not be 100% allocated in stocks. Whatever the financial situation may be, only experience can really have an affect on someone’s outlook.

The people who are the most argumentative are also the ones who are the most unsure about their finances. They are unwilling to expand their myopic views about how they see the world. For some reason they are also almost always in their 20s and think they know it all. If you’re so inflexible in your 20s there’s a high likelihood you’ll hit a tremendous roadblock later on. When I was in my 20s all I wanted to do was learn different strategies from those who’ve been there. What changed with Gen Y?

I sincerely hope readers find different ways of looking at things on Financial Samurai. To be unable to see varying points of view is an absolute mental failure.


Should I Get An MBA To Find A Wealthy Husband Or Wife?

Average MBA Salaries From Top SchoolsThe following post addresses a long-time reader’s question of whether she should go to business school to find herself a wealthy husband. Just recently the search term “go to MBA to find wealthy husband” also appeared on my Google Analytics dashboard as well. Women seem to hate me for writing articles on relationships, yet they still continue to inquire anyway. These posts take time to write and opens me up to all sorts of abuse, so the next time you’re in San Francisco, steak dinner on you! Hope you enjoy!

Why bother working hard all your life for a chance at financial freedom if you don’t have to? Instead of directing all your energy to making more, saving more, and investing wisely, it might be a better use of your time to identify where the wealthy and the potentially wealthy hang out.

Let’s say you are sick of your 30 year old Super Motivated Boyfriend (SMB) because he’s more focused on his career than you. He cocked things up in his 20s by partying too much and is now playing catch up if he ever wants to “be somebody” in today’s society. Meanwhile, here you are, a lovely 27 year old woman who just wasted the past two years of your life on this commitment-phobe. What to do?

Go to the most prestigious business school possible of course! For example, my fellow MBA classmates from Berkeley all earn six figure salaries with seven figure net worths seven years out and Berkeley isn’t even in the top 5. Their ages range from 35-40 and all of them are also married. (See: How To Make Six Figures At Almost Any Age)


Student Loans For College: An Inevitability For All But A Lucky Few

Wren Building College Of William & MaryAt 55 years old, Dr. Lin has been practicing dentistry for close to 30 years.   He grew up in Oakland and attended UC Berkeley for undergrad thanks to his stellar academic record.  When he graduated, Dr. Lin’s parents gave him three choices of what to do with his life: 1) Dentist, 2) Doctor, or 3) Lawyer.  Not very pleased with his limited choices, Dr. Lin choice the “easiest” of the three and became a Dentist by going to UCSF.

I first met Dr. Lin at an SF Giant’s baseball game our respective private bankers invited us to.  Despite the 20 year age gap, we connected immediately through a common interest in the stock markets.  Dr. Lin kept on telling me to buy dividend stocks such as BP and Coco Cola because they were “risk-free” investments with a guaranteed dividend return.  It’s how his mother got rich, and it’s how he is getting rich now.  Given any investment enough time, and chances are, things will turn out alright.

When I asked Dr. Lin about why he invested so much of his net worth in dividend stocks, he responded, “I’ve got two college age sons, and they are expensive!


Life After The Private Sector: Should I Get A Ph.D.?

UC BerkeleyPart of my goal during sabbatical is to explore other opportunities.  I’ve been in the private sector for 13 years and I’m looking to do something else.  I’ve been fortunate to save a good chunk of change during this period of intense capitalism.  Furthermore, with the creation of an online business to keep food on the table, there’s no need to do anything just for money anymore.

A key reason why I loved getting my MBA part-time for 3 years was because I didn’t have to worry about getting good grades.  I already had the “dream job” many MBA grads aspired to land.  Going to graduate school was purely for the sake of learning and meeting interesting people in various fields of work.

Once you make enough money to feel comfortable, making more money no longer becomes interesting.  What I’m more interested in is further self-actualization, service, and giving back to the community.


The Privilege Of Giving Back Through Yakezie

Number 2 Pencil Over Bowl Of Strawberry GuavasIf there’s one thing the Yakezie Network stands for, it’s hopefully the culture of giving back to the community.  To be able to give back is a privilege that shouldn’t be taken lightly.  At some point in our lives we cross a threshold where we have a little more than we need.  Reaching that threshold is a perfect time to start helping others.

The people who inspire the most are those who give, yet don’t have much themselves.  It’s the beggar on the street who gives his blanket to a partner on a penetratingly cold night.  It’s the five year old girl who gives away her only gift to a boy she does not know at an event for orphans.

If we don’t have money, we can always donate our time.  If we can donate both, even better!  I think it’s important to level the playing field so that everybody has a chance to succeed.  If someone is born into an environment that is not conducive towards education, it becomes very difficult to break free.  For those of us who have been given opportunities, we should provide similar opportunities for others.

The Yakezie Network launched its 4th Yakezie Writing Contest that provides at least $1,000 total to three finalists to help further their educational expenses.  100% of all proceeds goes directly to the winning applicants.  Please click the link to read more about the contest as well as the details about how to submit before the target deadline of Saturday, June 2nd.  Deadline is subject to change depending on the number of entrants.

Below is a sample of one of the previous YWC winners.  The young woman talks about her memories of her father.  This is one of my favorites.