So that’s it.  One quarter of the year is done, and a new quarter begins.  How’d you do?  Did you just meet expectations set forth in the 4th quarter of 2009?  Or did you beat expectations and prove to your shareholders and yourself that you’re investment worthy?  Executives of public companies go through this thought process all the time, and so should you.

There’s never been a better time than right now to go through all the clutter in the house and donate it all away.  Clutter should drive you nuts, because it’s a sign of excess.  Why do you need 7 pairs of jeans, 50 pairs of shoes, and all those magazines?  You don’t!  I don’t and I’m very disappointed in myself for accumulating so much junk over the years.

It really makes me sick to have so much stuff.  When I lived in a studio apartment, the place was filled with crap.  Now I live in a house, and it’s no different.  Consumerism has infiltrated me thoroughly.  On the bright side, thank goodness for counterbalancing mechanisms. If a person never feels full (sick of clutter), they’ll eat until they explode!  Today, let’s de-clutter and simplify.

MARCH FAVORITE POSTS ON FINANCIAL SAMURAI

* “The Mental To Physical Connection For A Healthier Lifestyle”

* “Insuring The Uninsured Is Worth It”

* “Wealth Is An Illusion Of Happiness”

Heads up Wall Street Journal, CNBC, and Bloomberg, if you want to do an interview, better let us know quick because The Samurai Fund is now up 11.5% vs. only +5.6% for the S&P year-to-date!  LEN, HAR, BIG are leading the way.

HIGHLIGHT POSTS FROM AROUND THE SPHERE

* “Successfully Work From Home” by new Yakezie Challenger Craig Ford guest posts on Ryan Patrick’s site on a topic which many of us would love to do one day!

* “Dealing With Dread“ is a fun video clip by entrepreneur Beth Andrus highlighting how to neutralize dread.  It’s all about proper association.  I hate doing push-ups and sit-ups, but that’s exactly what I do after every post because I link writing with exercise.

* “Saving Money By Staying Healthy” is a hilarious read by Money Reasons which any germaphobe will appreciate!

THE YAKEZIE

There are 60 members now working towards a common goal.  With three months left to our deadline, may I suggest focusing our efforts on getting to know and support 10 less familiar members in the group per month from here on out?  This way, we’ll ensure a tighter weave when we enter the second challenge after July 4th!

Our current challenge of improving the activity on our sites will never really end.  It’s just important that we get ourselves in as good a shape as possible before we take on new initiatives.  It’s like a boxer training for six months before a fight, or an astronaut going through all the necessary modules before launch.  The more prepared we are, the more success we will have in stage two!  I’m so excited about the next challenge, I can’t wait to formulate and share with you all the game plan.  Write on challengers, write on!

Regards,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

Follow on Twitter @FinancialSamura and subscribe to our RSS or E-mail feed.

It’s been just over a month since the Samurai Alexa Ranking Challenge was announced, and I’m pleased to report we’ve made tremendous progress!  With 35+ members strong, we are actively helping each other achieve our respective goals.  I’d like to use this opportunity to recognize several Yakezie members for their achievements and initiatives in helping the team.

* Daniel-San from Sweating The Big Stuff took the initiative to compile the list and keep track.  His efforts have in turn created a home for us members to visit once a week and get pumped.

* @Elle_CM from Couple Money has been amazingly selfless in retweeting my posts and many other posts.  She is exactly the type of member the Yakezie Group seeks.  @FinEngr created a Yakezie Twitter Group to keep track of us and follow.  Pls follow so the group can follow you back.

* Monevator, The Amateur Financier, Evolution Of Wealth created weekly wraps to specifically highlight posts from the Yakezie Group.  Meanwhile, Money Funk wrote a derivative post on how to increase your Alexa ranking.

* Eliminate The Muda and Planting Dollars have busted through their 200,000 goal and should obviously now shoot for top 100,000!

THE RULES HAVE CHANGED AND WE WILL ADAPT

At some point over the past several weeks, all of us got dinged by 2 spots on Wise Bread’s Top 100 PF list because of the addition of two new blogs in the #1 and #2 spots.  Congrats to those two blogs for being able to piggy back off their respective major platforms, the Atlanta Journal and The Star Tribune of Minneapolis and rocket straight to the top.

I liken the scenario to a situation at work where you struggle for a long period of time to get promoted, only to find out your manager hires someone laterally or from outside the firm to fill the spot!  Others have mentioned it’s like some who get into prestigious schools simply due to their connections, while the rest of us just make due with what we have.  Guess what team?  Life isn’t fair, and Wise Bread can do whatever they want.  We are not going to complain.  We will simply try harder!

It’s important to realize that in 5 months, to get on Wise Bread’s first page, reaching 200,000 will no longer be enough.  The 100th ranked blog will probably be ranked around 165,000 by then.  Furthermore, Wise Bread might start adding other piggy back blogs from major publications which will impede our progress further.  Once again, we must do as much as we can to help each other out.  Never surrender!

NEW INITIATIVES

* Guest Posting UP: I ask that all those in the Top 100,000 allow others who are outside the Top 200,000 to guest post if they want to.  There is a mutual benefit to guest posting where the guest writer gets to reach out to the host’s readers, while getting a link back to their own site.  Meanwhile, the host blog receives content.  The guest writer really benefits most, because many of the bigger sites already have a ton of content in the pipeline already.  The host blog will actively promote the guest post on Twitter and elsewhere.

* A Playful Dance: One of the great ways to get to know each other better is to write a post in response to a post from one of your members.  You see Ryan and Planting Dollars and Wojo at Fiscal Fizzle plays this out with the topic on “Is There Really Such Thing As Passive Income”.  That exchange has created a fantastic amount of insight for the readers, and I’m sure Ryan and Wojo’s relationship is better because of it.

* Carnival: Another major initiative is to create an ongoing Samurai Alexa Challenge Carnival each week or two.  We are small enough where we can highlight a post from each challenger, thereby helping promote their content, while promoting yourself since everybody will visit your site and read your content as well.  You don’t have to highlight a post from every site, however, please do your best to highlight as many as possible.  Just check out the comments at Evolution of Wealth’s Rodeo.  We’ve already got three lined up!

* Ranking Host Rotation: Daniel-san has benefited by keeping track of the group’s progress, as he should.  What we are proposing is to allow a new member to host and update the rankings for every month of the challenge.  I think we should discuss this proposal below, and get an idea of whether people like this idea, and would want to host the ranking as well.  With two things in motion (weekly wrap and ranking), we can share the wealth further.  Or, we can keep the ranking at Daniel-San’s site since it’s already there.  The host’s duty is to obviously update the rankings, check back on the original challenge post to see if new members would like to join, and add, while highlighting any big changes.

* A New Go To Ranking: Finally, at the end of the 5 month period, I plan to either bring the ranking back home to Financial Samurai or let the ranking float forever once a month.  The plan is to morph Samurai’s Alexa Ranking Challenge into the go to personal finance ranking page which will purely consist of individually run personal finance blogs that do not piggy back off other major publications.  We will create a entirely apples-to-apples comparison of the best PF sites in the world.  If anybody has any programming skills to create a page where entries will be automatically updated, please let me know.  When the rules change on us, we have the power to make our own rules!

THE CHALLENGE IS FOR EVERYONE

You may think this challenge is just dedicated to a community of bloggers.  In reality, the Samurai Alexa Ranking Challenge is a case study on how to improve all our lives, readers and writers alike!  Our personal real-life goals can range from finding love to early retirement.  What we want to show is that through the selfless promotion of others, continuous teamwork, and an unwavering commitment, we will succeed despite setbacks.  This is The Yakezie Way.

** Update Feb 25th: The Atlanta Journal and Star Tribune blogs which took up the top 2 spaces in WB’s rankings are no longer there.   Maybe this post made a different, maybe not.  Regardless, this is a positive for all of us, and should serve as a reminder that the rules can and will change.  We need to continue being diligent in our efforts.

I have likely left out some solid initiatives by accident.  Please feel free to remind me in the comments below, and paste any links so we can take a look!  Feedback on our new initiatives welcome.

Keigu (Regards),

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

Follow on Twitter @FinancialSamura and subscribe to our RSS or E-mail feed.

Samurai On Waialae Beach At Sunset

As one can guess, higher paying jobs leads to higher costs of living.  In fact, more than half of the 20 cities surveyed by the US Census Bureau are based in Caleeforneea, as Governor Arnold would say.

How is it that California is so dominant in the expensive category, when the mass of settlers first arrived on Plymouth Rock 300 years ago?  3,300 miles is a long way to travel, especially on horse and foot!  The main reason for the unfettered move out west is simply warmth and sunshine!

Every time I vacation in Hawaii, I always ask myself, why the heck ain’t I here for good.  Let’s face it, more sunshine equals happier people.  Sunshine is the classic zeitgeber to help us wake up and get us motoring in the morning.  No sunshine leads to no photosynthesis, which means no plant life, and therefore no ecosystem.

After 10 years of living on the east coast, I can still feel the grey skies weigh down my soul every winter.  Don’t get me wrong.  I love the winter snow during the holidays, but I just love being in a cheerful mood more.  Here are America’s most expensive places to live based off median monthly housing costs.

TOP CITIES WHERE AMERICANS PAY THE MOST TO LIVE

1. San Jose, Calif. Median Monthly Housing Costs: $1,828

2. Bridgeport, Conn. Median Monthly Housing Costs: $1,793

3. Oxnard, Calif. Median Monthly Housing Costs: $1,780

4. Washington, D.C. Area Median Monthly Housing Costs: $1,706

5. San Francisco, Calif. Median Monthly Housing Costs: $1,660 (Here!)

8. Honolulu, Hawaii. Median Monthly Housing Costs: $1,532 (There!)

15. Trenton, New Jersey.  Median Monthly Housing Costs: $1,401 (So not there!)

19. Seattle, Washington. Median Monthly Housing Costs: $1,368 (On the West Coast, but not as expensive likely due to rain)

Source: Forbes

CONCLUSION

So there you have it.  Would you be willing to pay $131/month more to live in Honolulu, Hawaii than in Trenton, New Jersey? You bet your buns of steel I would!  The next time you are feeling a little glum, look outside and see if the weather has anything to do with it. And if so, come back to this post and plan your move out west.

300 years ago, it would have taken you months to come out west.  Now, all it takes is a two week bus ride at most.  Don’t be afraid to pack up your bags and move, even with a family.  Leo from Zenhabits, with his 6 children are moving to San Francisco from Gaum, and Ryan from Planting Dollars left Wisconsin for Hawaii, why can’t you?  After experiencing 10 years on each coast, there is no doubt in my mind that living in a warmer, sunnier place is the way to go.  See you on the beach this winter!

Readers, if you could live anywhere, where would you live?

Why do people on the East Coast choose to submit themselves to harsh climates?

Do you think people fear that living in a more pleasant environment might make people friendlier and less motivated?

** If you enjoyed this article, please donate $10 to the Red Cross to be charged to your cell phone bill by texting “HAITI” to “90999″.

Keigu,

Sam Samurai – “Slicing Through Money’s Mysteries”

Follow on Twitter @FinancialSamurai and subscribe to our RSS Feed.

“It’s not whether you have your MBA, it’s where it came from,” writes John Micklethwait, Editor-In-Chief of The Economist. I’m sure on at least two levels, he’s upsetting people. On one level, those without MBA’s are going to find it presumptuous that getting an MBA is a foregone conclusion.  On another level, there are thousands of MBA grads who didn’t attend the top tier schools who will take offense as well.

John is smart to be so opinionated because after all, the people who will be buying his magazine are those who have always wondered whether getting an MBA is a good idea.  He forces the assumption that if you picked up his magazine, you must get an MBA, and not just any MBA, but one of the top schools from his polls.

I don’t entirely agree with John, but let’s face reality, getting an MBA is gradually becoming the new standard for newcomers to the world of finance because some go-getter decided it was the right thing to do and succeeded to get others to follow.  The MBA is also too expensive to not try and go to the best school possible (although it’s not the end of the world).  The inertia is too strong to reverse now!

Here are some of the takeaways from the magazine:

1) The average MBA graduate from all schools in the world earn about $90,000.  European MBA graduates earn $107,000, compared to $70,000 in Asia.

2) The Top 10 US MBA schools have an average salary + bonus figure of $120,000 – $125,000 post graduation.

3) All six of the American schools in the top ten have average GMAT scores of over 710 (out of 800). In contrast, students at London average 693, at IESE 685 and at IMD just 675.

4) The rankings are based on what the students want: increased pay, to open new career opportunities, develop a larger network, and personal development.

5) “Cheap” programs regularly cost well over $100,000 after accounting for lost wages, tuition, books and living expenses.  More emphasis should be put on part-time programs and their benefits given the costs.

SAMURAI $1,000 READER GIVEAWAY

I think it’s pretty clear by now there are enormous monetary benefits of getting your MBA from one of the top schools.  We highlighted last week those with graduate degrees have net worth levels 160% higher than those with only bachelor degrees. If you want to make more money, know that an MBA helps your cause tremendously.

The giveaway we are proposing is $1,000 worth of consulting advice to give you the highest chance of getting into your dream school!  Getting into a top tier business school could mean the difference of making millions over your post grad career.  Go to any MBA consulting service, and they often charge much more.  In fact, I was surfing the web and found that a site called “Personal MBA” charges $1,500 to coach someone 2 hours a week for a month for someone to get a “Personal MBA!” (not a real credential, but a great service and good idea!).

What We (Editor and I) Are Going to Do For You:

* We are going to be brutally honest and tell you whether your application has a chance or not.  Your parents and friends are nice, but can’t be trusted to tell you the whole truth!

* Good or not, we will optimize your resume, essays, and overall application.  You need as many objective eyeballs reviewing your application as possible!

* We will conduct two mock interviews and provide communication tips you need to work on, because frankly, communication is one of the key deciding factors.

* We will will be as involved as you want us to be and are committed to spending up to 8 hours just on your application.

We Think We Are Qualified Because:

1) We both have MBA’s from a couple of the top 10 school listed in The Economist’s rankings above.  We’ve also been accepted to several other business schools and have a proven record for success.

2) We have interviewed over 150 MBA candidates in our careers post grad and more than 400 candidates if you include undergraduate candidates.  In fact, I (FS) was just at a Haas Berkeley recruiting fair last month for 3 hours.  We are the end game (a post MBA employer), and have a solid grasp of what an ideal candidate looks like.

3) We know how the admissions process works and what they look for.  How?  We have developed friendships with senior people in the admissions department.

We might be small fish in the personal finance blogosphere, but believe me when I tell you one of us, was a very senior executive at a major Fortune 500 firm, and I am no dog chow either.  We genuinely just want to help and are not driven by money as evidenced by the lack of ads on the site.

Maybe you’re not interested in getting your MBA, but you have a friend who does. Please feel free to let them know.

To Participate Simply Do One or More of The Following:

* Provide a comment as to why exactly you want to get your MBA and why you disagree or agree with The Economist’s ranking.

* Twitter this post and let me know you’ve done so.  Our address is @FinancialSamura

* Tell someone at a major media publication about our giveaway and let us know who.  Frankly, if this post gets picked up by The New York Times, you win!

* Invite friends to Financial Samurai by highlighting this post, or any post in our archives on your Facebook “What’s On Your Mind?” box.  Have them comment “(Your name) sent me” and any other thoughts as evidence.

Winners Will Be Announced on Sun,  Nov 8!

There will be one main winner, and one minor winner based on who are the best publicists.  Maybe nobody will be interested, but maybe the internet will work its magic and find people who believe in the degree, and care about their careers, especially since round 1 applications are due in November.  It will truly be interesting to see how this promotion evolves or not, and will be the topic of a future post.

People are spending thousands of dollars on GMAT courses as well as personal consultants. High GMAT scores alone aren’t good enough.  In fact, I’ve seen plenty of sub 600 GMAT scores and poor undergrad GPA candidates get into top schools. The difference is your overall application, communication skills, and whether you have a connection helping you succeed.  This is our attempt at evening the odds!

If you build a relationship with us, by the time you graduate, you’ll have some of your biggest champions introducing you to various people in the private equity, investment banking, management consulting and start up arena.  How much is your future worth?

Related Posts:

“Get A 3.9 GPA and 1,300 On Your SAT’s And You’re Set For Life!” (a first chance at school)

“Go To Grad School, Get Rich Or Die Trying” (a second chance at school in case you messed up the first time)

“To MBA or Not To MBA” (what went through my head when I was deciding whether to go)

“The First $1,000 MBA Giveaway Winner Is…..”

Keigu,

Financial Samurai – “Slicing Through Money’s Mysteries”

Follow on Twitter @FinancialSamurai and subscribe to our RSS feed.

I’ve decided to dedicate much of the rest of this month focusing on graduate schools, specifically the much loved and vilified graduate degree, the MBA.  The deadline for round 1 applications is fast approaching, and I’ve come up with a $1,000 giveaway that any aspiring MBA applicant, online PhD applicant, or grad school applicant for that matter may be interested in receiving.  Hence, feel free to spread the word and stay tuned!  For now, let’s start off with a layup as to why getting your graduate degree is a good idea, if you want to make more money.

Many personal finance publishers use Net Worth IQ as a way to track their financial progress.  NW IQ managed to gather a bunch of good data to digest and analyze.  A lot of it is just common sense such as the older you are, the greater your net worth tends to be.

This is the chart that stood out most:

Someone with a graduate degree averages a net worth 160% greater than someone with a bachelors degree and 700% greater than someone with  a high school diploma.  The data is based on info provided by 2,900 users which is a big enough sample set.

5 Theories Why Those With Graduate Degrees Have Higher Net Worths

1) People are older when they enter or re-enter the work force

2) Graduate degrees command higher salaries

3) People  tend to work longer because they invested a greater amount of time and money in their education.  Doctors, for example, study until they are 28-30, and can work well into their 70′s.

4) People may have more money already, since graduate school is expensive.

5) People are motivated to succeed because they are sacrificing more, and need to prove to themselves they made the right decision.

There’s been a lot of debate over whether a graduate degree is worth it, and this data tilts the data towards yes.  You guys know we don’t like to rely on net worth, as it gives a false sense of security.  But, since net worth by definition is net of all liabilities, we can presume the cost of higher education, and student debt specifically, is included.

OTHER OBVIOUS CHART CONCLUSIONS:

The Older You Are, The Wealthier You Tend To Be (Except If You’re Between 60-64!)

The Higher Your Income, The Higher Your Net Worth

The last two charts aren’t a surprise at all.  The net worth differential among various levels of education is.  Now obviously there are plenty of wealthy people who don’t have graduate or even bachelor degrees (Bill Gates). However, if you’re someone who’s trying to decide between attending or not, perhaps this data may help you in your decision making.

CONCLUSION

I’ll be the first to tell you that getting a graduate degree was a royal pain in my a$$, especially going part-time.  Can you imagine working 60-70 hours a week, and then going to class from 9am-6pm every Saturday for 3 years?!  What’s worse was the last minute studying on Friday night when the only thing I wanted to do was pass out on the couch watching my favorite movies.  The good thing about a difficult experience is that it’s over, and what’s left of you is a stronger individual who can better endure future hardship.  Every weekend now feels like a vacation and I’m glad I got my degree.

To quantify the MBA is somewhat difficult, but I’d like to think it’s helped me avoid the chopping block during these past two downturns, and get me promoted once during school, and once right after I graduated.  The degree gives me the credibility to manage a business out west, and I’d be happy to do it all over again.

Readers, feel free to share your thoughts on why getting a graduate degree is a waste of time, or priceless for long term wealth creation.  Do you disagree with the statistics above?  If you feel comfortable, feel free to highlight whether you went to graduate school, mention how long you’ve been working, and how much you are making.

Related Posts:

“Survey Says: Get 1,300+ On Your SAT’s and a 3.9 GPA And You’re Set For Life!”

“To MBA or Not To MBA”

“Your Net Worth Is An Illusion”

“Fortunes, Fortunes, Everywhere!” (A post where we show how plenty of professions pay 6 figures)

Keigu,

Financial Samurai – “Slicing Through Money’s Mysteries”

Follow Me On Twitter @FinancialSamurai and subscribe to our RSS feed!

A very interesting article in the New York Times highlighted PayScale’s survey of 1.2million college graduates to find out what they made right out of school, and 10 years after graduation. If you look at the picture, it’s interesting to note that the majority of schools are: 1) Private Schools, and 2) Highly Ranked in US News & World Report and other popular college rankings.

The average SAT and GPA scores of these 20 schools are roughly 1,300 and 3.7, respectively. Hence, one could argue that the key to making a six figure income 10 years out of school is simply high test scores and good grades! As such, it behooves all incoming 9th graders to recognize their grades accumulate from 9th to 12th grade, and not to mess their chances up of getting into Dartmouth, UPenn, and Yale.

IN THE LONG RUN

I really used to think education was not very useful since we forget much of what we learn. But, as I grow older, it becomes apparent that many of the most successful people we know have been very well educated. Barack Obama went to Columbia for his BA, and Harvard Law School. George Bush Senior went to Yale, and even Bush Junior went to Harvard. Say what you will, but anybody who becomes the President of the Free World is successful in my eyes. In the long run, the cream rises to the top, be it whip cream or sour cream.

For the sake of argument, let’s say elite schooling is the only way to a healthy six figure income. The trick is to manipulate little Johnny and Emily to recognize during middle school or earlier they can goof up all they want, but once the 9th grade hits, they’ve got to buckle down. I remember when I was in 7th grade, my buddy’s older brother told me exactly this. He said, “RB, you squirt, you can be a goofball all you want and annoy me on our bus ride to school, but you better not mess things up in high school or else you’re going to be a loser.” His words are still quite clear in my mind 20+ years later. He scared the hell out of me, and I stopped trying to be cool and sit in the back of the bus with him. I also stopped shooting spitballs through straws which was a nice milestone.

Any parents out there, I would just tell it to your kids straight. There’s only one chance at life so they might as well work as hard as possible to get the best perceived education one can afford. The reason why private education costs so much is simply because parents are willing to pay for it. College tuition is essentially inelastic. The preceived value of a Harvard degree is tremendous. Whether you learn something more or not is not the debate. All the text books are generally the same. It’s all about perception, and the admission into a club which will open doors for you or your children. The perpetual motion of education has already been set, you just have to play the game.

With tuition at these schools hitting $30,000+/year, there is often an unfair advantage for already well to do families. The good thing is that many of these schools have hefty endowments with need base scholarships, and more often than not, rewards will be given to bring this cost down. Hence, don’t be deterred from applying to schools out of your price range. You never know what type of aid you will receive and if you don’t apply, you’ll never know whether you’ll get in. When I was in HS, I felt so guilty for my parents that I just applied to the local state schools. They were government employees, and didn’t make a lot of money. I sometimes wonder whether I would have been able to get in.

The article also goes on to highlight that the degrees with the highest salaries include: Aerospace Engineering, Chemical Engineering, Computer Engineering, Electrical Engineering, Economics, and Physics. Coincidence these majors don’t sound easy, probably not. It really is too bad that Social Work, Music, and Education are at the bottom of the list for salaries. If I were President, I’d pay these professions the most!

NOTHING IS A GUARANTEE

There will be countless examples of people who didn’t go to any of these schools in the survey, who’ve done well for themselves.  There are probably some big exec who graduated from an online university.  Heck, I went to public school for High School and College and turned out ok… I think. But, when people from these schools continue to dominate the senior management positions at many of America’s leading firms, we may be at a disadvantage if we want to reach the very upper levels of the firm. Look around at your managers. It’s not a coincidence that if Boss X went to Cornell, Boss Y right under Boss X also went to Cornell. You can take this analogy further to people in terms of sex and race. People like to be around people who are most similar to them. Just look around, and you’ll notice the “coincidences.” It’s just human nature, and it is what it is.

Many of us who are already working and didn’t got to a top school may ask, “I can’t rewind my life and go back to 9th grade, RB, so what now?” The good thing is that once you enter the work force, your success is largely up to your own performance (see “Rich People Try Harder: True or False?”) If you feel that performance alone isn’t good enough, look into part-time graduate programs (see “To MBA or Not To MBA“) or full time graduate programs. No question that many of us have had different economic upbringings and different maturity profiles while growing up. The way I view grad school is that it’s a second chance to try again if you’re unsatisfied with the first go around. You’ve got your entire life to work, contrary to the title of this blog!

Another thing to note is that going to a local grad school may often yield better dividends than a higher ranked school e.g. going to UCLA if you work in LA may carry more weight than going to Columbia, same thing goes for going to University of Wisconsin if you live in Madison and so forth.

Nobody really knows how successful one will be in their careers. All we can do is work hard, work towards harmonious relationships, and arm ourselves with as many weapons possible to combat in the work jungle.

Readers, what are your thoughts on the relationship between expensive elite private schools and your ultimate success in your career? I especially would like to hear stories of triumph proving all these survey’s wrong.

Link to article of survey.

Keigu,

Financial Samurai – “Slicing Through Money’s Mysteries”

Follow Me On Twitter @FinancialSamurai

I remember the moment I got my college diploma, I swore I’d never go to school again. At the end of the day, we forget the majority of things we learn and who wants to do homework anyway? All this changed when the Dotcom bubble exploded and I was left wondering whether I’d be the first person let go given I had recently joined my current job in 2001. Last in First Out, or FIFO as they say.

We had gone through 5 rounds of layoffs in 1.5 years, and I heard the 6th one was just right around the corner. As long as the firm would have me, I’d keep on working, but just in case, I needed a backup plan. I decided that surfing back home in Hawaii was not the proper backup plan so I came to a compromise and applied to the nearest part-time MBA program, which so happens to be ranked Top 10 in US News & World Report and the WSJ. The program promised the rigors of the full-time program, with the same professors and international opportunities all within 3 years. Upon looking further into my company’s policies, they offered to pay for my MBA so long as I was in good standings. The MBA program was a hedge, just in case I was one of the casualties, as one could potentially transfer to the full time program once accepted.

The 6th round came and went, and I was still left standing. Unfortunately, the company tuition reimbursement policy was canceled just two weeks before my acceptance. I decided to join anyway b/c at the end of the day, the economy was still shaky, and I didn’t want my application time spent go to waste. What the heck I thought. Be grateful for the opportunity.

COST ANALYSIS
1) Money. The MBA cost on average $28,000/yr for three years ($84,000!).  It’s slightly cheaper to get an MBA online, however the quality is never guaranteed.  I borrowed $18,500/yr via FAFSA loans at 2.5% and funded the difference. Painful? Absolutely, since I still owe money which is a subject I’ll talk about later. Worth it? Absolutely, even if the firm didn’t reinstate the tuition reimbursement policy in my second year, and ended up paying for 75% of the overall tuition. I readily admit that just like how you tend to tell your friends that $100 meal with your significant other was darn good (even if the $2 double cheeseburger at In N Out Burger was just as good), one has the proclivity of overstating their MBA experiences given the tremendous amount of time and tuition spent. However, getting the MBA was truly a priceless experience to me.

2) Insecurity. When I asked my fellow colleagues or friends to apply during the last downturn, the majority made the excuse that they were just too busy. 20+ hours extra a week, on top of a 50-65 hour work schedule is no easy task. But, what motivated me was FEAR OF FAILURE! I was petrified that I was going to get laid off before attending and during at least the first 2 years of school. I didn’t want to face my friends and family and tell them I was unemployed in case that day came. If I did get laid off, I’d just simply tell them I’d decided to go to business school on my own volition. This was my pride talking.

3) Rejection. The other main concern my friends had were the fear of rejection. What if we applied, and got our managers to write us glowing recommendations and the school rejected us? Would our managers then think we were second class citizens? This is a valid concern, which needs to be weighed carefully if you don’t have a great relationship with your manager. However, it takes a good relationship with your manager for her to write you a glowing recommendation anyway. And if she looks down upon you for trying and planning ahead, well…. I would say you’re manager may not be around much longer, and it’s best to get a recommendation from someone else senior. Keep your application process a secret until you get the notification.

4) Health. I went from roughly 160 pounds to 170 pounds during my three years. It was sad since one of my great passions is playing sports. Furthermore, I endured a lot of stress and moments with heaven where all I wanted to do was curse at the world. These curses were all confined to the 2nd half of the year, where the novelty of school wore off, and the arse kicking really began. Thankfully, the 2nd and 3rd years were only from 9am to 4pm, and consisted of self-chosen electives. It’s been four years since I graduated, and I’m back down to my pre-MBA weight thank goodness.

5) College Football and other fun things. Class was always on Saturday, so I could never watch any college football, not even my own Hokies. I couldn’t take my girl out for a morning walk in the park, nor did I have the energy to take her out for dinner at times. These are opportunity costs, but thankfully the campus had free wifi where I could occasionaly slack off and check the scores, watch some video, and IM friends!

BENEFIT ANALYSIS

1) Confidence. You learn a wealth of information you otherwise may not have any clue regarding. I had no idea how to model financial statements, create business plans, or figure out effective marketing campaigns. Now I have some idea. The information you learn breeds confidence in your abilities to communicate and tackle tasks. Better confidence, leads to better production and perhaps a better position within the firm and pay. I was promoted to VP after my first year in business school at 27, but i’m not entirely sure whether me going to business school had much to do with it. Perhaps after finishing business school, the degree helped validate the firm’s decision to promote me, and to promote me again one year after business school.

2) Friendships. You meet a great many friends who you would otherwise have never known. Spending 6 hours every Saturday for 3 years is bound to let you meet some people. There’s no better way to become great friends through hardship. And, I must admit by the 2nd half of the first year, many of us were feeling the pains of juggling both work and school. We just had a 3 year reunion at a friends BBQ down in Palo Alto. It was so great to see them again, many with new born children. Congrats guys!

3) Experiences. Your experiences shape who you are, and generally, the more you experience, the more well rounded you become. Going to Brazil, a country I would never otherwise have visited, made me love Brazilian culture and people. I never would have known about the tech industry the way I do now, if it wasn’t for school either. Over 50% of my classmates work in tech in Silicon Valley.

4) Credibility. You may gain credibility and a little admiration from your manager and colleagues if you are able to maintain your work quality, while going to school. Never complain about your workload. Your manager realizes the sacrifices you are making, and may be more positively predisposed come raise or promotion time. The key thing is to never led your school responsibilities affect your work responsibilities.

5) Everything else will seem easy. After 3 years of work and school, every weekend seems like a real vacation! No last minute homework to do on a Friday night, and no need to wake up at 7:30am Saturday to make it to class by 9am anymore! Yihaw! Not only do you feel every weekend is like a vacation, you can tackle much more in your career! Ever notice baseball players swing two bats when they are on deck? Or what about when football players chain a tire around their torso, and drag that tire during sprints? They do it b/c when i comes time to bat or bust the gap, it becomes that much easier.

WAS GETTING AN MBA THE RIGHT THING TO DO?

Absolutely! I attended school for the pure sake of learning, and not just with the goal of getting “A’s” because I already had a job and needn’t impress anyone. The professors were wonderful, and actually served as real-time consultants for my job at hand. I was forced to manage my time properly, and gained the discipline of juggling both a career and 20+ hours of class and study time a week. The study abroad trip to Sao Paulo and Rio were priceless experiences as were the off-sites and the friendships I’ve made. Make no mistake, there were trying times where all I wanted to do was quit as the workload mounted, but I kept reminding myself that school was only 9 months a year on Saturdays from 9am-6pm, and summer or winter “vacation” was just around the corner!

I would continue to be positively predisposed if I had to pay the entire $84,000 in tuition. Amortizing $84,000 over a 10-30 year time frame doesn’t seem too much at all. One can also potentially write off the entire tuition amount if you are in financial field, another interesting topic.

If you were to ask me whether going full-time would be as worth it, I don’t know for sure because I don’t know where I’d have ended up. The pros of going full time over part-time I believe are: 1) a rest from work to recharge your batteries, 2) the ability to truly delve into other business fields and switch careers, and 3) build even tighter relationships with classmates. The cons are: 1) You lose two years of career advancement and salary 2) you’re two years older, but hopefully at an elevated title and salary, 3) you may not be able to get in the field of your choice b/c you still have to interview well and snag that job post graduation.

The more I think about it, the more I believe that education is one of the bigger keys to success. From a very basic level, if the American home-buying community was truly educated on the dangers of option ARMS, and knew the discipline necessary to utilize that cashflow difference wisely, maybe there wouldn’t be such a world of hurt in mortgages. Education is what sets us free to help make rationale financial decisions.

The MBA is only a life stamp credential that shows you either decided to bust your butt for 3 years of your life to go part-time, or take two years off from work to go a different direction. An MBA graduate shouldn’t feel entitled to think the world owes them something just because they sunk $200,000 in lost wages and tuition over two years. The MBA is simply a tool for people to use to perhaps get their foot in the door, and utilize certain skills to make them perform better at their jobs. If you’re joining an industry where nobody has an MBA, then you may have wasted your time. However, if there is an employer who has a majority of MBAs and CFA employees, well then, your degree is probably necessary.

Remember, we forget most of what we learn anyway. So don’t ever let someone with an MBA big-whig you into thinking they’re better than you. And if you want to get an MBA, make sure you are financially able to afford to do so, and realistically assess whether the school that has accepted you is ranked highly enough to get you into your industry or firm of choice. The world’s richest people don’t have MBAs (Gates & Buffet), so the degree is definitely not a precursor to success. However, if there’s a choice between having the degree, and not having the degree the employer may very well choose the candidate with the degree for the same compensation if all else is equal. Since the trend has been towards more MBAs in the work force, inevitably, more senior personnel will have their MBAs over time. You just have to ask yourself, whether it is worth it to you or not.

OTHER LEGIT REASONS TO GET YOUR MBA

* You got fired and can’t find reasonable work.
* You hate your job, and want to try your hand in a new industry.
* You plan to work for at least 10 years after you get your MBA & leverage it. Some get their MBA, get married, & don’t work afterwards.
* You really want to learn more about academic business and your employer requires it for you to get promoted.

Readers with full/part-time MBAs and those without, what are your thoughts about the pros and cons of the degree?

Keigu,

Financial Samurai – “Slicing Through Money’s Mysteries”

US NEWS & WORLD REPORT 2008 AVERAGE STARTING SALARY (Average age of graduate: 28.5)

1 Harvard $130,000
2 Stanford $130,000
3 U. of Pennsylvania (Wharton) $145,000
4 M.I.T. $113,500
5 Northwestern (Kellogg) $133,000
6 Chicago $136,000
7 Dartmouth (Tuck) $109,000
8 UC Berkeley (Haas) $118,000
9 Columbia $144,000
10 NYU (Stern) $128,000
11 Michigan (Ross) $104,000
12 Duke (Fuqua) $114,000
13 Virginia (Darden) $121,000
14 Cornell (Johnson) $117,000
15 Yale $115,000