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Should I Get A Ph.D.? Not Sure If It’s Worth The Time, Money, And Effort

Published: 12/15/2020 by Financial Samurai 158 Comments

Right before negotiating my severance in 2012, I wondered whether I should get a Ph.D. After 13 years in the private sector, I thought it would be nice to switch things up. Besides, if I got my Ph.D., I could demand people call me doctor, just like how our incoming First Lady demands to be called Dr. Jill Biden!

It is absolutely fine to request people address you as doctor if you have a Ph.D. or Ed.D.. Whether people comply with your request is another matter. Only around four percent of Americans have obtained a Ph.D. Therefore, people who have gone through the rigorous process of getting a Ph.D. deserve respect.

I’d like to think that if I got a Ph.D., I would play it cool and tell people, “Just call me Sam.” After all, I’m not only a believer in stealth wealth, but stealth education as well.

For a better life, it’s better to pretend you are dumber than you really are. Otherwise, people are going to expect a lot from you. They may ask you a lot of questions and constantly challenge you as well.

Time is our most precious asset. The dumber you appear, the more time you will have to do as you wish. Trust me on this. I have all the time in the world and it still doesn’t feel like enough!

Here was my thought process about getting a Ph.D. way back when. I’ll go through the pros and cons of getting a Ph.D. From there, you can make your own decision on whether it’s worth getting this degree or not.



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The Case Against Meritocracy In School Admissions: Lowell HS Example

Published: 10/22/2020 by Financial Samurai 52 Comments

Most people believe in meritocracy. If you work harder than your peers, you should get more reward. But as we all know, none of us are born with the same circumstances. For example, it may be harder for a poor kid from a single-parent household to compete against a rich kid with two parents and endless resources.

Given this uneven playing field, the San Francisco Unified School District decided to implement a lottery admissions system years ago for elementary, middle, and high school.

It didn’t matter if your neighborhood public school was a block away from your home. For the purposes of diversification and equality, your kid might only get accepted to a school 30 minutes across town.

Unfortunately, socioeconomic and racial diversity didn’t happen. Instead, wealthier families ended up sending their kids to private school, where the majority of students are white.



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Is Private Grade School K-12 Worth It?

Published: 09/19/2020 | Updated: 10/22/2020 by Financial Samurai 171 Comments

Is private grade school worth it?

Are you wondering whether private grade school is worth it? I have since I have two young children. As of now, I’m willing to spend money on the best education possible. Spending the most amount of time with our children before they become adults and providing a great education are the best gifts.

However, are we really going to live in a world where the rich continue to hoard their multi-generational fortunes while the rest just struggle to get by? Will the playing field continue to be so uneven that the middle class and poor must work twice as hard to get half as much?



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Edly Review: A Way To Invest In Income Sharing Agreements (ISAs)

Published: 09/17/2020 by Financial Samurai 21 Comments

Edly Income Sharing Agreement

An Income Sharing Agreement, or ISA, is an alternative way for students to pay for university. Traditionally, students take out loans and take all the risk. If a student graduates from college with no job or a low-paying job, a university isn’t going to make up the difference.

This asymmetric risk profile is one of the reasons why I’ve been imploring people to attend a more affordable college. If you’re not already rich or don’t receive free grant money due to your genius, please don’t overpay for college. Further, be smart about picking a major in high demand.

Unfortunately, with the overall student loan debt amount ballooning to ~$1.6 trillion in 2020, I don’t think many people are paying attention. Good thing there’s an alternative to taking out student loans in the form of an Income Sharing Agreement.

Instead of taking out a student loan at a potentially high interest rate, with an ISA, a student agrees to pay a fixed percentage of their earnings for a fixed number of months.

In a typical ISA, students would agree to pay a fixed percentage of their income once they are employed and are earning in excess of a specified threshold salary. This threshold is usually $30,000 – $40,000, depending on the ISA.

An ISA is quite different from student loans, which accrue interest during college and regardless if the student finds a job or not. Further, student loan payments generally have at most a 6-month moratorium after graduation before payments are due.

It seems to me the an ISA is a win for the student and a win for the investor. Therefore, I’ve invited Edly, an ISA investment platform to write a sponsored post and share further insights about this fast-growing asset class.



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Homeschooling And The Decision To Teach Our Own Children Or Not

Published: 09/13/2020 | Updated: 12/17/2020 by Financial Samurai 71 Comments

After months of sheltering-in-place, many parents are wondering whether it’s best to revert back to traditional schooling or continue homeschooling. We’ve been wondering the same thing. Homeschooling has really grown on us because we see the merits of more efficient and customized learning for our son.

Before we initially sent our son to preschool last year, we were torn. We couldn’t decide whether preschool was the best thing for our son or whether preschool was just an artificial construct created by society to enable parents to work more.

Given we both didn’t have day jobs, we felt a little bad sending our son to preschool. What if he came down with COVID-19 and gave it to his baby sister? We’d feel horrible.

We also wondered, if we sent him to preschool, what were we going to do all day after 2.5 years of spending every moment with him? Preschool felt like we were outsourcing our parental duties.



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Determining How Much To Contribute To A 529 Plan: Too Much No Good!

Published: 06/13/2020 | Updated: 01/12/2021 by Financial Samurai 112 Comments

Determining How Much To Contribute To A 529 Plan

Wondering how much to contribute to a 529 plan? This article provides a proper framework for 529 plan contributions by age. Contrary to popular opinion, there is a possibility you could contribute too much!

Because of the passage of the SECURE Act, the 529 plan has received a functionality boost in 2020 and beyond.

A 529 plan can now be used for:

  • All college tuition and qualified expenses
  • $10,000 a year for K-12 tuition and qualified expenses
  • Apprenticeship programs and qualified expenses
  • $10,000 to pay down a qualified education loan repayment for each of a 529 plan beneficiary’s siblings

Given these benefits, if you have kids, contributing to a 529 plan makes even more sense. Always maximize the purpose of your money by taking advantage of any benefits the government throws our way. Goodness knows they tax us hard-working citizens enough!

After a strong 2019, I decided to take a look at my son’s 529 plan. Although it underperformed the S&P 500, it still reached a level that made me question whether it’s possible to contribute too much. That’s right, when determining how much to contribute to a 529 plan, too much might be no good.



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Should I Superfund A 529 Plan? Evaluating The Pros And Cons

Published: 05/26/2020 | Updated: 07/05/2020 by Financial Samurai 14 Comments

A 529 plan is a good way to save and invest for your child’s education. The after-tax money you put into your child’s 529 plan gets to compound tax-free, just like a Roth IRA retirement account. Further, when you use the money to pay for qualified college education expenses like tuition and books, the money is not taxed. The question some ask is whether it’s good to superfund a 529 plan.

Thanks to the 2017 Tax Cut And Jobs Act, $10,000 a year from the 529 plan can also be used to pay for grade school tuition as well. The added flexibility is nice for parents who are considering sending their kids to private school. Tuition can range from between $10,000 to $60,000 a year.

Should I Superfund A 529 Plan? The Pros And Cons

Normally, the maximum each parent is recommended contribute to a 529 plan is based on the maximum gift tax exclusion amount. This amount is $15,000 per parent per year in 2020 versus $10,000 in 1997.

The $15,000 per year is not limited by parent. It is limited by person. In other words, if you get two sets of grandparents to also contribute $15,000 each, along with two parents, that’s six people who can contribute a total of $90,000 a year! If this happens, your child will become a 529 plan millionaire in no time.

Just note, if you give more than $15,000 in cash or assets (for example, stocks, land, a new car) in a year to any one person, you’re supposed to file a gift tax return. You don’t actually have to pay a gift tax since you’re still living. You’re also not going to be sent to prison, like the parents who were caught bribing university officials to help their children gain admission. So don’t worry.



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Roth IRA Or 529 Plan To Pay For College: Comparing The Pros And Cons

Published: 05/08/2020 | Updated: 01/16/2021 by Financial Samurai 55 Comments

One of the main questions that has come out of my 529 savings guide by age post is whether to contribute to a Roth IRA or a 529 plan. This is a great question I did not think about because contributing to a Roth IRA is not something I have ever done.

Fortunately or unfortunately, by the time I worked a full year in finance, I was no longer eligible to contribute to a Roth IRA due to the income limit requirement. Instead, I just focused on maxing out my 401(k) every year for the next 13 years until I left full-time work for good.

Partly due to my inability to contribute to a Roth IRA, I developed a negative bias towards the investment vehicle. It made no sense to me why the government would set arbitrary income limits for retirement savings when I believed everybody deserved to save efficiently for their future. Further, the article is a nice counterpoint to the 99% positive Roth IRA articles out there.

Now that I’m older, wiser, and have two children to consider, let’s take a look at the pros and cons of contributing to a 529 plan or a Roth IRA for college. I’ll also share some thoughts on which route is best for you.



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Recommended 529 Plan Amounts By Age: Careful Saving Too Much

Published: 05/04/2020 | Updated: 07/26/2020 by Financial Samurai 74 Comments

From a financial perspective, one of the best things to come out of the coronavirus-induced market meltdown is being able to contribute to your children’s 529 plans at lower index prices. Let us dig deep into the recommended 529 plan amounts by age.

Given parents are investing for an expense that might not occur for another 10-18 years, it’s easier to invest in a 529 plan during times of turmoil.

Originally, I had only planned to invest $15,000 into my daughter’s 529 plan in 2020 because I was nervous about the stock market after a 10-year bull run. However, once the stock market started selling off in February and March, I decided to contribute more to her plan.

Recommended 529 Plan Amounts By Age
Contributed $30K in daughter’s 529 plan in March

The stock market kept on tanking until I ran out of bullets. By the end of March 2020, I had ended up superfunding $75,000 into my daughter’s 529 plan.

If I had contributed more, I would have violated the superfunding rule, which allows families to front-load five years worth of contributions ($75,000 per donor/$150,000 per couple) without having to file gift taxes, while protecting their lifetime gift and estate tax exemption.

Given the world felt like it was coming to an end in March 2020, my wife and I decided to have her dollar-cost-average into our daughter’s 529 plan by $15,000 a year for the next five years just in case the recovery takes years.

When the stock market began rebounding in April, so did both of our children’s 529 plans. Today, our son’s 529 plan account is only about twice as large, despite being 3X older.

This is when I began to wonder what is the appropriate 529 plan amount by age. I was beginning to feel like we had over-contributed to our daughter’s 529 plan.



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What If You Go To Harvard And End Up A Nobody?

Published: 03/17/2020 | Updated: 01/14/2021 by Financial Samurai 163 Comments

What if you go to Harvard University and end up a nobody?

Harvard University consistently is ranked one of the top universities in the world. But what if you got to Harvard University and still end up a nobody?

A happy life is all about managing expectations. If you matriculate at Harvard, whether for undergrad or graduate school, great things are expected of you. And if you don’t do great things, are you a disappointment? Many would say so.

Education has been on my mind a lot lately because of my new jobs as a high school tennis coach and as a stay at home dad who is worried about not providing proper guidance. 

I’ve seen first hand the grind my student athletes go through and I sometimes wonder whether it’s all worth it. Supposedly my high school is one of the best in the city, yet not every graduate goes to a university like Harvard.

Why Harvard University?

I pick on Harvard because it’s the most well known university in the world and also costs about $63,025 annually in tuition, room, and board if you receive no aid. You can replace Harvard University with any expensive private university in the Top 20. Schools like Duke, Brown, Stanford, Columbia, Yale, Cornell, Dartmouth, all count.

I’m assuming if you went to Harvard or another Ivy League School, you won’t be offended by this article. The golden carpet was rolled out for you compared to a field littered with land mines for the rest of us.

Using the word “nobody” is admittedly harsh, but I say I’m a nobody all the time and think it’s great! I went to The College of William & Mary, got my MBA from UC Berkeley and worked in finance for 13 years. Who cares. I’ve also been writing 3X a week on Financial Samurai since 2009. Ho hum.

Being a nobody is par fo the course. Most of us are not curing cancer or coming up with a vaccine for COVID-19.

On the other hand, if you attend a school like Harvard, you must go on to do great things. With an acceptance rate of only 5.4%, you aren’t allowed to retire early and waste your potential.

Forget about being a stay at home parent. Go out there and make a career for yourself! Don’t you dare work at the same job as someone who went to State U. either. Now that you can learn everything online for free, the stakes for achieving greatness have never been higher!

The purpose of this article is to:

1)  Challenge our unhealthy desire for prestige and money

2) Reassess the pressure cooker environment we put our kids through

3) Discover what actual Harvard graduates do for a living

4) Encourage our smartest people to do more productive things with their lives

5) Give folks who’ve been rejected from elite universities and coveted jobs hope that anything is possible

6) Go beyond the act of giving money by spending more time helping people directly

7) Encourage schools to encourage their graduates to broaden their career prospects



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