Category Archives: Money

Can you go to College Without Massive Debt?

We’ve all watched the news and read the stories. College is just becoming too expensive. Our country has a student loan debt problem.

And because of the stranglehold of student loan debt many young adults can’t take the next steps to adulthood like buying a house, or even a newer car. Many are putting off marriage because of the debt. None of this is good for our future.

But is there anything we can do about it? Is it just the fault of the college that is raising tuition each year or maybe the federal government that guarantees these massive loans? Can you really go through college without acquiring debt?

Yes.

That is actually the answer to each of those questions. And if you follow these steps and are willing to sacrifice some of the “college experience,” your college experience won’t saddle you with debt for the next decade or two.

Is a Four-Year College Right for You?

In our country, there is a push in elementary and secondary schools to put everyone on track for college. And unfortunately, many young adults go to college for a year or two (maybe more), don’t receive a diploma and only have student loans to show. And they are essentially back at square one as they were when they graduated high school (but with debt).

So, while it isn’t the popular thing to say, college might not be for you. Maybe there is a trade you could excel at simply by going to community college for a year and receiving an industry certification. And you’ll probably walk out with a good-paying job. And that year of community college could likely be bankrolled fairly easily without going into debt. Many high schools even offer programs to receive certifications. Do some research and see what options are available around you.

Don’t Choose the Most Expensive School

We often think that to land our dream job we need to go to a prestigious school that comes with a price tag that matches. For the most part, that isn’t true.

You can start at a local community college and often attend for next to nothing. In many instances, your local municipality or county will cover the cost of tuition at community college. And because it is “local,” you can live at home and save money. I know it’s not the dream of every 18-year-old to live at home, but it’s better to live at home while you are in college than after you’ve been out of college for a few years. Do it now and save. You’ll be happy you did.

And then when you complete your time at community college, look at state universities to complete your degree. They will generally be a much cheaper alternative while getting you the degree you need.

Look for Scholarships

Starting your senior year of high school, begin applying for scholarships. There are literally thousands of scholarships out there with multiple websites that will sort them for you. Apply. Apply. Apply. And for good measure, apply some more.

You will miss most that you apply for, but it will be worth it for those scholarships you do receive. Look at it this way, if you spent 500 hours applying for scholarships and received $25,000- you just made $50 an hour. And paid for a year or two at an in-state school.

Work While You are in College

No, you are not too busy to work while you are in college. (Yes, there are certain fields where you can’t work, but for most people that does not include them.)

And don’t just settle for a minimum wage fast-food job. Think like an entrepreneur. Cut grass. Babysit. Tutor. Walk dogs. Drive for Uber. Start a blog about how you are going to college debt free. Be a resident advisor and get free room and board. Just be creative.

Think About Your Major

Finally, what are you studying? What application does it have for the real world? This isn’t meant to discourage you from majoring in art history or theater or anything in liberal arts, but what are you going to do with that degree? What career will you have because you received that degree?

Money doesn’t need to be everything. You need to do what you have a passion for. But you also need to make a living. There are a lot of actors in Los Angeles who make a living waiting tables. That’s okay. But you need to have realistic expectations for when you do enter the real world.

College is a fun time. But it could also be a fun time without leaving with piles of debt. By approaching college like a business and being okay with being a little weird, you can leave with a degree that has prepared you for your career, all while being debt free.

Concerns Define The Middle Class

Updated on 3/23/2018

I spoke to Zach Shrier of Shrier Wealth Management (who also happens to double as Lauren’s cousin and was my investing teacher my freshman year of high school) about the definition of “Middle Class.” In 2017, about 70% of Americans classified themselves as part of the middle class.

Statistical Definitions of Middle Class

There are many ways of defining middle class. You can simply look at raw data and define each class as a percentage of American households earning incomes within a range. Using three classes, we might get something like this:

  • Upper Class – Top 20% of Population – Earning more than $122,500/year
  • Middle Class – Middle 50% of Population – Earning between $35,000 and $122,500/year
  • Lower Class – Bottom 20% of Population – Earning Less Than $35,000/year

You can play with the data however you’d like and define upper class as the top 5% (earning over $215,000) or even the top 1% (earning over $430,000) of the population. However, it doesn’t help define what it means to be middle class (or upper or lower).

Zach had a very nice idea, that rather than the amount you make, concerns are what define each class. Making $50,000 in Manhattan is very different than making $50,000 in a small town in Texas, so it’s clear that a number itself isn’t a great definition.

New Definitions of The Classes

When we look at what concerns people have, we get a breakdown of each of the classes:

People in the lower class are concerned with having a place to sleep and food to eat. These are people who are struggling to come up with the most basic needs. They may not have to worry about these things every day, but it’s something that’s always looming over their head. Will they be able to afford rent next month? Basic federal benefits are very important to them because they have few alternatives to government help.

People in the lower middle class are definitely concerned with the short-term, but less so than people in lower class. They may have the very basics covered, but government subsidies are still very important. They’re not able to save regularly as almost all income goes towards managing their day-to-day life (getting to and from work, food, housing, and basic “wants”). The people often make big sacrifices to get by, including living in multi-generational homes to keep costs as low as possible.

People in the middle class are concerned with having consistent employment as well as the costs of getting around and being able to save. While they might not be living month to month, they are worried about being able to support their family. They want to save to be able to afford to go on vacation with their family and not have to worry so much about the near future. Changes in gas prices are significant because high gas prices mean less money for the other things in their life.

People in the upper middle class worry not about gas prices, but about the costs of home ownership and the costs of education. They may be cognizant of the changes in gas prices in their area, they do not worry about affording the price. Whether it is $3 a gallon or $4 a gallon, they will pay the price because they have no alternative to getting around.  They may want to send their children to private school or live in an area where the public school system is of high quality. But living in that area likely means houses are more expensive, and they are concerned with being able to handle all of the responsibilities.

People in the upper class are people who have a different set of concerns: passing wealth onto the next generation. They don’t have to worry about money to cover the costs of their needs and wants, but they still want to make sure their children won’t have to worry about the same things.

Concerns Define Us

Everyone worries about money. While people in the upper class may not have to worry about affording things in the short-term, they have other concerns nonetheless. They too may never feel complacent with their wealth, something everyone can identify with.

Every class has a different set of concerns, and while there may be some overlap, it’s clear that higher up the ladder you get, the less you worry about your short-term finances.

What do you think of these new definitions? What class do you consider yourself a part of based ?

Thinking About Getting A Second Job? Read This First

It is pretty clear that the best way to meet your financial goals or acquire the things you want is to increase income. One way to do that is to get a second job. However, there are lots of disadvantages to getting a second traditional job. Here we’ll discuss some of the pros, cons, and alternatives to getting a second to help you in your decision to increase your income.

Disadvantage Number One

A set schedule. Having to comply with the set schedule that your secondary employer is likely the single largest disadvantage to a second job. They may ask you to work more than you originally signed up for or they may ask you to flex time away from your day job towards them. Even in the event that that the second company can comply with your day job’s schedule, it may end with the result of you working 7 days a week every week, which could leave your physical and mental health lagging.

Disadvantage Number Two

Confusing taxes. One of the nice things about a traditional job is that the employer will draft taxes from each of your paychecks for you rather than you having to pay quarterly or monthly as self-employment would require. However, you should take this tax withholding with a grain of salt – each of your two employers will probably use a calculation to determine your taxes withheld independent to that one job. With that, your total taxes due for your total income could, in certain cases, exceed your withholdings which would leave you with a bill due to the IRS at the end of the year. No one wants that, so if you do go this route, pay attention to the paperwork you fill out on day 1!

What Are Some Alternatives To Getting A Second Job?

Let’s start by looking at your budget. You’ve probably already determined that your bottom line after subtracting expenses from your income is too little, or worse, negative. This is where many people jump straight to trying to increase income though getting a second job. However, you should take a deeper look at your budget. What expenses are present that you could eliminate or decrease? Are you spending too much on entertainment? Too much eating out? Have you shopped around for cheaper car insurance?

While decreasing expenses isn’t doable for everyone, it is often times more scalable and a better long-term fix to your budget sheet problem. Reducing expenses rather than increasing income will leave you with the same amount of free time you currently have rather than dedicating that to a second job. Your stress levels and mental capacity geared towards work will not be negatively impacted as they might be with two jobs.

The alternative that seems to solve the largest number of these pitfalls is to find a job that allows you to work for yourself. This is a bit of an open-ended answer because there are so many possibilities: driving for ridesharing, mowing lawns in your neighborhood, making and selling instructional videos, freelancing a certain skill of yours, and so on. With this option you simply have more freedom. You can choose your own hours, to some extent you can choose what type of work you do, and you can choose your rate of billing. Further, as your personal finances fluctuate you can scale back or scale up as you see fit without having to go though an employer.