How I Made Millions Off a $5,000 Investment

Ok, so the title's a bit over-the-top on this one. But that's the kind of mood I'm in as I write this, so I'm going with it. :-)

Getting a college education and following it up with an MBA has been one of the best financial decisions I've ever made. The numbers show that if you get the right college degree and maximize the earnings from your career, you can add millions to your income throughout your lifetime. For me, my MBA was a major step in moving my salary up much higher than I ever thought it could go.

And best of all, this great investment didn't cost me that much. Yes, it did take six years of my life, but in terms of financial costs, I left grad school with only $5,000 in debt. Best $5,000 I've ever spent. I thought I'd briefly detail for you how I did it. The steps:

1. I applied myself in high school. Yep, you lay the groundwork for college scholarships/success starting in 9th grade of high school (for more on this line of thinking, see Why Extracurricular, Volunteer, and Community Service Activities in High School are so Important at Getting You into the College of Your Choice and What You (or Your Child) Should be Doing in 9th Grade to Get into the College of Your Choice). I studied hard, was involved in extracurricular activities (including leadership positions), served in the community and held a part-time job. All of these looked great on college applications and helped me get accepted to colleges I was interested in.

2. I went to an undergraduate school that was good (not great) but that was affordable. I did a cost/benefit analysis when I decided what college to attend. Today it seems that many kids simply pick a college they "like" and decide to figure out how to pay for it (or borrow for it) without much regard to how much the college costs and what the expected payout is.

3. I got scholarships based on: 1. Academic accomplishments (see #1 above -- my work in high school paid off here). 2. Leadership/activities. (Again, high school work paid off.) 3. Need. (At that time, I was from a "poor" family).  These added up to a nice chunk of change each year.

4. I applied myself in college. I viewed going to college as my "job" and treated it as such. Sure, I had plenty of time for fun and non-school activities (my fraternity brothers can attest to this), but I also studied hard and was involved in several campus organizations. This led to more scholarships and a lucrative assistantship in my sophomore through senior years.

5. I worked in college. My freshman year I worked in the library for a pittance, but because of my grades and activities I moved up into the assistantship the last three years of school. I also worked every summer and saved like a fiend. Even the summer I couldn't get my job at the grocery store back, I found work "walking beans" (don't ask if you don't know what it is -- you don't want to know.)

6. My success in undergraduate school set up my grad school success as well. I followed the same process -- looked at good but not great schools that were very affordable and used my high school and college results to get into one that fit my criteria. Also based on these results, I got an assistantship that paid my entire tuition for two years. But I worked for it. EVERY Friday and Saturday night for two years I ran a movie theater in the student union. Yeah, it was a pain to go to work when my friends were out partying, but the sacrifice was worth it as I left grad school owing only $5,000 to my grandmother (which I paid back a few years later.)

So, in the end, that $5,000 investment will end up earning me millions more than if I hadn't gone to college and grad school. Seems like a good investment to me! ;-)

BTW, when I went to college, I didn't know about all the other ways people can save when getting their degree. If you want more ideas on how to save on college, check out my college category for tons of ideas.

Comments

[beastlike]

That's basically what I did for undergrad, walked away owing only about 6k and paid it off a year later with all the part time work I did. MBA was paid for by the employer though!

I definitely agree that most kids just go to the college that they want to without any regard for the cost. Maybe the kids that have to pay for schooling their selves are more conscious of the cost?

[Minimum Wage]

And I could write a post about how getting the wrong degree can make a $5,000 investment lose millions.

[FMF]

Then why don't you -- at least you'd be doing something useful rather than complaining.

[M]

I'm not sure why the MW comment is considered a complaint. It doesn't offer much detail or support but it brings up what I think is an imp. and valid point. It is one I want to make as well, with the hopes that it won't meet with the same reception! (since my point is similar to MW's point, or how I interpreted MW's point at least).

As important as the points you make in your post are, choosing the "right" subject of study and field of employment is critical to the success of that formula. Studying some subjects and/or entering certain fields will often turn out--at least as far as turning education $s into salary $s is concerned--to have the opposite effect of what you describe, in that the time and money spent can end up being an overall loss than a gain due to the low wages in the field entered or low demand for expertise in the subject studied. Thus the time and money spent will be time and money lost, and opportunity to advance in a field during that time, to earn a fulltime salary and save from that salary, to earn interest and returns, and so on will be largely lost as well--all for an "investment" that may offer no increase in pay, benefits, etc.

Taking jobs in certain fields or studying certain subjects may be worthwhile but often for reasons other than future increase in salary. Reasons such as education for education's sake and the like are good reasons for such fields.

I think this is a very important point, one I wish I'd be more aware of years ago. Education can and often does help with increase in salary, but in many other cases, esp. with some grad. degrees, it is actually a poor financial choice, regardless of how well one does, how cheap the school, etc.

It may go without saying for some, but I don't think this point can at all be accepted as a given, as many are led to believe any college education and professional field will result in good salaries, and that education is always financially worthwhile. This is not the case in many instances, and I think this side of the coin must be looked at and acknowledged as well.

As a former hs teacher, I have seen how little many of today's youth know of the working and financial worlds, and we (society) are doing them a disservice by not teaching them adequately about these subjects as well as by perpetuating the myth that education, will always translate to riches.

I understand your blog is not nec. written for that demographic but even many in their 20s and 30s or older considering going back to school find out too late that the "investment" often turns into a financial loss rather than gain.

Many find the degree simply wasn't needed and that those years spent not working in fulltime in their filed and the potential salary earned and the like were all lost for nothing. Or worse, what I started to describe earlier occurs where the cost of school (not just tuition but everything including lower income, etc.) ends up being more total than the difference one can command in salary post-schooling (esp. is the difference in salary post and pre schooling ends up to be zero or close to it).

All that is not to discount your very on point advice, but simply to temper it with some additional considerations and to advise all potential students to do plenty of research into their fields, potential careers, cost of schooling including the cost of what you miss out on by not working fulltime in your field those years, to speak to those who've gone back for the same degree they are considering and who work in the same field, etc. and to truly learn if and what difference that particular degree can really make in one's chosen field.

[FMF]

M --

It's a complaint because he regularly says the same thing over and over again in a whining manner.

[Minimum Wage]

FMF has an excellent point there - there probably IS a worthwhile post to be made of it, but for now I won't go into tedious detail. I'll just say that my "investment" had a direct (cash) cost, plus the opportunity cost of the pay I could have earned in a "real" job full time, minus what I earned in "student" jobs, multiplied by the extended time I stayed in school because I could afford to take classes only part time. And then this extended undergraduate period afforded sufficient time for law school costs to inflate beyond my reach, rendering my liberal arts degree useless.

[FMF]

Yeah, but you make minimum wage -- how much income did you really lose? Couldn't be much.

[Minimum Wage]

I'm presuming that with my 3.9 high school GPA and my excellent test scores, and my work experience starting at age ten, I could have gotten a decent job right out of high school.

[FMF]

So why can't you get one now?

[plonkee]

Don't forget the opportunity cost of your 6 years. I don't doubt that you're still ahead, but it'll probably come out a lost closer.

[Minimum Wage]

My 3.9 GPA and childhood work history were worth something 30 years ago but they are worthless now. My dead-end adult track record is what employers care (and worry) about.

[FMF]

Yep, you waste 30 years and it doesn't matter whether or not you have a college degree -- it's going to end badly.

[Zook]

How about the opportunity cost of whining on the internet for 10-years Mr. MW? Where do you live MW, in the mountains of Albania?

M's counter-point seems to be a case specific point about someone he knows...

I can tell you this....Having just a high school diploma and college diploma does NOT set you apart in this world and in another 25-years, it will probably become a requirement to go past college or you will be just a "slacker".

Having certificate degrees, master's degree or law degree's may be considered a waste of time for person A, but on the whole, if you
are 22-years of age and want to get your master's degree in something and be done by 25, how on earth could folks complain about an opportunity cost?

This person A will probably live into their 80's and will have a higher education that is respected in this country and sets them apart from their peers. So when person B is clubbin' until 25, just getting their groove on, person A will be far and above better prepared for the job market. It's not like people live to they are 30-years of age. Giving up a few years to get an advanced degree helps MILLIONS of people in the workforce.

It seems to me, especially for internet debates, we need a specific case to discuss, because we all are coming at this from varied points of view.

[Minimum Wage]

I never went clubbin' and never got my groove on; some might say I had the worst of both worlds. My grades, test scores, and work history were worth something 30+ years ago.

So the question now is, what options do I have NOW to improve my situation?

[FMF]

How about you take the time you spend reading and commenting on blogs and start your own? (Or do something productive with the time like study, get a second job, etc.) Seems like you could advance yourself this way if you really wanted to.

[Minimum Wage]

Oh, and do you remember the Michigan economy circa 1980? The economy from which two-thirds of new graduates were fleeing? That is the economy into which I graduated.

[Minimum Wage]

Okay, fair enough.

[Minimum Wage]

First of all, I an entirely unavailable three mornings a week (medical). Second, I don't have a car or a license, so I am limited to those jobs I can get to on foot or by transit. Third, I am obviously unavailable the hours I currently work. Good luck scheduling another job into that! Last week I saw some great custodial jobs at Intel. Unfortunately they were swing shift and there was no way I could get home at the end of the shift.

[FMF]

I like the middle response the best.

[Maximum Wage]

I feel sorry for you MW. Better luck next life. I hope you don't have kids to ruin as well.

[Minimum Wage]

Where do I sign up for Maximum Wage?

[fivecentnickel.com]

I'm sorry, but that high school GPA/work experience argument is lame. Let's look at that 30 years (and yes, I'm making some assumptions/guesses about the timeline here):

30 years ago your high school GPA and work experience would've made you a great candidate for a good non-college-degree-requiring job of some sort. Then you went to college. Four years later you finished, and suddenly (college degree in hand) you couldn't qualify for a job that a high school graduate could've had four years earlier? Not likely. Sure, there was the opportunity (and real) cost of four years of college, but it's not like a liberal arts degree in the wrong field suddenly made you damaged goods and unqualified for a high school diploma-requiring (non-minimum wage) job.

Now... Skip ahead 26 more years. Yep, your high school GPA and work experience means virtually nothing now. You are likewise correct that 26 years of minimum wage work will make employers wonder about you (I know I would). But what happened in those intervening years? Apparently medical problems of some sort, but I'd hardly pin the nature of your life story on a poor choice of college majors -- there has to be more to it than just that.

FMF actually had an interesting (and very constructive) point. You seem to write well and think interesting thoughts (even if they're often presented in the context of what many perceive as a whiny comment). Why not create a weblog about living on minimum wage, etc. If you don't want to spring for the minimal costs ($8/year for a domain name and under $10/month) there are a number of free options out there. Start writing with passion and conviction, read up on search engine optimization (tons of free info available online) and website monetization, etc. Give it some time and you could build a solid bit of extra income. This can be done on your own terms during whatever time you have available. You've already create your own brand of sorts by commenting relatively widely in the personal finance blogging community. You might just be onto something.

[mbhunter]

Seriously MW. Start a blog. You obviously have something to say.

[Matt]

What a pointless blog post. Why the hell did Get Rich Slowly even link to it?

[suzanne]

I should probably add that since the advent of the internet, scholarships easier to find and sooooo muuuuch harrrrder to win. I do believe that the days when your college education was solely funded by grants and scholarships are over, unless you are an athlete or you have the most tragic of stories to tell the scholarship officers.

I'm experiencing this now, and I must have applied to 50 online and 10 local. Out of that, I got a $500 and a $125 scholarship. Every little counts, I suppose... but unfortunately it's a drop in the bucket of the real cost of education.

[Brent]

I just graduated from college, and I tell you what, I would happily trade an extra 3 some odd grand of debt for my years of friday and saturday nights. It doesn't mean you should be stupid in college, drink and never save, but man, enjoy your weekends, you only get your college experience once.

[aaron]

i think this method is time stamped a bit. take into consideration the perputatal saturation of the pool of in need of work grads. this drives salary expectations down. as the economy loses steam, having the MBA may be less of a commodity as it once was.. sort of like the college degree 'back in the day'. id not argue against anyone pursuing their career motivations and direction, but if its just $$$ that you want, id suggest you seriously think twice about trading time and money for another stamped, signed piece of paper

[FMF]

Aaron --

I think that an MBA isn't probably as lucrative as it once was, but it's still the #1 degree for return on investment. Source:

http://www.freemoneyfinance.com/2009/02/five-degrees-with-great-returns-on-investment.html

nigger