Here's a piece from Money Central that is a mish mash of financial thoughts -- all with the central theme that it's harder than ever for people in their 20s and 30s to get ahead financially these days. I don't really agree with their conclusions, but I do want to comment on a few items they mention:
There is the high cost of college. A bachelor's degree has become the equivalent of a high school diploma -- essential for basic status in the middle class.
While it's certainly true that having a college degree is becoming more and more common, that it's not inexpensive and that the college wage premium has shrunk, there is still a tremendous economic benefit in going to college -- up to $1 million or more. If they think it's tough making it with a college degree, they should try growing their net worth without one.
The key is to borrow as little as you can for college and pay it off as fast as possible.
Compounding these generational challenges is what Yochim calls "incessant commercial wooing." On TV, she says, "it's all about luxury and excess and consumption," right down to the fancy lofts and apartments where sitcom characters live.
Let me give a translation here: these people can't control their spending. Like many other financial issues, the problems discussed in this piece start with people who are simply spending more than they make. The problem is a lack of discipline and unwillingness to sacrifice to get established. But it can be done, as evidenced by this example:
"We ate on $10 to $15 a week," says McDaniel, a fundraiser. They lived in a $590-a-month unair-conditioned apartment on a trolley line in West Philadelphia, battling roaches and mice. After she earned her master's degree and began working full time, they moved to a better area and continued paying off debts. On Dec. 30, their frugality paid off. "We hit a zero balance on every credit card," he says. "That was quite a celebration for my wife and me."
Another post-college success factor I recommend is to keep living like a college student (poor) after you get your first job. This should allow you to generate a lot of excess cash rather quickly and pay off those college debts in very little time.
Free Money Finance recommends Emigrant Direct.
I went to college and got a master's degree, but there are definitely many careers where I don't think that earning difference holds true. I know a creative director who makes over $150k who never went to college beyond taking a few rudimentary design courses, and got jobs early on that taught him a lot.
You can also become a plumber, electrician, etc, without a college degree and you can make a lot. I think that we should have an apprenticeship system in this country.
I make 6 figures and went to public schools. I paid almost all my way through my undergrad (with some grants and some smaller loans) but that $40k of debt definitely set me back. I waitressed on weekends, lived with my mom for a year after grad school, and paid it off within a few years. Yes, my salary will be higher, but it didn't help any to have that amount of debt, you know?
Posted by: anonymous | February 17, 2006 at 02:54 PM
I know. But wouldn't you say it was worth it?
Posted by: FMF | February 17, 2006 at 03:13 PM