Should I go to college or try FI/RE?

[Aerides]

After hearing what people have to say on this forum and a few others, I did some research on a few things:
1. Several people recommended and asked about a community college option. There's one near me that would cost me $2,000-$3,000 and allow me to get an associates in 1 year with the credits I already have. My problem with this though is that I feel like you're missing out on the college experience.

CC is not instead-of, but in-addition-to. Especially with your credits, if you can skip freshman year and go to CC, then enter college as a junior, you'll still get the experience, minus the twits around you who drop out quickly who are just there to party. You save the money, stay home, and jump in for the 2nd half.

And the college experience will likely not be typical for anyone for the next year (yes I mean even starting fall 2021).

Any business experience you've had by 18 is nice, but it's not remotely what you'll understand is necessary by 25. Or 30.

And do try to resist the idea to plan out your decades...don't think too far ahead just yet because it will all change. It does for everyone.

 

[Scrapr]

Go to college. Enjoy the experience. Then you can think about your own business. While in college work on your sales skills. Any owner of a small/start up company must be able to sell. Also be able to understand a P&L & Balance sheet. How the money flows through the company. How your actions in the field affect the P&L & Balance sheet

If you go into the trades you will be head & shoulders above most of the competition. I am biased as i'm in the trades. I like HVAC as a recurring revenue source. ie; not chasing your first dollar of sales every month/year. You do that by "giving away" the install & selling the service plan. Do this 100 times & you could have $20k revenue recurring.

Good luck young man

edit: bad at math

 

[ivinsfan]

You are very focused but what exactly are you doing here? It's at least your second forum where you have asked identical questions. So this isn't your first rodeo. We certainly aren't telling you anything new.


In fall why wouldn't you simply apply to your colleges of choice and see how you feel when it comes time to make the final decision. This thread makes a real nice break from COVID but I don't think we are doing anything useful to you.

So define get a job instead of school. What job would you look for? Don't expect to make much money. You have a lot of choices but you are the one that needs to make them.

At this point remember you can make a plan but you can't control the future. i.e. the wife and kids when you turn 30. Slow down and narrow your focus to the here and now.

 

[armor99]

Hello, my name is Jacob and I am currently a high school senior. My ultimate goal is to hear people’s feedback on my situation to better weigh the advantages and disadvantages of going to college. First, a little about me. By graduation I will have a 4.1 GPA with a 1400-1500 SAT score. While both of these are pretty good, it still doesn’t make college free at the schools I’m looking at. I have roughly $25k in a 529 right now, and estimate $30-35k by the time I would enroll in college. I’m looking at public 4 year schools in Colorado with a good business program. Most schools I’m looking at have sticker prices of $25-30k/year. After financial aid would be awarded, I would be looking at $15-20k/year. Unfortunately merit scholarships will be the only ones I get most likely (I’m a white, third generation student). If we assume that the total cost will be $70k, I could pay $35k from savings, and probably another $20k as I worked throughout college. That would leave me with $15k in debt if all goes well. As I mentioned, my goal is to go into business and ultimately own my own business which does not require a degree. My goal is to use coasting FI/RE to save enough money in my 20’s and 30’s to semi-retire before 40. Financially speaking, I’m wondering if it would be better to take the 35k in the 529 and invest it, work while others are in college, and avoid student loan payments of $200-300/month. I know that a graduate might make more money post-graduation, but the opportunity cost of those loan payments could help catch me up. I know that it’s good to get the education, have the experience, network, and get a degree. The reality is that with my GPA and test scores being so high, I would almost feel like I was wasting all of that hard work if I didn’t go to college. I’ve read/watched a lot about this topic and over and over again I see people regretting their financial decisions in their early years. That’s why I’m trying to seek advice from the older generation and avoid those mistakes. I sincerely appreciate you all taking the time to read this and comment your thoughts. Thank you!

For what it is worth... These are my thoughts. To retire by 40 is a pretty lofty goal. It is possible, but it is a really rare thing. I compare it to becoming an NFL player. Possible, but statistically not in your favor. That is why a college degree in something useful... like in the STEM fields is important. Most people of age 25 never go back to college. You have a short window to be in the frame of mind to let that happen. A useful college degree never expires. If the business venture does not work out, you may have to work for a while, and try for your own business later.
But without the degree.... getting hired is very difficult. I have also see. In my career people that were able to get a great position at a company at a lower level, and work their way up into an engineering type position. They are very talented people, and have years of experience. However, due to the nature of HR departments, they become trapped there. Because without that degree, no other company will hire them. Do not let that happen to you...

 

[Jacob8887]

Thank you everyone for your responses! Some of that was tough to hear, but I needed to hear it. After seeing hundreds of responses across multiple forums and doing through research and analysis, I think I’ve reached a decision.

I used something called the Weighted Average Decision Matrix from The Millionaire Fastlane by MJ DeMarco. For those who are not aware, it involves ranking the factors that go into a decision by most important to least important. Then, rate the two separate decisions for that factor from 1-10. You then multiply the factor by the rating and tally up the results. After doing this, I decided that I will be going to college. The results showed 384-277 in favor of going to college over not going to college. In addition, the vast majority (80%) of responses to this thread advocated for college. I was able to find 11 reasons to go to college, and 5 reasons not to go. So across the board, everything was in favor of going to college.

I still believe that you can succeed without a college degree. You can learn everything you need to know outside of college and you can gain experiences in other ways than college. Nonetheless, I have a feeling that I would regret not going to college in some way or another.

It’ll be good to put my good grades and test scores to use along with my fortunate life situation to good use. A degree will be helpful for getting jobs and establishing a backup plan. The education and experiences that come from college will be unparalleled. I’ll have networking opportunities to meet future colleges, friends, and hopefully a wife. Most of all it’ll be fun!

While it may cost me money in the short term, hopefully in the long term I’ll earn more with a college degree. Plus, there will be tons of time during college and after college to travel, start businesses, and experience life.

Thank you all for being patient with a young kid like me. I really appreciate the advice that you all gave and please know that it helped in my decision making process.

Thanks,
Jacob

 

[ivinsfan]

Ok our job here is done,have a nice day..

 

[NgineER]

This was from a different forum:
Simple calculation to see if it's worth it.

Given your grades, I'll assume you're part of the crowd that would graduate in 4 years (over half don't). So, take your opportunity cost for those 4 years plus the debt for those 4 years.

Total cost. Assuming you make $15 an hour, and work 40 hours a week, this translates to $31200 a year (not including taxes), or $124800 over 4 years. Add in your debt of $15000, and you get $139800.

Excess earnings per year. Now, you take your projected salary with a degree, minus your salary without a degree. Here I'll assume you make the average of a college graduate (you can look up data for the specific degree you want to be more accurate), so that's $45000 - $31200 (or however much you'd make at this point), or $13800.

Now it's just your (total cost) / (excess earnings per year), or 139800/13800. This leaves you with 10.13, which is the number of years it would take you to out earn yourself.

This is the super simple version of the calculation. There's plenty of other things to factor in like taxes, job security, job benefits, job location, salary increases, upward mobility, compound interest for your opportunity cost and loans, and so on.

End notes:

I think depending on the degree you get, college can be very clearly worth it or very clearly not worth it. The under employment rate (have jobs that don't require their degree) for college graduates is just under 50%. Even if you aren't under employed, some fields don't pay well. These degrees are clearly not worth it financially.

I'm just over a year out of college and am earning just over $90k with a comp sci degree. Compared to what I'd be doing without a degree, using the calculation above, I'd out earn myself in less than 3 years.

I wouldn't take your 529 money out for investing unless there's absolutely no one else's education it can help pay for. It's taxed a butt load if you use it for anything but education.

TLR It depends on how much you'd make with and without a degree, which depends on your degree. You can use a simple calculation, with a little research, to figure out whether it'd be worth it, and how quickly it'd be worth it. Don't take your 529 money out if you can use it for someone else's education instead.

You don't seem like the average person (since you are here ). The base case of a $15/hour salary is not the business owner salary. But to be a business owner, you have got to have the drive, because you make it happen, no one else will do it for you.

Your salary after college should be adjusted to whatever field you are looking to enter, not the average, because you are not average.

I know family and friends who have had the following situations

Number1: 18-35 did not finish college $25k-30k/year, finished CS degree in late 30s--> $55k/year, started house flipping business and makes $100k/year

Number2: college-med school loads of debt, 30-33 residency at $35k/year. at 33 joins cardiology group starting salary $360k/year and 8 weeks vacation, partner at 35 $500k/year and 12 weeks vacation. 10 years later $1M/year and 14 weeks vacation

Number 3: STEM degree from good school, joins MegaCorp $65k/year, promoted after two years to $75k/year. I recommend top business school, he gets in with full tuition scholarship, graduates at 29 and makes $250-500k plus options.

Number 4: Started two start ups, CS related, worked ridiculously hard for four years for both, hiring a good group of 5 programmers he knew from various experiences. Each company sold for over $10M, first one at 32, second one at 40. Doesn't need to work, but loves it.

Many others just humming along with mediocre blue collar business getting by. Many at my Mega that come in and just keep working gradually increasing salary along normal path...

 

[braumeister]

It’ll be good to put my good grades and test scores to use

One final comment.
Your high grades and test score could mean that you're smart enough that you didn't have to work very hard through high school. Generally, the college experience is different enough that you won't be able to coast through like you have been. Not saying that this describes you, but it might.

If that turns out to be the case, you may have to shift gears and develop better study habits in order to finish college with the same kind of great record that you had in high school.

Just something to think about.

 

[friar1610]

Find a college with the best looking females....

Ever wonder why I miss the Navy?

 

[pb4uski]

....4. My passion is business/finance, that is most likely what I will study
5. I don’t know what type of business I want to run, I just know that I want to run one....

Sounds like me at 17. I was a decent mechanic and had managed the family side business of two self-service car washes during high school.... checked in them before and after school, did any needed repairs and maintenance, collected the money, did the bookeeping for them, etc. I broached with Dad the idea of not going to college and going to work as a mechanic like him (Dad had started as a heavy equipment mechanic, moved up into sales and had done very well). He made it pretty clear that his son was going to go to college (and actually, I think he had law school in mind).

I knew I wanted to be in business but I didn't know what specifically. I was good with numbers and had taken some entry level accounting courses in high school and like them and did well, so I decided to study accounting thinking that since all businesses use accounting that it would come in handy no matter what I decided to do in business.

I ended up working in accounting my entire career.... as an auditor, then in financial/executive management with a couple different companies (including getting an MBA along the way), and then in consulting/advisory for one of the big 4 public accounting/advisory firms.

I think college is your best bet. IMO, it just increases the odds for future succcess for you. While I know some contemporaries who did not go the college route and did well for themselves, I think a college degree just stacks the odds in your favor.

Best of luck young man... keep us informed on your progress.

 

[daylatedollarshort]

DH and I both have had a few jobs where it didn't matter where we went to school, but having a 4 year degree mattered whether or not we got the job. We have encouraged our kids to get 4 year degrees. I would suggest looking at combinations of online classes, community college, CLEPs, paid internships, financial aid and in state public schools. In our state the financial aid family income limit is quite high, I think around $90K for 2 kids in college and then tuition might be free at in state public schools. It doesn't really hurt to apply for financial aid and see what you might get.

Our kids' college cost us very little out of pocket. One had a 6 month payback period on a 4 year degree (tech field) and got to go to a great school near the beach in a lovely area. The other got hired full-time even before graduating from a paid internship and now has tuition reimbursement and has been recommended for an in company management training program.

Our kids were both good at networking, volunteer work and internships. Many kids starting out have degrees, but that field experience, even if unpaid, is hard to beat. Between a candidate with a degree and zero work experience and a candidate with a degree, several semesters of paid internship work and a glowing reference from a CEO, the latter might have the edge.

I think you are smart to weigh all your options and look at the cost benefit of college. I would look at the College Scorecard (all sorts of good stats on tuition costs vs salaries) and the Payscale Reports. The book The Millionaire Next Door has good information on the success of small business owners. And schools like Excelsior, Thomas Edison State College and a few others like them offer accredited, low cost degrees through distance learning geared towards working, adult learners - https://www.nytimes.com/2013/02/25/education/25degree.html

 

[Amethyst]

Well, meeting new friends and partying was definitely part of my CC experience.

Never gave football a thought, but can see where someone else might care. Again, COVID is messing this up anyway.

I lived with my parents, who were old-fashioned and strict. I used this to my advantage when possible (you'd be surprised how useful it could be), and got around it when not. And the food was better than any college cafeteria, plus I didn't have to pay for it

I'm curious...what "college experience" do you feel you'd be missing out on?


Living in a dorm, going to football games, meeting new friends, partying, etc.

 

[teetee]

OP I wish I was this serious about my life when I was at your age. If I get to do it all over again, I would put 99% of my energy on investing in my education and not just for the diploma. I want to learn as much stuff that helps me to do what makes a good life long career.

Things like IT in the cloud computing era, data analyst, robotics, or computing related in the healthcare system (electronic records, clinical decision making, AI, gene therapy and personalized / precision medicine, bioinformatics) are some of the areas that would be good to find your interest in.

I remember I did not know what to do until I was 30 so I have wasted at least 10 years. I was lucky to find a job after I got my masters degree at age of 36. You are ahead of me at least 14 years if you get to do what you like after college.

Not having the degree may work in the old times but it is getting tougher for someone with little experience to compete against other candidates in the job market.

On one hand you have lots of time since your not even 20. On the other hand, the sooner you graduate and make yourself an expert in a certain area, the faster you can start saving and investing, and then build your wealth. Definitely hit all the scholarship and get part time jobs you can find to avoid taking out student loans. Debt is number 1 enemy if your financial goal is to get wealthy in the shortest path possible.

 

[Amethyst]

Heck, a degree was being held out as the best option when I was a kid in the 70's. The mantra was, either get a diploma the usual way, or do the GI bill thing.

(I see a lot of memes about how easy it was to get a job and buy a house, with no education, in the 1970's or 1980's. These do not accord with reality as I experienced it )

Not having the degree may work in the old times but it is getting tougher for someone with little experience to compete against other candidates in the job market.

.

 

[Keim]

Strangely those memes always seem to get the impact of inflation wrong

 

[Amethyst]

There are a lot of people 60+ years old on this forum. Does anybody recall it being common for a person (well, OK, a man), to get a job right out of high school, buy a house and support a family almost immediately? Young people seem fiercely wedded to memes that claim this was somehow common in the 1970's.

It sounds more like the 1950's to me, if it ever was true at all - and only true in certain one-business towns, e.g. Detroit - but then one couldn't use it to compare oneself with baby boomers, since they were only kids then.

Strangely those memes always seem to get the impact of inflation wrong

 

[Gumby]

There are a lot of people 60+ years old on this forum. Does anybody recall it being common for a person (well, OK, a man), to get a job right out of high school, buy a house and support a family almost immediately? Young people seem fiercely wedded to memes that claim this was somehow common in the 1970's.

It sounds more like the 1950's to me, if it ever was true at all - and only true in certain one-business towns, e.g. Detroit - but then one couldn't use it to compare oneself with baby boomers, since they were only kids then.

I'm not sure it was ever true. When I graduated from high school in 1977, that did not appear to be the case; I had to join the military to get a job. I was 25 when the young wife and I got married, and we both had to work after that. It was not until we were 33/31 that we were able to buy a house.

 

[walkinwood]

Hi all!

2. There are community college options, but I haven’t really considered them, as I feel like it’s not the real college experience.

The real "college experience" is learning how to learn, learning how to think critically and for yourself. The pace of change keeps accelerating. You will not have just one career, but many - and the skills to reskill quickly will be the key to success. Even the definition of success may change

3. I’m well aware of how my parents, peers, and society as a whole seem to push the idea of college. While it can be beneficial, there are many people who do just fine without a degree using an alternative path.

There's something called survivorship bias. Statistically, people without a college degree do much worse than those with one. And don't for a moment think that those who do worse are just slackers. Many doors do not open for a person without a college degree.

4. My passion is business/finance, that is most likely what I will study.
5. I don’t know what type of business I want to run, I just know that I want to run one.

You do need some domain knowledge to run a business. The business/finance knowledge is obviously critical too.

Learn to have your own definition of success and don't let the hamster wheel crowd define it for you.

You're so far ahead of your peers in your thinking, that the probabilities are high that you will do well irrespective of what you choose. Good luck.

 

[marinauser]

Going straight from high school to a job was still pretty common in the early 70s. The steel mills were still hiring in those days as were many other manufacturers where you could get a good job. I would say by the late 70s to mid 80s that was becoming much more difficult. Surprisingly, the percentage of males going to college hasn't changed that much over the years since then - however, many of the men not going to college went into lower paying jobs than were available in the 60s and 70s. Good stats here: https://nces.ed.gov/programs/digest/d99/d99t187.asp

 

[finnski1]

I'm not sure it was ever true. When I graduated from high school in 1977, that did not appear to be the case; I had to join the military to get a job. I was 25 when the young wife and I got married, and we both had to work after that. It was not until we were 33/31 that we were able to buy a house.

Ha. I graduated in 1977 as well and got married at 25 also.
We were 31(me) and 34(DW) when we bought our first house as well.

 

[CRLLS]

In my personal experience, getting a job out of HS in the early 70's was not a problem. The problem was later on in life, when needing a job due to shutdowns and right-sizing. Regardless of my experience and past performance, not having the college diploma made it difficult to get the interview let alone the job. I managed to be paid well during my career in a technical field. My lack of diploma was a big factor in my ER. I would strongly recommend getting the paper to anyone today. The days of getting a job with a future out of HS are pretty much gone IMO, There are exceptions of course, but they are few and far between, not the norm.

Married at age 20-11/12. Bought our 1st house at age 25. Had 1st of 2 children at age 26.

 

[brett]

Post secondary education, college and university, changed my life.

Career opportunities, financial advantages, etc were benefits. The other benefit was life enrichment. Looking back, I am so thankful that I had the opportunity, made the effort, and moved forward with my life.

Invest in yourself.

 

[Kathe555]

My Dad never went to college. He was a welder and saved his money, bought rental properties, and then got a great job in Alaska.

He was able to retire at age 50 but waited until he was 55. He never brought stress home with him, unlike most of us that work white collar jobs.

The issue with blue collar jobs is the sphere of influence, in many of those industries, that makes you want to spend all of your money on fancy cars, motorcycles, boats, etc.

 

[socca]

The real "college experience" is learning how to learn, learning how to think critically and for yourself.

Academia remains one of the best places to gain an appreciation for - and practice - strenuous rational (SR) thinking (as opposed to lazy emotional (LE) thinking). Another good place to experience and practice SR thinking is in a corporate research lab; however, to get a corp research job you'll usually need academic credentials.

There's a lot more that could be said about the difference between SR and LE thinking. Let's just say that some folks believe that humans are at their very best when engaged in SR thinking.