Why go to college?

Nowadays some people question whether or not it is worth it to go to college. Let’s face it – college is not cheap, and it typically takes at least four years to earn a degree. In fact, it is expensive to attend college, especially if you go out of state, or to a private school. For both of you, I am estimating that it will cost close to $100K for your four-year degree. As you would expect, I have thought about this topic, completed some research, conducted my own analysis, and reached the conclusion that college is worth the investment of time and resources. Here are three compelling reasons why you should go to college.

1. You will learn about yourself – college offers the opportunity to figure out who you are…really. At college you get exposed to a lot of new things – new people, new places, and new ideas, to name a few. All these new experiences will help you learn more about yourself. I think it is critically important to take the time to learn more about yourself before entering the working world. You can do this through classroom experiences, social interactions, as well as self-reflection. While in college, it is likely that you will have more free time than any other point in your life. Take advantage of that time to learn about how you are wired, identify your strengths, your weaknesses, your passions, etc. Recently I had both of you complete the Myers-Briggs personality profile assessment. You learned about your personality – what you are like. In college, you can take this data and learn even more about who you are. It is worth it to know about yourself before venturing out into the world.

Personality types
Personality types

2. You will learn about the world – the academic experience in college is much different than in high school. You finally get the opportunity to take classes in subjects that interest you and learn more about the world. The working world offers many choices. Most colleges offer a plethora of choices when it comes to classes, majors, and research topics. College degrees range from technical subjects like computer science to the liberal arts like English, and everything in between. Some students will be preparing for the business world by studying marketing and finance, while others will focus on becoming an expert in playing a musical instrument. The choices seem endless at some colleges. It is easy to get overwhelmed. My advice is to take a diverse set of classes the first year, or two to figure out what interests you. Then, declare your major, and focus your studies on the topic that will become your job afterwards. Don’t lock into a major too early like I did, and definitely don’t take forever to figure it out.

3. You will position yourself for the future – let’s get practical for a moment. The research shows that on average college graduates make more money than those without college degrees. Simply put – employers pay more money for college degrees than for high school diplomas. Some will argue that some of the richest men in the world didn’t complete college (e.g., Bill Gates and Mark Zuckerberg). Yes – that is true, and there are others. But, they are the exception, not the rule. See the graphic below for more data about earnings potential.

Earnings potential based on education
Earnings potential based on education

I am not saying that money is the primary driving factor for getting a degree. I am saying that it may be challenging to earn a decent living in the United States without a college degree. I would not enter the workforce without one if offered the opportunity. There are counter arguments to everything I have written. I looked for a video about this topic with a perspective from someone more your age. The Youtube video below discusses this question. I actually agree with what they say regarding reasons why you would not go to college. If you know exactly what you want to do in life and getting a degree is not required, then it is worth considering skipping college. But, I would not make that decision lightly. A good college education has been a critical success factor for many in our family.

I am putting a warning here about the video. It does contain some profanity, so if that upsets you do not watch it.

Follow the 10-10-80 rule

Gavin finished his first summer job recently. He earned a fair amount of money and asked me about the process I use for managing my money. Gavin is just learning about money. I recommended that he keep it simple, and follow the 10-10-80 rule. This formula represents how you should allocate the money you earn – save 10%, give 10% (some call this tithing), and spend the remaining 80%. I cannot remember when I learned this rule, but I have tried to use it over the years. It seems to work well, although it can be tempting to spend more than 80%, especially if you experience a windfall.

1. Save 10% for yourself – there are multiple reasons to save 10% of your paycheck. First, it is helpful to have an emergency fund to deal with surprise situations that may arise. Opinions vary about how much money you should have in an emergency fund. One month salary is a good starting point. Second, you may want to save money for a specific purchase so that you don’t have to borrow money and pay interest. In general, I like to stay out of debt as much as possible, but I think it is okay to borrow money for some purchases. For example, you will likely need a loan if you decide to buy a house. Third, you will need money for retirement. In fact, you will likely need a lot of money. Start saving early for retirement, so that you don’t have to play catch-up later on. I did not save nearly enough early on in my career and am paying the price now. Avoid this mistake if you can. Most companies offer employees ways to save for retirement. Take advantage of these savings opportunities. Here is a video that talks about various ways to save for retirement.

2. Give 10% for a worthy cause – it honors God and helps those in need. I would love to say that tithing is easy, but it can be a challenge to give away 10% of your money. I recommend starting early so that it becomes a habit. Don’t tell yourself that you will give money away when you earn more and can “afford it”. I think it actually becomes more challenging the more you make. Once again, keep it simple. If you are a member of a church then you should tithe to that church. The tithe is intended for the church to operate and support the local community. If you are not a member of a church then look for a worthy cause to support. Plenty of them exist. I have taken different approaches when it comes to charities. One year I decided to support as many as possible – even with only a small amount. More recently, I decided to focus my donations to a few specific charities that I am passionate about. For example, this year I am focused on the Lead the Way Fund. They do great work. Lastly, some charities are not worth supporting. They spend too many resources fund raising, or other events, rather than making sure the money gets to those who need it. For example, I used to send money to the Wounded Warrior Program, but stopped due to a recent scandal about how they were wasting donor’s money.

3. Spend 80% to live your life – this part covers the rest of your expenses like housing, food, utilities, clothes, and other bills. 80% sounds like a lot. Not spending more than that seems easy, but I will warn you that it is not easy. What is easy is spending more than you earn by using credit cards and other methods for borrowing money that you do not really need. Trust me, it is really easy to buy stuff, esecially nowadays. You don’t even have to leave your house to shop and they will deliver many things straight to your front door. I am a big fan of online shopping, but it can be a slippery slope when it comes to spending money.

Lastly, I have warned you before about the dangers of credit cards, and will reiterate to be careful. At one point in my life I wracked up over $10K in credit card debt and had to refinance our house to pay off the debt. Really big mistake on my part. You should not be shocked to learn that the credit card company never called me to ask why I was spending so much money. The reality is that we had just moved and it cost a lot more money getting the new house set-up than I anticipated. The credit card company did not care because they make money out of the deal. The more I borrow, the more they make.

Managing your money can be tricky. I recommend keeping it simple, following the 10-10-80 rule, and avoiding debt as much as possible.

Here is another video in which Dave Ramsey and Chris Hogan answer a question about retirement from someone who is 23 years old.

Be picky about being picky

In America, we have a lot of choices when it comes to the things we buy. Think about it. When is the last time you bought something and there were no options – only one item for purchase. If you go to a restaurant you will usually receive a multi-page menu describing all the various options. The Cheese Cake Factory menu is thick as a book. It can be overwhelming. Visit an American grocery store and you see how many different kinds of Ketchup there is. I like hot sauce. It is amazing the number of options you have when it comes to buying hot sauce. Let’s talk about Starbucks – the options seem unlimited. It is a pet peeve of mine to stand in line behind someone who takes forever to order their drink. It is not like you are making a life changing decision, but you would think so based on how difficult it is for some patrons to make a selection. Even after you order the barista may ask you more questions about what you want – whip or no whip? Really.

I am a big fan of not overthinking things when possible. With that in mind, I recommend that you not waste your mental capacity on trying to figure out what to buy. Look at your options, determine what you like, calculate what you can afford, and then buy it. Don’t spend too much of your brain power trying to buy just the right thing. You can drive yourself nuts if you do. If you get it wrong, it probably will not be a big deal. There are three exceptions to this approach that I want to share with you so that you can be picky about being picky.

1. Quality vs. quantity – you will buy many items in large quantities. Don’t waste too much time picking these items. For example, I run a fair amount and like to drink Gatorade afterwards. Gatorade comes in many types and flavors. I like G2 because it is low calorie, and am not that picky about the flavor. When shopping for Gatorade I buy whatever G2 flavor is on sale. If none of it is on sale, then I buy one of my favorite flavors. Problem solved. Wristwatches are another matter. It is unlikely that you are going to buy multiple watches at the same time. In fact, you will probably only buy a few over your lifetime. In this case, do some research so that you make an informed purchase. I don’t have a lot of money, so really expensive watches are out of the question. I own two watches – one informal, and one formal. I wear a Timex weekender watch that I really like. It costs less than $100. You can change the straps on the watch to match the clothes you are wearing. For work, I wear an Invictus watch. It is stylish and only cost a few hundred dollars. Nothing fancy for me.

Timex weekender wrist watch
Timex weekender wrist watch

2. Premium purchases – you will buy a few things that cost a lot of money. Cars, houses, and college tuition are top of list for me. When spending a lot of money like hundreds of thousands for a house, you should spend a lot of time looking, researching, analyzing, and comparing before making a decision. Work with a good real estate agent who can help find you the right house, at the right price, in the right neighborhood. Some shows on HGTV make it seem like you can find a house quickly. I prefer to take my time and spend a lot of time thinking before buying. Bottom line – you should love the house you buy. If you don’t love it, then hold off until you find one you do. When it comes to cars I never buy the first day I visit a dealer. I don’t want to make an impulse buy. It is an easy mistake to make when buying a car. I prefer to visit multiple dealers, do a lot of research, and spend some time thinking about the purchase. Three car purchases I made were good – the Accord, Tacoma, and my Jeep. The Lexus I bought was a mistake. I should never have spent that much money on a car. Choosing a college is similar – do lots of research to include visiting each school before making a selection. The good news is that researching cars and colleges is much easier these days with all of the online tools. These did not exist back when I was your age.

Jeep wrangler
Jeep wrangler

3. Money makers – you should save and invest some of your money with each paycheck so that you can retire one day. When it comes to investments there are an overwhelming number of options. Be picky about who you allow to invest your money. Many financial institutions will promise high returns and low risk. They use this marketing lingo to justify charging you high fees for managing your money. Don’t fall for it. Every dollar you spend on management fees is one less dollar that gets invested. It is really hard for money managers to “beat the market”, and they know it. I have done a fair amount of research on this topic and decided to keep things simple. I invest in index mutual funds with low management fees. Several reputable companies offer these type nowadays. I would never attempt to invest my own money in individual stocks. It takes time and energy, and expertise that I don’t have.

In most cases I don’t think there is much value in being picky about what you buy. There is a time and place to be picky. I recommend the three listed here. In case you are wondering why we have all of these choices, the video below explains why:

Blondie Forever

This week I saw the band Blondie in concert at Wolf Trap. Beforehand I was not overly excited about the concert. I was looking forward to tailgating in the parking lot with friends but did not have high expectations of the band’s performance. You may not know a lot about Blondie. They were a moderately famous band from the 70s and early 80s. They had multiple radio hits and were pretty well known back in the day. Blondie’s greatest hits album is a good representation of their early musical career if you want to sample it. Boy was I surprised when Blondie took the stage. They were really good and put on a great show. Afterward, I thought about why Blondie was so much better than I expected. I can think of three reasons.

1. Be your best – Blondie opened the show with the song “One Way or Another”. It is a really up beat song, and one of my favorites by them. They really set the tone by starting the show with a bang. I noticed right away that their lead guitarist was not one of the original members. He was a rather young man full of talent and energy. I appreciate the fact that Blondie was not afraid to augment their line-up with new members. It made them a stronger band and helped them be their best for their fans. Don’t be afraid to include others who can help you be the best that you can be, even if you become rich and famous.

2. Continue creating – Blondie played several songs from their new album, Pollinator, during the show. I have listened to their new album several times, and it is actually pretty good. Not their best album, but better than most new music I have heard this year. Whenever a famous band puts out and plays new music they are taking a risk. Their fans are always going to compare the new music to their old hits like I just did. This comparison is not really fair, but it happens nonetheless. I appreciate the fact that Blondie continues to create – writing new songs, recording them, releasing them, and playing them live. One of my favorite bands, U2, takes a similar approach. They continue to put out a new album every few years. In contrast, many other bands stopped creating new music years ago. Instead, they rely on their past accomplishments and simply play their greatest hits during their concerts. Simply put, this approach is lazy. Artists should continue creating. I want to encourage you to continue creating over your lifetime. Don’t stop and rest on your laurels, relying on your past accomplishments to carry the day.

Blondie new album
Blondie new album

3. Keep kicking – Blondie’s lead singer, Debbie Harry, is no spring chicken. In fact, she is over 70 years old. But you would never guess that watching her perform in concert. She does a great job singing their songs, moving around the stage, dancing to the music, raising the energy level of the audience. I was really impressed with her performance. Let’s face it – it is probably no easy task for Debbie to complete a concert. Rock-n-roll is a young person’s profession, but you would never guess that watching Blondie in concert. They are still touring, and keep kicking. I sure hope I have her kind of energy and enthusiasm when I am over 70 years old, and I hope you will too.

Just so it is clear – I am not endorsing Blondie as model citizens, or saying that you should act like rock stars. Rather, I am exploring ways to learn something new from them. I think we can learn something from everyone, as long as we are paying attention.

Here is a video from Blondie’s early days – probably their most famous song, “Heart of Glass”. It was filmed in a disco – old school.

Here is a video from their new album. The song is called “Long Time”