With all the talk about the college tuition bubble in the United States (link for further information), I started to think whether it financially makes sense to compare 1 highly educated field of profession to that of something considered less skilled. For this thought experiment, let us compare the first 10 years of post high school income potential for two very different people. Raul just graduated from high school and is dutifully anxious to start his studies at Pre-Med U. From there, he hopes to go on to medical school, attend a residency program, and start earning the big bucks. John on the other hand has a different route in mind. He has decided to work at his local ACME plant as a fork lift driver. Let's compare their income over the course of 10 years and see who is better off.

First, we start with John since the math is a little easier. John starts his job at ACME right after high school making $30,000/year. This may be a little high, but we'll just assume he managed to acquire some overtime as well. Now assuming a 3% cost of living adjustment each year for inflation (i.e. in year 2 John will be making 30,000 x 1.03 = 30,900, etc.), John will have cumulatively earned $343,916. Seems pretty good. This is also assuming John doesn't live below his means and invests for his future.

Let's look at Raul now. Right out of high school, Raul gets accepted into Pre-Med University where he pays a yearly tuition (we'll assume it's all inclusive at this point and nets out whatever summer job income Raul might acquire) of $20,000/year with a 3% COL adjustment. Total debt over those 4 years equals $83,673. Now Raul gets accepted into medical school and starts with a tuition of $22,510 and over the course of 4 more years, acquires another $94,174 in debt. Total debt before Raul even enters the workforce is now $177,847. Economist have a little trick they like to add to this debt number which is the opportunity cost if he had instead became a factory worker and made $30,000/year. Adding in the opportunity cost over that 8 year span to Raul's hefty debt load means that the true cost for all that education now equals $444,617.

So far, it doesn't look too good for Raul. After 8 years of schooling, Raul now gets to earn some money via a residency program where he starts off making $45,500. After 2 years of this work, we will have reached the 10 year mark since graduating high school. Let's take stock of what we have thus far. John has made $343,916, whereas Raul is in the negative by $352,252 meaning John made $696,168 more than Raul in the past decade.

In fact, becoming a doctor is so brutal, that Raul will not have earned more money than John until year 16 when Raul had been earning $170,000 per year for the last 5 years. This is also assuming Raul doesn't pursue a specialty and has to spend more time as a fellow making low wages. In the end, Raul will have made more money than John if they had both worked at least 16 years, however, here's the catch. If John had been wise and religiously saved as much as possible all the while living very cheaply, he theoretically, could be retired at this point whereas Raul now has to work to pay off all that debt.

This lifestyle for Raul also takes a dramatic toll on family life. Potential children and marriage could be pushed off for years until Raul is done with school. If you plan on having kids in your 20's, then becoming a doctor is probably not the best option for you.

The way life deals out our deck of cards can vary drastically from person to person. Unfortunately, there's not much we can do about where we start, but we do have choices on how to live our life from that point on. Being an honorable person, working hard, and practicing sound financial principles will put you on the right path towards a prosperous future. Besides, who says Raul is living within his means?

Wonderful Moment of the Day - Planning my Great Aunt and Father's birthday parties at my house.

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