The Tuition Gap

If you've read any of my previous posts on college tuition, you'd probably get the sense that I'm a little frustrated with the current state of higher education.  Granted, some institutions provide a great product in the form of an expanded mind, but the cost is astronomically high.  It's almost a crime in how public and private higher education can mark up their tuition so high.

I was recently re-vindicated with this article from Business Insider which talks about the gap between tuition inflation, and the decreasing earnings college grads can expect.  I've attached the graph below.



There was once a time when someone graduating with a college degree could expect to increase their lifetime earnings more than what they had paid for.  If the above graph is any indication, you can see that the returns from a college degree are not what they used to be.  So what's causing these problems.  Well, the most glaring culprit is the increased availability of financial aid.  By proclaiming college to be within reach of a student's future income, more applications have been flowing through universities.  What's the best way for colleges to narrow their applicant pool?...increase tuition.  And so you now have a vicious cycle of higher costs wheres the economy and future job prospects have been flat at best.

The scariest part about student loans is that they never go away.  Unlike a mortgage in which you can walk away at any time and declare bankruptcy, student loans are unforgivable.  Even if you die, they get passed to your next of kin.  So be careful out there and assess your college options wisely.  Alternatively, why not apply for a trade school or two?  You would be making a great salary and could even own your own business.

Wonderful Moment of the Day: Seeing a rough looking guy on the Subway hold the door open for a young guy who clearly had a disability and needed a cane.  Situations like these make me think there's still hope for humanity.

The Rent Creep

If you have ever had an apartment or pay for rent, then you may know of this phenomenon I like to call the "rent creep".  To give you a little background, I'll use a legitimate story from my own experience.  Awhile back, I too was renting my own little apartment of sheer bliss.  Things were going great, and I had locked in a pretty decent rent for 1 year.  The rent I was paying for a 1 bedroom apartment within walking distance to a grocery store and my employment was $800/month.  A little high, but the cost savings from hardly ever driving more than made up for it. 

After my first year in the apartment, I received a notice from my landlord saying that they were going to increase my rent by $50 citing inflationary expenses.  Being the ever avid cost saver, I decided to do a little research.  It didn't seem right that my rent would be going up by 6.25% just because money became a little less valuable.  Luckily, the Federal Reserve keeps track of this information here, and I was able to quickly discover that inflation only occurs between 2-3% per year.  Armed with my new found knowledge, I quickly set up a meeting with my landlord, showed him my research and demanded that they not increase my rent.  Without much of a fight, they agreed, and I managed to ride out another year.

You see, landlords (like most everyone else), are opportunistic folks, and many of them have a standard policy of increasing your rent by a certain amount each year.  In an apartment building with 100 units, if they can get just half of them to accept the new terms, then they have increased their revenue by $60,000.  Subtracting an inflation rate of 3% and they just achieved a net profit increase of $31,200.  This is what I call the "rent creep", and landlords are hoping you don't put up much of a fight or even care. 

Often times, this type of price increase can occur across many different industries, notably the cable or phone bills.  If armed with the proper information, you too can intelligently make your case and avoid paying unnecessary prices.  A little data can go a long way.

Wonderful Moment of the Day: While playing a board game with my wife, a question came up as to which of the 7 dwarfs would she most be like.  She replied without hesitation "Cheapy"!

Great Self Improvement Resource

If you're like me, then today is the first day back after a nice week-long Thanksgiving holiday.  That means, that it's back to the grind, and time to get things done.  With that in mind, what better way to get yourself motivated than a list of 101 self improvement resources.  The fun folks at Pick Your Brain, have created such a comprehensive list that I encourage you to test out.  Here's my favorites from each category.

Self Improvement:
Dumb Little Man - A nice site that specializes in getting you motivated and making the best out of yourself.

Personal Development:
Life Optimizer - Just like the title indicates, this site produces some nice and concise posts on optimizing your life.

Mentally Stimulating:
Freakonomics Blog - If you liked the book by the same name, then you'll love this blog.  The contributors take a macro-economic look at all things and usually offer a twist.  This is a great way for you to become accustomed with some unfamiliar topics.

Business:
Get Rich Slowly - Get rich quick schemes make little sense and often leave you in tears.  This site takes the logical, and slow willed approach to creating a nice nest egg.  You can even learn a thing or two about personal finance along the way.

Educational:
Today I learned via Reddit - This one is my own addition, but let me tell you that it's great fun learning about all sorts of random facts.  Toady I Learned (or TIL) allows people to post interesting facts (usually references to Wikipedia articles) that will hopefully allow you to be a better conversationist at your next party.

Check out the site and let me know what you think.

Wonderful Moment of the Day: Reminiscing on the fun week I just previously had.

Black Friday Alternatives

It's Black Friday folks, and that means tons of shopping insanity.  Hopefully, with many big retailers keeping their doors open longer the night before, there is not as much craziness going on today.  The name Black Friday comes from the idea that it's the first day in the year to date that retailers finally make a profit (or are in the black).  The remainder of November and December are purely for profit at that point.  Some people really find some good deals today, but let me proprose some alterntives.

1.) Cyber Monday - stay at home, shop online, and have everything delivered to your house.  Pretty laid back if you ask me.

2.) Black Friday Weekend Craigslist shopping - Many people who shop on Black Friday are purchasing replacements for something they already have.  Imagine all the great deals you'll get by searching Craigslist in the coming days.

3.) Find Deals and Donate to Charity - If you purely love the rush of the crazy shopping experience, then why not apply your shopping skills for some good.  You can donate your purchases to charity and even score some nice tax write-offs. 

4.) People Watch -  This is actually kind of what I do on Black Friday.  Go to a mall, sit on a bench, and watch the craziness unfold around you.

5.) Sleep in, and enjoy your day - Relax, sleep in while digesting left-over turkey, and read about the craziness in the paper or online.

Whatever you decide, this day marks the first day in the Christmas season, so get ready for all the singing.

Wonderful Moment of the Day: Great Deals!

Being Thankful

With Thanksgiving tomorrow, I thought it appropriate to highlight some of the things I'm grateful for in my own life:

1.) My Wife who has been my biggest fan
2.) My Family who has supported me throughout my life
3.) Friends
4.) My Church and faith
5.) The determination, financial means, and understanding to manage my diabetes.
6.) My goofy cats
7.) Living in an age with so many great and interesting technilogical advances
8.) Being a citizen in the greatest country in the world (admittedly biassed opinion)
9.) Great neighbors
10.) Being considered one of the richest 3% of the world (literally, if your family makes more than $30,000/year, you are in this category too)
11.) My education which has enriched my life
12.) My job which gives me the flexibility to enjoy my life
13.) Just to be safe, my Wife again...she reads this thing :-)

What are you thankful for in your own life.  It often helps to make a list.

Wondeful Moment of the Day: Having like 9 members of my family stay the week.

The Power of Metrics when Buying a Car

Buying a new car is never an easy experience.  Your filled with all sorts of conflicting emotions ranging from anxiety, to sheer excitement.  During this rare lifetime event, you may even be persuaded to spend more than you originally thought.  After it's all over, you come out with a large monthly payment and maybe some regrets, but I'm here to tell you it doesn't have to be that way.  My secret weapon when shopping for a new car is the use of metrics, and I'll highlight one here that may be useful to you.

I cannot tell you the importance of metrics when comparing two complicated purchases.  Think about all the variables that go into purchasing a new or used car; how many miles does it have, will it have a warranty, what are the extended features, etc...  Depending on your resolve, you could end up with all sorts of prices.  My first step when purchasing a car is to determine what make and model I want to purchase.  This is sort of the pre-work that you must do before you even get to the dealership.  Research online whether the car you want has good reviews, talk to other people that may have this car, and see if you can "test drive" a friend's car.  This type of pre-work will help you build some resolve and get through the dealer experience unscathed.

Now that you are at the dealership and know what kind of car you wish to buy, the next step is to determine which car is the better value.  Below is an example of 3 Toyota Prius' (I believe Priora is the plural), each with different manufacturer years and different mileage.  To best compare these vehicles, I created a metric called $/Life (or how many $ per mile left in the car I will have to pay).  The basic formula is (Price/(200,000-current mileage)).  I figure 200,000 is a good mileage for the life of a car.  If you're a frugal person like myself, then you're going to drive your car until it's dead!  If you feel uncomfortable using the 200,000 mile limit, you can switch it to 100,000 miles or whatever else you like.

Based on the metric, you can see that the 2008 model prius is the best deal given the current mileage and price.  Now this should not be the end all, be all in your buying decision.  Understand that each car has different features and model years could be very different from each other.  Where this type of comparison comes in real handy is if you are comparing the same model year and make between dealerships. 

Next time you have to buy a car, give this a shot or create your own metric.

Wonderful Moment of the Day: 3 days until Thanksgiving!

Steps Towards Investing

Awhile back I wrote about the Heirarchy of Wealth in response to some questions around where you should be putting your money.  If you recall, it consisted of a pyramid where you worry about making money and paying off debt all the way up to maximizing your return through private stocks.  I wanted to revisit this topic and make it a little more simplified while only focusing on the investment portion.  I think many people tend to jump right in to owning personal securities (stock) before they've efficiently maximized there other options.  Allow me to elaborate.

Say you have some extra money lying around and you currently don't invest any of it.  If your business/corporation/company offers a matching 401k plan, then you need to take advantage of it immediately and at least contribute enough funds to meet the maximimum corporate contribution.  This is free money and will already get you on a good footing. 

After reaching your minimum 401k match, you now have a little more freedom and it is time to set up an IRA.  I'll get into the topic of an IRA or Roth IRA in the future, but my experience tends to favor a traditional IRA over a Roth.  The nice thing about an IRA is that you can basically invest in anything and receive tax benefits.  For 2013, you can contribute up to $5,500 to your own personal IRA tax free.  You'll have to pay taxes when you withdraw at retirement, but this is a great opportunity to lower your taxable income while you are still early in your career. 

Only when you have contributed the maximum $5,500 to your IRA can you go back to your 401k and maximize your contribution there.  In 2013, you can contribute up to $17,500.  When all is said and done, you will have contributed at least $23,000 towards retirement before you even start playing around with your own personal taxable brokerage account.  At this point, you will be on a better track than most people in the world and can afford to take a little risk.

I'll devulge more strategies in the future, but at least this will get you on a good footing.

Wonderful Moment of the Day: Cold day, but no wind...the wind here can be brutal.

Walking Off the "Cliff"

With all this talk about a "Fiscal Cliff", I'm sure many of you are wondering exactly what this might be all about.  Given the attention its garnered in the news recently, I thought it appropriate to discuss it and its potential impacts on the market.

So what is the fiscal cliff?  In short, it' a confluence of expiring tax reductions and government spending that when combined together could create enough of an impact to potentially send the US back into a recession.  In a little more detail, it is composed of the following:

1.) Income taxes will go up
2.) The capital gains tax rate will increase to 20%
3.) Dividend income will be taxed as normal income
4.) The estate tax will revert to a top tax rate of 55% with an exemption amount of $1 million
5.) The payroll tax cuts expire
6.) Automatic defense spending cuts kick in January 1st
7.) The US federal debt ceiling will need to be increased
8.) Other miscellaneous tax cuts will expire

So what does this mean to me?  Well, in the short run, expect your taxes to increase slightly (probably around 2%).  The sad thing about this is that the 2% increase coupled with about a 3% increase in the inflation rate means that if you don't get at least a 5% raise this year, then you will not be taking home as much money as you did the year before.  The other issues pretty much only involve you if your company has some connection with the federal government or if you trade a significant amount of money in stocks or other dividend related incomes. 

With that sad, not all is bad.  No politician wants this whole thing to erupt into a deep recession on their watch, so I suspect that many of them will put together some sort of comprise on the issues.  However, expect the markets to fluctuate significantly over the next month or two.  For long term investors like ourselves, this probably won't mean too much, but if you have some cash on the sidelines, it will definitely be a good time to buy some great stocks or mutual funds at bargain prices. 

Nobody is looking forward to another recession, but keep your eyes out for the diamonds in the rough.

Wonderful Moment of the Day: Turtle Truffle Pie!

Remembering Our Veterans

Flanders Fields

If you live in the United States, chances are you may have the day off today (especially if you work for the government or the financial industry) in order to take the time and remember our veterans.  The actual holiday was yesterday, but our nation has decided that we will still get a day off to celebrate the many sacrifices these soldiers and families have made.

In case you were wondering how Veterans' Day started, you can read up on it here.  In short, Veterans' Day was commemorated on November 11, 1919 to celebrate the end of WWI.  At the time, it was known as Armistice Day, but would soon enough be changed to "Veterans Day" as another world war rocked the world.

Besides getting a "free" day off from work, I encourage you to take the time and call up a friend or family member who may have or is currently serving in the armed services and thank them for all the sacrifices they have made.  For those of us who have never experienced combat, like myself, I can only imagine the things these young men and women have seen.

In commemoration of Veterans' Day, I leave you with the poem "In Flanders Fields" written by Canadian Lieutenant Colonel John McCrae:

In Flanders Fields the poppies blow
Between the crosses row on row,
That mark our place; and in the sky
The larks, still bravely singing, fly
Scarce heard amid the guns below.

We are the dead.  Short days ago
We lived, felt dawn, saw sunset glow,
Loved, and were loved, and now we lie
In Flanders Fields

Take up our quarrel with the foe;
To you from failing hands we throw
The torch; Be yours to hold it high.
If ye break faith with us who die
We shall not sleep, though poppies grow
In Flanders Fields

And so, with that I wish all the Veterans a wonderful and blessed holiday and praise you for the many sacrifices you and your family have made.

Wonderful Moment of the Day:  Celebrating the freedoms in which other men and women have fought and died for.

The Continued Benefits of Ting.com

Back in September, I wrote about our new phone plan search.  The Wife and I were longtime fans and users of Verizon, but our contract was expiring, and we just felt that we were getting charged way too much and that getting smart phones through them would cost and arm and a leg.  Since the writing of the last article, we bit the bullet, dropped Verizon and moved our numbers and plans onto the startup Ting.com which is owned by a domain provider called Tucows.

If you recall from my previous article, Ting seemed to make the most sense for what I was looking for in a phone provider; cheap bills, nationwide service, no prepaid minutes, and a reliable customer service experience.  With Verizon, my wife and I had to LG feature phones with texting disabled which cost us around $78/month.  All that is after you deduct 20% of the bill due to a corporate discount my company has with Verizon.  This seemed way too much money for what we were getting.  Sure, the phone service was great and I hardly ever had a dropped call, but we were living in the 90's and wanted to make the jump into at least 2005.

We signed up for Ting through their simple online form which basically consisted of telling them my old Verizon account numbers and our old phone numbers.  In a matter of a week, we got our first two LG Optimus' (Optimi?) and were on our way.  The setup was rather simple too, however there were a few problems along the way.  Since we were buying refurbished phones, mine didn't have any sound and my wife's broke down after about a week of use.  No worries, Ting has a year warranty on all phones, and so we promptly received two more at no cost.  They even supplied a return box which to send the old phones.  Ting does have better phones, but once a cheap guy always a cheap guy.  The initial purchase of the phones were only $68 a piece which is far from the top of the line models you see out there now.

Now the good news.  As the image at the top of the blog suggests, my new monthly payment was $46.79 netting me a savings of at least $30/month.  Ting has a graduated payment plan which means you pay for what you use on a step basis.  This first month, I used a bunch of minutes since I was downloading apps and playing around.  I expect this to go down drastically and will probably only be paying about $35-$40 per month.  Doing a little math, and I find out that in a little over 4 months, I have saved enough money to pay for the purchase of the two new smart phones, and over two years (which would have been signing onto a new contract) I will have saved $720.  Think of all the stuff you could use $720 for.  If you're not happy with your current phone plan or company, considering switching today.

Wonderful Moment of the Day: Had a delicious ham, salami, and capricola ham sub for dinner!

Dollar Shave Club Update

It's been a couple months since my adoption of Dollar Shave Club, and you may have read my first article  back then.  A couple of developments have occurred in the last few weeks, and it seems that the company is getting some further media recognition, so I thought it would be a good time to update everyone on my experience thus far.  

Recently, Wired wrote an article about a recent infusion of investment dollars into Dollar Shave Club.  If you recall, their business model revolves around providing no-name cheap razors delivered to your doorstep each month without any hassle.  It appears that going forward, Dollar Shave Club has some more robust ambition in pursuing even more products in a man's personal care.  Expect to see soon shaving cream and the likes in your medicine cabinet in the near future.  

As you may have read in my first article, I started my experience with Dollar Shave Club by ordering the 4x. This was a very sturdy and nice 4 bladed razor that came into my house on a monthly basis with 4 razor blades at a total cost of $6/month.  At the time I started this purchase, the simple twin razors were not available, and so I anxiously waited.  About a month went bye, and I received a notification that they simple twins were now available, and I diligently subscribed.  I received the package, opened it up, and found the razor blade in complete shambles.  Everything had been destroyed.  Chalking this up to just bad luck, I wrote Dollar Shave Club and email, and in about a week, they sent me another handle.  Sure enough, the whole handle was completely destroyed again.  Make no mistake, the simple twin is a piece of crap.  If the handle cannot even survive the mailing, how is it going to survive multiple uses.  Plus, the simple twin costs $3/month ($1 for the blades, and $2 for shipping and handling).  Realizing that I had made a terrible mistake, I went back to the 4x, and have been satisfied ever since.  It should also be said that the company did send me 2 simple twin handles in the mail again, but at this point I had it with that product and have moved on.  

It short, I do think Dollar Shave Club has a good business model and is evident by their excitement in funding, but I would stay clear of the simple twin.  

Happy Shaving!

Wonderful Moment of the Day: Sausage and fennel stew...yum!

We are Not in a Recession

Recession is a popular term in this day and age, and many people point to it as an accurate definition of what  the current state of the US economy is in.  I can't tell you how many times people have told me "recession this" and "recession that", as it is almost some sort of explanation for all their problems.  In fact, they even go out of their way to use some of the media bites they often hear and call the current market "the great recession".  These views are all incorrect.  In fact, we have been out of a recession since the 2nd quarter of 2009.

A recession by definition is two consecutive quarters of negative GDP growth.  As demonstrated by the chart to the right, the US has had positive GDP growth since 2009.  That said, it should also be noted that the US economy is not very robust and is only currently growing at about 2-4% per year.  

Alternatively, the economy has affected many individuals differently than others.  One of the most striking metrics for showing how the recent economy has affected others differently is the unemployment rate by education level.  Currently, those who have a 4 year college degree have an unemployment rate hovering anywhere between 4.5 and 6.8%.  Higher than the historical average, but pretty good overall.  The real situation comes with those who only have a high school degree.  For them, the unemployment rate is approximately 24%.  That seems almost absurd to think that 1 in 4 people without a college degree are unemployed.  Now if you take into consideration all the people who consider themselves underemployed (not working enough), and you have a far more significant problem.  

It's no wonder why many people consider the current economy to be in recession.  With unemployment high and affecting certain groups more adversely  people tend to find catchy words to classify the current state of things.  Instead of using recession, consider using the word "stagnation".  For example, "boy things are pretty bad in this stagnant economy".  Not only are your accurately describing the situation, but you might even wow some of your friends.

Wonderful Moment of the Day: Don't forget to vote tomorrow!

Worst College Majors for your Career

Keeping with the college theme this week (don't ask me how these themes come to me), I've found another article on the 10 worst college majors here.  As you may know, I've recently become a fan of Kiplinger's personal finance magazine and website, and I think they are chalk full of useful information.  To rate their list of majors, Kiplinger's looked at 6 metrics from average median salary to the likelihood of working in retail after acquiring said degree.  With that sad, here is the short list from least to worst:

1.) English
2.) Sociology
3.) Drama and Theater Arts
4.) Liberal Arts
5.) Studio Arts
6.) Graphic Design
7.) Philosophy and Religious Studies
8.) Film and Photography
9.) Fine Arts
10.) Anthropology

As someone who graduated with a liberal arts degree, I can tell you that it's not all bad.  In fact, your career is what you make of it, and the amount of time and effort you put forth.  I'm actually quite proud of the fact that I can quote Enlightenment philosophes and discuss a plethora of subjects when I'm at a social setting.  This skill is much more difficult to learn than most jobs.  In fact, I learned pretty much everything for my current job while doing it.  Plus, you can always go to graduate school to learn a more specialized trade.

I am a little surprised that graphic design is on the list.  There has been a number of times where having a good graphic designer would have definitely come in handy, especially with the look and feel of this blog.  That said, if you are a graphic designer and can help make this site look better, feel free to contribute and I'll publicize your name to all that I tough.

Wonderful Moment of the Day:  Got to use the word "philosophe" in a sentence.