higher education | Well Heeled Blog

Goodbye $23,000: The Biggest Check I’ve Ever Written

Written by WellHeeled on July 2, 2012 · 46 Comments

This check just says it all!

Remember when I said I want my graduate school to just take my money NOW? Hmmm.. maybe I shouldn’t have wished for that day to come so quickly! The financial payments office just notified me that our accounts are open and that my portion of the first semester tuition plus fees is due: $23,000. With a VERY deep breath, I moved all the money in my savings account into my checking account and wrote the five-figured check. I have never ever written a check for so much money, and it’s a little sobering. Graduate school is official… the cash bleeding has begun.

The good new is that I have successfully paid for the first semester of graduate school with cash. One down… three more semesters to go.

What is the biggest check you’ve ever written, and what was the occasion?

What Should a Personal Finance College Class Look Like?

Written by WellHeeled on March 13, 2012 · 41 Comments

The lack of financial literacy among young people is a perenially hot topic. Who is responsible for teaching young adults the basics of earning, saving, and investing their money?

Some colleges are taking up the challenge. My cousin, who attends one of the Seven Sisters, told me that her school offers a week-long personal finance class during Spring Break. (Huzzah!). So instead of flying home, she is going to stay on campus and attend the class instead. I was so excited to hear this – personal finance is a sorely needed subject, but most colleges don’t cover this at all. I received an excellent education from my school and took several semesters of accounting, macro-economics, and micro-economics. When I graduated college, however, I knew NOTHING about credit card rates, basics of asset allocation for personal investing, where to set up my cash accounts, etc. And let’s be honest, not everyone has to learn about the Argentine peso crisis, but everyone needs to understand how to manage their own money.

Fortunately, I fell into the world of personal finance blogging. So my deer-in-the-headlights period wasn’t as long as it could have been. Still, it would have been helpful to have a personal finance class before graduation, as part of a comprehensive education to launch young adults into the real world. I’ve discussed in the past whether schools have a responsibility to teach money management to students, so I’m glad that my cousin’s school is taking proactive steps to address this issue.

So, what SHOULD be in a week-long personal finance class? Here are my suggestions:

Setting up a budget and understanding real-life expenses. Or, a discussion of where does your gross pay actually goes to before you are left with your net paycheck, and then your discretionary income. Making $60,000 or doesn’t mean you HAVE $60,000 to spend. Sounds like a simple concept, but the first time I got my paycheck, I was shocked at the big discrepancy between my gross salary and my net income. I believe my reaction was along the lines of “Who is this FICA and WHY is he taking my money?”
How to pay for car / transportation. This should include discussion of car loans, down payments, auto insurance, etc.
How to handle student loans and possibly, prepare for graduate school financially. The class should talk about under what conditions can student loans be discharged (almost none), how long it will take you to pay off a student loan if you stay on a 10-year, 20-year, or 30-year payment plan, talk about the different types of student loan payment plans available and discuss the pros & cons of each, and map out what is the income you will need to earn to service your debts.
How to use credit effectively and responsibly. Over the course of a lifetime, those with an established, strong credit history save tens of thousands of dollars thanks to lower interest rates on everything from a mortgage to car financing to private student loans. So no discussion of personal finance can be complete without talking about credit. I am a big believer that credit cards can (and should) be a part of one’s financial tool kit. I’d like to see a discussion on credit card interest rates, impact of minimum payments and effective interest paid, how to manage your credit score, where to get your free credit reports, etc.
Investing for long-term goals and retirement (a thorough discussions of 401Ks / 403bs, Roth IRAs, IRAs, and SEP-IRAs, etc. would be very important here). Also, there should be a conversation on risk, rewards, fees, and impact on performance.
Insurance needs – talk about disability insurance, life insurance, types of insurance and places to do more research.
Teach them why personal finance is sexy. Seriously! What can be better than taking charge of your own financial life?
Where to go if you need more information or help about personal finances. Books, nonprofit classes, etc.

What do you think should be included in a personal finance class for college students? Would you have found such a class helpful when you were going to school?

Question From a Reader: Where and When to go to Graduate School?

Written by WellHeeled on June 8, 2010 · 14 Comments

One of my readers, “Em,” is thinking about going back to graduate school so she can transition in a career in Human Resources. I thought I’d open her question up to all of you.

I am in a bit of a career rut. I received my BA in 2006, and have since been working in assistant/office manager/receptionist-type roles. I am 26, and have been thinking it’s time to start thinking seriously about my career and the steps I need to take so that I can start down an official Career Path. I know there are no typical, proven, Total Success Guaranteed ways to approach the elusive Career Path, that different careers have different requirements, and that people find their dream jobs in multitudes of ways. However, I am finding myself stuck in this rut, and not sure how to move forward.

I would like to pursue a carer in Human Resources, specifically in the area of employee onboarding/training and learning and development programs. In this job market, I’m finding that you need previous HR experience even for the most entry-level jobs in the field, and because I cannot figure out how one gains experience in a position that requires the experience to be hired (which came first, the chicken or the egg?!), I’m thinking about going back to school.

However, school costs money. I do not want to stay at my current job long enough to take advantage of their education reimbursement program (I’d be required to stay at least another two-three years, if I even qualify for it, which I might not, since it is hard to justify how an HR program is important to my role as a receptionist in a company that doesn’t even have an actual HR department), but I have been thinking about my options, and trying to see what is worth the investment.

There are a few Human Resource Management Certification programs that I’ve been looking into, ranging in cost from $1500-$6000. The higher cost comes with the UC Berkeley (extension) label, better classes, and a (somewhat) closer proximity to where I live (though it’s still about a half hour. The lower cost comes with a California State school label, less interesting-sounding classes, and a location that I might not even be able to get to (I would likely be attending these classes at night after work). The other option is a strictly online university, but I’m not sure that would carry the same weight as even a state school.

The other option that I have just started thinking about is some sort of Masters program, though I haven’t begun to research programs, schools or costs yet. I always said I would only go back to school if it was necessary for furthering my career, and I’m starting to think that it’s time, but we’re talking about a lot of money here! Although the other side of me says “$1500? That’s like one, nice vacation. Or my portion of two month’s rent. It’s not THAT much, if it means doors opening to a new career.”

How do you decide when a higher degree is a necessity for career advancement, and then how do you decide how much money is worth it to spend?

image source: studentbranding.com

Graduate School: (When) Should I Go?

Written by WellHeeled on April 5, 2010 · 29 Comments

Graduate school is a significant undertaking both in terms of time and money. During the last few months, I’ve felt some pressure from concerned family members about going to graduate school. I know they only want the best for me, but I’m glad I followed my gut instinct and pursued more work experience instead. A business school education has been a professional and personal goal of mine since graduating college, but right now is not the time for me to go. Bottom-line: I only get one chance at an MBA, so I wanted to do this right.

The answers to “Should I go to graduate school?” and “When should I go to graduate school?” depend on the individual. I know very successful people with no graduate (or even college) degrees. I know very successful MBAs who had only two years or three years of experience before they headed to business school (if you are a college student looking to get an MBA a few years after graduation, check out Harvard’s 2+2 program). But I knew going right now wasn’t the right decision for me. I wanted more experience before I go because I’d have more to contribute to and more I can gain from an MBA experience if I have a few more years of seasoning. From a financial standpoint, I’d like a few more years to bolster my savings so that I can minimize the loans I’d have to take out.

Graduate education, be it medical school, law school, business school, or other masters programs or Ph.D. programs, exacts a hefty price. Medical school takes four years and often costs $200,000+ in tuition and living costs. Law school is 3 years (full-time) and 4-5 years (part-time), and the costs cross into the multiple six-figure territory as well. Business school is shorter at 2 years, but the average total cost for full-time students range from $100,000 to $140,000 for the two year program.

Given the costs, it’s very important that before making such a big commitment, people understand what they are getting into, and what the purpose for such a commitment would be. Here are three helpful questions I’ve asked myself to determine if graduate school is right for me, right now:

What will you do with a graduate school degree?

You don’t need to map out your career from graduation to retirement, or list out every possible contingency, but it’s a very good idea to carefully consider what you can do with your graduate degree once you get it. The point of graduate school can be for personal enrichment or career advancement, although for most people it’s a combination of the two. But unless you have a substantial trust fund, you can’t make a career out of being a “professional student.”
Do you need a graduate degree? How will it help you achieve your goals? Some fields require a degree to enter – i.e. if you want to practice law, you need a J.D. If you want to become a pharmacist, you need a Doctor of Pharmacy degree. If you want to teach at the post-graduate level, you need a Ph.D. and published research. You do not need an MBA to do business, although an MBA can be particularly helpful for career changes.

When is the right time for you to go to graduate school?

Some students decide to head to graduate school right after college. Some decide to wait a few years or decades between college graduation and a J.D., an MBA, or an MD. If you go to graduate school right after college, you will still be in the “student mindset” and will be able to start your post-graduate career sooner (i.e. if you are studying to become a lawyer, a professor, a doctor, a pharmacist, an accountant, etc.).
If you go back to school after working, however, you have the chance to save for graduate school and gain valuable work experience. Business schools especially prefer work experience (average age of a business school student is 27 to 28 at entrance), although the quality of work experience and the candidate’s maturity matter more than the quantity of experience. Make your decision with all these factors in mind.

How will you pay for graduate school? Is the debt load sustainable?

Don’t think about graduate school without also consider how you will pay for it. Many “professional” schools (medical school, law school, business school) in the U.S. may not offer much in terms of grants (i.e. money you don’t have to pay back). The expectation is that you will be able to make enough after graduation to service your loans. (From my limited understanding, many Ph.D. programs offer tuition grants and living stipends for their students, so the financial outlay is more reasonable at these programs.)
You can get more money out of these places if you are a stellar candidate whom they want to attract (many schools have a full-tuition or half-tuition fellowships that are awarded to the top sliver of students), or if you seek out outside scholarships. You can also apply to be a teaching assistant. Many schools offer loan forgiveness programs for students who go into nonprofit or government work. If you are considering this line of work, be sure to ask about such programs.
If you go to school part-time, you will have your income during school. But it will take you longer to finish your degree. If you go full time, you will lose X years of income. Some schools may also discourage full-time students from seeking work during the school year.
Going to grad school will give you higher chances of getting the job of your dreams. For example, people in law enforcement will consider a masters in criminology to acquire administrative positions and get promoted quickly. You just have to find your passion.”

image source: insidesocal.com

This post was featured in Carnival of Personal Finance #252

Visit to Columbia University

Written by WellHeeled on September 23, 2009 · 6 Comments

columbia university artistic 300x225 Visit to Columbia University

While I was in NYC, I took the opportunity to visit Columbia University and sit in a couple of business school classes. The Morningside campus, under the bright September sun, looked something out of a postcard. I spent 30 minutes just sitting on a bench, enjoying the sunshine, watching students walk by, soaking in the ambiance.

Must be the nerd in me – there’s just something about institutions of higher learning that makes me feel warm and inspired. Especially when said institutions have storied histories.

I sat in a marketing class that focused on customer segmentation, and a corporate finance class that discussed capital structure. Both were quite interesting, guided by enthusiastic professors and anchored by thoughtful in-class discussions. I came away from my visit thinking two things: 1. Everyone there is so smart and accomplished, and 2. I can do this, and I can see myself fitting in and contributing to the class.

I don’t know if those two thoughts seem contradictory or self-congratulatory. I suppose it’s this: it’s easy to be intimidated through any application process, because you tend to imagine your peers to be much more desirable candidates. It’s the achievement treadmill, and everyone else seem to have logged more miles than you. That’s where self-doubt creeps in to make a home, like a nasty cold virus that just won’t go away.

But the truth of school applications is akin to the truth of personal finance (indeed, and of life): there will always be people who are doing better than you (by any measure), and there will always be people who are doing not as well as you (by any measure). All you (and by you, I mean, me) can do is to make the best possible case, and stop worrying about everyone else.

So I sat in those two classes, I listened to the professor, and the students, and I knew: I can fit in here. I can succeed in this environment. I can contribute to the community and take the fullest advantage of my two years in graduate school. Doesn’t mean I’ll get in – but I know that if I don’t get into to my top choices, I will still do well for myself.

And it was a pretty good feeling.

Should Parents Pay For College Education

Written by WellHeeled on September 14, 2009 · 21 Comments

A college education has, for a large percentage of society, become the de rigueur entry-level degree. “Should parents pay for college education” is a question where the answer is always, “it depends.” In today’s economic climate, I imagine that many parents are having the difficult talk with their kids as tuition savings have fallen or parents have lost jobs. The Wall Street Journal reports that because of recession, many parents are deferring saving for their children’s college educational expenses.

Because of the economic crisis, 47% of parents are saving less or aren’t saving at all for their kids’ education, according to a Gallup survey released in May by student-loan provider Sallie Mae.

college savings 300x200 Should Parents Pay For College Education

No, parents shouldn’t pay for college education:

Some say that paying for one’s own education through scholarships, jobs, or loans instills a true appreciation for the education and gives the kid the satisfaction of “making it on his/her own”. Parental financial responsibility doesn’t extend to college. Parents should focus on their retirement first.

Yes, parents should pay for college education:

Others argue that colleges and the government expect a certain level of family contributions. The cost of attending college dramatically outpaced inflation in the past 20 years. Too much work during college may delay graduation and a heavy debt load is crippling after graduation. Parents have a responsibility to prepare to contribute to tuition.

My thoughts:

My parents experienced the Tech Bust of the early 2000s right before I went to college. They still paid for the bulk of my college education, but I knew they made huge sacrifices to do so. Mom has also indicated willingness to give me some money for graduate school when the time comes. Education is one of the ways that my parents show they show their support, and I’m so grateful for that.

So it is with that background that I would like to (and plan to) pay for a large portion of my kid’s college education (educational costs is one reason why I’m strongly considering having a single child, if I do have children). Of course, I expect he/she to work hard, apply to scholarships, and take out loans, but I would also expect that as a parent, especially one who has received so much educational support from her parents, to offer substantial financial assistance to my child’s education.

I don’t see kids in my future for a long time, but by the time I become a parent, I want to be financially prepared. I definitely think that retirement should come before kids’ educational expenses, but with proper planning, I hope to save for both goals.

Some personal finance bloggers have opened 529 plans for their children. Overachievers that they are, some (such as Jonathan of MyMoney Blog) even open 529s BEFORE they have kids. That’s my plan of action as well. I’m going to focus on saving for my future and investing in myself, so that once I decide to have a child, I can appropriately divert some resources to the Grand Enterprise of Kid-Raising (which will probably be more expensive than I can fathom. But I’m NOT going to start saving for my kids’ diapers right now).