Alma Mater

Who’s got some regrets? Who would change some of their past choices if they only could go back in time? Show of hands? No? Only me? Well, then, let’s talk about some of my own bad decisions.

#1: College.

Ok, so I went to Wheaton College in Illinois. I’m a former Thunder-ite (or whatever one would be called when the mascot is Thunder). Don’t get me wrong–I loved my time there, I met amazing classmates and professors, and I got a great education.

BUT.

Money-wise, it was NOT the best choice. Even though Wheaton has been rated fairly well in terms of “value” among similar colleges (private Christian liberal arts schools), did I really need to go there to get my degree? I’m a high school teacher. I could have gotten my education and English degree from any number of fine schools and carried a lot less debt post-graduation (or even none at all–gasp!).

Looking back on that crucial time of junior and senior year of high school, when everyone was making their college plans, I wish I had kept a more open mind.

My ideas about college were kind of snobby, truth be told. I could have gone to a community college just down the road and saved a ton while getting my gen-eds out of the way. I didn’t even consider it! I wanted to go to a prestigious four-year school, since I was a good enough student to get in.

-Lovely Blanchard Hall, the site of my first-ever college class. 

I wanted the classic college “experience”– living away from home, making my own decisions, being a part of dorm life. And yeah, there was some fun to be had. I went to Wheaton and I followed their rules, which meant I didn’t get into the whole college-partying-drinking scene, but I still had a great time.

But now…I feel like those experiences weren’t necessarily worth all the debt that I continue to pay off now. Well, technically, I’m paying for grad school now, and undergrad loans are done. But either way, I could’ve saved so much money by going to Parkland Community College for a couple of years, then transferring. I could’ve lived at home during that time.

I could’ve worked harder while going to school–I didn’t work at all except during the summer and then one semester of senior year. What the heck?!

I just took out those handy federal student loans, signing on the dotted line without batting an eyelash. Not a thought about how much debt I’d graduate with, or how many years it would take to pay back that debt.

Then, upon graduation, did I push myself to pay off those loans as soon as possible, freeing up my money for later on in life? No, of course not! Why would I do that, when the federal government allows me twenty years to pay it all back? This sounds insane to me as I write this. I can’t believe I didn’t get extra jobs, put every spare penny towards that student debt from the beginning. I didn’t think at all about my future family, my kids, my own retirement. I just didn’t think.

Look at this beautiful fall scene, the perfectly collegiate sign. Yeah, it’s pretty. Is it worth it to still be paying off debts fourteen years or more after graduation from college?

I don’t think so.

Let’s recap, soon-to-be high-school graduates, shall we? What are the mistakes you’re going to avoid?

Things Not to Do When Planning College or Post-Secondary Schooling:

-Setting your heart on only one school. There are plenty of wonderful options out there. If you don’t get in to your dream school, or really can’t afford to go there, don’t go there!

-Only applying to one school. Nate will tell you the same, and he’s seen far too many graduating seniors end up with nowhere to go because they didn’t get into the only place they applied. Even if you think you know where you’ll end up, apply to several places so you keep options open. You might even be surprised by the financial aid one college will offer over another.

-Not working to earn the money to pay for your schooling. You should be working while in high school, and saving that money. You should be working at least part-time while attending college, too. You might even choose to get trained for a decent-paying job right out of high school and work a year or two while saving for further education.

-Being a snob about your schooling. For most careers, you won’t gain much from attending an Ivy League school over a state school.

-Not counting the actual cost of your education. If you do take out student loans, know exactly how much you’re borrowing, how much interest you’ll be charged during repayment, and how long it could take you to repay those loans if you’re working in your anticipated field. I’m not saying don’t borrow, although Dave Ramsey certainly would. I’m just saying, your education is one of the most costly “investments” you’ll ever make in your life. Don’t go into it blindly.

*Case in point: For the 2015-2016 academic year, Wheaton College estimates an undergraduate student’s costs to be $45,260. This is meant to include tuition, room and board, books, and other miscellaneous living expenses for an on-campus student. Multiply this by four years and you’ve got a whopping $181,040. (That’s not even accounting for likely yearly tuition increases.) If you go by tuition alone, it’s $32,950/year, or about $131,800 over four years.

In comparison, if I’d attended University of Illinois in Urbana-Champaign, as did my mom, dad, and brother, I would have paid much less. This year, tuition at U of I is $13,640 for Illinois residents. Over four years, that would come out to $54,560. Holy cow! (I’ve actually never done this cost comparison before this moment, and even though I knew in-state tuition might have helped me at a public university, I’m still kind of shocked.)

Yeah. Wow. In this example, if I were a college freshman now, I totally could have attended the U of I (an awesome school, still filled with all the “prestige” of Wheaton) for $77,240 less than I paid to go to Wheaton, my ideal private Christian school. Just imagine where that $77K could have gone, plus the extra interest saved…

deFault Changing

I wish I could pull a Terminator and go back in time to save myself from some costly mistakes. I would give myself some sage advice regarding investing or at least tell myself to listen and FOLLOW the advice given by my friend Ryan circa the year 2000. Love those college years and all that debt, but that’s for a later post. Ryan enlightened me to the ideas of compounding interest, Roth IRA vs Traditional IRA’s, and 401k vs 403b’s. Really everything I would need to know to get off to a great start to financial freedom back when I was a mere 25 years old. How wonderful, how great, how grand! I was on my way to an early retirement….except I didn’t do anything.

I was a psychology major. What that means if you weren’t aware is graduate school was a next step requirement for any meaningful employment in a psychology/counseling related field. So I told myself “You don’t have any money to invest, you’re still in school. I just have to catch up with the retirement stuff when I finish school.” So I didn’t have a lot to save but I could’ve saved something. Let’s do a little math. To be honest I have never calculated how much I have lost due to my inaction so this should be fun…errr not fun. I didn’t really get my first career job until I was 28, a couple years after graduate school and a few years before starting gradate school again.  Everyone will have excuses why they can’t/won’t save. Stop and think what default you could change to save $25 a week? Starbucks, sodas, overpaying for car insurance, cell plan, cable/dish, eating out 10 times a week. There are a lot of ways to save WAY MORE than $25/week. But let’s be ultra conservative in our fun little game. Let’s say stashing away a whole 25 bucks a week or 100 bucks a month for the last 15 years with $500 seed money at 7% interest rate of return. Plug those numbers in Moneychimp’s compounding interest calculator. Presto! BAM! $33,645.18. Not bad for 100 bucks a month. Too bad I didn’t do it.

I have intermittently put money into a ROTH IRA and individual stocks since 2007 and finally utilized the 403b at work a few years ago. So I have accumulated slightly more that the $33,645.18 in the last 8 years, but most of that is the money I put in, not much free compounding interest. I haven’t maxed out the IRA every year and under utilize the 403b, but my wife and I are trying to DESTROY our last debts to change this. We both have student loans debts, are underwater on our house, and we were stupid and bought a timeshare right before we started our family. Yep there are a few more blog posts in that sentence.

We have done some things right. We cut cable/dish years ago, switched cell plans, changed shopping habits, etc. We changed our defaults in lots of areas to save money; now we are changing our default to destroy our debt and put our money to work for us to buy our freedom. It feels great.  This blog is our journey. I hope you read and act. Your future depends on it. Thanks for the new default perspective on retirement finances Mr. Money Mustache.