As featured in The Wall Street Journal, Money Magazine, and more!

March 2010

This is a guest post from MD of Studenomics, a blog for twenty-somethings who want to make more money, have more fun, and get the most out of their savings. Don’t by shy, stop by and consider subscribing.

You graduated from college a little while ago, finally found that first lucrative job, and now it’s time to get out of your parent’s house. Congratulations! Before you pack up your clothes, books, and collection of DVDs, and wave goodbye to your parents and their additional cleaning, cooking, and laundry services, consider the following.

Your credit score

Have you checked your credit score lately?

Your credit score determines whether you’ll be a trustworthy tenant. Pretty much every landlord these days will run a credit check on you to see where your credit score stands. A low credit score can interfere in you getting that basement apartment just outside of the city. Don’t let past decisions dictate where you’ll live in the future.

Your credit score also dictates whether you can qualify for a home mortgage. The lower your credit score, the higher of a risk you become to the bank. If the bank thinks you’re a risky customer, they may charge you a high interest rate, ask for a large mortgage down-payment, or not even give you the mortgage at all. After the credit crunch, this is more likely than ever.

Check where your credit score stands before you decide you to move out.

Your money in savings

How much money do you really have saved up? Will you have to dig into your retirement savings or emergency fund to cover moving costs? If you plan on renting a place to live, do you have enough money to cover a few months of rent if anything were to happen? If you plan on buying a house, do you have more money saved beyond the “down-payment” money?

Where do you want to live?

Your location will dictate how much money you need to have available. If you decide that a condo downtown is the best fit for your lifestyle, then decide to save a lot of money. Moving out in general is costly, but where you decide to live will determine how much money you will need for the day you decide to take the big leap.

The reason behind the decision

Are you moving out because you’re getting married? Are you moving out for a new job? Or are you simply moving out to improve your social life? One of those reasons may not be worth the cost.

Classic view on renting

Let’s challenge the idea that paying rent is throwing money away. You’re not throwing away money by renting! You’re paying for shelter, a roof over your head, a place to sleep, and a place to bathe. If you feel that paying money for a place to live in is “paying the mortgage for someone” then you should stay at home for as long as you can.

I’m not trying to say that renting is better than owning. The decision to rent or own a home should be a conclusion you come to on your own after extensive research and considering all of the factors. Just please shift away from the “throwing money” away mindset and look at all of the costs involved.

How stable is your income?

Sure, you could be earning a decent income today, but how stable is this income? Will you have this job in one year from now? Will you want to switch jobs in the near future? A friend of mine almost purchased a condo downtown a few months ago. He had everything taken care of except for one thing: his job could send him anywhere in the world. It’s a good thing he didn’t purchase the condo because he will be leaving town next year.

The costs involved in owning a home

Are you aware of all of the real estate fees you’ll have to deal with when you own your own home? The costs of home ownership go far past a down payment. Are you ready to pay for homeowners insurance, land transfer fees, moving costs, closing costs and lawyer fees, and the supplies and resources needed to maintain a decent home?

Many of my older friends who purchased a home immediately after graduating college tell me they absolutely regret it. They say home ownership reduces their flexibility and their finances were always tight due to the never-ending home ownership expenses.

If you think buying a home is better than renting, you must ask yourself this: Am I buying the home for the right reasons? I find that most people want to be “home owners” because of information that has been indoctrinated in us since we were little kids. It’s 2010 now. Certain “conventional wisdom” is no longer relevant and the home ownership debate has drastically changed.

Living on your own may be a solitary endeavor, but there’s lots of help available on the internet. Do your research before you make what is one of the biggest decisions of your twenties.

Photo: Seton Hall University


This is a guest article by SimplyForties, a 48-year-old single mother of a college-aged son, who is navigating her way through midlife and documenting it.

Like a lot of people, I lost my job in the summer of 2009. I had a very lucrative position as an off-site paralegal for a retired Coast Guard commander who worked as a liability expert in cases of marine casualty. He felt I was invaluable to him and he was willing to pay me a good deal of money to always be at the top of my client list. To top up my coffers even more, I had a few contracts providing technical network support to local small businesses. I was making a lot of money but I was also working a lot of hours.

When the bottom fell out of the economy, insurance companies were choosing to settle instead of going to court, and the bottom fell out of the liability business too. I lived in a very small town in west Texas and when my primary client had to regretfully let me go, there was little chance I could pick up enough business elsewhere to bridge the gap. I had a mortgage payment, a son in college and some decisions to make.

I had for a long time been yearning for a different sort of life, and this seemed like a good time to make a drastic change. I began to think about where I would choose to be if I could be anywhere. What I came up with was a little cabin, a few chickens and a garden; in other words, a much simpler, less expensive lifestyle. I put that out there and things started to get a little weird!

I stumbled across an article on a blog I’d never seen before. The article was about a small farm in southwestern Virginia the author had purchased. He was unable to occupy the farm right away, so he was looking for a caretaker. On a whim, I sent him a response. He received dozens of applications but, after discovering and reading my blog and realizing we were on the same path, he offered me the position.

I put my house on the market and made arrangements to sell the bulk of my possessions. In spite of the soft market, I was able to sell my house in three days for above my asking price. Within a month of having read that blog post, I was on the farm, living a very different life!

When I first came to the farm I was expecting to be here for a year. After six months, the farm owners suffered a change of circumstance and let me know that they would be moving to the farm on April 1, several months premature. I decided house-sitting might be just the gig for me so I signed up with a service and starting looking for another position.

Things are going pretty well. My next stop will be just outside Knoxville, Tennessee, where I will be house-sitting for some RVers who are setting off on a six-month trip around the country. In October I will be looking after a home in Houston for some clients who spend the better part of the year in France. That gig will take me through June of 2011 by which time I will have been house-sitting full-time for nearly two years.

Although my income and my social circle has greatly decreased, I have been able to keep working and keep in touch with those of my friends who mean the most to me, thanks to technology. I’ve learned a lot about myself since starting this adventure. I am confident that I will be fine wherever I go, that I will be up to the challenges that face me.

I miss having friends I can call to meet for lunch or catch a movie or go for a drink but there are nice, friendly people everywhere, and I’m learning to reach out a little more. I’ve learned that I value free time more than money. I used to dream of a windfall solving my problems. Now my needs are few and all I really care about is being able to pay my very few bills and hopefully put a little away. The main thing I’ve learned is to stop pushing and allow life to happen.

How does anything get done if you stop pushing? It’s not about doing nothing, it’s about deciding where to put your energies. I’m no longer striving for a better job, bigger house, newer car or a bigger bank account. I’m striving to be a better person. That’s hard work. I figure if I can get that one down, the rest will take care of itself!

I don’t know what is going to happen next but I know that it will be the right thing and I’m facing it with a feeling of happy anticipation!


This is a guest article by Investor Junkie, a blogger who writes about investing and being an entrepreneur.

In the past 10 years we’ve had many financial bubbles. First it was the tech bubble, and then it was the housing bubble. But do we have a higher education bubble? Having a web site named Investor Junkie I’m obviously into investments. With proper planning, I believe a higher education can be a profitable investment.

With the amount it costs for an education today, it’s important to consider the return on your investment. It’s an important investment of your time and money that if done carefully, can reap years of rewards. The CollegeBoard has some interesting statistics about the average cost of a college education for this year. According to their stats, these are the average yearly costs.

Private: $26,273 (up 4.4% from last year)
Public: $7,020 (up 6.5% from last year)

This doesn’t even include food, board, and book fees. In comparison to these increases, the average annual inflation rate was only -0.34% last year. (See later in the article how this rate might be questioned.) FinAid makes this depressing statement on their web site:

A good rule of thumb is that tuition rates will increase at about twice the general inflation rate. During any 17-year period from 1958 to 2001, the average annual tuition inflation rate was between 6% and 9%, ranging from 1.2 times general inflation to 2.1 times general inflation.

How can they justify the increases that over the past 10 years doubling inflation? If I earned the same investment returns colleges had with their tuition fee increases, I would have made out like a bandit.

Paying for college

How can someone save for college when the increase of college costs are beating most investments? Assume the average rate of the stock market is 8%. When starting with zero savings, this means you are almost ensured your goal will not be met.

I currently have two children with a third on the way. We are saving for our children’s education, but with the rate of increases it will be impossible to completely pay for our children’s education through saving alone. Just to keep up with the increase in costs, you need fund the total amount today ($105,092 for private schooling) so you are prepared in the future. This also assumes your investment matches the typical stock returns; if not, look out!

If your child isn’t first draft in college football picks, what are you other options? The CollegeBoard has an answer for this (emphasis is by me):

There is more than $168 billion in financial aid available. And, despite all of these college price increases, a college education remains an affordable choice for most families.

So if your family can’t afford it, don’t worry. There is massive amounts of money still available. What exactly is “affordable” if you have a college payment that equals a home mortgage in some parts of the country? The key part of this equation is for those who qualify for scholarships. For most, the logical conclusion is to get a college loan to pay for some or all of it. Debt is debt, no matter if it’s for consumer items, a house or an investment. Eventually it needs to be repaid. The worst part of college debt is it hangs around you forever. No bankruptcy will eliminate it. It doesn’t take a PhD degree to determine that $100,000 (at least in today’s value) will take years to recoup in salary.

If a recent graduate is able to get a job, according a BusinessWeek, they made on average $49,307 in 2009. In December 2009, the Wall Street Journal reported the rate of unemployment for recent college graduates was 10.6%, similar to the national level. Once a graduate gets a job and has other living expenses, how quickly will they be able to pay it off?

An education is an investment in your future, with the hope your salary increases because of the higher education. With any investment the goal is to achieve gains you wouldn’t have if you didn’t invest. The question is at what point does the amount of money required for a college education becomes not worth it? When does the ROI (return on investment) outweigh other investment choices? If you look at it from purely an investment standpoint and not for “enlightenment,” your choice of major and school might be different. The end goal should be getting the best bang for you buck.

What’s the cause?

Why is the cost of a college education rising as such a rapid rate? I only come to two valid conclusions. One option to consider, is the inflation rate is not an accurate representation. This could also explain increases health care and commodities. Maybe statistics like ShadowStats are discussing in fact showing the true inflation rate and better explain the reason education costs are increasing at the current pace.

The other conclusion is government intervention into the education system is causing the increases in pricing, whether through loan guarantees or loan offers direct to students. The government putting out more money to the public than what normally would be available makes more dollars chase after too few resources.

Regardless of the root cause, the cost increases are not sustainable. Students and parents can make other choices, such as attending a two-year college, attending a trade school, purchasing a business franchise, investing in a new business, or (in my opinion the worst option) not going to college at all. As many recent graduates have found out, a college education does not guarantee a job.

These recent graduates have the most amount of amount of debt compared to any previous generation. Today’s college education is equivalent to yesterday’s high school graduation, except with massive debt. That’s not a great situation to be in when just starting your career and life.


That’s a line from one of my favorites movies, Back to the Future, during the scene where Marty McFly almost has dinner with his mother and grandparents. If there ever was a commentary on consumerism, this is near the top of my list:

Lorraine Baines: Our first television. Dad just picked it up today. Do you have a television?

Marty: Well, yeah, you know, we have… two of ’em.

Milton: Wow! You must be rich!

The joke, of course, is that thirty years in Marty’s past, it’d be ridiculous to think that people could afford two televisions. And I think it was about a year after the movie came out that my sister and I both got a black-and-white set for Christmas. (That TV was cool, not just because it was mine, but because if I plugged in the Nintendo and set it to Channel 2, the TV became a police scanner. I am not making this up.) Having a TV in my room set me free from watching whatever my parents and sister wanted to watch. As the youngest, I finally had a little bit of power.

Now in 2010 and at age 34, I have all the power in the world, at least as far as TV is concerned. We hooked up a Mac Mini to a projector ($900 used), and we blast the image onto a $75 screen. We can watch anything online, anything in the iTunes store, anything on Netflix, etc. etc.

But I think I take it for granted that with the prevalence of DVRs and high bandwidth, each of us can watch whatever we want, whenever we want. I know objectively that’s not the case. Not everybody will elect for super-high bandwidth, or even a DVR from the cable company. Those things cost extra, and some people will undoubtedly find them to cost more than they’re worth.

That’s to say nothing of the fact that using a projector in your home is rare. People are much more likely to spring for one flat-panel TV in the main viewing area. But that begs the question: what do the kids use in their rooms? I’m especially curious to find out if they forgo traditional TVs entirely and just watch stuff on their computers.

So, if you wouldn’t mind helping me escape from the echo chamber of cutting-edge entertainment technology, could you help me with a little survey? Especially if you have kids in the house, I’d like to know the following:

If you do not see a survey above, click here.


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