Wise Bread (Philip Brewer)

Urgent: Check Your Withholdings

Philip Brewer — Thu, 19 Nov 2009 23:08:47 +0000

Your paycheck has probably been bigger this year because the government stimulus package cut the amount of tax withheld from people who were expected to get the new "Making Work Pay" tax credit. But there's a problem: According to the Treasury Inspector General for Tax Administration, more than 15 million taxpayers may unexpectedly end up owing taxes.

The idea was to get the stimulus out sooner (by workers taking home larger paychecks) rather than later (at tax refund time), but the new tables were applied too broadly. Among the people who may be under-withheld:

Dependents who receive wages
Single taxpayers with more than one job.
Joint filers where one or both spouses have more than one job or both spouses work.
Individuals who file a return with an Individual Taxpayer Identification Number.
Taxpayers who receive pension payments.
Social Security recipients who receive wages

Obviously it's bad for anyone to be unexpectedly under-withheld. It's especially bad for people who pay estimated taxes, as they may be so under-withheld as to have to pay a penalty on top of the extra tax.

If you fall into any of the categories above, you ought to take a few minutes to familiarize yourself with the details in the Inspector General's report, and get your withholdings adjusted while there's still time to catch up. It's got complete details on the credit and the various categories of people who might be under-withheld.

Permalink | 3 comments | Philip Brewer's blog | Channel: Taxes

Similar entries:

This article is from Wise Bread.

Does More Detergent Make for More Clean?

Philip Brewer — Thu, 19 Nov 2009 14:00:03 +0000

By Philip Brewer

Given the number of posts at frugality sites on how to make your own cleaning supplies (and the number of reads those posts get), the topic is obviously one of interest to the community. My take is that there's an easier way to save money on cleaning supplies than making your own: Use less.

It may not take a genius to observe that using less saves money, but it does take more than average awareness to see through all the ways manufacturers get you to use too much, and to see just how much less is actually enough.

Laundry detergent

For example, how much detergent does it take to get your clothes clean? The answer depends on how dirty they are. If you've been working (or playing) hard outdoors, it may take quite a bit. If you've been repairing bicycles or rebuilding engines or working as a fry cook, it may take even more. But if you've been sitting at home or working in a cubicle, it doesn't actually take much.

Plus, the fact is, using more detergent than you need makes your clothes less clean, because some of it stays behind in your clothes.

I first learned about this back in the mid-1990s, when several companies started marketing these ceramic disks that supposedly cleaned your laundry without detergent. Many people who tried them found that they seemed to work, but only for a while. Eventually, people figured out that what was happening was that there was enough detergent left in clothes from previous launderings to get the clothes clean, even if you just washed them in water, until everything in the load has been run through a cycle or two without added detergent.

Mull that over for a minute: Even after rinsing, there's still enough detergent left in your clothes to wash them again. That little detergent — the amount left behind after the rinse cycle in your washer — is all it takes to get your clothes clean.

Once I internalized that, I started using much, much less laundry detergent. For ordinary amounts of dirt, a quarter of the recommended quantity is plenty. For clothing that has only been worn indoors, just an eighth is probably enough. Not only will small amounts get your clothes clean, they'll be more clean, because they'll have a lot less detergent left in the fabric.

Obviously the manufacturer's incentives are to recommend using more. Not only do people who use more buy more, but it reduces the chance that you'll lose respect for the product due to having load of especially dirty laundry come out less than completely clean.

All your other cleaning supplies

Much the same is true of all your other cleaning supplies.

How much shampoo does it take to get your hair clean? It depends on how oily your hair is (and how much hair you have), but it doesn't take a lot to get hair clean. (And if you don't strip every last little bit of oil out of your hair by washing it twice, you may find that you don't need to add oil back in the form of hair conditioner.)

How much toothpaste is enough? The ADA recommends a pea-sized amount for children. (They suggest that adults use "just enough" to cover the length of the bristles on their toothbrush, but I expect that was due to pressure from the toothpaste manufacturers.)

In the kitchen and bathroom it's particularly easy to start with just a little and then add more if things aren't getting clean.

Using less doesn't just save money; it's also gentler on the planet. It uses less natural resources to make the stuff, package it, and ship it to you; it exposes you to a smaller dose of the chemicals involved, and dumps less of them into the environment.

Experiment with using less — and not just a little less. Start with using half as much. If things still get clean, cut by half as much again. Personally, I find that about one-quarter of the recommended amount is usually a lot closer to the right amount than what the manufacturer recommends.

Permalink | 27 comments | Philip Brewer's blog | Channel: Green Living, Health and Beauty

Similar entries:

This article is from Wise Bread.

Dream Job or Day Job?

Philip Brewer — Fri, 13 Nov 2009 16:29:27 +0000

By Philip Brewer

Most people I know have a frustrated passion. There's something they'd rather do a lot more of, but making a living gets in the way. Some people simply accept that their passion will get short shrift, while other people make great efforts to arrange their life so they can follow their passion. For the latter folks, I'm familiar with three general strategies: dream job, day job, and early retirement.

Dream Job

The dream job, of course, is making a living by following your passion. However small the fraction of writers, artists, actors, dancers, musicians, and athletes actually making a living at their art, you know it's at least possible — you can see people actually doing so any time you turn on the TV. With some hard work, a little luck, and the talent you were born with, maybe you could be one of them.

Of course, not everyone's dream job is in the arts. There are plenty of people who dream of jobs in engineering, science, politics, teaching, business, medicine, and so on. Contrariwise, many passions offer no hope of a dream job — raising your kids being an obvious example. WC Porter just had a good post on doing what you love and trying to make money at it, and it's good to keep all your options in mind — if you can't find your dream job, maybe you can create it. (Still, it's worth trying to find work worth doing and then trying to land a job doing it. Certainly, it's better than doing work you hate.)

It's easy for a dream job to become a nightmare. Sometimes your passion isn't quite as much fun when you have to perform on schedule. Sometimes your dream job turns out to include less following your passion and more filling out status reports, soothing customers, and running everything past legal. And, more than just sometimes, you find yourself competing with people who'll do the work for free, because it's their passion too.

Still, none of that is to say that you should give up on your dream job. Just be realistic about it and go into it with your eyes open. One part of keeping your eyes open is considering the other two possibilities: day job and early retirement.

Day Job

If you want to follow your passion, but also have to earn a living, one practical option is a day job. There are whole categories of day jobs that are popular with people whose passion makes demands on their time. Aspiring actors and dancers, for example, often end up working as waiters — because it's a job that lets them schedule around casting calls, auditions, and rehearsals.

The main criterion for a day job (aside from paying enough to support you) is that it doesn't drain you of whatever you need to follow your passion. A day job that leaves you exhausted might make it impossible to pursue your passion for music with late-night gigs. Working as a software engineer, I found that certain kinds of work seemed to use up whatever it was that let me write fiction. It was just certain tasks, so generally I could work at the day job all day and then come home and write in the evening. If that hadn't been true, I might have needed to find a new day job.

The best sort of day job for someone with a passion is one where you put in your hours and then you're done. Any kind of hourly work is good. Salaried work is less good — you're expected to get the job done no matter how long it takes. Worst is the sort of high-stress job where you're spending your nights worrying about your bosses, clients, customers, processes, or deliverables, and find that you can't focus on your passion. Because of that, a lot of people who go with the day job end up working what would otherwise be considered a low-end job, because it's one that leaves them with time and energy to follow their passion.

Even so, resist the temptation to settle for a job that's bad — in particular, for a job where either they don't respect you or where you don't respect the work. There is so much work that's worth doing, it's just stupid to flush your life away doing work that's worthless — even if it pays a little more. The downside of the "day job" strategy is that you're spending forty hours a week doing something other than your passion. Don't compound that by spending those hours doing something that you don't respect.

Retire Early

You can retire early if you combine a high-paying day job with a certain amount of frugality. The more frugality, the earlier you can retire. (Higher pay lets you retire earlier too, but if you work out the math, it doesn't help as much as you'd think. Between taxes, the almost inevitable higher standard of living, and the extra work that the higher-pay jobs tend to require, it turns out that frugality is the adjustment that ends up making the big difference.)

I covered the "retire early" scenario just a few days ago in my post on buying your way out of the rat race.

The main thing I'd caution against is the tendency to defer following your passion.

It's one thing to have to fit your passion into the spaces left around a job, a family, and all the other things you have to do. That's normal. It's fine. It's even good. Unless your passion is an odd one, the connections that grow out of living your life will feed into your passion.

But it's altogether different to put your passion aside until some future when you'll have enough time. That's almost always the wrong choice. Follow your passion right along. That's how it grows. That's how you remember why you're putting in the time and effort. That's what keeps your soul together.

As long as you don't put off following your passion, any of these strategies can work.

Permalink | 11 comments | Philip Brewer's blog | Channel: Career Building

Similar entries:

This article is from Wise Bread.

Coming Soon: Good Times for Temp Workers

Philip Brewer — Wed, 11 Nov 2009 16:09:05 +0000

By Philip Brewer

During a recession is the worst time to be a temp — whatever work companies have will go to employees, as a way to avoid having to lay them off. Another bad time is the middle of a recovery — things are going so well that managers figure it's safe to hire new permanent employees. Still, there are two good times to look for temp work, and we're coming up on one of them.

One good time to look for temp work is the second half of a period of growth. By that point unemployment is usually low enough that companies are having trouble recruiting new full-time employees, so they turn to temps.

The other good time, though — and this is the one we're approaching — is early in a recovery. When no one is sure that growth will last, companies will resist hiring new permanent employees. But if business is expanding, there's work that needs to get done.

At the very beginning of a recovery, companies will try to squeeze some extra work out of the employees they've got — but that only goes so far. Pretty soon they find that they're losing business because their employees can't get everything done. They need more hands, but are afraid to hire, and that's the point they turn to temps.

The Bureau of Labor Statistics data on "Temporary help services" shows a small uptick started in August (see graph above). It doesn't amount to much yet, but if the economy continues to grow, we may see considerable growth in temp work — growth that will beat the growth in overall employment until employer confidence returns strongly enough that they're ready to start hiring new permanent workers.

Much the same applies to freelance work as well. Employers who need to get work done — but don't want to hire new employees — will turn to freelancers much like they turn to temps.

Let me add one caveat here: I'm not predicting continued growth. It's hard enough to predict the present, let alone the future. The recent past, though, we can be pretty confident of — and the latest statistics show economic growth. The economy could turn back down — in fact it surely will, sooner or later. But, in the meantime, we're coming up on the best environment temps and freelancers have seen in years.

Permalink | 6 comments | Philip Brewer's blog | Channel: Career and Income

Similar entries:

This article is from Wise Bread.

Resources for Freelancers

Philip Brewer — Tue, 10 Nov 2009 17:41:21 +0000

By Philip Brewer

Changes in the economy have pushed more and more people into part-time, temporary, and freelance work, as more and more companies cut back on traditional, long-term, full-time employees. Recently the Newshour on PBS had a report by Paul Solman on the problems faced by freelancers in a tough economy — and pointers to some useful resources.

The key resource that Paul pointed to in the segment was the Freelancers Union, an organization that exists to help freelancers buy for themselves the sort of benefits that an employer might offer, such as group health, dental, disability, and life insurance, and a 401(k) plan. I haven't looked over their plans and don't know if they're good deals, but they're certainly worth comparing to your other options.

The group also acts as an advocate, pushing the government to expand the support that employees get to cover freelancers as well. Among their issues:

Estimated taxes It's not so tough to file your estimated taxes if your income is spread evenly over the course of the year. If your income is variable, though, the estimated tax paperwork is a nightmare — and the penalties for getting it wrong are pretty high. (I wrote a post on this last year: Taxes on irregular income.)
Self-employment taxes If you're self-employed, you have to pay both halves of the Social Security tax. The Freelancers Union isn't sure that double the tax is a fair burden — and is pushing to get Congress to see it their way.
Unpaid wages Pretty much every state has a department of labor that will come down hard on an employer who doesn't make payroll — but the state does nothing for freelancers who don't get paid.
Unemployment insurance Employees who lose their jobs can collect unemployment insurance, while freelancers get nothing.

They've also got some cool posters.

Permalink | 4 comments | Philip Brewer's blog | Channel: Career and Income

Similar entries:

This article is from Wise Bread.

Savings Bonds as Interest-Earning Travelers Checks

Philip Brewer — Sun, 08 Nov 2009 14:00:01 +0000

By Philip Brewer

Remember travelers checks? In the days before ubiquitous automated teller machines, they were a useful product. You could use them almost like cash — but you could carry more than you'd feel safe carrying in cash because if they were lost or stolen you could get them replaced. Well, savings bonds have all those features but one.

The thing you can't do with savings bonds is spend them like cash; you have to cash them in at a bank. (But then, I've sometimes had to cash travelers checks at a bank too.) In the US, pretty much any bank will cash US savings bonds. I assume there's something similar in other countries.

I first noticed this feature in the early 1980s — back before networked ATM machines made it easy to access the money in your accounts from anywhere you happened to be. Travelers checks were a useful tool for carrying your cash. But, when I noticed that several of their key features were shared with savings bonds, I started buying savings bonds instead — they paid interest. And I wasn't the only one. Anybody who needed to move around a lot — for example, military personnel — found them just as useful.

Basically, what you do is this: Buy savings bonds in small quantities over a period of time. This is easy to do; many employers let you buy savings bonds through payroll deduction and many banks will set up automated purchases as well. You can get them in all the denominations that you can get travelers checks and then some: $50, $75, $100, $200, $500, $1,000, and $5,000.

You can't cash the bond in until you've held it for a year, which is why I suggest buying gradually — you wouldn't want to put your whole emergency fund into savings bonds all at once. But, if you buy one every pay period or every month, pretty soon you'll have some that are more than a year old. Once that happens, they're basically just like travelers checks that you can only cash at the bank.

Go into pretty much any US bank with one or a few savings bonds (up to $1000 worth), and you can turn them into cash in just a few minutes. If they're lost or stolen or the paper certificate is damaged, you can get it replaced.

I've been enamored of savings bonds for a long time, but haven't talked about using them this way before here on Wise Bread, because they haven't had a competitive interest rate. Now, though, the rate on I bonds is looking pretty good.

As I mentioned back in July, the Consumer Price Index is about to surge. This isn't because inflation is rising (although I rather expect that to happen as well), it's just because it's now been a year since the big drop in oil prices.

The interest rate paid on I bonds is based on the CPI for the previous six months, so the effect of the oil price drop has already fallen off the calculation. Bonds purchased now will earn interest at a 3.36% annual rate for the next six months. That's a hard rate to beat in the current environment.

There's a 3-month interest penalty if you cash them in during the first 5 years, but even if you end up paying the penalty you still come out ahead compared to most vehicles for small savers. And if inflation rises (as I rather expect it to), the return just gets even better. Combine that with the features that make them like an interest-paying travelers check, and I think they're a pretty good buy right now.

Permalink | 12 comments | Philip Brewer's blog | Channel: Investment

Similar entries:

This article is from Wise Bread.

Can You Buy Your Way Out of the Rat Race?

Philip Brewer — Tue, 03 Nov 2009 14:00:01 +0000

By Philip Brewer

If you're tracking your spending, you know how much money it takes to live on. If you're tracking your investments, you know about how much return you're getting from your capital. With those two numbers, you can get a pretty good estimate of how much money it takes to buy your way out of the rat race.

In its simplest form, the cost to buy your way out is just your annual spending divided by the return on your investments. I used to do that calculation a lot. When I got my first job interest rates were in double digits, so I could imagine getting $30,000 or even $40,000 a year — plenty of money to live on — from an investment as small as $300,000.

A simple theory

Of course, that model is over-simplified. For one thing, you have to account for the possibility that in some years spending will be higher. (What if you need a new car or a new roof or to send the kids to college?) I knew how to handle that one, though: The same way I was already dealing with it when my income came from a regular job — covering major expenses by cutting other spending.

More fundamentally though, the simple model doesn't account for inflation. And, at the time when interest rates were in double digits, inflation was similarly high. It wasn't a problem you could just handwave away.

I spent way more time than it was worth trying to construct a mathematical model for living off capital — a model that accounted for taxes, provided for reinvesting enough after-tax income to keep me even with inflation, and still paid out enough money for me to live on. All this, mind you, while my net worth (after a student loan) was probably negative.

Anyway, that was my first guess at my number: a capital sum of $300,000, properly invested, would yield enough that I wouldn't have to work. That's what it would have cost me to buy my way out of the rat race. Other people have done the same sort of thinking and written whole books about it, and come up with better-researched models for accounting for taxes and inflation. I've written reviews of a couple of good ones: Bob Clyat's Work Less, Live More and Joe Dominguez and Vicki Robin's Your Money or Your Life.

The less simple reality

In practice, though, for most people, buying your way out doesn't work out.

First of all, it's really expensive. Unless you're extraordinarily frugal, it's still going to cost you tens of thousands of dollars a year to support your household. And (as you can't really count on double-digit returns on your investments), it turns out that you need around a quarter million dollars to stand behind each $10,000 of annual income.

More fundamentally though, no amount of capital provides complete security. Your money can be lost any number of ways. The economy could turn down. Even if the economy goes up, your investments could go down. You could lose your money to theft, natural disaster, lawsuits, or government seizure (not to mention simple overspending). You can try to protect against any of those things through a combination of due care and proper insurance, but there's no such thing as perfect protection.

Your real protection against those things is your own productive ability — which is something that can't be stolen, taken in a lawsuit, or seized by the government.

Buying your way out of the rat race is a suboptimal strategy. It can work — people do it all the time, although not very many of them — but it's hard. It also doesn't leave you so very much better off than you were — you may be able to quit worrying about losing your job, but you have to start worrying about low interest rates.

Now, accumulating some capital is a great idea. In fact, I think everyone should have a medium term goal of accumulating enough capital that the income from their investments could cover their bare minimum expenses. Once you get beyond that, though, adding more capital starts yielding diminishing returns.

The real way to escape the rat race: Refuse to race with rats.

So, what do you do instead? Basically, invest in your own skills.

Improving your skill at the job you already have can help you earn more (important if you don't yet have that basic level of capital), but developing skills at entirely new things gives you a whole new layer of protection against economic downturns and incompetent managers.

Broaden the kinds of work you look for. Don't focus only on finding the highest pay — look for work that's interesting and that's useful. It's more fun. It's also more secure — there's only one job that pays the most.

Beyond that, learn how to do, make, grow, and find things for yourself. To the extent that you can directly provide the things your family needs, you're not dependent on either your capital or your job.

Each of these things improves your security. Taken together, they can give you as much security and freedom as a human being can achieve.

Permalink | 10 comments | Philip Brewer's blog | Channel: Personal Finance, Career and Income

Similar entries:

This article is from Wise Bread.

A Society of Fear

Philip Brewer — Wed, 28 Oct 2009 13:00:02 +0000

By Philip Brewer

There are people out there whose livelihoods depend on the fact that most people go every day to some job or another. Business owners, investors, retired folks — capitalists in general — pay their expenses with profits that would be threatened if there weren't plenty of workers trading their life for a paycheck.

I don't mean to speak ill of capitalists — I'm one of them (in my own "eking out a meager existence" way). But as a group, they have a vested interest in most people choosing to get up and go to work every day. And, as a group, they're terrified that most people wouldn't do that unless they had to.

I think that's why society has been organized to make the wage slave/debt slave trap the default path for almost everyone.

It's a gentle trap: borrow a bit to go to college, a bit more to buy a car, a bit more to buy a house... You earn plenty of money and enjoy a comfortable life — and all you lose is your freedom to do anything else besides get up everyday and go to work.

When I wrote about it before, a lot of commenters chimed in to defend the wage slave/debt slave trap — on the grounds that it motivates people to "work;" that it teaches them how to "manage money;" that it keeps them "honest."

And I find that fascinating. Because, see, I can understand business owners feeling that way — their profits would drop if people managed to escape their debt traps, gaining options besides showing up at their job day after day. I can also understand managers feeling that way — their bonuses would be a lot smaller (and their jobs a lot harder) if their employees were in a position to choose the work that was the most fun or interesting or useful or important. I can understand the government feeling this way — income taxes could drop a lot if debt-free citizens could choose to earn less.

But I'm mystified by ordinary people feeling this way. It's bad enough that people put themselves into the position of having to go to work every day — and worse, having to go with whatever job pays the most because it's the only way to get all the bills paid — rather than being able to choose work because it's interesting or because it helps people. But that's only the beginning of the madness. Everyone in the debt slave/wage slave trap has to worry that any little mistake could cost them all their worldly goods and their entire future.

In a world where these sorts of debts are normal, an ordinary person with ordinary expenses has to be afraid all the time. An unexpected expense can put the whole household at risk — it means more debt, probably at a higher rate. Any little glitch in earnings can be ruinous — it means missed payments, late fees and penalty rates of interest.

Imagine if things were different — if most people had a comfortable emergency fund and little or no debt. A lost job would mean belt tightening, but not foreclosure. A sudden spike in fuel costs would mean turning down the thermostat and wearing a sweater, but not pawning the wedding rings for enough gas to get to work one more week. It would mean not living in fear.

As I said, there are a lot of people who think their livelihood depends on that fear. Those whose profits are higher and jobs are easier when there are plenty of frightened workers have a vested interest in things as they are. But I think we'd be better off if people were less afraid.

Permalink | 41 comments | Philip Brewer's blog | Channel: Personal Finance, Career and Income

Similar entries:

This article is from Wise Bread.

Who has the time (or money) for deals?

Philip Brewer — Tue, 13 Oct 2009 13:00:03 +0000

By Philip Brewer

I pay almost no attention to "deals" sites. I scarcely even read the lists of deals here on Wise Bread. There are several reasons, but they pretty much come down to two things: I don't have the time, or the money, to pay attention to deals.

In the abstract, deals are great. And, of course, actual concrete deals that you can use are even better. My wife, who does most of our grocery shopping, gets the grocery store fliers and plans shopping trips around what's cheap at the nearby places where we're going to buy our groceries anyway. But I think that's key: deals only save you money if they let you pay less for stuff you were going to buy anyway.

Lists of random deals, though, don't provide that. In fact, I find a list of random deals is usually just a big waste of time — because it consists almost entirely of things that I had no plan to buy.

In practice, it's even worse than that: a list of random deals is (and is intended to be) a temptation to buy stuff I don't need. After all, that's the whole point of deals.

The only good result from spending time trawling through deal lists is the happy coincidence of finding exactly what you were going to buy at an especially good price. The usual result — finding nothing I need — means that it was a big waste of time. The other possible result — finding something that I wasn't going to buy, but that's so attractive I end up buying it anyway — is a big waste of money.

I do sometimes go the other way around — decide that I want to buy something and then look around for a great deal. The companies that offer deals, of course, try pretty hard to make that effort unsuccessful. After all, the point of the deal is not to save you money, it's to get you so spend money that you otherwise wouldn't have. Once you've decided to spend the money, there's no point in giving you a deal.

The internet is a useful tool for finding a good price, once you've decided to buy something. It's more useful for finding ordinary low prices, though, rather than great deals. Happily, that turns out to be more useful to me than lists of deals.

Permalink | 26 comments | Philip Brewer's blog | Channel: Shopping

Similar entries:

This article is from Wise Bread.

Don't Go to College to Learn

Philip Brewer — Tue, 06 Oct 2009 13:00:08 +0000

By Philip Brewer

There are good reasons to go to college. And, if you do go to college, you will no doubt learn a lot. But you can learn anywhere — and probably learn more, better, and faster if you do so on your own. If you choose to go to college, make sure you know what you're paying for.

A really good teacher who moved the class along at just the right pace for you might let you learn faster than simply studying the topic on your own. But any large class will go too slowly for most of the students, while even so going too quickly for a few. There's also a community aspect to learning — other students will ask questions that you should have asked, except that you hadn't realized that you didn't understand — that you won't have if you study on your own. But you can get that other ways, such as with a study group.

College gives you two things that are harder to get on your own: a chance to network with your peers and a degree.

Networking

Working with other people is inherently valuable. Five people trying to solve the same problem can much more quickly think of and try out different solutions than one person working alone. Participating in such an activity can teach you things that you won't learn from a book, and teach you some of the things that you will learn from a book more quickly. Going to college isn't the only way to do that, but going to college does put you in the position of working with a lot of other people.

If you go to a prestigious college or university, the main thing that you're paying for is a chance to spend four years with the people of your generation who will be movers and shakers. Depending on how you want to spend your life, that may be hugely valuable.

If you want to be a politician, for example, or a CEO of a Fortune 500 company, it helps a lot to know the other people who are going to be politicians and CEOs. At a prestigious college, they're right there attending your classes and living in your dorm.

If that's why you're there, make the most of it. Pay attention to your classmates, with an eye to spotting the ones that are going places. Get to know them. Whenever possible, work with them. Especially then, but also when working on your own, do great work. The point here is not to get a good grade (although there's nothing wrong with that). The point is to make sure that your peers know that you do great work. Soon enough they're going to be hiring people. You want them to remember you as someone who'll make them look good.

Don't focus entirely on your fellow students — their parents and your professors will be hiring people even sooner than your peers will. But they'll also be retiring just when your career will be peaking, so make your fellow students your top priority.

Here's the key point: If you're going to an Ivy League or other prestigious college and you're not seriously applying yourself to the job of demonstrating to your fellow students that you're a can-do guy — the sort of guy that they'll want on their team when they're trying to get something done — you're just wasting your money.

Similarly, if your career path won't get much of a boost out of having made those contacts — if your plan is to come back to your home town and be a school teacher or a farmer — then, again, you're just wasting your money.

Certification

The other thing a college provides is certification in the form of a degree. For certain kinds of jobs, a certification from a top college can give you a big leg up. For most jobs, though, a degree from Podunk College is every bit as good.

A degree from a top college can also make it easier to get into grad school, but it isn't essential. Much more important will be good grades, good GRE scores, an impressive body of work, and networking with the professors at the grad schools that you're considering.

For certification purposes, it's really only the school that provides your last degree that matters, so you might as well go with the lowest-cost undergraduate option. A graduate degree from a top school is worth no more combined with an undergraduate degree from an Ivy League undergraduate degree then it is combined with an undergraduate degree from Northern Your-State-Name-Here University. This suggests that, once you know what your terminal degree will be, you should consider other factors than reputation — like cost and location — when choosing where to go for earlier degrees.

Exceptions

There are exceptions of course, which mostly boil down to opportunity and safety — two ideas that are often linked.

Learning how to defuse bombs, for example, would be hard to do on your own. First, because bombs to practice on are hard to come by, and second because you'd probably kill yourself before you developed the basic skills. Learning how to perform surgery is much the same, although you'd probably kill somebody else rather than yourself if you tried to learn that on your own. (Of course for surgery there's also the certification issue.)

If your studies depend on access to specialized equipment that you can't afford, or that would be illegal for you to own, or that simply would be difficult to arrange on your own (like a team and opponents for learning a sport), colleges and universities are one structure for getting access.

What else you get

I'm not saying that you get nothing out of attending a college besides certification and networking opportunities — far from it.

You get:

An educational path which has been designed by someone who's an expert in the field and has some understanding of pedagogy.
Some degree of supervision by people who will make an effort to keep you on track and learning at a reasonable pace.
Immersion in a community of people who are (to greater or lesser extents) focused on learning.
A position in society — student.
A structure for daily living and a protected environment within which to make mistakes — a dorm room and a meal plan are a welcome safety net for someone who has never had to pay bills and a good first step toward learning how to run your own household.

My point is that none of those things have much to do with learning the course material.

If you want to learn, as I said at the beginning, you can probably learn more, better, and faster on your own. Get a text book and work your way through it, doing the exercises. Look at the bibliography and read the books that the textbook author recommends. Go to a university library (or the internet) and get the latest papers by people doing cutting-edge work in your field. Plenty of universities have been putting lectures on the internet (in case you think you learn better from a lecture than from a book) and plenty are providing outlines for whole courses of study on-line.

A lot of people go to college simply because it's the next thing to do after graduating from high school. And I'm certainly not suggesting that you shouldn't go to college. I'm just suggesting that you understand what you're paying for if you do, especially if you choose an expensive school. If you pay all that money, be sure to get your money's worth.

Permalink | 19 comments | Philip Brewer's blog | Channel: Life Hacks, Career Building

Similar entries:

This article is from Wise Bread.