Less chocolate, more income

September 30, 2011
She doesn’t look quite like this

Last month we started an impromptu feature in which we devote a post to displaying the horrible habits and lifestyle of a particular self-styled personal finance blogger. It’s part warning, part comedy. The inaugural post in the series was titled “Retard of the Week”, but lots of people left comments saying that they found that offensive. We respect that, so we’ve decided to change it.

We’re now calling it Retard of the Month. This month’s honoree is Mom’s Plans, which sounds like and is a mommy blog. But instead of offering pumpkin spice latte recipes and craft projects for her readers’ daughters and effeminate sons, the woman behind it recently chose to host a popular personal finance blog carnival. This reclassifies her as fair game.

The brains behind Mom’s Plans lists (oh God, does she love to list) her debts on her website. Rounding to the nearest thousand, they include $7000 on one credit card, $13,000 on another, $7000 on one student loan, and an incomprehensible $30,000 on her husband’s student loans (plural). However, she is making payments on these loans. At a rate that will take her decades to pay them off, but whatever. More to the point, she’s chosen a time at which she’s drowning in consumer debt to

a) dispense financial advice to whoever wants to hear it, oblivious to any irony;
b) have kids, which aren’t exactly free, and;
c) see how much she can reduce those balances while simultaneously refusing to get a freaking job.

By the way, she took a 16-month leave of absence after her most recent kid was born. You know, because when you add another economic liability to a house full of them, the last thing you want to do is go out and earn money.

This woman’s stated goal is to become a stay-at-home mom. Not an astronaut, not a research scientist, not even a hot dog cart vendor (which would require at least the discipline to get out of the house.) Her professional ambition is to watch Live with Regis & Kelly while wearing her jammies and visiting Amazon to order Halloween costumes for her kids. And it’s not as if she started off doing this. To hear her tell it, being a stay-at-home mom was something she was working towards.

Becoming a stay-at-home mom is not a “goal” for several reasons, the least of which is that a goal implies expending some effort. If you want to be a mom who stays at home, you have to a) spread your legs and b) stay at home. She already accomplished the first half of that, and to do the second half, all you have to do is not do anything.

Think about what society has chosen to value and chosen to dismiss. Incurring consumer debts of $57,000 is considered something worth sharing with one’s readership. Imagine if someone else – say a recent high school graduate with a burgeoning career and a knack for deferred gratification – proudly announced that he’d done the exact opposite of the Mom’s Plans lady and had accumulated $57,000 in assets. Here’s my car, here’s my townhome, here’s my motorcycle, here’s my furniture etc. People would deride him as materialistic. They’d leave comments reminding him of the importance of a balanced life, friends and family, no one likes a serial acquirer, etc.

Building assets is commendable. It’s something to be proud of. It proves that you contributed something of value to the marketplace, and received just rewards for doing so. Building liabilities, as Mom’s Plans is doing, is the exact opposite of this.

The husband has rung up 10 years of student loans while working on a couple of advanced degrees. A), why does it take so long to earn a master’s and a doctorate, and B) why is education the one commodity that doesn’t have to submit to cost-benefit scrutiny?

If you’re going to college for 10 years, even if you somehow get a free ride for the entire decade, your education should still have to justify itself somewhere along the line. You can talk all day long about the intangible, non-monetary benefits of an education, even an advanced one. Doubtless they exist. But they still require real outlays of that pedestrian concern called money. Penn Foster – a school that we’re guessing Mr. Mom’s Plans has never heard of, let alone considered enrolling in – will turn you into a carpenter for $700.

The median salary for an entry-level carpenter in the United States is around $40,000, which means that any Penn Foster grad who financed his tuition can pay the whole thing back within weeks. While learning a legitimate, honorable trade that will be in demand as long as the overeducated need someone to hammer their nails and drive their screws for them.

Let’s not forget the utter narcissism of it. It takes a particularly inconsequential kind of person to post her freaking grocery list online and consider it compelling content.

But it’s inspiring. And it’s sharing. Who are you to judge?

Who are we? Just people who make an effort (there’s that word again) to write worthwhile, purposeful, intelligent and helpful personal finance content, 3000 or so words of it a week.

If knowing that someone else bought a bag of quinoa and some soy milk inspires you, you need new heroes. Here are some people you can find legitimate inspiration from:

Jesus
Kurt Warner
Winston Churchill
John McCain
Stevie Wonder
Tammy Duckworth
John Milton
This guy.

One more thing. The URL is MomsPlans.com, but the introductory image on the main page reads “Mom’s Plan”. Which is it? Do you have one plan, or several? If you have several, do they include putting in a bid for the URL MomsPlan.com, which appears to be a placeholder for a porn site?

Alright, yet another thing. This passage was too good to pass up. From her September 9 entry:

When September 11, 2001 happened, my husband and I were glued to the television for days.  We were horrified by what we saw unfolding, and I remember those days as particularly dark ones.

You mean because of the terror and the destruction and the wholesale murder of innocents? Yeah, it does seem as if those days were indeed “particularly dark”, once you stop and think about it.

This should be obvious, but if you were horrified by 9/11, that’s not exactly a sentiment that warrants mentioning. We get it. Then again, there are some things we don’t get. Later in the paragraph, she polishes this gold:

In light of the 9/11 anniversary, I almost feel silly posting these links, but they are my light reading that take me away from the heaviness of the events 10 years ago.

Homemade Peanut Butter – Heavenly Homemakers.  Who knew making peanut butter was so easy?  This is on my agenda to try in the next few weeks.

That’s an unedited excerpt. She went straight from 9/11 reflection into sandwich spreads. No cowardly, wanton act of mass human butchery is so vile that a peanut butter recipe can’t make it all better.

**This article was featured in the Carnival of Personal Finance #330:Canadian Thanksgiving Edition**

Filed Under: Bad Examples, Consumer Debt, Financial Retard of the Month Tagged With: , , , , ,

Sometimes, an education is the worst thing you can have.

May 20, 2011

Professors Snider and Cooper were right. Be chrool (sic) to your scuel (sic).

DISCLAIMER: (And we disclaim things so infrequently, you know this is big.) This post references and links to a story that originally appeared in the Las Vegas Review-Journal, a paper that treats even hints of copyright violation the way Genghis Khan treated Central Asia. The R-J and reporter Richard Lake provided much of the raw material for this post, as did the unfortunate MySpace page of the post’s protagonist.

Time for a painfully simple exercise. We’re going to give you a series of words – concepts, really. Then say whether each is good, or bad. Look at each one irrespective of anything else. Here’s an example:

Clean air – good or bad?

Don’t overthink it. It’s not “clean air, but what about all the manufacturing jobs that will be lost if the parts of particulate matter per million rises a tiny fraction?” It’s simply, “clean air”.

Understand? Answered it? Then let’s go.

Puppies – good or bad?
Ending terrorism – good or bad?
Education – good or bad?

Slow down there, Ace.

After years of real-world examples, there’s no getting around it – all levels of government spend far too much taxpayer money to put people in classrooms where they’ll neither do anything productive nor develop the capacity for doing anything productive.

(People are going to misinterpret this post, and they’re going to start by misinterpreting that line. We’re not saying elementary schools shouldn’t teach basic math and grammar. We’re saying college is more often than not a waste of time.)

In the last century, college/university has gone from a place where you learn a profession, to a mandatory rite of passage for kids with good grades who come from white-collar families, to a mandatory rite of passage for everyone, to a necessity no less fundamental than food and water.

That’s wrong on several fronts. Amassing debt before entering the real world isn’t necessarily bad, but the debt has to have a purpose. Seeing as this post is about education, let’s use a SAT analogy:

Borrowing money to buy a house : borrowing money to buy lottery tickets :: borrowing money to study engineering : borrowing money to study sociology.

No matter how hard we hammer the opposite point, some commenters are still going to miss it, and lament that we’re downplaying the importance of education. Again, we’re not. But the unalloyed word “education” isn’t always an absolute good.

Meet J.T. Creedon, student government president at the College of Southern Nevada. Guess how many years he’s been going there.

No, higher.
10. That is not a typo.
He’s 28 years old.

(We can only speculate as to how many of the people who voted for him wouldn’t have voted for John McCain for president because he was “too old.”)

Education, ideally, is a financial investment for the educatee: make little money for 4 years, so you can make a lot more money for 4 decades. Sure, there are purists who don’t concern themselves with such philistine values, and who argue that the trivium and quadrivium are ends in themselves – and that education for its own sake is our very purpose here on Earth. This argument will be valid the moment classrooms build themselves and professors forgo salaries.

The economic argument occasionally carries weight among the purists, if they can use it to serve their own ends. Money becomes suddenly important to some people when the possibility of losing it presents itself.

The legislators and executive officeholders in Nevada, like those in a lot of states, spent far too much taxpayer money during the good years and now face a budget crisis. In Nevada, education makes up 28% of the state budget.

To hear the pro-“education” forces, if you want to deny unlimited funds for students, teachers and administrators; or even get the percentage down to 26 or so, that means you want children to be illiterate and innumerate.

First, tens of millions of kids already are illiterate and innumerate, with no incentive for them to read, write, add, divide and calculate square roots. Read Facebook, Twitter, MySpace (especially MySpace, where we’re pretty sure you need to be convicted of a felony to open an account) or the comments on any site other than Deadspin if you don’t believe us. Most of these kids’ parents aren’t exactly qualifying for Rhodes scholarships themselves.

Creedon is exactly the kind of person that a blanket funding policy attracts, and helps render financially impotent. Creedon had only moved to Nevada when – well, when he was an age at which most community college students are a year from graduating. Now at 28, he’s not close to done. From the Review-Journal:

(H)e’s probably going to leave for an out-of-state university.
“I really want to go to a place where it’s a little more stable for the next two years,” he says.
He’s applied to universities across the country, from New York to Texas to Washington state. He’s received one acceptance letter and waits to hear from the rest. He also applied to UNLV, but that’s just his safety net in case he doesn’t get in anywhere else.

Again, 28. An age at which:

  • Steve Jobs had already sold millions of computers, taken Apple public, and ceded operational control of it to a professional CEO;
  • George Harrison had embarked on a solo career, because the Beatles had already broken up;
  • Steven Spielberg had directed Jaws, then the biggest-grossing movie in history;
  • Theo Epstein was responsible for the day-to-day operations of the Boston Red Sox;
  • Thousands of other people were doing something productive.

But hey, Creedon’s getting an education. Given that there’s a positive correlation between duration of post-secondary study and real-world success, those eventual 12 years in the classroom will certainly make Creedon a bigger star than Jobs, Harrison, Epstein and Spielberg combined.

We don’t mean to use an outlier as indicative of an entire group. Instead we mean to show that Creedon’s no outlier. His eventual diploma, should be ever earn one, will be in history and/or political science. That puts him square in the majority of unproductive, barely employable college graduates, but 95% of students at his college never graduate (necessitating the rare bold/italics/underlining hat trick.) Our educational system doesn’t merely turn these dropouts out by the myriad, it does so for obscene prices – both in terms of taxpayer wealth confiscated and of student loans incurred.

The president of Creedon’s actual college – not merely that of the student government – has that analytical flair that academics are famous for (again, from the Review-Journal):

Already, the college had to turn away 5,300 students in the fall.
“Had we been able to accommodate those students, our enrollment would have been much higher,” (Michael) Richards says.

They should phrase Richards’ statement as a true/false question in one of the community college’s introductory math tests.

What makes J.T. Creedon reprehensible is…well, several things and they’re difficult to rank, but what struck us hardest was his insistence on taking the moral high ground of concerning himself with the nebulous well-being of others, rather than looking at the financial necrotizing fasciitis case in the mirror. He publicly advocates securing ever more funding for students such as himself – oblivious to the reality that his own example is as strong an argument as any for gargantuan financial cuts.

This world would be a far better place if people took care of their own business first. J.T. Creedon is welcome to save the world from a shortage of overlearned, underexperienced waiters and retail clerks. That he feels an obligation to do so while taxpayers continue to wean him, well into adulthood, is his problem, and ultimately society’s.
—————
If your kid says he wants to go to college, or even merely thinks that that’s what you’re supposed to do when you get out of high school, part of being a parent is assessment and counsel. J.T. Creedon could have spent $3000 to enroll in truck driving school a decade ago, graduated with a commercial license a month later, and at the absolute minimum made $600,000 since then.

Heck, J.B. Hunt would have paid for his schooling, requiring only a one-year apprenticeship and allowing Creedon 9 years of freedom. But truck drivers never get on TV, nor do they have the luxury of organizing protests. They’re too busy delivering the food and drink that parasites require to survive.

Creedon could have learned to deal blackjack in even less time than it takes to learn to drive a truck. He could have done so for far less money, but with similar earning potential. (Albeit without ever seeing daylight nor breathing clean air. We live in a world of tradeoffs.)

Society can’t function without physicians and pharmacists. Nor without contractors and carpenters. But it’ll do just fine without directionless leeches.

This was Part I of a two-part series on higher education and how it pertains to the financial life of either you or the 20-something in your life. Part II, which is a lot less depressing than Part II, goes live Monday.

**This article is featured in the Yakezie Carnival on Judgement Day 2011**

and

**The Carnival of Wealth #40-Memorial Day Edition**

Filed Under: Bad Examples, Consumer Debt, Economy, Education Tagged With: , , , ,

Yip yip yip yip yip yip yip yip/Mum mum mum mum mum mum/Get a job

February 7, 2010

The Silhouettes broke up in 1968. Color photography was still many years away

Meet us back here on Election Day 2012, and tell us that “the college crisis” didn’t become an issue in the 33 months since this post appeared.

We’ve already heard how the domestic automotive industry is the unseverable spinal cord of the American economy, and that it’s our duty to our fellow man (if he’s a UAW member) to spend $50 billion propping up this radiant pulsar of American commerce.

In 2008, you had to go all the way down to the presidential candidate with the 5th-most votes (the Constitution Party’s Chuck Baldwin) before finding one who didn’t spout off some variation on how crucial it was to “keep Americans in their homes”, even if those Americans borrowed too much money and assumed that a steady increase in their homes’ values was a cosmological constant.

And as we heard from a prior presidential administration, doling out 700 billion taxpayer dollars (that’s $233 for each of us) was necessary to keep some of the nation’s largest investment banks in the business of lending money, otherwise “the whole system would collapse”, which presumably means we’d be reduced to collecting animal pelts in exchange for our mp3s and bedroom linens. “I’ve abandoned free-market principles to save the free market” was the quote. To paraphrase a ‘60s-era t-shirt and bumper sticker, that’s like (having sex) for virginity.

Meet the next bubble – post-secondary education.

The problem is this: despite the recession, our society has gotten so absurdly rich that today, young adults loaded with potential can postpone any worthwhile work and ring up debts in the process, all in the name of getting an education. How “education” became more important than “productivity” or “fulfillment” or “not being a drain on society” is unclear.

Yes, we’ve all seen the studies say that college graduates make more money than high school graduates – somewhere around $15,000 annually. This is a mantra people take to heart without examining in any detail. It sounds logical, as many jobs require applicants to have college degrees. But like many bromides that attempt to persuade you of a fact in as pithy a fashion as possible, the $15,000 allegation tells only a minute part of the story.

The median salary for petroleum engineers is around $108,000. For a physician who’s been out of school for a couple of years, it’s reasonable to assume he’ll make anywhere from $170,000 or so for a pediatrician to more than $500,000 for a neurosurgeon.

What about philosophy graduates? English majors? People who think a sociology degree is worth anything? We don’t have figures for them, because the Bureau of Labor Statistics doesn’t list “barista” and “street musician” as employment categories. Sure, the average college graduate makes a better salary than the average high school graduate. But the average college graduate is part doctor and part engineer. The students who major in the hard sciences are dragging the political science and journalism majors up with them.

This statistic puts the cart before the horse, and puts passivity ahead of activity. For many college graduates who inherently know, just know, that the last 4 or 5 years were worth it, they assume that that diploma is the negotiable equivalent of a $15,000 annuity. God forbid they actually go to the trouble of applying it.

The University of Hawai’i’s spring semester enrollment is up 9.4% over last year. Instead of working harder than ever to find jobs in a weak economy, people are willfully deferring life – and paying money they don’t have for the privilege. And it’s not like UH is creating more engineers and scientists. A college vice president says “They tend to be all over the place. We have graduate students seeking their master’s, students in areas where there’s a shortage, such as teaching, nursing and social work, and business is popular, but so is psychology.”

And parents, don’t leave the room. We’re not done with you, either. The following is your financial obligation to your kids: food, clothing and shelter until they reach the age of majority. That’s it. No one owes anybody a college education, just like no one owes anyone a house or regular doctor visits. Your kid is far better off becoming a welding technician straight out of high school than wasting four years earning a degree in gender & women’s studies and beginning the income-earning years tens of thousands of dollars in debt. Economically speaking it’s better yet that he become a neurosurgeon, of course, but the world still needs welding technicians.

On the macro level, everyone from your neighbor to the president is talking up post-secondary education. The neighbor does it because he doesn’t know any better, the president for the same reason any elected official advocates anything.* The talking points are familiar: the next generation of Americans needs to be prepared in an ever more competitive world, education is a fundamental right, do you really want America to be a nation of blathering idiots, etc., etc.
This obscures the truth by shrouding it in catchphrases. This may be indelicate, but that doesn’t make it false: things cost money.

An investment, even in one’s own education, is a deferment of resources for an expected return. The majority of college kids don’t know a damn thing about what they’ll do when they get out of college. Therefore for them college isn’t an investment, it’s an expense.

That’s not to say that finishing high school is all you need to do to enter the workforce with a minimum of debt. There’s still a thing called motivation. Completing school, at whatever level, shows that you had the diligence to sit quietly and take some tests. There are a million ways to earn a respectable living out of high school – carpentry apprentice, garbageman, junior lab technician – but taking a random selection of undemanding college courses is not one of them.

Yet the government, true to its misguided principles, subsidizes education. President Obama proposes, in public and behind a live microphone, that no college graduate should have to fork over more than 10% of his income in student loan payments. This is what commerce has come to in 2010 – the terms of an agreement are dictated by future occurrences. Of course no one wants to pay 10% of his income on debt obligations, or on anything else for that matter. Not that 10% is an insurmountable number, but if the government mandates that it’s too high, pretty soon people will agree that it is too high, and that no $40,000-a-year junior account executive should suffer the inconvenience of paying more than $333 a month toward her student loans.

It gets better. (Or worse, if this kind of thing bothers you, which it should.) The president adds that student loans should be forgiven after 20 years – 10 if the borrower “enters into a life of public service.”

His definition of public service goes beyond Green Berets and SEALs. Say you want to take your forestry degree and be a National Park Service ranger, which offers room and board and pays $35,000 annually. Thanks to the time value of money, you’d be getting close to a complimentary education while doing nothing that makes a measurable impact on America’s gross national product.

But after the 10 (or 20) years, the unpaid part of your education doesn’t suddenly become “free”. Services were still rendered, the college still paid its professors and maintained its classrooms and grounds. Who makes up the difference? (Hint: the same generous soul who already bailed out Chrysler, GM, AIG, Lehman, your deadbeat neighbor who didn’t know how to sign a loan document, etc.)

People respond to incentives. If the government declares that the price you pay for your education will be arbitrarily lowered, more people will go to college. And earn useless degrees. And take their sweet time paying them back, if at all. But at least our elected officials can brag that a higher percentage of Americans go to college than do the Irish or the Icelandic.

*To get elected. (And in this particular case, to distract attention from more pressing matters, such as the ever-closer destruction of Social Security.)

**This article is an Editor’s Pick at The Best of the Best in Money and Personal Finance #12**


Filed Under: Education Tagged With: , , , , ,
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