Fed Reserve Bank (San Francisco ) Ask: Is It Still Worth Going to College?

In today’s Federal Reserve Bank (San Francisco) Economic Letter, the value of a 4 years university/college degree is questioned, and findings are rather shocking : it will take 15 to 20 years in order to return the investment on average.

Table 1 Maximum tuitions by breakeven age and discount rates

Maximum tuitions by breakeven age and discount rates

The article concluded:

Earning a four-year college degree remains a worthwhile investment for the average student. Data from U.S. workers show that the benefits of college in terms of higher earnings far outweigh the costs of a degree, measured as tuition plus wages lost while attending school. The average college graduate paying annual tuition of about $20,000 can recoup the costs of schooling by age 40. After that, the difference between earnings continues such that the average college graduate earns over $800,000 more than the average high school graduate by retirement age.

Although there are stories of people who skipped college and achieved financial success, for most Americans the path to higher future earnings involves a four-year college degree. We show that the value of a college degree remains high, and the average college graduate can recover the costs of attending in less than 20 years. Once the investment is paid for, it continues to pay dividends through the rest of the worker’s life, leaving college graduates with substantially higher lifetime earnings than their peers with a high school degree. These findings suggest that redoubling the efforts to make college more accessible would be time and money well spent.

Good Article: 30 Financial Milestones You Need To Hit By Age 30

This article was published on moneyaftergraduation.com by Bridget, and I keep a copy here.

30 Financial Milestones You Should Meet Before Age 30

1. Financially independent of your parents. Parents always want to help but eventually their doting will become a hinderance when it comes to establishing yourself as a self-sufficient adult. I’m a firm advocate that you should establish complete financial independence of your parents in your early twenties, but if an unexpected emergency or crippling debt threw you back in the nest for a few years, make sure you claw your way out by 30.
2. Debt free. There’s no excuses to carry the spending mistakes of your youth into your 30′s, so your consumer debt should be long gone. Depending on what and how long you studied in university, your student loans should also be vanquished by age 30.
3. Out of overdraft. Sometimes your chequing account runs dry when you’re trying to make ends meet, but by age 30 you’ve had a bank account long enough to know how to stay out of the red. If overdraft is a habit for you, it’s one you need to break by 30.
4. Established good credit history. Maybe you missed some payments and even had a debt go to collections when you were young and foolish, but by 30 you should have redeemed yourself from these mistakes. A solid credit history will help you with big purchases like a home, but also shows you pay your bills on time and don’t live at the limit of your cards.
5. Have $25,000+ saved for retirement. If that number made your eyes bulge out, you better get saving. As a general rule, I think you should aim to have one-year’s worth of your salary banked for retirement by age 30, but if your spent a long time in university or had a slow start to your career, this may not be possible. $25,000 is a good amount to aim for if you need to set a target. Even if you don’t start saving until age 25, you’ll only need to put $5,000/yr away to meet this goal.
6. Started an investment portfolio. Whether it’s something simple like mutual funds or more advanced like common stocks, by age 30 you have to have your money diversified in something beyond a basic savings account.
7. Established an emergency fund. There are mixed opinions about just how much you should have set aside in case trouble comes your way, but the general rule is enough to cover 3-6 months of essential expenses.
8. Properly insured. Part of being a responsible adult is protecting yourself, and that includes small things like tenant insurance for your apartment right up to disability insurance. If you don’t have coverage through an employer, you should also look for health/dental insurance to manage those costs.
9. Maximizing employer benefits. If you’re lucky enough to work somewhere that provides you with perks, you should know what they are and be using them — it’s free money! Make sure you opt in to things like employer retirement plans and utilize spending accounts for learning & development. Don’t let these things go to waste!
10. In the habit of tracking your spending. It’s a tedious chore but the only way you’re ever going to manage your money is if you know where it’s going. By 30 you should be in the habit of tracking purchases and making sure you’re spending less than you earn.
11. Done with impulse purchases. The sooner you give up the habit of shopping when bored or grabbing goodies while you wait in the grocery store checkout, the better. Going into your 30′s, you understand your money can only work for you when you have it, so you’ve gotta stop spending it on things you didn’t originally want or need.
12. Willing to spend where it counts. As you near 30, your dorm-room living days are probably long over and you’re ready to invest in some nice furniture or pots and pans that aren’t coming second-secondhand (thirdhand?). Whether its your wardrobe, your home, or even items like a gym membership, you understand that sometimes quality costs and you’re willing to spend where it matters.
13. In the habit of regularly checking your credit report. You can do this once a year and for FREE, and it’s one of the simplest ways to protect yourself against identity theft while maintaining good financial health. You have no excuses not to!
14. On top or ahead of all your monthly bills. In your disorganized youth, you probably forgot to pay a bill or missed a deadline, but by 30 you should be well into the habit of meeting all your deadlines. Set up an auto-pay from your chequing account to ensure you never miss a due date!
15. At least one big splurge you saved up for and paid in full with cash. Whether it’s an extensive backpacking adventure or a new car, you should have at least one “fun” financial triumph behind you by the time you hit 30. Save up and spend! You have to enjoy your money as you take care of it!
16. An understanding of personal income taxes and how to minimize what you pay. Understanding what tax bracket you fall into and what credits are available to you means more money in your pocket every year. Make sure you’re contributing to your RRSP and claiming all other available deductions in a way that ensures you pay the least amount of taxes possible!
17. Diligently saving for a big purchase. Whether it’s a wedding or a down-payment on your home, there might be something very expensive coming up that takes a few years of planning. By 30 you should not only have a plan, but actively making headway towards your goal.
18. A clear direction of your career. Your job is your major financial asset, and the one that generates the most income for you. By 30, not only should you know what industry you work in, you should have logged a few years of professional experience in your field. If you were in school pursuing a graduate or professional degree, this might not be many years, but the most important thing is that you’ve started establishing yourself to reap the rewards of hard work in your 30′s and 40′s.
19. A profitable side income. However small, having a second (or third, or fourth) revenue stream is important. This can be a small part-time endeavour or something as simple as dividend payments from stocks you own. In any case, you should have an alternative source of income beyond your main employment.
20. A positive, growing net worth. By 30, it should be true that your assets – liabilities = positive number. This might be a challenge depending on how much debt you took on for school or how foolish you were in your early 20′s, but ultimately your net worth should be growing at a quick clip as you enter your 30′s. I suggest increasing your net worth by at least $25,000 per year.
21. A BHAG for your finances. BHAG stands for “Big Hairy Audacious Goal”. This can be something like retiring with $2 million or purchasing a vacation property by age 40 or earning a salary of $100,000 per year. Whatever it is you want, make sure it’s BIG and challenging so you can work towards it a little bit every year. When you meet your goal, make another.
22. An understanding and a plan of how your money will deliver the lifestyle you want. Following point #21, to their credit millennials dream big — sometimes a little TOO big! If you’re planning to pay off all your debts, get married, buy a home, have a child, get a promotion, buy a new car, and save $50,000 for retirement by age 30, you might need a reality check. Take a critical and realistic look at your stupid goals and determine if they really are feasible. Maybe make adjustments by lowering the target or extending the deadline. Remember, you’re not in a race! You will still be working and saving money at 31, so go ahead and delay some things until they’re really financially feasible.
23. So over measuring your finances against that of your friends. By age 30, some of your peers will have enjoyed tremendous success in their careers, and others will be struggling. At 21 there was little predict who would end up where, but by now the cards have been dealt and maybe you didn’t end up a millionaire by 25. While it can be hard to quell jealousy when someone is enjoying more financial success than you, your situation is yours and you have to manage it best you can. It’s time to get over this, bury the green-eyed monster, and move on. (This also goes for feeling superior to friends who are not managing their finances as well as you. Be an example, not an arrogant ass).
24. Less consumption-oriented. It’s easy to be dazzled by bright & shiny things in your 20′s, but heading into your thirties you understand that a new car or a big home are just things and ultimately don’t matter — and certainly are no testament to your financial health or success! By age 30 you should no longer be using material things to measure progress.
25. A healthy relationship with credit cards. By age 30 you should only be using credit cards for the conveniences and reward perks. You should always pay the bill in full and never miss a due date. You understand that creditors want to make money off of you, not provide you with benefits, so you pursue all rewards cards with caution.
26. A regular contribution to charity. Whether you drop $10-$20 monthly or a few hundred dollars a year to one or many charities, giving is an integral part of personal finance. Find a cause you believe in and do your part to help it succeed. This necessitates not only budgeting, but also serves as a reminder that many are not as fortunate as you and we have a moral obligation to help our communities by sharing our wealth.
27. If you’re part of a couple, a healthy way of sharing money with your partner. Whether it’s splitting bills 50/50 or one paying certain bills and the other person paying the rest, by your 30′s you should have figured out a system that works for both of you. Disagreements about finances are a leading cause of divorce, so getting over this early ensures a healthy wallet and a happy relationship.
28. A commitment to putting free or cheap before convenient. Whether it’s brewing coffee at home or looking for furniture secondhand, it will always be easier to buy new, but it’s in the best interest of your wallet (and the environment!) to seek out alternative ways to get what you want or need without spending much or anything at all. Make use of sites like eBay, Craigslist, and Kijiji or develop your own resources (ie. clothing swaps) and check out used bookstores, consignment shops, and thrift stores.
29. Done paying unnecessary fees. In your 20′s it seems insignificant to withdraw cash from an ATM that is not from your bank and it’s a hassle to call your cable or cellphone provider for a cheaper plan, but if you do these things and are strapped for cash, it’s completely your fault. It may have been forgivable to be careless in your 20′s, but going forward you never want to be paying more than you have to!
30. An understanding and appreciation for the reality that money is only a tool of exchange, and not worth obsessing over. It’s cool to be financially savvy, but don’t let it take over your life. By getting your ducks in a row in you’re 20′s, you’ll be all set to enjoy the financial fruits of your labor in your 30′s and beyond.

50 universal truths that will make you more successful

The following are from an excellent article by Julie Bort published on National Post (October 29, 2013).

  1. Have a passion for your work. If your work is meaningful to you, your work life will be a joy.
  2. If you can’t be passionate about the work itself, be passionate about the reason you do it. Maybe you don’t love your job/company/career, but the money and benefits are good for your family. Be passionate in your choice to do right by your family.
  3. If something needs changing, be the one to lead the change. If you dislike your job but are stuck, work on getting the skills that will get you unstuck. If there’s a problem at your office, work on being the one solve it.
  4. Start small and build from there.
  5. Do the obvious stuff first, then progress to the harder stuff. (Otherwise known as going for the low-hanging fruit.)
  6. If it’s not broke, don’t fix. Do improve it.
  7. The hardest lesson to learn is when to keep going and when to quit. No one can teach you that. At some point, you have to choose.
  8. The definition of crazy is to do the same thing the same way and expect a different result. If the result isn’t good, change something.
  9. No one succeeds alone.
  10. Ask for help. Be specific when asking. Be graceful and grateful when help comes.
  11. Surround yourself with positive people and you’ll have a positive outcome.
  12. Embrace diversity. The best way to compensate for your own weaknesses is to pick teammates who have different strengths.
  13. People experience the world differently. Two people can attend the same meeting and walk away with different impressions. Don’t fight that. Use it.
  14. You don’t have to like someone to treat that person with respect and courtesy.
  15. Don’t “should” all over someone, and don’t let someone else “should” all over you.
  16. No matter what you do or how much you achieve, there are always people who have more.
  17. There will always people who have less, too.
  18. No matter how much you excel at things, you are not a more worthwhile human being than anyone else. No one else is more worthwhile than you, either.
  19. If you spend most of your time using your talents and doing things you are good at, you’re more likely to be happy.
  20. If you spend most of your time struggling to improve your weaknesses, you’re likely to be frustrated.
  21. Practice is the only true way to master a new skill. Be patient with yourself while you learn something new.
  22. The only way to stay fresh is to keep learning new things.
  23. To learn new things means being a beginner, and that means making mistakes.
  24. The more comfortable you grow with making beginner mistakes, the easier it is to learn new things.
  25. You will never have all the resources (time, money, people, etc.) that you want for your project or company. No one ever has all the resources they want.
  26. A lack of resources isn’t an excuse. It’s a blessing in disguise. You’ll have to get creative.
  27. Creativity and innovation are skills that can be learned and practiced by doing your usual things in a new way.
  28. Take calculated risks.
  29. In the early stages of a company, career, or project, you’ll have to say “yes” to a lot of things. In the later stages, you’ll have to say “no.”
  30. Negative feedback is necessary. Don’t automatically reject it. Examine it for the nuggets of truth, and then disregard the rest.
  31. When delivering criticism, talk about the work, not the person.
  32. Think big. Dream big. (The alternative is to think small, dream small.)
  33. Treat your dream as an ultimate roadmap. You don’t have to achieve your dream right away, but the only way to get there is to take many steps toward it.
  34. If you think big, you will hear “no” more than you hear “yes.” They don’t get to decide. You do.
  35. How long it takes you to create something is less important than how valuable and worthwhile it will be once it’s created.
  36. If there is one secret to success, it’s this: communicate your plans with other people and keep communicating those plans.
  37. Grow your network. Make an effort to meet new people and to keep in contact with those you know.
  38. No matter what technology or service you are creating/inventing at your company, it’s not about the product; it’s always about the people and the lives you will improve.
  39. No matter how successful you get, you can still fail and fail big.
  40. Failure isn’t a bad thing. It’s part of the process.
  41. Things always go wrong. The only way to keep that from hurting you is to plan for that.
  42. Learn how to respectfully, but firmly, say “no.”
  43. Say “yes” as much as you can.
  44. In order to say “yes” often, attach boundaries or a scope of work around your “yes.”
  45. No matter how rich, famous, or successful another person is, inside that person is just a human being with hopes, dreams, and fears, the same as you.
  46. Getting what you want doesn’t mean you’ll be happy. Happiness is the art of being satisfied with what you already have.
  47. Working with difficult personalities will be a part of every job. Be respectful, do your job well, and nine times out of 10 that person will move on.
  48. For that one-out-of-10 time, remember you aren’t a victim. Do what you need to get a new job.
  49. As soon as you have something to demonstrate, get an executive champion to back or support your project.
  50. Focus on what you want, not what you don’t want.

Academic Investment and Engineering Careers Guides

Generation Jobless from CBC

The documentary Generation Jobless from CBC, caused quite a stir recently in university discussion:

… delves into why so many young Canadians are overeducated and underemployed.  The reality is that today’s twenty-something’s are entering  an economy in the throes of a seismic shift where globalization and technology are transforming the workplace. Automation is replacing tens of thousands of jobs at a time.  Companies fixated on the bottom line are outsourcing jobs and wherever possible getting computers to do the work.  Employers are placing a higher premium on experienced workers, unwilling to invest in training new entrants to the workforce……

Another two interesting readings: Speech in University Of Toronto by JD Clark and the Youth Unemployment in Canada: Challenging Conventional Thinking, published by CGA Canada.

ROI for University Degree

In the productive conversation from National Post titled Canada must streamline education to turn degrees into jobs, it sounded an alarm bell:

The overabundance of general degree graduates in Canada has led to dismal underemployment figures, Ms. Bell explains. “What statistics don’t tell you is that the system is churning out more BAs than we can possibly absorb. In fact, OECD [Organization for Economic Co-operation and Development] ranks Canada as No. 2 in underemployment of youth. Only Spain is ahead at 50%.”

In another conversation titled When does a university degree really pay off, it stated:

Everyone has heard the argument that education begets fortune and career success. But there are countless graduates who have invested tens of thousands of dollars in a university education, only to find themselves starting on a career path that barely covers their loan payments, or lining up with hundreds of other similarly qualified hopefuls for a job. … The question that looms large for many is: When is the return on investment (ROI) worth the effort? … The problem, however, is that education costs more and more, while graduates are getting jobs that pay less and less, Mr. Swail says. “The only things visibly increasing are engineering and medical degrees. Those do pay off. But, overall, society has done a poor job of linking the job market to what higher education is doing. More and more people come out of school asking, ‘What do we do now?’ ”

Engineering degree seems to be a good investment

The WSJ has some public available data mined from PayScale Inc for the past 10 years, and it clearly shows the engineering degrees really worth the investment in general, at least for now. However, there is no 100% certainty in any investment, including an academic degree.

Furthermore, although the ROI is somehow related to the major / subject of degree, it will also depending on the tech skills acquired by the person during years.  There is an interesting post on Business Insider claiming that 30 Tech Skills That Will Instantly Net You A $100,000+ Salary. Another list is the dice high paying skill lists.

How to become an engineer

I am studying engineering and find this ( Engineer Career Guide ) is useful. It is career-focused, rather than course-focused. It can immediately connect you with the job situation in the market. Another non-nonsense ebook is from TalentEgg.com.

Free Trial Windows Azure (Windows Cloud)

You can try out Windows Azure for 90 days free from here.

Details of 90-Day Free Trial
What you’ll get every month (in fact this is much better than my cell phone plan)
750 HRS Cloud Services
750 small compute hours
35 GB Storage
35 GB with 50M transactions
1 DU SQL Database
1 DU of Web & Business Edition
20 GB Data Transfers
20 GB outbound, unlimited inbound
10 Web Sites & Mobile Services
Can be extended to 1 year FREE

Some Strings attached for this trial: (I guessed this will defer a lot of peoples although you should generally trust Microsoft on its words)

A mobile phone
To send you a verification code by text message.
A credit card
Required for proof of identity. No obligation to purchase and no charge unless you explicitly remove the spending limit.

Excel in Customer Service

 from about.com

If your front-line people are fraying, remind them the trick to providing good customer service to all customers is going in with the right attitude.

So when you’re dealing with a customer, the person in front of you is not just another problem in an already busy day. He or she is an opportunity to make a difference to someone. That’s the kind of customer service attitude that will help you smile and really mean it – and send them away thinking good thoughts about your business and wanting to spread the word.

Formula for Success

A consummate workabolic, illustrator Norman Rockwell placed more credit for his success on his industry than his talent. This letter was written in response to a query about his ‘secret’.

March 8, 1965

Dear Mr. Brooks:

In reply to your letter of February 8th, I feel a little presumptive to give a formula for success, but here goes:

“A little talent, a lot of ambition, some self-confidence and a pile of hard work.”

Sincerely yours,

Norman Rockwell