For the past two posts, you’ve heard me rail about college, fundamentally questioning whether the astronomical tuition costs are worth it (here and here). The real test is what I do with ‘Lil and Mini Fox. Here are my thoughts:
Saving in a 529
Currently we are saving $1,000 per month in a 529. That will build to about $400,000 which will allow both cubs to attend a public college (like UNC-Chapel Hill) with a fair amount left over, both to attend a private college (like Duke) but we’ll need to come up with more money, or one to go to a public college and the other a private college and we’ll pretty much spend it all.
If you are planning on your child getting any education beyond high school, 529s are a no-brainer. They act like a Roth IRA in that they invest after tax money, but then all the investment returns are tax free. That can really add up to some significant tax savings.
The best or . . . something really good
Foxy Lady and I have been blessed to have good jobs that have allowed us to build a comfortable nestegg. One of the things we want to do with that is afford our cubs the opportunities to help them succeed.
If either ‘Lil Fox or Mini Fox turns out to be super smart and super hard working and super ambitious and is able to leverage those to get into one of the very best colleges in the country, we want to make the financial considerations a non-issue.
However, “best colleges” is a tricky term. If either got into Harvard or Stanford, they would go and Foxy Lady and I would come up with the money, no questions asked. You can include U of Chicago (where Foxy and I got our MBAs), MIT, Duke, Penn, Princeton, and CalTech as similarly expensive schools that we would swallow hard but also pay to gladly send our cubs to.
Beyond that, it’s hard to think of private colleges that would justify the 3x money that a public school would cost. That’s not to say there aren’t great private colleges that didn’t make my list of eight, but are they worth the extra cost? I don’t think so.
Local public college, but only if . . .
We’re lucky that in North Carolina we have some really great public universities. UNC-Chapel Hill is regularly rated as one of the very best. As a North Carolina tax payer we get access to that fine institution at a substantial discount. Also, NC State is very strong, especially in STEM. ‘Lil and Mini could get world class educations there.
Yet, Dad’s going to put some strings on that. If that’s the path they take they have to major in STEM, business, pre-law, pre-med, or some other area that can reliably offer jobs that justify the educational expense. I was a finance major and that has paid off. Foxy Lady was a marketing major and that paid off.
UNC is a great school and I have no reason to believe their drama and literature and sports science and art history and music and Asian studies and creative writing departments are great, being taught by dedicated professionals. But none of those majors offer good-paying jobs to the average graduate. The main point of my last post was looking at the significant expenses of college and making sure the job you get with that degree offsets those costs. For all those majors and many, many more, it’s not even close. I’m not about to spend a hundred grand so my cub can get a journalism degree then become a host at Applebees.
Trade college for a trade
This is the one I really get excited about. If our cubs aren’t Harvard material and aren’t interested in STEM, pursuing the trades is something Foxy and I are really going to push. Follow my logic:
Being a plumber or electrician has some great things going for it. First they make really good money. A plumber makes on average about $51,000. Remember that an average college graduate makes about $60,000, so they’re pretty close. Add in to that our discussion last post about “smart non-college kids” and if our cubs are smart enough and hard enough workers to average $60,000 as college graduates if they got that degree, they’ll definitely be able to make more than $51,000—probably fairly close to $60,000. That makes the salary a wash.
Also, the cubs can hit the ground running right out of high school. It takes about a couple years to get your license and a few years after that to become a master plumber. But you’re still being paid during that time, not paying tuition during that time. Big difference. Plus, by the time they would have finished college and entered the workforce making about $33,000 they could be a master plumber earning substantially more than that.
When you choose your education, you want to get something that will be in demand. It’s hard to say what the future will hold, but people will definitely continue to poop. Joking aside (although I do believe they will), there are a lot of reasons to believe that plumbers and electricians will continue to be in demand. First, those vocations currently skew older because that’s when the trades were taught more widely. There are a lot of 50- and 60-year old plumbers and electricians. It’s not a sexy job that kids today want to pursue, so those who actually do will make a killing.
Second, the world is changing in ways that will probably need that skillset. Plumbing and electrical wires are constantly breaking down so that will always provide steady business. Plus, changes are coming that play right into their hands. Two years ago we installed solar panels on our roof, and you know who did a lot of that work? California just went through a major drought which caused everyone to roll back their water usage; you know who installed those water-efficient showerheads and toilets?
An ace in the hole
You can tell I have an interest here. So it’s probably not surprising that whenever a plumber or electrician comes to our house (and charges about $200 for 20 minutes of work—not bad) I ask a lot of questions.
One thing that often comes up is what success looks like for them. Like everyone in any job, there are always those things that remain just out of their reach, but “man, if I could get that I’d have it made.” For a lot of tradespeople, it’s being able to go out on their own.
There was one electrician I talked to a lot when we installed our solar panels. He was about 35 and had been working for this company for about 8 years. He said he made about $50,000 a year and he was happy with that but he knew he could do better. He’d love to start his own business. When I asked him what was stopping him, he rubbed his fingers together. MONEY.
He just didn’t have the money saved up to go out on his own. I asked more details and he said it came down to having a truck and all the necessary tools (there are a lot). Once he had that, he could do his own thing, be his own boss, and keep everything he made instead of a portion going to his boss.
How much were we talking to get him set up like that? Between $80,000 and $100,000. That’s a lot of money, no question. For this guy, as well as most Americans whether or not they have a college degree, that’s an unattainable sum. That causes him to continue to work for someone else and not realize his full potential.
Do you know who does have $100,000? A kid like ‘Lil or Mini, whose parents have saved more than that for their college education. If ‘Lil Fox foregoes $100,000 (or $280,000 at a private college) of college costs, that money will be there and could be used for setting him up as an independent plumber. That puts him at a huge advantage, and isn’t that what Foxy Lady and I want to do with the education money we have saved for our cubs?
You could easily imagine our conversation with him: “We have saved $200,000 for your college, and we know you would be successful there if you wanted to be. Instead, become a plumber. In two years you’ll be licensed and three years after that you’ll be a master plumber. When that happens, as a ‘graduation gift’ we will get you the best work truck with the best tools, plus we’ll cover your business’s expenses for the first six months.”
Who knows how all this will pan out. These are my ideas right now. We have 13 years until ‘Lil Fox needs to make this decision, and a lot can change in that time. Also, there’s the little thing of what he want to do. But as of now, unless he gets accepted to Harvard or wants to become an engineer, I am really liking the plumber idea.
However, this post particularly the two before it really shed light on this enormously important decision and how all of us as loving parents can think about it a bit differently than we have been brainwashed to.