Personal Finance

The 5 Worst Pieces of Financial Advice You Could Possibly Follow

Expertise: Commercial Real Estate, Personal Finance, Real Estate Marketing, Business Management, Landlording & Rental Properties, Real Estate Investing Basics, Personal Development, Real Estate News & Commentary, Mortgages & Creative Financing
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dave-ramsey-overrated

Conventional financial advice can lead you in circles. At best, it will get you conventional (aka average) results.

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Considering that most people in America who believe these widely accepted nuggets of wisdom don’t even have $1,000 in emergency savings and have little hope of ever being able to afford their own home—let alone have any real level of income in retirement—you might want to rethink some of them.

In my experience, the following are some of the worst and most damaging pieces of financial advice.

Warning: Be Skeptical of this Financial Advice

  1. You Need to Go to College

I went to college. I don't think I learned much of anything useful in life and making money. The biggest thing you'll probably learn if you go down that path is how much of a massive burden student loan debt is.

There are certainly smart people who have continued their education to become doctors, lawyers, etc. Some have even started great companies.

Yet, ironically:

  • Most of the biggest success stories are of those who dropped out.
  • If you do the math, the return on a degree is now so low, no investor would want to make that investment themselves.
  • Millions of students are graduating, only to find they need to borrow more to go get retrained to be able to actually get a job

Do keep learning. If you want to go to college as a way to make connections or as a luxury, then get out there and invest in real estate first. After that, use your profits to pay for your formal education and a paper degree later.

Related: Is a College Education Financially Worth It — Or Is It a Giant Scam?

is-college-worth-it

  1. You Must Pay Off Your Debt as Fast as Possible

It may feel great to be deb- free. Though billionaires sleep very well owing billions of dollars, too. You don't want to waste money on high interest, bad debt. Yet, you may find a better use for your money than eliminating all your debt.

The deciding factor is really whether you can make more money by investing first. Say you've got student loans at 5 percent interest or a credit card with a 0% interest rate. If instead of using your cash to pay that off, you could go make 8 percent in a passive income property, 38 percent on a house flip, or more on a wholesale deal, why wouldn’t you invest first?

Take part of your gains and pay down part of your debt; reinvest the rest. Repeat.

  1. Pay Whoever You Owe First

The average way to do things is to get your paycheck, go splurge, pay all the bills, and then if you have anything left, invest or save it.

Of course, most of the time, there is nothing left. So you never invest. You never get ahead. More often you are borrowing extra money, because you are living beyond your means.

Instead, pay yourself first. You’ll find a way to cover the rest. This might mean setting aside money to invest right off the top of your check, no matter what.

The best return you can make is investing in yourself. Use it to learn a skill that will make you more valuable.

  1. Save, Save, Save

It is true that it is wise to have some emergency reserves. You don’t want to ruin everything else you’ve built for the sake of making the bills one month. Don’t put off investing or learning, but do try to build up some emergency reserves.

Three to six months of expenses is a good goal most have. That way if you ever get sick, can’t work, or your income gets tied up, you’ll be just fine. If you’ve got three to six months of expenses in the bank or under your mattress, and maybe access to a couple thousand dollars in credit, then anything more is probably a waste.

Leaving cash idle is worse than a risk. It is always going down in value. Plus, who knows what’s going to happen. A bank glitch or fire can vaporize it in an instant.

Invest, invest, invest. Especially in assets that go up in value, instead of down due to inflation.

male showing empty pockets implying moneyless

Related: Money Saving Tips: Not Enough Money to Invest, Think Again!

  1. All Debt Is Bad Debt

This is simply not true. There are two very different types of debt.

One is bad debt. That is used to buy depreciating items and more debt—like a brand new car. It’s crazy to take out a big car loan on a brand new car for it to immediately go down in value, plus demand gas, oil changes, insurance, and annual registration fees. Plus, you might have to pay to park it. That’s a bad debt.

Contrast that with using financial leverage to invest in real estate. For example, financing a house to flip. You might use a hard money loan and be charged interest at 10 percent a year, but you can flip that house and make 30 percent in a month. Now that’s smart.

Or you can borrow money at 5 percent to acquire a rental property that pays you every single month and gives you a 20 percent return every year. It will likely also go up in value over time. It’s basic math.

The Bottom Line

Be wary of mass media financial advice. Do not apply it blindly—not unless you want the average results others (who are probably broke) are getting with them.

You don’t even have to be good at math to figure out how much sense going against some of this conventional advice makes. Think about it for yourself. Use a calculator if you need to. Then make truly smart money decisions.

Have you followed any conventional financial advice that you later regretted?

Let me know in a comment below.

 

Sterling is an multifamily investor specializing in value-add apartments in Indianapolis and other Midwestern markets. With just under a decade of experience in the real estate industry, Sterling w...
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    Tom Phelan Real Estate Investor from Key West, FL
    Replied over 1 year ago
    I am amazed how 45,000,000 Americans with Six Trillion Dollars of IRA money primarily invested with Wall Street keep drinking Wall Street’s Kool-Aid. Wall Street controls 95% of all IRA funds while real estate cannot boast of controling even 5%. The biggest misconception is “Pre-Tax” Traditional IRAs whose mantra continues to be: “Pay taxes later when they are cheaper”. This belief borders on being delusional and Wall Street knows this even though over the last 100-years the average top tax rate has been over 50% (Reagan era included). Can one honestly believe taxes will be lower in the future especially considering our debt is Twenty-Two Trillion and climbing like the mercury in a thermometer with a lit match under it?
    Susan Maneck Investor from Jackson, Mississippi
    Replied over 1 year ago
    As someone who owns three properties in a retirement fund, that is not necessarily the best vehicle for real estate investments for the simple reason that you lose out on a lot of the tax advantages of real estate investments. When you take the income out you are taxed at the rate of ordinary income. I used retirement funds (via a solo401K) only when I ran out of monies available outside of my retirement. I have to say, though, I’m glad I did it.
    James Gorman IV Investor from Gig Harbor, Washington
    Replied over 1 year ago
    And I thought America had a population of about 30 million, and that the IRS brings in about 4.3 trillion to support government, Ooops Bigger Government, and growing if the DC swamp is not drained soon. In Washington State the highest RE excise tax rate just went up by a factor of 2.3438, that would be 234.38%, if you can actually exceed 100% of something ? TAX planning is something to consider in Real Estate investing. This is not exactly a adjustment for inflation, is it?
    John Cassel from York, PA
    Replied over 1 year ago
    Great article Sterling! I think about the college thing all the time….I got a 4 year degree in finance but I learned more in 6 months of reading once I got out of college than I did in college. As a fairly new parent I have decided I definitely won’t encourage my son to go to college and let him decide on his own. Also, love what you wrote about good debt vs. bad debt. I try to educate the people in my circle that not all debt is bad. They need to weigh the rate they are paying, the rate the asset is producing and the risk of the investment. Taking all of that into account, if you are making money on the debt it is not bad to keep acquiring more of that kind of debt. Keep up the good work!
    Sterling White Rental Property Investor from Indianapolis, IN
    Replied over 1 year ago
    Thanks for the kind words. And taking a similar path with my kiddo as well with putting decision in their hands relating to college..Do you currently use your finance degree or what you learned from college post graduation?
    John Cassel from York, PA
    Replied over 1 year ago
    I currently have a pretty good financial analyst position so I do use my finance degree. The degree probably helped me get my first job out of college but for all the subsequent jobs, experience was the important thing. My guess would be 90+% of the stuff I learned in college I don’t use and the parts I do i could have easily learned by teaching myself through books and other material. The jobs have helped me qualify for my first couple small MF deals but I am looking for larger (10-100 unit) deals at the moment where my track record, team and the deal will matter more than my W2 job. Thanks for taking the time to respond! John
    Carolyn Halstead
    Replied over 1 year ago
    I have 6 kids and I was a former Math Professor. We homeschooled our kids and when it came time for college, I did not push any of them. We did talk about the pros and cons; price vs earning potential; and how they were going to fund it. By letting them pay, it’s their money if they don’t do well, I get the role of encouraging solutions. That being said, half had no debt when done with school and half had about $100,000 in debt. All of them have high earning potential and 3 of the 6 have jobs in their fields (one has not graduated; one decided to change their career path, one just graduated and while working isn’t in the field yet). All of them are doing well. Having been a professor, the ones that did the best were the ones that understood the value of their education. Most of the time it was because they had skin in the game. I think investors would invest in education given these parameters. I hope this makes sense.
    Tom Phelan Real Estate Investor from Key West, FL
    Replied over 1 year ago
    If you want to see a country with Zero “Debt”, in particular “Zero Mortgage Debt” visit Argentina. Very, very few homes in Argentina have “Mortgage Debt” and not because they are wealthy. Only the rich in Argentina with Bank connections have access to “Mortgage Debt”. Argentina has no Mortgage Industry. It is common for adult children to live with parents until the grandparents die and the children or grandchildren move into the grandparents empty house. Often you will see forty year olds living with parents trying to accumulate sufficient funds to pay all cash for a modest home. This “Mortgage Free” society isn’t all a big plus, it puts the breaks on much of the economy. Imagine American with no “Mortgage” Industry. How many carpenters, electricians, plumbers etc. would be laid off? And for Realtors, with almost everyone staying put where would Listings and Sales be? I am not advocation 100% LTV loans, however, 0% LTV loans is not the wy to go either. Only recently did Argentine Banks come up with Automobile Loans for news cars. A loan requires 50% down with 19% intetest. That is why most Argentines drive old, old clunkers that are worth $500 – $1,000 in the USA but fetch $3,500 – $5,000 in Argentina.
    Paul B. Rental Property Investor from Dallas, TX
    Replied about 1 year ago
    The inflation rate in Argentina is quite high. Perhaps that’s why nobody wants to lend money: in a high-inflation environment, debtors win and lenders lose.
    Bill F. Rental Property Investor from Boston, MA
    Replied over 1 year ago
    Could you please provide some sources and or explain your methods of arriving at your conclusions in #1 that most of the biggest success stories are of those who dropped out and that the ROI of a college degree is low? What constitutes “most”? What defines “biggest success”? How did you account for survivor-ship bias when making the conclusion about drop outs? How is ROI of college calculated? Below what percentage is considered low?
    Harry Looknanan Jr. Rental Property Investor from San Antonio TX
    Replied over 1 year ago
    Bill. Great questions. I was just about to ask similar ones. Looking forward to the replies.
    Vaughn K. from Seattle, WA
    Replied over 1 year ago
    There are lists of what degrees net what average incomes.One can also find out what it tends to cost to get a degree, which varies widely. People have specifically broken this down to ROIs using some math before. Bottom line is certain degrees are a total waste of time… Read MOST degrees. If you’re studying some generic thing, graduating, and earning the same money as a carpenter who only went to HS… You’re waaaaaaay behind that carpenter at the end of the day financially speaking. However some degrees do pay, vs average incomes for HS graduates. Computer Science, engineering degrees, doctors, etc. However there is still opportunity loss to consider, especially for fields that take longer than 4 years. Finally, an intelligent person doesn’t need to do a statistically average non college educated job… A smart person can figure out any number of highly paid non college professions that pay HIGHER than almost ANY college degree does. Think plumbing, electrician, crane operator, or a million other weird jobs that pay very well. Even if one does study a good college degree, one is still behind the crane operator who is making 6 figures with zero debt and extra earning years. In short, getting a good college degree beats a mediocre non college job, but there are non college jobs that beat even jobs in highly paid degree required fields… In other words IT DEPENDS ON THE PARTICULARS.
    Bill F. Rental Property Investor from Boston, MA
    Replied over 1 year ago
    Thanks for taking the time to respond Vaughn. That’s more than we can say for the author… The reason for my original comment was to see if the author had any data to back up his claims or if he simply disguised his opinion as fact. It is not the reader’s job to conduct their own research to validate the claims of an author. The author should cite or link to the data they use to arrive at a conclusion if they want to change people’s mind or in this specific case, instill confidence in investors that they are a competent fund sponsor. On average, people with bachelors degrees have higher wages and lower unemployment than those with high school diplomas. https://www.bls.gov/careeroutlook/2018/data-on-display/education-pays.htm I don’t disagree with you that there are a lot of jobs in the world that don’t require a college degree and when combined with a lack of debt can be fruitful for folks. But lets not overstate things. Take an electrician for example, their average wage is between $51k-36k in the USA. https://www.ziprecruiter.com/Salaries/What-Is-the-Average-Electrician-Salary-by-State. That is the same as most of the lowest earning majors. When you get into the top earning majors or even average majors, it is no contest. https://cew.georgetown.edu/cew-reports/valueofcollegemajors/#explore-data Now debt to get an education is another issue. The author uses the large amounts of debt as a reason to not get a degree. So if you don’t take on debt then does college become a good idea? If so then the education isn’t the issue, but the amount of leverage taken to get that degree. Then the calculus changes from to go to school or not, to how to go to school without getting burdened with debt. As for your example about a crane operator, I’d love to see the data and how you modeled the situation to arrive at your conclusion.
    Vaughn K. from Seattle, WA
    Replied over 1 year ago
    Yes, if one is writing articles one should probably try to cite things… As a commenter it can get tedious trying to cite every random thing somebody has read/seen and is just mentioning off hand. One thing that I mentioned in a comment below is that IQ scores correlate far more strongly with income than degrees do. In the US today we have a situation where almost all “smart” kids go to college… The funny thing is the ones that don’t do pretty much just as well as those that did, because they’re smart. So IMO we have a misidentification of cause and effect. “Smart people go to college, and smart people do well” is more accurate that “people who go to college do well.” This is as per statistics, and common sense IMO. Obviously all those averages are just that… I sure know that electricians don’t make wages that low in my neck of the woods. Carpenters with any time on the job make north of $50-60K+ a year in my area, let alone better paid trades. I met a roofer once who was making something like $120K a year here, and that was 10 years ago. But averages are averages. With respect to the crane operator, that was a personal experience turned into a generic statement… I went to school with somebody who was making over $100K a year a few years after high school, and last time I ran into him was about to get a raise to close to $200K a year. He was always a smart guy, and his experience may not be average… But it goes back to my point about how being smart is the real decider of fate for most people. Look up IQ and earnings data sometime. It correlates more strongly than any other thing one can choose, degree, socio-economic status of parents, etc. But I do agree that the debt thing plays in. If you’re smart enough to actually graduate with a real degree (engineering, medicine, etc), that will likely pay even if you take on debt… Even better if you don’t take on debt. That difference of debt may be what makes the difference in the calculus in some situations. But at the end of the day it’s not about comparing averages… If somebody isn’t up to snuff academically to get a useful degree, they’re probably not better off getting a useless degree, even if it doesn’t come with debt. There’s still 4 years of their life wasted after all. It is a case by case decision that needs to be made REALISTICALLY based on the talents of the person in question. That is really my main point. Everybody needs to think through what they might like to do for a profession, consider what they’re realistically capable of, and make a rational decision. For kids their parents need to be involved in this. I think one problem is that many people have the “snowflake” problem with their own kids. Even if their kid is not cut out for getting a real degree of value, they want their kids to “do well” and encourage them to waste 4 years and get a degree that doesn’t add anything to their marketability. IMO people should be more realistic. If you have one kid that gets straight As, try to talk them into college. If you have one that barely graduated with Cs, maybe convince them to try out a skilled trade.
    Harry Looknanan Jr. Rental Property Investor from San Antonio TX
    Replied over 1 year ago
    Sterling, not sure if #2 is practical. The assumption is the credit card has 0% interest rate for the exact amount of time the student loan debt is, which of course we all know, the promo rate ends, and now you are paying 10% or more on this revolving debt. Another assumption is the person has a lump sum of cash that can either pay-off the student debt or invest in a fix n flip, or DP on a Property. I do agree that debt on income producing or appreciating assets is the prudent use of debt, but not when you have revolving debt like credit cards, car loans, boat loans, etc. impairing your monthly cash flow. The prudent financial strategy is to pay-down this type of debt, after it is paid off, use the sum total of those monthly payments and use that to leverage debt for RE.
    Vaughn K. from Seattle, WA
    Replied over 1 year ago
    The question is is the return greater than the cost on those cards… If a flip takes 6 months, and you have a card at 15%, and you will make 30%on the flip… And you’re able to get a flip put together with 20% of the total value, and the rest funded at 15% or less… You see where I’m going with this? If you’re able to effectively pay 7.5% (6 months at 15% APR) and come out way ahead, then that is still better than paying off the card first. The math won’t always work, but it often will. Having debt is always risky too, so the risk factor should not be considered nothing. But if you know what you are doing, it’s a strategic risk that can be worth it.
    Susan Maneck Investor from Jackson, Mississippi
    Replied over 1 year ago
    BTW, Sterling some of us didn’t go to college to get rich, we went so we could do what we loved, which in my case was teaching history. Making money for me only became a priority during the Great Recession, when I saw my retirement funds hit the skids. I poured as much money as I could into the stock market in from 2008-2010, more than making up my losses. Starting 2011 I started investing in real estate at the ripe old age of 55. I now own nine properties, but I sure don’t begrudge my education. What I would like to see, however, is a new type of “home economics” course in both high school and college as a gen. ed. requirement, one that truly teaches students how money works. Susan Maneck PhD
    Sterling White Rental Property Investor from Indianapolis, IN
    Replied over 1 year ago
    I hear you and agree with you. My point is mainly focused on how many such as myself go, because it is pushed upon us as a must to do to get a solid career/job and later post graduation no real skills were acquired that translated to real world. And to just to get a job where a degree wasn’t needed in first place unfortunately.
    Susan Maneck Investor from Jackson, Mississippi
    Replied over 1 year ago
    Businesses often insist on people with BA’s for management position s and don’t often care what the BA is in. Oftentimes they even prefer a liberal arts degree since the person they hire can at least read and write (something STEM majors sometimes lack.) Entrepreneurs of course aren’t necessarily looking for a job, per se, but it doesn’t hurt even for them to have some of the skills taught if only those found in a community college. What flipper couldn’t use some courses in carpentry, plumbing, etc.? And what businessman couldn’t use a bookkeeping course?
    Vaughn K. from Seattle, WA
    Replied over 1 year ago
    Sure… But getting out of school $50-100K in debt for a degree that doesn’t really help you in any way… Lots of people do this. You can always take targeted classes at a community college for useful skills you think you may want. That’s not a bad idea. But getting an “anything” degree just to have one, when you have no career path in mind… The last several years has showed just how horrible an idea this is for a lot of people. Just think of all the university grad baristas there are out in the world. They got SCREWED by going to college.
    Michael Baum from Olympia, Washington
    Replied over 1 year ago
    As for #1, it is all very dependent on the student. For example my son is set on being an architect. He has wanted that for a number of years now so I am working hard with him to make his dream come true. There are lots of ways to reduce the cost of schooling, sometimes before they even graduate from high school. Our example here in WA state there is a program called Running Start where they kids go to college to get both HS and college credits. With proper planning and strategery, you can really make that work. My son is just finishing up his junior year in HS and has 45 college credit hours completed. His program at a nearby technical college is the only one that has direct transfer credits to Washington State University’s School of Architecture. The public school system pays for 15 credit hours per quarter (3 classes). The transfer AA degree is 119 credit hours which is 19 more than normal AA-T. So we are paying full community college price for the extra classes he needs to complete. Bottom line is he will enter WSU as Junior at age 19. Is is already declared for the accelerate masters degree which adds one year instead of 2 and we will be out of pocket much less than if he had just completed HS on time and went to college. They key is to look and see where you can help your kids to get ahead without just paying through the nose.
    Michael Baum from Olympia, Washington
    Replied over 1 year ago
    As for #1, it is all very dependent on the student. For example my son is set on being an architect. He has wanted that for a number of years now so I am working hard with him to make his dream come true. There are lots of ways to reduce the cost of schooling, sometimes before they even graduate from high school. Our example here in WA state there is a program called Running Start where they kids go to college to get both HS and college credits. With proper planning and strategery, you can really make that work. My son is just finishing up his junior year in HS and has 45 college credit hours completed. His program at a nearby technical college is the only one that has direct transfer credits to Washington State University’s School of Architecture. The public school system pays for 15 credit hours per quarter (3 classes). The transfer AA degree is 119 credit hours which is 19 more than normal AA-T. So we are paying full community college price for the extra classes he needs to complete. Bottom line is he will enter WSU as Junior at age 19. Is is already declared for the accelerate masters degree which adds one year instead of 2 and we will be out of pocket much less than if he had just completed HS on time and went to college. They key is to look and see where you can help your kids to get ahead without just paying through the nose.
    Jordan Thibodeau Rental Property Investor from San Jose, CA
    Replied over 1 year ago
    We all have opinions and I just want to put another view out there because I see a lot of people on the forums considering dropping out of school to chase RE and I think it’s not the best advice due to the following reasons: #1 – There’s such a thing as the hidden cemetery fallacy. We hear about the successes, but the dead men don’t speak because they are either bankrupt or too ashamed to share their failures. Or survivorship bias. Right now RE seems like a no brainer and everyone should quit their jobs, but that sentiment quickly changes when we hit a recession. #2 Yes if you max yourself out on debt, a 4 year degree would be a bad choice, but if you go easy on the debt, take 2 years in community college, and get a degree that provides you with skills, you will greatly far exceed the earnings of an on college degree person. Sources: https://www.bls.gov/careeroutlook/2018/data-on-display/education-pays.htm #3 In some states you will earn double of a non college degree holder: https://www.businessinsider.com/how-much-more-college-graduates-earn-than-non-graduates-in-every-state-2019-5 #4 Drop out if you have a great idea that has market traction. Stay if you don’t. Most kids use the drop out rationale as an excuse because they don’t want to work hard. They think the real world is easier, but every career path has a grinding element to it and if you aren’t willing to put in the hard work to finish your degree, odds are you don’t have the discpline to do what it takes to build a great career. #5 A good degree teaches you 3 critical skills: Even if you get a random social sciences degree and you take your studies seriously you should be able to: 1. Communicate clearly. 2. Persuade people with well thought out arguments. 3. Develop a strong network that leads to new job opportunities. I’ve spoken extensively on the importance of networks. The three aforementioned points are critical for your ability to function well in our society and can be honed inside of college. Of course you can do it outside of college, anything is possible, but it takes a special person do hold themselves accountable to develop their skills on a regular basis.
    Vaughn K. from Seattle, WA
    Replied over 1 year ago
    1. I don’t think he’s saying you have to go full time… Merely that going to college doesn’t always make sense… And if you are going into RE, your job isn’t always going to be the most important factor anyway. For ANYBODY who gets serious about investing in anything, their job eventually falls by the wayside and becomes less important than their investments. That’s kind of the whole point of investing! 2. & 3. Regarding useful skills… Duh. I don’t get the impression he’s against anybody becoming a doctor… But if we’re going to compare somebody making the best choices, AKA studying a super useful degree, then we should ALSO compare that to somebody not going to college making all the right choices. I had a friend I went to high school with who was making 6 figures by 21 or 22 IIRC, basically still as an apprentice. The last time I ran into him he must have been about 26-27 and was about to get a raise to ~$200K a year. He was a crane operator. Went straight to work making more than most college degrees do while in training, and blew past even good college degrees within a few years. There are tons of skilled trades that pay as well as many degrees, or better. In short if you want to compare good choices to good choices, those are the types of gigs you need to stack up against an engineering degree, not washing dishes. 4. Sure. There’s a degree of that. I do agree some people use it as an excuse, but others simply realize it’s not worth the time for them. 5. LOL I agree with 3 that half the benefit is just who you may meet if you go to a good school. But 1 and 2, puh-leeze. Schools don’t have standards anymore. Even Ivy Leagues are graduating people they let in to get the proper demographics, not because of merit. I have met so many people who went to “good” colleges who don’t have a clue how to communicate in a business setting, or on a personal level. And they surely don’t teach people how to make logical, well thought out arguments. There are some classes that delve into those topics, but any random degree doesn’t teach people any of that in my experience. I went straight into business for myself, and can run circles around most college grads in a “debate” or discussion of pretty well any topic. The truth that nobody likes to discuss is that there are people who are “meant” to go to college… And those that aren’t. By that I mean many people just aren’t smart enough. Yet we’ve been lowering standards and ramming them through with useless degrees anyway, because that was the genius idea ultra egalitarians came up with awhile back. The people who never should have gone in the first place are exactly the ones that get harmed the most, because they likely won’t do that awesome after school no matter what a piece of paper says, yet they’ll still have the debt and the time wasted. This decision needs to be case by case, person by person. I have brilliant friends who cannot STAND being sedentary, which is generally required for desk work. So they said screw it and went into other fields that are more hands on… And have made piles of money doing it, because they’re smart. Alternatively somebody who doesn’t have book smarts will never succeed in many desk jobs no matter how hard they try or what a degree says. People need to be honest with themselves, and about their children, as to what is a reasonable course of action based on their potential, things they like/dislike, etc. Case by case. There is no right answer for everybody.
    Jordan Thibodeau Rental Property Investor from San Jose, CA
    Replied over 1 year ago
    No ones arguing that everyone should go to college. I’m stating that anecdotal info of “I know X who did great without college” OR “Bill gates and so and so dropped out” is great for personal stories, but when it comes to research statistics that are showing that non college degree holders make significantly less than college degree holders, it’s dangerous conclusion to make. We can argue with that all we want, and we all have edges cases, but the data is blatantly evident, college degree holders are making fare more than non college degree holders. Yes we all know the stories of people maxing out their credit cards for poor degrees or going to expensive private schools, but if you look at the data 15Million student go to state schools compared to 5 million that go to private schools. State schools are far cheaper and the students debt load is lower. https://www.statista.com/statistics/183995/us-college-enrollment-and-projections-in-public-and-private-institutions/ If you want to argue correlation V causation, that’s perfectly fine, but arguing I know a few people who bucked the trend, and telling others that they will be just as successful isn’t the full story. All I’m saying is, using the anecdotal V base rates is a dangerous path to take in life and people should be aware of the success stories and failures.
    Vaughn K. from Seattle, WA
    Replied over 1 year ago
    At the end of the day you’re making the same argument. “So and so got an engineering degree, and did awesome!” is the EXACT same as “So and so became a crane operator, and did awesome!” You do see that don’t you? Which is why I said CASE BY CASE is the only way to go. The average reflects what I say in my next paragraph. If somebody is considering getting a Gender Studies degree, they should be talked out of it as much as possible… Unless their family is worth 20 million bucks and they’re a trust fund kid. Compare Gender Studies or Russian Lit degree holders to HS graduates that chose a crappy profession and the difference will be next to nothing. The truth is that most intelligent people go to college because of all the pressure to do so… They mostly would have done well anyway. Most blow it cases don’t go to college, and would have been less successful either way. I guess on the margins we should be trying to convince the less bright folks to learn a useful trade, and encourage the smart people that don’t go to college to do so. At the end of the day it amounts to making the right choice for the person in question. Somebody with a 140 IQ should probably go to school and study something they hopefully like, and that pays well. Somebody with a 90 IQ who isn’t up to snuff to earn a real degree of any use is probably better off learning a trade than going deep into debt and wasting 4 years of their life getting a worthless degree. The fluffy “let’s pretend everybody is the same” mantra doesn’t work out IRL. People need to do what makes sense for them based on their abilities and likes/dislikes. Period. Calling on averages is irrelevant.
    Vaughn K. from Seattle, WA
    Replied over 1 year ago
    Also, since I off handedly mentioned IQ… IQ scores correlates far more strongly with positive life outcomes, including earnings, than college degrees do. In other words high IQ dropouts earn more than lower IQ college grads. It just so happens that we push most smart people to go to college nowadays, so they predictably do well and pull up the college figures. Interestingly over the last few decades as we’ve pushed to send less and less intelligent people to college, the income gap between degree holders and HS graduates has narrowed… Because at the end of the day being smart is what really makes most people successful, not having a pieces of paper.
    Katie Rogers from Santa Barbara, California
    Replied about 1 year ago
    “Most of the biggest success stories are of those who dropped out.” This is useless anecdotal information. Statistically, the vast majority of those who drop out find that financial success eludes them. Also profits from real estate are not guaranteed, regardless of BP stories. “If instead of using your cash to pay that off, you could go make 8 percent in a passive income property, 38 percent on a house flip, or more on a wholesale deal, why wouldn’t you invest first?” Those are big IFs and those outcomes are not necessarily known ahead of time. In my market right now there is a flip for sale. The buyer paid $490K and took the house down to studs. After remodeling, the rehabber listed the property for $750K. The property is not selling and just this week the rehabber reduced the list price to $719K. I have seen the house. It will probably sell for $650K. He will probably have a razor-thin return. Having cash handy makes it much easier to jump on good deals. There is near zero risk of losing your cash to bank glitch or fire, so we can dispense with the fear-mongering. “Or you can borrow money at 5 percent to acquire a rental property that pays you every single month and gives you a 20 percent return every year. ” Another example of overly optimistic estimates. Just because some people achieve this does not mean that anyone anywhere can achieve the same thing.