Archive for the 'What’s It Worth?' Category

The Value of a Degree

Last week, Five Cent Nickel had a post about What’s Your College Degree Worth? Which was a report on a study by Georgetown University Center.  The article and study of course throw out a variation of every schools favorite statistic:

One of the big takeaways from this study is that college graduates can expect to earn 84% more over their lifetime (on average, of course) than someone with nothing more than a high school diploma. But what about difference between majors. Surely some degrees result in higher earnings than others.

This 84% statistic is similar to the oft mentioned “$1 million dollars more over a lifetime” statistic.  I haven’t personally done the research on either of these, but I am skeptical.  You can see why by reading this post and watching this video.  I have no doubt that the average person with a degree will earn more than the average person without one, but I think there are many exceptions to the rule and that the advantage is nowhere near as large as it once was.

The Five Cent Nickel calls out the top and bottom 10, but here are the top and bottom:

Ten highest earning majors

  1. Petroleum Engineer ($120,000)
  2. Pharmacy/Pharmaceutical Sciences and Administration ($105,000)
  3. Math and Computer Science ($98,000)

Ten lowest earning majors

  1. Counseling/Psychology ($29,000)
  2. Early Childhood Education ($36,000)
  3. Theology and Religious Vocations ($38,000)

Here is a graph breaking down the findings:

Degree value chart - Provided by Georgetown Education Center

 

This latest research doesn’t change my opinion of higher education and I think only furthers my point that the decision to take on student loan debt and get a degree needs to be treated entirely like a business decision.  Will you get a return on your investment (ROI)?  That is to say, will the time and money you put into the degree repeat you and equal amount or more in future compensation and happiness?   If the answer is no, you need to consider a different career choice, spending less on education or both.  For example, if you plan is to take on $120k of student loan debt to get a $29,000 a job as a counselor, I think you probably need to consider getting yourself some financial counseling.  This just doesn’t make sense.

 

What’s Your College Degree Worth? | Five Cent Nickle

 

Image Credit: Georgetown Education Center

 

One’s Frugal Fail is Another’s Frugal Success

Confused?A tricky part of living below your means is knowing a good value when you see one.  Recently we ran a Frugal Fail about McDonald’s $1 Sweet Tea, and how buying drinks out daily was a great way to spend a lot of money on something that didn’t have much worth.  Of course, just a few weeks earlier, we had posted that McDonald’s $1 sodas were a good value relative to buying a soda at a convenience store.

What gives?  Are we hypocrites?  Contradicting ourselves?

Not really.  Our philosophy is that money is a tool that one uses to achieve happiness, and you have to know what makes you happy in order to use it properly.  Otherwise, living within a budget is just a grind.  In other words, something is only a good value if it is worth it TO YOU.

If 95% of the time you don’t spend a lot of money on drinks, then the $1 McDonald’s soda is a pretty good deal, especially if you compare it to the $1.69 to $2.99 that you’re going to pay in a convenience store.  The $3-$4 drink at coffee shop with a few friends on a Saturday afternoon is a great way to spend some time in a pleasant atmosphere (especially if you consider the number of hours of enjoyment you are getting from the experience).  But if you’re spending that kind of money most days on drinks — especially the kind you bring back to your desk and hardly notice that you’re drinking — then it’s likely you’ve gone from spending your money on something that makes you truly happy, and paying an awful lot of money to avoid brewing your own coffee or tea and putting it in a thermos in the morning, or remembering to grab a soda out of the fridge to drink later in the day.

Now, there is also the argument to be made that you are paying for convenience.  Understanding the value of convenience is a great subject for living richly, and we’ll be exploring that question next week.

 

Photo Credit: San Drino

Quick 8 and 18 month review of the BMW 335d

BMW 335d 2011 Review

The Diesel Driver recently ran an 18-month review of the BMW 335d.  The review is pretty much all positive.  They call out that few people have even noticed its a diesel, meaning that anecdotal “average Joe” can’t see any of the classic diesel concerns such as smell, noise, etc.

Few if any passengers have guessed it’s a diesel although many have commented on the car’s power. The 425 pound-feet of torque is not only fun but has come in handy many times over.

And on fuel economy they note:

The best sustained fuel economy we’ve recorded was 40 mpg (5.9 l/100 km), although we’ve seen as high as 42 mpg (5.6 l/100 km) for brief periods of time. On a drive from Philadelphia to New York, the 335d used 6.0 l/100 km (39.2 mpg) with an average speed of 65 mph (105 km/h).

I have had the car for about 8 months now and have driven approximately 3,500 miles.  To put it plainly, I absolutely love this car.  On the highway, I have been able to get 40+ MPG, and my average city/highway driving has given me with an average of 31-33 MPG.  The car is fun to drive, handles great and has excellent pickup (especially at higher speeds).

My only complaints with the car so far are:

  • When I first took delivery of the car, there was definitely a noticeable smell.  I did some research and this apparently due to “Particulate Filter Regeneration“.  After about 2500 miles though, I haven’t noticed the smell.
  • The HD radio reception is spotty.  This seems to be a common issue with BMW’s and is not limited to the 3-series.
  • I still miss the old “wrap around the driver” feeling of the old E46 style BMW 3-series seats and dashboard.

You can read our other diesel articles here:

More of 18 month review at the source…

BMW 335d 18-Month Report and Review | The Diesel Driver

What are Best Buy Reward Zone Points Worth?

One article we seem to get a lot interest in was our post on what My Coke Reward Points are worth.  Having recently gone to Best Buy, I figured it would be good to do a similar post on the value of Best Buy Reward Zone points.

The way the program works is straight forward:

  1. Join the program
  2. Earn 1 point per dollar spent at Best Buy
  3. Cash in the points for Best Buy certificates
  4. If you spend over $2500 a year, you get Premier Silver status and earn 1.25 points per dollar

The conversation ratio is presented in the following table:

Reward Zone point value

As you can see in the chart above, Best Buy Reward Zone points are worth about $0.02 a point, which means you are getting “2% cash back”.  This is actually decent, especially when compared to other points that are typical worth 1/2 of that at $0.01 per point.  In addition, when you combine this with a rewards credit card it is possible to get “3 to 5% cash back” when shopping at Best Buy.   While this may sound like a great deal, you should consider you are getting this “cash back” on prices that may not actually be that great of a price.

From my experience, prices at Best Buy tend to be 5 to 15% higher than they are online, even when including shipping.  The same is true when compared to club stores like Sam’s Club and Costco or discount retailers like Video Only.  This is not always the case, Best Buy sale prices usually match or beat some online retailers.  But, when Best Buy’s sale price matches online pricing, and you include the Reward Zone points, you may actually be able to get a good deal.

Pros:

  • Points are worth about $0.02 each (effectively 2% cash back)
  • Silver status lets you earn 1.25 points per dollar (effectively 2.5% cash back)
  • No need to carry the card, just use your phone number
  • Free and easy to sign up
  • The Reward Zone Gamer’s Club provides 500 bonus points per $150 spent (effectively 6%+ cash back)

Cons:

  • Points must be spent at Best Buy
  • You must spend at least $250 to reach the minimum cash back payout
  • Reward certificates are non-transferable
  • Points expire annually (unless you are Premier Silver, or use the Best Buy credit card)
  • Best Buy prices are, ironically, usually not the best buy available
  • Hassle of worrying about points

In conclusion, I believe Best Buy Reward Zone points are a great way to maximize the value you get when shopping at Best Buy.   If you spend more than $250 a year at Best Buy, you would be silly to not spend 30 seconds and sign up.  However, going out of your way to earn Reward Zone points, or earning Reward Zone points at other retails or with a Best Buy credit card is probably a waste of time.  Even though the points are worth $0.02 each, you have to use them at Best Buy and the higher price you pay over other retailers will probably negate the benefit.  However, if you can catch a good sale at Best Buy, negotiate a good price, or take advantage of a price match… it could be worth looking into.

One final thought.  The 6%+ on video games is actually a decent deal.  With this program you earn your base Reward Zone Points as well as get a bonus 500 points for every $150 spent.  The result of this looks something like this:

Of course, buying new video games at full price is hardly frugal living… I prefer to take advantage of pre-order sales (typically 10 to 15% off) or buy the game a few months after release.

 

Below Your Means Basics

This month we will be presenting a series of Below Your Means (BYM) Basics articles to help those of you who are new to living below your means, and serve as a refresher for those of us who have (or strive to) live the BYM way.

When you live below your means, you shed a huge source of pressure and strain in your life.  Spending beyond your means, in other words – going into debt – means you are trading your future to get something now.  You are agreeing that in the future you will be willing and able to have a certain amount of money.  But none of us can predict the future.  There are lots of ways people get into trouble with debt.  Accidents and health problems lead to massive medical bills and lost wages.  Your ability to earn can be impacted by layoffs, swings in the economy, your own health, and the health of your loved ones.  Those common tragedies are only one reason to worry about spending more than you have.  In fact, bankruptcy laws are in place to protect people specifically from those kinds of ‘unexpected’ crises.

Money CastleThere is a much more insidious price to pay for living beyond your means.  Doing so assumes that you know now what you will want and need in the future.  In reality, most of us aren’t entirely sure what we want and need today, much less the kinds of opportunities and challenges we’ll face tomorrow.  When you take on debt and fail to save, you narrow the possibilities of what the future could hold.  Want to move to a new town?  You’ll need a job with an income sufficient to pay for your debt, and you’ll need to sell your house before you can buy a new one.  Tired of your car?  You can’t sell it because you owe more money on it than it’s worth.  Have a great opportunity to travel to a place you’ve always wanted to visit?  You can’t take the time off, and you don’t have the money saved up to go.  Hate your job, or worse, discover that your career is unsatisfying?  You’re stuck because your monthly payments are too high to switch to something new.

Saving, on the flip side, acknowledges not only that you need to be prepared for the problems of the future, but that you want to have resources at your disposal to seize the opportunities that come your way.  Want to move to a new town?  Sell the stuff you don’t need, get a few leads on some work if you need them, and get going.  Tired of your car?  Sell it and get something else (or go without).  Have a great opportunity to travel?  Plan a leave of absence and head out!  Hate your job, or worse, your career?  Feel free to get started on the next chapter in your life.

In short, money is a tool that you can use to achieve happiness.  It certainly isn’t the only tool, but it’s an important one.  Using it wisely requires that you know yourself and what makes you happy, and you understand that as you grow and change, your wants and needs will grow and change.  While our site isn’t designed to help you live a deliberate, centered life, there are a few resources we recommend to do so.  Franklin Covey’s The 7 Habits of Highly Effective People, while centered a bit too much on an upper-middle class suburban existence, has a great process to follow to think through what is important to you and how to get there.  And David Allen’s Getting Things Done: The Art of Stress-Free Productivity is such a great way to organize your life that he has spawned what Wired magazine referred to as a cult of hyper-efficiency.  Covey’s book especially can take you to additional resources on how to live a successful, meaningful life, but honestly — whatever helps you discover more about yourself, and how to make good choices, go for it.

This month we’ll explore:

  • The Basics of Tracking Your Spending and Building a Budget: This is the single step with which your journey starts.  Sure, you can cut down on your spending, even significantly, without knowing where your spending is going.  But finance is, at it’s most basic, an exercise in math.  If you bring in more money than you spend, you’re living below your means.  If you don’t, you’re not.  Tracking your spending isn’t everything when it comes to living below your means, but it’s hard to be successful without it unless you institute an all-cash system.  Fortunately, there is a whole industry building computer software to help make it simple, and some of it is free.
  • The Basics of Debt and Savings: Debt means giving up opportunities in the future for a lifestyle today.  It is a very dangerous gamble.  You will also see how to use debt as means to manage your cash flow and take risks to increase your wealth.  If you have consumer debt now, you’ll need to first and foremost – stop digging the hole deeper!  Next, you’ll need to pay that debt off as soon as possible and free your future from the tyranny of your past decisions.  Savings, on the other hand, gives you freedom.  It means you have protection from the unexpected and resources that you can use to seize opportunities.
  • The Basics of Spending Wisely: Tips and tricks for spending the least amount possible on things that aren’t critical for happiness and health.
  • The Basics of Living Richly: Spend your money on things that bring you true satisfaction and happiness.  Spending as little as possible for everything else.  Knowing the difference isn’t always easy, and we focus on tools and techniques to help you get there.  To start, realize that most millionaires are ordinary people who live modestly.  And, as this study shows, money doesn’t necessarily bring happiness beyond a certain income.
  • The Basics of the Investing Smartly: Keep tabs on the economy and investing opportunities.  While we aren’t a strict investing site, nor are we financial advisers, we do report on happenings in the economy so you can make educated decisions about where to put your hard-earned savings.  We also believe that, like personal debt, government debt is very risky and the government’s inflationary and spending policies are significant risks to personal well-being and to our country’s future.
  • Common Pitfalls: Identify common pitfalls on your way to financial independence, and share the stories of people who share your commitment to living well by living below their means.

 

Thumbnail Photo: Blocks 1 by Crissy Alright

Story Photo: Frits Ahlefeldt-Laurvig