Wednesday, April 25, 2012

College degree, post graduate degree, student loans… Where do I start?

As with anything you have to start at the beginning.  As a kid I thought of becoming a doctor or a lawyer because those professions (even in the former communist culture of the USSR) were perceived as prestigious and desirable.  Well, my reality was defined by choices I made in high school and the overall economic capabilities of my family. 

After immigrating from the former USSR to New York, my Mom and I were poor (on public assistance) and I qualified for free lunches and breakfasts for that matter at my high school.  To make my financial and educational future just slightly more complicated (as it wasn’t already) I had a baby at 17 and 10 months (I was almost 18).  Still I wasn’t going to drop out of my career path to becoming a lawyer, three days after having my Son I went to college.  I went to St. Johns University government and politics undergrad program.  My first semester of school was challenging.  The reality of my situation finally hit and I had to drop out in my second semester to take time off to focus on “single parenthood” and on running a business.  Yep, I started a company that allowed me to be somewhat financially independent and allowed me support my Son and Mom.
Let's fast forward a few years, I had a group of friends who were successful professionals in various industries.  The ones I admired the most happened to be in finance and accounting.  They helped me determine that I would go back to school and get a degree in accounting.  Admissions in St. John’s were helpful and worked with me to get me re-admitted and get started on an accelerated track to completing my undergrad.  After one semester in Accounting (and speaking to a number of kids in that program) I changed to Finance.  I completed the program in 2001.  Before graduation I worked with the career center to get interviews with company that hired from St. Johns and was hired by a department in the U.S. Treasury to be an agent in the international banking division.

My education cost me about $55,000 (including living expense and books) and my first year on the job I was making about $45,000 (federal agent = government salary).  Not too bad considering I was learning a lot about banking and finance on the job!

However, I wasn’t a lawyer or a doctor.  What changed?!  Well, I had to be responsible and needed to get on a career track that could make me money right away.  If I followed law or medicine I wasn’t going to have the same opportunities after my undergrad program, I would need to go to a law school or a medical school.  My Mom wasn’t going to be able to support me since I was really supporting her and my Son.  So my reality was to get into a career that allowed me to start working and making a reasonable living right away.

If you are a kid or a parent, take a look at your “economic reality”.  Are you able to support a 7 year (undergrad and post grad) education track?  What should you make once you graduate (check salary info on BLS.gov the link is listed in references below)?  What are your annual expenditures for basic needs and necessities?   What will your tuition cost?  What will your student loan responsibilities cost once you graduate?  Assuming your education is an investment.  What should your return on investment be?  These are important questions that can be asked before you apply for a student loan and get into obligations beyond your financial capacity or reality.

By the way, I have had a successful career in banking and finance and have been doing great managing my own investment portfolio.  Living from pay check to paycheck is not on my radar. Nor should it be on yours.

References:

College Costs can be found here http://collegecost.ed.gov/catc/Default.aspx

Tamar Lewin, 6/2011, What’s the Most Expensive College? The Least? Education Dept. Puts It All Online New York Times retrieved from http://www.nytimes.com/2011/06/30/education/30collegeweb.html on 4/25/12

Salary data from the BLS: http://www.bls.gov/oes/current/oessrcst.htm

Take a look at our budgeting related blogs with sample budgets.




Tuesday, April 17, 2012

Race, Education and Financial Health

How are the three interrelated?  Here is my experience of their relationship:

The recent events of Trayvon Martin’s case have raised the questions of race, profiling and gun control laws.  My initial reaction was very selfish and paradoxical.  My son is 16 and a half and half black.  One of my hobbies is shooting with handguns and skeet with a shotgun. 

About two weeks into the coverage of the Trayvon Martin Case I reached out to the local news and asked them to do a story that would show how certain prejudgments / stereotypes are outdated.  I told them that interviewing my son and I would provide a great example.  My son is a well educated, mannered and rounded teen but because he loves skittles and can time to time wear sports clothes he may look like a “typical young black male” to strangers.  I am a blond in my 30th with Bachelors in Finance and Masters in Accountancy and over a decade of experience in complex banking and finance matters and long success in personal portfolio management.  However, to those who don’t know me I look like a ditsy blonde in her 20th.  Therefore, my Son and I are A-Typical, at least based on the old stereotypes.

Back to the interview, which consisted of a series of questions that provoked good conversation but what actually made the news was cut down to hardly comprehensible commentary.  Still our images made it to TV and hopefully presented an alternative to how a black teen/ young adult might look and behave.

One of the key questions that was asked and I guess the news reporter was determined to get an answer to was: “Is it unfair that many black teens are being asked by their parents to act WHITE?” My son’s response was simple, yes it is unfair.  People should not act differently just to blend in.

My answer consisted of the grown up reality: There is no such a thing as acting “WHITE”.  One can behave and look as an educated, well mannered and economically secure member of society regardless of his or her race.  And through my professional and personal experiences I’ve encountered plenty of people who were professional, well mannered, and in great financial health who were NOT WHITE.  At the same time, I’ve met plenty of WHITE people who were not well mannered, were not well educated or were in good financial health.

So this issue of acting WHITE is a misrepresentation.  Perhaps, a well meaning misrepresentation.  In my motherly opinion I think raising your kiddo with a clear understanding of how people think about image and behavior is key to being a parent.  One of my favorite books is “Influence- Psychology of Persuasion” by Dr. Cialdini because it very simply explains the basic nature of human behavior and the “shortcuts” we all make based on someone’s appearance/image.  So the current stereotypes for young black male, particularly those that model the images of the popular black rap artists are pretty sad and negative.

On the other hand, we all know that what we wear at home, to the pool, the beach, or a nightclub is not appropriate to wear to a business meeting or a funeral.  It’s really that simple.  But it begs the question: Does wearing a different set of clothes make you or me a different person? Of course not! 

Back to acting "WHITE or BLACK", in the case of acting “BLACK” there maybe a misconception that what rap artists portray in music videos is or should be the authentic image for a young black male.  However, the reality is that these rap artists also know as professional (professional = get paid for what you do) entertainers have to project a certain rebellious image (to sell their music).  They are paid to behave this way and to project a certain set of values and even to sell products and services (you know how most song lyrics mention brand names of products or services).  But as the old saying goes: “If so and so jump off the bridge will you jump as well?”  The same applies to what young people wear for fun and what they should wear to meetings or to go to more official occasions.   In other words, similar to the way a parent can explain to their teen daughter that dressing in very revealing clothes may get her a lot of negative attention,  a parent could (and should) explain that by wearing certain clothes and accoutrements a young man may project the wrong message.

This may be perceived as a shortcut is to make these boys “act WHITE” or make them look and behave a certain way that doesn’t allow them to express their individuality.  However, that is simply a reality for everyone in society.  Unless you are famous and independently wealthy you have to “play along” with the societal prejudgments. 

The more difficult and important long term objective is to overcome the stereotype assigned to young black men all together.  This has to begin at home.  Parents of young black boys have to focus on encouraging doing well in school (math, writing, science, college education, and financial education), reading beyond the required school curriculum, financial responsibility.  Parents can accomplish this by being role models through responsible behavior at home.   Additionally, there are many black men who are successful professionals like President Obama, Mr. Combs, JayZ, Mr. Woods (I know the moral issues are there but no one is perfect), and many others. 

In conclusion, parents should realize that stereotyping in not only tied to race, age, gender, or the general appearance.  Stereotyping is something that occurs subconsciously and there are simple shortcuts to help alleviate their affects.  However, our goals have to be focused on long term shift of stereotypes to make future generations of kids less likely to be perceived a certain way just because they looked a certain way.
 

Resources:

Dr. Cialdini’s official website http://www.influenceatwork.com/IAW-Home.aspx




Thursday, April 5, 2012

Conspicuous Consumption Part 1

We tend to spend money to show how successful we are to the outside world.  Marketing professionals use this tendency to develop “images” for products they want to sell us.

As an example, a top of the line Mercedes Benz shows the world how successful and rich the owner of the car is (or must be) because in the advertizing the owner/driver of the car are usually well dressed and appear to carry themselves with authority furthermore we know how much such a car costs.  He/she must be doing well financially to be able to have such a car!

And so a wonderful cycle of product image development and “sell” is created:


  1. A consumer with the (subconscious) desire to show everyone how “well” I am doing.
  2. Marketing specialist has a Mercedes Benz to sell.
  3. A long term campaign and pricing strategy is developed to show everyone who would drive/consume this product: “Successful, Good Looking and Rich”
  4. Our consumer in step 1 buys the Mercedes Benz.
What’s funny is that the reality of this purchase on the consumer is that he or she just bought a quickly depreciating “asset” (using straight line depreciation, over 5 years @ about $20,000/year).  Furthermore, they impacted their financial condition for the worse because now he/she has that much less to spend on their daily needs or investment objectives.  Also, they are still the same person they were prior to owning the Mercedes Benz, realistically the car (no matter how wonderful the engineering) did not change the consumer into the “imaginary” hero seen in the advertizing campaign.


I would be curious to see examples of implied value you can identify by looking at what you consume every day.

Reading list:
Thorstein Veblen, Conspicuous Consumption, 1902  http://www.fordham.edu/halsall/mod/1902veblen00.asp