College vs. Straight to Work: Two Paths to Financial Freedom

As you may know by now, there are two of us writing here about how we are learning to live life with guts. One of us (Alex) is going to college for a finance degree, is taking out some student loans, and is hoping to build an interesting career in the finance sector while getting out of student debt quickly and building wealth at the same time. The other (Mac) didn’t find going to college useful for what he wanted, and is now working full-time as a construction worker and is involved in starting a business of his own. He is living at home and therefore has very minimal expenses, and is making a lot of money relative to what Alex makes.

One of the main goals of this site is to contrast the life of a college student with the life of someone going straight to work. At one point in time, it was obvious that a college degree was a one way trip to a middle class income AT MINIMUM. However, we believe that this is no longer the case. Our goal is to make ourselves an anecdotal case study into the advantages and disadvantages of going to college, as well as the doors that open or close with each path. We will do this by detailing how our lives and situations change throughout the year.

We’re starting from day one. We’re both 19, so we have our entire adult lives ahead of us.

One of the big contrasts that arise when comparing our lives are finances. I (Alex) am set to take out $5500 a year in a Stafford Unsubsidized Student Loan at a 3.76% interest rate. (I hope to not have to take out this loan every year I’m in school.) I have currently saved up about $12,000 spread across various checking accounts, savings accounts (sigh) and investment accounts. So, subtract the $5500 from my savings and I have about $6500 in net worth.

Mac, on the other hand, is working construction for around $30 an hour after taxes. This is a substantial amount of money, especially since it is full time. However, the work is mainly in the summer, so once the fall comes he will most likely be out of work. The other business he is involved in does some contracting work that is mainly in the winter. So, you could say that while he does make some money, his income is relatively unstable compared to a college educated professional.

Both of our goals are to reach this thing called “financial freedom”. I’m sure you’ve heard of it.

What is this mystical and ambiguous term, you ask?

To us, financial freedom means that you can live whatever lifestyle you want without having to stress about the following;

  • Debt
  • Bills
  • Reporting to work at a certain time

The amount of money that this requires can vary depending on the lifestyle you plan to live for the rest of your life. I would say that my idea of financial freedom includes a large amount of travelling and spending copious amounts of time with family and friends having new experiences and learning different things all the time. I would venture to guess that Mac’s idea of freedom is roughly the same.

Alex’s Path to Financial Freedom

I’m going to set a hard “retirement” goal number right here, right now. I will consider myself able to “retire” when I accrue $1,000,000 in net worth. By the 4% rule, this means I could live off of $40,000 for the rest of my life and never run out of money. When do I want to reach this goal? By the age of 35. A lofty goal, but 16 years seems doable. This doesn’t mean I want to stop working by the time I’m 35, just that I would consider myself financially independent.

First, I have to figure out how to graduate college with zero debt. I know some people would say that mathematically I should pay the minimum payment since the interest is only 3.76% and I can expect gains of about 7% in a solid portfolio of index funds. But I say why don’t I strive for both, and make/save enough money to pay off the debt I already have while investing enough money to not have to take out any more student loans for the rest of college! Sounds good to me!

Mac’s Path to Financial Freedom

As Alex stated before, my Path is a bit more tricky and unsure. While yes, making 30$ full time is on the very high end for a nineteen year old and can open up certain avenues of Financial choices that are not regularly available to college age students, there are certainly drawbacks to starting your adult life prematurely without a college degree.

  Now, I’m guessing most of your who decide to take a few years before going to college or have just decided not to go entirely won’t be making money in the 20$-30$ hourly range. It will most likely be along the lines of 12$-18$ an hour, and that’s fine. My advice is to simply get a job, any job, and then sustain yourself on that income while you try to figure out how to turn whatever passion you have into a more fulfilling life.

  There were major life questions I had to answer before I made the decision to quit going to college and get a full time job while pursuing my passion of writing. The first one was where to live. I was fortunate enough to have parents who would allow me to stay in their house even though I was not going to school, and I jumped at that opportunity. Not having to pay rent opened up my already meager funds significantly, allowing me to save more on a monthly basis. If your parents are also as nice as mine, they will let you eat out of the fridge and sneak some snacks out of the cabinets. Remember: the less expenses, the better. You can save/invest, and get closer to creating financial breathing room for yourself. This is not a requirement for deciding to not pursue a college degree, but it helps significantly in the beginning.

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