Monday, April 30, 2012

Competition vs Cooperation (1)

One of the major problems with America today is it's concentration on competition over cooperation.  Competition can turn really ugly when it switches to survival mode.  Fortunately America has not yet made that switch, because if it does...things could get out of hand real quick.

A great leadership book was recommended to me from a very wise lady when I worked at Reynolds and Reynolds.  This lady was one of the most amazing woman I have ever met.  She knew herself very well, and the talents that she has are off the charts.  She's the kind of person that could fire you and you'd feel great about it.  She told me to read "The Five Dysfunctions of a Team". 

She said, "Gary, you may not know why you are reading it now...but one day you'll understand."

Like a good soldier, I went out and read that book.  It isn't listed as one of my recommended reading books yet, but it will be.

Someplace that competition happens all the time is with family.  Especially when it comes to in-laws.  Always a competition to gain someones approval over someone else.  Grandparents spoiling grand kids to show who is the best.  Brothers and sisters competing to get parents attention (good or bad).  I'm not quite sure why it happens, but it does.  Then if one kid gets more than another, jealousy ensues.  This jealousy typically doesn't stem from one kid to the other, but rather from one side of the family's parent to the other.  Why does your mom buy your sister's kids more presents than us? sister is thinking the opposite.  It is a crazy world we live in.

In my own family, my younger sister has been in a constant competition with me since she was born.  Constantly struggling to get mom or dad's attention and affection.  Worst part was many times she did this at the detriment of me.  Because everyone knows if you pull someone down to your level it is easier to outshine that person.  My sister recently has gone through some pretty big life changes, and I'm hoping that she has learned a great deal from the experience.  I think deep down she might feel she is a couple steps behind me all the time.  I wish she would realize that she is 3 very long years younger than me, and will never catch up.  Besides, there isn't anything to catch up with since we are both on the same team!

Cooperation is the opposite, and frankly, much harder to achieve.  Instead of pushing someone down, you have to pull them up.  Gravity works against you.  How do you pull someone up to your level?  Well, first of all the person you are pulling has to want to change.  This is life's biggest challenge.  A rising tide lifts all boats.  

If you ever tried to help someone up, they could pull themselves up while bringing you down.  Life is too short to go around pushing people around and bringing them down.  When I was in middle school...I was that kid.  I didn't want to be that kid, but I was past competition, and went into survival mode.  Middle school is a tough time in a young person's life.  I certainty wouldn't ever want to experience those days ever again.

I am constantly trying to learn new things.  Something I learned from my decision support class I took recently for my job was the different stages of a team.  These stages are Forming, Storming, Norming and Performing.  This is an interesting topic to explore.

It is my hope that my family can eventually work together as a team.  Nothing is more powerful than a family that knows how to work together to achieve a goal.  Life is a team sport...and it is critical that you build a strong family.  Some people have a good foundation when they are born.  Others may have to start from scratch.  Each generation has a decision as to whether they will build up the family...or cause division.  This is the same with our country.  We can either be on the same team and work together...or compete against each other.  For now, it appears the country have chosen competition over cooperation.  It doesn't have to be this way.

Sunday, April 29, 2012

Hobbies - Simulations

Part of being a Military Millionaire is figuring out what to do with your spare time.  A trend that I have noticed over the years is many wealthy people love their job.  Warren Buffett says he tap dances to work every day.  If you don’t love your day job then do something that you love in your spare time.  Don’t spend your whole life watching other people live their lives.  This means curb your time watching sports, TV and movies.  Unless you plan on being a critic, news caster, or sports announcer, watching and learning about sports figures probably won't help you become wealthy.

In my opinion it is much more beneficial playing video games than sitting and watching TV or a movie.  Why?  First of all video games helps refine your hand eye coordination.  Second, it may require you to read.  Third, many of them can develop skills without risk of failure.  First person shooters probably aren’t the best of video games since they typically are games that do not require you to read.  Not that they are not fun, but the benefits are reduced.

Video games can be one of the best learning tools available…Simulation.  Using simulation is almost like doing the real thing.  If you look at Edgar Dale’s Cone of Learning it falls under the say and do category.  When developing training this should be the goal.  Simulating, teaching others, doing the real thing.  Don't believe that video games or simulation works?  The military spends billions of dollars each year developing simulations for their major weapon systems.  I'm sure if you ask any pilot...simulations work!  Pilots spend countless hours pretending to fly under different scenarios.  The Army uses simulation to rehearse war time situations.  When the real thing occurs...everyone has done it before, and knows what to expect.

By simulating you do not have to worry about making mistakes.  You are better off crashing a plane in a simulator, then the actual air craft.  This saves tax payers lots of money.  This is the same with business, and many other areas in life.
Probably one of the best business simulators of all time in my opinion is the video game (simulation) Capitalism 2.  Stanford and Harvard Business have used this game in their classroom.  Good enough for Harvard…good enough for me.

This game teaches you business fundamentals.  The game is very complex.  Has everything from balance sheets, income statements, marketing, real estate, manufacturing, farming, mining and much more.  This game shows you PE ratios, dividends, market capitalization, and percentage of ownership that can play a role in corporate mergers (most which are hostile).  You can perform something similar to poison pills to avoid a hostile merger.

As hard as it might be to believe...the information age is changing the way we think and use money.  A rather unusual company created a very unique product called Bitcoin.  Take a look at what it is, and see if you can understand what the Bitcoin is about.

If you are not into might be at a major disadvantage in the next 10 to 20 years.  Games like World of Warcraft (WoW) and Ever Quest are much more than an addicting game that helps ruin marriages and relationships.  These games have all sorts of interesting areas that deal with...commerce, economics, community, diversity, marketing, and currency to name a few.

Some people successfully are able to play this game, and make money doing it.  Check out this article that talks about how to make money playing WoW.  The world is changing...and I think many people are not prepared for what lies ahead.  My goal is to hopefully educate the good military and civilian people so that you don't get taken advantage today, and in the future.

How am I studying for the CPA exam?  You got it!  Simulation!  This type of simulation isn't very fun.  However, being fun does not always equate to learning.  When I went to take my CPA exam, I knew what to expect.  I was ready.  Whether I passed is different question.  I will know by May 8th.

A few other games that steer toward simulation are the following:

Harvest Moon - Farming, puzzle solving (has many versions…probably would want to play a more recent one)
SimCity 4 – Management
Age of Empires 3 – Management, strategy
Civilization V - History, strategy
The Elder Scrolls V Skyrim -  Medieval times, puzzle solving
The Oregon Trail - History, decision making, survival
Fallout New Vegas - Post nuclear simulation
Gran Turismo 5 - Driving Simulation (play using manual shift only)
Space Quest and Hero's Quest Series by Sierra - These games are really old, but they were great.

Let me know if you have heard of or played these simulations…try them out.  Leave your comments regarding this topic.

Saturday, April 28, 2012

Military – Taxes

Great News!  This was my 3rd year doing taxes for military members and I must say I have seen big improvements.  I’m not sure if people are getting smarter about their finances or what, but I am very pleased.  I have seen more people with rental properties and interest than the prior two years.   Most of them out of necessity more than likely, but having a rental property is an important step in becoming wealthy.

If you have read the book the millionaire next door it talks all about millionaires.  Their buying habits, jobs, and a few other areas.  Another real estate investor Dolf de Roo who spent significant time researching millionaires stated that almost all millionaires either created their wealth or hold their wealth in real estate.

It is my opinion that most investing should be done at the local level.  I am not a big fan of throwing my money to Wall Street.  I do not know those people, and to be honest, it really doesn’t benefit anyone but myself.  Much of the trading on Wall Street is what is known as the secondary market.  Meaning...the company doesn't get a dime from you when you invest (unless they happen to be selling Treasury Stock).  It is a selfish way to invest.  As a military member or civilian...service before self is a well known concept.  This is true for investing.  If you haven’t heard that owners are the last ones to get paid…it is true.  As an owner of a business everyone else gets paid first.  If not, the business will not be successful.  As an owner you pay vendors, employees, expenses, taxes, banks, creditors, and then as an owner you might get paid.  However, even then the owner may not get paid.  Why?  Retained earning!  Most businesses requires cash to expand the business.  Taking on debt adds risk of default or failure of the business.  One way that business owners expand the business is by taking profits and plowing the money back into the business.

When you think about investing, think about how you can help make your community better.  A great way to do this is figure out something you like doing, and determine if you can make money doing it.  At the same time think about who can benefit.  For example…I have a friend Jamie who is very knowledgeable about bike parts.  He finds people selling bike parts, buys them, and sells them to a group of enthusiasts.  Everyone wins in this instance.
Something that I personally am interested in is trash.  Trash is everywhere.  The old saying is someone’s trash is someone's treasure.  This is very true, and I have thought about starting a niche trash business.  I want a business that my kids can learn how to do, isn’t difficult, and will make the community better.  On our family walks or when we are out and about we always look for aluminum cans or metal that people drop on the ground.  Each can I estimate is worth about $0.02.  Not very much money, but if we are out for a walk or bike ride around our neighborhood we can usually collect about $0.25 worth.

Keeping the cash in your local community is a key factor to growing a city.  Cash flow makes or breaks a city, business, and personal finances.   Several ways exist to invest in your community.  I am confident, that if most businesses were run and owned by local people they could gain market share.  It is all about what you want to do in your part time.  Feel free to share your ideas!

Keeping life simple

Whether Military or Civilian...many of us are constantly on the move.  As a military member you are required to move typically every three or four years.  This can be a stressful time in your life.  I've probably moved about 15 times in my life, and I'm in my early 30s.

Every time that I have moved I lost money.  I had to either sell things, give stuff away, or something breaks by the time it gets to my new location.  Fortunately for military members the government helps make moving as easy as possible.  Not to say moving is easy, but from my experience, I think the government does a pretty decent job.

This brings me to keeping life simple.  If you've ever watched TV shows like Pawn Stars, or American should realize that Americans have lots of junk.  Some of it is worth money, however many times it is next to valueless.  I find it amazing how many self-storage facilities exist these days.  I cannot even remember self-storage places growing up...and now they seem to be one every couple miles.

This reminds me of a really funny cartoon that the good folks at created.  You can watch the cartoon below.

I hope you get the point.  We do not need all of this stuff.  Marketing does an amazing job in making you feel like you need to buy all of this stuff.  This is one of the reasons why I have a book on the psychology of persuasion as one of the recommended books.  Hopefully this won't happen to you.

Since you will be moving, try to think a little further down the road to determine whether or not you actually will need whatever you are buying, and if it will be a hassle once it is time to move (think...outdoor grill or extra car when you already have one per driver).

If your next assignment is'll probably have to put those types of items in storage or sell them.  You can always use a grill at the local park.  Some people purchased vehicles when I was in South Korea in Seoul.  This didn't make any sense to me because public transportation or your two feet work wonders.  Making purchases like these adds up real quick.  A great technique that I sometimes use is if I want to buy something...I walk away, or perhaps go home.  If I still want the item tomorrow, then I'll buy it.  Typically after thinking about what I was going to buy I realized it wasn't a good idea.

Friday, April 27, 2012


I was out walking the other day and was thinking about a friend's recent experience learning about finance.  Learning something new can be frustrating...especially if you aren't very good with numbers.  Trying to explain how to measure a fund performance can get tricky.  One way of measuring performance of a fund is comparing against a standard benchmark used throughout the industry…the S&P 500.

If a fund manager can beat the S&P 500 benchmark then that fund is considered to be doing well (beating the market).  If the fund cannot beat the benchmark…then you would have been better off investing in the index fund of that particular benchmark (if the index truly matches the index performance).
Obviously several benchmarks exist for each type of market.  Bond markets have benchmarks as well.  Benchmarks are important for several reasons.  They can be as a way to psychologically sway yourself out of a bad fund.  I have come across people who will not sell or stop investing in a bad fund for various reasons.  The fund itself isn't what is bad.  Typically it is the fee structure and/or management team.

Past mistakes are known as sunk costs.  What you do in the present and future is what matters.  Holding onto a poor performing fund is typically never a good idea.  Many times these under performing funds have fast talking sales people who guilt you into keeping these funds.  Don’t be ashamed or upset…they are just doing their job.   It happens all the time…it happened to my mother.  Fortunately for her I was able to work with her and convince her that she needed to sell.  Her financial guy in our opinion...was basically robbing her of a great deal of wealth each and every year.

One of the tools that I used to convince her to exit was by showing her the benchmark that the fund was using.  We also looked at the history her account, and where the cash was flowing.  Then I showed her a better way of investing.  If you don’t have a strategy of something else to go into then it will be difficult to switch.  Fortunately my mother had invested in CDs for many years and it was something she was very comfortable with doing.  This an easy intermediate step before you get on a new path of investing.
If a broker ever boasts about their experience level, talks about the tax consequences of leaving, tell you that you aren't the biggest client, and/or if you think you can do better than them...go for it.

Don't know what to do with the money?  Pay off debt, or investing in government bonds by going to Treasury Direct is always a good place to start.

Thursday, April 26, 2012

Striving to be popular restricts having fun

The race for the president has to be one of the most stressful events that America faces every 4 years.  Stress for the candidates, staff, and American citizens all hoping that their candidate will be chosen.  With the exception of American Idol, the race for the presidency is one of the most voted events when it comes to a popularity contest.

I'm here to tell you that trying to become popular restricts you from having fun.  It can prevent you from being yourself, and this isn't something that you should do.  Most people can tell if you are being fake (one of the reasons most politicians probably aren't trusted).

There was a song that I used to listen to back in high school called "Popular" by Nada Surf.  It is song about high school and being popular, and had some good advice like washing your hair at least once every two weeks.  Being popular is really quite easy, but it can be rather stressful.  Eventually, you start to feel like you are walking on eggshells.  The trick to being popular is having diverse interests, listening, spending time with multiple groups of people, not being a jerk, but standing up for yourself.  No one likes a pushover either.

Popularity contests typically die after high school.  Some people engage in office politics, and I suppose they have some merits, but I'd rather have a good time.  At one of my going away luncheons I decided that I would sing for my co-workers.  Typically these luncheons consist of going to a restaurant, eating, having a supervisor say a few words about how great you were (whether true or not) and how much you will be missed.  You might say thanks for everything.  Food and drink is consumed, and then you leave.  Not what I would call a party of any sort.

Every party needs music!  I realize that I am not the best singer in the world.  I was quite nervous since this was the first time singing in front of a live audience since high school.  I emphasized on "don't you" to much.  This is why dry runs or rehearsals are important.  However, if I sang it again...I would do much better.

I have learned that most songs today are created by people who sing tenor.  I am a baritone, and do not have the voice nor range as I did in high school.  One of the worst things about getting old is losing many of the physical talents I used to be able to do.

Life is too short to not have fun.  I enjoyed singing, and if you watched til the end people had a good time as well.  I will begin to write a few articles here and there about creating your own fun.  You see...I feel with the invention of the TV, many people are living through others.  I think it is fine to watch a movie or watch a sports game every now and then, even follow a particular team.

If you have coach or become an assistant coach.  Be involved with your kids development.  If you are young...then don't watch people play a sport...get out there and get a game together.  Have you ever made your own movie or TV show?  Talk about learning some new skills!  You could even make money doing that stuff on YouTube.

If you aren't very good at something...does it really matter?  Find someone who is good at what you enjoy doing.  Having a good time, learning something, or making new friends can help you in many ways.  Sitting watching someone else live their life won't help you in yours.  So go on...get out there and do something!

Wednesday, April 25, 2012

Working from home professionals

I know that many people would love to work from home.  My older sister would love the opportunity to work at home while raising a family.  Something that seems to be catching on is professionals working from a home office.

Many employers are still reluctant to the idea.  Probably because they might feel they would lose control of their workforce if they allow telecommuting.  IT security is another big factor when it comes to working from home.  Congress recently passed H.R. 1722: Telework Enhancement Act of 2010.

"To require the head of each executive agency to establish and implement a policy under which employees shall be authorized to telework, and for other purposes."

Although, I do not see myself working from home anytime is very possible in the future, and wouldn't be difficult to implement.  The amount of money the government could save the taxpayer and the employees would be tremendous.  Imagine hardly any traffic on the roads...less maintenance would be required.  No more building new building for employees.  No more electric costs powering inefficient old building.  I could go on and on.

Joshua Carter, Dayton Ohio Attorney

However, I'd like to talk about Joshua Carter.  I've known Josh since 2009 when we worked in the same program office here at Wright Patterson Air Force Base.  I would consider Josh a lawyer of the 21st century.  Unlike many other lawyers, Josh posts many of his fees right on his website.  You'll know what to expect upfront without wondering if you are going to get charged a ton of money.  Because he has a home office without the expensive overhead costs of a traditional law firm, such as office space, billable hours and secretaries.  The saving goes directly to the customer.

Having a lawyer is a must once you start accumulating wealth or start a family.  Estate planning, Wills, forming legal entities, or if you need busted out of prison this can get expensive.  In my opinion Josh has some of the best rates in the area.  I cannot imagine going to anyone else.

On a side note...Josh had a small role in the Lebron James documentary "More Than a Game".  Josh is #50 and played against Lebron when he was a freshman.

If you have a legal concern or are interested in learning more, you check out his webpage at

Tuesday, April 24, 2012

Video Games - League of Legends (LOL)

Ever since I was a kid, I've enjoyed playing video games.  They are a cheap, and interactive form of entertainment.  Plus many times video games can be educational, and help with hand eye coordination.  One of the video games I am currently playing is League of Legends.

League of Legends is a 5 vs 5 player vs player (PvP) strategy game.  Fortunately the game doesn't track how many hours I have played, because it probably is a lot.  No question have I spent an enormous amount of time playing the game.  However, it isn't just a game that I play by myself.  I have played with my daughter, and I play with my friends while we talk on Skype.

The best part about this game is it is free to play.  Probably one of the most fun games I've played with friends.  The economic utility is skyrocketing!  I need to stop playing so much, which I have.  I've been forced into not playing as much as I used to play.  Between studying for the CPA, writing this blog, and kids...spare time is a precious commodity.

However, if you are interested in on the link provided.  Download the game, get Skype, and comment that you are ready to join the party.

Monday, April 23, 2012

Investing is like gardening

I was talking to John today, and he mentioned that one of his friends told him that investing was like gardening.  You need to cultivate your investments.  I thought that was pretty neat.

Whether you invest in stocks, bonds, real estate, livestock, business, or commodities...they all require some attention.  People used to dream about being a passive investor where you could just dump off your money at the local money manager, and they would get you 12-15% returns every year.  At least that is what everyone hoped for.  It hasn't turned out that way.

I actually had a money manager that told me that if I invested with him that my return on investment after 40 years was going to be 200 million dollars!  He was using 15% returns and had me contribute $500 per month for 40 years.  May be it was 50...I'm not really sure.  It did put a smile on my face at the time.

You know...we don't live very long in this world.  Some of us will be lucky to live to 100 years, but most of us never make it for one reason or another.  If you think back to when it was the year 1800 what life must have been like back then.  No Air conditioning, refrigeration, electricity, TV, cars, is amazing you would even want to live past 40 years old. 

Look at how much life got better from a standard of living perspective from 1800 to 1900.  Huge changes in standards of living.  The difference between 1900 and 2000 is simply incredible!  My point is that people who invested in America...or even the world had to have made some money if they invested in the vast majority of businesses.  I cannot imagine life not being better in 2100 than it was in 2000.  You couldn't even find my blog back just 12 years ago...even though I had a webpage in 1997.  I couldn't add hardly any pictures, and advertising to get visitors was practically non-existent.  Thanks to Google, Facebook, Twitter, has gotten much easier from an accessibility to information perspective.

One of my favorite proverbs is:

If you want to prosper for 1 year...grow grain.
If you want to prosper for 10 years...grow trees.
If you want to prosper for 100 years...grow people.

When you think about your investment or business strategy...think about which strategy you are going with.

Sunday, April 22, 2012

Health - Diet day 5

An update on my diet.  Well, the diet has been going very well.  I have managed to lose 8 pounds since my last weigh in (yes, I weighed myself around the same time as I did last time).

I guess my metabolism still does work.  Perhaps it helps if I stop eating over 3000 calories per meal.  Instead, I have been eating apples, rice, salads, and chewing gum (I don't swallow them anymore).  Although I haven't chewed any gum this weekend...I'll need to start chewing again when I go back to work.  I'm actually feeling pretty good right now, but today I did have some major cravings for all those unhealthy foods sitting in my house. 

You know the kind...chips, cereal (I eat it in mass quantities if I start), and orange juice.  I resisted the urge, and went to bed.  Mainly because I had been studying for the CPA exam.  I got a 25% on my first practice test.  I only have  3 weeks to go before my second exam.  Quite depressing, but I must continue on with the drudgery.
I do lift weights (15 pounds) each day, and do side straddle hops for my exercise when I am at home.  I  have a punching bag that I like to beat up on.  The weather has turned cold here in Ohio, so I haven't been outside much all week.  I'll keep everyone posted on my progress.  Thanks for supporting me in this difficult lifestyle change.

Oh and I thought my scale was broken, but I was wrong.  My wife fixed it!

Stock Research - Value Line

For all you stock market fans...this article hopefully will satisfy your hunger to learn more.  Want the latest and greatest stock picks, but can't seem to find any here?  Well, probably one of the best places to conduct your research is in your local library!  Guess what...if you haven't been there in a is still free to go.  Let's go dust off that library card and take a trip there shall we?

So, once you get in the library there are sections dedicated to all sorts of valuable information on business, stocks, finance, economics, options, commodities, bonds, real estate.  It is amazing...and free!!!  You can get books on how to do practically everything from starting a garden, a business, installing tile on floors, basic get the idea.  It's free!

You remember all those boring books in school that you forgot 90% because they didn't pertain to anything of value?  They forbid those books in the library!  If you do find one of those horrible books...let the librarian know that the book has no value, and should be discarded.

When I was growing up...I thought the library had all of those terrible books I had to read in school.  After avoiding the place for 24 years...I realized I was wrong about the library.  What a great resource!

In the local library in Centerville, Ohio where I grew up they also had probably one of the most prominent names in stock research available for free...Value Line!

How valuable is this stock research?  Value line's prices range in the $200 for online access or $249 for print subscription for 1 year.  How much is it at the library?  Zero dollars!  Talk about a way to get richer.  You walk into the library...pick up a Value Line, and instantly you should feel wealthier.  I know I did.

I'm certain every library does not carry Value Line products, but it is one that I have used with success in the past.  They have a long history of success, and would be a valuable part of your stock portfolio education.  I will say that I strongly recommend to read my recommended books prior to making any financial decisions...with the exception of budgeting, paying bills, or paying off debt.  Value Line will make it look like certain companies are a strong buy, but I suggest you learn more before taking the plunge. 

Please, do us all a favor, and comment on this article.  Let us know if Value Line is available in your area.  List the city, state, and name of the library.  If it is not...perhaps with enough people interested, we can send a letter to the library asking if they would subscribe.

Blog status update - This blog is a month old!

This blog has gone from an idea...and then came into existence.  I appreciate everyone who has visited the site, and I hope you have had some fun.  I will probably limit my blog status updates from once a week, to once a month from here out.

As always...stay safe, and keep learning!

Saturday, April 21, 2012

Money - Pay off Debt or Invest follow up

I know many of you might be thinking, but haven't commented on this subject, that I didn't pick the right choice.  That I should have said investing is the way to go.  After all...there is nothing sexy about paying off debt.  Boring subject right?

Imagine rolling up to your broker and saying...hey!  I'd like to invest this pile of cash.  The broker looks and you and says, "Why don't you take that money and pay off your mortgage."


I know...paying off debt is about as cool as going out on a date driving a Dodge Neon vs. Dodge Viper.

I get it...yes...that's what I'm saying.  I know, you cannot get rich by paying off your mortgage, but many people have mortgages.   It is typically the second largest expense next to taxes.

"Wait!  What about me?  I don't have a house!" Then, you need to start reading.

Starting by reading all of the recommended books listed on my blog.  You see, learning how to invest takes time...and unless you start today and have made it past reading the Intelligent Investor, then it would be difficult for me to explain where to go from here.  The blog has started to ease it's way into investing...but I think many people struggle with debt.  Until the struggle is over there isn't isn't any point in going there right now.  However, while you do the boring thing like paying off debt, you can start educating yourself.  Who the time you finish paying off your debt you might be ready to start investing.

Here is an example of why it is a good idea to pay off your mortgage debt rather than invest (when you have little financial education).

First of all, when you pay off your mortgage or credit cards...that money isn't lost.  As soon as you buy a lose money from a commission.  Then it goes down some more, and you lose more money.  Then you sell it cause you are in a state of panic, and you lose more money (yep...another commission).  Let's not do this.  If you don't think your mutual fund managers pay commission on the stocks they buy?  Think again...that is part of the reasons why they make you pay expenses.

You lose a ton of money on interest as well.  How much money?  Let's take a look.  If you go to my calculator page and click on the mortgage calculator you can follow along if you'd like.

Let's say you have a $100,000 loan @ 5% interest for 30 years.  We will (excluding taxes/insurance) making your payment is $536.82.

Total interest you would pay over 30 years is $93,255.78.  That is a truckload of money for some people.  You decide to pay $100 extra each month ($636.82) towards your mortgage.  What is your savings?  30,580 junior bacon cheeseburgers from Wendy's or a fleet of Dodge Neons (10 to be exact).

5 years goes by...your balance would be $85,028.12 (25 years to go).  You would have paid off $14,971.88 in 5 years.  Let's say you want to refinance because interest rates are lower.  4.5% for a 30 year, and 3.25% on a 15 year.  What should you do?

Let's look at the numbers...the clock starts over at 30 years again.  Monthly payment $430.82.  Total interest $70,068.78.  If you pay an extra $100 per month...$530.82 (less than your original payment), total interest $45,159.99.

For a 15 year mortgage...payment is $597.47 (less than you were paying with the extra $100 per month).  You knocked off 10 years off the life of the loan.  The total interest you will pay is $22,515.74.  Huge difference!

This means that a $6,000 investment ($1,200 x 5 years).  Helped saved you $47,553.04 and gave you an additional $39.35 in cash flow each month.  That is the power of putting money to pay off the house.  You now have more flexibility, and your mortgage payments will go towards principle rather than interest. 

Investing isn't sexy or exciting...well sometimes it can be exciting.  However, for the most part it isn't.  Trading, selling, gambling and marketing is what targets your emotions.  These are the cheerleaders of finance.  Many of your brokers are sales people.  This is why the illusion of excitement occurs.  No one gets excited about getting a stock dividend.  Mega Millions power ball with a chance to win millions of dollars...the news sells this stuff! Meanwhile millions of people are hurt financially.  I wish the madness would stop.

The real excitement when it comes to investing is realizing that you can retire when you want to retire.  Excitement is doing a job that you are passionate about or buying that dream house.  People invest so one day accomplish something.  Don't get caught up in the game...because if you don't know the rules, you will lose.

Money – Why I hate IRA and 529 plans

There is never enough shortage of bad advice in the financial world.  I was talking to John the other today as we discussed finance over our lunch walk.  Nothing better than exercise to get your creative and mental juices flowing, and I haven’t met a more reasonable critic than my friend John.  I recently read a blog giving financial advice to an older gentleman who said he would like to buy life insurance as a way to give money to his kids and grand kids when he eventually passed away. The advice was to rather get minimum life insurance and put money into a 529 plan.

Now, I do not know everything about this person such as age, career, life habits, cost of life insurance, but I do know that IRAs and 529 plans from my experience are terrible plans for most people.  There is a big difference between expected returns and actual returns, you'll need to understand that the two are very different (expected returns say things like...past performance doesn't guarantee future results).  

Life insurance has a guarantee associated with it.  529 plans do not have such as guarantee.  With life insurance, as long as you continue to make those monthly or yearly payments, you will get whatever amount the insurance company calculated as your life benefit.  If you recall from my life insurance might understand that the return on investment depends on how quickly you meet your maker.  Therefore the return on investment is unknown, but as long as you pay, you'll get something in the end (as long as the insurance company doesn't go bankrupt).

When I worked at Fidelity Investments as a stockbroker the majority of my phone calls were people needing to withdraw money out of their account. Which account?  My IRA they said in great disappointment.  The purpose of all IRA accounts is for retirement.  However, the people I spoke with were destroying what they had saved.  Worse part was that many of them were Traditional IRAs (probably rollovers from 401k).  This means means tax, additional tax, and more than likely they lost money in the stock market on top of it. 

This is what I call the quadruple whammy of finance.  A bad event causing withdraw, tax, more tax, and lost money to boot.  Oh, and if you decide to close your IRA...wham!  Another $50 or more sucked away just to close out the account.  My heart goes out to them, I feel your pain.  Didn't know about this?  Probably not...typically people don't go into a broker and ask, if I open up an IRA and want to close the account how much does it cost?  Or, if I lose money in the account...what happens?

One of my favorite game shows while growing up was Press your luck. Getting a whammy meant you lost everything…and there was a 1 in 6 chance of getting a whammy.  If you received four whammy and then you were out of the game permanently.

Getting a quadruple whammy for your retirement means you are finished (or at least feel finished), and that was the sound of their voices day, after day.   I would never want anyone to experience the horrible situations they experienced.   So, here I am talking to someone who not only has something horrible happen to them, but now they have to withdraw money out of their retirement account.

Most of these financial "experts" always push people to these areas.  529 plans is a must because everyone has to go to college.  Why?  To get the ultimate desk job?  I know of some people who have these desk jobs that are bored out of their minds.  As for me...I've been a Chairborne Ranger ever since I got out of AIT...and I love it!

So, why do I dislike IRA and 529 plans so much?  Well, no one talks about the ramifications of creating an IRA or 529 from a risk perspective.  Never is the downside risk spoken about, because this money is for retirement and would never be used in an emergency.  Being sarcastic…it happened all the time.  What if you put money in a Roth IRA it loses money and you decide to pull the money out?  You lose twice.  You lose financially from your economic loss.  Plus you lose from a tax perspective.  Had you invested the money in a taxable brokerage account, you could have written off the loss on your taxes.

This is true with 529 plans, 401k, and both Traditional and Roth IRA.  Granted you might have received a tax benefit from putting money into a 401k or Traditional IRA.  But the fact remains you cannot write off losses occurred.  The tax bracket you were in could be greater than when you first put the money in.  If you lose money in a taxable or brokerage account Uncle Sam in this situation says…I feel your pain and cuts you a break.  Otherwise your rich Uncle will say…hey you tried to cheat me out of paying taxes, you got what you deserved.

Money - Trading vs Investing follow up

One of my favorite authors is Robert Kiyosaki.  I would say that he is the reason why I decided to finally get financially educated.  His website has a wealth of information.  You should check out the site and look through his material...much of it is free.  A couple of the areas worth noting is his shooting of scared cows, and conspiracy of the rich.  The links are located at the bottom of the page.

I previously wrote and article on trading vs investing.  Robert Kiyosaki wrote an article that I thought I would share with everyone.  It is titled "Why the Cheap Will Never Get Rich".  He explains in detail why you should look at value rather than price.  If you could read just one article in your life...READ HIS ARTICLE.  It could change your life and how you think.  Which is why his books are a recommended read.  Personally, I think this was probably the worse book he wrote (only because he has gotten even better at writing).  However, it is critical to start at the beginning.  All of his books continually grow your knowledge, and more important, how you think about the world.

A great video game (and board game, I prefer the video game) that is available at the website for free is the game CASHFLOW.  This game is a great game to help you understand accounting and finance.  The ultimate goal for your finances is to have enough income or cash flow each month so that you do not have to work.  Think about it...people spend their entire lives living paycheck to paycheck up until you hit the government standard for retirement.  Then magically you will retire and have enough money to live on?  All the while doing this without financial education?

Sounds pretty far fetched if you ask me.  Most people will be lucky if they get 1/3 of their income replaced by social security.  Where does the other 2/3 come from?  Your 401k, 403b or TSP?  Fortunately for government workers we still have our defined benefit plans.  This will replace one third of your income if not more depending on how long you plan on working.

Hopefully this information will give you something to think about.  Remember check out the website.  If you have your comments.

Friday, April 20, 2012

New Military Millionaire banner

From the suggestion of one of my new readers...I have changed the banner for the blog.  He also mentioned for me to put a stock ticker on the page.  You can view it further down the page.  Feel free to comment on the changes.  Thanks Will for your support and ideas. 

People who read blogs are smart people.  Why else would you be here?  If you don't think you are'll get there soon enough.  Keep commenting and asking questions whether via blog, e-mail, or in person.  I'm always looking for fresh new ideas.

Will also told me that the font size could be bigger...what do you think?  Leave a comment and let us know!

Protecting your identity

Protecting your identity is no different than protecting your wallet, purse, or bank information.  It is unfortunate that people have the need or desire to steal.  Several ways exist to help protect you and your family from theft.  After all, if you make a ton of money only to be stolen by someone, that can be very disheartening.

Withdrew life savings to take this picture
Below I will list a few inexpensive ways to protect you and your family from theft:

1. Do not live in a neighborhood with a Home Owner's Association (HOA)

When I lived in Kentucky, the only place that I found decent was located in a home owners association.  As I stated in a previous article, we should have rented rather than purchase a house.  We had our first experience with a home robbery while living in an HOA community.  I had just bought a new miter saw ($200) and was working on my baseboards.  I would make a cut in my garage and then go in the house for a minute to nail it in the wall, then come back and make another cut.  I did this for about 5 times when the 6 time I came into the garage and it was gone.  At 2pm in the afternoon on a Thursday!  We lived at the end of a cul-de-sac.  My wife was paranoid and ready to move out.  The police man that came to the house said it happens all the time.  He pointed to several houses that had thousands of dollars taken in jewelry and another house getting tools stolen.

I've noticed from talking to others who lives in these HOA places that the people seem to be quite nosy.  One of my friends told me after moving in that about 5 women came to his door welcoming him and his wife to the neighborhood.  They knew he had a rental property, where he worked, and how much he paid for their house.  All of this is public information, but seriously...can you say stalkers?  Plus if they don't like something they complain to the HOA board.  The HOA can put a lien on your house if you don't comply with some silly rule like not being able to have a privacy fence.  So, if you enjoy your freedom...just say no!

Although I'm not certain, it just seems like these places would be easy targets for thieves.  One thing is for sure...make certain you keep your garage door closed at all times.  The thieves in our HOA stole items from the garage or entered the house an open garage door.

My final reasoning about HOA areas is the cost.  You are paying management fees.  Personally, I do not care whether someone's yard has turned into a meadow.  I do not care if someone paints their house pink or purple.  Many people have the mentality that if they lived in an HOA that people would take care of their homes, and all of the property values would increase.  How true was this?  It had the opposite effect.  I do not have data, but I would bet that homes that have an HOA or condo association dropped at a much greater rate than those that do not.

The things that decrease property values are, bad economy (people leaving, foreclosures), and not maintaining your home.  Being a real estate investor, I'm shocked at how many homes haven't updated anything in 20 or 30 years.

2.  Don't buy an expensive stereo system

More importantly if you do get a stereo system, do it yourself.  Have a friend help you out.  The problem with installing aftermarket stereos is the company has your address.  Many times thieves are the ones installing your system.  I've heard countless times of people having a new stereo only to be stolen a week later.  Thieves typically are someone who knows you.  Even if you don't know them.

3.  Buy used cars with a manual transmission 

Why buy a used car?  Ok, this probably isn't going to help you with preventing thieves from stealing, but it will typically save you money.  Most thieves probably aren't smart enough to be able to drive a manual.  Do yourself and the world a favor and learn how to drive one.  If my mom and both of my sisters can drive a stick can too.  They are much more fun to drive, keep people more engaged in driving (stop texting already), give your left leg some exercise, and your car will weigh less giving you better gas mileage.  A manual transmission costs less, and is easier to maintain.

4.  Tint your windows

Tinting your car windows makes it harder for thieves to see inside.  This should be obvious.

5.  Freeze your credit with Equifax, TransUnion, and Experian.

In Ohio the cost was $15 for all 3 places.  Help prevent someone from getting access to additional credit.  I recently did this since I do not see myself needing to get any type of credit in the near future.  Better to be safe than sorry.  However, it could be a real inconvenience if you purchase a lot of property, or fill out lots of credit applications.  Plus it would cost you $15 to unfreeze the account.

6.  Do not announce that you are going on vacation

The last thing you want to announce to all of your friends is that you will be going on vacation.  Much like the HOA problems...I figure most people who steal are from people you know.  It is too much risk to a theft to enter into a house that they haven't scoped out first.

Personally I have my home booby-trapped like the kid had his in Home Alone.  It also helps when the stuff in my house isn't worth stealing.

Money – Pay off Debt or Invest

Most of the time financial guidance is pretty simple.  You a few easy questions.  Do you have any credit card debt?  If the answer is no…then do you have a mortgage?   If they answer yes, I ask what interest rate is it at?   Sometimes the best means for your money is to refinance and pay off the mortgage quicker.  Refinancing at a 30 year mortgage I can never recommend.  I cannot ever recommend getting a 30 year mortgage on any home. A 15 year mortgage is my standard recommendation.  I wrote about this in my housing rule of thumb article.

I would ask if they trade stocks before?  I proceed to ask what they feel they can honestly get as far as rate of return on investment.  Most will say they do not know or quote some CD price.  You cannot expect to get great returns without knowledge in finance.  You can get slightly below average returns by purchasing an index fund such as SPY or a mutual fund that index the market.  And you can have your money siphoned away by purchasing certain mutual funds.  However, when I worked at Fidelity the S&P 500 index lost money for last 10 years.

Why slightly below average returns?  Because if you invest in any type of mutual fund or ETF there will be some sort of management, commission, or transaction fees.  This will typically result in slightly below average returns for a particular index.

Paying off your credit card debt or mortgage and having the correct financing on your house i.e. 15 year mortgage is never a bad idea.  If you say to yourself...I cannot afford it.  Instead ask yourself, "how can I afford it?"  How can I afford it doesn't mean out and finance incorrectly.  The main problem that American's faced they were over leveraged.  They also found out quickly that owning a house can be a big money loser.  If you rent and have no glad.  Many people would love to be in your situation.  Just remember...the present is always the best time to start to educate yourself about money and investing.

When it comes to investing it is really quite simple.  You find out the surest way to make the largest returns on your investment with the least amount of risk.

Let's look at the following scenario

Debt - Liabilities
Credit card debt $10,000 @ 21%
Mortgage debt $100,000 @ 5%

Cash emergency fund - $5000

This person wouldn't be able to start investing until they get that credit card debt eliminated.  If you have $5000 in an emergency fund, my suggestion is to spend it all to pay off your credit card debt.  You don’t need any emergency fund, if you are already in the state of emergency!  Anyone who has credit card debt is in a state of emergency!  This is where budgeting become the utmost importance.  Creating a budget is really quite simple.  Let's take at our pretend income statement:

Income: $2000   Expenses: $2100
Net: ($100)

If you see this situation...then you will never get out of debt by continuing on the same path.   What can you do about it?

Two things that I would suggest.  First of all, make certain you are paying at least the minimum payments on your credit card debt.  If you have been doing that then call the credit card company and TELL them politely to lower your interest rate.  If you went from 21% to 15% you'd save $50 almost instantly.

Income $2000   Expenses: $2050
Net: ($50)

If you used your emergency fund cash to pay off half of the credit card debt, then now your situation would be

Income $2000   Expenses: $1988.35
Net: $11.65

That is progress!  What about my emergency fund?

I’m sure you were taught you need one, but the truth is that your credit card is your emergency fund in this situation.  Getting out of this debt is your number one priority.  If something bad happens again that costs you $5000 then you are back to where you started by charging your credit card.  Regardless if you kept the money in savings or paid off half of your debt.  The difference is that if you paid off half your credit card debt, your monthly cash flow would have increased.  Therefore you are in a better position than if you kept your money in savings.  Why?  Because credit card debt is very expensive.  The interest alone can put a heavy burden on you financially.

How bad is credit card debt?  You can go to my calculator page to see how much it will cost.  However...Let's take a quick look:

Credit card debt $20,000 @ 27% = $5,400 per year or $443.84 per month
Credit card debt $10,000 @ 21% = $2,100 per year or $172.60 per month
Credit card debt $10,000 @ 15% = $1,500 per year or $123.29 per month
Credit card debt $5,000 @ 21% = $1,050 or $86.30 per month
Credit card debt $5,000 @ 15% = $750 or $61.64 per month
Mortgage debt $100,000 @ 5% =  $4,895.67 first year of interest

As you can see cards will destroy your wealth.  Paying off your credit card by not having that $5,000 emergency fund would save you $86.30 per month at 21%.  The quickest way to reduce your debt with credit cards is not paying them off.  It is getting that rate down!  That is real money, and that money can be used to pay off the debt faster.

The problem is spending habits.  Most people have luxuries that they do not need.  What is a luxury?  Everything besides food, water, shelter, heat/electricity, and transportation (whether a bus, walking, bike, car).  It is almost like the difference between people who have cable and those who use Hulu.  If you cannot wait one day to watch your favorite show for free on Hulu, then you might have a spending problem.  The convenience tax is very high, and for someone who is in debt, every dollar counts.  Don't waste it!

Disclaimer - The math doesn't account for everything, these are fictitious examples that are realistic in nature.  Be sure to do your own research and studying.  After all, knowledge is one of the easiest ways to lower risk, and become wealthy.  An idea can be worth billions...

Thursday, April 19, 2012

Not the smartest person in the room

As a teenager you see the world differently than you did when you were younger.  You are definitely smarter than your parents (thank goodness).  In fact, probably once you hit 19 you practically know when I turned 20, and was sent to South Korea in the Army I hit the pinnacle of knowledge.  No longer a teenager...I just hit genius level.  Although, genius or not...young people lack experience/wisdom.  The year 2000 was when I first started investing in stocks. 

Since I already knew everything, picking stocks had to be quite easy.  Besides if some old guy with like 20 years of experience can lose money running a mutual fund, I cannot do as bad as him right?  After all...I was powered by E*Trade!  

I did some research by reading Smart Money magazine.  I read what the articles were recommending, and picked all of the high yield stocks that I felt had the most potential.  After about 2 or 3 months all of my stocks went up by like 50%.  I purchased odd lot shares and was paying $20 per transaction fees using E*Trade.  My roommate Jared was like...dude you need to sell.

I only invested $1000 at the time, and I'm pretty sure after the year was up my returns was about $1,000-$2000.  I wish I had my old tax returns, but I can only find my returns from 2004.  So, when my roommate Jared told me I should read "Rich Dad Poor Dad" I thought to myself...I don't need to read a book.  After all, I already knew everything.  I soon realized that I was spending a lot of money on commissions.  These fees ate away a lot of my profits.

When you invest with only $1000 and purchase 6 different stocks...that is a lot of money in commissions.  $240 in trading fees or 24%.  I was always taught that you want to be diversified when investing in stocks.  This diversification cost me a lot of money.  How come I was able to double my money in a year?  Simple...I got very lucky.  Sometimes it is better to be lucky than good.

When I was 21 or 22 years old and staying in one of the hotels in Maryland before going into surgery at Walter Reed Medical Center I was watching TV.  I remember China (the woman wrestler) was on Letterman or something.  She talked about how WWE stock had gone down by half.  She said she wasn't concerned because the company was solid.  As soon as I had my surgery and got back to Fort Drum I placed a trade on WWE.  The company was paying some pretty good dividends.  It was a solid trade at the time.  However, again...I got lucky.

Something I found out as I got older is that being the smartest person in the room doesn't matter.  Besides...having a lot brains puts a lot of pressure and expectations on you.  Unlike in school where you have to do pretty much everything on your own (unless you cheat), in life you can have others help you (like your parents...although kids seem to push them away).  In fact...if you don't have other people help you, then you will have a difficult time in this world.

At my workplace they encourage you to know a little about a lot of different areas.   This should be your quest in life.  I know a little bit about a lot of areas.  I command elementary knowledge of plumbing, auto repair, electricity, home repair, sewing, and farming to name a few.  Knowing these skills has enabled me to save a lot of money, and has allowed me to carry on decent conversations with all sorts of people.  Plus being able to communicate with people who are experts goes a long way.  It's all about knowing your limitations and asking for help.  You don't want to be that guy that all they talk about is sports and beer.  Or the gal who all they talk about is shoes and celebrities.

Off know of people who put up pictures of celebrities in their room?  What if you went to that celebrity's house and you saw a picture of you in their room?  Creepy huh?  I hope you get the point.

Being the smartest person in the room may stroke your ego, but it might not be the best thing for you.  It might be more comfortable to hang out with like minded people, or people that are on the same intelligence level as you...but becoming a Military Millionaire is about challenging yourself to do more.  I have already realized that I am maxed out as far as my circle of knowledge.  I need to find a new mentor to help lead me to the next stage of wealth.

Life doesn't stand still, and the quickest way to learn is through doing and simulation.  It helps to have a good mentor or someone who will help you along the way.  Be sure to seek out those people who are smarter than you on a specific subject you may be interested in.  It could change your life.

Health - Dieting day 3

I'm already into my third day of dieting.  What a horrible experience it has been thus far.  On the first day of my diet one of the nicest ladies at my work place brought in delicious muffins.  Three different kinds, lemon drop, carrot cake, and chocolate.  I admit I ate the lemon drop (which I regretted later) and the carrot cake.  I then ate rabbit food for the rest of the day.


Day two I suffered from what I call the...hey fat boy start eating or else headache.  I proceeded to eat a small breakfast and lunch consisting of curry and rice.  For dinner, I ate a salad that my wife made me.  Actually, my wife made all my food so far in my diet.  When I get hungry I chew gum and drink water.

Day 3 I have started to feel better. My jaw hurts from all the gum I have chewed.  I probably burned off any calories the gum gave me through constant chewing motion.  This time another lovely lady coworker brought in cookies and gooey treats from Dorthy Lane Market.  They always sit the treats by my desk (cube is empty and is a high traffic area).  I resisted temptation this time as my coworkers let me know how much they enjoyed the treats.  For lunch is another salad and an apple.

Potato, mushroom and cucumber

Today for dinner is more veggies as shown in the pictures.  As for my new weight...I'm not sure.  I broke the scale after my first weigh in.  I'll never purchase another digital scale because they seem to always break. 

Lastly...please do not make fun of the food I am eating.  There are people all over the world who starve and would love to have this stuff...actually I just don't want my wife to get upset if people post negative comments.  Thank you for your understanding.

Wednesday, April 18, 2012

College advantage or college liability?

There probably isn't a parent in America that tells their friends and family that they don't want their kids to go to college.  Everyone seems to have the mentality that college is the greatest investment you can ever make.  I'm here to tell you that may not be the case.

High tech graphics using PowerPoint
I talked briefly that going to college can be a good investment in my previous article.  The truth is you need to figure out whether or not it is worth paying to get that education.  In many cases it might not be worth going to school at the price offered.  Think of going to school as buying a car.  Do you want to buy that car at the manufacturer's suggested retail price (MSRP)?  No, you want to get some sort of discount.  Well, unlike can get your education for free. 

For example...let's say that you want to go to school to get your biomedical engineering degree.  You can go to a website to find out how much the average salary for a biomedical engineer makes.  In Dayton, Ohio the median salary is $48,284.  In my opinion, this sounds like a lot of work for a job that doesn't seem to make a lot of money.  However, this is a starting salary.  As long as it is something that you would like to do, then by all means go for it.  But at what price?

Well, let's say you have three choices.  Option A you get a free ride.  Tuition, Room and Board is all paid for through a scholarship.  Because you worked so hard in school and you were able to get this is throwing in a new BMW as a graduation present...but only if you go to this school.  The only cost is $500 a year for food.  The school is a state school here in Ohio.

Option B is a more prominent state school in Ohio.  It has National recognition because it has a decent football team (I'm sure if you were a Michigan fan you'd disagree).  A scholarship is offered, but the total cost per year is $15,000.

Option C is a private university.  Scholarships are still offered, but the cost would be $32,000 per year.

Weighing the options...for whatever reason the student decides on Option C.  Why do they do this?  Maybe his or her friends are going to that school.  Maybe they liked environment better.  Perhaps of the perception of prestige would give the student a leg up.  Will this happen?  Maybe...however as an experienced recruiter I can tell you that employers typically do not care what school you went to get your bachelor's degree.  All they care about is whether you can save or make the business a lot of money, and you get along with others.  They want the best person for the job...period.  The proverbial...will you earn your paycheck?

Let's face the facts.  Does it really matter which school you pick?  The schools are all in Ohio.  No school in Ohio has the same prestige as Yale, MIT, Stanford, or Harvard.  It won't help you get your foot in the door like those schools might.  If you want to increase your chances of getting your foot in the door...find someone who works for the company you wish to work for, and have them write you a letter of recommendation.

Time for some math.  Over the course of 4 years you would spend $2000 for Option A (food), $60,000 for Option B and $128,000 for Option C (not including inflation or other factors).  If you subtract your potential salary by costs and then divide by the cost you'll get a return on investment percentage.  ($48,284-2000)/2000 = 2,314% return for option A.  ($48,284-60,000)/60,000 = -19.52% for option B.  ($48,284-128,000)/128,000 = -62.28% for option C.

Some return on investment calculators will use the entire earnings that you will earn over your career rather than one year of earning.  That would give you a positive ROI, however the financial damage would already be done.

Clearly option A is the best choice you get a new BMW.  More importantly, if for whatever reason you decide to switch majors, or worse drop out of school won't be heavily burdened in debt.

When I went to Wright State University for the first year my parents paid $10,000 for tuition and room and board.  I thought that was a ton of money.  This was one of the reasons why I joined the Army.  I thought to myself...why should my parents have to pay for this?

After finishing the Army, I got grants to finish my degree, used my GI Bill and worked part time to pay bills.  After graduating I got a job for $32,000 per year.  This means my ROI was ($32,000-10,000)/10,000 = 220%.  When I was able to get my current job, I had to pay for my master degree.  The cost came out to be around $10,000.  My increase in salary was $30,000.  Again...taking ($30,000-10,000)/10,000 = 200%.

I have another friend that went to a private school and incurred about $150,000 in debt.  They were able to get a job for $24,960 starting out.  This is a return on investment of  -83.36%.  A huge problem with school debt are they cannot be forgiven.  Meaning you cannot file for bankruptcy.  Number two is you'll probably end up paying double.  Meaning that $150,000 debt could be closer to $300,000 depending on interest rates length of time to pay off.  You cannot get ahead if your return on investment for education in the first year is -83.36%.  My suggestion is that you want your ROI to be greater than 100%.  Otherwise, you probably are wasting your money.

The final factor would be opportunity cost.  By spending money on option C you forgo other opportunities.  If you invested $32,000 and was able to earn 10% for 40 years compounding the interest 1 time a would have earned $1,448,296.18 at the end of the 40 years.  If you take the salary of $48,284 x 40 years you'll end up with $1,931,460...something to think about.  You can check out my MM - Calculator page to run your own compound interest calculations.  Try not to get into student loan debt in the first place, and you'll be in a much better position in the future.