That is the question! Whether ’tis nobler, in the mind, to suffer the tests and projects for outrageous parties…well, lets look at the numbers. I’ve got a buddy who I recently spent a few hours in the car with. Our wives were out of town together, and we didn’t know what to do with ourselves, so we drove to Birmingham to look for a place for him to live. Anyway, while in the car, we got to talking about his financial situation and whether or not it was a good idea for him and his wife to finish college. I asked him about what he ultimately wanted to do with his life, and he said that he would like to start a tree service in either Birmingham of Atlanta, and that his wife loves horseback riding and she would love to make a living at it. He told me that they were both finishing college because it was the wise thing to do. So I tried to help him look at it from a different perspective.

His Scenario:

They will both graduate 2 years from now, with a combined debt load of about $50,000. They have $11,000 in student loans now, so it will cost $39,000 to finish. This debt will then be personal debt that he will be responsible for, and at 7%, the average rate for student loans, he will be paying about $350 per month for the next 15 years and pay just over $24,000 in interest. The justification is that with a college degree, they will be able to get jobs (with a soft “j”) making $15,000 more per year between the two of them, which I dispute. Another number that has to be taken into account is the opportunity cost of attending college. Most people will not be able to have a full time job so between the two of them, they are NOT making the $50,000 they could have made each year for those 2 years.

All of this in plain English means that it will cost $163,000 for them to finish college, with the hopes of making an extra $15,000 per year doing something they don’t really want to do in the first place. So, 11 years to break even.

My Scenario:

What I suggested was that he look at it from another perspective. What if he were to take the $39,000 and used it to start a tree service for himself and get his wife up and running with horse riding lessons, which he says could have her making 2-3K by the end of the summer? Then, the debt is not personal debt, but business debt, meaning a potentially lower interests rate, and no personal liability, assuming he forms an LLC. This is the “out of the box” thinking that I have trained myself in. You see, the first thing you do that is out of the box is the hardest, then it starts getting easier, and it starts getting fun!

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