How To Approach Any Financial Question

graduate school save moneyOne thing that people often fail to realize is that personal finance advice in not cookie cutter information. Everybody’s situation is different and what may be appropriate for 99% of the people may not necessarily be the best for you. You need to take into account all the factors that are specific to you when you analyze the information given.

At the same time, you need to be careful not to make assumptions. Here’s a question. If you are applying for a job, do you think that it would make a significant difference in the prospect of getting job interviews if you have listed on your resume a graduate degree from a regular college or one from an online college? One guy did an analysis as best he could (what you have to do many times when it comes to finances) and came away with a surprising answer:

At the time I was considering where to go to get my masters, there were 17 jobs for which I would be willing to apply. So, I did what every reasonable person should do…

1. Broke down the money situation, how much it would actually cost me
2. Sent out 51 fake resumes to cross-analyze the interviews offered to individuals with degrees from different institutions.

Money Matrix: How much is it really going to cost me.

Where Tuition Length Deferred Income Total Cost
State School 40K 2/yr 80K 120K
Private School 59K 2/yr 80K 139K
Online School 29K 2/yr 0 29K

The obvious winner here is the online school. Not only does it have the lowest costs, I can still keep my day job because classes can be taken at any time. It is pretty obvious at this point why people like online degrees. But, how many job opportunities will I sacrifice by doing an online program?

His test showed that he would get one less interview (15 vs 14) with the online degree versus attending a regular graduate program. He also noted that the online degree would allow him to continue to work giving him 2 extra years of work experience that may have contributed to the online degree resume getting job interviews. In the end, he would save approximately $100,000 by getting the degree online for the sacrifice of one less interview.

I believe most people that are faced with a similar situation would never do the research on their own. Many would probably assume that the brick-and-mortar degree was worth more (and could very well be in other professions) and worth the extra money.

By taking the information you have and using it to the best of your ability to figure out the results, you can save yourself significant amounts of money over making assumptions. You should make the effort to analyze all your financial decision in a similar manner. If you can approach all financial questions as he did with his education, your finances will be quite healthy during your life.

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3 Responses to How To Approach Any Financial Question

  1. Joey says:

    Umm yeah, this person seemed to miss one tiny little flaw with his analysis… a lot of public and private universities now offer night and sometimes weekend courses which means you don’t have to defer anything. My wife did night courses at Woodbury University (private) for four years. Total deferred income? Goose egg. In fact, by being at a university for her bachelors, she was actually able to get a much better job, therefore increasing her income and offsetting the cost of school. Then we made the decision for her to get her MBA. We decided on Pepperdine. Going to Pepperdine’s Graziadio Business school at night meant once again that she didn’t have to defer any monies at all. As a matter of fact, she got an even better job and much better pay from the company that hired her because they felt they were getting a Masters quality employee without the Masters quality price. But we didn’t see it that way. She was now making 6 figures and with only a bachelor’s degree. So yeah, please take this person’s “analysis” which a heaping spoonful of salt. And don’t be lazy!

  2. Hashim says:

    “By taking the information you have and using it to the best of your ability to figure out the results, you can save yourself significant amounts of money over making assumptions.”

    That seems pretty obvious. I think the bigger lesson is to calculate Opportunity Costs so you get a clear picture of what the true cost is.

  3. Dan says:

    I think both reader comments have a point, and I think the answer is simply to analyze the type of job you have. If you have a position where you can afford to take night classes, then you’re all set. If you have a job that requires a lot of travel, such as consulting, then the ROI from the above calculations may be more applicable.

    I am certainly not saying that you should run out and start an online program (although I am in one and love it), but it’s certainly something to consider. The point is to try and make sure you attend the best accredited school you can after analyzing your life and work situation. Only then will you know whether or not the above calculations will fit into your life plan.

    On a separate note, I take issue with anyone saying an online program is a “lazy way out”. I work very hard in my AACSB accredited MBA program.

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