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A blog dedicated to providing readers information for all of life's financial decisions

Student loan servicers might give you the wrong information

Our team was alarmed to learn that recently, the Consumer Financial Protection Bureau found that many loan servicers actually give student loan borrowers incorrect or insufficient information about public-service loan forgiveness. There are currently several money-saving options for many student loan borrowers. However, if borrowers are unaware of these options, these programs become useless, and the borrower is left missing out on potentially, significant savings on their monthly student loan payments.

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The Basics of Money and Credit

In this series, Our team shares their thoughts on the basics of Money and Credit. These topics are typically covered with new customers.

First, let’s start with the basics of credit.

What is Credit?

Credit is other people’s willingness to let you use their money that you will repay sometime in the future. It is a privilege, not a right. By “other people,” we typically mean banks, credit unions, and credit card companies.

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Keeping Those Part-Time College Jobs In Perspective

Many many young adults are starting college this month. For most of them, this also means, starting their first jobs. One common struggle for new college students is managing school, work, and their new found income. This tends to be a great lesson in prioritization and time management. It can be tempting for young college students to focus on making money in their part-time jobs, but their priority should be on studying and finishing that college degree.

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You Don’t Need That MBA Degree: Continuing Thoughts on Higher Education


 

This is a guest post by Mariana Zanetti, who earned her MBA degree from one of Europe’s top business schools and has more than 12 years of international marketing experience in three countries. She is the author of The MBA Bubble and shared this post in response to an earlier Man Vs. Debt post by Joan titled Do You Really Need That Master’s Degree?

When my Harvard MBA colleague told me that I should pursue a “top” MBA program twelve years ago, I did not doubt it. “Don’t worry,” he said. “For the important things, money will not be a problem.” So I applied, I was admitted, and I enrolled in the MBA program at one of the top European business schools.

Some years later, I met all the professional goals I had set for myself: I had a high-paying and challenging job in a large and prestigious company. However, my MBA was one of the worst mistakes of my life and a huge waste of money. No, I didn’t really need to spend a fortune to get that MBA degree.

My colleague’s advice was well-meant and sincere. But I followed the advice of someone who had not needed to worry about money, as his company had financed his tuition. I learned later that everyone should definitely worry about money and debt, even if going to Harvard.

I am not saying that MBAs are useless, but they are pretty close. Except for a few exceptions, these programs have no influence on the graduates’ careers. Yes, MBAs get higher paying jobs. Yes, the MBA network is a great asset. Yes, you learn some interesting business concepts at business school from brilliant professors. Yes, employers value the degree in your résumé.

 

How can they be a waste of money and effort, then?

Correlation, not causation

Because the MBA is not the cause of professional success, it is only correlated to it. Ferrari owners are correlated to higher income, but the Ferrari is not the cause of their wealth.

It is easy to explain: Business schools only admit people who have already proved that they can have successful careers. The more prestigious (and hell, expensive) the school is, the more competitive and demanding its admission process. Yet the degree adds almost nothing that the student did not already have before enrolling, and there are several studies that already prove this. My wage was higher than the average, but so was the wage of all of my colleagues doing the same work, whether or not they had an MBA. I did not make a proper analysis of the Return On Investment (ROI) of my education.

As for the MBA network, it is completely overrated. You meet great people at the MBA… people like you. You meet people like you everywhere you go, and they do not ask for a certificate to connect with you.

Even if you are persuaded that there is a real advantage to pursuing an MBA, you should really think twice before going into debt to finance the degree. The world has changed a lot, but the MBA content has not. You will only use a small portion of what you learn in the program in your first job after graduation, and five years later, everything you will need to know might have changed.

Much of what you learned in the MBA is going to be obsolete, but the bills will continue arriving. Why don’t you start training yourself, instead? What sense does it make to buy a piece of paper that is constantly losing its value? No, you don’t really need that piece of paper.

But what about employers? Don’t they really value the degree?

They do. An MBA always looks good on a resume. If two candidates for a job meet the requirements, most employers will choose the one who has an MBA. What is the conclusion most professionals come to when seeing this? That the MBA is worth time and money. Wrong damned conclusion!

Employers will choose the MBA candidate… if there is a tie. But there is not going to be any tie if one of the candidates has the experience or the skills they value most. Why would people mortgage their future to buy a tie-breaking joker? Joan asks in her article: “Why on earth would they outlay the money and time [pursuing an MBA] and NOT use it to build toward something that will significantly change their earning potential?”

It is a good question, Joan. I know from experience that most MBA candidates do not even ask themselves this question first, even when most labor market experts say that these programs improve employability in a very marginal way.

If there is little advantage to getting an MBA, why aren’t there more grads with regrets?

There are a lot of people regretting it, mainly when their student-loan bills arrive every month, but they will never say it in a loud voice. There is no sense for them in shouting that the emperor is naked.

That’s why business schools continue with their deceitful marketing messages, playing with the data in the rankings: Very few people will dare to question them officially. Unfortunately, business schools run themselves the same way they teach others to run businesses: Most of them make profit without caring about adding value. This attitude was the origin of the horrible financial crisis of 2008.

So why do so many people still rush to get the degree?

It’s a good question. The truth is that, as everyone is doing it, the “everyone-is-doing-it” pressure increases, as Joan says.

Everyone was buying houses in 2006. Everyone was buying tulips in Holland in 1637, even when they were more expensive than a house on the Amsterdam channels. That is how a financial bubble is formed.

The fact is that MBA programs have increased their prices by 62% since 2005, and they are in the middle of an education bubble that is about to burst.

As Mark Twain said, “Whenever you find yourself on the side of the majority, it is time to pause and reflect.”

No, you really don’t need that degree.

 

Note from Joan: I really loved hearing Mariana’s take on my fairly anti-grad-school rant from earlier this year. It’s amazing to know that someone WITH the degree feels as strongly as I do about not getting it!

I continue to be interested in your thoughts on graduate education. This is (obviously) a topic I’m passionate about!

So what do you think? Is graduate school its own “bubble?”

Would love hear your take in the comments!

You Don’t Need That MBA Degree: Continuing Thoughts on Higher Education


 

This is a guest post by Mariana Zanetti, who earned her MBA degree from one of Europe’s top business schools and has more than 12 years of international marketing experience in three countries. She is the author of The MBA Bubble and shared this post in response to an earlier Man Vs. Debt post by Joan titled Do You Really Need That Master’s Degree?

When my Harvard MBA colleague told me that I should pursue a “top” MBA program twelve years ago, I did not doubt it. “Don’t worry,” he said. “For the important things, money will not be a problem.” So I applied, I was admitted, and I enrolled in the MBA program at one of the top European business schools.

Some years later, I met all the professional goals I had set for myself: I had a high-paying and challenging job in a large and prestigious company. However, my MBA was one of the worst mistakes of my life and a huge waste of money. No, I didn’t really need to spend a fortune to get that MBA degree.

My colleague’s advice was well-meant and sincere. But I followed the advice of someone who had not needed to worry about money, as his company had financed his tuition. I learned later that everyone should definitely worry about money and debt, even if going to Harvard.

I am not saying that MBAs are useless, but they are pretty close. Except for a few exceptions, these programs have no influence on the graduates’ careers. Yes, MBAs get higher paying jobs. Yes, the MBA network is a great asset. Yes, you learn some interesting business concepts at business school from brilliant professors. Yes, employers value the degree in your résumé.

 

How can they be a waste of money and effort, then?

Correlation, not causation

Because the MBA is not the cause of professional success, it is only correlated to it. Ferrari owners are correlated to higher income, but the Ferrari is not the cause of their wealth.

It is easy to explain: Business schools only admit people who have already proved that they can have successful careers. The more prestigious (and hell, expensive) the school is, the more competitive and demanding its admission process. Yet the degree adds almost nothing that the student did not already have before enrolling, and there are several studies that already prove this. My wage was higher than the average, but so was the wage of all of my colleagues doing the same work, whether or not they had an MBA. I did not make a proper analysis of the Return On Investment (ROI) of my education.

As for the MBA network, it is completely overrated. You meet great people at the MBA… people like you. You meet people like you everywhere you go, and they do not ask for a certificate to connect with you.

Even if you are persuaded that there is a real advantage to pursuing an MBA, you should really think twice before going into debt to finance the degree. The world has changed a lot, but the MBA content has not. You will only use a small portion of what you learn in the program in your first job after graduation, and five years later, everything you will need to know might have changed.

Much of what you learned in the MBA is going to be obsolete, but the bills will continue arriving. Why don’t you start training yourself, instead? What sense does it make to buy a piece of paper that is constantly losing its value? No, you don’t really need that piece of paper.

But what about employers? Don’t they really value the degree?

They do. An MBA always looks good on a resume. If two candidates for a job meet the requirements, most employers will choose the one who has an MBA. What is the conclusion most professionals come to when seeing this? That the MBA is worth time and money. Wrong damned conclusion!

Employers will choose the MBA candidate… if there is a tie. But there is not going to be any tie if one of the candidates has the experience or the skills they value most. Why would people mortgage their future to buy a tie-breaking joker? Joan asks in her article: “Why on earth would they outlay the money and time [pursuing an MBA] and NOT use it to build toward something that will significantly change their earning potential?”

It is a good question, Joan. I know from experience that most MBA candidates do not even ask themselves this question first, even when most labor market experts say that these programs improve employability in a very marginal way.

If there is little advantage to getting an MBA, why aren’t there more grads with regrets?

There are a lot of people regretting it, mainly when their student-loan bills arrive every month, but they will never say it in a loud voice. There is no sense for them in shouting that the emperor is naked.

That’s why business schools continue with their deceitful marketing messages, playing with the data in the rankings: Very few people will dare to question them officially. Unfortunately, business schools run themselves the same way they teach others to run businesses: Most of them make profit without caring about adding value. This attitude was the origin of the horrible financial crisis of 2008.

So why do so many people still rush to get the degree?

It’s a good question. The truth is that, as everyone is doing it, the “everyone-is-doing-it” pressure increases, as Joan says.

Everyone was buying houses in 2006. Everyone was buying tulips in Holland in 1637, even when they were more expensive than a house on the Amsterdam channels. That is how a financial bubble is formed.

The fact is that MBA programs have increased their prices by 62% since 2005, and they are in the middle of an education bubble that is about to burst.

As Mark Twain said, “Whenever you find yourself on the side of the majority, it is time to pause and reflect.”

No, you really don’t need that degree.

 

Note from Joan: I really loved hearing Mariana’s take on my fairly anti-grad-school rant from earlier this year. It’s amazing to know that someone WITH the degree feels as strongly as I do about not getting it!

I continue to be interested in your thoughts on graduate education. This is (obviously) a topic I’m passionate about!

So what do you think? Is graduate school its own “bubble?”

Would love hear your take in the comments!

Should You Sell Unwanted Gifts?

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One of our readers shared the following story and question with me, and gave me permission to share it here:

I’m trying to downsize and get rid of my crap to pay off my debt. I also don’t like clutter so I want to get rid of my stuff so my family of 3 can comfortably fit into 1100 square feet. But my father-in-law is the king of crap, and gives us stuff we’ll never use and never need. I have 2 hammocks (and live in an apartment), a circular saw, tons of memorabilia from our alma mater, garden gnomes, at least 3 universal remotes (for my 1 television), water skis, and tons of other stuff I can’t even think about. They were all gifts from him and he’s a very generous person, but in the past we’ve tried to explain to him that we don’t need this stuff and never use it. We would rather he save his money for retirement but told him if he insists on getting us anything, just give us the cash instead. But he doesn’t listen. I would feel bad getting rid of the stuff since it was a gift, but I just can’t use it. Is it OK for me to sell this crap as well? Or am I obligated to keep it since it was a gift?
We’ve talked around this issue here at Man Vs. Debt several times, but never addressed it specifically, so I’m thrilled to be able to share my take on this today.

 

Let me preface this by saying that I don’t think there is one right answer to this question. Is it “OK” to sell a particular item? I probably can’t decide that, but I can help you key into some phrases that might help you walk through the decision!

Obligation

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Top Job Seeker Tax Deductions

Traveling to job interviews. Dry-cleaning your best suit. Printing resumes on quality paper. Working with a job search coach. If you engaged in any job search activities in 2016, you may be able to deduct the related expenses from your taxes.

One of the most important things to note about , is that they are only tax deductible if you’re looking for a new job in the same occupation. If your job search is an attempt to switch careers, your expenses are not deductible. For example, if you’re transitioning from a print journalist to a web journalist, your expenses may still be deductible. But if you’re making the leap from a zoologist to an accountant, probably not.

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