I decided to hypothetically
put two people seeking professional
careers, one a prospective college student, the other a truck driving
school candidate, up against each other in a comparison of job
training, annual salary, debt accumulation, and investment capability,
while comparing time frames to similar objectives. Assuming we start
this time frame with the student entering college and the truck driver
entering truck driving school.
The college student is seeking one of the top paid careers
degree in any of the following: Marketing, Business Administration,
Mechanical Engineering, Management Information Systems, Civil
Engineering, Electrical Engineering, Computer Science, Accounting,
Finance or Economics. The truck driver is just looking for a good
driving job that will put him home every day with good pay.
To be fair, we will base the cost of the college student's
an average of $16,000 at an in-state public university, and about
$33,000 for a private school each year for 4 years. These costs include
tuition, fees, books, room and board and other expenses.
The cost of the truck driver's training school is $1,500 to
Most schools pay for room and board and some company schools pay the
student wages while they are training. Company schools will pay for
training if the student agrees to work for them for one year.
Now let's fast forward to the 3 month level from our starting
The college student is learning and acquiring debt. The truck driver
has completed his schooling and has been making money driving for a
break-in company at the rate of $35,000 a year. The driver has just got
enough experience to get hired with a career company and he does.
One year and 3 months from the starting point: The college
still learning and acquiring debt, somewhere between $20,000 and
$41,250. The truck driver has had several pay raises, and grossed over
$65,000 his first year with his new company. He put $15,500 in his 401k
with a handsome company match. He also put money in an IRA of $4,000
and is buying stocks. He goes home every day to the brand new house he
just purchased, and is enjoying all the freedom that driving has to
Two years and 3 months in: The total debt of the
is around $36,000 to $74,250 dollars, but he is learning. The truck
driver's gross earnings were $70,000 dollars, again topping out his
401k and an IRA for a new balance of $43,000 dollars with interest. He
is making extra payments on his home and it has been appraised at a
value $4,000 above original purchase price.
Three years and 3 months
from the starting gate: Our college student is beginning to realize how
long it is going to take to pay back those student loans. It's a good
thing he chose one of the top starting salary majors or he might be in
trouble. His total debt acquired so far: $52,000 to $107,250 dollars.
And our truck driver's house value has gone up to a total of $8,000
dollars above purchase price. His investment account's total balance is
4years and 3months later: Congratulations to our
student! Happy graduation! Your debt is $68,000 to $140,250, plus
interest. Your starting salary as an Electrical Engineer is $54,599.
Our truck driver has earned $78,000 dollars this year and his home
value is up $12,500 above the purchase price. His investment portfolio
balance is around $91,000 dollars.
A year later: In the following year
our college student is working and likes his new job. He is in the
market for a new home, but is very limited due to the debt he has
acquired. A job starting at $55,000 seemed like a lot of money when he
first started school, but with the student loans to pay back it has
limited him to a home below previous expectations. As much as the
student would like to save for retirement, he just can't seem to find
the extra money to invest. To furnish his new home he does what most
Americans do, he runs up those credit cards. Sound familiar?
Our truck driver couldn't be happier. He has plenty of time
at work to
study and learn all of the things he finds interesting. His home keeps
appreciating and stocks are doing well. He has close to a $130,000
balance in his portfolio and is enjoying all his free time driving down
the road listening to audio books on investing. He is getting ready to
build a new custom home, and with only about five years in this
industry, he can see an early retirement on the horizon.
Now if you look at the college student's $68,000 to $140,250
compared to the drivers balance of $130,000 plus home equity, we have
as much as a $300,000 difference at about 5 years. The student has the
power of interest working against him, while the driver has the power
of compounding interest working in his favor!
Being happy or successful in life is not about a title or a
paper. It's about making wise decisions that can make your life smooth
and stress free. Regardless of the reasoning, taking on debt is not a
good plan if you want to achieve financial independence or experience
true freedom in a timely fashion. It's a person's debt-to-income ratio,
and what they do with their money that counts. In this and most
scenarios, the college student will not ever catch up to the truck
If a person can go to college for free, great! I
have yet to see anything that is 100% free. Even if the college student
did go to school for free, he graduates with a balance of $0. The truck
driver has a handsome home and investment portfolio, with the ability
to work and live anywhere in the country enjoying all the freedoms that
trucking has to offer.
There is a truck driving shortage in this country that is
larger each year. There is no shortage of people taking on and
acquiring debt by going to college. Too many people just go to college,
no matter the cost, because they were brought up believing it is the
thing to do. The percentage of students that actually graduate and get
a degree that would enable them a have starting wage of $55,000 is
extremely small. Many students don't graduate, but have the student
loans to pay back anyway. Over 30% of college students leave after the
first year and almost 50% never graduate, according to the Department
of Education 2006.