Is College A Waste Of Time If You Want To FIRE Faster?
Does college help or harm your FIRE journey?
That depends on whether or not you take out student loans to go to college.
When I lived in Seattle a block away from Amazon headquarters, I met many tech people from Microsoft and Amazon.
They were were making close to $100,000 a year (before tax) right out of undergrad.
However, they might or might not have student loans to pay for.
Here’s an alternative scenario (keep in mind I live in suburban metropolitan NY where there are plenty of jobs).
You can make $45,000 a year right out of high school without a college degree.
Heck, in a recent post, I show how you can make $200-300 a day doing Instacart.
Whether you do plenty of side-hustles all day, or a salaried job plus side-hustles, if you don’t go to college, you’re not shackled with student loan debt.
Not to mention!
The amount of money you make might have you coming out ahead of your friends who earn more but have higher debt loads to pay off.
One Scenario Without A College Degree: You Work 2 Jobs
This is assuming you don’t do any side hustles at all and work 40 hours a week at one job and 30 hours a week at another job.
Assume a $15/hour wage.
70 hours x $15/hour = $1050/week before taxes.
$1050/week x 50 weeks (factor in holidays and vacations) = $52,500/year before taxes.
If you start right out of high school and make this money instead of going to college, in the 4 years while your friends are in college and you’re working, you’d make $52,500/year x 4 years = $210,000.
Assume income tax of 20% = $42,000.
$210,000 – $42,000 = $168,000 after income tax.
Let’s say you manage to invest 80% of that income because you’re living at home and costs are negligible.
80% of $168,000 = $134,000 invested over 4 years.
This doesn’t factor in growth of investments over those 4 years.
It also doesn’t factor in growth of income over those 4 years as you grow and get raises, etc.
So the numbers could be even higher.
You’d be way ahead of your peers who have to pay student debt right out of college.
Not to mention, a lot of your friends will graduate college and actually end up making the same amount of money you’re making because not everyone graduates with a degree in computer science and goes to work for Amazon or Microsoft.
Most of my friends graduated from college with about $20,000-60,000 in student loan debt and were making $40,000-60,000 their first couple of years in their jobs.
The one friend who didn’t go to college was making roughly that same amount anyways in a manufacturing/construction job with no college degree.
One Scenario with a College Degree: You Make More Money, But Have Student Loans To Pay
If a portion of your monthly income is going to pay student loans, that’s money you don’t have to invest.
Sure you make more money versus the average high school graduate, but this still delays when you can reach FIRE.
One of my friends graduated college with about $80,000 in student loan debt.
One friend graduated with $20,000 in student loan debt.
Another friend, $50,000.
I went to the cheapest state college and commuted from home to save on housing costs.
I graduated debt free and was making less than all of my friends.
We all had college degrees and they earned more.
But I had more invested toward FIRE than they did, because the money they would have invested was going toward paying off their student loans.
Because I didn’t have student loans, I was able to put more away toward investing for FIRE.
We all made concious choices based on peer pressures of society telling us what we had to do.
But I know I won’t pressure my kids to go to college just so they can make more money.
That’s the great thing about this era we live in.
Out of high school, you can make $70,000 a year doing Instacart 7 days a week, 50 weeks a year.
At that income level, plug growing your income and assets invested, you can FIRE by the time you’re 30 years old if you start at 18 right out of high school.
The Sooner You Invest, The More You Take Advantage of Compound Interest & Growth And Actually Beat Your Higher Earning Friends
Let’s assume during those 4 years in college, your friends don’t work at all.
All they do is go to class, study, drink and party and spend money on lots of drugs and alcohol.
But during those 4 years, you didn’t go to college.
Instead, you lived at home and worked a local job where you earned $40,000 a year or did side-hustles that made you $50,000-70,000 a year.
Assume you get raises along the way.
If you invested majority of that income over those 4 years, and kept it going until you were 30 years old, not only would you either be at FIRE or close to it, you could essentially never invest again for the rest of your life and your friends would have a hard time catching up to you in investments.
That’s because if they start earning when they’re 21 years old, and let’s say it takes them till they’re 30 or 40 years old to pay off their student loans, and then they start investing, they would have to invest SO MUCH MORE MONEY just to reach FIRE
Plus your investments have had years to grow ahead of your friends.
Compound interest plays a huge part in exponential growth.
Here’s a good article on compound growth of 3 different friends with math and a graph.
Social Pressures To Go To College
If you’re in high school and reading this, I understand the pressures you might be facing from your parents, guidance counselor, and teachers to go to college.
You might have grown up hearing something along the lines of “a person with a college degree makes more money on average than someone without a college degree.”
Besides those stats, I assume high schools have deeper motives besides getting students to go to college just to make more money.
Think about it.
The higher the ratio of kids going to college, the more prestigious the high school looks.
The more likely richer families will want to move to the area to be associated with a high-ranking school.
The school gets more money from the rich people’s property taxes.
The higher property taxes helps pay for teachers’ salaries and union dues, and school programs, outings, sports, etc.
The more enriching programs to smarten the kids, the higher the acceptance rates.
On and on the cycle continues.
I know it sounds like a conspiracy theory, but if we can become aware that there’s more to it then just ” go to college to earn more money,” then we can reach FIRE better.
It should be more like “go to college to earn more money, but try not to incur too much student debt, if any, because it’ll harm your investments on the route to FIRE.”
The Potential Detriment of a College Education Enroute Route To FIRE
In college, I was aware of the insidious pressure professors heaped on us to become employees and not take risks.
All of our professors had only ever been employees their whole lives and never started their own businesses.
They were always in education, from kindergarten through grad school, shielded from the harsh realities of the business world because of their unions, predictable schedules and salaried and tenured positions.
So they could only speak from their perspective and thus guide you down the only path they were familiar with.
Coming from a background where most of my family members were small business owners, I was more aware than most kids that there was more to life than just going to school, get a job, make money, get married, get a house, raise kids, retire, die.
When you start business, the more value you can provide to a customer, the more money you can make.
The more money you can make, the more you can invest.
The more you can invest, the faster you reach FIRE.
I felt like our professors were brainwashing us to be employees in whatever company we end up working in.
The issue with being an employee enroute to FIRE is that for the average salaried or hourly employee, no matter how hard you work, you don’t make more money.
You can move your hands faster, work harder, but your income is still the same for that period of time.
Whereas if you own a business and you’re smart enough, you can grow it to make you more money and reach FIRE ahead of your friends who are employees.
You also stand to reach what’s known as fatFIRE* faster if you’re a business owner versus being an employee.**
*fatFIRE is where you have minimum $2-3 million in investments before you FIRE. FIRE is normally around $1 million invested.
**In most cases. In some cases, doctors or tech people who are employees of hospitals and big tech companies might stand a chance of reaching FIRE as well as business owners because they make more money than most people.
Conclusion: The Whole Fucking Point…
If the whole point of the FIRE movement is to work hard and invest as much money as possible to FIRE and enjoy our lives decades ahead of the actual retirement age (62-65 years old), then we should do whatever it takes to get there as soon as possible.
You can reach FIRE faster if you don’t go to college because you won’t be incurring student debt.
With no debt, the money you make and invest goes further, even if your friends end up making more than you, they have student loans to pay.
Not to mention, they’ll be starting their investments later than you.
However, if you can go to college for free, then yes go ahead and maybe get that degree.
The only issue I’d look out for is getting brainwashed while in college that being an employee is the only way and settling for a regular salary when you can also do side-hustles to make extra money.
So do whatever you can to make that money faster.
Then invest that money till you reach FIRE.