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#22 - You Should Focus on your IRA not your Degree


#22 of 40 Reasons Not To Go To College to Study Computer Science

College takes you away from the possibility of maxing out your traditional or Roth IRA at the very moment you should be focusing doing just that. To make it worse, instead of not maxing out your IRA, you're actually taking on debt if you go to college, which makes the time that you start maxing out your IRA even more delayed. It's a lose-lose situation.

Here's my hot take: You should work a part-time job for enough hours that you earn $7300 a year starting at age 18. That $7300 would cover: 1 year of tuition at University of the People studying Computer Science B.S. ($1000). 1 year of Treehouse ($300). And a maxed out Roth IRA ($6000). That $7300 a year for four years is enough to fuel half a retirement. Let's look at the math:

Maxing out your Roth IRA at current IRA maximums would be $6000 a year from age 18-22. With a 10% return, you would have $27,800 in your Roth IRA at age 22. You would also have taught yourself how to program using Holm School, Treehouse, Lynda from your public library, freeCodeCamp, all the other free coding resources, as well as earning a B.S. in CS from UoPeople. You can start working in a programming job in your home town, living at home for the first few years. That $27,800 in your Roth IRA at 22 would compound to $1.04 million dollars (at 10%) by the time you're 60 (38 years). $1 million won't be the same in 40 years as it is now, but it's still a nice upstart.

Because you Holm Schooled and got your first programming job with a college degree you paid off working part time, you'll be debt free with a programming degree in your home town. By living at home for a few more years, you can max out your traditonal or Roth IRA ($6000) as well as your 401k (buying a S&P500 fund) for $19,000 a year, since you'll be living at home. Your job might pay tuition reimbursement, which means while you're still living at home you can continue to study computer science and earn a Master's in CS for just $8000 from Georgia Tech OMSCS. That $8000 over 3-5 years is well within most yearly tuition reimbursement budgets. At the point in which you complete your Masters in CS, you'll have maxed out your 401k and IRA from ages 22-27, resulting in $197,473.76 in tax advantaged accounts (your initial $27.8k when college age plus $25,000 a year for five years, plus 10% interest). That will be worth $4.59 million dollars at age 60.

Then, at age 27, you'll be able to move into a house if you don't want to keep living at home. Move into an affordable house, or rent, and you'll have a small mortgage. By keeping frugal, you'll be able to keep maxing out your IRA and 401k as well as saving in a post-tax brokerage account. With a master's degree in CS, you'll find a higher paying job in your hometown. You already have enough to retire on at age 27, so you can pay off your mortgage as quickly as possible while still maxing out your 401k and IRA. By age 35, you'll have $805k in tax-advantaged accounts, be close to paying off your affordable mortgage, and your cost of living will be so low due to your frugality that you'll be able to retire. You can use a Roth IRA ladder to access your retirement savings early. Or else keep working at that $805k will be worth $8.7 million at retirement. You can basically become a philanthropist.

Most kids think college is their opportunity to make more money in life. In fact, it's just the opposite. If you are going into debt at age 18, you are squandering away the potential to fund your retirement just from maxing out a Roth IRA from age 18-22. Maybe even a summer job would be enough to max out your Roth IRA, not even working during the school year. By funding a F-You Degree by working part time and then working the extra hours to be able to max out your Roth IRA, you could basically save enough to be a millionnaire at retirement. And that's even before your career starts. You'll want to max out your 401k and IRA in your twenties and have a savings rate as high as you can (at least 50%) while in your twenties. That is very difficult if you have college debt.

Since you can teach yourself computer science free online, there is no need to spend money on college. You can spend four years from age 18-22 Holm Schooling on all the free online resources to learn computer science. Live at home and work just enough hours to pay for your F-You Degree and your maxing out of your Roth IRA, whatever the IRA limit is at that time. Once you do those two tasks, stop working part time and study computer science. You might not even have to work during the school year if you work full time during the summer. Try and find an internship so you're getting paid while also gaining programming experience which you can use to get a job once you get your UoPeople degree. Once you get a programming job with a 401k and tuition reimbursement, you can then spend the next block of your life maxing out your tax advantaged accounts, getting a masters degree while living at home, and saving as much as possible.

That's how you Holm School. You don't Holm School by going to college. College is nice if you can go free, otherwise it sucks up all potential you have to fund your retirement while you're in your teens and twenties, when investing in index funds gives the most return on investment.

People say college gives you a million dollars in earning extra over a lifetime. Just spending some time at a compound calculator actually shows that losing out on maxing out your Roth IRA from age 18-22 removes $1 million from your retirement. So it's a moot point. You might as well get on the path to early retirement and Holm School a UoPeople CS degree while working part time for enough hours to fund UoPeople and your Roth. You'll wind up with a degree and zero debt, and enough in a Roth to compound to $1 million by the time you retire. That's even before you get your first programming job. After that, it's all about remaining frugal in your twenties, when savings invested in index funds in IRAs, 401ks, and post-tax brokerage accounts return something like 30-50x the savings amount by the time you retire.

Your job isn't to go to college. Your job is to find out how to get your first programming job for as little money spent as possible. Since that's your goal, college is obviously out of the runnings because it is so expensive. Holm Schooling, or a F-You Degree, is so affordable its free (in the case of Holm Schooling) or so inexpensive you can pay for it working 3 hours a week (in the case of a F-You Degree). If you live at home for the first few years after you get your first programming job, you can have a high savings rate (my savings rate is 80% living at home) which you can put towards your retirement. With that high of a savings rate, even while earning a master's degree in CS from GATech OMSCS, you'll basically be buying your early retirement. Otherwise you can keep working even through your forties and earn enough so that you can be a philanthropist. By being frugal, even in regards to education, you are becoming rich.

College is not worth the set back it creates in your retirement. Holm School and get your first programming job debt-free. You can use tuition reimbursement to earn any degrees you missed from UoPeople and GATech. You can live at home while earning these free degrees, since you'll be studying full time basically, all while working a job and having a 80% savings rate. That's enough to retire early even before you strike off and leave home with a Master's degree in Computer Science.

Instead of retiring at 35, college forces you to work decades longer than you would need to if you Holm Schooled. That's the danger of debt at a young age. But you can reverse that and avoid college debt and instead benefit from compound interest at a young age. Doing that can establish a retirement fund even before you get your first programming job.

If you are confused about how to do this IRA business, please visit Tips for Personal Finance or read JL Collins or visit our free index fund resources Github repo.

The important thing when you're 18 isn't your college degree, it's your Roth IRA. Set one up at Vanguard and put your energy into maxing that out to the limit when you're "college age" while also studying computer science on Holm School or similar sites and you'll find you're earned yourself $1 million at retirement in just four years of work. With your first programming job, you can buy your early retirement by maxing out your tax-advantaged accounts (and then a post-tax one) while you're still frugally living at home or else affordably in a rental property with roommates in your home town.

A College education isn't got at college anymore. A college education is found online for free. Paying a college for the benefit of your college education is a great way to write yourself out of retirement. Instead of learning programming for free, you're requiring decades longer of work just for the comfort of actually having a degree at age 22. If you can get a job after Holm Schooling CS for four years, and then use tuition reimbursement to earn those degrees, you're basically buying your freedom. College steals your freedom. It is a scam, in my opinion. The amount of money I spent on getting an art history degree would have been worth $6.0 million when I was 65 if I had invested that amount at age 22 instead. I went to a private college because I thought I was smart. Instead, going to a private college was literally the dumbest thing I have done in my entire life (other than a few horrible relationship decisions). My art history degree is literally worthless. The cost of going to college will forever impair my net worth. If I hadn't studied computer science when I was 29, I never would have a job that pays more than minimum wage. Going to college to study computer science is the only rational choice for people nowadays, but at the same time since there are so many free open source resources to learn CS online, there's no reason to pay anyone more than a couple hundred of bucks a year to learn to program. You can Holm School completely free using Open Educational Resources. You can learn CS through your public library's digital and physical resources. It's a great time to be a college age student, because if you want to be a programmer you can basically work for a decade and a half and if you're frugal, retire early. Since learning programming is free, you don't have to worry about college debt and you can focus on your 401k and IRA.

Part of Holm School is teaching that college has been deprecated. It's a sour product that has exceeded its "Best By" date. College actually prevents your from achieving your goals, versus working hard through self-study/holm schooling for free online. If you really need a degree, go with UoPeople. But otherwise almost everything you need to get your first job is available free at your public library or online. That's the amazing thing about open source. It can make you a philanthropist, able to be financially independent by age 35, at which point you can use your future earnings to whatever end you want. Be a philanthropist. Contribute to open source education so that everyone else in the future can avoid college debt, not just the computer scientists. Let's move on past this deplorable period in history where "non-profits" are exploiting kids for hundreds of thousands of dollars.

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