Is going to university really worth it?

There used to be a time when getting a degree from most public colleges was very affordable (sometimes with free tuition), and it helped young graduates get access the best paying jobs or professions.

Now, most students have to use one or more student loans to pay their fees, and after all that investment may graduate to a world full of job insecurity and high unemployment rates.

Many people ask the question - is university really worth it? The answer, however, depends on the circumstances of the individual, their aspirations and their access to money.

First, there are some professions where a university degree is essential. In these cases, students have no choice but to undertake further study and many will need one or more loans.

It is not unusual for medical or veterinary students to rack up debts, including student loans, of over one hundred thousand dollars during the course of their university education.

However, the status and potential earnings attached to these professions should mean that the suffering will be worthwhile eventually. In the US, doctors and veterinary surgeons are both highly paid and highly regarded professions.

Other industries also expect an undergraduate degree, such as in the legal profession. Although there are opportunities to access paralegal positions without a degree, to really have the opportunity of a high-flying career, a law degree is essential.

It is not unheard of for law companies and multinational firms in other areas to pay off the loans of graduates when they accept a job with the firm.

This fantastic opportunity only applies to the crème de la crème of candidates, however, so an outstanding academic record and evidence of potential and ambition is also needed.

Students who have difficulty with finance often take part-time work to supplement their income. However, if this is to the detriment of their studies, the end results may be less impressive.

It may be worthwhile to take some time out and build up financial resources before attending university, so that the student does not have to commit time to paid work.

There are numerous jobs, though, which do not require a university education and individuals may be better off by simply gaining work experience while earning a decent wage.

Some of the more manual professionals such as plumbers and electricians can bring significant financial rewards. Students generally gain an apprenticeship and may study at a local college to get the necessary qualifications.

Many highly paid individuals have taken this route through their working life and have built their fortunes and even empires this way, sometimes starting as a plumber, electrician, or carpenter before moving on to lucrative careers as construction managers or real estate developers.

So, university is really worth if for many people but it does depends on the individual’s professional aspirations. It is expensive but it may be essential. However, there are many ways to make a good living and that is only one route. If your talents lie elsewhere, investigate those options, as they may be just as lucrative and rewarding.

Tips on using a credit card abroad

In days gone by, taking a holiday overseas meant changing dollars for another currency or ordering a stack of travelers’ checks to cash in while on vacation.

However, consumers are increasingly opting to use credit cards while abroad to save the hassle of having to preorder currency, as well as to avoid the greater risks involved with loss or theft.

For those who opt to use a credit card while on vacation, it is advisable to take a couple of precautionary steps before leaving the US.

First, contact your credit card provider and let them know you will be going to a different country and plan on using your card. There have been instances of accounts being frozen after they were flagged up as possibly fraudulent due to transactions outside the US.

Second, ensure that you have your lender’s contact details, including the hotline for lost or stolen cards, and that you have written your card number and expiration date down. While this isn’t essential, it may help save time when you are in the midst of a crisis.

Credit cards are undoubtedly a very convenient way to pay for items when traveling overseas, but there are some downsides that need to be taken into consideration before using your plastic.

At home in the US, cardholders may be used to paying for purchases on plastic without any additional charges unless the retailer specifies otherwise, but while overseas, there are a number of different charges that can make any transaction more expensive than its cash equivalent.

Interest rates are often hiked up for any overseas credit card use and some firms can charge as much as 2% more in interest, just for the privilege of using the card abroad. This may not seem that much, but this is in addition to the other charges that firms may levy.

Two of the biggest names in credit cards, Visa and MasterCard, both add an additional handling charge onto any international purchases. This is usually in the region of 1% and is on top of the interest rate applicable to the account.

Withdrawing cash from a credit card is seldom a good idea and a policy best reserved for absolute emergencies, as it tends to attract a higher rate of interest or charges from the credit card firm.

However, using your flexible friend to get money from a foreign ATM is even more expensive than back home.

Cardholders can be hit with two sets of ATM fees - one lot from the ATM provider, which is usually in the region of $1 to $3 per withdrawal - and the other from the credit card firm who tend to charge around $2 to $7 for a cash advance from an overseas ATM.

It is not unusual to find the total charges from a foreign ATM amounting to between $5-10 per withdrawal - a hefty sum that soon adds up.

If all of the above weren’t weighty enough, cardholders are often penalized with poor exchange rates.

When an item in a foreign currency is purchased with a credit card, the currency must be converted back into dollars. The exchange rates applied to credit card transactions are notoriously low and usually among the worst conversion rates on the market.

Although credit cards are a convenient choice when going abroad and worth considering for not only their ease of use, but security, it is essential that the additional charges and interest are added onto the holiday budget to prevent a nasty shock when the bill arrives as the suntan is fading.

A Quick Guide to Planning your Wedding Abroad

For some people the ideal mental image of the happiest day of their life involves a flowing white dress, an English country village and a traditional church filled with family and friends. For others it involves golden sands, palm trees and guests in bikinis. If you find yourself leaning more towards the latter fantasy wedding, then perhaps a wedding abroad is for you.

So why choose a wedding abroad over a traditional wedding in the UK? There are a multitude of reasons – including weather, novelty and most surprisingly, cost.

Many a British wedding has been rained out to the utter dismay of the (slightly less) happy couple, so the attraction of hosting a wedding in a tropical paradise – where blazing sunshine and temperate climate are almost guaranteed – is easy to see. Obviously it is important to avoid the rainy seasons, but in general the weather for your big day will be assured compared to the unpredictable UK weather.

The novelty factor of having your wedding abroad cannot be underestimated. Whilst your friends will look back in years to come at the same ‘cookie-cutter’ wedding photos that are indistinguishable from every other wedding – you will be able to look back at photos of you enjoying the happiest day of your life on an exotic beach, the top of Niagara falls or wherever else your imagination can conjure up.

Your unique wedding abroad will also never be forgotten by your guests – but if you are planning a wedding abroad make sure to send your invitations out considerably earlier than you would for a wedding closer to home, to allow your guests to make travel arrangements.

Surprisingly the difference in cost between a wedding abroad and a wedding in the UK can often not be as extreme as you might think and this can be for a number of reasons. The average spend on a wedding in the UK is usually between £20,000 and £30,000. If you are planning to hold your wedding on an island in the Caribbean, where the local currency is generally dollars, when you take into account the exchange rate you can certainly get a lot more bang for your buck. As you will be spending a considerable sum on the arrangement of the wedding, it is also worth looking into international money transfer as a secure way of paying for the venue.

Finally it pays not to forget that the marriage ceremony is a legal procedure as well as celebration of your union, so be sure to research the relevant legal considerations of the country you are planning to be married in, as this can vary from country to country.

How much can you afford to pay for a house?

Today’s housing market may not be going well for those looking to sell, but buyers have an opportunity to find all kinds of deals that make home-ownership affordable. If you are interested in a comparison of loans that you might apply for, see here. There are several different factors that you should take into consideration when you attempt to make a home purchase.

The House Payment
The amount that you are going to pay every month for your home is the most critical number when it comes to finding out how much you can afford to pay for a house. This number comes from several other figures all working together to give you the monthly payment. As you work with mortgage calculators, take a close look at this figure to determine whether or not home-ownership is a possibility.

The Cost of the House
Whether you have retained the services of a realtor or plan to look around yourself, the overall amount that a home costs will figure into whether or not you can afford it. The more you research, the more you will find that there is a range in price that you can afford.

The Down Payment Amount
Do you have money set aside for a down payment? The down payment will reduce the amount of money that you need to finance for home-ownership. You will need at least a part of the down payment to be used as interest money when you place an offer on a home.

The Loan Terms
Financing a home is a critical part to the ownership process. Think about whether or not you are going to set up a loan for fifteen or thirty years. The payment will be higher with a fifteen year loan, but you will be able to pay it off sooner. Most people choose to finance for thirty years in order to be able to afford a bigger home.

Private Mortgage Insurance
If you don’t have at least twenty percent of the cost of the home as a down payment, you typically need to pay private mortgage insurance. This is something that will be added into your mortgage payment, so be sure to take it into consideration when planning.

Other Loans
Do you have other loans that you are currently paying on? When you decide how much you can afford to pay for a house, you want take into consideration the other amounts that you owe and how much you pay for them each month. Over committing when it comes to a house payment can put you in a difficult situation, so be aware of other expenses.

Projected Utilities
Remember that a home purchase comes with the cost of maintaining the residence. This includes electricity, gas, taxes, homeowner’s association fees and even the cost of garbage collection. Each of these payments needs to be included in how much you can afford when it comes to a home. You don’t want to be able to afford the payment but not be able to live there because of the overall cost of running the home.
Take all of these expenses and numbers into consideration when you begin the search for a home that you can afford. This is usually a lengthy process, but the final results are well worth the effort!

Problem 3: Not Looking at All Sides of a Problem

This problem is usually having a point of view on an investment situation where you may have taken someone else’s word on it or never really given the question serious thought. One common financial example of this the use of a financial advisor to assist you in buying and selling stocks, mutual funds, or other investments. Whenever I consider that advice from this kind of source, I ask several questions about the source of the advice. Some basic ones may include the following:

- Does this advisor have anything to gain or lose by my decision?

- Is this advice based on the advisors own expertise or on someone else’s?

- Is this person following their on advice on that issue?

- Is the advice based on a fair analysis or a biased analysis?

- Is it to my advantage to even consider taking this advice?

- If the advisor makes any performance claim, can the claim be backed up?

- Does the advice make sense?

- After further investigation and research on my part, does the advice still make sense?

- Does not following the advice make better sense?

The current rash of mortgage problems in the US, issues like short sales because of underwater mortgages and foreclosures, is one example of this kind of decision problem in action. Many people got into this situation because they didn’t think about the consequences of taking out a home equity loan to buy expensive toys, or the possible negative consequences of an adjustable rate loan.

There are many more questions that one can ask, but the basic point is that every decision can be looked at in more than one way. It is to your advantage to ask a few questions and do at least a little work to understand what may be behind a piece of advice.

Next Lesson: Being Overconfident In Your Predictions

Money Decision Problem 2: Solving the Wrong Problem

You can have the greatest system in the world for analyzing and solving your personal or business money problems, but you would be wasting your time if you were solving the wrong problem. This usually happens if you do not think through a problem before you start to solve it. To understand how to approach a particular problem you should understand at least these things about the problem:

1. What are the limits to problem at hand?
2. How do you define a good or a bad outcome to the decision?
3. How should you measure the outcomes?
4. What do you bring mentally and psychologically to the decision table?
5. What are other ways to look at the problem?

A Mutual Fund Example
One example of solving the wrong problem is to pursue a high rate of return from a mutual fund investments without first deciding what kind of comparison or benchmark you should use to determine if the return is high enough. For example, index mutual funds that are designed to mirror the results of the Standard and Poor’s 500 index consistently outperform rough 80% of all mutual funds. The original problem may have been how to choose mutual funds with high returns. A better problem to solve would be how choose mutual funds which consistently perform better than the S&P 500.

Final Thoughts
Remember that most problems involving money usually involve something else besides money or mathematics. If you focus on the parts of the problem that are objective and that can be measured or solved with common with equations and spreadsheets, you may miss the most important part of the problem.

Next Lesson: Not Looking at All Sides of a Problem

Money Decision Problem 1: Not Taking the Time to Think About the Problem

Money Decision Problem 1: Not Taking the Time to Think About the Problem and the Decisions that Must Be Made

Before you make a financial decision, you have to know something about your needs, the effect your decision may have, and how you go about making a decision. Some common money decisions that often happens too quickly is what credit card you should have, whether to buy or sell a stock, or whether to go into debt to replace your boring old (and paid off) car for a shiny new one. Taking the time to make a proper decision can save you a lot of frustration and regret, especially if you do it consistently.

A Credit Card Example
Let’s look at the credit card situation more closely. There could be dozens of reasons why you suddenly decide that you need a new credit card. You might not have one at all, but one day you decide to rent a car and find out that you need a credit card. You might have a card already, but you find a way to transfer balances and reduce your interest rate for the first six months. Even if you think you need to take action right now, it always makes sense to think it through to see if it is the right decision for you. The following are just some of the questions you should ask yourself before you sign on the dotted line:

1. What do you want to accomplish when making the decision? - At the very least, figure out if it is a short term or long term goal.
2. Who will be making the decision? - Typically anyone who will be responsible for paying the bill and whoever will be allowed to make charges on the card.
3. How should the decision be made? - Figure out things like whether you need to decide after comparing other options, or if any one person will have veto power.
4. Does the decision significantly affect other decisions?
5. Does the decision have to be made at all? - Think about what would happen if you took no action.
6. Does the decision have to be made by some kind of deadline?
7. What’s the worst that will happen if you don’t make a decision?
8. How much time do you need to make a decision?
9. What kind of options do you have?
10. Do you have any experience making this kind of decision, and if so what did you learn?

Once the background questions are settled and you have a good understanding of your overall situation, you have to start dealing with the decision making process. You should finish gathering any information that you need to make a decision. For credit cards, this would be things like late fees or other penalties, how much interest you will be charged, and what kind of no-interest grace period you have. These kinds of details should be spelled out in the agreement. If you don’t understand it, don’t sign it. If you don’t see it in the agreement, then it’s not part of the deal.

The next big steps are making the decision and carrying it out. If you decide to do something, then follow through. If you decide to do nothing, then take no action, no matter how tempting it may be. If you decide to change your mind, go through the same decision process. Don’t make the mistake of being logical and systematic the first time through and then being very informal the second time you wrestle with the same decision. Every decision is a combination of your analysis and your judgment. If you have a consistent process, you’ll likely improve the quality of both your analysis and your judgment.

Final Thoughts
Keep in mind that a credit card can turn out to be a long-term relationship. If you pay your bills in full every month, it can be a very happy and harmonious relationship. If you fall behind, it can turn real ugly real quick.

Next Lesson: Solving the Wrong Problem

Making Money Decisions

Do you every wonder about your ability to make good decisions about money? Do you think you need to know something special to be better than average? Before you got that seminar, buy that book, or sign up for that MBA program, you should take some time to look at how you make money decisions. Success in investing, or choosing the best mortgage, or picking a sensible credit card all starts with using your mind to figure out your options and to make decisions.

The Making Money Decisions posts will take you through a few basics of decision making and take some of the stress out of making decisions about your money.

The ability to make good decisions is as skill that can be improved through practice and the use of the proper techniques. None of these techniques are based on any sophisticated mathematical or psychological concepts. If anything, the basic techniques of decision making are about figuring out what information you need for a decision, making a clear decision, and checking up on the results afterward. It is about finding the proper balance between intuition and analysis and recognizing that you can develop all the decision making skills that you need to become a better investor.

Next Lesson: Taking the time to think about your money problem