OK, But What Does “Afford” Mean?
I tend to catch a certain sort of article that comes across my radar with fair regularity, such as : “Four Steps to a Debt Free Degree” by financial blogger Jeanie Ahn, which is a rehash of the included video by Rachel Cruze.
According to Mrs. Cruze, specifically to get through college debt-free a student needs to:
- Choose a College You can Afford
- Seek out all Opportunities for Financial Aid
- Work Your Way Through School
- Ask Your Parents for Help
I take no issues with articles like these in that they provide a little bit of food for thought to those who haven’t explored even the most basic options to save and earn money for school. I would highly encourage any student to seek out these opportunities in addition to dozens and dozens more that would shave one’s out-of-pocket costs down to reasonable levels. I’m hoping this upstart blog and upcoming book can shed more specific light on some of these over the next few months.
I also wholeheartedly agree with the article’s #1 being #1. Your first step toward an affordable education should be to stay within your means. That much seems obvious. But it brings up a question: Just what does “can afford” mean?
Continue reading OK, But What Does “Afford” Mean?
Let the Filtration Begin
What We Now Know and What We Soon Will
Thanks to the exercises in the previous chapters , you now know three very important things (things most college students have no clue of):
1. The specific experience and environment you want college to provide you…the Rank filter,
2. How much you can pay before you run out of money…the Resource filter and
3. The maximum you should pay in total for the experience to prove financially worthwhile…the Return filter.
Now you can begin the process of searching for colleges or programs that will satisfy all your criteria. Fortunately for us in the internet age students armed with foundational objectives can now turn to a number of free websites to begin the otherwise daunting process of filtering through all their college options. Continue reading Let the Filtration Begin
The Last “R”
So far we’ve explored ensuring affordability by running two sets of necessary filters: how to narrow down your college choices by priority so as to not run afoul of opportunity costs (Rank), and how to know how much college you can your income and assets will allow you (Resources). Now we’ll explore a critical third component to affordability/affordology: that of Return.
This exercise will help you make two critical financial determinations:
For one, you’ll note in the previous discussions we didn’t address a major funding component of college in this day and age: the loan. Before counting loans as a resource, we must know whether that loan will count as “good debt” or “bad debt.”
For two, even if a student has plenty of available cash resources and thus doesn’t need loans, it still helps considerably when choosing colleges to understand the tipping point at which the cost of a college is worth it or not. Continue reading Projecting Payoffs
Previously in these pages we’ve witnessed the high costs of college, the increasing rate at which for student/family contributions cover these expenses, and the all-too-common specter of fund shortage induced dropout levels. So how do we not fall short ourselves? Here’s what I recommend: Continue reading Plotting Resources
A Prioritized Pursuit
Rank: Priority of Priorities
In another posting related to a Chart, I encouraged you to look into colleges with monetary costs as a secondary consideration. That might sound funny coming from a blog dealing with keeping college affordable.
But remember, while you can get anything in life you want, you can’t have it all. Prioritization must be your first priority. Before we get into the actual dollar cost aspects of affordology, let’s firstly address the opportunity cost considerations. Even a cheap experience (money-wise) at the wrong place may prove unaffordable (opportunity-wise). Besides, as we’ve noted, costs are highly negotiable while the other aspects of an experience at a particular college are relatively fixed.
Continue reading A Prioritized Pursuit
When Purchases (Including Educations) Flunk You
So far I probably haven’t revealed to you anything earth shattering. For most, affordology seems simple enough in theory and the filters make sense. In some ways I’ve merely systematized thought processes we all instinctively and subconsciously complete on our own. However, you should be aware that at least three mistakes in thinking will trip you up (with fair regularity) if we don’t address them. Let’s explore these before we move on into the planning phase. Continue reading When Purchases (Including Educations) Flunk You
The Three Rs of Affordology
We can operate a machine without filters in place only for so long before the engine gets so jammed with junk that it quits working altogether. In the same way, a person who indiscriminately spends without filtration will suffer a breakdown. Affordology allows us to take what we know about good and bad purchases and filter all our options through what I call the “Three Rs”: Rank, Resources and Return. If any item fails any of these filters, we shouldn’t allow it to impact our wallet.
Think about any major purchase and the thought processes that must go into it for it to be a successful one. Let’s take an automobile for example. When buying a car, we (mostly subconsciously) consider the following factors: Continue reading The Three Rs of Affordology