US News & World Report’s Best Colleges of 2009

While these types of lists are about as valuable as lists for the top paying jobs, they sure are fun to read, aren’t they? I put even less stock in these types of lists since they’re far more generic than top job lists and less quantifiable. It’s like when the coaches are polled to get the rankings of the NCAA Division I football teams… I can’t remember the last time a pre-season #1 ended up with the trophy that next January (I don’t follow much college football though, I did go to Robocup powerhouse Carnegie Mellon).

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Review: 50 Prosperity Classics by Tom Butler-Bowdon

50 Prosperity Classics by Tom Butler-Bowdon50 Prosperity Classics by Tom Butler-Bowdon is an assimilation of fifty great financial classics that will help you “attract it, create it, manage it, and share it,” with “it” being prosperity. It’s part of the “50 Classics Series,” a series I’d never heard about until this edition, but it’s a clever distillation of many great works down into something shorter than Cliff Notes. For each of the fifty classics, there’s a brief salient quote, followed by a box of important facts (think: executive summary), then a few pages of commentary that reads like a book report. The book reads like a Who’s Who of important financial and business individuals from Warren Buffett to John Bogle, from Bill Gates to Guy Kawasaki, from Adam Smith to Peter Lynch. The books span the ages going as far back as 1778 with Adam Smith (the ones after that are P.T. Barnum in 1880 and Andrew Carnegie in 1889) and as recently as Suze Orman (2007).

I chose to take a look at Andrew Carnegie’s The Gospel of Wealth first, since it was the namesake and founder of my alma mater Carnegie Mellon University. How’s this for a quote to capture the message of the book:

“The man who dies rich thus dies disgraced.”

And the “In a nutshell” summery, written by the author, was:

The wealth creator has a moral obligation to enrich the lives of others in whatever way they can.

Then the author launches into three page book report of The Gospel of Wealth followed by a brief biography of Andrew Carnegie.

I’m a big fan of books where you get little stories and vignettes, something I mentioned in my review of Ken Fisher’s 100 Minds That Made The Market. This book is in that same vein, offering little stories about each author, summarizing their books into a one sentence and a “book report” that makes it easy and quick to digest. To be honest, it makes a great bathroom book if you’re into reading a lot about personal finance, wealth creation and management!


Randy Pausch Passes Away (1960 – 2008)

Randy Pausch, a Carnegie Mellon University computer scientist whose “last lecture” about facing terminal cancer became an Internet sensation and a best-selling book, died Friday. He was 47.

Randy Pausch taught Building Virtual Worlds, a class that started sometime in my sophmore or junior year, at Carnegie Mellon University and was a force on campus even before his famous Last Lecture. I always wanted to take Building Virtual Worlds but demand for the class was tremendous those first few years. I wasn’t going to get in the first few years it was offered but I’m upset I didn’t try harder. The class was well known around campus and it’s not surprising he was able to turn that into the ETC.

In listening to his Last Lecture, I understood where all his passion and his energy came from. He was following every dream he had and is an inspiration. If you haven’t seen it, I recommend watching it, you’ll be inspired.

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 Frugal Living, Personal Finance 

How To Cut College Costs by 13%-25%

Carnegie Mellon UniversityWant to know how I was able to shave nearly 13% off my college costs?

Advanced Placement classes.

I was able to graduate college a semester early in part because I loaded up on Advanced Placement (AP) classes while I was in high school. Someone got it into my head that I could take these AP classes for free (not counting the nominal fee for the exam) and get college credit for getting high marks on the AP tests. At the time, my brain wasn’t thinking “oh, I can save money on college,” but rather “I can spend time now and have it count twice – once in high school and once in college,” so it was in part the bit of hustle inside of me that spurred me to action.

I took your standard science and math ones (Chemistry, Physics, Calculus, Computer Science) as well as a few “useless” (from a college credit perspective, not from a learning perspective) classes like Comparative Government, English, Art History, US and World History. The net result was approximately one semester’s worth of electives (and most notably skipping out on an calculus class offered at 8:30am only, you have no idea how happy I was to hear that).

For those of you looking to do this, my advice is that you do your research about colleges ahead of time to ensure that your time is spent most effectively. Also, consider taking classes that you may never get credit for but would ultimately enjoy (I was never getting any credit for Art History, but I learned a lot in that class).

Here are some tips:

  • Check to see if your potential colleges give credit for high scores and in which subjects, then see what those scores are. I didn’t know this but I was never getting credit for Comparative Government or Art History.
  • If they do not but you are still interested, take the class but skip the exam. You only need the exam if you want credit, if you can’t get credit even with a score of 5, just skip the exam.
  • The SAT/ACT and SAT II exams are more important. Given a choice, focus on the standardized tests over the AP exams (that’s not to say you can’t focus on both) because those tests get you into college, AP scores just get you farther along once you get admitted.
  • To take full advantage, you may need to load up on non-elective classes to finish early. My credits were about 50% optional electives and 50% required electives but none applied to my core or foundation-type classes (CMU accepted my AP CS marks but the class was taught in Pascal and I didn’t know C/C++, which was the language CMU used at the time, so I had to take 15-127) so I had to load up on those in the vacuum left by fulfilled electives.
  • Don’t burn yourself out. If you take too many AP’s, you might overload yourself and perform poorly on the exams. Most colleges will only award credit for 4’s and 5’s, so keep that in mind.
  • Enjoy yourself. The point of these AP classes is to expand your mind beyond the typical topics covered in high school. Art History isn’t something most high school students have the opportunity to take, so enjoy the classes and broaden your horizons. Without that one art history class, I would know absolutely nothing about art, I’ve never regretted taking that class (even if I got no credit!).

There you have it, AP classes are your way of shaving 13%-25% (you can get, at most, a year of credit according to the College Board) your college costs.

(photo by steven n maher)

 Personal Finance 

My Best Financial Moves in College

When Patrick at Cash Money Life tagged me for this meme, he said that I probably had a couple little “hustles” going on the side when I was in college. I have no idea how he knew, though I had hinted about them in the past (selling stuff on ebay, online poker and blackjack), I don’t think I ever really wrote them all out in their full glory. I had some pretty lucrative things going, in college student terms, and it certainly easily sustained my lifestyle. However, the number one best financial move in college made the rest pale in comparison.

The number one best financial move I did in college was to graduate a semester early. That one move alone saved the cost of one semester’s tuition at Carnegie Mellon University, located in Pittsburgh, PA; which amounted to somewhere in the neighborhood of $15,000 plus room, board, food, whatever. I was able to do that because I always loaded myself up with classes, with AP classes in high school and then regular classes in college, and always pushed myself to the limit for those three and a half years. I don’t think all my little side projects, in total, earned close to that.

Of course, that financial move isn’t at all interesting and is borderline boasting (“oh look how smart Jim is!” we won’t go into what my grades were, shhhh!), so let me tell you about the most interesting of the side jobs I had:

Selling on eBay: eBay had started to get big and the whole “Buy Hot Deals from Fatwallet and resell on eBay” was still in its nascent stages. Whenever I see someone trying to make money, I try to figure out how that person is making money and then try to do it and then improve on it. So I saw these great deals on eBay for brand new products and so I investigated where they must be getting these great deals. Some were getting them wholesale (I didn’t want to get a tax ID and go through that process so I skipped it) but some were just buying stuff that was cheaper after rebate and then selling it on eBay. I did that a couple times before I realized the effort wasn’t worth it.

Eventually, I realized that what you needed to do was find products on sale where the eventual buyer wouldn’t be searching the Fatwallet forums or other deal sites. Computer and electronics shoppers are savvy enough to search the forums for a deal so eBay margins on those items is much lower. If you want DVDs, hats, and sports jerseys… those shoppers go to eBay first. Over the course of a year or so I sold maybe a eighty Michael Jordan Wizards jerseys, fifty John Deere hats (this was after Ashton Kutcher made them popular on Punk’d), and who knows how many DVD sets (my fiancee likes telling the story about how we ripped open a package from Canada of Band of Brother Gift Sets and then shoving them into packages for the post office because I was late on shipping them).

Eventually it got to the point where I was tired of looking at the eBay completed sale pages to try to figure out how much something could sell for and I put that Carnegie Mellon Computer Science education to good use. It took a few hours but I put together a Java application that went onto the eBay website and screen scraped the text off the completed auction pages. It collected the last two hundred auctions and then ran some simple statistic numbers. It told me percentage sold, average sale price, standard deviation, range, and who knows what else. I just wanted to know, in a few seconds, whether I could make money with a deal. It eventually started collecting the names of bidders, repeat bidders, losing bidders, and other information that would tell me how many people out there still want this stuff. So if someone was a losing bidder many times, I know at least one person is going to probably want this.

I actually sold the tool, after converting it from a Java app with a GUI to strictly command line, to a PhD candidate friend of a friend for $500, the first, and only, time I had sold a piece of software for money. It was pretty cool! Now eBay’s systems make the tool useless as they now require login, sanitize much of the bidder information, and otherwise make data collection difficult for people who don’t use their API. It was still a ton of fun though and I learned quite a bit from doing it.

So there you have it, both the smartest and the most interesting financial move I made in college. The smartest overall move, of course, was meeting my lovely wife! 🙂

 Personal Finance 

Early Mistakes are Lessons in Disguise

Last night I had dinner in San Francisco with J.D., his lovely wife, and Cap and we somehow got on the topic of how JD made the fantastically not awesome decision to buy Sharper Image. Cap lamented about how he was poor and didn’t invest in stocks (to be honest, I forgot what he said so I put in a typical Cap comment :)), I chimed in about how I erroneous Worldcom (I said Enron earlier but I got the two mixed up) on bad news but that it was a good lesson for me.

That got me thinking to something my father told me many years ago. He said, and I’m paraphrasing, that you either learn a lesson in the classroom or you learn it in real life, the one in real life is far more expensive (in both time and money) and dangerous. The best analogy I can think of were the “fights” I saw on the fraternity quad in college. Ever see two “tough guys” step up to each other, bump chests, and challenge each other? That, in part, goes back to when people would fight for territory and weakness meant someone else was going to swoop in on your livelihood.

On the fraternity quad of a private engineering school, you probably didn’t learn the lessons of the street growing up and probably didn’t realize that if you bumped up against the wrong chest, you’d be floored. In the fraternity quad of a private engineering school, the chest puffing stopped at just that, chest puffing.

Then my friend Howard from New York City showed up, a real cool Asian kid who stood all of 5′ 7″, but he had street smarts; where he came from, chest puffing and “go ahead, hit me” statements were soon followed by the very thing you asked for. One night he had a run in with some punk, there was shouting, some “go ahead, hit me”s were thrown around, and he swung. The guy didn’t fight back, but bless his bravado, he said “hit me again!” And he did. And again. Until the guy ran. (He later returned with five of his fraternity brothers, at which point we called him a [not nice name] and told him to [go home])

That other guy, he got a lesson he should’ve learned in the classroom – don’t pick a fight if you aren’t going to fight. Howard used his fists, depending on the street and the circumstances, it could’ve been clubs, knives or guns. The other guy got off cheap.

After that little trip down memory lane, it struck me, losing money on Worldcom was very good for me. At the time it was catastrophic, a loss of a thousand dollars in a Roth IRA that had only three or four; but it taught me that I really need to do a lot more due diligence before I’d be ready to invest any money in individual stocks. Due diligence is not an hour reading news stories, due diligence is poring over financial records, understanding how markets price stocks (biggest lesson is that it’s about growth, not intrinsic value; don’t quote me though because I’m terrible at investing), and a whole pantheon of factors I can’t even begin imagine, let alone enumerate. That’s precisely why I like index funds (though I’m waiting for the research that says index funds suck, you know it’s coming!).

That thousand dollars has probably saved me countless dollars over the years since and it definitely was the main reason why I didn’t buy Bear Stearns this past month.

Those who cannot remember the past are condemned to repeat it.
                — George Santayana, Reason in Common Sense


Beware On-Campus Credit Card Application Booths

My first credit card was an AT&T Universal card that I received after filling out an application outside of Doherty Hall on the campus of the esteemed Carnegie Mellon University. I applied because the guy was giving away t-shirts with funny slogans and I thought it was a great way to get a funny t-shirt right? Luckily for me the whole setup was 100% legitimate, since it’s now been eight years and my identity wasn’t stolen; but how many of those similarly setup operations aren’t legitimate? It’s a fantastic way to capture a ton of information in a short period of time from unsuspecting victims who likely aren’t even aware that identity theft happens.

Let’s say that the person accepting applications is entirely legitimate and he personally won’t run off with your information. What’s to say someone doesn’t mug him on his way home or break into his car and steals all that information from him? If you think of all the recent data breaches involving credit card numbers being stolen, they didn’t break into the store or the credit card company databases, they broke into the processor’s databases. Thieves aren’t dumb, they go for the weak link and a guy walking around with a backpack full of identities is a much better target (in terms of return on investment) than a credit card company or you personally.

Now, abstracting away the fact that your identity could be stolen, the fact of the matter is that you aren’t being compensated enough to use the card. There are a ton of credit cards that will give you $100 statement credits upon first purchase, there are a ton of cards that have much better fee structures and interest rates, and there are a ton of cards that give you more cashback rewards than the ones offered on campus. So, even if you aren’t going to have your identity lifted from you, the cards that you can find on your own, especially with the internet, are better than any on campus – plus $100 beats a t-shirt no matter how funny it is.

 Frugal Living, General 

Don’t Do Drug Tests For Money

When you’re college and without a steady income, you’re always on the lookout for a little extra income. I know I participated in maybe a fifty psychology experiments in the course of four years at CMU and was paid a pretty easy $5 or $10 per session (of about 45 minutes each). Psychology experiments were grade school type stuff, it’s when you submitted yourself to medical and drug tests that you could “make” some big money.

My advice? Don’t ever ever every participate in a clinical drug test for money. Ever.

Why? Read this (it’s a horror story, please be warned).

They were the first people in the world to test the drug, being developed by the German pharmaceutical firm, TeGenero, and designed to treat chronic inflammatory conditions and leukaemia. They were paid ÂŁ2,000 each.

Of a test group of eight, six are now battling for their lives. (ÂŁ2,000 is about $3,512.33 USD)

Raste Khan, 23, a television technician, said: “The test ward turned into hell minutes after we were injected. The men went down like dominoes.

I can understand participating in a drug trial if it’s curing a serious condition you’re suffering from and no current remedy exists, it’s a wholly different thing to take an untested drug for money.

It could also deal a hammer blow to the drug-testing industry, which often relies on hard-up students volunteering as guinea pigs. (emphasis mine)

Don’t do it. It’s a sad story and I hope that those six young men make a full recovery.

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