We all want to be successful and college used to be a route to success. But with college costs so high, it’s out of reach for some so we’ll explore alternatives to college.
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The cost of college tuition has risen 1,120% since 1978. There is $1.3 trillion in outstanding student loan debt in the US. Even if you do go to college, a degree is no longer the almost guaranteed ticket to the upper middle class it once was.
But not going to college, or not going via traditional routes, doesn’t mean you are destined for a life of low wage jobs and poverty. There are many paths to success and they don’t all require higher education.
Most of us are not going to get rich simply from our 9-5 jobs and even if we do, it’s still important to have at least one form of passive income, something that makes us money with very little effort on our part.
The best form of passive income is investing and the most important way to make a lot of money through investing is to start early. The more time your money has to grow, the better and there is no substitute for time when it comes to investing.
If at 18 years of age, you started with $1,000 and invested an additional $100 every week for 30 years at 7%, at the end of the 30 years, when you are 48, you would have more than half a million dollars, $539,643. You would have contributed just $156,000, the other $382,643 you made just from interest, from doing literally nothing.
If you don’t start until you’re 28 but start with double the amount, $2,000 and invest double the amount, $200 a week at the same 7% for 20 years, at the end of the 20 years when you are 48, you would have $461,451. You contributed $208,000 and the other $251,451 you made just from interest.
You can see what a difference time makes. We started with and contributed twice the amount but we still ended up with nearly $80,000 less because of the additional ten years our money had to grow in the first example. I’ll say it again, there is no substitute for time when it comes to investing.
Our favorite gateway drug to investing is Betterment. The fees are low, there is no minimum, and you don’t have to know anything about investing to get started.
Rental property is another great form of passive income. You might not think it’s passive if you think you have to be a hand’s on landlord and you would be right. And if you’re a hand’s on landlord, you’re restricted to buying property in an area close enough to where you live to attend to the property which is limiting if their isn’t a lot of stock or the area is very expensive.
But, when you partner with Roofstock, all of those problems are gone! They are a turnkey real estate investment property and do everything from find you a home to collecting the rent and taking care of repairs and maintenance. Not only do they do the work for you, but they greatly expand the areas where you can own property since they do the day to day stuff for you. We did a full review of Roofstock.
If you can’t afford to buy a rental property, you can still invest in real estate. Fundrise is crowd funded real estate. It allows individuals to invest in commercial property through an eREIT. We did a full review of the company.
Start a Business
Starting a business is a lot of work and takes time to be successful but that’s true of college as well. It takes time to get a degree and most degrees don’t land jobs that pay a huge salary right from the start. You spend time building your career in a way that will hopefully earn you a good salary eventually.
Because you can start a business on-line, the costs to do so can be minimal. LMM is an entirely on-line business and successful enough for Andrew to quit his six figure day job to do LMM full time. It took five years. Five years of extremely hard work to be sure, but just one year more than it generally takes to get a college degree and he did it while working full time.
I started an on-line business but it was sort of an accident. I had been writing for LMM for a couple of years which meant I had a pretty good portfolio built up. I made profiles on freelancing sites like Upwork and Guru and didn’t really think much more about it.
I had my first client within a few weeks without ever even having applied for a project. Within six months, I was making enough money that it made sense to start an LLC. Eventually, I was getting more clients from word of mouth than from the freelancing sites which allowed me to cut out their fees.
The portfolio I had from LMM gave me a jump and I was offered better paying jobs. If you don’t have the benefit of a big portfolio, bid on some jobs below the client’s posted budget just to try to get some work and positive reviews under your belt.
There are many different kinds of jobs on freelancing sites if writing isn’t your thing; graphic design, web site development, app development, animation, audio production, video production, voice talent and dozens of others.
There are certainly lots of other ways to start an on-line business but starting out on freelancing sites is one of the easiest ways to do it.
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Get into the Trades
It’s easy to get a jump start on skills you need to work in the trade industry because many of them are things you can start doing from a pretty early age and right at home. If you want to work on cars, you can start by asking a family member or friend of the family to teach you basic car maintence. If you want to be a carpenter, you can start by building birdhouses and then graduate to dog houses!
Some high schools offer trade programs and there are vocational schools that offer training programs for things like electrician, pharmacy tech, medical assistant, plumber, HVAC technician, and paralegal and many other careers.
Vocational training generally takes just two years and the average cost of a degree is $33,000 compared to $127,000 for a bachelor’s. The average salary for a vocational school graduate is $35,720 compared to $46,900 for a four year college graduate although obviously both those numbers vary by career.
While you won’t earn a salary doing volunteer work, there are some organizations that provide room and board and some that also provide a stipend. The Peace Corps is probably the best known and they offer some tremendous benefits.
The term of service is 27 months and the organization pays for travel to and from the country you’ll be volunteering in, a stipend that generally ranges between $200-800 a month, full medical and dental benefits (this is practically reason enough), and $8,000 at the end of your term. Volunteers must be at least 18 and US citizens.
Winrock is another organization that covers travel and pays a per diem for living expenses. They cover medical emergencies but do not provide medical insurance.
You aren’t going to make your living volunterring but you will gain experience, meet people, get to do some travelling, and possibly transition a volunteer position with an organization into a paid one.
Join the Military
Just like college, the military is not for everyone but it certainly comes with a lot of benefits. Members and their immediate family receive full medical benefits. Members can receive technical training in a variety of areas and have tuition assistance for college. The military is also one of the few places where retirees receive pension benefits after twenty years of service.
Join the Workforce
Knowing what you don’t want to do is as important as knowing what you do want to do. Figuring this out later in life can have bad consequences. It can take time to figure out what you want to do but it’s much faster to learn what you don’t want to do and when you’re young and just out of high school, the stakes are low.
You can job hop, place hop, and field hop a lot more easily when you’re young. You don’t have family or a lot of posessions yet to weigh you down. You hopefully don’t have a lot of expenses (live at home for as long as you can) yet so you can take jobs in low paying fields that you might be interested in, you can take low paying jobs period and that’s what most offers will be since you don’t have much or any experience yet.
But this is the perfect time to gain experience and when you find something you like, you can come up with a plan. Is it the type of industry where you don’t need further education but can work your way up? Do you need a college degree to get ahead? If so, in what major and can you continue working and go to school part time?
Will your employer pay all or part of your tuition? Is there further education required that isn’t a four year degree like vocational training or certification? Can you continue working while you pursue those things and will your employer pay for them?
There are some careers that don’t require a degree but still pay pretty well. We did an entire article detailing those jobs and not all of them are “dirty jobs.”
This is probably the best thing on this list. This is so great! Mission U is a one year program started by Adam Braun. His program addresses what he sees as the two biggest problems with the US higher education system; it doesn’t prepare people for the work force and the crippling amount of debt people are graduating with.
The program focuses on career building skills. Mission U partnered with employers like Spotify, Lift, Warby Parker, and many more to design the ciriculum to make sure those who complete the program have the skills employers are looking for.
The last six weeks of the program are spent teaching students interview skills including salary negotiation, certainly not things I was taught in college. There are no upfront costs at Mission U. Once a graduate is making $50,000 or more per year, they pay 15% of that to Mission U for three years.
Currently, Mission U is only operating in the Bay area so if you’re local or can get yourself out there, you can apply here.
Still College Alternatives to College
If you do still want to attend college but don’t want to take on tons of debt to do it, there are alternatives to the traditional path of graduating high school, starting college immediately and paying for all of it with student loans.
More Choices Than Ever
Previous generations seemingly had two choices, go to college or work in a factory but with the disappearance of factory jobs it’s now it seems like go to college or work a low wage service industry job. But we have more choices than ever.
If you don’t want to go to college, you don’t have to in order to have a nice quality of life. If you do want to go to college, you can do that without saddling yourself with thousands of dollars in debt. Explore the options open to you so you make the best decision for yourself and your future.
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Twelve Tuition Free Colleges: From US News and World Report