If I was 19 years old I would buckle down in college unlike what I did when I was 19 and I would either go to pharmacy school or dental school. I have a friend who is a dentist and he wants for nothing that money can buy.
It really depends on if you're talking about just making a decent living and also planning for a future nest egg, or if your just talking about having a job where you can make good money and fulfill a desire to serve the community like a dentist or a pharmacist. This is what I mean...If I was 18-19 again and know what I know now, and I was just looking at just dollars and cents, here are two options:
1. Become a dentist
- 8 years of college to become a detist - Average debt around 200k in student loans to pay back. Most likely no extra income during this time due to the demands of school. Age when I get out into the workforce putting my degree to work would be approximately 27.
- Start working at 27 with an average salary for dentist being around 150k per year. Depending on the route I take there will be considerable expenses in opening a practice, carrying malpractice insurance and then of course there are those nagging student loans to payback. Not sure what my remaining cash flow would be, but you get the point it wouldn't be anywhere near $150k until I was well established, which would probably take several years.
Second scenario
2. Go to trade school to become a welder (just example could be one of many trades) for 1 year cost approximately 4-6k.
- Average salary 40k (much higher if willing to travel). Since this is a what I would do if I was 19, I would be willing to travel for a few years to get ahead then settle down. This scenario would put me in the 60-80k range when you include the per diem. I use this example because one of my sons best friends did this very thing, and was actually making over 80k, so I feel I'm being conservative.
- Making 70k per year at 20, would have approximately 50k after taxes. Live off of half and invest half.
- Buy a entry level (single wide mobile) rental that I can rent for $500 per month = $6k per yr - 25% expenses (includes a management fee since I'm on the road)= 4k per year cash flow. I am now 21 years old
- Replicate the last step in year 3 = another 4k per year cash flow. Now 22 years old.
- Replicated the last couple of years but now I can reinvest the profits from the last couple of years and buy a nice rental which will rent for $600 per month leaving me an extra $5400 per year cash flow. Now 23 years old.
- By the way these real estate will also allow me to reduce my taxable income due to the depreciation associated with these investments so by now I'm probably only paying 15k in taxes giving me an additional 5k per year to invest. Which is a total of $18,400 just from investments plus 25k of my salary for a total of $43,400 to buy another rental that can rent for $600 bringing in another $5400 cash flow. I'm now 24 (in the 1st scenario I'm almost 1/2 way through college).
- Continue to do this every year only buy a little nicer rental each year, which will rent just a little higher. At this point probably increasing rent by $1200 per year on the new ones.
- Fast forward to 27 I now have 7 rentals bringing in a total of $47,000 per year cash flow after expenses (including a management fee). In scenario 1 I'm just graduating college with 200k in debt. In this scenario I'm making $47k per year whether I work or not (putting my money to work for me rather than me working for my money) plus I'm still making $70k per year at my welding job.
- At this point I can decide if I want to settle down and make less money per year welding by not traveling. Or I can continue to work a few more years and buy enough rentals to completely replace me income and retire at 30.
I'm not knocking becoming a dentist or a pharmacists, my point of this post is to show that sometimes we teach our kids that college is the end all be all to success. Truth is a dream with a clear vision of what your goals are, a strategy of how to get there, discipline to stick to it, a hard work ethic, and a never give up attitude are the ingredients to reaching those goals.
P.S. These numbers aren't pulled out of the air. I have bought several properties in the last couple of years in the $20k to $30k range that are bringing in more per month than the figures I used above.
