No Debt MBA

This is a story we've heard before...

2012-05-16T05:41:00.001-07:00

In case you need to read yet another downer article about how college grads have racked up outrageous amounts of student loan debts, The New York Times delivers. It's timely because graduation has just passed or is coming up shortly for most colleges. But the article fails to present any truly new or helpful information. The first paragraph says it all:

Kelsey Griffith graduates on Sunday from Ohio Northern University. To start paying off her $120,000 in student debt, she is already working two restaurant jobs and will soon give up her apartment here to live with her parents. Her mother, who co-signed on the loans, is taking out a life insurance policy on her daughter.

The article covers the growth in student loan debt, some personal profiles, and plenty of political drama. It also takes six pages (online) to cover the same story and issues as The New York Times has covered before. It presents no advice or help to students who already have loans. At best it's a cautionary tale or an alert.

While it's a great overview for someone who's never read about the issue before and one long shout out to Ohio, for students or grads who already know the story and have debt their time would be better spent doing something other than reading this .... like getting a second or third job.

Frugal MBA Students

2012-05-01T05:52:00.000-07:00

From what I write most of the time you'd think that all MBA students were reckless spendthrifts drowning in debt. Many days it does feel that way, but after almost a full school year I've definitely met a few other frugal students. Here are some of their tell tale signs:

Biking in to campus
Bringing a packed lunch or snacks
Making or packing tea/coffee in a thermos
No designer bags or clothes
Avoiding events with $50+ tickets
Living off campus for cheaper rent and having roommates
Staying home on the weekends - no international plane tickets

Though I paint MBA students with a broad brush, the emails I get and my own experience here clearly indicates there are exceptions and there is a range of spending levels. I get emails asking which schools give the most aid or if it's worth it to turn down a top school for a second tier with a full ride. Here I've met a student who worked in the public/non-profit sector in a low cost of living are before starting the MBA program. His kids are on food stamps while he's in school and he's living in a blue collar neighborhood far from campus for its quality schools and low rent in order to keep the MBA as affordable as possible.

I just wanted to make sure that it's clear the I'm often making broad generalizations which might be true for MBA culture and community in general, it is far from true for every individual. So if you're a frugal person or worried about debt coming in to an MBA program, yes, it will be hard. However, you're not alone and won't be. Like any community there are plenty of different people and you're bound to find someone who shares values similar to your own.

Why getting into Harvard is no longer an honor

2012-04-09T04:46:00.000-07:00

That's the headline of a recent column by Jay Matthews at the Washington Post. The argument that he and an anonymous student put together is that getting in to Harvard or any other highly selective school is less meaningful now that their selectivity is so high. When you admit less than 10% of your applicants it's very likely that many of those on the edge of being admitted or denied are not all that different. Matthews and his letter writer make this argument in a very generalized form, ending at the conclusion that being admitted to an Ivy or other top college is no longer a meaningful distinction.

Of course, investing five or six figures in a degree from a school like this is a pretty good indication that I wouldn't agree. Perhaps being rejected from Harvard is no longer a sign of mediocrity. However, if we say that people being accepted and rejected are indistinguishably perfect and accomplished that means that the people being admitted are perfect and accomplished. So for graduate schools, employers, scholarships and so on getting in to these schools still has enormous signalling power and makes the schools still worth pursuing in many cases.

On the employer side Matthews' argument might be more valid since there are potentially numerous people employers may overlook outside of their hiring processes focusing on top schools. People at other schools may be equally (or even more) talented and qualified while also potentially being cheaper in recruiting and salary demands. However, top schools still provide employers with the most expedient one-stop shop with an extensive quality check. The ease of use and guarantee of rigorous standards means that many employers won't take the time to look elsewhere.

I personally believe that companies' outright rejection or avoidance of students from non-name brand schools is something that would find more benefit in Matthews and others' criticisms instead of haranguing about college admissions criteria. Both schools and employers are tightly limited on the number of people they can take on in many cases. Schools do their best to admit the best for themselves, but having companies blindly follow them creates a large opportunity gap for those who don't attend top schools for whatever reason and a uniform definition of what is "best". Companies could potentially benefit from a wider labor pool with differentiated strengths and salary expectations. However, there is still a problem in the limitations of budgets of time and money for recruiting. If Matthews could solve that problem he wouldn't have to write a column for the Post.

What do you think?

Two links

2012-04-04T05:03:00.001-07:00

I came across two interesting articles in Time via Google News (my favorite time waster).

The first talks about the political debate around changing the interest rate on subsidized Stafford loans. As you know you can't get these anymore. The program was discontinued last year in budget cuts. But for those who got 'em while they were hot the current debate is on moving their interest rates from 3.4 to 6.8%. Which Time rightly points out, is doubling their interest rate to ... a still below market rate.

The second talks about a fascinating niche - senior citizens with student loans. Unfortunately Time couldn't seem to find one of this rare breed to interview and they don't do much more than throw around one or two facts and a heap of hypotheses and ancillary information, but I didn't even realize that this group existed.

Bonus: Time declares 200,000 the new 100,000. And my 10 year old, 145,000 mile car is officially below average.

Looking forward to summer

2012-03-28T10:50:00.000-07:00

While I'm still enjoying my classes and learning a lot, I can't help but wish for summer to get here already. I'm craving a little more autonomy and control of my schedule and feeling like an adult again. Something about having a class schedule, homework and no vacation or personal days makes me feel like I'm back in high school. Of course my internship won't give me real work benefits but it will be one step closer.

I'm feeling very satisfied with my summer internship. As I mentioned before, it's in an area totally different from my background, uses a completely different skill set, in a city I've never lived in before. So I'm excited for the opportunity to really get out and see something new and learn some really new skills. I don't know if this is what I will want to do full time after graduation but there's only one way to find out. I wanted to use business school as a tool to broaden my career options and understanding of the business world and this certainly fits the bill.

I'm dreading filling out my financial aid application

2012-03-09T10:28:00.001-08:00

So it's almost spring now and that means it's time to write up the FAFSA or whatever other financial aid application that your school desires so they can pass judgement on your finances and decide how much help you'll get in the next year. Last year this was a breeze for me. At least as much as any process involving doing your tax returns, finding old tax returns and filling out even more paperwork can be. I knew the rules, knew how to best arrange my finances in that light, and was pretty confident in my efforts to do so. I came out of the process with an award that far exceeded my hopes and dreams (ok, even I don't dream about financial aid) of what I might be awarded.

But there's a problem. Now I have to go through the process again and I'm nervous that it won't go as well. This year the paperwork is going to be almost as complicated. There will be fewer forms but my taxes are more complicated. I'm still putting off whether or not I'll deduct my MBA - it's the only thing awaiting completion on my return. Basically I'm worried because my finances are in really good shape, better than I was hoping in some ways. No loans, investments have done well, extra 529 money, and spending that stayed low through out the last year. That's worrisome because I fear I may be penalized because of my hard work and success and will receive less aid than last year.

But there's nothing to do but to fill it out, turn it in, and see what comes back. Cross your fingers for me!

MBAs can ID industry bubbles

2012-02-28T05:49:00.000-08:00

MBAs have incredible predictive abilities and on aggregate clearly predicted the 2001 tech bubble pop and the 2008 one in finance. Now you might this I've drunk the kool-aid of my own six-figure degree here, but I promise you I haven't. At least not too much.

What I'm talking about instead is the fact that historic data from the recruiting offices of top-5 schools show big spikes in students accepting offers in these industries the year or two preceding the market drop. Huge numbers of the graduating class of 2000 went west to join tech start ups, way more than in, say, 1998 or 2002 and you can see the same trend for the graduating class of 2007 and finance.

Unfortunately I don't have copies of this data to share with you, but there are a few things you can learn from it.

MBAs are terrible at recognizing bubbles - This is on average and in aggregate, but clearly by taking these jobs the students have failed to recognize that these industries were due for a major market correction.
MBAs are less useful the more there are together - A single business student can be quite rational but once you start pulling more of them into a group the more they tend to agree with each other. This is particularly evident when something is "hot" or "exciting" because no one wants to miss out. Fear of missing out is a hallmark of type A personalities and MBAs have it in spades. The bigger the decision the bigger the effect, causing the group think that goes in to how students decide between job offers here.

So, is there current market information you can derive from my inside track on campus? It doesn't seem like it this year. Tech has seen a resurgence along with start ups, consulting and finance hiring is strong, and there's probably a lot more interest in healthcare than there was five years ago. But nothing seems particularly hot or overheated. So I think we're just slowly pulling out of the recession and finding some balance again. But I would keep an eye on tech and healthcare over the next year or two as business schools publicize their careers data.

What do you think - are MBAs headed to an area in droves that seems prime for shorting?

I think I have summer plans

2012-02-27T05:26:00.001-08:00

I came out of recruiting pretty lucky - more than one offer all off them good. My offers were in very different companies and industries. Which made recruiting harder - less of the prep overlapped so there was more work overall - and also making my decision. I wasn't really comparing apples to apples which made my decision more one of self assessment and introspection that prestige, pay or location. I'm very, very happy and I think I've come to a decision.

I'll be using my summer to take a chance on an industry I never thought I'd work in and a company I never thought I'd work for. Something that I think might actually be a good fit but is outside my comfort zone and very different from my previous work experience. I'm excited. I'm taking a risk. And I think that's exactly what your one and only summer in a MBA program is for. I'm going to learn a lot more about myself and get to stay on a much steeper learning curve during my 10-12 weeks in the industry. It'll be challenging and I think I'll come out with new skills that will compliment the ones I already have. Writing it all down, I wonder why the decision seemed so hard.

Counting my blessings and looking forward to summer.

Recruiting thoughts from midway through

2012-02-21T03:52:00.000-08:00

Recruiting is still going full steam on campus at the moment with new job postings and seminars, but it's become a more diversified offering. the first couple months were heavily dominated by banks and management consulting firms, very big companies and the like. These offerings employ about half of a typical MBA class. The i-bank and consulting interview process is fast and time consuming. Back to back to back interviews weren't uncommon and if you made it through that you were in for more of the same at their office in a "super day". They may have been miserable going through it but that half is now in one of three camps:

1.) They got an offer and accepted it. Good and thankfully common. The hiring market for internships this year seems to be a-okay, knock on wood.
2.) They got multiple offers and are debating between them. Very good.
or
3.) They got no offers are in panic mode. Very bad but also very rare.

There are a lot more non-profits, healthcare companies, tech startups and more around these days. Many people are looking beyond even that and leveraging their networks and the school's to find niche positions in an industry of interest. This approach is a lot of work but yields some of the most rewarding and exciting opportunities. Of course while you're doing it you're totally envious of your consulting friends who have their internship in the bag and are spending their free time having fun but come summer they're the ones who will likely be jealous.

The light at the end of the tunnel can now be seen and it will be so good when it's all over.

Best of Money Carnival #142

2012-02-13T05:03:00.000-08:00

I'm honored to host the Best of Money Carnival this week. I had a lot of fun reading through all of the submissions. Without further ado, here are my picks for this week:

Job Loss Protection: An Emergency Plan at Married with Debt
Sweating the Big Stuff asks With The Federal Reserve Holding Steady On Interest Rates, Is Now The Time To Buy?
Free from Broke explains Cost Basis Reporting - How it Affects your Taxes
The Booze Run Saved us Close to a Grand at Sustainable PF
Money Reasons asks Are You A Money Hoarder?
Bucksome Boomer explains How to Find Financial Accord
Passive Family Income asks How are you Handling Increases in Your Medical Premiums and Deductibles?
At Darwin's Money I enjoyed his post on Your President Is Lying About a “Strong Dollar Policy” – Why Dollar Weakness Matters
Money Spruce asks Is a Master's Degree Worth It?

Finally, my favorite post was What Do You Do If You Really Cannot Afford Regular Health Insurance? at My Personal Finance Journey. A great overview of all your options in making a hard decision.

Thank you to everyone who submitted this week! Next week's carnival will be at Frugal Confessions.

Student loan holders headed to bankruptcy

2012-02-10T03:53:00.000-08:00

The LA Times has a brief update on what may become the "student loan crisis" talking about how bankruptcy attorneys are seeing a large increase in the number of potential clients with student loan debt. Over half of attorneys, according to the article, report increases of greater than 25%.

This is of course inevitable simply because the number of students taking out student loans has increased significantly over time as well. However what I don't know is how much the increase bankruptcy attorneys are reporting is beyond the expected increase based on the population of people with student loans. If this is much higher and there is no relief for the student loan debt burden then this could potentially spiral into something much more significant.

Thoughts?

1,000 tacos for you?

2012-02-09T10:58:00.000-08:00

For your frugal tip of the day head on over to Flowing Data for a great visualization of how much money you save by quitting cable and hear a great analysis of how he completely replaces his cable experience while still saving enough to buy over 1,000 tacos.

Mailbag post!

2012-02-06T04:18:00.000-08:00

I get a fair amount of reader mail for this little ol' blog all things considered. I try to write back to everyone who asks a question though I'm not always that prompt. I thought I'd share with you a question from a reader looking at an executive MBA, my reply, and see if you had any other advice from him. Without further ado, here's the letter I received from "Justin":

Hi,

I am considering beginning an application process at some of the top executive MBA programs, and would love to hear more about how you've managed to attend a top business school with no loans or debt. A little bit more about me, I am a working professional in the IT industry. I have 6 years of work experience and am working toward my MS in Business Intelligence. I should finish this degree in spring next year (2013).

I have taken pre-assessments with some universities, where both have said that despite having less than the median amount of work experience (10 years), that I still have a relatively strong candidacy, and should submit applications for Fall 2013 if I choose to apply. Though I am only 30 years old, I'm hoping that my technical ability, advanced degree, and work ethic will carry me through. If there is a way I can attend a top EMBA school while not pulling out loans, I am extremely interested in learning about this. I am very surprised that you were able to absorb this, and would love to learn more about your story.

I should also state that I'm considering an EMBA because I want to be able to finish the degree while not taking significant time off of work (such as full time), or spending many years pursuing the degree itself. Also, I have no interest in career changing, and I would be willing to sign a sponsorship which would require me to stay at my company if I were to get support in pursuing this degree. I have started researching proposals to submit to my management to this effect. Though my company has a reimbursement policy, I'm hoping I could negotiate some special circumstance.

Thanks for reading,
Justin

Hi Justin,

I'm in a slightly different situation, pursuing a full time traditional MBA. Coming in I didn't have sponsorship as an option. However, part of the reason I think I'll be able to graduate without debt is that my school offered me a solid amount of need-based grants. I got very lucky. My understanding is that there is less non-loan financial aid for exec ed participants and nearly no scholarships. So your employer is probably your best bet.

However, here's what I can give as advice to you:

How much does the EMBA overlap with your business intelligence degree? Before you commit a lot of cash to this make sure that the degrees are appreciably different (I don't know) and that adding the MBA will actually have a positive impact on your finances through job opportunities or raises with your current employer. An MBA doesn't necessarily make financial or career sense, especially if you already have a business degree nearly in the bag.

Looking for employer sponsorship is a great move. It can take a huge financial burden off your shoulders. See if anyone else at your office has done it and ask for their advice on getting approval. However, if your employer is not interested I'd seriously consider the previous point because it's potentially an indication that they may not value the degree and you'd be putting your own money on the line.

If you decide to go forward with the MBA, my advice to you would be to start living as if you had to
make tuition payments now. (How are you paying for your current Masters program? Can you ramp that up?) Both to get used to the lower standard of living and to sock away every penny you can before you get there so you have a buffer (or pay down credit card debt if any). The advantage, as you note, to an EMBA is that you still have income coming in while you're in school. So you have cash flow to pay your living expenses, but it's even better if you can stretch that to cover some or all of the tuition as well.

Make sure to take full advantage of the tax benefits of any tuition you pay. Lifetime learning credit or deducting the whole MBA if you're "carrying on business" can reduce your tax burden and give you
more cash to avoid student loans with. The IRS has fairly readable documentation on this and now would be the time to review their website to see what you can do with any 2011 expenses.

See if your state offers tax credits or deductions for 529 contributions. You can then use the 529 to pay for tuition. You'll need to do the math to see if this is a better option than deducting the tuition expenses since you can't double count them.

Consider distance or weekend programs if the NYC metro area doesn't work out. I think even Harvard is offering one at this point and it will allow you to continue working and potentially have more flexibility with your work schedule.

Best,
No Debt MBA

I'm hardly an expert here. Anyone else have solid advice for our friend or want to correct my points?

Things to look out for when getting a credit card with a bad credit rating

2012-02-05T06:32:00.000-08:00

The following is a sponsored post.

Life can be tough without a credit card, as having one is often a requirement for doing things like booking travel arrangements, renting cars and shopping online. But for consumers with bad credit ratings, the process of applying for a credit card can be fraught with financial peril, and unsavoury credit card companies may try to exploit consumers in this compromised position. This can make it near impossible for even the most fiscally responsible consumer to build their credit or even own a credit card. If you have a bad credit rating and are looking for a new credit card, here are some of things you should look out for.

Sneaky or exorbitant fees
Credit card companies may try to charge you a wide variety of fees, especially if you have bad credit. Credit card companies can charge an annual and monthly fee, fees for requesting credit limit increases, even fees just for accepting your application and setting up your account. Combined, these fees may leave you little to nothing of your credit limit to spend on actual purchases, leaving you better off had you not applied for the card in the first place.

Credit card marketing scams
Be especially wary of credit card companies that offer "easy" or "guaranteed" credit. These are usually fraudulent or illegal as no one can guarantee credit; legitimate credit providers will always check your credit report before deciding whether to give you a card. These companies will usually try to charge you high fees, oftentimes before you accept or even apply for the card. One especially sneaky way that they might try to charge you is by getting you to call a '900' number; these numbers are not toll-free and can cost anywhere from $2 to $50 or more.

Short grace periods
The grace period for a credit card is the amount of time that you have to pay off charges without having to pay interest on it. Look out for cards that offer grace periods shorter than a month; these cards will accrue interest even if you pay off your balance at the end of every billing cycle. A card without a grace period will accrue interest the moment you make a purchase.

High interest rates
Though having a poor credit rating will usually mean higher interest rates, you should still shop around to make sure that you are getting the best interest rate possible. Unsolicited credit card offers will often have higher interest rates than credit cards which you find through your own research. Also look out for credit cards with low introductory interest rates, as the rates may increase substantially when the introductory period ends or you make a late payment.

Having a bad credit rating does not mean you can never have a credit card. With careful research, you can find a card that can help you build credit for a better tomorrow.

Why my blog will never be a business

2012-01-11T07:24:00.000-08:00

Spend a little time online and you'll surely stumble across some corner of the internet touting how amazing starting a blog can be for earning income and how it's a great little business empire to build. If you've spent more than a little time on the internet you'll have realized what a crock of shit that is. Pardon my French.

It's true that there are people out there who make a full time living from blogging. Some who make a very good one. But put our skeptical hats on and we'll see why it isn't roses and rainbows all the time:

Often there's a service business tied in beyond the blog.
They work crazy hours
It comes after years of working at effectively far below minimum wage

Though I think some of these blog owners make great money and some of them even have great work life balance to boot, I'm never going to be one of them. Why?

I'm a terrible sales person. A lot of blog money is made pushing products be it your own ebook or paperback, credit card offers as I'm sure you've seen on other PF sites, or something else. It's not interesting to me and I'm not good at it. It's not a really viable way to generate revenue for me.
I hate pyramid schemes. A particularly financially successful group of blogs is the "I'm so great, read my blog to be like me" blog. This is especially true of the blogs that write about how great blogging is as a business. There are only so many suckers out there and odds are you're at the bottom.
You have no life. Until you reach the pinnacle of success in the blogging world where you can afford to have a staff to cover all technical difficulties and comment moderation, and you have a large stash of prewritten material, you are married to your blog. There are no real days off. You have to beat down technical issues at a moment's notice. It only gets worse as your blog grows until you can pay for someone else to deal with it. Oh, and by the way, that service costs a good chunk of your monthly earnings.
You write about the same damn things. Think about the blogs you know that have daily posts. Do you actually read and enjoy everything they have to say? I'd say I skip through about 80% of the material that comes up in my feed reader because it's the 500th post someone on the internet has written about why Roth IRAs are the best. After experimenting with this I know it can't hold my attention and I don't feel good about writing content like that. It's in no way fulfilling for me.
You have to write about topics that Google likes and in a way that their algorithm loves. I have never been able to bring myself to do any SEO beyond what logically makes sense for the blog reader. So if I've written a post in the past on a topic I reference in a new post I might link back. But the rest doesn't seem worth the effort. It takes a lot of work to pursue SEO and have your site still be interesting to read and have style and tone to the writing.

I've made a small amount of money with this blog, but it will never really be a business nor even a a consistently money-making hobby. The challenges involved in monetization of this blog are not ones that really interest me right now and the money for its own sake is not big enough for me to give up the time it would take right now.

One quarter done - goal and status update

2011-12-22T05:01:00.000-08:00

So I'm halfway through my first year of two for my MBA. It's funny to realize that I'm a quarter of the way done when I feel like I've just barely gotten my legs. The last few months have been filled with ups and downs, more ups but it's still been a stressful, all consuming time. The first bit was overwhelming because of the new routine, people, culture and trying to figure out how everything worked on the fly then once I got settled into a routine recruiting hit. Recruiting is stressful on its own but the evening events messed up my carefully crafted schedule a couple days each week. I couldn't bike because of the suit and the late wrap up time. I had to find odd pockets of time to prep for classes. I was hardly ever home.

I'm looking forward to coming back after new years. I feel comfortable with what's expected of me academically and in recruiting now, know where my limits are, and have a lot of the logistics figured out. I'm hoping to be less stressed and spend more time getting to know people better.

On the money side I'm still going on cash. This month will be the first where I'll need to transfer money out of savings to pay my credit card bill (in full, of course). My checking account is too low to pay the bill and I want to keep a buffer in there too. I'd just been cruising on my last two months of pay from this summer that I'd left in checking so far. Not even two full months of work, but more than four months of living expenses. It's good.

I need to decide ASAP if I'm going to pay spring tuition and fees in this year or next. Either way the money will come out of savings too. I think I should be good to ride out the academic year on my savings account to a hopefully lovely cushion of a paying summer internship. Knock on wood for me.

I'm pretty happy with where I'm at money-wise right now. My goal of no student loans is looking more attainable every month (knock on wood again). My spending is at a level I'm comfortable with and more importantly my standard of living is as well. I'm feeling healthy and comfortable. I haven't been worrying about a little money to go out and have fun or have people over for dinner. At the same time I've been pretty good about eating our own cooking which saves money but also keeps my diet better balanced. I've also been using my bike or feet for transportation which helps me get a little extra exercise in too. Finally, I just haven't had time to spend money on things that aren't important to me.

I want to give myself a solid pat on the back for how I've been doing. It hasn't been perfect but it's a huge amount better than it would be if I said the hell with it or ignored it. Going forward I want to maintain this balance and try to squeeze a little more fun with my SO in. How does that sound as a resolution for the new year?

Thinking about location

2011-12-20T05:06:00.000-08:00

At my business school, and I'm sure the rest of them out there, there are two particularly hot locations: San Francisco and New York. New York is a perennial favorite with MBAs and fortunately it has a plethora of banking jobs, a few consulting jobs and more to support them. San Fran is close to Silicon Valley which is of renewed interest to MBAs these days. Facebook and Google are two of the more coveted employers on campus. San Fran also has a variety of other jobs in health care, consulting, finance and more - a more diversified location than New York. Students who have a target location (particularly New Yorkers) talk about it frequently. Asking about who's there or what their chances are or how to network better for the location.

But allow me to let you in on a little secret that MBAs don't talk about much. Those locations and the others that business school students love, like London, Hong Kong, Boston or LA, are incredibly expensive. You knew that. High cost of living is no secret and people like to complain in that masochistic way about the price of rent or a meal out while saying there's no way they could live anywhere else. However, the pay doesn't really change if you're in New York or in Detroit. Think about that for a second. Housing in particular is apt. You know how far $150,000 doesn't go in New York and you know exactly how far it does go in Detroit.

It's common for pay not to fully adjust based on cost of living. That's true across industries. But many companies hiring MBAs specifically pay the same across all locations. Consulting firms are a good example of this. I've heard of a couple that have a policy of standard salaries across US locations. The consultants in New York dream of buying condos while those in Dallas have a few acres and a pool.

The evenness of pay is partly an equality issue for companies with multiple locations but there's also a supply and demand issue at play. Companies or branches in Detroit or Dallas know that to get top talent beyond the few people who have family in the area they will have to give an offer that is in the absolute sense comparable to a New York offer. This then gives them a relative advantage over the more coveted cities after cost of living is factored in.

It's easier to get a job in a non-trendy city. I can't tell you how hard Bain Texas, McKinsey Dallas, or Goldman's private wealth offices in Miami or Houston have been recruiting on campus. McKinsey Dallas sent messages to anyone on campus who in some way was from Texas, whether they were interested in finance, marketing or anything else. Target, in Minneapolis, is ambivalent about recruiting at top schools since their yield from interns to full time is so low - they can't convince anyone to live in their city long term. The number of people who show up to a hedge fund's recruiting session who has offices in New York, San Fran and London versus one that's based out of Houston or another location in the South, is striking.

So if it's easier to get a job in a non-trendy location and you have much better standard of living once you land it, what's the catch?

You have to convince the company that you're actually interested in them and their location. These guys know they're underdogs in recruiting and they really want to separate those who are really interested, who will definitely take an offer if it's given to them, and those who are using them as a safety for when their applications to other places come through. So make sure you have a good story to tell and do your research - you need to be in that first bucket for the odds to be better than average.
You have to actually work for that company at that location. This sounds stupid but for there to really be any value to taking an offer with a non-trendy company in a non-trendy location you have to be happy about it or at least okay with it. Otherwise you'll just be miserable and bemoaning your awful life in boring, backwater Atlanta while you're friends are having a great time paying $20 per drink in New York.

For many business school students these two factors are actually prohibitive. These are kids who have honed for decades their drive to be the "best", to go to the best schools, jobs, and so on. It creates a powerful, self-reinforcing form of group think. Because New York is where everyone says the action is, everyone wants a job in New York.

So you end up as one of over a hundred MBAs applying for one of four slots at every company in your target industry in either NYC or SF. You fill out numerous applications because your shots of success with any one company are so low. But each application you submit is lower quality because you don't have the time to devote to each, same for the interviews. You end up exhausted, stressed and pressed to find differences in any of the opportunities you get because you haven't had time to get to know the company or its work.

Let me just say, if you can do it wholeheartedly, this is one area where it really pays to buck the trend.

Accounting class comes to the real world

2011-12-18T15:33:00.000-08:00

I'm no CPA. When I entered business school I know pretty much nothing about accounting. My understanding was that accounting for companies was something like balancing your checkbook or what Mint spits out. Oh how wrong I was. First step was becoming acquainted with accrual accounting. Cash in, cash out was no longer enough to merit saying your company had earned money. Then I had to figure out all of the different ways that that data is presented: balance sheets, income statements, statement of cash flows.

It sounds incredibly boring and sometimes it was but the financial statements released by companies are read by thousands of people around the world in minute detail. Those financial statements, seemingly mind numbing tables of incomprehensible numbers, are scrutinized by analysts in funds controlling trillions of dollars. So when something is noted there you may not know about it but the right people listen and their money talks.

Before business school, tantalizing headline aside, I would have ignored this Wall Street Journal article about annual reports, a company's yearly overview of their financial statements. I would have been missing out. Congress last year slipped a little new requirement in for companies' annual reports: disclosing if they do business in the Democratic Republic of Congo. This doesn't sound like a big deal in a mammoth document that you and your neighbors or friends don't read, but it could potentially drive out of business Congolese mining that supports "kidnapping, child labor, rape, mutilation and murder."

Companies are leery of reporting any inaccurate information on their annual reports. Doing so can have major legal reprisals and, more importantly, cause a large drop in their stock when inaccuracies become known. No one wants to invest in a business that doesn't tell the truth since there's no way to know what you're really getting for your investment.

So when companies are legally obligated to report if they use materials that originated in Congo mines they take it seriously. This new regulation will hopefully drive a system for better tracking supply chains and will give companies a better system, which is also more transparent to consumers and investors, to see where their materials come from. Once that happens, few companies will want to make the disclosure on their annual report that they are still using tainted materials and there will be a strong reason for them to switch away from the mining businesses that finance the warring factions committing atrocities in Congo.

A conflict which the best diplomatic efforts haven't been able to reason with, human suffering that aid efforts can't begin to assuage much less stem, and a mess that is well funded so that outside governments couldn't shut it down. Until now. One little slice of an 850 page banking regulation that affects paperwork that few regular Americans actually read might cut off the life blood of the whole thing and degrade the backbone of funding to the point where conflict in Congo comes to a grinding halt.

It's by no means a done deal; the Securities and Exchange Commission hasn't hammered out the details yet and they're already taxed to enforce existing rules. But even the prospect of disclosure has companies thinking and there a glimmer of hope for efficacy and real change. And if this works, still a big if, it may provide a template for other change in the world. Conflict diamonds, child labor, you name it. Companies won't just be held accountable by consumers who lack the leverage to get real information but by their own supply chains and major customers - the core of their business. You may be able to really know which companies do business you don't agree with. Socially responsible investing might have more data, more participants and more teeth.

All through accounting. Write it off as a dull subject for nerds with pocket protectors at your own risk.

Money isn't the point

2011-12-05T13:35:00.000-08:00

With recruiting heating up and plenty of investment banking, private equity and such recruiters taking people out to dinner it becomes obvious that in some ways we are the 1% or are mightily striving to get there as a class. People talk about how much they want to have kids, a family or how hard it is to find a supportive spouse and in the same breath talk about career advancement in a track that guarantees that they wouldn't spend much time with their spouse and kids if they could make that happen in the first place.

It's tempting, on some days incredibly so, to get sucked into the mindset of prestige and compensation (and compensation as a proxy for prestige, a double whammy) as being the end all be all of a job search. It becomes a reflex that needs to be defended against to think that companies that pay less are less worthwhile to work for. We've heard the rumors and press that places like KKR, Goldman Sachs, Deutsche Bank, etc pay boat loads of money but it's hard to verify especially since a lot of compensation is tied up in bonus.

Frankly I think I'm doing a pretty good job of holding fast against the herd mentality and the culture that permeates recruiting. I'm not looking for an investment banking job and I'm avoiding compensation as a first pass opportunity filter. Yes, I will think about per-hour compensation in a rough ball park for an industry, but it's a distant second to interests, culture, opportunities, and geographic location.

I'm seriously considering starting my own business and have a few projects simmering on the back burner.

What's really enabled me, as a highly risk-averse person who demands financial security to put aside the MBA chatter about salary-plus-bonus and career tracks is that I am financially secure and will be throughout my time in business school and beyond. I have six figures in assets right now. I'll graduate (knock on wood) debt free and very much in the black. I have created my own safety net and I don't need a company to give it to me.

Another student lamented over lunch last week that he found humor in the idea that our business school opens up so many doors for us with the vast alumni network, brand name, entrepreneurship programs and alliances with non-profits, but that he really can't take advantage of the vast majority of it because of the student loan burden he'll graduate with. He's shooting for a job with one of the big three consulting firms.

This recruiting season I've felt incredibly fortunate and I'm desperately trying to tune out the noise of the "right" path and hold on to the feeling. I truly can do anything for my summer, after graduation and beyond. I have made myself secure, with a reasonably deep safety net, my SO holds similar values, and I can trust myself to maintain that going forward. What I really need to do is let go and follow my interests to something I'm excited about; I'm not naive enough to think that money will automatically follow but I should trust myself that I can make it work economically. I'm truly free to make whatever choices I'd like.

In setting the goal of being debt-free money was never the true point, but instead a stepping stone to avoiding the classic MBA career trap. Now that I've done the leg work and, barring major upset, the foundation of my flexibility has been well laid, I need to make sure I take full advantage of my own hard work. I'll be disappointed with myself if I pick a job just because it's prestigious or has the highest rate of bonuses because I can do better.

End of year financial agenda

2011-12-01T10:10:00.000-08:00

Now that it's December it's officially time to begin wrapping up 2011 and prepping for 2012. I'm a little sad about this - 2011 was really good for me - but I'm also excited to be headed into what will hopefully be an even better next year. Plus, to be honest at this point I am SO ready from a break from classes and school. I really want some time and space to think and hash out some ideas I've had recently which is what business school is supposed to be all about but hasn't been happening.

But, for the purely money aspects of 2011, here's my remaining to do list:

Run some numbers to see how much I can afford to contribute to my Solo 401k for the year
Figure out if I can pay spring tuition in 2011 or 2012 and if I have the choice which one do I want (leaning towards 2011 if possible)
After running more numbers and looking at a calendar combine 1 & 2 to decide if and how much to buy of Series I Treasury bonds in December
Do some leg work to figure out if I can deduct my MBA. My preliminary research is that I won't be able to since I'm not continuing in the same line of business but it's a lot of money and I'm not sure what course I'll be pursuing after graduation so I'm still feeling uncertain about what I should do.
I've earned a little bit from the blog this year and I'm trying to figure out if it's worth it to reinvest or if I should just take it, pay the taxes and use it to pad my savings or up my splurges in the next year.

I think that's it. So if you have advice on any of the above let me know!

Thankful

2011-11-22T10:11:00.000-08:00

I'm around three months through my MBA program and I was pretty surprised when I figured that out. The time has really flown. I can't believe it's Thanksgiving already and soon enough it will be Christmas and I'll have wrapped almost a quarter of my time here.

Thanksgiving, now that I'm an adult, is probably my favorite holiday of the year. When I was a kid it involved long road trips to family where invariably someone would get sick in the car and we'd all have to sleep on the floor and smile and eat our vegetables. Now that I'm an adult I'm looking forward to being home with my immediate family and having a low key couple days of catching up and eating my body weight in sweet potatoes.

I'm incredibly thankful that I'm able to be with my family this holiday season and that we're all healthy and doing well. My problems are truly first world problems of what to eat for dinner while traveling to them and if I want to make the crust from scratch when I make my apple pie. I am so fortunate and I want to hold on to that feeling more often through the highs and lows of business school and life in general.

But back to sweet potatoes. I found last winter that I'm actually crazy about them. Dead serious. So here's my little bit of wisdom on a frugal, healthy dish for thanksgiving and beyond.

Buy a crap ton of sweet potatoes when they go on sale this week or next.
Wash
Slice into chunks (traditional) or thin disks (will cook faster and great for sandwiches)
Marinate in olive oil, a little salt and vinegar and spices with enough water to keep everything good and wet

Spice option A - rosemary, a little oregano
Spice option B - a little cinnamon, chili powder

Roast in the oven at 425 or, if you're fortunate enough to live in a climate that allows, grill (disks work better) until soft. Basting with marinade occasionally, optional but helpful.

What are your thanksgiving plans and what are you feeling thankful for this week?

Sick leave

2011-11-17T11:14:00.000-08:00

My SO was home sick last week and we got into a discussion about what companies are trying to control and promote by having sick leave or not. I've worked for companies that have had unlimited sick leave, a few days of leave and none at all, requiring you to take a personal day.

We know that companies want you to show up at work as much as possible but showing up when sick just spreads your germs everywhere and results in you taking much longer to get better. I know that I'm not nearly as productive when I'm sick, plus it's miserable, so I typically minimize all work for a couple days and sleep as much as possible to get over the bug ASAP. However, without sick leave I've found I'm very reluctant to take this approach and use up personal leave. Similarly, I'm reluctant to miss classes here at school since content won't be repeated. On the flip side I'll admit to taking a mental health day or two at the company I worked at that had unlimited sick leave.

So, our debate, and what I want you to weigh in on, is if restricting sick leave or having none at all actually has an economic benefit for companies or if the spreading of germs and longer duration of illness actually results in less productivity. Do you think those with unlimited leave are suckers?

Recruiting season

2011-11-14T09:53:00.000-08:00

Recruiting season is in full swing here for summer internships and it packs a wallop. I might not have dinner at home all week between company dinners, evening receptions, happy hours and so on. It's incredible the amount of money companies put into this. Reserving a space to host, paying fees to the university to do on campus recruiting, promotional materials, wining and dining students PLUS all the productive time they are losing from the people who attend these events.

Call me cynical but I think there are a few reasons companies do this:

Some companies truly want to find the right people for their organization
Others want to compete for the most prestigious/smart talent
Recruiting at prestigious schools and wining and dining supports your brand - even if a student doesn't want to work at McKinsey they might hire them as consultants later on. Similarly, you might not want to work for Goldman Sachs or JP Morgan but your peers will tell you about their private banking services. The networking is not just student to company but company to student.
Everybody else is doing it - I imagine some companies fall into this trap just like students do
On campus recruiting can be a cattle drive - if you need warm bodies pre-screened for a solid degree of intelligence and drive come to campus and bag 'em early and often.

Although I know people are incredibly important to an organization, I don't know if this level of effort and outreach, particularly in this manner, is effective at reaching and attracting the people these companies actually want. Surely there is plenty of noise lumped in as well - many people go to information sessions not knowing if that company is right for them, the industry/role is a good fit or even what the company does. It seems like word of mouth recruiting and referrals from those inside the company would be much more effective. But I imagine that a system like that doesn't scale well when you're the size of Microsoft or Exxon or Morgan Stanley.

Tonight I'm going to a dinner hosted by a name brand company I'm not sure I want to work for. It's at a steakhouse near my home and hosting is costing the company over $125 per head plus alcohol. While it's nice to be wined and dined I'm sure I'm not going to get $125 of utility from that meal and a seated dinner may not be the best venue for me to learn more about the company and vice versa. What does it say about that company that they are recruiting this way? Is it a meaningful data point since this behavior is a cultural norm?

How does hiring work at your organization? Is it effective?

PS - How can I tell if a company will be a really good place to work?

No More Harvard Debt

2011-11-09T05:08:00.000-08:00

Recently re-found and have been reading No More Harvard Debt. It's written by a 2009 HBS alum who's trying to pay down $90k in student loans. Well written and solid account of being on the other side of graduation with student loans.

Living like a student

2011-11-01T04:08:00.000-07:00

I love Jacob's post about living like a student over at ERE. I too have some fond memories of my college days with activities that were near free but tons of fun. One of the frustrating things about being in business school is that students here don't act or spend like students a lot of the time. Most activities involve going out and spending money, there are plenty of expensive trips abroad each weekend, and BMWs are much more common than hand me down Civics. I actually have more luck engaging in student-like gatherings such as game nights, potlucks, or movie nights with friends outside of business school who are gainfully employed full time. What gives?

How do you feel about living like a student? Can't get enough or can't get away fast enough?