<p>Cardiothorasic surgery is anything BUT the average salary.</p>
<p>And remember that NPV values returns now versus later. Factor in the far more significant loans and opportunity cost, and the actual NPV/IRR returns on medicine may not be nearly as high as you think.</p>
<p>
[quote]
I guess you didnt read what I was talking about before posting. We were comparing engineering, the career, to JD,MD, good MBA, the careers, not the majors. So what I said still stands, the salary ceiling of an engineer with a graduate degree such as an M.S. is still low compared to the starting salary.
[/quote]
That is a false comparison.</p>
<p>You need to compare opportunity costs. JD/MD/MBA really only starts paying off later in life. For someone who doesn't have parents helping them, that can be quite beneficial.</p>
<p>Lets just compare the average law school grad to the average engineering grad. Lets assume wealth accumulation is the primary goal of this exercise.</p>
<p>22: Both graduate from undergrad. Engineer starts making 50K/year. 20K in to savings.
23:
24:
25: Lawyer graduates from law school with 100K/debt (net worth: -100k/year). Engineer net worth is ~65K. Lawyer starts job making 55k/year. Lawyer is already 165K in the hole. I think it's pretty safe to assume that the engineer is making 55k/year at this point. So basically, at age 25 the engineer is making the same money, but has a net worth +165K over the lawyer. The salary of the lawyer has to grow quite fast in order to get rid of the deficit.</p>
<p>Lawyer initial salary: [url=<a href="http://www.bls.gov/oco/ocos053.htm%5DLawyers%5B/url">http://www.bls.gov/oco/ocos053.htm]Lawyers[/url</a>]</p>
<p>Engineer initial salary: [url=<a href="http://www.bls.gov/oco/ocos027.htm%5DEngineers%5B/url">http://www.bls.gov/oco/ocos027.htm]Engineers[/url</a>]</p>
<p>Cardiothoracic surgery is notorious as a dying field, by the way. The demand is drying up as Interventional Cardiology becomes more and more powerful.</p>
<p>^^^^^
Even if this is true, it doesnt hurt my arguement, I doubt that you would argue that cardiothoracic surgery is still not one of the highest paying job titles in the country. As long as they are still one of the highest payed, the comparison is still valid.</p>
<p>Unless we have any 65-year olds debating the merits of a career, it's prudent to think about the future. They are not, however, "payed" anything whatsoever.</p>
<p>What's your "arguement", anyway? That engineering per se has a relatively low salary ceiling? I don't think anybody would disagree. (Common sense readings of Payne's wording indicates that there was a typo in post #131.)</p>
<p>
[quote]
Lets just compare the average law school grad to the average engineering grad. Lets assume wealth accumulation is the primary goal of this exercise.
[/quote]
</p>
<p>Well, if you wanted to go through that exercise, you should probably use the actual average debt of engineering majors instead of assuming it to be zero, and the amount of income they're actually able to save, instead of assuming an incredibly high percentage. </p>
<p>But that would miss the point anyway. The wide variation in starting salaries and the potential for extremely high income that exist in law do not exist in engineering. If you look at the numbers you cited, you'll see that an income in the 50th percentile for lawyers would be in about the 90th percentile for engineers. And this is despite similar starting salaries.</p>
<p>"What's your "arguement", anyway? That engineering per se has a relatively low salary ceiling? I don't think anybody would disagree. (Common sense readings of Payne's wording indicates that there was a typo in post #131.)" </p>
<p>Someone actually was arguing that, which is why I was arguing that they did.....</p>
<p>Well, what Payne and Ari are really arguing is using an economic tool which is very well accepted called Net Present Value. Salary is a ridiculous way to measure the lucrativeness of a career.</p>
<p>After all, let's say, hypothetically, that you're willing to pay me a million dollars a year to clean your pool -- provided that I spend eight years paying you a million dollars a year first.</p>
<p>Would that job have a high salary? Yes. Would it be lucrative? No.</p>
<p>I did the math with chemical engineering.</p>
<p>Auto Mechanic: $563K
Chemical Engineer: $539K
Family Practitioner: $641K
Corporate Attorney: $707K
Interventional Cardiologist: $771K
Neurosurgeon: $862K
Corporate Finance: $1.8M</p>
<p>
[quote]
Well, if you wanted to go through that exercise, you should probably use the actual average debt of engineering majors instead of assuming it to be zero, and the amount of income they're actually able to save, instead of assuming an incredibly high percentage.
[/quote]
Ummm. Saving 20K/year is quite easy. Put 15.5k/year in your 401K. Then you are at a gross income of 40K/year which is quite liveable. Figure 30k/year net. Just save a paltry 5K off that. Boom, 20k/year.</p>
<p>And any debt that engineers have can be assumed for the standard grad. It's not like law school applicants have less debt from undergrad than engineers.</p>
<p>
[quote]
But that would miss the point anyway. The wide variation in starting salaries and the potential for extremely high income that exist in law do not exist in engineering.
[/quote]
True. </p>
<p>
[quote]
If you look at the numbers you cited, you'll see that an income in the 50th percentile for lawyers would be in about the 90th percentile for engineers. And this is despite similar starting salaries.
[/quote]
Like I said:
[quote]
The salary of the lawyer has to grow quite fast in order to get rid of the deficit.
[/quote]
</p>
<p>Hidden from the calculations is number of JDs that don't (ie: can't) get jobs as Lawyers. I suspect this would make the legal profession wince a little.</p>
<p>And yes, post #131 was a typo. College confidential has a short edit window and I don't proofread.</p>
<p>
[quote]
Well, what Payne and Ari are really arguing is using an economic tool which is very well accepted called Net Present Value. Salary is a ridiculous way to measure the lucrativeness of a career.</p>
<p>After all, let's say, hypothetically, that you're willing to pay me a million dollars a year to clean your pool -- provided that I spend eight years paying you a million dollars a year first.</p>
<p>Would that job have a high salary? Yes. Would it be lucrative? No.</p>
<p>I did the math with chemical engineering.</p>
<p>Auto Mechanic: $563K
Chemical Engineer: $539K
Family Practitioner: $641K
Corporate Attorney: $707K
Interventional Cardiologist: $771K
Neurosurgeon: $862K
Corporate Finance: $1.8M
[/quote]
What time frame are you using?</p>
<p>Window starts at age 18 and assumes retirement age of 65. Salaries are drawn from salary.com for the 27708 area code and make the best available (not very good) adjustments for career progression. Undergraduate expenses are calculated as $30,000 while medical or law school is considered $40,000. 7% interest rate is used. Federal taxes (which punish concentrated earners like physicians and reward diffuse earners like mechanics) are included.</p>
<p>There is no hours correction.</p>
<p>
[quote]
Lets just compare the average law school grad to the average engineering grad. Lets assume wealth accumulation is the primary goal of this exercise.</p>
<p>22: Both graduate from undergrad. Engineer starts making 50K/year. 20K in to savings.
23:
24:
25: Lawyer graduates from law school with 100K/debt (net worth: -100k/year). Engineer net worth is ~65K. Lawyer starts job making 55k/year. Lawyer is already 165K in the hole. I think it's pretty safe to assume that the engineer is making 55k/year at this point. So basically, at age 25 the engineer is making the same money, but has a net worth +165K over the lawyer. The salary of the lawyer has to grow quite fast in order to get rid of the deficit.
[/quote]
</p>
<p>What? You can't save $20k on a $50k salary!!!! Even if you max out your 401k (which is tax-deferred until you take it out by the way), you're going to net anywhere between $35k-$42k (my mom makes $58k or something, she barely nets $4k a month, even with two kids, and "head of household" filing status), if you have no kids. You're single, have no kids, no assets, no investment losses, you're in the worst situation possible for tax purposes. You'll probably net about $3k a month if you're lucky.
Say you get really lucky and you net $3000 a month, which translates to a $36k a year. Let's look at your first year budget:</p>
<p>Rent=$750 a month and that's being optimistic, $1250+ if you're in a higher cost area<em>12=$9k in a lower cost area, $15k in a higher cost area
Security deposit=$750, whatever 1 month's rent is, sometimes 2 months' rent=$750-$2500
Clothing=$1500 (a few nice suits and other stuff)
Health insurance=$200/month</em>12=$2400
Car insurance=$150/month<em>12=$1800
Car payment=$300-$400/month, depending on what you buy</em>12=$3600-$4800
Gas=$150/month<em>12=$1800
Utilities=$100+/month (including cable)</em>12=$1200
Cellphone=$50/month<em>12=$600 ($200 for cellphone itself)=$800
Furniture and things for apartment=$3000
Renter's insurance=$50/month</em>12=$600
Nice computer=$1500
Dry cleaning=$25/month*12=$300
Total=$28,250 in a lower cost city, $36k even in a higher cost city. By the way, you still haven't eaten yet, nor have you paid off any of those student loans, or credit card debt; neither have you bought stuff for your office, christmas presents, had your engine oil changed (at $80 a pop), paid those inevitable tolls, your morning coffee, or that gym membership. I'd say you'll probably be about $5k-$6k in the hole your first year if you're a higher cost area, or if you're in an ultra high cost area like NYC, about $10k-$12k in the red. If you're in a lower cost area, you'd save $5k, optimistically.</p>
<p>So say you're in a higher cost area, but not NYC. Then you're about $9k in the hole first year (you net $36k, spend $45k), and most of those are one-time expenses that go away after the first year so your expenses go down $7k or so, and you get a 10% raise, which is still optimistic. Then you net about $3500 more a year, and spend $7k less. Factoring in inflation of 2% a year, you still only have $2k left, if you didn't get fired, laid off, or quit to go back to school. Third year, say you get another $6000 raise, that nets you another $4500 a year, and that means you save about $7k your third year. The discrepancy is more like $110k, about $85k-$90k if you're in NYC, SF, LA or any of those high-cost areas, where rent would certainly run you more than $1500 a month.</p>
<p>I challenge you to live on $2500 a month in any place with an above average cost of living.</p>
<p>And say they start at $55k, well their salary will probably double or more in 5-7 years while an engineer's salary stagnates after 7-10 years. And if you land biglaw, which you're virtually guaranteed once you're in a top10 law school and do moderately well, you START at $200k and if goes up a good 8-10% every year. And if you make partner after 8-10 years, well you'll start pulling in lower 7 figures. Now that $150k difference seems trivial now, doesn't it? </p>
<p>I know how much engineers get paid, my dad is one. His pay basically stagnated at $120k-ish.</p>
<p>Hilarious. Here's are my current expenses. Southern CA, medium cost of living area. Lets remember, I'm using a "medium" 55K/year salary projection. In reality, I don't anyone making that little as an engineer here.</p>
<p>Recurring expenses (per month):
Rent + Utilities: $600
Car Insurance: $80
Cell: $60
Gas: $200
Health Insurance: (20% of premium) Lets just use your $200 despite it being high.
Food: Lets go with an absurd $400.</p>
<p>That puts them at $18480 for the year. A gross of 40K (after 15.5k in 401 assuming no matching) will probably be ~30K net (probably a little more, but I'll cut you some slack). That means you have ~11.5K extra for additional expenses. Are you kidding me? That's basically 1K a month that you can spend on whatever. But remember, I say they will be saving that 5K. So yeah, they have $542/month extra to spend on other expenses.</p>
<p>
[quote]
Window starts at age 18 and assumes retirement age of 65. Salaries are drawn from salary.com for the 27708 area code and make the best available (not very good) adjustments for career progression. Undergraduate expenses are calculated as $30,000 while medical or law school is considered $40,000. 7% interest rate is used. Federal taxes (which punish concentrated earners like physicians and reward diffuse earners like mechanics) are included.</p>
<p>There is no hours correction.
[/quote]
When you say "expenses", you mean yearly expenses, right? And I'm assuming you're are assuming graduate school starts directly after undergrad.</p>
<p>Where do you find a place in SoCal for that matter where rent is $600, unless you're living in a bedroom in someone's house? By the way, $400 is REALLY not that absurd. That comes out to a good $13 a day, which is NOT absurd. Go out to eat, bam, that's $10. For food, I'd say, given you go out 10 times a month, I'd say $500-$650. And by the way, car insurance WILL be three digits a month. My mom pays $90 for car insurance, and she's been licensed for 15 years. Male? 22? Expect around $150+. Geico quotes $200/month for two cars when I add myself as a codriver, NOT primary driver, on my mom's policy.</p>
<p>By the way, you forgot car payment. Being able to save $20k on a $55k salary is absurd. $15k, yes, maybe, but $20k is not possible.</p>
<p>
[quote]
Where do you find a place in SoCal for that matter where rent is $600, unless you're living in a bedroom in someone's house?
[/quote]
Of course it's a single room. If wealth accumulation is your goal, that's what you do out of school.</p>
<p>And car insurance can be quite cheap if you don't get collision insurance (which is what I do). Hell, I'm considering getting a Viper as a second car. Merely 250/month.</p>
<p>Expenses include tuition, and I did assume that graduate school started directly after undergrad. For that matter, I assumed undergrad started right after high school.</p>
<p>The net effects of a delay on wealth would be ambiguous, depending on how long of a delay and how much they were being paid. I didn't find a safe way to make these assumptions and so didn't bother.</p>
<hr>
<p>What happened to taxes in your little discussion? The 401K might be tax deferred, but the rest of your income isn't.</p>
<p>EDIT: Sorry I missed that. I was looking for the word "Tax" and didn't see it, but the subtraction does seem to be there.</p>
<p>
[quote]
What happened to taxes in your little discussion? The 401K might be tax deferred, but the rest of your income isn't.
[/quote]
I'm accounting for it.</p>
<p>55k/year => 40k/year gross after 401k => 30k/year net. I think that's a safe estimate.</p>
<p>I probably should include a traditional IRA though to bring it to 35K/year gross. So no savings need to be done post tax to meet the 20k/year goal.</p>
<p>It's more than possible to insure a car for less than $100/month. I only pay $60/month for my little Integra. Also, $600/month for a bedroom? Totally doable. It's what I paid for my little apartment in SD.</p>
<p>Who ever just said they are gonna get a viper and not put collision on it needs to rethink that......</p>
<p>If some idiot hits your car and totals it, with a viper, your out 45 grand.....</p>