ROI Data by Schools and Majors

Part of the service these bonus dependent industries provide new employees is to informally educate them (through peer networks) on the vagaries of the industry they found themselves in, and to tell them to live within their means. Not to assume the bonus will happen year in and year out etc. They are intensely aware of the risks that are embedded in the jobs. People are not randomly flaming out getting their cars repossessed. In fact, a lot of these folks live well below their means relative to the average American at that pay well that is not in the industry. Part of this is also a deep desire to develop the capacity to retire early if possible, or at least not be heavily dependent on employment at that pay level – this also leads to more saving than spending.

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I work in Total Rewards and you would be surprised at the number of people that spend every penny they earn and cash out stock as soon as they can.

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I qualified it – I said people in these bonus dependent industries :-). I live in one. And I know many people that live in other bonus dependent industries. And I heard from my kid about volatility in comp in the industry he is looking at (also bonus dependent), and what people who he talked to that are further out in their career advised him.

I work in Talent Acquisition and collaborate closely with my colleagues in Total Rewards and you should hear the stories they can tell about 7 figure earners asking “what are the penalties for cashing out my 401K” (as if you can’t google it) or “is it possible to get a company loan against next year’s performance bonus?” And some very sad stories about new hires- senior people-- who cannot wait to get reimbursed for moving expenses when they are relocating so they need the cash upfront, or longstanding employees who have been earning at a significant level for years-- who cannot scrape together 15K to reserve a truck until their Mobility package kicks in.

Not talking about new college grads who don’t have assets. These are middle aged, high performing professionals who apparently spend every penny, including those year end bonuses.

Neela, it is great you know so many thrifty people. The national data on wealth accumulation suggests that once again- your personal network is filled with outliers.

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Must keep up appearances.

I’m really glad my kids didn’t ever get into that hole. Even back in their school days when out buying jeans for them, I asked, “Which one do you like better?” and got the response, “They’re just jeans! Buy whatever is cheaper.” Two of mine have already saved enough to buy property for themselves - in their 20s. Vehicles too, of course - all three with that. And they continue to fund retirement.

Are they also on these forums complaining about not getting college financial aid for their kids?

And your experience is leading you to exactly the wrong conclusion because you incorrectly assumed that experience in your industry would translate to this industry.

It really doesn’t at all. I suppose that if you searched hard enough you could find some examples, but the overwhelming reality is that people in this industry understand well the difference between fixed costs (like rent or mortgages) and variable costs (such as an expensive vacation). For people in feast or famine jobs, like trading, it’s pretty common that they buy their homes with cash because they know that way they can survive times of famine.

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This is very true. I know so many examples of people that buy houses with cash.

Buying with cash has its moments, but so does leveraging if we’re talking ROI. The key is staying in the black overall so if things go wrong, it’s not a loss.

College debt, itself, (or paying a higher amount for college) can also be leveraging (earn more from it), or it can be “treating” oneself to that perceived better “x” if it’s merely the journey they want a better ride on (better fit). We have no regrets doing the latter for our kids. ROI isn’t everything to us and never has been.

ETA And no cars, or anything else, repossessed.

There’re three outcomes for people who were highly compensated when they were young: 1) they earned enough to retire early; 2) they climbed up the corporate ladder to remain highly compensated; or 3) they ended their careers in the highly compensating businesses, voluntarily or involuntarily, and have to live much more frugally.

Quite often the people in category 2 are also in category 1, but haven’t gotten around to pulling the trigger on the retirement part.

People who don’t take personal leverage do so because it enables them to take more risk in their job. This is sort of required in some jobs – either you are trading, or doing a startup, or working for a startup. It is usually a considered decision.

We buy clothes at COSTCO. :rofl:

I buy Hondas for me, drive 3-5 years, and then hand them down to my teenagers when they are ready to drive.

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Group 1 and 3 may also have considerable overlap – group 1 may have lived much more frugally than their income in the first place to reach early retirement, and continued to do so after retiring (or switching to a second lesser paying career).

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We’re odd then. Could be - on this forum I often think we’re odd - though when I talk with others around us we seem to be more normal. We leveraged for H to be able to start his own business. At that time we were much younger and it wasn’t a given that we would succeed. It was rough for about 18 months and we had spending down to the nickel, plus put a bit into leveraged debt. Fortunately, it worked out really well.

Now, for us, leveraging is purely to get more for our money. I do a fair bit of math when buying expensive things. eg Is it better to pay cash for the vehicle or take the 0% interest? Often 0% is better based upon the return I can get for the difference in cost.

One reason we could be different is neither H nor I had much pocket change to start with as a couple - just our income, and student loans.

As a father who encouraged sons in HS to explore STEM (if only to rule it out), this thread is intriguing on several levels. Yes, we glanced at US university ROI tables when discussing global university selections, but heavily discounted them for reasons outlined herein (dubious data, spurious correlations, regional distortions, etc). And they both expect to pursue pre-experience masters outside of the US, so we generally investigate through a global lens. I recently stumbled upon an interesting Taiwanese cohort study:

Are soft skills and employment experience better predictors of graduate success than hard skills acquisition (STEM)?

Interesting analysis, specifically how the authors framed the investigation of graduates’ extrinsic (employment income) and intrinsic (job satisfaction) success →

https://www.researchgate.net/publication/352172537_Graduates’_career_success_predicted_by_mathematical_and_affective_abilities_effective_higher-education_learning_and_economic_contexts_A_bioecological_positivity_to_success_model

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It would be great if we had actual data on each graduate from each school, but we don’t. I do think it’s reasonable to say that, in general, some degrees offer greater first job compensation than others. The debate seems to be “by how much” and “for how long”.

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You are not odd :-). I am the same way. I am saying that there are a small set of people that have the opportunity / or perhaps required to, take a lot of risk on the job. So then those people take less risk elsewhere. That is all there is to it.

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I am sure the usefulness of various skills varies by culture. What applies in Taiwan may not apply here. It also may not apply in all industries uniformly, or even the same way, in the US.

There is a lot of nuance as to why some jobs / industries have more compensation than others – starting or otherwise. Medicine offers high salaries because of restricted supply. Tech offers high salaries because they are creating either micro or even big monopolies, and often the employees partake in some of the gains. Those parts of tech where you are not a part of a monopoly of some shape or form do not have big salaries. Some parts of finance offer high pay because you are joining a well known / established franchise, say Goldman, and they (and you in turn) get paid well because they provide an excellent product – so people pay up for a high quality product more than it costs to make that product. Another example of this is the Apple iPhone. That is why Apple’s gross margins are massive, and the employees gain some together with the shareholders. Apologies if I am stating the obvious.

I used to discuss this with my kid in middle school that you get paid more than normal because a) you have a monopoly, b) you have expertise that others want (neuro surgeon), c) you are risk taking in a smart way (real estate, trading in finance), d) you discover something new. Broadly everything that makes money falls into those four buckets.

Some parts of tech, these days, fall into all four buckets. You as an employee have to be careful whether your company is losing some of these edges, in order to maintain your earning power. Nothing is forever.

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