The concept of Value vs. Price is one that I am inexplicably fascinated by. Maybe it’s the fact that most people ignore it entirely, or maybe it’s because following its principles virtually guarantees success in any area.

Most people do not understand the difference between value and price or, at the very least, greatly underestimate it.

So, what is the difference between value and price? Value is the benefit derived from an action, and price is the benefit lost by performing an action. What makes this such a profound concept is that every action has a value and a cost associated with it, and it is usually fairly easy to measure. Our unconscious minds are constantly evaluating the price and value of every possible choice, which ends up governing many of our actions.

Example #1 - Wealth

Take the purchase of a computer as an example. If you buy a computer for $1000, the price is simply $1000. But what’s the value? Let’s assume that you’re a writer, and you are replacing an old computer which has suddenly broken. You have a book due the next day, and will be penalized by $10,000 if you do not turn it in on that day (yes, I know this isn’t a realistic penalty). In this case, the value is about $10,000.

For me to buy that computer, however, the value is far less. I have several computers. I don’t use the computer that much anymore. The value isn’t $0, because I could potentially sell the computer (probably for less than $1000), with an additional price of my time. So the value may be $700 to me.

In this example, the decision of whether or not to buy a computer is obvious for both me and the writer. The writer should buy it, and I should not. The cost of an item is the net effect it has on us, after considering the price and value. For the writer the cost of the computer is -$9000, meaning that he is essentially gaining $9000 by completing the transaction. To me the cost is $300, meaning I am losing $300 by buying the computer.

An interesting phenomenon to note is that sales often don’t REALLY affect the cost of an item. For example, if there was a $200 off coupon for that computer, it wouldn’t change my decision to buy the computer or not. It obviously wouldn’t affect the writer either. The only possible effect it would have is to make us more likely to purchase that product AT THAT STORE, rather than at all. I see many people (I used to be very guilty of this) buying things with low price, but significant cost. Doing this is a sure path to financial scarcity.

Of course, price isn’t simply the number on the pricetag. What if the computer was for sale at $800 100 miles away, and $1000 2 miles away? A round trip drive to get the cheaper computer would take me 4 hours rather than a couple minutes. If four hours of my time (plus wear and tear on the car and gas) is worth less than the $200 difference in price, the writer should drive and get that cheaper computer.

This seems like a simple concept, but I can’t tell you how many times I’ve seen people (myself included) spend hours searching for a lower price on something which only ends up saving $20 or so. Often times dealhunting isn’t worth the cost.

Example #2 - Relationships

More interesting is this concept applied to non financial matters, because most people don’t even begin to consider it. Let’s take, for example, the choice of going out to clubsor staying in.

If I go out to a club, the intention is to meet women. I don’t drink, I don’t dance, and I don’t particularly relish the club atmosphere. Sometimes I’ll go downtown to hang out with friends, but that’s a different decision.

In any given night I might talk to 9 different women. Three groups of three. For me to be significantly interested in a girl, it takes time for me to get to know her (mainly because I’m picky and have a list of things which will disqualify her). I would estimate that I am seriously interested in one out of three hundred girls that I meet downtown.

If I’m interested in a girl and have a good opportunity to get to know her, I believe that she will be attracted to me almost 100% of the time. However, I’d say that getting a good opportunity to get to know a girl only happens around 40% of the time. The club atmosphere makes it difficult to get a good opportunity, but it is possible to increase that percentage to 100% with skill. In LA it was probably more like 70-80% for me when I was well practiced.

So let’s boil these numbers down. If I’m only able to attract 40% of the 300 girls necessary to find one I’m interested in, that’s 750 girls I must meet before finding one who I will be compatible with and will develop a relationship of sorts with. If I am meeting 9 girls per night, that means that it will take 84 nights out to “meet someone”.

On an average night, including driving and getting ready, I probably spend 5 hours to meet those 9 girls. That means that the price of meeting a girl is 420 hours of my time. That’s significant.

Of course, I do have fun when I go out and meet all those people. Some might become friends. I’m also going out with my friends and we joke around and have a good time. However, I would probably be doing something fun if I wasn’t going out as well, so those two effects can cancel each other.

What’s the value of beginning a relationship with a girl? It’s tough to say. If I had no other means of meeting a girl, I would probably go out religiously. The cost of NEVER having a girl is monumental, so I would be willing to spend the 420 hours of my time to meet that girl.

The reality, however, is that I do meet girls in other situations. Whole foods, friends of friends, and even through my blog. This is why I rarely go out anymore - the price I pay is simply not worth the value I receive.

Example #3 - Health

One last example is eating healthy. Eating raw food is expensive. I went to the grocery store last night and spent $150 buying 4-5 days worth of food. That’s probably about $7000 more per year than regular food would cost me. It’s also a pain. I can’t eat anything more than a plain salad at most restaurants. Some of the foods aren’t as tasty as conventional foods. That represents a significant price to pay for eating raw food.

What is the value of eating raw? For one, longevity. I believe that I will not only live for 10-20 years longer than the average person, but will be active and healthy for at least 10-20 additional years. I also need less sleep (to be determined by my break from Polyphasic sleep), which gives me more usable time. Let’s say that I go from 8 hours to 5.5 hours, which I feel is conservative. That’s 912.5 hours per year, or around 50 extra days. I also feel a lot better on a daily basis and look better thanks to lower bodyfat percentages and better skin.

For the sake of convenience (and because we don’t have years to make every decision), let’s cancel a few things out. Let’s say that the value of feeling and looking better is roughly equal to the cost of not being able to eat out, and not being able to eat tasty things like egg rolls.

The average lifespan is 75 in America, so let’s assume I will live to 90. I believe that’s very conservative. Since I am about 25 now, that means that I will be alive for another 65 years. At 50 extra days per year thanks to decreased sleep, that gives me an extra 3250 days of life, or almost 9 years.

The additional $7000 price of eating raw multiplied by my remaining 65 calendar years adds up to $455,000. That’s not insignificant.

So, when it all boils down to it, I am paying $455,000 for an extra 24 years of life, or $19,000 per year. To me that’s obviously worth it. To others it’s not. How about you?

Living Your Life

Living your life by the concept of Value vs. Price is essential. By constantly increasing the value of your habits, relationships, and posessions, you are constantly moving forward, and increasing your pool from which you are able to pay the price of new value. For example, with all my extra time, I can SPEND more time to gain more value.

Being a lawyer, to me anyway, would be the opposite. The value I would receive would be high (a high salary, power, prestige, etc.), but the price would be far too dear. Giving up my waking life for the majority of my productive years is not worth $100k, $200k, or even $1mil per year.

In one of the comments someone asked what I plan on doing now that I’m done with gambling. It’s a good question, and one that I don’t totally have the answer for.

I feel like I’m a little bit behind, since it hit me so fast. Normally I would prefer to have a solid new plan in place before stopping one business, but that’s not how it always works.

My approach has been to get involved in a lot of different ventures, and to let time sort out which are worth doing and which aren’t. Actually, this post is more for me than you guys, just so I can take stock of where I’m at.

• The Skinny Snob Diet Book : I wrote this book because of my excitement with eating healthy. It’s been selling for four months now, and is doing ok. I don’t make a lot of money with it, but it doesn’t take a lot of my time either. I think if I had a better sales page it could make a lot of money because the info is really good.
• Better Than Your Boyfriend : This site is definitely my favorite project that I’m working on. That’s very fortunate because the money I make isn’t close to justifying the time I spend. As I continue to experiment with different ways of making money with it (ads, the casino link, donations), I’m confident I can find a way of generating income without compromising the quality of the site.
• The TV Show : I’m working on a TV show with a friend in Boston (that’s where I’m originally from). Right now we are still developing the show, but my expectation and hope is that it will become my primary source of income at some point. Unfortunately I can’t really say much more about the show yet.
• Mentoring / Life Coaching : I recently took on someone to mentor in business. This is another project that I really enjoy being involved in. I’ve always enjoyed working with other people and helping them, so it’s a natural fit. I will probably soon consider taking on more clients with this.
• A Possible Web Business: I have two killer ideas for some online businesses. Unfortunately the technology is over my head, but I just met some very interesting and capable people here in Austin with experience in this sort of thing. I’m hoping they can give me some advice or possibly work with me on this one. If launched, I think it would be a huge moneymaker.

Well, it’s a start anyway. As you can see, my current position isn’t all that great, but there is a lot of room for expansion. My hope is that this site will grow like Steve Pavlina’s to the point of covering all my necessities, so that I can focus all my remaining energy and time on the TV show, mentoring, and the web businesses. I have good momentum, so I think it is going in that direction. My newest plan is to start targeting specific sites whose users I would probably like having here. Lifehacker.com is the next one, so I’m going to start writing some personal development articles with them in mind.

I think it will be really interesting to look back at this post in a year and be like, “Man… with all those plans, how did I ever become a male stripper?”

I had never gambled before and knew nothing about it, but I’d gotten too many e-mails like it. I was at my parents house for winter break during my first year at UT, and I was bored.

“Free $50 just for downloading our casino!”

Hmm. That doesn’t seem very risky. I might as well download to see what it’s all about.

I downloaded, and sure enough they added $50 to my account, which I quickly lost. Even though I lost it, there was a moment where I was up to $75. What if I had cashed out? Would they have actually given it to me? (actually the answer is no… later in my career I found out that that was a particularly sketchy casino)

Then I took a chance. I found another casino that promised to give me $200 if I deposited $200 at their casino. It was a lot of money - but that just made the free $200 more appealing. I was scared when I deposited, and my heart jumped when I saw my balance double to $400 instantly.

Blackjack.

I played a few hands and was actually winning. I managed to get up to $500 and I cashed out. Was I going to get paid? I was skeptical, and felt like an idiot for trusting the site. There was no way they were about to give me $300 for fifteen minutes of playing a game at their site.

A few days later a strange envelope came for me in the mail. It was a check for the $500 I had won. Wow.

When I returned to school I found myself in the cafeteria eating with some friends. Also in attendance was a guy named Adam, who was a friend of a friend. I mentioned something about my gambling experience, and his ears perked up. He was interested in gambling too.

At that point I was playing cautiously, maybe winning or losing $20 a day. I didn’t have a ton of money, and I was just testing the ropes - I felt like there just HAD to be some way to make money doing it.

After lunch I invited Adam to join me and gamble on my computer. He brought along a computer blackjack game and the manual that came with it. We played a few hands and then the “blackjack strategies” section of the manual caught our attention.

The Double Martingale System.

It sounded exotic. We read the description of it and it seemed pretty legitimate :

Bet $1. If you win, you’ve just won a dollar and you’re done with this cycle. Start over.

If you lose, then you bet $3. If you win that you have won 3, lost 1, for a grand total of winning $2. That’s $1 per hand played.

If you lose again you bet $7. If you win that you’ve won 7, lost 4, for a grand total of winning $3. Still $1 per hand played.

In fact, as the progression escalated to 15, 31, 63, 127, 255 and beyond, you would always end up winning $1 per hand played. And you had to win eventually, right? It was genius.

We decided that we ought to go into business together and try this strategy out. Being the prudent business men we were, we played about five minutes on his simulation and declared the strategy a clear winner.

I had some money in one of my casino accounts, so we used that. At first it worked - we made maybe $30 or so. But then all of a sudden the progression had doubled and we had to bet over $500. We didn’t have that much money in our account. But that wasn’t the strategy’s fault - we just didn’t have enough money.

At this point it was about 7am. In our excitement we had stayed up all night playing and planning what to do with our massive winnings. That’s when we made an important decision - we would empty my bank account which contained the $1000 that constituted my life savings, and use that. We’d split the winnings or losses down the middle.

Excited, we went downstairs to the bank and wired the money. A few minutes later, it was all there. We placed our $500 bet and held our breath. 16 vs. 10. Not good. We hit, got a 2, and the dealer busted. We won! It felt great -we knew the strategy was good and that we had made the right decision.

The big bet scared us, though. I don’t remember exactly how we modified our strategy, but we somehow changed it so that after some point we would cut our losses and start the progression over.

But then something happened… instead of steady winning, we started losing. Soon we were down to only $800, but our resolve remained. We WOULD make this work. I was exhausted from staying up so late so I went to sleep while Adam continued to play.

When I woke up, it was like a kid on Christmas. l couldn’t wait to see the small fortune he had surely amassed. I logged in and checked the balance :

$310

What? I expected an extra zero on the end - at least. I called Adam and woke him up.

“We need to get to playing. We need to make our money back.”

Equally foolishly, he agreed. By the time he got to my room we were down to $150. Soon that $150 had turned to $77. Our hopes had been dashed. We failed, and all of my money was gone.

But then something strange happened. It was as if fate didn’t wanted to avoid the imminent promises to never gamble again, and we started winning.

And winning. And winning. Soon we had recovered all of our money and then some! Our balance hit $2000. Every time we’d lose money we’d reevaluate the bizarre flowchart that described our strategy and add another branch to it.

Soon our friends were recruited, and a 24 hour playing schedule was implemented. We had a high score sheet where we’d write down our hourly profit and try to outdo each other.

We kept our lips shut about our winnings, but everyone in our dorm knew that we were gambling. More importantly, they knew that we had serious gambling problems. Random aquaintances would come up and try to explain the dangers of gambling. I’d keep a straight face, but inside I was dancing. I was going to be rich, and I wasn’t going to work for it.

Soon we were up to $5000 or so and felt invincible. But the rumors around the dorm were increasing - everyone thought we were pouring all of our money down the drain like idiots. We had to change their minds.

We declared that we were big winners and offered a chance to invest with us. Give us your money on friday and on monday we would return it, reflecting our win. So cocky we were, that we guaranteed against losses. No one wanted to take it. Finally we found one person and took his $100.

On monday we proudly returned $200. Everyone was amazed, and we were happy because we’d just topped $10,000. The money went to our heads and we started spending it. We spent some in real life and even more future profits in our heads. We’d buy boats, an island, planes, or whatever else we wanted. I never had a cell phone before, but I went and bought the most expensive one available at the time that only high powered executives could afford.

Soon we split into two teams and kept playing. We’d go to the business building at UT and play side by side, smirking at the business students who were cranking out their term papers. Within a few more days we reached $15,000.

I thought we were unstoppable. But Hayden, eternally more cautious than I, managed to unravel our strategy and do the math. We were getting lucky… the odds weren’t in our favor - they were just temporarily skewed and would catch up with us. As if on cue, Adam called to report a $5000 loss.

My whole world was crashing around me. The past couple weeks had me completely convinced I was on the fast track to wealth, and I didn’t want to let go of that dream. Reluctantly we cashed out and split the profits.

Adam spent his $5000 on cello camp that year, leaving him broke again the next.

My $5000 sat in the bank for a while until I decided to try again. More thorough this time I worked and worked to try to come up with a winning strategy. By some fate, one hit me. It couldn’t be that easy, could it?

Sure enough, the next few months proved that it could be that easy. I wasn’t making much, but $100 per day for just an hour or two of work became my routine. Some of the casinos would pay me like that first one did, others would stiff me. Some seemed to have the games rigged and I couldn’t win no matter what. As time passed I figured out which to trust and which to avoid.

I took my first job the next year. I wanted a car, but didn’t want to spend all my money on one, so I decided to get a job and pay myself back before quitting. Using most of the money I didn’t have in casinos I bought a 1985 Mercedes 380SE. It was my first Mercedes, and I was loved it.

My job was delivering pizzas, and I only needed to work for two months to recover the money spent on the car. Every day delivering in my Mercedes I would make $100, and then I would go home and make about that much gambling in just a few minutes. As pizza delivering became more boring, the gambling thing looked more attractive.

In a fit of irony my car actually broke on the way home when I was one day away from earning enough to pay myself back for it. The timing chain was broken and the car was totalled.

So much for a real job. I needed to focus on gambling and buy another Mercedes.

Shortly after, I decided to drop out of school. Class was getting in the way of gambling and thanks to Papa Johns Pizza, I knew I would never get a real job again - the money isn’t good enough to justify giving up my precious time. With gambling I could play whenever I wanted, take time off when I wanted, and play from anywhere in the world.

I gleefully marched into the UT counselor’s office.

“What can I help you with today?”
“I’d like to drop out”
“Oh… ok. Well.. why would you want to do that?”
“Because I don’t like doing this, so I’m not going to”
“I’ll just mark it as a semester off so that you can come back”
“No. I’m done.”

And I was done. It felt surprisingly good.

Calling my mother didn’t feel quite as good. In her life priority list, school is a clear number one. And possibly numbers two and three too. The conversation ended when she hung up on me :

“… Fine Tynan. Go play some poker. *click* ”

It seemed like a good enough idea to me. She was convinced for a long time that I wasn’t making any money. I’ll never forget the quote : “Tynan, if you took a second and actually added up how much you won and lost, you’d find out that you were actually losing.”

She was wrong, though. My monthly income doubled within a few months of dropping out. After a few months she began speaking with me again, and eventually gave me some of the money they had saved up for college to use in my gambling business. After that my income hit six figures and stayed there.

The next six years, peppered with a few stressful disasters, was pretty smooth sailing. I never worked more than 20 hours a week, and often less than 10. I hired employees, got an office, and had custom accounting software written. I even paid my taxes.

Finally I burnt out, though. It occured to me that although it was easy enough to make a huge salary every year, I was never going to become a multi millionaire from gambling. It has a limit. Also, after playing millions of dollars of hands every year, I just got sick of seeing casinos.

Yesterday after a business partner reneged on a deal that we made, I decided it’s finally time to quit and move on to bigger and better things. I’ll still deal with my existing cashouts, but within a month or two I’ll probably be done with gambling for life. It’s a bittersweet goodbye, since gambling was so incredibly profitable and fun for me.

It seems like a dumb idea to forfeit so much easy money, but the fact is that I don’t enjoy it anymore. I really believe that it’s important to enjoy what one does, so I’m going to work on becoming a rapper.

If you want to try gambling, there’s one casino that is head and shoulders above the rest : Casino-on-Net. During my six years, I have never had a bad experience with them or heard of them ripping someone off. This is very rare : almost every other casino has ripped someone off at some point. I’ve also seen Casino-on-Net pay out over $100k in one time, so if you win big you can rest assured you will get paid. Many casinos will never pay you if you win a lot. Best of all, they still give you $200 if you deposit $200 of your own money. With a head start like that, the odds are stacked in your favor (just don’t go playing keno or something like that). They also have some of the best Blackjack rules around. To give it a try, visit the casino now. You can also sign up for a demo account there if you want to try the double Martingale system and see how gut wrenching it is without risking money.

Two gambling related books that I love are : Bringing Down the House: The Inside Story of Six M.I.T. Students Who Took Vegas for Millions and
Busting Vegas : The MIT Whiz Kid Who Brought the Casinos to Their Knees.

Good luck!

EDIT: Someone has told me that Casino On Net is no longer 100% reputable. The incident he mentioned had to do with marketing and not player relations, but it’s now been more than two years since posting this and I no longer know which casino is the best.

I’ve long considered myself a fantastic buyer. Notice I don’t say shopper - that alludes to a hobby or form of entertainment. To me, buying is serious business.

Even before I had any serious degree of financial success, many people assumed I was rich because of my material posessions. I guess most people could pull that off by maxing credit cards, but I was actually socking money away for later.

How do I do it? Read on…
(more…)

So… what’s the best way to get famous? Clearly, piggypacking of someone else’s career. I mean, look at how Benzino dissed Eminem to get in the spotlight a couple years ago.

Kevin Federline has released an abortion of a song called “PopoZao”, which features idiotic choruses and a full twenty seconds of him actually rapping. If he wasn’t piggy backing off of Britney Spears, I’m pretty sure not a single person would listen to his song.

So, in an effort for me to become a famous rapper, I’m going to piggy back off of HIS “fame”. It’s a solid plan. I’ve written a song making fun of what a retard he is, particularly referencing a video that was released of him jamming out to his own song.

If you haven’t seen this cinematic triumph, check out below :

Ok, when you’re done wiping the feces off your screen, check out my lyrical assault : Fed Up With Kevin Federline

Holla!

Terry and I went to Krunkaoke as usual, but things didn’t quite go quite right.

I decided to change one of the verses to one of my own design. The plan is to slowly keep doing that until I’m just doing original songs and basically get to practice having a concert.

Also exciting was Terry’s new rap name : T-Nugget. This allows us to replace “nigga” with “nugget” which sounds close enough that songs sound good.

Terry lives pretty close to Krunkaoke, but he always drives up to my house first. Then we practice in the car until we get there.

I guess we didn’t practice enough, though. In the middle of my verse I forgot a line and messed it up. I cut out of most of the embarrassing awkward part, but you can see the beginning of it in this video. Then on my last verse I was so frazzled from the error that I made several more.

It was my worst week so far, so next week I return with a vengeance. Here’s the video :

Nap time now… when I wake up - more updates!

My friend Jonah decided that he was going to break off his long standing relationship with the more common bills and use two dollar bills as the primary fodder in his wallet. I thought it was ingenious. Here’s why:

• They’re uncommon. Everyone likes getting them.
• They’re remarkably convenient for most purchases. Even having up to $50 in your pocket in Jeffies is pretty easy.
• If you don’t mind occasionally being generous (or a bastard), you never need change.

I never like copying people’s quirks, but this one is too good. I told him that I wanted to copy it, but whenever anyone remarked how cool it was, I would give him credit. He agreed.

I went to the bank yesterday and as I was leaving, I remembered that I wanted to get some deuces (oh, did I mention how cool all the nicknames are for them?). They had just gotten a shipment in, so I got my hands on a freshly minted stack of 100 sequentially numbered two dollar bills. Thanks for the idea, Jonah!

In less jubilant news, I lost another fish today. When he left for Vegas, Manny gave me his awesome fish tank, stocked with only five fish. They did very well for a month or two, but when I went to Massachusetts and had the thermostat to heat, there was a heat wave. That resulted in one cute little guppie dying, and the danio getting sick.

Last week a golden gourami jumped out of the tank during one of my naps. I was really sad about him because I had trained him to kiss my finger, and if I walked around the tank, he would follow me.

The sick fish kept getting worse and worse. I looked it up online, and he had dropsy. The web site I went to said that there’s no cure, although the fish sometimes get better on their own. Unfortunately, mine kept getting worse. Yesterday I went to the pet store and mentioned it and he told me there was medicine for it! The poor little fish was on his last legs/fins, but I figured I’d try to save him anyway. I bought an additive that gets mixed with the water and treats fungus, medicated food, and also fizzy tablets that treat the water for bacteria. I did a water change and over the next few hours added all the medicines.

The next morning he was dead.

While at the pet store, I got another cool fish called a rope fish. It’s a 10″ long fish that looks like Trogdor, which is what I named him. One cool thing about him is that he can survive without water for up to eight hours, and even after he’s “dead” he may come back to life if you put him back in the water. I’m glad to hear it, since they’re also notorious for jumping out of the tank.

My traffic has died down since the major exposure from the penguin story. Fortunately, many people liked the blog and stuck around - About 20% of my visitors are repeat visitors now. Thanks to everyone who has linked to me and to everyone who checks out my blog every day.

This post is dedicated to my friends Hayden and Alen. They know why.

In our culture going to school is given a lot of respect. Dropouts face a sharp negative stigma. They’re quitters. They’re losers. They’ll go nowhere in life. But is this really true? How big of a factor is college on success?

Here’s a list of some of the dropouts that I personally admire :

Bill Gates
Steve Jobs
Paul Allen
Richard Branson
Larry Ellison (Oracle)
Dave Thomas
Ted Turner
Henry Ford
Almost 1 in 5 of the US Presidents including Lincoln, Washington, Jackson, and Cleveland
Albert Einstein
Walt Disney
John D. Rockafeller
Mark Twain
Charles Dickens
Thomas Edison
Benjamin Franklin
Ray Kroc (billionaire founder of McDonalds)
Claude Monet

That’s right. Every one of those people dropped out of school before graduating college. They account for 4 out of 5 of the richest people in the US.

What does college really get you anyway? For one, it’s a lot of fun. I basically considered it to be like summer camp. I got to live close to a lot of cool people with few obligations (other than class, which interfered occasionally). It’s also a sheep herding school. It teaches people to be obedient and subservient - deadlines are the biggest priority.

There are two distinctions I want to make. First is that there are some professions where college is not only helpful, but is necessary. You would be hard pressed to be a doctor, a lawyer, or an investment banker without schooling. So if your passion is for one of those professions, I’m not suggesting you drop out.

The other distinction I need to make is that “College” is not equal to “Learning”. It can be, but isn’t by necessity. You’d be hard pressed to find a successful individual who isn’t obsessed with learning. Knowledge IS power, but school isn’t the best vehicle for that knowledge.

Well, going to school can’t hurt, right?

WRONG.

First, I’d like to suggest that most entrepreneurs would be harmed by going to school. It conforms views and does not at all reward individuality or thinking outside of the box - two traits I consider essential.

People generally go to school from ages 18-22, or even longer. I consider these to be PRIME years. When you’re young you have the luxury of taking risks. You have few responsibilities, so if you go bust you can start over easily enough. Once you grow older and have a spouse and children, you may not have that luxury. So college steals some of our most valuable years.

College-mongers just LOVE the statistics, don’t they? So do I.

According to the college-mongers, an average person with a Bachelor’s degree will earn 900k more in a lifetime than someone who never attended high school. First of all, I believe this is faulty logic because it’s considering all the people who couldn’t possibly get into school (most likely because they don’t have a high level of capability). This article is intended for those who have the choice. But… let’s go with it anyway, since it’s the closest statistic I can find.

I did the math on what a college education REALLY costs.

Here were my assumptions :

• According to the College Board, tution prices for 2005-2006 are:

  Private School - $21,235 (rising at a rate of 5.9% annually)
  Public School - $5,491 (rising at a rate of 7.1% annually)

• According to historic prices, the average return on stock investments were 11% annually

I was curious to see what would happen if the enterprising 18 year old decided to invest his money rather than spend it on college. Would he be able to close the 900k lifetime gap?

I made an excel spreadsheet and plotted it out to retirement age of 64.

The individual considering private school made up the 900k difference by the age of 41. If he waited until he was 64, his tuition would have turned into 10.7mil. For you college-monger stat people, that’s almost 12 times the earnings gap. Notably, he’d be able to live pretty nicely off his nearly $1.2mil in interest he’d earn yearly.

What about the public school hopeful? Surely he couldn’t make up almost a million dollars in less wages, could he? Of course.

He could reach 900k and retire ten years early at 54 and enjoy the average 108k in yearly interest for the rest of his life. If he waited until 64, his tuition money would have turned into over 2.8million, leaving him with 300k in yearly interest to scrape by on.

Then I took it a step further - Would a college goer EVER have more money saved than someone who didn’t go?

• The average college graduate earns $45,400 their first year out of college.
• The average high school graduate earns only $25,900 their first year out of high school.

To be more than fair I assumed two things. First, that the high school graduate spends 100% of his income on living expenses. Second, that the college graduate spends exactly as much as the high school graduate. In reality it would be a lot more, but I wanted to simulate them each having an equal standard of living.

I increased both salaries by 3% per year to account for inflation.

So what happened? The high school graduate who saved private school level money ALWAYS had more money than the college graduate, by at least $220k. The college graduate saved less than 1.3mil by retirement, only 12% of the high school grad.

The college graduate fared better against the high school graduate who only saved public school level tuition. By age 32, college graduate had reached the amount saved by the high school graduate. However, by age 50, the high school graduate was back in the lead and remained there. At retirement age he had more than twice what the college graduate had.

What does this all mean? It means that you need to THINK FOR YOURSELF (or follow my flow chart and let me do it for you), rather than assuming college is the right move. Personally, dropping out of college was the best move I ever made. My friend Phil has a successful business and a very happy life. My friend Elisia runs KittyRadio among other businesses, and is very happy and successful.

Unless going to college is going to teach you specific skills that you will need to follow out your passion in life, it is very likely that not going is a better option.

So, I leave you with a flowchart to decide whether or not college is right for you.

The spreadsheet I created for this article