Avoiding the snake oil salesmen, the leech of your financial independence.

My friend’s daughter has stumbled around since her 2010 BA in Art and English from a University of dubious merit. She has graduated around £20,000 in debt. She is struggling to get work so she is talking about doing a Masters. My friend is worried about this because he is funding her existence at the moment and doesn’t foresee supporting her much longer.

The problem may well be that his daughter just can’t to get a job and so she is turning back to the education teat for security. It’s a risky move because she could end up 27 years old, £30,000 in debt and with two degrees that employers aren’t very interested in.

Not only would she be £30k in debt, she has lost 10 years of compounding returns. This is not a good position to be in. Not for her or any of us. People with no financial security always seem to end up relying on the state. That means working people have to pay taxes to support them. That’s money they don’t spend elsewhere. Bailing out someone who makes mistakes means you don’t spend that money in some hard working shop keeper’s store.

I sense no small cynicism on the part of the Universities, for peddling snake oil. What else though are these lecturers going to do a living? The only people who get paid for simply knowing about esoteric things are academics. Everyone else is paid to make something.

Does the responsibility lie on the shoulders of the daughter? She signed the agreements after all, so she needs to have done her due diligence. What about the father? What disastrous advice and poor guidance has led to this situation where they have wandered into the clutches of chancers who have taken them for £30,000.

You have to build yourself a skill set that enables you to produce something that people want. If you learn video game design then there’s an obvious market for what you can do. The more clearly you can define your skills the better.

Science is often a good choice. I have witnessed people with a degree in Computer Science earning piles of cash after only a year. He had three job offers before he even left University. He was on almost £100k a year before he was even 25.

The usual retort is when they tell you ‘I measure my success by fulfilment and my ability to think critically and analytically, read widely and write well.’ Just think about these things for a moment. The assumption we are supposed to accept, without evidence, is that only humanities degrees will enable you to achieve these things to a suitable level and also that these things are of absolutely crucial importance to be exercised at the very highest level.

These are all also things that are quite hard to measure. We’re asked to just accept that an English degree is superior to a science degree because the holder is ‘an analytical thinker who is able to write really well’. Is that not also a scientist? There is no proof that an English degree brings these benefits, merely it is a claim, one that is made over and over again. Life is full of these such claims. Renting is dead money, that’s another one. Say it often enough and no evidence is needed, it’s taken as accepted fact.

The next argument is ‘doing it in your spare time isn’t good enough; you don’t get to ‘immerse’ yourself.’ The problem I have with this defence is that I don’t think someone needs to dedicate years learning things that won’t get them a job. It really is a dangerous indulgence because if you can’t do something with it, you’re leaving yourself with a hell of a lot to pay back down the line when you could have just taken a class or two or read a book. With a good degree you are able to teach yourself humanities in your free time.

I have learnt far more in the last five years reading politics, economics and philosophy in my spare time than I ever did at college and University.

Liberal arts degrees are nice and fuzzy, but the value they offer is dubious and hard to prove. That’s why we often hear cloudy phrases like ‘well rounded’ and ‘depth of learning’, ‘think critically’ and ‘immerse one-self’. Again this is the language of snake oil salesmen.

When there is no benefit that can be clearly defined or proven, we need to resort to cloudy language.

If you can afford to throw away money then do whatever you like with it, but for most people a degree is an investment, the biggest single investment they will ever make and it is significantly damaging to not protect yourself from snake oil salesmen who propose difficult-to-market disciplines.

I hope to hell these kids who waste their money years studying woolly subjects in the humanities have all the creativity and depth of knowledge they say they have, because they’re really gonna need it.

Just as a footnote:

I know of someone with a Humanities degree who earns a lot of money. Me. I got my job after working up the ladder for many years and putting my career first. This all had nothing to do with my degree. I have worked my way into this position DESPITE my degree.

Leveraging the fifth decade – How to get rich and fat simply by working at Starbucks

It’s very easy to enjoy a life of prosperity. It’s very easy to be modestly rich. All one has to do is be patient, avoid the traps that drain your resources (having children too early, getting into debt, costly divorces, mortgages) and start saving early. If you get even the most modest of jobs, if you work reasonably hard and stick with it then over time you will experience success. Life is a long road at 20 and the great ally you have is time.  You tend not to see this until you’re 40 and if you’re not careful, you end up like me, trying to encourage kids to be productive and wise, but never being listened to.

They all seem to want to not work and spend their time going on marches and fighting for lofty social causes. It’s all well and good, but they end up in trouble in their 30s and require bail outs, which causes more problems.

The best way to a better world that I can see, would be for people to be responsible. Work, save and plan. The problem is, kids all think they are all undiscovered superstars. I know this, I know many 20 year olds. I am friends with many young men and women and I have a nephew who is 19. My God, until recently I had a girlfriend who was 19. In the UK the youth seem to have their heads in the clouds. Please note, when I get out of the UK the change is remarkable. They are so much smarter, better educated and responsible. I am talking about the Eastern European countries here. There is a reason I spend as much as my free time there as possible.

You got a bum deal lad, but who's fault is that?

You got a bum deal lad, but who’s fault is that?

What is starting to worry me is that it seems that students are leaving university with ever greater levels of personal debt and some argue, ever decreasing standards of education.  Does a degree in ‘Mass Media’ or ‘HR Studies’ really contribute anything to a person’s intellectual clout? Yes? It makes you rounded and considered and you get the important experience of life on campus? Great. Is this something that is really worth a debt of £40,000?

But it’s not the debt that is the real financial risk. No. It’s important, it’s a big deal, but there is another. It’s the one that never gets spoken about, but there is a much greater financial loss that one suffers when one goes to university.

Before we get to that, and as an aside, I’ve been to University and I know what ‘experiencing student life means’ and that is, for the overwhelming majority of students, five years of getting drunk all the time, smashing things up as you convince yourself you’re just as exciting as Axl Rose and of course, having sex with lots of different people.

I have been a hiring manager and I have conducted interviews and shortlisted candidates in tandem with other hiring managers and my observation is that degrees are just seen as a necessary thing to have, the title is largely ignored. They must have a degree and we don’t really care in what. This is not for jobs as a lawyer, this is for fairly casual first rung graduate positions like recruitment consultant, account manager, marketing assistant, HR officer. I don’t think the day is far off now though, when employers cotton onto the fact that a lot of these degrees are totally pointless and not worth even the extra ink it took to print it onto a CV.

When I hire, I now ignore the degree and choose exclusively on experience and attitude. The degree is irrelevant. I think I am a step ahead of the curve here, but I think it’s coming.

There are two cast-iron bromides I hear in the modern day which are supposed to point the unwary listener towards economic prosperity and these are:

  • You must get a degree.
  • You must buy a house.

I think the best advice in the majority of cases would be the exact opposite of both these things. Avoid a degree and avoid buying a house. Whenever there is a ‘conventional logic’ that all people ‘just know’, it’s a flashing red light to me to look closer. Whoever first said ‘renting is dead money’ simply didn’t know his arse from his helmet.

Nevertheless, it’s still seen as a sensible, if not imperative long term bet to go to university and get a ‘rounded education’. But is it really? Does the debt in itself now make it a non-starter? Those who work in the lower rung fast food industries are often derided, who hasn’t whipped out a witty quip about jobs at McDonalds?


I have long believed now that a simple, let’s say Starbucks barista, would stand just as great a chance, if not more, of achieving economic prosperity than the average graduate.

A real study would take hours and hours of work, including and allowing for pay rises in real time and the subsequent effect on compound interest as well as intricate study on what constitutes the ‘average graduate’. However, we don’t need 100% accuracy here, we just need to do some back of the envelope maths to sense check if it would be worth spending some time looking into properly.

It’s very hard to guess what the accurate salary of a graduate may be after 10 or 15 years of graduating, so I am going to have to take a real life example. I’ve chosen my friend Sarah, who had an average degree and an average job in marketing.

The all-important 20s

The twenties are the most crucial part of your life when it comes to economic success. In your early 30s, you have a period where if you cotton on quickly enough, you can rescue your mistakes to some degree, but by then you have to make some serious sacrifices for the next 20 years. The engine of prosperity is your 20s because it’s here that the seeds you sow become mighty oaks. If you are looking for a comfortable, modest retirement then I expect you need at least a £250,000 pot which would earn you £15,000 a year tax free. I see this as the minimum. Once you have this, every extra penny is gravy money. Sell a few watches/paintings/ties on Ebay a couple of times a year or get a little hobby job at a theatre for some pocket money and you’re living easy.

Now, if you get a job in a law firm or as a doctor, yes, this is different. Your earning potential in your 40s could rescue a small nation from economic decline. An investment banker who gets a couple of hundred thousand dollar bonus each year in his 30s only needs three of these to unlock a ‘comfortable, modest retirement’. These guys have their sights set higher; they drive expensive cars and live in very expensive neighbourhoods for the sacrifices they make.

I am talking about the average person here, the £20k to £30k a year man, the account manager, the advertising exec, the project manager, the mechanic and the window cleaner. The twenties are crucial because it’s in the fifth and fourth decade of compounding that we start to see large growth. Working backwards from 65, your early 20s are the fifth decade.

Let’s start with the student at graduation, 20 years old. The average student debt is £44,000. The repayments are £1710 per year, or £142 per month for 25 years.

In your 30s, when you are on a higher salary, finding that extra £142 per month is easy – but by then it’s too late. You need that cash in your early 20s, the fifth decade.

The average starting salary for graduates is £16,000. That’s £1152 per month after tax. I am going to assume that the graduate gets a graduate level role immediately upon graduation. This is not what happens in reality. Many find it hard to get jobs straight away and often it can take a couple of years before the higher paid job comes along. Some even do gap years and go travelling to ‘find themselves’ (get drunk some more and have sex some more), delaying their repayments by one year. Losing one year in the fifth decade spills a huge dollop of your economic gravy.

If you leave school at 16 and get a job at Starbucks, yes, you only get a salary of £11,000 as opposed to £16,000, that’s £869 per month after tax BUT .. and this is such a big but, I can’t stress it enough:

  • You add 4 years to your earning.
  • You avoid the student debt.
  • You unlock an extra 4 years in the fifth decade.

These are three big wins; each is an order of magnitude greater than the previous.

Jobs at Starbucks, Greggs, Chipotle (I can’t stop eating at Chipotle by the way, if you haven’t tried it yet, give it a look in) or even just in manual labour, are pretty easy to get. Most kids don’t want to do it because they have this sense of entitlement to greatness.

Now it’s gets a bit woolly, I admit, because between their start dates and their 30th birthday, their salaries will rise. There are too many variables to realistically second guess, but what I do know is that from my experience of being a graduate and having a large pool of friends who were all also graduates, salaries are often only around £30,000 at 30. This may be skewed by the fact that many people take gap years and then struggle to find a ‘suitable’ graduate job (one where you wear a suit and sit in a glass and chrome office).

So, graduate salary progression then. Ten years from £16,000 to £30,000. At a steady rate of progression I got the average salary over 10 years to be £23k.

Starbucks salary progression? Now this is harder. I don’t know anyone who works at Starbucks. So I went to my local Starbucks and asked about work there and what kind of progression there is. Apparently you go from Barista, to shift supervisor, to assistant manager to store manager.

Now… When I was a kid, I spent 6 months working at Blockbuster Video (remember them). I do recall that the store manager had been there many years, it was over 10; the assistant manager was one of my best friends and had been there for just 5 years and was offered the chance while I was there to go and manage a store in another town. So this being said, I think it’s more than likely that 10 years working at Starbucks would have you in a store manager’s position. I think you could do it in 5 to be honest.

So the Starbucks salary progression is 14 years from £11,000 to £26,000.

Again, I am assuming it takes this guy 14 years to make store manager. I think that’s far too pessimistic, but then I did possible force a gap year into my graduates career progression so, let’s keep it simple.

I work out the 14 year average at Starbucks to be £25,000 which is £1662 per month after tax. This compares to the graduates £23,000 (£1549 per month after tax).  It looks like a very similar earning curve in your 20s. The conventional logic is that the graduate does better because he starts to pull away in his 30s. However:

  • The graduate has a higher earning potential later in life (I actually doubt this).
  • The Starbucks barista has no student debt and has enjoyed 9 saving years in his fifth decade.

So up to the age of 30, our Barista, by now a store manager, earns more on average, without having to cater for loan repayments. Our grad has earned less, but is about to enjoy 3 years of higher earning over our poor barista.

This is where most people call it an open and shut case.


Leveraging the 5th decade

I going to grant the barista at the age of 16 four years living at home, then he moves out at 20. This is what I see most kids doing these days, having a 19 year old nephew and being privy to the lives of him and all his friends, none of whom are going to university all living at home working shop jobs.

Well the big cost is rent. The average rent is supposed to be £700 per month, but I know you can get digs for much cheaper than this. Remember I am a contractor and regularly rent short term accommodation all over the UK for the various jobs I get across various locations. I took a peek on the Spare Room website and it seems £500 a month is a rough average. I usually barter down for less. I get £600 a month all bills included in Central London. Rent would actually be much lower because Spare Room carries a premium for the short term nature of things. My 5 bedroom house in Lancashire would rent out at £650 a month. Get 5 young professionals in there and your rent is insanely cheap.

So up until 30 you have around a third of your salary in rent. It leaves them both around £1000 per month after tax.

Now what follows is all based off my real life figures and experience as I have recorded monthly in a spread-sheet through a lot of my 20s and 30s. Just over fifteen years of data and I know exactly what my outgoings are. The figures are always similarly proportional.

  • £150 per week on food and entertainment.
  • £25 on travel
  • £30 on miscellaneous (phone bills, clothes).
  • That’s £205 per week times by, roughly, 4.

That’s £820 a month.

So left over, the graduate has £129 a month. This is roughly just enough to make his student loan repayment. The barista would have £242 per month, with no such debt obligation, so the barista gets to save up money, not only all through his fourth decade, but also through almost all of his fifth too.

Leveraging the extra time is like starting a football game a few moments early and getting yourself 2 goals up.

Now, where does our barista invest his money? Well, now we have to be even more speculative, but, we can still keep it reasonably accurate. His options would include the stock market, peer lending, a simple bank account, pension funds or even a side business. He could go for a blend of all of them. I am going to say this, in this example I will suppose he gets less than what I get and ends up with only 5% on the markets. This is very pessimistic. I’m getting 9% and a lot of people are getting 6% on Funding Circle.

So what is the sum total of saving £242 per month over 14 years at 5%?

At 30, the barista would be a store manager of a large company, with great career prospects and £60,000 in the bank! His next promotion would be bumping him closer to district and regional manager levels, promotions which start to command reasonable salaries. The average age of a Starbucks regional manager is actually 42, which seems a big gap from store manager. I may need to do more research into the bits in between.

Some anecdotal evidence from a Starbucks employee:

The typical barista is age 18 – 22. Store managers are not often much older. Of course Starbucks has many older employees in the stores, but the typical age group for baristas is that 18- 22 age group.

Look, we can definitely expect that our barista has made store manager or more by the time he is 30. At 30 our graduate is, well, rather like a lot of the graduates I know at 30, still well in debt and with no savings whatsoever.

Now I can hear the graduates cry, ‘ah, but we’re graduates, we will earn more in the future’. The problem is though, it’s not the couple of £10k a year more that you can make in your 30s that is important. It’s that fifth decade you miss out on and can’t get back.

The barista could, at 30, just stop working and go and spend the rest of his time teaching snorkelling in Mexico or running a beach bar for tips because if the barista didn’t pay any more into his investments then his £60,000 pot at 60 would be: £330,000

Sure – the graduate could earn more if he spends his 40s and 50s grafting, but if you’re a grad, you have to seriously pull some bucks in to make back this £330,000 difference that you lost in your fifth decade. Not many grads can pull in £330,000 extra after taxation. You’d have to BANK an extra £10k a year than the barista every year from 30 in order to be able to catch up.

You ‘aint going to. I don’t know many 31 year old grads who are banking £10k a year. I am. But I am earning a lot of money. My job by the way, project manager, does not require a degree, just years of experience. You could get in at 20 years old as a project support officer without a degree. I’ve hired PSOs without degrees. It’s a first rung admin role.

If the barista continued to work and pay in at the same rate he has been doing, then his pot at 60 would be a staggering £605,000. The graduate can’t get close.

This is a significant argument. Losing early investment years to study and paying off debt prevents you benefiting from the early stages of compounding interest, the early stages, in your 20s are the vital stages.  

Look, a lot of this is speculative, I get that. Some degrees are real degrees and they spawn high flying careers, such as law or careers in STEM. Some people wouldn’t be happy working in Starbucks, some people might make bad investment decisions and wish they could earn more to earn some back. Someone may slip on some soap in the shower and crack ones head open and turn into a unicorn. We do have here some very real empirical evidence here and a reasoned argument that going to University and getting ‘A. Degree’ is not the default correct decision and passport to prosperity that we are constantly told. Far from it. If there is anything that is the key to prosperity, it’s not a degree at all costs, it’s the fifth decade.

Dere's gold in dem der... err... roasts

Dere’s gold in dem der… err… roasts

If I had a child who wanted to get £40k in debt to study ‘Mass Media’ my firm advice would be to get into the job market, pick up an apron and start pouring some damned coffee.

I studied ‘Languages and Business’. The business element, when I look back, was laughable. Lecturers rattling out truisms and supply theories like the ‘just in time method’ that could be grasped in three minutes but took three weeks to pound out an essay. Yeah I get it, storage space is expensive so don’t have your stock sitting around too long.

I was very lucky; I came out at 21 with no debt. I can pass off my university years as ‘worth it for the experience’. It was great, I admit. I got drunk most nights and slept with a lot of hot young chicks, but had I come out with £44k of debt, then I may have felt very differently about it. Banging 50 broads is not worth £44k to me. I’d still be paying it off now. I am lucky that I found out about investing at 25. I got my fourth decade, but man, I wish I had my fifth.

Everybody talks about the student debt as being the problem, but it’s not. The £44k worth of debt is a problem sure, but it’s dwarfed by the £60k of investment you didn’t get the opportunity to create in your late teens and 20s and the further £300k this investment could likely become if you leave it long enough.

(this essay assumes reasonably robust financial markets where money can be invested. I am aware that many people argue that currently there is nowhere you can get a decent return, the stock markets are overvalued, we’re headed for a significant doomsday financial crash. These are assertions to be discussed in another post. If you do firmly believe this, then my advice would be, don’t get a degree, start learning a useful skill like plumbing or auto mechanics and instead of putting £100 a month into stocks, just buy gold and put it in a safe. You’ll be a post apocalyptic 30 year old with a handy post apocalyptic skill and a box full of gold rather than just being a feckless nerd with a humanities degree).