Ok, readers, here as promised, tales of regrets and bad decisions coming your way, as well as a breakdown of exactly how much those bad decisions have and will cost me. It's long and has math, so buckle up, buckaroos. 

I spent all my graduation money and didn’t have a job in college.

Remember how I got a full ride to college? I had so much extra money direct deposited into my checking account each semester that I didn’t feel the need to have a job in college. My parents supported this, because they felt like focusing on classes and extracurriculars was the best way to approach college and a worthy financial reward for my scholarship achievement. While I was in college, I was glad to have the time to pursue all the things I wanted to both academically and on campus. I did EVERYTHING on campus – sorority, orientation leader, student government, honor societies, campus tours…you name it, and I probably did it. Along with a full course load, there really wasn’t a ton of extra time to have a job. At the time, I didn’t at all regret choosing not to work during the semesters, because I planned to work some during the summers and I liked having the freedom not to add the burden of a job schedule to my life.

The first summer after college, I did return to J.Crew to work, and I worked some over the Christmas holiday.  But subsequent summers, none of which I regret, were spent accomplishing my three main goals for my college career: Studying abroad in Europe, spending the summer on campus as an orientation leader, and interning in the Senate. The last two actually did pay a little bit, but not even enough to keep me truly afloat for the summer.

So let’s review, boys and girls: I didn’t have a job in college in any meaningful capacity. At all. Four years (plus a year of grad school) in which I was basically 100% a consumer and not a saver. This. was. stupid. On top of this, I spent ALL the graduation money I received from my high school graduation announcements (around $1500). On what? Oh some sweet Vera Bradley bags and other assorted, useless nonsense. Actually, I take that back. I still have and use two of those Vera Bradley bags, and one serves as my gym bag to this day. But all in all, spending that money was just not smart at all. I also spent around the same amount of money that my grandmother had put away for my college. Again, on what? LITERALLY NO IDEA.

How much money could I have saved if I had worked 10-20 hours per week during college?

Now let’s begin the painful process of calculating how much money I could have saved for my future had I just worked a bare minimum job during each semester of college. This snowballs in a later regret story, so get ready.

For illustrative purposes, let’s pretend I worked either on campus in a low-key job at which I could multitask, like at the library, or that I babysat, or some combination of the two. We’ll assume I made $9/hour for two years and $10/hour for two years and that I worked 12-15 hours on average per week for 15 weeks per semester. Let’s also pretend that I saved/invested all of this money because I was living on my scholarship excess. I’ll remove a small portion for state/SS/Medicare taxes at the end. How much would I have after four years of college (not calculating rate of return on investments over the 4 years or discounting for the time value of money)?

Freshman Year

Fall:                 12 hours/week at $9/hour = $108/week

                        15 weeks at $108/week = $1,620

Spring:            15 hours/week at $9/hour = $135/week

                        15 weeks at $135/week = $2,025

Total:              $3,645

Sophomore Year

Fall:                 12 hours/week at $9/hour = $108/week                                                                                                 

                        15 weeks at $108/week = $1,620

Spring:            15 hours/week at $9/hour = $135/week                                                                                                 

                        15 weeks at $135/week = $2,025

Total:              $3,645

Junior Year

Fall:                 12 hours/week at $10/hour = $120/week

                        15 weeks at $120/week = $1,800

Spring:            15 hours/week at $10/hour = $150/week

                        15 weeks at $150/week = $2,250

Total:              $4,050

Senior Year

Fall:                 12 hours/week at $10/hour = $120/week

                        15 weeks at $120/week = $1,800

Spring:            15 hours/week at $10/hour = $150/week

                        15 weeks at $150/week = $2,250

Total:              $4,050

Four-Year                             Less Taxes

Total:             $15,390         (~10%):         $1,500

Grand Total: $13,890

So if I had just worked any combination totaling above hours throughout the course of four years and saved all of it, I would have had almost FOURTEEN THOUSAND DOLLARS just sitting there waiting for me at the end of college. If we added my grad school year to that, it would be closer to $17,000.  So let’s round to $15,000 for the whole ordeal for now.

Total cost of my mistakes circa August 2011: $15,000

Which brings me to my second and third terrible decisions, both of which relate to law school.

Pause for a financial non-regret, albeit one that was expensive as hell: I received a full scholarship to law-school from another in-state university, which has a very good law school. I also received an extremely generous scholarship from another great law school in a neighboring state. I received no scholarship money to the law school I attended, and paid full, out-of-state tuition for 3 years. I do not for one second regret my decision to attend the law school I did. Moving halfway across the country to attend one of the top law schools in the U.S. was one of the best decisions I’ve ever made, and if I’d stayed in my home state for law school, I can’t begin to fathom where I would be in life today. What I do regret is paying full out-of-state tuition for three damn years. 

Now back to the regrets. This one is sort of a double-regret.

I also didn’t work in law school.

If I’d babysat or nannied in law school, I would have made $15-20/hour, and I would have had down time during those hours to study for my classes. I actually started nannying the summer I was studying for the bar exam (because my student loan money wouldn’t be coming and I was otherwise living on credit cards and a little bit of savings from summer associate jobs). Don’t get me started on this time period in my life. Studying for the bar is one of the worst, most time-consuming things a person might have to do in his or her lifetime that doesn’t involve a serious illness or childbirth. I’m not joking. So the fact that I was able to work babysitting into that summer is proof that I could have done so during law school and significantly relieved the financial pressure on myself.

The savings would have come from some combination of borrowing less money from Aunt Sallie Mae for living expenses, paying at least some of the interest on my student loans while I was in law school, and having more spending money. I’m not even going to begin to try to valuate how much into each category the money would have gone, so for the calculations below, just imagine that this lost value would be somewhat higher based on the cost of interest over time.

How much money could I have made in law school by babysitting or nannying?

For the purposes of this illustration, I’m going to assume that I made $15-20/hour and worked 10-20 hours/week. My schedule in law school was just as busy and unpredictable as college, but fitting in 10-20 hours, especially including night sitting jobs, would have been no problem.

1L Year

Fall:                 10 hours/week at $15/hour = $150/week

                        15 weeks at $150/week = $2,250

Spring:            15 hours/week at $15/hour = $225/week

                        15 weeks at $225/week = $3,375

Total:              $5,625

 2L Year

Fall:                 15 hours/week at $20/hour = $300/week

                        15 weeks at $108/week = $4500

Spring:            20 hours/week at $15/hour = $300/week

                        15 weeks at $135/week = $4500

Total:              $9,000

3L Year

Fall:                 20 hours/week at $20/hour = $400/week

                        15 weeks at $120/week = $6,000

Spring:            15 hours/week at $20/hour = $300/week

                        15 weeks at $150/week = $4,500

Total:              $10,500

Three-Year                          

Total:             $25,125

Ouch. That’s a lot of money. In fact, that’s almost a years’ worth of tuition or close to two years of living expenses (you’re really poor in law school). I did save a lot of my biglaw summer money, which I used to pay moving costs and deposits and such when I moved for my first job. Oh and my dog. I bought a very expensive puppy. Again, I’ve always been a discrete saver, but not a long-term one.

Oh well. Now moving on to EASILY the biggest financial regret of my life…

I didn’t buy the condo I lived in during law school, which cost me (1) two years of in-state tuition and (2) equity/rental income in a rapidly appreciating asset.

This one still keeps me up at night. Hoo boy. When I moved for law school, I rented a studio condo for $700/month. The condo complex is in an area of the city that was decent and that is now one of the trendiest neighborhoods in the city, in a city that has been hoppin’ for the better part of a decade now. A neighboring condo was listed for, if I remember correctly, $78,000, although it could have been in the high 60s. The studio was laid out and appointed in such a way that it felt much larger than it was and was more than enough space for one person. In fact, a family of 3 lived there before I did. The complex was older, but pretty nice, and a unit there was totally worth $78,000.

In many states, the eligibility to pay in-state tuition simply requires land ownership in the state, but some states require that you actually live on the property you own to establish intent to stay (so you can’t just buy like, half an acre in cow country to avoid paying out-of-state tuition and then bolt back to wherever you came from at the end of school). Don’t even get me started on tuition costs and the out-of-state/in-state stuff. That will have to be the subject of another post. Anyway, I’ve digressed.

So the state where I attended law school required the latter – that a person live on property they own for at least 12 straight months in order to qualify for the in-state tuition break. I had a friend from another state who always intended to return to his home state whose father purchased a condo for him to avoid the full tuition bill for 3 years. This is a great example of how the financial sophistication of your parents (or lack thereof) contributes to your financial autobiography. My parents are college-educated, intelligent people, but they are not especially financially savvy. The extent of their investments were their 401ks and a savings account as far as I am aware (which is ahead of most Americans, but still). Had my parents been like my friend’s father, they would have thought of this on their own and probably taken care of it for me. I’m not overly into discussing privilege or obsessing over my own (or lack thereof, depending), but having parents who know what they’re doing financially and have done it for themselves is a HUGE advantage in life, and is foundational to the purpose of Champagne & Capital Gains. I want my future children, and the children of my readers, to grow up with parents who understand and manage money well, because it changes the whole trajectory of your life. That starts with the readers themselves doing the legwork to become financially savvy and stable.

So back to the story. I’ve rented a condo for law school, and I am paying (s/o to Law School Tuition Bubble for the awesome law school tuition data) $46,028 per year to every in-state student’s $31,829 per year.

How much did not buying a condo cost me during law school?

Let’s say I purchased my condo, or one in the same complex, for $75,000. That would have required a ~$15,000 down payment. Does that number sound familiar? Oh yes, it’s the amount I would have had saved IF I HAD WORKED IN COLLEGE INSTEAD OF MAKING DECISIONS I NOW REGRET. Cool, so bad decisions stacking. Y’all see why this one makes me so, so angry with myself? Now let’s break down the numbers. For purposes of this illustration, I’m assuming we made no down payment for the mortgage, because my parents couldn’t have helped me. I’ll build in an estimate for maintenance, since I’d be dealing with that as an owner.

Mortgage Amount: $75,000

Annual Property Taxes: $1,500/year

Mortgage Insurance: $500/year

Mortgage: 30 years/4.00% (average at the time)

Total Mortgage:                   $525/month

Rent:                                       $700/month

Total lost on rent

in 3* years:                           $4,500

Less Maintenance:               $750

Grand Total:                         $3,750

 

In-state Tuition:                    $31,829

Out-of-State Tuition:            $46,028

Difference:                          $14,199/year

Total lost in 2 years:          $28,398

Grand Total Lost During                                                                                                                   

Law School:                        $32,148

*I moved and had rent of $550 for a year, so this number includes that difference.

Ok now let’s add on student loan borrowing costs to these loss numbers. Federal student loans have a 4% origination fee (that’s f***ing highway robbery, y’all. Seriously. Morally bankrupt. Whereas it makes borrowers literally bankrupt.) and the average for my student loans over the 3-year period was 7%, so we’ll go with that for simplicity. I paid for my housing with student loans (ouch), so the full amount can be amortized for this exercise.

Total loans:                $32,148

Origination Fee:         $1,286

Total Financed:        $33,434

I was negatively amortized until late in 2017, so these loans have been collecting interest since they were originated (although that interest didn’t capitalize to principal until I refinanced). Thus, we can calculate the total interest from when I’d have received the bulk of the benefit of in-state tuition (2012) until 2017, at 7% compounding daily (another form of highway robbery). I used Sallie Mae’s interest calculator for this. Here it is:

Total Financed:          $33,434

Total interest:            $11,702

Total Refi Amt:        $45,136

NOT BUYING MY CONDO COST ME $45,000 BEFORE I EVEN REFINANCED and counting no rental income.

Now let’s finance that piece for the 20-year refi I did (which I plan to repay within 10 years, so I’ll provide numbers on both). I did a variable refinance, which I’m semi-regretting now that the Fed has remembered it exists and has power to change interest rates, so I’ll use 5.25%, a slightly higher number than my current interest rate, to calculate the total cost of this.

Total Refi Amt:        $45,136

Accrued Interest

20 years:                    $27,859         

10 years:                    $12,976

Total Cost of Loan

20 years:                   $72,995

10 years:                   $58,112

Y’all. Not buying that condo will cost me, over 25 years, $72,995, which is THE ORIGINAL PRICE OF THE CONDO. Brb, breathing into a paper bag for like 3 years. 

This doesn’t even include the increase in the value of the condo, and the rental income I would have received over the course of the time period. Let’s do that math too, because I haven’t had enough self-flagellation today.

How much has/will not buying a condo cost me in rental income & net worth?

Rent was $700 on a condo that would have had a $525, 30-year mortgage. The value of the property at the time was ~$75,000.

Today, condos in the complex sell for ~$100,000. My guess is that rent today would be around $925 or $950 based on the increase in property value since I was renting (1.33x). I don’t know a lot about how residential rent prices are set, so please feel free to chime in, all you rental property owners. To be conservative, we’ll go with $900. I also don’t know the cost of managing the property, but my landlord managed mine herself and it was pretty straightforward at this complex. I’ll build in an amount at the end for costs of ownership.

So, as of now, 4 years after graduating, I would have made the following:

2014-2015 Rent, $750/month:      $9,000

Net of Mortage ($6,300):               $2,700

2015-2016 Rent, $800/month:      $9,600

Net of Mortage ($6,300):               $3,300          

2016-2017 Rent, $850/month       $10,200

Net of Mortage ($6,300):               $3,900

2017-2018 Rent, $900/month:      $10,800

Net of Mortage ($6,300):               $4,500

Total Rental Income:                      $14,400

Less Est Landlord Costs:               $4,400

Net Rental Income:                          $10,000

 

Original Value:                                   $75,000

Current Value:                                   $100,000

Market Equity Increase:                 $25,000

Payoff Equity Increase:                  $10,000

Total Equity Increase:                    $35,000

Grant Total Lost Value

(Rental Income + Equity):             $45,000

We’ve crunched a ton of numbers, so I’ll bring it all back together for you. If you calculate the total cost of the student loan debt I accrued plus the total value brought to my net worth by owning the property (if I’d wanted to get really technical, I could have subtracted the mortgage interest from the total saved on student loan interest, but I will not do that to you people), the amount is astonishing.

 

$117,995.

 

Not buying that condo has, to this point, cost me $117,995, and will cost me more, because I would be receiving ongoing rental income and gaining equity in the condo over the next 20 years. I do not have the strength to calculate those numbers, but it’s EASILY more than $200,000. If I’d worked in college and paid the down payment on the condo, that number would look even worse.

Talk. About. Regret. I like to live my life looking forward, but this one was a hard pill to swallow.

I know I can’t be alone in my past self’s poor decision-making! What financial regrets do you have? Share in the comments!