Mr. Dollarman – Financial Backstory (Part 2)

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students at their college graduation
College Graudation

Armed with the Financial Lessons I Learned From My Childhood, I was ready to take on the world. Naively, my parents only held a few professions in high regard. In their eyes you could only become a doctor, lawyer, or engineer for them to take your chosen profession seriously. My parents would often lecture me on how:

You can either toil away with hands/body, or let your mind toil away for you

Mr.Dollarman parents

Determined to please my parents, and intrigued with mathematics & science I chose engineering as my major. With no one in my community to lean on for guidance I embarked on this trailblazing journey alone.
Day in and day out my days for five years straight were spent hitting the books. My main focus in school was racing to the light at the end of the tunnel. Semester after semester I was hopeful that classes would gradually become easier, but I was wrong.

While balancing a full time engineering course load I worked, and also enrolled in my school’s Air Force ROTC program. Every waking hour was either spent dedicated to my studies, working, or planting the seed for my future military career. In the moment it felt like I would be in school for eternity. What kept me going was knowing there was a discrete end date to all of this suffering. My time in college showed me that anything is possible through shear grit and determination.

Lessons I learned from college

Learn to manage your time effectively

You’ll be surprised how much you can get accomplished if you methodically plan out each day. During college I had to manage multiple activities simultaneously such as working full-time, classes, studying, and ROTC. This was only possible by staying committed towards achieving my ultimate goal of graduating/joining the military. What helped was not getting caught up on how much time I had to go before graduation. I took it one semester at a time which helped me stay sane and not give up.

Find innovative ways to pay for school

Two years into my studies I was accepted into a really prestigious, private, and awfully expensive school (~$40,000 per year). At the time I was attending a public university whose in-state tuition came out to about $8,000 per year. I’d just received a ROTC Scholarship that semester, and could pay for the tuition in full. I ultimately chose to continue attending the public university. I felt more comfortable being able to pay for my tuition outright should I ever loose my scholarship. In hindsight I’m so glad I made that decision.

In subsequent years I witnessed so many of my classmates fail to keep up with their grades. They either dropped out of school completely, lost their scholarships, or changed their majors. Nothing in life is guaranteed, and at the end of the day a degree is a degree. I did make it through college unscathed never losing my scholarship. I’m happy I didn’t have the additional stress of worrying about potentially paying back $100,000+. Because how ROTC scholarships work loosing your scholarship means you’ll potentially have to pay back the money back you received.

I would recommend everyone to seriously weigh out the reasons you want to attend a very expensive university. When you enter the workforce your peer group will include those who chose a cheaper way to get the same degree. It really comes down to your work ethic, how well you work with others, and your communications skills. The degree is just one hurdle you have to jump over to get your foot in the door.

Don’t take on debt if it can be avoided

Although money wasn’t an issue for me during college I mistakenly took on debt that I could’ve avoided. Two years prior to graduation I had multiple streams of income to help with my expenses. Not going away for college enabled me to save money by not having to pay for food and housing expenses. The benefits outweighed the cons of still having to abide by my parents rules while still under their roof. Every waking hour was spent either at school, studying, working, commuting, or doing ROTC activities anyway.

My job mainly consisted of office administration work where I made $14/hour (~$27,000/year), and had many perks. Perks consisted of the ability to create my own schedule, being able to study after completing my daily tasks, and a tuition stipend of $5000 per semester made out directly to me. I also had my Air Force ROTC scholarship. The scholarship paid my tuition in full and came with a tax free stipend of $1000 per semester for books. I also received tax free cadet pay of roughly $400-$500/month. I had no expenses besides my cell phone, transportation, and entertainment. Totaling it all up I brought in roughly ~$44,000/year after my tuition was paid for.

How did I mess this all up?

I got greedy. Upon completing my sophomore year of the ROTC program I was eligible to sign a contract with the Air Force. One day during the school year a “financial adviser” from USAA did a presentation on managing your personal finances optimally. Solid information about personal finance was presented. At the end of the presentation he also pitched us a product called the Career Starter Loan. To be eligible for the loan you had to be on contract with the Air Force. The terms were $25,000 @ 4.99% paid back over five years from commissioning equating to about $492.21 a month.

He argued that we should use the money to refinance any high interest student loan debt we had. If we didn’t have any student loan debt he suggested that we use the money to invest in the stock market. Just two years away from graduation I was well on my to walking away from graduating college debt free. Falling victim to peer pressure as it was the cool thing all my classmates were doing I took the money. Obviously I didn’t need the money but ran off the logic that I should forget about the money and invest it into the stock market. I chose to stick the money into a S&P 500 index fund. These decisions were made during the 2008 market downturn. The index fund returned an average of roughly 7.8%/year over a 10 year period following the crash.

Money burning a hole in my pocket

money in pocket
Money burning hole in pocket

The money stayed invested for a short while in a USAA brokerage account. As I grew closer and closer to graduation the urge to use some of the money for “needs” grew stronger. I got it into my head that my future earnings once I graduated could easily handle the monthly payments. I began to feel the $25,000 burning a hole in my pocket. Being young and naive I fell in to the consumption temptation “pit of despair”, and started buying stuff. I spent all the money by the time I graduated on electronics, restaurants, entertainment, and vacations. It was during this time I started down a toxic path of frivolous spending to no end before discovering FIRE.

Please tune in for part III of this series where I’ll be going into depth (with numbers) through my post-college years prior to getting engaged to Mrs. Dollarman.