Here's the chicken or egg of the business world: is an MBA worth it? You may recognize this trend from Chad Harbach's sensational MFA vs. NYC which got the literary world talking about whether writing graduate programs were necessary to crank out bestselling novels, or if living on the streets of NYC was experience enough. The same debate is up for entrepreneurs.
Take a peek inside an MBA class, and you'll be inundated by unsmiling suits and big-time CEOs turned professors aggressively putting chalk to board (or, SmartBoard marker to Smartboard). For a modest fee of around $140k, (and that's not even counting the lost income expense) you'll learn everything you need to become the next Mark Zuckerberg. Right?
Well, not necessarily.
Business school may seem to be the right choice on paper, but it's too broad. There are so many different kinds of business schools that it's difficult to rule them out in general before doing some research on the type that will suit you best. For that, Forbes gives a great guide for knowing what to look for.
According to business owner Tom Castelloe though, you might as well just skip the whole business school thing. According to a US News article, he says, "Jump in the water and try to swim," rather than go the conventional route with education. He tried it (business school) and said it didn't necessarily open the doors that he thought it would. And entrepreneurs should be saving every dollar they can.
But what if there was a way to get the benefits of a business school education on someone else's dime? Some companies will actually pay for your MBA, and in that case, you should totally do it. This will just help you learn the name of the game faster while you work and make an income. But we advise against going to school with no source of income to support you.
We know it's risky to get out in the real world and start the business you've been dreaming up since you were a kid. There is no formula to becoming a successful entrepreneur. Some of it may be taught, but the essence of entrepreneurship is in your own personal drive and passion. You can take a look at some of these awesome tools for entrepreneurs to get started. The MBA vs. NYC debate might be heated, but you won't get anywhere by arguing about it. Just doing something is a step in the right direction.
- When Is an MBA Worth It? | Investopedia ›
- 13 M.B.A.s that are really worth your money - MarketWatch ›
- Is an MBA really worth it? This billionaire has your answer ›
- Should You Get An MBA? Is The Degree Worth It? | John A. Byrne ... ›
- Was it worth it? | Which MBA? | The Economist ›
- Is an MBA Really Worth It? ›
When you take out a loan for a car, charge something to your credit card, or get a personal line of credit, there is going to be an interest rate that applies to your loan.
A lot of different factors go into what you will be charged, including your own personal credit score. But even those with flawless credit still see a minimum charge that they can't get around. That all goes back to the Federal Funds Rate.
One thing consumers rarely realize is that all of our banks are lending money to each other every night. Banks are legally required to maintain a certain percentage of their deposits in non-interest-bearing accounts at the Federal Reserve to ensure they have enough money to cover any withdrawals that may unexpectedly come up. However, deposits can fluctuate and it's very common for some banks to exceed the requirement on certain days while some fall short. In cases like this, banks actually lend each other money to ensure they meet the minimum balance. It's a bit hard to imagine these multibillion-dollar financial institutions needing to borrow money to tide them over for a bit, but it happens every single night at the Federal Reserve. It's also a nice deal for those with balances above the reserve balance requirement to earn a bit of money with cash that would normally just be sitting there.
The Federal Reserve
The exact interest rate the banks will charge each other is a matter of negotiation between them, but the Federal Open Market Committee (FOMC) (the arm of the Federal Reserve that sets monetary policy) meets eight times a year to set a target rate. They evaluate a multitude of economic indicators including unemployment, inflation, and consumer confidence to decide the best rate to keep the country in business. The weighted average of all interest rates across these interbank loans is the effective federal funds rate.
This rate has a huge impact on the economy overall as well as your personal finances. The federal funds rate is essentially the cheapest money available to a bank and that feeds into all of the other loans they make. Banks will add a slight upcharge to the rate set by the Fed to determine what is the lowest interest that they will announce for their most creditworthy customers, also known as the prime rate. If you have a variable interest rate loan (very common with credit cards and some student loans), it's likely that the interest rate you pay is a set percentage on top of that prime rate that your lender is paying. That's why in times of low interest rates (it was set at 0% during the Great Recession), a lot of borrowers should go for fixed interest rate loans that won't increase. However, if the federal funds rate was relatively high (it went up to 20% in the early 1980's), a variable interest rate loan may be a better decision as you would be charged less interest should the rate drop without the need to refinance.
The federal funds rate also has a major impact on your investment portfolio. The stock market reacts very strongly to any changes in interest rates from the Federal Reserve, as a lower rate makes it cheaper for companies to borrow and reinvest while a higher rate may restrict capital and slow short-term growth. If you have a significant portion of your investments in equities, a small change in the federal funds rate can have a large impact on your net worth.
Whether you're leaving a job involuntarily, departing for something new, or just want to prepare for the unknown, it is smart to understand all your options regarding your 401k.
Frugal gifting often gets a bad reputation. However, this shopping method does not make you cheap — it makes you practical. Frugal gifts often avoid waste and overspending and can be just as meaningful (if not more so) as any other present.
With the National Retail Federation predicting each consumer this holiday season to spend upwards of $1,000 on holiday gifts amidst an economic recession —this year might be the perfect time to reconsider your spending budget. We've formulated the ultimate list of frugal gift-giving ideas to get you started.