College Majors Are Not Created Equal

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That's 800-525-7000. This is faith and finance, biblical wisdom for your financial decisions. Okay, high school students have been told for decades that if you want a better paying job, go to college. And many young adults have done that, no doubt, some with the belief that all college majors are created equal.

They're not. Going to college is a financial decision, second only to buying a house. More specifically, it's an investment decision. Will it pay off? Well, perhaps the most important factor determining that is whether you graduate with a degree, fail to do that, and any money you spend or borrow for college will likely be money down the drain in terms of future earnings. The good news is that data just released by the Federal Reserve Bank of New York shows that earning a college degree is still financially worthwhile. Generally speaking, the data shows that recent college grads working full time earn about 25,000 a year more than those with only a high school diploma.

The catch is they have to be working. That means majors chosen by college grads must give them skills that managers are willing to pay for. Another study by the American Educational Research Journal shows that engineering and computer science degrees give the highest rate of return on dollars spent for education. They're followed by business, health, math, and science majors. So, for example, those with a bachelor degree in engineering can expect to start out at around $80,000 a year and significantly higher with a master's degree. The highest paid engineers working on aircraft, satellites, bridges, and other infrastructure can earn several hundred thousand dollars a year. One catch, though, you have to be really good at math.

Meanwhile, computer systems managers make on average a bit over $140,000, but can earn significantly more than that depending on the level of complexity and responsibility with the job. The study also showed that education, humanities, and arts majors ranked the lowest in return on investment. Now, to be clear, we're not telling you to avoid those fields if that's where your passion lies. But college is expensive, and it's important to know the earning potential of any major you're considering, especially if you're borrowing to attend college.

U.S. Census Bureau data shows a median salary of around $53,000 for degrees in family and consumer services and fine arts, and $55,000 for degrees in elementary education and social work. If that's where you're headed, you'll need to watch your expenses like a hawk and borrow as little as possible. Now, consider that according to the National Education Association, teachers with student loan debt owe an average of $56,000. We'll take that with a grain of salt because the NEA exists to advocate for higher teacher salaries, but if that figure is even close to accurate, it shows the difficulty many teachers have in paying back their student loans when they only make that much in a year. Remember, college is an investment, so always consider how long it will take to pay back your student loans on the salary you can expect to get with your major.

Obviously, the less you borrow, the faster that will be. But also, the higher the salary, the faster you'll be able to get out of the red and into the black. Perhaps the ultimate example of that is the emergency room physician. That person will leave medical school with an average of $215,000 in student loan debt, according to the Education Data Initiative.

Now, that sounds like an awful lot, and it is, but consider that the median salary of an emergency room physician is now $350,000 a year. A doctor will almost certainly pay off student loan debt before a teacher. But again, we're not telling you not to become a teacher or social worker if you feel that's God's calling on your life. Just do everything you can to minimize your student loan debt. That's good advice regardless of the major you choose. So take as many advanced placement classes as possible, get a part-time job in high school and college, and put your earnings toward tuition. But perhaps the most productive use of your time will be applying for scholarships. Set up a scholarship application assembly line and apply for dozens of them.

The greatest gift you can give yourself is to graduate from college with little or no debt. All right, your calls are next. The number, 800-525-7000.

That's 800-525-7000. I'm Rob West, and this is Faith and Finance. We'll be right back. We are grateful for support from Soundmind Investing and the Faith and Finance Program. For more than 30 years, they've been helping Christians reach their financial goals with step-by-step guidance for investors at every stage, from those just getting started to those who are not. Through scriptural principles and practical suggestions, SMI offers financial wisdom for living well.

More information, including the short video webinar on profit and peace of mind, no matter what's happening in the market, is available at soundmindinvesting.org. So glad to have you with us today on Faith and Finance. I'm Rob West. It's time for your calls and questions. We're ready for you.

The lines are open. We just need you. 800-525-7000 with any financial question today, whether it's your lifestyle, maybe it's your spending plan, how to stay on budget in light of these sky-high expenses. Perhaps you're struggling with how to navigate this market or paying down debt.

Maybe it's giving wisely. Whatever you're thinking about today, we'd love to hear from you. The number is 800-525-7000. That's 800-525-7000. You can call right now.

To Chicago. Hi, Ann. Go right ahead. Hi, I have a quick question. And thank you for taking my call.

You're a blessing for us. My question is, is I have an investment property that I'm planning to sell. But at the same time after I sell that, I will planning to pay off a mortgage at a primary residence. Okay. And I was wondering, is there any tax advantage if I do that?

There really isn't, Ann. So what you do with the money after you sell this property really has no bearing on the tax consequence of it. If it's a rental property, unless you do what's called a 1031 exchange, where within 45 days you identify another rental property, and then within 180 days of the sale, you close on that new rental property, which in effect will just push the capital gains tax down the road to a future sale. Apart from that, you're going to pay capital gains depending upon your income. So do you know, will you have a profit on this property? Basically taking the selling price minus any improvements, not general maintenance, but improvements to the property and then subtracting your original purchase price. Will you have a profit on it? Yeah, because actually I don't have a loan on that property that I'm planning to sell. Okay, but the loan doesn't make a difference here. What this has to do with is, what did you originally pay for this property?

Do you remember? Oh, it was like maybe $50,000. Okay, well you'll need to nail that down, but let's say it was $50,000. And then do you know roughly what you put into it in the way of improvements? Not maintenance, but where you added a room? Yes, we had to remodel it like maybe $100,000 and invest in it.

Okay, so let's just use round numbers. Yeah, $150,000. And what do you think you'll sell it for? $300,000. Okay, so let's say you have $150,000 in gains, the difference between the $150,000 you put in it and the $300,000 you're selling it for. Are you married filing jointly or single?

Yes, jointly. Okay, and is your income, not the sale price or the profit, but your income, your adjusted gross income, is it somewhere between $89,000 and $500,000 or is it below $89,000? It's maybe $80,000. Okay, if you're under $89,250, and that was the 2023 number, it's a little higher for 2024, your capital gains rate is zero. You have to get above $89,250 in the form of income before you have to pay capital gains based on the current capital gains rates. So if you're under that, you wouldn't have any capital gains. If you're above it, then you would. And that first bracket between $89,000 and $550,000 is 15%. But it sounds like you may not even have that. And what you do with the money, whether you take it and you give it away, or you put it in your checking account, or you invest it, has no bearing on whether or not you owe capital gains tax. Does that make sense?

Okay. So in other words, if I sell a property and get a $200,000 profit on it, it would be best for me also to just invest it, like roll it over to another property? Well, yeah, so it really comes down to what is the best investment for you and your husband given your goals and objectives. I wouldn't let the taxes determine that. If you plan to continue being a landlord and investing in real estate, then it would make sense for you to comply with what's called the 1031 exchange. And then if you had any capital gains, you could push it forward. But it sounds like based on the fact that you have less income than $89,250 as a couple married filing jointly, your capital gains rate is zero.

So you can take that property, sell it, not pay any capital gains, and then you decide, do we want to put it in another property? Do we want to invest it? Do we want to show up our emergency fund?

It's completely up to you. I hope that helps you and thanks for your call today. Let's go quickly to St. Louis. Maureen, go right ahead. Thank you, Rob. I'm 71, still working. I'm a widow. I have my husband's pension and my own Social Security I'm drawing. And so I'm in a good place with income. I'm trying to play catch up on retirement to prepare for retirement. And I max out my 401k and I'm doing fine there. My question is about IRAs. Does it make sense to take I can take $7000 out of savings and just lump sum into an IRA?

And if I do that by April 15th, that counts for 2023, then I could do another 7000 for 2024. Am I going to be taxed again on that then? I mean, I've already been taxed as earned income.

Yeah. So you know, if it's sitting in your savings, you've already paid the tax. So you'll either just put it into a Roth.

And there's no tax there. You can make that contribution because this is after tax money, which is what you have to put in a Roth. Or you could put it in a traditional IRA and get, you know, a deduction on that money going in. And because you're getting the pension and Social Security, and you're continuing to work, your CPA might say, Yeah, this is a great idea. Because when we take it out, down the road, we're going to be in a lower tax bracket, because you're not going to be working any longer, you'll just have the pension and Social Security. And so a tax benefit or deduction today on that contribution is more powerful. Now, the unknown is where tax rates going, if anywhere, they're probably going higher, we're still in the Trump tax cuts until 2025. So it may get offset, meaning tax rates might be higher a decade from now. But your income is lower.

And so maybe it's a wash. But at the very least, I think the idea is you could put that money in. Now, if you do the traditional IRA, you are going to have to start taking some money out as a required minimum distribution here in the next couple of years. So you know, probably at age 73 for you. So you just need to recognize that whereas the Roth doesn't have the RMD.

So you could put in that after tax money. Do you anticipate stopping working in the near future? Or are you going to just continue to work for the foreseeable future?

I'm going to say a year and a half to two years. Okay. And at that point, would the pension and Social Security be enough? Are you going to have to turn around and start drawing an income from the retirement? I'll be drawing an income from retirement. All right. And what do you have already saved in your 401k and other vehicles before this potential contribution this year?

I'm gonna say 300,000. Okay. And do you think that you could, you know, pull out only 1000 a month, plus Social Security and pension and be okay? Yes, yeah.

Okay. Well, so you're fine on that 300,000. So I'd probably put it in the Roth if you're feeling like you need more. And that way, you don't have the required minimum, you don't get the deduction, but you can invest it and let it continue to grow and just be a part of that 300,000 that's growing for your future.

That'd be my suggestion. But it sounds like you're doing great, Maureen. I love that you continue to work and save. And I think you're going to be in great shape. Thanks for your call today. All right, folks, we're going to take a break. When we come back, more of your questions, lines are open.

I'm ready for them. 800-525-7000 with whatever's on your mind. Again, 800-525-7000.

We'll be right back. To be good and faithful stewards as a nonprofit organization, we rely on help for monthly faith by patrons, supporters of this mission to help us continue and expand our outreach. Has God provided financial answers for you through this ministry? If so, consider becoming a monthly faith by patron visit faith by.com and click give. As the leading advocate for the Christian financial industry, Kingdom Advisors serves the public by promoting the integration of a biblical world view across every aspect of the financial services industry, and we serve a growing network of thousands of Christian financial professionals, equipping and empowering them to carry biblical financial wisdom to their clients, peers and community. For more information, visit kingdomadvisors.com. That's kingdomadvisors.com.

This is Faith and Finance, biblical wisdom for your financial decisions. I'm Rob West. Looks like we have one line open today. 800-525-7000. You can call right now.

Let's head to Canada, Northern Alberta. Hi, Christy, go ahead. Hi, Rob. A longtime listener. Larry Burkett was very influential how we viewed finances and especially debt. It impacted how we taught our young family 33 plus years ago. And this has made a huge difference in all of our lives, ourselves and our children that are now adults and are giving. We're very, very grateful for your show. Oh, wow, Christy, that means a lot. Thank you for saying that. Yeah, well, I've never called, but I've thought and praise God for you for many years.

And so I'm glad that you're carrying the torch. My husband and I are believers and in our mid 60s, we're dual citizens of the US and Canada, and half of our working income was gained in each country where we own and operate a farm and have for 40 years. There's no successor in view right now. We want to continue to farm as long as our health allows. But we have no retirement accounts or plans for retirement, but we are completely debt free. That's been our main drive. So we're not sure if we should start with an accountant or a lawyer or another place.

Just wondering if there is a certified kingdom helper that would be familiar with agriculture qualified in both the US and Canada and retirement planning or where do we start? Yeah, excellent. Well, first of all, thank you for your kind remarks. I'm so delighted to hear of your testimony about your faithfulness in serving the Lord, his faithfulness to you and the impact of the late Larry Burkett. I share your sentiment and it's amazing to me how many people still to this day reference Larry and his impact on their lives.

Countless millions have been touched by his work going back all the way to the late 70s. And so I appreciate that. It sounds like you all have done quite well. You're hard workers. I love the fact that you're debt free. I love that you've prioritized generous giving to the Lord. And I realize perhaps you're wondering about, you know, your readiness for retirement, just given that you don't have a lot saved up. And yet, you know, I think there is some planning to be done here. God is your provider.

And that's what we need to certainly rely on. You mentioned that your income comes from both the US and Canada. Will you be receiving the Canadian pension program? Yes, I'm just starting to sign up for those. And so we'll have the Canadian pension plan for some.

And then we moved up here about 29 years ago. So the first part of our work here was in the US farming. And so I also we both also have to sign up for the Social Security as well.

Yeah. So if you make the meet the basic requirements under each country's system, then you can certainly be eligible for benefits from both countries. As long as you have enough Social Security credits, then then you'll get that as well.

So I think that's the first step is just to compare the benefits that you'll be receiving. Hopefully, hopefully from both the US and Canada against your income or excuse me, against your lifestyle spending so that you understand once you are unable to continue to farm, you know what that looks like, whether or not that will be enough to maintain your lifestyle or whether there'd be a gap of any kind there. And then putting together a retirement budget, which most folks live on 70 to 80 percent of their pre-retirement income because they're debt free, kind of like you are. The kids are off the payroll if there are kids.

You know, you're not saving for retirement anymore. So, you know, your expenses come down and, you know, hopefully the the income that you have from the US and Canada would match that. In terms of a certified kingdom adviser, Christy, you know, there absolutely are CKAs there in Canada. You're welcome to head to our website at faithfi.com and just put in your province there and do a search. You may have, you know, just because of how large geographically and disperse Canada is, you know, you may have to work virtually with a CK who's not right in your backyard.

Lord willing, there will be somebody close by. But I'd interview two or three. And in particular, look for one that is familiar with both the US and Canada, just given the fact that you've resided and worked in both. But I think that is the next step. I think it would be well worth the time and cost to visit with an adviser who could help you develop a comprehensive plan and, you know, help you chart the course for the future. OK, and would it be good to check with an accountant too?

I think so. Yeah, and I would let the adviser coordinate that. Perhaps he or she has a CPA that they work with, hopefully one that is able to work both in the US and Canada. You may have to engage a CPA from each country. And, you know, that that search engine there at faithfi.com would allow you to put in your city of choice and then you could expand that search radius and find someone who's perhaps one that resides in the US as well as one in Canada.

And that way they would be familiar with each system. OK, well, perfect. Well, I appreciate all the other information you give about signing up for Social Security and guarding your credit and all that. You guys are a real blessing. And I thank you so very much. Well, thank you, Christy. That's very kind of you. And may the Lord bless you.

Tell your husband we're delighted for you and he as you head into this next chapter of your lives. Hey, I want to send you a gift just as a way of saying thanks for being a part of the program and for your call today. It's called An Uncommon Guide to Retirement. And I think it'll be a blessing for you.

You know, it takes into account listening for God's voice regarding your calling in retirement, helping you to think through family systems and leaving a legacy, even the idea of sabbatical rest in the early part of retirement. So I think it'll be an encouragement to you. It's by my friend Jeff Hanen and it's subtitled Finding God's Purpose for the Next Season of Life. So you stay on the line and if we can, Christy, we'll we'll send it right out to you. But thanks for your call today.

That was great to have you on the program. If you are looking for a Bible study, perhaps you'd like to explore the money topic in a small group study, maybe a church. Maybe you're in a men's or women's group or you have a small group in your neighborhood and you're always looking for relevant topics, taking you deep into scripture. Well, our brand new four week study Rich Toward God just came out a few weeks ago. We'd love for you to check it out. It deals with the topics of what it means to live rich toward God, the pride we can have in prosperity, the uncertainty of tomorrow and how we plan for that through a biblical lens, all of those topics and more. Again, check it out at faithfi.com.

Just click shop at the top of the page. That's faithfi.com and you can order your copy today. Folks, it's been a true joy to help you be redirected back to God's word, help you manage God's money with wisdom and diligence, but ultimately to be a faithful steward. Let me say thanks to our team today. Devin Patrick, Robert Youngblood and Mr. Jim Henry couldn't do it without those folks and the entire team here at FaithFi. May the Lord bless you and come back and join us tomorrow. We'll see you then. Bye bye. Faith and Finance is provided by Faith Buy and listeners like you.