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An Emptier Nest

September 26th, 2021 at 08:37 pm

We've got MM(18) all moved in at his college.  Phew!  The first week was pretty much a vacation for him.  Orientation week, with some practical orientation stuff but also a bajillion activities.  Some highlights were crawdad fishing and beach bonfires.  Classes started last week.  All my fingers and toes are crossed that the kids can stay on campus this year.  

MM(18) had never gone back to school after the pandemic started, so I can't even imagine the stimulation overload he is experiencing. 

I am personally very zen about the emptier nest.  Probably for many reasons.  MM(18) is very independent and will be just fine.  My bff attended this college and I spent many a weekend there during my college years.  So it helps that it's very familiar to me.  Also, my parents never really took us anywhere, *but* for this incredible deal of a beachfront hotel they found in the 1980s, that's about 10 minutes from this campus.  I think the whole thing would have been a lot harder if we didn't have such a familiar place to go to that first night.  We gave MM(18) about 24 hours to get settled, before we left.

I am planning a trip in a couple of weeks.  Ideally will be taking DL(16) with me.  He has never been to the college/town and would be good for him to see where his brother is living.  He asked to stay at the usual hotel and so I obliged.  But that necessitated a mid-week stay at $200+ per night versus a weekend stay at $400+ per night.  (Yeah, it's not the insane deal that it once was).  In the future we will be finding other places to stay.  In fact, MH wants to be cheap and not stay at a hotel at all (during move-in, when we visit, etc.)  I told him we were too old and well off to make that a day trip (10 hours round trip, just for the drive).  I said something like, "We aren't 18 any more."   😉  But we could probably stay with our parents for a night and make a day trip of it.  I basically set the college travel budget to -$0- once MM(18) accepted at this college.  The costs are very minimal (especially with the electric car) and can be absorbed in our regular vacation budget.  

I may be zen, but MH Is not zen at all.  He was the one home with kids, and both MM and MH have been home together mostly 24/7 the prior 18 months.  On top of that, MH just had a really rough week.  His coping clearly improved after a couple of days, even as things continued to go to heck.  *sigh*

Oh yeah, and MH was called back to work a couple of weeks ago but then that got postponed indefinitely.

I guess it's just a lot of limbo at this point.  Considering October a bit of a limbo month.  

One of the big things is figuring out the food situation in our household.  I would have guessed that MM(18) was about 50% of our household grocery spending.  I am not quite so sure now.  Besides DL(16) being picky and looking starved...  Any extra junky food I brought home has disappeared in a flash.  So I am thinking that DL(16) is just more of a stealthy eater.  Still, he is pickier with dinners.  We clearly no longer have to make dinner every night *and* double batch everything.  It's been more cooking every other night.  We are probably going to do some major revamping of our meals.  I mean if DL(16) seriously won't eat what we cook, then we will drastically change our cooking.  Feeding two middle aged people is entirely different from feeding "5,000 calories per day teenager athlete."  We don't need all the calories and so we just have a lot to figure out.  Maybe starting to mix in our future empty nest diet with "still have a very high calorie teenager" diet.  Alternating days. 

I am just waiting to see how October shakes out.  How MM's spending shakes out at college, how our grocery spending shakes out here.  If we notice any difference in our utilities, etc.  Once this starts to sort out then I can make sense of our budget going forward.

MM(18) is pretty much on his own, financially.  & I mean, we are covering tuition/room/board/medical.  I just mean anything above and beyond that.  But on the flip side, his job fell through last month and he ended the summer with about $3,000 less than we expected.  So that is why I am anxious to see how much spending he ends up doing and what he needs to cover.  Also, still trying to decide if we help him with groceries and stuff like that.  It just depends how much he is spending and how much we are saving.  If our grocery spending literally goes down by half, I could probably send him some grocery money.  It is our preference that he does not work this first quarter.  Something else to just re-evaluate mid-year.  

MM's first impressions are that he can remain uber frugal.  He's already told us he won't need a bike and that he doesn't see any reason to spend money.  It will be interesting if this still stands in another month or two.

MM has been okay with the food so far, but he also started up long distance running.  I honestly don't know if he will have enough food for that.  At home, he'd eat 5 large meals a day.  I guess that's the other thing we will have to figure out.  See if he has enough dining dollars (I already bought the biggest plan and am doubtful it will be enough).  There will be lots of tweaking everything "food" in the next few months.

& then of course, figuring out what the heck is going on with MH's job.  It is not surprising at all that is up in the air (with the pandemic) but the timing (and indecision of his employer) just sucked.  He was looking forward to going back to work and having the distraction.  

Will see how next week goes but if MH is still unemployed as of October 1, I guess we will also be going back to one-income mode.  & some of that might be shifting more financial responsibility to MM(18).  I don't know how it's all going to shake out. 

As always, the work situation is complicated.  I'd say that MH will be pretty picky until the pandemic eases and DL(16) gets his driver's license. The bottom of the barrel jobs are opening up yes, but then there's just more competition for better jobs.  His job is worth waiting out the month of October for.  If they are still delaying indefinitely or telling him nevermind, once October is ending, then it will be back to the drawing board.  Which may likely just be taking another year off.  I don't know.  I am probably more of the "screw this, just retire" mentality.  MH thinks the grass is greener and idealizes full-time work to help him deal with the emptier nest and the impending empty nest.  He is also extremely financially conservative and so wants to be working while we are paying for college.  Because of this I am sure my blog is confusing as we vacillate between these two extremes (retire or work full-time).  

College $$ Update

August 14th, 2021 at 02:35 pm

I finally got confirmation on the final piece of financial aid.  

I never expected any need-based financial aid whatsoever.  But our State has a middle class grant (if you attend a public college).  It just takes forever to process.  & the whole thing seemed very vague, but the dollar amount showed up in MM's 'financial aid' stuff this week.

This confirms free tuition for Year 1.  Woohoo!

I had actually just left it very "whatever" because I hadn't realized you had to pay tuition to get college tax credits.  So either he had free tuition or we had a college tax credit, it was going to all be the same in the end anyway.  I was guessing he'd get $2K-$4K for this State Grant. 

In the end it works out to: $6K scholarship + $2K Grant + $2K tax credit = Free Tuition Year 1.  

As to room/board...  The dining plan is a wash with what we already pay to feed that kid.  So I am not expecting to have any added expenses on this front.  

Dorms were a big question mark due to the pandemic.  They've gone back and forth if they will do full capacity and I didn't know where things landed.  Less roommates would equal more cost.  I personally would prefer less roommates and more cost.  (The dorms are far below market rent, and it's pennies more to get a solo room.  Not literally pennies, but when it comes to the market cost of housing it's just like nothing).  We were able to state that preference on the housing application.

The dorm ended up being much lower than I expected (probably went back to full capacity, after quoting us up front with 'half capacity' costs).  I had also completely forgotten about the deposit I paid with stimulus/unemployment money.  The total cost is $9,000.  He ended up with the cheapest option, and more roommates.   That does include utilities, laundry, everything.  For reference, is cheaper (substantially) than the rent I paid in San Francisco when I was 18. 

I decided to pay quarterly (this school is quarter system) because as much as I prefer to pre-pay things, there was no financial benefit to doing so.  Keeping track of a monthly bill would drive me crazy.  So quarterly will end up being the sweet spot.  First quarterly payments will be due September 1.

It works out to the following (after deposits already made):

Tuition $700 (will save this in taxes, but have to pay it up front)

Dorm $2750 

Dining $1050

---------------

Total $4,500 1st Quarter

So I will be draining $4,500 from the $12K I have set aside for College Year 1.  That looks more like $15,000 Total (for the year), but will be offsetting the $2K tuition with a tax credit.  & I expect to save $5K-ish in groceries over the next year.  So really I was estimating $12K for dorm when it only ended up being $8,500 (after funding deposit with other monies).  Which leaves a lot of cash to throw at food, if my grocery estimate is way off.  If we still have 'Year 1' money left over, that's a good start to 'Year 2'.  We will spend the next 12 months coming up with the money for Year 2. 

Our credit card bill is absurd, at $4,000 already for the month.  That's roughly $2K medical + $1,200 laptop + $500 auto insurance.  Plus regular spending.  I am going to pay off $4K-ish this week.  Was just waiting to nail down college costs before I start pulling money from savings (wanting to transfer just one lump sum).   I'd say on an average month we spend about $700 on this card.   So seeing that $4K balance like 5 days into the month...  I need to pay it down for my sanity. 

Edited to add:  Finally, I saw a tip where to figure out this CA financial aid stuff.  MM(18) had a login and so we just looked at it.  They are only rewarding him 3 years of the CA middle class grant, because he is starting technically as a sophmore.  (Which might be useful for other majors, but he can't apply any of his one bajillion credits to his engineering degree). I am writing this down here because I will never remember this.  Jotting it down for now, and will get more organized later.

MM Money Update

June 26th, 2021 at 03:26 pm

I will try to do a brief MM(17) money update.  I never got around to that.

MM(17) had about $30 left in his checking account.  I guess he estimated pretty darn well (he hasn't worked since last summer).  He also had a $200 IRS refund to deposit. 

{This does not account retirement & savings.  Probably $5K+ in his high yield savings accounts}.

In the end, we finally hired a more full-time admin assistant at my job, when MM(17) went back to school last fall.  MM had mostly been filling that role, during our busy summers.  But the admin assistant is a college student and ended up going out of the country for a few weeks.  So MM(17) has worked two weeks already and will fill in next week.  He will make about $1,500.  (He's working part-time hours, and we were also gone a few days on vacation).

The plan is otherwise for MM(17) to take the month of July off.  He has some college orientation stuff and is going to Florida with some of our family.  After that he will be 18 and we are desparate for construction site help, so he agreed to work full time on site during the month of August.  That still gives him 2 weeks (early September) to take off and prep for college.  Usually the kids start school early August, so he is really enjoying the long summer.  He will probably make $5,000, even with 6 weeks off.

The construction job will be terrible, but it will be an experience.  It sounds very likely he will have mega high paying internships in future summers (due to his college and degree choice).  

I joined a parent group for his college and is probably TMI at this point.  Information overload.  But some of the conversations have been really helpful.  The concensus seems to be that $200/month spending money is pretty average (mostly for food and transportation expense/uber).  MM(17) is far below average.  But I am fine with using the average as a starting point.  $200 x 9 months = $1,800 per year spending money.  I think he will end this summer with enough cash to cover all 4 years (and then some). 

MM(17) is a personality who likes work and independence, and can work with all A's.  That said, we all agreed he really needs to just take the first semester/year and get settled.  I wouldn't be surprised if he decides to get a job at some point, even if just a few hours per week.  But it also sounds like he is pretty well set up to not have to work at all during the school year.  

I did see that the summer job he had secured on his own last summer (that never came to be), that they had bumped their hourly rate and were offering free daily meals.  !!!  That's quite a benefit for a very hungry teenager, but I knew he wouldn't be too enthused by their junk food menu.  Anyway, I did bring it up but he told me he thought it was better to take the job with less exposure to mega amounts of people.  Fair enough. If he had chosen the other way, would have just told my boss, "Sorry, but they are feeding him every day!"  & my boss probably would have matched it anyway.  Given him an extra $30 per week or whatever.

 

College Set Up Funds

June 6th, 2021 at 03:48 pm

My last post was how I decided it was easier to utilize credit card rewards than scholarships (in particular, really ridiculous applications for small dollar amounts).

Then, the in-laws came up yesterday to celebrate MM's Graduation.  So I have some numbers in hand.  They had brought up cards/gifts from that side of the family.

MH's Family:  $670

(Mostly from Grandparents; some from Great-Grandparents and a Great-Aunt)

My Family: $0  

(I will be shocked if MM receives even $1 from my family.  I have by far the much bigger family, but they mostly don't seem to care that I exist.  My parents just are not cash gifters.).

Because of the state of my family, I really just didn't have any idea what to expect.  I thought MH's family was probably going to be generous, particularly his parents.  But...  I don't really have a frame of reference of what is "normal".

In fact, before this turn of events, I started to eyeball all my credit card rewards and thought I might just earmark them all (roughly another $2,000) for college expenses this year.  I don't expect to need all of it, but would raid what I need for college set up type expenses.

In the end, if I add the $300 Target gift cards I have and the $755 credit card reward that I just did (I should get that cash any day)...  

Grand Total:  $1,725

Most of that will go to a laptop, the rest to dorm expenditures.  I think this *should* cover everything.  Will see where we end up.  (Anything extra, we will let MM keep.  I suppose it's plausible that he will have more gifts than expenses). 

With the chip shortages and everything, we are leaning on MM(17) to pick out a laptop this weekend, so that it arrives in time for school.  I probably should also set a hard deadline to make dorm purchases this month.  It just keeps coming up over and over to plan ahead before popular items are sold out.  MH just happened to notice the long lag time in laptop delivery; he was pricing laptops last weekend.  I don't think we would have been this far ahead thinking about it except I was trying to decide if this credit card reward would cover a laptop purchase.  

This is just one more step in ensuring paying cash for college *and* not touching college funds.  At current, that is our goal for freshman year.  Future years, depends on grandparent gifts and MH's employment.  (100% will pay cash, no loans.  But not sure how realistic it is not to touch any college funds). We had decided to pull dorm costs from college funds, but then we had stimulus and unemployment monies to cover Freshman year, in addition to a free-tuition scholarship.  So we have gone back to Plan A, cash flowing everything.

College Updates

April 16th, 2021 at 02:58 am

It's still a coin flip between the two State colleges.  The schools themselves are pretty much the same in most ways (academics and job opportunities).  Both are impossible to beat from a cost/benefit standpoint. The decision at this point is purely how/where MM wants to live.  

MM told us he would decide this week.

He did get his last private school rejection last Wednesday.  (They pushed back decisions about 10 days due to huge increase in applications, so is why it's getting so late).  So yeah, the second he does decide, we need to scramble with housing applications and orientation signs ups (which opened up last week).

We dropped everything last Thursday and took him to tour both schools, to help his decision.  He toured both at some point but has been a while.  MM is so tactile, I knew it would be good for him to go see in person, as he makes his final decision.  It also gave us a chance to do our first longer trip in the electric car.  600 miles roundtrip.  Not the most practical with such a rushed trip.  But it looks like we can get away with paying -$0- for fuel if we can have more time on these trips.  (I will do another post later about the road trip/electric car). 

This is what I wrote in my first official college post in this blog (4 years ago):

Some of the ways that we expect to keep college costs down:

--Saving money ahead of time for college
--Scholarships
--MH working more while kids are in college
--Possibly finding an employer who will chip in with college costs (re: Grad school)
--Kids working in high school/college, even if just during summers
--Thinking outside the box as to housing (which is important with the high housing costs here)
--Mostly considering public colleges
--Community college (this is really what all the regional public colleges prefer these days, getting first two years done at CC, so motivation is more than just saving money)

Certainly not meant to be an all inclusive list, but in general sums up how we stayed out of college debt.

All of these things will come into play.   A college student gave us a tour of the farther away college.  One thing she mentioned was that most students take at least one online GE class at the community college every semester, because it's cheap and easy.  (Community college is currently free in our state?  Before that it cost virually nothing).  I had kind of written off community college re: the specific colleges MM applied to (beyond anything more than maybe a summer class here and there).  But maybe we will utilize after all.   

MH has voiced wanting to go back to work full-time.  I had told him to put a pin in that with the more mushy gushy private schools (more income wouldn't help our bottom line).  But...  That's all moot anymore.  He can make as much money as he wants, we might actually be able to keep some of it!  Both sets of Grandparents have offered to help more, even with the cheap public colleges.  So...  Will see if any of this sticks.  Not sure what to do with all this.  If they do both help *and* MH gets a full-time job...  We may just tackle our mortgage??  MM(17) should also be getting mega high paying summer internships, with either of these colleges.   Will see what sticks and will figure it out.  

When MM picks a college, I will go through numbers in more detail.  Will just start with my current salary and current assets.  Anything else will be gravy; not counting any eggs before they hatch. 

 

Less Limbo, More Financial Freedom

March 24th, 2021 at 01:33 pm

Crazy Crazy Week(s)!

Things just went from 0 to 60.  Schools are opening back up (in person) this week.  We hosted guests for the first time in a year (St. Patty's Day dinner).  MH got jury duty.

& then College...

So far, we have ruled out the more expensive and more far away private colleges.  It's official that MM(17) will stay in state.  It's a super rough year on the college front, I already mentioned.  But the east coast college had 70% more applications that prior year(!) and dropped their acceptance rate from 8% to 4%.  Was a stretch anyway, but I think we are pretty shocked he didn't get into his #1 choice (LA college).  Have had some time to digest and move on.  Honestly?  We were supportive because MM was MM.  We were discussing *if* #1 college choice was $40K per year, we would make it work (with help from Grandparents).  He is extremely driven and he knows what he wants to study.  But...  Public school is so much better for *our* personalities.  Private school was so...  Complicated.  In the distance, in the cost of travel.  How MH couldn't work at all because it would just make it more expensive (he'd net nothing after increased college costs and taxes).  How we probably couldn't accept gifts, it would then be too prohibitively expensive.  I kept calling it "mushy gushy."  Public college is just so much more straightforward.  I literally wrote in my college comparison spreadsheet, "Unlimited Income and Assets!" for the public schools.  The cost won't drastically change if our personal circumstances change (for the better).

MM(17) is totally cool and fine.  He is not emotionally wrapped up in college choices.  Still has *no idea* which college he wants to go to and is a hard enough decision with just two college offers in hand. 

{Still waiting to hear back from one private college.  It's the least expensive and mushy gushy.}  

All remaining college options cost roughly the same.  One might be free tuition, the other might be free room and board.  But it all roughly comes out to comparable price (over 4 years) for all the options.  & the least expensive option has some other trade-offs.  Cost is removed as a deciding factor, for what's left.

This was my last post re: public college tuition.

Tuition and fees at our alma mater:  $31,000.  <---  That is total for 4 years (sticker price)

In addition, there is a state grant that I believe was $2K per year.  & MM is a kid who will get some scholarships.  I'd be surprised if we paid more than $15K?

In the end, the other State college is more expensive (full price is $40K; $10K x 4 years) but gave MM a substantial scholarship.  Our cost:  Probably $0.  It depends how the State Grant shakes out.  & he won't need a car there at all, which saves a lot of money.  So probably would be the most expensive school (of the schools he has been accepted to and we are waiting to hear back from), but they just leveled the playing field with a merit scholarship.  

It looks like college is probably going to be a small blip for us financially.  I am just going to enjoy that, for now.   😁 Am not going to bother worrying about any finer details until a college decision is actually made.  When the college decision is made, will work through all those finer details.  If MM needs a car, what we expect MM(17) to pay for, if we even touch his college funds (probably not), etc.  

Edited to add:  Don't have to buy MM a winter wardrobe, don't need to worry about travel/airfare costs, etc.  The cost savings are significant all around.

 

 

Stimulus & College

March 9th, 2021 at 02:40 pm

I feel like every time I look at the news, there's more money raining down on us.

{I am so glad I haven't contributed to 2020 IRAs yet, or filed our tax return.  We would have had to change/amend everything.}

It seems likely this is the first year (ever) that we will go on extension.  Our taxes are very simple.  But...  As much as I had come to abhor the ridiculousness and tradition of 12/31 retroactive tax changes (which made my life mostly impossible when I worked in tax).  Making tax changes March after the year is over, is just absurd.  😠 I hope it's a 'once in a lifetime' pandemic thing and doesn't become the new way of things. 

Mostly irritated because, we really really really could have used that extra $11,000 for college.  But I put it in my 401K to avoid a tax cliff (50% tax rate).  Nothing we can do about it.  That is something I can not change.  

{This commentary is in regards to retroactively making first $10K-ish of unemployment tax-free in 2020}.

I can revise this when new stimulus is finalized, but it looks like this is probably how things will shake out.

First $10,000-ish of unemployment will be tax free for 2020:  

Tax savings 2020:  +$1,700

Child Tax Credit changes:

Tax savings 2021: +$1,750?**

At the lease, $1,000 tax savings for DL (increased child tax credit)

**Oh boy, this one is going to get complicated.  If we don't file our 2020 tax return, we will get advanced child tax credits for MM that we won't have to pay back.  At this point, maybe we just file our tax return in September (final due date).  I will have to go through the math and figure this one out.  

Thankfully, they also made this credit more refundable.  I was already targeting -$0- Federal taxes in 2021.  This could mean that we literally pay -$0- in Federal taxes but the government pays us (negative tax rate).  We pulled this off during some of our early one-income/maternity no-income years.  Our tax rate hasn't been -0- or negative since our kids were babies.

Unemployment extension:

???

I did see the latest unemployment extension being thrown around is through Labor day, or when MH's job would most likely come back anyway.

I am not sure if MH will keep looking for work or will have the patience for unemployment red tape.  We will have to run through tax and college financial aid calculators to figure out if we are getting anything net net net (with extra income).  This will be better math once we have a college decision in hand.  Unemployment has already replaced two years of his income, for reference.  We may just be happy with that and done with this red tape mess.  

Stimulus:

+$5,600

This is the amount we will probably receive.  I've never seen any AGI cutoff discussed that would affect us. Our AGI was same 2019 and 2020 (based on current tax law) and so it doesn't matter which year they pull to base this stimulus off of.  Potential new tax law just lowers our AGI even further for 2020 (which wouldn't change anything).

I actually was holding off tax filing because technically MM(17) was not eligible for the last two stimulus amounts.  It sounds like he will be this round.  I wasn't going to volunteer that he has turned 17 last year, in case he wasn't eligible for this round either.  <---This is the reason we haven't filed our tax return yet.

Phew! Thank goodness we held off.  Now, I am going to wait for unemployment taxes to sort out.  I don't want to have to amend a tax return.

I do hope they can figure this out before April 15th.  (I mean, between finalizing the bill, and getting everything programmed with tax software and IRS.  It takes time to implement tax law changes).  I don't want to go on extension, and it would be nice to know how much we could put into Traditional IRAs before the April 15th deadline.  🙄  (Depends on our AGI).

Edited to add:  This was written before I read we could get some child tax credit for MM and not pay it back, if we do go on extension.  I guess extension it is.

Total unexpected monies:  $9,050

I guess that breaks down into $5,600 expected soon and $4,700 at the end of 2021.  Minus some advanced tax credits we may have to pay back in 2022. I can't adjust my withholding to pay negative tax (or even $0 tax), so I don't have any other way to advance these monies into 2021.  But I guess it works out nicely that the government wants to advance these tax credits, July through December of this year.

If MM goes the public school route (and lives in the dorms) then that is 1000% what I am going to do with this $9,050 basically falling from the sky.   We needed to roughly come up with $10K per year.  We are going to probably pay most of the dorm costs with his college fund and it sounds like the bajillion dollars in groceries we spend (for that kid) will equate to dorm food costs.  That leaves about $5,000 that I think is mostly hyper inflated expenses (that we would be more frugal about), things MM(17) covers already (like the cost of his car), and things we expect him to pay for (books, personal expenses).  <---- He also has very generous grandparents willing to help him fill up this $5,000 bucket.  

This is really rough, but is where our heads are at with public colleges:  We will get -0- financial aid**.  I never expected any financial aid for public in-state colleges, but it's official that the financial aid reward is: $0.  (I do not seriously consider student loans as a financial aid reward).

**We are technically eligible for some automatic State grants, which sound like they may be $2k per year (for public college).  Those will take forever to sort out, so I don't know.  We are putting this in the 'not counting our eggs, but will take more money falling from the sky' category.  I expect more details in October, if he chooses a public school.

No one in our family has ever lived in a dorm (and did not go away to college, for the most part).  Though MH and I both chose not to spend our 'college money' on college, and felt we needed that more for post college housing in the SF Bay Area.  We have kept that same mindset and never really expected to use this money for college.  It's extra complicated because MM's college money is gifted from grandparents.  Too many strings and weirdness, which is also some of why I just ignore it.  So... we discussed recently and agreed that pretty much his college fund would be spent on dorm costs.  If MM is going to live in the dorms, we won't be saving this chunk of change for him to use after college.  It will be up to him.  (We won't pay it forward, if he chooses a significantly more expensive college route).

I had a lightbulb moment.  I have to back up first though.  I've gotten a few well meaning comments (over the years, in this blog) that we need to be prepared to pay for college before college starts.  ??? (& to clarify, I mean like having to pay a semester ahead of make a down payment.  Though honestly, all I see is installment payment options, anyway. We are more "pre-pay as much as we can" personalities.  I think we'd pre-pay the semester rather than deal with the hassle of more frequent payments.  But I am also hyper aware that is not normal whatsoever).  Look, I entirely put myself through college.  I know how college works.  We also have never borrowed for anything (but our home).  You don't do that just flying by the seat of your pants.  I think people are confused.  We have never tied up a penny of our money 'specifically for college.'  This doesn't mean we have no money, no plan.   MM(17) can go to school pretty much anywhere he wants to go to school, and we intend to pay cash.

Hence my lightbulb moment.  As I think through how much these windfalls mean we pretty much will be spending $0 or our own income/savings this year.  It's... 1 year down and only 3 to go!?  It's kind of blowing my mind.

I just keep thinking, "6 more years..." and so it's kind of nice to realize that it may just be "5 more years..."  College is our last big mountain before financial independence.  

 

Starting to Feel Real

February 24th, 2021 at 02:47 pm

My baby is going away to college.  😭

Yeah, that was always the plan.  But this year is the *worst* to apply for college.  The colleges that MM has applied to have all had record numbers of applications this year (I read one college had 30% more applications than last year).  Also, they are holding spots for 'pandemic gap year'.

We were 99.99% sure he should be able to get into our alma mater.  It's an under-rated college that is impossible to beat from a cost/benefit standpoint.  It costs nothing, and is where all the Silicon Valley companies recruit from.  But this year is so weird, I have been thinking it's good we never looked down our nose at community college.

So yesterday morning when I woke up, MH told me, "Our baby is going away to college!"  I didn't know what that meant.  He told me he officially was accepted to our alma mater.  That he has somewhere to go.

It turns out he had also been accepted at the other State University that he applied for, just didn't realize until late the next day.  That is exciting because it has a much lower acceptance rate.  This was also the only school he applied for that is not in a high-cost region, so while their fees are a little higher than our alma mater, I expect that to be offset by their lower dorm costs and generally lower cost of housing in that region.

Yeah, when MM told me last night that he had more news, I couldn't even fathom what college he might have heard from.  Their official acceptance date was April 1, and everyone is pushing back their acceptance dates.  I was most definitely not expecting to hear back from two colleges this week!

This week is just notice of acceptance, with details to follow.  But I have enough information to share.

Tuition and fees at our alma mater:  $31,000.  <---  That is total for 4 years (sticker price)

In addition, there is a state grant that I believe was $2K per year.  & MM is a kid who will get some scholarships.  I'd be surprised if we paid more than $15K?

This is precisely why we have never set aside any large dollars specifically for college. 

Community college was very much on the table for the UC route (the more expensive public colleges in our state).   They *beg* their kids to go the community college route and mostly no one listens.  This would have kept the cost at about $30K for a UC degree, if MM did first two years at community college (and likely also would be reduced by grants and scholarships).  I share because MM did not end up applying to any UCs and so we are not seriously considering community college at this point. 

We've got about 6 weeks to see how the private colleges shake out.  Maybe 7 weeks for that and financial aid.

 

College Plans

December 20th, 2020 at 03:07 pm

At the last minute I did end up opening a 529 plan for MM(17).  I always presumed we might utilize if MH took on a full-time job or we had some other sort of windfall.  Otherwise, it's just a lot of red tape with absolutely no benefit to our personal tax situation.  In addition to that, want to keep things flexible.  Our public colleges cost pennies, so want to be able to use this money potentially after college.  

In the end, while in complete limbo with college and no idea which way it might go, I decided last minute to put MM's money into a 529 plan.  There's no downside.  It's all in cash, so even if he decided tomorrow to not go to college, we just take it all out without any penalties.  It's only the earnings that are penalized if not used for college.  So...  That's about $150 per year we have to make sure to spend on college.  I think we can live with that.  We just didn't want to commit a lot of dollars that could only be used for college.  But I guess waiting for so long also dodges that bullet.  Which is probably why the more I thought about it, the more it seemed obvious we should just bite the bullet.

If I had to do it all over again, I wouldn't change a thing.  This was what worked best for our personal situation.  It was easier to keep the investment growth tax-free when the money was in the kids' names.  & this kept these funds very flexible.  The 529 plan never made any sense until we started applying for colleges (529 plans are not factored as much for financial aid).  & like the plan was all along: it's easy to change your mind at any point along the way. 

{I don't know what I will do for DL.  If he only applies to in-state public colleges, then it's pointless to mess with his college money.  Will think about it in another 2 years.  I think he's much more likely to go the community college route}.

I've also been thinking more about Plan F, G & H, (versus Plan A, B, C) while applying for private colleges and with MH being unemployed, etc.  The end result?  *shrugs*  Feeling non-fussed about it all. 

I think the obvious is that we can slow down or stop retirement contributions, to pay cash for college.  More of a Plan H type scenario, after running through Plans A-G.  I wanted to share for a couple of reasons though.  Mostly, wanted to share as a heads up that this plan is on the table (so it's not a total shock if we go that route).

But...  I also figured out I had been re-inventing the wheel.  It seemed like the obvious and logical thing, as we are "put our oxygen masks on first" personalities who are far ahead on retirement savings.  In the end, I perused Bogleheads a bit and those are my people.  I realized I had been re-inventing the wheel re: what is a very common approach over there.  Amazingly smart people who know their tax stuff (which might be my yardstick, as a tax professional.  In general, free tax advice is worth about as much as you pay for it, so Bogleheads always stood out to me).  But...  Bogleheads is also very crowded and just "too much" for me so I don't spend much time there.  I just sometimes go over there to look up a specific question.

It wasn't just just this one point that was very Bogleheads.  It was our entire approach to college, which is why I feel like I have been re-inventing the wheel this whole time.  If nothing else, it's a lot of "put your own oxygen masks first" personalities over there, which becomes a very different approach than the average college advice.  (The only reason we have any money to put into a 529 is because it was gift money from grandparents).

I think for most things, I have exceptional real-life mentors.  But...  probably feeling a little out of my depth on this one.  Our parents and us just went to very affordable public colleges.  My parents did not help me whatsoever with college, so though they may be my biggest financial mentors, this is where we diverge.  My other biggest financial mentor did not have children.  

So...  We are just in limbo land for another 3-4 months until college acceptances and scholarships and financial aid sorts out.   

To clarify, in the past we have decided we are "done" with retirement savings.  Our money will compound to where it needs to be at 65, if we stop contributing entirely to retirement.  We keep contributing because we want to retire early and also for the "worst case" scenarios.  

More to the point though, the biggest reason given for not skipping retirement contribution years is to "not give up retirement space."  As someone who also likes things like food and shelter 😁, we give up tens of thousands of retirement space every year.  For us, this is a nonsense reason.  Our three biggest household expenses will literally disappear or decrease substantially when our kids are done with college and fly the nest (mortgage, health insurance, food spending).  We can literally just double up our retirement contributions for a few years after college and end up in the same place anyway.  I wanted to jot this down, because it's a point I may forget.

Edited to add:  The 30% we put to retirement in 2020 was nowhere near the max we could have contributed.  But like I said, I do also like things like food and shelter.  😉

Edited in Late March:  This is entirely moot at this point.  We've ruled out anything far from home (travel costs) or mega expensive.  So...  We will keep our 20%+ retirement savings rate while paying cash for college.  If we just go with Plan A, then...  Plan H is *way* off the table.

 

Opening a ROTH IRA

May 23rd, 2020 at 03:02 pm

My last post re: retirement savings for MM(16):

When he does his taxes, we will discuss funding a ROTH this year (2019). I don't really see the point and don't think that we will. But we left it to discuss at tax time, and that he has until April 15th to decide. He has a lot of very big expenses to in the near term horizon. If nothing else, he is saving up for a car. (The current car is only for his use until he turns 18, then it goes to his brother). After that, he will be saving up for a home. If not also saving to help pay for college. I couldn't have even fathomed saving for retirement before I graduated college (no parental support past age 17; no help with college). & I don't feel too much different at the moment (about him putting off retirement savings until after college), while his #1 college choice is a very expensive private college. If he ends up going to our alma mater (it costs pennies) then we can re-evaluate. I think this year is most likely, "Keep it in cash, see how things shake out next fall". We will discuss all the pros/cons, and he will be the one to make the decision. So while I am strongly leaning towards not starting to save for retirement yet, will see what he thinks.

It is personally not a priority of ours to help our kids fund their retirement. I have no plans to contribute whatsoever to that, so it's going to have to be his dollars if he does contribute.


In the end, MM(16) decided to go with the ROTH option. He is depositing 100% of his 2019 earnings into a ROTH. He made this decision back in January. I made a convincing argument for the, "have your cake and eat it too" plan. (ROTH money can always be used more short-term, no penalty for taking back the original contributions). I told him he could always abandon the ROTH contribution if he didn't have a summer job by April 15th. He was okay tying up all that cash if he would make more money this summer.

Then... Tax deadlines were extended. I think he was still going to go through with the plan.

Now that the cash is piling up from his summer job (at my office), we sat down last week and picked an investment. He was really limited at Vanguard with the $1k minimum funds. He decided on some balanced fund, maybe 60/40. (This money is mostly earmarked for a house down payment at this point. I'd maybe more heartily recommend 90/10 if this was actually for retirement).

In the end, I couldn't figure out how to open a minor ROTH account at Vanguard and added it to my chore list. Having to actually do this over the phone... UGH!

I had some time the other morning and revisited. Was googling a bit. Surely someone figured out the magic formula to just do online. While googling, Fidelity popped up with their online process to open an account for a minor. (Which is super easy apparently). They have so many $0-minimum mutual funds now, I didn't know. I had told MM (before) pretty much he couldn't park it in cash unless he just wanted to open a ROTH with one of our banks or credit unions and then just roll it over later when he has more than $3k. But... Now he could just park it in cash (at Fidelity) if that is what he wants to do. Which is may be what I do today just to get the ball rolling (he will be at work all day). I was just waiting for him to go over the Fidelity options and make a decision.

I share because it feels like we did about 90% of the work in our teens and 20s. Choosing to work and pay cash for everything. Investing in real estate very young. Etc. But opening a retirement/investment account when you are 16? That is next level. At 16/17, I was worried about paying for my wheels, paying for college, paying for the roof over my head in a very expensive city. It will be interesting to see what our kids can do without all of those financial burdens. Though we are kind of just, "Dude, you are going to need that money for housing." But they have so much support that they can afford to take a little more risk with that money and can view it as more long-term.

MM(16) is still saving up for a car, but that is also very nebulous and he has enough cash for that. Not sure if he will even want or need a car while in college? Saving it up just in case. That should be more clear when he decides how much of his 2020 income to park in his ROTH.

College Update (08/08/19)

October 4th, 2019 at 12:46 am

Where we have been at with the college thing is that my oldest son has all the tech genes that completely skipped us. So, not only is he interested in the shortest and most practical route from Point A to Point B (typical engineer), but he also lives exactly where he needs to be to go to college. Not exactly where we live, but it's all pretty much in our backyard.

So while I am open to just about anything (within reason), MM(16) has a gazillion A+ colleges to choose from that cost pennies.

So that's mostly where I am at with things (and where I have always been).

On the flip side... MM(16) has always been an extreme outlier. When he was younger, I thought it might mean he was cut out for Ivy League. I always felt very *shrugs* about this because no one in our family (parents/us/siblings) had ever spent any significant dollars on college. & our parents have done *very well* financially over the long term. So, if one out of every 10 of us is an outlier, we have the cash to help them. For us, MH could take on a full-time job to pay cash for college. & in addition to that, our parents would be willing to help. & there's scholarships. MM has nothing but options.

MM(16) went on a tour of several colleges, a couple of weeks ago. We were curiously waiting to see how that shook out. Before that time, he had only toured our alma mater (which has been his #1 choice).

There was one obscure private college that I was glad they were going to hit on the tour. I had a friend (very similar personality) who went there, and so was just curious. I then read it is the "most expensive college in the U.S." So, of course, MM came back with this school as top contender. *sigh*

Honestly and truly, I feel pretty zen about it. If it's meant to be, we have the means to make it work. I think this sums it up pretty well. MH was worried maybe everyone was getting a little too emotional about it. I said last night, "I have the feeling MM will end up at this school, he can get it in, and it will work out. But it's not like we are going to lose any sleep over it if he doesn't get accepted." I think we all feel pretty *shrugs* about it. I just have a very good feeling about it. But you know, *boohoo* if we get to save a billion dollars and he can go to school at any of the top engineering schools in the Bay Area? Pretty much, he can't go wrong. Nothing feels very much at stake here. In fact, I don't even know if MM will choose this private school over more affordable options, if he does get accepted. He's just too logical and practical. We've already discussed that the location isn't particularly ideal. Sure, everyone there gets Bay Area internships. How useful is that when you go to school 6 hours away?

So, that is where we are at with things. It's clear as mud. Flip a coin. Our alma mater is absolutely impossible to beat as far as cost/benefit. So, does he go to school at a school that cost pennies or does he choose one of the most expensive schools? Talk about black and white! Will see...

It's been kind of funny because my husband has accused me often of being close-minded when we talk about college. ??? I always tell him I am open to anything, but come on, there's a 90%+ chance MM just goes to our alma mater. Why would we consider anything else? I guess I know my kid, his talents are the same as many in our family, and I am familiar with most the relevant schools. Even so, I am surprised how much I called it. He's interested in the all of the colleges I would have expected him to be. Some of the other colleges I didn't know much about and he wasn't interested in. So pretty much nothing new came out of this trip, except him being particularly enamored with the one school. It doesn't surprise me at all, but I also wouldn't have been surprised if he decided that was a racket and impractical.

MH has never heard of this school before, and feels kind of like the train left the station without him. We left him in the dust. I finally said, "Do you believe me now? I've always said I am open to absolutely anything." Yeesh! He believes me now. & I admit if I had never heard of the school, I'd probably not be too thrilled with this turn of events. IT's funny how the tables have turned. But for such a small school, they sure have a lot of tours. So we are loosely planning to go tour the college in the spring. We need to get MH up to speed, and lord knows I know very little about the school. We need to see it for ourselves, and ask a lot of questions.

This leads me to revelation #2. So, I am looking into other school tours. We obviously have to hit Berkeley and Stanford. Close to home, easy to tour whenever. Anyway, I am truly open to anything. I am always thrown off when "being open to living at home" or "being open to community college" is taken as the polar opposite. I've gotten so many lectures about this stuff when I've actually never seriously considered that MM would live at home for college anyway. ??? I think that is because of his tech leanings and us being generally underwhelmed by college options in our lower cost haven. Meh. Honestly, I wouldn't even send him to community college here. I think the odds that he will live at home for college are at about 0%. So... I had to laugh at myself when thinking about college tours, I didn't even think of anything local?? & then we went on a drive to Yosemite last week and we passed a billion (so it felt like) colleges I didn't know much about. It's like, "Oh yeah, there's that college and that college and that college..." & then I got home and started thinking about all these other big name tech-y colleges (that I had forgotten about when making initial list). UGH! So, I asked MH if he wanted to tour a couple of the local schools. He did, so I will add them to the list. But I told him that other than that, I Was done. If he heard of some other college that really struck his fancy, to let me know. But I think we can officially check off that we did our job as parents, if we take him on an additional 2-4 tours.

I share, because I think this illustrates why we haven't seriously considered any out-of-state colleges. We are pretty much drowning in affordable/excellent public options. This has always been a very clear trade-off to higher housing costs. I had always planned to take advantage (and we certainly did so with our own degrees too).

I guess #1, this is where we are at currently with all things college. But #2, I have to throw it out there in case I do eventually announce that my son is going to some crazy expensive private college. Because if I don't share this post, it might seem like that is coming way out of nowhere. Like with my husband, I know I have always said I am open to absolutely anything (within reason). But he didn't *get it* until last weekend. I expect it's the same in my blog.

As a refresher, these are our parameters re: college, from prior blog post:

We both agree that we expect the kids to work significantly during high school and college, that our own financial health comes first, and that we don't want to borrow a penny for college. We don't want them to graduate with any student loan debt. We are willing to help our kids in any way we can as long as we are within these parameters.

It always strikes me kind of silly as people get really bogged down with the details. If I had a dollar for every person who told me just how their kid will go to college (where, how they will or won't work, if they will live at home or in the dorms, etc.) from like the day their child was born. This has always struck me as completely insane. Heck if I know! Depends depends depends. I've never focused on the details. It's the parameters I mentioned above that matter to me. Not mortgaging my future (or encouraging my kids to mortgage their future), and it has to make any sense whatsoever. But beyond that, I couldn't tell you any of the details. Even 2 years out, still feel very much, "It depends how it all shakes out". & of course, more opportunities always arise when you keep your options open. The second we start locking things down and being inflexible, the less options we will have. Which is why we are going to wait until it all shakes out.


In addition to that, it's been very important for us to have our kids work and save money now, because I don't know how college will shake out. It's very likely my "extreme outlier" child will not be able to work during college. Obscure private college heavily encourages summer work and internships. That would be very much in line with our values. But it's pretty clear that he probably couldn't work during the school year, at that college. I wanted to clarify because I did put "work" in there. I've never taken it for granted that our kids could work as much as we did during college. That was more, "Our kids aren't going to sit on their butts and do nothing during the summers," if nothing else. There will be always be some way to work and contribute.

Edited to add: To be clear, our "expected contribution" at private college is literally 10 times as much as sticker price at any public college. Unless he does very well on the academic/sports scholarship side of things, the cost of this private college will be ridiculous. It's a decision that is impossible to make until we have college acceptances and scholarships in hand. Until then, it's going to be clear as mud. Will plan for both extremes.

College Note

January 12th, 2018 at 02:26 pm

The PTA meeting we went to this week was for DL's school. Because his school is an art/academic focus, he's required to take 8 classes every semester (in order to squeeze in the crapload of electives). In contrast, MM(14) only takes 6 classes. So DL will graduate with a few extra credits. I don't see any reason why he'd supplement his high school education at all.

That said, they were mentioning AP classes and community college and so on. & apparently community college courses are free to high school students. I don't know the details, but wanted to take note.

That said, it costs pennies regardless, so I already considered it "free". But it's apparently really and truly FREE. (Off the top of my head, I think a regular college course would be $100, for reference).

I am taking note for my other child. I wouldn't be surprised if he graduated early. There is family precedent there. Right or wrong (I don't know) we've really leaned on him to just slow down. But he has such a light courseload (for him) that I can totally foresee him getting through several college classes before he graduates high school. It's more the norm these days anyway. In his case will just be more self motivated.

Checking In

January 1st, 2018 at 04:53 pm

Work has been crazed. The last week of the year is always the busiest/most stressful work-week of the year for me, but was compounded this year by many different factors. I am taking this long 3-day weekend off to recover and reset. Then it's diving head first into the busy season (for the next 4 months).

MH was asked to work the prior two weeks, and there was talk of maybe this week too? He usually has 6 weeks off during winter. In the end, Friday was his last day of the season and they said they will probably need him again in three weeks (normal start time). He missed having winter break home with the kids, but they are old enough I don't know that it mattered. If they were younger, he would not have worked so long. We are so present with our kids though, I will admit it felt weird for us to be so tied up with work. During tax season (and December usually), his work is REALLY slow, and so most of the time it works out to be more yin and yang.

In addition to all that, I've been running kids all over the place. They had infinite short days at school (prior 2 weeks ~ I think because two different schools so every day one of them had a short day for this or that reason, just happened to not be the SAME days), and DL's vocal performance ended up being a 4-night commitment. Their vocal concert was absolutely amazing though, and I didn't mind some forced breaks. On Friday I picked up DL from a sleepover at 11am. Just a lot of domestic stuff that MH generally would have been handling.

-------------------------------------------------------------------------------

FISCAL DOINGS:

Ended the year with net worth up $95,000. !! I think that is the first time we've done that without the bulk of the gains being real estate gains. (We've done this many times before ~ six figure increases ~ with California real estate).

More details later...

SOME FINANCIAL NOTES RE: IN-LAWS:

**Was discussing timeshare with MIL. She is VERY tone deaf (her way or the highway) and her plan has always been to pass on her timeshare(s) to us though we are not interested in the slightest. Sure, free places to stay wherever is all good. But paying the annual fees and dealing with all the red tape, plus feeling obligated to use every year? No thanks!? Especially for two people who would be perfectly content to never get on an airplane.

Anyway, she is getting really disgruntled with her timeshare situation. & has made very clear she is not sticking us with that crap. I guess if you wait long enough (20 years!?) sometimes these things sort themselves out.

**MIL and FIL have decided to gift their car to MM(14) next Christmas as they are both VERY excited about this!

Again, this is one of those things that just needed time. There was talk of buying MM a car at some point, which just made me uncomfortable. They are totally the types to do that without consulting with us. I thought that might be a FUN bridge to cross eventually (NOT!). But they also have 4 grandkids very close in age and I am guessing they were getting ahead of themselves. Anyway, the latest is that they want to gift their vehicle to MM when he turns 15.5 (which is actually very helpful as it gives him a car to learn to drive on). They made clear to MH that this car is for BOTH kids. Again, is kind of what I was thinking anyway. So maybe this will resolve in a very helpful way.

{I don't remember the details, but it may be a 2005 with something like 150k miles? I think it sounds like a perfect first car for a teenager. I would happily pay for it, knowing it was well cared for. But I am not surprised they just want to give it to him}.

In my case, my parents weren't in any kind of financial situation to help me and neither were my grandparents. & I could just walk to school. I bought a car because I *wanted one* but that fell entirely on my shoulders. This situation is just very different. MM would prefer to ride his bike to school, but it's just way too dangerous. We don't have any public transport, and he knows he's not going to get any freedom on that front unless he has a car to drive. (Meanwhile, he would have preferred to just bike or take the bus for the past several years). BUT, he also has a brother that is only two years younger. MH would like to go back to work full-time, and we would put that responsibility on MM (taking his brother to school). I would rather provide a car in a situation where the car is more needed AND will make our lives easier. I was thinking that gives him two years to save up for a car and to come up with a more long-term plan. It only seems fair to offer the same to his brother. When he turns 18 and goes off to college, then his brother could use the "temp/learning" car.

I don't know how long it will last, but I will enjoy being on the same page with the in-laws. Will see how it shakes out in another year or so. I wouldn't hold my breath. But it's nice to have a plan and to be offered such a generous gift.

**On the flip side of the coin, MIL did not fund kids' college this year. No idea what that is about. MH won't ask her about it and I wouldn't touch that with a ten foot pole.

Is out of character for her, so I thought she might realize eventually (nieces' birthdays or Christmas). Christmas came and went with no mention, so I guess it's official the kids' college money will not be added to (2017).

I honestly think she forgot.

This doesn't change anything for us. I just share because their "college" accounts will be stagnate unless MIL starts contributing again (was $1k per year, per child). Anything we save up, we would not put in our kids' names or tie up in education funds. & I don't see making the effort to save any more than we already are.

Edited to add: The college money was just forgotten. Received in early 2018.

Harvesting Tax Gains

July 20th, 2017 at 07:50 pm

Today I harvested some tax gains. Is a strategy to keep "taxable" investments tax-free.

In the process, I just converted to admiral shares and way lower expense ratios. In theory, I'd generally just immediately buy back what I sold; selling solely to lock in 0% tax rate on those gains. But in the end I decided to move funds over in the process and to be a little more efficient.

For myself, technically any long-term capital gains are tax-free for Federal. But... That's not entirely true because bumping up our AGI (even just a couple of thousand dollars) wreaks all sorts of havoc on the rest of our taxes. It decreases what we can put in tax-deductible IRAs and reduces our medical expense deduction, etc. But, whatever. It's not like it's going to get better than a 0% tax rate. (I mostly expect our income and taxes to be much higher in the future).

Since we've mostly been able to shelter our investments in retirement funds, this is the first time that I've had a tax-free gain to harvest. At about $3,000 for long-term gains and I figured I could live with that. (I probably wouldn't want to add much more to our tax return. We are already on track to maybe have 10% more wage income than last year).

For the kids, I have been selling off funds frequently to the same end, though I got a bit of a break the past two years. But for today, MM was at a good selling point. $1,000 investment income is tax-free for them. $1,500 is just some very minimal state tax. I might have timed it well enough that they are more in the $1k range and won't owe any state taxes.

Note to self:
$1,000 investment income is the sweet spot for kids. No requirement to file a tax return at this investment income level.


If you have no idea what I am talking about, here is a link that explains:

Text is https://www.bogleheads.org/wiki/Tax_gain_harvesting and Link is
https://www.bogleheads.org/wiki/Tax_gain_harvesting

I guess this came to front of mind because my dad *finally* sold some mutual funds that he had wanted to sell a few years back. He's waited for tax reasons, and I guess given my tax perspective I have no idea what he has been waiting for. !! I mean, Obamacare was the reason the last two years, but now in 2017 I would have sold January 1. Not sure how long 0% investment tax rate will be around and am glad he finally took advantage.

As for the kids' "college" money, it's conservatively invested (balanced fund) and I have an equal amount in cash (our cash savings/emergency fund). So I feel that I Can shoulder any short-term market fluctuations. It seems way too premature to do anything with that. Kids start college in 4 & 6 years. Keeping in mind that we used our own "college money" for a home down payment instead of college. (College is still super cheap here and housing is only more insane now than it was then). This really could be money that remains untouched for 10+ years. So for now, we have no plans to cash out any college money or to shift to a more conservative allocation. We may set aside more new money in cash, as college becomes more imminent.

More on the Common Data Set (College)

May 9th, 2017 at 09:02 pm

I had wanted to share the common data set as to starting to nail down actual college costs (versus just picking numbers out of the air).

{See last post}.

But of course, if you've been looking up this information, you see that there is loads of other useful information in these reports.

I was just poking around a bit today and found a series of interesting articles on the subject:

Text is http://www.thecollegesolution.com/tag/common-data-set/ and Link is
http://www.thecollegesolution.com/tag/common-data-set/

Enjoy!

I think that for myself, none of this is terribly useful until my kids start nailing down where they might want to go to college. Wink

The Cost of College

May 7th, 2017 at 01:47 pm

I get the sense from college conversations that many are just making stabs in the air as to the actual cost of college.

It's actually kind of ironic because I know many people seem to think I am crazy when I talk actual costs. But the reality is that I have been tracking actual costs and real numbers. That is what we are planning for.

That said, it's apparently been a while so I will adjust my projections today. With a kid starting high school this fall, I will probably make it an annual thing to update actual costs. Should probably start keeping a closer eye on it, as to planning ahead.

So... I heard this tidbit about a decade ago? Every (4-year) college provides a "common data set" report on their website, for every school year. There is a lot of information in these reports, but includes a clear and concise summary of actual tuition + fees that students pay. They also share room and board costs, the cost of books and supplies, etc.

When I first heard this, I looked up my alma mater. My alma mater had this information going back to the years I attended, so I looked through those numbers and I will say that this is really good information.

Confident in the usefulness of the numbers, I started to track public school costs in our state. This is probably easy for us because we live in a large state with so many excellent college choices. So this is all I am bothering to track, for now. & of course, I presume we can narrow down as kids get older and start to zero in on what they might want to study or where they want to go to school.

In a recent college post, I did throw out $20k as the number I have been using to estimate the cost of 4 years of college. I don't remember the last time I looked up the numbers, and was clearly rounding. But as of today, I will revise to $30k. Per information below.

For me personally, I am leaving out room and board, and the cost of books and supplies. Kids need room and board regardless, and dorm living is not a requirement to go to college. I figure at the very least they can pay for their own books and supplies, so I am not going to worry about that part.

So I took the tuition and fees for the 4-year public college, and multiplied by 4 (years). Tuition + fees = $29,762. I will just round up to $30k. & of course I know that costs will increase in the next few years. But I have those years to adjust and save more. For now, I am going to take some time to wrap my brain around this new $30k estimate.



The costs above are from my alma mater. It's probably hard to come up with a better cost/benefit scenario as to college. This is in the middle of Silicon Valley. Location location location.

We have another public option. The UC (University of CA) system:



That comes up to about $14,000 per year, tuition and fees. I would presume community college first 2 years (cost pennies). Rounding up, that's $30,000.

So I know that planning for $30,000 will buy my kids a lot of options.

{Over the years, it's worked out that both options cost about the same}.

As an aside, our community colleges cost $46 per unit. I would just budget -0- as to saving ahead for community college. We can cash flow any community college costs.

--------------------------------------------------

I mentioned in earlier post that in-laws were giving us money (annual gifts) for college. We have $40,000 saved already, from these gifts. I'd like to get this up to $60,000 ($30k x 2) to cover a full degree for each of our kids. It seems we are well on track with that. I don't need *all* that money before they start college, but looks like we most likely will, with future gifts and investment gains.

We would like to match this sum, to buy our kids more options and/or maybe cover room and board.

For now, we have $20,000 saved up. We are saving $8,000 per year. This puts us well on track to match their gift money before they start college. We will make $60k our new "college savings" goal.

I know costs will increase and we will have to increase our goals over time. The nice things is we have time. We don't have to have all this money saved up before they even start college. I think knowing this and planning for future increases is why I Feel rather *shrugs* about adjusting my estimates.

--------------------------------------------------

Edited to add: Based on comments below, I wanted to edit to clarify a bit.

The colleges I cut and pasted above have very low on-campus living rates. There are several excellent public colleges in the region we grew up in. These are areas we know very well. Also, my kids *can* live at home and earn a profitable college degree. Rent/dorms is just not a necessary cost of college, for us.

Another College Post

May 5th, 2017 at 06:04 pm

I had a couple of other (college) posts I wanted to get to (and I will eventually) but saw an interesting article today from the NY Times:

As College Deadlines Near, Families Wonder What They Can Pay

Text is https://www.nytimes.com/2017/04/28/your-money/paying-for-college/as-college-deadlines-near-families-wonder-what-they-can-pay.html?_r=0 and Link is
https://www.nytimes.com/2017/04/28/your-money/paying-for-col...

"The colleges talk a good game about affordability. But once the teenagers do their part and gain admission, their families get lowball offers for aid and are daunted by the debt they would have to take on to make the numbers work."

& re: free college in New York:

"Sara Goldrick-Rab, a Temple University professor of higher education and sociology, and author of “Paying the Price,” worries about the New York program and the assumptions that many overly optimistic students may make. Data suggests that at least 20 percent of students who are financially eligible at first will end up leaving the state and having their grants turn into debt."

I think a lot of this is moot for us, having access to many high quality and affordable colleges. But, I've always been skeptical of the private school/aid route because it seemed like there is a lot that could go wrong (that would mean ending up in piles of debt). & of course, I don't see anyone talking about this, but this is just what I was thinking. You know, what if you take some kind of aid, lock in a college, and then lose the aid for some reason? So I was intrigued to see that my concerns aren't unfounded. At the end of the day, there's some value to just taking the low sticker price and not worrying about keeping your aids and scholarships. I share because I know this will weigh heavily in our own college decisions.

Regardless of your perspective or opinions, it's an interesting article.

College

March 29th, 2017 at 02:52 pm

I figured I should start a "college" category in my blog. Still got a ways to go, but it's creeping up on us.

The *big picture* is that no one in my family has ever borrowed for college, so the road to a debt-free college is crystal clear to me. & I don't mean at all from a wealth/means standpoint. I put myself through college. Putting my kids through college should be infinitely easier, in comparison. They will have significantly more options than we had. It also probably helps to live in a state with abundant and affordable college choices.

Some of the ways that we expect to keep college costs down:

--Saving money ahead of time for college
--Scholarships
--MH working more while kids are in college
--Possibly finding an employer who will chip in with college costs
--Kids working in high school/college, even if just during summers
--Thinking outside the box as to housing (which is important with the high housing costs here)
--Mostly considering public colleges
--Community college (this is really what all the regional public colleges prefer these days, getting first two years done at CC, so motivation is more than just saving money)

Certainly not meant to be an all inclusive list, but in general sums up how we stayed out of college debt.

My husband and I actually had completely opposite college experience. Our parents were both opposite extremes, and so we seem to end up meeting in the middle. We both agree that we expect the kids to work significantly during high school and college, that our own financial health comes first, and that we don't want to borrow a penny for college. We don't want them to graduate with any student loan debt. We are willing to help our kids in any way we can as long as we are within these parameters.

I'd say that when our eldest was ages 0-10 that college was not on our radar at all. Part of the reason is that in-laws were providing college money. They gift the kids $1k per year, each, since birth. Initially they invested with their super pricey broker (load funds + ridiculous advisory fees) but for whatever reason they gave us the money to manage in recent years. Which means the money is actually growing instead of being eaten away by fees. Phew! At this point we are quickly closing in on $40k, which would cover two public college degrees, and allows for future price increases as they continue to receive gift money.

We personally have not tied up this money in college type funds because we don't have any incentive to. We would rather have free use of the money. We don't have a big enough income, but I do have enough tax knowledge, to not bother with 529 plans or other college savings options. To be clear, we are not paying any taxes on these investment gains. So we don't need the trade-off of extra hoops to jump through for tax breaks that we don't need.

Along the same lines, MH and I both used our "college money" for a home down payment instead. In a state where college cost pennies and housing costs are sky high, I think it seems very likely our kids will experience the same. So I don't want to be penalized for tying up their gift money for college when they more likely will use it for post-college housing. Ideally, we'd actually really like to pay it forward and save this in-law money to give them as a lump sum *after* college. I don't know if we will be able to swing it, but this is what we would like to do. & if we can't, we definitely want to do something like this for our grandkids. (I think if it was not for the in-law money, this would just be a "pay it forward to grandkids" goal).

Anyway, the "generous in-law situation" sums up ages 0-10 with our kids. Between that and the low cost of college here, and my hubby's prolonged unemployment, it just hasn't been on our financial radar at all.

That said, we have in the past put ridiculous percentages of our income into ROTHs knowing that we could use that money for college. I can't say it would have been our financial priority to tie up *all* our money in retirement funds, otherwise. So I am sure for a while that was our college strategy, and I did discuss in this blog during those times.

In 2014 we were in a position to start putting money away into taxable investment accounts again (in addition to fully funding IRAs). I guess college is the only goal at this point, besides retirement. Though I don't consider this *all* to be college money, it is certainly accessible if we need it for college. We are putting away about $7,500 per year. I think matching the in-law college money is a good place to start. It probably works out too that we will probably get there in another couple of years. At that point we may just back off and figure that $40,000/each is a phenomenal start. I think we'd probably most likely just focus on cash flowing the rest (if there is anything left to cash flow).

Since I worked my way through college, I think the idea of MH working + kids working seems easiest on some level (would be a LOT of cash that we could put towards college). But, I think the "saving ahead" is important just because you never know. Relying on future income streams is a little outside of my comfort zone. So while some part of me thinks that "cash flowing with several jobs" is really the most obvious and the easiest, we always have a Plan A + Plan B + Plan C, etc.

Edited to add: I didn't mention financial aid. With the high wage/low college cost combo, regionally, I don't expect it to come up. I know it's infinitely more complicated than that, but that's just the short answer. It will be a better use of our energy to seek out scholarships that aren't based on need.

---------------------------------------------------

In other news, I am sure I have discussed in the past about MH thinking of returning to college. I mentioned in my blog several years ago that nothing about the timing was right. With the economy in particular, it seemed like a particularly poor time to invest any money into a degree.

Today, things are lining up to make a lot more sense on this front. So I know it's something we will discuss more seriously as to the next two school years. I will have to leave that for my next post on the college topic.

Taxes, Ting, Groceries

January 31st, 2015 at 02:38 pm

**I did file our taxes on Tuesday.

And... I already got a refund from the state. WHOA!

The irony is that I mostly never get state refunds because there have been so many years our state has been insolvent. I've already adjusted our taxes this year so that we should not get a penny back from the state for 2015.

IRS refund should arrive early next week. The entire $3,300 in tax refunds is earmarked for travel this year.

I have not filed the kids' taxes yet but they are mostly done. I might file them today. I just wanted to double check everything and I still have to pay the taxes they owe. They owed $6 in state taxes on about $2,500 of investment income. I try to keep their income tax-free but don't expend much energy towards that end. BM owed 5 of those dollars - I didn't notice his dividends were starting to get up there. More money, more dividends! I will revise my tax strategy to "$1,500 annual income" for him. If he owes the state $5 for that, I can live with that. (Federal is tax free $2k per year with the kiddie tax rules, but the state is only $1k tax-free).

**We got our first Ting bill since I have had work wifi. We barely used any minutes, texts or data this month. Our bill was $26.60. This is definitely what it will be at through tax season. When winter is over and my dad starts traveling again and I am not holed up at work 6 days a week, will see.

That's for the two of us. So, $13.30 per phone.

**Dh did a grocery run yesterday and did really good. He had earned $25-off and stocked up on a bunch of sales. Receipt said he paid $120 and saved $60. The pantry runneth over...

**Oh, and yesterday was kind of a lucky day all around. Surprise money in the checkbook. (Not expecting refund quite so fast). In addition, dh got his passport (we did not pay to get it faster, but they just sent it in a couple of weeks??). & dh also got the extra bulb for his projector (that was a rebate deal). Woohoo!

Lucky Day

November 21st, 2014 at 04:37 am

**I noticed that the projector that we just bought was selling for $200 less today. (Probably has been one sale for a while, isn't that how these things go? Did it go on sale the day after we bought it?)

I wasn't sure it was the same projector, but I forwarded the link to dh. He pretty quickly wrote back that he had secured a $200 refund. Woohoo!

**Dh found a large amount of change, like he always does. It was up on a ledge and so I presume he just felt weird taking it. Because it wasn't on the ground? Don't ask me. Noticed it while picking up LM from school and I was going to let LM grab it on the way home, but forgot.

Anyway, I remembered later when driving the kids home in the evening and BM popped out of the car and the change was still there.

Three quarters and three dimes!

Other Fiscal Doings:

**Payday this week; paid off projector purchase. (When I get the $200 refund I will put it to savings).

**I redeemed $40 cash back from the Citi double dash card. Will throw into investments (snowflakes to investments). I expect to have $3,000 by year-end. (Not ALL snowflakes, but heavily contributed to with snowflakes).

**I harvested gains in the kids' investment accounts. I thought I was going to skip this year, but I can't complain about the market.

I basically just sold and re-bought their funds, to lock in tax-free gains.

**I made a play on Target stock after the data breach and that is paying off this week!

**I paid $2.65 for gas this week.

Death to the 529

January 10th, 2013 at 05:39 pm

So, I talked to MIL to sort out the 529.

The final nail in the coffin was that BM's 529 plan didn't make any money in 2012. Even MIL knows that is "really terrible." !!

I don't have anything personal against 529 plans - they are a good tool for the wealthier. BUT, it is good to know how your 529 plans are performing and it is good to know if you are actually saving enough taxes to warrant the higher fees and all of the limitations that come with a 529 plan. I included a helpful article below, that discusses some of this. In addition, many tax cuts were just extended more permanently. For us, this means our taxable investments won't be taxed, for the foreseeable future. 15% tax bracket = 0% capital gains tax rate. & doubtful we will have gains large enough to bump us into a higher tax bracket, especially since we can harvest tax gains periodically. This recent tax law change makes the 529 plan pretty useless for our purposes.

I won't hold my breath until MIL gets her money out - I know stock broker will give her a really hard time about it. The penalties and interest don't amount to a hill of beans since the thing never made any money.

---------------------------------------------------

9 Situations In Which a 529 Plan May Not Make Sense

Text is https://blog.wealthfront.com/9-situations-529-plan-sense/ and Link is
https://blog.wealthfront.com/9-situations-529-plan-sense/

Doings

January 9th, 2013 at 08:40 pm

**Dh tried another Indian crockpot recipe. Chicken vindaloo.

The recipe closely approximated this one:

Text is http://www.sparkpeople.com/mypage_public_journal_individual.asp?blog_id=4848562 and Link is
http://www.sparkpeople.com/mypage_public_journal_individual....

Except the recipe dh made was about double. (I am surprised it all fit in the crockpot). I think the flavors were good, but was a little watery instead of creamy. I found another recipe that was tomato sauce based and we might have to try that one for comparison.

Anyway, no wonder this is one of my favorite Indian dishes. All it is is a LOT of onions and garlic and peppers, and vinegar (TONS of onions!). That's about it - throw in some chicken and a pile of spices. YUM!

Will see how the leftovers shape up - if the sauce thickens a bit. This was dh's complaint about the saag paneer - he added cream after and said it was perfect. Might be the same story for this dish - it just isn't creamy. It's good enough that I don't think I really care. Big Grin

------------------------------------------------------

**I got a parking ticket in San Francisco for not curbing my wheels on a "more than 3% grade." Rolleyes I googled a bit, and while these tickets are often wrong, apparently, and fightable, I am pretty sure the grade was more than 3%. I've already paid the stupid thing... It's just that it never occured to me to curb my wheels since I wasn't actually on a hill of any note. I looked up 3%, and is about how it sounds. Like, about flat. The moral of the story is to never park *anywhere* in San Francisco without curbing your wheels. For me, lesson learned!

I won't sweat it, but I am peeved on a deeper level about the government's desparate grab for funds. I have a couple of friends who got even more stupid tickes locally, recently. IT doesn't matter what city - they are all desparate. At least mine wasn't $250...

$60 Out...

-----------------------------------------------------

**MIL is talking about cashing out BM's 529 and giving the funds to us to invest. I am extremely pleased about this. I was telling dh, I have no idea why/when/how she started giving us the money to invest, but I appreciate it very much. I don't like 529 plans to begin with (inflexible/high fees), but what is worse is they have it in Merrill (more fees and fees and fees).

This was the holdout - she has a few thousand in a 529 plan for BM, from when before LM was born. Apparently once LM was born she just starting giving us the annual gifts.

I don't think there will be *any* penalties or taxes, because the thing has never made any money. But, that is what we have to sort out.

----------------------------------------------------

**Dh is talking me into returning to the city for a live show in a couple of weeks. Apparently the Thrilling Adventure Hour is going to be peformed there. It is an old-fashioned radio type show - usually performed live and then put out on podcast. Some of our favorite actors and comedians.

This is dh: "Of course the kids can go - it is not 21 and up." We have our strengths, and dh often seems clueless when it comes to the rules of children. I suppose it probably would have been easiest to call the venue. I *finally* found the policy last year was no children under 5. Though I will recommend a call to be sure, before buying expensive tickets!

I am not a huge fan of the podcats, but I am totally hooked on Paget Brewster in the Beyond Belief show. She is a crackup!! Really makes you appreciate radio theater - something we have never particularly experienced in our lifetime.

It's the week after dh's birthday, so I think we will likely not buy him anything for his birthday, and will make it a birthday thing. In fact, his mom was going to give him a check. No idea how much, but I think it is fair to use it for this. Other than that, will have to come out of vacation fund. We have short-term savings for this kind of thing, BUT, I already hit the short-term way too much for the first of the year. This is an opportunity that can not be passed up, but we have the vacation budget for it. {We had been talking about going to LA to see the show at some point - which would cost a heck of a lot more in gas and such}.

---------------------------------------------------

Other money out out out:

**BM needed new shoes - ran by Payless yesterday (thank goodness for those wide sizes).

**Funded kids lunch accounts for second half of year.

**Passports will be $200+ - will take from vacation fund. I don't know my options for paying. I assume check only, but will have to look that up. {I am trying really hard to go checkless, but something or other always pops up!}

Baconator & Investment Taxes

March 30th, 2012 at 12:24 am

**Is it weird that I am bummed that first mortgage payment is not due for another month?

I think I am just itchy to make first payment and to see how extra principal payments are handled. The CU website does not have a space to enter "extra principal" with payment, and I am not keen to revert to a paper and check method (I do have paper coupons). I think I will just make the paymnet and send an e-mail about the principal application. I can't be the only one online who wants to just pay it at the wesbite, without a paper check.

Anyway, it's probably best to replenish savings with next paycheck. April 16th should bring me some serious cash inflow. Or not. I need to wait for my overtime to be 100% sure how much I want to put to the mortgage, anyway.

**I am thinking a lot more about tax gain harvesting. I share in case you are not aware that the long term capital gains tax rate is 0% for "15% or lower" income tax brackets. {Expires this year? Maybe not expiring with all this election stuff?} I've got too many tax shelters to bother with taxable investments, so it doesn't mean much to me, but am thinking about it in term of kids' UGMAs and my folks (who have no income at the moment, but lots of investments). Regardless, I was also thinking this was an easy scheme to skirt around the kiddie tax. To harvest gains. If the stock market stays up like this... I googled a bit and apparently this is quite common. I just hadn't thought about it before. Will need to think about it more as the stock market performs well and their balances grow.

**So much of marketing is getting you to pay more for very similar products. (Or, allowing you to pay much less, if it means you wouldn't buy it otherwise - i.e. senior and student discounts. Better to sell at lower prices than not all, to certain demographics).

Funny experience today. Dh met me for lunch. I had $7 cash in my wallet, and wasn't so interested in eating out, as I just wanted a break from craziness at work (but no time for the usual drive home). So we go to the Wendy's across the street, and I just look at the Dollar Menu and get some junior bacon cheeseburger thing. & some value fries. Dh orders the Baconator! It came out to like $7. Neither of us eat there very much at all (once every couple of years?). I am a BK gal and he likes Carls Jr. So, we sit down to eat and dh looks at his very small burger, and looks at mine, and says, "What is the difference??" I said, "It looks like it has a thicker patty?" He didn't believe me, but I thought it looked very slightly more substantial. Though otherwise it was pretty identical. So he tells me, "I paid $4 for this thing!" I just had to laugh because though it was a perfect size for me, there was no way that little burger was going to hold him until dinner. He was thinking big giant Carls Jr. type burger, know what I mean?

So he did complain about it - they told him it had a "premium bun" (looked identical?), more bacon, extra cheese, and a bigger patty.

Pfffft...

I am sure all fast food chains have similarly priced type items. We just happened to order the budget-priced and the cadillac-priced version of the same thing. No discernable difference. We were both business majors (he majored in marketing), so there is nothing surprising about this. But I just thought it was funny. My dh was not amused!

Ah, I love the dollar menu!

I actually just noticed the other day that the BK shakes were almost $4 as well. I was thinking of getting one. I looked at the price and thought, "Like hell!" Their little fudge sundaes are $1. I figured the difference was negligible there, too.

Thoughts on the ROTH

April 15th, 2009 at 03:28 pm

I changed our retirement contributions around.

I made my last 2008 contribution on Monday. We maxed out 2007 due to a windfall but didn't even bother trying in 2008. But I always put as much as I can into the prior year. So if we were to have another windfall, or dh were to return to work, we don't let go of ROTH contributions foolishly.

Anyway, since January I have been contributing $350 per month to MY ROTH simply because it was the only financial institution I Could figure out how to make 2008 contributions to automatically, during 2009.

Dh and I view our retirement (As everything else) merely as "one." That being said, he does not work and I have a pretty awesome retirement plan at work. The only downside, and it is a big one, is that if something happens to me, dh only gets something like 50%. I didn't even necessarily realize this until rather recently when I updated my paperwork to add my children as secondary beneficiaries.

Anyway, so between those 2 factors, I think it is a priority to plump up his ROTH. I will probably get $8k in my work plan this year. We will probably only put $4k-$5k into the ROTHs. Seems fair that it should go to him. (In the meantime, life insurance makes up for this unfortunate fact).

That being said, my boss will retire in a few years and I can roll my work retirement into an IRA. So this is certainly not the situation forever.

I am contributing $50/month, going forward, to my ROTH. Just to keep it rolling. I am contributing $300/month to dh's ROTH starting in May. I just set it all up for automatic contributions. Since the last couple of years we have only been contributing around $100/month max, we have stuck to the "retirement funds" and "Total stock indexes." As I changed things around my $50 continues to go to a "retirement fund" and dh's contributions are 50% total stock index/ 25% international index / 25% balanced fund. We haven't bought much international since the market dropped, so it's good to jump back in at lower prices.

I read something the other day like those Retirement funds are risky. Some are down 50%! Well, sure, if you just contributed once, at the peak, and never looked back. Dollar cost averaging significantly smooths those bumps. My "retirement fund" is down 20% today. I have contributed every month since mid 2007. I became a fan of dollar cost averaging when I had my 401k at my last job. It REALLY helps when the market slides anyway. We've unfortunately contributed most of our retirement monies in 2000-2001 and 2007-2008. Great! Right before the busts. But the dollar cost averaging makes it manageable. The losses are significantly muted. Being able to continue to contribute while the market is in the toilet, does pay off in the long run. WE are literally about breakeven - the balance in our retirement today reflect the initial contributions we have put in the last decade. Which kind of sucks that we don't have gains - but happy to say we truly have not "lost" much.

-------------------------------------

This year has been good to us. We met our 15% gross to retirement and 10% gross to cash savings goals in one fell swoop. I was hoping to meet these goals when LM garduated preschool. Our home refinance and his unplanned switch to a much cheaper school has made these possible about 18 months of schedule.

So I have been stepping back and looking at our startegy. My goals are clear. The best way to achieve them are not.

Maxing out the ROTH (basically, maxing out a second one) is clearly a priority. WE are still in a virtually zero tax bracket and we would be crazy not to take advantage.

Other goals are to save for college and to pay down the mortgage ahead of schedule. I will put up with a mortgage that is reasonable and cheaper than renting, in the short term. In the long run we are extremely debt adverse and want it paid off well before retirement.

I am worried about affording our health care, as usual. But besides those types of expected expense increases there is not a lot on the horizon. WE are very content with our "Wants" spending at present. I know dh wants more gadgets and we talk about more grand vacations when the children are older. But those things can wait for a second income or a big raise. In the meantime we are quite content. The nice thing for our wants wish list is most of them are one time expenses. Nothing we necessarily need a permanently increased income for.

I have personally been tempted to stop or greatly reduce ROTH contributions just long enough to get our cash savings up to snuff. It is TEMPTING!!!!!! IF we had $30k in the bank I think our current $5k annual cash contributions would suffice. But with the market in such a tizzy, dh and I decided to continue the ROTH contributions as is. We are instead nearing $20k in the bank, and so have a decent amount of cathing up to do. But for now we are optimistic we can max out one ROTH and get our savings up to snuff in the next year or 2.

As far as maxing out the second ROTH? If we can avoid using our medical deductible, we can max out a second ROTH, maybe in 2010. We could contribute that money to a HSA but I like HSAs about as much as 529s. Lots of fees and little flexibility. Which leaves me of the opinion that HSAs and 529s will be our friend when my spouse returns to work and we have more savings than we know what to do with (& when our income tax rates are higher). In the meantime? Not ready to contribute to a HSA or a 529. They make little sense for people in our situation.

Which leads me to thoughts on college. No one in my family has spent much on college, and prices are still quite reasonable in California. In fact, my parents did not save a dime of money for me for college and since dh's parents are huge college money gifters, my kids have about as much money as my entire college education cost (a whopping $10k) at age 3 & 5. IT's not something I particularly sweat, and is another reason I would not save TONS in a 529. BEcause you get penalized on the money that is not used for college.

I have been thinking about it and maxing out our ROTH would put us about 25% contributions to retirement. Clearly more than necessary (we have always put away 10% - 15%, since we graduated college). As long as we are in this position I have decided not to contribute more money to the kids. The one exception is I may contribute a little more so I Can diversify their funds a bit more. (Since every fund needs a certain minimum). Aside from that, the ROTHs will become triple purposed. They hold some of our cash emergency fund, they hold a decent amount of our true retirement funds, and now they will hold a decent amount of investments for college in the offchance our kids "must" go to Stanford or something along those lines. In the meantime, truth is, their college will probably be paid for by the grandparents anyway. So even if dh returned to work, not sure we would go the 529 route... I view it more as contributing to retirement, but I can still sleep well at night if I am REALLY wrong about the whole college thing.

Which means simply, after thinking about it, the only true goal we have once our retirement vehicles are maxed, is to pay off the house.

Dh's income literally went about 100% to our house when he worked (down payment). & I think we will resume this plan when/if he returns to work. Literally, take his paycheck and pay down the house. It's amazing to me what a huge difference a mere $5k a year in income could make. That would be quite a dent. But yes, I think we have come full circle.

I tend to be extremely idealistic so we shall see. One thing at a time...

I just wanted to share my thinking with my current goals. They always seem to be evolving as circumstances change.

Moolah...

June 29th, 2007 at 05:33 am

$20 challenge:

$7,635.32 - Balance 6/18

$ 90.00 - Interest
$ 75.00 - Focus Group
$ 75.00 - Gift Cards (reward)

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$7,875.32 - Balance 6/30
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Dh did a focus group last night. They only take a few people so you can get paid to show up and just leave (kind of like jury duty - but a much bigger paycheck).

So he made $75 for 2 hours - he did get called in. They paid cash. He kept $20 to replace his emergency $20 in his wallet, I took $5 since I also had no cash, and will put $50 in the bank with my paycheck next week. I might just save it, but am thinking to holding onto it in case I need babysitting next month. He is going on a big 3-day hike but no date set. Not big on planning - LOL. I may need a babysitter since it will be a busy time at work. We'll see. $50 would hardly cover it either, but it's a start. Otherwise I'd put it straight to the efund.

He filled out a form that asked questions about me too. So now 2 of us are in the focus group pool. SWEET. Hell he made more per hour than I do. I am impressed!!!

Interest ran around $90 this month. Yes I did the balance transfer but the money was only in there a few days before interest was paid for the month. Actually most of it comes from my new 5.7% c.d. It's only a 0.4% increase but gosh between that and the balance transfer for a few days made QUITE a difference. A very good month.

Oh yes and the $75 gift cards - credit card rewards. We used them for stuff we were going to buy anyway (food, laundry detergent, kids PJs, kid birthday presents). Free money.

Our credit card bill thus far looks INSANELY low for the month (knock on wood). The gift cards no doubt helped. Well just a few more days. We may come under budget. Even with some huge excesses. Lord knows how - we just haven't spent much on gas and groceries since we got back from vacation. ??? Even with ALL the driving. Gas prices going down certainly helps.

In other news I think I lost my mind. Though I am not big on putting the kids before us financially (well their college anyway - obviously we put them first today). On the other hand, I am learning about the power of compounding. I am considering dropping in $50/month into a mutual fund for them. Looks like they will get enough money from grandma to open a fund this year. If I open one I kind of want to make regular contributions, and the AIP minimum is $50. I believe per month. So I am considering it. I could easily redirect the money I was prepaying on the mortgage to this for BM this year. & next year I can start to add the money for LM too. $50 by itself is small beans. & since LM is younger I can easily wait another year to better afford his contribution.

I will consider it if I can fully fund my IRA. Dh's IRA next year will be left to windfalls and him working. Then again all I need him to scrounge up is $400/month to fund his IRA and put our retirement savings at 25% (25% of my wage anyway). It's not that big of a deal. I think though I like this idea because I can put a very small token amount to the college funds now and it should REALLY pay off with time. I estimate with a pretty conservative balanced fund that their money would be $50k/each at college. Just doing $50/month plus grandma's money. & if she eventually stops her contributions, if dh is working we can make up the $1k/year easily. So I think $100k for college (for both the kids) is a worthy & easily attainable goal. The fact is the longer we wait the more it costs us. I am coming around.

I am not a big believer in 529 plans since we didn't spend much at all on college. I don't like the penalty for not spending it on college. I am considering UTMA accounts instead. We could avoid taxes in the meantime. Which is not really my aim. Well, maybe it is. LOL. I have always been against saving a big chunk in the kids' name - entitlement issues. But whatever. Between that and their already existing 529 ($4k or so?) and any taxable investments we'll save down the road, yes this is why I never really worried about it. The kids will have so much more money for college than I could have ever even imagined having. They are truly blessed. Up until now I figured a paid off mortgage before they start college and a 2nd income would have them WELL covered. & it really would. But hell if we save now then that is less we have to save later - more we can enjoy that second income when it returns. Big Grin

Well it's a plan, for now I am looking at a budget like this:

17% Retirement (long-term)
13% short-term ("escrow" fund)
5% mid-term (car/house fund)
1.5% Kids

I think I can throw them that bone. My aim has been 15% retirement so if we made it and everything else is covered, the kids will just have to be darn spoiled...

My parents hinted they would trickle down more money (they have been getting a lot in inheritance/wealth management gifts from their parents). So it is likely we can scrounge up a full IRA contribution for dh next year as well. Part sweat, part windfall perhaps. Not counting on it but there isn't really anything else we would need the money for at this point. Well I hope it stays that way anyway!

If you told me in 2003 that I could swing this all on one income I would have never believed it. WOW. We used to save dh's money. I keep pondering the many scenarios if he goes back to work and we won't even need it for savings. Perhaps early retirement will be back on the table. Since we have had kids I figured that was out the window. Wink I try not to get too ahead of myself there. Health insurance is still a huge issue and I also need to save pennies for orthodontia and all that too. I think we will still have PLENTY of challenges ahead. But my more immediate goal of working part-time is becoming more and more realistic by the day. My goal was to support my family on part-time income by age 40. Getting there. With each raise we rely less and less on my entire income, and the market is still conducive to some big raises. So I am feeling good these days about everything financially. I really haven't for the last couple of years. So PHEW.


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