529 SAVINGS PROGRAM

[Weston]

Anyone have any advice/opinions on college savings programs for children. Not too technical now (Louis) :D

[benj]

SAHF's wife is a stock broker for Charles Schwab
and studying to be a financial planner...
if SAHF fails to surface, try pm'ing him...

Personally I would ask myself,

Do I pay off the mortage first at 7% interest, or

do I pay into a college fund that pays x% roi (return on investment)?

Interest'n question

G'Luck...my house is paid off and
my kid wants to be just like me, a sahd :shock:

[SAHF]

I have surfaced! :lol:

We have a state owned program that the wife and I like. The state of Florida has a program that we can pay into for our kids now and it will save us 10's of thousands later. Prepaid college.

Once my two hit college level, they will have their choice of any college within the state of Florida. If they do not wish to go to college ( :? ), they can cash in the money that we have invested (of course, no interest).

We also use the UPromise factor as well! Anything that we can do to help our kids out is ALWAYS a great way to get paid back in the end!

[Weston]

Ok. Thanks guys. I do like the idea of paying off the mortgage early benj. We refinanced at 15 years instead of 30, so that helps.

[jeffus]

I get moans everytime from financial planners when I tell them the house is paid off! We have no mortgage and we're about 40.

Well, the way I see it - paying a 100k mortgage @5% for 30 yrs = $93,251.94. Forget the mortgage interest deductions - it won't add up to $93k in 30 years..

We'll add $93K we saved on mortgage payments to the 15 years to save-up some cash for her colllege and 25 years to save for our retirement without having that mortgage ton-o-brick's hanging over our heads every month. And I get to raise her!

To us, that's priceless....

[Weston]

Sounds great Jeff! I always think its funny when people focus on the tax benefits of a mortgage. Problem is the more money you're able to deduct, the more you are paying in interest to a bank.

[tt3]

We're also on the 15yr plan, but putting $50 more then the payment. Its amazing how quickly that adds up.
Financial adviser... dang, gotta find us one of those.
The last one we had would hold quarterly meetings and tell us why they're losing our money.

[homewithtwins]

We started a 529 for our twins soon after they were born. We do an auto debit from checking at the first of each month. We are only doing the minimum at this point, but it adds up over time.

We decided against the prepaid plan because we didn't want to be locked into state schools.

[jeffus]

Well, we never actually pay for one of those planners. We sometimes get offers for a 'free' evaluation and occassional take them up on it to see if we missed something or maybe get a good idea on something new.

Thing is, I'm already all over the finances. I use Quicken. Got everything in there. So I/we walk in with a crystal clear picture of where our dough is. Tons of reports, graphs, etc. They're not used to that level of organization and use your disorganization as their primary sales pitch.

Since they can't do that with us, we quickly ascertain that all these guys are a bunch of hacks who follow the training manuals. Couldn't come up with an original idea if their life depended on it.

There's no one more motivated than me when it comes to my money. And I can only blame myself if I do something wrong.

[Anonymous]

Here are some of the sites I have come across that may help when contemplating college planning.

http://www.savingforcollege.com
Lists/rates/discusses a variety of 529s

http://www.upromise.com
Already mentioned by many.

http://www.babymint.com
Similar business model to upromise.

http://www.floridaprepaidcollege.com/
For those of you who live in FL.

Also look for pre-paid plans in your own state. Many states now offer them. Some are very good, and some are very risky. DO your homework.

I personally think paying off the mortgage is a great idea. You do save more money in the eliminated interest than you "get" in the deduction. The only caveat is the "oppertunity cost" of the funds. Is your rate below market, what would you do with the money otherwise? For example if you take 100k out of the cd market and pay off your mortgage you get the one time save (and a substantial one). But what if you took the 100k and purchased a rental property which could generate income in-excess of the prevailing cd rate? It is a hard decision, and will differ for everyone, but while paying off the mortage is a wonderful idea, consider what your options are, particularly if you have a very low rate.

ch10dad

[Weston]

Thanks everyone for the advice and weblinks!

I've become disillusioned when it comes to investing, tax-deffered in particular. Plus - i'm not a brite man.

:-k ..... #-o ..... :x ..... ](*,)

[Anonymous]

We started a 529 for our twins soon after they were born. We do an auto debit from checking at the first of each month. We are only doing the minimum at this point, but it adds up over time.

We decided against the prepaid plan because we didn't want to be locked into state schools.

Check with your state plan, often. Currently in FL you can use the plan for out of state plans as well. This has changed since we moved here six years ago. Sometimes the changes are in your favor, sometimes not.

We signed up both kids for a 529 that guarenteed a floor rate of 4% on deposits, about 3 years ago they changed the floor for new plans to around 2.25% (fortunatly we got in under the old floor).

I would strongly sugguest that you look into anything and everything you can, now. And keep notes, that way you will have a better idea when you find a plan that is right for you.

We signed up both kids on our state pre-paid plan for tuition only at first. After listining to our neighbors with college age kids we decided to add the fee-plan for both kids. The increase of the plan was $1000 in just one year!!! (The tuition part also went up, but I don't know how much.)

It's not that much work, and besides it's easier than estate/retirement planning! Actually you could consider college planning part of estate planning. The better educated your kids are, the sooner they get their own life, home, car, bank account, etc... ;-) !!!

ch10dad

[Weston]

good point chanel 10! The sooner they're educated the sooner they leave.

Unless of course they become "life long students". Then they just live at home untill they're thirty because they have no real world skills.

Now I'm really scared! :shock:

[Weston]

.....maybe I'll just stick with the "coins in the coffee can" fund.

:roll:

[jeffus]

No, sorry, I'm not a financial genius.

But you may want to off-shore the DadStaysHome trust fund in the Cayman Islands (to avoid any potential tax implications). And have the dividends distributed through a bank in, say, Switzerland...