Contributing to 529

suecadence

I set up a 529 for my little guy.  Now I am wondering how much we should be contributing per month.  For those of you who contribute to a plan, do you have a set dollar amount you put in each month?  A percentage of your income?  I used one of those calculators and it told me that we'd need to contribute over 600 dollars a month to pay for college in 17 years.  Damn.

Artslvr

Oh dear, $600 a month?  I guess we could do that... if we stopped paying for silly little things like food and diapers and clothing...

Haven't set ours up yet.  So you're way ahead of me.

vtkgirl77

I know, it's crazy how much education will cost in 20 years! You are ahead of the game since you already have a savings account set up.

As far as percents or amounts go, I do not have any information or recommendations. However, I heard some advice from Suze Orman which made sense to me. She said that your first long term savings priority should be making sure you have enough in retirement to take care of yourself. If you are putting enough away for you retirement needs, then start putting money away for your children's education. Her philosophy is that students can get loans and find a way to pay for school. However, you do not want to pay for their college expenses but then put the burden on them to support you in retirement.

So, my main focus is putting away money for retirement right now. I should open a 529 soon but I will probably not be putting much into it right now since things are tight. So, that's how we are handling it in our situation.

katiek414

Here's hoping for a scholarship...

I talked to our financial advisor about the 529 a few months ago.  He suggested that since I would be working, to put in any money we could.  He said that most of his clients will just put a little in here and there at the beginning - then once the child reaches school age, they use the money they were spending on full time child care and put it directly in to the 529.  That way, they don't notice the money is really missing  Made sense to me.

We're going to try to pay what we can for college- but I'm sure he'll still have a few school loans.

Gigs2000

SOO depressing, isn't it?

I like PP's financial planner's advice!  We haven't modified our retirement contributions, but I just paid off my car so my old car payment became our  monthly 529 contribution.  All the jokes about kids eating up disposable income seem to be accurate.

mek10976

ummm....DS better get a scholarship or else he will be homeschooled for college.  YIKES!

AnnaBananaBelle

We put $500 a month into DD's 529.  We are thrifty in other areas of our life, because this is a priority to us.

Artslvr

vtkendra:

She said that your first long term savings priority should be making sure you have enough in retirement to take care of yourself. If you are putting enough away for you retirement needs, then start putting money away for your children's education. Her philosophy is that students can get loans and find a way to pay for school.

Us too!  We are not contributing as much as I would like to retirement, so we need to get that squared away first, as student loans historically have pretty low interest rates... can't get a loan to retire...

Artslvr

katiek414:

He said that most of his clients will just put a little in here and there at the beginning - then once the child reaches school age, they use the money they were spending on full time child care and put it directly in to the 529.  That way, they don't notice the money is really missing  Made sense to me.

This does make total sense, I definitely like this thinking...

Sofka

Kendra is correct, you can borrow $$ for education but you can't borrow $$ for retirement.

In VA you can tax write-off $3000/yr so we contribute $3000/yr into DD's 529, it's automatically deducted from our account every month. We have 4 diff. funds

when grandparents give cash gifts, we add those to her 529 as well.

barkers4jmm

Sofka:

In VA you can tax write-off $3000/yr so we contribute $3000/yr into DD's 529, it's automatically deducted from our account every month. We have 4 diff. funds

when grandparents give cash gifts, we add those to her 529 as well.

We do this, too, except that the Virginia deduction is actually $4,000.  Plus we add money gifts from my parents.  My dad wants to open his own 529 for her, too, but he's waiting until he turns 70 in a couple years.  At the point, the Virginia deduction limit is lifted if you open the account age 70 or later. 

 

vtmezzo

We currently contribute $100 per month to DS's 529. We'd like to do more, but we simply don't have it unless we cut into our retirement contributions and personal savings contributions, which I think are more important for the time being. I really like the idea of taking the daycare payments and contributing those once the child is schoolaged - seems that it would be a painless transition since you're used to the $$ not being there. We also deposit any grandparent monetary gifts into his account as well.

Artslvr

vtmezzo:

I really like the idea of taking the daycare payments and contributing those once the child is schoolaged - seems that it would be a painless transition since you're used to the $$ not being there.

Except when you're waiting for #1 to go to school, to free up money for daycare so you can have another kid.  That's our quandry as we decide if and when to have #3.  #1's daycare payments would go to #3.

At that point we'd have to wait for #2 to be school aged and start saving her daycare payments... if that makes sense.  I guess that would work though - just a delayed schedule.  Then when #3 is school aged we'd in theory have #2's and #3's daycare payments to contribute to all three kids.

Sorry to hijack this thread, it's just really helping me think through this, so thank you for posing this question! 

kirnat848

We put in a set dollar amount for each kid every month, it just comes right out of our account so I dont have to worry about it. And then at the end of the year I set an amt I'm going to spend on xmas gifts for them and if I dont spend that much then I put the difference into their 529, and any and all checks we get from family for the girls goes in there too. They are aloud to keep cash but any checks go into savings.