College/Savings fund anyone?

Justtee33 · June 2013

What are you doing? How are you doing it? I now nothing. Where do I begin? Thanks!

brachysira · June 2013

I used a calculator, and it says we'll need more than our house is worth... I am hoping for reform. We know we have to save, even if it's not enough, so I'm trying to get DH to discuss it so we can agree on a number. Probably $100-$200/month. I'm hoping I can get a more substantial job at some point, which could help. We will do a 529 plan.

JJ_13 · June 2013

We have a 529 plan. It has all of about $50 in it. Huh?

We do hope to be able to pay for college, but have no problem telling our LO(s) that she/they have to go in-state. Luckily we are in a state with good in-state schools and, at least currently, have no plans to move.

ohlordy · June 2013

I started a sub-account at my bank before baby was born and now that we have her social security number, I'm looking into 529 plans. I'm not too sure how those work so it'll stay in our banks sub-account for now.

If you google "529 savings" you'll find a website that talks about the different options for different states.

this decaf life · June 2013

We started a Florida Prepaid account for DD.

[Deleted User] · June 2013

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nuzzin · June 2013

My Father started a 529 plan for Hadley and put a good amount of money in it to start her off, We also have started a savings account that we put her baptism money and any money she had gotten for her birth etc in it

Justtee33 · June 2013

Great thank you! We'll look into the 529 plan. Right now the little we have is in my savings acct but now that im going back to work id like to build on it and get it out of such easy reach

Im sure I can find this online but since im here, does anyone know what percentage of income one might recommend to save for college or life?

tilsonc · June 2013

Justtee33:

Great thank you! We'll look into the 529 plan. Right now the little we have is in my savings acct but now that im going back to work id like to build on it and get it out of such easy reach

Im sure I can find this online but since im here, does anyone know what percentage of income one might recommend to save for college or life?

You can deposit $40k or so this year and LO will have enough for college. We have already put several thosand in a fund and want to do the rest by the end of the year to get it out of the way. You can also do $400-500 a month in a 529 if you want to spread it out. I would try to put as possible away in the first couple of years as it will be $400k (with inflation) when they are 18. NY has a great 529 with low fees if you do not get any tax breaks from your own state plan. I would not do it with a financial planner and just do it on your own if have a decent idea of what funds to pick.

In general you should be be saving 15 percent of your income for retirement. You need to do this and have no debt (except your house) before you save for LO college.

Rosebean · June 2013

In Canada you can do a RESP (registered education savings plan) and the government will put in 20% of your first year contributions.... However, your kid (or one of your kids) must go to school to get the money. Otherwise whatever the government contributed will be rescinded.

Our government also gives monthly child tax dollars per child until the age of 6. We don't need the additional money ourselves, so we are choosing to put that money in the bank for him each month instead. It should be a substantial amount in 6 years, to which we can then invest it for him.

brachysira · June 2013

tilsonc:
Justtee33:

Great thank you! We'll look into the 529 plan. Right now the little we have is in my savings acct but now that im going back to work id like to build on it and get it out of such easy reach

Im sure I can find this online but since im here, does anyone know what percentage of income one might recommend to save for college or life?

You can deposit $40k or so this year and LO will have enough for college. We have already put several thosand in a fund and want to do the rest by the end of the year to get it out of the way. You can also do $400-500 a month in a 529 if you want to spread it out. I would try to put as possible away in the first couple of years as it will be $400k (with inflation) when they are 18. NY has a great 529 with low fees if you do not get any tax breaks from your own state plan. I would not do it with a financial planner and just do it on your own if have a decent idea of what funds to pick.

In general you should be be saving 15 percent of your income for retirement. You need to do this and have no debt (except your house) before you save for LO college.

I would suggest spreading it out. Depositing huge sums means that you don't get the benefit of market averages, meaning that you might buy when the market is doing very well and then lose if it doesn't keep doing well. Buying a little every month protects you from this. If you have an spare 40k in one year, you probably don't have to worry as much about this since you are probably doing very well financially. Plus spreading it out allows you to get an idea of whether your LO is really college bound. Probably is, but putting all the money away now and then finding out you have a severe case of autism or something might make you have to pay penalties on the savings to get it out. State 529 plans are different and you have to compare and see which one is best--read up online--there can be advantages to going in-state, but they may not beat the advantages of a plan in another state. Yes, you have to be able to save for retirement and pay of credit cards before saving for college.

tracy41 · June 2013

I still have some guilt but I decided not to do a 529 plan because I didn't want the money only available for college. For DS1 his dad and I started putting $200 a month in a regular savings account a little under a year ago that he'll be able to use to get a car and start college. Every time it reaches a certain amount we plan to move the money into a longer term investment with a higher interest rate. When he gets birthday money it goes in there, too, although obviously he'll probably want to keep some of it as he gets older. For DS2 I'll do the same. And I love the poster who said that putting $40K in the account now will take care of it. I wish I had $40K to put away for their college now!

Justtee33 · June 2013

tracy41:
. And I love the poster who said that putting $40K in the account now will take care of it. I wish I had $40K to put away for their college now!

I know right! Must be nice...

dalzien · June 2013

Rosebean:
In Canada you can do a RESP (registered education savings plan) and the government will put in 20% of your first year contributions.... However, your kid (or one of your kids) must go to school to get the money. Otherwise whatever the government contributed will be rescinded.
Our government also gives monthly child tax dollars per child until the age of 6. We don't need the additional money ourselves, so we are choosing to put that money in the bank for him each month instead. It should be a substantial amount in 6 years, to which we can then invest it for him.

This. We are using our Child Tax Benefit and our Ontario Benefits for a savings account for DD. We were told it would be in our best interest to put the money into a Tax Free Savings Account and then invest in GIC's rather than RESP's for the time being seeing as interest rates are still really low. We put in the entire amount every month seeing as we are financially stable and don't really need the money for anything else. We have the money withdrawn on the 1st automatically to avoid wastefully spending it.

Nbwade · June 2013

I don't know very much about this stuff. If you have a 529 plan and your child doesn't go to college then do they still get their money and is there a penalty?

ForeverEverAfter · June 2013

We're in Canada, so we started a RESP for LO. The grandparents put 1000 in to start it, and the government adds 20. We will contribute once our own student loans are paid off. Our goal is to be able to pay her tuition. DHs income will double in the next few years, so I'm not worried about waiting to save.

iumegan716 · June 2013

We have 529s for the boys as well. The credit card we use most puts 2% of our purchases into the 529 account.

tilsonc · June 2013

PeanutR1:

Rich doesnt always equal smart. 40K put away right now with an expected return of 5% a year at 18 years is $96K. That MAY pay for state school then. Certainly not private - maybe a year.

Also, there are tax consequences to putting that much money in a 529 at once. Strategically, it's not a good idea. You can only gift 13k to a minor per year. So 2 parents, 26K a year. If you go over that, you are subject to a steep gift tax. The other option with a 529 is that you can front load it, but you can't gift another dollar to that child for 5 years. So yes,you could put away 40K in one shot if you keep it in a regular savings account, but to do it in a 529 is not the wisest of plans.

There is an exclusion for the 529 where you can put up to $65k in 1 year without gift tax. However, you cannnot contribute to it for the next 4 years.

tilsonc · June 2013

brachysira:
tilsonc:
Justtee33:

Great thank you! We'll look into the 529 plan. Right now the little we have is in my savings acct but now that im going back to work id like to build on it and get it out of such easy reach

Im sure I can find this online but since im here, does anyone know what percentage of income one might recommend to save for college or life?

You can deposit $40k or so this year and LO will have enough for college. We have already put several thosand in a fund and want to do the rest by the end of the year to get it out of the way. You can also do $400-500 a month in a 529 if you want to spread it out. I would try to put as possible away in the first couple of years as it will be $400k (with inflation) when they are 18. NY has a great 529 with low fees if you do not get any tax breaks from your own state plan. I would not do it with a financial planner and just do it on your own if have a decent idea of what funds to pick.

In general you should be be saving 15 percent of your income for retirement. You need to do this and have no debt (except your house) before you save for LO college.

I would suggest spreading it out. Depositing huge sums means that you don't get the benefit of market averages, meaning that you might buy when the market is doing very well and then lose if it doesn't keep doing well. Buying a little every month protects you from this. If you have an spare 40k in one year, you probably don't have to worry as much about this since you are probably doing very well financially. Plus spreading it out allows you to get an idea of whether your LO is really college bound. Probably is, but putting all the money away now and then finding out you have a severe case of autism or something might make you have to pay penalties on the savings to get it out. State 529 plans are different and you have to compare and see which one is best--read up online--there can be advantages to going in-state, but they may not beat the advantages of a plan in another state. Yes, you have to be able to save for retirement and pay of credit cards before saving for college.

I understand what you are saying, but you will end up spending A LOT more money if you spread the contributions out. That's like telling someone to get a car loan because they can spread out the payments. Who wants to pay $600 a month until your child is 18? Its easier for us to just get it completed as soon as possible. I have a post graduate degree and don't have any concerns about LO not going to college. It can also be transferred to a sibling.

Kingston54 · June 2013

We are in PA and we have a TAP 529 account for our kids. You pay the current tuition rate NOW and buy "credits" for the future...

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