31

This is primarily opinion based but will answer some factual parts of your question. Aren't there always risks with debt/spending money? Of course. People plan all types of contingencies but there is always the "black swan" that they did not see coming. It is/was foolish for home buyers to fall for the mantra of "buy as much house as you can based on ...


20

With that close an age gap it would probably make sense to use separate 529s. Technically you can transfer funds and even change the beneficiary from one sibling to another, but if both are in college at the same time you would probably want to let both of them use 529 money at the same time. Also, with multiple accounts you have more flexibility over the ...


9

In my opinion, this is probably a personal choice. With no extra paperwork, you and your spouse can each gift $15000 per child. Unless you are planning to gift more than $30K combined, one acct, to keep it simple, is enough. If, on the other hand, your total gifting will exceed this, the simplest approach is to use the 2 accounts, and not need to use the ...


7

Separate accounts may be better if you live in a state where 529 contributions are deductible from your state income taxes. OP did not list a state, but you may need separate accounts to claim the deduction for both children. In Maryland the deduction is "per account"[1] or "per beneficiary", and each account can typically only have one beneficiary at a ...


6

People always say it's worth it to spend $/take out a loan for an education because it's invaluable or will pay off in the end. You are right to be skeptical of this advice. But isn't this kind of thinking what's causing people to go into upwards of 140k in student loan debt? Yes. 100% yes. No matter the degree, it is generally the folks who ...


5

Michigan's 529 plan offers a wide variety of investment options, ranging from a very conservative guaranteed investment option (currently earning 1.75% interest) to a variety of index-based funds, most of which are considered aggressive. You said that you are unhappy with the 5% you have earned the past year, and that you thought you should be able to get ...


5

I would go here and play with the FASFA financial aid calculator to see if you qualify for grants, which is probably your ultimate objective. It would seem to me that qualified retirement contributions do not count towards eligibility provided you are younger than 59.5, and even then it would be questionable.


5

Yes, it's considered the students asset, regardless of the custodian aspect. I don't know how you'd propose to put it in a retirement account, even with the earned income to facilitate this, the limit is $5500/yr. The larger issue is parental income. That and parental assets. Tough to game that part of the system to get aid. In the end, one should look ...


5

Like most US states Maryland has two different 529 options. The prepaid college trust The College investment plan Instead I would like to sock away money on an ad-hoc basis as I can afford it. The Prepaid College Trust is designed to pay for semester chunks. The College Investment Plan doesn't require a large lump sum, or large monthly payments. The ...


4

There are several variables to consider. Taxes, fees, returns. Taxes come in two stages. While adding money to the account you can save on state taxes, if the account is linked to your state. If you use an out of state 529 plan there is no tax savings. Keep in mind that other people (such as grandparents) can set aside money in the 529 plan. $1500 a year ...


4

I'm not a 'rule of thumb' guy, but here, I'd suggest that if you can set aside 10% of your income each year for college, that would be great. That turns out to be $900/mo. In 15 years, if you saw an 8% CAGR, you'd have $311K which happens to be in your range of expenses. And you'd still have time to go as the baby won't graduate for 22(?) years. (Yup, 10% ...


4

My worry is that the online degree is less recognized and it is harder to find good jobs. You get what you pay for. "On-line degree" is not really the issue. The issue is the recognition and the reputation of the degree (and the institution). It may hurt you more to have a degree from some bogus on-line site not accredited by anyone on your resume than no ...


4

If you're paying for (out of savings or via a loan) a graduate degree in math or a related subject, rather than getting paid to do it, you're being conned. The norm for these kinds of programs (always apply as PhD-track even if you might not go beyond masters) is that you get funding through the institution in the form of teaching assistantships, research ...


4

Rule of thumb: in the USA, a student who's qualified doesn't pay (other than time and effort) to receive a graduate level degree. (This does not consider "professional" degrees such as JD, MD, OD, DDS, etc) The mechanic by which the degree is actually paid for is pretty different between Masters and PhD. Masters degrees are paid for (perhaps not at 100%, ...


4

Are there different people that would be interested in contributing for different kids? This is generally only an issue if your first kid is from a prior marriage/ relationship. If there is a group of people related to one kid and not the other, having separate plans probably makes it easier for them to contribute. How concerned are you about equality ...


3

From IRS Publication 970 Tax Benefits for Education Note: Qualified tuition programs (QTPs) are also called "529 plans." Changing the Designated Beneficiary There are no income tax consequences if the designated beneficiary of an account is changed to a member of the beneficiary's family. See Members of the beneficiary's family , earlier. ...


3

I think it's hard to argue with a guaranteed ~5% savings on the portion that could be deducted, but to save 70k per child you'll be contributing far more than $2,500 per year. So in that case I think I'd use Maryland's system for $7,500 per year to maximize the tax benefit, then go with New York's plan for the rest of your contributions each year for the ...


3

Just follow Dave Ramsey's steps. Save your baby emergency fund of $1000, pay off the HELOC, save 3 - 6 months emergency fund. After going in that order, invest 15% for retirement, save for college and put all the extra towards the mortgage.


3

OK, maximum reasonable amount (sort of an oxymoron the costs are not reasonable) is going to be end game more around $180K (2016 dollars) with the parameters you listed. My son is going to college next year so we did a little looking around the last couple of years. Consider higher growth rates the first 10 years, then you would pull back on the aggressive ...


3

In my opinion, whichever plan or commodity system you use is just supplemental to a very simple thing: go to your bank's online account, set up a regular transfer (monthly in my case, maybe weekly for you depending on when you get your salary in your country/state) to a savings' account in your kid's name with a decent rate, and just watch it grow. Then ...


3

The way deductions work normally does not take into account what account the transaction was made using. I.e. you report your gross income, your deductions and they subtract the deductions from the income. What's left is your taxable income. The tricky part comes with pre-tax contributions to tax advantaged accounts (like 401(k)). Those plans require ...


3

I'm not aware of banks offering savings account for specific reasons, other than certain accounts for college funds, as the number of reasons someone might want to open a savings account is almost infinite. What I did was open 3 savings accounts with the same bank (I could have opened more, but I didn't need more). Each account is labeled with a nickname ...


3

You are ignoring that a degree opens the door to significantly higher salary, interesting jobs, international travel, etc. Money is not the only consideration, some people would find it boring to spend their life flipping burgers, even if it would be financially advantageous. Overall, if a degree is a hard fight for someone or annoying work, it's probably ...


3

From my reading of the Utah 529 Plan - My529.org I don't think you can consolidate your children's 529 into a single account. Normally each account has to have only one beneficiary (child). As qualified educational distributions will need to have the appropriate beneficiary tax id. Trying to change beneficiaries is actual paperwork submitted to the plan. ...


2

In the United States there are some specific savings accounts, some of which have rules from the federal government (education) and some that are setup by the bank/credit Union. Some institutions have a Christmas club, where money is set aside each week or each month and then you are given access at the end of the time period. Some institutions have ...


2

You should be doing everything at once. You can save for retirement while still having debt. One thing I would look out for is the education. Take the airplane advice and put your own oxygen mask on before your kids. Paying for their education will mean nothing if they need to support you later on. This isn't a question so much of what to do with the money ...


2

Well, first off, if your children are NZ citizens, they can borrow money at 0% interest for tertiary education and I don't see any benefit to not taking free money. A saving account is your money, and will accrue a little bit of interest and you will pay tax on that. A family trust (I hope this is what you mean by trust fund) is a separate financial entity ...


2

A bank can reject a loan if they feel you do not meet the eligibility criteria. You can talk to few banks and find out.


2

Can someone provide any helpful tips on how to manipulate the input without actually doing anything illegal? The key is to start several years before the form needs to be filled out, some would say you need to understand the financial aid and scholarship forms before you start to save for you child's education. The forms from the college board CSS ...


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