Delay RE to help children grad school costs?

[ivinsfan]

I've full six years tuition saved for all my three kids in their 529 plan. But they do not know that and I'm not planning to tell them until they all graduate and pay me back their entire tuition bill....Here is my plan.

I've been telling all my three kids that they've to take a loan for their college education to keep their skin in the game. My daughter just finished three years of college and three more to go(PharmD) and have been taking limited unsubsidized stafford loan and telling her that rest is being paid from home equity loan. I've told her that if you do not pay back loan to me, we'll loose our house. Once she graduates, I'll pay her stafford loan and ask her to pay me back entire tuition bill over time so she can save money on interest. It'll be deposited into her own brokerage account. Once all three kids pay back, I'll tell them the truth and give that money to them. Hopefully... By that time they are all matured and would have learned the lessons of savings from this experiment.

What they will learn is that their Dad is master manipulator...come back and tell us about the fallout when they figure that out.

 

[Sunset]

I would not pay for grad school for my kids.
I gave the each big fat checks every year for college, even if they had to go an extra year due to change in Majors.

Besides, grad school may not be that important, I never went to Grad school, I did go back and get a second degree in a useful field that paid $$$$ vs my first BA, and then I earned as much as all the folks with graduate degrees in that field (that I met).
Work experience with a degree counts a lot, and negates the grad degree effect in some fields.

 

[Fedup]

What they will learn is that their Dad is master manipulator...come back and tell us about the fallout when they figure that out.

Not just that, it's very convoluted. I mean there is a simpler way for the same result.

 

[evilanne]

What they will learn is that their Dad is master manipulator...come back and tell us about the fallout when they figure that out.

+1

I've told her that if you do not pay back loan to me, we'll loose our house.

That's a heavy load to put on your child(ren)--unnecessary stress like that may not teach them anything beneficial and could lead to unintended consequences.

 

[retire2020]

To those who've portrayed me as master manipulator, unfaithful, convoluted, unnecessary stress.....I shared my plan and nowhere in the post I asked for your opinion or asked you to follow my plan. I never mentioned that my plan is the best plan and neither do I care what you think of my plan. How much you know about me and my kids? You all have great plans and I respect what you've done in your individual case and whatever has worked for you - none of my business to criticize you or put you down. I've learned a lot from others' experience and simply sharing my plan in return so others can learn if they feel it may work for them. For me, my plan has worked well so far and my daughter has maintained 4.0 GPA. I do not see/feel that she is stressed out and enjoys her time in college. She gets rewarded every semester for exceptional grades, money she earns by working part time/summer goes to her Roth IRA(18K so far in last three years), money she won in scholarship goes to her brokerage account. We're proud and happy with what she has achieved so far and thats what matters to us!

 

[Fedup]

I'm sorry about my posts, you are right, it's your money and your family. But one of the things about posting on any forum is you need to have thick skin to post. People will comment. Have a good day.

 

[Dash man]

To those who've portrayed me as master manipulator, unfaithful, convoluted, unnecessary stress.....I shared my plan and nowhere in the post I asked for your opinion or asked you to follow my plan. I never mentioned that my plan is the best plan and neither do I care what you think of my plan. How much you know about me and my kids? You all have great plans and I respect what you've done in your individual case and whatever has worked for you - none of my business to criticize you or put you down. I've learned a lot from others' experience and simply sharing my plan in return so others can learn if they feel it may work for them. For me, my plan has worked well so far and my daughter has maintained 4.0 GPA. I do not see/feel that she is stressed out and enjoys her time in college. She gets rewarded every semester for exceptional grades, money she earns by working part time/summer goes to her Roth IRA(18K so far in last three years), money she won in scholarship goes to her brokerage account. We're proud and happy with what she has achieved so far and thats what matters to us!

You're obviously a proud father who wants your kids to have some skin in the game, and I totally agree. But I do recommend skipping the part about possibly losing the house. As parents we do have to set an example to our children, so being honest and maintaining integrity is important. The home equity storyline is unnecessary and they may wonder about why the deception later on. Just pay off their student loans when you deem appropriate. That's what we did and it worked well.

 

[LOL!]

I retired early with two kids in college and no financial aid. There are nice tax breaks for folks with kids in college. The stock market was helpful, too. One kid finished with a Master's degree and is "launched." The other is still an undergraduate and will go to grad school, too.

So to answer directly, No, I would not delay early retirement just because my kids would be in college. Whether we help with grad school or not depends on the situation.

I will note that often the stock market makes one's portfolio grow by much much more than the cost of college. You seem to have at least $3MM of assets, so you have enough money for lots of things if you want to spend it. In 3 years, you will have $4MM+.

It will take some time for you to be more carefree about money, but I think you will get there.

 

[retire2020]

You're obviously a proud father who wants your kids to have some skin in the game, and I totally agree. But I do recommend skipping the part about possibly losing the house. As parents we do have to set an example to our children, so being honest and maintaining integrity is important. The home equity storyline is unnecessary and they may wonder about why the deception later on. Just pay off their student loans when you deem appropriate. That's what we did and it worked well.

Home Equity Loan was an answer to her query about how her tuition is being paid since stafford only covers 5-7K out of 30K tuition bill per year. Her follow up question was 'What happens if we do not pay back?' and my answer was that we lose this house. Thats it - One time conversation where my other two kids happened to be there so they heard it too. She said that would be bad and that was it.

 

[sarasota]

College tuition is something that is a matter of opinion. I see benefits of funding kids college and also making them fund it on their own. In our case we prioritize fully funding a master's degree for the kids before we would consider early retirement. I wouldn't consider myself ready to retire or financially independent until money for college was set aside for all kids.

 

[Letj]

Home Equity Loan was an answer to her query about how her tuition is being paid since stafford only covers 5-7K out of 30K tuition bill per year. Her follow up question was 'What happens if we do not pay back?' and my answer was that we lose this house. Thats it - One time conversation where my other two kids happened to be there so they heard it too. She said that would be bad and that was it.

I know you're sensitive about this but I think it's unethical how you've positioned it. Surely there are other ways to make children have a skin in the game without resorting the deception. As parents, children watch everything we do and say and often
the values they display as adults is a reflection of what they learned from their household.

 

[Texas Proud]

Home Equity Loan was an answer to her query about how her tuition is being paid since stafford only covers 5-7K out of 30K tuition bill per year. Her follow up question was 'What happens if we do not pay back?' and my answer was that we lose this house. Thats it - One time conversation where my other two kids happened to be there so they heard it too. She said that would be bad and that was it.

I know you're sensitive about this but I think it's unethical how you've positioned it. Surely there are other ways to make children have a skin in the game without resorting the deception. As parents, children watch everything we do and say and often
the values they display as adults is a reflection of what they learned from their household.

You gave a rant to people who took exception to your way of paying for your kids college... but I will comment anyhow....

I am with Letj.... actually LYING to my kids is not something I will do... I have brought them up to always tell me the truth no matter what.... that if I find out they lied to me the punishment will always be worse than if they told the truth.... so far it seems to be working... my daughter lied to me earlier this year about one of her friends.... I felt she was lying and when I found out she got the boom lowered on her... if she told the truth nothing would have happened except for me asking a few more pointed questions and trying to teach her something...


So, you can be as upset as you want for people making comments about your methods, but I agree with them and think your method is bad... especially when the kids learn that you lied.... unless of course you do it all the time and they already know...

 

[Dash man]

Telling the truth after the fact and admitting your initial approach wasn't the best after thinking about it, can still teach a positive lesson to your kids. Just a thought.

 

[Aiming_4_55]

Ok, some disagree with Retire2020's approach. It's his approach, move on.

For me, if presented with the pure Q & A, would I delay RE to be in a better position to help with my kids' grad school cost.... maybe, but my situation is different.

- I'm in my late 40's, targeting ER at 50 so the option may be easier to work longer for extra $$$
- My job is about the same, I could walk out any day if the BS bucket overfilled
- Due to current age of my kids, they would not of started college when I ER
- I rec'd very little help with my undergrad expenses, i.e. one time gift of $100 dollars
- I worked full time and full time student (prefer my kids to not do this)
- I worked full time for 4 years after undergrad and leveraged employer benefits to cover 2 grad classes per term. They paid for 2 grad degrees over 3 years.

I have extra $$ targeted at helping with first new car, wedding, home down payment, and emergency. They are fixed amounts, not blank checks. If grad school is more important (also depends on the career/major), then I might help. None of this have been discussed as they are too young except for the desire for them to go to college.

As for OP's question about employer 401k or move to IRA. It depends on the investment options and expense. I have done both, but am fortunate to have several former employers 401k at Fidelity, so it's not too bad. I've consolidated investment money to three, i.e. Vanguard, Fidelity, and TDAmeritrade. I need to focus on consolidating the excessive checking accounts, but that was due in part with real estate and managing expenses.

 

[youbet]

I didn't say anything wrong with it.

Good! Because there indeed isn't anything wrong with it........

 

[fire53]

OP here, thank you everyone for you thoughtful responses, advises, and sharing your personal experience/plan on this topic:

While I totally agree with letting the kids to have skin in the game and it is a great lesson for them to manage their finances. However, it makes me feel good to help out. I learn this from my mom who was a single mom and had scarified all her life for us to have a better life then her. Happy mother days to my late mom and all the moms out there.

As mentioned, I've told my children that I will fund their 4 yrs (in state) colleges and they will be on their own after 4 years if they decide to continue. (In oldest child case, it will be ~$200K in loans). I plan to take half of the college funds of the 2 younger kids and loan it to the 2 olders, so the older ones will have part of their loans interest free.

Obviously, the risk is that if they won't finish their grad school and/or won't pay back the personal loans. And to provide an insurance for this risk I can do OMY or 2MY as some has suggested. Beside I would like to have some paddings to my FIRE plan, I feel kind of nervous to pull the trigger when none of the kids are yet to launch.



Thanks

 

[Fedup]

Good! Because there indeed isn't anything wrong with it........

Maybe to you. But everybody has their own opinion on this. I personally believe the parents should be responsible for it. My husband and I refused money from his parents when it comes to schooling. That was our responsibility.

 

[ivinsfan]

OP here, thank you everyone for you thoughtful responses, advises, and sharing your personal experience/plan on this topic:

While I totally agree with letting the kids to have skin in the game and it is a great lesson for them to manage their finances. However, it makes me feel good to help out. I learn this from my mom who was a single mom and had scarified all her life for us to have a better life then her. Happy mother days to my late mom and all the moms out there.

As mentioned, I've told my children that I will fund their 4 yrs (in state) colleges and they will be on their own after 4 years if they decide to continue. (In oldest child case, it will be ~$200K in loans). I plan to take half of the college funds of the 2 younger kids and loan it to the 2 olders, so the older ones will have part of their loans interest free.

Obviously, the risk is that if they won't finish their grad school and/or won't pay back the personal loans. And to provide an insurance for this risk I can do OMY or 2MY as some has suggested. Beside I would like to have some paddings to my FIRE plan, I feel kind of nervous to pull the trigger when none of the kids are yet to launch.

Thanks

Congrats to you, you have raised 4 well adjusted hard working kids who value education, that is a huge accomplishment. Young adults with this kind of motivation will be able to figure out the pitfalls of financing masters degrees. IMO you'd be paying them a compliment by assuming they can figure it out themselves.

If you really want to retire, go for it. Perhaps throwing master's degrees in the mix is just you being not ready or nervous about pulling the trigger and finding reasons to keep working.