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Old 08-06-2009, 10:50 PM   #21
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I'm a few years from ER, DS is headed to college this month. We told him it was our in-state U. unless he got a scholarship. He's very bright: turned down a full ride at one state school for about a 3/4 scholarship at another. He can earn 1/8 working, and we're picking up the other 1/8.

Rambler, I followed your post with interest. We've taken the lump sum approach too. Just went over the budget with him, and we both agreed it was reasonable. I don't want to micro-manage his finances or get hit with odd bills to approve. He's been well trained in frugality, and is fully capable of living on a budget, though the record-keeping side of LBYM is beyond him right now. DW and I are holding our breaths that this lump sum approach works out with all the other challenges of a first semester at college.....
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Old 08-06-2009, 11:01 PM   #22
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So, if one is still working, one has the option of delaying his retirement a bit, while if one is already out the door, he might be pondering whether to tell Junior to be his own. I guess that is what bothers the OP.
Yes, that makes sense. Thanks.

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Old 08-06-2009, 11:02 PM   #23
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I'm a few years from ER, DS is headed to college this month. We told him it was our in-state U. unless he got a scholarship. He's very bright: turned down a full ride at one state school for about a 3/4 scholarship at another. He can earn 1/8 working, and we're picking up the other 1/8.

Rambler, I followed your post with interest. We've taken the lump sum approach too. Just went over the budget with him, and we both agreed it was reasonable. I don't want to micro-manage his finances or get hit with odd bills to approve. He's been well trained in frugality, and is fully capable of living on a budget, though the record-keeping side of LBYM is beyond him right now. DW and I are holding our breaths that this lump sum approach works out with all the other challenges of a first semester at college.....
Thanks Headingout

DS was a volunteer missionary for a couple years after HS, and did very well on the meager allowance he had. Also did very well for the first 4 months at college....never went over say $250 or $300 for food and incidentals. Then from May/June things changed. He'll get back on track. He just got a job, pretty good one actually that has plenty of hours and good pay for a college kid. He was an under achiever in HS, so no scholarships. I think one possibility is that he had too much time on his hands during the summer, with limited availability of classes and had a hard time finding a PT job (whew, that's over now and he can keep the PT job while he is in school...we counseled him from the beginning that food and incidentals would also be his responsibility after his first full year, but we will pick up the rent so long as it is a student apartment). I'm just nervous, I guess.

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Old 08-07-2009, 12:36 AM   #24
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We sent them to college then changed our name, address, and phone number
A couple days after I started at USNA, my family moved from Pittsburgh to Denver. (They gave me their address.) So when people asked me where I was from, I said Pittsburgh. When they asked me where my parent's address was, I said Denver.

USNA databases would only deal with one address, and they picked Denver. So that dichotomy led to a number of interesting conversations with people who I was eager to avoid conversing with.

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It was kind of open ended. I'm just wondering how tough it is for people to retire before sending their kids to college.
It's "just" a matter of how much money you want to spend. If you want to sacrifice ER for a few years to put your kid through college then it's a personal choice and a budgeting/saving challenge. By "personal" I mean "the sense of internal satisfaction derived from behaving in accordance with your values", not "your kids will thank you for it".

In 1992, when we'd procreated but hadn't thought much about ER, we bought into the conventional wisdom of paying for college. We started with the College Board's survey data, applied their college-inflation rates on the spreadsheet, chose an assumed investment return, used our TI calculator decision-making handbook to determine the monthly savings rate, and began saving $100/week to meet the 2010 goal. This was before 529s so we used EE savings bonds for a year or two (while they were still a good deal) and then shifted to a UTMA split 50-50 among domestic & global value mutual funds. I'd update the spreadsheet annually from the College Board survey (later their website) and we later started setting aside $5K at the beginning of the year.

This worked out great during the world's biggest bull market. It didn't work so well during 2000-2001. About that time I became aware of Buffett and book value. We ditched the domestic value fund (Heartland Value) and bought Berkshire Hathaway. I ER'd in 2002. We continued to ride the global value fund (Tweedy, Browne) until about 2006 and Berkshire until early 2008. We've been sitting in CDs for nearly 18 months.

Then our kid decided to apply for an NROTC scholarship. Woo-hoo! The recruiting district just put her in for an immediate scholarship reservation, which should help persuade Rice that they can afford to admit her. The money's still sitting in CDs in case NROTC doesn't work out. Whatever's left over will be strongly nudged toward her Roth IRA (and the TSP if she stays Navy) and the rest will discharge our parental obligations of helping her to come up with the down payment for a post-Navy house or for funding her own kid's college expenses. We're legally obligated to explain to her how a UTMA works, but we're not legally obligated to do it before she turns 21.

If I was doing it all over again, I'd use a 529 with a goal of paying for four years at UH. Everything else would be her problem.

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Then from May/June things changed.
This summer, while our kid was at a three-week college program, I learned that Facebook has a feature to indicate whether or not you're in a relationship. Has your son recently been flipping the setting on his Facebook page?
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Old 08-07-2009, 05:42 AM   #25
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Old 08-07-2009, 05:47 AM   #26
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...Rambler

This summer, while our kid was at a three-week college program, I learned that Facebook has a feature to indicate whether or not you're in a relationship. Has your son recently been flipping the setting on his Facebook page?
He hasn't changed it, but I know he's chasing a particular young lady. Seem's he likes to flash daddy's money. He took his girl out for sushi a couple weeks ago and spent $50...I took DW out to dinner tonight, Gyoza/potstickers and ramen: grand total $13...same dinner we have about once or twice a month (I don't eat sushi).

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Old 08-07-2009, 05:50 AM   #27
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I most definitely will, I will retire in 3-5 years and my baby was born this year.

I have enough in ibonds to pay for 7 years of projected tuition expense of an ivy league school. If he doesn't need it, we'll have that much more in retirement.
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Old 08-07-2009, 05:56 AM   #28
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I'll add for those who don't know ibond interest is not subject to federal tax if used to pay for college tuition.

As for R&B and other fees, I started a 529 plan this year, and intend to put the maximum in it that is deductible (state tax). This year that was 10k. I will continue to fully fund it every year that I need to until I'm comfortable that it will fund 4 years of room and board expenses projected out 18 years.
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Old 08-07-2009, 10:17 AM   #29
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I think that it would be tough to say go it alone to your kids. I trust people here would at least fill out the aid forms. I knew someone whose parents refused to do so and he couldn't get any kind of financial aid at all, not even loans. That was quite a while ago, but I assume it still would be true today.

If you are moneyed your kid won't get much if any financial aid anyway so if you don't pay what does the kid do? School is too expensive to work your way through. The dispensers of aid don't care if you don't want to pay, they assume you will.
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Old 08-07-2009, 11:03 AM   #30
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I ER'd 5 years ago with two school age sons, both are now juniors (one in college and the other in HS.) I don't know any magic on how to make it happen.
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It's "just" a matter of how much money you want to spend. If you want to sacrifice ER for a few years to put your kid through college then it's a personal choice and a budgeting/saving challenge. By "personal" I mean "the sense of internal satisfaction derived from behaving in accordance with your values", not "your kids will thank you for it".
That about sums up my thoughts on the matter as well. I've got a DB pension, a lump sum payout on top, access to health insurance at a still reasonable cost, and I did well in the stock market starting in the early 80's. Simple answer is I can afford to do it and I want to do it.

Up until 2007 I was letting the college money ride in the stock market, but when it started looking ugly I sold enough to raise cash for both kids' college expenses and put it aside. I've missed some upside in the last few months, but I slept well during the really bad times.
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Actually having a bit of a problem with DS's expenses right now. He has somehow gone from being a very frugal fellow to being a big spender in a period of just a few months.
I'm knocking on wood while typing this, but I think I've lucked out so far. With the oldest one anyway.

There's not much deprivation going on around here, but there wasn't much in the way of luxurious spending either. Anything over what I provide for has always been at their expense. It's amazing how thrifty they become when it's their money going out the door.

The oldest one's miscellaneous school expenses have been very reasonable, in fact he came in under what I budgeted for his freshman year, and I was fairly parsiminous. When we dropped him off for freshman camp I handed him a few bucks in cash, put a hundred in his checking account, and threw a couple of hundred more on his school account and said "make it last but call if you're broke."

We were lucky in two broad areas, one literally being broads. He's dated a little there and at home and I think he got scared off by his selections. One liked to drink, like a fish. There was a story involving her and tequila that seemed to be the end of that budding relationship. After that he stuck with girls at school, but I think he ran into a string of them that were aggressively seeking a future husband and he's not even interested in going there yet. A few others were all crossed off his list with the comment: "I'm no great intellectual, but damn, they should at least be able to carry on an intelligent conversation about something".

All of which brings up some questions about my wife and the milkman. If he were truly my offspring, at this point in his college journey he should be thinking about joining AA and dodging some girls' angry parents. It's probably too late for genetic testing.

The other lucky break was his choice of friends. All of them are tight as drums when it comes to money and he says that modifies his choices on expenditures. The first two years they all ate almost exclusively at the campus cafeteria just because they all had required meal plans and couldn't afford to eat anywhere else.

The only expense issue is a potential one involving staying focused on a degree plan and graduating in a reasonable time. He was a biology major but he switched to computer science. He got sideswiped by a class in that major last year and he'll be taking the same class again this semester. He's stubborn like his mom and doesn't want to give up, but he has expressed the concern: "what if you're not right for something you really love?"

Like most fathers, my goal is to be able to boot the little birds out of the nest and see them fly on their own. College is part of that, and my paying for the education is something that makes me feel good about kicking them out of the nest in the near future. Both kids have been thoroughly indoctrinated in LBYM and we've discussed hundreds of real life cases of people who've blown up their lives financially and otherwise. When they take off on their own it will be with a degree that will help them start their careers, with a good work ethic, without a huge student loan tab, and with a better than basic understanding of how to manage their money without falling into one of those financial holes that so many people seem to find.
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Old 08-07-2009, 05:11 PM   #31
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I don't have any tricks that haven't already been mentioned, e.g. 529s, UGMAs, tax-free (when used for educations) bonds and mostly save early and same a lot.

I have two kids, ages 16 and 18. I budget $125k/kid for college. That is based on 5 years at a UC school. I currently have about 75% of that value in 529s and UGMAs. The reminder will come from my own after tax investments.

The UGMAs were started within a month or two of when they were born. I still DCA into the 529s.

I have a net-worth spreadsheet that does a bunch of ER calcs. I subtract the $250k for college from my net worth before doing any of the ER calcs.

I am at or near FI now but I will probably wait another three years before making any decisions.

Nevertheless it is nice to have both the college and ER financial needs pretty much taken care of.

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Old 08-07-2009, 08:39 PM   #32
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He hasn't changed it, but I know he's chasing a particular young lady. Seem's he likes to flash daddy's money. He took his girl out for sushi a couple weeks ago and spent $50...
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(he is a really good kid, but likes to cook and thus likes to feed the whole apartment block several times a week).
Well, OK. Call me cynical, but I read that "cooking for the block" comment and thought "Riiiiiight..." Can't imagine parenting where I got that cynicism from.

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I'll add for those who don't know ibond interest is not subject to federal tax if used to pay for college tuition.
I briefly experimented with this last year on my tax returns and learned that TurboTax actually asks for the name of the college and the purpose of the expense. It was enough info to make me wonder if the colleges submit matching records to the IRS. You definitely don't seem to be able to claim airfare and campus parking as tax-deductible college costs. Is it only tuition, or can it be used for "other" fees? Because there are a bunch of other fees, and unfortunately not all of them are paid direcly to the institution of higher learning.

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I think that it would be tough to say go it alone to your kids. I trust people here would at least fill out the aid forms. I knew someone whose parents refused to do so and he couldn't get any kind of financial aid at all, not even loans.
I've read that many schools won't even start the paperwork for merit scholarships and work-study, let alone needs-based scholarships, without the FAFSA. They claim to comply with federal law but they base their databases on the info in the FAFSA. In a couple more years I can see the FAFSA becoming part of the college common application.

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All of which brings up some questions about my wife and the milkman. If he were truly my offspring, at this point in his college journey he should be thinking about joining AA and dodging some girls' angry parents. It's probably too late for genetic testing.
My sea-duty schedule pretty well nailed down (so to speak) the date of our kid's conception, and I'm almost positive that I was present for the blessed event, but our kid's puritanical attitude toward sex/drugs/rock&roll gives me pause. Boy is she due for a surprise in her dorm room someday.

OTOH you and I may be somehow related...
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Old 08-07-2009, 08:43 PM   #33
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Kids? What are kids?
OPK

Other People's Kids
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Old 08-07-2009, 09:50 PM   #34
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When I went to college, my folks would only pay a meager amount towards some room & board. So I worked about 30 hours a week during college and lived very, very frugally. So frugally in fact, that I have several nick names from those days. My spouse had everything paid for from her parents and then social security when her dad died.

Flash forward to our kids. I don't expect to pay for my kids college expenses while my spouse expects to pay 100% of everything. We have some 529 plan money that will be helpful, but it won't go the whole way unless something miraculous happens in the next 12 months in the stock market. However, because my spouse really believes in paying for the whole thing, she will keep working and could devote 100% of her take home pay to college education expenses while we use our portfolio to cover our other expenses.

That would be another 9 years of working for her until our youngest is through college. Somehow I think she will have a change of heart after the first kid is through college and the second kid will get screwed.
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Old 08-07-2009, 10:00 PM   #35
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I briefly experimented with this last year on my tax returns and learned that TurboTax actually asks for the name of the college and the purpose of the expense. It was enough info to make me wonder if the colleges submit matching records to the IRS. You definitely don't seem to be able to claim airfare and campus parking as tax-deductible college costs. Is it only tuition, or can it be used for "other" fees? Because there are a bunch of other fees, and unfortunately not all of them are paid direcly to the institution of higher learning.
Our school sends us a form at year end to tell us what to report. Here, it is just tuition for us, although the IRS does allow for "other" fees. So, there is nothing to decide. I do not know if the school reports to the IRS though nowadays with everything computerized, it should be quite doable. What irks me is that textbooks are not deductible although they are quite expensive.
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Old 08-07-2009, 10:02 PM   #36
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OPK

Other People's Kids
The kids that will continue to pay into SS for us all.
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Old 08-08-2009, 12:57 AM   #37
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I retired in March of last year, younger son was in 2nd year of college. It looks like it will be a 5 year degree and he is doing well (on dean's list). I told DS that I would help out where I can but only budgeted for 4 years. He is at a state school. He was unable to find a job this summer despite a very diliget effort. Just moved him into a shared apartment today, he was in the dorm the first 2 years. State school is good; I used to say junior college I have covered by my spare change jar, a state college mostly saved enough, Stanford or Caltech AND i KEEP WORKING.
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Old 08-08-2009, 03:21 PM   #38
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The kids that will continue to pay into SS for us all.
Bless their little hearts.
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Old 08-08-2009, 03:34 PM   #39
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Eh, my 20-yr old son is taller than me.
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Old 08-08-2009, 04:13 PM   #40
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I briefly experimented with this last year on my tax returns and learned that TurboTax actually asks for the name of the college and the purpose of the expense. It was enough info to make me wonder if the colleges submit matching records to the IRS. You definitely don't seem to be able to claim airfare and campus parking as tax-deductible college costs. Is it only tuition, or can it be used for "other" fees?

Unfortunately only tuition. I have started a 529 for room and board and fees. The rules on the 529 are far more flexible.


edit: correction, tuition and mandatory fees. not room and board though. http://www.irs.gov/publications/p970...blink100021097
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