Can't get much more "Young Dreamer" than this. But mods, feel free to move it to whatever forum you deem appropriate.
I could use any helpful hints, tips, or tricks from those of you in the Houston area... or those of you who've parented college students and managed 529 accounts.
Rice University has been expanding its student body faster than their dorms. Every year each dorm has to figure out who's living on campus and who's moving off, whether it's via lottery or some other selection process. However some of the students volunteer to go off-campus just to get away from the dorm drunks, the stoners, and the jerks who set off 2 AM fire alarms. (Hey, these are some of America's smartest drunks, stoners, & jerks.) Moving off-campus also makes sense for other reasons. One of their dorm rooms had a pretty significant A/C & mold problem this year, and our daughter's getting tired of the few miscreants who disrupt the entire dorm with their sophomoric party behavior after midnight.
For most of those reasons, our daughter has volunteered to move off-campus at the end of sophomore year. Perhaps she has more reasons that she doesn't care to share with dear ol' Dad, but she hasn't volunteered and I'm not asking.
Let me proclaim up front that none of this is my problem. She's figuring it out on her own, and so far it seems to be going well. Rice staff & students have a whole advisory system set up to support their "OC" students, and she's using that. She has a huge network of RAs, masters, residents, and advisers. However a college campus tends to lack a perspective of anything longer than 3-4 years.
She might as well learn about the surprises of apartment living now, before she's an ensign at nuclear power school with no time to learn from scratch. She's earned the privilege. She's doing good on her grades and in NROTC, and she's much better at handling the finances than she was a year ago. She's also operating at absolute max throttle and max dynamic airframe stress, so she might as well find some other way to make her life even more challenging. What a nuke.
As parents, we'd prefer that she not feel financially constrained to live next to a meth lab. It seems reasonable to subsidize her to the tune of what we'd be paying Rice for room & board ($12,700/year). She has summer school and NROTC summer training lined up with another Rice student, so the two of them have applied for an apartment lease starting 1 May (in five weeks). By August they're talking about eventually splitting the rent among three or four students in a 2BR2BA floorplan of 1200 sq ft. It looks like it costs $1550-$1600/month. The apartment complex is about a mile from campus. It has a website with pretty pictures and the property managers seem familiar with Rice students. (I know this because I had to sign the lease guarantee.) She has a campus rep of being savvy with money so I think this will force her to learn to assert herself when her roommates have to cough up their rent checks.
We've encouraged her to live out of her seabag and go really cheap on furniture because this is a bad time to be saddled with material possessions. Once she graduates from Rice she'll spend 15 months in nuclear submarine training (at two different places) and then basically "live" aboard a sub until she gets qualified. (Even on a surface ship she'd be "encouraged" to spend lots of time onboard improving her knowledge.) Add in weekend duty & six-month deployments, and she really doesn't need much from an apartment or furnishings until she rotates to shore duty. Luckily she enjoys home decor challenges and she's enamored of this article she saw on making a bed out of old pallets + a futon. If that's her HGTV style then she'll have no problem finding dumpster furniture.
It's been suggested (by other "helpful" parents) that we should buy her a condo to sublease to her roommates, and then in a few years we could unload the real estate for landlord cap gains. We're experienced landlords, but I'm skeptical that Houston real estate would treat us so well in just two years.
Any other advice or surprises with moving off-campus?
Back in the early 1990s (when wooly mammoths roamed the Web) we saved for her college education with EE & I education bonds. Their interest is tax-free when redeemed for qualified tuition programs. However our daughter got herself an NROTC scholarship to pay all her tuition expenses, and we can't redeem the bonds tax-free for room & board. The legal loophole is to redeem the bonds, roll them over to a 529 account (another qualified tuition program) and then disburse the 529 funds for room & board. Now that she's living OC, I want to disburse the 529 funds directly to her (the only beneficiary) by electronic fund transfer to her checking account. Fidelity's 529 billpay program is perfectly happy to let me enter Rice's address to send dorm payments, but the program doesn't offer an EFT/ACH option to a personal checking account. I'm working on that with Fidelity's customer service now.
I discovered a nasty little tax caveat at:
Avoid These 529 Withdrawal Traps
Next she plans to buy a car. In the middle of America's fourth-largest city, barely a mile off-campus. Luckily this is also not my problem because we raised her on a "Kid 401(k)" savings plan that produced $5000 on her 16th birthday for "my first car". She's held on to that money (in PenFed CDs). I guess she could also tap her Roth IRA contributions, assuming I was dumb enough to tell her how to do that.
Instead I've pointed out MrMoneyMustache.com articles on bicycle kiddie trailers and the concept of "frugal badassity". I'm working up an epic e-mail on "Dad's Guide to Buying a Used Car for Under $5000" that's probably going to equate to "2002 Honda Civic". The reality is that the Texas DOT may make car ownership too much of a hassle. She has to decide whether to register the car with Hawaii plates (her aloha preference, but Hawaii taxes military pay) or whether to become a Texas resident (Texas does not tax military pay) and register the car in Texas. It's possible that Texas might also require a 19-year-old to take a road test for a Texas driver's license, and she's researching all of that.
Rice has a campus version of Craigslist ("OwlList") that would help her locate a good used car. I'm also teaching her about CarFax, Consumer Reports, Kelly Blue Book & Edmunds, and a mechanic's inspection. When we visit her next month I'll also show her how to check out a car, although one of her gearhead friends will probably take care of that.
Again as parents we'd pay the insurance (until she graduates). She won't get comprehensive or collision, of course, but we'd spring for towing insurance. She'd have to pay her own roadside assistance. And registration. And taxes. And campus parking. And gas. She already knows how to change the oil.
Any other surprises about buying a good used car in Houston?
Once she has her bad self set up in her OC crib, perhaps with her dream ride, is there anything else she should watch out for?
I could use any helpful hints, tips, or tricks from those of you in the Houston area... or those of you who've parented college students and managed 529 accounts.
Rice University has been expanding its student body faster than their dorms. Every year each dorm has to figure out who's living on campus and who's moving off, whether it's via lottery or some other selection process. However some of the students volunteer to go off-campus just to get away from the dorm drunks, the stoners, and the jerks who set off 2 AM fire alarms. (Hey, these are some of America's smartest drunks, stoners, & jerks.) Moving off-campus also makes sense for other reasons. One of their dorm rooms had a pretty significant A/C & mold problem this year, and our daughter's getting tired of the few miscreants who disrupt the entire dorm with their sophomoric party behavior after midnight.
For most of those reasons, our daughter has volunteered to move off-campus at the end of sophomore year. Perhaps she has more reasons that she doesn't care to share with dear ol' Dad, but she hasn't volunteered and I'm not asking.
Let me proclaim up front that none of this is my problem. She's figuring it out on her own, and so far it seems to be going well. Rice staff & students have a whole advisory system set up to support their "OC" students, and she's using that. She has a huge network of RAs, masters, residents, and advisers. However a college campus tends to lack a perspective of anything longer than 3-4 years.
She might as well learn about the surprises of apartment living now, before she's an ensign at nuclear power school with no time to learn from scratch. She's earned the privilege. She's doing good on her grades and in NROTC, and she's much better at handling the finances than she was a year ago. She's also operating at absolute max throttle and max dynamic airframe stress, so she might as well find some other way to make her life even more challenging. What a nuke.
As parents, we'd prefer that she not feel financially constrained to live next to a meth lab. It seems reasonable to subsidize her to the tune of what we'd be paying Rice for room & board ($12,700/year). She has summer school and NROTC summer training lined up with another Rice student, so the two of them have applied for an apartment lease starting 1 May (in five weeks). By August they're talking about eventually splitting the rent among three or four students in a 2BR2BA floorplan of 1200 sq ft. It looks like it costs $1550-$1600/month. The apartment complex is about a mile from campus. It has a website with pretty pictures and the property managers seem familiar with Rice students. (I know this because I had to sign the lease guarantee.) She has a campus rep of being savvy with money so I think this will force her to learn to assert herself when her roommates have to cough up their rent checks.
We've encouraged her to live out of her seabag and go really cheap on furniture because this is a bad time to be saddled with material possessions. Once she graduates from Rice she'll spend 15 months in nuclear submarine training (at two different places) and then basically "live" aboard a sub until she gets qualified. (Even on a surface ship she'd be "encouraged" to spend lots of time onboard improving her knowledge.) Add in weekend duty & six-month deployments, and she really doesn't need much from an apartment or furnishings until she rotates to shore duty. Luckily she enjoys home decor challenges and she's enamored of this article she saw on making a bed out of old pallets + a futon. If that's her HGTV style then she'll have no problem finding dumpster furniture.
It's been suggested (by other "helpful" parents) that we should buy her a condo to sublease to her roommates, and then in a few years we could unload the real estate for landlord cap gains. We're experienced landlords, but I'm skeptical that Houston real estate would treat us so well in just two years.
Any other advice or surprises with moving off-campus?
Back in the early 1990s (when wooly mammoths roamed the Web) we saved for her college education with EE & I education bonds. Their interest is tax-free when redeemed for qualified tuition programs. However our daughter got herself an NROTC scholarship to pay all her tuition expenses, and we can't redeem the bonds tax-free for room & board. The legal loophole is to redeem the bonds, roll them over to a 529 account (another qualified tuition program) and then disburse the 529 funds for room & board. Now that she's living OC, I want to disburse the 529 funds directly to her (the only beneficiary) by electronic fund transfer to her checking account. Fidelity's 529 billpay program is perfectly happy to let me enter Rice's address to send dorm payments, but the program doesn't offer an EFT/ACH option to a personal checking account. I'm working on that with Fidelity's customer service now.
I discovered a nasty little tax caveat at:
Avoid These 529 Withdrawal Traps
Rice's financial aid website lists the "cost of attendance" at the same $12,700, so that's OK. However I need to check our 529 withdrawals and total college expenses against the tax credits. Luckily I'm still working on our 2011 tax returns, although I may have screwed up 2010's tax credits.An excess 529 withdrawal includes room and board costs in excess of the amount the school includes in its "cost of attendance" figures for federal financial aid purposes. If your student is living off campus, ask the financial aid department for the room and board allowance for students living off campus. If the student is living in campus-owned dormitories, the amount you can include in QHEE is the amount the school charges for its room and board.
Even if you've properly accounted for all qualifying expenses, and withdraw from your 529 account only enough to pay for those expenses, you may end up with a non-qualified distribution. This happens because of the coordination rules (AKA anti-double-dipping rules) surrounding the various education tax incentives. You must remove from your total QHEE any of the tuition expense that is used to generate an American Opportunity tax credit or a Lifetime Learning credit. For example, if you claim a $2,500 American Opportunity credit on a federal tax return you must remove from QHEE the $4,000 in tuition and related expenses that was used to support the credit.
Next she plans to buy a car. In the middle of America's fourth-largest city, barely a mile off-campus. Luckily this is also not my problem because we raised her on a "Kid 401(k)" savings plan that produced $5000 on her 16th birthday for "my first car". She's held on to that money (in PenFed CDs). I guess she could also tap her Roth IRA contributions, assuming I was dumb enough to tell her how to do that.
Instead I've pointed out MrMoneyMustache.com articles on bicycle kiddie trailers and the concept of "frugal badassity". I'm working up an epic e-mail on "Dad's Guide to Buying a Used Car for Under $5000" that's probably going to equate to "2002 Honda Civic". The reality is that the Texas DOT may make car ownership too much of a hassle. She has to decide whether to register the car with Hawaii plates (her aloha preference, but Hawaii taxes military pay) or whether to become a Texas resident (Texas does not tax military pay) and register the car in Texas. It's possible that Texas might also require a 19-year-old to take a road test for a Texas driver's license, and she's researching all of that.
Rice has a campus version of Craigslist ("OwlList") that would help her locate a good used car. I'm also teaching her about CarFax, Consumer Reports, Kelly Blue Book & Edmunds, and a mechanic's inspection. When we visit her next month I'll also show her how to check out a car, although one of her gearhead friends will probably take care of that.
Again as parents we'd pay the insurance (until she graduates). She won't get comprehensive or collision, of course, but we'd spring for towing insurance. She'd have to pay her own roadside assistance. And registration. And taxes. And campus parking. And gas. She already knows how to change the oil.
Any other surprises about buying a good used car in Houston?
Once she has her bad self set up in her OC crib, perhaps with her dream ride, is there anything else she should watch out for?