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Old 12-13-2019, 03:20 PM
 
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Quote:
Originally Posted by StealthRabbit View Post
And what is your Parent's ROI on their college investment in you? Did you compensate them + ROI? I had a renter who did that for his parents, but didn't know it was common to do so. I think most kid's feel it it their 'entitlement' and don't give a second thought to re-paying with gains to parents. I suppose some parents would refuse it, in which case I would expect their kids 'pass-it-on'. Give the equivalent $$ to a charity or family needing edu$ in the name of their parents.

Don't know, as no one in my family (for last 4 generations) ever got a dime for college (or any other endeavor) from their parents.
My family is in the "pass-it-on" school of thought. They fully expect me to do the same for my kids, and so on. Ironically, my parents ended up making too much money in their lifetime according to our government so they'll be paying for my kids college in order to reduce estate taxes, but then I'll be in the same boat when I'm older so will be looking for more grandkids to pay college costs for

For the record, my father came from nothing and earned everything solely through being an employee at a large corporation, and I'm following in exactly the same path. Aside from education costs, my family does not give handouts to the kids (me) or the grandkids (my kids). I will likely do the same.
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Old 12-13-2019, 03:23 PM
 
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Why not have the child save the 15k a year you’ve proposed and have them figure out their path such as trade school or whatever without giving them 200k?

I think I’d hang on to my 200k and still accomplish the bulk of the development for the child no?
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Old 12-13-2019, 03:23 PM
 
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Originally Posted by ChessieMom View Post
LOL!!! How do you figure that a kid will have 15k to put away each year? That’s hilarious.
What living expenses would a 18-19 year old have living at home with their parents? Pitch in a few bucks for food...maybe pay their car insurance?

A better question might be - why couldn’t a kid put away $15k/year?

I did.
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Old 12-13-2019, 03:24 PM
 
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Quote:
Originally Posted by eddiehaskell View Post
Not 18 - sometime in their 20s when they’ve proven themselves.
Very few 20 somethings have really proved themselves
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Old 12-13-2019, 03:25 PM
 
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Quote:
Originally Posted by eddiehaskell View Post
This crazy method requires virtually no unique skills...just a basic understanding of finances.

And yes...a $200k investment from parents. Perhaps in a trust so the child can’t touch it for a certain amount of time.

I would submit that by age 25-30 an intelligent young person with a little guidance could have a net worth of $500,000+ and no debt. This could essentially make them self sustaining for life...and rich by 40-50 if they hold on to a few basic principles. The person would also be young enough to still attend college if they so choose.

And let’s face it, who’s the same person at 25 as they are at 18? By 25 most people will have a much better understanding of who they are and where their interest lie.

For a young person that lives at home (or on the cheap with roommates), $200k + contributing $15k+/year of their own money + no debt could pay huge dividends long term. Not to mention the life skills accumulated through being in the working world and understanding exactly how to manage finances.

Look at all the people out here who are 30 with a negative net worth (a worst case scenario for any child of mine). Most will probably be 55+ before they can even imagine what $500k looks like.

For this to work you need a very level headed and practical child that is capable of doing more than working for minimum wage. Something like HVAC, plumbing or good car salesman would be perfect.

You are basically front loading a good understanding of finances/modesty which long term could be way more valuable than college.

If your child succeeds by coming out on the other end with $500k + no debt....well, they will have earned their PHD and most likely have a long comfy life ahead of themselves. They won’t be working a job they hate...they’ll have plenty of time for family/kids...plenty of time to take care of their mind/body, etc.

I guess the most valuable lesson would be how they’ll have to quickly learn the value of a dollar to reach $500k. Once THIS lesson is instilled in a person - money becomes ‘one less thing’ as Forest Gump would say.
It's a lose/lose because a lump sum of $200k for an 18 year old is a waste. Two scenarios:

1. Unrestricted money: It gets enjoyed rather than invested, and every job requiring work or every college program requiring delayed gratification seems like a "bad deal".

2. Restricted money: If it's use-restricted for education, it might not get used at all, and it would be $200k that could still be in my accounts untouched.

Take it year by year. If the kid is in college, see if you qualify for grants, is your child working during the semester, does the employer offer tuition assistance, etc. Get a loan to float the cost, then pay it off with the reimbursement check. Loans in child's name only, but coach them along the way to make sure the numbers will add up come reimbursement time, that the entire cost of the semester is covered by the benefit.
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Old 12-13-2019, 03:28 PM
 
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Quote:
Originally Posted by Lowexpectations View Post
Why not have the child save the 15k a year you’ve proposed and have them figure out their path such as trade school or whatever without giving them 200k?

I think I’d hang on to my 200k and still accomplish the bulk of the development for the child no?
The $200k pushes them over the top and makes very early retirement a possibility. If I can potentially save my child 20 years of grinding on a job...why not?
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Old 12-13-2019, 03:35 PM
 
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Quote:
Originally Posted by eddiehaskell View Post
The $200k pushes them over the top and makes very early retirement a possibility. If I can potentially save my child 20 years of grinding on a job...why not?

You could give them funds any point later in life. All I see is downside for doing it very early on.

If I gave you the following which scenario produces the best results?

200k @ 20 years old
400k @ 30 years old
786k @ 40 years old
1.5mm @ 59 years old


Mind you if we are talking about you personally taking a scrape at the data you’ve given would you be setting 200k of your 800k aside today? Or discounting for when your child hits 20?
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Old 12-13-2019, 03:46 PM
 
12,387 posts, read 7,426,659 times
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Quote:
Originally Posted by ddm2k View Post
It's a lose/lose because a lump sum of $200k for an 18 year old is a waste. Two scenarios:

1. Unrestricted money: It gets enjoyed rather than invested, and every job requiring work or every college program requiring delayed gratification seems like a "bad deal".

2. Restricted money: If it's use-restricted for education, it might not get used at all, and it would be $200k that could still be in my accounts untouched.

Take it year by year. If the kid is in college, see if you qualify for grants, is your child working during the semester, does the employer offer tuition assistance, etc. Get a loan to float the cost, then pay it off with the reimbursement check. Loans in child's name only, but coach them along the way to make sure the numbers will add up come reimbursement time, that the entire cost of the semester is covered by the benefit.
If the goal is leaving a debt driven society - I feel like college will set more people back then it gets to ahead.
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Old 12-13-2019, 03:49 PM
 
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Btw - I know 18-19 year olds working construction making the equivalent of $20-25/hr. And what’s to stop a 18 year old from working 55+ hours/week?
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Old 12-13-2019, 03:54 PM
 
12,387 posts, read 7,426,659 times
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Quote:
Originally Posted by Lowexpectations View Post
You could give them funds any point later in life. All I see is downside for doing it very early on.

If I gave you the following which scenario produces the best results?

200k @ 20 years old
400k @ 30 years old
786k @ 40 years old
1.5mm @ 59 years old


Mind you if we are talking about you personally taking a scrape at the data you’ve given would you be setting 200k of your 800k aside today? Or discounting for when your child hits 20?
Any money given would be a reward for staying on a early retirement path. I would personally prefer any child of mine to have the option of not working past their early 40s...or at least being able to do any job they desire regardless of pay.
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